12 Doors and a $4M Portfolio as a Real Estate Power Couple

Ashley:
This is Real Estate Rookie episode 301.

Zosia:
Until recently I quit my last job right around middle of January full-time. And so this has been a new experience for the both of us, but it’s been really exciting. I think when you immediately tell your spouse or your partner or your kids to do something, their immediate response is, “No.” I don’t know why. It’s your friend tells you, “Absolutely, I want to go do that thing.” Your spouse tells you it’s, “I’m not sure about that. There’s definitely got to be a catch.” And so I think that’s what spouses that are having trouble, I think be patient and be very clear and concise as to why you’re sharing the information and what you want out of it. And I think your spouse can understand a lot more.

Ashley:
My name is Ashley Kehr and I am here with Tony Robinson.

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And we’re here, we’re in person in Denver. And Ash, we don’t get to do this enough. We couldn’t be physically further away from each other when we’re actually recording the podcast because I’m in California, she’s in New York.

Ashley:
Yeah.

Tony:
And is there anything above New York? I don’t know my geography.

Ashley:
Canada.

Tony:
Just Canada. It’s Canada that’s next, right?

Ashley:
Yeah.

Tony:
We literally couldn’t be further away from each other, so it’s always cool we can get together in person. And we’ve got a really cool episode for you guys today. You guys have met her husband, Tyler Madden, but today we have Zosia Madden on the podcast. And I love the Maddens and I really enjoyed this conversation because not only was it about real estate investing, but it was also about all of the tangential things that are so important to be successful as a real estate investor.

Ashley:
And we touch here a lot on partnerships. They’re obviously a married couple in their partnership, but how they’re working on two businesses together. And Tony and I recently wrote a book Powered by Partnerships, which is coming out in August. And I feel like we should have Zosia write little version into the end of the book here about it because a lot of the information she gave was so powerful on business partnerships and relationships with your business partner, whether they’re your spouse or not. I think some of the biggest takeaways for me was how to establish and maintain your role and what those responsibilities are and how to grow that, but also how to keep a good relationship with your partner that you’re working with.

Tony:
And we spent a lot of time actually just talking about the concept of getting your spouse on board. That’s a question that comes up all the time. We hear it all the time, see it all the time. And it was just a really… I don’t know, it was just a really insightful conversation around what that actually means and how to achieve that. If you’re listening to this podcast and you want your business partner, your spouse, whoever, girlfriend, boyfriend to quote unquote, “get on board”, this is a great episode for you.

Ashley:
And Tony does a great job of explaining the three levels of getting on board as to what those three levels are and what it means to get somebody on board in those three different levels.

Tony:
Excited for the conversation with Zosia. This is the part of the podcast, or this is the part of the podcast where I usually read a review from someone in the Rookie audience, but since we were here in Denver, we thought what better thing to do than to have someone read a review live from the audience. Today we have Tyler Madden who is on the spot, and he’s just going to make up a review and then he will actually post that review once he’s done on Apple Podcasts.

Tyler:
You bet I will. As far as this episode, I can’t say that I could love any episode or any guest more than I loved this episode and this guest. I’m amazed that I get to work with this person. I learned a lot about working with your spouse, coming together on a common goal, being able to dream together with your spouse or your partner. And I would hire this guest in a heartbeat to work with me.

Tony:
That’s a great-

Zosia:
I think it says there too, how attractive all three were.

Tyler:
Let me add that now.

Zosia:
I just asking.

Ashley:
Usually we read the username. What is your username for-

Tony:
That’s Sure. What’s your username?

Ashley:
… your Apple podcast?

Tony:
No, actually, we want your first email address. Give me your first email addresses.

Tyler:
Oh, my first email address that I ever had my MySpace address?

Tony:
Yeah.

Tyler:
Oh, wake setters rock.

Tony:
That’s actually not that bad.

Tyler:
Probably @Yahoo or Hotmail.

Zosia:
AOL.

Tyler:
AOL.

Tony:
Aol.com. My first email was [email protected]

Zosia:
I think mine was like snowboard chick night.

Tyler:
Nailed it. We nailed the screen nickname… You get that done.

Ashley:
Zosia, welcome to the podcast. We are so happy to have you here. We’ve had your husband, Tyler Madden on a couple of times and welcome to the show.

Zosia:
Thanks for having me. I’m excited to be here.

Ashley:
Can you let everyone know a little bit about yourself and why you’re here?

Zosia:
Yeah, absolutely. My name is Zosia Madden and I work with my husband Tyler at our construction company called Laurelless. And until recently, actually that was very recently, I quit my last job right around middle of January full-time. And so this has been a new experience for both of us, but it’s been really exciting. And before that I was in restaurants for over 15 years of high level executive teams there. And then went to BP for a minute and now I’m working with Tyler, so very excited. We invest in real estate here in Denver and Aurora, so we have a nice little investment egg here as well. And I’m a mom to a two-year-old. Life’s crazy.

Tony:
Just set the table for us, Zosia. How Tyler’s already done this for folks that don’t have the backstory. How many units are you guys up to, buildings, et cetera, here in Denver?

Zosia:
Absolutely. We are currently at 12 rentals. We have 11 medium term rentals of that. All of them are-

Tony:
You guys have 11 now?

Zosia:
We do have 11 now.

Tony:
11. I didn’t know that.

Zosia:
Walmart’s explaining my delivery times currently on my watch, I think.

Tony:
That’s awesome.

Zosia:
We just decided to turn a couple of them after I opened them up on Airbnb for some long-term people and I got 10 requests in a day. And so I said, you know what? Let’s just furnish them. And the guys that are living there currently are willing to put together the furniture, which I felt was clutch. I’m saving a little bit of time and energy there. But we’re at 11, our portfolio’s just under $4 million with those four properties, which is really cool. In Denver, we invest in a high… I don’t know, it’s an expensive market, but we do things the right way. My husband spoke about on the last podcast is that we bought seven units all at once.
I was nine months pregnant. That whole process was crazy and we sacrificed a lot. But I think the ROI was huge on those deals, which led us into the most recent deal we just finished in January. But I know Rachel mentioned she lived in one of the properties on the last episode. And then we’re looking for a new one. We’re doing our first flip in Denver, which we’ve never done a flip before. We’ve always been buy and hold investors. And so this would be a lot of fun. We are going really heavy with the design element on this one, and we think that it’s going to turn out really well.

Ashley:
That that’s amazing. And congratulations on your accomplishments, and I’m sure there’s going to be a lot more to come. But let’s talk about you transitioning from a W-2 to working directly for the construction company and you guys do remodels. And we just had Rachel Richards on episode 300 where she had hired you guys and she was one of your first investor clients, where you usually gone and done high end luxury remodels. And we did some bonus content too, if anyone wants to check that out, where we actually interviewed Zosia and Rachel where they tell all about that experience together. And you’ll find out if they’re friends or not or if they hate each other.

Tony:
That was a great tease, Ash. That was true-

Ashley:
It was good.

Zosia:
I want to watch it now.

Ashley:
There might have just been a fist fight out in the parking lot and Rachel left, but you can watch the bonus content to find out. Tell us about the mindset shift you had to go through of… And you did this pre-show to us as to saying, okay, here you are on the W-2 and here’s your husband building the business during the day. And you’re going on these opposite paths and then at night coming back together to work on the business. Explain that transition that happened once, now you both are working on the business. What is your day-to-day like?

Zosia:
I think it’s interesting because I think a lot of people have it in their head that I’m going to quit my W-2, I’m going to become financially free and quit my W-2. But oftentimes it’s not that easy and it really is, it takes a lot of time and effort and energy and really ensuring you’re on the same page with the spouse that you’re trying to do that with. Some people could be doing it single, I get that. But for our journey it was, I loved my W-2s always. I was very successful. I made a lot of money. I moved up the corporate ladders. And for me it was consistency and it felt safe to always have that W-2. Now, it was also really important all those years for me to have that because it helped give us the leverage that we needed to buy some of our initial properties.
I don’t think that we could have done some of the properties that we did without having that consistent paycheck. But it came to a crossroads when, I think what happened was, it really happened when I became pregnant and we bought those seven units and we sacrificed a lot at that time. Tyler was working late nights at the project. He was still swinging the hammer on those to make sure that the deals made sense. I was feeding the babe and there until 10:00 PM waking up in the middle of the night while he was coming home. And so I think that people don’t often think about all the sacrifices you have to make to be able to get to the point of being able to quit a W-2. And I think one of the breaking points was we were continually doing that. We were veering off and then sometimes we’d come back together and then we were veering off again.
And what that was, it was not allowing us to live a parallel life towards our goals and towards what we wanted as our future. And so what really was the changing point was we went up to Breckenridge and we took Cash, but during his nap times, we set our intentions. We looked at where we wanted to be in 10 years, in five years. And we’d always had big goals, but they were fluffy. They were like, “Hey, we want to do big things. We want to take over the world.”

Ashley:
Like no plan.

Zosia:
No plan or action. And then we said, “Okay, where are we really at financially right now? Where could we be if I quit my job and helped grow Laurelless?” Because at the time it was just Tyler and our project manager. They were taking on just a few jobs here and there really successfully. By a few jobs I mean they’re half a million dollar jobs, so you don’t have to take on a lot of them with the business that we have. But it still felt like we were off. And at that moment, we set our sights on where we wanted to be in 10 years. And then we said, “Okay, how could we get there in five?” And then we still thought, “Okay, I’m going to stay at a job for another year, year and a half, maybe two.”
And then at a certain moment we just said, “No, our goals and where we can become and where we could go and what it would do for our relationship and where we are together and grow the business was more important than keeping that W-2.” And we knew that our finances were set because of our rental portfolio, which was helpful, but we also knew that what I was going to bring to the business would make up the dividends as well on the other side.

Ashley:
This trip to Breckenridge.

Zosia:
Yes.

Ashley:
Alignment meeting, per se.

Zosia:
Yes.

Ashley:
This was a big change for you guys.

Zosia:
Absolutely.

Ashley:
What are three, maybe questions rookies today could sit down with their significant other, their spouse, their business partner, three questions they could sit down and ask each other that would bring them to that same kind of impact for their life. What are three things you can think of?

Zosia:
Let me give me a quick story. It started with Tyler doing the 60-day challenge with you and Steve Rosenberg and doing these I am statements every morning. And so we had started doing these I am statements and they’re affirmational morning statements. But what Tyler and I had done is a couple of years ago, gone in separate rooms and created our I am statements separately. What we did in Breckenridge is we went line by line of what were things that I am affirming every day and what he was affirming every day. And we found that over 50% were almost exactly the same, but we didn’t even know it. We didn’t know that we were moving towards the same day-to-day because we always did that as our separate mind time. I think that, figure out where you want to go and then really align with your spouse on let’s go line by line.
And we have 20 I am statements. I am passionate about my life or I am not held back by self-limiting beliefs, things like that where it’s reminding myself to get out of my own head sometimes. And then we have bigger team goals of I’m not trading my time for money and things like that, where then all of a sudden we have the same ones every single day. I think that’s really important. I think asking yourselves, what does your perfect day look like in five years? Which is really hard for a lot of people to answer.

Ashley:
That is for me so hard.

Zosia:
It’s really hard. And my answer’s still a little fluffy, but I think overall I have a really good understanding of what that looks like and it’s not, not working.

Ashley:
Do you mind sharing it with us?

Zosia:
Yeah, for sure. I think in five years our ideal time is we wake up on a beach. I know the place, I know how it feels, and I am with Tyler and Cash, we’re able to check in that our businesses are working and businesses plural, but I get to enjoy my time and my energy where I want to spend my time and my energy. And again, it’s not like I’m going to do this, this and this every day, but I know it’s an essence and it’s a feeling that I like and that’s really what I’m working towards and that’s what we’re working towards.

Tony:
I just want to share one thought because I struggle with the day thing too, and I like to look at it more as what does my perfect week look like? Because I feel like that gives you a little bit more flexibility.

Zosia:
Absolutely. Yes.

Tony:
Because I enjoy podcasting, but would I want to do is every day? Maybe not.

Zosia:
But in a week-

Tony:
But it’s like, if I can squeeze this into a Tuesday, when we do this on Tuesdays. If you’re listening to this, you’re like, “I can’t think about what my perfect day looks like.” Zoom it out just a little bit and say, “What does my perfect week look like?

Zosia:
That is super helpful. I do think sometimes we’re scoped too far down to think about bigger picture. And then I think number three is what could you change today or this week that could get you closer to where you want to be in five years? I think that sometimes it’s those small changes, those small thought processes that we put on the back burner and realize if you take action today on those items, it’ll just compound. It’ll make a lot easier to get to where you want to be.

Ashley:
That is such a great statement. Ask yourself during that alignment meeting is what is one thing we each could be doing different each day to get closer to that goal? And that really gets you thinking. And then maybe start thinking of a couple of more things. These are actually three easy things I can do that are going to change my life dramatically.

Zosia:
How do you eat an elephant? It’s one bite at a time. And I think everybody talks about this, but so often we think we need to take it down immediately. We need to quit our jobs now. We’re in such a space of immediacy with the way that the world is right now, that we think that everything happens really quickly. But Tony, you’ve been doing this for a long time, Ashley, you’ve been doing this for a long time. From what you started as property management to what you’ve built now is a huge difference from what you learned at your previous jobs to building the real estate, to getting to where you are. And some people are like, “Oh, they’re super successful. They did it overnight.” And that’s just with your goals with where you are in your career, anything, it takes time.

Tony:
We were all at a Brandon Turner’s Better Life Event and we saw Jay Papasan on speaking and I really enjoyed his presentation. I’ve read the book the one thing.

Zosia:
It’s great.

Tony:
But hearing him break it down in person and it even gave more power to-

Zosia:
Absolutely.

Tony:
… the idea what you said of here’s my long-term goal, what’s the one thing I can do today, this week, et cetera, to kind of move towards that? A question that I get a lot too, because a part of the reason why I feel like me, you and Tyler and my wife Sara, all get along is because we resonate with the fact that we’re doing this as married couples.

Zosia:
Absolutely.

Tony:
And I know one of the questions I always get is, “Tony, how did you get Sara on board?” What was the journey for you and Tyler? Was it always, “Hey, we’re going to do this together.”?

Zosia:
No.

Tony:
Walk us through that journey. How did you get from, “I’m climbing the corporate ladder, I’m doing this thing, I’m really good at it,” to, “Hey, I like this idea,” to, “I’m going to help a little bit,” to, “Okay, cool, we’re doing this together.”

Ashley:
And it’s not even just investing, it’s actually running business too.

Tony:
Running a business.

Zosia:
And that’s what we say too. We’re running two businesses together. I really think that if you have a real estate portfolio, that’s a business, if you’re doing it right. You have a P&L, you understand where your expenses are, you need to have insurance, all LLCs. You’re running a business. We’re running two businesses together, which is kind of insane when you think about it and we have a child. We like each other most days. And so I’m like, “Okay, this is why it’s all working.” But no, I think that it was a slow roll, which I think I’ve heard is how you did it with Sara as well. As with anything, I think when you immediately tell your spouse or your partner or your kids to do something, their immediate response is, “No.” I don’t know why. It’s your friend tells you, “Absolutely, I want to go do that thing.” Your spouse tells you it’s, “I’m not sure about that. There’s definitely got to be a catch.”
And so I think that that was my sentiment for a long time of, “This is too good to be true. I’m not really sure.” Now go back 10 years. I grew up in apartments. My mom was a single mom. My mom has never owned a house, so I was always in apartments. And so when Tyler goes, “Hey, let’s get a house,” I was confused as to why. We had a great apartment. It was fine. But that was a huge switch just in my head space then of buying a house and seeing what Tyler did of the sweat equity he put into that house. And us getting roommates before house hacking was a term to pay for things. And then fast-forward, I think really when he realized that it was time for his mindset shift. I had done one maybe five years prior. I had always had to do leadership books with the job that I was in, and Tyler wasn’t ready then. And understandably so when I was reading those, my mindset was towards my job that I was at at the current moment.
And he didn’t really understand how it impacted us as a whole. Now when Tyler was ready to make that mindset shift, he kept on coming back to how it made an impact on us as a whole, not just him being a general contractor or him in the real estate space, which I think is a huge difference when you realize that the information that you’re bringing to your spouse can make a difference for your life as a whole. I started seeing bits and pieces of that. He joined a couple of masterminds and a couple of challenges. I would see how much effort and work he was putting into that, which inherently was a lot more than I had seen him put into anything outside of work previously. He’s somebody that doesn’t take on hobbies or get really focused on something. And so I was really impressed with seeing all of that.
And then I think once he got into listening to the podcast, I think he really started listening to the rookie podcast. I think after you were on the Steve thing to the OG podcast and just some other books. And slowly he would just send me video recordings of him driving in the car, but just his phone up to the recording of just snippets. And he would just text me the snippets. And I’m like, “Oh, that’s interesting.” And then all of a sudden I’m listening to the podcast on my own. And so I think it was slowly of, “Okay, how do we do this?”

Ashley:
Planting the seed?

Zosia:
Definitely planting the seeds. It was like not… What’s the opposite of a bamboo. Bamboos grow really fast. It was whatever the slowest growing seed there is is was me. And then it was once we… We’re relatively spontaneous people. I think you guys know this about us, we’re were pretty spontaneous. There was just a certain moment that it switched and all of a sudden it’s like we were in Maui. I was 33 weeks pregnant, we were on our babymoon, a realtor calls us with this deal, and we said, “Go walk it.” And we’re on this beach and they’re walking the property here in Denver. It’s snowing in Denver. And we’re like, “Let’s do it. How do we figure this out?” And then all of a sudden, another deal came our way in two weeks. And we’re like, “Well, that’s a million dollars in real estate in two weeks.” And we just, I think had… Luckily Tyler had enough foundational information and we had been analyzing it on deals.
This is not like a, “Hey, just randomly go and buy a million dollars in real estate.” Do a lot of research, take your time, understand what you’re doing. But we had all that information. And so we felt really comfortable finally doing it. And I think that it was a partnership and us going in on those. I think it could have been any other way considering I was so pregnant and we knew what the work was going to be to take that. I think, it was definitely a slow inspirational, just planting the seeds and then all of a sudden when we were ready, we were ready. And I think you guys feel that because when you were ready, then all of a sudden the rocket ship happened. You guys exploded. And so I think that that’s what spouses that are having trouble, I think be patient and be very clear and concise as to why you’re sharing the information and what you want out of it. And I think your spouse can understand a lot more.

Tony:
You said so many good things in there, Zosia. But a couple of things I want to point out. First, you said that you saw how serious Tyler was taking this. He joined masterminds and challenges. And I think when you see your spouse investing a lot of time and energy into something, you as the other person can hopefully recognize that this is something that’s serious. But I think that only works if there’s a certain level of trust between the spouses.

Zosia:
Totally.

Tony:
Because if Tyler was the type of guy who had a different idea every other night and half-assed everything that he did when he came into this real estate kick, it would just be the latest flavor of the week.

Zosia:
Absolutely.

Tony:
But because that level of trust was there for you to know to that, if Tyler’s really focusing on something, then this is something that’s serious.

Zosia:
Absolutely.

Tony:
I think that’s the first layer. And I think what a lot of spouses who are trying to get their spouse on board, what they struggle with is the pace at which the other spouse wants to move. And they’re like, “I’m reading all these books. I’m going to these events. I need you here with me right now.”

Zosia:
Ready.

Tony:
And it doesn’t always work that way. And I think the way that you talk about it where it’s like, “Hey, let me just send you this one clip. I’m not going to send you a whole podcast.”

Zosia:
No.

Tony:
15 seconds.

Zosia:
Exactly.

Tony:
And that’s a great way to ease into it. Every spouse moves at their own pace. But the last thing I’ll say on this… And I’d like to talk about this cause the question comes up so often. The last thing I’ll say though is that people also need to understand that just because Tony and Sara or Tyler and Zosia are business partners and they’re doing it together, that doesn’t necessarily mean that that’s what you and your spouse are going to be. And there are levels. It’s like you could have level one where your spouse is opposed and they’re like, “I don’t care what you say, I don’t care what you do. We are not investing in real estate.” That’s the first level. The second level is, “Hey, I see this is important to you. I’m going to be supportive, but I’m going to stay over here and I’m going to do my thing.” And then level three is, “Okay, let’s do it together.”
And so many people they think that getting their spouse on board only means level three when really it could just mean level two, your spouse is there, they’re going to support you, they’re going to encourage you, but maybe they like what they’re doing in their day job and maybe they want that for themselves.

Zosia:
Absolutely. And I think that’s a good point. And what we’ve realized is that exercise that we did in Breckenridge, going back to that mastermind of alignment, that doesn’t have to be that you’re going to work together. That alignment doesn’t have to say we’re working together. That should be what you do with your spouse if you’re on level one or level two. Because I think that being on the same page and living life together and still enjoying the day-today, whether or not you want to do the same things, not everybody is meant to do the same things. And that’s totally great. It works for Tyler and I, it works for you and Sara, but I do like what you’re saying. But I do think that getting alignment, or at least where do you want to live your day on the day-to-day, your week to week, your month to month, your year to year, and understanding that when you come back together, when you retire, whatever that looks like, will you still know who each other are?
Have you been going on this journey together? Have you really been aware of what you want and how you want to get there, whether or not it’s together or separate? But if you’ve decided to make that commitment and you want to stick in that commitment, then how are you going to live that? And what lanes are you going to live that in?

Tony:
So good. All right. Sorry, I took us on a tangent there, but I thought I was-

Ashley:
No, I think that’s a really great one to go on, because that is such a common question that we get asked and I’m sure, especially you. And even in my own situation where I was on level two. I was investing, my husband had no interest, and it ended up taking us different paths leading to our separation. But I think that that’s definitely something really important to talk about in the beginning as to how you are aligned. And having those alignment meetings. Like Zosia said, it’s like, okay, when you get to the point where you’re retired, you’re empty nesters, the kids are gone, do you still like each other? Do you still want to do the same things every day? You don’t have your jobs now that you love. And it got to the point where we both loved the separate businesses and I was building my business so that he didn’t have to do his business.
That was my whole reason for starting it, was so that he didn’t have to do the farm every day. And it’s like, “Well, actually I want to keep doing the farm every day.” And that’s where it’s like, “Well, we can’t do anything together now that we both want and we want these different ends.” And it’s worked out fine. Everything is great and stuff. But having those in meetings and understanding along the lines where you’re both going as I was working for a completely different end goal than what actually he wanted. I think that having that clarity from the very beginning is so big.

Tony:
But I think that’s just the hard part about marriage in general. Who I am today at 32 is very different than who I was at 25.

Zosia:
Totally.

Tony:
Very, very different than who I was at 20. And it’s like, I think I feel so fortunate that as I’ve gone through these different phases, Sara and I have gone through… We’ve been pointed in the same direction, but it’s like, who knows? Maybe at 45 we’re going to be totally different people. My hope is that we’re still growing in that same direction. But I mean, you never know. People change over the decades.

Zosia:
I know Tyler as the 17-year-old driving a 1984 Chevy Blazer, with the subwoofers in the back of his car to the person who was fighting for a career and to becoming a GC, to be becoming a amazing father. And we’ve seen that evolution of who we are and definitely who we are at 17 is totally different than who we are when we really, really started actively, we are going to make a future together in 2009 or so. But we’ve known each other for over half our lives now, which is kind of crazy. And that same with you and Sara, where the fact that we’ve been able to do this… And there’s days where we have hiccups, don’t get me wrong, it’s not all sunshine and butterflies every single day. There are times where we have to work on what we’re doing, but we have decided to work on it. And then we work in the business. There’s days where I’m like, “I don’t like that business decision.” Or he’s like, “I don’t like that business decision.” And we have to work through that now because it’s not just dinner.

Ashley:
And it’s so hard.

Zosia:
It’s not just dinner.

Ashley:
That personal line and the work relationship-

Zosia:
That’s huge.

Ashley:
… together. How do you not let the work conflict with totally the personal relationship.

Tony:
It’s a balance set.

Zosia:
Set boundaries.

Tony:
It’s a balance.

Zosia:
For sure.

Tony:
Well, let’s talk a little bit with Zosia now about what today looks like.

Zosia:
Absolutely.

Tony:
You’ve left the W-2 world.

Zosia:
Left the W-2 world.

Tony:
And now you’re full-time here both in the real estate business and the construction business. Two questions. What is your role first, and then how did you decide between you and Tyler that would be your role?

Zosia:
Something that we’ve always known is that Tyler’s a visionary. He is very good at big picture, very good at big goals. And I don’t know if it was my upbringing or what, but I am a here and now black and white relative pessimist. What that usually-

Ashley:
I can’t even get past this week. It’s like, here’s what I need to do right now for the business. That’s not like-

Zosia:
I don’t know. And so us doing that, the vision goal setting was real hard for me. Still, it’s fluffy in the background, but so I have always been the one that’s like, “Okay, what bills are due now? How do we make an impact now?” And from my last job, right before BP, I had this phenomenal COO. I had looked up to him for many, many years, and he was just really good at what he did. And he helped those day-to-day operations. He helps employee management, made sure that contracts were good, made sure that nothing was really falling through the cracks, and was the direct liaison to the CEO. And so originally I was just going to maybe be… And of course titles or titles, at the end of the day, we titled myself the COO.
I’m an operations, really, I just am supporting the growth of the business. And so what I do day to day now is ensure that the system has been brought up financially to ensure that we understand where all of our money is forecasting, where all of our money is going. We can bring up the fractional CFO in a minute.

Ashley:
Well, let me ask you something there with the growth of the money. Is that looking at the total picture of, “Okay, here’s how our business is doing financially, but also here’s the money we pull out of the business, pay ourselves, here’s where our personal spending investments things are too.” Is that-

Zosia:
Yes.

Ashley:
… near the whole realm of that?

Zosia:
I run basically both businesses, so our real estate business and our P&L and numbers that way. And making sure that hey, payments are coming through. We do everything through Airbnb. It just makes my life a whole lot easier. I just see payments coming through, automatic payments going out, and then we have the net profits at the bottom of all of that. And then we have our P&L for the business where we have all of our salaries, all of our information, and really it’s like controllable costs, non controllables, things like that. And then our number at the bottom. We have an amazing CPA who has talked us out of both getting full up bone salaries from our company, so we do more distributions. It’s understanding all of the ways that both tax-wise, personal living wise, how we’re going to live from both the real estate business to the business business on ourselves.
And really right now we’re taking very minimal salaries from the business because we are in this growth mode and we have the ability to do it. Some people would say, “That’s a bad deal. You need to bet on yourselves and pay yourselves more.” But we really want to keep the business making money for now. And then if my forecast is correct, we’ll be able to take a nice bonus at the end of the year, or we’ll just reinvest it into itself. I’m not trying to bleed the business right now. And that’s what is our main focus.

Tony:
Zosia, I’m so glad you brought that up and I want to pause on that for a second because it’s in the traditional world of business, that’s what most owners do. But in the world of real estate investing, it seems weird that you’re not taking all of your cashflow from your business immediately. You look at startup founders, they almost never pay themselves anything. And they’re taking every single possible penny that they can and dumping it back into the business because they know that if I sacrificed a little bit today and I continue to do that for an extended period of time, now the business starts to become this self-fulfilling thing where it’s growing and there’s this momentum.

Zosia:
Absolutely.

Tony:
And it grows beyond what it ever would’ve had to start taking a bigger salary initially. We do the same thing. We take a very small amount out of our real estate business, even our media companies, a very small amount. And we reinvest as much as we can. I get sick sometimes thinking about how much I pay in payroll to other people.

Zosia:
Payroll, payroll taxes, workman comp insur… Our workman comp insurance this year alone was like $13,000 just for the year of workman comp-

Tony:
Isn’t that crazy?

Zosia:
… for three employees. Insane. We talked on that before.

Ashley:
In my experience, mine was actually very different when I started real estate investing, I bled that rental income and I used it to pay off all of my debt.

Zosia:
Which is great.

Ashley:
My student loans, my vehicles, farm equipment and then after that, I’ve barely touched it since.

Tony:
But see, even then, there was a purpose.

Zosia:
You were playing straight.

Ashley:
But still it was like… I wouldn’t recommend doing that because I didn’t really have a ton of reserves starting out because I was literally taking every dollar I had. I had my Dave Ramsey snowball effect forward as to, here’s how much I can add from each property each time. But I might have bled it a little bit too much.

Zosia:
But now it’s paid off. And I think that-

Ashley:
Oh yeah, which is great.

Tony:
Okay, so sorry, back to your role. I became where we left, sorry, I triggered something.

Zosia:
No, so I’m really working on operations on the day-today. Working with our project manager and our superintendent almost daily. We’ve implemented a couple of platforms that really help us stay organized.

Ashley:
Well, let me ask you a question on that as far as, okay, so the guys are construction guys, okay, hands on. How has it been getting them to implement different systems, processes, software? That’s something that I’m like for the property management company, getting vendors like an appliance store. It’s a mom and pop appliance store and it’s like, “We have this software, we’ll just email you. We have a work order, here’s what we need. You call the tenant directly.” They’re like, “No, no, no, no. We just want Darryl to call us. Just have him call us.” And it’s just like, “Okay.”

Zosia:
Please use my system.

Ashley:
How has that been through your team, implementing the stop door and getting them to take… Here you go. You got to take photos and all this stuff.

Zosia:
It is a work in progress. I think that it is… We just had a call yesterday actually with our team of, our next level 10 on Tuesday. Each of them has to-

Ashley:
Explain real quick what a level 10 is.

Zosia:
Oh, yeah. Level 10 is just our business meeting, we run, we’re trying to. I’m probably not 100%, but running the entrepreneurial operating system for our business where we set rocks. And then we have our level 10 meetings, which is just an overview of where our business is at in the current moment. But we have it every single Tuesday at 10:00 AM to talk through good news where we’re at with our projects, our quarterly rocks, and then identify issues, identify and solve. We are really working towards keeping that consistency, because it just keeps us all on the same level playing field. But on that call, we realized that, hey, there’s been some lapses in some systems where I’ve implemented them. And that’s kind of the same thing as the spouse giving advice. Sometimes it needs to be people’s ideas in order to really get full buy-in, but sometimes some employees just don’t think that way, which is fine. How do you make things almost their idea and hand them something that feels like their idea, but then they feel more apt to respond and take it on.

Ashley:
Instead of it being like, “Here’s more work that I have to do.”

Zosia:
More work that I have to do or anything. We’re trying to make things easier for them. And I think almost letting them listen to how much Rachel loved the daily logs. And because we’re getting daily logs maybe every other day or every third day instead of the term daily. And again, we’re working such small projects, but we want to scale this business. We’re a seven figure business right now, but we want to continue to grow that. We want to double or triple our income every single year. And the only way we’re going to do that successfully is to have great systems and processes and be you clear.

Ashley:
And if you let something slide now to every third day, then it’s like you’re scaling, you’re growing. And it’s like, it’s hard to go back and say, no, we do this every day. And as the business owner, it’s very easy to let that slide because it’s like, it’s not a huge deal now I don’t want to want a confrontation.

Zosia:
And that’s the conversation that we continually have with them is, “Hey, this isn’t about today or tomorrow, this is about next year. Or when you get an employee underneath you. It’s how are we going to train this or coach this or teach this?” And I think that’s the nice thing about my background was in people, training development and implementing systems, so it’s helped. And I think one thing that our team is bringing to our next meeting are three things that they could change tomorrow that would make their jobs easier. And whether or not I’m going to be able to say, “Yep, no more X, Y, and Z because you think it’s going to make your job easier.” But I can at least understand where they’re coming from and what are the roadblocks or what do they think is going to make their lives easier. And so that way we can try and implement something that they’re more bought into. Now, we have-

Ashley:
That’s such a great idea, is asking that question.

Zosia:
I think it’s just important to get your team’s insight. Now there’s different ways to lead a team. There’s different ways to lead it that hey, you can be just a dictatorship and tell people what to do. You can be a little bit more easygoing on the backside and just say, “Hey, we’re just running a business.” But we have very distinct goals for this business and we don’t want to take any chances right now on taking 10 steps back from what we’ve created in the here and now. I think it is about creating those systems and getting those things going, which is a big part of my job, going back to the question.

Tony:
Let me share two things, Ash, because we’ve struggled a little bit with adoption and system technologies, et cetera. And I can give two examples of different ways we did it. In our cleaning company and Joshua Tree, we instituted new software. And as part of that software, very similar cleaners had to take photos, a lot of photos. It’s a lot of photos of the pantry showing that it’s clean, of the fridge.

Ashley:
When Sue was talking about that, that is the exact thing I was thinking of.

Zosia:
Yes.

Ashley:
Because I was like, there’s no way my cleaners would do that. And that’s where it goes back to, but implementing it.

Tony:
Here’s how we set it up. First we educated them, we said Airbnb has changed the standards for what a five star clean looks like. And we literally showed them the screens inside of Airbnb where if you get four stars, it’s very clean. And now to get five stars, you have to be extremely clean. They understand that the bar has been raised. We changed their payment structure, so they get bonuses if they had five stars. Now they’re incentivized to make sure that they’re doing a better job. And there’s also a penalty. If they get multiple bad reviews, they’re docked pay. Now there’s this financial incentive. And then we also tell them, “Hey guys, the other reason that we have the photo is because sometimes guests do lie.” They’ll check into a property and they’ll just say things, try and get a discount.
And now we can say, look, if we have a photo, timestamped photo daily of what the property looked like before the guest checks in, now we have proof to say that it wasn’t on you as a cleaner. And this literally just happened yesterday. I got a message from one of my VAs that said, a guest checked in and said, “Hey, the hot tub’s dirty.” And the message came later in the day, so there’s a chance they could have used it. My VA brought up the photo sparkling clean hot tub before the guests got there. Now we know it wasn’t because our cleaners did something wrong, it was something with the guests. That was one example. There was a financial incentive. There was-

Ashley:
How did you handle that? Did you go with the customers always right and do something?

Tony:
Hey, we’ll send them the photo. We’ll say, “Oh my gosh, it’s so strange. Here’s what it looked like before you checked in. We’re not really sure what could have happened. Is it possible someone could have used it?” I don’t know what their response was, but that’s usually how we respond to something like that.

Zosia:
That’s great.

Tony:
And then the other thing that we did… And this is actually for our coaching programs. We have sales reps in our coaching company and we have software that we need to use inside of it, they’re just to make sure we’re tracking everything. And our sales reps, when they have calls with potential students, they’re supposed to mark the call. Did this person actually show up? If they show up, did they join or did they not join? Because we can’t tell, are we doing a good job if we can’t track those things?
And our sales reps were doing a really bad job of doing that. We made a change to where if you close a sale, if someone joins the program during your coaching call, but it’s not marked in the system, you’re not going to get paid for it. The system is a single source of truth. If you send an invoice and we pull up the system and it’s not in there, then it doesn’t exist. 100% compliance as soon as that happens. It’s like you got to find different ways, I think, to motivate people to get them on board.

Zosia:
I think it’s so important to start with why, with anything that you do, if you explain why that you’re doing something. And I think that that’s really what we’ve done as a business. It’s saying, “Hey, why do we need a COO? Why do we need to bring up a fractional CFO? Why do we need to hire Amanda Hahn as a CPA?” Why do we need to have all of these things and understand the why down the road? And I think it really helps get people a little bit more bought in if they get bought in and want to grow with the team. And that’s really what Tyler and I are trying to build an empire here. I think so are you and so are you. And I think that that’s what we’re doing is we’re not just going to be BRRRR investors forever. We’re going to be people who run businesses. And I think that that’s really where the value lies in creating systems.

Tony:
Can we talk a little bit about the fractional CFO? What is that? What does the benefit? Just walk us through what that is.

Zosia:
It’s funny actually. I hadn’t heard about fractional executives until I worked at BiggerPockets and they had a couple of fractional execs. And really what it is is when a company of a certain size might not have the money or resources or need to bring on somebody in certain roles full-time. Something that Tyler and I have done is we’ve built out an organizational chart for where we are currently, where we need to be probably in about a year. And then future tense, what do we need and where are we going to be big picture? Big picture, we’ll have all this in-house. We’ll have a CFO, we’ll have somebody that does technology, we’ll have someone that does marketing, things like that. But for the fact that we are a four-person mighty team with subcontractors, it didn’t make sense for us financially to bring on a financial person.
We actually found somebody in the network that ran a construction company that highly recommended their fractional CFO. And what that is is we pay him a monthly fee. I meet with him weekly, if not biweekly, if there’s something else coming up. He’s also able to meet with our team about accounting processes or things that are going on. And he really challenged me to understand the finances more than I ever had. Luckily with my experience in restaurants, I had a really good understanding of a profit and loss statement. I always knew about those because in restaurants, everything is on the bottom line, and that’s how you make all your money. And luckily with our rental portfolio, I’d been really good at tracking numbers and everything, but not really for Tyler’s business. And Tyler really, the way he ran his business previously, which was not wrong, but it was, “Hey, I have multiple bank accounts for each job. I’m going to run it through. Anything that’s left over I get.”
And this is great. And that worked really well when it was just him. Once we started having more overhead, more payroll, insurances, automobile costs, paying for other things, it just started getting a little messy. And so what this fractional CFO does is really just encourages me to understand, to forecast numbers, make sure that we’re staying budget versus actual. We do reports and reevaluation at the end of every month to understand where were we over, were we under. Why were we missing $42,000 this month? Oh, it’s because we had to pause because of cabinets, which means that that money is now going to get allocated to June, which means we’re going to have a heavier month, which means that, hey, maybe we can take on an extra job or not, or put more money into a different part of the business that we’ve been holding off on like marketing.
And so it just really allows us to see bigger picture on it. And he’s just a business coach. He’s done a lot. I highly recommend that on things that you’re not 100% comfortable with or 100% knowledgeable, hire somebody that is. And same thing with the CPA. At the end of the day, Amanda Hahn’s amazing. And she wrote two amazing books for BiggerPockets. But I don’t have time to read those and actually become an accountant-

Tony:
Implement it.

Zosia:
… and implement them. Whereas us hiring her, we’re able to call her and say, “Hey, we’re about to buy a house. Is that cool or not?” Or, “What should we think about?” Or for the business wise, “Hey, what should we be paying ourselves?” “Oh, well, you want to worry about your payroll taxes? Don’t pay extra to those, get it through distributions.” And I’m not a legal advice, this is no legal advice, but that’s just what she told us to do. And I think that educating myself with great people around, I think that I’ll keep them on. There’s some people that say, “Hey, use these mentors or use these fractional people that you hire for a little while and then learn it yourself.” But I don’t have time for that, so I’m going to keep them on until we get to a place in the business where we could hire on full-time.

Tony:
Hire them full-time. I love that. When you invest in smart advisors, they’re worth 10X what you pay them.

Zosia:
Oh, absolutely.

Tony:
You hire a good CPA, they’re going to make you 10, 20X what you pay them.

Zosia:
Totally.

Tony:
And I knew that with Amanda. And it’s funny because I actually talked… We talked about this before, but I talked to your fractional CFO. And I didn’t want to commit to paying someone else for another service. But looking back and saying it out loud, it’s like, I know I’m doing myself a disservice because every time I’ve done that, they’ve earned more back than what I’m spending to retain their services. You guys learned something from me today also. I got lessons to learn.

Zosia:
I love it.

Ashley:
Well, let’s go into our rookie exam.

Zosia:
Okay.

Ashley:
Our first question is, what is one actionable item that rookie listeners should do today?

Zosia:
I think after what we were just talking about is figure out what you are good at and figure out what you’re not good at or what you don’t want to learn. And go either to your network, hire an advisor, hire a coach, hire somebody fractional. I think that oftentimes it feels scary in the beginning to spend money to make money, but that is definitely an old saying, and it’s a saying for a reason. I think that you need to spend money to make money oftentimes. And finding the right person that you can add into your life will make a huge difference on the growth and trajectory of your business. Real estate or an outside business as well.

Tony:
I love that. Question number two, what’s one software app system or tool that you use in your business?

Zosia:
Google.

Tony:
Google?

Zosia:
Google Drive. Google Drive is my savior. I love Google Drive. I think that it’s so easy to organize. We have a big hub for all of our information. We upload all of our… We have per project, we have invoices, we have specs, we have everything that we need in there. And I think it integrates really nicely with Slack. And so anytime I create anything, it just goes back and forth. I was going to say JobTread, but that’s really construction based, so it doesn’t really affect a lot of people. But I think if you use Google Drive the right way, it can be really transformative with the business.

Tony:
Are you using Monday at all or are you using any kind of project management software?

Zosia:
We’re kind of using Asana.

Tony:
Okay.

Zosia:
I think one thing with, back to your question about adding on too much and systems and processes. I’ve used Asana in my past. I loved it. And it was almost too much for this team all at once, so we needed to get back to the basics of let’s just get things organized and then send out reminders via just emails, or not emails, but on your calendar. And I think slowly we will get back to Asana because I think it is important, but a lot of our project management happens through JobTread. I think that it was… We need it for the internal components of our business, but not necessarily for jobs. And right now we’re so focused on jobs that the internal focus can be grassroots right now. And we’ll get to that I think next.

Ashley:
Okay, cool. And then you already shared this, but where do you see yourself in five years?

Zosia:
Playing on a beach with my cute little boys, including my husband and my cute little boy. And I think that that’s just watching the sunset and knowing that life is okay and not having a checklist or to-do on the back of my head, I think I would really appreciate that.

Ashley:
That’s awesome. Well, thank you so much for joining us. Can you let everyone know where they can reach out to you and find out some more information about you?

Zosia:
I’m on Instagram @zosiamadden and then really a lot of our story is shared on my husband’s Instagram, which is @tylermadden. But I think that’s really where… We have a website, we’re redoing it right now. I think follow us on Instagram for the most up-to-date.

Tony:
Spell Zosia for folks in aren’t good with that stuff?

Zosia:
Oh, yeah. Z-O-S-I-A. Madden, M-A-D-D-E-N.

Tony:
Perfect.

Ashley:
You were awesome. Thank you so much for joining us live here in Denver. We really appreciate it. I’m Ashley @wealthfromrentals and he’s-

Tony:
Tony J. Robinson @tonyjrobinson.

Ashley:
Thank you guys so much for joining us and we’ll be back on Saturday with a rookie reply.