BiggerPockets Real Estate Podcast

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614: The Cash-Flow Boosting Businesses that Savvy Real Estate Investors Own w/Codie Sanchez

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May 26, 2022

Guest

Codie Sanchez

Codie Sanchez, an experienced investor known for acquiring cash-flowing businesses, shares her insights on the parallels between real estate and business investments. She highlights the importance of understanding asset valuation and cash flow, emphasizing how savvy real estate investors can also profit from buying undervalued businesses. Codie categorizes which types of businesses can maximize cash flow while minimizing expenses. Listeners learn about strategic acquisitions, micro private equity, and using technology to enhance revenue—turning their investments into flourishing ventures.

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ADVICE

Buy Profitable, Not Fixer-Uppers

Buy an established, profitable business, not a fixer-upper, for your first deal.
There are many good businesses available, so avoid turnarounds initially.

insights

INSIGHT

Business vs. Real Estate Sales

Only 1 in 12 publicly listed US businesses sells annually.
This contrasts sharply with real estate, highlighting more opportunities.

insights

INSIGHT

Baby Boomer Business Opportunity

Many baby boomers own businesses and are nearing retirement.
This presents a huge opportunity to acquire established businesses.

Get the Snipd Podcast app to discover more snips from this episode

Navigating Cash Flow Challenges

01:42 • 3min

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Identifying Investment Opportunities: Quick Tips and Sponsor Insights

04:51 • 3min

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Micro Private Equity: Strategies and Insights

07:49 • 25min

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Understanding DISC and Team Dynamics

33:18 • 5min

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Strategic Approaches to Business Acquisition and Problem-Solving

38:18 • 4min

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Strategic Acquisitions in Real Estate

42:09 • 17min

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SaaS Acquisition Insights

58:50 • 17min

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Navigating Social Media Fame

In 'Who Not How', Dan Sullivan and Dr. Benjamin Hardy introduce the 'Who Not How' framework, which challenges the traditional 'how' mindset by encouraging readers to ask 'who' can help achieve their goals. This book teaches how to delegate tasks effectively, find experts who can handle specific challenges, and create transformational relationships. By adopting this mindset, readers can free up time, build supportive teams, and achieve their biggest goals while maintaining personal freedom and reducing burnout.

The Fountainhead

Ayn Rand

Published in 1943, 'The Fountainhead' by Ayn Rand tells the story of Howard Roark, a young and innovative architect who refuses to compromise his artistic vision despite the opposition from society. The novel explores themes of individualism, egoism, and the conflict between those who think for themselves (the 'first-handers') and those who follow the opinions of others (the 'second-handers'). It also delves into the lives of other characters such as Dominique Francon, Peter Keating, Ellsworth Toohey, and Gail Wynand, each representing different aspects of Rand's philosophical ideas. The book is a defense of egoism and individualism, presenting a radical rethinking of basic moral concepts and challenging conventional notions of selfishness and altruism.

Rich Dad Poor Dad

What the Rich Teach Their Kids about Money - That the Poor and the Middle Class Do Not

C.P.A. Sharon L. Lechter

Robert Kiyosaki

The book tells the story of Robert Kiyosaki's two fathers: his 'poor dad,' a highly educated but fiscally poor man, and his 'rich dad,' the father of his best friend who was a successful entrepreneur. It emphasizes the importance of financial education, distinguishing between assets and liabilities, and building wealth through investing in assets such as real estate and businesses. Kiyosaki argues that a good education and a secure job are not guarantees for financial success and provides practical lessons on how to make money work for you rather than working for money.

Atlas Shrugged

Ayn Rand

Published in 1957, 'Atlas Shrugged' is Ayn Rand's magnum opus and her longest novel. The story is set in a dystopian United States where increasingly burdensome laws and regulations strangle innovation and productivity. The plot follows Dagny Taggart, a railroad executive, and Hank Rearden, a steel magnate, as they struggle against 'looters' who exploit their work. A mysterious figure named John Galt leads a strike of productive individuals, persuading them to abandon their companies and disappear. The novel culminates with Galt's three-hour radio speech explaining his philosophy of Objectivism, which emphasizes rational self-interest, individual rights, and the importance of the human mind. The book explores themes of capitalism, property rights, and the failures of governmental coercion, presenting a provocative vision of a society in collapse and the potential for a new capitalist society based on Galt's principles.

Knowing how to buy a business is a lot like knowing how to buy a rental property. First, you’ll need to know the price of the asset, then the cash flow, followed by expenses, and finally the structure. Because buying real estate is perceived as “simpler” than buying a business, most investors decide to go the real estate route—but they could be missing out. Codie Sanchez saw this opportunity when she was working in venture capital and decided to try out the business buying route herself, just on a smaller scale.

Codie can be perceived as your classic “value-add” investor, which much of the real estate investing community can relate to. She finds a business that has a strong foundation but lacks the tech or marketing to grow faster or increase its profits. When a business has a strong underlying value, just like a rental property, it’s easier than most people think to “renovate” it into something that will sell for far higher.

Codie stresses that buying businesses isn’t so different from buying real estate. She also categorizes which businesses real estate investors should buy if they’re looking to maximize their cash flow and minimize their expenses. With some help from Codie, you could be relying on much more than just rent checks soon!

In This Episode We Cover

What a “value-add business” looks like and how to find undervalued businesses

Evaluating and analyzing a business purchase and which key metrics to calculate before making an offer

Buying off-market businesses and why most business owners never consider selling (until you ask)

The three questions every investor MUST ask before buying a business

Buying instead of building and how trying to build a business can cost you much more than just money

Becoming the business owner, not the operator, and outsourcing everything you can

And So Much More!

Links from the Show

BiggerPockets Youtube Channel

BiggerPockets Forums

BiggerPockets Pro Membership

BiggerPockets Bookstore

BiggerPockets Bootcamps

BiggerPockets Podcast

David’s YouTube Channel

Hear Codie’s Interview on The BiggerPockets Business Podcast

How to Use the DISC Profile to Communicate Effectively in Business

“Contrarian Thinking” Newsletter

Quiet Light

BizBuySell

Empire Flippers

Connect with David:

David’s Instagram

David’s BiggerPockets Profile

Connect with Rob:

Rob's BiggerPockets Profile

Connect with Codie:

Codie's Twitter

Codie's Instagram

Codie's TikTok

Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-614

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