I had met Adam Oback and Bobby Nilsen casually before. Quite frankly I was super curious for myself how they were able to flip $150M worth of real estate in just about 3.5 years. I wanted to peel back the onion and ask what exactly is their secrete sauce to scaling so quickly. To my surprise, the answer isn’t all that complicated.
Partnership Foundation
Adam and Bobby were actually fraternity brothers at San Jose State. They had pursued different paths before partnering up–Bobby spent some time in the military and various government jobs while Adam had a few entrepreneurial endeavors. That relationship and history enabled them to trust each other and same with other successful partnerships they had complementing skills. Adam personally admits he’s glad Bobby’s around to do the more technical or business stuff since he hates dealing with spreadsheets. Meanwhile Bobby loves having Adam for the managerial and team building aspect of the business.
First Few Deals
The first deal they worked on was a flip in Concord. They got the deal from someone they met at networking. They weren’t expecting to make a lot of money but really just to get their feet wet. Their second deal was a fourplex in downtown San Jose. They purchased for $1.2M, put in about $100k of rehab and shortly sold it for $2M.
Albeit they were still new, because of the fact the agent got to double end the commission they ultimately got the deal. They interviewed a few hard money lenders and decided to go with Keith Tomao at Conventus, who coincidentally around the time was looking to scale up his business as well. The duo also interviewed a bunch of subcontractors and general contractors. They intentionally scheduled the walk throughs where the contractors would all come in at the same one-hour window to keep the bids honest. The GC they went with also was fast growing and fortunate to have the key pieces in place to take on more projects.
Right Place Right Rocketship
With their early success, Adam and Bobby quickly snowballed their operation. At any given time they’re doing about 4 – 10 projects or about 20+ deals in a year. Some projects are very quick, like a one-week rehab, some they wholesale. Essentially they’re looking for 10% margin. At their peak they have about $18-20M of projects going on at the same time and their monthly interest payment alone is over $80,000.
Still, how does one get the kind of brass balls to do what they do? What I got out of our conversation was that Adam’s previous ventures developed his risk appetite and they were process oriented and detached from the outcome. If they lost everything today, Adam confesses he’ll just go back to the same thing they’ve been doing, cold calling 25 agents a day and build the deal flow pipeline. Having the relationship foundation I mentioned was also a key. Plus they have the other critical pieces in place with capital funding the projects and a GC to do the work.
It hasn’t been all rainbows and unicorns though. The slowdown and correction late 2018 has punched them in the face just the same with everybody. They lost about $500k on a flip because it had a 4 month rent back plus the house was at a T intersection and a weird layout.
Truthfully, the concept isn’t hard. Whether it’s real estate or any other business, you need to focus on the three main parts: 1) deal flow, 2) capital, and 3) execution. Without any one of those your engine is going to sputter. In Adam and Bobby’s case, I’d say the real secrete is their nerves of steel.
If you enjoy hearing stories like this, check out out monthly Meetup in San Jose. We meet on the last Wednesday of the month.
