BARRY LIPPARELLI | MY GREATEST INFLUENCE

[Intro] Are you looking for freedom, freedom from the daily grind and hustle, or just finding a way to live the life you always wanted? Then join us on the investing for freedom podcast. Our hosts, Mike Ayala will help you discover new ways to find freedom with tips, insights, and interviews you’ll learn the exact systems he’s used to travel the world and live his best life. True success and happiness are all about freedom. And here’s your roadmap on how to find freedom on your own terms. Welcome to the investing for freedom podcast. Here’s your host, Mike Ayala.

Mike Ayala: Thank you for joining the investing for freedom podcast. Today is a very special day. I am sitting in the presence of, and he’s going to be so mad at me when I say this. I’m sitting in the presence of one of my favorite people in the entire world. And we’re going to get into some of this today, but I don’t even think that Mr. Barry Lipparelli begins to understand the impact that he’s had on me, in my life, in so many other people. So one of the main reasons why I started the investing for freedom podcasts was I found myself just surrounded by amazing people. And I thought to myself, man I want to share this with the world and we’re going to get into this a little bit later in the interview too. But I had somebody asked me the other day if Barry was a paid mentor of mine. And I’m like, no, I mean, Barry’s never asked for anything from me. We’ve done a lot of different types of business together, but he’s definitely not a paid mentor. And there’s a lot of that out there. There’s a lot of paid coaches. There’s a lot of paid mentoring, but I’ve found that some of the most amazing people that I’ve had on this podcast and then I get to get in front of are not paid mentors. They do it because they love it. They do it because it’s a give back thing. There’s that concept about to whom much is given much is required. And I think Barry kind of falls into that. So without further ado we’re just going to get into this. So Mr. Barry, I appreciate you joining me today.

Barry Lipparelli: Thank you.
Mike Ayala: Yeah. Glad to have you here. So there’s four questions that we

always start out with. So who’s had the greatest impact on your life?

Barry Lipparelli: Boy, I’ve had several people that impacted me most. My father was a businessman and he sold life insurance for quite a few years and then decided to go out to the real estate business. And I was a young kid, but I used to hang around the office all the time. And I like listening to the deals and found it very interesting, but he was conservative, had gone through the depression and so he was money-wise, and I’ve found in the past that there’s different facets of life.

One of them’s physical, like you get hit by a semi-truck, you’re going to die. And then there’s biological so that if you get cancer, corona virus, you’re up a creek usually. And then there’s also economical off. And he was, had gleaned that most of his life. And I didn’t appreciate it as much as I did until I went to school. And I think what the lord does to people is gives them a talent that they have to find. I went into the real estate with my, I hung my license with my dad and people would come in and they’d say to me, I want to talk to a salesman. And I said, well, I am a salesman. Well we want to talk to a broker. And I said, well I’m a broker. In those days, you could just, if you got a high enough score, you could get the broker. So then they say, I want to talk to your dad. In other words, they don’t think that you have any expertise and that you didn’t know anything. So I could see real quickly that wasn’t going to work too well. So I went to work for the assessor’s office in the tax patient department and became an appraiser. So I got a background in taxes and appraisal. And then I met my wife who by the way, was another person that was, has been a tremendous influence in my life. The bearing that she has on the real estate is she, she has a real low risk tolerance of about one. And I have a risk tolerance of about 10. So between the two of us, it averages out about five, which is pretty good. So when I made my first real estate investment, she was scared to death. And then dawn on her that I wasn’t the enemy. So I was trying to do it for the benefit of the family. And I want to go back to my dad a little bit. One time I had him, before he passed away, I had some equity positions and I used to tell him, I said, oh, I got equity position. I don’t have any cash. I said, I won’t have any cash till that damn thing gets paid for. And he says, well, I’ll be 65. And he said, wow, you’re going to be 65 someday anyway, you might as well have something paid

for. I thought, oh, that’s kind of smart. And also one of the problems of real estate, people are called brokers is because they’re always broke. And what that means is they got all these real good real estate deals. They’re going to apply it to. So they ended up buying a lot of property. And so which is all right, if you’re astute about it. But the benefits that real estate give are tremendous and there’s nobody in the world is not effected by real estate. You’re either buying a house or you’re renting a house, or your worst comes to worst, you’re sleep on the ground. You’re somewhere. There is real estate involved in it. And the challenges of it and the opportunities of it has always been thrilling to me. And cause I think it’s real beneficial for the community.

Mike Ayala: That’s awesome.

Barry Lipparelli: Anyway, those are the two most important people. My dad, number one and my wife.

Mike Ayala: Great stuff Barry, super, super inspiring. So if you could narrow it down to one thing that has had the greatest impact on your success, what would it be? And maybe another way to phrase that is what is your superpower?

Barry Lipparelli: I would say probably to see the deals and that’s probably that talent that the lord gave me, but I can look at, I can look. In fact, I walk into businesses and I can sit down and [06:42 inaudible] tell my wife. I said, they got too many employees, or I’ll tell my wife, they need to do this and do that. Finally, she’ll say to me, it’s not your problem. And one of the things, because of years of being an experience, owning real estate is a lot of work and it looks like it’s really easy. It’s like everything else, if you know how to do, it’s great. But if you don’t know how to do it, it’s a bear cat. But when I drive through a community new town or something like that, I look at the buildings and I think golly, somebody is in charge of that one and somebody in charge of that one. And so it takes a quite a bit of expertise. And I kind of alluded to that a little bit. Like you have to have a background a little bit in appraising and a little bit of, quite a bit of financing and you have to know economics. And so it takes quite a bit, it’s kind of like a rancher. They got expertise. You know, they got to worry about crops and worry about prices and worry about diseases and worry about production and worry about hay and feeding the animals, cat, whether, there’s a million insects, diseases, million factors that you have to know. It’s the same thing with real estate. But if you get it, you can learn it. And all you have to do is focus and pay attention. The interesting thing I noticed about real estate though, is there are so many facets of it that you pretty much have to zero in on one particular facet, meaning you can get into multiple family housing, or you can get into commercial property, or you can get into sales, residential, or you can get into construction residential, and you can go to work and title companies, or you can, of course attorneys, they usually specialize in real estate because it has its own set of problems and not on and on or on. So there’s lots of opportunities, but you have to pretty much focus. And I think a real key that we had was our flexibility because at one time we built, we were building houses and then the interest rates went insane. So then we would switch to a different product or different, I’ll give you an example. One time we had a development in Elko, they developed a whole bunch of mobile home lots in the spring creek area. So I went and bought as many as they let me buy, which was about 10 at the time. And in those days, you put. In that case, you put 10% down at 10% interest, they finance you for 10 years. Then I thought, well, I tell you what, one of the things my dad taught me was a real important is the impeccability of your credit, pay your bills. So on it’ll come out why. So then I went to Idaho Boise and I was looking for people that wanted to sell their mobile homes, used mobile homes. And then I would find out who was financing it and find out if it was an

assumable contract, some financial institutions yes, some no. So if I called you up on the phone and you told me such and such financial institution, which I knew was assumable, then all I had to do is go dicker with you to determine how much it was going to put a down payment, buy your property from it. And I’ll also look at the condition and make sure it was something we could utilize and once that was done. And you negotiated to buy it, I hired an outfit to bring all the mobile homes to Nevada. And I went out and developed the mobile home lots and put the mobile homes on there. And the financing with FHA in those days was also 10 years on mobiles. So you might have an eight-year, nine-year, 10-year contract. And then I was, I sold them, and I carried the paper for 20 years. Rap around. And I thought, gee, I wonder why everybody else isn’t doing that. But I found out, in a hurry it’s called intense management and we had you don’t know no experiences. I’ll tell you one really quick. We had a guy come from Alaska. He paid us a down payment, bought the property and moved in, so fine. Pretty soon the first of the month come around and hell no payment. So what the heck, I’ll have to check this out. So my brother and I, we drove out there and it was abandoned, and the guy had put an addition on it, and it was all done except the roof and the roofing material was sitting there. So we just put the roofing material on top of that thing and finished it off and turn around and resold it again if you can imagine, and then I had people call me up and say I’m done. So all the [11:51 inaudible] we’ll try and get you something else. Nope. Give it back to you. I don’t want it. I’m gone. So we got them back that way. So that was one of the problems that we were having. And then a utility company got bought out by another utility company and they raised the rates, and these were all electric. So the key bills got exorbitant and they started abandoned the properties. So problem, you go thinking, thinking, thinking, thinking, I came up with an idea. So we went to Salt Lake City and bought wood stoves, brought them out and put all the wood stoves in and then resold them. Now everybody was happy. That was the solution. But boys scary when you’re going through that. And we found out because that intense management, we also had one that the guy vacated it and took off and he got up and went and got in his car, went to Timbuktu. We don’t know where, but he left everything. This was like, he was eating the lunch or breakfast at the table and got up and walked out the door and left. Clothes, food, everything. But the power got cut off because he wasn’t paying the power company, which we eventually got that fixed up. So it would switch back to us and my brother and I want to look at it. It was so bad that we were embarrassed to ask cleaning people to come out there. So we got sacks and open up the refrigerator, there was fish and potatoes, rotted, stick it into, this is a downside of real estate. We stick it in bags and go outside. And then dry retch for about 15 minutes and laugh like hell, go back in and get the stuff finally got into condition where we could bring a cleaning people to go out there and do it. But one

of the reasons that that nobody else was doing is because of the intense management, which you have to be prepared to handle it or not. So to level that out, we started a property management which was also non-cash acquisition and started building up, doing the property management to take those big high ups and downs out of the consistency of insurance agency will do that also by the way. And after a period of time we got so busy that I ended up giving the property management away. And that was the other thing I was telling you about to be selective in the real estate thing, because there are people that do property management in very, very successful, and it takes a certain type of person to want to do that. I sold a fourplex to a friend of mine one time and he was kind of a worrywart and he’d go by and pick up all the stuff off the ground. He cut the lawn and the guys call him up and told him they couldn’t pay him for a month. He said that’s fine. And it was driving him insane to the point that I said to him, matt, let’s sell it, dude, his wife wasn’t too excited, but she wasn’t the one that was going through the stress over it. We ended up selling it to it. For about three or four years every I run into him, oh god thank god we sold that. So he just, wasn’t one of those guys, by that other guys that that’s just exactly the thing they should be doing because that fits their personality and their goals and what they want to do. And that’s it, finding your talent. So when you get into real estate, you can look and see which one you want to pursue and pursue that one mainly because being a jack of all trades, you’re not as successful as if you’re paying attention to one goal that you’re digging. You can have a goal and get to the end of that and then switch to another facet to go further if you want. And that’s what we ended up doing. One of the, that’s why I mentioned flexibility’s real, real important.

Mike Ayala: I like that. I have this, you probably haven’t heard this because I don’t think we’ve ever talked about it, but I’ve kind of created a five-part formula that I kind of teach people and it’s what he really want. Why do you want it? What are you going to do to get it measure results and adjust? And you were talking about flexibility and I get more people that ask me about the adjust part. Like why is adjust in there? And it’s because all these things that you’re talking about, like, coronavirus is a great example. I think a lot of people knew that some kind of financial correction was coming, but to come this fast and this heart and I talked to you a month ago and you said in your lifetime, you’ve never seen anything like this. So we’ve got to be able to be flexible right?

Barry Lipparelli: I’m telling you the only thing that saved us through that was the strength of the financial statement. And the reason is stronger now than it was, is because we’ve had time to accumulate and do debt reduction and stuff like that.

And however, that’s ended up being a real strength for us. And we’ve had situations where people wanted help through that thing, and we’ve been able to help them because we’re in that position. So it’s kind of nice. That’s nice. And I think the majority of it’s somewhat over, unless we get another spike and that’s the only thing I’m concerned about at this point.

Mike Ayala: Yeah. Interesting times for sure. What was your greatest, I’m excited to hear this? What was your greatest setback and what did you learn from it?

Barry Lipparelli: Oh boy, exactly what that was. I went into a partnership with a cousin of mine in the reno area. And we actually had been in partnership in the Elko area and had invested monies for him and had managed it. We have been real successful making money. So it came to decision to invest in the reno area. Cause that’s where he lived. And we thought we were doing the right thing and we’d had a good rapport up to that point. And we started buying properties and making investments and stuff. And then all of a sudden after about a year, it dawned on us that he was embezzling from us. And that was kind of a shocker. In fact, we learned a couple of interesting things if you’re in a partnership. And the only way to rectify that partnership is you have to go through the court systems, which is tougher. If you have an LLC, the person with the controlling interest can elect the property manager and subsequently if there’s four of you together, for example,
and three of you are in agreement with something and the other guy’s not, you can vote to have that guy, if he’s the operating manager switched out. So that’s what we did on the LLC portions that we had and then took over the properties, which was a real burden because I was up to my keester in alligators in the Elko area and had to stop, not stop it, but pursue rectifying that down there because at one point we owed more money than I used to make in a year and it was credible. And so we had to go through the court systems. As a result, we went through two district courts and went through two supreme courts. And I have a canceled check on my desk, my shelving over there, where the attorney that brought the last supreme court thing was such a goofus that the supreme court fined him for malfeasance and what have you. We lost about $50,000. They fined him for $300,000. So I got a copy of the canceled check. Anyway, we won both the district court and both the supreme court, but we built a new wing on the lawyer’s offices with the amount of monies that cost us. It was staggering amount of money. In doing that, I learned to be real cautious on my partnerships. We don’t have partnerships. We’ve got LLC once in a while, but we don’t have partnerships. And it taught us to be a little bit more cautious. I think I probably am a little bit naive in that I’m in a smaller community where everybody knows everybody and your reputation is imperative and that in a small community, if you violate that you’re going to be out of

business, whether you like it or not, because people won’t trust you if you lose that trust. Now, I haven’t had the experience in a metropolitan area where that somebody might have the advantage of taking advantage of so many people, nobody knows, and they can’t relate, but in a smaller community, you can’t get away with that. So that was pretty much was the worst, worst experience I went through.

Mike Ayala: Probably a good time to bring up the three cs that you’ve taught me. Cause you were just bringing up, you know, in the small community and in this day and age with technology and yelp and the business rating systems and all that, it’s probably easier in a metropolitan area to snuff that out a little bit. But it still comes back to the three cs. Why don’t you talk to us about that a little bit?

Barry Lipparelli: Well, I think I mentioned a little bit about one of, my dad told us about our credit, which is very, very important, your credits real important. So we tried to keep our credit impeccable. In fact, I’ll tell you some of the advantages. When I went to Boise to buy those mobile homes, I go to the financial institutions to get the assumption thing and to find out if they wanted to market any. So we went about four o’clock in the afternoon. I took my financial statements, a couple of years income tax and gave the necessary information to the gal. And she said, I’ll have an answer for you in the morning at eight o’clock. Okay. Thank you very much. So we took off in the next morning, I went to her office and at eight o’clock, she said to me, how many would you like to buy? She didn’t care how many we bought. So we bought quite a few to get the 10 that we needed out there. And then we ended up doing another 10, by the way. And so having that impeccable credit rating and fico scores and stuff like that, they didn’t have fico in those days, but they had a credit rating system. And you get that kind of response from people instead of [22:26 inaudible] or whether why they want to help you or not help you. And then the other thing that was real important is your character. We have the philosophies that if you tell somebody you’re going to do some do it. And we think part of our success was a, and I say success in that from our perspective of success. Now we don’t have a hundred million dollars or anything like that. And a lot of times you get that success because you happen to be at the right place at the right time. But these three cs play a real important part in that thing. And then your capabilities, what can you do? And what can’t you do? So you don’t want to tell somebody you’re going to do something, then don’t do it. So rather than do that, we’ll say to you, at this time, we can’t do that. Or we don’t have the capability of doing that. And that way you get a reputation so that when you [23:23 inaudible], and I give you some little illustration of that. We had a friend that was a, he was a real character. He had a big coyote on his deals for some reason. I don’t know if it

was psychological or if this is the way he was raised or that’s what he thought was good business. But I remember taking offers on a piece of property from him and I would go to the seller and they would say to me, who is this buyer? And I would tell them the name. And they would say, no thanks. They wouldn’t even look at the offers. They wouldn’t. He had that kind of reputation. Well, who needs that? You’re not going to be very successful if you haven’t got [24:06 inaudible]. And then on the credit thing, one time I bought a piece of fourplex from a fellow and he carried the paper for me. And then I bought another piece of property, it was a commercial property. And the guy carried the paper for me, and we made the payments like crazy. And then an opportunity came up where we had to go to a financial institution, borrow the money, and they want to know your deals, what you got cooking and stuff like that. So I took them all the information. So they wrote letters and app in forms to fill out by both of these guys that had carried the paper for me. Both of them brought the paper to me, signed blank and told me to fill it in and send it into the financial institution, which is a big no-no. And financial institutions don’t like that. So I sat with them to fill the thing out, to make sure that they knew what the heck was cooking was on there. And we told them exactly like it was. And as a result, we got the financing and then I’ll tell you another one. It kind of blew me away. We had a gal here that was a manager, was a secretary in a savings and loan association. And I watched, as she manipulated the manager out of his job, he lost his job and she took over the thing and it stuck in our crop boat. We were taught also to keep your mouth shut and keep your nose out of everybody else’s business, even though you don’t like it, shut up. Years later, I had an opportunity to buy a 42-unit apartment complex. And I went to the finance, a different financial institution in reno area. This gal was the secretary to the boss. So if I had a [25:56 inaudible] with her and what I went in there, I’m positive. She told that boss, boy, I’ve dealt with those guys. They know what the heck they are doing. No problem. We would have shot ourselves in the foot. So that’s character. And boy, sometimes it’s hard to suck it up, but you just have to.

Mike Ayala: That’s gold.

Barry Lipparelli: Boy I’ll tell you, a lot of times I’ve seen that. Or fact I had a good friend, a real nice guy, but for some reason they were excavating the earth behind his property. Quite a ways about a block away. And he didn’t like it, he raised all kinds of cane with him. Later on, he came back to ask him, to bring him some dirt over to his house. And they say, aren’t you the guy that complained about us? Not only no, but hell no, we’re not bringing you any dirt. So sometimes you’re better off keeping your mouth shut, boils down. But you have to be astute enough to know when to speak up and when to be quiet.

Mike Ayala: That’s good. What is the piece of advice you find yourself sharing the most?

Barry Lipparelli: That’s a good question.
Mike Ayala: I’ve received so much wisdom and advice from you over the years. I

could see how this one could, there’s a lot of it. But there’s probably some. Barry Lipparelli: Yeah. I tell people…
Mike Ayala: That’s okay.

Barry Lipparelli: I tell people, if you read the bible that says, seek ye first, the kingdom of heaven and all these things will be given to you. So if you have a rapport with Christ and I don’t think they realize it, but he’s involved in your life 24/7. And in fact, I’ll tell you an interesting thing. You see this right here? For
hair. It illustrates the colors of the [27:48 inaudible] Mary number one. And then I wear it to remind me of Christ 24/7. So if you just leave it on one finger, it doesn’t work. So every day I switch fingers. So it irritates me a little bit. So I’m cognizant of that. And then when you’re talking to people, you’re cognizant of that. You’re real cognizant of what you’re talking. And in the mornings, when I do my morning prayers among other things, I pray for the good lord to protect me from myself. Number one, and number two, to fill my cup with love so that I can distribute it through the day to the people that I come in contact with because I think it’s important to love thy neighbor. Occasionally my cup runs out about three o’clock in the afternoon, in which case I get up and go home. And the reason I do is because I’m probably going to do something not too smart. So then you go to bed and in the morning, you wake up your cup’s full again. You can go out and distribute it to people. So, and a lot of times, especially when they’re in stress people, if there are confrontational to you, if you react with confrontation, you’re going to have a war. So if you can just keep in mind that how you react is your decision. No one else’s, then you can be calm and let them get off their chest, whatever it might be, burdening them. But the reason my desk is so wide is because when I help people, they want to crawl over that desk and give me a hug and I’m not a hugger. And I’ve had actually grown men that come with the financial distress and can see how to get in there and straighten it out. And they cry, crazy. And this is a no tears zone. So I try not to, not to cry but sometimes they can’t help it. I I’ll give you an illustration. A fellow had a loan on a piece of commercial property, and he had paid on it for five years. And the understanding

with the financial institution that they would do a five-year renewal. Well, in the meantime, the bank went, broke in another bank bought that financial institution, and they would not recognize the renew at the end of the five years. And he wasn’t in a position to get anything taken care of. So to make a long story short, we made arrangements for him to get financing, to pay off that financial institution and give him enough time breather so that he could refinance on a longer-term basis to get this thing. And he literally cried. He was so damn relieved because of the stress. So financial problems can cause a tremendous amount of stress. And usually when people, her and her husband got divorced several years ago and she is a home, but he needed to have her name, his name off of the property because he had found a significant other and had another child with. So I racked my brain and made a long story short I financed the home so that she could stay in the home and he got released from the liability. So he could go out about his business, which reminds me, she happens to be Spanish speaking. And I have secretaries that can interpret for me. And I like helping them, especially because when my grandparents came from Italy, interestingly enough [31:44 inaudible], my grandfather came and then my grandmother came later, they were corresponding.: And as immigrants, they ran it to a substantial amount of prejudice. And couldn’t speak the language. In fact, my grandmother tried to learn English, and somebody teased her about it because she, and she refused to learn English as a result of that. So, which was too bad because I didn’t get to communicate with her very much because I didn’t speak Italian, but my dad spoke fluent Italian. And when I was working in the assessor’s office, so I happened to look up, not needed, on those days, it was a mortgage and mortgage, [32:37 inaudible]. They had borrowed $900 to buy their home and to come 20 years to pay that dude off. But during the depression, they had money invested in a bank here that went broke, like all the rest of them. And they lost all their savings, which was rough. Anyway, as a result of that, I feel like I can help the Spanish people. Number one, especially the illegals. It’s okay for them to own real estate, but they can’t go get borrow money from financial institutions because they’re illegal. And the thinking from the financial point of view is that if they get deported, they’re going to get the property back. And they got, I tell people the same thing. I want to loan it out my money out for a little bit of interest. I’m not interested in the real estate. If I was interested in real estate, I’d be going out buying it. I don’t want it to get it because usually we do [33:35 inaudible] won’t have it. Before we take the property back. If we can, there’s some guys that just flat can’t deal with. Anyway the Spanish speaking peoples, they go over to a financial institution and the first thing they do is slam down a bunch of papers that thick. They can’t even read it, let alone fill the dumb thing out if they could get the money. And one interesting story where we were selling real estate, they used to come in and they’d say to my interpreter, they wanted to buy a house. How much

for that house? And we tell them how much it was like $49,000. It wasn’t nothing expensive. Would you like to help you with getting financing if they were legal, no, no we pay cash, I’m going, why the hell are they doing that? So I racked my brain, took me a long time to figure it out. But what they do is they get two or three families buy a $6,000, mobile home pay it off, and then they’re just paying $400 a month rent or $350 or whatever at the time. And then they’re saving their money. So they go out and buy real estate. And if the last guy, when he gets out of there, he just sells the mobile home to the next crew and they go about their business. And one of the things I keep in mind and you ‘be surprised about this. I support a group in Haiti through another fellow. He’s from New York area. Their average income is 70 cents a day, their rents $2 a month. And they have a tough time making it at that. They have no electricity, nothing. And I would like to have programs set up where youth can go over there for about six weeks and find out what the side of the house is like that. But anyway, these refugees come, they have such a tough time that, so I like helping those. Then the other thing is this, interestingly enough, there are other Spanish who are predators take advantage of them because they can’t go get that financing. And I had a situation where a guy paid eight points and about 15% interest on a real small mobile home loan. It jerked my chain. So we’ve paid the guy off and did a regular deal for him and taught him not to ever do that again. And it’s mind boggling to me that another Spanish speaking guy would do that to the Spanish. Guess there’s in every system some will take advantage, some of them won’t. But Christ was a refugee, did you know that?

Mike Ayala: It’s interesting.

Barry Lipparelli: Most people forget that. When he [36:32 inaudible] Egypt. Well, that was another story. Joseph was a carpenter, but I don’t know if he could speak the tongue or not number one, number two, a lot of times they didn’t have enough work. So Christ experienced that poor. Did I answer your question?

Mike Ayala: This is amazing. So you had, you were talking about, and this is just another point of appreciation that you’ve already talked about. So you talked about the poster board where you laid out all the debt. And in 2007, it was late 2007. We had a goldmine shut down and I’ve shared this story before too. We had a goldmine shut down, remember queen stake, they owed us almost $400,000 and then the financial crisis is beginning to happen. And we had, as Barry would say [37:27 inaudible]in a ringer. And you actually, so I had nick who was our controller at that point in time, I had reached out to you and said, hey, here’s our problem. Here’s our trouble. And you said, listen, I’m going to come over Tuesday.

I don’t know what day it was, but I am going to come over Tuesday, we’ll get out a poster board, which is whiteboards now. And you said, I want you to get all your debt out. I want to get everybody you owe, all your expenses and you spent, I think, four or six hours in a conference room with us on a white board. Do you remember this?

Barry Lipparelli: I remember doing it. But I don’t remember how much time it took.

Mike Ayala: Yeah. It was a long time. And you sat in there and took us through that process. So I just, again, another point of appreciation in the conversation about, and even for the listeners, if you have yourself in trouble, these are not just stories. Like you literally could go through that process and you helped us do that.

Barry Lipparelli: So yeah, there are all kinds of people can do that for you. But the biggest problem is locating somebody that can help you with that thing. Yeah. A lot of times I see what they get in trouble with is they’re trying to pay long-term financing over a short-term period so that they get cashflow problems. In fact, my brother calls me cashflow. My middle name is cashflow.

Mike Ayala: I like it.
Barry Lipparelli: And checker, because I always just got to check everything. Mike Ayala: Nice, Barry cashflow Lipparelli.

Barry Lipparelli: Barry cashflow checker. I have employees that I rely on a lot. And the people that you surround yourself is very important also because they can help and support you because you get not, we’re not huge, but we got big enough where you can’t handle everything. One of the reasons we gave away the property management, we couldn’t handle, too much volume and stuff to do. And we did a lot of time before they got gung-ho computerized. I’ve been through no computers, to computers. I have key employees and I try to pay them above a normal wages. And the reason I do is because I feel if you pay peanuts, you’re going to get monkeys for employees, it boils down that and I’ve seen operations like that. And maybe they can justify it because savings, I don’t know, but we found that it cost money to retrain them and you’re better off to treat them right so that they don’t go. And I have people who’ve been with me 25 years, 18 years, 20 years, 15 years. And we feel that’s real important to them. And now we started really early. We started a profit-sharing plan so that we contribute. [40:20 inaudible] 15% of their

salary goes into that pot. And I manage that and for them and I participate too. So I’ve benefited, just, not just solely because of them, but a lot of times they get in a financial problem, bad, we’ve had circumstances where we had to fire them to withdraw the funds and then rehire him few months later down the road to get over some financial help. And then you get circumstances like into my lending. You can’t underwrite certain things like you can’t underwrite, a guy getting fired or your guy dying, or there’s another one. You can’t underwrite disabilities and divorce. I mean, but you can’t underwrite that and always wandered that about financial institutions, especially when I was in real estate business on a home, they want you to have your debt ratios correct. And once in a while, we’d have a character that would in the middle of a real estate deal, go out and buy a pickup truck and it screws debt ratio up and blow the deal. But also, I had this, which was an interesting, if the deal got blown for some reason, the next day go down and buy a truck, I don’t know if it’s psychological or what, or a car and but anyway, the day after this closed and the guy’s debt ratio is good. Everything’s good. He can go down to buy 10 Cadillac’s the next day. They can’t do a damn thing about it. So I don’t know what the big emphasis on that is. And a lot of times in our loaning process, instead of getting involved in that stuff, we analyze the collateral. So that there’s enough equity position so that if you get in a position where you have to take it back. So I do more of that than I do fico scores and credit balances.

Mike Ayala: Yeah. And that’s another big c that you had. So character credit, capabilities and collateral. That’s another c that you’ve talked to me about a lot. Making sure that you’re collateralized properly. That’s kind of interesting. You told me at one point in time, anything else on that? We started our first business plumb line in 2004. And I met you right around the same time. Well, I didn’t meet you then, but that’s when we really started talking business and you became a mentor of mine. You told me something earlier, I don’t know if you remember this, but you said to me, if you take care of the business, the business will take care of you. Talk to me about that a little bit. It seems super simple, but…

Barry Lipparelli: I’ve seen people go in business and then all of a sudden, they got tremendous cash flows coming in. So now they think they’re king of the mountain and they’re going to go out and start buying things and getting indebtedness and not realizing that there’s going to be ramifications. And I’ll give you an example. A friend of mine was an electrician and he bought the electrical business, and he was real experienced and knowledgeable. And I tell people, you’ve got to have two things if you’re going to be in business, you’ve got to have some product knowledge, extremely important, and you’ve got to have some business knowledge. Now I could go run an electrical outfit in two seconds flat,

but I can’t wire out. So now where I see a lot of guys make a mistake as they’re working as a cabinet maker or electrician or plumber. And they decide that they’re going to go out and start their own business. Even though they have the expertise of the product, they don’t have the business expertise. This fellow was one example of that. He had a tremendous knowledge, he’s successful now. He came to me shortly after he bought the business and he had an opportunity to get a half a million-dollar contract. And I said to him, you’re going to be surprised at my reaction, he said what? I said, don’t take that contract. And he goes, why? And I said, well, here’s why. And so I showed him that you have to pay your electrician. You have to buy all the supplies and everything like that. And that outfit that he had the probable contract with was a mining operation. And sometimes they take as long as 90 days to pay off their debt. And they’re good for it. And they’re no problem, but you got to have a cashflow in order to pay all those guys and run your business and still have the billing out as an accounts receivable. And that accounts receivable eat you up [44:54 inaudible] make your head swim. And people don’t realize that’s the same as cash. You have to convert cash into that accounts receivable of carrot. So if you’re carrying the product, you still got bills to pay over here without that cash, you can’t pay it. So he ended up not taking that contract and he has subsequently come and thank me a million times for that. He’s in a position now. So if they brought in a half a million contract, he, he can do it. But you have to the walk, the crawl, the walk, baby steps. And then I think I told you one time before, but I call it the tube. You got to stuff into the tube before something comes out here and it might be a three- or four-months span. So when you’re starting a new business, you have to survive that period of time and most operations are not profitable the first year. And most people don’t realize that, they just think, I am going to throw my sign out here and sell hamburgers and everybody

[45:50 inaudible] going to be coming in. But that’s not the way it works. That’s that business expertise that you got to have. And then there’s a quite a bit of knowledge involved, like when you have a business, you got to be a jack of all trades and a master of none. You got to know accounts receivable, accounts payable, taxes, all kinds of tax ramification. You got to do filings [46:21 inaudible] and you got to do them on a timely basis. And they educate you on those by penalizing 18 years of growth value one you can’t afford. In fact, back to that laundromat, when I bought that laundromat, we used everything we had to get the money for the down payment to get it and get it organized and get going. And right out of the shoot, I got a call from the southwest gas company. They wanted a $4,000 deposit. Well, hell we never dreamt that. Why would you have to have a deposit? We pay our bills; they wanted a deposit. But we didn’t have $4,000, scared of us. Anyway, we ended up getting a bond. It’s like borrowing somebody else’s financial statement in order to get the bond on it. And then we started doing corrections. This is off the

subject a little bit, but we started cutting down on the gas usage. By well, for example, dryers have an igniter. Cause it used to run 24/7 and it sounded like nothing. But remember that quarter deal I was telling you about. It was costing us 30 cents a day per machine, because they were running perpetual and I found out you could get an attachment to that thing. So that that’s the flame didn’t go on until you put your quarter in, but it didn’t sound like a lot, but it saved us like $400 or $500 a month. And we went through each item like that until we got to cut, to the point where the gas company guys came over to make sure our meter working right. We cut our costs almost in half just, well, they had a furnace was on top of the roof. So it’s pulling in 10 below zero weather during the wintertime and heating at 70 degrees to get it down. We thought, hell that’s nuts. So we got rid of that. Put a couple of [48:09 inaudible] what do you call it? Put a couple of [48:13 inaudible] in there. So they were sucking in 65-degree temperature to get it out at 70 degrees. Anyway, we cut that gas bill. That’s another thing, sometimes when you’re in the middle of the forest, you can’t see the trees like on financial statements. I’ve had guys bring them over and you can look, you can look. And since you’re not involved in it, you can spot stuff that they could take advantage of to decrease those costs. And a lot of times when guys were doing acquisitions, they get the financial statement, they look and see if there’s something that, if they bought it, they can cut that out so that they can increase that net. Remember I taught you have income, the only way, the only thing, two things you can do one of two things or both is to raise your income or decrease your expense factor to increase that net, which is that thing that converts into value. That’s what we were trying to apply over. That thing took me a year, but I got to turn it around, ended up being…

Mike Ayala: That’s why it’s so valuable again, back to the story of you coming in, sitting down with us for a few hours or even to just have a mentor. Because when you say like, you can’t see the forest through the trees, I’m not exactly sure how you said it, but sometimes we’re so caught up in our own problem and we’ve created such a problem and we’ve been dealing with it for so long. And again, just a moment of appreciation, but I’m sure you can wrap on this for a minute. I appreciate you because you’ve helped me get through so many of these times. And it’s for that reason, like when we have a problem in our life, we need to be able to reach out to somebody. And so what would you say it’s hard to be open and honest, and that’s another thing that I appreciate about you. You’re always open, you’ve been very transparent. You’ve dealt with a lot of problems. Like you’ve experienced a lot. You call them the gray whiskers. You didn’t get all those by. I’m just having everything go. Perfect.

Barry Lipparelli: I have to resize this too, lot of people helped me. I didn’t discover all this stuff or do it by myself. People helped me.

Mike Ayala: Yeah. So it’s that mentoring thing. And I would just encourage any of the listeners too… The more challenging times are the more you need to find a berry Lipparelli in your life and they’re everywhere, right?

Barry Lipparelli: Oh yeah. There’s a lot of people, they’ve aged, and they’ve been through the experiences and knowledge.

Mike Ayala: But if you’re not completely honest and transparent, you know, I think as a society and you could correct me on this because you’ve seen a lot more generations than I have.

Barry Lipparelli: That’s all right.
Mike Ayala: You’ve seen a lot more than I have.
Barry Lipparelli: I have more yesterdays than I have tomorrows.

Mike Ayala: That’s a good way to put it. But I think a lot of times I feel like, especially nowadays don’t want to be completely open and transparent and in order to really truly get help, you need to just lay it all out on the table. And I’ve appreciated you for that. Cause I’ve never felt judged by you.

Barry Lipparelli: No, I don’t like to judge because I don’t want to get judged either, effective, a friend of mine was talking to me one day. I can’t wait until those people get their justice and Christ raised hell with them [51:12 inaudible] because they’re doing something wrong, you know? And I said, man, I’m not that way. What do you mean? I don’t want justice. I want mercy. I mean it too. In fact, I’ve thought a lot of guys on their deathbed. Yeah. If you have anything to say to Christ, you say mercy, that’s all you got to say. Well, they are, to back to your question. They are, and I don’t know what the cause of that is. If it’s a self- protection thing or if it’s a cultural learned situation or what, but I told him the truth. Of course, any information that they give me is confidential when they come in here and they know that. So they’re more susceptible to give me the information. I noticed like on trips though, I was off of the sideline a little bit. People will tell you stuff they wouldn’t even tell their priest because they don’t think they’re going to ever see you again, I guess. And my daughter ended up becoming medical, which I don’t know where she got that. But she specializes in women’s health. And

she says that, they tell their medical people stuff that they wouldn’t even tell a priest or a preacher. Cause I don’t know why they, if they know that confidentiality or what the heck it is. But I go to a big city and I tell people, good morning, they look at me like I’m going to pull out a .45 and rob them or something. Which reminds me today’s, I graduated from high school on this day.

Mike Ayala: Wow. Like 10 years ago.

Barry Lipparelli: Yeah. Last week, as fastest time goes, it was last week. Anyway, the reason it reminded me of something. I was, making an application for a loan on an eight plex, it was two fourplexes. And oh, they put me through the ringer. On, more, more, more, more finally, one day, honest to god the gal asked me, what day did you graduate from high school? So I told her, and then I said, now, what has that got to do with this loan? And she says, homeland security. I still haven’t got that. So now I got a line of credit. Whenever I call her, they want to identify me. I said, why aren’t you going to ask me the date I graduated from high school. They all look at me like I’m nuts. They’ve never heard of that before. In fact on that same loan, one day, I call that underwriter, cause it took so damn long and frustration. I says, tell that underwriter, this isn’t an armed robbery. I just want to borrow a few books. And I have every intention to pay them back.

Mike Ayala: That’s awesome. I love it.

Barry Lipparelli: Well, [53:47 inaudible] up there, when bought those trailers, you’re going to love this. I got a call from the financial institution, from somebody in there. And he said, you’re in violation of law. What do you mean? You said you got nine FHA loans on mobile home; you’re only supposed to have one. I said, well, let me tell you a little secret. Well, they had that on their loan loss reserves and bank was just real tickled to sell those to me and get rid of them so that they could get her off their books. I said you check that out, let me know. I never have heard from him since. Must [54:22 inaudible]. You got rules and regulations. You got to put them in sand, not in concrete.

Mike Ayala: That’s a good one right there. When we do our next podcast in a couple of years, I’m going to, hey, remember you told me.

Barry Lipparelli: Financial institutions, they make a rule up on the top. I experienced that with the bank that was in Vegas and they came up here, opened a branch. They’re running it like they got a Vegas operation. There’s two different economics, two different real estate programs.

Mike Ayala: It makes a lot of sense.
Barry Lipparelli: They make one rule, and nobody can, has the authority to make

any adjustments.

Mike Ayala: You got to put your rules and regulations in sands, not concrete. I like that. So shifting gears on you a little bit. We’re in June 2020. We try to stay evergreen on the podcast cause you don’t know when somebody’s going to be listening to it. So, it could be five years from now. But we’ve just experienced this Covid thing and financial turmoil, really, the world’s kind of in an uproar and being a spiritual guy, I’m sure, I think there’s a lot more going on and just, the world in general and in god and spirituality, but coming through all this, what’s your overarching perspective right now? Because we’ve had the corona virus, we’ve got protests. The world is in upheaval. Financially it seems like we’ve kind of put a major band aid on a huge bleeding wound. But what’s your overall perspective on everything where we’re at right now?

Barry Lipparelli: Well, there’s different to areas to concentrate. Earth always had turmoil and I refer to a scripture reading where, the trees planted next to the stream and it’s root are [56:15 inaudible] becomes a deserty hot summer. The leaves are still green. And that’s that reaction thing I was telling you, you have an individual decision to make on the reaction. Obviously, I don’t condone those police officers. Well, I don’t judge it because you have to be there to know the circumstances, but from what been revealed at this point, it was a big, no, no. And you have tragedies that happen constantly and that’s a tragedy and I think it should be a learning lesson so that we can stop those kinds of activities somehow. And I don’t care what color a person is. They’re human beings. Some of those guys are so precious

[57:07 inaudible] heaven to find out god’s black. That’ll make them quiver a little bit. But I never could see prejudice, for some reason. When I was a young boy here in school in Elko, we didn’t have prejudice. I didn’t know what religion you were. I didn’t know what ethnicity or wherever they call it ethic group you were with. And we had a black kids in our classes and the only time they ended up being ostracized was if it was some activity that they were doing, it was not acceptable versus what they were. In other words, if a guy was a jerk, he was a jerk, he was out. So I wasn’t raised with that. And that new show that came out the green book, I don’t know if you’ve had an opportunity to see that, but it’s a story about a black pianist, real talented. He decides to take a trip in the south, one that you don’t know, prejudice. I mean, it was before the sixties, before they got civil rights. And they had this book, it was called the green book and it was you’d open it up. And if you

went to Elko, Nevada would tell you where you could eat as a black person and where you could sleep and stuff like that. I wasn’t aware of that when I was a kid, except I work in a service station and a black family came in and I took care of it. Gas him up and [58:38 inaudible] and he says, could you tell me where I can eat and where I can sleep. And the kind of astounded me. And for some reason I said, just a second, I’m going to go ask my boss. I could sense something was cooking. I didn’t know quite what it was. So I went in there, lo and behold in Elko, Nevada, there was a couple of places they could eat and a couple places they could sleep. And my boss told me what the names were. And so I referred him to that, but I was flabbergasted that, that was even a question. I just didn’t, in my mind. And later on, in later years, you get a kick out of this. When my dad and I bought a piece of property from group called the African Methodist episcopal Pentecostal church, which was a black group of church people. And there was only one black family left wanted to sell this property to us. So we couldn’t get clear title to the property. They couldn’t give it. So we went to court and the court said, well, you have to write a letter to everybody that had any connection with that church. So I got the book from them and I read it and I wish to god, I’d made arrangements for that book to go to the northeastern Nevada historical society. But it didn’t. In that book, it said that Elko had an NAACP in the 1940s, which I didn’t even know it existed at that particular time. In that book, they would say, I’ll tell you his good name. They would say Dave [inaudible], who happened to be the married at that time. I knew him later years, he was real good to us. [1:00:28 inaudible]. But if there was a guy in there, though mistreated him, they’ve put it in there. Joe blow was blah, blah, blah. He did this and he did that… Don’t go buy from his business and stuff like that, which floored me. But anyway, make a long story short. We wrote letters to all those people. That, of course they all came back because there was no address. They were gone, been gone. And so they gave us clear title to that property so that we could buy that from those people. And well, real interesting experience. A little bit off them point, I’ll tell you about those people. You’d crack up when I tell you this story. It was a black couple; the guy’s name was Sid and the gal’s name was Ethel. Their last name was Moore. Sid and Ethel Moore. Their house caught on fire one day. And so they got the insurance money, and had it rebuilt, and it costs more to rebuild it than the insurance company had paid them. So they came to my father and they said, told him the story and I don’t know how he thought of this, but he was one of those characters. He found out that Sid was a veteran, military veteran. And that the property was in the name of Ethel Moore not Sid, so my dad made an offer and acceptance up and it put purchaser Sid and Ethel Moore from Ethel Moore. So they could get refinancing under the GI loan. So they submitted it. They denied it. That was in the sixties. And that’s when they were having all this civil right crap. So Ethel got kind of upset. So she started

writing letters and she wrote to all the Nevada congressmen’s she wrote to the president, the vice president wrote letters. One day, my dad gets a phone call. And this guy says, this is so and so I don’t remember the name. I’m the head of the veterans administration in Washington DC. And he said, who the hell is Ethel Moore? So my dad explained, they put that loan together. They finance that house for them. So he could pay off his thing and get back to his…

Mike Ayala: Because she had been so persistent.
Barry Lipparelli: It’s just [1:03:02 inaudible].
Mike Ayala: It’s like that story about the widow and the judge and the bible.

Barry Lipparelli: That’s exactly right. But that my dad put that thing together. It was a wonderful story, but that’s the same people that we ended up buying that, well, I got to something else. They had a musical piano. One of those drop the coin and it plays music, but it was broken. So they wanted to get rid of it. They sold it to me, and it takes about three glee clubs and two military personnel to lift this sucker up. Cause I had to move at once and I got it in a bedroom in my house. It still doesn’t work, but I’ve been thinking about getting that damn thing fixed and give it to the northeastern Nevada historical society in their behalf, which I think they’d get a big kick out of that. Although they’re both deceased now. The reason, what happened to that book is, Sid had a daughter, unbeknownst to me in Texas, after they died, she came up here to sell the house, get her stuff. She got that book and I can’t remember her name or what part of Texas she is in [1:04:10 inaudible].

Mike Ayala: Sid and Ethel Moore. So what do you think from a financial perspective? What’s your, I mean, I know we could talk about this for days.

Barry Lipparelli: You mean because of the corona virus.
Mike Ayala: And even not just the coronavirus, but the amount of money being

printed and jobs, all of it.

Barry Lipparelli: Well, I think there’s a, sad that we had to go through that thing. I think president trump gets a lot of criticism and I’m not for against anybody. I think he’s handled that quite well. Although there are, it had to go so fast that it created all kinds of problems. For example, I know diseased people that received the [1:04:59 inaudible], this money, they need to send it back, which is a hardship on them. Cause once they got it, they hate to send it back. And then I see abuses in

that pp I think and, but I think overall generally it was a beneficial, I think they should be a little bit more conservative because the amount of trillions of dollars that the government owes, it’s going to bite us at some point. The problem with it is without getting a big doctorate degree in politics, they don’t have the ability to challenge that because they will lose the elections. So one of the things I don’t like about the congress is that a guy, the day after he’s elected, he’s got to still run for, cause he’s got to be elected again in two years, it makes him susceptible to lobbyists and to making decisions to their benefit in order to become reelected. I don’t like that. I think there should be a change. I’ve got a suggestion if anybody ever wants to hear it, about how they could change that, that would make those guys less reliable on that. Anyway, that’s another story. So I think that’s a real possibility that inflation is going to bite us in the [1:06:20 inaudible] down the road a little bit. The hardships that the corona virus is real. And I don’t think they had much choice to stop that. What I’m concerned about now is the possibility of it spiking before they can get a vaccine. And then I’m nervous about it in the event that they do get a vaccine. It has to be tested enough to make sure that it’s not going to cause more problems than it’s solving. And it caused a pent up of people in shelters and older people, it was no big deal. They were sheltering just because they’re older. And the problem is that pent up energy I think was looking for an excuse in order to do the riding. I disagree with the riding. I think you can assemble and protest legitimately, but going in and robbing people, in fact a lot of times they can’t figure it out because they’ll go into their ethnicity group and rob their own people. And then all of a sudden, they set it on fire and burns down. Now they can’t buy their groceries locally. They got to go 17 blocks down the road to get to some other grocery. That makes no sense to them why they would do that and why punish the people? Why punish anybody else that has nothing to do with the problem. By the same token, it’s created some opportunities. I’ve watched that I’m not into the stock market, but I watched that market. Take a nosedive, hell if a guy would have bought stock at that time if that’s your expertise, it wasn’t a mine, otherwise you could make a fortune in that thing. And people have knee jerk reactions. And it’s reverts back to what I was telling you before. If you’re a retired and that’s is your whole talk and is jeopardized, you’re scared. So you sell out, you wait until the damn thing comes back and bite back in. But in the meantime, you might lose a tremendous amount of money. Even those guys that they held their money during the depression, after the depression, good luck how could you hang on to it if you were starving. The unemployment rates that they’re experiencing, that they had during the depression, but during the depression, they didn’t have social security and they didn’t have unemployment checks and they didn’t have a stimulus checks and that stuff. And one of the reasons FDR created a lot of those, like the WPA and the CCCS and that kind of stuff was too get the people

reemployed. And instead of doing that, they did it by stimulus, which is, it was good.

Mike Ayala: Do you think, you had told me early on and you’ve kind of alluded to this through the interview, but you should shared certain types of businesses that you, I don’t know if you remember telling me this, but insurance, real estate, low overhead type businesses. So I guess, twofold question. Do you think it’s a good time to start a business? Or to get into real estate? And if so, what types?

Barry Lipparelli: Well, I like real estate. I still think there’s opportunities. In fact, I help guys that are doing flippers and they lose a deal and they look like they lost their dog. I mean, just relax. Keep looking. There’s always some opportunities because there’s a certain character of people that they won’t take care of their property. In fact, I can tell you an illustration of that. Sold the property to them, but they were so used to being an apartment. Something went wrong. They wanted the guy to come back and fix it, fix it, fix it. Finally, he got tired of it. Told him, no, you’ve bought this. This is your property. They lived in the house until it got unbearable. And then they gave it back to him and left. So you got those opportunities. There’s people that won’t take care of their stuff. I don’t know if it’s the way they live or if they don’t have the ability or the knowledge to keep it nice that you get penalized when you get in those situations. So there’s opportunities there. I think because it expanded into the e-commerce that there’s tremendous potential and commercial real estate. And a lot of the little guys that aren’t in a position to put those big deals together, they can get invested in real estate investment trusts, and they have every kind of real estate that you can imagine that you can get into that thing. And if you don’t know what you are doing, you should get an advisory service of some kind that tells, they research it and do an analysis on it, cost you a fee, but it’s usually pretty [1:11:29 inaudible], so that you’re investing in the right ones. But even then, no guarantee. But there’s companies like a realty income, [1:11:42 inaudible] they’ve consistently paid a dividend for years and years and years. And so there’s several of those companies, you could get in the wrong or for example, if you got into cruise ships or I don’t know if there’s a [1:11:59 inaudible] for that, but cruise ships for example, man that’s a real poor time even now they are dirt cheap. But I would be really reluctant because I think it’s going to be a psychological thing for people to want to get back into that.

Mike Ayala: Yeah. We used to love cruising, but I can’t imagine getting on a cruise boat. Yeah. I don’t want to be trapped at sea for 25, 30, 40, 50 days.

Barry Lipparelli: And airlines, for example, I think they’ll come back
eventually. Cause it’s just the best mode of transportation, but the biggest problem is those guys in business like that they have to survive. That’s the survival mode. So that’s why I emphasized the strength of your financial statements. And you’re being a little bit conservative in your operations so that you can, well, I tell people so you can survive your mistakes. That’s what about it boils down.

Mike Ayala: Do you think that, so you had told the story earlier about the electrician who was a good technician, but didn’t necessarily back to the capabilities part of the three cs. He wasn’t necessarily experienced in running business, which the only way to get experience in running businesses to get the whiskers right. But do you think it’s a possibly, is there a good, is it a good time to potentially buy existing businesses? I know we go through cycles where there’s a lot of times where I’ve thought to myself, well, I could start a business faster, cheaper, easier than going and buying an existing client list. But then there’s times like this that make me think that potentially there might be tired operators, or they’re strapped on cash or, maybe they’re just done. Do you think it’s a good time to maybe buy businesses? Have you thought about that?

Barry Lipparelli: Yeah, I have, actually it is. Anytime is a good time really. Because you can take advantage of some of those opportunities. I tell people this, it’s interesting. They look at me like I’m crazy, but the construction costs are so high because of the labor costs, but it’s sometimes a hell lot easier to go get the financial statements for the last two or three years on a specific piece of property and doing analysis on it from the net perspective to the value and to buy that way cheaper than what you could construct. So you have to look at both sides, which is going to be the best rate of return on your money for what’s you are getting. But you can, I watched in the Boise area, cause my daughter lives up there during the financial crisis everything went to hell in a hand basket and they were buying duplexes up there for a hundred thousand dollars, duplex. Yeah. Which is incredible to me because you can’t even buy a lot for a hundred thousand up there now. But those same hundred thousand dollars properties are probably worth $250,000 right today. But for a guy to buy at that particular time, he has to have the knowledge knowing that’s the cheapest thing they get, but then you have to also be in a cash flow position so that you can make the payments if you can’t do the rent. But we got scared one time in Elko because a fellow that was in business came to us and he said, hell, in the early eighties, he says, man, these mines are nuts. They closed down. Everybody’s unemployed. I can’t stand it. He said, I’m going to sell everything out, which he ended up doing, which was a mistake. But he did. And, but boy, that made me think, and I had to sit in a chair for almost two

days. I just sit in the chair; I’m thinking for about two days. And I came to the conclusion that I can’t remember now, but say the rants were $600 a month. I said, if we have to reduce it to $300 a month, we can still make our nuts. So we’re okay. And we’re going to ride this horse until we get bucked off. But, as it was, it ended up being the right decision. So there has to be some thinking process in what you’re doing. And you’re going to follow when I tell you this, I went almost 30 years without a vacancy factor other than ins and outs. Which is incredible. But I had a mine operation come to us in that early eighties. And they wanted us to build some apartment complexes. Well, I was interested. So I sit down with him and I said, well, after we got all done talking, I said, well, how long would you lease those operations [1:16:10 inaudible] those apartments from us? And they said, well, 18 months, you got to be kidding me. I’m going to go get 30-year financing. You want me to do it 18 months? I said, no, we’re not interested in that.

Mike Ayala: It’s not a win-win.

Barry Lipparelli: Well, on the way back, backwards looking that’s really easy in hindsight. We probably should have done it anyway because I didn’t know it was cooking, but we were a little bit concerned because the mines are so tight mouthed. You don’t know what they’re going to do from day one to day two, tomorrow they might lay off 350 guys. You don’t say a word. Or they might be hiring 350 guys. And so it’s kind of hard for outside business guy who doesn’t have inside information. So what triggered us to get a little bit aggressive on investment was when they built that one and a half billion processing plant, we thought anybody that’s got that kind of money, they’re not going to put that in there for six weeks. They’re going to be a long-term smoker so they can amortize the cost of that. Then we started getting aggressive. And then I would advise like when you’re doing your mobile home park, we were lucky in Elko because when they had that financial distress, property values went to hell in Vegas, Salt Lake City, reno, Boise, all around us. But Elko didn’t get hit with that. What happens in Elko is they are watching that national news is why I take that with a grain of salt. They got really negative because the national news was negative. Well you got to separate yourself from national news. It’s not, it’s what’s happening in your local economy. And I can illustrate that for you too. But anyway people got negative, so they quit spinning their money in Elko, even though they were working after a couple of months, they realized they’re doing fine. So then they started firing back up and everything was going really well. But I even went through that 1973 when they had the oil embargoes, people wouldn’t come from Salt Lake [1:18:07 inaudible] well, they had gas to get over there, but they were afraid they couldn’t get the gas to get back to Salt Lake City, which was the gaming in those days, it wasn’t in mining. It was

mostly gaming and ranching operation. And I saw the casinos in this area lay off 15% of their employees, which just staggered me. You don’t know impact. Well, you didn’t see that happening during the recession because the locals were working. In fact, we were lucky during this corona virus thing, the mines didn’t shut down because they were essential, and they are remote. And Elko wasn’t too impacted by that shut down. Although I saw a tremendous amount of people in the casinos and bars and stuff like that went out. The Nevada system was used to processing about 2,400 applications a week. And all of a sudden, they got hit with $370,000 applications. Their systems collapsed. And I know people that never did get unemployment. In fact, well, one of them, I just talked to a guy yesterday. She was a waitress. Her boss happened to get that pp thing. So he put them on back on payroll. Otherwise she’d have been up a creek. And so there’s been some hardships come out of that thing. And then a lot of people say, well, you’re going to lose a few people in the corona virus. Well, that’s really easy to say it unless you’re one of them. And my daughter being in the medical profession, several nurses from her area have got to New York to help those guys up. And they were working on some tough duties in Boise. Well, people on terminal cancer and car wrecks and heart attacks and the all kind of medical problems. And they said that was pure hell, that’s how they described it. It’s horrible. So it’s a real thing. And I think they made the right decision to distance people and get that hopefully [1:20:01 inaudible]. What I’m worried about, I think I mentioned it. If they don’t get a vaccine and that thing spikes again, they have to shut this thing down. It might be irreparable, and a lot of businesses wouldn’t be able to snap out of it. So I would take a somewhat conservative stance. But if everybody in united states got negative, it collapse itself. You got to disassociate from that and look at your own environment. I was going to illustrate that for you. Like if you add a house, here it’s worth $250,000 in Elko. If you had that same house in a wells, it’s worth $150,000. So each individual community has their own real estate market. So you can’t just say, well, I’m going to take the same stuff I got in Elko, then go to Boise, you better go up there and analyze Boise before you start investing in there to see what’s cooking. And I see some of those guys making that mistake. They come out of the California and they’re paying too much money for investments because they don’t know what they’re doing and yeah, we’ve got the cash. Cause they’re selling a house down there for a million. Come up here and buy a house for $250,000 and they got $750,000 to mess around with. Be real careful. Especially if you don’t have any whiskers, you got to have some experience or knowledge in that.

Mike Ayala: Yeah. That makes a lot of sense. That’s probably a good segue into this question. So you’ve seen a lot of change over the years. What advice do you have for business owners and real estate investors during you said this before,

these are unprecedented times, right? So we’re just talking about being conservative. Maybe that’s some of it, but what advice do you have just in general for business owners, real estate investors, it could be high level.

Barry Lipparelli: Assuming you got your financial situation stabilized, you are in pretty good shape. I would say all kinds of opportunity. Oh, absolutely, opportunity. In fact, I don’t take advantage of them because of my age. But I don’t mind. I have done this. I’ll find a hell of a deal. I’ll call somebody

[1:22:02 inaudible] this thing it looks like, assuming you got your financial….

Mike Ayala: What haven’t we talked about that you want to cover?
[1:22:14 inaudible]. Let’s kind of wrap this up. What one or two things you are most proud of?

Barry Lipparelli: It’s not anything possessions. It’s relationships with other people, friendships. In fact I read an article several years ago where the good lord says, enjoy those people around you. Cause you don’t know how long they’re going to be with you. And I’m experiencing that because of my age and that kills you. But I’m glad I had those relationships.

Mike Ayala: I love that. And just want to say that I appreciate you.
Barry Lipparelli: Well, I appreciate you too. You’ve made me more than I am.

Mike Ayala: It’s awesome. Yeah, it’s been good. You know, and again, somebody asked me the other day, cause I talk about you a lot. But somebody asked me the other day, this mentor you’re always talking about, is he a paid mentor? And I’m like, no, you’ve never asked me for anything. In fact, you’ve done nothing but help me.

Barry Lipparelli: Well I realized at a relatively young age that I was given that talent and I’m trying to live that, love thy neighbor. And I’m glad to help people. It helps everybody. When you help somebody else, it helps you actually. And that’s like, I told you, if you go to a community without any real estate people, they won’t thrive. You got to have those people, investors, businesspeople and stuff like that. In fact, a lot of times I’ve had a tough time dealing with the, I’ve talked to several priests about it, being invested in the world where you are serving mankind and the good lord. But by the same token, I can find you a scripture that says, if you don’t work, you shouldn’t eat. So you have to work. And he gives you those talents for it. But I think capitalism’s a great thing, but it has to be monitored. And the reason it

does is because it can get into greed and selfishness and subsequently abuse of others and probably why they have so many rules and regulations, but usually 1% of the people are what’s creating those problems that creates the law that goes on top of everybody. And if you’re not doing anything wrong, you shouldn’t care. For example, one time they decided they wanted to raise the tax on licenses so they could hire more highway patrolman. And everybody was having a fit. I says, I don’t care if they got 50 patrolman or 10,000 of them, if you’re not doing anything wrong, what do you care? So I support those police officers and thank god they’re there to otherwise we’d have anarchy, because there’s always the few that will get into the greed mode and abuse and ruin it.

Mike Ayala: That’s such a great way to end, right before I share one last thought you keep talking about and this is a scripture, but love the lord, your god, and love thy neighbor as yourself. And I’ve thought about this for years and you exemplify this. There’s one more part of that, that I think it was actually in the new testament that Jesus talked about. And I think it was in the old too, but love the lord, your god with all your heart, mind, soul and strength and love your neighbor.

Barry Lipparelli: Most people I tell them this, gentleness and kindness are esteemed in heaven. So it’s important that we did that gentleness and kindness to others because they have burdens. I don’t care who you are talking to, they got a burden. Now they might not share it with you, but they one, and I think it’s because we go through these different trials and tests, to enhance our endurance, which enhances our spirituality. And your goal to reach the level of holiness that Christ calls you to. That’s real easy to say, but pretty tough to live. It’s very difficult. And most people are looking for peace, but they don’t see it in Christ. In fact, they look at you like you’re nuts if you tell them that. And so they go try and everything else, like they’ll get into drugs or sex or gambling or alcohol or whatever the hell they are getting. And usually those end up being the bigger problem than the problem that she had before. And you only get us real limited amount of peace out of that thing, it was so damn temporary. It’s in consequential. Versus if you rest in Christ and live in Christ, you have that piece. I have a piece that’s out of this world. In fact, I have it to the point where people come and talk to me and I’ll walk with them till they leave and they’ll go, man, I feel so good coming and talking to

you. That’s why. Not me. It’s Christ. So, and then they thank me, and I say, don’t thank me. Well, thank the good lord because he’s given me that ability and the grace to share it with the other people, its real important. And people have done that for me. Don’t kid yourself. I didn’t get here by my lonesome.

Mike Ayala: Well, I thank the good lord for you, and I thank you as well.

Barry Lipparelli: I tell people this sometimes when they’re real good at what they do, I thank the good lord for your talent. And I thank you for sharing it.

Mike Ayala: I love it.

Barry Lipparelli: I’ve told people that and got to see the look on their face. I don’t do it unless it’s sincere and needed. That’s not phony. I don’t want to do phony. It won’t work. I’ve done that to people, and I got to see their look on their face. I don’t know if they think [1:28:31 inaudible] just off cause of themselves or full of prunes. They haven’t figured it out yet. Or if they think, golly, that’s an interesting concept or I don’t know what their thinking is.

Mike Ayala: Well, this has been amazing. I appreciate your time as always. Barry Lipparelli: Happy to do it. I didn’t realize, I didn’t anticipate that. Mike Ayala: This has been on my hit list for a while.
Barry Lipparelli: Well, I’m glad, bucket list. I’m in the bucket.

Mike Ayala: Yeah. Well, I appreciate everything about you. I, I love and appreciate everything you’ve done for me. And thanks for taking this time.

Barry Lipparelli: It’s a two-sided street. Two-way street. Mike Ayala: Yeah. Thank you.

[Outro]

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