Improving the Construction Experience for All with Rico León

Episode 77 • 15th March 2023 • Construction Disruption • Isaiah Industries

Rico Leon:

My why is to just hyper-educate contractors for a bunch of things that are never taught. These things are not taught when you start a business like, Hey, by the way, this is what you should do when it comes to taxes. This is how you make sure that you have a subcontractor agreement. You're not spending $1,000,000 on insurance and there's so many things that they should learn and know, day one, that can prevent so much heartache.

Todd Miller:

: 00:00:34

Welcome to the Construction Disruption podcast, where we uncover the future of building and remodeling. I'm Todd Miller of Isaiah Industries, a manufacturer of specialty metal roofing and other building materials. Today, my co-host is Seth Heckaman. Mr. Heckaman, good to see you here today. How are things going?

Seth Heckaman:

: 00:00:53

Going well. Good to see you. How are you?

Todd Miller:

: 00:00:56

Doing great. So what great news do you have to share with us today about the upcoming Metal Roofing Summit. It's that time of year and that special event and conference we all love?

Seth Heckaman:

: 00:01:08

Yeah, closing in on it at the time of this recording will be released, but starting to build lots of great momentum here for that end of April event we have coming up April 25th through 27th, here in beautiful Dayton, Ohio. But really looking forward to and getting lots of great response from attendees and sponsors as well. Just the opportunity to get all back in the same room. Recap last year, share our learnings and plans. Looking ahead to this year and beyond. But it's such a great, significant part of the value of the event as a whole and we try to do a good job at fostering that, not packing the agenda to the gills with speakers and other sort of commitments, but leaving space for attendees to network with each other, sharing best practices. Anyone from just getting into the metal roofing business this year, or even just considering it, having the chance to interact and network with those like you who have been doing it for 40 years. So that sharing of information is great and the sponsors play a huge role in that as well. We're having some great sponsors come back. Built Right Digital on the marketing side, we have Metal Roofing Consultants, Contractor Coach Pro, some other consulting and coaching services who can be a great resource for attendees. To try to bring additional value through those connections to key sponsors to support every stage of your business and help make 2023 all the more successful. So really looking forward to it.

Todd Miller:

: 00:02:37

Very cool. So that is April 25th to 27th, the website where folks can learn more and register and depending upon the timing, perhaps take advantage of our early bird special is metalroofingsummit.com. And I agree with you, the networking is great. You never know whether you're sitting next to someone who sells 20,000 squares of metal roofing a year or someone who's just getting started or what you're dealing with. And so it's just great to learn and share. So I will share with our audience real quick, we are once again this episode doing our challenge words. So both Seth and I and our guest have been given a specific word, sometimes kind of a fun word, to try to work into the conversation as seamlessly as possible. And at the end of the show, we will reveal whether we've been successful at working in our challenge words. So I'm very excited about today's episode. I think we've got a great one for you here. Our guest today is Rico Leon of the brand new HGTV program Rico to the Rescue. But I have to tell you, this guy is one very busy and high energy guy. He's driven by his compassion and the things that he cares about. And his new program focuses on righting wrongs and bringing resolution to times when contractors have left homeowners with unfinished projects or projects of inferior workmanship. But on top of that, as if that wasn't enough, Rico is also heavily involved with restoration projects through Red Hawk Roofing, real estate development through G-O-A-T, GOAT Development, and he even consults and helps other businesses through his consulting firm, the Future Consultants. And interestingly, pretty much all of this seems to have happened since about 2018 when he was traveling from his roots in Pittsburgh, Pennsylvania, to a new location, new start in California. And his car broke down in Denver and he stayed there. So, yeah, yeah, that's quite a story. But look at what this guy has accomplished in just a few short years. Rico, welcome to Construction Disruption. Real privilege to have you on the show today.

Rico Leon:

: 00:04:52

Yeah. Thank you so much. I mean, I love the title of your podcast as well because it is an industry that needs disrupted. It's been the same for such a long time. But then, of course, as we all know, the pandemic happened and just threw a wrench into the ways of before and contractors even doing the right thing or wrong thing got into the industry. Things took way longer. It's just, it has to change now. Like we have to do our due diligence. Math is different, the pricing is different and insurance companies, how they handle things is very different. So it does need to be disrupted on our end where we have to be better. Perfect title.

Todd Miller:

: 00:05:31

That's a great point. Yeah, I agree. It's time that things have to change and the world is going to go around us if we don't bring the industry up to today's place, and it's in the world. So I've got to say, though, to be honest, your bio is a lot to take in, and I didn't even cover everything you're involved with.

Rico Leon:

: 00:05:51

Sure.

Todd Miller:

: 00:05:51

Can you tell us a little bit about your own story, in your own words? You know, how did a kid from Pittsburgh end up in Denver disrupting the construction and real estate industry the way you are?

Rico Leon:

: 00:06:02

So I got my all of this knowledge and experience through working for Roto-Rooter. So I started the restoration branch of Roto-Rooter. So day one, it was brand new trucks, brand new equipment. I've talked about day one, day one of that particular branch, and I had 70 plumbers, so I was in the heart of Pittsburgh, had 70 plumbers referring just me, restoration work. They would call one person. I was working 24-7. I remember I didn't drink for two years because I was the only one on call, which is 24-7. And in Pittsburgh, I mean, they had, all its old plumbing, terracotta. I mean, like we were doing tons of excavation, tons of plumbing work and there was always like on premise sewage backups, like all the time, every single day. So that's how I got kind of like into the emergency restoration realm. And I got paid by like the size of the claim, right? Like I would file the claim, I would do all the paperwork that, you know, for Roto-Rooter, their due diligence. Like it's a corporate company, so the paperwork is like this. Like now we just have one work authorization, move on. They had me sign like three Bibles worth of paperwork per claim. So I learned a lot in very little time. But I remember, a lot of homeowners that didn't really understand how to go through a claim. They would be like they turn the fans off, right? And I'm like, Hey, Mrs. Jones, you can't turn these fans off. I know it's loud and all this kind of stuff, but if you turn them off, then the place doesn't get properly dried out. So I started paperwork, like I started creating paperwork that would prevent homeowners from doing these things so then we're not held liable. So like, I came from starting to do like contractual things for the company. So a lot of the paperwork that Roto-Rooter uses nationwide, I was creating the process in the systems in my early twenties and then of course, like, like Mrs. Jones wants to turn the fans off. It's like, Hey, you know what, Mrs. Jones? I get it. If you want to turn the fans off just sign right here, making us not liable for when you get sick, your family gets sick, but you can't come back to us when there's mold everywhere. Okay? Just sign right here that you're okay with us taking the equipment out, not drying it properly. Da da da da da. And they're like, Oh, never mind. Just do the right thing. And I'm like, Yeah, I know, I know what I'm doing. So it was a verbal jujitsu, which I started in my early twenties. I mean, I'm fast forwarding a little bit, but I came out to Denver and when my car broke down, I was like, I love Colorado, I love Denver. Let me do what I did there, here. And then I just met with all the big guys, all these big guys in the industry. And I was like, There's no freaking way like these are my competitors. Like I felt like an adult amongst children in my twenties out here in Colorado, just because it was like everyone was so green, at least on the contractual process side. So just started working for $30,000 a year, which is negative dollars in Colorado. But like at least that was the position I wanted. And then I just started to see how many people don't have the right processes, the right systems, the right protections of the industry. And that's how I grew so quickly. Like inevitably, once I got screwed out of a lot of commission from my last employer, I was like, I'm going to do it on my own. And then long story short, like here I am now. My first year with Grace Kennedy, who's my business partner, she and I did 17 million our first year by ourselves, by ourselves. That was 2020. We signed 17 million and it was just her and I. Like there's companies that have 30 employees that are like high 5 million, right? So we were just going insane. And then again, like fast forward, like all the mistakes that happened, the processes that aren't there, you know, $100,000 mistakes, those are how you learn, right? So I started creating a work authorization and a process that cuts time shorter. Like, you know how insurance companies are, right? So let's just say I come into the game and they know they're going to pay because I have people that have more massive certifications than anyone in the state. So they know we're going to win the money battle. Now, what's their second thing? It's to intentionally delay. Tell me if I'm wrong. Oh, where's that check? Oh, you didn't get the check. Oh, I'm so sorry. Let me cancel it. I'll reissue it. Show me proof that you even sent the first check? Where was it to? They do these things intentionally to delay. So I started creating processes for contractors and homeowners alike to use so they don't do those things. I mean, there's a list of ten things that was one of them. So I come from a contractual mind and a systematic mind, and that's what makes it so scalable, what I'm doing. And it also prevents construction companies from screwing themselves too, because if you screw yourself and now you're not making any money on the project, you have no incentivization other than to like not go legal to take care of the homeowner. And that's why you're seeing 95% of contracting construction jobs going south.

Todd Miller:

: 00:10:53

Yeah. Wow, very interesting. I love what you're talking about, systemization. And we talk a lot about that here on this show and helping contractors to build those systems into their business. I know a book we reference a lot is called The E-Myth by a guy by the name of Michael Gerber. And that's what he's all about, is teaching those systems. And interestingly, although you hate to think of construction projects going south, we do have an upcoming episode we're going to be recording with an attorney in Florida, who represents homeowners and contractors a lot and about insurance companies. So I'm looking forward to what he has to say.

Rico Leon:

: 00:11:32

I love that.

Todd Miller:

: 00:11:33

So I have to tell you, a couple of weekends ago, I was home nursing a case of COVID, and I stumbled across Rico to the Rescue on HGTV. I think it was maybe your second episode, and I think they ran a couple of them back to back that night. But I really enjoyed it. And I was really taken by your construction smarts, your style, but really by your compassion for these folks. And I understand that you watched your parents go through a bad contractor experience at some point and that really impacted you. Can you tell us a little bit about what drove you to this idea of a show that makes things right for homeowners who are left high and dry by contractors?

Rico Leon:

: 00:12:16

Yeah, it is truly, it's funny because I never really thought about it until I realized like, this did happen to my parents previously. But when I first came out here, as do you have empathy and you're taking care of these homeowners, you see so many things that are against progress, right? Intentional delays, manufacturing. There's no materials. Permits now take four months longer. So it's not easy having that type of compassion and holding someone's hand through this not fun time. It's like, it's not fun, right. But there is a right way about it. And I think educating the homeowner of the good, bad, and ugly first is ideal because I think a lot of construction guys, restoration guys, we're just selling. Like we're just trying to get the dotted line signed saying like, everything's going to be amazing. That sales guys moving on to the next sale. And then, you know, the homeowner who heard everything that they wanted to hear now is getting handed off to this person that they've never met. And this level of miscommunication where instead of just hyper-educating the homeowner of the good, bad, and ugly, they could really distress the construction and restoration companies as much as the homeowners. Where it's like, Hey, these are the battles you're going to have with insurance. These are the battles you're going to have with the time schedule. These are the battles you're going to have if it lasts more than 12 months and you only have, ALE, additional living expenses that cover 12 months. These are the hardships that you're gonna go through because of the lack of coverage you have in your insurance policy. Like these are not conversations anyone likes to have, but if you have them first, you have less headaches. And everything I do now is like a headache to income ratio. Not all money is good money. Like I turn away work all the time because if they're not properly covered and they don't have the mindset of this is how it's going to go. They have this like fantasy land that I'm going to build them the Taj Mahal in three months, that's just not true. So just cut the whole sales pitch out, just hyper-educate homeowners moving forward and like contractors need to take this on as well, like money management, like back in the day, like you could spend some of the money, the first two checks. Now you need all first two checks to get things to the certain milestone before you can start collecting. Because even in Colorado, like there's a law that you must show that you spend a certain amount of money towards the project. And if you can't show that to the homeowner, they'll just sue your ass. So there's certain things that you have to just do with more due diligence. And again, like no one educated my parents. They're just like, everything's going to be taken care of. And then obviously what happened, happened. So I saw like financial stress stresses us all. All of us, all of us. No one's immune to it. So I saw how they spent, how much money paying for insurance and then insurance barely paying them for what the value of the recon was. And then the contractor taking the majority of it saying, Oh, you know, we need more money, insurance doesn't want to get more money. And then my parents are like, shit out of luck. So it's because no one's educating the homeowner. There's contractors where, they're contractors, but I don't feel all contractors are bad. It's just that these times, things are different. Like a contractor needs to delegate their money differently compared to how things were before.

Seth Heckaman:

: 00:15:31

I love that message that you're getting out. Because, you know, we've been in the business and watched it and we're all in this business where there's always a sextillion number of ways a job can go sideways. But keeping that communication open, you can make your way through any sort of hiccup. So being just upfront and honest with customers and walking through it together, but soon as you're trying to avoid that conversation, everyone starts wandering and getting stressed out and the conflict starts.

Rico Leon:

: 00:15:56

Yeah, I mean, it's like construction is the Wild West right now. And I think the hardest thing in the world right now for a lot of people is to not like telling the homeowner what they need to hear versus what they want to hear. Your sales guy or sales female, you're just selling, right? Because we got mortgages to pay, we got kids to feed. So do you say what you need to say to get the dotted line signed so that you could feed yourself? Or do you tell the homeowner, here's the good, bad, and ugly? I got you, though. I got systems in place that will battle it together. My level of communication is going to be phenomenal. I'm going to take on less work to hyper-focus on your job if you go with me. So there's different ways to go about it. And I feel like, you know, it's everyone's has such a different position, so it's hard for people to be like, Well, Rico, I can't think long term. I can't sell ten jobs that way because I got bills to pay. So that's the conundrum, right? That's like what a lot of people like to call hullabaloo, where it's like there's too many too many options, right? So in that scenario, it's like, what route do you want to take and how do you want to represent your company or the company you work for?

Todd Miller:

: 00:17:01

I love the thing you said earlier where you mentioned headache to income ratio. And I, I know as soon as you said that Seth was thinking Yeah Miller, you need to listen to this. Because that's what I have gone down that path a few times. So as I watch your show and kind of thinking about Rico to the Rescue, I know that I live by this idea that at our core is I think all of us pretty much want to be good people. We want to care for others, We want to do the right things. But on the other hand, when it comes to contractors who don't take care good care of their customers. Where do you think things have gone south for that contractor is? Is it a lack of funding, lack of resources for the contractor, lack of education, just over their head?

Rico Leon:

: 00:17:47

Well, you know, you could introduce me to ten different people that could build you a beautiful kitchen. But do those ten people have someone that's beautiful when it comes to money management or communication? If the answer is no, then this is why we're here. This is why we're here, because the guy could build you a beautiful kitchen. But then it's like, Hey, can you show me the P&Ls, how you spent the money? Did you get the lien waiver signed by all your subcontractors? Do you collect W-9s from your subcontractors? Does your work authorization like? Then they're like, Oh, I don't know. Like, I just I just build cabinets. So that's why so much is going downhill is because they don't know the time management, the money management, the milestones, and the proper work authorizations like all contractors should have in their work authorization. But they're not. They can't be held liable for things that are out of their control. Permitting, if the homeowner chooses tiles that are custom-made in Italy and it takes four and a half weeks, two months to get here, and that's on them, right? Or change orders like not verbal change orders, but like written down, agreed-upon change orders. And like, what about what happens when a homeowner changes their mind 12 times in a year? Now it's costing the contractor an extra 60-100 hours of work and he or she is not implementing that into the scope of work. Sometimes contractors work on a project and they're like, Holy shit, I did this whole thing for free and they need to know how to manage their time, their money, and make sure that the homeowners have certain responsibilities on them as well, and that there's certain things a contractor like, Hey, if you're got to change your mind 12 times, I'm going to have to charge you $100 an hour for 3 hours for every single time you do this kind of change order, because it's going to take my time, money and energy. We agreed upon something day one and you changed your mind 12 times, and that's going to change the scope of work. But if that work authorization doesn't clearly state and protect the contractor, then the contractor's screwed. Now the contractor's screwed and not making money on the project. And they're like, Why am I here? Your project doesn't feed my kids and the homeowner's like, This isn't my fault. You're the expert, you priced it this way. You promised this. Contractors have to do better math, like they have to have better math, where it's like the sometimes they just sell to sell so they could collect the check. Don't do it because you're going to get sued. It's going to go downhill. I've seen it so much like the time management is so shit, it's bad. It's a pandemic. It's a pandemic in itself, right? So if contractors can start protecting themselves, telling homeowners how it's going to be, take on less work, have good protections and insurance, have better money management, things would go a lot smoother. It's just, it's going to take time for people to do that. It just takes the right contractor. And that's why homeowners have to do ten times more due diligence and contractors have to state, this is milestone one, milestone two, milestone three. This is how I get paid. And by the way homeowners, contractors don't want it to take a year because that that contractor now has to pay mortgage for 12 months versus six, gas for 12 months versus six. Like contractors want to knock your project out. I don't think a lot of them are trying to intentionally delay. But the problem is, too, does a contractor grow some balls and say, hey, you know what, Mrs. Jones, I'm so sorry I priced it wrong. The price increased by 20, 30% when it came to the engineered trusses that you picked or the materials that you picked. I'm not going to cover those costs because of how the market is. Again, they need to have something in their contract that protects them from these increases of pricing, because if they don't, then the homeowners think, well, that's on you. And then here we go. You know, once the lawyers, the contractor has no money, he doesn't care. Homeowners had a limit in their head of 100,000. Now you're saying it's 150. They're like, F you like, I don't, I think this is B.S. You're a horrible person. These things happen all the time. It's just having a clear conversation about it before things move forward and then having a game plan, a 30-day game plan. Let's do this, 30 days, I'm going to do this unless you write me a check. I could show you proof that things are more expensive. Let's move forward. The thing is, contractors, instead of creating solutions, are pointing the finger. It was that, it was windows. It's like children. We have to stop that whole blaming thing. Like homeowners don't give a shit. Like homeowners don't care if your kid's sick, they don't care. Like, I want my house back. And the sooner contractors know, do every job like it's gonna go legal. Keep track of all your conversations. Stop having them over the phone. And if you have it over the phone, make sure you send the homeowner an email. Hey, great conversation about this business. I just want to reiterate. Boom, boom, boom. And then you agreed about this, this, this. Like, if you go about every job, like it's going to go legal, it's not because you know it's going to go bad. But at least you could go back to something and say, Hey, Mrs. Jones, you mentioned that you wanted this type of flooring, these windows. These windows are six months out, so we can't get your house roughed in until then. You agreed here in this email like you have to have that because if not, this is all that happens. Finger pointing. Alright, cool, call a lawyer. I should start a law firm because, like, everything is just going legal and the lawyers win. If you're a homeowner and you're right, you still lose if it goes legal because you're still paying someone to be right. Like, even on my show, I try to prevent that from happening now.

Todd Miller:

: 00:22:59

Yeah, absolutely right. And so often know what we always talk about is, you want to set expectations for the project and making sure those expectations are clear. And the more you can have that spelled out, I think ultimately the more comfortable everybody is. And it gives you a pathway when hiccups do occur, it gives you a clear pathway of how you're going to resolve the situation. So on the show, though, you have homeowners come to you who have gotten crosswise with their contractor. And I imagine typically when they come to you, they're pretty bummed, frazzled and upset by what's going on and not happy. So what typically is their frame of mind when they come to you? Do they not want to talk to that contractor ever again? Is that kind of the norm?

Rico Leon:

: 00:23:43

I mean, every situation is so different. The scale of work is so different and the contracts are very different. Like this is, it's like talking about relationships. There's so many factors and opinions, but at the end of the day, it's how much work have they done? What can we like? Because they'll say, Hey, we're at 80% and we'll look at and be like, This is 40%. Where is that 80 coming from? We don't know. So at least we had the expert eyes where we could tell the difference. So it's as simple as this homeowner had an agreement with Contractor A. How much money did you give Contractor A? What did he or she say they were going to do with this money? Okay. They said that they're going to get into at least the mechanical electrical plumbing side of it, paid in full. Okay, cool. Let's go walk the house and see what's a lie and see what's the truth. The contractor has their version, homeowner has their version. The thing is, there's a miscommunication because sometimes, like I speak both languages, I speak homeowner and I speak contractor. So what I like to do is always talk to the contractor first where it's like, what happened was that your subs like, did your subs screw up? Because if you like, let's say you do electrical and plumbing and the framing is bad, right? And you pay these guys halfway or in full. If the framing fails inspection, you got to take all that back out and then you got to repay the electrical and the plumbing guys to redo it. They're not going to come back for free because you're framing guy screwed up. As a GC, what do you do? Do you eat that cost because you put those people in place or do you have the money to cover it? And if you don't, guess what? They're telling the homeowner, pay for it. They don't have the insurance that properly cover bad work. Like and then it's a shit show. They're never going to come back because they don't. Like me, I was very lucky. We made a lot of money in 2020. I didn't buy a 2022 Corvette. I didn't buy a Harley-Davidson. You know, Harley, I didn't buy anything. I kept that money there because I know I need like get out of jail money, which is like, I don't want to get sued when something goes south because I knew something was going to go south. I had a general contractor steal like 100k from me, use it on a completely different project. Told me that he paid the subs. Subs are calling me like, We never got paid. And I was like, I paid this guy in full And they're like, Yeah, no, never got paid. We're going to pull liens on the property and I'm like, WTF? Like I was, I was like, This is B.S. So I had to write another check for 35k/45k to the subcontractors and it's like, give me the lien waivers or I don't give you a check. They signed the lien waivers. Now I know that they're going to finish the project, but guess what? That was my $45,000. Like that was money that I earned. That was for for my family, for Grace, for people on my production team, for all this. That's money that they stole from me. So, like, thank God I didn't buy anything. Like I had rainy day funds. And I think a lot of contractors don't like they're just don't have that rainy day fund. They're working very hard, we're all working hard. But like, how soon do you want to be like, have money to make sure that if things go south, you could cover it, move forward, take the loss, but at least you keep your reputation. And some contractors, they just they never have the money to fix it. So they're just like, Alright, whatever. Sue me. I have no money. You're going to get $0 out of it. And money management is the reason why so much is going south.

Seth Heckaman:

: 00:27:11

Yeah, it all goes back to those systems you talked about. We like to have that make the problem go away money. But, you know, businesses, they don't even know their margin in the first place and don't, whatever they get paid is whatever's left in the bank account after the end of the job. They never build it up. Starts from ground zero.

Rico Leon:

: 00:27:27

And who's teaching them and who's teaching them how to manage the money during the pandemic? You know what I mean? So that's why I have 800,000 people hitting me up right now. Asking me to fix a 2000 problem in New York, a $700,000 problem in Hawaii. Like, I mean, I'm getting blown up because this is happening everywhere, right? And I think obviously, I can't save everyone. But my new goal, with the show and just in general, just even with my podcast, my interviews at anything, it's aligning the contractors with the right process systems, know-hows, and protections and then aligning the homeowners with the right questions. How to vet, like failsafe milestones like also levels of responsibility that they have as well. I think once both sides are armed beautifully and things, like if things go slower but safer, I think that's better for everyone. So then you don't have all the gray hair, right? And again, like everyone wants a house done in like very little time. They want it for whatever amount of pricing. It's just you have to align those two things. You've got to stop selling, like stop selling the job, just hyper-educate both sides and then move forward once you agree upon a thing.

Todd Miller:

: 00:28:37

You know, I love that because both parties, both the property owner and the contractor, have the same goal. Everyone wants to have a successful project at home. And so, you know, creating that pathway so that it's successful for both of them makes a lot of sense. I loved, I applaud you, though, you know, back in 2020 and your business growing like crazy, bringing in lots of profit and you had the self-discipline to know that, Hey, I got to save this. And that's fantastic. And I think that's something that a lot of contractors are, let me say, I have learned even from business ownership, it's all about self-discipline and making good decisions. You can go out there and chase every shiny new object you want and you're gonna drive yourself right into bankruptcy.

Rico Leon:

: 00:29:20

Yup. You're going to eventually have to sell it to take care of a problem like that. Just get the whole purchasing part of it and just leave it in the bank for a little bit.

Todd Miller:

: 00:29:29

So you are also involved in real estate development and also consulting. Can you tell us a little bit about that?

Rico Leon:

: 00:29:36

Yes, so I do residential real estate, commercial real estate. I have a team, we do lending. I mean, everything ties in. This is an ecosystem that I'm in. In fact, I was referring, not joking, hundreds of millions of dollars in construction, real estate, you name it. And even in commercial roofing and I never got paid. Like story of everyone's life, right? I gave that guy a $1,000,000 job. He never paid me. Well, I was referring a $35 million commercial property in Puerto Rico, never got paid. $65 million B-level commercial property up north of Fort Collins, never got paid. Tens and tens and tens of millions in residential, never got paid. Tens and tens and tens of millions in commercial roofing, never got paid. So there's a reason why I have a license. There's a reason why I have a brokerage, my own consulting firm, my own roofing company. It's because that circle has to be small, like people love, love it when you give them work, but then they don't want to give you that check. So that's why I own all of my own companies. But on the development side, where I work with a lot of hedge fund companies and investors is very interesting. I have a lot of relationships with like prefab companies all over the nation that are doing things are insanely innovative and I won't like mention too much, but I came up with two different ideas about two years back that these companies implemented. One was to have pre-engineered, mechanical, electrical, plumbing, pre-boxed. So like there's places that send the house shell, but none of the finishes. There's some people that do it all. There's some people that just, you know, just a shell, not even anything else. Some people are just foundation vertical, horizontal. I started reaching out to these prefab companies years ago and I said, look, the trades are going to start charging so much money, rightfully so professionals. But like with for materials, that's a cost that we cut down because they wanted me to do like 300 homes in Lakewood. I had like 1000 home deal in Dallas they wanted me to do and I wouldn't take it on. I would not take it on only because I know that type of liability. It's not worth the millions of dollars that I would have made until systems and processes are in place. So I told them I was like, if you get the mechanic electrical plumbing, pre-engineered and sent out, that would save us so much time, so much liability. We can start knocking out properties quick and they're doing it now. Another thing that I told them is like, we're getting dumber. We want things to be easier, right? So I said, Hey, like there's a shell that they send out and every piece of wood has a barcode on it. So like when you scan, like if you just get like lost in a build, you scan the barcode and there's an app that shows you exactly how to install it, how long it should take you according to the code of where you are building it, whether it's Denver, whether it's California, whether it's Utah, Florida. So like they're creating systems to make things plug and play. That's what I like. I like systems, I like, I'd rather train ten GCs and 100 tradesmen and get 2% of a multi-hundred million dollar deal, then make 7 to 10% physically do it myself, take on the liability and do that same thing. So I like the processing side more, but they're doing insane stuff. Like I can't mention names, but like I've been in insane gangster rooms with people like these hedge funds and you probably know they're the big guys and we're in this round table and they're like manipulating the politics in South Africa so that they can monopolize the quarries and then use the shipyards off of South Africa that are purchased with a shell corporation. So they could save themselves like $100 million a quarter in materials. I mean, this is like gangster, badass stuff that they're doing. And they were doing that long, a long, long time ago. And I love that. I think that's dope, I think that's cool. Like, I just I love systems, processes and things that like, will change and help America in general. Because a lot of people are stressing there's so much heartache because of things going south, because there's just no process. It's just like, I like this guy's been doing it 30 years, America, like I hope he does well and it's just like on a prayer, right? So I think the industry's been ripe for a change. I don't think there's been enough innovation, but now people are starting to implement that innovation. I think it's going to be for the better.

Todd Miller:

: 00:34:01

Very good. Well, I want to switch gears a little bit and ask you a little bit different question. So you are the only Latino host on an HGTV program, and I think that's pretty cool, especially considering that Latinos are such an active and vibrant part of the construction industry. Can you reflect on that a bit and what that means to you to have that honor and that distinction?

Rico Leon:

: 00:34:22

Yeah, you know, I saw that article and I was like, there's no way that like, I'm the only one and I know its' gonna grow. I know there's more people, more Latino hosts coming for sure. But yeah, when I saw that article, I was just shocked. But, you know, obviously, like it's an honor for someone to write that article. And I'm definitely going to represent the Latino people very well. But yeah, I mean, it's again, like being able to speak Spanish fluently helps in construction, for sure. But like, I don't know how much you guys talk about insurance companies, but insurance companies take advantage of people that English isn't their first language. This happens all the time, so it's three times more work for me to help people that are Spanish-speaking because they don't understand the language. Right? So I'm hoping with the show and just the culture in general for more and more people to help that culture go through these hardships because it is ten times harder. Like people do take advantage of people that don't speak English as their primary. So it is one of my biggest whys, which hopefully throughout the years it'll grow to a point where it's not an issue. But yeah, it's definitely an honor to have that label. I don't think that label is going to last very long. I think there's definitely a shift and things and you'll see more Latino hosts out there.

Todd Miller:

: 00:35:42

Very cool. So we think that a lot of the members of our audience here on Construction Disruption are kind of getting started out in their careers. You know, it might be design, might be construction, could be remodeling. What advice would you have for someone who is just getting started in this industry?

Rico Leon:

: 00:35:58

Best advice would be protect yourself, like have a strong work authorization. Like I started my company by selling everything that I owned. I had like a PlayStation, my motorcycle and all that kind of stuff. I started my website was like, horrible, you know what I mean? But that's where you start, right?

Todd Miller:

: 00:36:15

Sure.

Rico Leon:

: 00:36:15

I would just always take on less, like take on less work, hyper-focus on closing those deals so you can have happy customers. Like, a happy customer is going to spread the word to two, three, four or five people. But an unhappy customer is going to spread that word to 100 people and that compounds. So if you do math, you're going to realize it's better to hyper-focus at the beginning on your reputation, like get those five-star reviews, get a nice business card, get out there, and don't always ask for the business. Like learn how to help other people first versus gimme, gimme, gimme, gimme, gimme, start to just take care people naturally. Like work a 9 to 5, pay your bills. Every hour that you have after that, network. Build a good reputation, start connecting people. Don't ask for anything in return. And when you build that reputation, it's going to come back to you a thousand times. That's that's how I was able to just blow up like crazy because my first couple of years out here, I would just consult for free. Like I would just help my friends and insurance and real estate and their marketing for free. And then what happens? Like, Hey, I do new construction, I got 25 people, and then without selling all those jobs, I'd make sure that we met the person, that the job was right. I said no to a lot of work. And I think that's another thing too. Like, not all money is good money. Make sure the people you're doing the work for understand the process, the system, and how it's going to look before you go. Cause there's nightmare homeowners as well. I've dealt with many, I've dealt with homeowners that build their house. It's gorgeous, like the most, it's beautiful. There's like a little scratch in the corner. They're like, Well, we're going to hold on to $85,000 because of that. I'm like, you know, like, that's not happening. So, like, be careful, like who you do work for. Build a good reputation, and then it'll compound as you move forward.

Todd Miller:

: 00:38:04

So it's obvious that, you know, you are staying incredibly busy and you are doing a whole lot out there. And it's obvious that you are driven by your passions. I mean, someone isn't going to do everything that you're doing unless they feel very passionately about it. I'm kind of curious as you look, big picture, what impact would you like your career to have on the construction industry?

Rico Leon:

: 00:38:26

Great question. Yeah, my why completely changed, I think, during the show because a lot of this stuff is preventable and not all contractors are bad. You know what I mean? Like, I've seen really good guys get taken advantage of as well, and it's not their fault, but yet they didn't have the proper contract system in place. So my why is to just hyper-educate contractors for a bunch of things that it's never taught. Like these things are not taught when you start a business like, Hey, by the way, this is what you should do when it comes to taxes. This is how you make sure that you have a subcontractor agreement. So then insurances are in place. You're not spending $1,000,000 on insurance and there's so many things that they should learn and know, day one that could prevent so much heartache all over the nation. And the more people learn about it, the better everyone's going to be as a whole, including the homeowners. Like homeowners need to know the good, bad, ugly and what their responsibilities are as well, and how to manage and work with a contractor than micromanage a contractor like, Oh, you're an employee of mine now, so do this, this, this, this is to my becking. And I think if we could change homeowners mindsets on how to be with contractors and contractors how to be with homeowners, everything will move smoothly. And my why is I'm going to be that person that helps both sides out because I've been on both sides, you know what I mean? So I've had homeowners that were nightmare homeowners and I've had nightmare contractors steal money from me. So instead of just like pointing the finger, it's like, you know what? I'm going to take every lesson I've learned and make sure everyone knows about it.

Todd Miller:

: 00:40:05

Well, that's awesome. And I'll say this to anyone out there in our audience who has a construction business or maybe getting started, you got to listen to Rico and his advice here is absolutely spot on. So this is a guy for you to follow and try to emulate as you build your own business as well. Well, Rico, thanks so much. We really are close to wrapping up the business end of things here. Really enjoyed this and just incredibly insightful. Is there anything we haven't covered today that you'd like to share with our audience?

Rico Leon:

: 00:40:37

I mean, I have so much to cover. It would be a ten-hour podcast, right? We might have to do another segment down the road. I think one of the biggest things is the insurance side. Like in the future, let's definitely cover the good, bad, ugly of insurance and how homeowner's in contract because the thing is now you got mortgage company, insurance company, a homeowner has never gone through a claim and then a contractor and then like five other contractors that got brought in out of nowhere. So that's a mess. Like, that's never smooth. I think there's only been two jobs that, like the check was written of what we wanted. And then it was amazing. And the house went up so fast. I'm pretty sure those adjusters don't have jobs anymore. So the processes, the systems and the paperwork and the the language that I have is so amazing that homeowners and contractors could use to shorten that length of time. All the ways that they tried to delay it, I cut that thing in half. So I would say in the future, if we do have that conversation, I'll give contractors some beautiful language to help them have a smoother, faster insurance claim processes. Again, that helps the homeowner, which at the end of the day, that's what it's about. It's like giving the home like we're going to get paid to take care of the homeowner, and the homeowner is going to have a beautiful product at the end. That happens when claim processes go faster. If it goes faster than the contractor or the restoration company gets better margins and they get better margins, then they pay better contractors and subcontractors and it goes smoother. It's when you start dipping into that profit margin that they're just like, Oh, let's just get like cheaper floors so we could make some money. That's not okay. That's where it goes downhill. So I want maybe the next time we talk, let's go down that rabbit hole, which is a big one.

Todd Miller:

: 00:42:26

Let's do that. I'd love to do that. And like I mentioned, we have an attorney coming on the show here in a few weeks to talk about that insurance. So it'd be great, to, we'll do that episode, I'll send it to you to listen to, and then we'll do a follow up episode after that. I think it'll work well.

Rico Leon:

: 00:42:42

Oh, I would love that. Yeah, thank you guys so much for having me. This is awesome.

Todd Miller:

: 00:42:45

Well, I have to tell you, before we close out, I'd like to ask if you'd like to participate in something we call our rapid fire questions. So, Rico, these are seven questions. Some may be serious, some may be silly. All you got to do is give a quick answer. And our audience needs to understand if Rico agrees, he doesn't have a clue what we're going to ask him so are you up the challenge of rapid fire?

Rico Leon:

: 00:43:05

Yeah, I don't. Go for it.

Todd Miller:

: 00:43:07

Okay, great, great. Well, we will alternate asking. Seth, I'll let you go first.

Seth Heckaman:

: 00:43:12

Great. Rapid fire question number one. If you had to eat a crayon, what color would you choose?

Rico Leon:

: 00:43:20

I would choose a white crayon because any other color is not going to look good.

Todd Miller:

: 00:43:27

I gotcha. Okay, question two. What would you like to some day now, way in the future, someday be remembered for?

Rico Leon:

: 00:43:36

I would love to be remembered for specifically this for changing the game. I mean, you had the word disruption in your podcast. To really disrupt is to hyper-educate. So, man, before I die, if I could educate homeowners and contractors to make their processes smoother and better, that's the big impact I would like.

Todd Miller:

: 00:43:54

Awesome.

Seth Heckaman:

: 00:43:55

Awesome. Question number three, name a four letter word that starts with the letter B as in Boy.

Rico Leon:

: 00:44:03

Brat.

Todd Miller:

: 00:44:06

Brat and Barn are the only ones I can think of. Okay, so I had to ask you this question. So what really motivates you the most? Is it this passion to change things, or is there something else that really moves you?

Rico Leon:

: 00:44:22

No, it's anger. Anger is the reason for all of this. Anger is the reason. That's when I've gotten screwed out of millions of dollars. It's when homeowners get screwed from contractors or insurance companies. It's anger. Like anger is the main motivator and things that don't have to happen, that happens. So that's my fuel. Like, yeah, I have the ability to change a lot. But what fuels me is the way I was treated for doing the right thing. I was treated insanely unfairly because I did things with integrity. I don't think that's okay. So the anger is really the main reason why I started all my companies. It's just because I want to be your competitor now. Like I'm going to show you how to do it right and do things with integrity. And now, now you have to compete against me. Good luck, like good luck. So it's anger versus anything else.

Todd Miller:

: 00:45:11

Oh, I love that, awesome.

Seth Heckaman:

: 00:45:13

There you go. Yeah, Construction Justice Warrior or something like that. That can be your byline.

Rico Leon:

: 00:45:18

The spinoff show for sure.

Seth Heckaman:

: 00:45:20

Next question. You find yourself in the middle of a zombie apocalypse. Who do you want on your team?

Rico Leon:

: 00:45:29

Who do I want on my team? So it would be number one would be Grace Kennedy. So I have phenomenal business partners, but Grace Kennedy has been my right hand since since the last like five years. So if I bring construction and restoration insurance, real estate, she's always been my most trusted right hand. So if I'm going to go to war. Plus, we own a lot of guns. And she's really good. She's really good with a shotgun because we like to go clay shooting. So she would be the first person I call.

Todd Miller:

: 00:46:00

Good answer.

Seth Heckaman:

: 00:46:00

There you go, awesome.

Todd Miller:

: 00:46:01

Question number six. If you could instantly magically learn one skill, what would that skill be?

Rico Leon:

: 00:46:08

Wow. Instantly, magically learn one skill. It would be, whew that's a good one. I would say patience. I don't have any. So it's, that's one thing I'm trying to be better at. My mom's like, you need to be more patient. I was like, I don't have time for that. So that would be one thing. I would definitely try to to be better with for sure, because I come from East Coast. We want everything done yesterday, and I took that East Coast work ethic, I brought it to Denver. That's why I've been taking over fairly quickly because I work every weekend. Like working is my blood. I just don't have the patience. People are like, Hey be patient. It'll come. I'm like, No, I want it now.

Todd Miller:

: 00:46:48

I was going to say, that work ethic and that impatience has got to set most Denver folks on their ears, that's for sure.

Rico Leon:

: 00:46:55

Yeah. Yeah, for sure.

Seth Heckaman:

: 00:46:56

Alright, last question. Are you a morning person or a night owl?

Rico Leon:

: 00:47:02

I'm both. I would say I'm more of a morning person. I like getting things knocked off the list sooner. It just kind of sets the rest of the day. I work out a lot, I have a healthy lifestyle. I do like IVs a lot and ADIB. So I'm like vitamin D, I do like a hundred thousand BUs of that. Like, I'm very, very evenly keeled. So I have phenomenal energy throughout the whole entire day. I don't crash, and I think it's just because of that healthy lifestyle. I love mornings more and then nights it's like when I can like watch Netflix, relax. That's when I like to shut it down.

Todd Miller:

: 00:47:35

Also, good answer. This has been great, and I'm pleased to tell our audience that we were all successful at our challenge words. Seth, you had the word?

Seth Heckaman:

: 00:47:46

Sextillion.

Todd Miller:

: 00:47:47

You worked it in there smoothly.

Rico Leon:

: 00:47:50

So that was good. I didn't even react,I was like, Alright, that's cool.

Todd Miller:

: 00:47:55

Rico, you had?

Rico Leon:

: 00:47:56

I had hullabaloo.

Todd Miller:

: 00:47:58

Hullabaloo, yep.

Rico Leon:

: 00:47:59

Which is a word I've never used. So I tried to get in there.

Todd Miller:

: 00:48:03

You worked it in well. I had the word bumfuzzle. I like that word. That's actually a word that I do use on occasion.

Rico Leon:

: 00:48:11

That's funny. Very funny.

Todd Miller:

: 00:48:16

Hey, this has been great. What a pleasure this has been, I look forward to next time. But for folks who would like to get in touch with you or want to follow things, I know they can watch the show at 9 p.m. Eastern on HGTV. And last week's show was the A-frame episode where the contractor said he was 80% done and all he had done was gut the place and make a mess and live there for a while.

Rico Leon:

: 00:48:41

Correct, yeah. He tried squatting in there while building it.

Seth Heckaman:

: 00:48:44

Oh gosh.

Todd Miller:

: 00:48:47

I encourage everyone to watch the show. But how can folks learn more or get in touch with you or whatever might work for you?

Rico Leon:

: 00:48:54

Yeah, a lot of the advice I'm going to be putting out will be mainly on my Instagram, which you could find me just typing in Rico to the Rescue. And same thing, just if you look up my name, Rico Leon, I have on my main website where it shows you all the businesses that I own consulting, all that kind of stuff. So if you're a contractor and like want to know all the paperwork and the process and the systems and the sales, like how I did so much in such a little time, I do consulting for contractors. I give on the paperwork, I do that kind of stuff. I train those people so they'd be more dialed in. Same thing with the real estate side. So I'm in so many businesses, but if you just go to like ricoleon.com, it kind of covers everything.

Todd Miller:

: 00:49:33

Awesome. Well, thank you so much for being our guest here today. This has been a pleasure, thank you.

Rico Leon:

: 00:49:38

Of course, thanks for having me.

Rico Leon:

: 00:49:40

Todd Miller: And I'd like to thank our audience, too, for tuning in to this episode of Construction Disruption with Rico Leon of the new HGTV show Rico to the Rescue, airing on Saturday evenings. So I encourage you to please watch for future episodes of our podcast. We always are blessed with amazing guests. Don't forget to leave a review on Apple Podcasts or YouTube. Until the next time we're together though, think about changing the world for someone. Make them smile, encourage them. Simple things, but yet powerful things that we can all do. In the meanwhile, God bless and take care. This is Isaiah Industries signing off until the next episode of Construction Disruption.

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