Real Estate Rookie Podcast

Rookie Podcast 47: 0 to 7 Deals in a Year Using Other People’s Money with Andres Bernal

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Andres Bernal came to America to play tennis with only $500 in his pocket. He thought that professional tennis is what his life would end up revolving around. After playing for 2 years and being burnt out from work, Andres decided to take some advice from his family members: start buying real estate.

After buying his primary residence, he started looking into multi-family homes that could make him some cash flow each month. He later put down 3.5% with an FHA loan to purchase a triplex, and rented out the bottom 2 units while he lived in the upper 3rd unit. He sold his condo, had some cash, and was ready to start investing more.

Andres had some pretty creative ways of getting funding for his real estate deals. He started calling every contact in his phone, asking if they were interested in real estate, and if they were, he packaged up a deal for them. The trade? He does the work and the analysis, they do the financing.

These types of partnerships have worked well for Andres and they can work for other rookies as well. His advice is to test the partnership, build the trust, and use the BiggerPockets Rental Property Calculator! The rest will fall into place.

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Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie Show number 47.

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Andres:
You have to build that trust. You cannot ask someone for money, if you don’t have that trust. You have to build and nurture that relationship. And you have to create that.

Ashley:
My name is Ashley Kehr. And I am here with my co-host, Tony Robinson, who is about to jet off on his honeymoon. This is technically your second honeymoon.

Tony:
Just a little bit. Because we had the wedding in Cabo and then we came back home and now we’re going back to Cancun for the honeymoon. So we’re experiencing the best that Mexico has to offer right now. We’re excited.

Ashley:
Yeah, I was so excited for you. I’m stuck here in the freezing cold. We had snow the other day and now we have rain and you’re off to Mexico.

Tony:
Yeah. Well the crazy part is it’s going to be raining almost the entire time that we’re there. And we specifically chose Mexico because this is supposed to be the best time of year for weather, but there’s some storm that’s moving through. So who knows how good it’s going to be when we actually get down there? We might’ve been better off going to Buffalo. So who knows?

Ashley:
Good to see you.

Tony:
Yeah. Awesome. Well, I’m excited for today’s guest. We got a really good story today. We’ve got Andres Bernal, who’s got this just really inspiring motivational story about how he came from the Dominican. Came here to America with $500 in his pocket with his dreams of being a professional tennis player. And when that didn’t work out, he moved to real estate investing. So a lot of really good nuggets that listeners are going to get from his episode today.

Ashley:
Yeah. Andres touches on a lot of stuff that me and Tony hop on too. It doesn’t hurt to ask. Get a job as a maintenance person to get yourself into real estate. There’s so many things that we talk about that Tony and I are really passionate about. But he just does such a great job of explaining different things, including how to set up a partnership structure and how he actually finds a partner.
He’s a big believer in saving his own money and not putting his own money into the deals. So he still has those reserves, but he’s going out and finding money or finding partners who will put all of that money in. So I think you guys will find great value, especially listening into that partnership piece.

Tony:
Andres, welcome to the show, brother. We are super excited to have you on, man. You’ve got a really inspiring motivational story that I’m excited to dive into, man. But thank you for joining us today, man. And welcome to the show.

Andres:
Thank you. Thank you guys for having me. Very excited.

Tony:
So before we dive inside the meat and potatoes of everything, Andres, tell us about you. How’d you get to where you are today? What brought you to real estate investing?

Andres:
So growing up, I grew up in Dominican Republic. I had my godfather, he was in construction. And for some reason he got wealthy at one point and that stuck in my mind. Then I went to college in Puerto Rico. I play tennis. So I got a full ride to play in Puerto Rico and it was a blessing. Nothing out of my pocket. I got actually three degrees and then came to the US with the hope of playing professional tennis.
And at the time, I just had someone that was going to help me out to play professional tennis, but that was an option. Then that person… I land here in Connecticut with literally maybe $500 in my pocket, a year visa. And then I came here, played professional tennis for almost two years. And then suddenly, I started working and I started understanding the United States’ system about working 9:00 to 5:00 and working a lot.
And at one point, I was working 10 to 12 hours and I burned out. So I google, how can I not work that much and make some money? So I came across real estate because my godfather’s like, “If he’s doing it, then I can do it.” And suddenly I start digging through real estate and it’s been a ride. Yeah.

Ashley:
So what took you to you’re jumping into real estate? You googled it, you did that. What happens next? Do you analyze for three years? Do you buy your first property? What happened after that?

Andres:
So after that I bought… So I was renting my place and then I decided to buy my own place. It was a small condo. And then that’s when I started digging in real estate. I said, “Well, if I can just rent this out and then a couple of years sell it, I’m pretty sure it will appreciate.” Then while I was living in there, I decided to go full on real estate. I said to myself, “I’m going to buy one or two deals every year.”
So after the condo, I bought a three family with a FHA loan. And that is the sweetest spot. And I think everybody should start that way. I think every new investor should start that way. I bought a property that is around up to 210 with three and a half percent down. And I roll some closing costs too. I mean it was a no-brainer for me at that time because it was not too much money.
So I just encourage people to stop thinking that you have to put 20% for a property. Three and a half percent is free money for me.

Tony:
So I just want to make sure we got the story right. So you bought a condo first as your primary residence. And then after that, you transitioned into a three unit.

Andres:
Yes.

Tony:
Is that correct? So walk us through that thought process. Because you have this condo. It’s just you, you’re you live in there. What was the switch that went off that said, “Okay, I’m not going to go out and buy another condo. I’m going to go out and buy something three times as big and get a triplex.” What was that thought process?

Andres:
Well, the first thought was there’s a… A lot of people are saying, “Well, why not just live in one unit and rent the other one?” I think that’s almost like a religion at this time. A lot of people talk about that. And also I was running the numbers of if I rent… It was already ranted. So it was a three family. First and second floor was section eight and I was going to live in the third floor.
The thinking process, I think it was just I can live here and the worst case scenario, my mortgage I can afford the mortgage. Because it was at that time, $1,000, 1,200, something like that. So I can afford it. So why not? If I’m paying the same thing for my condo here, why not buy a three family?

Ashley:
With that worst case scenario, a lot of people don’t get started because of fear and they don’t take action. Well, you looked at what your worst case scenario is and you knew how to solve that problem. So worst case scenario, you had zero tenants and you had to pay the mortgage yourself. Well, you set a safety net. You’re like, “Well, I can afford that. I’m going to buy a property where I can afford the mortgage on my own if I have to pay it.”
So I think that's a great lesson right there is whatever you're afraid of, find ways to get around that if that does happen. Put those safety nets in place. So tell us a little bit about handling the tenants. Because now you're all of a sudden a landlord, the tenants you inherited them. What was that like?

Andres:
So the first floor it was a little awkward because now the landlord’s going to live in the unit. So I moved in. At the first I said, “I’m just going to live here for a year or two without not knowing…” I actually didn’t know. But I was listening to BiggerPockets. And I was educating myself a little bit about listening to Brandon about how to treat the tenants and all that.
And I think that it was very awkward. There’s a lot of things that tenants do, smoking and all that. And I was not… I didn’t like that. So I had a little bit of a problem with the second floor tenant. But we made an agreement and he moved out maybe two or three months after that. So I think it was a smooth process. Actually, the first floor tenant’s still there. That was in 2016.
And he’s great. I think that for all the new investors… A lot of investors, especially at this time with COVID, they complain about tenants not paying rent. But I also think about, how are you treating your tenants? Because, I have maybe 10, 12 tenants right now and they all pay in time and they all have suffered from COVID. But they know also that if something it’s broken and needs to be fixed, I’ll fix it right away.
And I think that I establish that relationship with them. They pay rent two or three days before it’s due every time. And I think every investor should also not thinking about, “The evictions moratorium, it’s postponed to February, March, whatever.” You have to think, “Okay, that’s not good.” But also you have to think about how do you treat your tenants as well.

Tony:
So it sounds like you learned a lot Andres on this first property in terms of dealing with tenants. And I think that’s what scares a lot of people, right? That’s what holds them back like Ashley alluded to. You briefly mentioned this, but I want to go back to it. You said that you had a tenant who was a problem tenant, but you made an agreement with them, for them to leave.
And that’s every landlord’s dream is that they have a bad tenant and they find a way to peacefully get them out. So walk us through. What was the issue that you were having with that tenant? And then what was the deal that you worked out to get them to actually leave peacefully?

Andres:
Yeah. So I said to him, “Listen, I cannot stand smoke. I’m an athlete.” At the time I was playing professional tennis and I was traveling a lot. But I cannot be around people who smoke. So he said, “Well, I’m not smoking.” And I can smell it from my unit. “I’m not that far from you buddy.” And then I think I said it repeatedly, respectfully. And he at one point said, “Okay, I’m just going to move out.”
I didn’t even have to do cash for keys or anything like that. I think he was respectfully saying, “This is a problem and I’m going to live here. And whether you like it or not, I’m the new landlord.” So everything was good. And I helped him actually to find a place. That was another thing. He was section eight, so I talked to the agency. And say, “Let’s just find a new place.” And he found a new place and he moved out. So everything work pretty well.

Tony:
That’s a really smart strategy to help the problem tenant find somewhere else to live. “We’re not a good fit, but here’s a place that will happily accept you.” I like that strategy. Now, what advice Andres would you have for someone who’s a new investor that’s going to be a first-time landlord? What are some of the lessons you learned on that threeplex, that you feel have helped you scale that you wish you would’ve known when you first started?

Andres:
The first and only thing I will say is solve a problem. You have to solve a problem. You might say, “Cash for keys is when you give money and then they give you the keys.” So sometimes I have give up to 1,000. But I think it’s just, you have to solve the problem. At one point, I have to pay a U-Haul for that person. It was two to $300, but that allowed me to get the tenant out, which it was problematic at first place.
Also, I found they needed people to move. I found one of my contractors that say, “Hey, I’ll pay you by the day. Just help these people to move.” And just try to solve the problem. I think that’s the only and I think that’s most important thing. And even if you don’t like a decision the beginning. Because again, every new landlord doesn’t have $1,000 to give a cash for keys or 500 or 600.
You have to find what do they need? If they need people to… Sometimes they need just a U-Haul. So what is $200, $300 for U-Haul so they can move? Sometimes they need a security deposit for another place. Well, in that case, you have to weigh what is best for you? So if $1,000 is what they need, I rather lose $1,000 right now than now with eviction moratorium, nine months worth of rent.
I mean, that’s a no-brainer for me. And if you don’t have that $1,000, go with credit card. I don’t advice that a lot, but ask your fiance or your girlfriend or your boyfriend or your mom or dad. You have to ask someone for that.

Ashley:
And then you added into your business as a loan payable and you pay them back out of your business when you get a new tenant in there and pay it out of the rent.

Andres:
Yeah. Done. Smart.

Ashley:
Okay. So talking about money, there’s something I want to ask about when you first came to the US. Now you had mentioned that you watched your godfather build wealth and everything like that. What was that like when you came here and you started out? Are you a huge tennis player that you had millions of dollars to buy these first properties? How did you come up with your payments for my down payments?

Andres:
For my down payments. So I didn’t start investing until I finished my professional career. I actually lost maybe $18,000 playing professional tennis. Because the first year of professional tennis is very hard and they don’t pay you well. So I travel all around the world, but I didn’t get paid that much. So then I transitioned to a professional tennis instructor.
And that’s where I start making some money and making some reserves. And I save a lot of money. I remember at one point eating grilled cheese for dinner just to save money and being a little frugal at the beginning. And I remember having maybe $10,000 and that’s exactly give or take what was the down payment for the three family that I just bought.

Ashley:
And to touch up on what you said, was you lived below your means to save that money.

Andres:
Yup, I did.

Ashley:
And then you made that a priority to you. Yeah.

Andres:
Yeah, yeah. I didn’t buy anything expensive, anything… I did some sacrifices, but it’s all so worth it. And I feel like everybody should do. If you don’t make a lot of money, you should make some sacrifices, some adjustments.

Ashley:
Yeah. That’s just something I wanted to touch on because I think it’s important that people know that you don’t have to come from wealth or have a ton of money, have a high paying job to invest in real estate. But also if you do have those things, use that money to invest because there’s so many people that they say, “Well, they inherited money. They won the lottery, they did this. And they started investing in real estate. They had it set up.”
Yeah. But think about how many other people have that kind of wealth behind them and they don't invest in real estate. So I think no matter what your background is, if you're investing in real estate and you get started, that is great. Because this is still such a small community of smaller investors getting started. And I just think it's so great. And just congratulations on your [crosstalk 00:14:58].

Andres:
Thank you. Thank you.

Ashley:
Going from playing tennis to getting into real estate investing. But what happens next after the triplex?

Andres:
So after the triplex, I bought a… At that time I was saying, “You know what? I want to scale and I want to scale quickly, but I don’t want to use my money.” So I got to get creative. I got to use… My father is very… He’s a salesperson. He has his own company in DR. He’s telling me all this technique to talk to people. And I’m like, “You know what? I’m going to just find people that have money in no time. And I’m just going to scale. No matter what, I’m just going to scale.”
So at that time I moved to another tennis club. And the owner said, “I have some money.” I’m like, “Great. I have time and I have the knowledge. This is my portfolio. This is what I’ve done. I did a house sale and I did this. So why don’t you just… Let’s just do it.” And I bought a single family for 144. I think this was a very good deal. I bought it for 144, but I also… We got also a piece of land because I asked.
And a lot of people are afraid of asking. But because I ask we're making maybe $50,000. We'll sell the land. So I bought it for 144,000. We changed the septic and they put the money. I put the knowledge. So I'm still managing that property today. We rented to student rentals. And right now it's rented to 2,600. And the beauty of this is we don't pay any utilities at all. So we just have a resource for CapEx, maintenance, vacancy. But it's cash flowing about 500 for each. So it's cash flowing around 1,500 total.

Tony:
So that’s really cool, Andres. Especially new investor’s goal is to partner with someone that has the capital. There’s a lot of folks that have the knowledge, they have the desire, but they don’t have the capital. I guess a couple of questions. First, where did you find these capital partners? And how did you structure this in a way that made sense for both you and them?

Andres:
So you have to talk to a lot of people. If you’re an introvert and you don’t like to talk to people, I will say go to Facebook. The first thing I will say actually it will be, make a list of… Just take your phone right now and make a list of all your contacts. And I bet anything that you will find at least one or two people that have money that maybe or maybe not necessarily invest in… Know about real estate, but they have capital.
And that’s what I did. I took my phone. I found maybe 15 people and I ring, ring, ring. “Hey, how are you? Do you invest in real estate?” “Yes, no. Okay.” “This doesn’t work? Okay. No problem.” Ring, ring, ring. And then just keep calling. And I think everything it’s… If you call 15 people, I’m pretty sure you’ll find one or two.

Tony:
Yeah. Andres, I want to pause on that. Because it’s a really good concept, but I want to dive a little bit deeper. So when you’re calling these folks, what is it that you’re actually saying? Are you saying, “Hey, I have this deal. Are you interested?” I guess just what’s the pitch to them? How are you putting that together?

Andres:
Yeah. So first of all, if I haven’t seen them in a long time I will say, “Hey, how are you?” And all of that. I’m not going to go straight to business. And then I will say, “Hey, I invest in real estate. Will you be interested in investing in real estate?” And if that person says, “No,” then I don’t push. If that person says, “Yes.” So I said, “Okay, I found these type of deals. We can buy a three family or a two family. And these are all the numbers.”
The one thing that I have as advantage was a BP calculator, which is amazing. Because you can print that report and I send them to that. And then I feel like the eyes of the investors, when they see everything organized and everything, “Oh my God. This person knows what he’s doing.” So I think that’s one of my advantage. I presented that and they say that. But before that, you have to build that trust.
You cannot ask someone for money if you don’t have that trust. You have to build and nurture that relationship. And you have to create value. At that time, I did have money but they have more money than me and they want to put it to work. So I’m like, “Let’s just do it.” They found a whole project, they found the renovations and I found the deal. And I found very good deal because of the piece of land that we actually got next to it.

Ashley:
How did you structure that partnership? And was it you that said, “Let’s do it this way?” Or did they give you an offer or did you have to negotiate a little bit? What does the actual structure look like?

Andres:
So we are a third partners. We create an LLC. We bought the house cash and we are splitting all the profits three ways. So at the end we put $50,000 each. So they said, "We're going to lend you the money at no interest and at no timeframe. So you can pay us back whenever you want. If you do good in the tennis business, you can pay us back or we can refinance the property." So I'm like again, I don't want to put any money of my own savings.
So I have to buy a property where after we purchase it and we fixed it up and we rented out like a… It was a BRRRR strategy, but I didn't know at that time. So at the time I'm like, "Okay, if it appraise for $200,000, then we can pull out 150." And that way I pay them back and I didn't use none of my money. And now I just created 500 of cashflow per month. So that's pretty much what was in.

Ashley:
Yeah. That’s great. And then for your partnership agreement, is this something that is going to continue on? You’re going to keep doing deals with them, or this was a one and done thing?

Andres:
This is going to keep building where actually I’m managing a project for them. Then we can talk about that later if you guys want. But I want to keep doing that. I will highly recommend for people when you’re doing partnership, you test the character first. Because everybody is good when everything goes well, but what about when something happens with the property? So I think everybody should say, “Okay, if something goes wrong, how this person’s going to react?”
Do an operating agreement, which does… We did that. We pay some money for the lawyer, but it’s all worth it because it sets everything clear. They are the capital partners, I’m the manager. I make the decisions. If something goes wrong more than $10,000, we can all talk about it. But everything is set in stone just in case something happens.

Tony:
One thing I want to comment on really quick, Andres. Just going back to something you mentioned earlier. You reached out to a bunch of folks and you said that if you hadn’t talked to them in a while, you warmed them up a little bit. But Ashley and I have talked about this before is that people invest with folks that they know they like, and they trust. And there’s a lot of different ways to build that know, like, and trust.
It could be that you have a preexisting relationship, maybe they’re a family friend. But also things like your Instagram, your Facebook, just posting and being active on there and letting people know what you’re up to. I was actually just talking with another investor yesterday and he’s got a YouTube channel where he talks about his real estate investing. And at the end of one of his videos, he said, “Hey, if you’re interested in working with me, reach out.”
And he had a bunch of people reach out to him and willing to invest in his deal. So just be vocal, be transparent about what you’re doing. And you’d be surprised at how many people that are listening and paying attention.

Andres:
That’s a better way. What you just said Tony, is the best way to know people that invest in real estate. Actually, that has brought more partners to me. And many people that I know they couldn’t believe at the beginning when I started investing and now they’re believing. And now they’re saying, “I want to invest with you.” And other new investors says, “Well, I don’t have any properties.” But you don’t have to.
What about if you met with the realtor and take a selfie and say, “Hey, meeting with the realtor today.” Or say, “I’m looking at a house right now. I’m looking at a house.” Or let’s say something broke in your own house. “I’m fixing this. I’m a DUI landlord.” Or like, “I know how to fix this.” Things like that. You don’t have to have a property to show the world that you actually invest in real estate, or you’re about to start investing in real estate.
Social media has changed my life. And I don’t actually post that much. That’s one of my goals in 2021. But the little that I post, it has give me so much good results. And a lot of people… I actually have now half a million to invest, but right now I’m trying to get a very good deal. And it’s all because social media. It’s all because I do this and I just show… I actually show more problems in the properties and people are more motivated because I know I can solve an issue.

Ashley:
Let’s talk about that solving of the issue, because you’re basically doing a lot of the GC work. What kind of systems you have in place to do this efficiently? You go from tennis pro to slowly starting into investing, and now you’re managing these big rehabs. What has that transition been like? And you’re still working. You have your tennis academy too. How are you managing all of this?

Andres:
I don’t even know. So I slowed down a little bit the tennis business. I’m trying to make it more automatic. I also trying to focus on the people that I really, really want to teach and the people that I think it’s going to be beneficial. So from working 50 hours, now I’m working 30 hours on the tennis business give or take a week. And now the GC with the same partners. Say anything with social media, I have a crew that obviously they are not on a payroll.
But I know I can count on them. So I found this property for my partners. They have a lot of capital. So I say, “How about if I charge you a fee for finding the property? How about if I charge you a fee for renovating, I give you a budget and then we just do it and I find you a good deal?” And they say, “Yeah, let’s do it.” So that’s what just happened. And I make $6,000. Well, actually we’re almost finishing the project.
And I’m making $6,000 just because I asked. And obviously I do have knowledge of renovations and all that. But I think because you take… In real estate, you got to take risks. And I think a lot of people are suffering right now of analysis paralysis. That’s what I see recently on the Facebook Real Estate Rookie. A lot of people are analysis paralysis. And I said to…
The only thing that I have to tell them is, listen, if you have analysis paralysis right now, just think about working 9:00 to 5:00. Just think about working on weekends, being away from your family. Think about your boss demanding you more harder work for him or for her. So let the pain motivate you. And that’s what it motivate me. That’s what I’m doing this GC right now.
Because right now I’m my own boss. I quit my job last May. And I found my own tennis business. And it’s still the best thing that I ever… The best decision. I worked for somebody for seven years, which I still love that person. But it’s a game changer where you can take control of your financial independence.

Ashley:
And your time too.

Andres:
And your time.

Tony:
Yeah. Andres, you seem like a big mindset guy. I love the way that you’re framing everything from a really entrepreneurial investor type mindset. And I think that’s what holds a lot of people back. It’s not so much, they don’t understand the mechanics, but it’s the mindset isn’t right. So I loved you’re bringing that value. Now, I want to touch real quickly on the vendor piece.
Where are you finding these people? Because I think for new investors, one of the biggest challenges is how do you go about building the team? And it sounds like you found a really effective way to do that. So shed some light on that for us.

Andres:
Yeah. So referrals are the number one. I highly recommend for people to look for referrals when they’re trying to build a team. So I asked, “Who do you use for flooring? Who do you use for this person?” So I created my team in terms of… But for me doing good work is the first thing. Doing that at a reasonable price is the second thing. So I think it’s just about asking and you’re going to…
And every new investors, I think… Every time that I talk to a new investor, they think that it’s all about finding one person. If that person doesn’t work or real estate doesn’t work, real estate is the worst. But I maybe went through five, six people to find one good plumber. But now that I build my team, this morning something happen I call them, “Hey, can you do that?” I know he can be there. I know he will put me first.
But I have established that relationship. And also, I think one of the most important thing is said with clarity what you expect from that person. I think as a new investors, I remember saying, “Hey, how much does that flooring cost to install?” “Yeah, it’s going to cost you a 3,000.” “Okay. No worries. Okay. I’ll pay you later.” Or, “I’ll pay you a 50% now and then I’ll pay you 50% later.”
Or they dictate how everything works. And now I’m like, “No. I’m going to pay you in thirds and this is what I expect. I don’t want my…” I don’t know if you guys have the same experience. But sometimes if you don’t tell them, “Do the trim this way. I don’t want any gaps.” You have to tell them this stuff. Because otherwise, if you don’t say anything, you will have to clock a lot.
You’ll have to fill those gaps and you will have to do the work yourself afterwards. And the job is not going to be done. So set expectations before you start working with them without being too mean or anything. Just say, “This is what I expect. I will pay you in time. No problem.” And then whenever they finish pay them in time, don’t delay until they [inaudible 00:29:34].

Ashley:
It's almost like a bank. A bank when you go to do a construction loan with the bank, they have their draw site. They do an inspection before. Make it the same for yourself, have the same rules that the bank does and stick with it and follow with it. So what else do you own? What else has been in your portfolio? I had seen in the show notes that you've done almost every kind of real estate investing. So just tell us a little bit more about your portfolio.

Andres:
Yeah. So I did a house sale. It was some property that I found and I make $3,000 out of it, which was great. Then I sold the condo that I originally bought. I sold it, I made around 12,000 just because the tenant just pay off the mortgage. It was cash flowing maybe $150. But the tenant was paying. And at the end of the five, six years, I made $12,000 on that one. Then I have the three family, which it has appreciate almost $100,000.
And in Connecticut, properties don’t appreciate that much, if for some reason that property has appreciated 100,000. I have a duplex, I did another BRRRR with none of my money. Again, with another partner. It was a tennis friend that I have that work with me. And right now I have a contract with a single family, another rental that I’m buying with my fiance. She wants to be in the game.

Ashley:
That's awesome. Tony got his fiance involved too with real estate doing short term rentals. You said one of your properties is cash flowing $150 a month, but you made $12,000 for the year. Can you explain how the equity pay down accounts for that 12,000? Just explain that to everyone, how you came to that 12,000 that you made for that year.

Andres:
Yeah. So I bought the property for 90,000, in 2014, September. And then I lived there for two years and then I rent it out. So the cashflow, when I rented out, it was 150 because I have to pay for HOA fees. And condo usually they’re low on maintenance, I think. But they’re not such a great investment. So my 12,000 came from then paying all my mortgage at that time. And I think I was adding maybe $100 or maybe $500 per year to pay with the cashflow because I didn’t need it.
So at the end when I sold that property, I sold it for the same price that I bought it. It didn’t appreciate anything. But then when I pay my realtor and all the closing costs, I got a check for 12,000. I’m like, “Oh my God, this is great.” I didn’t expect like that. But it was 12,000.

Ashley:
Yeah. So you purchased the property, you lived there for free for a while. And then you had it cash flowing at 150. And how many years went by before you sold it?

Andres:
Six years.

Ashley:
Okay. So within that six years, it didn’t appreciate at all but you still walked away with living for free getting some cash flow in your pocket and $12,000.

Andres:
Win, win.

Ashley:
That’s awesome.

Andres:
Win, win.

Tony:
That’s a mic drop moment right there.

Ashley:
Right. So I think it’s just important to realize that it’s not always the cash flow. There’s so many different ways to manipulate… I don’t know if that’s the right word. But manipulate real estate to make it to your advantage or to that appreciation play. There was no appreciation, but somehow you still got it because your tenants are paying down the mortgage and you get that equity built into the property.
So that’s a great example. I love that was how the different ways that you benefited off of that property. Living free, the cash flow, and then the equity pay down, getting that check when you sold it for the same price you bought it for. That’s great. So let’s go on to one of our segments. It is called the MVP.

Crowd:
MVP. MVP. MVP.

Ashley:
This is where we want to hear about the most valuable player on your team. The most valuable person that has really helped you grow your real estate portfolio.

Andres:
So I think the… I will say it cannot be family. It has to be part of my team, right?

Ashley:
I will do both. Tell us both.

Andres:
Okay. Okay. I will say my MVP will be my dad. And I will say dad and mom, but more my dad because he put my mindset of don’t take no for an answer. Just keep trying, just keep pushing. Don’t criticize, don’t condemn, don’t complain. That was his three Cs. And I will say on my team, I will say Melissa, my realtor. She is also my friend and actually my tennis client too, but mostly my friend.
She’s been amazing. She sells half a million properties here in Connecticut. But whenever I see a property, 175, 200,000 she say, “Let’s just go. I don’t mind putting off. I don’t mind working with you.” And I think we have closed maybe five or six times already, and she’s been great to me. So I’ll give it to Melissa.

Tony:
Beautiful. So many people named a realtor. So the first question that comes to mind is, how do you find a rockstar realtor as a new investor?

Andres:
I will say, first of all BiggerPockets. I will say, just go to the website. And even though I didn’t find her through that because she was my friend before my realtor, I have found other good realtors through BiggerPockets. I will say, ask for referrals. Not necessarily ask for people that have a property, like a primary residence, but people that have investing. Because it gets a little tricky there.
So I will say ask for referrals and go to BP and just find realtors there. I heard a few people saying that you go to Zillow and whoever has the most stars is the wrong person to call. I won’t recommend that. Number one, because these people pretty much pay for that advertising and they nag their clients to get stars and all that. And number two, they’re pretty busy.
And as new investors, they probably don’t have any time for you. So I will say, look for the person that really hungry and really wants to work with you.

Ashley:
Yeah. And if you guys are looking for an agent and need some help finding one in your area, BiggerPockets has a great resource for that, biggerpockets.com/find-an-agent. You guys can check that out.

Andres:
I want to also reflecting off what I was thinking on the podcast to every new investor, every rookie here that did not get into the trap of these gurus, because I did. And I don’t want anybody to do the same mistake that I did. I paid $22,000 that I didn’t have for a course that help me just a little bit. I had a mentor for a weekend and she was focused more on the marketing side.
And I went to a seminar in Virginia and it was information that is out there. It’s information that is on the podcast. It’s information that is on BiggerPockets and Google and people. So I will highly recommend to people do not get into that trap because even if you bad a bad deal-

Ashley:
I want to know how you got into that trap? Did this come up on Google? Did someone recommend it to you? Because there’s so many… Especially now on social media, there’s so many of these different courses, these masterminds, these classes. How can someone pick out which one is actually worthwhile or not? $22,000, that could have been a down payment on a house. And I think a lot of people are thinking the same thing. So tell us, how did you fall into that trap and what happened next?

Andres:
Yeah. Even if you buy a bad deal for 22,000, you get more education in those seminars. I think it was something that came into my Instagram or Facebook about free webinar. Not webinar. It was like in a hotel. It was free for one day, sorry. Then they set you up to come for three day. They charge you a little bit, not too much. And then if you come to the three day at the end, they sell you that package.
And literally, nobody has washed my brain until I met them. Which obviously I’m not going to say any names. But they tell you to raise your credit card limit. They tell you it’s your education, it’s your this and that. And honestly, at this stage of new investors, if they charge you 22,000 or more than 20 grand for educate yourself or buying your first deal, I think that there’s something wrong there that I didn’t see.
So maybe later on in life, if you want a personal coach or somebody like that, then yes. Totally worth it. I believe in coaching. I’m a coach. But 22,000 when I was just like… All my savings. I call my bank, raise my credit card limit for a course that I didn’t took any action. And I’m a massive action taker. I came here to this country with $500 in my pocket and a year visa and not knowing what was going to happen.
So I fell in the trap. So I would just highly recommend to the best education you can get are books and podcasts. I read a lot of books, so I will highly recommend to just read books and listen to podcasts. This is free education. This doesn’t get better than that.

Tony:
Thank you for being so transparent, Andres. I think a lot of people have gone down that path and been not super satisfied with the results. One thing before we move on. There was a book called The Millionaire Fastlane by M. J. DeMarco. And in that book, he talks about how a lot of the gurus that you see, their business isn't about the work. Their business is about coaching other people and teaching other people how to do the work.
So if you look at some of these gurus, they make way more money selling courses on how to do it than they ever made actually doing the thing. And you’ve got to be really careful because not everyone is as legitimate as they say. So thank you for being transparent with that, man. We appreciate it.

Andres:
Yeah. I found out that the person who was leading the course say she was an investor and all that. And a year ago or two years ago, I found out she’s a realtor and not even a good one. So it was just like it was not a [crosstalk 00:39:58].

Tony:
Yeah. There you go. So you never know what you’re getting into. The title guru, people throw that around a lot, man. So thank you for sharing that Andres. We appreciate it brother. So why don’t we move into the next segment here, which is our rookie request line? So we’re taking questions from our listeners. And for those of you that want to maybe get your question featured on the show, just give us a call at eight, eight, eight, five, rookie to leave a voicemail and we might use it on the next show. So you ready for today’s question, Andres?

Andres:
Yeah. Shoot.

Tony:
All right.

Dom:
Hi, my name is [Dom 00:40:25]. I’m from Scranton, Pennsylvania. I’m currently a junior at a local university. I have just around $19,000, $20,000 saved up in my account. I’m thinking about getting into real estate. I’m picking up a minor in real estate. And what should I do to prepare for that, what books to read? Just anything that would help me see where I want to go with this. Thank you.

Andres:
Great. I will say I will start reading, How to Invest in Real Estate. I think it was Brandon and Josh Dorkin wrote that. I will start there. I will say, try to get all the books like Landlording.

Ashley:
Managing Rental Properties is his one, Brandon’s.

Andres:
Yeah.

Ashley:
Is that what you’re talking about? Yeah.

Andres:
It’s very, very good. I will say the BRRRR strategy. I think BRRRR is changing the world of investing. So I think I will start there reading that book too. Because buying real estate and recouping the money, it’s a great concept.

Tony:
And if I could add one to that. I loved your advice. I would also say just maybe try and find a way to start doing something real estate related. Can you become a property manager? Work for a leasing company? Can you go work for some general contractor and sweep up the job? Is there something that you can do in your free time to get you closer to the action of real estate? And that's how you start building that confidence and education as well?

Andres:
Yeah, definitely. You might not know any investors. But one thing that you can do is realtors are going to go everywhere. That’s one person that is going to go everywhere in every market. So talk to a realtor and say, “Hey, can I go to your showing. Am I allowed to go to your showing?” Or, “Can I see the properties that you’re selling?” Or, “Can you give me any good recommendations?” I think it’s just asking.
Because I think every new investor should create their plan. And now I have a small group where I can educate other people. And I narrow it down, create a 30 day plan. First week, mail realtor. Call as many as you want. The next week, call a lender. The next week, put an offer. And I know a lot of people still it’s threatening. It’s like, “Oh my God, I still feel afraid of doing that.”
And if you’re afraid of talking on the phone, then go on Facebook and meet people. And I think if you don’t do what is free and what is available now, it’s going to be very hard to keep your path to real estate. But I think anybody can do it. And it’s free. Asking is just free.

Ashley:
I love that advice, Andres. And to add one more thing to this is instead of preparing yourself right now, why don't you just start house hacking right now? You're in college, get some of your buddies together and move. What do you charge him by the room to live in a house? I'm sure you know, around your university which are the good streets, which are the bad streets AKA, the party streets, the non-party streets.
But start looking at properties. And says he’s a junior now. So for your senior year, have a house. And then when you move out, maybe you stay in the area or you go somewhere else. But then you just continue to keep it as a student rental. But if you live there for one year, you can get the FHA.

Andres:
Oh my God. Going back to the question that person asked, if I were that person I would definitely… Just like you said Ashley. I will definitely buy with the FHA loan, a house, a single family, which tends to be cheaper than a duplex or triplex.

Ashley:
And easier to find nowadays too.

Andres:
And easy to find and easier to sell, easier to manage. I think it’s the perfect strategy. You find a property, you rent the rooms out to your roommates and then you can get out of the house whenever you graduate. Right now, I’m actually trying to focus on student rentals because I can cash flow right now and I am cash flowing with a property that I just closed in January, 5th, $1,000 per month.

Ashley:
Awesome.

Andres:
And it's doable. And I'm in Connecticut and I'm near Yale University. You don't have to be near Yale University. There's some small community college, they're looking for housing. And student rentals are recession proof too. So even if we go on a recession, a lot of people tend to get their degree under recession because they're trying to prepare for that. So I think for me, student rentals is the way to go.
Even though I love duplex and triplex, but student rentals I think is the way to go. Especially if you are a college. All the vacancies you can fill it up because you are in that college and because you know, who is in that college. So you have contacts there. So I think it’s a great advice that you just gave Ashley.

Ashley:
Yeah. And then one more thing I have is I would switch your minor if it’s not too late out of real estate. And I don’t know… He didn’t say what his major was. But for your minor, I would switch it to something business related if you don’t already have that. Even just taking a couple of accounting classes can help you so much and learning how to manage the finances for your business, which I think is so important.
And for real estate Andres, you touched on this a lot is podcasts and books. You don’t need to go to college to actually learn real estate investing.

Andres:
That is right.

Ashley:
Hey, well, thank you so much for all this great knowledge. We have one more segment for you and it is our random questions. So I’ll go first. The first question I want to ask is, what is a quote or some kind of saying that really sums up your approach to real estate?

Andres:
What quote becomes a real estate? That’s a good one.

Ashley:
Or just any kind of saying.

Andres:
A lot of business sayings but-

Ashley:
Yeah, yeah.

Andres:
Well, I will say I heard this one and it’s, repetition is the mother of skill. I think as a professional athlete, you do the same thing over and over and over and over. As a real estate, I highly doubt that when you find one realtor, you stay with that realtor for a whole investing career. So just reach to a lot of realtors. It’s free. Reach to a lot of lenders, also free and easy.
Reach to a lot of contractors, even if you don’t have any property just to see how much they’re charging. So just repeat, just repeat. I think if you are consistent with that repeating, you can achieve financial independence which I think is the main goal here.

Tony:
So Andres, I guess my question for you is you’ve got a really unique backstory. And I love how you said you came here. You had few dollars in your pocket. If you have to start all over. Say that we picked you up and we dropped you back in the United States. And say you only had that $500 in your pocket again. With all of the knowledge that you have now, what does that first 90 days look like? What are you doing differently this time?

Andres:
Assuming that I have housing and then shelter, right?

Tony:
Yeah, you got the basics taken of. Yeah.

Andres:
Okay. So I will say the 500 I have, I will probably spend $200 in books and then the rest, I will just listen to people. I will take maybe $100 worth of Dunkin’ Donuts and Starbucks and invite other investors. Say, “Hey, I’ll bring you a latte, whatever you want, if you just let me walk with you, talking to your contractors.” And if you don’t know these people go… Facebook, I think it’s great because you can find all these different groups.
And all my referrals I found it through mostly Facebook. So go to Facebook, create an account. It’s free. Basically just keep talking to people, keep reaching out. It’s everything free. I don’t think you should spend anything. One thing that has helped me, and I’m glad that I spent is the BP calculator. Because everything is so simple. I’m a huge spreadsheet guy too, but when I can just put the number and all that, and I can get all the benefits out of it, it comes down to nothing.
I will say 100 bucks on 200 books. A 100 on Starbucks or Dunkin’ Donuts or whatever. And then the rest just save it. You could save it. You don’t need to spend it.

Ashley:
And I think a lot of people forget this because I forget it sometimes. And I saw on Instagram, Shelby Osborne, who’s a realtor in Fayetteville, she was on the BiggerPockets Podcast, not too long ago. And she said that a lot of libraries will do audible books now where you can actually download the audible books for free and listen to them right through your library. And then also you can check out a lot of real estate investing books from your library too.
So you might not even have to pay a couple hundred dollars for books. And then just to touch on the coffee, I love that idea so much. Even if you hosted a meetup in a coffee shop and put it on BP like, “Hey, come here. Even new investors.” You’re going to learn something from anybody that’s interested or just started out too. You don’t have to always meet with a professional or a pro.
Because people learning, they’re going to be the ones that are excited the most and want to talk about it. And you’ll be able to learn something from them. So even just saying, “Hey, come to this coffee shop this day. I’m buying everyone free coffee.” Start a meetup that way. So I think that’s a great idea.

Andres:
Short story. One time there’s a local restaurant that I really want to help. And I said to that person, “Hey. I want to host a real estate meetup. And I don’t want to charge an entry fee because I want them to feel comfortable. But I’m going to let them buy food and drink and all that.” This is like a year ago before COVID hit. We have almost 30, 32 people.
And until this day I go there, she doesn’t charge me for food or anything or coffee. So it’s free. You just talk to a local restaurant and say, “Hey. When can I do this event? And I’m going to bring you people.” And just establish that relationship. Again, it doesn’t cost you nothing. And I still get free coffee from them. So that’s pretty sweet.

Ashley:
That’s a great idea too, because you’re right. You’re giving business to the restaurant. Well, thank you so much for joining us today. Can you tell us a little bit more where everyone can find some more information about you?

Andres:
Yeah. So I’m on Instagram. Mostly Instagram and Facebook. My Instagram is Andres Bernal. It’s A-N-D-R-E-S-B-E-R-N-A. And instead of an L, I have a one. And then on Facebook, I’m Andres Bernal. Feel free to reach out to me. I will love to connect too. It doesn’t matter where you are. If you’re Missouri or Canada, just reach out to me.
If you’re local, that will be great. I will love to meet more people. I will love to learn. I’m a little obsessed with learning. So if anybody out there needs any help, then they can reach out to me and I will love to help anybody.

Ashley:
Well, thank you Andres. We really appreciated all the value you provided us today. Everybody, I am Ashley Kehr from @wealthfromrentals and he’s Tony Robinson @tonyjrobinson, and we hope you’re enjoying the new year.

 

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In This Episode We Cover:

  • Why FHA loans are a great first financing tool for rookie investors
  • Calculating out your “worst case scenarios” on houses
  • How to treat tenants so they want to stay (and will respect your home)
  • Why investors need to solve a problem for tenants (especially those that cause you the most trouble)
  • Finding local investors and investors within your existing circles
  • The profitability of student housing as an investment
  • Using social media to grow your existing network
  • How to set expectations for contractors
  • And SO much more!

Links from the Show

Rookie Deal

  • Single family house West Haven, CT.
  • Purchase price: $144k cash (using other people’s money)
  • Renovations: $7k
  • ARV: $200K
  • Rents:$2600 with no utilities.

Andres’s MVPs

  • His dad and realtor

Books Mentioned in this Show:

Connect with Andres:

Ready to go take action? Every Wednesday, the Real Estate Rookie Podcast will arm you with tips, tools, and inspiration to help you launch your real estate investing career. Hosts Ashley Kehr and Felipe Mejia welcome a wide range of guests as they tackle the newbie questions you've always wondered about, but might be afraid to ask. Listen. Learn. Then make it happen!
    Boris Suchkov Real Estate Consultant from Pasadena, CA
    Replied about 1 month ago
    I invest in real estate in Scranton, PA and I was so excited to hear a Scranton university student call into your show! I would be happy to walk him through my first deal in Scranton, share what I learned and discuss why I chose Scranton as a place to invest. I don't know if you collect any contact info on the Rookie Request Line, and if you can connect us. Dom, if you see this comment, please feel free to reach out!