Hector Hernandez is a Restaurateur, investor and entrepreneur. He has been investing in real estate for 10 years but only began investing in Multi family since the beginning of covid forced the temporary closure of the restaurant industry. In two years Hector has partnered with local investors and grown his portfolio to 69 Units that includes a 30 unit mobile home park in Silver City New Mexico

Here’s some of the topics we covered:

  • First Steps
  • Craigslist Deals
  • Raising Property Rent
  • Increasing Property Value
  • Going Larger Faster
  • Family/Work Balance and How TO Manage Them Both

To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com

Full Transcript Below

Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week I interview Multifamily Rock Stars and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “like” and “subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome back to “Multifamily Rock Stars”. And as you guys know, this is where we interview people that are crushing it in this business. And we share the inside scoop into how multifamily investors are creating incredible success in their businesses and also in their lives. As always, I’ve got my co-host who’s the director of our massive action team for my warrior mentorship group, Mark Nagy, on the call. Mark, what’s up, brother? What’s got you excited?

Mark
Excellent as always, man. Just excited to dive into another juicy interview here with Hector.

Rod
Yeah, well, I know you know Hector. I’m pretty sure that you spoke with him when he came on. Welcome, Hector. Let me start there. Sorry, buddy. How are you?

Mark
Yeah, about a year and a half ago.

Hector
Good. How are you guys? Nice to see you.

Rod
Good, man. Yeah. So I think you joined the Warrior program, like back in July of 2020. But tell us your story, brother. Tell us, you know, who you are and where you came from.

Hector
Yes, a little bit about myself. So, Hector Hernandez, I was born into an immigrant family, and we actually have and operate two restaurants, very successful restaurants in Albuquerque, New Mexico. And, you know, prior to joining the Warrior program, I feel like I was okay with, you know, the restaurant life and just kind of working open to close every day. Fast forward a couple of years, you know I got married and had my son, and I feel like having my son really changed my perspective on just kind of what I really wanted out of life, and really, maybe it wasn’t so much the restaurant life, but it is the freedom that is brought to you by real estate.

Rod
Yeah, well, I know that I think you’re in like 69 units now, and you’ve got a 30 unit mobile home park under contract. Congratulations on that. We had a little conversation about that before we started recording. So, you know, you saw the restaurant business. It’s a great business, obviously. I’ve owned some myself, but it’s a very consuming business. I mean, you literally live there, as you know. I’m sure. You’re there from when you open till close. I know your little guy now is two years old. That’s the reason you realize you needed something that, you know, you can back off and spend time with family. And that’s what this business does. So I love it. I know that you did that with a partner or you’ve done some of this with a partner. Talk about, you know, because this business is a team sport. Take a minute and talk about maybe what role you play and what role your partner plays in your partnership to do this?

Hector
Absolutely. So as far as the personal value that I bring to our partnership, I feel like it’s finding the deals. I’m big on sending mailers. I’ve actually sent mailers with a picture of our family on it and have quite a good success rate. I’ve experimented quite a bit with different colors of envelopes. And it’s funny, the second deal that we came across, he actually sent me a text and said, hey, you sent me the same letter in different envelopes. He says I want to sell you my property.

Rod
Love it.

Hector
Yeah. So, you know, it’s kind of like you say, Rod, you might hit them, not get them at the right time, but you know, you got to hit it with them over and over.

Rod
Yeah. No, I know that’s in our training program in the warrior group, we’ve got, you know, examples of letters and whatnot. And I know one of the big things I teach is to absolutely put a picture of you and your family, especially with me, because I’ve got a face for radio, and I put Tiffany on there. And of course, she’s gorgeous. And, you know, that absolutely increases your response rate. You know, I noticed something on the wall behind you, brother. Is that your vision board?

Hector
Yes, it is my vision board.

Rod
I love it. Guys, you know, here’s a guy that listens to what we say, okay? And that is you’ve got to know what it is you want with clarity, why you want it, and get pictures. I’ve got vision boards behind me, behind my green screen here that I look at regularly. And so I love seeing that, buddy, that’s really cool that, you know, you’re doing what needs to be done. That’s the bottom line. And focus on what you want, not what you don’t want. And that’s what the– you know, having these pictures of what you want around you will do for you. I love it. Go ahead, Mark.

Mark
Some of those– obviously, you’ve done some smaller JV deals with your partner there, and you mentioned finding deals. What’s been your strategy for picking those types of deals? Did you want to start with smaller deals in your backyard? Did you just send out letters to a bunch of different sizes and just the smaller ones happened to work out? What was your strategy initially going into it?

Hector
Right. So it actually started with the boot camp right around when Covid first started. And we had a lot of extra time on our hands because the restaurants were closed down, as you can remember. And so I signed up for the boot camp with Rod, and, you know, it was shortly thereafter, maybe a week after, when we were looking through Craigslist, because, on the material it says, check Craigslist for one year to find deals.

Rod
To look for deals, right.

Hector
And sure enough, we came across the first deal, and prior to that, I had already been kind of working on my miracle morning, kind of like Hal Elrod says. And I said, okay, you know, why start with four if you can start with something bigger. And time and time again after listening to your podcast product, I know that one of the things that oftentimes people say is I wish I would have gone bigger sooner.

Rod
Right.

Hector
So I kind of kept that in mind. And when this one came up, it was 11 units. And we just kind of, you know, the numbers worked after we negotiated the price. And it just worked.

Rod
And you started there. How far away is this eleven-unit from where you live?

Hector
Maybe five miles.

Rod
Oh, fantastic. Yeah. I’m going to tell you–

Mark
Craigslist.

Rod
Craigslist. Yeah. Isn’t that crazy. You know I teach this stuff and it’s so awesome to hear that, you know, people take and listen. You know, there is no secret sauce to buying multifamily properties. You know the blueprint is there. We’ve got the blueprint. You don’t have to reinvent the wheel. And so, you know, you’re just doing, you know, what we suggested. I freaking love that. And, you know, even the mailing. Like I said, that’s a fantastic way. And it does work better with smaller units and anything under 50, really. I would say it’s probably the breakpoint and even maybe less than that now with the pricing haven’t gone where it’s gone. So tell us about that eleven-unit. Describe the deal and, you know, why was a great deal.

Hector
Yeah. So I feel like the reason that for me it was a great deal is because it’s in a part of town and it’s maybe a C-property and with very much room for increased rents, you know. And right off the bat, once we close out the deal, maybe within a month later, I was able to raise rents by $100 because a lot of the tenants were from month to month. So we changed them to yearly leases and increase them to $100 on each unit.

Rod
Wow. And so what size units are they?

Hector
They’re a combination of one-bedroom and Studios. They’re about four Studios and 71 bedrooms.

Rod
By the way, guys, that $100 increase on an eleven-unit property is a $264,000 increase in value. Boom. The day he did it. Okay. This is why we love this business, guys. And that’s only on an eleven-unit complex. Awesome. In fact, I’ll tell you a quick story. We were at my San Antonio asset. Mark, you haven’t even heard this. We’re at my San Antonio asset, and my property manager inspected all the units because we had to look at the fire extinguishers, make sure they weren’t expired, just kind of do like a fire-related inspection. Well, while she was walking through our 296 units, she found 64 that had pets that we did not know about. And so every one of those people is paying an extra $20 a month starting in 30 days here. Plus we got a pet deposit, but that $20 a month, you know how much that increased the value? Like just under $400,000. Okay. That’s why we love this business, guys. Okay. Anyway.

Mark
And even the eleven-unit over $200,000. Show me a single-family flip where you’re going to get that on average.

Rod
264,000. Quarter million. Okay. Yeah. Love it. Love it. So what’s next? Are you going to go larger? Are you thinking you’re going to stick with the size that you’re at? Obviously, it’s working, but what’s next for you?

Hector
So honestly, Rod, for me, I set my initial goal at 50 units by the time I was 35. I said you know what? If I can get to 50, I think that would be enough for me. To even think that I’m at 69 units currently, it’s just mind-blowing to me. Right. And I’m grateful for everybody I’ve had the opportunity to work with and, you know, the partnerships that I form. So I think for me, it’s just now I’m going bigger, just finding a deal, because I do believe that if you find the right deal, the money will find you.

Rod
No, that’s absolutely true. In this market, there’s so much money looking for a home, and you use your skillset to find deals. That’s the one thing everybody wants right now. So definitely the truth.

Mark
So I get this question a lot, Hector of how do you manage all this with a son, a family, you know, maybe a job, a business, whatever. People ask that a lot. How do you build a business with all that going on? How did you do all this while having a family and all this other stuff going on?

Hector
You know, I have a very understanding and very amazing wife. She understands that we’re in this together, and that’s the reason we’re building our real estate portfolio is to kind of, you know, build that freedom that we want to have together. And so, it’s difficult. And I’d be lying if I said I have it figured out. Right. I’m still learning as I go, and I just, you know, wake up every morning and do the best I can.

Rod
Yeah. Are you still working in the restaurant, too?

Hector
Yes, absolutely.

Rod
Okay. So you are up to your eyeballs. Well, you know how I feel about this. Okay. And that is especially with your little man. And I teach this in my boot camps with you, my warrior, that there’s nothing more important than those relationships. I talk about, you know, the greatest regret in my life was working too hard when I was with my kids and being distracted when I was with them. I know you’re doing this, but you got to throw that phone in the drawer, you know, even if you’re only giving him 30 minutes of your undivided time. You know, totally present for that. And that’s just, you know, I don’t want anybody that I connect with and touch to ever have the regret that I have. My kids tell you, I’m a great dad, but I didn’t live up to my own expectations. So let me ask you this. As you were going through this, did you have any, aha, moments? Any moments where you’re like, okay, now I get it. And just before, during, after at any point in this process of yours?

Hector
For me, it was during my negotiation for the eleven-unit complex, because prior to that, I feel like I battled with my internal self kind of saying, like, well, you’re a Restaurateur, what makes you think you can do real estate, right? And you’re telling yourself all these things and you internalize them, and you just got to learn to make that voice quiet. But what happened in the negotiation of my eleven-unit complex is I had invited the owner over to the restaurant during Covid.

Rod
That is smart. Smart. Love it.

Hector
He’s an older man. And I told him, hey, look, you know, I made the offer. This price is not going to work. How do you feel about this price? And then we just negotiated. And one of my last offers was I said, okay, how do you feel about this much? And the year’s worth of tacos? He just kind of looked at me and like, who is this kid? And he said, okay, fine, we’ll dry it up.

Rod
No kidding.

Hector
Yeah.

Rod
Well, that’s so cool, buddy. And I want to tell you, and I know you learned this in our program with elderly people like that. Bonding is so freaking important. And you connected with this guy. He saw you in your environment. He saw your family. I mean, that just makes all the freaking difference in the world. So good for you. So let me ask you this. How did you push through that fear? I know you had the warrior group. You spoke about that a little bit before we got started. Can you elaborate on the support system that you, you know, talk about that?

Hector
Yeah, absolutely. So the warrior group is actually, man, I feel like just surrounding myself with like-minded people. The Facebook group, actually, it’s nice to go in there and just see people that are struggling, going through struggles, similar to the one that you’re going through as well. And also victories. Right?

Rod
Right.

Hector
When you see people that are just posting their victories, and it just really pumps you up to just see that it is possible.

Rod
Right. By the way, guys, if you’re interested in the warrior program, to apply, text the word “CRUSH” to “72345”. That’s “CRUSH” to “72345”. And you can check us out. We’ll check you out and see if it’s a fit. But I’m super proud of something. And you may not even know this, Hector. My Warriors, I believe, are close to 55,000 units owned now. And we need to really dig in and see what everybody’s got, because we’re just– that I know of, at least. And so we’re going to dig into that. But it’s just extraordinary because I’ve only been teaching a little over four years now. So, yeah, I’m really, really super proud of that.

Hector
That’s awesome.

Mark
Yeah. I know you talked about some of the struggles, people helping you and motivating you to push through that. What do you think is the most common reason for people failing or giving up before they get to that first deal?

Hector
I take a couple of things you know, and some of that includes analysis paralysis. Right. I found myself kind of caught in that as well. You know, I had taken the courses. I had learned as much as I think I could have learned for the moment being. And at some point, you learn all you need and you just have to take action. And sometimes I feel like roadblocks might come up as well, like just little things. And they let that deter them from proceeding with whatever it is they want to accomplish.

Rod
Yes, I love it. Back to that eleven-unit. How did you finance that deal? Just curious. How did you put that together and where did the money come from and so on and so forth? Was it out of pocket from you and your partner, did you raise any money and how did you finance it?

Hector
So that one for me was I had refinanced money out of two of my single-family houses. And in my negotiation, I actually told him, he said he would carry the note, amortized over 30 years at a 5% interest.

Mark
Wow.

Hector
At a 20-year balloon.

Rod
Wow.

Mark
20 years. Jeez.

Rod
Did you accept that and do that?

Hector
Yes, absolutely.

Rod
Oh, my God. Fantastic, brother. Fantastic. Good for you, man. Guys, listen, you know, if you come to my boot camp, you’ll hear me talk about this. You know, I’m not sure when this episode will air, but, you know, I’ve got a virtual boot camp coming up on March 12th and 13th. And, you know, if you DM me on any social channel, I’ll see that you can get in there for $97. And I don’t sell anything there. So it’s 16 to 18 hours of training, nothing being sold. Kind of a no-brainer. You got value, correct Hector? That was the first thing you did was virtual, right?

Hector
It was the best money I ever spent as far as myself in this industry.

Rod
Thank you, buddy. One of the things that I talk about is when you do these mailers, you want to mail people that have owned, ideally for a good bit like 20 years, ten years minimum. And which is what I’m sure you did, is how you found that deal. Well, you actually got that one on Craigslist. But when you find somebody that’s owned that long, you’re going to figure out some things. Number one is they’re fully depreciated, so they have no write-offs anymore. So, you know, if they sell, they’re going to give $0.70 on the dollar minimum, probably to Uncle Sam. Also, you know, if they’re elderly, they’re not going to take that money and put it in another high-risk investment. They’re risk-averse. And so, you know, they’re probably going to put it in the bank. And what’s the bank paying, right. So you won’t have a conversation, something like, hey, you know, Mr. and Mrs. Jones, I’m going to buy this property for a million bucks. And, you know, Uncle Sam takes his chunk, you’re going to end up with, say, $700,000 the most. It could be less than that even. And at 1% at the bank, this is what your payment will be. But now if you work with me and like in your example, I’ll pay you 5%. That payment is three or four times what they get from the bank. And you always have this conversation with an elderly seller. Otherwise, you’re not doing them a good service because it’s usually better for them like it is for this guy. He just wants the cash flow because they only pay taxes on what they receive every year. So it’s a fraction of–you know, what they get at the bank is a fraction of what they can get from a seller finance deal. I’m really impressed, brother. You absolutely listen, you took action with what you learned, man. Very impressive to hear all these things that you’ve done, you know, that we teach. So I’m really proud of you, bud. Let me ask you this. You know, I like to ask this question because you know, a lot of people that haven’t taken action yet, I want them to hear it from you, not from me. You know, what words of wisdom would you share with somebody that’s an aspiring real estate investor that knows they want more? They see this as a possibility. What would you say to that person?

Hector
Honestly, what I would say is that it’s a quote. It says, “on the other side of your fear is the life that you do want”. And I know sometimes we limit ourselves and we have these limiting beliefs that make us feel like we can’t do what we want. But if we could just overcome that, you know, the temporary struggle to overcome those fears is massive.

Rod
Love it.

Mark
And just to give people a little bit of context, how long do you think you were educating or listening for before you started taking action, overcoming that fear? How long did that take you, that process?

Hector
Man, I’d say, I mean, I never stopped learning. Right? I’m still even taking courses until this day. But the initial curve, I’d say a solid month. I would wake up and my son was a newborn. So I would wake up at five in the morning, and for the first two hours of the day, I would just study, especially from the program provided to you in the warrior group. So I would take those courses and for the whole month.

Mark
A month. And I like that. I want to drop quick attention to that real quick because–

Rod
Please.

Mark
I talk to people every day that tell me, oh, my God, I’ve been listening to Rod for a year, for two years. And then they tell me, oh, well, I just need to learn a little bit more before I take action, or I think I just need to go to this or go to that. And Hector comes out and says, I’ve been listening for a month before I took action.

Rod
No, no, a full month. Like it was a long period of time.

Mark
Yeah.

Rod
I mean, It took me a whole month to get started. Good butt. See, that’s his definition of time, though. That’s how he used time. That was too much. He should have gotten started sooner. I freaking love that attitude.

Mark
That’s why I’m laughing.

Rod
Yeah, me too. You weren’t going to say something. I already jumped in anyway. I was going to jump in because–

Mark
For those people listening that have been listening six months, a year, two years, whatever. Go out there and just do it, whether it’s us or something else, just get in there. Quit telling yourself the excuses that you need to learn more and get out there and actually just do it and pull the trigger.

Rod
Yes. That magnificent life of your dreams is just on the other side of comfort. You know that it is. Every one of you listening knows that. So what even I asked you, let’s see, you know, when someone is going to get into this business, what do you think are some questions they may want to ask themselves before they get rocking here? Are there any questions you ask yourself you know before you got going when you started? Talk about that for a minute. Because life is about questions, you know. We’re asking ourselves questions all the time. And the key is to ask quality questions. You know, like, why is this happening to me? You ask how questions instead of why questions. But go ahead.

Hector
Right. I think the clear that you can be on what it is you want. Right. On your vision, for example, I had narrowed mine down. I said, okay, on my vision board, I put down that I wanted you know, 15 units, 15, and 30 units. I wanted it in Albuquerque because that’s where you know, I felt comfortable investing. And of course, there’s that financial portion of it where you have to see what can you afford, you know. And if you find something that you can’t afford by yourself, who can I partner with to afford it?

Rod
Yeah. I mean, that’s one of the big advantages of the Warrior program. Just because most of those 50,000 plus units were done between warriors. Is there anything I mean, you haven’t been at this that long, but with what you know now, is there anything you might do differently if you went back to when you first started or right before you started?

Hector
As cliche as it sounds, it’s going bigger, right?

Rod
You would have gone bigger, too. Okay. You totally would.

Hector
I think so, too. I’m not comfortable where I’m at right now, but I feel like if I would have pushed my fear just a little bit more, I could have started with something bigger.

Rod
Okay. I also want to ask you, you know, you’re good at finding deals. Why do you think that is? What skills do you have that make you good at that? What do you think, you know, driver skills, mindset? What do you think might be causing you to be good at that?

Hector
As I’m sure you know, Rod, in the restaurant industry, it’s very cutthroat, very tough. Right. And a lot of people–

Rod
Actually, I did not know that. I didn’t know it’s cutthroat. No, I didn’t. I mean, It’s not a word I would have used to describe it. So interesting.

Hector
Yeah. So for me, I feel like a lot of people get very comfortable you know, with just working nine to five, and that’s okay if that’s what you want for your life. But for me, I’m used to working seven days a week, working nights, working weekends. And so when people don’t want to work on the weekends or I’ll work whenever I can to do whatever it takes until the job gets done. So that includes you know if I have to send mailers 1000 times and I’ll send mailers over and over again and kind of like in the second deal, even if I don’t catch you the first time, you know, I’ll get it again and again.

Rod
Yeah. Let me add one thing here, Mark. You know, with these mailers, just you know, you learn this in my boot camp, but, you know, it’s not a once and done thing. Like he said, you have to mail them every few months because you need to get them when they’re motivated, when they have a divorce or a death. I hate to say that, but when they have a life event, you want to get them when they need to sell, not when they might be just quasi thinking about it. Ideally, you want motivation. And so, you know, you’ve got to be consistent. And we teach you, you don’t have to mail thousands and thousands of letters. You hone the list down enough, you can do a few hundred. It’s just not a significant expense. It’s an expensive time, but not necessarily money. So just want to enhance that.

Hector
Absolutely.

Mark
Yeah. Another warrior that I saw actually in the group I thought was ingenious, and I think he got a deal from it as well on the mailers. Just a little golden nugget here is he took– I don’t know where he found him, but he got these little tiny miniature bricks and he put them inside the mailers. You know, it’s lumpy mail, I think it’s what it’s called. Right?

Rod
Yeah.

Mark
So, people, they get a piece of a letter in their mailbox and they see there’s a lump in it. And so they think, oh, what’s this? And so they open it and there was little brick inside, and it said, you know, “Looking forward to building a relationship with you”.

Hector
That’s awesome.

Mark
That was just a small little thing that you can take and use. Again, I don’t know where he got the bricks, but you could probably find it online.

Rod
Oh, yeah, you can find that stuff.

Mark
You can find it there.

Rod
There’s little oh, God, what’s the name of that website? It’s got all that little crap in it. Oh, gosh darn it, I’m drawn a blank. There’s a website that has all the stuff in it, but that’d be great for broker relationships and property manager relationships. You know, for owners, I think, you know, you sent an invitation envelope, it always gets opened. I don’t care what’s in it. If somebody looks like they’re getting invited to something that’s handwritten, I promise you they’ll open it. With a stamp, always open. Different colors, postcards. You just change it up and use your imagination. And, you know, we teach some really some Ninja tricks there as well. That I’m not going to say on the podcast. You’re going to have to come to the boot camp. And by the way, again, it’s 97 freaking dollars, if you DM me. You know if you have any interest in this business, you need to be there, period. It’s all virtual. You can do it in your underwear. And I’ve never had a complaint. That’s a lie. The only complaint I ever get is that the breaks are too short. So, you know, if you have any interest, you know, text “Rod” to “72345” and then DM me, and I’ll give you the code. But that’s the website. It’s “multifamilyvirtualbootcamp.com”. And again, if you’re interested in the Warrior program, text “CRUSH” to “72345” to apply. You mentioned a quote. And I love quotes. And so, are there any other quotes that you really love? And also talk about, you know, where you think you get your drive from. So start with the quotes, and then I want to hear where you think you get your drive from.

Hector
Absolutely. So for me, I think one of my favorite quotes is it’s actually, it’s a poem but it’s “Our deepest fear is not that we are inadequate, our deepest fear is that we are powerful beyond measure”. And it’s a whole poem.

Rod
That’s Marianne Williamson’s famous thing. It’s beautiful. Guys, Google that. Google that. I actually say it at my three-day boot camp. I actually read the whole thing out because it’s such an incredible message. Love it, brother. Love it. So where’s the drive coming from, buddy?

Hector
The drive? I think I attribute a lot of the drive to my parents, honestly. And like I said before, they are Mexican immigrants and in the restaurant industry, that’s kind of what I saw growing up my whole life, you know. Not that they never fell, but I saw them knocked down a couple of times, but they always got up and always persisted and were just very amazing. And I think something worth mentioning is that for them, you know, and what I got to see is that even though they didn’t speak the language when they first came into the United States, they let their work do their talking for them. Right?

Rod
Love it.

Hector
And that’s why, you know, if you’re going to clean the table, you clean it to the best of your ability. Whatever it is you want to do, you do it to the best because your work speaks for you.

Rod
What an awesome message. Hector, what a treat this has been. So great to see you. So freaking proud of what you’ve accomplished already. Keep it going. And I don’t know if you’re going to be able to make it to the Warrior event we’re having, probably not with the restaurant business. We’re having our Warrior only event coming up on April 1st and 2nd. But it is great to see you, my friend, and keep up the good work. And I’m sure we’ll talk soon, buddy.

Hector
Thank you guys very much.

Rod
All right. Mark, I’ll see you later, buddy. Thanks.

Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our warrior students do just that using our “ACT” methodology, which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?

Rod
You bet. Guys, we’ve been going nonstop for three years, building an amazing community of like-minded people, and our coaching students, which we call our Warriors, have had extraordinary results. They’ve purchased thousands and thousands of units and last year we did over 1000 units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity, to find and close deals, and to build partnerships nationwide. Now, our warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text “CRUSH” to “72345” and we’ll set up a call so you can check us out and we can check you out. That’s “MentorWithRod.com” or text “CRUSH” to “72345”.