Hector Garcia is a 36-year-old entrepreneur with a proven track record of multiple small business exits since the age of 18. With a deep understanding of his local market, Hector has transitioned into commercial real estate, specializing in identifying high-potential value-add opportunities. Since joining Rod’s Warrior Group in 2022, he has successfully partnered on multiple deals with fellow Warriors, further accelerating his growth and impact in the multifamily space.
Here’s some of the topics we covered:
- Hector’s First Multifamily Deal That Changed Everything
- Rod’s Wild Cash for Keys Story You Won’t Believe
- How Hector Doubled the Property Value
- The Game Changing Power of Joining the Warrior Group
- What It Really Costs to Rehab Multifamily Units
- The Best Advice for Anyone Stuck on the Multifamily Sidelines
- What Hector Wishes He Knew at 18
- What the Most Successful Real Estate Investors All Have in Common
- Finding Your Superpower In Multifamily Real Estate
If you’d like to apply to the warrior program and do deals with other rockstars in this business: Text crush to 72345 and we’ll be speaking soon.
For more about Rod and his real estate investing journey go to www.rodkhleif.com
Full Transcript Below
00:00:28:23 – 00:00:51:12
Rod
Welcome back to multifamily Rock star. So as you guys know, this is where we dive deep into our guests deals and we give you really practical and actionable items. So you can get started doing this business and do your first deal, especially if you’re new to multifamily now, because this is here in my studio, I don’t have Marc Nagy on this episode, but, we’ll just do without him today.
00:00:51:18 – 00:01:10:03
Rod
Anyway, today I’ve got Hector Garcia, who is here from California, and he’s here, we made it work perfectly because we have our warrior event this weekend. We have several hundred warriors here, and so it was perfect for him to fly out, do this episode here in the studio rather than, on zoom. So, welcome, brother. Glad you’re here.
00:01:10:05 – 00:01:13:06
Hector
Pleasure to be here. Thank you so much. Yeah.
00:01:13:08 – 00:01:17:14
Rod
Absolutely. So. So, why don’t you give us a little background on you? But.
00:01:17:16 – 00:01:36:00
Hector
Yeah, sure. So I’m an immigrant just like yourselves. Okay. I came to, Southern California. My parents brought me here when I was three years old. So I grew up in in Orange County, California, and I grew up poor. I grew up hungry, not physically hungry, though we’d always had food on the table. But, I was definitely hungry for a better life.
00:01:36:02 – 00:01:38:02
Rod
Yeah. When did. Where did you immigrate from?
00:01:38:04 – 00:01:38:14
Hector
Mexico.
00:01:38:15 – 00:01:45:20
Rod
Mexico. Okay. And so you immigrated when you were three. And, Well, continue.
00:01:45:22 – 00:02:01:24
Hector
Yeah. So growing up poor, I mean, life was tough, but I had friends at church that were really wealthy. And going to their homes are beautiful big mansions, and they’re living a great life. And I said, you know what? There’s the way I’m living is obviously not the best way. And there’s something better for me out there.
00:02:01:24 – 00:02:18:23
Hector
And this was me and, you know, six years old seeing this, so. No. Knowing that there was a better life out there, I just knew that we were going to make it one day. And fast forward to when I was about 15, 16 years old. I graduated early on high school. I finished all my high school credits.
00:02:19:00 – 00:02:32:11
Hector
The principal asked if I wanted to work with the seniors. Say, no thanks, just send me my diploma. I’m going to go straight to work. So at 1516 years old, I was already working, doing mortgage loans, and that was my entry into real estate, during the oh 5 or 6 time.
00:02:32:11 – 00:02:32:19
Rod
Oh, my.
00:02:32:19 – 00:02:33:21
Hector
God. The reason that.
00:02:33:21 – 00:02:39:09
Rod
Was that was a crazy time for mortgages. Don’t tell me you worked for countrywide.
00:02:39:11 – 00:02:42:08
Hector
Countrywide did my loan there. Okay, okay.
00:02:42:10 – 00:02:53:01
Rod
Yeah, I have a remind me to tell you something after the recording about countrywide, but, Yeah. I mean, if you could fog a mirror back then, you could. You could buy a house. Yeah. Stated income loans, ninja loans.
00:02:53:01 – 00:02:55:11
Hector
Yeah. No income, no job, no problem. Yeah, yeah, yeah.
00:02:55:11 – 00:03:03:24
Rod
No no worries man. Y’all don’t care if you work at Wendy’s. You can buy a $300,000 house. Yeah. Big deal. Yeah. No problem. Wow. So you did that? Well, that was, you know, how old were you?
00:03:04:02 – 00:03:05:02
Hector
15. 16.
00:03:05:02 – 00:03:08:19
Rod
Really? Yeah. You worked on the phones or something? Cold calling. Cold calling.
00:03:08:19 – 00:03:25:24
Hector
Oh, wow. And then, check this out. My first, commission check. And this will be important, right? I still lived in the duplex in the garage of the duplex. So in the wintertime, it was like living in the ice chest. In the summer, it was like living in the sauna. No kidding. But I was out there cold calling in my very first commission.
00:03:25:24 – 00:03:27:18
Hector
Commission check was $9,000.
00:03:27:18 – 00:03:28:14
Rod
No kidding.
00:03:28:14 – 00:03:33:18
Hector
So for a poor kid, that was extremely just like, wow, you know, the gates had opened.
00:03:33:19 – 00:03:34:18
Rod
That’s awesome.
00:03:34:18 – 00:03:37:04
Hector
You know, with that, by my first check, I bought a bed.
00:03:37:06 – 00:03:55:12
Rod
You bought a bed? Yeah. Wow. That’s crazy buddy. Yeah. Wow. That says a lot about your drive. Very impressive. Yeah, that was a crazy time. I mean, my net worth in 2006 went up $17 million while I slept here. The values went up. And then, of course, we all know I lost my ass in oh eight.
00:03:55:12 – 00:03:59:17
Rod
I lost everything, 50 million. But, So. So what did you do after that?
00:03:59:19 – 00:04:20:10
Hector
Well, oh, 6 or 7 times of great. Right? You know, 16, 17 years, all making consistently 30, 40 grand. 50 grand was my, my biggest month doing the loans. And then I came and I had bought my first house that year. Previously at 1708 came in. It was like a classic story of rags to riches, right back down to rags.
00:04:20:12 – 00:04:22:23
Rod
You know it well. Yes.
00:04:23:00 – 00:04:23:24
Hector
That’s what happened.
00:04:23:24 – 00:04:28:17
Rod
How did you. Oh, wait a minute, wait a minute, wait a minute. How did you buy a house when you were 17? Did you have your parents sign for.
00:04:28:18 – 00:04:44:14
Hector
Yeah, yeah. Okay, so I put up. Yeah, but at the money structure, the loan with countrywide. No, no. And by the way, countrywide, my rep that I was giving them the loans to told me, Hector, this is the last loan we’re going to do. I’m only going to do it because you’ve given us a lot of business this past year.
00:04:44:15 – 00:04:46:17
Hector
Well, my loan was the last countrywide loan.
00:04:46:17 – 00:04:47:13
Rod
No kidding.
00:04:47:18 – 00:04:50:01
Hector
Talk about the straw that broke the camel’s back, right?
00:04:50:01 – 00:04:54:21
Rod
Oh, yeah. Well, so so so. Oh. Ade hit. What happened?
00:04:54:23 – 00:04:58:06
Hector
What? Lost everything. Met my wife around that time.
00:04:58:09 – 00:04:59:01
Rod
Lost your house.
00:04:59:01 – 00:05:11:03
Hector
To. Lost the house? Yes. The poorest lost Lexus. My wife had met me around that time. Two years later, we got married 2010, and I was already driving the Dodge Nissan. The $1,500 whoop de. So I knew she wasn’t in it for the money.
00:05:11:05 – 00:05:14:10
Rod
Oh, that’s good sign. That’s a good sign that she hung in there with you.
00:05:14:10 – 00:05:31:06
Hector
She hung in there? We just hit, 15 years in January. So the 15 years we are married in 2010 and, Yep. I still kept my toe in the water with the real estate. So we did a couple single family flips. I did some land deals, so smaller deals. But yet I always knew that going back to real estate, there was a lot of wealth there.
00:05:31:06 – 00:05:36:15
Hector
And I’m from California, so you can make six figures on a single family flip. And that’s what we did for a couple of years.
00:05:36:15 – 00:05:45:12
Rod
Okay, okay. And so, why multifamily talk talk about your first. Let’s talk about your first multifamily deal.
00:05:45:18 – 00:06:05:23
Hector
Yeah, sure. That was in, 2019 right before the pandemic. I had a business, that I was running. And during that time, I finally picked up the book Rich dad, Poor Dad. Finally, after six years, and that just really opened up the doors to me for other commercial books and nothing about real estate that I just, you know, indulge myself with.
00:06:05:23 – 00:06:24:12
Hector
And I picked up this one book called, Commercial Real Estate Investing for dummies. You know, those little Yaml books? It’s actually one for real estate, right? And I learned the power of NOI forced depreciation cap rates and that which is mind blowing to me that for a dollar of rent increase you could create $20 of value on the back end, which is mind blown.
00:06:24:12 – 00:06:43:06
Hector
Right? Right. So, shortly after that, I told my wife, you know, I’m going to dive into, commercial real estate from now on. And, sat down, did some goal setting. I put myself in a position that I’m going to buy my first commercial property in six months. I don’t know how, but I’m going to do it, and I’m going to make $1 million on that deal.
00:06:43:08 – 00:06:55:14
Hector
Six months going by, I found a deal and my wife’s like, okay, we found the what are you going to do? What are you going to get the money? Yeah, let me tell you about that. I’m going to have to sell the house. This is before I joined the warrior program that I learned that you can raise capital.
00:06:55:14 – 00:07:06:09
Hector
Right? Wow. So I had to sell the house. I sold the business, and I put all my eggs and the one basket to buy the first commercial property was a 20 unit multifamily deal, and, San Bernardino, California.
00:07:06:10 – 00:07:09:22
Rod
No kidding. Okay. What, you end up paying for it?
00:07:09:24 – 00:07:22:09
Hector
Paid a 70 25A door, which is a million for 50. I put about 400 grand into the renovations on month 15. It was fully, stabilized, fully rehab. That appraised worth $3 million.
00:07:22:09 – 00:07:23:01
Rod
No kidding.
00:07:23:01 – 00:07:33:12
Hector
And I sold it 18 months later, which was, a month, 18 for 2.8, so just shy of $1 million profit, just like I had written down on my goals. You know, the previous year now.
00:07:33:15 – 00:07:40:11
Rod
So how did you get that value up? What what were you going in rents and what were your, you know, what you get it to? Yeah.
00:07:40:11 – 00:07:44:05
Hector
The rents were six, $700, roughly. And,
00:07:44:07 – 00:07:44:20
Rod
When you bought.
00:07:44:20 – 00:08:00:01
Hector
It, when I bought it and I bought it, remember, in a 2020 around Covid time. So right when I bought it, half of the building wasn’t even paying rent. Oh, wow. So I went in there and I did cash rookie. So I literally got all the nonpaying tenants out. And the ones that were paying that were able to stay, which was a half of them.
00:08:00:03 – 00:08:01:08
Hector
But I did my renovations.
00:08:01:08 – 00:08:21:05
Rod
Okay. Hold on, hold on, hold that thought. Okay. So he just talked about cash for keys now back. You know, especially in California, it’s a pain in the ass to get somebody out. Yeah. I will tell you. Cash for keys is a fantastic framework to get tenants out rather than evicting them. If it’s possible to do that, I’ll tell you quick story.
00:08:21:05 – 00:08:47:15
Rod
As an aside, I, you know, I had a 403 unit in Shreveport, and it was, Oh, my God, what a freaking nightmare that place was. And we had a shooting between and it was with two, two units that knew each other in the complex. And, and I mean, this this to give you some background, I when I took this place over, I had a partner next partner and emphasize the word ex partner.
00:08:47:16 – 00:09:09:19
Rod
Bring us the deal. And, he had his management company managing it. Have didn’t have a clue, you know, because they’d never managed to see asset before. So they just crashed and burned. Both pools were down. They were. It was grossing $100,000 a month on 403 units. To give you an idea how bad it was, I spent, you know, months there, got it up to 300,000, and thank God we sold it.
00:09:09:19 – 00:09:27:04
Rod
And I just tell you, I’m digressing a little bit, but it’s a funny story. I just found out. Well, I found out about six months ago. It’s completely empty now. It’s it’s it’s been shut down. Yeah, but anyway, so I’m walking through the complex with the property manager after the shooting, and I hear his loud music coming out of one of these units.
00:09:27:06 – 00:09:44:05
Rod
I go up to the door and I’m like, pounding on the frigging. And by the way, don’t do this, okay? I wasn’t strapped or anything, and I just pound on the freaking door, and I the guy came to the door and said, shut that frickin music down. So I can talk to you and I. And I said, if you can be out of here by tomorrow, I’ll give you $1,500 cash.
00:09:44:05 – 00:10:04:05
Rod
If not, you will never rent again. I will make sure that happens. I had the 50. He was out. I went to the other unit. I was there actually three involved. I got all three of them out within two days. But the only caveat with cash for keys is you got to check your local laws, especially, if you’re managing, you know, as a management company entity.
00:10:04:07 – 00:10:19:09
Rod
But it’s a fantastic way to get people out and it’s cheaper and especially if they leave it, you know, at least, swept, swept condition. Anyway, so sorry to digress, but but it is a great strategy if you can implement it. So please continue.
00:10:19:11 – 00:10:36:08
Hector
Well, that’s been the main strategy that I’ve been using really California. And that’s the only way that I see that we could create exponential, equity growth on a property, because there’s a bunch of properties with extremely low rents. The landlords just having, you know, raise the rents on, especially because California, they got some strict rent control laws.
00:10:36:12 – 00:10:40:05
Hector
Just why go through the trouble of raising 3%, right. If you’re going to have a mean.
00:10:40:07 – 00:10:42:14
Rod
That’s a freaking joke. Yeah 3% it is.
00:10:42:19 – 00:10:50:18
Hector
So that the the value that I do is I go in and I vacate the tenants and I buy them out. But there is laws, with that. So I know you talk.
00:10:50:18 – 00:11:19:20
Rod
Yeah. Be careful that just be careful. Just check your rules and whatnot. But, yeah. And and, you know, one thing he said about increase in, in the NOI, you know, increase of a dollar can be a $20 increase. It is. It is that much okay. And so, you know, I love to give the, you know, the example of that, asset we have in San Antonio where we painted the park parking spaces, put numbers down there and, and said, hey, here’s you can reserve your own parking space.
00:11:19:22 – 00:11:39:03
Rod
It’s 25 bucks a month. You can park right in front of your unit first come, first served, had 100 people take it, and that those 100 people at $2,500 a month annualized is 30 grand at a four cap was a $750,000 increase in value. Right? For some freaking paint. We didn’t pay for the paint tow company, did it?
00:11:39:03 – 00:11:46:02
Rod
So they could have the towing contract. So yeah, that’s why we love this business. So anyway, what did you get the rents to after the 600.
00:11:46:02 – 00:11:48:05
Hector
1150, 11 or 1200 almost.
00:11:48:05 – 00:11:48:17
Rod
Doubled.
00:11:48:21 – 00:11:53:24
Hector
So that’s that’s why I was able to double the purchase price on the building. I paid a million for it, sold it for two, eight, 18 months.
00:11:54:02 – 00:12:00:19
Rod
That’s freaking beautiful. Yeah. So why did you join the warrior program then? I mean, you already kicking ass here?
00:12:00:21 – 00:12:03:12
Hector
It was me putting up all my own money.
00:12:03:12 – 00:12:05:01
Rod
Oh, yes. So in 2000. That’s right. Yeah.
00:12:05:01 – 00:12:20:19
Hector
So the house sold the business, which I only kept a year’s worth of reserve. So I put a lot of financial stress on myself and my family. Later, once I joined the warrior program, I realized you don’t have to put up all your own money. You can go out there, create wealth, create great returns, tax benefits with you and all your investors.
00:12:20:21 – 00:12:31:14
Hector
You guys, you still get to do the deals that you love and you know you’re going to have great exits with. It’s like a beautiful thing all the way around. So, yeah, I don’t have to go out there and put myself in those positions anymore. And you don’t.
00:12:31:14 – 00:12:33:09
Rod
Have to tell the boss you’re selling the house.
00:12:33:15 – 00:12:41:17
Hector
Exactly. Her dream house. Right? Right. Well, we got it back. We got another beautiful house in a gorgeous neighborhood and on a golf course. And, you know, things are beautiful now.
00:12:41:17 – 00:13:03:15
Rod
It’s nice. Nice, nice. By the way, guys, if you’re considering possibly getting some guidance so you know, you can experience the life you want this year rather than later, you know, or maybe, you know, you thought that you might be able to learn how to use other people’s money to do this business. Like Hector is done. Text the word crush to seven, two, three, four, or five.
00:13:03:17 – 00:13:17:19
Rod
See if the warrior program might be able to help you with that situation or help you in this business in general. Because I got to tell you, there are a lot of deals coming right now, and we’d love to help you accomplish what you want in your, you know, in your life and create lifetime cash flow for yourself.
00:13:17:21 – 00:13:40:03
Rod
So again, text crush to 72345. So let me ask you a question. You know, you know, I have a lot of listeners that haven’t taken action yet that no, they should do something. You know, what’s one action item that you would tell them to do? You know, what would you tell them to do, rather, to get going in this business or get going in general?
00:13:40:03 – 00:13:42:04
Rod
Okay.
00:13:42:06 – 00:13:56:08
Hector
You’re not pay me to do this. Right, but just join the down warrior program. Oh. That’s good. It’s really what it is. You have to be able to network with other people that are doing much bigger things than you are, and they’re going to hold your hand and guide you, on how to do these things. You can’t do it alone.
00:13:56:08 – 00:14:12:11
Hector
I mean, I put all my eggs in that one basket and it was a success, but it could easily been the other way around. And I could have lost my shirt with it. Yeah. And why put yourself through those positions when you could go out there for a small fee, hire a coach, and then really do things the right way and be successful at it?
00:14:12:15 – 00:14:22:01
Hector
The the entry fee is really not what should hold you back from, you know, reaching your life goals and just things that you really want to accomplish with life. So definitely get a coach. Yeah.
00:14:22:01 – 00:14:26:01
Rod
And well either if it’s even if it’s not us, get a frickin coach. Because one.
00:14:26:01 – 00:14:26:16
Hector
Hundred percent.
00:14:26:18 – 00:14:48:12
Rod
You know, I mean, we’re a full disclosure. We’re a fraction of what other people charge. And we I think we’re our results are better than all of them combined. I think we’re pushing 270,000 units at this point. And I’ve only been teaching seven years, something I’m very proud of. But, and we’re not just doing multifamily anymore, by the way, when we’ve got a, we’ve got a ton of when you’re doing a hotel conversion, right.
00:14:48:12 – 00:15:07:03
Rod
Yeah, yeah, you’re doing a hotel conversion. We’ve done some of those. We’re we’ve got tons of senior housing, tons of self-storage, mobile home parks, retail, mixed use industrial, flex space. I mean, you name it, we’ve got people doing all of it, and, and some very successful hotel conversions, by the way.
00:15:07:03 – 00:15:09:00
Hector
Oh, yeah. I’d love to get into that.
00:15:09:00 – 00:15:23:05
Rod
If you want. Yeah. Now we will actually, let’s get into it right now. So talk about the hotel conversion deal you’re doing right now. I mean, I know one of our warriors did one here in California. Meyer. You know Meyer, and. Okay, so now you were.
00:15:23:11 – 00:15:24:12
Hector
Such a huge warrior, bro.
00:15:24:12 – 00:15:30:10
Rod
I know, I know, but he, I mean, his returns were incredible. Yeah. So talk about your deal.
00:15:30:12 – 00:15:44:14
Hector
Yeah. The hotels in general got me into the hotels is number one. I don’t have to do the cash or keys anymore. Right? They have the clothes. We literally just don’t rent the rooms out anymore. And now we have a vacant building that we go in, do our renovations and bring them to market.
00:15:44:16 – 00:15:46:08
Rod
Bring it to market as a multifamily.
00:15:46:08 – 00:15:47:01
Hector
Bring it to market.
00:15:47:01 – 00:15:55:09
Rod
And also so talk about the physical layout of the hotel. Was it like a motel or was it a real hotel?
00:15:55:11 – 00:15:56:02
Hector
Motels.
00:15:56:04 – 00:16:09:00
Rod
So it’s a motel. So it’s like all one level or a two level level, two level. So they did did because the biggest thing there is the plumbing in the electrical. Right. Did it already have some quasi kitchens or kitchenettes? No.
00:16:09:00 – 00:16:17:19
Hector
So every hotel room already has their restroom. Right. So right behind the restroom there’s always a little little pony wall. And that’s where we could them in to.
00:16:17:19 – 00:16:18:14
Rod
Come in for the kitchen.
00:16:18:14 – 00:16:32:02
Hector
Correct. So, okay, you walk in the hotel room, there’s a restroom, there’s a little shower, a little closet, and it will add a little kitchenette right behind it. And that’s pretty much all you need to put a studio in the studio unit. Correct? Okay. And as being in California, the.
00:16:32:02 – 00:16:33:00
Rod
Rents are crazy.
00:16:33:00 – 00:16:53:06
Hector
It’s ridiculous. So for a studio apartment in this neighborhood that we’re buying because we’re buying in great neighborhoods, we don’t want to be seedy neighborhoods. So finding hotels and good neighborhoods where we know the appreciation is there, we know the rent growth is there. In a class just across the street, similar size. What rent for 23 to $2500 for a studio or a studio?
00:16:53:06 – 00:17:05:19
Hector
Not a one bedroom, not two bedroom, a studio. Wow. So us coming in here, getting an older hotel, doing the renovations, adding our kitchenettes are going to be beautiful. They’re going to have the same amenities as a class. They’re going to have the pool, the gym, the clubhouse.
00:17:05:19 – 00:17:06:19
Rod
So there’s a pool there.
00:17:06:19 – 00:17:07:05
Hector
There is a.
00:17:07:05 – 00:17:08:01
Rod
Pool there and a.
00:17:08:01 – 00:17:16:08
Hector
Gym. Correct. But they’re going to be about $500 less than what the A-Class building across the streets are going to be. So because it was a hotel and it’s smaller units of course.
00:17:16:08 – 00:17:40:09
Rod
So so my only, my only thing with that is I have I’ve had small studio units before and the turnover can be higher than, than, you know, a typical one two, three bedroom place. But with inflation and the cost of living anymore, people have got to have a place to live. And, you know, like we’ve got a 296 unit asset in San Antonio, the one I was talking about the parking spaces.
00:17:40:11 – 00:18:04:08
Rod
And we’ve got a pretty soon, you know, the units are pretty small, but because that they’re the the market is so tight, you know, they, they rent and they rent quickly. So, I know I love the model. Now I’m just out of curiosity. Dig a little deeper on that deal. What is the, CapEx meaning? A, you know, the renovation cost per unit for putting in the kitchens or kitchenettes?
00:18:04:08 – 00:18:07:00
Rod
And what are you putting in a small stove, a small fridge?
00:18:07:00 – 00:18:10:01
Hector
Yeah. Full size cabinets, full size refrigerator, because they’re going to.
00:18:10:01 – 00:18:11:01
Rod
Be a full size range.
00:18:11:02 – 00:18:13:04
Hector
Yeah. Mini fridge is not going to work.
00:18:13:07 – 00:18:15:16
Rod
Oh I agree completely. So full size fridge.
00:18:15:16 – 00:18:21:16
Hector
Yep a stove, two cameras cabinet space. And that’s pretty much everything else is vinyl flooring. We’ll put.
00:18:21:18 – 00:18:22:13
Rod
You put in a kitchen.
00:18:22:13 – 00:18:26:00
Hector
Sink. Kitchen sink. Correct. You plug that into the shower or dishwasher or.
00:18:26:00 – 00:18:26:16
Rod
No, no.
00:18:26:16 – 00:18:35:10
Hector
Dishwasher. Every rental that I have, we always take them out because they’ll leak. They’re notorious for leaking. We go back, we have to do repairs. So I just opted out to not have a dishwasher.
00:18:35:13 – 00:18:37:15
Rod
So what’s the laundry solution there?
00:18:37:17 – 00:18:42:03
Hector
We have one big, laundry facility that is going to be coin operated.
00:18:42:03 – 00:18:50:08
Rod
Some extra coin op right there in the facility. Yeah, yeah. Interior corridors, I assume exterior. Okay. So I can see, like a motel with a pool in the middle.
00:18:50:10 – 00:19:06:01
Hector
Towards the front. But there’s a couple courtyards. Will be some barbecue areas. Okay. I just it already feels like an apartment complex, which is great reason why I like that. But number one, the location we couldn’t beat. Okay, ten minutes away from Knott’s Berry Farm and five minutes away. I’m sorry. Ten minutes from, Disneyland theme park.
00:19:06:03 – 00:19:12:13
Hector
I’m minutes from Knott’s Berry Farm theme park. Growing community. It’s it’s just that the location is killer for California.
00:19:12:14 – 00:19:14:15
Rod
Okay. It might be good for those employees.
00:19:14:19 – 00:19:15:11
Hector
100%.
00:19:15:11 – 00:19:20:23
Rod
Yeah. So, what was the going in price on it?
00:19:21:00 – 00:19:22:22
Hector
We’re buying it for a $13 million.
00:19:22:22 – 00:19:24:16
Rod
13 million? And how many doors or.
00:19:24:16 – 00:19:25:11
Hector
Keys were.
00:19:25:11 – 00:19:32:08
Rod
They call it? Keys for key 104 keys. And it’s 13 million. So what is that, 130 K just.
00:19:32:08 – 00:19:33:15
Hector
Under 130, correct?
00:19:33:16 – 00:19:41:01
Rod
Yeah. I mean, that seems so freaking high to me, but but it is now how much you know, how much per unit, right. In California. How much per unit to CapEx.
00:19:41:01 – 00:19:50:11
Hector
So out the door with the kitchenettes and with the extra renovations, the roof, the parking lot, redoing the pool, the surface, it’s a $3 million budget.
00:19:50:12 – 00:19:58:11
Rod
So 3 million, 3 million of CapEx. So be about one 160 per door, correct. In low cuts and,
00:19:58:13 – 00:20:05:23
Hector
Multifamily in that neighborhood. There’s nothing in California, over 100 plus units that are trading under 250 a door.
00:20:05:23 – 00:20:07:02
Rod
250 okay.
00:20:07:02 – 00:20:10:01
Hector
So that’s oh, we’re conservative. Two 2230 extra. Yeah.
00:20:10:01 – 00:20:26:15
Rod
Oh, yeah. I mean, not all studios, though. You’re going to be a little less so, but still, I mean, you’ll have instant equity and, you know, again, you may have a little turnover, but, no, it sounds sounds that sounds like a screaming deal. I love it, love it. In fact, I want to do some of those here in Cal in, in Florida.
00:20:26:15 – 00:20:34:07
Rod
And there’s tons of those motels around Disney and things like that. And like I said, one of our warriors, Meyer, had incredible returns on one.
00:20:34:09 – 00:20:46:03
Hector
You could double the purchase price on those. And and believe me, you could do this. And I’m doing it in California, which is the heavy, less tax, state. Right. The hardest state to do business in. And it works here. My goodness. You could do it in.
00:20:46:03 – 00:20:47:19
Rod
Not exactly. No, exactly.
00:20:47:19 – 00:20:48:17
Hector
A lot easier for sure.
00:20:48:17 – 00:21:10:23
Rod
Exactly. By the way, we talked before we started recording about my love for California, and I told him, listen, I do love visiting. I just can’t stand the politics. I mean, they’re overtaxed, they’re overregulated, they’re broken. Cut the stuff. They’re they’re they’re the insurance is going up and and yeah, don’t get me started, but but hey, if you can make money there, you can fricking make money anywhere as far as I’m concerned.
00:21:11:00 – 00:21:29:12
Rod
So, you know, what are the suggestions might you have for someone? You know, just starting out in real estate, they, you know, or hasn’t even started yet. They know they need to do something. They’re sitting on the sidelines wishing they were sitting here on my couch talking to me about some success in real estate. What advice would you have for them?
00:21:29:12 – 00:21:47:06
Hector
You know, self-education starts with self-education. I started off, which is reading the Rich, That poor, that book, and then it’s led me to other books. So really, you know, yeah, put a lot of money and time into self-education for yourself. And then the doors will open to you for a lot of opportunities, because you’ll be looking for opportunities at that point.
00:21:47:08 – 00:21:54:08
Hector
And that’s when you came around. So at that time, I was already looking for a coach. I was looking to do bigger deals, and then because I was open to.
00:21:54:12 – 00:21:56:01
Rod
And that was 20, 22, 20.
00:21:56:01 – 00:21:56:16
Hector
Two. Correct?
00:21:56:19 – 00:21:58:16
Rod
Okay. And how many deals have you done since then?
00:21:58:17 – 00:21:59:19
Hector
I’ve done five other deals.
00:21:59:20 – 00:22:28:03
Rod
Five other days. Oh, fame with warriors and lawyers. So listen, everybody thinks it’s all roses and gravy when you get into this business. Talk about some a talk about some setbacks or some, some, some hurdles you’ve had to overcome. And I’m and we’ve all got you know, this is one of the questions I always ask in my boot camps of the panelists because, and I have every one of them come up with one, because I think you learn more from failures and from setbacks than you do from wins.
00:22:28:05 – 00:22:32:03
Rod
So talk about us. Talk about a setback, a doozy, and maybe what the lesson was.
00:22:32:03 – 00:22:50:16
Hector
Oh, for sure, it was a big lesson. And going back to the catch were key is what led me to the hotels, because I did buy one asset where I was going to do the same value that strategy, go into the cash for keys, making everybody right. Well, I started this was in L.A. so I started offering and there’s rules to follow with the cash keys in LA.
00:22:50:16 – 00:23:09:11
Hector
It starts at $10,000. So I offered 10,000 to make eight. That didn’t take it. It was an eight unit, smaller complex, but they didn’t take 10,000 for 15. They didn’t take it out for 20,000, and they didn’t take it. Wow. Later, I came to find out that, the first family member had moved into a complex 30 years ago.
00:23:09:11 – 00:23:26:00
Hector
Every time there was a vacancy that would bring in a new family member. So it was a compound of eight units filled with it. Nobody was going to move out. They were all family. And that’s when I said, you know what, I can be doing this forever. I’m not going to be splitting up. This families ended up selling that building for a little less than what I paid for.
00:23:26:00 – 00:23:28:22
Hector
After I did some CapEx on the exterior, the roof, the paint, the.
00:23:28:22 – 00:23:29:23
Rod
Windows, you got out of.
00:23:29:23 – 00:23:44:04
Hector
It, but I got out of it. And that was a turning point for me. And a big lesson learned that the cash flow keys is great, but man, can you really get your ass handed to you if you don’t do your work? So that’s what led me to the hotels and buying vacant buildings and doing the renovations. I don’t have to kick out anybody.
00:23:44:04 – 00:23:47:01
Hector
Got to go in and do my work and I know I could create value.
00:23:47:01 – 00:23:53:02
Rod
Oh, that was that was an moment. It was, what do you enjoy the most about this business?
00:23:53:04 – 00:24:16:00
Hector
Oh, man. This first of I’m doing what I love. I love to transform communities. I love giving a nice, clean, place for good families to come in and live out. And it’s just we’re creating an impact, not just financially, but, an impact for the community as well. The cities are on board with our conversions. The people that are coming in are really happy to finally see something that’s affordable.
00:24:16:00 – 00:24:23:04
Hector
And it’s clean in the city that they live in. So, it’s just a great, great model to be in, in the multifamily spaces.
00:24:23:04 – 00:24:40:14
Rod
Nice, nice. Well, you said something that you’re you’re loving it. And and I will tell you, you know, when you love what you do, work is play and you never work another day in your life. And candidly, you know, if you’re in, if you’re in a job you hate, what are you doing? Figure it out and go find something you love.
00:24:40:15 – 00:24:59:21
Rod
Life is too frickin short. This isn’t a dress rehearsal. Okay? So go figure out what you love. Get a little uncomfortable. It might be a little uncomfortable to go find something else, but that magnificent life of your dreams is just on the other side of comfort. So get off your butt and go do something else. I don’t care if it’s multifamily.
00:25:00:00 – 00:25:18:13
Rod
Figure out what your vehicle’s going to be. Maybe some other asset class in real estate. Maybe it’s buying businesses. You know, buying a franchise or whatever. But don’t do it. Don’t don’t wait. Don’t be in the same place you are right now, 1 or 2 years from now. Unless you freaking love where you are right now. Okay, that’s that’s my advice to you.
00:25:18:15 – 00:25:38:09
Rod
So, I mean, you’re not that old, but I was I was giving you shit that I’ve socks that have two decades on you. You’re 35, right? 37, 37 okay. But let me ask you this question. If you could go back and tell 18 year old Hector something, knowing what you know now, what might you do differently, if anything, maybe nothing but but just curious.
00:25:38:13 – 00:25:55:23
Hector
Oh my goodness. Network and your net work is your net worth. Yeah. So really just net worth like crazy, you know, rub elbows with the people that are doing the things that you want to do. Yeah. And my goodness, I so wish I would have had a coach when I was younger to, you know, avoid the pitfalls that I’ve had.
00:25:56:00 – 00:26:07:21
Hector
And I you know, we wouldn’t we would be different, in a different place now if we would have started younger. I mean, I’m still I feel like I’m still young. I still have a lot to go, for sure. Then I’m really excited. One of the future holds for sure.
00:26:07:23 – 00:26:24:23
Rod
Well, that’s why we have the warrior event this weekend, right? So, you know, that’s why. You know, I didn’t we discovered, I don’t know, probably probably pushing five years ago now that our most successful warriors by far were the ones that were the most connected in the community. So we started doing things to help facilitate those connections and strategized it like crazy.
00:26:24:24 – 00:26:47:02
Rod
So we, you know, we have zoom breakout rooms where people warriors can speak date. But the biggest thing is the events. So these warrior only events next one will be in Phoenix. I can’t remember when, I think October, but, yeah. And hundreds of warriors get together and, and I tell New Warriors when they sign on, I say those connections are more important than learning the business.
00:26:47:04 – 00:26:53:05
Rod
It really is your. It is who you know more than what you know, which sounds crazy, but it’s the truth. You agree.
00:26:53:07 – 00:27:11:16
Hector
100%. Yeah. The partner that I’m doing the the hotel conversion with, great warrior. You’ve known me for many years, JD Singh. Right? He’s got, you know, almost a dozen hotels under his belt already. So. Right. Where else can I find another successful person that’s got a dozen hotels and wants to partner with Hector? Right. Found them in the warrior group.
00:27:11:21 – 00:27:30:21
Rod
So everybody has fear, right? Going into things, you know, what is fear? False evidence, appearing real. Fuck everything and run. You know, I like I like to think it’s face everything and rise. But how did you push through fear when you first got into this business? I mean, because there’s, you know, like like that even that 20 unit.
00:27:31:01 – 00:27:36:13
Rod
So a whole lot more zeros than a freaking flip. Yeah. Right. Right. So how do you push through the fear?
00:27:36:15 – 00:27:57:07
Hector
You know, self-education. And I had educated myself on again going back to Noi and Cap rates so you can have fear of doing a large deal. But people like numbers don’t. So the numbers make sense. And it’s just the fear in the back. You know, holding you back. You can overcome that fear. Yeah. Just just like Nike says just do it exact.
00:27:57:09 – 00:28:12:04
Rod
Great advice because this business primarily is empirical. It’s primarily numbers. You get the numbers right. You ask all the right questions. You look under all the rocks pretty hard to make a big mistake because it really is numbers. That’s a great answer. Do you have kids?
00:28:12:06 – 00:28:16:07
Hector
I do, so we have two, seven and nine.
00:28:16:09 – 00:28:25:05
Rod
How do you. Because you know I’m big on this. How do you manage your time so that you spend time with who’s most important in your life?
00:28:25:07 – 00:28:44:18
Hector
Oh, I wake him up every single morning. I get him, dress me and my wife, we feed him and I’m the one that takes them to school every single morning. All that. So I have that five minutes on the way to school where I could get to talk to them, get them ready for school, motivate them a little bit, and I’m the first one there when they walk out the door and we always have dinner together, it doesn’t matter what we’re going through, how busy we are.
00:28:44:20 – 00:28:48:08
Hector
Phone is off, I’m away from the office and we always have dinner together.
00:28:48:09 – 00:28:49:17
Rod
Fantastic brother.
00:28:49:19 – 00:28:51:04
Hector
Family is for sure. Yeah.
00:28:51:06 – 00:29:06:16
Rod
You know, that’s a big one for me now. Now that’s fantastic. Are there any things in the business that you don’t feel like you’re great at that you maybe align with other people for, or you have other people do for you because this business is a team sport.
00:29:06:16 – 00:29:26:18
Hector
100% agree. So I’m great at finding the deals, putting it together. I can underwrite and I know what the deals worth. Once I’m done with it. Right? But once the conversion is done, the units are turned, tenants are moving in. I don’t like the asset management part. Managing is just not my forte. So that’s where other people come in.
00:29:26:20 – 00:29:32:13
Hector
Other team players, right? Whether it’s a partner, property manager. But it’s something that.
00:29:32:13 – 00:29:36:15
Rod
So you’re ready to hand it off. You just want to get the deal done and move on.
00:29:36:18 – 00:29:37:02
Hector
Get to.
00:29:37:02 – 00:30:01:05
Rod
Know. You know, Tony Robbins talks about these different archetypes, and and there’s there’s the, there’s the artist or the creator, there’s the entrepreneur and there’s the manager leader. You are the entrepreneur. Now, you could, I could also call you the artist, but, in, in like this, a partnership that you have with, JD, maybe he’s the artist and you’re the entrepreneur.
00:30:01:07 – 00:30:19:02
Rod
You. But but the entrepreneur wants to get the deal done and get out. Then then they bring in a manager to manage. And in our business, it’s an asset manager to manage the property management companies. Right. And or just to manage the asset, as it were, with, with the hotel. Well, no, that’d be a property management company as well.
00:30:19:02 – 00:30:41:14
Rod
So. Yeah. So think about that as you’re listening to this, what you might be like, like if you’re looking at, Internet companies, for example. You know, how how someone will, like an Uber, for example, there were the artists that put that thing together. They pro the programmers put that thing together. Haven’t got a clue how to run a business.
00:30:41:14 – 00:31:00:08
Rod
So they bring in venture capital. The venture capital company brings in the C-suite, the CEO, the CEO or the CFO. You know, all these different people to help them build that business. And so, and, so, you know, the venture capitalist would be the entrepreneur. And then they bring in the manager leaders to help manage the business.
00:31:00:08 – 00:31:21:09
Rod
So there’s another example of that dynamic. So think about where you fit into that equation. Because all of those pieces are needed in the multifamily business as well. Well listen this has been awesome brother I appreciate you I appreciate I’ll see you here the day after tomorrow at the At the Warrior event. And I know you’ll be networking like crazy, but I appreciate you coming in and spending a few minutes with me, man.
00:31:21:09 – 00:31:22:01
Hector
I appreciate it, man.
