Robert Leonard (01:49):
How’d you get into real estate?

Vince Rodriguez (01:51):
Probably 90% of the guys you have on here, it’s by reading Rich Dad Poor Dad in 2018. I got immediately depressed for six months. I was like, “Oh my god, [I] wasted my whole life just doing engineering stuff.” That’s how I got into it.

Robert Leonard (02:05):
After you read that book, what was the first thing you did? It sounds like you went into a little period where you felt bad for yourself. I think that’s probably common for some people, but after that, what was the first thing you did? What did you really take away from that book that you took action on?

Vince Rodriguez (02:18):
How I actually did that was [inaudible 00:02:19] my best friend, he actually showed me that book. He’s like, “Dude, you got to read it, you got to read it.” And I spent two years not reading it. Then eventually I decided I’ll do the audiobook. Then I was like, “Wow, this is bad. The whole thing is a scam. All my engineering, everything, you don’t really make any wealth generation.”

Vince Rodriguez (02:37):
What I did was I immediately started going around to bigger pockets and I became a programmer and started analyzing the [inaudible 00:02:44]. It took me about six months from the first day I read the book to actually get a triplex in my name.

Robert Leonard (02:52):
I like that your friend did that because I’ve actually done that. I have a couple of close friends, maybe three or four, and my brother, [whom] a couple of years ago, I think for Christmas, I sent them all a copy of Rich Dad Poor Dad. I’ve done that for a few of them every year. Since then I’ve sent them various different books. I just buy them on Amazon and have them shipped right to their house.

Vince Rodriguez (03:09):
It’s so crazy that one book could have such a meaningful difference in your life.

Robert Leonard (03:14):
It’s funny that you didn’t read it for a while because I know specifically one of my friends, he didn’t read it for a while and then, maybe a year, year and a half, two years later, he sent me a photo of him reading it and he had a bunch of highlights in it and it was a little bit delayed but I was so happy to see that he was actually at least reading it. I know for him it made a big impact and he’s already changed his life a bunch, so I like this idea of giving books as gifts. I really like that idea.

Vince Rodriguez (03:39):
Is that how you got into it too, Robert?

Robert Leonard (03:42):
I actually got into it by accident. I bought a condo out of college because everybody told me that I couldn’t, and so I decided I wanted to prove them wrong and so I bought a condo. I was a senior in college. I worked almost full-time throughout college to save up enough money and I bought the condo before I walked at my college graduation.

Robert Leonard (04:03):
It was two bedrooms and so I lived in one of the bedrooms and I rented out the other bedroom. Basically, I was living very close to free a couple of hundred bucks a month and I realized that this was an investing strategy, and I figured, somebody else must’ve been doing this and similar to you, that’s when I found bigger pockets and just the rest is history from there.

Vince Rodriguez (04:22):
You just house [inaudible 00:04:23] by accident? You didn’t even know about it?

Robert Leonard (04:26):
I had no idea. I bought the house, I lived there for a little while and I realized that I had the second bedroom that I had never even opened the door and I think I’d lived there for a couple of months and I said, “Well, I should probably do something with this.” I ended up renting it out for like 700, $750 a month and the mortgages are all in, was about 1,000 or 1,100, so I was living for like $300 a month and I realized I’m not that smart. Somebody else must have done this before me.

Robert Leonard (04:51):
I started to research it and I realized, wow, this is actually an investing strategy. Wow, I guess I can be an investor, and that broke down all of my limiting beliefs and that’s what got me into real estate.

Vince Rodriguez (05:02):
That’s fascinating to see that you came [and] figured out [how] to figure out the strategies by yourself.

Robert Leonard (05:08):
I just got lucky, I guess. But I know your first deal that you did [it] alone. [It] wasn’t quite as successful, maybe, as mine. I know it was a bit of a nightmare. I want to get into the details of that, but before we do, did you start out alone or did you start doing deals with your business partner, Drew, first?

Vince Rodriguez (05:25):
We actually started doing it together. The file and stuff is in my name. For that one, I do it strategically so that not a lot of loans are in different people’s names, so I keep them out, but yeah. We did it together, the first deal.

Robert Leonard (05:38):
Did you start with Drew first or did you do your own first?

Vince Rodriguez (05:43):
I started [with] Drew, so we are business partners on all the deals.

Robert Leonard (05:48):
Even this one you did alone?

Vince Rodriguez (05:50):
Yeah. This one, what happened was we talked about doing the deal together and so [we] read a lot of books. I became super obsessed with it, and I thought I’m a genius. I know everything about everything, but I totally forgot about the people aspect of the business. I completely phased out about it.

Vince Rodriguez (06:09):
When we bought this deal together, what happened was there were squatters. Nobody was paying rent. They were literally cooking meth and doing drugs in the house. I was like, “This is not good.” What happened was a lot of months, nobody was paying rent, so I had to figure it out. People were stealing from us. They were using electricity from one unit to the other. It was just a super nightmare. At the same time, Drew, my buddy, he’s the guitar instructor in Orange County. We live in Orange County, so he decided to open up a brick-and-mortar at the same time.

Vince Rodriguez (06:37):
We didn’t know what to do because that situation was really bad because we had to do this business, and we were thinking of just walking away. We were like, “Dude, this is too much. We don’t make that much money. We make this amount, but I’m funneling this.” I told Drew, “Okay, you should go ahead and just work on your business.” Because he’s just starting, there’s a lot of work to do. He used to go to people’s houses and teach guitar and eventually he started a store.

Vince Rodriguez (06:59):
Literally, he could go there and take music lessons. I just told him he can concentrate on that aspect of the business. I was managing all of the stuff in the deal in the [first] months, so that’s why I meant more like by myself in the beginning. I had to kick out all the people. I had to evict them. I had to manage the contractors, who were stealing from me from my credit card, not doing any work. I was paying people by the hour. All terrible mistakes. Been set up [on] the job.

Vince Rodriguez (07:26):
I spent more than $10,000 to fix a tub in a toilet, in a restaurant. It costs maybe like $1,500 to do it, but the guy would be like, “I’m painting today.” It was like I’m paying for a week. Now, I’m paying a week’s labor, $20 an hour for a week, and I see it was not done. A lot of things I learned on this first deal, but the most important thing is we decided not to sell the property. We decided to go through it, so I was able to finally kick everybody out, evict them, and I found a great management team. All that stuff.

Vince Rodriguez (08:00):
Two property managers quit on us. They literally called me and said, “You know what, we can’t do this. I know this is our job.” And they just quit. That’s how bad this company was.

Robert Leonard (08:10):
Did they not want to manage that specific property because of the tenants?

Vince Rodriguez (08:14):
Yeah, they were just not capable of that. Finally, we used a local company called [inaudible 00:08:19] Property Management. They’re the biggest franchise in the U.S. I didn’t want to use them in the beginning because they were expensive. They were 10% and all that like, [inaudible 00:08:29] charge somewhere. I went for the cheaper property management, and they didn’t know what to do. They left by themselves, then I went back to the property manager, the initial one, which I knew was good, so they manage all my units now.

Robert Leonard (08:41):
You mentioned that you were going to get out of the deal or you thought about it. That’s one of the things I like about real estate, is that you have so many exit strategies. Even if something goes wrong, you at least could get out of it. What was your plan in terms of getting out of that deal? How were you going to get out of it? Were you just going to sell it?

Vince Rodriguez (08:55):
We thought for a hot second, should we just sell this and call it a day and maybe start over again? That was the strategy, but we would have lost a lot of money because the guy wanted $296,000 for this type of product, and it appraised for $237K, so I said, “Hell no, I’m not buying this.” I bought the price down to $265K, and then I got a $9,000 credit, kind of. I bought it for like $256,000, but still, I’m buying it underwater.

Vince Rodriguez (09:24):
It’s only about $237K, I bought it for $256K, and I spent easily $50,000 on this property. If I’ve sold it, I would have lost $50,000 plus the closing costs. That would have been good. I figured in my head, there is in no way I’m going to lose this much money if I keep it. I could easily rent this out for $2,700 a month.

Vince Rodriguez (09:45):
By that time I was able to kick one guy out and one unit was paying rent, so about $900 was coming in. I was like, “Okay, I could see the money coming in the bank. Then, after six months, I was able to kick everybody out, and everybody was paying rent. Then, it was making money.

Robert Leonard (10:02):
Why did you decide to move forward buying a property for more than what it appraised for?

Vince Rodriguez (10:08):
I wanted to get into the game. I was looking around for a little bit and I was in making moves and I did the 1% rule and stuff. I’m super nerdy with math and everything. I’m an engineer so I do all the math and I was like, this makes sense even at like 250 because I could easily go $2,700 for rent on a worst-case scenario. I just decided, yeah, how long are we going to wait around. I always figured that if you got into it, you can increase the rent slowly and all that stuff.

Robert Leonard (10:39):
That’s interesting because I have the philosophy that the asking price doesn’t matter. A lot of people have this bias where if they buy a property for under asking, they think they got a good deal and if they pay over asking, then they got a bad deal. I don’t necessarily think that’s true. I think it depends on the numbers. I’m not an engineer, I’m an accountant, but I’m a numbers guy just like you, so just for easy numbers asking 100,000.

Robert Leonard (11:01):
But you know it’ll work for you at 120,000, why wouldn’t you buy it for 120,000? The numbers still make sense. Just because you paid more than asking doesn’t mean you didn’t get a good deal. You could buy, say that same property for 80,000, but it’s not even worth that because the numbers don’t even make sense.

Robert Leonard (11:15):
Maybe you would have had to pay 60,000 and you still got it under asking and you think you’ve got a good deal but the numbers don’t make sense. For me, it’s more about the numbers making sense rather than it is getting it above or under asking. Although the caveat is for me, it’s about the asking price, not necessarily the appraise value. I don’t know if I could buy a property personally, for more than the appraised value.

Vince Rodriguez (11:37):
That is the one caveat. It did help me to reduce the price by $50,000 almost with a low appraisal coming in. But I still had to do 20,000 and out-of-pocket extra. Because the bank won’t cover the loan.

Robert Leonard (11:50):
That was exactly what I was going to ask, is usually the loan 20% down or 15% to 25% down on the appraised value or purchase price, whichever is less and since your appraised value is less than the purchase price, you had to come up with a different [price] and the 20% down payment. Is that correct?

Vince Rodriguez (12:07):
Exactly.

Robert Leonard (12:09):
How did you and Drew meet and get aligned on being real estate investing partners?

Vince Rodriguez (12:15):
I met Drew at a conference in LA a long time ago, long time ago. We met at a networking meetup in LA. It was a long time ago. I was asking a question to the guy who was running it and Drew was just sitting behind me and he’s pat me on the shoulder and said, “Hey, I’m from Huntington Beach.” He used to live in Huntington Beach.

Vince Rodriguez (12:34):
I looked at him and I was like, “Dude, I’ve never seen this blonde guy again in my life.” Then we did hang out the texting and we started hanging out in Huntington Beach. Then it took a while just hanging out in the circles of his friends and my friends and one day we were just like, “Maybe we build a real estate, for real. Because all these guys are not doing anything with their lives.” He was like, “Yeah, let’s do it.” But I was like, “No, no, seriously, we should go buy a house together.” And he was like, “Okay, well let’s actually buy a house.” We were like, “Are you serious?” Then we just figure it out, we should just do it. Now we have a lot of houses together.

Robert Leonard (13:08):
Did each of you bring different strengths to the partnership? Did you have certain skills that he didn’t have and you guys commended each other well or were you just wanting to partner together so you just decided to work together?

Vince Rodriguez (13:19):
Well, no. We became good friends initially, so we have a good friendship between us. That’s definitely, I would say number one. If you don’t like the person you’re working with, it doesn’t matter what business training or what skills they have. If you don’t like working like, if I don’t like working with you, I’m not going to work with you and I don’t care.

Vince Rodriguez (13:37):
We like each other so it looks like the aspect of the relationship was good, but yes, he does bring that totally different skill set that I don’t have. He has his own business, he a music school. He’s an entrepreneur and me on the other hand, I work in my engineering field for a medical device company in Orange County. I’m super nerdy on numbers and I’m very obsessive about it I like the grand [inaudible 00:14:02] and style of teaching.

Vince Rodriguez (14:03):
I do not like Bill Ramsey at all, not even 1%. I’m very different so I’m very aggressive in terms of networking or talking to people, raising money, those kinds of things. He knows how to run social media and putting good posts and how to run a business and implement different systems in place. That’s like I have a script for calling and all those things [inaudible 00:14:29] but he comes in on high-level strategy, but I do that business as in running the numbers or finding the deals and stuff.

Robert Leonard (14:36):
Are you still working your W2 job today?

Vince Rodriguez (14:39):
Yes. I have to start working at 8:00 AM.

Robert Leonard (14:44):
How is you having a W2 job help you with financing? I’m guessing because he’s a business owner, he probably doesn’t have W2 income which makes it more difficult to get financing and you being a W2 employee, you guys could probably rely on you and your W2 income to help you get good financing. Have you guys pursued that and has that been helpful for you?

Vince Rodriguez (15:07):
Yes, you’re right. W2 as you know underwriters, so the [inaudible 00:15:11] guidelines, they love W2. However, let’s say I make $100,000. I already have a lot of houses. I’m already skilled with DPI. It doesn’t really help me anymore. Now they’re like, “What is your dog’s last name? Does your dog have a school? We want to see the tax return up your cat.” It’s just ridiculous how many different things you had to jump through. For the 1099, you’re absolutely right, they do prefer us more like W2s. However, he’s had his business for a decade.

Vince Rodriguez (15:39):
If you have two years of tax returns and he shows a net profit of we’d say 80,000 or 100,000, they will take that income. They will say, “Okay, that’s fine.” I know a lot of the passive protection tax strategies, how to structure your deals and business entities and stuff, how they work. I have a pretty deep understanding of those things. I set him up with an S-corporation and he has a small salary and all that stuff so he takes a K-1 distribution but he also has a W2 a little a bit in there. The banks will use those documents as the reliable income.

Robert Leonard (16:12):
I wanted to talk about that because a lot of people may not have their own money to buy a deal and so a common recommendation in the real estate world is to get a partner. And they think, well, I don’t know anybody that I can partner with, or I don’t have any money or why would anybody want to partner with me? One of the things I always recommend is if you have a W2 job, you are super valuable to somebody else who may not.

Robert Leonard (16:33):
You might be able to be their…they call it their W2 partner because you’re the one that’s going to provide the reliable, verifiable income to get financing for somebody who might have cash that wants to invest in the deal but doesn’t have the W2 financing available to them. I think I wanted to talk about that piece because I think that’s important for people to understand, is that maybe you don’t have all the money or all the answers but if you have a W2 income, you could potentially bring that to a partner and use that as value to get [your] first partnership.

Vince Rodriguez (17:01):
That’s actually what I do. I have raised a lot of money over the last year and not a lot, but a little bit and exactly do what you just mentioned. I would throw a loan on somebody else, be it my sister, my brother-in-law, my buddies and they all have their own and I just go on title.

Robert Leonard (17:18):
How do you and Drew structure your partnerships from a legal and profit perspective? How about the perspective of different responsibilities? How do you split that?

Vince Rodriguez (17:28):
Since I super nerd about these things and there are different ways to do it. There are only very few ways to do it. One is you could be a lender, so you become a debt partner. You don’t like that. You could do that but there’s no upside for the people who give you money because you just can’t get debt on the property.

Vince Rodriguez (17:47):
The second one is you could be an equity partner which is our preferred method. How we do the dealers let’s say, I’ll give you a simple example, when the money is lower, there’s not too much money involved. Let’s say it’s $100,000 property and you and I go in on the deal so, you give me 25,000 to buy the property, you get half the deal. Then we just give you a percent of the money you invested. We don’t call you an investor, we call you a partner.

Vince Rodriguez (18:14):
Because if you do call the person an investor, they are protected by FCC guidelines and it’s all kinds of problems. We say they are equity partners so you can either drop a TIC, which is the tenancy in common agreement or you could do a JB. That’s how we’ve been doing. But the ideal way of doing it is you create LLCs and you partner with people. But a lot of people get stuck in this thing like, [inaudible 00:18:37]. I know a lot of people talk about, “I’m going to start an LLC.”

Vince Rodriguez (18:41):
But I’m like, “Bro, you’re worth garbage. Your car is leased and you live with your mom. You don’t need an LLC. You’re worth nothing. Who’s going to take a word from you. You don’t have anything to your name.” It doesn’t matter to have LLCs. Even if you’re getting [your] first property, technically you don’t need an LLC because if it’s inside the property, you’re still going to lose the property even if you have the LLC. The LLC is for your other assets but you don’t have any other assets, so you don’t need an LLC. You could just go buy it in your name and eventually if you have 20 doors, sure you can have LLCs.

Robert Leonard (19:14):
Having an LLC is a huge misconception that new investors have. I know I had that misconception when I first got started. When I first got into real estate I said… I also have a business partner. His name is Ryan. I told him I said, “Ryan, we’re never buying a deal unless it’s in an LLC.” This is because I didn’t know any better. We had a little bit of assets.

Robert Leonard (19:32):
Neither of us are rich by any means, but we had some assets but it really wasn’t even for that. It was just, I thought I was misinformed that you had to have an LLC to invest. We formed an LLC, we did all that, and then we went to go buy the property and nobody would lend to us in an LLC because it was less than four units.

Robert Leonard (19:49):
We realized that we couldn’t do that and thank God I had the podcast and I was able to talk to some guests that I’ve had and I was able to network with them and find out what should I do? I learned from all these successful investors, they said, “Listen, you can just get an umbrella insurance policy that’s pretty cheap for a million or $2 million in general liability insurance and it’s really not that expensive, and it’ll essentially give you the same protection as the LLC was.” What we did is we ended up buying the property in our personal names and we just ended up getting insurance to cover the liability instead of going the LLC route.

Vince Rodriguez (20:20):
That’s how nearly is supposed to do and people are listening. This might be a good point for them to see. When you’re talking about residential real estate which is one, two, three, four units, no one will ever lend to you in an LLC. What you would have to do it’s like how Robert just mentioned it, you would have to close in your name, and you could rent it over into an LLC after you closed. If you choose to, you could throw it in a trust and hide it. That’s different ways to do it but you have to always close in your own name. But once you go five minutes, yeah, you can close in LLCs.

Robert Leonard (20:50):
That’s only for a traditional lender, though you can find other lenders that will do it. I have three properties that I’m buying right now. They’re all single-family and we’re using an LLC. But we’re not using a traditional Fannie Freddie loan provider. We’re using a portfolio lender who’s lending their own money so we’re able to get different terms and they’ll lend to an LLC. But for the general public, I’d say 90, 95% of financial institutions will not lend to an LLC, just like you said, for under four units or under five units.

Vince Rodriguez (21:18):
Once you go portfolio or even some credit unions, they might be willing to work with you. But assume you pay a point more than regular rates, right?

Robert Leonard (21:28):
Yeah. The interest rate isn’t as good, the term on the loan isn’t as good and it’s a 5/1 arm, I believe, or maybe a 7/1 arm, so it’s not a 30-year fix like you would get. Traditional financing is much better. You get a 30-year fixed rate. You don’t have to do anything for 30 years. Typically it’s a lot lower interest rate. When you go portfolio lending the term, we’re only able to get 20 years instead of 30 years and it’s an amortization over 20 years, but it’s still a 5/1 arm so it comes fully due after five years, so after refinance, and the interest rates a little bit higher. The terms of the financing are not as good, but it’s definitely an option.

Vince Rodriguez (22:05):
I would say it’s definitely for complicated, like more complex people like you who’ve done a few deals definitely don’t recommend it for the first-time buyer.

Robert Leonard (22:15):
I agree. The only reason that we’re even doing this is because they will lend to an LLC, and we’re going to start bringing in partners to invest in our deals and they’re going to be partners in the LLC, so that’s just going to make it easier for us to get deals rather than doing it in our personal names and having to have the investor have their personal name in the deal as well. You and Drew focus on buying two and three-unit apartment buildings in California and you’ve moved to Atlanta as well now. But why do you focus on two and three-unit buildings?

Vince Rodriguez (22:46):
We didn’t know how to do big deals and just boy, I don’t know. I still don’t have a five-unit or even a four-unit. It’s mostly just duplexes and triplexes actually, all of it. We wanted to have the best of both worlds, so which is the cheapest loan possible Freddie guidelines. We wanted to cash flow still a little bit. Not single-family, but not five units, so we picked the one in the middle, which will give you a little bit of the cash flow, but the cheapest loans possible. That’s why we picked those.

Robert Leonard (23:14):
A lot of people that listen to the show reach out to me and ask how they can invest in expensive markets. California is one of them but there are other markets across the world really that people reach out to me. Some in Canada, some in other markets. California is generally really expensive. How are you able to invest in such an expensive market successfully?

Vince Rodriguez (23:33):
I live in Orange County. Do I invest in Orange County? Heck no. No chance. The cap rates are like three here. It means if you buy something of $100 in cash after all your expenses, you make $3 at maybe $2 and a half, three, so that’s not a good investment. But I go more inland. I buy all of my units are mostly in Bakersfield, California. That’s a little bit of a desert town. It’s between Fresno and LA. That’s a different area where you can actually cash flow so that’s where we buy then.

Robert Leonard (24:05):
How has your experience been investing in a state where the laws tend to favor tenants more than the landlords?

Vince Rodriguez (24:12):
I’m not a big fan, dude. I’m not paying out, let’s say… Let’s give the listeners an idea. Let’s say you own a car and then I decide to park the car outside and when you come in the morning, there are 10 homeless guys living in the car. Then you call the cops and the cops say, “Well, you got to file a petition to get them out of the car but you have to go to work.” That’s California. If you buy a house and somebody just moves in that night, it’s over for you. Now you have to evict them. They have laws to protect them and stuff.

Vince Rodriguez (24:42):
Who owns the house? Do you own the house or the guy who just walked into the house own it? If the laws are protecting him more than us, it’s not a favorable situation. I always see like, “Okay, what are you going to do? Are you going to just complain and not do anything and be like now you’re poor?” You just have to work with the system. I tried to work with people, used management. I bought a property recently. I’ll talk about this quick.

Vince Rodriguez (25:06):
It’s the duplex we bought from a mom-and-pop guy in Lake Street. It is poorly managed. Some of the tenants are not paying rent, they’re not going out, it’s in the middle of the pandemic and I had decided to buy this property with cash. Terrible idea, you could say. I go there and I say, “I work for the owners. They’re reasonable people and we want to help you and all that stuff.”

Vince Rodriguez (25:27):
I just work out a deal with them, I said, “You know what? Stay here for four more weeks for free. You don’t have to pay us rent for my owners.” As I’m the owner [I] tell them I’ll talk to the owners. We’ll give you four weeks to move out and I’ll give you $1,000 cash when they move out. Just sign in this document and we’re good. They said, “That sounds great.” They signed the document. Four weeks later, they were gone. I gave them $1000, each cash and they’re gone and now it’s completely renovated and it’s rented out to two new people who are paying rent.

Vince Rodriguez (25:56):
If you spend the time to look, this is the system, you just have to figure out a way to maneuver it. That’s why I never understand when people are super pro, either one side in the political system, but I’m like, “Dude, what are you doing about it? Are you buying assets or are you just talking about it?” That’s most people I know. They’re just one way or the other but they don’t do anything.

Vince Rodriguez (26:16):
Is California a blue state? Yeah, sure they’re very kind, friendly. They try to help the tenants, but you still have to play the game. You can’t win if you don’t play. I always like to figure out what is happening. I follow all the laws. Whoever’s elected, I don’t mind. I just work with it, try to make it work for us as investors.

Robert Leonard (26:35):
You mentioned an interesting concept that I want to talk about a little bit more because I think it’s a somewhat polarizing idea. I’ve read online, whether it be BiggerPockets or some Facebook groups or just other real estate resources that some people believe in using this strategy and other people think it’s completely unethical. What you mentioned is that you don’t tell them that you’re the owner. You act as if you work for the owner. How do you think about this for the people that think it’s unethical to do that?

Vince Rodriguez (27:03):
Here’s my question. Why does the tenant have to know who owns it, other than for harassing the owners? What is their point? If they want to get the light fixed, they have access to my property manager. They could just call Chelsea and be like, “Hey, can you come fix this?” And somebody will be there 24 hours. What is the reason for them to actually talk to me? There is no reason. Do I actually own it or do my LOC on the frame so I could play that game too.

Vince Rodriguez (27:29):
Maybe I don’t own it. Maybe on the holdings, LOC owns that house and I’m your manager in that LOC, which is what I tell them. I am a manager for the owners, which is my business entity. There are ways around it and I have literally zero conundrums or things about “I’m not revealing who I am.” Because they’re getting a good place to stay and it’s taken care of by a third-party management company and I am literally a third person. I am not directly involved. I just go in if things are not working so maybe I have to take care of it, I’m willing to go.

Robert Leonard (28:04):
Why did you decide to expand to Atlanta from California?

Vince Rodriguez (28:09):
My super cool sister and my sister’s family, they live in north of Atlanta, so they are in the Alpharetta area and I’ve been visiting Atlanta for a long time and I do like the area. I do market research and a lot of people are moving to that state. I like the greater Atlanta area and I do want to get out of California, just to have a different perspective, see how the appreciation plays in a different market than just Bakersfield, California.

Vince Rodriguez (28:33):
The cash flow is good but the appreciation is not that good. I just recently bought a duplex in Stone Mountain, Georgia, which is just outside of Atlanta. If you want to talk about that, I can talk about that, how I raised money. That might be very useful for people to see things you could actually achieve by just going to a meetup.

Robert Leonard (28:53):
That was actually exactly going to be my next question, was how much money have you and Drew raised for your deals and how did you actually raise that money?

Vince Rodriguez (29:01):
So far we’ve raised about half a million dollars of other people’s cash and most of it just came from during the pandemic. For this property we were talking about, the Stone Mountain, Georgia, I remember maybe a year and a half ago, I went to this meet at Newport Beach. I think it was through BiggerPockets, these guys running some meetup and I went there. Those groups of people are talking about different things, ask questions and somebody will answer.

Vince Rodriguez (29:26):
But a lot of people are asking just not smart questions, man. It was just like it doesn’t make any sense so I was just getting annoyed. I’ll respond to those questions but in a funny way. I’m like, “How many LLCs do I need?” And I’m like, “Bro, you make 30,000 in Walmart and you have a Tyco. You don’t need LLCs at all.”

Vince Rodriguez (29:45):
People saw me answering these questions but it will be to the point and there’s this one guy called, Allan, and I didn’t even talk to this guy because this guy wasn’t bothered. He had millions of dollars of real but I didn’t even talk to him because I was just saying hi to people, I didn’t want to push anything, but he contacted me through BiggerPockets and said, “Hey, do you want to go get coffee?”

Vince Rodriguez (30:01):
We started hanging out and I took him to Bakersfield, I showed some of the properties, I kept in touch so I’ll invite him to evenings and stuff, just a guy I met online, but a very nice guy. He actually gave me the entire money to go buy this duplex in Stone Mountain, Georgia. We bought it from [an] off-market deal, so it cost about $170 cash, and we will split everything 50/50.

Vince Rodriguez (30:24):
It just shows that if you take the time to develop relationships and if you are knowledgeable about something you talk about, people do notice it and then they will give you their money because they know what you’re talking about. We’re actually finishing up the rehab right now in Stone Mountain. I’m overseeing it. When I go to Atlanta, I go meet all these people, contractors, realtors, wholesalers, off-market deals handymen, property management. I have all these teams set up in Atlanta so I’m working with those guys. I’m going to be buying another duplex for my sister there too.

Robert Leonard (30:56):
We talked a bit about the partnership structure between you and Drew. How do you structure it with your investors?

Vince Rodriguez (31:03):
Great question. Super simple is if let’s say you’re doing duplex, triplex, fourplex deals, Drew and I keep 50% of the deal, and the partners who we bring in keep 50% of the deal, but they put in the down payment. It’s usually 20 to 25%. Drew and I, we do all the work, but we do still keep you as a partner. We don’t call you as an investor. We could technically on paper, you can pick the color of the paint but would you ever pick that? Probably not.

Vince Rodriguez (31:32):
But you do have the same. Because you’re just equal partners as we do all the work and we just give you a straight return on your money. If he invested like 100,000, they’re going to get $6,000 a year and be distributed monthly. And you get half ownership on the tax returns. It gets a little bit complicated if you want to go into the details because on your 1099 you’re going to claim half the rent that came in as your income. But that’s not the money you get because I pay all the mortgages and the management and all that stuff. But for tax purposes, that’s how it’ll work.

Robert Leonard (32:04):
Are they getting a K-1 or a 1099?

Vince Rodriguez (32:08):
They get a 1099 because K-1s are not worth it for me for these guys. Because like I said, if I’m creating a partnership 1065 tax return for my duplexes, which makes $7 every eight days, is going to be a nightmare because it costs me $1,200 to do a K-1 just for myself and Drew, and if I have seven partners, it’ll cost me 1,200 per partner. It’s not worth it, for sure.

Robert Leonard (32:31):
How are you legally allowed to give them a 1099?

Vince Rodriguez (32:34):
You could do that. Because it’s just a business. My property manager gives me a 1099, let’s say for $100,000. Let’s say I have a duplex with you and that duplex made $20,000, you’re claiming half of the duplexes expenses. I’m going to give you a 1099 for $10,000 for half of that income. Now, are you paying income tax on the $10,000? Heck no. You know that real estate we don’t pay income tax on it because you’re going to claim all the depreciation, all that stuff.

Vince Rodriguez (33:00):
I’ll just look at that property because I have third-party property management. They used to have folio just tells you exactly how much that probably made. Whatever your ownership is, let’s say the property made $100 and your ownership is 100%, you’re getting a 1099 $400 if that property made $100 dollars. Then so on my tax returns, it will show that I got $100,000 dollars coming in but I paid out $80,000 to all my investors, so I’m only on the line for $20,000. [For] my remaining houses, I’m able to just offset that income from all the other assets I have.

Robert Leonard (33:34):
You’re buying the property in an LLC and then the investors are getting, everybody that owns part of the property is getting a 1099 for the percent ownership that they have of the rental income and then they get a different form for expenses and that’s how they write off the expenses?

Vince Rodriguez (33:50):
Yeah. I will actually give them the property manager they have degenerate expensive or posts and stuff so I’ll just copy up the whole thing. They could see my whole portfolio if they want, but so that’s how it works. I don’t actually buy the property in the LLC. I am slowly moving some of my assets into LLCs. I have a couple of LLCs but I do buy them.

Vince Rodriguez (34:09):
Let’s say if you and I bought the property and I’m like, “Dude, I don’t want to do this. Don, can you do the loan?” It will be on Robert Leonard. You will have the title and that’s how he’ll buy the property and then we can move it out of it. We could put it in a trust and change the beneficial interest to an LLC. You want to offset the due on sale clause.

Robert Leonard (34:28):
I’m currently buying deals during the pandemic. I’m actually buying probably more than I ever have before and I know you are too. Why are you continuing to invest during a global pandemic? Why is now still a good time for people to invest in real estate?

Vince Rodriguez (34:42):
That’s a good question. A lot of people ask that. Actually interesting story for me is I’ve been in this game for three years and before, just when the pandemic started, I’ve had five units and $400,000 of assets. That’s all I had. Now I have two and a half million dollars, so I bought over $2,000,000 of assets or 20 doors just in the pandemic.

Vince Rodriguez (35:02):
During the pandemic when everybody told me, “Don’t do it.” That’s the exact reason I did it because everybody said don’t do it and they don’t have any assets. My question is, let’s say I lose all of these houses, I am still better off than the people who don’t buy anything. Going back to zero is the same, if I anything I lost half, I will still be better than people who don’t buy anything. They say like, “I want to wait for the market to dip, and then I can come in.”

Vince Rodriguez (35:31):
But I’m like, “The market to dip, what are you talking about? If the market dips, how well are you going to know what to do? You’ve never bought any asset in your entire life. I constantly buy, Robert constantly buys, Brandon Turner constantly buys. You think you’re going to compete with Brandon Turner and Robert Leonard when you haven’t played the game in 35 years of your life? There is no chance you’re going to get in the game. Because Robert is going to take cash and buy it. You won’t even see the deal.”

Vince Rodriguez (35:55):
They waiting or sitting on MLS. They’re like, “I’m going to buy this duplex.” Like, “Nope, actually Robert sent a direct mail male and he’s in the house right now signing the deal. It’s over.” But you won’t even see the game. That’s why you always have to be in it to understand. It’s like working out. It’s like, “I’m going to start working out January 1st.” You know it’s over for the guy. He’s never going in January 1st.

Robert Leonard (36:17):
When it comes to goals and goal setting, I never set a date like that. I always make sure I start right then. As soon as I think of the goal, I start right then. Around November, December, people start to think of their new year’s resolutions and I never wait until January 1st to start. I always start, if I have goals I’m working on, when I finish those goals, then I’ll get to the next goal.

Robert Leonard (36:36):
I don’t wait until Monday or Tuesday or whatever these arbitrary dates that a lot of people wait for. But what I really liked that you mentioned is that if you don’t buy now and you have no experience, you’re not going to buy in bad times and that was the biggest thing for me because I was that person that wasn’t buying deals. Because I always sat on the sidelines.

Robert Leonard (36:53):
I said, “I’m going to wait for a correction. I’m going to wait for a correction. I’m going to wait for a correction.” Then I learned from Brandon Turner that… He just taught me something that really lit a light in my head, I guess you could say, is that if you’re not buying when things are good, when times are good, money’s easy to come by, everything is great, what makes you think you’re actually going to pull the trigger when something is bad?

Robert Leonard (37:13):
What makes you think you’re going to have the experience or be able to find money or be able to finance a property when things are crumbling around you? You have to be able to have some experience when times are good and have some experience under your belt so that you’re ready to invest when times are bad.

Vince Rodriguez (37:27):
Exactly. That’s a great point, man. I don’t want people to misunderstand us. You still have to do the numbers. You still have to know what’s a good deal and what’s not a good deal. You could play small and try to buy a comfortable number. But last year when we were picking up deals and I was buying deals now people who are waiting for the market to dip, it’s gone up 15%. It’s over. You already lost.

Vince Rodriguez (37:50):
Now, what are they doing? They’re like, “Well it’s gone up 15%. I got to wait.” It’s not going to be working out in your favor. It’s just bad news. You’re not leveraging other people’s money. It’s just there’s nothing. People who don’t own assets in the U.S., they’re getting screwed man, left and right. It never works out for them.

Vince Rodriguez (38:07):
Even if you take, let’s say you’re taking money from the government, you’re getting every month, it’s not really serving you anything. They are spending so much money, they’re giving it to you, what are you doing with the money? You’re giving it to me. You’re giving it to Robert. We own assets. We are going to increase the rent. It’s always going to work out in our favor. You are never going to win. You’re always going to lose.

Vince Rodriguez (38:26):
Doesn’t matter. When you go to the store, we’ll give you 1000 bucks every month, free money, eggs are now $15, it’s not $5. And who owns the eggs? Well, Robert owns the grocery store. Okay, great. He’s depreciating the grocery store and he’s riding up the expenses and you’re going to pay more for the eggs. There’s no way. You have to own assets [in] this country, otherwise you’re going to get screwed.

Robert Leonard (38:46):
You mentioned the most important thing that I talk about all the time, the numbers have to make sense. I said I’m buying more right now than ever before which is true and I think now or any time is always the right time to buy a deal but then numbers have to make sense. You can’t just buy a bad deal to buy a deal. But if the numbers are great, it’s always a good time to buy a deal.

Robert Leonard (39:05):
It’s crazy for me to even talk about this because I never thought about that before. I always thought I could time the market. I always wanted to buy at the lowest of the low, but now I just realize it’s so much more important. If the numbers make sense, it’s always the right time to buy a good deal.

Vince Rodriguez (39:20):
You have an interesting perspective because I know you also have another podcast for stocks. You have the perspective of the stock game and the real estate. I’m super techno with stocks. I do have stocks because I work for a company [inaudible 00:39:34] a lot of stocks but it’s like one particular company stock and it’s on the OTC market. But I didn’t have to a little bit 401(k) and somewhere around maybe 20,000, not too much. But I am not into stocks because a lot of the people even people who I talked to, they’re like, “Well, it’s stocks versus real estate.”

Vince Rodriguez (39:48):
I’m like, “Stocks versus real estate, Dude you’re not even in the same room as me.” They’re like, “But let’s see who does more?” I’m like, “Who does more? I’m using my sister’s quarter-a-million dollar cash. I’m getting infinite games. Can you borrow money from your mom to Invest to buy Microsoft stock? No. So you already lost, it doesn’t matter. I’m not even using my money to generate wealth anymore.” It’s like, you can’t compete with someone who raises money. They’re always going to win.

Robert Leonard (40:14):
I think there’s room for both. I think both asset classes have their place in someone’s portfolio. If somebody doesn’t like stocks though, they don’t have to have exposure. But I personally like to have a little bit of exposure to both things in my portfolio and I’m leaning more towards real estate these days than stocks but I definitely still have stock exposure and I probably will forever.

Vince Rodriguez (40:34):
There are some tax-advantaged accounts. For example, my company matched a little bit so they’re matching it at 1%. I’ll be stupid not to put 1% to get the free money. That’s basically number one. Their tax brackets are higher. You’re paying 50% taxes. You might want to contribute some into 401(k)s. I definitely like [ROTs 00:40:54]. That’s awesome.

Vince Rodriguez (40:55):
You can own assets, you could buy houses from an LLC, which is owned by a ROT. That’s interesting. That goes tax-free. Any money you generate from the rental property that’s inside your ROT doesn’t pay taxes forever. That is just crazy. Those things that you can’t beat for sure, you have to look into those things.

Robert Leonard (41:15):
Which types of resources have been most helpful and influential for you as you’ve grown as an investor? What have been the most important things that you’ve learned from those resources?

Vince Rodriguez (41:25):
Would say number one is audiobooks for me. I read, and regular books too. It goes from super nerdy to a little bit nerdy. I do read a lot of books, dozens and dozens of books so that was my number one resource. It helps me think differently. I would have never thought like Robert Kiyosaki and his dad. I could have gone my whole life thinking I’m a genius, I’m making $110,000. What a great person. I am useless. Literally wasted my whole life.

Vince Rodriguez (41:55):
But you read this one book and it’s like, “Wow, I’m just the biggest idiot.” I know, this crazy. Another thing I really, really started enjoying was podcasts like you, Axle’s Multi-Family Wealth, I like that. Robert, Cliff, and BiggerPockets. All these guys, it’s so valuable and it’s clear. What are you doing? Are you listening to [the] radio?

Vince Rodriguez (42:16):
I was so sad that I was listening to [the] radio and I was going to work and I commute an hour every day. I was like, “Wow, I spent a year listening to the next song Katy Perry released.” That was just crazy. You have so much stuff nowadays that you have access to so much information. There’s literally no excuse you could give yourself anymore. It’s just crazy.

Robert Leonard (42:38):
I completely agree. I think for me one of the biggest, has had an impact on my success is from turning my car rides and my commutes into a mobile classroom. It doesn’t cost a lot of money to buy audiobooks, podcasts are free. You can learn a ton of information rather than wasting that time listening to music in the car, you can use that time to get educated and you kill two birds with one stone because you’re doing your commute anyway and you’re able to learn.

Robert Leonard (43:04):
For me, for a while, I was commuting an hour one way to work and an hour home. I had two hours a day where I was just wasting time where instead I could start using it to learn and use educational resources, and I think for me, that’s probably had one of the biggest impacts on my life and my success.

Vince Rodriguez (43:21):
That made us really good, and if means something, I’m a musician. I play in a couple of bands and I’m saying listening to music is a waste of time all the time. I’ve created music and I play music. I love playing piano and stuff but still, one hour a day just back and forth, you got to start putting something in your brain that’s the important and thing. Another thing you could add to this is definitely the people you hang out with. After reading all these books and stuff, I don’t even hang out with the people I used to hang out [with].

Vince Rodriguez (43:50):
I just tell them no, it’s a waste of my time, I wouldn’t. I want to be [the] biggest loser in the gang I’m hanging out, because then I’m learning from these guys. If I’m a rockstar in the gang, I’m not learning anything. You want to hang out with your high school buddies, maybe give them every third Thursday, six to 8:00 PM, that’s it. They can’t be coming to your house every day and talking about the latest bachelor episode. That’s a waste of your time.

Robert Leonard (44:15):
I’ve done that as well. My circle has gotten a lot, lot smaller over the last couple of years, and it’s hard to quantify what impact that has had on me but I know it’s been a big one. I know it’s been a big focus for me so I completely agree with that as well. Vince, thanks for joining me on the show today. For those listening that are interested in learning more about your journey and want to connect with you, where’s the best place for them to go.

Vince Rodriguez (44:39):
You can DM us [in] Instagram or you can go to our website. It’s the same. It’s AnVi Investment. It’s A-N, as in Andrew, and then V-I, as in Vince. So AnViInvestment, one word. You could do .com, you could go to our website. Shows the stuff we’ve been working on, portfolio, and stuff. If you go to the Instagram, you can always talk to us. We also do some consulting if people want to know how they get into that and stuff.

Robert Leonard (45:07):
I’ll be sure to put a link to Vince’s resources below in the show notes. If you guys are interested, you can check that out there. Vince, thanks so much for joining me.

Vince Rodriguez (45:15):
Thank you, Sir. Nice chatting with you.

Robert Leonard (45:17):
All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (45:23):
Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.