Epic Real Estate Investing - Enrico Sanchez - Opportunity Zone | 523

Episode Date: November 22, 2018

Meet Enrico Sanchez, an Associate Vice President of Wealth Development at Caliber Companies, who took small steps to finance and real estate to finally become a very successful entrepreneur. Learn about Caliber, its Opportunity Zone Fund as well as about the tax benefits you get for investing in them. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, Rockstar, Matt here. I wanted to take a quick moment to express my gratitude for you on this Thanksgiving. And just give thanks for starting our ninth year of the epic real estate investing podcast. I mean, thank you so much. I couldn't have done it without your support, without your willingness to share the show with your friends, to share it with your family. I mean, there's really little that pleases me more than hearing that people found the show based on a friend or a family member's referral. So, thank you. I can't say it enough.

And to show my gratitude, I've got some. something really special for you tomorrow. I don't think we've ever had a Black Friday promotion. I've never been much into the ritual, but the team insists, and they've made a compelling argument for it. So they put something together for you that you'll totally be able to appreciate. So look out for that tomorrow. And until then, enjoy this time with your loved ones, and enjoy today's show.

This is Terrio Media. All rightyty, so hello and welcome to another episode of Thought Leader Thursday right here on the epic real estate investing show. So today I'm joined by a real estate entrepreneur who started off his journey selling fruit in front of his house to help his mom pay for his soccer fees. And then from there, curiosity and passion for finance and sales and real estate started a form to where eventually he created a consulting business. And he's working with a venture capital firm now, an angel group formed by a Grand Canyon University professor, an angel investor. So as an associate vice president of wealth development, the real estate wealth development firm, Calibur,

He works with clients to help them grow their wealth through investing in Calibur's funds and their various strategies. So please help me welcome to the show, Mr. Enrico Sanchez to Epic Real Estate Investing. Welcome, Enrico. Yeah, and thank you, Matthew. I think it's something truly special with what you're doing with your brand and with the podcast. So thank you very much for having me on the show today. You bet.

Yeah, I stumbled upon you on Instagram and you've got a lot of interaction and it sounds like you're doing some good things. I was reading your captions and your bio. And I was like, wow, this might be a really good fit. So thanks for accepting the invitation. I'm glad we're here. Before we get into what you're doing today, what were you doing just prior to working with Calibur? So prior to work in Calibur, as you mentioned, I was at a venture capital firm, and I did have my consulting business.

I also, so I was actually introduced to Calibur through a group. It's called an Angel group. And through that group, I was able to dive more into finance and also be referred to the CEO here at Calibur. So it was a great group and it was a great way to get started. And from there, I just was really just hustling. I started off going door to door for my consulting business. I didn't know anyone here. And, you know, lucky enough, I actually got a few clients just going door to door.

And one of my first marketing clients that I got was actually one of my first. investors here at Calibur. So it was a great experience to do that. Great. So explain me. What were you consulting on? What were you doing going door to door? So I was, mostly when I started off, I was providing sales funnels, you know, just general social media. I also did apps for people and websites. So I had a team of developers that I would outsource some of the stuff to and I learned how to do design. And so I kind of started off my entrepreneurial career, kind of being the yes man, so to say, just connecting people with what they need and who they need and, you know, making my part. Okay, I get it. Okay, so you're doing

kind of like B2B marketing, I guess, is that's what you're doing? Exactly. Okay. So where the attraction to real estate come from? You know, I've always been really interested in real estate. My dad owned a mortgage company. My mom, you know, she did some real estate herself. And so there's always a big interest there. And then the other thing, too, is that everyone needs real estate, right? One way or another, it's always going to be something that's needed. And so, like I said, with that group Canyon Angels, I just really started to dive deeper into finance. And when I did that, I dove deeper into real estate and different investing options and different things like that. And that's how it came across Oliver with what they're doing, because it's kind of different.

I've heard some of your podcasts talk about syndications. And so, you know, Calibur's not, they don't syndicate deal by deal. There are some deals that they do, but they're more of a, have a limited partnership where you can invest in different funds. And I thought that was really unique in how they were doing it. And kind of making real estate more diverse for any type of investment strategy. So that really was awesome to me. And also, Calibur is a very on.

entrepreneurial company. The two founders that really started this company, they were both very entrepreneurial on how they started. 2009, 2008, when everyone was running away from the real estate market, that's when they were getting in. That's when they were building trust with investors. And because of that, they've been able to do extremely successful to this period of time. So as far as their investment focus, their investment strategy, their interest, where does that lie predominantly? Or is it extremely diverse? It's extremely diverse. It's extremely diverse. So one thing about Calibur is, so right to date, we have $375 million under management. We have $225 million of investor capital investment in projects, and we have four different

funds. So it's really diverse because if you wanted to get monthly cash flow and invest in residential homes, you can invest in a residential advantage fund. If you want to get a fixed income, then we have a fixed income fund that goes out there and lends short-term. debt and senior debt to our other assets that we're acquiring. And then we have a kind of our flagship fund or diversified fund. And it's really unique how that works. It invests in multifamily, hotels, retail, you name it, commercial. And then last but not least, we have a very new fund, which is kind of playing off of the

new 2017 tax laws and the Jobs Act and tax laws. And so we actually released a new fund around the Opportunity Zone funds. Got it. Yeah, that was what I thought was most appealing and interesting. Explain to me what this opportunity zone is. Yeah, so, well, first off, to kind of, before we talk, it's a major tax benefit to the investors. But before we talk about that, the great thing about it is kind of like the catch to it, is that the funds have to invest in these Opportunity Zone places.

So basically, the Federal Opportunity Zone program allowed the state governors to choose about 25% of the state's low-income census tract. And so because of that, you know, a lot of people think that these areas are undesirable. And that couldn't be further from the truth. Give me an example of one of these areas. So one of these examples is a perfect example is Grand Canyon University. Grand Canyon University, if you don't know about it, it's a great kind of case study of what funding into a low-income census track can do. For instance, about 10 years ago, that 1,000 students on campus. Now to date, they have a little bit north of 20,000 students, but that's not even the great thing about it.

The great thing about it is a fact that in one year alone, the crime rates dropped by nearly 30% in the area, and the home rates and the income for the businesses has just roan exponentially since GCU's been funding money into that area and have students, you know, put their time and efforts to that community surrounding GCU. So that's a great example. Another one is downtown Mesa. We now have eight assets there that are in the opportunity zone. And it's another great place that, you know, they're just growing and growing. They're really putting a lot of effort into growing that downtown community right there. Got it.

And so your fund, the Opportunity Zone Fund, is that what it's called? Did I say that right? It's, yeah, technically it's a caliber tax advantage opportunity fund. Got it. All right. So that fund goes out and looks for to take advantage of this Jobs Act. And that's where they focus their financial focus, I guess, right? Exactly.

So we actually have, like I said, we have 15 assets right now that are sitting in opportunity zones. Now, that's not going to play a part for our fund right now, but it kind of goes to show that's RD caliber strategy and how we invest. And investing in those, we think, are very desirable areas because they have a lot of potential to grow. Right. Okay. So it's a long-term growth, long-term development type vision, right? Exactly. This is to both end of residential and commercial?

Yeah, so a lot of it's going to be like our diversified fund that we have right now. So a lot of it's going to be commercial, retail, residential, and especially ground up development. That's another thing. Calibur has an amazing development and construction team in-house, and that's going to play a vital role into what we do, because part of this program means that we have to add substantial value to any, asset that we acquire. So we have to put renovation or ground up development, whatever it may be.

So that makes it very advantageous for us because of the pure fact that we have to, you know, utilize our development team and our construction team. Right. No, I think that's a lot of people don't understand that distinction there where funds are actually in control of the development. And then there's other funds that just give their funds to other funds and like kind of pray and hope that they do it right. So the fact that you guys are in control, I think it's a huge advantage for any fun and obviously for what you guys are going after. I assume I'm going to still it right out of your mouth because of the most exciting part about this program is going to be the tax advantages. Right. So the tax advantages are big time. First off, one of the biggest things is that you're

able to defer your capital gains. Now, it's meant for people who have capital gains. Right now, there's about $6 trillion, I believe $6 trillion in assets that are just sitting there, right? No one's doing it. No one's realizing their gains because they don't want to sell their property and pay the taxes or they don't want to do a 1031 or they don't want to sell their stock in Apple that's increased rapidly. So there's a lot of people sitting on their money and this gives an opportunity for people to invest their capital gains into a fund. And when they do that, it allows them to defer the taxes that they would pay until 2026, December 31.

And what people don't realize about that is, you know, it seems cool. You don't have to pay taxes for now. But what people don't realize is the present time value of the money, right? Because when you put it in a fund that's going to grow interest on the money, then you're not just paying taxes right away. You're going to grow enough interest to potentially pay off the taxes and have the money that you had originally paid the taxes on. That's the first thing.

The second thing is that you are able to get a step up in cost basis, which is eventually going to, if you're in the fund for seven years, it'll decrease your taxes by 15% that you would normally pay. And lastly, one of the biggest things is if you're in this fund for 10 years, you pay zero on your gains from the fund, not on your taxes, but on the gains from the fund. Mm-hmm. Nice. Yeah, so based on what you're saying, as amazing as those benefits are, obviously, not everybody can benefit from them. So who is the ideal person for your fund? Do you have like an avatar or the ideal situation for who might be interested in this? Of course. One of them would be, you know, and we've got a lot of interest from people in a bunch of different scenarios. One of the main scenarios is people that have been 1031 and they just, you know, and we've got a lot of interest from people in a bunch of different scenarios. One of the main scenarios is people that have been 10.

running and they just, they want to get out of that game. So they want to sell their asset and they want to take their principal to live on or go travel on and they want to invest their capital gains. Another one is people who have, you know, they've made very successful investments and now they're ready to realize their gains on it. Another one is people that get stock options from their employer and now they have to act on it. Got it. Perfect. To back up, just a little bit. What is the, what is the big strategy? With that many funds and having that much money under management, you got to keep it working, so you have to continually find new opportunity. What is the process at Calibur for finding new deals? Yeah, so we actually, as of right now,

we don't even really necessarily go out and look for deals to acquire. We have a ginormous pipeline of people that are trying to, you know, give us their deals or whatever it may be. And by default, you know, Calibur is very strategic in how they do that. And because we have a lot of opportunities, a lot of partnerships, a lot of times, you know, we just get great deals from people that we know. And people within our network that say, hey, I know someone that's trying to sell this property, maybe struggling with it, this is what needs to be done. And Caliper can come in and say, this is perfect for us.

We know how to manage this hotel because we have a partner with a hotel management team that just is amazing at their job. And so we could acquire a hotel that's in perfect quality condition and just manage it better than the last guy. Right. Yeah, at every level it's still a people business, right? The relationships are what run everything. It's awesome.

So if someone wanted to get in touch with you, Enrico, or wanted to inquire about the fun, what would be the best way for them to do that? The best way is just going to be, well, there's two options. Check out caliberco.com. and you know you can look more on there. If you want to see more about the opportunity zone, you can do caliber.co.com slash opportunity.

And lastly, if you want to talk to me directly, you can email me at Enrico. dot Sanchez at caliberco.com. Fantastic. Super. Well, this has been a pleasure. Let's stay in touch. I'm always interested in talking to people

when they've got new and creative ways of doing things. There's always so many insights I can gain. And I know the audience can as well. something new and exciting comes up your way that you want to talk about. Enrico, I invite you to come back, okay? Yes, sir. Thank you very much. And I totally agree.

I think what you have there with your community is a great candidate for hearing about this, especially a lot of probably people in your community that invest and do the 1031 exchanges. It's going to be a new opportunity for them to do something different than a 1031 and get the principal back from their investment and be able to go travel or live on it or whatever it may be. Right. No, I get that. I think there's so many options out there and people just don't know where to look for

them. Like if they just knew what was available, then it could make some better decisions for what they want to accomplish for their future. So that's why I had you on. So I really appreciate you coming on, sharing that with us. And we'll stay in touch, okay? Thank you, Matt. I look forward to.

I'll talk to you soon. You bet. Take care. All right. So thanks for tuning in to another episode of Thought. to Thursday. God bless to your success. I'm Matt Terrio. See you next week. Live in the drink. This podcast is a part of the C-suite

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