Epic Real Estate Investing - How to Escape the Rat Race in One Year, or Less... | Episode 78

Episode Date: December 2, 2013

Fernando Ornelas, Epic Pro Academy member, shares his story with Matt how he escaped the "rat race" in less than a year. Specifically, you'll hear how Fernando acquired his first group of properties, the strategy he used to acquire his second group of properties and the strategy he's now using that has built his personal portfolio of equitable interest in 100 properties in less than a year. Download Matt's free real estate investing course How to Do Deals : No Money Required and learn how to invest yourself, or visit CashflowSavvy.com where Matt will show you how he can do all the heavy lifting and investing for you. Subscribe to this podcast at EpicRealEstateInvesting.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Yep. Yep, yep, yep, yep. Hello, and welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Very happy that you're here. This is the place where I show people how to get out of the rat race using real estate. and it all begins with a simple shift in mindset,

a shift in focus. Simply stop focusing on creating piles of cash and start focusing on creating streams of income. Streams of cash. What we like to call in the real estate world, we call that stuff cash flow. It's so cool. By doing just that, making that shift and mindset,

I escaped the rat race in less than four years. What literally 99% of our population is unable to do in 40 years, and I don't share that with you to brag. No, not by any means. I don't consider myself special in any way, meaning anyone can do this if someone would only just show them how. Someone was gracious enough to let me in on this particular life secret, and now I'm letting you in on it.

I'm paying it forward, so to speak. And if you think that's the good news, it gets even better because, you know, it took me just under four years to escape the rat race, and that was with making a ton of really dumb mistakes. But the great news about that is that you don't have to make all of those mistakes, meaning if you hang out here for a while, you know, you just hang out here, you and me, you should be able to travel that road much quicker than I did. And to help you get started, I created a free step-by-step course to show you exactly how to do it,

to show you exactly how I would do it if I had to do it all over again. And you can download that free course at free real estate investing course.com. Free real estate investing course.com. Okay, on the show, today I'm joined by one of my coaching clients. a member of the Epic Pro Academy, who I've actually helped this year escape the rat race. And if he does it right, we've escaped it forever. But if you know him the way that I do, you know he'll probably never retire. But now he's working because he wants to, not because he has to.

Awesome dude. He's become a really good friend, a partner, and we'll get into all that. But let me introduce you to him. Here, live and in the studio, I'm joined by Mr. Fernando Orneles. Fernando, welcome to epic real estate investing. Thank you, Matt. Thanks for having me here. You bet.

I'm really happy to have you here. Thanks for taking time out of your day to chat for a while. No problem. Sure. Hey, to get started, can you just share a little bit, I don't know, about your background? And specifically, you know, what life was like for you before you decided to become a real estate investor. I know you kind of have two phases of real estate investing in your life. So let's go back to the first phase and kind of explain that and bring us up to speaking of where you are today.

Sure. Definitely. So I've always been intrigued with real estate. Started very young. I actually was best enough to purchase my first property at the age of 21. I remember buying it. And at the time, I was almost done with my undergrad and bought it, rented it out. Within a year, I sold it and made almost about $30,000 in profit. So it was 100% capital gain. And I looked at the time, I was working part-time and finishing school, and I figured, I was in my paycheck on which I made that year as opposed to what I made in real estate. It was like three times as much. And I figured, wow, here's something that I can really grow on to and grow this part. So from there on, I started reinvesting that and buying additional property. But it was always for, with the intent of reselling it. always the intent of speculation and capital gains.

For some reason, I just thought, if I just buy it, in one or two years, I can just go and resell it. And sure enough, I was blessed enough during that time, I was just, I didn't know it at the time, but I was just riding the wave this whole time. And here I thought I was... What year was this? This was... This was back in the 90s, so late 90s. Late 90s.

So it was about an eight or nine year run. All right. So I thought that, you know, I thought I was, you know what? I'm like Mr. Mini Donald Trump here. It's really easy. All of these could just got to buy it and wait a couple years and then resell it. And sometimes, you know, you'd make, you get some really great checks, some hefty checks. Especially here in California.

Yes, it was all in California. So absolutely. Then came 2007, 2006 or 2007, I started investing out of state. And same thing. Everybody was going crazy. And this was in the state of Arizona. So I went out and did the same thing. And it was incredible.

I go out and look at a couple of properties. At the same time, there would be, you know, multiple investors there are trying to buy. And so I also went into that market, bought a couple of properties there. Now, at the time, which is this is just, I don't think I ever told you this, Matt, but at the time, when I purchased that property, I bought two properties, from day one, it was negative cash flow. from day one. But my intent with that purchase was to resell it in two years and obviously read the benefits of a capital gains.

So again, all speculation. Right. So, and then I went into another area that I was unfamiliar with, which is construction. This is already in 2007. And I wanted to build a single family home and then resell that. And obviously 2008 hit and, like many people, it basically abolished me. So at that time, it was a hard hit for me at the time. And just like many people, I wasn't the only one.

But the tidal wave just came down and I had to start over again, you know. Right. And at the time, even though I was devastated and I was, you know, I was upset and disappointed in myself for not seeing the signs and, you know, not properly to prepare myself or educating myself. But, you know, a 10-year run, you know, I'm thinking I was Mr. Mini Donald Trump. I think this is easy. So I took some time off to really recoup.

I knew I was going to get back into it. I wasn't going to let these events, you know, define me. But I just needed some time. So I let a year, a year and a half, two years pass. And I started going back into educating myself. I said, you know what? I'm going to come back into this game. but this time

I'm going to educate myself and find a mentor more importantly than anything else and I know that you're a big promoter and advocate of Robert Kiyosaki Matt and you know I'm a big fan of his as well and you know he's all about financial education he calls it the new money you know right the ROI for him is a return on information

so I became a seminar junkie and podcasts and books and and I really became obsessed. It's probably the best word to describe it, with wanting to succeed in real estate. And after multiple avenues of

connecting with people and going to different networking events, and it's always funny at these events where I come and meet certain quote-unquote gurus or you come up to them and they tell you that they know everything about real estate and I get excited and ask them, so what area do you specialize in?

What do you do? What do you do? Do you Fix and fix and flips or what do you own? Well, and then they would have answered, well, we don't own anything yet, but I do know everything. You know how that goes. I met that person before. So I knew that I wanted to get aligned with and be associated with a mentor that had a portfolio that was actually not only teaching it, but he himself was already doing it. And that's why I came across you. I found you and I connected with you, but it took me some time.

You know, it wasn't like I just, it took me about seven to eight months to really listen to you and your podcast. And I felt really comfortable when I contacted your office. And that's what all started. Got it. Got it. I remember that day. Yeah. You're actually, you actually, I don't know, you kind of contact me more of as a do-over listener, I think, didn't you?

I did. Yeah. I mean, that makes sense now that I know the whole story because, the real estate thing was essentially a do-over for you. Right. Or at least that's what was in your mindset. Right. Right.

Cool. So here we are, you know, we met a year and a half ago or so. And explain to me, you know, what you've done since. One thing that really clicked and it registered, Matt, right when I started, when I hired you as a mentor, coach, was, And it's just, it's such a simple, it's simple, but yet not many people really understand it. It's really investing for cash flow or investing for capital gains. You know, one produces portfolio income and another produces passive income. You know, like you said at the beginning of the show, it's, would you prefer piles of cash or streams of cash?

And looking back at when I first started investing, it was all based 100% of speculation. You know, I wanted just to get that big payday. you know, make the $20,000, whatever it was, $20,000 and $30,000. But that really resonated with me, and it clicked, and I understood. And another thing that I noticed with you was your resourcefulness and a resource base. And that's when, you know, the famous Michael Jordan quote, with talent wins games, but teams win championships. And I wanted to build a team around me,

same thing to help build a real estate empire because I love real estate and I was always intrigued by it and I remember reading a blog of yours where either you have time it's time money credit or knowledge right so I wanted to build a team around those four categories you know people that had the time money credit or knowledge and and help build a portfolio that way and form joint adventures. And that's when you knew and I got together earlier this year and started doing that. So I just, I just feel so blessed, Matt. This year has been just incredible, incredible what we've done this past year. And I know that I couldn't do it alone. I know that I had to go out and reach a mentor to be able to accomplish that. So I'm going to teach me and guide me and hold my hand. And that's

what you've done for me. Super. Sure. So since we've done this, I mean, I'm aware of what we've done because we've done a lot of business together. And I saw you over there before we were starting to record. You were over there with your pen and paper and you're you're tallying up some figures. And, you know, bring us up to speed. What have you accomplished? What do you actually have? What's tangible for you right now after a year and a half? Last night I was telling us before we started recording this. But last night, I couldn't believe it. Last night, I tallied up. are what we've accomplished in the last 15 months, you know, between personal and the joint ventures that we've established together. And I tell you up, we have 45 single-family residences. Wow. And going into the multi-unit buildings, we have 55 doors. So if you, if you tell it those up, it's, it's 100 doors in 15 months that we've, we've, we've, we've, we've,

able to acquire. Awesome. And this is what blows my mind is there's no banks involved here at all. No banks. Right. I can't believe we've done that much together. Well, a portion of that, I mean, a good portion of that part of that, the single families for sure.

You picked up a bunch of those on your own. Yes. Yeah. Right. So let's kind of, so that's what you got. How did we get there? So, you know, we started coaching and you kind of took a different path. You know, I had on a couple coaching clients a few episodes ago,

and they very much went out there and started pounding the pavement and getting the deals and putting them under contract and assigning the contracts and sending them to their buyers list and blah, blah, blah, blah, making all kinds of money wholesale. You actually chose a very different path. So why don't you tell me about that? Sure. I wanted to build true wealth. That's my whole intention.

And I know you have a lot of coaching clients that want to go and learn how to wholesale and so forth. But what I wanted to do was build teams and create wealth from that. And that was my objective from the very beginning is how fast can I get out of the rat race? What do I have to do to get out of the rat race? And kind of work the formula backwards from there on it. But yeah, that was my plan from day one was to buy and hold and just create wealth and earn enough pass. of income, obviously, cover my expenses. Right.

Okay, so you had a very different mindset coming into the coaching program. So what was your first step? Tell me about your very first acquisition. Sure. The first thing I did was obviously purchased a couple of SFRs for my wife's and I portfolio. And then from there on, after talking to you, was to be able to utilize a little bit of beverage and bringing some partners. That way, you have at least a small equity portion of that portfolio.

So it's very interesting because a lot of times you go to your personal relationships, not knowing where it can lead to, you know, I think a lot of people are very intimidated by that. But looking at my personal relationships, I was able to pull together a couple of joint ventures, not knowing that they had any interest to begin with. you know, initially. Okay, let's stop there. So you purchased a few properties on your own.

Right. You and your wife. Right. Then you went and you started tapping into your own personal network. And you just said something right there that I think is key. You didn't even know they had interest. So how did that conversation or how did you peak their interest? How did you find out whether they had interest or not?

What I did was I went to my personal relationships and, you know, just in conversation. they asked me that things were going and I started kind of talking about what I have been doing for the past couple months and depending on how the conversation was going I can tell whether they had some interest or not

and for personal friends of mine or acquaintances I had interest I mean I can just tell and I would tell them the ROIs that I was getting and they were just fascinated by it and then from there on they started asking me well how can I get into it

Right. Right. And one thing that I also learned from you, Matt, too, was what's worked for me is, is a lot of times you would ask that person if the knew anybody else that would be interested in that. So that also has helped for me in the past, too, you know. So it's, it's, you'd be surprised. If you really sit down and look at your, your person, you're just your immediate network. Okay? And you just look at potentials who'd be interested in you approach them.

And then from there, you just, one person needs to another person. And, oh, you know what? You can go talk to my uncle or talk to this person. And it can lead to many, many opportunities that you had no idea, you know, could even come into fruition. Right. So really just not keeping your success a secret. No. Really is what it is.

And there's a, the, I guess the hint there is not to go out and brag, but, you know, in casual conversation, people ask, hey, what's going on? What's new? There's your opportunity to actually share with them what's new. That's exactly right. Right? That's exactly right. Perfect.

So you did that and you acquired, I don't know, another half a dozen properties that way, right? Right. Half a dozen. Yeah, we actually bought all dupexes too. So that was 14, actually 12 doors. I'm in there. Super.

So how, I'm kind of setting myself up for this one because I already know the answer. But how did you find those deals? Well, obviously through, you know what really helped me too was, I know you hosted a couple of, or you host property tours. And that really helped me. I went out last year to two of your property tours out in Memphis. And that really opened up my, I mean, my whole, the realm of possibility. Right.

What we can accomplish here? Okay. So that's not where I thought you were going, but now the sense you brought it up, What was it about the tours? What did you see on the tour that you couldn't see from a video or hearing the podcast or read in a book? You see all the action. You know, the way you had the property tour structured. You see the before, the during, the after process.

And I'm talking about the rehab. So that really, it was, to me, it was actually fascinating to see that, you know. Because, you know, sometimes you're just stuck in your little bubble. A lot of times I also have, you know, I have certain friends of mine that won't go. outside of California or are too afraid to go outside of California. But I'm going out to the property tour that really, really, really, and the light ball went up like, wow. Super.

So obviously that tour instilled the confidence in you moving forward. And that's where you purchase your properties. Correct. Got it. All right. So you've got, I don't know, about 10 by now. Then you came through and got those using, leveraging our team, the cash flow savvy team. Right.

And then, so now you're kind of, I think you kind of shared something with me that at that moment, okay, I'm done with this. Not done with this, but I'm ready for something bigger. So tell me, explain to us the next step in the process. Sure. From there, I started, I've always been a big thinker, Matt. I know. I know. Just like Donald Trump says, if you're going to think, just think big anyways, right?

Right, right. So what I started thinking of was who in my network can, you know, and either refer me, number one, or number two, be involved with me to be able to pull together funds and just buy, you know, a couple hundred properties. So from there on, what I did was I actually had a couple of friends that were already involved in real estate. A different type of real estate, they actually do more of a fix and flips and construction. So I went to them and I showed them. what I was doing and the return we were getting,

even though it was a completely different business model than what they were doing, they obviously understand ROI's and they see the returns, and it was a no-brainer for them. But I want some of this, you know. So from that point, I think for them, Matt, since we have an established relationship, it was a lot easier for them to,

take my word for it. And without hesitation, they just jumped on it. And that's when we formed a couple of joint ventures and started buying, you know, multiple properties. That it. You know, you mentioned one of the things that stuck out to is, you know, to be a successful real estate investor. You need knowledge, money, time, or credit.

Right. And, you know, you were acquiring the knowledge as you went and you had some past experience. At least you knew what not to do from your past experience. obviously you had some flexibility in your time and you had some money of your own. You had some other money and your resources. But I think what allowed you to access most of that is the credit part. And I'm not speaking of credit score.

I'm speaking of credibility within your network. Right. Where it actually, when you went and shared yourself and you shared your success and you presented opportunities to the people within your network because of your credibility, they were very receptive. That's correct. That's right. And I think that's, uh, there's an invaluable lesson there. So it's not only important for you to maintain your credibility inside of your real estate investing. It's also just in your overall life because you already, uh, paved the way for that. Right. Perfect. Um, all right. So we, you've got some

bigger fish that you pulled into the game. And we went forward from, um, you, you've got some bigger fish that you pulled into the game. and we went forward from there. So what did we do there? Well, from there, what we did was, this is the most exciting part, is that once they started to see, and we actually flew out to one of the markets to look at the properties and what had been purchased already,

and these are the actual partners, they got excited. So from there on, what they're starting to do now is now they're going to their networks. And now they want to go ahead and refer us, even more people to come into, to work with us as well. Right. So it's like a, it's a domino effect. You know, that's the most exciting part. And we're just getting started.

That's what gets you the most excited. Because we see what's been happening. Now they're going to refer their friends. And it's just going to continue growing that way. Now that we have some established credibility and they're seeing the returns. and it's already, it's real, it's here, it's happening. So that's what's, that's what I'm, and just can't even sleep over thinking about it. I know you, you frequently text me in the wee hours of the morning.

Okay, so what are you, that's obviously what's going on, that's what you've done. You've acquired, you know, 100 properties, 100 doors, you've got equity interest and 100 doors now. And you're excited because you're starting to get the referrals of the bigger money. Right. So what do you see in your real estate investing future, and how is that going to impact your life? You know, I have a note I'm a refrigerator mat to myself. It's from myself to the future Fernando. And I'm sure you've probably heard it before.

But if your dreams don't scare you, they're not big enough. So I actually want to, I want to build, I want to build into. to be part of and have some type of equity position for a couple thousand properties in the next few years. And what we've done in the last 15 months, it's going to be very attainable

because I already know the basics of it. It's not far-fetched. Right. It's pretty, it's going to sound very difficult for a lot of the listeners, but it's not that difficult, you know, to do that. that once you've established the base, you know.

But I can't emphasize on building the team. You've got to have a team together, you know. And using those four, the time, money, credit, and knowledge, you've got to see what you bring to the table and how can you bring, how can you partner up with somebody that has the missing link? Right. To build that together, you know?

Because why do it alone? Right. Right. Yeah. If you're in the business long enough, you realize that you can only hit, a certain level all by yourself. And I figured that out in 2012 with Mercedes and myself running this business 100% by ourselves.

You know, and we did really well. We had a seven-figure year. And we went and we consulted with an investor, or not investing, a business coach. And he told us that, you know, I can take you to eight figures, no problem. But you'll essentially implode unless you start hiring more people. unless you start building the team, unless you start preparing for scale. And that's exactly what we've done this year. So I get it.

Yeah, team, it's everything. And it's one of those things like taxes. Like taxes are such an important part of your real estate investing, but they're so boring to talk about. Like there's no sizzle in taxes. And I think same with the team. Like you hear that over and over again, you know, team, team, team, yeah, yeah, yeah. But there's no sizzle in that.

But it absolutely is one of those building blocks of your real estate investing career. I mean, you don't want to be wholesaling properties. You want to be slanging properties for the rest of your life. You want to be able to scale and do the big stuff. You're right. And you know what too, Matt, even if you look at, you know, the many real estate gurus, quote-unquote, that I've even followed before with their books, they have teams in place. They don't do it alone. I mean, they have teams.

Even if you look at, even like Donald Trump and Robert Kiyosaki, you know, Ken McEnroy. They all have teams in place. And that's what you need to do. You need to kind of diversify a bit and partner up. Partner up. And you know what happens is the velocity of money starts to build even quicker if you do it alone. And it's all about the velocity of money. How fast you do it.

Right, right. I think that with the market opportunities we have right now, speed is absolutely essential. You know, one thing that I remember asking you, Matt, you probably remember this, but about a year ago I asked you, I know you talked to a lot of different real estate gurus. And there's one thing that really sat with me, and I won't remember, I won't forget this, but you also asked a lot of successful real estate entrepreneurs, what do you regret the most? And the answer to you, I should have bought more when the time was right.

Remember that? Mm-hmm. I do. Yeah. That's, yeah, I have asked that question to a lot of people, a lot of successful real estate investment. not necessarily gurus, but people that are just, they built their wealth through real estate. And they all say the same thing. I mean, 75, 80, 85 year old real estate investors, they always say, I wish I would have bought more.

And I think right now, you know, the path that you're on is a massive acquisition mode. And I think, you know, your family and yourself are going to be the beneficiary of an awesome mindset and action that's supporting. that mindset. Right. That's awesome. And no more, no more working for money, Matt. It's going to be about acquiring assets. That's right. That's all it's going to be about is acquiring assets. That's right. Awesome. Well, Fernando, thank you so much for hanging out with us here today and being so gracious with your time and your sharing. No need to ask you to stay in touch, though, right? I mean, as you're actually be coming to work with me at the top of the year. And can we put this on record as your official acceptance of that position?

I gracially accept that. Awesome. Well, you heard it here first. Fernando will be taking the reins of our turnkey operation, cash flow savvy as chief of operations. And, you know, I can't think of a better person to do so as he's a product of the product. He's a product of the service. And the service has been a huge success for us here at Epic Real Estate. And Fernando knows both sides of the business.

He's the ideal person to help others, or I should say, to lead others out of the rat race. He's been there. He's done that. And, you know, I'm really honored that we'll be working together full time because, you know, nothing excites me more than the idea of how many more people that will be able to help working together, working together for a common cause. It's taken a really long time for me to cross paths with, you know, with someone that has the character, the experience, the right skill sets, and whose heart.

and passion is in the right place. So, Fernando, welcome aboard. Thank you, Matt. Looking forward to it. Me too, me too. Okay, so if you'd like to get in touch with Fernando and ask about his experience or ask any questions about his current real estate holdings

or about anything that you heard on today's episode, it's very, very simple. Go to cashflow savvy.com, just like Fernando originally did when he was listening to this podcast, and download our investor packet. And you know what? Fernando will actually get in touch. with you. And if he's going to help you decide whether this is going to make sense for you or not,

okay? Either way is 100% okay with us, but that's how you can talk to Fernando. Awesome, dude. I'm sure you can tell by this interview. So thanks again, Fernando. Thank you, Matt. You bet, bud. All right, that's it for today. Until next time, to your success. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in Reader. real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening.

We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.