KGCI: Real Estate on Air - Achieving Financial Freedom Through Real Estate and Car Rentals

Episode Date: February 14, 2025

Welcome to the Akaba Home Financial Freedom Mastermind podcast, where we explore the keys to financial freedom and how to achieve it. Our podcast is perfect for anyone who's looking to gain control of their finances, build wealth, and create the life of their dreams. I'm super excited to be joined by Ricardo Carrillo, who was a senior loan officer on David Green's one brokerage team, and Ricardo is an expert in the world of real estate financing, and he's helped countless individuals achieve their dreams of home ownership and investing. In addition to his expertise in the financing portion of real estate, he's also an avid car enthusiast and a real estate investor himself with a diverse portfolio that includes long-term rentals, short-term rentals, and unique cars,

rented on Turro. Ricardo, thank you for joining us tonight, man. I appreciate it. Thank you, D. Thanks for having me. Of course. And I'm genuinely interested, and we talked a little bit before we kind of went live in your backstory because we've talked so much on different deals and you've found creative ways to get us to the finish line. But the first question I really had is what pushed you toward becoming a mortgage broker in the first place? I don't think anybody will start their real estate career and say, I want to get into lending. I think most people will probably think about being a realtor first. I actually already had a background in finance. I used to work at Chase. Somewhat as of an investment banker, I actually have my series licenses so that I was

able to talk about investing. And I ended up transitioning into real estate. I actually got fired from my job at Chase. And the day after I went to David Green, which I found, I was already listening to Bigger Pockets. And for those of the people who don't know, he's the podcast host for Bigger Pockets, which is basically the largest real estate podcast in the U.S. and I went to his office and I left my resume. He wasn't there. I left it with the broker at the office. And it was kind of just like a shot in the dark.

Like, you know, I want to work with you and I'm willing to work for free. Three months later, I get a random text messages, random text message from a phone number and it's David. And I was like, okay, it's cool. You know, let's see where this goes, right? And went through a couple different interviews, started working on his team on the real estate side. And I honestly, I didn't know anything. I was 21 at the time. didn't know much about real estate other than the stuff that I had already known from my parents managing their

properties and their rentals and got into that. And then he was like, hey, you know, I want to build a mortgage lending company. Can I assign you as like the person who's going to get in touch with these brokers and see if they can teach you? And then, you know, as they teach you, we'll start working on expanding the team and rolling it in so that we can start offering this to our clients. And it was really just from a realtor's point of view of I'm frustrated. with my lending partners. They're not doing what I want them to do. And it's not helping the client experience.

So why don't I just step in and create the company that will issue, we'll do that, you know, right? And kind of get us to that point. So started working with him. That was what I think towards the end of 2019, beginning of 2020. And then a couple months in, we hired our broker Christian. And fast forward to now, we just onboarded 15 new people last week. I think we're up to 70 people on our team.

And we're licensed in 30 different. States as of last week. So that is a lot of growth. Yeah. In a short period of time, you went from, hey, a concept to fully functioning, lending across the nation. And if you don't mind, if we could zoom out, because I've looked at some of the numbers when I was doing some of the research, but how many, how many loans have you closed

roughly in the last three years? Last year, I think we did just a little under 200. And that was just my team. And I mean, my team I would consider relatively small, although I run the biggest internal team within our company, the one brokerage. I have four people who help me process loans and then I have another assistant who helps me with the day to day and all the other stuff that I do. Wow. No, that is incredible, Ricardo. I don't know how you do it on the day to day, especially lending across the nation.

I'm only licensed in one state and that's enough for right now. And so when you look at kind of the team that you've built and things that you're doing, one question that comes to mind is I know that you're a mortgage broker. Many people don't know the difference between a mortgage broker and going to a Chase Bank, Bank of America and talking to a lender there. What's the main difference between those two? That's a great question. I think it's honestly the most important thing when you're starting to shop for properties

is understanding who you're going to be working with on the financing side because in all reality, the financing. is the most important. It's the least fun part because you're not shopping for the properties. But when it comes to the different types of banks, the way that I like to explain the categories is you have a retail lender, which is like a Chase Wells Fargo Bank of America. It's a branch that you can walk into. You can say, hey, here's what I want. They're going to be the most cookie cutter, right? They're not going to really like the self-employed people. They're going to want to stick towards the people who are salaried W-2 borrowers. Maybe they're just buying their first primary residence. You're going to find like the least, the lowest selection of products with a bigger bank because they don't need to do all of the other

creative stuff that these other banks offer. And so that would be the first thing. The other thing is you're only going to get their specific interest rates too. If you walked into a Chase, they're only going to offer Chase's interest rates. They're not going to give you Wells Fargo rates at Chase. So when you're trying to do the shopping, you have to jump around to so many different people. You've got to get all these pre-approvals done. You've got to get your credit report pulled multiple times. And that just becomes frustrating in and of itself. Right. So when we start to work with a broker, a broker's job is really to narrow down not only the best product for the client and what they're specifically trying to do, but also find them the best deal with interest

rates and down payment in terms and everything else. Right. So as of right now, I think we have close to 95 different banks that we work with. And that just ranges because we offer so many different products, right? Not everybody will do one product. But when I, when I narrow down the, the product for the client, then at that point in time, we will go and we'll shop the different lenders that offer that product to then see who's giving us the best pricing. And that's the main thing. We have a portal that's kind of like Expedia, but for lenders, sorts all my banks from cheapest to most expensive.

And then we end up placing it with the one that's giving us the best pricing, who I know can still get the deal closed on time. I love it. I love it. And as somebody that has recently made the transition from W2 of eight years to 1099, I definitely understand the difference now when you go to a bank and they're like, hey, we can't lend to you. But in working with you, and we're going to be connecting here soon for my next property, but in working with you, we found ways to work around that with the 1099 income. And that's been incredible.

And as you mentioned, being able to source from multiple different people and just come to you and kind of work through that has been seamless as well. I do the same when I look at insurance. A lot of people will call their own different insurance companies. I rock with an insurance broker that I've been with for six or seven years and it just it kind of makes the process a little easier. Yeah. I mean, it's so much, it's so much easier for the consumer. And I think the bigger thing, too, that people ask is they think that they might be paying more by working with a broker, right, as opposed to working with the lenders specifically.

The one thing that I want people to keep in mind is when you work for the, when you work with the broker, the broker acts as a representative for the bank, right? But we're not loyal to that bank in the sense that I don't have to do the loan with them if somebody else is giving us better pricing. So it would be as if you went to somebody at Chase, who they got paid directly by Chase, but then they went and were able to get you pricing from somebody else. So that's essentially how it works.

It's not like you're adding a middleman or an extra step. We basically will just work as the representative for these lenders, and it makes it so that they don't have much more overhead either, right? Absolutely. Absolutely. That makes sense. That makes sense. And a question for you kind of piggyback and off of that,

that, right? When is the right time to approach, you know, a mortgage broker, a lender in the process? Should you already have a property identified, putting offers out there, or when do you come to that mortgage lender? Yeah, honestly, I would say you should talk to your mortgage lender before you even go find a realtor. Really, just because you want to get an idea of what specifically you can qualify for. And as the realtor, you're not really going to be able to help the client as much as you would if they already had a pre-proved completed, right? When somebody already knows what they can qualify for and they bring that to the realtor, that just makes it easier for the realtor to go and help them find properties, right? But we can't do that if you haven't started

with the lender. Like I said, it's the least fun part. It's the part nobody wants to deal with, but it's the one that's the most important, especially at the beginning. Absolutely. Absolutely. And one of the things we talked about a little bit before we kind of hit record is just how many deals that you've been doing over the past couple years, right? And if you were to go to Ricardo's IG, he keeps kind of a running tally of the volume of transactions. I believe you're over 300 million, which is crazy. And to put it in context for anybody that's listening, if you funded 300 million dollars in deals, the average house price in Georgia is right around 400K. So that's over 750 houses, is 750 transactions where something new could happen and that you've had to kind of work through

to make it happen. And so there's not a lot that comes your way. I would assume that's, hey, this is the first time I've seen this. Yeah. Yeah. No, it's very, I mean, you and I just had one together where that was probably something I haven't seen before.

And it's been a lot of transactions, right? I mean, in all honesty, it's just gaining more experience with each one. And they're not all the same because I have people who are first time home buyers and they're just starting and they're buying their first home to, you know, eventually scale their portfolio. And I have other people who are buying their, you know, 20th property, right?

And they're buying another investment property and they're already used to the, to the way that things work. Yep, yep, it's true. And I know that there's going to be different individuals that are on the line kind of joining live that are in different spectrums of their investing career, whether they're looking to get their first property and kind of want to understand, hey, a little bit more about FHA versus conventional and things of that nature. And so if we wanted to dive a little bit into that, just that simple question. I had somebody ask me that the other day.

And I always refer them back to the lender. I give you like a high level detail. And I'm like, hey, go here for the full detail. But if we want to look at just an FHA loan versus a conventional, where you're going to live in the property, maybe house hack, what are some of the differences between those? The biggest difference is the down payment. Right. So typically on conventional financing, if you're a first time home buyer, you can get a three. percent down payment option on conventional financing, which is by far the best route to take.

I'll explain the both, but really, when you look at both side by side, you're going to save a lot more money over the life of the loan on conventional financing than you would on FHA. Very rarely do I recommend FHA, and there's specific scenarios where I will. But other than the down payment, so the down payment, what you could say is 3% for a first-time home buyer on conventional financing. It's 5% down if you're not a first-time home buyer, and you already own another property, but you're buying a new primary residence. FHA financing is specifically three and a half percent down as the minimum. But what a lot of people don't know is that FHA actually

has a financing fee that's associated with it. And it's typically a percentage, a little bit less than 2%. It's paid to the housing and urban development department, basically because they're the ones who allow us to use the FHA loan. But it's added on top of the loan and then it's paid over the life of the loan and it accrues interest. So when you put the two side by side, you would pay three and a half percent down, right, as you're out of pocket. But now you also have this roughly two percent financing fee, right? So if you add it all together, you have three and a half plus another, you know,

two percent that ends up being financed. It's more than five percent. If you had just gone with conventional at five percent down, you would have spent less money. Yes, you're going to come out with more out of pocket of front, but it, over the life of the loan when you put them side by side, you're going to save a lot more on conventional financial financing. Absolutely. Absolutely. And thank you for explaining that a bit. And when you look at one of the reasons that I like partnering with with you as well and also with my CPA and other

professionals that I work with is I try to surround myself with people that are investors themselves. In my mind, if you are going to be investing in similar deals and things of that nature that I am, I think you're probably going to want to master your craft so that you can get some benefit. and then also I get some benefit because you've already kind of figured that piece out. And so from an investing standpoint, when did that come to play? When did you buy your first investment and when did you start getting into this crazy investing world? Yeah. So I had already thought about wanting to purchase real estate or building wealth through real estate since I was younger. Just because when I was growing up, my parents owned a couple investment properties.

And we live in the San Francisco Bay area. all of the properties that we have that needed work or whenever there was something to be done, it was always me, my dad and my brother, and we would go fix it ourselves. My dad would literally never hire somebody else out for anything unless it was something that he absolutely didn't want to do. So nine times out of the 10, we were the ones going to fix the property. And it was something that I already knew. I want to get into real estate investing, but I'm just going to outsource that.

I'm not going to go do the work myself, right? I'll just pay for somebody to go out and I'll make sure that I'm accounting for that that's needed in the expenses. I bought my first property at 22. I had actually just turned 22. I think the closing was like a week after my birthday. And it's a long-term rental in Stockton, California, which is like an hour away outside of the Bay Area. That one has just been up and running as a long-term rental.

The numbers made sense. I got lucky because one of the clients that I had been working with, we did a couple refinances for her. She was in the part of like reorganizing her portfolio. She didn't really like that property because her neighbors were, a little bit of annoying. So I ran the numbers on it. I said, hey, it makes sense. You're already going to work with us to sell your property. Why don't we just talk about what price point you want and we'll make it work? So I ended up getting into that property because I bought it from her. And it's been totally fine for me. I've had no issues. My tenants fix all the problems.

I just get a text message when the Zelle comes through. And that's really all that I have to worry about. It's been, I can say that I've spent zero dollars on repairs in the last two years since I've owned it. When they move out, when they move out, I definitely have to do some stuff to the house. But yeah, since I bought it, nothing's been, you know, no issues whatsoever. And then as I was kind of, you know, going through the process, I thought about there has to be a different way than buying a bunch of small long term rentals that all cash flow two to $300 a month, right? I want more zeros in terms of cash flow. And what can I do to achieve that? And so that kind of led me down the path of short-term rentals. And I thought to myself,

well, if I'm going to buy a short-term rental and I'm going to try to get into it, it needs to be an area where I know I'm also going to want to use the property. So naturally, I thought about Miami, right? I ended up purchasing my second property. It was a condo in Miami, Florida. And I bought that one at the end of 2021, September 2021. And rates were still low at the time. I had to use a creative loan product debt service financing to get into it because I didn't qualify.

And yeah, so I started with that property. that one was already brand new. We just furnished it. I put it on 0% interest credit cards. I wanted to pay itself back when it started to make revenue. And then a couple months later, I ended up buying the property that I'm in right now, which is the five-bedroom house in Scottsdale, which is the newest short-term rental. Nice. Nice. And before I forget, that that first property that you got, if those tenants ever want to move out, please send them out with. I need some. I need some that are going to fix up all the problems. But no, this is incredible. That's like, a wealth of experience, both from the long-term perspective to the short-term and across multiple states. And so you mentioned wanting to buy in places that you would visit yourself. Is there any, because, you know, there's some different type of strategy. Some people are comfortable buying across the nation in different locations. Other people want to build up a portfolio in one location. How have you been able to manage this across three different states?

That's a great question. And I think, honestly, with where technology is at right now, now and with the access that we have to the internet, it's so, I think it's easy to manage properties but living in another state, right? You can set up your cameras, you can vet the people that you want who have access to your property, you can vet your handyman, you're cleaning people, right? All of that is, I think, is not that difficult. And coming from a person like myself, who I really care about automation and I don't want to have to deal with doing the management and messaging these people and doing all of that. So my mind just naturally, thinks about those things when I decide to get into something new that's going to require my time.

And I think that's why it was so easy for me to say, let's just do it. And I'm the type of person that I just shoot from the hip and I'll figure it out later. Because in all honesty, I don't have time to slow down and think about it. So I just, I'll figure it out as I go. And that's kind of what happened with the Miami property. I ended up finding a cleaning lady through a referral. She ended up not working out. We replaced her through turnover B&B, just found another, you know, person to do the cleaning.

And yeah, I mean, everything else has been good. I told you off camera earlier that I have a friend of mine who also manages my properties. And we did that for a little bit. And just recently with this property, I switched it over to these guys that I'm working with home team VR, home team vacation rentals. And so they're managing, they're managing this Scottsdale property. And I'll probably switch over the Miami one and a little bit to them. Nice. And do they manage across the nation?

Yeah. They have, I think, close to 120, 120 properties under. management right now. I've worked with both of the owners of the company. They, they ended up becoming business partners. But one of them, his name is Michael Alafonte. And myself and my team were in his mastermind group as a lending coach. So I host meetings in his, in his program about understanding financing for short-term rentals and naturally kind of just aligned to have them take over the properties. But one of the things that people ask me all the time, like is it worth it to switch to a property management company or do I

need to find a property management company right away. And I always suggest trying to manage it yourself first. So you have an understanding of what it takes to manage the property. And so you can know that you're not getting ripped off when you end up switching it to a management company. Because there's some who charge 25% for short-term rental management. And I don't think they're doing 25% worth work. Right.

And you're not going to know that unless you go through and manage it yourself. Right. So that's what I always recommend to try to do it yourself first. And then down the road, you can offload it. to a management company, but at least you've tried it and you know what it takes. And that's a huge nugget because when you look at short-term rental property management versus long-term rental property management, it's completely different, right? Long-term rental, it's like 6 to 10% that you'll get charged.

The more units you have, you can get closer to that six. If it's one unit, two units, probably going to be closer to 10. But the reason being, when they put a tenant in there, after the first month or two, those guys don't want to be bothered. They're like, hey, we're good unless there's an issue, right? With short-term rental, there's so many turnovers that it's like, okay, there's a lot of touchpoints. So to your point, it's good to go out there, get that experience yourself, use the systems. There's so much technology out there that can kind of help you make it happen.

And then when you get to a certain point where it's, you know, maybe you don't have the time, you can either build a team or kind of, you know, leverage that piece out. I know I personally, I got to four in Metro Atlanta and then started managing about five on top of that and realize pretty quickly, hey, I need to build a team. So now we got a team for Metro Atlanta kind of handling that piece, which is why I'm able to sit here and talk to you today. Yeah. Yeah. It's same thing for me. I mean, I got to, I got to two. I'm like, I know I can't deal with this. I got to offload this over to somebody else. Yep. Yep. And so I know one of the things that we kind of discussed a little bit before is ways to analyze properties to where you're not going full

microscopic level in burning out and potentially losing deals in a quick fashion, do you have some tips for quickly analyzing both long-term and short-term rental properties? Yeah. Long-term rental properties, I would highly suggest people invest in a rental meter. That's literally what we use all day long. When I'm looking at properties for clients because they want, I have to plug in numbers for rental income or whatever the case might be. That's literally what I'll default to. And I, what my suggestion is, is if you're looking for a long-term rental, run it through rental meter, and then take that, whatever that number is that's populating.

You can use the 75th percentile if you want or the median revenue number that pops up. Just running through your calculator, whatever sort of software you're using, whether it's through bigger pockets or whether it's a spreadsheet that you made. Just plug it in, the rough number, see if it works. If it works, great. Just put that property as one of the lists that you have of, I need to come back and analyze these further later, right? And just keep cycling it through that way.

I think that's the fastest way to turn through properties. For Airbnbs or short-term rentals, one that I learned from my broker, and I think it's worked really well for my properties and for some of my investors, is he wants properties to have enough revenue in the year to where it's at least 15% of the purchase price. So if you're buying a million-dollar property, you want at least $150K a year in revenue. And so what I'll do for my short-term rentals, if I'm running through and looking at getting one and I'm running numbers, I have AirDNA. So first I would suggest investing in AirDNA, of course.

I think that's something that everybody should be using if they're looking at short-term rentals, but don't use it as a trusted number one source and I'm not going to look at anything else, right? You have to still run your comparables on Airbnb and look at other properties that are listed and other websites and those types of things. But the fastest way that I set it up is I'll run the property through AirDNA's Rentalizer. And if that number hits 15%, it gets added to my list of properties that I need to come back and analyze later. So that's the way that I can run through too. The other thing I will say, and I know you experience this a lot too, is with people who are trying to analyze multiple markets, especially for short-term rentals, it's so difficult.

I think it's so difficult. It was hard for me even when I was trying to pick between Fort Lauderdale and Scottsdale for my next investment property and analyzing both markets. So I always suggest people just pick one, analyze the properties in that market. If you've gone through a lot and the numbers are not working, fine, then pivot to the next market. Until you find when that works, when it works, great, lock in that property, get to the closing line, you know, go through the process of setting it up. And then when you're ready for the next investment property, maybe pick the other market that you were thinking about. And that also mitigates your risk. So not all your properties are in one location.

Absolutely. Could not agree more. And it's one of those things where when you're talking to somebody that is, you're talking to somebody that is, is working in a bunch of markets. I try to have just a one-on-one initially to find out like your why and things that nature and what this looks like five years down the road. And to your point, you do got to try to focus down as much as you can because if you got 50 million options or you give somebody, you know, eight choices, they're going to be sitting there, him and and hawn for a long time. Whereas if you say, okay, this market, now I'm going to look at properties in

these neighborhoods, things that nature, you can quickly achieve your goals and start to make some progress here. Yeah. Yeah, I agree. It's, it's easy to get stuck in the, excuse me, and the analysis paralysis part of it. That's just the hardest part. You've got to get out of that as quickly as you can. That's the only way that you're going to be able to execute on a property. Oh, yeah. Oh, yeah. And I know it's not all peaches and roses when you're investing in, you know, real estate, right? I've had my licks. People have heard about a couple of my wounds and I'm happy to continue to share them for your, for your, for your, uh, you're listening. But have you had anything happen? and we talked a little bit about the Scottsdale house,

but do you mind sharing just a couple of things that you've worked on to get it up and running? Yeah, so this was my first property that I really dove into doing a complete renovation. I got to show you the before photos later, but every room in this house had different flooring. I'm not kidding you. And it was brand new flooring. Some of them had brand new flooring.

And I just thought to myself, this makes no sense. The seller must have gone to Home Depot and said, I want the cheapest one that I'm going to be. be able to fill up this room with like one of the rooms had blue tile with like weird star patterns it didn't make any sense but i mean to to my point i think the some of the issues that i ran into was i think you're always going to go over time and over budget on your first property and you want to you want to over you want to over uh analyze and and think that you you might end up going over what you're already thinking is going over budget right at one point i thought going over

budget was me going over 150k and I ended up going over 180 right so those are just some some things to keep in mind especially if you're dealing with one that's a deep renovation but this is a 2,800 square feet it's a it's a five bedroom house it has two kitchens one of the kitchens we converted it to a bar I tore two walls down um I did like an indoor outdoor feeling for this property because it has a pool and so I wanted it to be like a bar has the had the bars like indoor outdoor that was kind of the strategy with it. But the hardest things that I had was, I think, with my contractors trying to narrow down on one. And then once my contractor was getting towards the finish line, he just started dropping the ball and being very laggy.

And I ended up having to find somebody else to come and finish the work, which was very frustrating. So that ended up pushing me past the timeline. I also had my AC flooded underneath my brand new flooring in the middle of construction. And it was in the one weekend that I had left because I had a wedding to go to. to. And so I just get a photo for my contractor, and he's standing in a puddle of water in my kitchen. And I'm just thinking to myself, like, what is going on? I'm going to have to replace this new flooring and all this stuff. So that ended up costing a pretty penny. And then a couple months later, I left again because I took a trip to Europe. And I get a text message from my pool guy.

And he says that my pool pump had caught on fire and half of it had melted down. And I didn't even know how. I don't even know what happened. Nobody was at the house. It was completely empty. Everything was turned off. And that ended up costing me another five grand. So to replace basically most of the pool pump. But yeah, over budget, you definitely want to add another, you know, a couple thousand dollars to the budget.

I think the last thing that happened was when we were two weeks about, we were about to finish construction. And one of my bathrooms, the water starts coming back out of the toilet. it. And we ran some camera lines through and we found out that a tree route had actually broken the pipes underneath the house. And it was something that we didn't catch during the time that I went through my inspections when I was buying the house. But it ended up costing me another 15 grand. And they had to tear up my entire front yard that was already landscaped brand new. So those are the three things. And I think it's like when I didn't want to experience at all.

And I wasn't expecting it. But yeah, so now it's now it's live. We have close to 15K in bookings confirmed for the next month or two here. I think it's starting to look better. Hey, I'm happy that it's turning up for you because I know those trials and tribulations early on probably made you question like, hey, what am I doing here? But it's one of those things where you got to just keep pushing through. I think the consistent theme with each of these things happening is you leaving, man. We can't have you leave Arizona anymore.

You just got to stay in that house, make sure everything's good from now. Yeah. Yeah. I wish I could turn it into a house hack. Have I had a detached garage or something here? I would definitely live in one portion and just rent out the whole house on Airbnb. Absolutely. 100% agree.

All about the house hacks. Yeah. Yeah. The way to go, especially for primary roads. Oh, yeah. Oh, yeah. I started, and you know this story, but I started back in 2016 with the house hack. And I've been house hacking ever since.

currently sitting in a house tax single family of the in-law suite and yeah i don't know that i'll ever go back man you can't i don't like paying the full mortgage no no no but i got two more items that i wanted to address and kind of touch on before opening it up to the group to ask questions yeah and the first of those is what do you got going on the rest of this year man what what are the other trips that you got planned and what are some of the big events you got coming up yeah my main focus for this year honestly is just hosting more real estate events with my realtor partners. You and I are hosting one. We're going to host one towards the end of this year.

I'm super excited for that. I think that's going to be awesome because it's going to be our first one outside of California. So we cover a handful in the Bay Area and a handful in L.A., the surrounding L.A. area. We did one last weekend that had close to 280 people that came in. I thought it was such a great turnout of real estate investors, people who are in the industry. We had some hard money lenders there. we had realtors there. I think it's just a great networking experience overall for people who are in the industry.

Because once you get into it, you notice the group of investors and people who are in the investing space is very small, right? The pool is very, very small. So that's my main, my first main focus. I'm all about helping people with the knowledge that I have in lending and what can we do to get financing for more real estate and help people build wealth through real estate. That's the ultimate goal. Absolutely.

Absolutely. I think you're doing an incredible job, right? And I can't wait to do that meetup event with you. I know we still got to plan a couple things, but excited to get you down to the city and take you out and check out Atlanta, man. This is when you're probably going to get enthralled with and want to spend some more time out here. It's a pretty cool city. Yeah, I'm holding, I've never been to Georgia, but I'm going to hold off until I get there with you and then we'll be able to experience it. Done and done.

And the other piece is I hear that you like cars and that you also are. are doing a little bit of tour. Where did that love come from? And what do you got? Yeah. I think honestly from just when I was little, I had over 100 hot wheels when I was little, and it was funny because I used to have this little carrying case to take all the cars around. So I've always had a love for cars, not really working on cars, but like I'd love for like the actual cars themselves and the driving experience. It's a little bit harder for me to fit into the more luxury cars now because I'm six foot five. And most people can't tell from the camera, but I'm very tall. So for me to sit in the smaller compact cars is just frustrating. But yeah, so I mean, since I was in real

estate and I started making money through real estate, I wanted to have the experience of having those nicer cars, but I didn't want to deal with the payment, similar to a house hack situation, right? I don't want to deal with the payment of my own house. I don't want to deal with the payment of my own car. So it started because I was driving over 100 miles a day to get to our office and back. And I didn't want to put mileage on my car. I have an Audi S5. That was my first car. And I ended up buying a Tesla. I bought a Tesla Model S. And it was for the commute, right? I was like, I don't want to put miles on my Audi. So let me drive the Tesla back and forth. It's going to be cheaper on gas. That was around the time that gas was also like increasing a price. And I had found out about Turo. And I was like, why don't I just also listed on Turrow and

we'll see if it gets booked. And if it gets booked, then we'll start, I'll figure out another way to get to the office. Right. Well, the month after I put it up on Turrow, it was booked 24 days. And I don't think I was expecting that. And I kind of just had to learn. And I was just like, well, let's figure it out. Let's get the photography, have the nice listing and kind of go through that process. A couple months later, I started figuring out a way to run numbers on the platform and

like analyze cars. And so I ended up buying a BMW I eight. That was the second car that I bought. And that car did absolutely crazy. I think in the first six months that I had it on, it did almost 30K in revenue, which I I mean, it was, it's an expensive car, but I mean, it was more than more than paying for itself. There was some months that I did over 10,000 in revenue with just that car, especially during the summertime. I ended up getting a really high offer on the car from one of my guests to buy it.

So I ended up selling it to somebody on the Turrell platform, which I thought was like the perfect exit for that vehicle. And then I ended up buying a portion 9-11. I actually bought that when I was in Miami setting up the Airbnb in Miami. And then after the Porsche, I bought another BMW I8 that was hopefully going to do similar numbers as my other one. And then a Tesla model as Plaid is the other one. So those are all of the cars that I have right now. The Plaid is basically my daily driver. I drive that all the time, just like my most comfortable car to drive.

And the rest of them stay pretty booked on the weekends. I think the markets just kind of enshambles a little bit across everything rentals. right there's not a lot of people spending a lot of money on on these cars but also the group of clientele that is paying for it tends to have the money to be able to pay for it if they're going to be booking it so absolutely and you get to test them out and kind of driving around when it's not booked which is awesome and I'm a huge fan of the Tesla as well I got a Tesla Y two years ago and it's changed my life man now on the highway like I'm not driving the car's driving I'm chilling I know you're probably doing the same yeah yeah that's I mean all

Honestly, once you get one, I feel like you don't end up wanting to switch back. But I love both. I think my favorite cars is probably the Platt and the portion 9-11. Those are probably my two favorite cars. Like, if I was to get rid of everything, I'd probably keep both of those and just have it in the fleet. Hey, I love it. I love it. And Ricardo, we appreciate you, man.

Thank you for joining us. But in the meantime, when is your next trip? What's the next thing after Arizona? What's interesting for us and our setup, under our company, we have our team of realtors that covers pretty much all of California, right? We have a team of agents that covers both NorCal and SoCal. And then on our lending team, we have myself and a couple other individuals. And we are licensed on the lending side in multiple different states, right?

So when we do deals in California, most of the time it's with the agents that work on our team. And so we like to work with them and host meetups on investor training and everything else. I love it. I love it. Okay. And Kareem, welcome. Hey, guys. Sorry about that. Just finished work. They go, great. Yeah, how's it? How's it going? Oh, good. What you got, man? No, man. How do we scale? How do we scale this damn thing? You got a proof of concept. I'm happy. I'm comfortable. How can we scale this damn thing?

Ricardo, I'll let you go first. Give it to me. Yeah, I mean, in terms of financing, I think it's just recycling equity. Something that I didn't touch on, but for my own investing portfolio, I actually leveraged a home equity line of credit on one of my family's properties, and I pulled out 400K from the line of credit. I used the line of credit to finance down payment and closing costs on this Arizona property, as well as all of my construction.

And so I basically did a bird deal. I just haven't done the exit for the refinance out to go back and pay the he lock off. There's also excess funds that I had from the deal too. So I actually took that and I'm under contract on another condo in Miami, Florida. So that's what I would say. I mean, personally, I'm someone who works in the industry. I'm very biased towards leverage.

And I'm always down to be at 100% loan to value and leverage as much as I can. So I think when you really start to dive deep into the real estate community and buying more real estate, you'll find out that getting the money for the down payment of closing costs is the hardest part out of everything else. You can find deals. You can get the financing. We can figure everything else out. Just getting the money together is the hardest part. And I think that's why a lot of people start with like syndications and all those other things to pull money together and buy more real estate.

So I think that's why the leverage part is very popular because you just recycle the equity that you have in your homes. you take that and you buy the next one. What happens to your credit, like your credit score essentially, when you pull out, is that like another loan that gets reported on your credit report? Yeah, so, I mean, it is another loan. The thing is to keep in mind, especially from a mortgage lender's point of view, we don't look at the amount of inquiries that somebody has. We don't really, I mean, unless it has an impact to your credit score, yes.

but most people who have high high inquiries doesn't have a huge impact. I think I have like 22 inquiries in the last two years and my credit is still sitting around 760. So I mean, like the inquiries themselves don't really have an impact. So we don't look at it from the mortgage landers point of view. We also don't look at the overall balances. That's something that a lot of people don't know for the mortgage lender's point of view. We care about the monthly payment.

Right. So if the monthly payment is higher than a different loan that you might have with a lower balance, then those are the things that have started to impact you. So Ricardo, and I know you answered this earlier, but this person may not have been there. After your first initial investment, what was your portfolio like the following years? After my initial, yeah, so my initial investment was the Stockton Property, which is the long-term rental. And then after the long-term rental, about a year later, about a year and a half later, I ended up purchasing the condo in Miami, Florida.

and then six months or so after that, March 2022 is when I bought this Scottsdale property. And then around the same time, I got the offer accepted on that pre-construction condo in Miami, Florida. So that one I'm excited for because it's, I got it at a price point of when the market was still hot. But I think by the time it closes at the end of the next year, we're going to be in a very similar market to be able to close on that one. And then I'm going to set that one up as an Airbnb as well. Nice. And I would agree with you. I think it's one of those things where with the market kind of shifting toward the end of last year with the interest rates going up, a lot of people went straight to the sideline and said, hey, I'm just going to wait and kind of see what happens. But this is the opportunity to go out there and secure some properties, negotiate and really make some things happen. And then when it settles down again, just refinance. Refinance and the deal gets even better. Yeah, 100%. Mark, what you got, man? Welcome. Hello, Ricardo.

How you doing, Mark? How you doing? I'm doing well. I can't get my camera to work. Again, thank you for finalizing our loan for a few months ago. So my question is really around, are there additional fees when you have to pay, work with a broker mortgage company versus going directly to the bank? I know you talked about the advantages, but are there any disadvantages? That's a great question.

And to my knowledge, there's no disadvantages. In all reality, it's just advantages because of the fact that we essentially get to price the loan out with the different banks that we have in our network. I think maybe the only disadvantage is if your broker doesn't have a lot of lender connections, right? Because, I mean, we have close to 95. So we have a lot of different banks that I can run the pricing through to see who's giving us the most competitive rates. But I think where a lot of people get confused is they think that they have to pay the bank and then they also have to pay the broker. But in reality, the broker, it works as the representative for the bank who they end of doing the deal with.

So the cost is still the same to the consumer. It just depends on who's giving us the best pricing. Okay. Thank you. Yeah, of course. Just a follow-up question, if I may. Can you talk about your on the West Coast and then you decide to buy a condo in Miami? Yeah.

Can you talk about that experience? Because you're going from one coast to the other. Yeah. Was it, obviously you went to a vacation spot area of the pressure, that was your strategy. Yeah. But was that a big leap for you to do that since you were coming from the West Coast to the East Coast? Yeah, I think, I think that I had already felt the preparation from just already working with clients who were doing deals outside of California. So I don't think I was necessarily as scared because of the amount of people that I had spoken to.

to who owned out-of-state properties. I actually, I actually, I sent the, I sent the request out to my realtor in that area. And within seven days, we had the offer accepted on the property. So for most people, that's very fast, right? They might, they might not want to get an offer accepted so quickly and want to take it a little bit slower. And then I actually even closed on the property without seeing it, which is something that most people won't do. but it was a brand new construction of property. We did like a whole FaceTime walkthrough inspections and everything was good.

So really didn't have any issues with buying it out of state. I think the only thing I was preparing for at the beginning was getting my core people like narrowed down ahead of time, right? Who was going to come in and clean the property for me? Who did I have on the list of handymen? And those types of things. I think those were the only things that I was really looking for at the beginning before I bought out of state. Thank you. Yeah, of course.

I think my battery just died, so I'm switching that out. But while we're waiting for that, Kareem, welcome back. Thank you, thank you. Ricardo, we were going over the loans and how it impacts your credit. When I was asking from, is from a debt, like debt to income ratio, I think. I'm saying it right. Yeah. So when you take it on a home equity line of credit or a home equity loan,

essentially you're adding to your loans. So you're dropping your qualifying amounts, right? Is that where you're getting at? Yeah. So we do have to account for the payment and what that payment is going to look like. Now, specifically for me, I think what, what, helped me out was the fact that I already needed to use loans that didn't look at my debt-to-income ratio. So I wasn't necessarily as concerned with what the monthly payment was going to be.

But if we were to go- Yeah, because I had to do DSDR, exactly. And that's just because I didn't have my two years of tax returns. Now that I'm getting everything sorted out, I should be able to come back and qualify for conventional financing again. But the way that it's viewed is only on the balance that you have out. So it's kind of like a credit card, right? Because you have credit cards that probably have a higher limit than what you're actually paying, what you're spending on. Right. So same thing applies to the line of credit. You can have a $400,000 line of credit with a $50,000 balance on it. And we're only going to hit you with the monthly payment of that $50,000 balance.

Not the full line amount, right? Yeah. And we just, whenever we do preapprovals, we just want to account for it. We want to make sure that we're plugging in those numbers at the time of pre-approval. So when my team and I pre-approved someone who has a line of credit and they're going to use the line of credit for the down payment and the closing costs, we'll plug in an arbitrary number, say maybe they're pulling out 100K, right? So we'll plug in whatever the payment is going to be on that 100K to make sure we're accounting for it and that the debt to income ratio is going to be okay. Yeah. So you just have to be very rigorous with picking the property to make sure that it covers 100% of the financing. Yeah. Yeah.

Unless it's a different sort of strategy, right? The other way that people like to use the lines of credit is for properties that have value at. Maybe there's some sort of work that you're going to do to the property and you know that you're going to have it appraise for a lot higher later. You're going to try to pull that money back out and then pay off the line of credit. So that's another way of looking at it. I always, when I think about using the line of credit, the biggest risk that you take is that the line of credit rates are adjustable. So they could change monthly, right? And similar to a credit card, you don't want to be stuck with that if your payment's going to double.

So I always tell clients, you want to make sure that you think about what your exit strategy is going to be within, you know, one to three years of your repayment timeframe for that loan. How does, how are the interest rates with DSCR loans? Are they much higher than like a commens? Yeah, typically DSCR is about one to one and a half percent higher than conventional financing. Although most situations, if people can qualify for conventional financing, very rarely do I recommend they switch to DSCR. Unless we've really exhausted the conventional options and they can't buy any more with conventional loans, then at that point we want to switch to the debt service. Because you've got to keep in mind, too, they also have higher down payment requirements typically than what you'll get on. conventional.

Yeah, most of them are between 20 and 20 and 25, sometimes even 30 percent down. Oh, okay. Yeah. Ricardo, I have a follow-up question. Well, he gives in. Do you just do investment loans or do you actually do primary loans as well? Yeah, we still do a lot of primary residence loans. Pretty much everything from conventional financing all the way up to commercial financing,

non-conventional loans like the ones that me and I have done for ourselves and even even hard money loans too for people who want to do like fix and flips okay yeah I might be coming to you because I'm getting ready to look at a permanent residence loan and I'll reach out to you separately yeah yeah let me know