The Science of Flipping - Episode 167: Bobby Castro - From Broke to $1 Billion Dollar Business Empire

Episode Date: September 11, 2020

In this episode learn about Bobby Castro who built his Billion Dollar Empire. Learn the top real estate strategy in this interview with Bobby Castro.

Welcome to the Science of Flipping podcast. I'm your host, Justin Colby. Justin Colby. What is up, everybody? Welcome back to an incredible episode of The Science of Flipping. And I, again, have an incredible guest. I mean, literally someone that I aspire to be one day. Mr. Bobby Castro, how are you, partner? Thank you, Justin. I'm doing great. Thanks for having me, man. And you're somebody I definitely want to get to know more. You have the same energy, same passion, and you got the people skills, man. Yeah. Well, this is what we're going to dive into. But I want everyone to understand more

about you. And I don't want to even try to give my best attempt to give you the edification you genuinely deserve. You have sold a billion dollar company. You have a massive rental portfolio. But tell a little bit more of the people where you come from, how you got started, just your background, like your ninth grade education. Right. Like people need to know more about you. And I don't even want to try to do you injustice. So, dude, give us a quick 30 second background of yourself and where you've come from, what you built. I mean, it's really remarkable. Absolutely. And I think it's the same story that a lot of other people have.

I'm maybe just able to speak about it because maybe some of the things I've accomplished, but I am the proven example that anybody can do this. I am by far, by far, not the smartest knife in the drawer. I just figured out how to scale. Back in the day, today, ninth grade is high school. Back in the day, it was junior high. That's when I decided to leave in the ninth grade. My mom supported it. I failed at the third grade.

I was not a difficult child. I used to have a lot of questions because I have a hard time comprehending things. And I like to re-ask it, re-ask it, make sure I get it. I was just on a Zoom call with my controller and poor Jamie had to explain things to me 10, 11 times before I got it. But I understand it. I became aware of all my weaknesses and I just ignored it and not get a little bit into it. But I have a beautiful mom. She's 80 years old. She raised me and my brothers waiting on tables, three full-time jobs, no exaggeration, before Denny's, where you and I may go four in the morning with our buddies,

that graveyard shift, that beautiful waitress, that was my mom. And she did such a great job. She always delivered value to the customer. She smiled when she didn't want to smile. Thank you when she didn't want to thank you. Hoping that she gave you value for that 18% gratuity tip. After that shift, she walked home, didn't drive home. And that was by strategy because there was no car. So we lived close by two of her jobs. She went home, rest up, took a shower, did the same dog and pony at another restaurant, then went home, did the third gig at the Rony Pup Steakhouse in Miami Beach. I see my mom do that my entire life, adult life, never complained about it. And during this process, I saw my mom struggle substantially by trying to make the bill, paying the bills. We grew up with zero exaggeration on Rent-A-Center. It still exists today. And these are for families that don't have the financial whereabouts to buy furniture, nor have the credit to finance it. And my mom used to pay weekly and biweekly a coffee table, a bed for her children, a couch where she slept on.

My mom's room was a couch. And they used to pick it up back and forth. One day we won't have furniture. One day we will. Every other month the lights were on. And she made the best of it. But to be honest with you, it bothered the heck out of me so much. It just bothered me. I just wanted a little bit more about that. I

couldn't figure out life, but it just really irritated me because it was so negative. You know, give you a little backdrop. My dad had me when he was 50. My mom was 27 years old. Big difference here. I was born in the Bronx in New York and my dad had 11 kids before he met my mother who was 27. My dad, he passed away when he was 94 years old. He was a beautiful person, a Puerto Rican dude that loved the ladies. The ladies loved him. He was so kind, very passive. And there was a lot of passion, as you can imagine. My mother is Jewish and Irish. My dad, he was Puerto Rican.

A lot of personalities in this whole soup. And that comes with some chaos, some drama. We all have it in our families. But it bothered me. There was a lot of chaotic things going on. And I told my mom I want to leave school in the ninth grade. I left school. She got me my first job at Pasquale's, 57th Avenue in Hialeah, at a restaurant.

And I started doing what my mom was doing, hospitality. And that's where I picked up some people skills, thanking people, serving people, not expecting anything. But hopefully I did a good enough job for a good tip. And I see my mom do that. And just by nature, I started creating, just giving value, giving value and seeing the frustrations on the backdrop. And my mom even tells me today, Bobby, you figured it out.

I had to pretend it, but you actually live it. And what she was saying is that you really mean when you say thank you to someone, you mean it from your heart. I used to have to thank you when sometimes I didn't want to. And I it from your heart i used to have to thank you when sometimes i didn't want to and i never understood what my mom used to say about me because she tells me i never spoke until i was seven years old i quit my first job went into my first business cleaning restaurants office buildings um didn't have much success i was very

young it wasn't mature in the mind i got my my first true gig next to the airport in Miami, next to the Miami High Line, 36th Street, Pink Pussycat. And as you can imagine with the name, it was an adult establishment. So I used to clean the place at 7 in the morning when they closed up. I did that for a while, got more gigs like that. I figured that profile said yes to me everyone was saying no because i just didn't have the credentials insurance and all that it ended when an adult entertainer said how old is he just you know not meaning no harm but it

just triggered like oh my gosh we shouldn't have this kid here. That ended that gig. And I quit and went back to waiting on tables, doing hospitalities. My weakness was what I feel a lot of young people on social media have weaknesses from. And this is the reason I decided to come on social media. And I come with no motives, no expectation. Bobby Castro was addicted, addicted of the classified ads. There was no internet. Anything that had in the flyer newspaper, become a millionaire, make $100,000 next month, blah, blah, blah, blah, blah, blah. I would respond to it, send away for a package.

Every other day, I would have dozens of packages, and I would just smother myself in all this information and do nothing with it, thinking that it was just going to come out of the envelope and deliver me all this money and all these miracles. Not realizing I was completely stuck and not understanding it because I wasn't as blessed as we are today with this internet. Google is very powerful. Google is the best resource out there by far if you're broke. And that was my struggle. I'll be married 30 years this October 6th. Today, Sophie and I sit on a $300 million personal net worth. We have $400 million of our real estate apartment portfolio, no investors. We raised no money for either or business, one penny at a time. And I figured to stop that madness many years ago about this fixation of getting rich quickly, I was getting really stuck quickly and remained,

I built this momentum, Justin, that I couldn't get out of it. And I think a lot of people are there. They just don't understand that they're there. And people skills, by laying on tables, I was working at the Rusty Pelican on Key Biscayne when I decided to get real with my life. The day changed for me when I was living in my in-law's house for free. We had no money, Sophie and I. But we had a little baby girl, Priscilla. She's 29 years old now. She was about two years old. How old were you then?

By the way, the Rusty Pelican is still like a monument in Miami. My wife is from Miami. But we had a little baby girl, Priscilla. She's 29 years old now. She was about two years old. How old were you then? By the way, the Rusty Pelican is still like a monument in Miami. My wife is from Miami. My wife is Cuban. So when you talk Miami, I'm like – I waited on tables there at night. And that's when my life started to really go in a good way. And you were what? You said 29?

I know your daughter is – I'm 53. So whatever that math is i can't so she's she's 29 now so she had to be two years old then okay and uh so sophie pulls up on a car in front of dixie's and pedro's house on lejeune and 103rd street in hialeah and my wife is cuban her whole family's cuban awesome and they gave us a car a real beat-up car they gave us so much love and all the money they had but this car had no air condition it had the reverse fumes where there's like carbon dioxide it's just you drive it you're like this and there's just so much fumes yeah for some reason I was walking out of their house

and Sophie pulls up the car was black dusty so he pulled up sweating and behind her in the car seat was Priscilla peach peach super red trenched in water because here in South Florida is called something called humidity many people and I'll never forget me and I looked at my daughter and she looked at me just so happy, so everything. I used to say and I used to complain how I grew up and I said never my children will ever grow up like I did. At that moment, I realized I talk crap, blah, blah, blah. My daughter's in a worse position.

My mother did better than this. That day, I put down the classifieds. I put down all the fast track stuff, always looking, working harder, looking for the quick fix, trying to trick myself. And I got real. I went to the Rusty Public and got a job, waiting on tables. Got a job during the day, Beller Business Bureau, selling memberships and businesses. And it all started there, one step at a time. And I decided to start at the stage where I was at.

I used to be negative A as an Apple, working on efforts that have everything to do with letter Z. And I was skipping it all along. And now realizing no one's going to be here to help you, Bobby. There's no one willing to bet on you, not even yourself. And it started there one thing at a time. That's when I started the company out of the kitchen table, working at the Rusty Pelican, selling the memberships. And I ran into an individual, individuals with good people skills. Hey, I'll buy this membership that I don't believe in. I don't like it.

I don't think it brings value. But come work for us. Do something with us, and we'll buy it. Of course, I said yes to it because it was an opportunity. And that's how I got into healthcare financing. And that thing led me slowly. And trust me, every moment I was trying to pre-pivot myself and I held myself back on purpose with the help of my beautiful wife, St. Bobby.

Don't make the mistake again. And trust me, there was millions of times I was ready, ready to jump ship and pre-pivot because of my wife and because I started surrendering, starting to listen to her. She had the best intentions for us to succeed. And that's so hard for people to really get to. But I'm so blessed that I got there because my father was a little opposite. You know, I explained some of his backdrop of all the relationships. And Sophie and I slowly built it. People skills, meeting this one, meeting that one.

We created the company. And with others, hundreds of people was part of this. My brother was involved, the whole nine yards. And to give you the power of compound efforts and not getting distracted, years later, a knock comes. Hey, we want to wire you $75 million. I'm just cutting it through short. We're basing your company on a valuation of company evaluation of 250 based on what we know.

And we would like to invest 30% and buy 30% and just be passive investors. And again, like I took that job and that opportunity. You say yes. Said yes, whatever. Well, the wire transfer of $75 million showed up. And then you start looking at the power of google and research that's free of charge huh people are crazy why would someone do that are they out of their mind press enter oh my gosh they stole it because we were paying attention to this being distracted

thinking we were doing good right because we told ourselves, you think you're doing good, how much more you can do better? All along, they were buying this. When we said, oh, my God, we simply did this, fueled our energy and our attention with no distractions. Eleven months later, we knock on the door. You have a first-order refusal. Man, you guys are awesome. Have no issues with you,

but we want to take another 19% off the table, but still controlling only 51% of the company. Oh, great. Yeah, you guys have been rocking. We've been making a lot of money, but it's 600 million, not 250. That was 11 months later, you're great. Well, it closed.

All cash. Then we fueled it more. and then you start exiting for a billion i could have exited for more but the terms were really hassle free the power of paying attention and surrendering saying you know what bobby and i was rocking back then i was making very good seven figures money and doing good and my doing rocking and rolling over here all along i should have been paying attention here so we can lose ourself and bobby castro every day i gotta check myself two hours every morning i work on myself to make sure i don't jump ship and i'm paying attention to the correct things to the core values where i want to go i'm going fast here. And my message is your minutes are non-refundable.

And if you're investing them all here thinking you're rocking and you're stacking and racking, chances are you're not. Should you be paying attention to some other areas in your life? So I don't know if that was a long-winded answer to your question. Dude, I mean, I just want people to get to know you more. I mean, you're in this space now, you are very loud, both personally, which I love, but also you have the ability to reach a lot of people. And I think people need your message above 99% of what is out there on the internet. To your point, you are addicted to the ads in the newspaper. Well, people are fully addicted

to Instagram, Facebook, and everything. I mean, TikTok and all of them, right? But there's a missing component as an entrepreneur, and I'm specifically in the real estate slash education space, and you have an incredible portfolio, which we could talk a lot about. But also, people have to understand extreme focus will result in extreme results. And if you are not focused on the right things and or distracted and or, you know, shiny object jumping around as you did as a young man, you're not going to get any results. You're going to be very mediocre at best at whatever you are doing without the results that you're really looking for. And you even proved it to say you were kind of over here pounding your chest

saying I'm rocking and rolling. But if you just focused on over here, all of a sudden you have a billion dollar company, right? And there's a lot of us that have that company, have that possibility. We're just giving our energy elsewhere. And what I would like to say is how i did it how i was able to scale i'm using this example again which is a true story about the 250 to 600 million to a billion when you start i'm all here i'm very good here totally when i when i said okay i gotta start When I said, okay, I got to start paying attention to this, I realized, my gosh, I don't have the skill sets to take it to the next level.

Now, that's a true entrepreneur to say, you know what? I need better than me. That is when the huge pivot came that can happen in any stage of your life where you start saying surrendering. You take a backseat. That's what a true leader does. Gets resources to compensate all those. Look at me. I'm so hyper. I can't even stay focused sometimes to compensate, but I know my weaknesses. I don't try to repair them or fix them because that'll take a lifetime. I just feel my strengths. I compensate all my weaknesses by bringing other people aboard. Bobby, how do you

get those great people? Again, years ago, I learned people skills, the power of really, of giving more value than I receive. I was always about that because I was a waiter. I saw my mother doing it, just giving more value, being sick as a flu and still waiting on tables. So you have to scale with others. And during the years, starting to understand that, Sophie and I respected every freaking penny, dude, every penny. We compounded every penny to 10 pennies. We started with one house, two houses. We made some mistakes before that. We tried to start big again, failed over and over, skipped the process of learning real estate. That's where the investment is, is learning. It's magical. Then we started one house,

went to 16 homes, then sold them, went to a duplex, triplex, no exaggeration, to the point where I was so obsessed that I didn't want to skip the process. Fast forward years later, we sit on $400 million and we've always been low leverage. We believe real estate's on the buy. It gives us hundreds of thousands of dollars a month in distributions, no tax implications. We did this at the same time building that billion-dollar company. Well, Bobby, how do you focus on both? You have to understand, real estate is a wealth situation. It's not going to supplement your current situation. Your job is to make as much

income, continue investing, investing, still focusing on money. Capital is important. So scaling what we did, how we scaled all our businesses were from others helping us get there. We put a compensation program together. If you're successful, I'm successful. What I just said was not what I, I said, if you're successful, I'm successful. Most people say this, if I'm successful, you're successful. No, no, no. Make them successful. You will become really extremely well. You're giving me shivers. And the reason I'm such a passionate, we were talking before this, right? I'm so passionate on the subject of leadership. I firmly believe, I mean, I don't want to get to the whole country and what's going on, but because we are recording this in the middle of literally the most fractured the country's ever been,

the COVID, the whole thing. But in corporate leadership, let's talk about business to stay on business. I firmly am a believer of the reason why people fundamentally don't have the ability to grow and scale to the level they want. And some people want the billion dollar business. And I love that, right? And then other people just want to get to a place where they're not just, you know, having a high paying job doing all the work themselves, and they want to have some leverage. But the reality is there's one missing component in my mind, and I'd love to hear your take on this, but it is 100% the difference between being a boss and being a leader. And I firmly don't believe people are genuinely leaders. They would love to call themselves that.

They will get on Instagram and post every name possible about leadership. But in what comes to doing what leaders need to do, which in large part is doing the work and then combining that with surrounding yourself with people, they don't. They would rather just call themselves a leader. And so it is a missing link. I don't think people are necessarily born to be leaders. Well, let me rephrase that. I do believe a very small percentage of people are born leaders, but it is a muscle that you need to continue to strengthen over and over and over again. And so I'd love to hear your perspective on that. And I love the topic because I practice this. And I'm telling you, I got where I'm at now.

And I'm getting more out of life because of it. And hundreds of my partners, I don't never call them employees. And I've been so close to them. My office used to be right in the main hub. I never had a title. I never had a position. Leaders build leaders. And most, I keep saying ego is not your amigo.

Sometimes ego can get in your way. Everyone's caught up in a title. I'm the owner. It's me. They are not ever going to truly see their full potential and scale or more so create leaders. The way I was able to exit, it wasn't just me, me, me, me. It was others. I created other leaders that were so far better than me. Now you're willing to surrender to that to understand, hey, I've taken it to this stage. Now, this is out of my, you know, I don't have the skill set here. I'm going

to have most of us fail at that. I used to fail over and over there. That is a true leader to say, Hey, I am not the Mac daddy at all. I'm here to create something. And I'm life is about this. You give value to life. You create value. You have valuation. In real estate, as you and I know, you give value to a property, you put capital improvements, you increase the rents, it increases in value. There's no difference in business. I do private equity investment. And the concept of scaling real estate, private equity, VC, it's all about the value add, the value add in your business. If you have a small business owner and one of your listeners are listening,

I don't care what industry, you're never going to create valuation in this business unless you bring on better than you. And the only way you're going to bring on better than you is to release yourself with a me, me, I, I.

There's so many people that have an ego and it's never your amigo. Oh no, Bobby, but I'm a real nice guy. I'm like you. Listen, ego comes in so many different forms. I'm telling you, I have no problem being exposed to opportunities, no problem making money.

Think about what I just said. That's financial freedom. But the biggest bonus is how I'm making others massively successful. The return on that investment is frigging huge. Yep. No, I mean, dude, we could go on and on. I mean, we can do a two-day seminar, you and I, just rocking the house on this. Because it really is, it's always going to be about the people.

And I always try to, so there is a great meme that I firmly believe where there's a picture of a boss pointing, and then there's a picture of a boss pointing and then there's a picture of a leader like caring right and I love that meme but it to me that is really it right you lead by example you lead through your actions you lead by not having a label by not being the owner by literally creating partners in your business, treating them that way. Right. And I think the real, another disconnection I think is people really don't know how to treat their partners, employees, whatever they want to be able to label them because they don't know what they

value in working with you. So if you never have a sit down with some of your star employees or all of your employees and say, what's important to you? What in life is important to you? Great. We're paying you enough to, you know, make a living, put food on your table, pay your bills, go to the movies, et cetera, but remove the money. What do you want out of life? What's your passion? And not understanding that if you haven't done that right now, and you're listening to this podcast, whether you're listening on iTunes, watching it on YouTube, it doesn't matter. If you haven't had those conversations with your key personnel, period, you're not a leader yet. Just don't care about the people enough to even

have the conversation. You simply aren't a leader. You may be a boss. You may be a dictator in the sense of you just tell people what to do and they do it. You're not a leader. I agree. You're never going to scale. I mean, I see a lot of companies. I speak to a lot of entrepreneurs, incredible businesses beyond belief that they don't even see it. And they're saying, Bobby, man, I'm having a hard time scaling. And I'm spending time as I ask a lot of questions. And you'll be amazed when you just listen. And nine out of ten times, the reason they're not scaling is because of them.

For the same topic we're talking about, and only if they can surrender to it. And I tell entrepreneurs, man, you can have $10 million. You could be producing $50 million net income like I was. And then you could start producing $200 million net income. Big difference. And how you do that, you need others to a $200 million net income, big difference. And how you do that, you need others to scale. I don't know, man. I wish, man. I had somebody like myself pouring out my heart because I can assure you I'll probably be worth 10 times more.

And I do believe money provides resources for you. It's not everything, but it provides resources. You can help out organizations. You can help family members. You can help healthcare if something, God forbid, goes wrong. And the Internet's powerful, man. And watch the content you dive into. Watch. Sometimes you're not pizzazzed with all the planes, the Ferrari, all the – it means nothing.

You get nothing out of looking at that stuff. It is crazy. I, you know, listen, I'm 39 now and, and I did my thing and I've run a very 13 years. I've run a very successful real estate business, more on the fix and flipping and wholesaling component, right? Collecting quick cash. Um, I actually now, because I am now married, my mindset has changed, right? So now it's dude, the the Maseratis, the Rolex, like I've had it all. Very cool when you're young and single and just want to be the flashy, you know, D-bag, right? And self-proclaimed, I got it, right? I know exactly how I was living. But now the mindset realizes, and sometimes it's just a timing in life, right?

So for me, it was a maturity phase of like getting to the place where now I need to think about my future who cares about my very nice car that is expensive why don't i put take that same money and put it into another rental or or say hey bobby bro let's do a syndication i'll give you like that money is so much better used there etc and so again we could do 13 these podcasts because that's a whole nother subject about timing timing in life and being able to receive what is being communicated. Because first of all, tell everyone where to find you. Your YouTube, your Instagram. People need to hear more of you. So tell people where to find you.

My son, you know, on social media, I was only supposed to be on it for six months because when I exited my business, the business for nearly 20 years was like my child, man. I was so close to the people, incredible. And my son, beautiful. I have a son, 23 years old, Sophie and I. He said, dad, you're going to fall off a cliff, man. You're going to be very depressed because you used to always give them value. And all my friends pick your brain.

They want to know how to do real estate, this, that. Let me put you on social media. I don't know. Then finally, of course, I said yes because I love my baby boy. Well, a year later, I'm still here only because of incredible people. And I want to tell some people if I may real quick. And the reason I'm still doing is, and it's sad, man.

This is what most people don't want to hear and talk about social media. I get a lot of these DMs and messages from incredible, beautiful people. And it's scary. Suicide, depression, I mean, drug abuse. I mean, and you look on the social, their profile, you would never, ever believe it. It seems like, my God, I want their life. That's right.

Behind the screen, I found out on the social media, they're so truthful. And it breaks my heart because I'm speaking to people that don't even know how they're going to make payroll, but yet they're driving a $200,000 car. And that's a problem. So it keeps me engaged because they're vulnerable. They want to improve.

They want that. And my content is just about reminders, man. The strategy comes when you're ready for a strategy. Right now what I give is some wake-up calls and some basics of talking to another Bobby who's all over the place. You will get to a stage where you do need strategy, but right now, before you invest in strategy, you got to get yourself right. My Instagram is officialbobbycastro. Some people like me, some people don't, and I don't blame them, to be honest with you, because I get all frantic and everyone says, why do you get so mad?

I'm not mad. I just want to urgently tell people people you're burning your minutes, man. Don't you see it? And I get it. They don't see it, but I see it. And, you know, go to Google, put Bobby Castro. I'm sure something will pop up. Well, and here's the thing. You win either way. If people love you, they will be die hard Bobby Castros, right? You win. If they don't, you win because they're not going to resonate with you anyways. They're the ones that have the weak mindset that always will blame someone else. And you're not a psychologist.

You're not a therapist. All you can do is give back the way you know the best way how, right? So God bless your son for getting you out here, bro, because you are changing people. We have a mutual friend, Cole Hatter. I saw you did something with Cole. You're just changing people's lives just by being you, bro. And, again, you say this on – I've been following you.

This is why I'm – you know, you're here, and thank you again. The whole no motives, that's the key. You know, all these people on Instagram, Facebook, there are motives and I get it, but they're coming from a place of like, pay me this and I'll give you this information. I respect it. In fact, to some level in the real estate space, I'm in that game. I understand that. But I love that you're there financially to say literally no motives. I just want to change your life the same way I was able to change my employee's life, my partner's life, and so be it, right?

And so, dude, I couldn't appreciate you more. And there's good people out there like you, man, teaching people bona fide formula, especially in real estate. It's never going to be a better opportunity. There's going to be massive wealth being created here in 2021, and I'm begging people, invest in bona fide information. So when it comes around, you are ready. You're like a freaking fighter in training for nine months,

ready for that championship fight. And if you're not prepared for it, man, when preparation meets opportunity, explosion in a good way happens. We call that luck these days. That one's luck, right? Brother, I appreciate appreciate you go find him on instagram official bobby castro and then his youtube channel i mean get a hold of this guy um man i couldn't appreciate you more thank you so much for being on thank you