Ep 552: The Hard Way To Get Rich

In this episode of the Hive With Us Podcast, Daniel Martinez and his co-host discuss the challenges and strategies for becoming successful in real estate investing and wholesaling. They emphasize the importance of avoiding the pitfalls of bootstrapping a business and instead advocate for raising capital and partnering with experienced individuals. The episode covers the benefits of leveraging other people's money (OPM), the importance of experience, and the potential pitfalls of various investment strategies. They also highlight the advantages of land investing over other asset classes.

Chapters

Chapter 1: The Fallacy of Quick Riches in Wholesaling (0:00 - 1:17)

Introduction to the common misconception that quick riches can be achieved through wholesaling. Daniel and his co-host explain the reality of reinvesting earnings back into the business.

Chapter 2: The Challenges of Bootstrapping Your Business (1:18 - 3:09)

Discussion on the difficulties and limitations of bootstrapping a business. The hosts share personal experiences of reinvesting all profits and the resulting financial strain.

Chapter 3: Raising Capital and Partnering for Success (3:10 - 7:00)

Importance of raising capital legally and ethically. The hosts emphasize partnering with experienced individuals and leveraging other people's money (OPM) to accelerate business growth.

Chapter 4: The Advantages of Land Investing (7:01 - 11:29)

Comparison between land investing and other asset classes, highlighting the high ROI potential of land deals. The hosts share anecdotes about successful land investments and the benefits of minimal management and capex.

Chapter 5: Building a Strong Business Model and Team (11:30 - End)

Insights into building a robust business model and team. The hosts discuss the importance of having a skilled and dedicated team, the significant work involved in real estate investing, and the value of continuous learning and adaptation.

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Transcript

Chapter 1: The Fallacy of Quick Riches in Wholesaling.)

the hard way to get

[Music]

rich yeah this is a good one man this is

something that I've been wanting to talk

about for a while because U I think

early on in your real estate investment

career or wholesaling career in your

mind everybody's mind when they first

learn about wholesaling they're thinking

that they're going to get a bunch of

sales yeah take all that cash $10,000

assignment Fe I'm going to be rich every

week from now on and then you're

planning on taking that money and that's

going to be your money that you're going

to buy houses with and buy other assets

with and that's how you come up right

mhm but I think that's a fallacy that we

should talk about before somebody gets

too far along into into their career cuz

then they'll do what we did yeah what

did we do reinvested we went all back in

everything we had every done it didn't

matter if that money was for Christmas

presents or a new car and went back into

the business let's go let's roll it

let's roll it so it's painful it's very

painful and a lot of people they I'm a

bootstrap it bootstrap it bootst it

boot it don't do it

so that's another title the hard way to

get rich bootstrap your business don't

bootstrap your

business so the reason why bootstrapping

your business is is hard and sometimes

you have to you have to do it for a

certain amount of time I think that's

that's the that's the true part about

this is you have to do it for a certain

amount of time but once you get to a

certain point what do you need to

Chapter 2: The Challenges of Bootstrapping Your Business.)

do I think no matter what yeah you cut

your teeth however you have to first

things first close deals but at any

point that it makes sense for you

quickly I would say start raising

Capital raising Capital legally and

ethically learn what that means um we're

not going to teach on that channel on

this channel you know that's that's like

legal advice I'm just saying get out

there and learn how to how to borrow

money against your deals so I would

think stage one right before you can

even do that really is you have to have

the deals or else this doesn't work at

all you can go raise all the capital in

the world you don't have anywhere to

place it then uh you know then you're

raising for nothing yep and there have

been instances where people have gotten

big trouble for it and also um um just

had to give the money back right to one

or the other and I think that's a best

case scenario if you have to just give

it back with no loss yeah but um I think

what what we do as we're like in the

lead generation the lead engine business

yeah is uh we get the assets all the

time right so we get these deal on the

time that we can borrow against to to be

able to correctly place that Capital

yeah and I think that's that's the key

the key is get your marketing cut your

teeth get your marketing order get deals

and then you can raise deals and

whenever you're ready to I think it's

different people it's different for

everybody but whenever you're ready to

to start raising money I think that's

the key is when you can raise money and

borrow against whatever assets you're

trying to take down that's when you're

in the money and that's the easy way to

get rich but the hard way to get rich is

reinvesting every dollar for for years

that that that's that's the hard way it

get it gets very mundane and uh what was

the meme is it's like I'm not poor I'm

just a liquid yeah and I think that's

where it leaves you because uh yeah all

the extra you have that you could use

for like vacations Comfort automobiles

healthy food you know the important

things in life uh you don't you there's

Chapter 3: Raising Capital and Partnering for Success.)

no cash laying around for that because

you keep rolling it back in so knowing

what we know now early on we would have

initially started with just putting the

deals together for learning how to do a

profitable deal right so that's stage

one I could there's a little learning

curve there but also going out and

actually raising the capital so what can

a person do to shorten their learning

curve and not have to wait to learn how

to do a deal start to finish before they

go raise partner with who people that

experience partner with people that

experience so one thing that's

interesting is that you as individual

have your own access to your own lenders

but you can bring your lenders to your

deal and partner with an expert and

still do that

deal and that's the way to do the deal

without having

to put put your neck out and possibly

lose it MH cuz you're working with an

expert yep and so that's that's I think

our business model is beautiful and you

if you don't for whatever reason don't

think Danny or myself is handsome enough

for your deals find somebody that knows

what they're doing stay as close as you

can to that person for as long as they

will let you right sometimes you're

getting too close with people they kind

of shove you out um I think what we the

way that we do it is we give away all

the information right and we help raise

the capital for these people so we're

we're again a concerted effort let's say

we only brought the expertise but you

guys went and raise the capital well we

would see if we had a deal to place it

and sometimes we do sometimes we don't

but more likely than that we can put it

somewhere nice and this is one of the

things where you have there there's

three there's three points to a deal you

need the deal you need the capital and

you need the experience and knowledge to

know how to do it we don't need to fill

all three of those points yes we'll buy

the deal yes we'll bring the money and

yes we'll you can Source the deal but if

you could bring capital or experience or

knowledge and justce money who's going

to give you money anybody and everybody

I me we'll give you money yeah and

that's what I'm saying if you're

experienced on what you're doing we

we'll find the money for you so it comes

down to the you if you if you can fill

one or two of those things you can

leverage your position no matter even if

you're just starting hey bring a deal

boom now we're going to share the

information with you and bring you along

for the ride that we learn how to do the

deal so I think that's the ultimate

trade-off as a new person you go out you

contract something you don't know what

to do now you don't have the resources

you don't have the finances you don't

have the attorneys in place yep they

come to us hi M

University they they we analyze the deal

we say yes this looks like there's a

decent amount of profit here what are

you trying to get out of this and then

really it depends on where you are with

the deal how much you participate but

normally it's a nice fat whole selfie

you know sometimes six figures and you

know around there the one I can think

about is Tanisha Tanisha found the deal

we bought the deal and now she's trying

to find a buyer for a deal but she's

it's her deal yeah it's her deal and

she's putting her own SW equity on her

own deal to come fruition so when

whenever that deal finishes she get paid

even more cuz she put more Sweat Equity

than everybody else yep and she just

didn't sell the deal to us yeah she

didn't have a dime out of pocket so now

she can participate in the upside but if

somebody says Hey I just want my 100

Grand or my 50 Grand I'm out of here we

can yeah we'll pay you up front like

that we can move it around we can

partner with you like I said so it

really depends on the ticket on a deal

by deal basis but if the deal is strong

enough we'll find the capital but if

you're just good at finding capital or

it's always around you then we'll have

we'll have a deal for it where it just

makes sense for everybody and they're

really strong deals yeah very very

strong deals um I T I had a I talked to

a CPA lender that's coming on and he was

amazed at the returns you know you don't

say you know and this this is uh we talk

about this about like what's a good Roi

like you could do crazy rois in land

like crazy rois we're like you we IAL me

and a we have a video that Mike Flor is

recorded with the Uber driver and she's

living in San we're in San Francisco

right now if you don't know and uh she

says she's she's investing her

Chapter 4: The Advantages of Land Investing.)

California money into Section 8 into

into uh good states that have good

rental property and like what type of

return you're getting well I don't know

and I'm just like like if 12% return

boom like we can handle that you don't

have to do none of that like hands hands

off investing 12% return with no

management capex or like to her like I

don't know what type of return she was

getting but when you really think about

ownership of these assets you got to

think of the cost cost literally there's

a video on Twitter I saw yesterday

they're like uh these are these are the

things that replace the Last 5 Years of

ownership owning this house and I'm like

oh more reasons to invest in land

because like you you really don't

understand what you're buying when you

buy a house yes I'm buying cash while

I'm buying a passive investment but you

have all the

downside something somehow some way you

know you find a way to break even and

then I think the ultimate play is for

for collecting houses is is a

depreciation and then of course like

long-term appreciation nobody I don't I

don't know that anybody buys

specifically to make a million a month

but um yeah I think it has its place but

with what we do it's just so it's so

different it's so different and like um

we talked we talked to somebody like

we're giving a minimum like 15% return

or something like that and they're like

they're they're raising money like 7 8%

because their deals barely yield 10% Roi

or 12% Roi there's something else right

there so on our deals we have people

that we could pay out 10 20 30 40% you

know depends where that in the deal and

and a lot of deals um that people are

used to going into like 99% of deals out

there um you're going in real

heavy very heavy yeah you're not you're

not uh maximizing The Leverage and

you're not really in a good position so

let's talk about this this is a great

this is a great caveat so like let's say

you're buying a million-dollar apartment

complex a million dollar comp complex I

don't I never bought a multi family but

you're going to usually the banks going

to finance 60 to 70% of that who comes

up with the 40 you and your private

investors the reason why is because you

might have a 3 to five year exit if

things go wrong there goes your Equity

we're seeing it right now with

Apartments everybody's losing their

apartments right now it's going crazy

and the reason why that's happening is

because your Equity position on the

capital stack disappears and everything

go wrong

so the thing we thing where we

differentiate is we're creating so much

value even if we have to liquidate at a

at at a cheaper price in our exit we

still have a great buffer margin and

that's the difference when multif family

cap rates shrink or interest rates go up

or down you're going to feel that in

your Equity position and there's not

enough Roi that it just shrinks your

thing and now you lose

it yeah I think that's why these deals

are so good is because we can we can for

one

we can value at a lot of layers yeah not

just like one or two different ways and

it happens pretty quick so I think we

being that we can afford to uh value out

that many times over you know then we

could always pay a great return and then

also there's a lot of buffer between uh

the profitability of the deal and what

the investor is supposed to get back so

there's such a wide Gap you know it's

hard to imagine that so I was talking to

somebody and they said they invested

$50,000 into a multif family and they B

like 400 back now that might s good to

you but my head immediately went to how

long was that that was my first question

how long did this take and it was it was

like five six years which comes out to

like a 12% annualized return oh man so

that guy's a superstar cuz he 8X his

money but he was making 12 12 12 12 so

you have to look at whenever you see

this is this is my my my pet peeve

online is like oh I bought it for x and

I sold it for X but what what was the

time invol how much did you have out of

your pocket how long did it take how

long did it take cuz every everybody's

like well I bought it like my grandma

bought this house for 40 Grand and now

they're selling it for 400 well how long

has this been it's been 50 years

oh my goodness that's like a 6%

return and everybody's like oh that's a

great Buy and Hold Buy and Hold you're

going to make a lot of money buying and

holding yeah that's what I'm saying so

and again like I said maybe it has its

place if you have excess capital and you

can find really good deals on houses and

Chapter 5: Building a Strong Business Model and Team.End)

you got a strategy you know more power

to you um but if you're just looking at

straight acceleration of capital to go

from a new guy that has nothing to being

in control of of a million dollars in

cash I can't think of an easier way to

do it then with land you you could do it

in a day or in a week or in a month I

this is this is the point where I I want

to get into is that um what what's the

work involved to do that what's the work

involved to do that in other asset

classes like you have to do you have to

know underwriting for one right underr

it's it's just insane it's insane I

think people people want to multiply and

amplify their money but they don't

realize the work it takes to do

it and other in other spaces so I think

we got two good things going here for us

is that for one we have the work ethic

of freaking robots like aliens the hyp

work of the hyp yeah we have a work

ethic of of some animals but then also

now it's a very very fine skill set that

we've pieced together yep you know

that's really cool if we piece together

something that's tremendous and uh it

seems like everybody notices it already

yeah and like I said it is a lot of work

it's a lot of work don't even tell you

it's not that's what I was going to say

so as beautiful as the machine is the

hours that goes into it is just

unmatched yeah we we have like 30 people

working right now so yeah we're doing we

can we can show the hugs we can show all

the things but there's 30 people working

at minimum and more coming and more

coming by the second you know so there's

there's a lot of man hours and we'll

talk about time that's P that's pushing

this thing yeah so lots of

hours lots of uh uh concerted effort

making this machine move that's why but

yeah lots of good smart people working

in the background making it

happen petarian me me and an we we're

the janitors of this thing because there

there's a lot of moving parts and we

have to clean up clean up and create we

clean up a lot of messes we out a lot of

fires we create some fire sometimes you

know but we're human too and we love

this business if you guys have been

following us for any length of time I

just want to say that we really do

appreciate you guys yeah you know

there's people that have been here since

the beginning but we've just never heard

from them or spoken to them so yeah if

you guys reach out you know just say hi

we'll be glad to see if we can look at

some deals for you or just you know

invite you to one of our calls or

something like that but yeah I say get

out there and raise Capital guys because

if you don't start there it's going to

be a long painful Ride Like I said and

of course you want to learn how to do

deals I think that could even be

secondary if you're really good at

raising Capital then said you partner

with us on something and we'll teach you

the rad start to finish but I would

start don't don't do not wait to raise

Capital don't wait one more day your

business will struggle for it and you're

going to what you did earlier anyway yep

we'll see you next time thanks guys

[Music]

Ep 552: The Hard Way To Get Rich

Daniel Esteban Martinez

Anthony Gaona