The Unrealized Power of Creative Hospitality Real Estate Mastery with Rafael Loza

[0:00] you do and what you’re all about in the real estate space yeah man um so i pretty much have known for short-term rentals hospitality that’s kind of where the content that i put out to the world is the short-term rental stuff but i’ve been a real estate investor for about eight years um i started with doing rental arbitrage so basically renting out apartments furnishing them and then you know renting them out on on airbnb furnished and making a spread and profit i did really well on that scale that business significantly to about 170 units and then there i took that cash flow and just started actually going into real estate um i’ve done long-term rentals mid-term rentals short-term rentals multi-family boutique hotels development i mean pretty much anything creative finance anything you can think of in the real estate space my expertise now is putting deals together i love putting deals together with uh good people partnering with good people and uh you know primarily focused around short-term rentals is still my bread and butter but i mean anything anything real estate man excites me so uh i’m kind of excited to be on this podcast actually

[1:10] because one of the biggest things and forgive me if this comes off the wrong way but i know you you primarily set your focus around agents and teaching them to invest and i love talking to real estate agents that don’t have the experience with investors because it’s always a good teaching lesson so i’m kind of excited to go over some of these things that or maybe some tips tips and tricks that some agents out there could take and apply things like pitching creative finance or pitching long simple little things that a lot of agents out there don’t know to help an investor or for them to move into an investing world away from just selling and and uh you know acquiring properties for people you know that’s definitely another benefit of this podcast is it can be kind of a bridge it’s it’s like two different worlds um i don’t know if it’s just wholesale retail uh if that’s the way to describe it but it’s definitely two different worlds and i think that often agents have kind of i mean i think it can go both ways i think there can be like kind of bad uh blood between the two a little bit like it might you know like uh agents might see investors as wasting their time because they’re

[2:13] talking about things like i you know seller financing and they’re like if they can’t get it financing from the bank why would the seller want to do this and so i think it’s really good to to have these conversations and to kind of open um open people’s minds and help people understand um and at the same time i think it’s also you know there probably would be some good questions that an agent could ask an investor to see how experienced they are how um you know like like to to vet them a little bit as well to see like because i think there probably are some people that have never done anything that have listened to a thousand bigger pockets podcasts and yeah and may not actually ever take action but want to talk about it um a lot so yeah so um but tell us a little bit let’s just get right into that i mean tell us a little bit about what uh you like to teach agents um when when you come across some that aren’t you know as investor friendly haven’t been in that space much well you know it’s you know man it’s it’s a tough i don’t want to say it’s a tough question to answer but depends specifically on the person that i’m dealing with uh typically when i when i work with an agent

[3:18] you know primarily it’s hey they’re going to get you under contract to to either sell your home or to help you find a home right um i go more of a direct approach typically uh so i have a handful of agents that i work with that are that i’ve kind of i don’t say molded but we’ve worked together so long to where they understand where i’m coming from with specific details or needs to acquire specific property but the biggest thing is every property is different and when you go to acquire a property the strategy sometimes could be very different than your typical conventional offer where you’re going to offer something close in 30 days go through an escrow process right i’ll give you a perfect example right now so i’m working with the realtor and i say i i go about it differently because i actually went directly to the seller’s agent instead of getting my buyer’s agent to reach out to him and i’m like hey dude listen um i’m working i wanted to call you directly because i’m gonna go about this a little bit different than what you’re probably used to how familiar are you with dealing with investors and he’s like oh i’ve dealt with a few investors i said oh even better

[4:21] perfect um so here’s what i want to offer i’m looking at a property um actually this was a piece of land i’m looking for this this specific plot of land uh you’re the seller agent and i want to see if we can either do a seller finance on a 12 month note or we can do a six month escrow to be able to to close on it in six months once i acquire the construction loan and the guy was like well i i guess how does why would you need a six month escrow or why would you need to do a seller finance i said well preferably i’d like to do a six month escrow because then i don’t have to do two closings right seller finances stuff to close going to escrow title fees all that stuff but if you do a six month escrow i can put a larger amount of vmd down let’s just say something like 10 down and the reason why i would need six months escrow is because then i can go and go through the entire process that i need to make sure that i can build on this lot right and then acquire a construction loan and at the time of the construction loan i close on the land and i close on the construction loan as opposed to getting a loan for your land and then having to go and get a second loan and a lot of these

[5:26] lenders obviously always make a big deal about these things right you can’t get a loan behind a loan on a piece of land and so when you explain that stuff anyway long story short i went through this whole process with this guy and um he was still confused right so he’s like just write up the offer so i wrote up the offer and he sent it in and they came back with like some crazy ridiculous um counter offer and so i’m like hey dude listen i think there there might be some some sort of misunderstanding as to why i want to do this let me re-explain it so i sat down we explained it again and this was a really simple right i mean just six month escrow like there’s not a lot of yeah it’s like it’s not like i’m asking for some crazy seller finance terms anyway long story short we got the offer accepted because i was able to the realtor was able to understand where i was coming from what were the needs that i needed then he was able to take that knowledge and explain it to the seller and go look this is what they’re doing this is why they’re doing it this is how they’re doing it um and this is how they’re going to close in the six months right the biggest fear usually for

[6:25] these type of loans and i’m talking about this one specifically or these types of um contracts is they think that we’re not going to close in six months and we’ll back out so typically what i’ll do is i’ll do something like a non-refundable emd after the contingency period right so like on a 21 day look if you keep it if we fall out you keep 20 grand you’re done right um anyway long story short that’s one of the reasons i don’t know if that kind of gives you an understanding of where i’m coming from yeah i mean a bunch of other ones i can do well yeah no i think i think maybe this is a highlight of of some of the differences between investing space and uh retail space uh it’s often an investor is talking directly with an owner they’re talking directly with the owner and they are if they’re good they are looking they’re they’re trying to figure out exactly what is important what that seller needs in a deal and then they have their knowledge and apply it uh of all the different ways the deal could be structured to then be a very good win-win for both parties um and so this is where like you

[7:27] know you know seller financing can be a really good uh opportunity for both parties where if somebody doesn’t want to take the capital gains hit right away um and they want to you know break that down into the seller payments or the owner the seller financing payments um every year that’s that’s one way that you can really benefit a seller and if you don’t understand that as an agent um i think oftentimes when seller financing comes up it’s people are thinking well it’s because this person can’t actually get financing so like you know why am i gonna bother with this person they can’t even go to a bank and buy this property but again there’s so many different factors i mean you can you can there’s so many different levers you can pull and understand this stuff like you can you could overpay for the property with the right terms like it could you know if the interest rate is less um or you could even have a zero percent interest rate if you bake it into the purchase price and if the seller only cares about the purchase price and they want that ego stroke whatever of selling it for that much

[8:24] money even though it’s not worth it that’s possible there’s a way to make it work um and so i think that’s where um you know having a really good understanding of the whole picture um it can be missed um in an arm’s leg transaction where you have two agents representing other other sides and maybe they aren’t too busy to really talk to each other well or fully understand their their clients perspectives and and what their needs are um and or just don’t really understand that there’s different ways of doing things and you know right standard yeah i mean i’ll give you another example and it’s funny you say this but the biggest thing that i run into is typically agents they just either don’t want to deal with something that they’re not familiar with because they think it’s not either not going to close they won’t get paid their commission or some something along those lines um i had a i called one in southern california and i’m like okay man uh you know just again i’m calling you directly because i want to explain what i what i’m going to do and the and the guy stops and he’s like he starts laughing and he goes why don’t you just have your buyer’s agent call me and i can

[9:26] deal with them directly and i’m like god i i know where that’s going to go right it’s going to be like an instant like all the all the so i did and it’s funny so in my head i’m like okay well this guy’s not going to want to either consider what i’m going to offer or he doesn’t want to deal with it so we send in the offer and sure enough they’re like why would we even consider showing this to our sellers and i’m like well that’s why i tried to get you on the phone to explain the situation and you said no and so now my agents over here trying to explain it to them you know my buyer’s agents trying to explain it to them and um anyway long story short we ended up not acquiring that property because it went nowhere but you know the biggest thing that i that i run into is is a lot of a lot of agents that again don’t understand the process or they think that the process is incorrect or they think that it’s not in the best interest of their seller without or they just don’t know how they’re going to benefit from it right so there’s a lot of different ways that you can close on a deal just like you said i guess you just have to be kind of open to understanding and learning so so even to give

[10:30] you an example dude for the short-term rentals like now specifically i only work with realtors that are versed in short-term rentals and there’s a pocket of really good ones out there because number one they’ll know exactly the best use case for an investor to try to either get like a like the short-term rental tax loophole that people can get right um if they go and buy short-term rentals an investor offset their w-2 income type of situation and a lot of realtors out there don’t know about it yeah and so it’s like when you when you talk to a realtor that understands either some sort of tax law some sort of short-term rental they understand how to underwrite a property they know what the possibility of a property uh in terms of the revenue it’ll generate dude those people are great because it just those realtors are great because it cut it cuts the timeline of acquisitions on a property to like literally this right you can go for months looking and these guys just they drop it on your lap and they go hey dude these are the properties i have and this is what we think it’s going to make

[11:25] and i’m like oh man this is great yeah and you start a conversation yeah i think i think what you just hinted at is probably the biggest opportunity um right now in the airbnb space um and i and i think we could we could get into this too i don’t know how many different markets you’re in in airbnbs but we all know that there was a huge flood of interest in airbnbs over covid uh both in i would say people wanting to stay in them uh if they weren’t traveling as much internationally etc they might want to go to the you know local resort close by to them or something instead um and and then also just investors buying into them and so i think a lot of people bought airbnbs um in and with analysis numbers with figures from before this boom happened um and then they realized that they weren’t going to be able to get that pretty quickly um and and so at this current state there could be some markets that are hurting pretty bad from oh yeah um this oversaturation of airbnbs maybe less stays in general um with all that being said and i want you to answer that question i’m sorry for making this such a

[12:30] long-winded uh question here but i think there’s also that opportunity still uh for somebody who is a high income producing or high income um earner doctor whatever that they could use that tax loophole that you talked about and offset their taxable income with an airbnb so if you are in a situation where you need to sell an airbnb um there is that buyer out there still that maybe not need to make as much money uh on the cash flow but they have huge incentives from the tax benefits tax write-offs so but yeah so you know there’s a little bit about yeah there’s multiple things that you brought up there right so dude i’m in i’m in i don’t know like nine different markets across the u.s some really heavy short-term rentals some that i’ve just found that generate good cash flow and um they’re all different so the big ones that got really hurt are the ones that everybody jumped into right like the smokies that’s like hands down one of the worst that you can jump into and i’m not i don’t want to make it sound like i’m talking bad on it and i know because i’m in that market right um what after the covid boom where everybody was just pumping cash out right for short-term rentals a lot of

[13:36] people went in and bought those well now that everything’s kind of stabilized the the revenue that people are seeing is down i mean like across any market right now it’s about 18 22 now uh from what i’m seeing and that’s i mean dude i’ve seen properties even in mexico right like in some really beach towns that are down about 20 well it’s just that’s just the way the market is right now um it’s a cycle right and so the the people that got in at that time with the really high interest rates or the really high payments or the really high purchase price they’re either in a spot right now where they have to pump more money into the property to really make it stand out in order to continue getting that revenue or they’re having to off offload it at a discount now that does two things number one you if you step up and you put money into the property you really make yourself stand out you’re going to continue just fine number two the person that’s trying to come into the into the industry right now if you do it right in the right market you can get a very nicely discounted property that will still

[14:41] generate income knowing that you have to put money into that specific property right you’re not just going to buy it and expect it to start making money um and so for as a matter of fact for the high income earner that needs some sort of tax write-off that can offset a w-2 we just sold one right now for 1.8 to somebody exactly doing that right and this was a ultra luxury property ground up development um we actually sold it right before we even completed the construction because they were in the market and a business partner of mine has a bunch of these high-end luxury properties and he’s like hey dude i just sold one for like a really significant amount and i’m like holy cow and so i’m like let’s just let’s just start talking to people and put put ours up right and uh one of my other business partners a really good friend of mine he raises capital he’s raised about 30 million or something this year and so i’m like hey dude i was like we have these properties why don’t you come in and i mean this is how you raise capital he raises capital with by taking income from really high income earners doctors like you said and they’ll invest it into properties where they can offset

[15:45] their w-2 or into other different types of tax strategies anyway long story short again i don’t want to keep them keep these answers long-winded but somebody that makes a certain amount of money can go into a specific market and buy something that’s real that really stands out and now i talk about this a lot but the the people that are doing really well in the short-term rental space are the luxury high-end properties that are attracting the type of customers that aren’t affected by current market conditions and the best way to say that is people that just have money that aren’t affected and that can spend money and they’re booking or there’s people that are traveling they’re booking high-end properties or paying the high nightly rates or it’s a group of people so if you’re traveling for example you travel with six of your friends you go and get you know a six-bedroom home and you can you can book something significantly more expensive but it saves you guys all the money more money because you’re booking together right as a group and so these big properties and these high-end luxury properties are the ones that are really just not being affected as a matter of fact

[16:48] we’re seeing an income and i’m in both markets i’m in the budget friendly and i’m in the high-end um type of property so again i’m speaking from experience here and so the in the really high-end properties we’re actually seeing an increase in revenue currently as opposed to my low ends i’m in some properties that are beating me up right i’m like getting wrecked uh again because i just i haven’t put in amenities or i don’t want to invest more money into them or they’re in a market where i’m just kind of like okay eventually this market will turn but then those other high-end properties are really pumping cash out so the the high net worth individual that has a couple hundred grand that they need to write off in w-2 income can go and buy a property now there’s a lot of i don’t you know not financial advice here guys but you know there’s a lot of little details that have to be matched in order to offset that w-2 one of them is for example you have to uh manage it for over 100 hours in one year’s time more than everybody else on the uh in the business or more than your cleaners you have to

[17:46] put in more hours things like that um and we can talk about all that if you want but um those people can go and acquire a really large property for example the one which is sold for 1.8 and then they do a cost seg on that type of property and they’re saving i mean i did one last year and i saved around 260k in taxes which is kind of insane you know what i mean yeah so and and then on top of that my understanding is that that can roll over as well so like if you’re not i’m able to to realize all that um savings you can you can roll it over to the next year so it’s it’s can be a really powerful thing in this market um with 100 depreciation being back um the yeah and and yeah you do have to put the time in so that’s definitely a factor there as well is it do you know if it’s a spouse if it’s able to be a spouse as well like yeah so it actually can be a spouse so if you’re married your spouse can be the one documenting the management of 100 hours and you’re you’re fine it’ll it’s either one or the other now if you’re single it’s got to be you but if you have a if you’re married your spouse can

[18:51] totally do it for you um we’ve noticed that the the the couples that are married their spouse is always the one documenting the time you know like there’s certain things you can document too not everything’s counted towards management yeah and i think i think that was one of the reasons a lot of uh stereotypes of who realtors were or are is um the spouses of a dentist the spouses of a of an agent and this is gets into um being a real estate professional designation which is essentially kind of what this loophole is allowing people to get into that space so like if if they are not a real estate professional they’re not a full-time investor that’s not where all their money’s coming from they’re not a full-time agent where all their money’s coming from that um they have a w-2 they’re able to kind of tap into this world that we are in um by doing this short-term rental thing and and if you’re just an if you’re an agent um and you’re considering it not that a short-term rental isn’t a good option it could still be a good option but you don’t need to do a short-term rental you can just do a regular investment it can be a long-term lease it can be a multi-family you can invest in a

[19:55] syndication um and have basically somebody else do everything for you and reap the benefits of that cost seg that they do um and just just an example give you an example of what i’ve done uh and i might have gotten lucky but i invested in uh a syndication fifty thousand dollars into a syndication and the first year i was able to write off sixty six thousand dollars off my taxable income which is a great ratio right yeah i mean that’s really good and then i was able to on top of that um you know get like i think it was like 11 return on my investment uh just from dividends so second year was another sixteen thousand i don’t know what the third year is going to be we’ll see but but that’s the if you don’t this is another thing that like you know crossing this bridge between investors and agents can help people understand like the power of like you know all the opportunities that are out there like i mean this yeah it’s a huge game changer and you should be meeting with accountants to verify this information and and all that kind of stuff but but know that it is there and people aren’t just going to tell you about it necessarily you kind of have to go out and figure this stuff out

[21:04] you know you brought up a bunch of good points number one for everybody listening to this if they’re still listening to this point right now right find a cpa that’s familiar with real estate laws that’s the biggest one i’ve talked to i mean dude i’ve gone through no joke like eight cpas and i’ve heard i’ve pitched the same strategy and every single one has given me something different right and so everybody’s going to give you advice all the cpas will give you advice based on their knowledge right so i would suggest talk to multiple experienced in real estate before you go and do any of this any tax write-off has to have a basis behind it what’s the basis that you can say hey what’s the justification of how you got that write-off in order for it to make sense in the in the eyes of the irs because again look none of this matters unless you get audited right which however we should also be doing it correctly right like i’m not saying go and do it without like don’t do it if there’s no basis or justification but before behind any tax strategy you need to make sure that that it’s there before

[22:00] you go and do it um second part for the for the agents the biggest opportunity you know if i was a real estate agent dude right now the biggest opportunity that i would do is i would start learning the benefits of how you can number one acquire under contract these large properties that you can offload but educate yourself on how you can benefit a buyer or how a buyer can benefit i’m sorry not how you can how the buyer can benefit from you bringing them this property right all the agents that i know that are crushing it most of these guys have pocket listings that never hit the market because they have a buyer’s pool and they know what that buyer pool is looking for and it’s either high net worth individuals and when the time comes when they’re like hey dude you know i have this much money this guy these agents know the tax laws and they’re like hey i’ll go find you a property right now for two million bucks that that will will generate revenue or at the very least break even right so you’re not losing money you’re not putting money into this property but you can write off 300 200 100 500

[23:03] doesn’t matter k worth of taxable income instead of you paying that money to the irs you own an asset that’s going to appreciate over time you wrote off all this money and you as the agent took it to them right like that’s a huge advantage if you understand those things yeah 100 i i um i was talking to a former client friend etc who was a physician and was explaining this to them and and it’s just you know they didn’t really understand that uh fully and and you know now i have you know won that business from that person uh for a long time because i i’m seeing more than just like a facilitator a door opener you know i’m like a trusted advisor that can actually um bring them a ton of value um so yep it’s such yeah i mean obviously education is important but uh for some reason this side of things don’t isn’t always seem like something that people should learn um in real estate sales yeah tell me a little bit about the arbitrage thing so um if people aren’t are familiar with that uh yeah just kind of break that down a little bit and why and your approach when you’re talking to the the the landlords etc when you’re when you’re looking at getting that done yeah you know when i when

[24:18] i started um wanting to invest in real estate my idea was that i was just going to go and buy a property in southern california put a tenant in it right listening to bigger pockets right buy the rental put a long-term tenant you’ll cash flow above without all the stuff that that you know um that’s how i started listening to bigger pockets and uh you know when i started looking for the property i quickly realized that southern california you’re looking at 450 500k like i’m not gonna cash flow with the current rent at that time like i actually would be negative cash flow so i’m like well there goes that right like my real estate investing journey is over and so i’m like okay i’m gonna get into wholesaling right it’s like the next thing right so uh especially at that time so i had just left my i used to have a collection agency i had left that i was like i’m done with that i took i think i had like 20 grand on my name um use that to for my living as i was trying to figure out what the next thing was got a w twitter casino ran through all my money and uh i was all kind of heartbroken about

[25:20] hey i’m not going to actually be able to go buy a property anymore um i didn’t even have enough for the down payment to begin with so i’m doing research and that’s when i kind of found out about airbnb again listening educating myself talking to people i two guys i don’t even remember where we met or how we talked but they were like hey these guys you know they pull up in a ferrari or something and they’re like what are you doing like oh well we have a bunch of units or airbnbs apartments on airbnb in a building and i’m like what like that’s a thing you could do that and they’re like well you know we’re doing it like if we get caught we’ll just leave the building and i’m like well that’s not a very sustainable business model um at the same time i learned about short-term rentals and i’m like wait a second short-term rentals is just airbnb airbnb is just a marketing platform so i’m like how can i make this a legit business so um i’m like i’m gonna start calling apartments and see if i can actually do this myself dude it took me about six months of just a bunch of no’s right because i don’t know how to pitch it nor did i know how to say it then i found a guy

[26:18] that was teaching business systems and i was like my first like little mastermind that i joined and um i think it cost me like 600 bucks for like a set of videos at that time this was back in early 2017 i think late 2016 and um i’m like okay so i can actually convert this thing into an actual model uh i set up an appointment at an apartment complex and i’m like hey listen my name is rafa i’m with night and ring properties i run a short-term rental um corporate housing company and i’m looking to expand in your area uh the way i work is we go and we lease it from you through my company we lease it long term we get it furnished and then we provide it for people who come either for business or leisure in this market and we provide it to them as a short term uh fully fully furnished uh accommodations we provide everything that they need would you would you guys be open to that in in your complex and she’s like she’s like look man she’s like we uh we’re going through a big rehab right now uh can you pay the rent and i’m like yeah i can pay the rent she’s like why don’t you come by and take a look at it i’m like sure so i go into this apartment complex it was 120 units i believe

[27:23] and 60 of them were vacant they were going through a big overhaul of like remodeling this thing so i’m like oh my gosh i hit the i mean i got lucky i hit the jackpot on that building because number one they had a need that i was able to solve which was to lease out apartments asap number two um they didn’t understand the model so i was able to explain them explain it to them from day one and three when they saw how well i did i mean they they were just throwing apartments at me they’re like hey dude take more take more take more and i’m like okay great so i i ended up getting a two-bedroom apartment we got it furnished it cost me i had no money at that point dude i had five grand to my name so i called my brother i’m like hey dude i was like i got this great business idea he’s like i got a credit card he let me borrow a credit card uh which is funny i just did a facebook post about how i’ve been raising capital from day one i never even thought about it but uh i borrowed money and so he lets me borrow this credit card for nine grand i pay for all the furniture on it the five grand went for the first month’s rent and the deposit uh two weeks into this thing it took two weeks to

[28:18] furnish two weeks later of operations i make six grand in revenue and then the second month the full the following month the first full month of operations i made six grand in profit and i’m like holy cow this is a real thing now mind you this was before airbnb was all over right like it was people didn’t know about it it wasn’t as popular um so fast forward nine months later i i scaled it i started talking to other other apartment complexes same pitch then i started working more directly with investors that own buildings okay and so uh i had about 18 at one point and then 27 something like that and then covet hits and i’m like oh crap i went from like 76k in projected revenue to like 700 and then i had like 50 grand in rents i had to pay so you know the whole world’s like blowing up on me um story short i ended up closing i i negotiated a bunch of uh deferments on payments with some of these landlords that i had a really good relationship with but a lot of them ended up closing down not in my own fault but because the built the the the owners of the buildings you know a bunch of people

[29:22] couldn’t pay rent at that time so they lost the buildings or they sold the buildings they asked us to leave and then it came to a point where i had about six again and i’m like oh i need to scale this thing and so um i joined a mastermind a real estate mastermind and this guy was like hey dude if you’re really good at something why don’t you just stick to it in my head i’m like i’m really good at arbitrage and so right after covet dude uh thank god i did this because i mean the benefits were just fantastic i scaled it to about 76 units at that point and we were just pumping cash out dude i mean it was just like a cash machine and uh funny enough at that point i was getting really popular in the short-term rental space and talking to people and networking i was actually featured on bigger pockets too with uh tony and um from there kind of it just kind of took off people wanted to work with me and then because of the popularity and just being public about it and teaching people how to do it i mean people were just throwing buildings at me i took over a 30 unit building i took over a 20 unit building

[30:20] i mean it was just significant um and it was great you know we’re pumping cash out and then i took that money and i put it into other cash flow and assets i that’s when i started buying um a few small multi-families some long-term rentals uh bought my parents a house um which is awesome and then bought a couple boutique hotels and then i just learned all aspects of real estate from there just putting deals together and then the market took a dump and of course i had to and then actually i’m dealing with some really bad regulations in some cities so we have to close on a bunch of locations right now but um yeah i mean i don’t know if that that kind of gives you a whole story of my my life yeah no that’s amazing um uh you know there’s there’s a few strategies and i think like there’s a couple different ways and and lessons to learn here um a like you’re in a market so the coasts are typically more expensive they’re more appreciation heavy markets and that can be a good thing it could be an advantage thing for sure you hold property there for a long time it’s going to do pretty well probably

[31:19] um but getting in that’s hard and so you’re in this market where um you know a just be able to buy a place it’s going to be so super expensive it’s going to be really difficult and then it doesn’t make sense like the numbers don’t pencil out so like so what do you do um and so i think this is this is a really good uh alternative a really good way of getting into uh the business getting into uh the the world without having with with you know the challenges that you were facing i mean this is a really creative way of getting there and i think arbitrage is great um you know doing a house hack could maybe have worked if you were living in a place for a while maybe long enough um had you know some roommates that would would live there with you or or you know doing a duplex kind of thing um that that covered your expenses while you saved up for another one and then maybe by the time you had enough money for another one uh that place would cash flow um so there’s there’s different ways and i think what’s important is to kind of think about your portfolio as a whole and kind of where you want to go

[32:20] so appreciation and cash flow are are two different things and you’re not supposed to count on appreciation but if you’re going to be in california like you can you know there’s markets that they’re gonna they’re gonna appreciate and it’s gonna be great and it’s good to have you know kind of both so like cash flow can keep the lights on cash flow is great and important you might not be in a market that you can get that easily and so that’s the strategy you can do it you can invest in another market you can go to the midwest and learn how to invest in other markets um and and or you know take advantage of the local appreciation you can do the house hack you can do it slower you can kind of build up that capital and equity and then deploy that in a different market or in a different strategy where you can get more of the cash flow um so it’s just important to kind of think this way and to think about how you know what are the advantages of where you’re at what are the advantages of um another market another sector and how can you get both of those worlds i mean because i think both are very important yeah i agree with you and it’s also aside from where the location base it’s

[33:23] also where you’re at in your stage in life right yeah um a lot of people just want to supplement some income cash flow comes in perfect for that if you’re already making good money you’re happy where you’re at your life is great your job is beautiful you know i’d go after appreciation the long-term play where it could be your retirement 30 years from now i always tell people i’m like dude buy a house now it’s going to be worth a couple hundred grand more in 30 years from now you sell that bad boy and you you know you got some really good money to retire with and that’s just from one property if you do it correctly for me and i’m i was 29 when i started investing in real estate 30 30 something like that i don’t even remember 30 i think and so i’m like i i had no money to my name like i needed cash flow i didn’t want i dude i’m not a w2 guy i think i’ve had three jobs my entire life i’ve always been an entrepreneur so i’m like i and i’ve always lived off of what i’ve been able to make but at that point i was like okay i really need to make some money here and um my back when my back’s against the wall i work really well and so when i started doing that stuff and then i started

[34:19] cash flow and i mean for all i want is cash flow that’s for me yeah you know i just want to live that lifestyle now that cash flow was able to bring that appreciation because now i have some really good assets that i know in a couple years i’m gonna have a nice chunk of change right and now that i’ve learned a little more now i’m like okay what’s that fine balance of i can cash flow but i also want to be able to be okay in 30 years right when i’m not even 30 years but let’s talk about 10 15 years from now i want to have that appreciation to where i’m everything’s got some really nice equity if i need to i can cash out on a fire sale or enough is paid off to where i’m cash flowing really well at that point i’m taking the hit now but you know down the line that cash was going to be really well because those properties have paid themselves off yeah and the beauty of a cash out refinance being you know tax-free is another another amazing benefit that you can see and it’s just it’s harder at the beginning like it’s hard to to get that property to you know have some expenses that you may have to pay out of pocket if you’re in a really appreciation heavy market and cash flow is just super

[35:20] tight i mean but if you can you stick it out it can be a yeah an amazing thing this is uh yeah i’m sure there are so many more things we could talk about um but i do want to ask you about the golden nugget you have for our listeners you know uh being that this is an uh we a real estate uh agent focused podcast um i think what we talked about earlier is probably the best thing that i can suggest you know if you’re an agent out there trying to break into the space and you’re learning everything i think if you find a niche in terms of not just a market but a strategy that could work really well for example educate yourself on strategies aside from just doing the conventional 30-day close you put it on the market you wait for somebody to reach out to you right be proactive go out and build the relationships i mean dude real estate is all relationship based including agents right and so if you go out and build the relationships but the biggest thing is be open to learning and be open to different ideas now not only can benefit you but get benefit your seller or your buyer right that’s the biggest thing

[36:31] for me and i think if i were to give any type of golden nugget is learn those strategies that will really benefit again yourself and your agent because man there’s a lot out there that you can really really learn and apply to the business model where you’re not going to be a one-trick pony you’re not just waiting for someone to hit you up on the mls to say hey is this property ready because i got a long-term buyer who wants to move into it no now you’re finding investors you’re being proactive it might it might be somebody that can’t make it work through a conventional loan but you can make it work through some sort of creative finance because you know that your seller is a a person who’s got a ton of equity that they can save on taxes that if they they hold the note they’re making money they’re not paying the taxes and their cash flowing every month and it’s secured against their own property all i mean at least that strategy alone right there right now you have a second exit as opposed to having to wait for someone to come to you on the market 60 90 120 days later type of deal yeah no that’s great i love it yeah it’s such a good thing to to understand both both sides of the

[37:34] coin really yeah i mean like and it’s just you never know when it’s gonna be helpful um your own personal deals could be um and that’s the other thing it’s like you know there’s definitely opportunities that agents come across and if they don’t understand some of this stuff uh they’re not gonna take advantage of it ever and again it’s not like you’re taking advantage of people it’s uh knowing that you have a way of making this a win-win for everybody and um be able to be the one that’s also winning more than just a commission check yeah dude and not even not even that you know aside from educating yourself helping someone out eventually i don’t know not not everybody wants to be an investor but a lot of agents the majority of the agents that i talk to in my network all want to invest at some point and if you start learning that stuff dude it’s just another tool in your tool belt that you can apply to your own investments right because now you can go i mean you guys have a leg up you guys get to see all the stuff on market the stuff that’s pocketed right all those things and you can figure out a

[38:30] way to make those strategies work for yourself i think that’s great 100 yeah i mean i think it’s you know if you look at it like from a robert kiyosaki cash flow quadrant kind of uh way like you know we’re we’re all like feeling like we graduated by getting into the self-employed uh but if you’re really just your own if you’re if you’re the only person in your business you know like like you’re just really an employee of your business and uh i i still like you i i prefer that i would rather be like in that world 100 but you know the more you can get into that other quadrant of a business owner of an investor uh the more that you’ll have your your you know have people’s time and and and capital working for you without you um and that’s where where true magic happens so yeah i love it um how about a favorite book uh one you think that’s fundamental that everybody should read or just one you’re currently really enjoying uh you know i used to listen to a lot of a lot of educational and mindset stuff i’m actually listening to some sci-fi book right now uh because every now and then i need

[39:33] a break but whenever when anybody asks me this question i the one that always comes to mind is um the gap in the game um or principles right by ray dalio uh who’s the gap in the game um i haven’t read it but i have that’s great yeah you know and and i’ll tell you why i bring it up i again i used to listen to a ton of mindset stuff because i’m always trying to grow but the the reason why i like it so much is because um we get so consumed in the business about what we’re gonna do and how fast we can grow and how large we can grow and more money we can acquire and you kind of a lot of people and i don’t know if i’m speaking to myself here but you kind of get lost in enjoying the progress of what you’ve accomplished yeah you know what i mean and so that book it just puts perspective it’s like dude take a breather how did you do last year how are you doing this year are you doing better you’re crushing right not you know everybody’s keeping up with the joneses type of situation where everybody needs the next next best thing next best thing next best thing and it kind of humbles you a little bit where you’re

[40:39] like dude i’m actually doing pretty damn good and a lot of people don’t put that into perspective that’s one of my favorites and then principles by redalio man it just it’s principles of life right in business and that that’s just a great educational book on where you can take your life right your values all that stuff of exactly what what’s your non-negotiables you know what i mean yeah no totally uh i don’t think i finished that book but i definitely got started really excited about it when i first came out i have a laundry list of books like that oh man so do i yeah you have 120 that i have left to read still i’m like okay i’ll get to them at some point but no it’s it’s good and i think i think i was actually just talking about this another podcast it is i think it’s good it’s important um to realize that like you know like don’t give up on reading uh just because you just can’t really bring yourself to read this dense uh not as interesting book like but switch it up like go go read something that’s fun something that you really enjoy um you know get your harry potter book out or whatever and i think like better than anything you’re like building that hat you’re going to

[41:46] that book you’re going to to to reading to be the source of your boredom or like you know your down time as opposed to just scrolling on tick tock or whatever and and you know oh yeah you can all agree that’s better for you your attention your the habit building etc so yeah i love it i read it i read a really good quote um by naval ravakant years ago um yeah i mean he’s awesome i listen to all this stuff all the time and uh you know he’s a a um uh what’s the word angel investor yeah he’s an angel investor but no i’m looking for for his his type of like he’s um a lot of gosh darn it what’s you know when you’re trying to do like thinking of bigger things i forgot there’s a word for it anyway whatever um anyway he he said this quote uh and uh it’s a lot of theory i guess is what maybe what i’m what i’m trying to get at but anyway he said this quote is read everything and anything until you love to read right yeah and it’s just you just read until you love to read and it’s the same thing right even with audiobooks if there’s something dude i’ll listen to an audiobook where i get through chapter four and i used to beat myself up and i’m like i gotta finish this dude if you don’t

[42:52] enjoy it move on to the next one yeah right dude i like i’ve read comics i’ve read manga i’ve read uh fantasy i’ve read educational and when i get to a point where it’s like i just stop enjoying it i just stop there’s no don’t beat yourself up like just read it enjoy it up to the point where you don’t and move on to the next one if it’s not for you it’s that simple you know and eventually you’re gonna find something that you’re just gonna go through all the way that’s very naval i think i heard on a podcast or an interview recently them talking about him just not doing anything he doesn’t want to do like i i heard that one too yeah that’s funny yeah i love it yeah he’s he’s great if you guys haven’t listened to him he’s a yeah he’s an amazing thinker um and it’s very uh i don’t know what the world is this is it’s enlightening to listen to him because he just thinks about things so uh and he communicates the all this deep thoughts so clearly so he’s great philosophy i guess is philosophy in his theory is the right thing that i’m trying to find i don’t know whatever yeah yeah he’s great um so finally if anybody wants to uh you know follow you or your journey

[43:54] are you on social media what where can they find you yeah so i’m all over the place man i got a youtube channel i don’t post very often on youtube i just post deals or because i want to teach on there exactly how i acquired it the nuances of the deal again i love putting deals together so youtube rafaloza facebook rafaloza i just recently started posting a lot of stuff on facebook just again to teach people or to guide them in the right direction and then instagram is where i was really heavily posting uh instagram is it’s rafaloza so it’s rafaloza but any of those platforms man anybody can reach out send me a message i always respond and i’m always open to conversations i’m always up in structuring deals i’m always open to teaching people how to structure deals whatever the case may be yeah i love it well rafa thank you so much for being on the show it’s been a lot of fun and a great conversation we’ll have to do another one because i’m sure we had at least two hours more we can talk about this forever man i appreciate you having me on thanks for listening to the rei agent if you enjoyed this episode hit subscribe to catch new shows every week visit rei agent.com for more

[44:55] content until next time keep building the life you want all content in the show is not investment advice or mental health therapy it is intended for entertainment purposes only