JF2530: Investing While Working Full Time with Vincent Rodriguez

After learning the key to turning his first property around in 2018, Vincent Rodriguez went on to grow his investments even more in the next few years. Last year alone he grew from 5 units to 25 units during the pandemic, all on top of working a full-time job. Vincent is sharing his secrets for growth, partnerships, time management, and his exact deal structure with his partners. 

Vincent Rodriguez Real Estate Background:

  • Mechanical engineer and managing partner for AnVi Holdings, LLC
  • Started investing in real estate in 2018
  • Currently has 24 doors across 3 cities; duplexes, triplexes
  • Based in Orange County, CA
  • Say hi to him at: www.anviinvest.com 
  • Best Ever Book: ABCs of Real Estate Investing

 

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how you doing? Welcome to the Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of the fluff. With us today, Vince Rodriguez.

How you doing, Vince?

Vincent Rodriguez: I’m doing great, man. Thanks for having me on the show.

Joe Fairless: Well, I’m glad to hear that. It’s my pleasure. A little bit about Vince—he currently has 24 doors across three cities; it comprises of duplexes and triplexes. He’s based in Orange County, California. He’s a mechanical engineer, and he started investing in 2018.

With that being said, Vince, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Vincent Rodriguez: Yes. I’m originally from South India, I came to the US as an immigrant in 2008. I did my Master’s in mechanical engineering, and just took the normal route to success as we were taught, and I just discovered real estate a few years back after I read the one and only book everybody reads, I read Rich Dad Poor Dad.

Joe Fairless: So you read Rich Dad Poor Dad, you are a mechanical engineer… What did you do after reading that book, that were the first couple of steps?

Vincent Rodriguez: Okay, so one of my best friends, Vivek – we grew up together in India, and he told me to read this book for two years at that point, and I didn’t read it, right? And he had a couple of properties in Philly. And one day, I was just driving to work and I just put on the audiobook, and I listened to it and I was depressed for like two months straight. I was just like, “I wasted my whole life. This is literally garbage. I’m the biggest loser in the world.”

And after that, I decided, “You know what, I’m going to read every book that’s out there, literally.” And one of the books I read was your syndication book; I’ve read it twice, actually, because it’s so complicated. I had to read it twice because I was forgetting stuff. That was January 2018. And then in July, I bought my first triplex with my buddy, which is [Inaudible [02:26] Andrew; we bought a triplex in Bakersfield, and that was our first entry into real estate.

Joe Fairless: So tell us about the numbers with that deal.

Vincent Rodriguez: Okay, so that deal – they had it on the market, it was an MLS deal, and they listed it for 296k. The appraisal came in at 237k, so I was able to negotiate it for about 256K. And I did all the math. I’m an engineer, so I’m good with numbers, so I thought I was such a genius, like “Oh, I’ve got everything covered. This is going to be the best deal ever.” It was literally the worst deal in the world. It was so bad. I was like, “I’m going to lose everything”, because I didn’t factor in the human factor. So all the tenants were really bad. They were cooking meth, and they were stealing power. Nobody wanted to leave. Nobody was paying rent. So that was the best lesson I’ve had. It cost me a lot of money, but we turned that property around. And now it’s—

Joe Fairless: How?

Vincent Rodriguez: Okay, Joe, I have to tell you, that property was so bad… Two property managers quit. They called and said, “Hey, we can’t do this. This is the worst ever.”

Joe Fairless: You’re in Orange County, How far away is this property?

Vincent Rodriguez: This is in Kern County. This is Bakersfield. So it’s the North of LA. It’s not too far, about two hours.

Joe Fairless: Alright. So a couple hours away from you.

Vincent Rodriguez: Yes, a couple of hours away from me. And obviously, as you know, it’s not a cash-flowing area. The cap rates are so low, you’re talking about a 3-3.5 cap. So if you’re getting mortgaged at four, you’re underwater already. It’s really bad. So I had to buy stuff there just to get into the game.

So how we turned it around was the went to one of the best property managers, they’re called Real Property Management. They’re the biggest franchise in the US, so they manage our property. So I worked with them and they came together and we had some ways to move people out. We put a cop in the middle unit. Once you put the cop in the middle unit, the other people just disappeared. So that was good.

Joe Fairless: What discount, if any, did you give the police officer?

Vincent Rodriguez: No discount, just they were our tenant.

Joe Fairless: And why would they live there, compared to a lot of other places to live that are safer?

Vincent Rodriguez: Well, the interesting thing was, it was near medical center; so it’s a definitely a D neighborhood. So I did not factor that. But once you took out the bad apples, I put a really nice fence around it and stuff… That property cash flows pretty well, it brings in about 27.75k a month and I have mortgage, I’m refinancing; it’s [unintelligible [00:04:50].20] and it’s a pretty good property. Everybody pays on time; since the first six months after, it’s been good. I think you talk about this in the book too, having a team, you talk about thought leadership, but it’s also what kind of tenants you put in. Jake and Gino talks about that too.

Joe Fairless: So a police officer, a fence, and the right property manager – those were the three keys to turning the property around?

Vincent Rodriguez: Yes, I have to give almost all credit to my management guys in Bakersfield. We were thinking of moving away, because at that point, Andrew, my partner – he teaches music in Orange County and he decided to open a brick and mortar store, instead of going to homes and teaching like that, so we decided that’s the best for him. So he took on that, so I had to deal with all this stuff for like six months, which is a lot of work, because I have a W-2 job, too. But as people mention all the time in real estate, it’s very forgiving if you stick with it. So if you stick with it for long enough time, it’s almost no chance of you losing, if you just stick with it.

Break: [5:55] to [07:57]

Joe  Fairless: Well, let’s talk about you building to 24 units and having a full-time job. For Best Ever listeners who are listening and have a full-time job and do not have 24 units yet, and don’t plan on leaving their full-time job, but want to have 24 units, what are some tips that you’d give them to acquire them while still having a full-time job?

Vincent Rodriguez: That’s how I actually reached out to you guys, because obviously, your podcast with BiggerPockets is one of the top, and you guys have the big dogs. You’ve got Brandon Turner and Grant Cardone, you know, those kinds of guys. And I reached out and said, “Hey, you don’t have really normal people. I’m a normal dude with the W-2 job working in Orange County. But I went from five units to 24 units during the pandemic.” So this is just in the last 12 months. So if I could do it — obviously, I have partners and stuff, I raise money and stuff, and reading your books and such, trying to show people what I can do with their money, then it becomes exciting.

One of the most interesting things that I’ve learned is, we usually think very small as human beings. I think we think our friends and our peer circle is what we have to work with to actually raise the money. So we never really understand there’s a huge network of people with lots and lots of money. That’s what was most fascinating to me, that money is abundant, and I would not have known this if I did not read a book such as yourself, Michael Blank and you. You talk about these things.

So I started going out and meeting people and such. I actually met this guy in a REIA meetup. And this guy was so high up, I didn’t even want to talk to him, because he had a lot of properties… But he kind of figured out that I knew a couple of things. And I just bought a property with him in Atlanta, and he wired $190,000 cash to close the property, and I put $0 in it, and we own the property 50/50. It just shows that you can build your own circle if you have some kind of value that you bring to the table; you don’t have to ask your friends from work for $5,000 to buy a condo. You can literally borrow $200,000 cash if you know what you’re talking about.

Joe Fairless: How did you meet that person?

Vincent Rodriguez: It was a real estate meetup in Newport Beach. I think it was a BiggerPockets event or something like that.

Joe Fairless: Okay. And—

Vincent Rodriguez: Yes.

Joe Fairless: Do you remember if you went up to him or he went up to you, or were you speaking at the event? Can you just add a little bit of color?

Vincent Rodriguez: Yes, I keep mentioning this… This is something I read from your book, thought leadership. You talk about this a lot, and I didn’t quite understand it in the beginning. So I’m super nerdy. I like to read a lot. There’s a bookcase behind me with all the books I read. I read 50 books a year. So there was like a round table, and people were introducing, and then people started asking questions. But some of the questions weren’t  relevant at all. So they’ll ask questions like,—I just got annoyed. They’d ask questions like, “Hey, so am trying to get into real estate. So how many LLCs do I need?“ So I will answer and be like, “Hey, man, you make $30,000 at Walmart and your net worth is negative $2,000. You have no reason to buy an LLC for that reason. Why are you asking this question and wasting time?”

So by buddy, Allen, he recognized that I knew some stuff. I’m like, “Why are these guys asking all these questions? It does not make any sense.” But I didn’t even talk to him, because he was too high. But he reached out to me on BiggerPockets and said, “Hey, do you want to go get coffee?”

Joe Fairless: You were on the roundtable being interviewed, or you were in the audience?

Vincent Rodriguez: It was just a roundtable and people were asking questions, and anybody can answer it.

Joe Fairless: Okay, understand. Got it.

Vincent Rodriguez: Yes.

Joe Fairless: Thank you.

Vincent Rodriguez: So I was just answering questions based off investor mindset. But at that point, I only had five units. But I’m young and I was trying to learn the game and trying to get involved. So this is an older guy, and he’s got properties and he just saw, I think, like, “This guy is kind of hustling,” and he came up with me to Bakersfield a couple of times. And he said he doesn’t want to put money in California. You know, California being a blue state and all, and it’s very tenant-friendly. California is like you own a car and then somebody moved in overnight into the car and you go to your car and then, “I have rights. This is my car.” That is California with the properties. It’s not very friendly for investors.

So this guy, he did not want to invest in California. So I said, “Okay. My sister lives in Georgia.” So I said, “Okay, you know what, I’ll look around Atlanta, and let’s get into that.” So I went to Atlanta to see my sister and I developed the team along with my buddy, Andrew, who runs a company in real estate. So I did all that work and he recognized it, I bought him a deal… And he was like, “Yes, let’s do it.” But it took a year of talking and building that relationship. That’s the thing you talked about in the book – you want to hook them and you show value. But I did it more organically by just hanging out and having drinks and stuff like that.

Joe Fairless: I didn’t realize the conversation would turn to you partnering with others, which I’m glad that it did, so that we can learn more about how you’re structuring deals and growing. But before we get into some specifics on that, when I originally asked you the question, I asked, “What are some tips you’d give someone who has a full-time job, who wants to scale?” And then you talked about what you’ve been doing.

So one thing I got from that is by partnering with others, and also you mentioned, not being limited by our initial thoughts of what’s possible… What about some time management skills? How do you manage your time, having a full-time job, but then also having investing partners and deals, and overseeing management of the deals, and finding deals, etc?

Vincent Rodriguez: Good question. Sorry, I’ve been on a tangent about partners.

Joe Fairless: Oh good. No, no, no, it’s fine.

Vincent Rodriguez: You being a syndication show and all, it might be useful. So—

Joe Fairless: It is. We’ll come back to that.

Vincent Rodriguez: Yes. So time management-wise, for example, I work for a medical device company in Orange County; they are really a great company to work for, some of my team; smart people. And I tried to be wary of that and I try not to do a lot of things between 9-5. I do do—I am taking 30 minutes out of my day to actually do this during my work hours, my lunch break and stuff. But I enjoy spending time in real estate, so I don’t see this as work.

So for me, time management becomes — this is not a chore for me. Hunting for deals, getting off-market deals, building relationships with people, educating people about real estate is not a chore for me. I’m very passionate about it. I want to help people achieve financial freedom. I want to help people buy a condo, buy a duplex. I don’t even care if you give me money. I’m just, “Buy a house for yourself, I don’t care.” Just do something with it.

So I don’t see it so much as time management, I see it more like I am passionate about it so it becomes much easier for me. And after hours is where I spend the most of my time for real estate.

Joe Fairless: Now let’s talk about structures and how you structure it with your partners. Do you structure it now the same way that you structured the first deal that you worked with partners on?

Vincent Rodriguez: Yes.

Joe Fairless: So it’s the same structure?

Vincent Rodriguez: Yes. I’m very familiar with all the structuring and stuff because I spend so much time in this. So easy way do you say is—they’re all JVs, right? But I just do tenants and common agreements, which means we take title as whoever’s in the deal. So I have my sister in some of the deals, some of them are just Andrew and myself. It’s a 50/50 split most of the time, so somebody brings in the money and I do all the work and do all the management and asset management and repairs and everything. And usually, I like to do like a just a return on their money, like a 6% preferred returns. That’s it.

And if the property does better, pre-COVID, I was paying my sister and people up to 8%. But then I dropped it to 6%. I like to keep the math simple like that based on the amount they invested, because I have 10 properties; doing the work on 10 properties to calculate the profit distribution – it’s a hassle for me, because I don’t have thousands of units, so I don’t have any people, so I’m running the numbers. So 6% is like,” Oh, you give me 1000 bucks, here 60 bucks for the year,” or something like that.

Joe Fairless: Mm-hmm. So it’s 6%, and then profits are split 50/50 thereafter?

Vincent Rodriguez: No, I just give them 6%. And if the profits go up, I adjust that percent. But remember, these are not debt partners, they’re all equity partners.

Joe Fairless: Right.

Vincent Rodriguez: So they get a 1099 based on how the asset is doing, and they get to write off half of the expenses and management and depreciation.

Joe Fairless: Got it. So you’re splitting the profits 50/50. So how does the pref factor into that?

Vincent Rodriguez: How I do it is, let’s say the property is $100,000 property, you gave me $20,000 to buy the property, right?

Joe Fairless: Mm-hmm.

Vincent Rodriguez: I would just give you 6% on the $20,000 you put in, regardless of how the property is doing. Now, if the property does really, really well, I look at it for a few months, and I’ll adjust your 6% or 7% or 8%. But I just do that just so that—

Joe Fairless:  I get it.

Vincent Rodriguez: —my paperwork is less, yes.

Joe Fairless: Okay. So when the property sells and every penny has been distributed and you’ve moved on, and the property no longer is in your portfolio, will each of you have earned 50%?

Vincent Rodriguez: Regardless of how much money I paid you for – let’s say we held the property for 10 years, and I sell the property, and at that point, based on appreciation mortgage pay down, let’s say we have $100,000, I will split it 50/50, regardless of how much money you made in the 10 years.

Joe Fairless: Okay, alright.

Vincent Rodriguez: Yes.

Joe Fairless: So it’s 6% pref. We won’t even say pref, I think 6% return loosely over the period that you’re holding the property, and then when you sell, you split the profits 5/50.

Vincent Rodriguez: While they collect the tax benefits, too.

Joe Fairless: Right.

Vincent Rodriguez: And if I can adjust the returns, I will. But my property are just 2-3 units, it’s a hassle. I’m trying to get into the bigger game, we’ll see.

Break: [18:01] to [21:05]

Joe Fairless: How many investors do you have?

Vincent Rodriguez: So I’ve got my sister, I’ve got Andrew’s mom, I’ve got a couple of my mortgage brokers, so that’s three. I’ve got my buddy, Steve, from work. I’ve got Alan. I guess I have like five, I think.

Joe Fairless: Mm-hmm.

Vincent Rodriguez: But I’ve raised over half a million dollars in cash.

Joe Fairless: Wow.

Vincent Rodriguez: Yes.

Joe Fairless: Perhaps my thinking is off, but $500,000 to me is a lot of money. But it doesn’t seem like a lot when in the context of buying 24 units. So how did you acquire 24 units with—again, half a million is a lot, but with only $500,000?

Vincent Rodriguez: Well, my 24 units is only worth two and a half mil, maybe a little bit more. So what is that, like 20% or something?

Joe Fairless: Are they all in California?

Vincent Rodriguez: Most of them are in California. Most of them are in Bakersfield. I just got into Fontana which is a little bit East of LA. I’m trying to kind of get out of Bakersfield, and I bought a little duplex there. But I have actually 26; I have a duplex with my sister, too. I have two duplexes in Georgia, Atlanta area. I learned all these things from literally listening to your podcast every day like a maniac for like a year… So I will look at Atlanta area and I’ll be like, “Hmm, what’s Theo saying today?” And then I’ll be like “Go outside of Atlanta? Let’s do it.” So I have like a duplex in Stone Mountain, which is outside of Atlanta. So I’m looking at Norcross, now. My sister lives in Alpharetta, which is north of Atlanta.

Joe Fairless: Sure. And why are you wanting to get out of Bakersfield?

Vincent Rodriguez: Like I said, the blue states, I’m not super into that. And I don’t like too much tenant-friendly laws. Like if I own something, I want to have control over it, right?

Joe Fairless: Right.

Vincent Rodriguez: I would still continue to buy in Bakersfield, because I have a team there and I buy off-market deals and stuff. I don’t even buy from the MLS, it’s mostly my wholesale guys just gives me the deal, and if I can bring it in cash, refinance out, stuff like that. So it’s worthwhile for me to hang out here a little bit. But I think if I want to go to 5+ units, like you guys teach, I think I will be exclusively looking at Atlanta area, just because of how the economy’s playing out for Georgia.

Joe Fairless: Has there been an instance, like a specific example, having property in Bakersfield, where if you had it in, say, Georgia, that you saw it was not favorable for you, and it costs you money?

Vincent Rodriguez: For example, just the eviction process, if I have to go through it, it’s much more hassle in California; it’s very tenant-friendly, in terms of moving out.

Joe Fairless: In what way?

Vincent Rodriguez: For Texas, you can serve a notice three days and they have to get out in a week or something. I know for me the process itself, it takes much longer.

Joe Fairless: How long?

Vincent Rodriguez: I think you put 3-5 day notice for them to respond, if not, and then it goes to the next state. But there’s tricks they can do; they can wait till Friday, [4:59], and they go and do something and they can extend it. So they can extend it for months at a time if they want. We call them professional tenants. If they know how to play the game, they can really stretch it out for months and months, and you could be stuck with paying the mortgage while they don’t pay any rents for six months even.

Joe Fairless: Taking a step back, what’s your best real estate investing advice ever?

Vincent Rodriguez: Think bigger, but don’t try to do everything by yourself. And your network is not just the people you see every day. You can go beyond that.

Joe Fairless: We’re going to do a Lightning Round. Are you ready for the Best Ever Lightning Round?

Vincent Rodriguez: Let’s do it.

Joe Fairless: Alright, best ever book you’ve recently read.

Vincent Rodriguez: Best Ever book I’ve recently read… Ken McElroy, he wrote a new book about the ABCs of Real Estate Investing. I like that.

Joe Fairless: Best ever way you like to give back to the community?

Vincent Rodriguez: By helping others achieve financial freedom. One of my goals is to make my sister financially free in maybe five years or so.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Vincent Rodriguez: Hit us up on Instagram, it’s just AnVi Invest. AnVi Invest. Or https://anviinvest.com/ to just message us. We like to help people buy their duplex, triplex, whatever they want to do.

Joe Fairless: Vince, thanks for being on the show. Thanks for talking about how you’ve accumulated now 26 units, and the partnerships that you’ve cultivated in order to do that, the specific structure that you’re using and how you’re going about reaching other investors, and how you’re a—boy, you’re a student of real estate. 50 books a year, and listening to many podcasts every day – it’s certainly no surprise that you’ve gotten to where you’re at in a relatively short period of time. So thank you for being on the show, I hope you have a best ever day and talk to you again soon.

Vincent Rodriguez: Thank you, Joe. Thanks for talking to me.

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