Ramon got his start in real estate when he left the corporate world to be an entrepreneur. A large part of his success he can attribute to being able to identify what he is good at and sticking to where he is wanted. After multifamily investing in Miami didn’t work for him, Ramon tried the fix and flip model. Ultimately neither strategy was fulfilling, now he lends money to active investors, and loves it. Hear what he looks for before lending to an investor and why being able to put your ego aside and focus on your strengths is key to being a successful entrepreneur.If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Adding value can happen in many ways. Steven found a niche for himself in the 1980’s and has been designing high end interiors ever since then. Not only will he design a brand new interior, Steven goes above and beyond by furnishing with fine Italian furniture, and many other small details that a lot of companies overlook. Hear why this is valuable for the investors that hire him.If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. With us today, we’ve got Steven Gurowitz. How are you doing, Steven?
Steven Gurowitz: I’m doing well, Joe. How about yourself?
Joe Fairless: I’m doing well, and nice to have you on the show. You’ve got an interesting background. Steven has started his own design firm, which is Interiors by Steven G., in the early 1980’s. He started out as a real estate investor. He’s based in Miami, Florida.
I’m gonna go ahead and just turn it over to Steven. Steven, do you wanna tell us a little bit about your background and your current focus, just how you got started?
Steven Gurowitz: Got it. Well, Joe, 44 years ago I started working for a very small boutique interior design firm here in South Florida, and I took a love and liking to the industry and I really became very self-educated. As the years went on, I was with the firm and became a junior partner, and then almost ten years into it I said “There’s a better mousetrap, there’s a better way to do this, and I’m too talented a person to sit here.”
35 years ago I left the firm, started Interiors by Steven G. out of the den of my home. All of a sudden, my business started to grow and the next thing I knew, I owned my first showroom that was 10,000 square feet. Developers started to call me to do model apartments, model homes and common areas of buildings, so I saw a great opportunity to integrate the world of design into investing and real estate… So I personally started to invest in pre-construction. But what I did was as I closed on the real estate, I would furnish it above the norm, to bring a wow factor to the real estate, put it back on the market for sale, and let’s say 10%, 15%, 25% of the entire project was up for resale from investors. My units would sell first because of the wow factor, and I sold them at a larger price than anybody was getting.
As that started to transpire, my business started to grow. Today we’re at 100,000 square feet of space, and we do this all over the United States for developers and private owners. Basically, I went out to the broker community. In Florida, as everywhere in the country, when there was a boom there were always tremendous investors from out of the country, from local… And I said to the real estate agents, “I will furnish and decorate your owners’ condominium apartment and give them (or you) one year to sell it and pay me. If it doesn’t sell in one year and one day, I get compensated.” We have done this to the tune of 1,000 units, and at the end of the day, nothing has stayed on the market more than six months.
We just opened up a project called [unintelligible [00:05:01].02] a very high-end, luxury project in Williams Island, Florida where we installed four model apartments. The first model sold furnished in one week. So it started to grow, and as long as the owner owns the real estate free and clear and it’s not mortgaged and I can be protected, I’m in the deal… As long as it needs something that’s more on the high end.
Now, we opened up another showroom four years ago next door to us called Now by Steven G., which became popular-priced design packages, as we call them, that run from $35,000 to $125,000, that we’re doing for investors that are renting and getting a bigger dollar, or flipping and getting a bigger dollar in popular-priced real estate. But the place that this really works the best is what I call the luxury market, which is really two million and up.
The developers, the real estate people are selling them like hot cakes, as I am for myself personally. Every project that I do for a developer, I’m hired years before it’s a reality. So I buy at a favorable price, I wait it out, I give it the deposit, I furnish immediately after I close, it goes on the market within a week, and boom. It has just been a huge part of our business where I had to hire a team of designers to work under me, that only do that. That’s how much work we have from our regular business and what I call the investing in real estate business.
Joe Fairless: So at the core of what we’re talking about is – let me know if I’m summarizing this correctly – you identify an opportunity to enhance the interior of a condo, of an apartment, and by doing that it’s then more appealing and then it moves off the market, and then you’re compensated for adding that value through that process, and you do that as a third-party to help out. And you help out brokers who have a deal that hasn’t been moving, and you also do that with your own investing, with pre-construction deals.
Steven Gurowitz: I’ve gotta tell you the only word for it, Joe, is unbelievable. I have clients that hire us to do their own residential work, and they ask me if they can invest with me in my process. Thank god we’re that free firm, I don’t need anybody’s capital, and the end of the day we all know investing money today is always a touchy thing, whether it be the market (even though the market has soared), real estate especially in Florida.
When the market crashed in ’08, it was January of ’08. By June, prices went right back to where they were and higher. So it’s an amazing marketplace, Florida, because it’s a melting pot of people from all over the world, and everybody’s running especially with their money out of a lot of strange countries, because they’re worried about their future there. People that have lived their entire lives there are coming here and buying three, four, five different investment pieces of real estate, so we have found it to be a huge part of our business. Huge.
Joe Fairless: And doing it in Miami is the perfect market to do it, and clearly with your accent you’re not from Miami, are you? You’re from New York?
Steven Gurowitz: Born and raised in Forest Hill, Queens, [unintelligible [00:08:28].20]
Joe Fairless: I knew it! [laughs] I lived in New York City for ten years and it was pretty clear to me that you’re a New Yorker. Okay, so you are doing it in a market (Miami) that caters to more high-end real estate than, say, Cincinnati, or Dayton, Ohio or something like that. So you’ve got a business model that fits within a market… What is your team doing to these units – just pick maybe any of the examples that you’ve mentioned – to enhance the appeal to a potential buyer?
Steven Gurowitz: Okay, well 90% of that luxury high-end real estate in South Florida, the developers have a very fancy word called “decorator-ready.” That means it’s empty. There’s no floors, the walls have a primer code of paint, and bathroom and kitchens are installed. Other than that, you have to go in and design and furnish the entire unit; you have to put flooring in, window treatments. But what we do that’s very different is we go in and furnish it first-class with Italian furniture, with beautiful Italian porcelain floors. We drop ceilings and do LED lightning, so when people walk in, they’re blown away. They don’t expect it, number one, and when people – especially the lady of the house, which if a family is buying, we all know [unintelligible [00:09:49].11] and if the housewife doesn’t like it, the husband can’t buy it.
So the lady of the house walks in, falls in love, and the best part about it for a buyer is today if you buy a brand new condominium and it’s raw, you have to do the design work, you have to pull the permits, and the downtime between permitting and ordering is 6-8 months. Now if you buy and it’s empty, you’re paying your maintenance, your taxes, your electric bill for 6-8 months and you can’t even stay in the unit. And everybody in the high-end world has lived through a designing of an apartment or a home in their past.
The husbands are not fools, they know what their wives will spend. If they walk in the door and they get a number and it’s finished and the wife likes it, that’s 90% of the battle. The rest of the battle for the husband is not allowing the wife to go over a budget, which is also famous in my industry. So there’s a fixed number, you move in the next day if that’s what you wanna do, and you’re done. So there’s a big savings between the taxes, the maintenance, insurance and electric, and the use of the unit immediately is what we call instant gratification, and it definitely works.
Joe Fairless: When you approach brokers – or when brokers approach you – to help them move a property that hasn’t moved yet, or sell a property that hasn’t sold, to be more specific, you told us earlier that it has to be free and clear so that you’re not having to wait in line in case it never sells. What percentage of leads have a broker representing an owner who owns it free and clear?
Steven Gurowitz: 90%.
Joe Fairless: Welcome to Miami. [laughs]
Steven Gurowitz: Well, you’ve gotta remember, after the crash, Joe — before the crash you were a buyer, you could put 20% down and go for a mortgage, okay? So what happened in the crash – thousands of 20% buyers walked away. “Keep my 20%, I’m not closing the buy.” So who got hurt? The developers took a bloodbath. After that, the developers changed the modus operandi. By the time you close today on a luxury condominium in South Florida at any price, you have put up between 50% and 60% and in some cases more of the money and you’re not walking away. So now guys that might have bought three or four years ago when the market was red hot, now the market’s cooled down a bit – you know, it’s that cycle that South Florida goes through – and a building could close with 160 brand new apartments, nobody’s walking away because they have too much money at risk. Now 40 units can be up for sale the next week in a building with 160 units; there were 40-50 investors, or in some cases they could be half the project.
So now the realtors are looking for an edge as to how to get their client out. So if you had 5-6 million on the table, hard, cold cash, and the realtor said “Listen, I’ve got the best designer in town. His track record for selling empty real estate decorating it is unsurpassed. He’s gonna decorate the unit. We have a year to sell it, or pay whatever comes first”, the clients bite at the chance, because there’s no outlay of money. I outlay all the dollars, no matter how much it is.
I have a deal cooking in a project right now where an owner owns a penthouse and it’s a two and a half million dollar buildout, and I’m just waiting — he has approved, his realtors are ecstatic, I’m just waiting for the lawyers to sort of dot the i’s and cross the t’s… And I know – because I know the project like the back of my hand; I did 53 units for owners of the project – when this is decorated, this will sell for between 18 and 20 million dollars furnished.
Joe Fairless: How do you know what in this case — I mean, you said you have a high level of experience with this property… But for a property that is a one-off, how do you know how much to spend and where to spend it so that you do get the ROI back?
Steven Gurowitz: Okay, so rule of thumb in the high-end design world – 50%-65% of luxury condo buyers spend between 20% and 30% of the cost of the real estate to do the buildout, flooring, TV’s, sounds systems, finished. The average. Then there are people that spend 40%-50% because they just have the dollars, they want it over the top etc. So if I’ve got a five million dollar piece of real estate, it’s 1 to 1,25 million for the complete buildout, which is roughly 20%-25% of the cost of the real estate, and it makes it appetizing for anybody in that price point. And remember, and the richer and the higher the price, Joe, the more the luxury real estate will sell, because they don’t wanna go through the root canal and the downtime of six months, eight months, or whatever it could be. Instant gratification is an amazing word that just continues to fly by.
And keep in mind, in the last 44 years I do about 2-3 a year for myself, as a separate business. And believe me when I tell you, the only time I’m gonna say I had a lull was the first six months of ’08. After that, everything sold; it was just like it never happened, and there was an amazing bounce back. Everybody was jumping out of windows in January, and all of a sudden in South Florida, came May-June, it was like it never happened, and developers started raising prices all over town.
Joe Fairless: With it already being done for the buyer, it’s also a benefit that they can finance it, but do they finance these properties, or do they just pay in cash?
Steven Gurowitz: I’m gonna say 80% of our market here in South Florida is a cash buyer.
Joe Fairless: Okay.
Steven Gurowitz: But I will tell you, Joe, there’s a lot of out of country or off-shore buyers that would like a mortgage; they can’t get one from a conventional bank because they’re from Venezuela, or Argentina, or Brazil. There’s guys making a zillion dollars here in the hard money lending business, and they’re giving mortgages like [unintelligible [00:16:46].06] at 10%-11%.
Joe Fairless: Based on your experience as an entrepreneur/real estate investor, what is your best advice ever for other real estate investors?
Steven Gurowitz: I believe that the greatest time to buy luxury condominiums – because that is really the biggest part of the real estate world in South Florida – is to only purchase free construction. And I am a believer [unintelligible [00:17:16].12] pre-construction, because every developer wants to get to a certain pre-sale market, they’re flexible on price. And you can sit there and you can – let’s use the word ‘negotiate’ a better number. When you go into a project and you buy when it’s finished, you’re paying top dollar, and if you’re an investor, you’re not getting out and making money. You’ll get out, but the windfall is not gonna be there for an investor, Joe.
Joe Fairless: It’s such a smart business model, one because you’re in a luxury niche, and two, you’re solving problems for real estate brokers, for developers, and then also for the buyers, and you’re making money along the way and really giving them an offer they can’t refuse. Do you think this could be replicated if you lived in Boise, Idaho, or Houston, Texas, or Corpus Christi or somewhere like that?
Steven Gurowitz: I think it could be replicated anywhere in the United States, as long as you have as a designer the knowledge of the value of the real estate that you’re buying, versus the investment to flip. Certainly, Joe, if you’re buying a $250,000 condominium that’s a two-bedroom, you have to be cautious to what you spend on the fix-up, but I believe it’s a business model that could work anywhere. It’s all about the dollar investment and the wow factor.
We did a project in Miami, Joe – a guy builds a condominium building in downtown Miami. no parking. Think about what I just said – no parking. If you have a car, you’ve gotta find a lot to leave your car, or a meter on the streets, or figure that out.
Joe Fairless: That’s a problem for a luxury [unintelligible [00:19:01].04]
Steven Gurowitz: Yeah. And I’m gonna say luxury, but popular-priced. 450k, 550k, 650k. Those were the price points. So he came to me and he said “I want you to do 25 units.” We furnished 25 units for $18,000 a pop. He sold them overnight, because people walked in, even in that price point, and loved the fact that they could close and move right in. So I believe it’s all relevant to — I’ve got a monster project that people are talking to me now in New Orleans… Because our trucks go all over the country. So they came to me with a project, and I said to them, I said “Guys, I think you’re taking the wrong approach at this price point. And they looked at me and I said “Look, I’m doing this 44 years. I think I’m pretty glib. I say you should sell every one of these units furnished, and give the buyer five different looks to choose from, all in the same price point.”
Two days later I get a phone call, “We love your concept, let’s roll.” So again, I’m just waiting for contracts to be signed. Who takes the approach, try to do something different is the way I’ve always focused, not only for my real estate investing, but in my design business, which allows everything to happen. We’re doing between 100-125 residential design projects a year. Huge numbers. My staff is 82 at this point. We’re running six trucks. We just came back from the Hamptons in New York, we just finished a job in Kioa Island… People want the talent of the firm, and that leads to everything else. When you have a happy client, just like if you have a good real estate deal – everybody’s happy, and the broker does a great job. If you’re gonna do more real estate, you’re with that broker a second time, or third time.
We have people here that are doing the fifth, sixth, seventh job in 35 years with us.
Joe Fairless: Well, it sounds like it’s a no-brainer ROI on those deals. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Steven Gurowitz: I’ll do the best I can, Joe.
Joe Fairless: Alright, deal. First, a quick word from our Best Ever partners.
Break: [[00:21:21].24] to [[00:22:10].05]
Joe Fairless: What’s the best ever book you’ve read?
Steven Gurowitz: The Art of War.
Joe Fairless: Oh yeah, good one.
Steven Gurowitz: By Sun Tzu. I couldn’t read it all at one time, Joe, because it was so complicated, but when I got through it, I actually read it a second and a third time, because I found things in that book that lent itself towards a business model, not only going to war. So I loved the book.
Joe Fairless: Another book I know you’d really like is by Robert Green, The 33 Laws of War. What is a mistake you made on a transaction?
Steven Gurowitz: Believing verbiage out of a developer’s mouth, rather than having it in black and white?
Joe Fairless: What happened?
Steven Gurowitz: 90% of what was promised was not delivered, and it was a big disappointment and I was lucky to get out with my pants, if you know what I’m saying. I closed [unintelligible [00:23:02].08] and all of the lifestyle never really happened, because there was a disclaimer kind of a thing in the contract, and I trusted. That was years ago, and I’ve learned from that if somebody makes a commitment or a promise, they shouldn’t be afraid to put it down in writing, as I do for my clients.
Joe Fairless: Best ever way you like to give back?
Steven Gurowitz: Joe, that is a very touchy subject for me, because without the hoopla, without my name having to be on a building, both personally and corporately, we are very philanthropic here… Whether it be to the [unintelligible [00:23:42].21] Foundation, whether it be to children’s autism… Last week the local newspaper (Miami Herald) put out a wishbook for Christmas; we donated a custom wheelchair for $8,800 for a young boy struggling with his parents. We have done huge hurricane relief, we have run our tractor trailers to [unintelligible [00:24:04].12] to New Orleans when they were hit; we ran tractor trailers to Baton Rouge, Louisiana, we ran to New York and New Jersey, not once, twice. We teamed up with Channel 10, they went out on the air, we filled up 53-foot tractor trailers, had the Florida Highway Patrol escort us so our trucks didn’t have to stop at weigh stations, so we would get to the North-East in 22 hours. That is what I call karma, to be able to give back when you’re blessed, and we’ve been very blessed and fortunate here in Florida.
Joe Fairless: How can the Best Ever listeners learn more about your company?
Steven Gurowitz: They could feel free to call. I love to talk to people. I’m probably the most reachable designer in the industry. They could call my cell phone at 954-592-3332 or text me, seven days and seven nights. The phone is never off.
Joe Fairless: Well, Steven, thank you for being on the show. It’s a beautiful business model (pun intended) and it’s an approach where you’re dealing with the luxury market and you’re solving problems for real estate brokers, because it helps them sell a property faster for owners who have a property that hasn’t sold, because that helps them get the sale done faster… For developers and then for luxury buyers, because it’s a turnkey operation and they don’t have to worry about hiring contractors after they move in. Then for all the poor luxury buyers, they can finance those costs versus having to pay out of pocket.
Steven Gurowitz: Joe, [unintelligible [00:25:42].04] thanks you. I’m honored to be on this show.
Joe Fairless: Thanks for being on the show, my friend. I hope you have a best ever day, and we’ll talk to you soon.
Have you made the jump into real estate investing yet? If not, wholesaling is a great way to get started, even if you have some experience, I’m sure you can still learn from Raul. At only 23 years old, he is doing more deals than a lot of people twice his age.
Raul Bolufe Real Estate Background: -President at Capital Rise Investments LLC -Have done over 200 deals since beginning wholesaling in 2014 -By age 23 he has wholesale over $15M and made $355K off of the MLS -Now has a team of 7 people and 3 agents working with the company and growing -Based in Miami, Florida -Say hi to him at capitalriseinvestments.com -Best Ever Book: 10x Rule by Grant Cardone
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, Raul Balufe. How are you doing, Raul?
Raul Balufe: What’s up, man? Thanks for having me, Joe.
Joe Fairless: Nice to have you on the show, my friend. A little bit more about Raul – he is the president at Capital Rise Investments. He has done over 200 deals since the beginning wholesaling in 2014. By the age of 23 he has flipped over 15 million dollars of property and made 365k off of the MLS – we will get into that. He is based in sunny Miami, Florida. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Raul Balufe: I started investing a couple years ago, about three years back. It was a scary transition, because especially in this market it’s really competitive, but I figured “Hey, if other people can do it, I think I can do it, too.” I was actually selling cars at my dad’s dealership, and then I saved enough money and I bought my first rental property and I figured “Hey, I could do this again.” So I started listening to podcasts, reading books, and I got into it.
I got a mentor down here, and I started with the MLS, learning how to send offers, learning how to find buyers, and that’s pretty much how I got my first deal. Now I’m just running with it… We still do MLS, but now we’re doing a lot of mail, we’re doing some bandit signs, we’re doing some internet marketing, websites, and we’ve kind of grown to a team of about eight men, and doing some deals.
Joe Fairless: You’ve got an eight-men team… Walk us through who does what.
Raul Balufe: I’ve got an assistant secretary – she pretty much answers the day-to-day calls and does the checks and pretty much the organization. I have an acquisitions manager for MLS, then I have a sales manager that pretty much does all the sales, I have two acquisitions members, I have one sales guy, and then I have an office manager and two VAs. I don’t know if I lost you there, but…
Joe Fairless: No, you didn’t… [laughs] I’ve been taking notes. Who did you hire first?
Raul Balufe: My first hire was actually one of my first VAs.
Joe Fairless: And how did you find your VA?
Raul Balufe: Online, through Upwork.com. I think before it was oDesk, or something.
Joe Fairless: Yeah… What did you have the VA do?
Raul Balufe: I had the VA send offers for me. I kind of showed him how to fill up the contracts using freedom soft, and I had the VA tell him what [unintelligible [00:04:54].02] and then I would send him the information that would do it.
Joe Fairless: What type of training process did you do at the VA?
Raul Balufe: I actually got some of the training process from another podcaster, Joe McCall… He has some training thing for that, of what to have VAs do. I used the backbone of that, and then I kind of just implemented my own little strategy with them. But usually through e-mail or through YouTube video – I’ll make a little video of how to do it, and they would do it.
Joe Fairless: And how much do you pay them an hour?
Raul Balufe: One VA – I have him at $3.33 and the other one at $4.50.
Joe Fairless: For someone who has a wholesaling business and wants to make that first VA hire, what would you recommend to them? Either a lesson you’ve learned, or ways to get out of the gate strong.
Raul Balufe: What I would recommend is make sure that you yourself know how to do the task very well first, before you can get someone to do it… Because since it’s not in person, you can’t really show them, so it might take a lot of explaining and videos and training to really get them to do it. So make sure you really know how to do it perfectly before you get someone to do it.
Joe Fairless: So before we try and automate our process, we actually have to know the process – is that what you’re saying?
Raul Balufe: Yeah, man… It makes it a lot easier. It’s just so much easier to be able to train somebody on something that you know how to do in and out, so they can sense that you know how to do it.
Joe Fairless: 15 million dollars worth of properties that you’ve wholesaled, right? Not fix and flipped, but wholesaled?
Raul Balufe: Wholesaled, correct.
Joe Fairless: Okay. And how old are you now?
Raul Balufe: 24.
Joe Fairless: And when did you get started? In 2014?
Raul Balufe: Yeah, correct.
Joe Fairless: So 2014, this is 2017 – so in 2016 you were 23 and in 2014 you were 21. So you started when you were 21 years old, and in two years you had wholesaled over 15 million dollars worth of property, right?
Raul Balufe: Yeah… I’m right around 26 million now.
Joe Fairless: What was the first property you wholesaled?
Raul Balufe: The first one I did was actually — I was doing a technique that I learned from Joe McCall, actually… Pretty much texting landlords on GoSection8.com, asking them if they wanted to sell their house. I got a hold of a property manager, and the property manager introduced me to the landlord. That’s pretty much how I got the first deal. I said, “Hey, are you looking to sell?” He said “Oh, I’m not, but my landlord is. I manage his properties.” He put me in contact with him and he gave me a lot of information about his properties; I made him an offer, and I actually got two under contract. That’s how I got my first deal.
Joe Fairless: Where are these properties located?
Raul Balufe: South Florida.
Joe Fairless: Can you give us the numbers on that first one?
Raul Balufe: I was getting it for 62k and I assigned it for 68k. So I made about 6k there.
Joe Fairless: And you mentioned GoSection8.com – obviously, it’s a website. I haven’t heard of that one.
Raul Balufe: That’s pretty much a website where landlords and potential tenants can go and view properties that are Section 8-ready… Pretty much properties that the landlords only want to rent to Section 8 tenants.
So the tenants can create an account as if they’re the tenant, and they’re able to view these properties. The landlords create an account like if they’re landlords, and they can list their properties there. And it’s free.
Joe Fairless: Okay. And you went online and you texted the number, you got a hold of a property manager who then introduced you to their client, the landlord, and then you wholesaled his property.
Raul Balufe: Correct.
Joe Fairless: $62,000, and you signed it for $68,000… You gotta do a lot of those to make up 15 million in two years. Help fill in some of the gaps there.
Raul Balufe: When I say 15 million it’s worth of properties, not 15 million profit.
Joe Fairless: No, I get it. I was with you on that. [laughs]
Raul Balufe: Yeah, okay… I’m like “Damn [unintelligible [00:08:55].22] I’d be next to Donald Trump, or something.” So basically our average property now is about 120k. Basically, we do about 80 deals a year.
Joe Fairless: Okay, I’m with you.
Raul Balufe: Do you kind of see how I got there? So the 60k one is one on the lower end.
Joe Fairless: That was your first property.
Raul Balufe: Yeah, it was my first one. So now our average wholesale is from 140k, 160k, something like that.
Joe Fairless: What are you doing with the profits? Are you investing them into long-term holds, or are you just putting them all back in the business, or are you buying cars, or what?
Raul Balufe: No, not cars, man… [laughter] Maybe a little bit. So a big portion of it in the beginning (in my first two years) was going into buying rental properties. I accumulated a little portfolio of single-family homes – I’ve got about ten of them now. After I did that, I started putting more of the profits back into the business: hiring new people, sending more marketing… That’s when I got more into mail and online advertising, and hiring more staff to help me grow.
So to answer your question – yes, in the beginning more towards buying properties for rental income, and then now the majority going back into the business.
Joe Fairless: What’s been the best investment that you’ve made back into the business and what’s been the worst investment that you made back into the business?
Raul Balufe: That’s an awesome question. [laughs] I like that question. Okay, so the best investment made back into the business was reinvesting in mail marketing. I’m sure you hear – and probably everybody listening to this probably hears a lot of podcasts or reads books, and they hear that mail goes up, it goes down, but if you’re consistent, mail works. At the end of the day it’s just the way I’ve seen it.
I might have a month that I get a 2% return, I might have a month that I get a 6% return. It just all depends, but being consistent with the mail has helped me out a lot. And apart from getting deals through it, it builds a lot of credibility, because you’re getting off-market stuff, and buyers love that.
When I get an off-market deal and I’ve got them through mail, it really builds a lot of hype towards the properties that we’re getting, and it shows that we’re active out there. We’re not only getting deals that are on-market, but we’re also really hunting for those deals that are off-market.
Joe Fairless: No one else has mentioned the “building the credibility because you’re getting off-market deals”, and I’m glad that you did, because I never thought of that.
Raul Balufe: I saw that happening, because I’d be like “Man, this house’s price is the same as the ones that are on the MLS, but we’re getting three times the amount of calls.” So as I start talking to these people, they’re like “Yeah, but I haven’t seen this deal before. How many more of these do you get?” I’m like “I’m actually getting them more frequently now because I’m doing a lot more marketing.” They’re like, “Okay, make sure you put me in your VIP list. Make sure you get me on there.” I’m like, “Alright man, will do.” I started noticing that… And it gets more buyers, and you can then turn those buyers into people who buy other properties.
Joe Fairless: I like that. And what about the worst investment you’ve made back into your business?
Raul Balufe: The worst investment that I made back into my business… Great question. Well, I would have to say it was maybe spending it on systems that I didn’t need. I don’t wanna name any names, because I’m not out here to bash anything, but mainly just systems that you don’t need. Try to simplify your business.
Obviously, you need a CRM, or you need certain sheets or computers or software or whatever, but don’t get over-hyped on all that stuff. Get stuff that works for you and that makes it simple to buy and sell houses, or whatever your business is. So maybe that was a big spending mistake.
Joe Fairless: I’m not asking you to name a name of the system or the software or whatever, but I would be curious to know – and I’m sure the listeners are as well – what functionality did that have that you were like “I don’t need that.”
Raul Balufe: Well, functionality maybe not so much, but more like — for instance, I had one CRM for buyers, one CRM for sellers; I had another CRM for contacts… But one CRM could have done all three, if you can find a way to customize it, or whatever. So I was kind of like falling in love with “Oh, this CRM has this feature, this CRM has these features”, but do I really use all those features? I’d rather just put in one platform and customize it as best as I can, even if it takes a little bit more labor… But really get it on one system so it’s just more organized, more clean. You go to one place to find all your leads, one place to do your follow-ups… It works a lot easier.
Joe Fairless: What CRM do you use? Because obviously you’re happy with it if you’re using it.
Raul Balufe: I use FreedomSoft. I’ve been using it since I’ve started. It made a lot of good changes recently. I know Rob Swanson took over not that long ago. I really like it; it works perfectly for me. For buyers, sellers, you can put your contracts on there… I like the new leads tab; you can get phone numbers, and stuff… It’s pretty cool. I don’t even use all the features, but it has a ton for me to use and it’s really user-friendly. It’s nice, I like it.
Joe Fairless: Best Ever listeners, you can listen to our interview with Rob Swanson, episode 772, how he scored ten million dollars at the bottom of the real estate market.
What is your best real estate investing advice ever?
Raul Balufe: My best advice is pretty much staying consistent. I was actually talking to somebody today – it’s really easy to give up in real estate. Real estate was never made to be a short term gain type of business; it’s always been like a buy and hold business, or buy your home, resell it in a year, or whatever. If you stay consistent, constantly talking to leads, sending mail or whatever way you like to get leads, and you take the right actions, you can succeed; you will succeed. You just have to be consistent.
Joe Fairless: How do you educate yourself? Because your mind has evolved more than other early 20-year-olds that I’ve come across, so clearly you’re into personal development, and you’ve mentioned some podcasts… Where do you get that information from, and have you always been that way?
Raul Balufe: I’ve always been very curious and I kind of wanna know how everything works, so that was kind of like in my nature, but podcasts have helped me a lot. You can just find so much information on podcasts… Your podcast – you have a ton of interviews with very interesting people, successful people… A ton of all these other real estate podcasts – I mentioned Joe McCall, Sean Terry, Matt Theriault… If you just listen to a bunch of these podcasts, you get a lot of knowledge… Way more than you even need. So that definitely helps a lot.
I read books… I know you’re big on books; you ask for everybody’s favorite books at the end of this show… So I love books, podcasts, YouTube, webinars… A little bit of everything. There’s tons of free education out there.
Joe Fairless: What are some of your favorite go-to resources?
Raul Balufe: Well, I purchased some of the courses from Sean Terry and Matt Theriault – I’m constantly going back to those courses. I like to refeed that material back in me; even if it’s like the basics, it’s always important to know the basics. Once you fully understand that, you can really start thinking like “Okay, in my business how can I implement the basics again?”, whether it’s sending mail, or… However you get leads – MLS – you always gotta go back to the basics, buying and selling. That really helps me a lot.
Podcasts – I listen to your podcast, I listen a lot to Matt Theriault and Epic Real Estate…
Joe Fairless: Now I wanna go back to the direct mail marketing, because you said that’s been the best investment you’ve made back into your business, and you’re consistent with it. Will you define what consistent is as far as frequency and how many you send out?
Raul Balufe: I’ll get a list and I will send once a month for six months minimum. Whatever list that may be and however many people, I’ll send for a month, every month, six months straight… And different pieces of mail. I’ll send a postcard one month, a letter the next month, then another postcard, then another letter… All different for six months. I think that anybody hitting a list should at least hit it three months back-to-back-to-back, and for ultimate results, six months.
Joe Fairless: And have you looked at how many leads you’re getting from the one, two, three, four, five and six-month mailers and have you seen which mailer generates the most leads as far as one through six months?
Raul Balufe: I have tracked that, however I will say — that’s kind of a good question, but what I see is that I get easier sales or easier acquisitions months four, five and six. Maybe the leads won’t be the same amount, but it’ll be a lot easier to get that house under contract, because they’d already seen my name for three months or four months; I don’t know if that makes sense.
Joe Fairless: Yes, that does. Are you ready for the Best Ever Lightning Round?
Raul Balufe: Yeah, let’s do it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Break: [[00:18:08].15] to [[00:19:00].00]
Joe Fairless: What’s the best ever book you’ve read?
Raul Balufe: The 10X Rule by Grant Cardone.
Joe Fairless: He’s a Florida guy, isn’t he?
Raul Balufe: Yeah, he lives in Miami. He lives in [unintelligible [00:19:06].27]
Joe Fairless: Best ever deal you’ve done?
Raul Balufe: The second property I bought – a single-family home. I bought it for like 47k, put in like 20k; I’ve been renting it for three years and I just got it appraised for like 150k.
Joe Fairless: Congratulations. How did you get the money to buy that single-family home?
Raul Balufe: I had already wholesaled a couple houses, so I had some money saved up. Then I got a hard money lender.
Joe Fairless: Do you still have that hard money loan on the property?
Raul Balufe: I do, I have renewed it for these years, but I am in the process of refinancing it with a conventional bank.
Joe Fairless: Best ever way you like to give back?
Raul Balufe: I actually enjoy teaching and mentoring people who are not as fortunate or maybe not as savvy with information or school. I like to kind of just speak motivation to them as much as I can, and share with them any secrets or anything that helped me along the way or keeps helping me in my business. I like to help people who kind of see things a little bit differently.
Joe Fairless: What is a mistake you’ve made on a transaction that you can think of?
Raul Balufe: On a transaction… Definitely with buyers – collect their escrows. That sounds simple, but man, these buyers are sharp.
Joe Fairless: Will you elaborate on that?
Raul Balufe: So if you’re selling a wholesale deal, a lot of times for me if I’m doing [unintelligible [00:20:35].05] I gotta put that escrow; so I’ll sell it to a buyer, I’ll get the contract signed, and in the beginning I kind of put it off, like “Okay, it’s a done deal…” But then a week will pass by, they never followed up, they never sent deposit, and they’re like “Okay, I don’t want the deal anymore for some reason”, and now I have to rush and find another buyer, do this, do that… That will all be avoided if you collect the deposit or have them sent to the title company when you sell the property to them.
Joe Fairless: What’s the best place the Best Ever listeners can get in touch with you?
Raul Balufe: They can go on our website or our Facebook, Capital Rise Investments LLC, or CapitalRiseInvestments.com. I have my office number there and my e-mail – all that information if you guys wanna get a hold of me.
Joe Fairless: Raul, thank you for being on the show and talking about how quickly you’ve gotten out of the gate in real estate, in two years, from 21 to 23, having wholesaled on average over 15 million dollars, which I think was on average like 200 or so houses (I think) when I did that math…
Raul Balufe: Right. 80 houses a year.
Joe Fairless: Yeah, 160… Yeah, I knew that didn’t sound — yeah, 160. I was doing the math off of the 68k, so that’s what it was. But it’s very impressive what you’ve done and the team that you’ve built, and how you have put a premium on the learning and then applying what others have done and then replicating the model. I think that’s the storyline for this conversation – you’re not recreating the wheel, you’re simply implementing what’s been proven that other people have done and you’re taking massive action and you’re scaling along the way.
Raul Balufe: A mix of education and action is definitely the way to go in any type of business or in anything you do in life; as long as you learn the right things from the right people and implement the action and you do it consistently, you’re set up for success. You cannot fail.
Joe Fairless: You summarized that much better than I could. Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Raul Balufe: Thanks, Joe. I appreciate it. Take care!
Have you failed yet? Do you consistently month after month wholesale properties with the team that works cohesively? If you’re still struggling then you may not have all the pieces. Our guest is extremely persistent and has had it pretty rough before he finally started to net approximate $13,000 per deal, hear how he did it and how he built his team.
– Founder of FlipEmpire.com & Creative RE-Solutions, LLC – Has flipped well over 300 properties – Specialize in wholesaling residential and multi-family real estate investments – A former GE financial analyst – Based in Miami, Florida – Say hi to him at www.FlipEmpire.com
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