Real Estate Investing in 2021 with Mike Cantu #ddre31

Mike Cantu is undoubtedly one of Southern California’s best-known real estate investors. He’s been a full-time real estate investor and real estate entrepreneur for over 35 years. Mike runs a buy/sell business as well as managing a portfolio of rental houses out of Southern California. He’s the author of Don’t Get Voted Off Real Estate Island and Rental Properties and Management From A to Z. Prior to real estate, Mike was a professional skateboarder on the Pepsi Skateboard team from 16 to 21 years old. This week, we talk about Mike's continued love of real estate, his favorite deal sources, managing his rental portfolios, how the market has changed, and strategies he's using in 2021 to buy deals in his back yard.

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00:00​ The Data Driven Real Estate Podcast Welcomes Mike Cantu, California real estate investor
00:06​ Why Mike still loves the game of real estate
03:29​ The important difference between investing in houses vs. homes
06:37​ How to find real estate deals in 2021
12:13​ Real estate flipping, wholesaling, and rentals. What's the mix?
14:27​ Wholesaling and creating a buyers list
19:03​ Understanding the tax ramifications when you flip and hold
21:26​ Why Mike still buys real estate. Appreciation, depreciation, or both?
24:45​ What is the average length of stay for tenants?
27:00​ How has Mike's landlord style impacted his rental portfolio during COVID?
32:06​ How Mike acquired his first rentals?
32:47​ What is subject to investing?
36:16​ Single-family homes or multifamily property investing?
38:43​ How has marketing mix changed over the past decade to get real estate deals? Direct mail still work?
44:29​ Are creative financing deals possible these days?
48:49​ Advice for new real estate investors
51:52​ People problems vs property problems

Episode Transcript

Aaron Norris (00:06):
Welcome back to the Data Driven Real Estate
podcast, the podcast for realestate professionals dedicated
to driving business using data.
I'm Aaron Norris with SeanO'Toole with PropertyRadar and
this is episode 31. Today wefeature Mike Cantu. He's one of
probably the best known realestate investors in Southern
California. He runs a wholesaleflip business as well as a
sizable rental portfolio. Andtoday, we cover a lot of ground

(00:26):
from his favorite type of datathat he uses to find the deals
and the way he goes about doingit. His mix of wholesaling
versus what he holds, and after40 years, why he even still
loves the game, and so muchmore. You won't want to miss
this week on the podcast. Mike,welcome to the show. First
question starting off, why thegame of real estate after all

(00:49):
these years, why is real estatestill awesome.

Mike Cantu (00:55):
It's kept me from having a real job. It's kept me
out of mainstream America. Igrew up with military discipline
in a small house with ninepeople. And I just always wanted
to do whatever I wanted to do.
And that always conflicted withhaving a job. Never been afraid
of work, but I just can't standto be told what to do. And early

(01:17):
on, I was exposed to it. Ibought the whole story hook line
and sinker didn't question asingle bit of it. I knew every
word was true. And all I had todo was stay on that escalator
and it will take me to thepromised land.

Aaron Norris (01:35):
Has it worked out better?

Sean O'Toole (01:38):
So how long ago did you start?

Mike Cantu (01:42):
39 years ago, Sean, I started in April of 1982. This
is, I'm embarking on year number39 being a full-time real estate
entrepreneur.

Aaron Norris (01:54):
And so, you've been through a few cycles, and
you're still in it. And it'swhat's fascinates me for some
it's a means to an end and foryou. You're hooked.

Mike Cantu (02:06):
It's a passion, I, as I mentioned yesterday Aaron
and there's no doubt, I'm goingto have to go through a 12 step
program to get out a dealmaking. I'd wake up thinking
about deals. I woke up reallyexcited this morning, I closed
the deal. Yesterday, I gotconfirmation right at five
o'clock. And it's a keeperhouse. I don't keep much

(02:28):
anymore. I've got plenty all therooms I need. But I thought oh,
this is a great house at a greatprice and great location. I
can't sell this. And first thingI thought this morning when I
woke up, we closed it. It'smine. So, yes, I still get
really excited about doingdeals.

Aaron Norris (02:45):
Are you still actively marketing for deals in?

Mike Cantu (02:49):
Absolutely, absolutely. See, Kim has been
with me, this is her 30th yearof working with me. And as long
as I tell her if she ever quits,I quit. And she says 'Well,
she's never going to quit'. So,I thought, okay, I'm in business
still. So, it keeps, themarketing keeps Kim busy. And
she's always got the managementside of things. And she's always

(03:11):
busy all day every day. And itworks out for both of us. But
yes, absolutely market. It'sseveral different niche markets.
And we can talk more about thatif you want to go down that road
as far as marketing goes.

Sean O'Toole (03:25):
Let's just do that.

Mike Cantu (03:29):
Okay, I was gonna say I did make a few notes here.
On the marketing, of course,everything falls into one of
two, one of two categories,owner-occupied or non
owner-occupied. There's onlythose two categories. But in
each of those categories, Idon't mail to owner occupiers, I
buy houses, not homes. And I'vealways been much more

(03:51):
comfortable dealing withanything other than a home,
especially if there's kidsinvolved. I would love to see
every homeowner get top topdollar and do the right thing.
But as far as rentals andvacation properties, stuff like
that, all those are houses,that's just inventory. But
within the non owner-occupied,we have several sub niches that

(04:13):
we mail to. And it's one of twoapproaches that when you do a
big mailer, I consider that likeblind archery, just shooting
arrows in the sky hoping to hitsomething. And then the other
one is when we're going after avery specific property that's
like a rifle with a scope andtotally different approach a
personalized letter makingreference to the specific

(04:36):
property and the details of it.
So, I absolutely, I lovemarketing. I love coming up with
new trying new lists. Andactually the one I just closed
on yesterday came from a newlead source, which on our first
test drive, oh, but I got agreat deal out of what I thought
okay, that worked. Keep ongoing.

Sean O'Toole (04:57):
Nice. Nice. I gotta tell you Don't get voted
off real estate Island, whichwas a, I guess, audio series you
did, I don't know if you did itis text as well, I listened to
it, I still think is one of thebest, like kind of overviews,

(05:18):
and you know, and part of it isyou're pretty funny guy.

Mike Cantu (05:23):
Thanks Sean. I try and have some humor in there, I
just, I don't want to be themonotone drone, you you to
sleep. So, no, that's just mecoming out in those, in that.
But that was my big give back,Sean, I had been the recipient
of some great information. Butit was because I went searching

(05:44):
for it. And I've always saidseek and you shall find finding
is reserved for the searchers.
And for the people out theresearching, I thought that's part
of the cycle. Gotta give itback. And favorite, one of the
favorite things I own is a filein a file cabinet, which was a
bunch of unsolicited lettersfrom people that information
from that course has changedtheir lives, created a better

(06:05):
future made them some money,solve some problems, and I just
love doing that real estate'ssuch a neat vehicle to wealth
and retirement. And I lovesolving the challenges and the
creative aspects of it. Mostpeople and agents, no two deals
all cash or some money down andget a loan for the rest of it

(06:26):
from the bank. And that is justthe very tip of the iceberg with
what is possible in real estate.
And I love the creative stuffsproblem solving.

Sean O'Toole (06:37):
Yeah. And I really loved your approach. You know, I
think so many people are liketrying to, quote unquote, see
interesting what you're justtalking about with homes versus
houses, right, and you likedealing with the landlord. So,
it's just a more professional,it's, they're not losing
something that's, you know, nearand dear to their heart. It's
just a business transaction. So,I thought that was a really

(06:59):
interesting point. And but evenin your, you know, one of the
things that really stood out tome in your in your book series
was just how you go about thenegotiation. And it's not,
there's nothing in there aboutlike trying to hide the value of
the property or anything else,it's a very kind of methodical
approach of just going throughof, look, here's the expenses

(07:20):
you're going to have in selling.
And here's the advantage ofselling it quickly. And these
things all have value, and itadds up and you end up with a
good deal. But without, withouttrying to trick anybody.

Mike Cantu (07:31):
Oh, no, I like to put it out on the table. See,
Sean, I don't want to do a dealif when the dust settles, both
sides aren't really happy aboutit. Unhappy seller prior to
close of escrow remains anunhappy seller after close of
escrow. And I like everybody tobe smiling and just thrilled to
be doing business together. Andif I can accomplish that, great.

(07:53):
If not, we don't do the deal.
And back to the owner-occupiedstuff, Sean, early on, I did buy
several owner-occupied houses.
But the problem I have is whenI'm sitting at the kitchen table
with the seller, and they telltheir circumstances to me, I can
come up with at least every timeat least three if not four, or
five solutions. And the problemwith that is solution number

(08:16):
one, and number two usually arenot me that there's a better
solution. And I feel obligatedto share that with people.
Otherwise, I put it into thecategory of lying by omission by
omitting some key facts. And ifI can't put everything out on
the table, I'm going to havetrouble shaving in the mirror, I
got to be able to look at myselfand like what I see. And if I

(08:39):
don't disclose everything, itbugs me. So, I like everybody to
know everything my motive whereI'm at and what the plan is.

Sean O'Toole (08:47):
There's a lot of people who who believe you can't
make money, you know, buyinghouses, you know, unless you,
you know, kind of get them wellbelow market value. And that
kind of implies you're cheatingthe person, there's a lot of
infact the press and others outthere kind of you know often
insinuate that these flippersare out stealing homes from

(09:08):
folks. And, you know, I'm surethat there are some bad actors
out there that do that. But with39 years of experience, I mean,
you've kind of proved that's notnecessary.

Mike Cantu (09:20):
Oh, no, no, I'll knock on wood as I say it, but I
don't use litigation as abusiness tool like some people.
And I try and stay out of court.
I have very, very fewdisagreements with my tenants,
with sellers. And it can alwaysbe resolved. In my experience.
If you want to resolve there's away I've yet to come to the

(09:40):
scenario where I couldn'tresolve a situation that
somebody was unhappy withwithout going to court over it.

Sean O'Toole (09:50):
Right. If it probably comes down to trust. Do
you feel like that's animportant part of your business
up front and the rest?

Mike Cantu (09:58):
Absolutely Sean, it's back to if I don't feel
good about it, I've had peoplethrow out a number. And I've
told them, that's the wrongnumber. But there's more meat
than that than that. And I justthat's not number I have in mind
and I can come up higher. Andthis is numbers I have and this
is the whole scenario here,start at the beginning and work

(10:20):
down to the net to you. And it'squite, my numbers are quite a
bit more than you threw outthere. And I'm comfortable with
this. And so, I, it's kind ofweird, but at the same time,
when I leave, I think I feelbetter. I feel okay with it.

Sean O'Toole (10:33):
You've actually negotiated them up.

Mike Cantu (10:35):
Yes..

Aaron Norris (10:37):
That's a nice strategy.

Mike Cantu (10:39):
It is weird strategy. But it's usually quite
often it's an older person, andthey have one of what they're
getting rid of. It's not likemiddle-aged person that's got a
dozen or something. In one, it'sthat scenario, you know, I got
to step into my dad shoes, and Ithink he's got one and he's
gonna want to get as much as hecan out of it.

Sean O'Toole (10:59):
Yeah, and it's gonna make a meaningful
difference in their life,probably that difference as
well, so.

Mike Cantu (11:04):
Oh, yes. And I am a firm believer in karma. What
goes around comes around. And ifI, I tried, try, try to be a
good person do the right thing.
And that's been a lifelongbattle. And that was my intent.
When I woke up this morning,have a good day, do the right
thing, be a nice person andsolve stuff don't do battle.
See, that's a lot of people gointo the marketplace with the
mindset of they're gonna competeand do battle. And I have a

(11:28):
complete opposite. I don't likecompeting. I like creating. And
I don't like doing battle. Ilike playing a game. So, when I,
I want to go create, I want toplay a game and create. That's
my attitude. And I stay awayfrom the competitive arenas. I
haven't been in the MultipleListing and years now my

(11:50):
secretary Kim's in there everyday getting comps, but I don't
look for deals in there. Andauctions haven't been around.
So, most of the stuff I do onceagain, is I'm creating an
opportunity, rather than goingto look for an existing
opportunity that multiple peopleare competing for. So, I want to
create and be the only onethere.

Sean O'Toole (12:12):
That's good.

Aaron Norris (12:13):
What's, uh, what's your percentage mix of business
as far as flip, holding foryourself and then wholesaling to
other investors.

Mike Cantu (12:21):
Um, Aaron I in the last few years, I might keep one
or two houses a year. And like Isaid, I've got a big pile and
I'm very happy with it. I didhave a rule that if I took on
something new, I was going toget rid of my least favorite
properties. But it's been yearssince I've had a least favorite

(12:42):
property. I like them all. Andso, the last few that I've kept,
I just expanded the pile alittle bit more. But deep down
inside, first and foremost, I ama landlord. That's what I
strived for. All I ever wantedwas enough money coming into
where I got out of bed when Iwanted, did what I wanted and
long ago surpassed that. Butthat's when I wake up in the

(13:04):
morning. That's first hat I puton as my landlord hat, make sure
everybody's up and running,solve the problems. And then I
go into being a real estateentrepreneur.

Aaron Norris (13:14):
So, you're still actively marketing and the deals
that you're able to negotiateyou end up, do fix and flip any
of those or it's all wholesal

Mike Cantu (13:22):
Occasionally, I pick and choose those battles
carefully. Aaron at thebeginning of the year, I did a
couple of flips full rehabs,$50,000-$60,000 type rehabs,
and... but it all depends on theinventory that comes across my
table. And I mean, I in the lastfew years, I changed my job
title. And I've downgradedmyself to the real estate

(13:46):
dumpster diver. I've came upwith some real, but there's a
buyer for all of that stuff. Andonce again, it's all a math
equation and the math works.
There's a taker for it. But Iyeah, I dredge up some pretty
interesting stuff. So, thatstuff absolutely wholesale, I
try and avoid entanglements. Idon't like dealing with the city
any more than I have to pull apermit here and there. But to

(14:09):
have structural plans, I try andavoid that. If it involves
blueprints, I just assumed passit on.

Aaron Norris (14:18):
Okay.

Sean O'Toole (14:19):
All right. Let everybody work their niche.
There's guys that are that arein this business that have a
construction background and soit's better fit for them
anyways, right?

Mike Cantu (14:27):
Oh, absolutely. I have my buyers list. I've always
said my buyer's list. I'm likethe shoe salesman. I know what
my buyers financial feet looklike and what they're after. And
so, when the shoe comes acrossmy desk, I know whose foot I'm
going to try and put it on.
That's the analogy I've alwaysused that um, yeah, there's a
taker for everything out thereunder the great umbrella of real

(14:48):
estate. What I do is just avery, very small percentage of
what's available there. I mean,I when people say real estate to
me, I know the whole world isreal estate. But what comes to
mind when I hear that word isentry-level housing in decent to
good neighborhoods. And I'vealways said that I am in the

(15:09):
kindergarten of real estateplaying in the sandbox. And I've
always been comfortable there.
And my friend beat me up foryears and years asking me when
I'm going to step up that pennyany game that I played all these
years and, and tell him I sleepwell, I'm very comfortable with
it. I don't want to be out overthe end of my skis, wondering

(15:31):
what my next move is I, I likewhat I do.

Sean O'Toole (15:35):
Has how much has the mix between buying rentals
doing retail flips that are, youknow, fully rehabbed and to end
users and flips to wholesalers?
How is that mix changed for youover the 39 years? Or is it been
pretty consistent, that you'vedone a mix?

Mike Cantu (15:54):
In the last seven, eight years, Sean, I've expanded
my territory. I've gone intoRiverside County, which for 30
plus years, my marketplace was30 miles long, 20 miles wide,
just a big egg. And there wasplenty of stuff in there, the 15
freeway was about a third of theway East into my marketplace.

(16:16):
And my game plan was always tokeep west of the 15. And use
East of the 15 to earn the moneyto keep the other stuff see I
have a theory, it's called partsand tools. And every time I see
a deal, the first thing thatclicks is this a part, or is
this a tool, and the parts arethe pieces that you're

(16:38):
assembling your retirement withthe good stuff, stuff that you
can't sell, because you're notsupposed to sell it, that when
you see it, you think, Oh, Iwant to keep this, this is a
great asset, the good stuff andthe good neighborhoods. And
those are the parts. Andeverything else is a tool,
whether it's a wholesale deal, aretail deal, an interim rentals,

(17:00):
short term, long term, whetheryou're growing it up in value
amortizing down the debt, butthe ultimate goal is to harvest
the equity out of the tools andpay off your parts. And that was
my theory with the 15 freewaygrow a bunch of stuff east of
the 15 harvest it pay off stuffwest of the 15 freeway. So, I
love the parts and tools theory.
And I'm actually have anotherdeal in escrow that I'm really

(17:23):
excited about, came with a bigslab of equity, and a long term
tenant. And I'm going to keepthat but I knew immediately that
that ultimately is going to be atool. And I'll probably hang on
to it for several years untilsomething happens with the
tenant if he stays for 20 years,I may own it 20 years from now.
But it's not something that isthe cornerstone of my

(17:47):
retirement, it's a tool to payoff something else.

Sean O'Toole (17:52):
So, you're keeping it because it's got an existing
tenant, you don't want todisplace that tenant. So, you're
basically holding it to allowthat tenant to to finish out
their term, whatever term theywant. At that point, it's not
something you want to keep.

Mike Cantu (18:06):
Well, there's, there's a six-figure, nice
six-figure slab of equity in it.
And it's a good solid house in adecent neighborhood. Or if I
were to fix and flip, but I'muprooting a long term tenant,
which I've done before, but Iprefer not to. But from the tax
standpoint, if I hang on to itfor a year, see that falls into
a category I call floatinginventory. Over the years, I

(18:27):
bought lots and lots of houseswith other people's tenants in
it. And if it's a decent housewith a decent tenant, even if
you're feeding the smallnegative, I've got to raise this
guy's rent, but I figured if Ileft everything alone, that it
might cost me a couple $1,000 tocontrol 150 plus in equity for a
year or two, that it's a nominalamount. So, it's not cash flow,

(18:50):
I'm looking for its equitypreservation. And if I get a
pass a one year mark, and then adifferent tax bracket, if I flip
it.

Sean O'Toole (18:58):
Okay.

Mike Cantu (18:59):
Or I can or I can exchange out of it.

Aaron Norris (19:03):
There's a lot of..

Sean O'Toole (19:03):
There's some complications around that,
right, like, because if you'rein the business of dealing
properties, you, aren't yourflips, still considered ordinary
income? Or do you just placethem in separate entities or
something?

Mike Cantu (19:16):
Separate entities, if there's a chance I'm going to
keep it goes one place. And if Iknow what's going to be a flip
that goes elsewhere,

Sean O'Toole (19:23):
Got it.

Mike Cantu (19:24):
That, would be corporate versus LLC.

Sean O'Toole (19:27):
So, it's an important thing for listeners
just to pick up on right. Like,if you want to keep some and
flip some and you're doing morethan I think it's five deals a
year, you have to be verycareful to keep those in two
separate places. Otherwise,you're going to end up paying
ordinary income even thoughyou've held it for a while.

Mike Cantu (19:44):
Mm hmm.

Aaron Norris (19:45):
Good point.

Sean O'Toole (19:47):
Yeah, that's, that's, that's one that I missed
early on.

Mike Cantu (19:51):
Yup. Yup.

Sean O'Toole (19:52):
That's not a, that's not a happy call. What do
you mean?

Mike Cantu (19:55):
Right, right. Oh, no, no. And so, I have two
distinct entities. Actually,there's three entities there, my
long-term stuffs and one entityand the flip stuff gets ran
through a C Corporation, andthere's an LLC for all of the
not sure stuff, that the interimstuff.

Sean O'Toole (20:15):
And then I did a lot of commercial. So, I kept
this separate entity for what Icall dirty dirt, right? So,
things that I bought at trusteesale that could end up having an
environmental issue or somethingthat, you know, I didn't want to
have contaminate all oreverything else I own. So,
that's an important thing forlisteners thinking about getting
into this business, especiallyif you're going to use a few

(20:36):
different strategies, you needto think through the tax and
liability sides of that. So,that's a good, a good little
side note, we came across there.

Mike Cantu (20:48):
Yes, no, I'm all I'm always looking at the tax
standpoint of things too. Andone of the things I realized and
I'm focusing on now that didhelp with the decision to keep
the property I closed yesterday.
I've had some of these rentals27 and a half years or longer,
and I'm losing some of mydepreciation and I, is that free
ticket is shrinking. That Ithought, Oh, no, the goal for

(21:12):
this year, next year, I needsome new depreciation. And I
want it to come with some verywell-located quality assets.

Sean O'Toole (21:21):
Interesting, yeah.
Many angles there to be playing?

Mike Cantu (21:26):
Yeah, I never thought I would be this age, and
out I'm looking for morerentals. But it's not for
income, not for theappreciation, it's for the, for
the depreciation, not theappreciation.

Aaron Norris (21:39):
In that case, are you looking to 1031 exchange
into new great houses? Or whatdo you think?

Mike Cantu (21:49):
I'm looking at just acquiring them. Aaron, I like I
said, I, as I come through myportfolio, there's some, of the
best advice I ever got was manyyears ago from John Schaub. And
think he said it like everyear, get rid of your wors
house, take it out to pasturand shoot it and replace it wit

(22:09):
a better house. And eventuallyou will have no junk. And 2
some odd years later, I think iwas 2005, 2006 the markets goin
crazy. You just have to look ayour watch to see what the valu
of the house was. And every daI would come through the fil
cabinet. Same file cabinets agonope, nope, nope, nope, nope

(22:30):
And I thought John was righteventually you will have n
junk. And so, I don't havanything I want to get rid of
So, if I'm getting thadepreciation, it's got to b
buying new assets. So, I thinokay, here I am an expansio
mode again. And I've gonthrough expansion an
contraction many times. Anactually, that's something

(22:51):
have a note on that. I only havtwo kinds of days. Rarely,
might have one or two, maybthree neutral days a year. Bu
within seconds of waking up,immediately know, am I my i
expansion or contraction modeAnd what I always fantasiz
about is being able to have fivor six expansion days in a row

(23:14):
and then a couple of contractiodays to clean it up some kind o
method there, but they'rrandom. But I acknowledge m
expansion or contraction. Asoon as I opened my eyes thi
morning, I realize I'm alexcited about my new purchase
ready to go slay thmarketplace. And I'm definitel
in expansion mode today, whicmost of the time I am. Bu
occasionally I hit thcontraction mode. And those ar

(23:38):
the days I don't want to talk tpeople. I want to clean up th
mess, get organized and wondewhat am I created here? And ho
do I control this thing

Sean O'Toole (23:47):
That's awesome.
That's it. That's a good youknow, because I do think you
know, if you never clean up likein the software business, right,
we just always create and wenever go back and clean up boy,
it gets to be a mess after awhile. So, it's a very similar,
similar thing. That's probablytrue of of all businesses,
right. Sometimes you just needto go get all your ducks in a
row. That's a really, I love theexpansion and contraction mode.

Mike Cantu (24:10):
Yeah, it's some days I go into my office like
yesterday, and I thought, Okay,I need a contraction day in
here. I tell people I have apilot's license. I pile-it here,
I pile-it there, I make awesomepiles and pretty soon there's no
room on my desk. And I thoughtokay, yesterday I found myself
organizing piles thinking I'mgoing to have to acknowledge
each one of these piles. There'sa hole for every one of these

(24:34):
pages, but they just need to getthere.

Sean O'Toole (24:37):
A pile-it license?

Mike Cantu (24:41):
Has been an expert pile-it for as long as in
business.

Aaron Norris (24:45):
When it comes to being a landlord, what would you
say is the average length ofstay for your rentals?

Mike Cantu (24:52):
Knocking on wood but Aaron I'm gonna say I'm gonna be
at 10 years plus.

Aaron Norris (24:57):
Yeah. And what do you contribute that to, is it
the inventory you hold or howyou take care of the tenants?

Mike Cantu (25:03):
Multiple ways.
Absolutely. It's the house. Isit somewhere where they want to
be? Is it a good house in a goodneighborhood? All of my rents
are under market. In varyingdegrees, it depends. I was gonna
say I do have a list and if Iraised my rents to market, the
difference from what I collectis more than most people would

(25:26):
be thrilled to retire on. But Ihave tenants, okay, I have a
house in Clermont that came witha couple that have been there 31
years before I bought it astenants. And I bought that in
the year 2000. The husbandpassed away a few years ago, but
Kate is still there. So, my mathtells me she's going on year 52,
as a tenant in that house, andI'm fixing a house in Montclair

(25:51):
that I bought 20 years ago,Sherry had been in that house 15
years before I bought it. Andshe's a wonderful tenant. So, I
have several tenants that had along history before I came into
the picture. And we passed thetwo decade mark on several of
those. And some of my tenantssay I bought a house in

(26:13):
Claremont. In 1998, I remember Iwas on the phone and my other
phone rang, I told my brother toanswer it, he starts taking down
information at the time, I had aPennysaver ad running. And then
he hung up the phone and left hecame back a half hour later and
said want to buy a house inClaremont. It was a burnt house,
but um, I ended up making a dealwith him, he bought the house on

(26:37):
my ad call. And he fixed it up.
And the same tenant I rented toin 1998 is still there, and
they've done nothing but improvethe house. She got married,
they've added patio covers andnew driveway, stuff like that,
or I think carry on.

Aaron Norris (27:00):
And how's that?
How has that played out duringCOVID? You know, you hear a lot
of landlords complaining that,you know, people have skipped
but you're appraoch tolandlording...

Mike Cantu (27:07):
I had one tenant that went AWOL. I had a couple
of tenants only two that evenmentioned it. And I explained to
them that this isn't a freeticket that there will be a day
of reckoning and we have a verylong history. And it might be
difficult to find a better housefor less money. After all the
dust settles here. And this is atemporary situation to where and

(27:28):
I still firmly believe that. SeeI, I've always always tried to
be the best landlord I couldpossibly be and fix stuff when
it breaks. I'm there, every yearhas a theme to it. And this year
is no different, this yearactually started in November the
year of the water heater. I'llmake water heaters deep in about
three months and they've gottenexpensive, but I thought okay,

(27:52):
last year prior to that theprevious 12 months was a year of
the sewer main line I ended upreplacing four sewer main lines,
jetted several other ones out aseptic Leach lines replaced and
I thought okay, before that,previous before that was central
air. They were just blowing upright and left. And there's

(28:13):
always a theme to the year. AndI think that's part of what
happens but the right attitude.
I don't get mad when somethinghappens even when it's a major I
think okay, what's the rightattitude? Be grateful I have the
assets and the means to keep itgoing. And that makes everything
better smile on my face and sendpeople over we get it fixed. And

(28:33):
tenants thank me for it. So no,I try and be the best landlord I
can be absolutely.

Sean O'Toole (28:40):
Well, let's talk about for the new guys starting
out. Because that's, that is youknow, I'm fortunate I'm in that
position. I had a couple folksthat came down with COVID. I
just told them, 'Look, don't payfor rent, I'm gonna forgive it.
I'm not gonna ask for it later'.
Right? It's, but that's easy todo later, right? When you're
first getting started, andyou're first taking you down
your deals, and you'releveraged, and all the rest,

(29:02):
like it's pretty hard to sayhey, don't you know, I got this.
Don't worry about it right witha tenant. And so how do you do?
I mean, it's 39 years ago, somaybe you don't remember at this
point. But how do you make that?
How does the new guy make thattransition? Right? How do they
get to the point where they'vegot enough reserves and can

(29:24):
really take care of theirtenants and the rest?

Mike Cantu (29:26):
Well, I was thinking as you were explaining the
scenario there, Sean, I'm goingback to my first nine rental
houses, I was still renting abedroom and a house for $150 a
month and I had nine rentalhouses, none of which I could
afford to live in myself. Andso, I was but by providing
better housing than I had, butof course I was Nick Blackwell

(29:48):
telling me how to get this doneand it's tough but I used to do
a lot of my own repairs. Ithought that's, that was the old
school. That's the way Nikc didit. So, that's the way I did it
is grab the tools and fix stuffand, not that much stuff broke
it was my, could have been mydownfall was tenant turnover,
not picking the right tenantsearly on, I got sent to school

(30:10):
on that one time after anotherafter another. And I just
getting, it gets old when you'reputting white paint and beige
carpet in the same house for thethird time in three years the
first time it's fun second timesaggravating. And the third time
can be depressing. So, it's butdon't go too fast too far. This

(30:32):
is as far as building yourempire goes very methodical
piece at a time take care oftoday's cash flow needs before
you worry about your futurewealth. I see people go way out
on a limb and not havingreserves and just taking on
assets to where I think Nope,there's got to be a balance
there. You got to be able toprepare for disaster. And for

(30:53):
more than one house, you'vealways got to have some
reserves.

Sean O'Toole (30:57):
Did you always use wholesale and flipping to fund
the rentals? Or did you werethose first nine rentals where
you just somehow talked to bankand loaning you the money and
going for it.

Mike Cantu (31:09):
None of none of my first nine rentals had anything
to do with the bank. So, Sean,I've never been much of a bank
borrower because I've never hada real job. I got some advice
early on it was, I was told whenyou go into the bank, stay off
the carpet, because that's whereyou're going to debt, stay on
the tile and make your depositsand everything will work out
fine. I have adhered to that Istay off the carpet at the bank,

(31:34):
I think in my whole real estatecareer and might have done a
grand total of nine bank loans.
I don't think I ever hit doubledigits. And out of the 1600 plus
transactions. 10 of theminvolved the bank. And the only
bank loan that I have right nowis I have one and it's on my
daughter's house. It's beenaround for 17 years, and it's
good loan and fixed rate and Ithought okay, 13 more years or

(31:58):
add some principal to it. Butthat's the only bank loan I
have.

Sean O'Toole (32:06):
And so, how did you acquire those first nine
rentals? If it wasn't bank loan.

Mike Cantu (32:11):
Most of them were either subject to existing debt.
A lot of it was sellerfinancing. Some of it was
private money. And some of itwas hard money. So, it was all
the non conventional sourcesthere.

Sean O'Toole (32:25):
All right, all right.

Mike Cantu (32:26):
And like I said, I did lots of creative stuff,
Sean, I just, I didn't haveborrowing power, and I didn't
have a bunch of money. So, ifyou have a dream, you got to
figure out how do we make thiswork. And that that became my
MO. I took over lots and lots ofloans. FHA stuff used to be
really easy. Just pay the $45and sign a one page application
thing and you were in.

Sean O'Toole (32:47):
Yeah, yeah, the assumption thing was, was good.
So, just I'm going to explainwhat subject-to is for folks
really quick out there. Subjectto is buying the property
subject to their existingmortgage. So, you'll leave the
current mortgage in place. Andthat has gotten it you know,

(33:08):
back in what the 80s, you couldyou could assume loans not
really isn't the case anymore.
Most mortgages today havesomething called the due on sale
clause, which means that if theperson transfers the house to
you, that triggers the loanbeing payable in full now it
doesn't mean you maybe can'tmake the payments for them for
months or years. But there issome risk there. Was that less

(33:31):
of an issue? You know, back whenyou got started the subject to
is it more of an issue now orany challenge?

Mike Cantu (33:41):
I'm the only person I know that's ever had three
loans called due because of thedue on sale clause. They were
all unique circumstances, butthey were fairly early on. And I
did have them called due and Iworked around it, I sold one of
the properties I rounded up themoney to pay off the other two.
But in today's climate, I havefriends that have taken a couple

(34:04):
of 100 loans subject to none ofthem about anything called due
with today's interest rates attwo and a half percent if the
banks can any anything more thanthat 3% plus, why on earth would
they foreclose go through thehassle only to ultimately end up
with money to loan out at alower interest rate? It makes no
sense. Now I could see if rateswent through the roof. There

(34:25):
might be some incentive to callthat stuff. But um, it's a tool
and like I said, I nobody,nobody in my circle has ever had
one called due.

Sean O'Toole (34:35):
So, you're gonna do it, be ready for that
possibility. But it can be auseful, useful tool.

Mike Cantu (34:43):
Yes. And I had, I had a loan I tried to get a bank
to call it due because of that aprepayment penalty I didn't want
to pay and I did everything Icould do to torment them into
calling a due and they refused.
They said no. You can pay thatprepayment penalty one way or
the other. So you even if you...

Sean O'Toole (35:01):
Even if you want them to they won't.

Mike Cantu (35:03):
Right, right.

Sean O'Toole (35:05):
That's great.

Aaron Norris (35:07):
Considering the market that you like to market
to the landlord's absentee, ithas COVID been a moment where
we're finding out the tide hascome back. And are we finding
who's been swimming naked asyou're marketing to them? Or do
you have a lot of landlords indistress right now?

Mike Cantu (35:23):
Oh, it all depends where their stuff is Aaron. And
that's the once again, it comesback to well located real
estate. I have a friend that had20 some odd houses and a not so
good area, an outlying area, andI believe in March of 2016,
collected for rents in April, hecollected one and hasn't seen

(35:46):
the dime since then. And it wasthe location and the type of
person that it attracted. Sothat has a whole lot to do with
it. And I know the lower endstuff, people are struggling,
they're gonna do what they haveto do. And they're not opposed
to moving. It's a good housewith an older family in it.
That's been there a while lastthing they want to do is change

(36:08):
school districts and unpack atwo-car garage. So, it's the
product and the location.

Aaron Norris (36:14):
Okay. Yeah.

Sean O'Toole (36:16):
Yeah.

Aaron Norris (36:16):
Nice. Now, early on, I remember interviewing you
and you did not likemultifamily. You are really an
SFR. Guy. How does that changed?

Mike Cantu (36:25):
Nope, I'm stil, I'm still the single-family guy that
only multifamily that I have istwo duplexes, downtown
Huntington Beach and an A plusneighborhood block from Main
Street and Coast Highway. It'stwo duplexes, I occupy one of
the duplexes my daughter on theother side, and two very good

(36:47):
friends in the other unit willjust make for a great
environment. If I didn't havethe two friends and the other
units, they may, they may havesat vacant for forever, because
that's my weekend place and it'smy lifestyle. But other than the
two duplexes, I'm still singlefamily, I want more than two by
four and drywall separatingunrelated families that I'm

(37:08):
responsible for. And I justdon't like doing adult daycare.
And it's a different mentalityin the unit mix than it is a
single family. My experience issingle family, people want to be
left alone, and get on with lifeand the units that I've had the
tendency to want me to doeverything right now to changing
lightbulbs.

Sean O'Toole (37:30):
Yep.

Aaron Norris (37:30):
Yeah.

Sean O'Toole (37:31):
No, that's a really interesting point. You
know, it does seem like you getmore turnover, like the
apartments like a stopping pointfor people like something they
have to do for a period of time,but not something they want to
do for a long time. And I've hada couple of exceptions to that.
But largely, that seems to bemore of a temporary solution, or

(37:51):
is the single-family homes likepeople, it's becomes their home,
right? And they want to stay andthey want to stay for a long
time. If you treat them fairly,it'll stay forever. 20 years
apparently.

Mike Cantu (38:04):
I told the tenant in Montclair the other day, I'm
having a bunch of work downthere. We had a block wall blow
over in November in the highwinds. And my insurance didn't
pay for it. So, I had to havethe wall removed, fence put up
and figured, okay, it's been 20years, it's time to do some work
on that house. And Sherry wasall concerned that her rent was

(38:25):
going to go way up. And I toldher that's not the game plan
that she's been a great occupantas far as I'm concerned. She
spend the rest of her life inthat house. Just stay on board
with the program, pay the renton time, and we're good.

Sean O'Toole (38:37):
Wow. That's great.
Okay,

Aaron Norris (38:43):
Has your, has your marketing mix changed? You've
been doing direct mail for along time, but I don't remember
seeing a YouTube channel by MikeCantu just yet.

Mike Cantu (38:52):
Nope. And I am still so, electronically challenged
there. And you know that I, Idid learn how to forward a text
message picture. But I've stillyet to send an email. I mean,
that's every day I go in myoffice and there's a stack of
emails Kim sorts through themthings what's what I would deem

(39:12):
to be important printed out, Isort that over the trash can.
Then I handwrite my reply on onthe actual paper and I slide the
stack back to Kim and she takesit from there the text messages
that I do on my phone. Itypically write down what I want
on the yellow tablet, put myphone on it slide into Kim tell
her to make it happen. She doesI've got fat fingers and we're

(39:35):
reading glasses so I could nevertext. Well, I probably could on
my own. But I think of mestruggling at the kitchen table
to send a text message and Ithink how would you do that
driving I'd be in the ditch and10 seconds. So, Nope. I still
operate with a yellow tablet, apen and a telephone.

Sean O'Toole (39:56):
Let's talk a little bit about and one of the
things that I think is mostchallenging for folks doing
direct mail doing any of thesead campaigns, and they get that
phone call, right? And theperson's interested. And, you
know, and this is where you'reyou're surviving real estate
Island series was so good wastalking about how to handle that

(40:19):
call. And because I think that'sreally hard for folks, right,
you get that call and what doyou say? How do you, you know,
how do you move from a call of'Okay, I'm maybe interested in
selling' to like a close deal.

Mike Cantu (40:34):
Sean, every conversation is different. And I
want to get a few things out ofthe way real quick, one of the
first questions. Once we getpast the introduction and
shallow, meaningless chitchat, Ialways ask him, is there any
interest in the possibility ofselling that house? And I'm

(40:57):
always surprised when people sayno, not really, I just want to
see what you're up to and whatyou thought it might be worth
and blah, blah, blah. And let'sget to the point. Are you a
seller or not? Once we get pastthat, then I did, I would want
to ask some questions, paint apicture, I always ask people,
what would they like to seehappen in a picture for me, and
quite often, it's veryunrealistic. And if that's the

(41:19):
case, I usually ask them, what'syour second choice. And I try
and keep the conversation going.
I'm on a fact-finding mission.
And I rarely, rarely, cansomebody pry a number out of me
during our first phone call. AndI have several friends that
operate totally different thanthat, that they're throwing out

(41:41):
numbers within five minutes ofbeing on the phone, because
they're computer people. Andthey've got two screens that are
split screens, and they've gotall the valuation sites up and
driving the Google car past thehouse, and they see everything
going on, I don't operate likethat. I don't think that quick,
I just want all the info, Iassure them that I will do my
homework and get back with himeither this afternoon or

(42:02):
tomorrow morning. And if it's agood phone call, drop what I'm
doing, do the homework andconstruct and present an offer
to them. It all depends on howthe call goes. But that's the
important one, Nothing happenswithout the phone call. But the
phone call...

Sean O'Toole (42:19):
Point of that call, are you talking versus
listening?

Mike Cantu (42:23):
It all depends, Sean, sometimes I think I'll
start talking and I think wait aminute, I started talking and I
can't shut up. I wonder what Ijust said, and that. But it all
depends how the conversationstarts out. I add people just go
and go and go to war. I'm takinga couple of pages of notes. And
I think okay, I don't have anyquestions after that. They had a

(42:43):
whole monologue. And I've gotsome great notes out of it. So,
once again, I realized Sean,we're in the people business.
And first and foremost, I mean,I rent to people I sell to
people I buy from people. AndI'm constantly going back to the
people store for new people andwhatever needs to be done. That
it's a people business, firstand foremost. And then, of

(43:05):
course, everyone's different.
So, it all depends. It dependshow it starts out. I've led
people by the hand, I felt likeI was the student and they were
the teacher more than one. I'vehad some great deals where the
sellers did all the talking, ifone comes to mind was several
years ago, I had made a deal for80,000 cash on a house. And
Ramona was so excited about it.

(43:28):
I meet the seller there, he wasabout 85. And he was almost
seven feet tall, put his armaround me and we're walking
around the backyard and waistdeep grass. And he told me he
can't take 80 cash. And Ithought, okay, hear him out
before I get upset over it. Hesaid, I've got two sons, and
they'll just piss the moneyaway. Or he called them his

(43:49):
kids. And I said, How old areyour kids? He said, 58 and 62.
And he said, they'll just pissedthe money away. Here's what I
want. I'd like 10% down. And I'dlike you to make the monthly
payments for 10 years and addthem to where we ended up with a
great terms deal but no changein price.

Sean O'Toole (44:09):
And that was all his idea.

Mike Cantu (44:11):
It was all his idea after we had made a deal. And I
thought once again, I love realestate. So, I didn't say much in
that whole deal other than myinitial offering. He said sounds
good. Let's meet and see whatyou're getting yourself into.

Sean O'Toole (44:27):
That's great.

Aaron Norris (44:29):
Are you finding a lot of landlords these days
wanting to do those kinds ofcreative finance deals?

Mike Cantu (44:35):
It all depends on the circumstances, Aaron I
people tell me people don't doseller financing. I bought a
property four months ago that Ihad to clean up lanes and stuff.
The seller carried the balanceof zero interest for five years
and I thought I've got 60payments and that place is paid
for it to break even until then,but I just asked him would you

(44:57):
take $550 a month, so I'd paidin full? And he said,
Absolutely. How many years isthat come to? And I said, right
about five. And that once again,that was something I hadn't
planned on keeping. But Ithought with zero-interest
financing that falls into the,the tool category, that it's a
tool to get something paid off,I'm gonna hang on to it. It came

(45:20):
with a tenant. I thought, No,this isn't such a bad scenario.

Aaron Norris (45:24):
I like the way you phrased that to. You didn't
mention an interest rate, it wasa payment.

Mike Cantu (45:29):
Right. Absolutely.

Aaron Norris (45:31):
You're one of the most consistent people I know,
you're are you still doing thehour a day learning?

Mike Cantu (45:39):
Absolutely. Aaron, see, I tweaked my back good a
year ago, in March, and tookfive weeks of going to the
chiropractor, and acupuncture.
And I have a great book, it'scalled the better back book. And
I would look at it and swear, ifI ever got up, right, I would
exercise every day. And today isday number 289. without missing

(45:59):
a day, but that I break it up inthe morning, it takes about a
half an hour, and then theevenings, about an hour, all of
the evening stuff is on anexercise mat. It's stretching.
But what I do that I eitherlisten to a cassette tape, yes,
I have hundreds and hundreds ofthem in a cassette player for
I'm finding golden stuff that Ihadn't listened to in years, or

(46:21):
YouTube videos. And it's all intwo categories. It's either
personal development, build abetter mic, or adding to my real
estate toolbox. So, for 289days, I've had an hour plus of
education every day, and theystill read an hour a day. And
that's typically 20 to 30 pages.

(46:45):
I like to absorb what I read. Idon't skim much. So, absolutely.
And that keeps me fired up. See,I'm, you know, I'm a huge fan of
education I attribute to whereI'm at 100% because of the
education. And I ask people allthe time, do breakfast today,
did you eat lunch today? Well,of course I did. Ask them what

(47:08):
they ate. And I said, Okay, yougot your physical nutrition.
Tell me about your mentalnutrition. And our mind and our
body are two entirely differentthings. And why would you starve
your mind of nutrition and justfeed your body? That makes no
sense whatsoever? S,o no, youneed your mental nutrition every
day to keep you fired up. Andit's the alternative thought

(47:28):
processes that have made for avery interesting life that
you're not exposed to in school.
And you got to go searching forthat.

Sean O'Toole (47:37):
Let's follow that up with, are there any, any
favorites? Obviously your owndon't get voted off real estate
Island. And I want to ask you,if people can still get that and
if so where?

Mike Cantu (47:48):
Oh, absolutely. It said go to Mikecantu.com. I
claim to have the worst websiteon the internet. It was made
many years ago. And all that'sthere is my two courses. And
yes, I've always been amazedthat I still sell several
courses a month I've done zeroadvertising. It's all been word
of mouth. And I know Kim's got acouple of boxes of both courses.

(48:12):
And when they run low, sheorders up some new ones. But
they're still there. Now I dowant to make a comment

Sean O'Toole (48:18):
You still on cassette tape? Or you, you do
offer..

Mike Cantu (48:21):
No, it's on CD but Gary Johnston. He's been a fan
of those and he teaches and whenhe teaches he always sells my
stuff. Now I believe they putthem on an mp3 or on a stick or
something. Whatever thetechnology people use these
days. He has brought it into the21st century so, it's if your
order it, it's coming on CDs,Gary Johnston has the high tech

(48:45):
version of it. And I don't evenknow how to explain it.

Sean O'Toole (48:49):
Okay, so other things what, but you mentioned
you've got quite a few anyrecommendations for top
recommendations for real estateinvestors folks that want to be
Mike someday?

Mike Cantu (49:02):
It only. Yes. And I'm going to go off in different
categories. See Jack Miller wasmy hero. I learned more from
Jack over 25 years I used to flyall over the United States
wherever he was teaching, Iwould be there. And I would
typically get four to six, maybeseven of Jack's classes a year.
They were always differenttopics. I couldn't wait for a

(49:22):
schedule but Jack's been gone adozen years and it's hard to
find his stuff. I love JohnSchaub, out of Florida from th
landlording standpoint. I telpeople John's stuff is golden
That it's, it's a bargain anbuy everything that he sell
that he's kind of been likereal estate dad influencing m

(49:43):
in the rental game. I love BrucNorris' stuff. I've got a bi
section of my library of Bruce'stuff. I think I have everythin
the Norris group's ever pulleout and gone to just about ever
class I've ever done. I lovPete Fortunato out of Florida
I'm a creative problem solverthinking outside the box, I'v

(50:04):
learned a ton from Pete over thyears. And I'm still a Ro
LeGrand fan. He opened my eyeto I've known Ron old probabl
30 years now. And they didn'follow him for quite some time
he kind of went off in thcommercial arena. And but goin

(50:25):
back through his old stuff,realized No, this, this was par
of the basis of my businesmodel. I learned it from him
and I'm getting a kick out of rlistening to cassette tapes. Bu
I always wondered, every timedid a great deal, I thought i
was an anomaly. And this was thlast time and that I kep
getting lucky. And Legranchanged my attitude about that

(50:46):
that no, they're like buseshowing up at the bus stop. The
come every five minutes. Iyou're searching for it, I mean
seldom do we find what we're nolooking for. And you've got t
define the product that you wanand then go looking for it. An
I, I've searched for that foyears and talk back to som

(51:07):
marketing. I've always gonafter the what not the who, tha
had the what and finding outhat there was a pattern wit
the who are one of my marketincampaigns is going after the wh
not the what, if that makes ansense the person not th product

Sean O'Toole (51:24):
Yeah. No, that's... we think a lot about
that right? In terms of themessage and stuff, what the
message that works for oneperson won't work for the next
person. So, thinking about that,who part, makes it important for
sure.

Mike Cantu (51:37):
Yeah, yes. And as soon as you get the who on the
phone, the next job is to, isthis a property problem or a
people problem? It's usually oneof the two seldom is it both?
And so I try and find that well,what what are we out to solve
here? People problem, a propertyproblem?

Aaron Norris (51:51):
Do you have a favorite?

Sean O'Toole (51:52):
That's interesting. Give us a couple
examples of people problem in aproperty problem.

Mike Cantu (51:56):
Property problem, they don't have the money to fix
it. Let's use a probate for anexample, we got code
enforcement. And it's just amatter of time. It's a
deteriorating asset. That's aproperty problem a people
problem is when they've got adrug problem, a divorce problem.
It can be a whole long list ofpeople problems, that they're

(52:16):
not capable of continuingownership of the property.

Sean O'Toole (52:20):
Yeah. And you see that with landlords too, you get
landlords that are in thosesituations with th,e with the
you know, you think abouthomeowners getting themselves in
over the skis or whatever, butyou're focusing on landlords.
So, landlords are strugglingwith these, these people and
property problems as well.

Mike Cantu (52:38):
Absolutely, absolutely. And, you know, like
I said, Sean, 99.9% of what Ibuy is landlord, landlord
material. And they fall intothose two categories, people
problem or property problem. Thedeal I closed on yesterday, lady
had inherited it 10 years ago,lives nine hours away in
Northern California and hasnever seen the house.

Sean O'Toole (53:01):
Yeah.

Mike Cantu (53:01):
And just collect, she collected $1,000 a month
rent, which is about half ofwhat it should be.

Sean O'Toole (53:08):
Yeah. Interesting.

Mike Cantu (53:10):
Yep, she was behind on maintenance behind on taxes
just behind on everything. And Ithought this is turning into a
property problem for her.

Sean O'Toole (53:20):
Yeah. Yeah. And she probably you know, she
probably could use the $1,000 amonth but maybe didn't have the
money to come in and solve thisissues or the time.

Mike Cantu (53:31):
She's much much more excited over the slab of money
being wired to her accounttoday. That was a, that was life
changing money for her.
Absolutely.

Sean O'Toole (53:41):
Yeah. Awesome.

Aaron Norris (53:42):
Do you have a favorite people or property
problem?

Mike Cantu (53:48):
Yeah, good house in a good neighborhood for cheap.
And that doesn't doesn't matterwhat the problem is. We can work
it out. As long as they'rehappy, and I like it. So, that's
all good.

Aaron Norris (53:59):
Just like problems.

Mike Cantu (54:03):
Nobody, nobody's given away a house without some
kind of challenge and there havealways said nobody will give
away equity. They will trade itfor peace of mind. They will
trade it for a lot of things butthey just aren't going to hand
it to you and I still have yetto buy a perfect house and in a
neighborhood for 70 cents on thedollar minus repairs that that

(54:24):
has never happened in my world.
There's always something inthere that I've got to clean up.

Sean O'Toole (54:30):
Every guru though promises like you shouldn't even
consider it unless it's 70 centson the dollar after repairs. And
you know, and you should be ableto get those all day long.
Right?

Mike Cantu (54:42):
And Sean I still and 39 years haven't had the
gift-wrapped, half-price bargainset on my porch that would
qualify as a keeper house. Itjust the A neighborhood stuff I
bought it's been problemproperties that they've needed.
work. And a good deal usuallycomes with some hair on it. And

(55:03):
I learned a long time ago, myreal job title is chief problem
solver. Whether I'm in landlordmode, entrepreneur mode,
whatever mode I'm in, my job isto solve problems and make
decisions.

Sean O'Toole (55:18):
We, you know, we've helped 10s of 1000s of
investors over the years and wealways know are in trouble, like
when they've their first call onsupport is, well, I've looked at
10 properties, you know, or Isent direct mail to 100
properties, and I haven't beenable to find one that I can buy
for 70 cents on the dollar afterrepairs, and I don't think your

(55:39):
software is any good or I don'tthink your data. It's like, oh,
man!

Mike Cantu (55:45):
Sean, that boils down to belief I, If you think
you can, you're right. And ifyou think you can't, you're
right. And I've always been abumbling optimist. Life
continually beats me down intobecoming a realist, but it
bubbles right back up to whereI'm just I'm very optimistic and
always have been. So, I'mlooking for solutions on the
bright side of things. And Ihear it all the time. This

(56:08):
business is hard, I'mstruggling, I can't make a deal.
And I think that's a lot to dowith attitude. And what have you
done to build your real estatetoolbox up? And are you actively
pursuing your education toovercome this stuff?

Sean O'Toole (56:23):
So, I think we both know that right? 30% after
repairs isn't really realistic.
That's not the kind of deal thathappens out there. Like, for
somebody new coming into thisbusiness, you know, what, what
kind of realistic target shouldthey expect? Like what's,
hat's a good but doable dea? Like, what's the deal? The

(56:44):
e's so many really works har, they can do four, five, or ten
over a year.

Mike Cantu (56:49):
In Okay, now, Sean, when you say a deal, are you
looking to flip stuff, or you'relooking to keep stuff and those
two deals are going to bestructured differently? Now,
see, I'm in the equity bsiness. And I've always said I
m an equity purchaser, no euity, no deal. And there's a w
ole world of slim equity bsiness out there taking over g
od loans. There's a lot of pople that will pay a premium b

(57:13):
cause they can't get a bank lan, but they'll pay over m
rket with cash down payment to aexisting loan, if it can be s
ructured for them that way, bcause they don't have b
rrowing ability. I know more pople can't borrow bank money t
an can. So it all depends on wat you're out to accomplish. A
d once again, shout I'm still bying at 70 cents on the d

(57:33):
llar. The deal, I closed ysterday at $475,000 plus built
in 1977, that I paid $275,000for it, and it might need $30,
00 if it was empty. So that cetainly meets the 70 cents o

Sean O'Toole (57:49):
So they do you are finding them.

Mike Cantu (57:51):
Oh yeah. And the other one that I'm keeping I
almost embarrassed to say it'sslightly below 50 cents on the
dollar. And I thought I don'tneed to flip this that I play a
game every month, Sean and Iplay lots of games with myself.
Like, you're not allowed to getin the shower till you've done

(58:12):
your first half of exercise.
Rule number one and I wasstruggling this morning, but I
pulled it off. But I play lotsof games and I as a real estate
entrepreneur, I compete againstmy net rents. So I go to work
every month as a human beingtrying trying to out earn the
net rents that the housesproduce. Sometimes I do most of

(58:33):
the times I don't. But I look atwhat the inventory that I buy. I
mean, I'll everything ends up inone of two checkbooks at my
place. So all of the proceeds ofthe game ended up at home. But
more often than not, I don'tbeat my rents anymore I used to

(58:54):
but as the rents increased, it'sbecome harder and harder unless
I have a whopper month. Thatdoesn't happen. But still the
stuff I'm buying andwholesaling. My buyers have
strict criteria, and most ofthem are in the mid-70s, 75 cent
on the dollar minus repairs. Sif I'm going to make a wholesal
fee, I got to come in less thathat. And some of the junk tha

(59:14):
I buy Sean, I buy some of thjunk at 30, 40 cents on the d
llar. And I pass it on at 50 cets on the dollar, but you're go
ng to spend some money making it

Sean O'Toole (59:25):
Right. got real problems.

Mike Cantu (59:28):
Yeah. And I somebody people are out there looking for
a 20 grand net net net spreadafter everything. And it doesn't
matter if it's $100,000 house ora $300,000 house. I totally
disagree with that philosophy. Iwant the risk and reward to be
in line with each other. And ifI'm doing a $400,000 house, I
certainly want a bigger paydaythan the 100.

Aaron Norris (59:52):
Green. Well, we are at that time mark, we needed
to let you go but is thereanything you're really excited
about or opportunity you see in2021

Mike Cantu (01:00:00):
Yeah, I see, it's either going to be really good,
or it's going to be really bad.
You know where and I have nailedit 100% of the time on
predictions for the market, I'venever been wrong, not one time.
And I'm not going to be wrongthis time. Because the market
does one of three things, it'seither going to go up down or
stay the same. And that justnailed it. That's what's going

(01:00:21):
to happen. And you need togovern yourself accordingly. So
that all three scenarios workfor you. But I don't think the
stay the same parts going to bethere. I think we're either
going to have a great year, orwe're going to have a
challenging year. I don't thinkit's going to be middle of the
road. I'm optimistic about it.
But I'm also prepared for thedownside if that happens. But as

(01:00:43):
long as I can keep making deals,life's good.

Sean O'Toole (01:00:47):
That's awesome.

Aaron Norris (01:00:48):
Very good. I will make sure to post the links. I'm
going to look at Jerry, GaryJohnson's website to see if the
technology advanced version ofyour book is on one of those
sites. I know how to so I reallyappreciate your time. As always,
it's been great.

Mike Cantu (01:01:03):
I can't believe an hour went by we were just
getting started here. Today, Ithoroughly enjoyed it. It was
good talking to you, Aaron,you're looking good these days.
And Sean, likewise, we haven'tchatted in a while and really
enjoyed it you guys.

Sean O'Toole (01:01:20):
Thanks so much.

Aaron Norris (01:01:21):
Thank you for listening to the data driven
real estate podcast, you canfind show notes and links to
some of the resources mentionedin the show at
datadrivenrealestate.com. Clickthat join the community. And
you'll be forwarded to thePropertyRadar community where
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(01:01:41):
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