April 2, 2025 • 55 mins
Summary
This conversation explores the journey of real estate investment, focusing on strategies for refinancing, navigating market challenges, and the lessons learned from experience. The speaker shares personal anecdotes and insights that highlight the importance of understanding the market and developing effective investment strategies.
Takeaways
That 45 unit complex eventually became eight hundred thousand dollars in cash out and a refinance.
Refinancing can unlock significant cash flow.
Navigating market challenges is crucial for success.
Every investment teaches a valuable lesson.
Success in real estate requires a well-thought-out strategy.
Understanding the market is key to making informed decisions.
Investing is a journey, not a destination.
Cash flow is the lifeblood of real estate investments.
Experience shapes our investment strategies over time.
Learning from failures is essential for growth.
Chapters
00:00 Introduction to Real Estate Investing
02:56 Boris Sanchez's Journey into Real Estate
10:51 Understanding Property Valuation: Residential vs. Commercial
17:31 Starting in Residential: A Stepping Stone to Multifamily
21:55 The KISS Method: Keep Some, Sell Some, Scale
28:15 Navigating Market Challenges and Business Resilience
30:36 Impact of Rising Costs on Real Estate
32:05 Challenges in Syndication and Market Dynamics
35:53 The Risks of Syndication Investments
38:06 Strategies for Stabilizing Investments
39:44 Lessons Learned from Market Challenges
41:54 Mindset for Long-Term Success in Real Estate
44:47 Navigating Difficult Deals
48:38 Future Strategies and International Investments
51:02 Opportunities in the U.S. Multifamily Market
52:43 Educational Resources for Aspiring Investors
55:37 Outro
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Boris (00:01):
That 45 unit complex eventually became $800,000 in
cash out in a refinance. And soagain, I kept some, I kept that
one, and I refinanced and I made$800,000 just tax free.
Intro (00:19):
Welcome to the Real Prop Pro podcast, where strategy,
innovation, and wealth convergeto redefine real estate
investing.
Ian (00:34):
Hello, and welcome to another episode of the RPP
podcast. I'm your host, IanDietler. My real estate journey
started back in 02/2016 righthere in Sacramento, California,
where I focused on fix andflips, joint ventures, and
managing rehab projects. I'vealso built strong connections by
(00:54):
networking at local and nationalREI events and learning from
some of the best investors inthe business. My goal with this
podcast is simple, to bring you,the listener, unfiltered
conversations with experiencedinvestors who have been through
the highs and lows of realestate investing.
Whether you're just gettingstarted or trying to scale your
(01:15):
business, this show is all abouthelping you level up. What is
RPP? RPP stands for Real PropPro, and our mission is to help
people break into real estateinvesting through education,
training, and easy to usestrategies. While we have a
strong focus on tax deed and taxlien investing, especially with
(01:36):
our software, We also teachwholesaling, lease options, sub
two, seller financing, wraps,fix and flipping, and so much
more. For those looking to goeven deeper, we even offer an
advanced training on ourfounder's unique strategy for
select students.
The goal is simple, give youtools to build long term wealth
(01:58):
in real estate. And if you wannalearn more, please visit
realproppro.com. Our guest todayis none other than Boris
Sanchez. He is the founder ofSanmore Investments and is a
highly accomplished commercialreal estate investor, broker,
lender, and educator. Boris hasowned over 1,500 multifamily
(02:20):
units and is actively buying andselling commercial properties
every month.
With over thirteen years ofexperience, he's been involved
in over $1,000,000,000 incommercial real estate
transactions. His SanmoreInvestments team is on track to
acquire another $35,000,000 incommercial real estate over the
(02:41):
next year. Beyond investing,Boris is also a mentor, helping
both new investors break intomultifamily and experienced
investors scale their portfolio.Today, we'll dive into how he
got started, his unique KISSmethodology for multifamily
investing, how he survived thebrutal market shifts in Houston,
(03:03):
Texas, and what's next forSanmore Investments, including
his expansion into London.Boris, welcome to the show.
Boris (03:12):
Thank you, Ian. I appreciate it. Thank you for
having me.
Ian (03:14):
Yeah. I'm so happy to have you on here. We've known each
other for a little bit of timenow. We've met up a couple of
times virtually, got to talk alittle bit. And so just want to
kick off this talk with what gotwhat was what got you started in
real estate or what was yourfirst job even before that?
Boris (03:35):
Oh, man. Okay. So we're going way back. My first ever
business, I started when I wasseven years old. I guess I've
always kind of been a littleentrepreneurial.
And yeah, it started early forme, you know, and that business
is actually a food deliverybusiness within my own school in
Columbia, South America.
Ian (03:56):
Can you talk a little bit about your journey through
college and then your earlycareer leading up to getting
started in real estate investingin multifamily?
Boris (04:05):
Absolutely. So, you know, obviously since that first
business I've owned a myriad ofbusinesses, you know, through my
high school, through my college,even through my master's degree.
I've been a car dealer. I had acar dealership. I had a a
consultant business.
(04:26):
I had an ecommerce business. Iwas drop shipping and shipping
products all across the world.And, yeah, I landed in real
estate because of my family.They had a real estate company.
Started with my mom in February.
I didn't really like real estateat that point. It took me a
(04:48):
while to join, and I guess beconvinced. I joined in 2011
after my master's degree, afterI got home from from London
where I got my master's degree.And I started as a loan officer
at that point. And I startedhouse flipping, you know, just
like pretty much everyone elsethat starts.
And then I was tired of it.Honestly, it was not my thing. I
(05:12):
saw a lot of drawbacks, lot ofpatients that I didn't have. It
is very limiting when it comesto options. I can go into detail
if you want on that, but allthat led me to eventually start
on commercial.
And the way I really noticedcommercial was because all my
clients where they were flippingcommercial and I was getting the
(05:38):
loans for them. And I even sawwhere I was getting financing
for transactional wholesalers,which means that they would buy
something at a certain price,sell it right away, and then
make millions. And so I wasnoticing that I was on the wrong
side of the table on that one.And so I started with the first
(06:00):
one, bought my first complex. Itwas an eight unit apartment
complex.
Ian (06:06):
Okay. Can you tell us a little bit more about that first
transaction, that firstmultifamily investment you made?
Boris (06:12):
Sure. So I bought that back in 2013 and I bought it for
140,000. It was nowhere fancy.It was a dilapidated kind of
crack house building. And reallywhat was attractive to my
lender, because lenders weren'treally used to commercial hard
money at that point, And so whatwas attractive is that there
(06:36):
were two fourplexes side byside.
And so I bought them both, and Ibought them for a hundred and
40,000 using hard money. Ireserved $60,000 in rehab and
immediately went to work aboutwe finished about six months
later and started filling themup and at at at a little above
(06:59):
market rate. Because what I sawis that our product was really
nice. It was brand new. We hadreally done a good job in the
rehab.
And so we started leasing themat $750 instead of the market
$6.50. Again, it's not the bestof markets. I know that's
really, really cheap. And it wasalso $20.13. And so, yeah, I
(07:22):
wanted to make a thousanddollars at the end of the day.
That was my goal. That was mycashflow goal. I wasn't really
intending on being rich off onedeal. I knew that I was starting
out, but I wanted to go tobasics. And so I said, look, if
I make a thousand dollars amonth off of this deal, it's
great.
And I was making that. I wasmaking more than that. So I was
(07:43):
doing really well. But then Idecided to refinance and get out
of the hard money loan. And soone of the things that you have
to do is get an appraisal.
So I got a bank, they approvedme, they went ahead and did an
appraisal. And lo and behold,keeping in mind that my cost is
$210,000 I brought $10,000 tobuy that deal. And so keeping in
(08:05):
mind the $2.10, the valuationactually came back at $472,000
and I was blown away. I said,you know, there's no way.
There's no way this thing isworth 472,000.
There's got to be somethingwrong here. I don't believe it.
And so I started reading moreinto the appraisal and what
makes it, you know, what makesit 472,000. Back when I started,
(08:29):
there wasn't really a lot ofpeople talking about commercial
valuation versus residentialvaluation. I I really think it
was just kind of two separateworlds at that point, and so I
was kind of breaking intosomething new.
And so, yeah, I discovered why.I, you know, discovered a cash
flow valuation method and themarket valuation method of of
commercial real estate, and itmade sense. But for me, I just
(08:51):
really wanted to test thewaters, so I put it for sale.
And I said, you know what?Alright.
So this thing is worth thatmuch. Let me just put it for
450,000 and see what happens.Well, lo and behold, two weeks
after I put it on for sale, Igot a full price offer, 450,000,
and the guy closed like a monthafter that. It was an amazing
(09:12):
deal. I ended up, you know,netting more than $250,000 in
profit if you include the rentsand stuff that I made.
And so, it was it was a great,great deal. And even for the
bank, the bank actually thatrefinanced me took the guy's
finance. They they they actuallygave me the money for the gave
him the money for the purchase.And and so it was a win win all
(09:34):
around. It was a it was a greateye opening experience.
It for sure let me see the lightwhen it comes to investing. I've
never made so much money in mylife. Obviously, it changed my
life.
Ian (09:49):
From what I just heard, it sounds like you invested $10,000
of your own money and walkedaway with almost $300,000 What
kind of timeline was that? Howlong of a time had passed from
when you purchased it to whenyou sold it?
Boris (10:05):
It was one year from when I purchased it to when I sold
it. And, you know, doing, youknow, going through the whole
motions of rehabbing, upleasing, you know,
stabilization, putting it on themarket, all that stuff. And then
obviously finally closing. So itwas about a year.
Ian (10:24):
Something that you mentioned, think that'd be
really good for listeners,especially beginning listeners
or people that are in theresidential space as opposed to
the commercial apartment space.Can you talk about what you had
mentioned as far as theevaluation of what a single
family home is worth and howthat's determined as compared to
(10:45):
how a multifamily building orapartments are valued? Can you
talk a little bit about thedifference?
Boris (10:54):
Absolutely. So I would say knowing what I know now,
residential valuations is verylimited. They're very limited
and there's not a lot you can doabout it. And what I mean by
that is that it only matterswhat your neighbor has sold for,
or when you're doing a flip whenwhat those houses' neighbors
(11:15):
have sold for. It's verysubjective.
If if somebody decides to firesell their property at a
discount because they wannaleave and go somewhere else, or
maybe they're facing some kindof hardship, that's going to
directly affect the valuation ofyour property. And so everybody
knows that you take six compsaround the same subdivision or
(11:38):
in a limited proximity to thatproperty, and you take the sale
comps over the last year or so.And so it has a problem because
obviously if you want to rentit, that's not included.
Whatever you're renting it for,no matter if you say you take a
$300,000 house, which I know inCalifornia doesn't exist, but
(11:59):
even in Texas, I know it does.And in you take 300,000 of a
house and you fill it up with,you know, with a tenant paying
$30,000 a month, it's still atthe end of the day, a $300,000
house that, you know, incomeSorry,
Ian (12:15):
$3,000 a month, right?
Boris (12:17):
Well, no, even if you rent it at 300, I'm sorry, at
$30,000 a month, it's stillgonna be a $300,000 house. You
see what I mean? That thatvaluation doesn't matter. Mhmm.
You know, whatever income thatyou're making is great for you
because you're making $30,000 amonth.
What I'm saying is that thatvaluation doesn't matter. Even
(12:38):
in the rise of Airbnb and shortterm rentals, it doesn't matter.
It's still very much a just compkind of business kind of
valuation, of appraisal. And sothat's what I really like about
commercial is that in commercialyou have both types of
(13:00):
valuations. You take intoaccount what the property is
making.
It's like a business, really. Ifit's like a steakhouse, the
steakhouse has to sell so manysteaks a day in order to be
valued at something, right? Samething here. That's what people
don't or fail to see issometimes that commercial really
is a business that you buy andsell. Well, a home is more of a
(13:21):
homestead for people, even ifyou're renting it out and making
money.
Even if you're renting it day byday with Airbnb. And so that's
something that is very limitingwhen it comes to investments
because you don't have directcontrol of what that home's
value is. And you just havecontrol over your own
(13:42):
investment, but you should be,you should be able to, the homes
should be valued for cash valueif they're rented, but that
just, that's just not acceptedin this grand scheme of things.
Ian (13:55):
So can you explain to the listeners how the value of a
commercial property as far aslike apartment complex or
something, how do appraisersactually figure out the value of
those properties?
Boris (14:11):
And so there there's two types of value or really three
if you wanna considerreplacement costs. So
replacement cost is the onethat, you know, you basically,
what would it cost to buildbrand new? And that's what it's
valued for at least in in thatthird type of valuation. The
first type really is marketvalue, which you take
comparables much likeresidential, but you take them
(14:33):
in the same class. So in mostareas, obviously, you're not
going to have the same kind ofbuildings right next to each
other or in the same subdivisionunlike homes.
So you take what we callclasses. The class system is a
way to kind of qualify aproperty based on the age, based
on the neighborhood that it'sin, and based on the location
(14:57):
and the shape of it. And so wehave classes a, b, c, and d. A
being the very best and d beingpretty much destroyed because
that's kind of what I of like torefer to. Class C and Class D
are areas, kind of blue collarareas, properties built older
(15:19):
than 1990, you find a lot ofvalue add in those kind of
properties.
And so you have to compare aclass C to another class C,
right? And so that's why thecomps actually, guess, they
don't really matter as far asproximity goes. It really
(15:39):
matters more as to what kind ofclass they're in. And so market
value and comparables are stillconsidered in commercial, but
that's just one type of value,the market value. The other type
of value is obviously the cashflow value, wherein you take
into account the income, theoperating income minus the
operating expenses, and you comeup with something called the net
(16:02):
operating income, the NOI.
You compare that to a cap rate,is the cap rate, it is a ratio
which really tells folks howmuch a property would be making
if it was paid cash. Okay. Andso not to confuse a lot of folks
out there, and I don't want toget too technical because I
(16:23):
don't want to confuse folks. Butyes, it is a benchmark in which
you compare property to propertybased on how much return that
property is making at thecurrent moment. So it's more of
a sales tool than anything else.
And so that cap rate divided bythe NOI will give you the value
of the property. And so as youcan probably infer, you can
(16:46):
increase the income of theproperty, lower the expenses,
and then you would increase theNOI, which then would directly
affect the valuation of theproperty upwards. That's called
forced appreciation by the way.
Ian (17:01):
Yeah. And hopefully we can talk a little bit about that
because I know that's somethingyou're really passionate about.
Okay. Well, kinda moving on to,like, a kind of a new subject.
Thank you for bringing that up.
I think it's really important toknow the difference between how
to value a single family home ascompared to a multi family home
(17:23):
so thank you for explaining thatto our listeners. A lot of new
investors wonder if they can gostraight into multi family or if
they should start with singlefamily homes first? What's your
take on that?
Boris (17:35):
That is a very good question and one that I get
asked a lot. And so my favoritething to say is you should start
in residential. People usuallygasp when I say that. But Boris,
why aren't you so so againstresidential? Why why would you
start there?
Well, the thing that people needmost is education and a lot of
(17:57):
self learning. You have to learnabout what kind of manager you
are, what kind of projectmanager, what kind of investor
and what kind of landlord youare. And so, all these things
you're going to be learning fromthe experience of construction
and project management, right?Not to mention obviously tenancy
and landlording. But what I meanby that is you should start in a
(18:21):
home and kind of trying to puttogether the labor, the
materials, the vision of thishouse, maybe do a couple of flip
homes first and see how it goes.
You know, most likely you're notgonna make any serious money
from it. You're probably goingto lose some, you know, and
that's okay because you learn alot about, like I said, yourself
(18:42):
and your crew and what kind ofproject you want to run.
Commercial properties areobviously in nature way more
costly. They're bigger projectsand they have the potential to
completely wipe out peoplefinancially. And I have seen it
time and time again, especiallyin those last two years.
(19:04):
And so you really want to payattention to all that and make
sure that you're not going intoa marathon not knowing how to
run. You know? If you gottaknow, you gotta know how to walk
first before you can run, andthen you can run marathon. You
know? And so you got to justtake it easy.
Be patient with yourself. Iwould say do a lot of classroom
(19:26):
learning if you can, orpartnering up with somebody
that's more experienced, andthen taking on a construction
project and then taking onsomething small and multifamily.
What a lot of people fail to dois actually they miss a very
important step and that isowning their own multifamily
properties. A lot of folks, theygo directly from flipping
(19:48):
straight into syndication. Youknow, they go straight into, all
right, here, I got $25,000 50thousand dollars Now I'm going
to put it with somebody thatknows what they're doing.
That is not what you should do.What you should do is experience
what it's like to own apartmentcomplexes and commercial real
estate. You know, I'm not justtalking apartment complexes. It
can be a retail building. Itcould be, you know, a shopping
(20:11):
center.
It could be a small officebuilding. It could be a self
storage building, which I alsohave experience in. And so you
have to make sure that you knowwhat it's like before you can
trust and put your money withother people that, and ask the
important questions. You know,like what, you know, what, what
are you going to do with this?What's your, what's your opinion
(20:31):
about this and that and fees?
And are you going to do this andthat to the property? You should
ask this of your syndicatorbefore you invest your money
passively. You should be anactive investor. And that's not
talked about enough in thisbusiness. I'm a fanatic of
owning your own properties.
They've changed my life, likeI've said in the past. From my
(20:53):
first deal on to my biggestdeal, they've all made really,
really good money. And so whywhy would I need to put my money
into some with somebody else? Ibelieve anybody and everyone
should be able to do it on theirown, even full time employees,
which my clients are, mystudents. And so everyone says
they want or has the excuse oflike, I don't have enough time.
(21:13):
But if I tell you that that timehas the potential to completely
change you and your family'slives, you're probably going to
dedicate more time to it. Right?And so it is very important to
learn and to take the steps thatneed it and to actually go
through the pains. It's not allall roses and rainbows. There's
going to be some pain, somestress.
(21:34):
But at the end of the of it all,come out, you know, wealthier,
come out more experienced, moreknowledgeable, and ready to take
on another project.
Ian (21:43):
You've I've heard you talk in the past about the KISS
method. Keep some and sell some.Can you break that down and can
you explain to the listenerswhat the strategy looks like in
practice?
Boris (21:55):
Sure. So a lot of folks are knowledgeable and they know
about the BRRR method, the BRRRmethod, the buy, renovate, rent,
refinance, repeat method. Andthat's one strategy within real
estate. When I mentioned that,there's different strategies
within real estate. And I thinkthat is a flawed one, and I
(22:19):
think that one is very limiting,much in the way that residential
is limiting.
I think a lot of gurus like toteach limiting things instead of
options. Any good investment,any good investor should have
options available to them. Andso one of the great ways to do
so is to know that there areoptions for you. And in
(22:41):
commercial real estate and inresidential real estate,
obviously, you have options. Andso I invented my own strategy
called the KISS method, K S S S.
S's, K S S S. Keep some, sellsome, scale. Is that I guess
that's five S's. Yeah. Keepsome, sell some, scale.
And that's because you do wantto keep some. As I have said in
(23:08):
the past, cash flow is verygood. Another podcast I've done,
I would say cash flow is verygood to maintain your wealth.
You want to make sure thatyou're keeping some and for tax
reasons as well. You know, youwant to make sure to depreciate
these things and be able to getrid of your capital gains taxes,
you know, other wins that you'vehad throughout the year.
(23:29):
And that's when you sell, yousell some, you're going to have
some capital gains that you canoffset by the depreciation of
the ones that you're keeping. Sokeep some, sell some. So with
cashflow, you're going to wantto keep some and for
appreciation and forcedappreciation, you're going to
want to sell some in order tobuild wealth. So forced
appreciation is a wealthbuilder, cash flow is a wealth
(23:51):
maintainer. And you just don'twant to maintain your current
level of wealth, you want tobuild it.
So that's why you have to sellsome. But again, you have the
taxes in mind, that's why youhave to keep some. Keep some,
sell some, and you scale. Sowith the money that you're
making from you selling, allyour properties, you're going to
want to put into larger andlarger properties to experience
(24:12):
economies of scale. Right?
You're going to want to keepthem in larger and larger
complexes, Or if you're juststicking to residential real
estate, then at least you caninvest in a portfolio or
something like that, a portfolioof properties where you can
manage them closely. So youdefinitely wanna scale. You
don't wanna stay on the samekind of bracket. You always want
(24:35):
to make sure to move up. And Isee no better way than selling
property.
And yeah, some people kind ofget scared by that because of
the taxes. But again, if you'remeeting with your CPA and you
have a strategy to kind of beat,you know, the capital gains, and
you're gonna be that better forit.
Ian (24:57):
Can you kind of talk a little bit more about that in
regards to how it helps buildthat long term wealth. How is
the KISS method building longterm wealth?
Boris (25:13):
So the KISS method obviously is a lot like what
I've experienced throughout mycareer. You know, I bought one.
I sold it. Like that thatexample that I gave in the past
about my first deal, I sold it.And I didn't blow the $250,000
that I made from that deal.
Obviously, I I got rid of somedebt, but I started buying more
(25:37):
property from it. And I startedlearning about what it is that I
did right, what I did wrong. Iended up buying two more deals,
one eight unit complex and oneseven unit complex. And so I did
the same in both of those. Butthen I noticed that I was
actually headed to a big taxbill, to a big tax bill.
(26:00):
So I went and I started keepingsome as well. So my eight unit,
think that one netted me like$200,000 The seven unit, it
netted me around the same,dollars 175,000. So I bought
more property with that. Withthe eight units profit, I even
(26:22):
bought a 45 unit complex. So Iwas experiencing scale.
That 45 unit complex eventuallybecame $800,000 in cash out in a
refinance. And so again, I keptsome, I kept that one and I
refinanced and I made $800,000just tax free, completely by
(26:44):
refinancing and cashing outwhile I was also selling other
property at the same time. So,you know, again, experiencing
that keep some, sell some, butstill scaling up. And a good way
to test yourself to see if youreally wanna scale is if you ask
listeners, if you bought andsold property and made quarter
(27:06):
of a million dollars, what wouldyou spend that on? Would you a
lot of people will say, well,I'll buy myself a house, a car,
great.
Great. But then what have youdone? Not really. Not really.
Well, you you you invested in ahouse, and you could possibly
maybe cash out of that.
But at the end of the day, it'syour house, and you've spent it
on stuff. You should take abouta quarter of that, invest it.
(27:30):
I'm sorry. You should pick aquarter of that, spend it on
yourself, and spend it on debtand everything. And the rest of
that, 75%, you should reinvestit and scale.
You know? Should scale up andmake wealth. What you're after
is generational wealth, nottomorrow wealth. That's not
gonna last.
Ian (27:49):
Yeah. So it sounds like kind of holding, like, basically
the scaling aspect of it andholding more and more units is
how you're going to build thatlong term wealth. Correct?
Boris (28:00):
Right. Yeah, exactly. So you're going to want to hold on
to raise the value, forceappreciate, know, fight taxes,
and then on the other side,you're going want to sell in
order to scale up and toobviously make wealth.
Ian (28:15):
That's a great strategy. I always love hearing you talk
about that. So inspiring. Thankyou. Last we spoke in November
of twenty twenty four, you werevery open about some of the
challenges you've been facing atthat time.
Can you kind of talk to thelisteners about what you were
going through and what yourbusiness was experiencing?
Boris (28:37):
Well, I mean, know, just like everything, our business is
very held to the market. So whenyou have no buyers and no nobody
lending, you know, it's it'stough to sell property. And so
we ended up, you know, doingvery well because some of the
property we're holding had a lotof equity in it. And so while
(28:58):
all the other property were kindof brokering and reselling, was
not selling. And it was verydifficult to actually get deals
to actually buy because buyerswere still even very held onto
the highs of the 2021 and 2022.
They still wanted, you know, thevery top and we were buying down
(29:19):
here. And so that delta is theugliest thing I've ever
experienced in my financialcareer, I guess, because we were
still buying at the heightbefore COVID and deals were
being sold and traded in, andthen the economy was nice and
the rates were acceptable. Andthen COVID came, it was just
kind of a scare, but it reallywasn't because people were still
(29:42):
trading. But what happens duringthis nasty delta time where
buyers think that there's worthso much and sellers think it's
worth down here. I'm sorry.
Yeah. Buyers think it's theopposite. Buyers think it's not
worth much. Sellers think it'sworth a lot. You have an ugly
(30:02):
delta, whether it's not really abuyer's market.
It's it's or a seller's market.It's neither. You know? And so
it was difficult to get dealsunder under contract then, and
so we had to give really, reallygood deals on the stuff that we
already held in order to kind ofmake income and still be able to
(30:23):
float on by, you know. A lot ofbusinesses closed their doors.
A lot of commercial real estatebrokerages and other wholesale
shops, they closed their doors,and we were kind of proud to
just kind of coast along.
Ian (30:39):
Were the interest rates rising a factor and also was
insurance rates in your localmarket also a factor?
Boris (30:48):
Big time. Yeah, big time. So not only, yeah, the rates are
rising, you know, to somethinghorrible. So bank lending was
just out. It really kind of puta chokehold on the market itself
as well because then you hadthat widening of the delta that
(31:10):
I just spoke about.
But then insurance costs weregoing up because here in
Houston, we've experienced a lotof freezes, hurricanes,
tornadoes, derechoes,everything, as well as the rest
of the country. It just seemsthat it's been happening more
lately. And so insurance rateshave really gone through the
roof. I think a lot of carrierswent out of business as well.
And so, And also, also put inthe fact that property taxes
(31:38):
have been going up steadily aswell.
And even more than steadily,they've been multiplying in a
lot of cases. And so it reallyputs a lot of choke on the
business of commercial realestate. And so we experienced
that. But again, I think, youknow, if you navigate it and you
know enough and you kind of givegood deals to people and buyers,
the few buyers that are left,then then, you know, that made
(32:01):
us that made us a really goodbrokerage, know, that are a very
good investment house.
Ian (32:06):
The next question is, know that you don't really do as much
or maybe not any syndication,but I feel like you have a
pretty good finger on the pulseas far as syndications and
what's working and what's not.Can you talk a little bit about
how these changes over the lastcouple of years really got a lot
(32:28):
of syndicators in trouble?
Boris (32:33):
Syndication, for those that don't know, are is when you
crowdfund and you put togetherdeals as a group. Right? It is
an SEC kind of a guided securitybecause at the end of the day,
you're offering to make money onyour money as a group that's
called security. And so it'sheld by the SEC and regulated by
(32:58):
them. And so what ended uphappening right before COVID was
that a lot of deals were beingput together by folks just
wanting to squeeze an extraounce of value from all these
properties.
They wanted from one group thatdidn't charge parking fees, and
(33:20):
the next group wants to chargeparking fees, and they want to
charge pet fees, and they wantto nickel and dime folks. And
because of the effects Iexplained previously, because of
forced appreciation, they wantedto experience that as well. They
want to kind of squeeze all thevalue they could out of a lemon,
out of a property. Andeventually it's going to implode
(33:42):
because there's only so muchvalue that you can squeeze
before something has to give,either the market, either people
are not buying, eithersomething's got to happen. And
so I really believe it was abubble that's not spoken about
enough where folks, it was justso easy to put deals together
and money together, actuallyeven before and after COVID,
(34:06):
before this kind of like periodof downturn that we just went
through, it really was easy toraise money and charge fees for
it and charge finders fees andall kinds of fees to the group
that was investing in a certainproperty.
(34:27):
And so, you had a lot ofinvestments go down. A lot of
folks that didn't get paid,didn't get their investment
back, and the property went toforeclosure or went down or, you
know, or or closed. And I feelreally bad for those people
because they believed in thebest. But also, that's another
reason why I believe in activeownership of your own
(34:50):
properties, because you havemore of a hold on what, you
know, your own money is doing.Not to mention that you're
buying a property.
At the end of it all, thatproperty is going to be worth
something, whether it's got zerotenants or full of tenants. And
so it is something that I still,I'm a critic of syndications. I
(35:14):
really think a lot of folks areirresponsible, even though they,
you know, they swear thatthey're not. And at the same
time, I really do see that thereare a lot of folks out there
that are supremely goodinvestors doing syndications And
and, you know, and this is notabout them. They're they're
doing well now.
I've got some really closefriends that are doing that. And
(35:35):
I've, you know, ever since thestart, I wish them well. I just
don't believe in the fact thatfolks should invest their money
and put, put it together with agroup where they can be doing
it, themselves and making manymore times what their return
was, that they were offered.
Ian (35:53):
Yeah. So if you could elaborate a little bit or just I
kind of had a question you weretalking about. Sometimes people
would put in their money in oneof these syndications and
sometimes they would go south.Have you ever heard of someone
putting money into a syndicationand just losing that entire
(36:13):
investment? Or how does thatwork when the syndication fails?
Boris (36:18):
Yes. I have lots of people. Lots of people have, you
know, they've lost their moneyand there's not a lot you could
do for it because at the end ofthe day, you knew what the risks
were or you supposedly knew.And, you know, these guys, for
one reason or another, they thesyndicators, the general
(36:40):
partners, they did all theycould. You know?
I'm not saying some of them didit, like, fraudulently. I'm sure
that happens at some point, butI am sure that a of them did not
intend on fraud. But at the samelevel, either way, the folks
(37:01):
lost their money because ofsomething that happened. You
know, rates went through theroof and maybe they couldn't get
a loan fast enough to bridge thegap. Maybe their occupancy went
really south and they couldn'tmaintain the property afloat.
(37:21):
And so they just you know, theywent through foreclosure and
folks just lose all their money.It's this is really what
happens. There's there's nothingreally that happens afterwards
just saying too bad, so sad. Itdepends on what the syndicator
chooses to do at that point, Iguess. Like, hey.
Well, let me, you know, pitchyou something else that, you
know, in a in a, you know, in abetter position that that can
(37:43):
make it up for the last one. I'mnot sure. I guess there were
some of that. But again, I don'treally mess with that because
it's just the same kind ofproblems over and over. You
know?
The market is the market. It'sgonna go up and down sideways.
And so I believe the only kindof better control that you can
(38:03):
have is owning your ownproperty.
Ian (38:06):
What were some of the key moves that you made or your
company made to stabilize theportfolio?
Boris (38:16):
Once we saw the costs rising, like insurance and
taxes, we obviously shoppedthose around, well shopped
insurance around. We did what wecould on taxes, protesting taxes
and devaluation with the county.But we started resorting to
other programs such as Sectioneight, and we started selling
(38:37):
other property that still hadpretty good equity in it. And
so, yeah, we launched all thetools available at our disposal
in order to kind of stay afloatand make sure that we don't go
the same direction that someother folks went.
Ian (38:51):
And what lessons did you take away from that experience?
Boris (38:55):
I mean, I was glad that I was kind of self taught that I
went through the pains ofteaching myself and that I went
through the pains of learningthe hard way what it takes to
own property. I was glad that Ikept property that had a lot of
(39:15):
equity into it because that mademe millions, in a down market.
And so, yeah, was glad and alsotaught me that I don't know
everything. And even though Ilove to teach real estate and
teach real estate investments,I'm always a student of the
market and the market has a wayto surprise you always. And so
(39:37):
I'm constantly learning.
I'm always evaluating andlearning from others and
learning from my own mistakes.
Ian (39:44):
And you had mentioned earlier that you're doing some
storage unit investments. Whendid that start and and how's
that going for you?
Boris (39:53):
Yeah, it went really well. I just sold my property
that I just had. It was twofifty two units, but it was
really nice. I bought it for$1,100,000 back in 2022, August
of '20 '20 '2. And it had extratwo acres.
It had extra three acresactually. And with one acre, we
kind of expanded the parking lotand made outside, you know,
(40:16):
uncovered storage, which ismostly, well, more than likely
like a parking spot really forpeople. So we've made units like
that. We expanded theoperations. We went completely
with no personnel.
So everything was virtual. Folkswere able to rent their own unit
that way. And it was reallywell. I just sold it for one
(40:38):
point I'm sorry, dollars2,000,000. 2 million dollars
flat.
And so it was a greatexperience. Something that I put
into the property probably lessthan a hundred thousand dollars
total. You know, painting extra,you know, parking lot, which is
made out of what's calledTruGrid, which is like a plastic
(41:00):
slash pebble parking lot. And soI yeah. It was it was a really
good experience.
It's profitable. You know, wentthrough the pain of getting
everything converted fromjournals, like written down
journals to full fledged AI typemanagement. That was a pain.
(41:23):
Trust me, it was not easy. Butat the end of the day, it was
very profitable.
Ian (41:30):
Yeah, it's incredible to see how some people run their
businesses. Like you said, youknow, handwritten journals, the
receipts that have the twodifferent color papers so they
can rip it off and give them,you know, the other yellow and
pink paper and stuff like that.Just crazy what how some people
are running their businesses. Soif if we could take a little bit
(41:55):
of time, can you talk a littlebit about the mindset that's
involved in you know being asuccessful real estate investor
and what's involved in like whatare important things for
listeners to know aboutovercoming some failures, right?
I feel like a lot of investorsget into the real estate game,
(42:17):
they try it out, maybe somethinghappens and then they throw up
their arms and they say it doesthis real estate investing stuff
doesn't work.
So can you talk a little bitabout the mindset and what's
required to be, you know, a realestate investor long term?
Boris (42:35):
Absolutely. Me and my peers talk about this all the
time. Other guys that kinda dothe same thing that I do. It it
it is something that is not forthe faint of heart. Making the
money is great, and that's thebest part.
Right? That's the reward. Butthe risk, the stress, the work
behind it is can be toil can cantake a toil on your mind and
(43:00):
your family if you let it getout of control. I believe you
have to always have the winner'smentality, the winner's mindset,
the end goal in mind. You haveto be prepared to plan for the
worst, always.
I hate to be a pessimist, but Ilove to plan. You know what I
(43:22):
mean? I love to plan for theworst that is. And so, because
that has a tendency to alwayspleasantly surprise you. So I
kind of, well, I want to tell,you know, folks, basically, you
know, it's not all roses andrainbows.
There are going to be times thatyou're going to want to quit and
(43:44):
you're going to want to justsell everything, that you're
going to be just tired ofeverything and everybody. And it
is like life. You know? Life islike that in a lot of ways,
except this was really thiswould really test you. And so
you're not counting on thesalary.
You're not counting on thatmonthly cash flow rental check.
(44:06):
Sometimes it doesn't come. Whatare you gonna do? What are you
gonna do about it? What youknow, what how are you planning
to be prepared for that?
And how's your mindset going tobe prepared for that? Right?
That that says a lot about whatthe next steps are. If you're
not in the right mindset, you'renot going to have the right mind
(44:27):
to plan down the road and beprepared to deal with the
punches. You know?
Because sometimes you do have totake the punches. You you know?
Sometimes you can't avoid them.You know? And and it is all
about knowing that those arecoming and and knowing how to
how you're going to react.
Ian (44:47):
Can you talk about a deal, in your experience, that went
south and and kinda how you wereable to either get things back
on track or, you know, walkaway? Can you talk about one of
the worst deals you've had todeal with?
Boris (45:03):
Sure. So there is one deal in particular that I I
always like to tell my studentsand that's property here at 3801
Brewster Street in Houston. Itwas a 12 unit apartment complex,
and it completely tested me inevery single way. I got screwed
(45:26):
over by several differentcontractors, both small and big
contractors. I had gotten brokeninto that property several times
and stolen all the materials.
We found cash registers in theground full of cash, which isn't
a good thing, believe me,because the police are going to
(45:47):
shut you down for a while. Andnot to mention there was a
flood, there was a fire with noinsurance. And so I lived the
whole market, the whole projectof bad news cycle in this
project alone. As it were overthe span of like eight months,
(46:11):
there were just bad news afterbad news. Honestly, it got to
the point where there was justyou know, I was expecting the
bad news, and it was so such alike a nightmare project that my
friends even, they hated hearingabout it so much that they
actually literally hired apriest to come bless the place.
(46:33):
And, you know, that sprayedkinda holy water everywhere
because it was just, you know,it was just a nightmare. And and
the funny thing is right afterthat happened, you know, we
found a unique way to actuallyget back on track. We had bought
this property around $350,000and the original budget was to
(46:56):
spend another $250,000renovating it. But because of
all the things I just mentioned,our budget ballooned to like
over a million dollars. And sobecause of my knowledge, because
I knew that the only way to savethis project from really going
off the rails was to actuallywhole lease it to somebody else
(47:19):
in a triple net basis.
So somebody else takes on theexpenses. It's called a master
lease. And we found that exactclient that wanted to lease it
that way, and it was a clinicfor sober living. So where folks
go to kind of get sober fromdrugs and alcohol, and that was
(47:41):
the tenant. They actually leasedout all 12 units.
And because we had nothing butincome and no expenses, our
valuation ballooned to over$1,200,000 and thereby saving
the projects and making surethat I learned a very valuable
lesson, which was commercialreal estate has a funny way to
(48:04):
actually save you, you know,even at the worst times, if you
know what you're doing, if youdon't know what you're doing, it
has a power to wipe you off.
Ian (48:12):
Did you already know about the master lease or is that
something that you learned aboutto kind of save the project?
Boris (48:19):
I knew about it from the standpoint that I knew, you
know, from going back to basics,if I, if I lease it out and have
another bad income and noexpenses, that's going to
balloon the valuation. Right?And that's that's exactly what
we deployed in this case inorder to save the project.
Ian (48:39):
If we could shift gears a little bit. Last time we spoke,
you were talking about maybechanging the strategy or
changing the market. So what'sthe strategy for growing sand
more internationally?
Boris (48:54):
Man. That's a really good question. So we have noticed
there is a a need for a realestate software that's next
generation. And so we're heavilyinvesting into that right now. I
can't say a lot about it rightnow, but let's say that our
(49:15):
Sandbox future is software.
Wow.
Ian (49:20):
Okay. I thought we were gonna talk a little bit about
investing in London, but thatwas a secret, a little secret I
wasn't expecting to hear from.
Boris (49:30):
Yeah, exactly. Yeah. Well, you know, I'm always going
be a real estate investor, aninvestor and a entrepreneur
nonetheless, like I explained inthe beginning of the video. And
so, I'm always I'm enamored withreal estate. I love it.
But I wanna also be a I wannacontribute to it. And to
(49:56):
continue contribute to making itbetter as well as, you know,
invest into an asset that'scould potentially be worth
hundreds of millions of dollars.And so that's what we're
investing in, but you're notincorrect. The well, my future
for as far as I can see is Iwill keep on investing in in
(50:17):
commercial real estate becauseit's been a big, you know,
wealth maker for me, and itwould be foolish for me to
actually let this go and just gointo something else. And so in
some ways, shape or form, I'malways investing.
And yes, I am investing in TheUK, in London. I have several
properties there with a partnerof mine. I really see that
(50:39):
market as a big opportunity anda very, very attractive market
for tenants. And so, yeah,obviously, it's it's great for
diversification as well, whichI'm heavily a fan of. So, yeah,
we're we're gonna keep oninvesting both here and in The
UK and investing in severalthings and and just kinda see
(51:00):
what happens.
Ian (51:01):
As far as The US market, what do you see as the biggest
opportunities for multifamily inthe next five to ten years?
Boris (51:10):
Really think that's a great question, by the way. I
really think that folks who areprepared to own property and
have educated themselves to, youknow, be really good real estate
investors. There is a hugemarket out there, especially
(51:33):
right now to invest at thiscurrent moment. Prices are
cheap. Property is cheap rightnow.
If in 2019 or 2022, werescratching your head, why you
missed out, you're missing outright now. So there is a giant
opportunity right now for folkswho wanna get in and invest
(51:53):
either on their first home or ontheir first apartment complex or
just a multiple of both. Andbecause prices have been cheap.
Like, I think that's last time Isaw these prices. They it was
back in 2014 when I firststarted.
You know? Twenty thirteen, '20'14. And so when they say, oh,
(52:17):
man, I missed the boat. No. Youdidn't.
You were just were not preparedfor when it comes around. And if
you're not prepared right now tolook at deals and to start
buying, I would get get therequick. Get that education you
need. Learn how to run beforeyou can, you know, before you
can run a marathon. And then,you know, you can invest and
(52:38):
then you can, you know, buildyour wealth like you've always
wanted to do.
Ian (52:43):
Is there any way for people to get ahold of you or is there
any type of product or servicethat you wanna promote on the
show today?
Boris (52:50):
Absolutely. I'll plug my own commercial real estate
investment university. And sothat's called CREU, c r e u dot
online. That is a, like I said,commercial real estate
university where I've I'vefilmed over thirty hours of
content, and you can learn atyour own pace there. I break
(53:13):
down every single strategy thatI've ever learned, give several
different examples of, you know,stuff that I invested in, the
good, the bad, all the mistakesthat I've made.
I break down the contract, thevocabulary, terminology, and
like I said, strategy on how tohow to always make a kind of a a
winning case for a property.Creu.online, crew Online.
Ian (53:39):
Before we wrap up, let's talk about our free weekly book
giveaway. Each we were eachweek, we're gonna give away a
real estate, business, orinvesting book for free. So
here's how to enter. Just justlike this episode on however
you're listening to the podcastand comment below with the book
you'd like to receive. You havefive days after the air date to
(54:00):
enter, and one lucky winner willhave one of the books shipped
directly to their house.
So some of the ones we havethese are some of the ones we
have to give away. Boris, do youany of these sticking out to
you?
Boris (54:15):
Believe and Achieve. Oh, that's a great one. Yeah. Oh,
well, Rich Dad Poor Dad, ofcourse. Great.
Great ones. You have some reallygood
Ian (54:22):
rich dad, poor dad one and two. The second one is called
the cash flow quadrant.
Boris (54:27):
Cash flow quadrant.
Ian (54:28):
Got the 10 x rule. So so just so just comment on which
one you'd like to have and onelucky winner will send it
straight to your house. Onefinal thing is if today's
episode teaches you anything, isthat real estate is never a
straight path. Markets shift,deals go sideways, interest goes
(54:48):
up and down, insurance goes upand down, the economies change.
But the investors who adapt andpush through are the ones who
are going to come out strongeron the other side.
Boris has shared with us somebrutal challenges he's faced in
his company in the past coupleyears, but he didn't quit. He
adjusted. He found solutions,and he came back better than
(55:11):
before. So I hope some of thisstuff has helped the people here
today. And if they're sittingthere thinking, I don't know if
I should get into multifamily orthe markets are too tough right
now, just remember, there'snever a perfect time.
The only way to learn is to getinto the game. Thanks for tuning
(55:31):
in, and I'll see you on the nextepisode.
Boris (55:34):
Thank you.
Ian (55:35):
Thanks.
That 45 unit complex eventually became $800,000 in
cash out in a refinance. And soagain, I kept some, I kept that
one, and I refinanced and I made$800,000 just tax free.
Intro (00:19):
Welcome to the Real Prop Pro podcast, where strategy,
innovation, and wealth convergeto redefine real estate
investing.
Ian (00:34):
Hello, and welcome to another episode of the RPP
podcast. I'm your host, IanDietler. My real estate journey
started back in 02/2016 righthere in Sacramento, California,
where I focused on fix andflips, joint ventures, and
managing rehab projects. I'vealso built strong connections by
(00:54):
networking at local and nationalREI events and learning from
some of the best investors inthe business. My goal with this
podcast is simple, to bring you,the listener, unfiltered
conversations with experiencedinvestors who have been through
the highs and lows of realestate investing.
Whether you're just gettingstarted or trying to scale your
(01:15):
business, this show is all abouthelping you level up. What is
RPP? RPP stands for Real PropPro, and our mission is to help
people break into real estateinvesting through education,
training, and easy to usestrategies. While we have a
strong focus on tax deed and taxlien investing, especially with
(01:36):
our software, We also teachwholesaling, lease options, sub
two, seller financing, wraps,fix and flipping, and so much
more. For those looking to goeven deeper, we even offer an
advanced training on ourfounder's unique strategy for
select students.
The goal is simple, give youtools to build long term wealth
(01:58):
in real estate. And if you wannalearn more, please visit
realproppro.com. Our guest todayis none other than Boris
Sanchez. He is the founder ofSanmore Investments and is a
highly accomplished commercialreal estate investor, broker,
lender, and educator. Boris hasowned over 1,500 multifamily
(02:20):
units and is actively buying andselling commercial properties
every month.
With over thirteen years ofexperience, he's been involved
in over $1,000,000,000 incommercial real estate
transactions. His SanmoreInvestments team is on track to
acquire another $35,000,000 incommercial real estate over the
(02:41):
next year. Beyond investing,Boris is also a mentor, helping
both new investors break intomultifamily and experienced
investors scale their portfolio.Today, we'll dive into how he
got started, his unique KISSmethodology for multifamily
investing, how he survived thebrutal market shifts in Houston,
(03:03):
Texas, and what's next forSanmore Investments, including
his expansion into London.Boris, welcome to the show.
Boris (03:12):
Thank you, Ian. I appreciate it. Thank you for
having me.
Ian (03:14):
Yeah. I'm so happy to have you on here. We've known each
other for a little bit of timenow. We've met up a couple of
times virtually, got to talk alittle bit. And so just want to
kick off this talk with what gotwhat was what got you started in
real estate or what was yourfirst job even before that?
Boris (03:35):
Oh, man. Okay. So we're going way back. My first ever
business, I started when I wasseven years old. I guess I've
always kind of been a littleentrepreneurial.
And yeah, it started early forme, you know, and that business
is actually a food deliverybusiness within my own school in
Columbia, South America.
Ian (03:56):
Can you talk a little bit about your journey through
college and then your earlycareer leading up to getting
started in real estate investingin multifamily?
Boris (04:05):
Absolutely. So, you know, obviously since that first
business I've owned a myriad ofbusinesses, you know, through my
high school, through my college,even through my master's degree.
I've been a car dealer. I had acar dealership. I had a a
consultant business.
(04:26):
I had an ecommerce business. Iwas drop shipping and shipping
products all across the world.And, yeah, I landed in real
estate because of my family.They had a real estate company.
Started with my mom in February.
I didn't really like real estateat that point. It took me a
(04:48):
while to join, and I guess beconvinced. I joined in 2011
after my master's degree, afterI got home from from London
where I got my master's degree.And I started as a loan officer
at that point. And I startedhouse flipping, you know, just
like pretty much everyone elsethat starts.
And then I was tired of it.Honestly, it was not my thing. I
(05:12):
saw a lot of drawbacks, lot ofpatients that I didn't have. It
is very limiting when it comesto options. I can go into detail
if you want on that, but allthat led me to eventually start
on commercial.
And the way I really noticedcommercial was because all my
clients where they were flippingcommercial and I was getting the
(05:38):
loans for them. And I even sawwhere I was getting financing
for transactional wholesalers,which means that they would buy
something at a certain price,sell it right away, and then
make millions. And so I wasnoticing that I was on the wrong
side of the table on that one.And so I started with the first
(06:00):
one, bought my first complex. Itwas an eight unit apartment
complex.
Ian (06:06):
Okay. Can you tell us a little bit more about that first
transaction, that firstmultifamily investment you made?
Boris (06:12):
Sure. So I bought that back in 2013 and I bought it for
140,000. It was nowhere fancy.It was a dilapidated kind of
crack house building. And reallywhat was attractive to my
lender, because lenders weren'treally used to commercial hard
money at that point, And so whatwas attractive is that there
(06:36):
were two fourplexes side byside.
And so I bought them both, and Ibought them for a hundred and
40,000 using hard money. Ireserved $60,000 in rehab and
immediately went to work aboutwe finished about six months
later and started filling themup and at at at a little above
(06:59):
market rate. Because what I sawis that our product was really
nice. It was brand new. We hadreally done a good job in the
rehab.
And so we started leasing themat $750 instead of the market
$6.50. Again, it's not the bestof markets. I know that's
really, really cheap. And it wasalso $20.13. And so, yeah, I
(07:22):
wanted to make a thousanddollars at the end of the day.
That was my goal. That was mycashflow goal. I wasn't really
intending on being rich off onedeal. I knew that I was starting
out, but I wanted to go tobasics. And so I said, look, if
I make a thousand dollars amonth off of this deal, it's
great.
And I was making that. I wasmaking more than that. So I was
(07:43):
doing really well. But then Idecided to refinance and get out
of the hard money loan. And soone of the things that you have
to do is get an appraisal.
So I got a bank, they approvedme, they went ahead and did an
appraisal. And lo and behold,keeping in mind that my cost is
$210,000 I brought $10,000 tobuy that deal. And so keeping in
(08:05):
mind the $2.10, the valuationactually came back at $472,000
and I was blown away. I said,you know, there's no way.
There's no way this thing isworth 472,000.
There's got to be somethingwrong here. I don't believe it.
And so I started reading moreinto the appraisal and what
makes it, you know, what makesit 472,000. Back when I started,
(08:29):
there wasn't really a lot ofpeople talking about commercial
valuation versus residentialvaluation. I I really think it
was just kind of two separateworlds at that point, and so I
was kind of breaking intosomething new.
And so, yeah, I discovered why.I, you know, discovered a cash
flow valuation method and themarket valuation method of of
commercial real estate, and itmade sense. But for me, I just
(08:51):
really wanted to test thewaters, so I put it for sale.
And I said, you know what?Alright.
So this thing is worth thatmuch. Let me just put it for
450,000 and see what happens.Well, lo and behold, two weeks
after I put it on for sale, Igot a full price offer, 450,000,
and the guy closed like a monthafter that. It was an amazing
(09:12):
deal. I ended up, you know,netting more than $250,000 in
profit if you include the rentsand stuff that I made.
And so, it was it was a great,great deal. And even for the
bank, the bank actually thatrefinanced me took the guy's
finance. They they they actuallygave me the money for the gave
him the money for the purchase.And and so it was a win win all
(09:34):
around. It was a it was a greateye opening experience.
It for sure let me see the lightwhen it comes to investing. I've
never made so much money in mylife. Obviously, it changed my
life.
Ian (09:49):
From what I just heard, it sounds like you invested $10,000
of your own money and walkedaway with almost $300,000 What
kind of timeline was that? Howlong of a time had passed from
when you purchased it to whenyou sold it?
Boris (10:05):
It was one year from when I purchased it to when I sold
it. And, you know, doing, youknow, going through the whole
motions of rehabbing, upleasing, you know,
stabilization, putting it on themarket, all that stuff. And then
obviously finally closing. So itwas about a year.
Ian (10:24):
Something that you mentioned, think that'd be
really good for listeners,especially beginning listeners
or people that are in theresidential space as opposed to
the commercial apartment space.Can you talk about what you had
mentioned as far as theevaluation of what a single
family home is worth and howthat's determined as compared to
(10:45):
how a multifamily building orapartments are valued? Can you
talk a little bit about thedifference?
Boris (10:54):
Absolutely. So I would say knowing what I know now,
residential valuations is verylimited. They're very limited
and there's not a lot you can doabout it. And what I mean by
that is that it only matterswhat your neighbor has sold for,
or when you're doing a flip whenwhat those houses' neighbors
(11:15):
have sold for. It's verysubjective.
If if somebody decides to firesell their property at a
discount because they wannaleave and go somewhere else, or
maybe they're facing some kindof hardship, that's going to
directly affect the valuation ofyour property. And so everybody
knows that you take six compsaround the same subdivision or
(11:38):
in a limited proximity to thatproperty, and you take the sale
comps over the last year or so.And so it has a problem because
obviously if you want to rentit, that's not included.
Whatever you're renting it for,no matter if you say you take a
$300,000 house, which I know inCalifornia doesn't exist, but
(11:59):
even in Texas, I know it does.And in you take 300,000 of a
house and you fill it up with,you know, with a tenant paying
$30,000 a month, it's still atthe end of the day, a $300,000
house that, you know, incomeSorry,
Ian (12:15):
$3,000 a month, right?
Boris (12:17):
Well, no, even if you rent it at 300, I'm sorry, at
$30,000 a month, it's stillgonna be a $300,000 house. You
see what I mean? That thatvaluation doesn't matter. Mhmm.
You know, whatever income thatyou're making is great for you
because you're making $30,000 amonth.
What I'm saying is that thatvaluation doesn't matter. Even
(12:38):
in the rise of Airbnb and shortterm rentals, it doesn't matter.
It's still very much a just compkind of business kind of
valuation, of appraisal. And sothat's what I really like about
commercial is that in commercialyou have both types of
(13:00):
valuations. You take intoaccount what the property is
making.
It's like a business, really. Ifit's like a steakhouse, the
steakhouse has to sell so manysteaks a day in order to be
valued at something, right? Samething here. That's what people
don't or fail to see issometimes that commercial really
is a business that you buy andsell. Well, a home is more of a
(13:21):
homestead for people, even ifyou're renting it out and making
money.
Even if you're renting it day byday with Airbnb. And so that's
something that is very limitingwhen it comes to investments
because you don't have directcontrol of what that home's
value is. And you just havecontrol over your own
(13:42):
investment, but you should be,you should be able to, the homes
should be valued for cash valueif they're rented, but that
just, that's just not acceptedin this grand scheme of things.
Ian (13:55):
So can you explain to the listeners how the value of a
commercial property as far aslike apartment complex or
something, how do appraisersactually figure out the value of
those properties?
Boris (14:11):
And so there there's two types of value or really three
if you wanna considerreplacement costs. So
replacement cost is the onethat, you know, you basically,
what would it cost to buildbrand new? And that's what it's
valued for at least in in thatthird type of valuation. The
first type really is marketvalue, which you take
comparables much likeresidential, but you take them
(14:33):
in the same class. So in mostareas, obviously, you're not
going to have the same kind ofbuildings right next to each
other or in the same subdivisionunlike homes.
So you take what we callclasses. The class system is a
way to kind of qualify aproperty based on the age, based
on the neighborhood that it'sin, and based on the location
(14:57):
and the shape of it. And so wehave classes a, b, c, and d. A
being the very best and d beingpretty much destroyed because
that's kind of what I of like torefer to. Class C and Class D
are areas, kind of blue collarareas, properties built older
(15:19):
than 1990, you find a lot ofvalue add in those kind of
properties.
And so you have to compare aclass C to another class C,
right? And so that's why thecomps actually, guess, they
don't really matter as far asproximity goes. It really
(15:39):
matters more as to what kind ofclass they're in. And so market
value and comparables are stillconsidered in commercial, but
that's just one type of value,the market value. The other type
of value is obviously the cashflow value, wherein you take
into account the income, theoperating income minus the
operating expenses, and you comeup with something called the net
(16:02):
operating income, the NOI.
You compare that to a cap rate,is the cap rate, it is a ratio
which really tells folks howmuch a property would be making
if it was paid cash. Okay. Andso not to confuse a lot of folks
out there, and I don't want toget too technical because I
(16:23):
don't want to confuse folks. Butyes, it is a benchmark in which
you compare property to propertybased on how much return that
property is making at thecurrent moment. So it's more of
a sales tool than anything else.
And so that cap rate divided bythe NOI will give you the value
of the property. And so as youcan probably infer, you can
(16:46):
increase the income of theproperty, lower the expenses,
and then you would increase theNOI, which then would directly
affect the valuation of theproperty upwards. That's called
forced appreciation by the way.
Ian (17:01):
Yeah. And hopefully we can talk a little bit about that
because I know that's somethingyou're really passionate about.
Okay. Well, kinda moving on to,like, a kind of a new subject.
Thank you for bringing that up.
I think it's really important toknow the difference between how
to value a single family home ascompared to a multi family home
(17:23):
so thank you for explaining thatto our listeners. A lot of new
investors wonder if they can gostraight into multi family or if
they should start with singlefamily homes first? What's your
take on that?
Boris (17:35):
That is a very good question and one that I get
asked a lot. And so my favoritething to say is you should start
in residential. People usuallygasp when I say that. But Boris,
why aren't you so so againstresidential? Why why would you
start there?
Well, the thing that people needmost is education and a lot of
(17:57):
self learning. You have to learnabout what kind of manager you
are, what kind of projectmanager, what kind of investor
and what kind of landlord youare. And so, all these things
you're going to be learning fromthe experience of construction
and project management, right?Not to mention obviously tenancy
and landlording. But what I meanby that is you should start in a
(18:21):
home and kind of trying to puttogether the labor, the
materials, the vision of thishouse, maybe do a couple of flip
homes first and see how it goes.
You know, most likely you're notgonna make any serious money
from it. You're probably goingto lose some, you know, and
that's okay because you learn alot about, like I said, yourself
(18:42):
and your crew and what kind ofproject you want to run.
Commercial properties areobviously in nature way more
costly. They're bigger projectsand they have the potential to
completely wipe out peoplefinancially. And I have seen it
time and time again, especiallyin those last two years.
(19:04):
And so you really want to payattention to all that and make
sure that you're not going intoa marathon not knowing how to
run. You know? If you gottaknow, you gotta know how to walk
first before you can run, andthen you can run marathon. You
know? And so you got to justtake it easy.
Be patient with yourself. Iwould say do a lot of classroom
(19:26):
learning if you can, orpartnering up with somebody
that's more experienced, andthen taking on a construction
project and then taking onsomething small and multifamily.
What a lot of people fail to dois actually they miss a very
important step and that isowning their own multifamily
properties. A lot of folks, theygo directly from flipping
(19:48):
straight into syndication. Youknow, they go straight into, all
right, here, I got $25,000 50thousand dollars Now I'm going
to put it with somebody thatknows what they're doing.
That is not what you should do.What you should do is experience
what it's like to own apartmentcomplexes and commercial real
estate. You know, I'm not justtalking apartment complexes. It
can be a retail building. Itcould be, you know, a shopping
(20:11):
center.
It could be a small officebuilding. It could be a self
storage building, which I alsohave experience in. And so you
have to make sure that you knowwhat it's like before you can
trust and put your money withother people that, and ask the
important questions. You know,like what, you know, what, what
are you going to do with this?What's your, what's your opinion
(20:31):
about this and that and fees?
And are you going to do this andthat to the property? You should
ask this of your syndicatorbefore you invest your money
passively. You should be anactive investor. And that's not
talked about enough in thisbusiness. I'm a fanatic of
owning your own properties.
They've changed my life, likeI've said in the past. From my
(20:53):
first deal on to my biggestdeal, they've all made really,
really good money. And so whywhy would I need to put my money
into some with somebody else? Ibelieve anybody and everyone
should be able to do it on theirown, even full time employees,
which my clients are, mystudents. And so everyone says
they want or has the excuse oflike, I don't have enough time.
(21:13):
But if I tell you that that timehas the potential to completely
change you and your family'slives, you're probably going to
dedicate more time to it. Right?And so it is very important to
learn and to take the steps thatneed it and to actually go
through the pains. It's not allall roses and rainbows. There's
going to be some pain, somestress.
(21:34):
But at the end of the of it all,come out, you know, wealthier,
come out more experienced, moreknowledgeable, and ready to take
on another project.
Ian (21:43):
You've I've heard you talk in the past about the KISS
method. Keep some and sell some.Can you break that down and can
you explain to the listenerswhat the strategy looks like in
practice?
Boris (21:55):
Sure. So a lot of folks are knowledgeable and they know
about the BRRR method, the BRRRmethod, the buy, renovate, rent,
refinance, repeat method. Andthat's one strategy within real
estate. When I mentioned that,there's different strategies
within real estate. And I thinkthat is a flawed one, and I
(22:19):
think that one is very limiting,much in the way that residential
is limiting.
I think a lot of gurus like toteach limiting things instead of
options. Any good investment,any good investor should have
options available to them. Andso one of the great ways to do
so is to know that there areoptions for you. And in
(22:41):
commercial real estate and inresidential real estate,
obviously, you have options. Andso I invented my own strategy
called the KISS method, K S S S.
S's, K S S S. Keep some, sellsome, scale. Is that I guess
that's five S's. Yeah. Keepsome, sell some, scale.
And that's because you do wantto keep some. As I have said in
(23:08):
the past, cash flow is verygood. Another podcast I've done,
I would say cash flow is verygood to maintain your wealth.
You want to make sure thatyou're keeping some and for tax
reasons as well. You know, youwant to make sure to depreciate
these things and be able to getrid of your capital gains taxes,
you know, other wins that you'vehad throughout the year.
(23:29):
And that's when you sell, yousell some, you're going to have
some capital gains that you canoffset by the depreciation of
the ones that you're keeping. Sokeep some, sell some. So with
cashflow, you're going to wantto keep some and for
appreciation and forcedappreciation, you're going to
want to sell some in order tobuild wealth. So forced
appreciation is a wealthbuilder, cash flow is a wealth
(23:51):
maintainer. And you just don'twant to maintain your current
level of wealth, you want tobuild it.
So that's why you have to sellsome. But again, you have the
taxes in mind, that's why youhave to keep some. Keep some,
sell some, and you scale. Sowith the money that you're
making from you selling, allyour properties, you're going to
want to put into larger andlarger properties to experience
(24:12):
economies of scale. Right?
You're going to want to keepthem in larger and larger
complexes, Or if you're juststicking to residential real
estate, then at least you caninvest in a portfolio or
something like that, a portfolioof properties where you can
manage them closely. So youdefinitely wanna scale. You
don't wanna stay on the samekind of bracket. You always want
(24:35):
to make sure to move up. And Isee no better way than selling
property.
And yeah, some people kind ofget scared by that because of
the taxes. But again, if you'remeeting with your CPA and you
have a strategy to kind of beat,you know, the capital gains, and
you're gonna be that better forit.
Ian (24:57):
Can you kind of talk a little bit more about that in
regards to how it helps buildthat long term wealth. How is
the KISS method building longterm wealth?
Boris (25:13):
So the KISS method obviously is a lot like what
I've experienced throughout mycareer. You know, I bought one.
I sold it. Like that thatexample that I gave in the past
about my first deal, I sold it.And I didn't blow the $250,000
that I made from that deal.
Obviously, I I got rid of somedebt, but I started buying more
(25:37):
property from it. And I startedlearning about what it is that I
did right, what I did wrong. Iended up buying two more deals,
one eight unit complex and oneseven unit complex. And so I did
the same in both of those. Butthen I noticed that I was
actually headed to a big taxbill, to a big tax bill.
(26:00):
So I went and I started keepingsome as well. So my eight unit,
think that one netted me like$200,000 The seven unit, it
netted me around the same,dollars 175,000. So I bought
more property with that. Withthe eight units profit, I even
(26:22):
bought a 45 unit complex. So Iwas experiencing scale.
That 45 unit complex eventuallybecame $800,000 in cash out in a
refinance. And so again, I keptsome, I kept that one and I
refinanced and I made $800,000just tax free, completely by
(26:44):
refinancing and cashing outwhile I was also selling other
property at the same time. So,you know, again, experiencing
that keep some, sell some, butstill scaling up. And a good way
to test yourself to see if youreally wanna scale is if you ask
listeners, if you bought andsold property and made quarter
(27:06):
of a million dollars, what wouldyou spend that on? Would you a
lot of people will say, well,I'll buy myself a house, a car,
great.
Great. But then what have youdone? Not really. Not really.
Well, you you you invested in ahouse, and you could possibly
maybe cash out of that.
But at the end of the day, it'syour house, and you've spent it
on stuff. You should take abouta quarter of that, invest it.
(27:30):
I'm sorry. You should pick aquarter of that, spend it on
yourself, and spend it on debtand everything. And the rest of
that, 75%, you should reinvestit and scale.
You know? Should scale up andmake wealth. What you're after
is generational wealth, nottomorrow wealth. That's not
gonna last.
Ian (27:49):
Yeah. So it sounds like kind of holding, like, basically
the scaling aspect of it andholding more and more units is
how you're going to build thatlong term wealth. Correct?
Boris (28:00):
Right. Yeah, exactly. So you're going to want to hold on
to raise the value, forceappreciate, know, fight taxes,
and then on the other side,you're going want to sell in
order to scale up and toobviously make wealth.
Ian (28:15):
That's a great strategy. I always love hearing you talk
about that. So inspiring. Thankyou. Last we spoke in November
of twenty twenty four, you werevery open about some of the
challenges you've been facing atthat time.
Can you kind of talk to thelisteners about what you were
going through and what yourbusiness was experiencing?
Boris (28:37):
Well, I mean, know, just like everything, our business is
very held to the market. So whenyou have no buyers and no nobody
lending, you know, it's it'stough to sell property. And so
we ended up, you know, doingvery well because some of the
property we're holding had a lotof equity in it. And so while
(28:58):
all the other property were kindof brokering and reselling, was
not selling. And it was verydifficult to actually get deals
to actually buy because buyerswere still even very held onto
the highs of the 2021 and 2022.
They still wanted, you know, thevery top and we were buying down
(29:19):
here. And so that delta is theugliest thing I've ever
experienced in my financialcareer, I guess, because we were
still buying at the heightbefore COVID and deals were
being sold and traded in, andthen the economy was nice and
the rates were acceptable. Andthen COVID came, it was just
kind of a scare, but it reallywasn't because people were still
(29:42):
trading. But what happens duringthis nasty delta time where
buyers think that there's worthso much and sellers think it's
worth down here. I'm sorry.
Yeah. Buyers think it's theopposite. Buyers think it's not
worth much. Sellers think it'sworth a lot. You have an ugly
(30:02):
delta, whether it's not really abuyer's market.
It's it's or a seller's market.It's neither. You know? And so
it was difficult to get dealsunder under contract then, and
so we had to give really, reallygood deals on the stuff that we
already held in order to kind ofmake income and still be able to
(30:23):
float on by, you know. A lot ofbusinesses closed their doors.
A lot of commercial real estatebrokerages and other wholesale
shops, they closed their doors,and we were kind of proud to
just kind of coast along.
Ian (30:39):
Were the interest rates rising a factor and also was
insurance rates in your localmarket also a factor?
Boris (30:48):
Big time. Yeah, big time. So not only, yeah, the rates are
rising, you know, to somethinghorrible. So bank lending was
just out. It really kind of puta chokehold on the market itself
as well because then you hadthat widening of the delta that
(31:10):
I just spoke about.
But then insurance costs weregoing up because here in
Houston, we've experienced a lotof freezes, hurricanes,
tornadoes, derechoes,everything, as well as the rest
of the country. It just seemsthat it's been happening more
lately. And so insurance rateshave really gone through the
roof. I think a lot of carrierswent out of business as well.
And so, And also, also put inthe fact that property taxes
(31:38):
have been going up steadily aswell.
And even more than steadily,they've been multiplying in a
lot of cases. And so it reallyputs a lot of choke on the
business of commercial realestate. And so we experienced
that. But again, I think, youknow, if you navigate it and you
know enough and you kind of givegood deals to people and buyers,
the few buyers that are left,then then, you know, that made
(32:01):
us that made us a really goodbrokerage, know, that are a very
good investment house.
Ian (32:06):
The next question is, know that you don't really do as much
or maybe not any syndication,but I feel like you have a
pretty good finger on the pulseas far as syndications and
what's working and what's not.Can you talk a little bit about
how these changes over the lastcouple of years really got a lot
(32:28):
of syndicators in trouble?
Boris (32:33):
Syndication, for those that don't know, are is when you
crowdfund and you put togetherdeals as a group. Right? It is
an SEC kind of a guided securitybecause at the end of the day,
you're offering to make money onyour money as a group that's
called security. And so it'sheld by the SEC and regulated by
(32:58):
them. And so what ended uphappening right before COVID was
that a lot of deals were beingput together by folks just
wanting to squeeze an extraounce of value from all these
properties.
They wanted from one group thatdidn't charge parking fees, and
(33:20):
the next group wants to chargeparking fees, and they want to
charge pet fees, and they wantto nickel and dime folks. And
because of the effects Iexplained previously, because of
forced appreciation, they wantedto experience that as well. They
want to kind of squeeze all thevalue they could out of a lemon,
out of a property. Andeventually it's going to implode
(33:42):
because there's only so muchvalue that you can squeeze
before something has to give,either the market, either people
are not buying, eithersomething's got to happen. And
so I really believe it was abubble that's not spoken about
enough where folks, it was justso easy to put deals together
and money together, actuallyeven before and after COVID,
(34:06):
before this kind of like periodof downturn that we just went
through, it really was easy toraise money and charge fees for
it and charge finders fees andall kinds of fees to the group
that was investing in a certainproperty.
(34:27):
And so, you had a lot ofinvestments go down. A lot of
folks that didn't get paid,didn't get their investment
back, and the property went toforeclosure or went down or, you
know, or or closed. And I feelreally bad for those people
because they believed in thebest. But also, that's another
reason why I believe in activeownership of your own
(34:50):
properties, because you havemore of a hold on what, you
know, your own money is doing.Not to mention that you're
buying a property.
At the end of it all, thatproperty is going to be worth
something, whether it's got zerotenants or full of tenants. And
so it is something that I still,I'm a critic of syndications. I
(35:14):
really think a lot of folks areirresponsible, even though they,
you know, they swear thatthey're not. And at the same
time, I really do see that thereare a lot of folks out there
that are supremely goodinvestors doing syndications And
and, you know, and this is notabout them. They're they're
doing well now.
I've got some really closefriends that are doing that. And
(35:35):
I've, you know, ever since thestart, I wish them well. I just
don't believe in the fact thatfolks should invest their money
and put, put it together with agroup where they can be doing
it, themselves and making manymore times what their return
was, that they were offered.
Ian (35:53):
Yeah. So if you could elaborate a little bit or just I
kind of had a question you weretalking about. Sometimes people
would put in their money in oneof these syndications and
sometimes they would go south.Have you ever heard of someone
putting money into a syndicationand just losing that entire
(36:13):
investment? Or how does thatwork when the syndication fails?
Boris (36:18):
Yes. I have lots of people. Lots of people have, you
know, they've lost their moneyand there's not a lot you could
do for it because at the end ofthe day, you knew what the risks
were or you supposedly knew.And, you know, these guys, for
one reason or another, they thesyndicators, the general
(36:40):
partners, they did all theycould. You know?
I'm not saying some of them didit, like, fraudulently. I'm sure
that happens at some point, butI am sure that a of them did not
intend on fraud. But at the samelevel, either way, the folks
(37:01):
lost their money because ofsomething that happened. You
know, rates went through theroof and maybe they couldn't get
a loan fast enough to bridge thegap. Maybe their occupancy went
really south and they couldn'tmaintain the property afloat.
(37:21):
And so they just you know, theywent through foreclosure and
folks just lose all their money.It's this is really what
happens. There's there's nothingreally that happens afterwards
just saying too bad, so sad. Itdepends on what the syndicator
chooses to do at that point, Iguess. Like, hey.
Well, let me, you know, pitchyou something else that, you
know, in a in a, you know, in abetter position that that can
(37:43):
make it up for the last one. I'mnot sure. I guess there were
some of that. But again, I don'treally mess with that because
it's just the same kind ofproblems over and over. You
know?
The market is the market. It'sgonna go up and down sideways.
And so I believe the only kindof better control that you can
(38:03):
have is owning your ownproperty.
Ian (38:06):
What were some of the key moves that you made or your
company made to stabilize theportfolio?
Boris (38:16):
Once we saw the costs rising, like insurance and
taxes, we obviously shoppedthose around, well shopped
insurance around. We did what wecould on taxes, protesting taxes
and devaluation with the county.But we started resorting to
other programs such as Sectioneight, and we started selling
(38:37):
other property that still hadpretty good equity in it. And
so, yeah, we launched all thetools available at our disposal
in order to kind of stay afloatand make sure that we don't go
the same direction that someother folks went.
Ian (38:51):
And what lessons did you take away from that experience?
Boris (38:55):
I mean, I was glad that I was kind of self taught that I
went through the pains ofteaching myself and that I went
through the pains of learningthe hard way what it takes to
own property. I was glad that Ikept property that had a lot of
(39:15):
equity into it because that mademe millions, in a down market.
And so, yeah, was glad and alsotaught me that I don't know
everything. And even though Ilove to teach real estate and
teach real estate investments,I'm always a student of the
market and the market has a wayto surprise you always. And so
(39:37):
I'm constantly learning.
I'm always evaluating andlearning from others and
learning from my own mistakes.
Ian (39:44):
And you had mentioned earlier that you're doing some
storage unit investments. Whendid that start and and how's
that going for you?
Boris (39:53):
Yeah, it went really well. I just sold my property
that I just had. It was twofifty two units, but it was
really nice. I bought it for$1,100,000 back in 2022, August
of '20 '20 '2. And it had extratwo acres.
It had extra three acresactually. And with one acre, we
kind of expanded the parking lotand made outside, you know,
(40:16):
uncovered storage, which ismostly, well, more than likely
like a parking spot really forpeople. So we've made units like
that. We expanded theoperations. We went completely
with no personnel.
So everything was virtual. Folkswere able to rent their own unit
that way. And it was reallywell. I just sold it for one
(40:38):
point I'm sorry, dollars2,000,000. 2 million dollars
flat.
And so it was a greatexperience. Something that I put
into the property probably lessthan a hundred thousand dollars
total. You know, painting extra,you know, parking lot, which is
made out of what's calledTruGrid, which is like a plastic
(41:00):
slash pebble parking lot. And soI yeah. It was it was a really
good experience.
It's profitable. You know, wentthrough the pain of getting
everything converted fromjournals, like written down
journals to full fledged AI typemanagement. That was a pain.
(41:23):
Trust me, it was not easy. Butat the end of the day, it was
very profitable.
Ian (41:30):
Yeah, it's incredible to see how some people run their
businesses. Like you said, youknow, handwritten journals, the
receipts that have the twodifferent color papers so they
can rip it off and give them,you know, the other yellow and
pink paper and stuff like that.Just crazy what how some people
are running their businesses. Soif if we could take a little bit
(41:55):
of time, can you talk a littlebit about the mindset that's
involved in you know being asuccessful real estate investor
and what's involved in like whatare important things for
listeners to know aboutovercoming some failures, right?
I feel like a lot of investorsget into the real estate game,
(42:17):
they try it out, maybe somethinghappens and then they throw up
their arms and they say it doesthis real estate investing stuff
doesn't work.
So can you talk a little bitabout the mindset and what's
required to be, you know, a realestate investor long term?
Boris (42:35):
Absolutely. Me and my peers talk about this all the
time. Other guys that kinda dothe same thing that I do. It it
it is something that is not forthe faint of heart. Making the
money is great, and that's thebest part.
Right? That's the reward. Butthe risk, the stress, the work
behind it is can be toil can cantake a toil on your mind and
(43:00):
your family if you let it getout of control. I believe you
have to always have the winner'smentality, the winner's mindset,
the end goal in mind. You haveto be prepared to plan for the
worst, always.
I hate to be a pessimist, but Ilove to plan. You know what I
(43:22):
mean? I love to plan for theworst that is. And so, because
that has a tendency to alwayspleasantly surprise you. So I
kind of, well, I want to tell,you know, folks, basically, you
know, it's not all roses andrainbows.
There are going to be times thatyou're going to want to quit and
(43:44):
you're going to want to justsell everything, that you're
going to be just tired ofeverything and everybody. And it
is like life. You know? Life islike that in a lot of ways,
except this was really thiswould really test you. And so
you're not counting on thesalary.
You're not counting on thatmonthly cash flow rental check.
(44:06):
Sometimes it doesn't come. Whatare you gonna do? What are you
gonna do about it? What youknow, what how are you planning
to be prepared for that?
And how's your mindset going tobe prepared for that? Right?
That that says a lot about whatthe next steps are. If you're
not in the right mindset, you'renot going to have the right mind
(44:27):
to plan down the road and beprepared to deal with the
punches. You know?
Because sometimes you do have totake the punches. You you know?
Sometimes you can't avoid them.You know? And and it is all
about knowing that those arecoming and and knowing how to
how you're going to react.
Ian (44:47):
Can you talk about a deal, in your experience, that went
south and and kinda how you wereable to either get things back
on track or, you know, walkaway? Can you talk about one of
the worst deals you've had todeal with?
Boris (45:03):
Sure. So there is one deal in particular that I I
always like to tell my studentsand that's property here at 3801
Brewster Street in Houston. Itwas a 12 unit apartment complex,
and it completely tested me inevery single way. I got screwed
(45:26):
over by several differentcontractors, both small and big
contractors. I had gotten brokeninto that property several times
and stolen all the materials.
We found cash registers in theground full of cash, which isn't
a good thing, believe me,because the police are going to
(45:47):
shut you down for a while. Andnot to mention there was a
flood, there was a fire with noinsurance. And so I lived the
whole market, the whole projectof bad news cycle in this
project alone. As it were overthe span of like eight months,
(46:11):
there were just bad news afterbad news. Honestly, it got to
the point where there was justyou know, I was expecting the
bad news, and it was so such alike a nightmare project that my
friends even, they hated hearingabout it so much that they
actually literally hired apriest to come bless the place.
(46:33):
And, you know, that sprayedkinda holy water everywhere
because it was just, you know,it was just a nightmare. And and
the funny thing is right afterthat happened, you know, we
found a unique way to actuallyget back on track. We had bought
this property around $350,000and the original budget was to
(46:56):
spend another $250,000renovating it. But because of
all the things I just mentioned,our budget ballooned to like
over a million dollars. And sobecause of my knowledge, because
I knew that the only way to savethis project from really going
off the rails was to actuallywhole lease it to somebody else
(47:19):
in a triple net basis.
So somebody else takes on theexpenses. It's called a master
lease. And we found that exactclient that wanted to lease it
that way, and it was a clinicfor sober living. So where folks
go to kind of get sober fromdrugs and alcohol, and that was
(47:41):
the tenant. They actually leasedout all 12 units.
And because we had nothing butincome and no expenses, our
valuation ballooned to over$1,200,000 and thereby saving
the projects and making surethat I learned a very valuable
lesson, which was commercialreal estate has a funny way to
(48:04):
actually save you, you know,even at the worst times, if you
know what you're doing, if youdon't know what you're doing, it
has a power to wipe you off.
Ian (48:12):
Did you already know about the master lease or is that
something that you learned aboutto kind of save the project?
Boris (48:19):
I knew about it from the standpoint that I knew, you
know, from going back to basics,if I, if I lease it out and have
another bad income and noexpenses, that's going to
balloon the valuation. Right?And that's that's exactly what
we deployed in this case inorder to save the project.
Ian (48:39):
If we could shift gears a little bit. Last time we spoke,
you were talking about maybechanging the strategy or
changing the market. So what'sthe strategy for growing sand
more internationally?
Boris (48:54):
Man. That's a really good question. So we have noticed
there is a a need for a realestate software that's next
generation. And so we're heavilyinvesting into that right now. I
can't say a lot about it rightnow, but let's say that our
(49:15):
Sandbox future is software.
Wow.
Ian (49:20):
Okay. I thought we were gonna talk a little bit about
investing in London, but thatwas a secret, a little secret I
wasn't expecting to hear from.
Boris (49:30):
Yeah, exactly. Yeah. Well, you know, I'm always going
be a real estate investor, aninvestor and a entrepreneur
nonetheless, like I explained inthe beginning of the video. And
so, I'm always I'm enamored withreal estate. I love it.
But I wanna also be a I wannacontribute to it. And to
(49:56):
continue contribute to making itbetter as well as, you know,
invest into an asset that'scould potentially be worth
hundreds of millions of dollars.And so that's what we're
investing in, but you're notincorrect. The well, my future
for as far as I can see is Iwill keep on investing in in
(50:17):
commercial real estate becauseit's been a big, you know,
wealth maker for me, and itwould be foolish for me to
actually let this go and just gointo something else. And so in
some ways, shape or form, I'malways investing.
And yes, I am investing in TheUK, in London. I have several
properties there with a partnerof mine. I really see that
(50:39):
market as a big opportunity anda very, very attractive market
for tenants. And so, yeah,obviously, it's it's great for
diversification as well, whichI'm heavily a fan of. So, yeah,
we're we're gonna keep oninvesting both here and in The
UK and investing in severalthings and and just kinda see
(51:00):
what happens.
Ian (51:01):
As far as The US market, what do you see as the biggest
opportunities for multifamily inthe next five to ten years?
Boris (51:10):
Really think that's a great question, by the way. I
really think that folks who areprepared to own property and
have educated themselves to, youknow, be really good real estate
investors. There is a hugemarket out there, especially
(51:33):
right now to invest at thiscurrent moment. Prices are
cheap. Property is cheap rightnow.
If in 2019 or 2022, werescratching your head, why you
missed out, you're missing outright now. So there is a giant
opportunity right now for folkswho wanna get in and invest
(51:53):
either on their first home or ontheir first apartment complex or
just a multiple of both. Andbecause prices have been cheap.
Like, I think that's last time Isaw these prices. They it was
back in 2014 when I firststarted.
You know? Twenty thirteen, '20'14. And so when they say, oh,
(52:17):
man, I missed the boat. No. Youdidn't.
You were just were not preparedfor when it comes around. And if
you're not prepared right now tolook at deals and to start
buying, I would get get therequick. Get that education you
need. Learn how to run beforeyou can, you know, before you
can run a marathon. And then,you know, you can invest and
(52:38):
then you can, you know, buildyour wealth like you've always
wanted to do.
Ian (52:43):
Is there any way for people to get ahold of you or is there
any type of product or servicethat you wanna promote on the
show today?
Boris (52:50):
Absolutely. I'll plug my own commercial real estate
investment university. And sothat's called CREU, c r e u dot
online. That is a, like I said,commercial real estate
university where I've I'vefilmed over thirty hours of
content, and you can learn atyour own pace there. I break
(53:13):
down every single strategy thatI've ever learned, give several
different examples of, you know,stuff that I invested in, the
good, the bad, all the mistakesthat I've made.
I break down the contract, thevocabulary, terminology, and
like I said, strategy on how tohow to always make a kind of a a
winning case for a property.Creu.online, crew Online.
Ian (53:39):
Before we wrap up, let's talk about our free weekly book
giveaway. Each we were eachweek, we're gonna give away a
real estate, business, orinvesting book for free. So
here's how to enter. Just justlike this episode on however
you're listening to the podcastand comment below with the book
you'd like to receive. You havefive days after the air date to
(54:00):
enter, and one lucky winner willhave one of the books shipped
directly to their house.
So some of the ones we havethese are some of the ones we
have to give away. Boris, do youany of these sticking out to
you?
Boris (54:15):
Believe and Achieve. Oh, that's a great one. Yeah. Oh,
well, Rich Dad Poor Dad, ofcourse. Great.
Great ones. You have some reallygood
Ian (54:22):
rich dad, poor dad one and two. The second one is called
the cash flow quadrant.
Boris (54:27):
Cash flow quadrant.
Ian (54:28):
Got the 10 x rule. So so just so just comment on which
one you'd like to have and onelucky winner will send it
straight to your house. Onefinal thing is if today's
episode teaches you anything, isthat real estate is never a
straight path. Markets shift,deals go sideways, interest goes
(54:48):
up and down, insurance goes upand down, the economies change.
But the investors who adapt andpush through are the ones who
are going to come out strongeron the other side.
Boris has shared with us somebrutal challenges he's faced in
his company in the past coupleyears, but he didn't quit. He
adjusted. He found solutions,and he came back better than
(55:11):
before. So I hope some of thisstuff has helped the people here
today. And if they're sittingthere thinking, I don't know if
I should get into multifamily orthe markets are too tough right
now, just remember, there'snever a perfect time.
The only way to learn is to getinto the game. Thanks for tuning
(55:31):
in, and I'll see you on the nextepisode.
Boris (55:34):
Thank you.
Ian (55:35):
Thanks.
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