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Real Estate Investing School Podcast
163. Wholesaling, Lending, and Beyond with Ernest Quiocho
00:53:14
Welcome to the Real Estate Investing School Podcast. In this episode, Joe has a discussion with friend and investor Ernest Quiocho. Ernest, a proud Samoan living in St. George, UT shares his journey from being a former college athlete to becoming a...
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- [00:00]
A
The hardest part about a real estate transaction isn't the money, it's the deal. There's so much money in real estate, but there's the deal finding that's the hardest part.
- [00:13]
B
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today is Ernest Kio. Ernest is first and foremost Samoan. He wants everybody to know that he's originally from Southern California, currently lives in St. George, Utah, where I'm at. Former college athlete turned flag football player. He's married, three kids. He's a content creator and an investor. Welcome to the show, Ernest.
- [00:39]
A
Appreciate it, brother.
- [00:40]
B
Yeah, man, glad to have you here. You're kind of newer in the real estate game, but you've kind of dabbled in quite a different pieces of it, which is kind of cool. How long have you been real estate into real estate investing?
- [00:54]
A
Yeah, I started looking into real estate investing in 2021. So started. Started looking into it and I probably didn't really take action until like later on that year. Towards the end of the year. Yeah, just kind of been navigating through it ever since.
- [01:12]
B
So tell us a little bit about your background then, kind of what's your story? What if you, what were you doing for work, you know, then now what kind of put real estate on your radar as an investment as opposed to just somewhere to live and yeah, kind of what's your background with. With everything.
- [01:28]
A
Yeah. So I actually come from as far as like, entrepreneurship. I started off in network marketing, had a couple of companies that I went through, and that was kind of really my taste of like, entrepreneurship of, you know, just the, the, the mindset outside of just working 9 to 5 and just, just in being in that industry, that's kind of where I got the, the urge to like, listen to podcasts, listen to mindset development type stuff. And so I started listening to a guy by the name of Eric the hip hop preacher ET Yeah, I know him, man.
- [02:09]
B
Yeah, it's funny, the correlation. So I didn't mean to interrupt you, but you're just saying it's like, oh, I was into entrepreneurship, so I was into self development. And it's so funny how that works. Like, it's so true. Like, why does it need to be that way? Like, I don't know, there's something about entrepreneurship that's just like, it's so hard that you feel like I have to improve every aspect of my life or I can't do this. Like, but, but it really correlates people in sales and entrepreneurship. I just See, like, they're like, always studying every way to make their lives better. And, you know, personally, financially, fitness wise, like, it all just overlaps somehow because there's just something about, I don't know, maybe it's taking responsibility for your own life, or maybe it's just so hard that you're like, I need all the help I can get. But I don't know. I've been thinking about that lately.
- [02:58]
A
Yeah, I think, you know, that is a good point because I kind of think about, like, man, I didn't listen to any of that stuff prior to. And like, it was all like, my, my, you get in my car and I'm listening to music. And, you know, now when I get in my car, the first thing I want to listen to is somebody talking about becoming better. No matter what it, what it is, it's just like, I want to listen to something positive and music's like the last thing I want to put on. Nothing. I hate music or anything like that. But I think it was more so of just like, for me at least, it was like, I just want to pretend that I'm an entrepreneur and this is what entrepreneurs are doing. So I'm going to listen to podcasts, right? And it's just funny that as I listen, I'm like learning like, oh, crap. Like, this is actually vital to what I'm trying to do because I'm realizing the person I am today, it's not going to get me to where I want to go. So if I listen to these people, take what they're saying, not just listen, right? Not just be like a hero of the word, but a doer also, like, I gotta take action and I actually gotta put in the work. So, yeah, so that is a. I'm glad you brought that up too, because I, I think about that sometimes. So it's like I put on a podcast and I'm like, how did I get here? I was listening, you know, rap music not too long ago, and now I'd rather put this on. Um, like, not just even in my car, like, while I'm working out, if I go for a run, like, that's what I'd rather listen.
- [04:16]
B
That's when you know you're feeling it. Thick is when, like, you're listening to books while working out. People are like, you're crazy. I'm like, it's just, it's good time to fit it in. You can get an hour of study while working out. Like, you know, how do you not? So.
- [04:31]
A
And probably get to it about I was gonna say we'll probably get to it, but like the 50k, that's what was in my ears, bro. It wasn't music. It was. Yeah.
- [04:42]
B
So we, that was kind of the first time we really spent some time together. I think we'd run into each other actually looking at some properties or something like that, but. But the first time we really like kind of spent some time was we're doing this 50K. So that's like, it's like 30 mile trail run, the Red Mountain, 50K down here in southern Utah. And that was a long time to.
- [05:02]
A
Do the day before, by the way. I did.
- [05:04]
B
I was hanging out with you guys at the birthday party and I'm like, oh, you guys are doing that? I guess I should. Maybe I'll do a leg. I was gonna do like one leg. And then I woke up that morning, I was like, I might as well start at the beginning with them. And ended up doing the whole thing. But that was a long race, dude. That was a long race.
- [05:21]
A
The only reason I did it all the way through is because I put the money up. I mean, the fact that you had no like investment in there and you were just like, I'm just gonna do it. Just, just. Cuz, you know, that was. I look up to you for that, bro. I was like, wow, this guy finished, man.
- [05:37]
B
Once you're in it, I don't know, there's something about it. But it was fun. The first half was awesome. It was like you, me, our buddy Seth, and we're just running and like having a good time the first half. And then the second half we all split up and Seth's way ahead. He's gone just murdering this thing. And then you and I are just back there and we split up and we go into a pain cave. Pretty deep. I did for that last 15 miles.
- [06:03]
A
Yeah, that, that, that race was wild for sure.
- [06:06]
B
Was that the first time you've done a race that big or anything like that?
- [06:11]
A
Yeah, up until that point it was, it was just half. Half marathons. I did three prior to that and that's. That was like my limit of distance wise.
- [06:20]
B
Yeah, that's awesome. Half's the best length there is. You guys, like anybody wants to get like half, Like I just did a half iron man. So much better than a full distance. Like half. Half marathons are a thousand times better than full marathon. Like there's. It's so much more enjoyable, man.
- [06:38]
A
That's. Yeah. That's just crazy though, to think that I, I went that far.
- [06:43]
B
That's awesome. That's freaking dope, dude. I love it, like, say. But it all. It all intertwines, you know, just pushing yourself financially, mentally, physically, you know, emotionally. Like, they all correlate so much. And. And I think there's this thing about building up this. Like, I can do anything. Like, I just ran 30 miles through the mountains with, like, a. I don't even know what was the elevation gain. It was crazy. I know. It's like double angels landing, which is, like, I don't know, thousands feet of it. Yeah, it was way higher than.
- [07:13]
A
I just know. I kept looking up, and I'm like, I'm nowhere near the top. The whole time I'm climbing, I just kept looking up. I'm like, seth and Joe are up there somewhere. I'll get there one day.
- [07:24]
B
When it was just so much up and down, up and down, up and down, you know, that it was, like, a lot of elevation gain overall. And. But, like, for me, it's like, once you realize that you can do hard things, like, well, if I can do this hard thing, then I can do that hard thing. And if I can do that hard thing, then I can do this hard thing with parenting, and if I can do this hard thing with parenting, I can do this hard thing with entrepreneurship. And it all just starts to, like, overlap and correlate, and it's pretty cool how that happens. And it's. It's cool seeing you experience the same thing.
- [07:53]
A
Yeah, I was kind of like, when I seen you accomplish the half iron man, I was like, I honestly am not jealous that you went through it, but I am jealous of the feeling after, because I. I know that feeling after. There's got to be a high, you know, just like, the 50K. Like, the fact that you can look back and say, like, damn, I did that. Like, I went through that, and I. And I accomplished that. I was like, man, that's. That's gonna be a good feel. That's why I can't wait for the next race, whatever that is. Like, you get that.
- [08:19]
B
Yeah.
- [08:19]
A
That little high.
- [08:20]
B
So it's. It's a cool thing to. To just reach new levels. And every time, like, oh, man, I can do more than I ever thought. I can do more than I ever thought, and just, like, it just keeps going. But so e. T, though, he's not a real estate guy. He's just, you know, kind of a motivational speaker, gets people off their butts, and he's cool. I like his stuff. So you're listening to him and and then can. Yeah. Expound on that.
- [08:45]
A
Yeah, well, he is. And to kind of throw that in there. He is a real estate guy now because the guy he has on his podcast as a co host, his name is Jamal King, and he runs a real estate program called Make Real Estate Real. That's his program just kind of like the best thing school. And so that's where I first heard about real estate was. Yeah, well, I've heard about real estate in general, but listening to his podcast, real estate was really plugged in after every show. At the end it was like, hey, yeah. And even, even ET Was like, look like, yeah, I make, you know, I'm a millionaire because of person, you know, because of public speaking. Like, I'm a speaker. I. I make my money here. But Jamal has helped him realize, like, unless he's putting that money to work, that's just active income still. Just active income. Right. Because he actually has to show up, do the, do the, do the work, and then he gets paid. Whereas Jamal was like explaining like, you know, you find a property that could give you a return that could cover whatever expense you're looking to cover in your life. You know, you get a. Enough of those properties, you're. You're getting all your expenses covered for by these investment properties. So that's what eventually, because it was just going out in one ear, out the other, you know, I'm just like, well, I'm here for the personal development. I don't really care about. About that part. Until I bought my first house at the end of 2020. That's when I was really like, I want to know if going through this transaction with buying my first home, if it's similar to, to buying an investment property or, or a fix and flip. Like, I want to learn more about that because it wasn't that bad of a process. Like, I, it wasn't a nightmare is what I'm trying to say. And so, yeah, yeah, so that's when I, I bought his course. And then during the birth of my third son, my last baby, while my, My wife was sleeping in the hospital bed, just throughout the middle of the night, I just went through the course. I bought it maybe like a day or two before, and I just went through it in one night. And so, so yeah, that's where, that's where I got to learn about the different ways of investing. Buy and hold, fix and flip, wholesaling, all of that.
- [10:56]
B
That's awesome. And you've dabbled in all those then, right, like over the past few years, You've done, done some lending, you've done some wholesaling. You, you have a, a long hold rental in your portfolio right now. I want to dive into each of those. Is, do you have a favorite or are they just all different to you?
- [11:15]
A
Yeah, they are all different. Like I got a high, you know a different high from, from doing each one just because I do want to be involved in, in all transactions. Yeah, I got my long, my, my long term rental. I bought that in 2022 so not too long after, within, I don't know what is that like six months of getting started. I use. Eric Gubler was my real estate agent that he helped us find the, the property.
- [11:43]
B
Shout out to Eric Bubler Real Estate Investing.
- [11:46]
A
That's right. Plug that guy. He's. He's been a great friend of mine. We, we've known each other since college and so.
- [11:53]
B
Oh really? That's cool. I didn't know that.
- [11:54]
A
Yeah, we had a class together and then. So to, to have him on, on the squad to help me find the property was big time because he's just a great guy and he did a really good job of just coaching us through it and helping us to know that the numbers were the most important part. So yeah, anything we didn't, he didn't push us to go to any direction on any property. He let us, he gave us the information and let us make the decision on what we wanted to do. So that one was good. That one actually I would say was, was more gut wrenching. Just because it's your first one, it's gonna your name to it. Like in wholesaling you're always assigning the property. There's very minimal risk of wholesaling. Like you're always, you know, you're just assigning a contract to an end buyer and then there's ways to get out of that transaction without losing any earnest money if you have anything down. So it's not as, as gut wrenching but that I would say that first rental. Hopefully the next ones aren't as, as, as bad or as giving me as much anxiety. But almost canceled on that one several times just because I was just like.
- [13:03]
B
This is a primary house hack or is it just a rental rental, like totally separate.
- [13:08]
A
Yeah, this one's just a rental. Rental.
- [13:11]
B
Gotcha. That's awesome. So you guys, you bought this and it cash flows like it covers its cost.
- [13:18]
A
Covers this cost. We make about between 3 to $400 after all expenses are paid.
- [13:24]
B
That's awesome. In Utah, I mean obviously you got It a few years ago, which, which helped. You probably got a little better interest rate then than we're looking at today, which makes such a big difference.
- [13:35]
A
Definitely better than today. Yeah. And then as far as fix and flip, I've been in a passive investor, so I haven't found a property and taken it down myself and done any of the, the hard labor or like investing into it. Kind of just like, hey, someone has an investment property and I've just put like passive, or just been a passive investor. And then when it, when it, when it sells, you know, waiting for the returns on that.
- [14:01]
B
When you were doing that, like kind of like a private lender, were you just getting a set percentage pay back on your money or were you getting a piece of the, the sale price, like at this piece of the pie at the end?
- [14:13]
A
Yeah, so it was, it was just a return. So like, like if I gave 10 grand, they're like, hey, the return on investments. 35. Once it sells, then cool. Then. Yeah. So that's kind of the, the transaction there on, on that side. But yeah. So I wouldn't, I wouldn't consider that actually doing a fix and flip because there's obviously more that goes into it than just handing off, you know, money.
- [14:37]
B
It's doing it the right way, if you ask me. You know, it's funny because we talk experience there. No, I mean, well, we talk a lot about passive income. People love passive income. Pass. It's like, and I say this all the time, like, the only real passive player in this game are the lenders.
- [14:53]
A
Yeah, true.
- [14:54]
B
Like, like that, that, that was like, how many hammers did you swing? You know what I mean? Like, you didn't have to go find tenants. You didn't have to put it on the market. You weren't marketing. You. You just do your due diligence at the beginning. Do I like the flip guy? Do I like the asset? You know, you look at those things just like a bank or any lender would. And then if you say yes, like, that's about the end of your work. Like that's the true passive income. And so I think there's something to be said for that. And anybody who starts making like real, real crazy money, they start lending it out because that's where it just can just pay for itself. And you don't have to do anything. But that's cool. So you got into lending, which is interesting. A lot of times people think that's only for like the big dogs, huge players making hundreds of millions of dollars or whatever. It's like, and that wasn't your story. You just, you, you're just lending on Marvel, low key, smaller scale, but you're doing it like, how, how did you get into lending money? And like, how much are you lending? Where are you finding that money to. To lend?
- [15:59]
A
Yeah, so, so I did my first wholesale deal I did, was in Chicago, found a property for an investor that was looking and ended up assigning the property to him. And that investor actually became my partner. He saw the value in being able to find deals and so he was like, hey, before the deal closes, you just want to wholesale or do you actually want to partner up and do something like a, like a flip? And I said, I definitely want to do, you know, other things outside of this, other investments of actually taking down property. So we partnered up, created an llc, little company, and now we were sitting on funds. So I, I didn't use any of that. That money I made from that wholesale deal. I made about 13 grand on my first deal. Biggest check I've ever seen up that at that point. And so he combined his funds that he had. I combined, you know, the money that I had. We created this little company and then we were waiting for a flip. So, you know, we're looking around in Chicago mostly, but you know, I was also like, hey, if you're open, we can do other markets. He was like, yeah, whatever. So anyways, we're sitting on this cash. We had about 45 grand that we had put together. And I, I was, I had networked with a guy that was like, hey, I'm coming across deals where people need like a quick turnaround, like a, it's a wholesale deal. They need EMD earnest money deposit. And then once the, once the property is assigned and closed, then they give a portion of the assignment fee based on how much money they needed for earnest money. So if they needed a thousand dollars earnest money deposit, they might, at the end of, at the close of the, of the transaction, their assignment fee, if it's 10 grand, they'll give us, you know, $2,000 back. So a thousand dollars plus our, our thousand dollars back plus a thousand dollars return for, you know, lending out something small like that?
- [18:07]
B
And is that, do you even have to wait till it's all done and sold, or are you getting that as soon as they assign it and get to collect money?
- [18:13]
A
So we, so, so you gotta be careful because some wholesalers, it's not an actual deal, you know, they might have it under contract, they might put in earnest money, but if they don't have a buyer that they're actually assigning it to. That's kind of where we raise some red flags like, well, unless you have an end buyer, we're not going to actually submit this earnest money because yeah, it's just, it might not even be a deal based on that if they don't even have anyone wanting to buy it. So we do make sure that like they have a buyer in place. There is an assignment contract to the end buyer done. And once we know that that's at least pretty solid, then we'll put the earnest money in. And you always go through, always go through a title company, never just send it directly to after you may not see that money ever again.
- [19:04]
B
Definitely.
- [19:05]
A
But yeah, and then these transactions, because a wholesale transaction can take anywhere from 7, 14, 21 days. So it's a pretty quick turnaround and you can come up your own, you can negotiate your, your return. It's, it's not like it's set in stone.
- [19:22]
B
What kind of, what kind of returns are you getting on? And so just to clarify a couple things. So is this what they call like gator lending or gap funding? Like you're just covering that little bit? They need to. Because when you get a place on a contract, you need to, you normally put down some earnest money, like hey, here's 5,000, $10,000, whatever, to say you're serious to, to get that place under contract. And as wholesalers, you get it under contract, but then you assign that contract, you sell basically the right to buy that property to someone else that actually is the end buyer that ends up closing on it. But you still need earnest money to get it under contract. And so that's what you did first was the whole wholesale thing. You got a place under contract, turned around, found it in buyer, you sold it to them, you guys had this profit and then instead of taking that profit, you actually rolled it into. And lending to other people as a gator lender, where you're going, hey, I'll help people cover the costs to get their wholesale deals under contract and get, you know, their, their investments going. And, and so that you can move forward. And so what kind of returns are you making on that, that gator lending that, that gap funding when you cover that earnest money or whatever they need to get it under contract and get going.
- [20:33]
A
Yeah, you can, I mean you can, you can make up your. So I'll just give you an example of one that we did. We lent on a subject to deal. So the investor bought a property subject to. But Then he was going to wrap it to a non conventional buyer, but he needed some funds. I don't actually remember what the funds were for, but the guy that brought us the deal, he's pretty solid, so. And the guy that was the actual investor that needed the money, I actually, I was at an event, I talked to Pace Morby and he knew the guy personally and he's like, solid dude. Kind of like confirmed like this would be a solid deal if we, if we did lend the money. So we lent the guy 25 grand and then he, and then in the end we received back. I think it was like 11 grand back on top of the, the 25 that we. Yeah, that we. There was actually, it was supposed to be lower than that, but the guy that structured the deal for us, he put in the clause, you know, if it's not paid any, any days after the 90 days that it was due would accrue some, some penalties. And so the guy had everything in place. It wasn't that he didn't have an end buyer, it was just that the.
- [21:48]
B
The buyers drag on. Things drag on.
- [21:51]
A
It dragged on. And we like.
- [21:54]
B
I love that. Guys, listen, penalties, penalties. People like, like you gotta have consequences or people don't listen because it's hard. You gotta prioritize your life. You're like, okay, where am I going to put my time? Where am I going to put my energy? And when there's heavy consequences, it, it changes how you prioritize something. Right? And, and if you don't put penalties on, especially lending money. I see this all the time. Guys will lend money for stuff. And I'm like, well, what, what's, what's the penalty if they go longer and they're like, oh, there isn't one. It always goes longer. It's, it's going to go longer even if there is a penalty, which then you're fine with things like que. I made more. But if there is no penalty, then they really could drag that thing on forever. And you got all this money tied up that you could have been spending other places anyway. Yes, I love that you mentioned that. I just want to drive that point home, have some penalties because it'll probably work out in your favor. I mean, you guys got almost like what, a 40% return on that in a couple months?
- [22:50]
A
Yeah. So, yeah, so each of us, me and my partner, because we, we put the money in half and half, so we made $4,500. You know, at the end of that 90 days, it dragged on just a little bit. But still, it. Yeah, it was enough that the guy was, like, trying to speed it up and anyways, yeah, so, yeah, we made. Together as a. As a company, we made nine grand on top of our. Our money that we invested. And. Yeah, so I don't. I didn't know the person. That's why I had to say the numbers, because I don't. I didn't work it out as what. As far as I'm not good at math.
- [23:21]
B
I have no idea if it's not on a spreadsheet, but I can just, like, plug it in, like, I don't know.
- [23:26]
A
Yeah, the nice thing, too, was the guy that brought us the deal, he got a cut of it too. I think in total was like 11 or 12 grand. So he took a smaller cut, but he had no money in the deal. He had no risk. And so by him structuring the deal, like, did a great job structuring it for us. Like, he got a little payday too, so.
- [23:43]
B
And that's why you guys got nine, because he was getting the other bit.
- [23:46]
A
Yeah, he got like two. Two or three grand off of that, so.
- [23:50]
B
Okay, cool, dude. That's what's wild about real estate. Like, there's such big transactions. There's just so much money to go around, and it's like the person buying it was. It was worth it for him too. You know what I mean? Whoever was doing the subject, like, it's usually worth it for everybody or they wouldn't do it. You know what I mean? But it's just so cool that there can be, like, the guy's selling it and he's stoked. He finally got rid of that, you know, responsibility, that headache, whatever. You know, whatever reason he wanted to get out of it, that obligation. And then. And then the guy brings it to you. He makes a couple thousand bucks. You guys lend some money, you guys make a couple thousand bucks. The guy is signing it and selling it to the next. The buyer, you know, he's making some money. And. And it's just like everybody's making money along the way. And I would say, typically at the end of the day, everybody's happy that they did because they. Or else they wouldn't have done it. You know what I mean? So pretty rad. That's cool. So you. Have you done that? You've done that a couple of times then?
- [24:46]
A
Yeah, we've got. I've got. Our money is tied up in a deal right now, actually, so we've landed on another deal. It's actually not a real estate Deal. It's more of a. An insurance policy. It was kind of new, but there is a 50% return, so that's what was more most enticing to us. And there's an attorney involved. And so, yeah, it's pretty secure. Even if things don't pan out, well, at least have our money returned to us because we've got, like I said, an attorney on our side, hopefully.
- [25:20]
B
So how do you secure that money? When you're looking at funding one of these deals and you're doing this like gator lending or whatever, what kind of security do you have that they don't just put the earnest money down, the contract falls through, the seller gets the earnest money, you walk away with nothing. There's no deal done. Like, how do you secure your. How do you protect your funds when you lend them out?
- [25:41]
A
Yeah. So obviously there's a contract in place, so you want to make sure that there's a contract in place. As far as this one goes and even the other one. That's a great question. That would probably be a question. I was going to try to make it up and pretend like I knew. Honestly, I just know that the. The investor that, that has been bringing us these deals, he does a really good job with structuring the contract. So I know that there was some protection in there. Yeah, I feel bad. Your listeners are probably like, what? That doesn't help.
- [26:16]
B
But, yeah, you're good, dude. With real estate, with everything else, I was like, you only know what you know. You know what I mean? And the things you don't know. I'd run into stuff like that all the time. I'm like, how the hell do I not know that? Like, I've done so much stuff. I'm like, I should know that, but I don't. You know what I mean?
- [26:31]
A
Then.
- [26:31]
B
But then there's a whole list of things I hear I do know. And it's just funny to me, that's actually encouraging because anybody hears this, it's like, yeah, like, you don't need to know everything. You're not going to know everything. You're going to know this much. One deal in, now you know this much, three deals in and you know, and next deal you'll probably know more about how you secure it. And that's still, you know, more like there's just always ways to grow. But one thing that's really cool is you're working with people you trust.
- [26:57]
A
Yep, that's what I was going to say. That's what it is, basically.
- [27:00]
B
And that makes Life a lot easier, you know, not. Not just the people you're giving the money to, you trust them, but also your partner on these deals that's funding. And he's funny even more of it than you are, it sounds like sometimes it's like you trust him. And so it's like when you can work with people you trust, it makes life so much easier and so much more enjoyable. Yeah, it's vital. So. Yeah. Do you know, it's a. They say real estate's a team sport. You know what I mean? And. And when you can have a team that you like and you trust it, it makes things move a lot quicker, a lot safer, a lot more effectively.
- [27:36]
A
Yeah, I'm all into. I'm all about, you know, collaboration over competition, for sure. I think. I think Brody's a huge. Maybe even you, too, that believe. Big believers in that, you know, and, like, don't need to compete with everyone, like, collaborate, network, and this is what can happen.
- [27:54]
B
Yeah, no, it's cool. And in the past, I always kind of just try and did my own thing because I just don't want to, like, dealt the headache. It's like, stuff. But lately I've just. I've been doing some more partner deals and bringing people in and, like, finding deals for them and. And it's. It's been kind of fun. Like, it's. It's cool to work with people. I've been able to see it's been easier for me to grow my portfolio, and they're growing their portfolio, and I'm like, oh, this is just kind of a win win. And as long as you structure it right, so no one's feeling compromised, then. Then I think it's good. A lot of times, like, oh, people are like, I don't want to do a partnership or work with other people because what about xyz? I'm like, so just structure XYZ in a way that you're stoked about and you don't care. Like, most of my partnerships, I do. I do all the work. I do everything. I make every decision, and I have, you know, executive decision power to make every decision. I don't have to clear everything with my partners. Like, what about this rent and what about this tenant? What about this paint color? Like, I don't do any of that because that's what I didn't like about the idea of partnering is just the slowness of, like, clearing things with every partner I had about every decision I made. And I was like, look, I'm going to unilaterally make every decision. And my partners I bring in, because that's how I structure my deals. They're stoked. Yeah, I don't want to deal with that crap. Like, that's literally why I'm having you do it, is I don't want to have to make any of these decisions. I don't want to think about it. I want to give you my money. You build our portfolio like, that's it. And I'm like, great. That's what I want to do, too. And so if you structure things the way you want, it's perfect. But that might not be it for some people. They're like, the most important thing they want is education. They know I want you to show me every step of what you do, and that's why they'll partner. And I've seen people, like, take away less profit just for the experience.
- [29:36]
A
You know what I mean?
- [29:37]
B
It's like, okay, if that's what you're going for, just structure things according to what your goal is, and then you're going to be stoked on the partnership because it's. You structured it the way you wanted. You didn't have to do it some other random way. Like you were saying, with these returns, you can put whatever return you want when you lend out money. And if. If they don't want to give you the 35 you demand, then you don't lend the money and you're fine. And if they take it, then you're stoked because you're getting the return. That was worth it for you. Yeah.
- [30:05]
A
Yeah.
- [30:06]
B
I love that, man. That's cool. So you've done. You've done a couple wholesale deals, though. I know we've been talking about the lending thing, the wholesale thing. You're finding a property, you get it under contract, and you find someone else to buy it, and then you cake a piece of the middle. Let's dive into that. How many of those deals have you done and where have they been at?
- [30:28]
A
Yeah, so in total, I've done five deals. One by myself, that one in Chicago, that very first one, and then the rest have all been partnered deals. So, yeah, so the one was in Chicago, and then the rest. The other four have been in Utah. So Orem, Sandy, Salt Lake, those areas. I haven't done any in St. George. That would be nice to get one here in. In town where I live. But shoot, at this point, I. I don't know if I'd wholesale. If I find something, it's. It's either I partner with Someone like you, we've been talking about partnerships, you know, or try to take it down myself somehow. But, but yeah, so, so like you said, it's just assigning, getting, finding willing seller that would, you'd be able to. And I think the, the wholesale part gets a bad rap because a lot of people call us low ballers, right? And the thing is when you're, you could become labeled as a low baller if you don't know how to comp property. Comp properties properly. So if you're not very good at comping properties and you're just going out, going off a Zillow, making just like a guess of what you should offer, then that's where I think you run into problems. And we get a bad rap from, you know, the real estate community. But what I've come to know, wholesalers as they're, you know, your bird doggers, your people that are, that are, like you said, looking out for properties that people that are really heavy investors don't have the time to look for, you know, they're busy with their projects. So they're not, their eyes aren't on these properties. So if you're able to find one these, there's plenty of buyers out there. The hardest part about a real estate transaction is it the money, which, you know, I started learning early on. It's the deal. Like there's so much money in real estate, but there's the deal finding that's the hardest part, right?
- [32:27]
B
And it's got to be a deal like not finding a piece of crap to sell. Like, that's not a deal, that's just sales. That's just selling a product. But if you actually find something that's an actual deal. Oh, dude, you got, you'll have investors lined up out the door to snag an actual deal that'll give them a good return. You know what I mean? Like, yeah, 100%. Because, because that's the tricky thing is finding the dealing you don't have. It doesn't matter how good you are at everything or how much money you have, if you don't have a deal, what are you going to do with your money? You know what I mean? You can't act without the deals. So how are you, how do you find these deals? Now I also want to know, you said you partnered with these wholesale deals. What does a wholesale partnership look like and how are you finding these deals?
- [33:11]
A
Yeah, so there's a couple ways that you can partner. So when I partnered, I basically tried to structure and not Just me. But like I partnered with two other wholesalers and basically what we did was we figured out how to put together a team because wholesaling it has some parts to it. You have to find the deal. So an acquisitions wholesaler, someone that's out there calling either off market leads or on market. So that's how we find our deals is we either we can skip trace leads of vacant properties. You can find, there's plenty of services that you can use to, you pay a little bit of money, but you're.
- [33:46]
B
Able to skip, skip tracing it. It's a software where you can see like all the people that are associated with an address who've like owned it or lived there, hopefully owned it. But you can get, you get like a list of like 20 phone numbers and email addresses, right? Like these are probably the person that might own it. So you can reach out to them to try to find the owner. What are some, what are some of the softwares, the names of the software that you use?
- [34:08]
A
Yeah, you can use Propstream, there's batch leads, there's. I used, I forget the one I used when I did the one in Chicago. I haven't used that one since because I've realized, you know, PropStream, batch leads, that's one that like Pacemorby is partnered with. There's Deal finder, deal machine, there's, there's like several out there that, that you can use. You use their, go into their system. Just type in like a area code and then you're looking for, you can click on like vacant or absentee owner. You know, someone that owns a house that lives outside of the state. There's, it gives you like a cat a list of categories of things so you can filter out what type of house you're looking for. And so normally if it's vacant, that kind of gives an idea that it's a potential fix and flip. So that's the, that's the go to list that, that we did when we did off market was vacant homes. And so you put in that the area code of what you're looking for. It brings up a list of homes that fit that criteria. And then you go to skip trace. It may cost a little bit of money and then once you pay for it, it'll give you the phone numbers and the names of all of those addresses. And like you said, it may or may not be the actual owner, but it'll give you, it'll give you like three or four numbers to call from. So you at least have, you know, Some options to see, hey, maybe you might hit the right number, maybe not from. In my experience, majority of them were the actual owner. So that was nice. It was kind of rare that you got someone that was like, no, that's no longer my property. So. So yeah, so you use these services. And then the other way that we looked was just on the mls, so you look on Zillow and you can just find the homes that are listed for sale. And that's another way like that, that's probably the best way because that's an indication obviously that someone wants to sell their houses on the market so they're, they're motivated. Whereas off market it just might not be listed. But there's, you don't know whether they're.
- [36:18]
B
Actually, if they're on mls, they're, they're, they're usually contracted with a broker to sell it. So do you work with brokers and under contract sellers like that or you get them like after they expire?
- [36:32]
A
Yeah, no, we, that would, that's another good list is expired, but no, I haven't called expireds before, but yeah, we just contract through the, the agent, whoever the list agent is, we just call them up and we usually look for days on market because if it's been listed 30 to 50 to 70 days, that means they're not, they're either not getting the offer that they want or now, you know, maybe they're motivated at that point. Like that's it just. There's a lot of telling signs cut.
- [37:01]
B
In that just part of your expense to make sure the agent gets paid their commission because there are, you know, and then it's just part of doing business. That's cool.
- [37:09]
A
Yeah, yeah. And we always try to, we. The, the, the key for us at least is try to have the agent represent both sides because there's incentive there too for the agent to, to represent us. And the buyer, they get, you know, a little bit more on the commission side. So.
- [37:26]
B
Yeah, that's awesome.
- [37:28]
A
So there's an acquisitions wholesaler. There's someone that goes and finds the property. Then you need someone that, I mean, you can do, you can do all of these yourself. What we were trying to do was break it up so that we could fight, we could look for deals quicker. So, so I'm gonna say the process but like know that you can do all of them yourself. You don't have to get a team together. It just might take a little bit longer unless you get a good system down. But I was the acquisitions guy, so I was the Guy making the phone calls to the agents about different properties. And then we had a guy that was doing the, the comping, he would comp all the properties. So that, that way I already had a number. I didn't have to go get off the phone, go start running numbers. Because I didn't want to waste any time running numbers prior to making the phone call because the phone call would determine if it's a deal or not anyway. So it's like, don't waste your time looking at numbers before you comp it.
- [38:20]
B
Before you reach out or you comp it after you get a hold.
- [38:24]
A
Yeah, I would, I would comp it after I reached out. I would make sure I made offers. But when I was on my team, that guy that was, he was the one that was actually sending me the properties to call on and he already had in notes what it would comp, what it, what the comps were. So that was like, hey, this is the offer where it would need to be at if they're open to, you know, an offer at market value. So yeah, and then we had, and then we had someone that would dispo the property or sell the property to an end buyer. So he was the one that took care of all the buyers. Right. So we had that little process, find, comp and sell. And then when the deal closed, then we all split it evenly between the three of us. That's so.
- [39:12]
B
Man, I love that. I like that breakdown. And again, it's cool. Like, and what I love about is you, you guys are just doing this low key, right? Like that's just three of you. You're not spending $20,000 a month on marketing. Like you're just kind of doing this, you know, buy a couple cheap lists and call through whatever, you know. And it's cool because with wholesaling it can be as big as this, you know, billion dollar business. You'd be running a huge operation nationwide down to.
- [39:38]
A
Yeah.
- [39:39]
B
Huge call centers outside the country. I mean it can get, it can be wild and, or down to just like literally some 17 year old kid that can't even put a house in his name going, I want to get into real estate. So he learns how to comp, figure out what things are worth, learns how to read a listing, starts calling some people and gets, gets something lined up and then turns it over to this wholesale group and they, they do all the rest of it. Or you can hold that himself and you can literally make money at just one solo dude getting something under contract and assigning it to someone Else with no money, you gotta have a little bit of experience, do some research, and that's it. So, you know, it can be like, say it'll be a lot more legwork because you're gonna have to do all three of those sides, you know, but you could literally do that as a solo person with zero money and be the best way to learn the industry and get your feet wet in real estate. And a lot of people do start there. Or it could be as big as a multi million dollar business. You know, anything in between, which is kind of where you guys are at, which is cool. I just, I just love that aspect because I've interviewed a lot of big wholesalers and I love to just like, dude, it doesn't have to be this huge business to still make 10 grand here, 20 grand here, next 50 grand there. It's like, that's, that's still a lot of money to a lot of people. You know what I mean?
- [40:58]
A
Which can be cool. And don't forget, there's vas too. So you can hire. I mean, if you wanted to, it might take. You might have to burn through more leads because they're not you, they're in the Philippines or whatever country. But yeah, you could do that. I don't know if you mentioned that already, but yeah, no, yeah.
- [41:14]
B
I mean, yeah, you can hire virtual assistants, you know, overseas to call through them if you don't want to do it. You know, you can do as much on your own as you have the time. I just think of someone with like no money, no job, all the time in the world. It's like they can't afford a va, they don't have partners. Like, dude, go find a deal and, and get on a Facebook group of investors and say, hey, I think I have a deal. You're gonna make five or ten grand. Like, if you can just do that, like, it's. It's crazy. And people are sitting around working jobs, they hate, making pennies on the dollar, working insane hours, and it's like if they just learn a little bit of how to hustle and take it under them, their. Their life in their own hands, like they can. Providing way more value to sellers, buyers, investors, everybody along the way. And there's money to be had, you know, which is cool.
- [42:06]
A
Yeah, Agreed.
- [42:08]
B
Crazy, man. We could chat about this forever. I do want to go into some of our final four questions and get your thoughts on that, but what's a good way for people to follow you? So non real estate related, I know you and your wife Kind of have these fun content creation stuff and. And every. I'm. I'm gonna be super blunt here. I'm like, dude, these are so dumb. And then I'm watching it and I'm like, dude, these are so funny. Like, I can't take my eyes off it. Like, every time it pops up on my feet, I'm like, here's Ernest being funny again. And then I don't sweat, I don't swipe. I'm like, staying on and I watch the whole thing and I'm like, like, dude, they get me every time. Like, they're pretty funny, though. And I've got young kids like you guys, so it's a good time. But. But what's a good way for people to follow your fun stuff and also your real estate stuff?
- [42:52]
A
Yeah, so Ernest Kyocho. So just my first last name is my username on Instagram. And so I'm there same thing on like, Tick Tock. So, yeah, like Joe, like Joe said, like, most of my. My content is like skits with myself, family. And I. I laugh that you said that, bro, because I think that every time I push posts, I'm like, this is so stupid. Stupid. And. And then when it does, well, I'm like, oh, man, I have no idea why people like this. But, yeah, it gets. Sometimes it gets traction, sometimes it doesn't. But yeah, it's just so funny that you said it because I'm like thinking the same thing, so. I appreciate your honesty, man.
- [43:33]
B
Well, I didn't mean to offend you. I'm glad I didn't.
- [43:37]
A
I know people want to tell me the same thing because I feel cringy every time I'm recording something.
- [43:43]
B
But they're fun. I always enjoy watching them. So. Yeah, so. So it's just your name, Ernest. E R N E S T Kyocho. Which is Q U I O C H O on Instagram, if people want to reach out to you to maybe partner with wholesaling or lending, getting, you know, gator funding from you, if they want to do anything real estate related, is that the best way to reach out to you just on Instagram or.
- [44:07]
A
Yeah, they. Yeah, they can DM me and I'm pretty active in there, so I'll see. I check it. Even if it gets hidden, I look at all the requests and stuff like that.
- [44:16]
B
So that's great, man. Awesome. Well, let's dive into our final four. Here we go. First question. If you had to start your real estate journey over knowing what you know now, what would be Your first or second move.
- [44:29]
A
House hack.
- [44:30]
B
House hack.
- [44:31]
A
Just buy that primary buy. I would buy something up to four units, live in one, rent out the others for sure. Can't hard to do that with a family or. I'm not saying it's not. It's not hard to do. It's just because I kind of want to do it with my own house, rent out the rooms currently. But with kids, it's got rent to strangers right now in your own house.
- [44:53]
B
Right. For sure. A little trickier. No, I love that. And I would say this, like, even if someone's like, oh, I'm not willing to rent out a side of the house or rent out a bedroom or anything like that, the other half of this, the house hack, is just buy something that when you move out, you can rent it for about the cost of the mortgage and its expenses. Because then you can just go put 5% down, buy something, then move on in the next place. Buy something, you know. So even if while you're living there, there's no financial support, you're not renting out anything, you're paying everything. But the moment you leave, it can about COVID itself. You now have another ad to your portfolio and maybe you got in it with 0% down or 3% or 5% down. And then you do that again and again and again. Even if you're not doing the duplex, fourplex, basement unit adu. You know, if you can do that, awesome, you get the benefit while you're there. But if not, at least you can rent it out when you leave and you don't have to sell it. And then you're not actually growing your portfolio because you sold your home because you'd be hemorrhaging $2,000 a month because it's. The mortgage is so much more than you can rent for. So you can find a way to. To get those numbers to work. Then go buy a primary every year and just roll that for the first couple years.
- [46:04]
A
So yeah, great advice. And I'm not a. An expert at it. It's one I just learned. Another way to house hack is just rent out space like in your garage. You can.
- [46:14]
B
Yeah.
- [46:15]
A
As storage or like a studio or so anyways, I haven't done it so.
- [46:20]
B
Many things like that now like you can rent out like an RV pad. Just, you know, someone can park their boat for storage or their RV for storage if you have extra space like garage. Like there's every. Dude, there's. You can rent out anything nowadays you can milk in any case anyway. So Number two, question number two, what book or podcast would you recommend?
- [46:44]
A
Okay, book or podcast. If it has to do with, obviously, real estate, I would say Wholesale Hotline is a good one. Obviously there's, you know, bigger pockets and stuff. But one that, like, I'm. I'm really geared to is Wholesale Hotline, and that's put on by Jamil Damie and Brent Daniels, if you're familiar with who they are. They're like in the wholesaling world, too, but they're. They're also just big on partnerships. And so they do a live show every Monday. And so it's not only educational, but you can actually be in the comments live in the live chat.
- [47:22]
B
Cool.
- [47:23]
A
People are always throwing out like, hey, I want to partner. And so a lot of people have. Actually, I've never partnered with anyone in that chat, but people have partnered in the chat and have created partnerships in there and done deals. So they give you education on the real estate world, but then you can also find partnerships there.
- [47:43]
B
I love it. All right, what's the most expensive or interesting mistake you've made in real estate investing?
- [47:55]
A
Yeah, it would probably be one currently that I'm in. I. It's. It's a. I do have one passive lender gator lending deal that I'm doing that there's an. There's going to be some litigation involved. So I lent ten grand to. To a company that's doing fix and flips all throughout Texas. And the. The girl that I went through, I think she was genuine, but she has since distanced herself from the partnership and left. Left the company. And so that doesn't look good. And then we just haven't really heard any. We haven't gotten any updates on the properties. So I've actually got involved with that. The girl that we all went through, she actually put us, all the investors that are on these deals together in a email chat. And we're all trying to figure out right now how to meet up with an attorney to basically see how to resolve this situation because we were getting hints that it could be fraud. So anyways, I feel like that's my biggest mistake because I probably was just a little too lax on doing my investigation before I actually lent the money on that one. Just. Yeah, just because I was getting excited, things were picking up. I was kind of just. Yeah, that one I was a little bit lax on. So I didn't, I didn't hesitate. As much as I. I do on normal deals, I do give a little bit hesitancy. Right. Because I want to make sure it's legit, and I think it started out that way, but I think, yeah, so.
- [49:34]
B
It'S funny how that'll happen. You get too many wins in a row and you get kind of like, comfortable, like, oh, it'll be fine. Yeah, I've seen myself do that.
- [49:45]
A
Is that mentality. So, yeah, so this will be, this will be my biggest mistake. But I, I, I'm sure there's going to be a huge lesson that comes out of it, for sure.
- [49:55]
B
Cool. I love it, man. Appreciate you sharing that. All right, to wrap up, what is one word or a short phrase to encapsulate why you love real estate investing?
- [50:07]
A
Oh, man. Freedom, I'd say.
- [50:14]
B
Yeah, Freedom, my language, man.
- [50:16]
A
Yeah, that's, that's essentially what I see it can do for us. So we're not there yet, obviously, but yeah, that's, that's what I, Every property is just a means to an end of, of what it can do for you, what bills it could cover, what, you know, what, what vacation it could allow you and your family to take. I mean, so that's how we look at any transaction we go into. We, we make sure it's not just, it's not just something that's going to give us, you know, a quick, some quick cashier. We're in it for the long game. My family and my wife's on board too, so that's cool. And so, yeah, freedom for sure.
- [50:52]
B
I love that, man. I mean, that's literally my whole brand. I've got a Instagram, frdm, Freedom without the vowels freedom, REI Club. Like, that's been my LLC is Freedom Management. Like I, I brand that. I love that. It's what it's always been about. And that's what I love about real estate is, is the idea of an infinite return. Not just, oh, I make, I work hard, I get a wholesale dealer, I flip a place or make a sale, or I get a commission, where you make this money one time, and then it's like, okay, now I gotta start over, right? But I give an infinite return. I'm like, this thing will be bringing me money forever and my kids money forever. Like just an infinite return. It's like there's no amount of effort that I can hardly justify to put into something if it's gonna pay me forever, it's like, okay, that's worth a little bit of sacrifice to me. That's worth some effort because it's gonna pay me forever. And the infinite return of real estate is it gives you the peace of mind of the freedom of like, oh, I'm okay. Because it'll. It'll be there tomorrow. It'll come in the next month. Next month. So. Yeah, well, the. More like the 7th of the month. The 1st of the month is when all the banks take your mortgages and you're like, oh, I have no money. And then the tenants start bringing in the rent and pays you back and like, oh, yeah, okay, we're getting it. So true. The banks don't mess around. They pay. They take a little quicker than the tenants seem to pay. But that's awesome, Matt. Well, sweet. I appreciate your time. Thanks so much for making it. I know this is our second go around at trying to record this. You have your shirt on this time. So last time you were, like, sitting in your car post gym, I think, like in a tank top or something and your phone overheated. So I'm glad we were able to make it work this time.
- [52:46]
A
Now I'm glad we went on that run and got a little bit closer, bro. You're a cool dude. And, yeah, I just appreciate the knowledge that you drop on me when we. When we go on those runs and when we hang out. So appreciate you, brother.
- [52:57]
B
100%. We should do some deals, man. I love it.
- [53:00]
A
All right, bro.
- [53:01]
B
All right. Well, this is Joe Jensen signing off for the real estate investing school, reminding you to keep your learning ahead of your earnings.