Podcast Summary: Real Estate Investing School Podcast
Episode 232: REAL DEAL: Getting Creative with Single-Family Homes
Release Date: January 30, 2025
Introduction
In Episode 232 of the Real Estate Investing School Podcast, host Brody engages in an insightful conversation with Felipe Mejia, a seasoned real estate investor dedicated to creating financial freedom through innovative strategies. The episode, titled "REAL DEAL: Getting Creative with Single-Family Homes," delves into Felipe’s unique approach to investing in single-family homes by converting them into duplexes, resulting in substantial cash flow and long-term wealth.
Guest Background and Mission
Felipe Mejia is a passionate real estate investor with a mission to help create 100 millionaires and multimillionaires through real estate. He recently founded REI Call Center, a company aimed at scaling his investment strategies. Felipe’s dedication to real estate is deeply personal, rooted in his childhood experiences during his parents' divorce, which compelled his family to generate income through real estate to stay together.
Notable Quote:
"I have a goal right now of helping create 100 millionaires or multimillionaires through real estate. So he's like, all in on this goal."
— Brody [00:50]
Core Investment Strategy: Converting Single-Family Homes into Duplexes
Felipe discusses his primary investment strategy: purchasing value-add single-family homes and converting them into duplexes. This method involves adding separate living spaces within the same property, thereby increasing rental income and ensuring a minimum cash flow of $1,000 per roof.
Key Elements of the Strategy:
- Property Selection: Minimum of three bedrooms and one bathroom upstairs, with a fully empty basement and garage.
- Conversion Process: Repurposing existing utilities without extensive restructuring, ensuring compliance with local codes.
- Cash Flow Goal: Each property must generate at least $1,000 in monthly cash flow.
Notable Quote:
"Every single-family home that I buy has to give me $1,000 in cash flow or more."
— Felipe Mejia [02:14]
Personal Story and Inspiration
Felipe shares a poignant story about his mother, who played a crucial role in his entry into real estate. Faced with the threat of foreclosure during his parents' divorce, his mother ingeniously converted their basement into rentable living spaces, generating the necessary income to keep the family home.
Notable Quote:
"My mom added three bedrooms, a small kitchen, and a bathroom. She went out to construction sites and rented out rooms, generating $1,200 a month."
— Felipe Mejia [04:54]
Operational Insights: Managing Properties Efficiently
Felipe employs his mother to manage tenant relations and late payments, enhancing operational efficiency. Her proactive approach ensures steady cash flow and minimizes the risk of missed payments.
Notable Quote:
"She’s slick, bro. She’ll front the rent money and charge the tenant a late fee, covering any delays."
— Felipe Mejia [03:21]
Scalability and Portfolio Growth
With over 20-25 properties under management, Felipe details his process for scaling his portfolio. Key factors contributing to his success include a well-defined buy box, strategic property selection, and leveraging equity through lines of credit to fund new acquisitions.
Notable Quote:
"I’ve been able to capitalize on my buy box over and over again, keeping my investments consistent and profitable."
— Felipe Mejia [06:39]
Funding and Financial Strategies
Felipe outlines his funding approach, which emphasizes saving for substantial down payments (20%) and utilizing equity lines of credit to finance additional purchases. This method allows him to reinvest without depleting his capital, maintaining continuous cash flow from existing properties.
Notable Quote:
"I save up 20% down and use lines of credit on equity to buy the next deal, never cashing out personally."
— Felipe Mejia [14:05]
Rehab Budget and Cost Management
Managing rehab costs efficiently is a cornerstone of Felipe’s strategy. By leveraging family connections and skilled tenants for construction tasks, he keeps renovation expenses significantly lower than industry standards.
Notable Quote:
"I can do rehabs for under $30,000 by using my own connections and minimizing contractor costs."
— Felipe Mejia [17:50]
Deal Sourcing and Market Knowledge
Felipe emphasizes the importance of understanding the market and identifying value-add opportunities beyond the property's current state. He advises investors to look for properties with potential hidden value, such as unfinished basements or additional living spaces that can be converted to increase rental income.
Notable Quote:
"Look beyond what's just there and capitalize on the mistakes of the listing agent or the appraisal."
— Felipe Mejia [18:19]
Creative Financing and Overpaying for Potential
Challenging conventional wisdom, Felipe discusses the benefits of overpaying for properties based on their potential to generate income through creative financing and strategic improvements. This approach allows for continued asset retention and cash flow generation, avoiding the pitfalls of constantly selling assets.
Notable Quote:
"I have also paid market or over based on what I know that asset can do. If you know your market, you can take advantage of that."
— Felipe Mejia [20:12]
Key Takeaways and Advice for Aspiring Investors
Felipe shares his most valuable lesson: the importance of selecting the right partner, particularly a spouse, who supports both personal and business endeavors. He underscores that having a supportive partner is crucial for long-term success and stability in real estate investing.
Notable Quote:
"Pick your partner the right way, like your spouse, who you're going to do life and business with."
— Felipe Mejia [21:41]
Connecting with Felipe Mejia
For listeners eager to learn more or seek guidance, Felipe encourages reaching out through his social media handles. He remains accessible and responsive, ready to assist aspiring investors with their real estate journeys.
Contact Information:
- Social Media: Felipe Mejia REI
Conclusion
Episode 232 of the Real Estate Investing School Podcast offers a comprehensive look into Felipe Mejia’s innovative strategies for maximizing returns on single-family home investments. By converting properties into duplexes, leveraging equity financing, and maintaining disciplined cash flow goals, Felipe exemplifies a successful path to financial freedom through real estate. His personal journey and practical advice provide valuable insights for both novice and experienced investors seeking to enhance their portfolios creatively and sustainably.
Listen to the full episode here.
Subscribe to the Real Estate Investing School Podcast for more actionable strategies and expert interviews.