Waiter to Financial Freedom in 18 Months (5 Rentals & $5,000/Month Cash Flow)

Summary

Real Estate Rookie Podcast Summary

Episode Title: Waiter to Financial Freedom in 18 Months (5 Rentals & $5,000/Month Cash Flow)
Release Date: March 17, 2025
Host: Ashley Kehr and Tony J. Robinson
Guest: Andres Martinez

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Introduction

In this compelling episode of the Real Estate Rookie podcast, hosts Ashley Kehr and Tony J. Robinson sit down with Andres Martinez, an inspiring real estate investor who transitioned from working as a waiter to achieving financial freedom within just 18 months. Martinez shares his journey of acquiring five rental properties and generating an impressive $5,000 per month in cash flow through a strategic co-living approach.

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Guest Background

Andres Martinez arrives on the podcast with a remarkable story of perseverance and hustle. Coming to the United States at 18, Andres worked a multitude of jobs to support himself, ranging from dishwashing and waiting tables to construction work. His relentless work ethic was fueled by his ambition to build a stable financial future.

"I came to this country when I was 18 years old, worked my way through every possible job that you can work as an immigrant."
— Andres Martinez [00:45]

After completing college and getting married, Andres faced a significant hurdle: despite earning almost six figures in cash, he couldn't qualify for a traditional mortgage to buy a home. This setback ignited his quest into real estate investing.

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Starting the Real Estate Journey

Unable to secure a mortgage, Andres turned to creative financing methods. A quick Google search led him to Pace’s mentorship program, which emphasized buying houses without banks or credit. This pivotal decision marked the beginning of his real estate journey.

"I joined Pace's mentorship, and a couple of weeks later, I found my first house appox."
— Andres Martinez [02:00]

Initially, Andres delved into wholesaling to build capital. Over the course of a year, he completed approximately six deals, which provided the necessary funds to purchase his first investment property.

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Transition to Co-Living Strategy

After a year of wholesaling and some experimentation with short-term and mid-term rentals, Andres discovered the co-living model. This strategy involves renting out individual rooms within a larger property, sharing common spaces like kitchens and bathrooms. Co-living proved to be a more sustainable and profitable approach for him.

"Co living because it sounds doable. I started putting some test ads to people."
— Andres Martinez [07:33]

Co-Living Defined:
Andres explains that co-living, also known as room rentals or path split, is akin to short-term rentals but targets longer stays. Unlike traditional rentals, co-living focuses on renting out individual rooms, fostering a community among tenants without the host necessarily organizing extracurricular activities.

"It's pretty much renting a room inside a house and you are sharing the kitchen a lot of the times, you're sharing the bathrooms."
— Andres Martinez [07:49]

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Validating the Co-Living Model

To ensure the viability of his co-living strategy, Andres conducted a series of tests by running his own advertisements on platforms like Zillow Apartments, Facebook Marketplace, and Craigslist. Contrary to some investors' skepticism, he found a high response rate from genuine inquiries rather than random clicks.

"I started getting like 13, 14 messages a day... People do respond, right."
— Andres Martinez [14:00]

This hands-on approach allowed Andres to refine his tenant selection process, ensuring high occupancy rates and minimal turnovers.

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Overcoming Challenges: The Contractor Nightmare

One of the most intense moments in Andres's journey was dealing with a fraudulent contractor who stole $5,000 worth of flooring and threatened to destroy the work he had completed. Faced with mounting pressures from both the project and personal health issues, Andres took matters into his own hands, completing the renovation himself with the help of YouTube tutorials.

"I had to spend every night after working a full-time job working on their property just to like meet their deadline."
— Andres Martinez [20:56]

Despite these challenges, Andres successfully launched his first co-living property, quickly attracting five tenants even before the property was fully renovated. This success was a testament to his resilience and strategic mindset.

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Building a Scalable Portfolio

Currently, Andres manages five properties with a total of 36 rooms, averaging seven rooms per house. His meticulous approach to property selection ensures that each investment meets his criteria for size and cash flow potential.

"Minimum three bedrooms, two bathrooms, 1600 square feet plus... need a PITI at 1600 or less."
— Andres Martinez [26:43]

By focusing on properties that allow room for expansion and maintaining low mortgage payments through creative financing, Andres has established a robust and scalable portfolio.

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Financial Achievements and Future Plans

Andres's portfolio generates over $10,000 in monthly cash flow. After splitting profits with private money partners, he nets around $5,000 per month. His success is attributed to high occupancy rates (97%) and minimal tenant turnover.

"Once you set up the culture of the house... they’re gonna follow that."
— Andres Martinez [29:12]

Looking ahead, Andres plans to expand his portfolio to ten properties before venturing into ground-up development, aiming to build properties specifically designed for co-living.

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Key Takeaways and Insights

1. Creative Financing is Crucial: Andres's initial hurdle with traditional mortgages led him to explore alternative financing methods, which proved essential for his success.

2. Test Before Committing: By running his own ads and validating tenant interest, Andres ensured that his co-living model was viable before fully committing.

3. Resilience Pays Off: Overcoming challenges, especially with unreliable contractors, showcased Andres's determination and ability to adapt under pressure.

4. Scalable Strategies: Focusing on properties that allow for room rentals and maintaining strict financial criteria has enabled Andres to build a scalable and profitable portfolio.

5. Building Tenant Culture: Establishing a positive and structured environment within co-living spaces reduces tenant turnover and ensures long-term occupancy.

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Notable Quotes

• "We never let anybody on the show say they are not smart because you have been smart in some aspect to be able to meet it this far in your real estate investing journey."
  — Ashley Kehr [03:27]

• "It is pretty much renting a room inside a house and you are sharing the kitchen a lot of the times, you're sharing the bathrooms."
  — Andres Martinez [07:49]

• "We bought my first house with other people's money, so I cannot fail them."
  — Andres Martinez [24:02]

• "Once you set up the culture of the house and you have like two or three guys there with the culture of the house, then the new people that move in, they're gonna follow that."
  — Andres Martinez [29:12]

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Conclusion

Andres Martinez's journey from a hardworking waiter to a successful real estate investor is a testament to the power of perseverance, strategic thinking, and adaptability. By leveraging creative financing and embracing the co-living model, Andres has built a profitable and scalable real estate portfolio in a remarkably short period. His story serves as an inspiring blueprint for aspiring real estate investors looking to achieve financial freedom through thoughtful and resilient investing strategies.

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Connect with Andres Martinez:

• Instagram: @AndresMartinez_C
• YouTube: Search for "Andres Martinez" for property walkthroughs and additional insights.

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Thank you for tuning into this episode of Real Estate Rookie. Stay tuned for more inspiring stories and actionable real estate strategies every Monday, Wednesday, and Friday.

Transcript

[Ashley Kerry]

Hey, rookies. On the show, we always talk about having a bias toward action.

[Tony J. Robinson]

Our guest today never gave up on making real estate work for him. He partnered with other real estate investors and used co living as his real estate investing strategy to be able to quit his W2 this year.

[Ashley Kerry]

This is the Real Estate Rookie Podcast, and I'm Ashley Kerry.

[Tony J. Robinson]

And I'm Tony J. Robinson.

[Andres]

And welcome to the show.

[Tony J. Robinson]

Andres. What's up, brother? How are you doing, man?

[Andres Martinez]

Good. How you doing, guys? Thank you so much for having me.

[Ashley Kerry]

Yeah, thank you so, so much for coming on. Andres, can you share a little bit of your background before we actually get into real estate? What were some of the critical steps you took kind of in your current state before you started your real estate journey?

[Andres Martinez]

Well, let's start from the beginning. Like they said, I came to this country when I was 18 years old, worked my way through every possible job that you can work as an immigrant. I started washing dishes, busboy, kitchen, eventually become a waiter, assistant manager, the ballet, parking, cutting, yard, some construction work, put myself through college. After college, I got married, and my wife is like, hey, we need to buy a house, right? And at that time, I was working full time as a waiter, so I couldn't qualify for a loan despite, you know, making good enough money. You know, we were expecting to qualify for a house. We just couldn't. And it's upsetting, you know, because you're making almost six figures, and just because you get paid in cash, you know, they don't want to take it. So I made a quick Google search how to buy houses without any banks, any credit. And as you guys know, that's like Pace's slogan. So I found Pace. I started watching Pace's videos, I found bigger pockets, and, you know, a week later, I was like, I'm gonna find myself a deal. So I joined Pace's mentorship, and couple weeks later, I found my first house app too. And that was the beginning of my real estate journey. For a year, I did wholesaling with that to build cash. And one of the last deals that I wholesale was to this guy who I didn't know what he was doing with the house because the house didn't really have an exit strategy. And when you wholesale creative deals, you gotta make sure that your buyer is. They're not gonna default on the loan. So I went with him to the property. We walk it. His GC is there, and he's like, I'm gonna put a wall here. I'm gonna put a wall here. We need another Bathroom here. I was like, man, what are you doing? He's like, oh, I do. I was like, that doesn't exist. That's false. So I went with a different buyer who was going to do an Airbnb in there. But that piqued my curiosity because he sent me his spreadsheet like, hey, we're going to make 3,000 net in this house. But I just couldn't believe it because who's going to share a room? Who's going to share a bathroom? And then after that, I started researching room rentals because at this point, this is now December 2023, a year after starting wholesaling, I'm like, I need to buy my first house. I've built this capital. I want to be an investor. So I researching that, I was like, okay, this sounds like a good strategy. Because that year when I started real estate, when I was doing wholesaling, I really dove into short term rentals and midterm rentals because I thought that's what I wanted to do. It is so hard. I'm, I'm not a smart person. I don't know how you guys do short term rentals, midterm rentals. I, I don't understand how to run the numbers. I have joined, you know, a lot of coaching programs that I've paid for. I've seen every YouTube video possible. I still don't get it.

[Ashley Kerry]

Hey, we never let anybody on the show say they are not smart because you have been smart in some aspect to be able to meet it this far in your real estate investing journey.

[Tony J. Robinson]

So, Andres, there's a couple of things in your story too, because I want to get into it how you made the transition over to co living. But there's a couple of things I want to get into. First, you mentioned Pace. You know, for our Ricky referencing Pace, Moreby and Pace actually wrote a book for biggerpockets. It's called Wealth Without Cash. If you guys head over to the Bigger Pockets bookstore, you can pick up a copy of that and learn about, about the strategy that Andres was leveraging to help him kind of get started in real estate investing. But it sounds like, Andres, that you said you started wholesaling first, which is a way to generate some cash, and then you decided, hey, let's get into kind of, you know, actually owning the real estate as a, as an asset. And I just want to point out for a lot of our rookies that are listening, you might find yourself in a similar position where you have the desire to go out there and start Building your portfolio. But from a cash perspective, maybe you're not ready. So even if you can't necessarily put down 20% grout and buy that first rental, are there other things you can do within the world of real estate investing to generate the cash which will then eventually allow you to go out and buy something? So, Andres, just really quickly, before we get into the co living, how long were you focused on kind of that, that active income strategy before you had enough cash set aside to go out and actually get your first buy and hold rental?

[Andres Martinez]

About 10 months. 10 to 11 months.

[Andres]

10 months.

[Tony J. Robinson]

Holy crap. That was a lot faster than what I was thinking, man. That's.

[Andres Martinez]

I wasn't that successful, honestly, that year. I mean, at that point I was before that working full time as an assistant manager slash waiter. So I was making pretty good money. But I was working seven days a week, you know, 12 hours a day, like no days off. If they called me, I have to be there. But with wholesaling. Well, how I get into wholesaling, Right. While doing the full time job, I was flipping clothing online, like going to the thrift stores and selling it on ebay. Poshmark. I was flipping furniture, I was flipping appliances.

[Ashley Kerry]

We love side hustle ideas on the show and that is a great one.

[Andres Martinez]

I always side hustle when I was in the community college. My sister in law used to work for Bioworld, which is the company that produces those things for Hot Topic. You know, the kind of like anime toys and backpacks. They would have a clearance every three months and sell everything for a dollar. So I would go buy a hundred things, put it in the trunk of my car and go to college, park right outside the, right outside the arts building and sell it to all the, you know, the otaku guys there that play music and do arts. So I would pay my tuition that way. I've always liked the idea of side hustling. You know, like if we go back to when I was a kid, you know, reselling candy, deflating other people's bicycles so I can sell them air. You know, I've always had that mindset. I was four or five. No, don't judge me.

[Ashley Kerry]

Were you like, I've seen this Instagram reel where a girl pranks her dad and she goes to her dad and says, yeah, I went to the mechanics and they actually, they have premium air there. It was only $100 and I got premium air in my tires, like just to get a reaction, you know, out of her dad of it. Is that you? Are you selling the premium air.

[Andres Martinez]

I've always had these little side hustles in. You know, in college I run a poker room under table until I got kicked out. But that mindset of always doing something on the side, you know, that's. I think that's something my parents, you know, gave me. Because, you know, when you come from poverty, all you have is hustle, greed, and you cannot give up, right? The, the hopes of my, my ancestors lay on my shoulders. I gotta keep going no matter what. So now we jump into wholesaling, right? I wasn't very successful. I only did like six deals in one year, which is not a lot, but it gave me enough cash where I wanted to to buy a house, right? And, you know, I decided to go with co living because it sounded doable. I started putting some test ads to people. I was like, hey, yeah, I need a room, I need a room. Studio apartments at that time in Fort Worth are going for 1200, 1300. So if I can get somebody in a room for 700 to 800, that sounds like a good model.

[Tony J. Robinson]

Sorry, before we go on, I just want you to define what co living is. We've had a couple of guests on the podcast who have kind of gone through this strategy. But for folks who are listening and they've maybe never heard the phrase co living, what exactly is this and how does it differ from traditional long term rentals or traditional short term rentals because.

[Andres Martinez]

Of various names, you know, co living, room rentals, a lot of people know it as path split. Like the same way we know short term rentals as Airbnb because that's the biggest platform that does it. But it's pretty much renting a room inside a house and you are sharing the kitchen a lot of the times, you're sharing the bathrooms. Now a lot of people right now, you know, all the big coaches, they're fighting into, oh, if there's no community in it, it's not a co living. It's just like you're renting a room. I would say that's the landlord's taste. Depending on your tenants. A lot of people really try to do a lot of extracurricular activities for their tenants. You know, like pizza parties and trying to do this, trying to do that. I don't do anything like that. I just let them be. And I've had only one turnover since I started in 10 months. So I think I'm doing something right. A lot of people don't believe me. It's like, that's not possible. You have like 42 tenants and only one has left. I was like, yeah, you know, give them a good product.

[Ashley Kerry]

We're going to take a quick ad break, but when we come back we are going to hear more from Andres on his portfolio and how he cash flows from his co living strategy.

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[Ashley Kerry]

Okay, now let's get back into the show. So Andres, I have a question for you. As far as the co living, you know, I always think of co living as, you know College, like that's what everybody did in college was rent by the room that got places. And you mentioned a couple places where you can list the apartment, such as Pad Split and several others, and those are like the Airbnb platform for co living. What, what do you think is like, the big reason that co living is becoming more popular right now? You know, people talked about rent by the room, you know, you know, out throughout time, I guess. But like, it seems like this year, going into 20, 25, co living is the hot new thing. Several years ago, it was air, and then after that it was midterm rentals. What do you think is the major shift that has made this like a hot commodity right now for investors, but also for people who want to live.

[Andres Martinez]

In co living, it's, you know, real estate cyclical, right? 28, 29, the bar was the biggest thing because you could get all your money out, you could get paid, you can get cash flow. 16, 17, Airbnb is a boom. Two years ago, everybody was like, oh, the interest rate is so low, let's get it at that low, and resell it on a wrap. Also at the same time, hey, let's do traveling nurses, right? Let's do midterm rentals. And now everybody's failing on that. Now it's like, oh, co living because it's secure cash flow. The thing is that colleaving is actually really good because, you know, just as a general economical principle, we're targeting the people who make the least amount of money, right? And we are taking care of the most principal need, which is shelter. You know, so that's always going to be there. Because what happens studio apartments, which is, you know, the efficiency apartments, the cheapest thing that you can buy, those prices have gone so high that people can't qualify for them, right? For example, this studio apartment in this area, that is 1200, you need to make about 43, $44,000 a year to live in. What happens with the people who are making 36, 35? What happens to the people that are making minimum wage? Where are they living? Right? So even middle school teachers, high school teachers, they don't make that much money, right? I have one teacher and one of my properties. And when she came, she was crying. And I was explaining her like, look, this is not a group home, right? There's an engineer here, he was from home. There's nurse. The other guys work locally because she couldn't believe it. Like, she went to college, she has a master's degree and she has to share a Bathroom with a couple guys. So it is what it is.

[Tony J. Robinson]

You know, Andres, let me ask because you mentioned something that you did a little bit of a test before you actually dove into this strategy. And I'm just curious, what was that test? How did you try and validate this idea before you actually committed to it?

[Andres Martinez]

Advertising? Because my biggest fear, it was like, how long is it going to take to get full? Because at that time I was using, you know, other companies numbers, they're telling you like, hey, takes like this long. They stay for that long. And then talking with investors actually in the platforms, like, dude, we're barely breaking even, right? As soon as you launch, they get you full. But then after that they start taking tenants because, you know, so many people are diving in. And there was, at that time there was no control, which is about a year ago. You know, landlords can do whatever they want. So I was like, let me, let me just run my own ads, do my own marketing, see if I can get my own tenants. So I started researching how to do that. I found Sam Wiegert, who is probably the biggest investor in this market. He's out of North Carolina or South Carolina, somewhere in there. And he does a five day free course where you can learn how to do this yourself for free. So I copied that and I started Marketing on Zillow Apartments.com, facebook Marketplace, Craigslist, all the room rental websites, Roomies, Roomster, Somper. I only got leads from Facebook Marketplace, but I started getting like 13, 14 messages a day.

[Ashley Kerry]

Was it like, is this still available?

[Andres Martinez]

All of them were, this is still available. And a lot of investors told me, don't do it because people just click on it and they will respond. And I was like, okay, do you respond to is this still available? No, never. Well, let me do it. So I started replying and guess what? People do respond, right? They don't type room for rental just because they're crazy. So I started having conversations with them and you know, the property was barely under contract. I had just gotten out of contract with the seller and I was already people like, I'm ready to move in. So I was like, okay, this works, let's. And then something else happened where the person who was going to onboard me into the company, they said a few things that my lawyer didn't agree with. Right? And that's something a lot of gurus and investors don't talk about, which is the legalities of it. And that's something, you know, we have to be aware of it. Otherwise you know your investment is going to go belly up.

[Tony J. Robinson]

Yeah, it's a super cool way to kind of like test this strategy before going into it fully. And I guess two follow up questions for me. Number one, what did you actually put into the post that you think like garnered such strong attention? And then second, how did you actually land on the pricing for the room rental? Like you said, like, hey, for you it's difficult how to, you know, underwriting, analyze properties as a short term. I know how to do that really well because we've done it a lot. But like the idea of the single room rental, I feel like there's a little bit less clarity around how to do that. So first, you know, what did you put into the post to generate so much attention? And then second, how did you decide how much to actually charge for your rooms?

[Andres Martinez]

Yeah, so the way you underwrite a room rental, you go from the comms in the area, right? You can go, you can use comms from Silo. Silo is great. Realtor.com because it tells you what the apartments in the area are going for. So once you find that price in your area, let's say it's between 1,1200, you want to be within 65 to 70% of it because it has to be a deal, right? You're telling people you're going to share a bathroom, you're going to share a kitchen, so it has to be a deal. So I started testing ads at 60%, 65%, 70%, 75% and 80% of the price of the studio apartment, which is at that time the cheapest available option. And I started getting responses in all of them, right. I was okay, so it's not about the price, right? Because now we're talking about 775, 800, 825, 850. My cheapest advertising at that point was 600. And I started getting people who would not have qualified anyways, right? They just got out of jail, they have multiple felonies, DUIs. And one thing I really like about Facebook Marketplace is that you can click on their profile and see their pictures. As a general rule of thumb, if their profile picture is themselves holding a few guns with a lot of weed and a couple pit bulls, they're probably not going to qualify, right? And so you don't even have to waste time betting this, this possible tenant.

[Ashley Kerry]

I've done that before too, is where, when I haven't done in a while, but I used to post long term rentals on Facebook and I would go and I'd also look at like, their interactions with comments or like, if they had pictures of them, like in their own house, like trying to look like, is it kept clean? Is it nice? You definitely can find a lot about a person by going through their Facebook page for sure.

[Andres Martinez]

I think yes, because they are deliberately choosing that to be their avatar. You know, they want the world to know them as that. So if you want the world to know just that, well, I will my as well treat you like that. Right. And you know, there's so much volume right now from my ads, so I can choose the better tenants. Right. So right now I have a criteria where I'm really just looking for introverts, you know, and the when they respond, it's like, hey, tell me a little bit about yourself. I'm a night owl. I keep to myself. That's perfect. Because what happens before, I was looking for like building the community type of thing. And that usually means you're gonna get people who want to talk to others. They might be friends for a month, for six weeks. Eventually they're gonna crash, right? Because you don't know that person. You don't know their background. So while building my lease, I was like, what is the middle ground? Where, like. Because eventually they're gonna come to you if there's a problem and you have to be the referee, right? You broke the lease, you're out. So what happened? The people that have a good background check that we're living with, people who don't have a good background check, they start texting me. So I was like, what you don't like about this? And I was like, man, they're forcing us to do this, they're forcing us to do that. Like, they want us to buy the towel papers together, the toilet paper together. They want us to share this and that. It's like, what would you like? I was like, I just want to buy my own business. Done. You're allowed. Right. And I kind of let each house self regulate. Right now I have five closing, one more in two weeks. Hopefully we're almost there.

[Tony J. Robinson]

And Andres, on. On those five, can you just kind of walk us through in a little bit more detail? So you have five properties currently. How many rooms is that and how many specific tenants is that across all those rooms?

[Andres Martinez]

It's 36. 36 rooms. So about seven per house. One has eight.

[Ashley Kerry]

Oh, my God. Those are big houses.

[Andres Martinez]

Yes.

[Ashley Kerry]

Did you buy these big houses or did you add rooms to them? Like take a dining room and add.

[Andres Martinez]

We definitely had rooms because you Know, it's really rare to find a seven room house, right. Actually, I don't know if my Instagram is going to be someone in here, but I have videos of there because now I'm the GC on the property. So I do walkthroughs of the properties, how to do the layout, how to do the construction quickly. A lot of people when they're acquiring these properties, you know, they have a three month holding period, plus another month of renting. The fastest one we did was we closed on August 13. By September 1, it was fully renovated, fully stubbed, so we don't have any holding costs. We added four rooms. You know, we find all the people. My longest time has been three weeks, except for the first one. The first one, I went with a contractor and she stole my money. That's how I end up doing the construction myself.

[Tony J. Robinson]

Well, you got to tell us a little bit about that story, Andres. I mean, I feel like every, every real estate investor's got at least one bad contractor story. So tell about yours.

[Andres Martinez]

So she can recommend it to me by another couple investors in the area. I went to check her work that was close to my, my property. She was doing two full flips, full gut, you know, changing plumbing. I was like, okay, that's a big job. This is not a small time contractor. And then they start doing my job. And then, you know, the guys are not showing up every two, three days, which sometimes is normal when they have multiple projects, right? And then spring break hits and I asked for LBP flooring. That was in the contract. And I get to the home and I see the guys cutting the flooring with the, with the mirror saw and putting dust. Sounds like that's this wood. LBP doesn't have any wood. This is laminate. Then I see the brand and it's the cheapest thing that you can find at a Home Depot, right? And I was like, hey, we didn't agree on this. And she's like, well, we already put it, if you want lp, you don't have to pay more. And that was, that was it, like, so, okay, yeah, sorry, but I already knew that it was going to happen. Fetch immediately. Three days later, you know, she doesn't deliver the rest of the flooring. She took it. It was about $5,000 worth of flooring. She didn't pay the guys for two weeks. That I didn't know. And then they come to the house. It's like, hey, she said you didn't pay her. We're gonna destroy our work.

[Ashley Kerry]

Oh my God. Geez, I'd be crying at this point.

[Andres Martinez]

Just, you know, I have to say, at the property, right? The subs who did the tile work for the bathroom tried to break in a Saturday at 2am so luckily I'm there. So I have to get on a fight with them, have to call the police. So after that, I stay at the property every night, and I had to finish the work myself, right? I'm kind of handy. And YouTube is your best friend. You can learn everything in YouTube right now, right? So I was going to Home Depot at 6am buying material, going to work from 9am to 11pm, going back to the job site 11:30 to 2am, sleeping next day, they say for like two weeks. So there was no delay in my first property, right? We were like, we're gonna go live April 1st. We're gonna go live April 1st no matter what. Because I bought that house with other people's money, so I cannot fail them, right? Even though I have the money to pay for our crew at this point, I'm. Because I don't know how to hire them. I don't know if what they're doing is right. The only way that I knew that it's right is if I can do it myself and I can see that they're doing it like I'm supposed to do it, then they're doing it right, Right? So that was a big experience. I almost have a heart attack during those two weeks. Had to go to the emergency room. My heart would just not stop because it's a lot of stress. At the same time, I had some bad news with my wife. You know, we need to do an IVF treatment. So I had to put another 25,000 into there. So my reserves are like. So anyways, we went live. The property wasn't even finished, and I already had five people moving in, right? So I made the rooms upstairs ready. The bathroom's ready. I was like, look, the kitchen is not ready. Downstairs is not ready. Cool. They didn't even see the room. So that I think it was a blessing because now everybody wants to come see the rooms. But for the first one, it was all online. I didn't even have pictures because the house wasn't ready. And these guys moved in. They paid a deposit. They like the area so much, they just move in.

[Ashley Kerry]

I have to say, I'm so impressed with your hustle. Like, I mean, just all the side hustles that you. You've done throughout your life so far. But in this circumstance, not many people are willing to roll up the sleeves and to spend every night after working a full time job working on their property just to like meet their deadline, to be able to pay back the people that invested with them. And that really does take some character. And I commend you on that hustle. We had a similar experience happen and I'm very thankful. I had a partner on the deal who was the one that went in and did all of the work on it when we had to fire our contractors and had no one else to lean on. So just from watching him kind of go through that grind, like, I share a little bit of your experience, but I just want to commend you on that hustle. And I hope everyone listening knows that, like, sometimes things like this will happen in real estate where you are going to have these really stressful periods. But sometimes just working hard and putting in that labor, putting in that sweat equity, and that may not even be actually doing the physical labor of a rehab that might be sitting behind your computer trying to find money or, you know, analyzing deals every single night, that grind is what's going to get you through that hard time in your investing journey. Just like Andres just showed us, there's light at the end of the tunnel. As to renting out the whole house without even having pictures available for people.

[Andres Martinez]

To look at, that was a blessing. I don't know how I got that. And actually those guys are still there, right? So when I do my monthly check ins, it's funny, in January everybody got sick. So I do my monthly check in around January 3rd to go to the house and they're all of them sitting in the dining area drinking chicken soup. And I was sick too. So I sat with them and we're talking about it and I was like, do you guys remember when you walked in? And I was like, yeah, man. Like, I don't know how. Like, I would never moved anywhere else without pictures because I was literally sending pictures. And it's a war zone. You know, it's a construction zone. We build the walls. There is like drywall everywhere. It was a bad area. I don't know how they did it, but it worked out. Thank God they're still there. It is what it is.

[Tony J. Robinson]

Andres, you said that there's not many, just seven bedrooms laying around that you're able to go out and purchase. So you're converting a lot of these and adding the additional living space. So I guess as you're sourcing your properties, what is it exactly that you're looking for? Like, what is your buy Box. How, how do I know, as someone who's never done this before, what type of property is a good candidate to turn into a seven or eight bedroom property?

[Andres Martinez]

Pretty much you're going to go by a square feet, right? Each room you want to be around 250 square feet. So you can multiply that by seven. But a lot of the times if you stay above 2,000 square feet, you're going to make it work for seven to eight rooms. But that really depends on the mortgage payment, right? Again, I bought all of these creatively. They are all sub to seller finance. So we have 3% interest rate, 2.75% interest rate. Our pitis are pretty low for Texas, 1900, $2,000. So we get a good spread on the end. So even though I can put eight rooms, I stay at seven just to give it a little bit more space. And parking is really important. So if I had to define my buy box, it would be, you know, minimum three bedrooms, two bathrooms, 1600 square feet plus. So if it's 1600 square feet, I need the PITB at 1600 or less, right? If it's, if the PITI is above $2,000 a month, I need the square feet to be above 2000 as well because I need to add a seventh room to make the cash flow work. And given the all the work that you have to put into these, I think you need at least 2,000 net every month, otherwise the property is not really worth it. And I pass on a lot of deals because it's like 1800, 1700. And I was like, yeah, no, I need 2000 because it's a lot of work and I do everything myself. Right now I'm still training my replacement, but it is very hands on, I think. To me that's one of the biggest things. When I talk to other Colibian investors, the moment they tell me it's easy, I stop talking to them because that means that they just started a month, they only have one property, they haven't gone through it yet. But just think about it, right? And you're gonna see it in the comments. You have seven people from seven different backgrounds now sharing a house, right? You are the referee for everything. Everybody's gonna be texting you this and that and that's. And now when I do coaching, it's like the first three months you're gonna be very intense because you have to put some people in line, you have two other people let it go until you find the right fit, right? But after three months, like my other houses that have been open for six, nine months. I don't get a message for two 60 days, right? Because those three months were very intense. I was on top. I was checking the security cameras outside like hey, you parked in the wrong place. This and that, no guests, blah blah. But once you set up the culture of the house and you have like two or three guys there with the culture of the house, like, hey, we're clean, everybody parks in the right place and this is how we do it, then the new people that move in, they're gonna, they're gonna follow that.

[Ashley Kerry]

We have to take the final ad break, but we'll be right back after this. While we are gone, make sure you are subscribed to the real estate rookie YouTube channel.

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[Ashley Kerry]

Okay, welcome back from our short break. So Andres, you kind of mentioned there that you are doing all of your rehabs. Are you still working a W2 job?

[Andres Martinez]

No. So I quit my job two days before Thanksgiving last year.

[Tony J. Robinson]

Congratulations.

[Andres Martinez]

I just couldn't do it anymore. We were setting up a house at that time. I had three houses under contract for December. So it was going to be a lot of work. And I don't have any money in my saving accounts for the rookies listening to that. At that point I had $300 in my cash flow.

[Ashley Kerry]

And you quit your job?

[Andres Martinez]

And I quit my job. And when I said I bought my first house with my own money, I used credit cards, I didn't have cash because we've missed a lot of like all my savings went away with my, my wife's treatment and my, my heart problems, right? All like every penny that I saved since I was 18 to like this point when I'm 30, right? Every dollar every night I didn't go out. Every saving that I was like for my investments, it went away in three months because of health issues. But I had to keep going, right? And I, I quit my job, I got another property and that's how I kind of started doing side jobs as a just general contractor because now I have good subs and a lot of people wants to do co living. So I kind of, you know, help them with the layout, help them doing the construction. I make some money there now from, from the properties, enough cash flow to cover my basic needs. So, you know, it's the first stage of financial freedom where, you know, if I really don't want to get out of my house, I don't have to. But, you know, we want to keep going.

[Ashley Kerry]

And you found a business that integrates well with your real estate too. For a long time I was property manager and I did it for myself and I did it for another investor. And it worked out really well having, you know, that income alongside my real estate investments also too. So now that you've started this GC business, how are you becoming bankable or what are you doing without your W2 income to actually finance deals?

[Andres Martinez]

Well, so all the deals, even the first one, were bought with opm. So for the rookies, that means other people's money. So I actually got paid to buy each house, right. Because I'm acquiring the deals myself. So I have my wholesale fee in there or acquisition fee now I call it a management fee. So because all of these are creative deals, we buy them sub 2. We don't have to go to bank, we don't have to talk to anybody. We just go to title company, direct to seller, direct to agent, and we acquire the houses, right? So Each deal comes out around 65 to 80,000 total from acquisition, repairs to furnishing. And I usually bring a private money partner to each deal and then we split the deal half and a half so they bring all the money to closing and they do everything else. That's why also I don't think a property is worth if I don't make less than 2,000amonth because I have to split that with my private money partners. Right. So their cash on cash per property is between 40 and 50%. That's a lot. You don't find that laying around. That's why I've had so much success like raising money at the beginning because that's really hard to find. And people that have money to invest, they want to make sure that it's in a, you know, recession proof kind of investment and affordable housing is always going to be around.

[Tony J. Robinson]

And just let me ask, have you ever thought about doing like co living but through ground up development, like just buying a plot of land or redeveloping like you know, small house, tearing it down and just building something built specifically for co living?

[Andres Martinez]

Yes, that's, that's the next stage. If we go back, I'm pretty new in real estate, you know, I still don't know how to do better. And that's what I'm saying I had to do right now because I still don't get it. Like how do you guys refinance those properties? Those numbers are so wild because I get to the arb, but then the appraisal is going to give me a different number. I really don't get it. It's a lot harder than creative finance. But yes, ground up is going to be the next step. So right Now I have five closing on six. I want to get to 10 and then after that do only ground up because at that point, you know, the cash flow is good enough where I can feel free and I can focus on finding land and develop that.

[Ashley Kerry]

Well, Andres, thank you so much for coming onto the show today. Just real quick, before we kind of wrap up here, would you just give us an overview of what your monthly cash flow is off of these five properties that you've been able to generate?

[Andres Martinez]

Yes. So in total we make a little bit over 10,000. So like depending on 10,500, 10,400 and once I split that half and a half with my private money partners, you know, they get their half, I get my half. I've had this year 97% occupancy rate. I have only one turnover. Yeah, it's been great so far. Honestly, I don't see me slowing down with these. The only thing that slows me down is finding good deals because parking is very important here in Texas. Almost everybody drives a car and I don't want to bother the neighbors, you know.

[Ashley Kerry]

Well, you just gave everybody shiny object syndrome looking to get that type of cash flow and everyone's going to be looking into co living. So, Andres, thank you so much for joining us. Where can people reach out to you and find out more information?

[Andres Martinez]

My Instagram is probably the best way. My handle is Andres Martinez. Like my name underscore C. And you can leave a question here in the comments. I will try to be here and respond because I have also some videos on YouTube so you guys can go see there and check and just reach out if you have any questions and be ready to work because if you tell me you're lazy, I'm not going to respond.

[Ashley Kerry]

Yeah, love that motto. Thank you so much for watching this episode of Real Estate Rookie. I'm Ashley and he's Tony and we'll see you guys on the next episode.