Operating At A Level That Competes with Hedgefunds with Aaron Amuchastegui

Aaron Amuchastegui: [0:00] And so I remember texting a buddy and saying, we need to buy 35 or $40,000,000 for the houses in the next sixty days. Send me everything on MLS built from 1985 and newer because we're gonna buy everything. We're gonna make everything built 1985 and newer. We're gonna do the Blackstone model. And then we also start buying these new home neighborhoods then.

Speaker 2: [0:17] Welcome to the Collecting Keys Real Estate Investing Podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:40] What is going on, guys? Welcome to this episode of the Collecting Keys Real Estate Investing Podcast. Today, we are joined by Aaron Amuchastegui, and I feel like we just, like, got schooled on so many things.

Dan Austin: [0:56] On every part of our business.

Mike DeHaan: [0:57] Yeah, such an insanely high level. If you guys never heard of Aaron Wichestegbe before, he has been around the real estate world for a long time. He has been on all sorts of different real estate podcasts, media, those sort of things. He is one of the top flares out there in the real estate world to the point that, you know, he is directly competing with, like, Blackstone and some of these big hedge funds. Right? Yep. And, you know, on top of all of that, he does it in a way that allows him to also have like a cool life and not have to be like a super crotchety business guy that is He's very

Dan Austin: [1:35] very balanced in everything he does in life.

Mike DeHaan: [1:37] Yeah. Exactly.

Dan Austin: [1:38] Fun makes a lot of money.

Aaron Amuchastegui: [1:40] Yeah, it's

Mike DeHaan: [1:40] great business. Exactly. Yeah, it just does everything super well. He has done what what do you say estimated 2,000 flips that he's bought mostly from the foreclosure auctions. Yeah. Over the last what fifteen years. He owns millions and millions of dollars worth of real estate. And one of the great things about this episode is he goes into the systemization about how he does all of that, even down to how he systematizes the conversations with his contractors, how he systematizes his scheduling of all that, everything.

Dan Austin: [2:13] Just cut and paste it, and it'll work.

Mike DeHaan: [2:14] Yeah. Just cut and paste Yeah. And kinda one of the crazy things is too, is as you're going through it, it's not that freaking complicated. You know, he is just doing the small stuff better than everybody else, and he has his rule book, and he has his, like, basically standards that he forces people to meet. And if they don't meet, he gets rid of them, and if they do, then, you know, he uses them to build his incredible system that is just churning out money right now.

Dan Austin: [2:39] It is, and towards the end, he gets into some of his predictions and all that sort of stuff, and he gets... Kind of dials into an explanation on cap rates and why he thinks you need to buy off off the market at, you know, 30% below the peak. Mhmm. So that is a really interesting thing for anybody out there looking for expertise on what to expect and how to

Mike DeHaan: [2:57] stay active, quite honestly. Exactly. Yeah. And that... I think that whole thing is very valuable to you about, you know, if you give him a follow on Instagram or you reach out to him, which you definitely should. I think this episode is Definitely follow him. He is one of the most respected minds when it comes to the economy, not only regarding real estate, but also just in general. He spends an incredible amount of time studying it. He's super passionate about it. And he drops a ton of predictions about, you know, what's gonna happen with real estate over the next little bit and stuff that you can do to prepare to capitalize on those opportunities. So either way, really incredible episode. This is like, you saw everyone this episode, I was like, Are we real podcasters now? We're having this kind of here.

Dan Austin: [3:36] We've made it. Yeah, we've made

Mike DeHaan: [3:38] it someone that, you know, I've looked up to for a very long time. So it was super cool to have him on. So definitely reach out to Aaron. And if you enjoyed this show, you should please share it with everyone else who might also enjoy hearing this kind of information. If you don't know anyone who would enjoy the stuff that Aaron talks about in the show, you gotta find new friends, honestly, because your friends are not focused on

Dan Austin: [3:57] the because right

Mike DeHaan: [3:58] there is nothing but incredible knowledge in this episode. So please share with everybody that you can. And then also too, if you wanna start finding off market deals, so that you can start to apply these systems that Aaron's going to teach you, you should go to collectingkeyspodcast.com/free. You can get your free five step guide, start generating off market leads and closing deals yourself. Okay. And then you can start making real money, and then someday, maybe you'll be looking at jets, just like Aaron Mucci, I guess he is

Dan Austin: [4:23] looking at jets. I got my shirt on the way. Yeah. Confirmation. It's in the mail. Perfect.

Mike DeHaan: [4:27] I actually got two coming this week

Dan Austin: [4:28] as well. So o two double down.

Mike DeHaan: [4:31] Yeah. But awesome, guys. Well, enjoy this show with Aaron, and you are going to learn an incredible amount. So make sure you have a notebook handy. Alright, guys, today we are here with Aaron Amucha Steggi. And I am so excited. He is one of the biggest heavy hitters in the go abundance crowd and the real estate crowd in general. You've heard us talk about go abundance a lot in past episodes. And Aaron is kind of one of those guys that I would say drove me to pursue things like GoBundance in the past when I was like, how do I get around more dudes that are doing stuff with Kiyos? So Aaron man, we're super excited to have you on the show. And maybe for, you know, you've done a lot of long form stuff around your background. Maybe just give us like the too long didn't read version about who you are, what you do. And, you know, it's like the short version of

Aaron Amuchastegui: [5:21] it. Yeah. Yeah. Cool. Well, thanks for pronouncing my name right.

Dan Austin: [5:26] The That's the first time he's ever done that on the show, by the way. He's... He he will get the most simple names wrong.

Mike DeHaan: [5:31] So I practiced it. I have it all, like, listed out in phonetically syllables here.

Aaron Amuchastegui: [5:36] Well, it sounded natural. I appreciate it so much. Sometimes even my cohosts on my own podcast, I don't say my name right. So the Even though I'd say it all the time as I introduce myself, so I appreciate that. We met through the GoBundance crowd stuff, and I'm sure you guys have talked about it. GoBundance changed my life I was lucky enough get in there about six or seven years ago as it was smaller. But regardless of size of it at the time, my life has been able to compound very dramatically and very drastically since then, since joining a mastermind, since joining that group. To go into my backstory, I'm gonna start at like when I got into real estate. So I grew up in real estate, my dad was a home builder, I got to see a lot of different stuff in the '80s and the '90s, I got to see what interest rates did to developers in the '80s, I got to see the idea of having a business as a job. My dad was a home builder, a custom home builder, and so his business was a job. It needed him, it needed his care, and when he wasn't able to do it anymore, or if he was on vacation, nothing was happening anymore. But it was fascinating to see his version of the business. When I was working with him, he built first hospital in town. We were the biggest builder in this small town. But then the next time the hospital job came up, he didn't get the job.

Aaron Amuchastegui: [6:58] We couldn't believe it. We had sent together this portfolio and one of the things they said was like, well, look at the guys that you got it from. Every one of them has a bachelor's degree and their credentials were just so much better. And my dad was like a self taught guy, had like a two year engineering degree. And I said, okay, I'm gonna go get a degree and come back to Klamath and run my dad's company. That was as big as my dreams were. Like the, okay, I'm gonna go out of town, I'm gonna get a degree and come back, so next time we're gonna get those big jobs so nobody can say that anymore. Because they were like, you're the most qualified and you're the best and we know you're gonna have the best everything, but without their credentials you can have it. Which is kind of silly with some of our other stuff too. We wrote books about homeschooling and the pros and cons about education. But I left away my education. And I went down to Cal Poly, San Luis Obispo after a whole bunch of pivots and all sorts of things in my life that put me on the right path and the wrong path. I was a little bit older when went to school. But I was studying construction management. And that idea was I had already done a couple years of architecture at the University of Oregon a few years prior.

Aaron Amuchastegui: [7:59] So I wanted to learn about, it was a little bit of architecture, little bit of engineering, a little bit of construction, a little bit of business management. It was like the coolest degree for what I wanted to go do in my life. And then I got down there first and I realized that California was the land of milk and honey. It was 70 degrees and sunny every day, and it was super, super nice. And I had never seen something like that. So originally I thought I'm never gonna leave Oregon. And then when I got down there, like, don't know if I ever going back. Pretty quickly, they would have these companies come in and recruit. Come in and it was like the height of the housing boom at the time. And I thought it was fascinating to meet these home builders that were building at scale. And it's a really important part of my story because learning from them about building businesses at scale was really, really life changing because I saw home builders that were doing something slightly different. They were building these amazing houses that were 90% as good as a custom home but for like 30% of the cost. They found out ways to systematize it to get the bids in and get the trades in where they could build a house in sixty days and they could build it for 200 or $300,000 The way we would've done it with my dad's, it would've taken a year, would've been 600 or $700,000 Now it would have been perfect. And compared to these other ones that were, I'd say, again, 90% of the quality. And so I got to start learning these systems.

Aaron Amuchastegui: [9:13] I thought it was fascinating. What I also thought was fascinating was in custom homes, you sell the house for the cost plus a markup. So essentially he's like, It's gonna cost us $500,000 to build this thing, we'll sell it to you for 550,000 regardless of the cost. What I learned from the home builders was it wasn't like that. They were going to sell the house for whatever the market told us. Whatever the market would bear, whatever comps told us, that's how much we were going sell it for. If it said we were going sell it for $500,000 we were going sell it for $500,000 whether it cost us $500,000 $400,000 or 200,000 In 2005, the crazy part was we were building these houses for like 200 or $300,000 and selling them for 600 or $700,000 And we were selling them, it was like $20.21, right? We'd have a wait list. As soon as you listed on the market, you'd get offers by the time they finished. So man, I had no idea how good my life was. We were golfing a couple days a week. We were building these houses. They were selling like hot sticks. Man, I couldn't have graduated at a better time when I went to go work for these home builders after. Housing market started crashing in like 'seven. In 'seven it was kind of slow, but we were in California and kind of the hotbed of where it was hitting. So at first it was like, oh, sales aren't happening that quick. And then we still had pending cash flow coming but we didn't have any new contracts happening. And all of sudden one month all the revenue dried up. And we had to lay off a bunch of people and there was like 75 people working for the company, laid off 70 of them.

Aaron Amuchastegui: [10:37] Went from golfing a couple days a week to doing manual labor and doing these builder workouts and doing these short sales with these developers. This is like 'eight. And by the time 'nine hit, we were like, we got to do something different. We were trying a whole bunch of different businesses. And as I fast forward pretty quickly, we tried a whole bunch of different things. We got lucky enough to find the foreclosure business. I'll say we kind of created an industry. There were a couple of people that were buying foreclosures on the courthouse steps before us, but I was the first person to do it at scale in Northern California. Was the first person to say, Here's the business plan as a home builder. I'm going to apply that to this business with the same sales and marketing type teams, the same construction strategies, all of that. From 2009 to 2012, I flipped a ton of houses. It was amazing. I didn't have a mastermind group that taught me about long term holds or investing. I was cocky and I was young and I was like, look at all the stuff that I did. So when there was times I could have made some better decisions and better planning, thought I was untouchable and I wasn't. A big company was getting into the industry and offered, they came in and said like, Hey, do you want to come join us? If not, we're going put you out of business. I didn't do the research and I got put out of business. It was pretty wild. So then I had a few years where I went from making hundreds of thousands of dollars a month to nothing.

Aaron Amuchastegui: [11:56] Wow. To where I was almost looking at getting foreclosed on myself for my house that I lived in. I was like, that was wild. That's crazy. And I was trying figure out what was next. I applied to be like an Uber driver and a building inspector at the city of Napa because I was still doing a couple foreclosures now and then in counties that other people weren't touching. And pretty soon after I applied to be the, after I was like signed up as an Uber driver and had applied for the other job, I saw a new opportunity out in Texas, which in Texas it was the same business plan, foreclosure business. I learned so much from making lots of money and losing it all. I said, if I ever get another chance, I'm gonna do this business. I fell into an opportunity in Texas when I got there in 2015 at an auction, nobody was there. So I was like, this is like 2009 all over again. This is my big second chance. I had years of knowledge and years to think about what I did wrong. What am I gonna do different this time? I remember going to an event in like 2014, 2015, this single family rental conference. And there was only seven companies that owned a thousand houses or more at the time. Really? Only seven? Wow. Only seven that owned a thousand What houses or

Mike DeHaan: [12:56] do you think that number is now? Just I guess for context, what, eight years later?

Aaron Amuchastegui: [13:00] I think it's probably in the hundreds, in the few hundreds. A lot of them kind of conglomerate and jump together, but at the time... And now they're bigger too. One of them was Invitation Homes who had maybe 10 or 20,000, let's say, at the time. And they were the biggest ones. They were Blackstone. Those were the guys that came to talk to me about joining them or they were gonna put me out of business. And now they have hundreds of thousands. But I remember thinking, there's only seven companies that have 1,000 houses. I'm like, I flipped 1,000 houses. That wasn't that hard. And I also remember thinking when I was broke in 2014, man, if I'd have just kept 50 of those 1,000 houses or 100 of those 1,000, I would have been set for life. So when I got my new second chance, I focused on that. So from 2015 on, I kind of focused on buy and holds, similar business plans. I got really, really, I combined a lot of effort with a lot of luck when I started buying in Texas in 2015. That's pretty early for Texas. And I remember thinking prices have never gone up in Texas. So I don't wanna ride the big waves like we saw in California of houses going up and then crashing and the house going up. I said, I want something nice and stable. I'd fly out to Texas every month.

Aaron Amuchastegui: [14:09] I'd buy a house at auction. I'd fix them up, I'd rent them. And yeah, I kept doing it year over year. By the time 2020 hit, I had a ton of houses out there. Prices obviously ended up going up. And so I started building my wealth strategy that way instead. And a combination of like sometimes I'd flip them to make some money to pay for stuff, and then hold as rentals. That's my cliff notes version. There's some podcasts out there where we talk for an hour before we get to that point. There are obviously a lot of lessons and up and downs in there. But that's what got me to this buy and hold strategy that I do now.

Mike DeHaan: [14:45] Yeah, and I just love that that's the cliff notes because that's like the lifetime of a lot of people. You know. And I guess for a teaser for other people, if you if you like that backstory, Aaron has parts of his story about where he's in prison as like a youth. You have parts of it where, you know, you're getting very close to bankruptcy is different things. I know your first business that you ran, I believe you actually had to lay off all of your staff, and that was like a whole ugly situation, and you lost an incredible amount, even on top of just like the $100,000 in income going to zero, you actually gotten a lot more financial trouble, if I remember correctly from stuff that I've heard.

Aaron Amuchastegui: [15:21] Did you?

Mike DeHaan: [15:21] And so that's all mixed into that really incredible growth that you just shared in what, like eight minutes there. So no, that that's super good stuff. One of the things that I really admire about all you've done is you've done all this rise and you're still going, but you're also not like a square. Like you do a lot of cool stuff. You're always like going to concerts and you're playing golf and you're traveling and doing all those sort of things. So what I would love to dive into is as you know, you're building all this out, the systemization of all of it, right? So like, most of people listen to collecting keys, they have small businesses, they're looking to know how to scale them. The way you built there, I mean, you say twenty fifteen to now you've done all that much, but that's... It's eight years, but that's not like an insanely long time. And I imagine you must have started off, you know, even early on at a pretty high velocity. So I guess what's your secret behind that? Is that... Did you start out like a workaholic? Did you start like team first? Like, what does all that look like on the back end?

Aaron Amuchastegui: [16:17] Yeah. It's... As you touch on the close to bankruptcies and things, I went to zero probably three times. And I went to multi millionaire to zero three times, which is having to start over a few times is brutal. You think you only need to learn it once. But that should give a lot of people hope if you get to see what I'm doing today is it's thinking about in 2015 I was broke 100%, zero. I was starting at zero, was gonna be an Uber driver and was trying to figure out just so I wouldn't get foreclosed on. One difference when I started over in 2015 and why I started going so deep into systems is when we did really well from 2009 to 2012 in auctions, there's so many steps to auctions that are required. You've gotta drive every house, you've gotta do title on every house, you've gotta comp every house, auctions happening every day. So you're looking at 500 houses a day in order to try to buy three. You're trying to buy three houses out of those 500, but you have to do so much work on all 500 in order to get those three. And And so it created a lot of different tasks. And I remember when I got put out of business in 2013, that the biggest reason was my overhead was so huge. Had all these employees, all these company trucks, all these team members that were doing different things. And we had pretty good systems again like putting them into spreadsheets.

Aaron Amuchastegui: [17:34] But I just remember thinking what broke me wasn't buying bad deals. What broke me was having too many employees and too many expenses when I didn't have income anymore. And so when I restarted in 2015, I read a book called The four Hour Workweek, Tim Ferriss. It's one of my most life changing books ever. I read that and The Miracle Morning at the same time when I was trying to rebuild my business, and those two books changed my life, saved my life really. And when you combine them, it's even better. Because if you're getting up early and then you're doing the four hour work week practice of working really effectively and hard between 6AM and 8AM, you really have the rest of the day to work a second job or do whatever you want. But in 2015, I restarted, I remembered thinking, I need to have a better system. I need to do this better. I need to figure out how to be able to do the same job without having 20 or 30 employees and without having a bunch of company cars because that's where I got into trouble last time. I was making so much revenue on the top end, it seemed like adding a new employee every time was no big deal. And so when I went in and started building the system the next time, there was this mindset idea of every decision you make has to be the long term for the system. And so I'll get into that. And then I also started figuring out how to build software essentially to take the steps and streamline different things. And so some of that was first using a CRM.

Aaron Amuchastegui: [18:55] And then it became to me like designing my own thing, essentially with PowerPoints, and then finding a team in India that could essentially build out my brain as a CRM, as a process to start building out these systems and then coming up with the SOP. So the idea was I was very intentional in 2015 to have systems. Now I have a bunch of systems inside that company as you build. The first thing I said was you have to think about as you're building your company, you're building it as the long run for scale and for a system. And so what does that mean? You can hire a contractor and use them one time and finish the system. And during the negotiations, so you usually say, Oh, we're not gonna pay a deposit, but you really wanna get this first one done. And he's a decent price. So if you pay him a deposit, can get done and this job will get on the market next week. And so that's like a short term solution. You know what, I'll just make it work. I'll focus on it. I'll have to do a little bit extra management. Maybe I'll buy the materials over here and and we'll do it this way because I wanna get this job done. Now the long term way of thinking is going, Oh, if you need to be paid a deposit, you're not a big enough contractor to actually be able to do 20 houses a month with us or 30 houses a month with us.

Aaron Amuchastegui: [20:05] You're not gonna be able to grow to that business mindset. So I'm gonna wait, I'm gonna keep looking for somebody that I wanna test out and see how they're gonna work in the long term. Same with any sort of trade, like painters and HVAC contractors and landscapers. Once we found the trades that we really, really liked, and now even in Central Texas, it's not uncommon for us to be able to buy a house on Tuesday. We go back to the office, we get some pictures set up that are part of, if somebody goes to the house and re keys it and they take pictures that are part of our SOP, they know which 100 pictures to take, they upload it to our app. We do a couple of drag and drops and saying what trade is gonna do it and what day and we say go and it sends an email. And six days later, that house is going to be painted, have new carpet, new appliances, it's gonna be cleaned, that the HVAC is gonna be detailed, like everything's going to be done and they're all gonna be done by a subcontractor. So our house is gonna get done in four or five days. I've got a lot of YouTube videos of some crazy flips that were gutted to the studs that we did in four or five days. And those ones even had new granites, new countertops, everything.

Aaron Amuchastegui: [21:08] That was all based on a long term system. So finding the right painter, he was the tenth painter I hired. And I tell people, if you're trying to build a system, you're gonna hire 10 painters before you find the one that you're gonna use. Or you might be getting quotes from 10 before the one you're gonna get to use. And then once you find the one that can be a part of that system, that's that first step. I remember the landscaper on the fourth or fifth job, she had sent a quote for me to do the work for $4,000 I approved it, said 4,000 is good. After the job she said, Hey Aaron, I ended up being able to do it for 2,000 because we were able to save the grass in the backyard. I'd never seen the house, I was never going to see the house. If she never told me that, I was never going to find out. If she would've sent me the 4,000, I mean I approved, I said I'll pay you $4,000 to do it. She said, Hey, I did it for 2,000. Now what's awesome is I never had to double check her pricing ever again. For the next seven years, she became someone I could trust. I had a window guy do the same thing. He was like the sixth or seventh guy that I was using. And there was a sliding glass door that had lost some of its laminate. And as it lost some of its laminate, I told him to go replace it. And he said, gonna cost me $650. Cool, go replace it. You're approved.

Aaron Amuchastegui: [22:16] And then he said, Aaron, I got craziest news. I was able to get this covered under warranty because it was only built two years ago, even though it was a foreclosure that we bought. Cool. So they're gonna send me a brand new door and it's gonna get here in two weeks. Nice. Okay. And he said, But I had an extra door at my office. So I went ahead and installed the door today. The one that comes in for free, I'm gonna keep and I'm not charging you. He could have done the same exact thing. I didn't know, I would have had no way of knowing he got it covered under warranty or swapped out the stuff at his house. I had no way of knowing any of that, but he said, hey, it's free instead of $650 So then he became my glass guy. So building really good trades, firing them quickly.

Mike DeHaan: [22:55] That's good.

Aaron Amuchastegui: [22:55] Right? I can't trust you, you're out. You don't perform on the day that we say, you're out. We send the email and you say you're gonna paint tomorrow and nobody shows up tomorrow, you're out. So be quick to hire and quick to fire. And then once you find the people that are in, then teaching them the system to go, here's our spec, here's our color. Now part of that is our carpet company. They know what carpet we're gonna put in every house, it's a system. They know what paint color we're putting in every house. It's a system. They know who the other trades are so they can coordinate with each other. They can see it on the email they get. They can coordinate with each other. So those are some of the examples of the systems of figuring out what happens in your business that you're doing it all the time. Some of the other things we started building out with the software is every time you buy a house, you're turning on utilities, you're ordering insurance. Every time you're starting landscape maintenance. Every time you sell a house, you're doing those three things too. You're turning off insurance, you're turning off utilities, you're turning off the landscape maintenance or the pool maintenance. So we started building all that into our same little system. The day that I say I bought a new house, says, do you want to email these people?

Aaron Amuchastegui: [23:55] It says, yes. Looks like a personalized email. So that was one of the biggest tricks of scaling was technology. And now there's so many CRMs that people can build and add onto and use. But any task that you're doing that's repetitive, that you don't like doing or that's time consuming, you gotta record a video on how to do it. You gotta put it into a standard operating procedure, and then you gotta figure out is this something that we can automate. And if it was stuff that I could automate in like 2015, 2016, then sure as heck you can automate the heck out of stuff today.

Mike DeHaan: [24:22] Yeah, no kidding.

Aaron Amuchastegui: [24:23] You could probably just tell ChatGPT to do it now, and it does it.

Dan Austin: [24:26] Totally.

Aaron Amuchastegui: [24:27] Those are my biggest tricks with scaling is just thinking about scaling for scaling sake and making the decision based on, I'm not gonna do the short term thing. I'm not gonna use a contractor I'm just gonna use today to solve my problem. I'm gonna wait till I can find a contractor that I think I'm gonna use for the rest of my life down here, I can test them.

Mike DeHaan: [24:42] I love

Dan Austin: [24:43] that, there

Mike DeHaan: [24:43] you go.

Aaron Amuchastegui: [24:43] Because I'm gonna have to fire 10 of them before I find the one I want. That's awesome. I'm gonna have to try and hire 10 of them before I can find the one that's gonna happen. So you gotta make sure that the ones that you are hiring have a chance.

Dan Austin: [24:53] Yeah. That's like taking, I don't know, the vision I have of the real estate, the flipping, and wholesaling, and just real estate, and business in general, is there's a lot of small operators that are unprofessional. They don't professionalize it to the level of what you're saying. You're taking it to the next level, and I have one question for you, because I know a lot of our listeners are thinking this as well, because I'm thinking this, is like, when you're talking about hiring these tradesmen, these contractors, do you have any specific questions, or process you go through just to hire them? Because when you're doing 20 or 30 houses, right, and you're the big show in town, it's easy, you're kind of in demand for contractors, because they wanna work for you, because you know, they know you're gonna get that But when you're flipping one to two houses a month, that becomes challenging, at least for sure in our market, to get ahold of depth of contractors, and when you're only doing one to two houses a month, it's challenging to be able to fire a contractor one after the other if you can barely find them, because schedules are challenging when you do find somebody. So do you have any tips on how you're doing that? How are you getting bench strength in your contractor pool?

Aaron Amuchastegui: [25:58] Every time we restart a new market where we're only doing one or two houses a month, it is a challenge. And the first is the conversation. Hey, this is so and so. Do you do paint on new homes? Yeah, we do. Are you taking on new work right now and do you work in this town? And they're like, Yeah, we do. And we're like, Great, we're trying to find a new trade. Let's say you're doing two a month, but now you've done 10 in that town. Even if it's taken a year. You're like, So we've recently done 10 houses. We've tried a few different guys. We're trying to find somebody that can actually deliver that when we're saying they're gonna deliver, that's able to match our unit prices and doesn't have a problem covering up the carpet every time because we're still seeing this. And then we wanna make sure that we can lock in regular unit rates. Knowing that sometimes you're only gonna have to put one coat of paint and so you're gonna win. And other times you're gonna have to put three coats of paint, so I'm gonna win. But we're gonna give you that volume, it's gonna average out. And they're gonna say, Yeah, that sounds good. That's something that I wanna do improve myself. Or they're gonna say, No, it's not.

Aaron Amuchastegui: [26:58] Now, realistically, five or six people are gonna say, no it's not. So it's a numbers game of like dialing to try to get people. And the second thing is always at the beginning, don't know you. So they're like, so I want you to pay me a deposit, I want you to do this, we've got a backlog. Now a year ago was really hard. Today it should be getting a lot easier to find contractors. A year ago they were like, I can charge you deposit and never show up. And you're just gonna be fine with it because it's so hard to get a contractor anyway. So at the beginning, I was having to convince them why to do it. Like I've done these other ones, or here's my plan, or we're doing two a month right now, but we're gonna be doing 10 a month and we want you to be able to get on our side. We're thinking about the long game as we do that. And then there's a lot of times now where I say, I have to explain to them too, you can lean us, we can't lean you. And even though you don't know us from anybody, you can lean us. And then I'll say Google my name, Google my company, we're findable. Now before that, so let's say, again if you don't have that, you'd be able to say, Google my name or Google my company, or here's a list of addresses, or here's a list of referrals of contractors that have used us in the past.

Aaron Amuchastegui: [28:07] So you have to convince them to do your system. Why should they do your system? It's like you're having to sell yourself as much as they're selling you. So our initial email that goes out to people, after that first phone call conversation, we shoot them off an email and it says, Hey, just wanted to follow-up again on that chat. Here's some summaries of our stuff that we're doing. I've got a job I could start you on tomorrow if you're ready. Now for paint guys in particular, first they get a video from me It's like a two or three minute video that explains how we do our systems, how we do our processes, how we do our payment programs, and like a little intro. And it's like, and here's our website and here's this, so like some feel good stuff. It's three minutes. We also have a three minute video about how we want our houses to be painted. And like the process for what people do and it's literally a step of like in what order they should paint to be able to meet our unit rates and it shows how we can have houses painted in two days with two people. And so it gives this big intro for them and so once they see that they go okay this is somebody that I wanna work with. Now the reality is even if I've only done one house before, I could have that same set of videos. I could have a video of us painting houses with our processes, I could have an intro video from me and some of those. So you have to convince them also.

Aaron Amuchastegui: [29:23] Now if you're never gonna do more than two a month, Dan, then you don't have to systematize it. Because the best system is probably get bids from five different painters because who's ever the most desperate this month is going to do it. Roofers are like that. So roofing in general, we always quote the roofs because it's so few and far between. We'll bid out to the same five roofers and every month a different guy is low. And the prices will range from 4,000 to 8,000. And the guy that was 4,000 this month is gonna be 8,000 next month because now he's busy. Like roofers will bid, whoever doesn't have a job tomorrow will bid it for 4,000. And whoever has a job tomorrow is gonna bid it for 6,000. If somebody's booked for two weeks, they're gonna bid it for 8. So if you're only doing 2 a month, the system could just be like, no, you're gonna just call 10 contractors every time, and the system is a numbers game, and you're gonna get quotes from three out of the 10, and then you're gonna choose. Does that make sense?

Dan Austin: [30:14] Oh, that's total sense, and Mike and I have been through this. And I would still argue, if you're doing two a month, for the folks that happen to be in our Mastermind program and stuff, they're running their off market business too, they're flipping houses, they're burying houses. There's a good level of systematization, where you should be able to sit at your desk and do all of those jobs, like running that whole business, but also be able to get a flip done without having to run out there a 100 times. And so, I think there's a happy medium, but I love your approach to this, because it's how Mike and I have approached the entire other parts of our business, is like, okay, we gotta look for this as the long term growth plan. Yeah, we're only at one to two now, but we wanna be at 100, you know, for what, you know, replace flipping houses with whatever that is in business.

Mike DeHaan: [30:56] Yeah. Now that's good stuff, and I love too, you're systematizing the communication part, which is usually what takes the most time by having that follow-up email with the videos and all those sort of things. Like that's insane numbers of hours of just back and forth you're eliminating there. You buy most of your properties at foreclosure still, correct?

Aaron Amuchastegui: [31:15] Yeah, a little of both. I mean, and in that systematizing thing, we see that in Instagram, right? Sure you guys have gotten like the video that they say, Hey, made you a personalized video.

Mike DeHaan: [31:23] Yeah, of course.

Aaron Amuchastegui: [31:24] And the guy comes on and he just goes, hey I've been loving what you're doing on social media. I love your page, I love that you're into real estate and I wanna try to make more videos for you. And he sends that video to 10,000 people that are in real estate and it seems very personalized. And so you're gonna be doing the same thing with your trade communication. You've nine different trades, you've got like nine different videos you're gonna make, you have one scope of work that they get to send out that has really clear pictures. The other way is to systematize the constructors to make sure you've got really clear before pictures, you've got this nice scope of work on there. We draw lines to every picture of like the landscaper's doing this, the trash out guy's doing this, the painter's doing this, the handyman's doing this, as we're kind of going through. So yeah, it was really heavy foreclosure like 2015 to like 2020. When 2020 hit, foreclosures got placed on a moratorium. And so for that first six months, we were kind of really slow. We were really worried that we were gonna see what we saw in 2009. So we fire sold a bunch of our stuff because my mindset was hey, if I get out early before stuff loses 50% in value, if the market's fine, that's fine, I'll make plenty of money next year. But if I'm right, you wanna be first out. So I'm always the guy to be first out when things start to go wrong. Because if everything's fine, then everything's fine.

Aaron Amuchastegui: [32:39] I'm gonna get a ton of money just running my business as normal. So if there's nothing to be alarmed about, cool. All I'm doing is leaving a little bit of money on the table by exiting these things early, and next month I go back to my regular business plan. But I'm going to avoid that big downside. 2021, end of twenty twenty and 2021, we started to find these other opportunities to buy mostly because we saw the benefit of being through a few different market cycles. And most of the time saying like in 2009 being like, wow, we discovered it before anybody else but we couldn't raise money fast enough. Or even in 2015, all right, I had a new business plan but I still couldn't raise money quite fast enough. 2021 was a unique time because everything I was looking at was saying housing was way, way underpriced and it was gonna keep going even at a time when everybody else had kind of slowed down. January 2021, a lot of people, the market dipped quite a bit, volume went way down because everybody had just thought like, woah, end of twenty twenty was crazy. Prices went up like crazy, now it's gonna crash, it's not sustainable, so let's just relax a little bit. It was a unique time to go, I see this opportunity coming forward, and I had essentially an unlimited amount of money. I had an unlimited amount of lenders that would lend us super cheap money. I had an unlimited amount of investors that were begging me to say like, Hey, can I lend you money at 7% interest on your properties and the opportunity? So in 2021, we bought foreclosures, but we we bought MLS stuff, we bought new home stuff. Way back in 2012 when Blackstone put me out of business.

Aaron Amuchastegui: [34:09] When they told me they were going to, I was like, you're not gonna do that well in a rental fund. These houses aren't even that good at rentals. What I didn't realize was they were gonna buy everything on MLS, everything at auction. They bought 99% of the product for sale in that county, period. Incredible. Everything. For asking price, for cash, for whatever. Well, nine months later, everything in that town was worth 40 to 50% more because now there was no supply and people still wanted houses. So 2021 was pretty unique where we saw kind of the similar thing. And so I remember texting a buddy and saying, need to buy 35 or 40,000,000 for the houses in next sixty days. Send me everything on MLS built from 1985 and newer because we're gonna buy everything. We're gonna make everything built 1985 and newer. We're gonna do the Blackstone model. And then we also started buying these new home neighborhoods then. So 2021, we bought a lot of new home stuff, had some just screaming deals with that because by the time we got everything we bought in MLS, everything we bought in new homes nine months later was worth a ton more. So our bet paid off big. And we got to really see some of the other side of that. I bought an apartment complex at the time. So I've got like a class A apartment complex that was in the middle of construction. We door knocked it when three of the five buildings was done and they were kind of nervous because the market started to slow down and they were like, man maybe we should sell this thing.

Aaron Amuchastegui: [35:28] And so they sold it to me at a heck of a deal. And nine months later the apartment was done, and nine months later those new home buildings were done and they were all worth like 40% more than we had contracted them for. It was Incredible. I had some really, really amazing bets. Today I'm flipping like a house or two a month that I buy at auction, but the market's really funny to see what the next bets should really be. I've started to really tailor and adjust some stuff.

Dan Austin: [35:53] Yeah. So when you're saying that you were buying all these homes, you're buying them for your portfolio to keep as rental properties?

Aaron Amuchastegui: [36:00] Yeah. So I did a few different things. So some of them were portfolios with investors. They were investors that invested with us way back in 2010 and 2011 and wanted to come back along for the ride. Some of them were just for me and my wife. And I have two different business partners that I own. With each of them I own a lot of different houses and some of them were just with those guys. Most of it was buy and hold. There was some of those ones that were ridiculous though, where by the time we closed on it, we're in escrow for $2.80 and it's worth 400,000 the day that we close on it. And there was like two of them next to each other, 50 miles from anything else that we had. So we just put them on MLS the next day and sold them for 400. We just decided to flip them instead. But the bulk of them, 90% of them went into our portfolio. But I think everybody should have a combination of quick flips for the fun money. I mean, do a lot of fun stuff. Like you said, if you follow me on Instagram, half of my life is crazy fun stuff. So you gotta have some of the flips to pay for the fun money and then the long term holds to make sure that no matter what, you're gonna be fine in the long run.

Dan Austin: [37:02] Yeah, that's great advice right there.

Mike DeHaan: [37:04] I love it. That's always been our MO too, why we've wholesaled for the most part. We've done really kind of like easy flips, but we kept a ton of properties through 2021 and 2022. So now we can you know, keep putting that additional money into the business and take some larger risk. It doesn't really matter because we have a backstop in terms of our cash flow and our rental properties, things like that. It gives you that much more freedom. And, you know, the extra money that we pull out of the business and the transactions we can use to travel or, you know, do whatever Dan's got his Lambo coming next week. So getting he does it.

Dan Austin: [37:37] That's his goal. If I was a car guy,

Mike DeHaan: [37:39] yeah, if you're a car guy. Yeah, no, I mean, that that's super cool. So I guess, give a sort of level of scale that you've reached, how many deals have you done now? What does your total portfolio look like, you don't mind sharing that?

Aaron Amuchastegui: [37:51] I've probably bought 2,000 single families at auction before. We have eight fifty houses that are mostly in Central Texas. We have some in Arizona, like some in Ohio, some random... I guess I have two in Arkansas now. I've got some random portfolio places, but it's houses mostly in Central Texas. Plus I've got a 77 unit apartment complex and I've got some land that I got entitled over the last couple of years that I closed on after I got entitled that I'm supposed to build a class A apartment right next to my 77 unit. I'm supposed to build another 96 units there. I own a climate controlled facility in Michigan. That's not a good bet yet. We'll see if that pays off. Climate controlled storage, it's still only like 30% occupied. Big old building, it was all the hype for a while. That's my portfolio now. What we're seeing in like, there's like a story of a bunch of different worlds right now. Central Texas, median prices are still going down a little bit, stuff is slow. I've got a house that I had listed at $4.60 four months ago that now I'm at $3.90 And I've got no offers on and comps were at $4.60. Wow. We're just in a really slow area and that's a huge decrease. That's like a 20% decrease. So it sounds like 40 from the peak.

Aaron Amuchastegui: [39:04] So we have some markets that just aren't very, that they're kind of stagnant. Stuff just isn't selling, it's not going really great. We have others that are doing okay. But in Texas it's like pretty average, pretty balanced. And so I'm not really buying much here unless it can actually cash flow as a rental at a 7.5% interest rate. And I think it's discounted 30 to 40% from the peak. Because if I can buy something that's 30 to 40% less than it was a year ago and it cash flows at a 7.5%, then what goes down will go up eventually with real estate. I started buying in places like Arkansas where the market is going up. So we're starting to diversify a little bit in these other places. There's places in Florida where the market's going up. Washington D. C. The median house prices are going up. So there's certain markets where you're still getting home price appreciation. And so I am starting to branch out of that. And then we have probably like 150 of our doors in Texas we're actually trying to sell right now. So even though they're down 20% from where they were at the peak, they're ones that don't have long term debt on them. And we do have a lot of equity in them because we bought them at really, really great times. So there's like a development I think we bought for 3,000,000, it was probably worth 6,000,000, now it's worth 4.5. We're actually trying to sell it for 4.5 because we wanna pull that cash out for the opportunities that we think are ahead.

Aaron Amuchastegui: [40:23] So we're reanalyzing our portfolio. If it doesn't have long term debt on it, if it's not an asset that I'm like, I'll be proud to own this thing in ten years, We're trying to cash out some of those gains that we had. Even though we didn't time it quite right, we should've done it before. We should've sold them sooner. Yeah. But what can you do? Because we think there's a lot of opportunity coming.

Mike DeHaan: [40:40] Yeah, well yeah, like you said, you like to be the first one out. And that's a perfect transition too, because I know that you are somebody who really spends an incredible amount of time, you know, doing your research and analyzing numbers and seeing what the government's doing and the larger financial picture, not just locally, but across the world. You know, and a lot of the different information that you release is such a good deep dive Very good. That is very, very valuable. So I guess in your opinion, you know, we're kind of in this funny stalemate with real estate right now. What do you see happening over the next, you know, one year, five years, ten years with the real estate world? Yeah. And I guess the economy as a whole too, because I know you get it, led to a much larger picture as well.

Aaron Amuchastegui: [41:23] Yeah. Thanks for noticing. Yeah. Right? Like, that is my favorite. I try to say that I'm a I'm like a trend spotter and like analyst because all my biggest bets were like that. The 2021 bet was was trend spotting and making a bet when no one else saw it. Getting into foreclosures in 2009 on the courthouse steps and seeing that it could actually be scaled and become bigger than any homebuilder we ever had, bigger than the homebuilder I was working for. So it all comes from studying the market. And really people should be studying the market like crazy because you never know what's going to be that different trend thing that happens. So news is very national and news is very local, and you need to have all of it. Jobs in certain towns and new warehouses getting moved to certain cities, especially small. If you've a town where populations under 60,000, a lot these little outskirt places, one new job source or one new job closing will affect the market dramatically.

Mike DeHaan: [42:20] So

Aaron Amuchastegui: [42:22] they're like, Oh, there's gonna be 400 new jobs in MacGregor, Texas. SpaceX built a thing there, but there's a new job coming in with 400 new jobs. Well, in that town, there's 140 houses on the market for rent or for sale. You're like, all right, when we've got that many new jobs coming in and there's only 140 on the market, it's going to push the needle, it's gonna move the needle one way or another. So on a very local scale, you wanna be looking at stuff like that. On a broader scale and figuring out what states are gonna start doing really, really well. I remember at the beginning of COVID, people were saying Texas was gonna be one of the states that did the best with the COVID idea based on where warehouses could get changed over to, where they could move some of the systems to or call centers and things like that. And so you see places like Bentonville, Arkansas, where Walmart just required, anybody that works for them has to have their corporate office moved to Bentonville. And they have to move it onto the Walmart. Walmart has this giant campus, so if you're gonna sell us a good in Walmart, your executive staff has to actually live in Bentonville and you have to have an office next to Walmart so they can walk over and ask you a question whenever they want.

Aaron Amuchastegui: [43:27] It's incredible. So obviously Bentonville has been going crazy and the people that are having to move and relocate out there aren't the small earners, they're the higher earners. They're the people that are earning a few $100,000 a year and up. So that doesn't really affect the lower level price point there, but it really affects the $506,100,700 thousand dollars price point demand. So there's local things like that that happen in markets that you're in or in markets around, so reading as much as you can to figure out what areas are going to be different. If I tell you the market's gonna go down everywhere, there's gonna be some places that'll be different like Bentonville. Or if I tell you it's gonna go up everywhere, there's these Texas towns that were all oil based. And as soon as the well went dry, there are towns that are ghost towns in Texas where apartment complexes went from 10,000,000 to 2,000,000. Some interesting things that we're seeing on a more global scale is we're seeing cap rate compression dramatically has changed, office and multifamily. And a very quick example of that is if a cap rate was 5%, two years ago cap rates were 5%. An appraiser would say, if you're making $50,000 a year on that property, it's worth a million dollars. That's it. Dollars 50,000 year profit, it's worth a million dollars straight from cap rate. So now cap rates are seven because the Fed drove prices up. They're gonna keep raising rates another probably three or four times, which will probably push cap rates up to the eights for commercial and for anything that's like a B class or below multifamily.

Aaron Amuchastegui: [44:58] So when it goes up to seven cap, you have to say at what price does this property have to be to be making 7% a year on your money? I actually had a little calculate, I don't know if you guys can see that behind me.

Dan Austin: [45:10] No, not really.

Aaron Amuchastegui: [45:11] So I had a little, I was actually working through There you go, a little number with there go. So a million dollar five cap property, when it changes to a seven cap becomes a $700,000 property. So it has to be worth 700,000 because 7% of 700,000 is 49,000. So five cap it's worth a million bucks, seven cap it's worth 700,000. So we have a 30% price decline on multifamily and office even if nothing went wrong. If everything went right, if your occupancy is still 100% occupied, if you're still super profitable, you lost 30% in value. And the same thing with commercial and office. The other challenge the commercial office has had is there's just less people renting. There's less people renting office space. There's less people working in an office. I have a great big office right now and even come October, I think when we leave that office, I think we're gonna go back to remote or something much smaller. And I'm the biggest tenant in this office. We had a Wells Fargo downstairs and it was like a bank and the first two floors, now the Wells Fargo's gone. It's like that office building itself is gonna go from like 40 tenants two years ago to like four. And you go like, that's gonna be crazy.

Aaron Amuchastegui: [46:19] There's a property in Portland right now scheduled for auction next week. It sold for $69,000,000 a few years ago. And its opening bid is $15,000,000 on the foreclosure. I think I saw you

Dan Austin: [46:30] post that on Instagram, that's wild. Yeah, I'm like, it's that's wild.

Aaron Amuchastegui: [46:34] And the reality is it's probably worth like 40 or 50, so someone will probably go buy it at 15. It's not that it's not occupied either. I've got tenant leases on the whole thing. I've got the breakdown of all the income on it. But it's a cap rate compression combined with two different rates. So why is stuff foreclosing or why would an apartment foreclose? If somebody bought their apartment, like the apartment I got in MacGregor that I bought several years ago, we're fine. I wish that it was still worth $15,000,000 and now it's worth 10 or 12 because of cap rate compression. That's heartbreaking. That makes my balance sheet on my net worth look worse. It makes me sad. But it's fine because I have a long rate. My rate's locked on and it's not gonna impact anything. Doesn't matter, it doesn't appraise. But most apartments, and for that matter most commercial and office that was bought in the last three or four years, was bought with short term debt. Twenty four month to forty eight month debt. And that means after twenty four to forty eight months, it comes up for renewal. So if somebody bought that million dollar apartment two years ago, they probably put $200,000 down and they got an $800,000 loan on it. So they have an $800,000 loan. Today, appraiser, the bank says, all right, time to get a new loan on it.

Aaron Amuchastegui: [47:44] And we're not gonna give you this 5% loan anymore. Somebody's gonna give you a 7.5% loan. They go, okay. So then they go get an appraisal and now it appraises for 700,000.

Mike DeHaan: [47:52] So it

Aaron Amuchastegui: [47:53] appraises for 700,000, even though the current loan on it is 800,000. So then they say, okay sir, cool, you've got your apartment complex, we can give you a $500,000 loan at 7%. So if you write us a check for $300,000 on the apartment that you put $200,000 down on two years ago, and people don't have it. Especially like syndications where they raised money and people put stuff in. So And we're seeing a lot of syndications get foreclosed on. We're seeing a lot of multifamily get foreclosed on. So the biggest opportunity we see happening is in multifamily acquisitions over the next year or two, where there'll be heavily discounted. Land development acquisitions that are heavily discounted because they were the same, they're bought with short term money. They buy them so they can get them entitled and put roads in, and the plan was to flip them. There's lots of classes out there that teach people how to flip land and things like that. Well it's all done the same thing with hard money and short term debt, so there's gonna be a lot of opportunity in buying those for kind of pennies on the dollar. The commercial office space, I still don't like that industry right now. But buying a $70,000,000 property for 15, that works. Yeah, Right, if it was 70 once and if it's at 40 now, that's worth the risk and knowing that eventually five, ten, fifteen years from now we'll have some cap rate compression where that'd be a huge deal. I remember the Fountain Blue Casino in Vegas for the longest time nobody would buy that thing because it was so many issues.

Aaron Amuchastegui: [49:17] And it was like a Carl Icahn. It ended up being just a giant deal, I can't remember the numbers on it, but it was bought for 200,000,000 and sold for 1,000,000,000 or something years later. The number was, whatever proportion, it was like a 70 or 80% gain on something that at the time no one wanted to touch it.

Mike DeHaan: [49:32] But the

Aaron Amuchastegui: [49:32] reality is time can heal a lot in real estate too. Economy wise, man, I think we're still gonna see a lot of economic impact fall out over the next six or seven months. The prediction I made in like September was the Fed was gonna raise rates until July, and then they were gonna stop. And then nine months later we would see the rest of the downfall. I think that prediction is running pretty close, but now I think they're probably not they're gonna raise even longer. And at that time people told me I was crazy. Fed will not raise rates for nine months, they told me. They said rates will be back down if Google IO was crazy. But now it's even at like, they're at month 10, they're probably gonna go to month 12, and then eventually they'll stop. Once they stop, it takes about nine months to see the rest of the economic fallout of spending really, really slowing down. And once spending really, really slows down, that's when we'll start to see the rest of the economic fallout with jobs and with money and inflation getting under control. There's certain things that are fighting inflation. We could get really technical on, there's still a lot. So I think we're still gonna have pretty heavy inflation over the next six to nine months, so that's a decent thing for kind of asset stuff. I don't think we're gonna see rates below six any time soon for the average home buyer as they're holding.

Aaron Amuchastegui: [50:42] Don't think to get to five, I think we're two years away from a 5% interest rate on stuff. I don't know, as I dig into the predictions, I think that overall the economy's not gonna be great, but it kinda had to be done, and it's predicting the other way.

Mike DeHaan: [50:58] Yeah. The big upside's always gonna have an equal sort of balancing act, right? Nothing can just go forever, and people, for some reason, always forget that when we're you know, in the boom period. Right?

Dan Austin: [51:10] So So frustrating, though, because it's like the slow... And you know, like, what you're saying, Aaron, like, I I 100% agree with you, but it's like a waiting game because we all wanted to be this awesome money making economy, but it's just part of the ups and downs, and sometimes this slow weird trough.

Aaron Amuchastegui: [51:24] There's this concept called buying in the bottom third, and I think in some markets we're probably in the bottom third. And so what does that mean? So if something is worth $100,000 and it's gonna be worth 50, it's gonna bottom out at 50. We don't know if we're at bottom yet, right? But it's gonna bottom out at 50. The bottom third would mean anywhere between 50 and 66 is the bottom third of the fall. And so if you're gonna get back into the stock market or get back into housing or get back into multifamily or anything else, you wanna be in that bottom third. It's impossible to time the bottom really. But if your goal is to buy in the bottom third, you could buy something for $60,000 today and maybe next year it is gonna be worth 50. But your five year plan, maybe your ten year plan still goes back to 100. So I think in a lot of markets we're probably in that kind of bottom third. So that can help some people get a little bit more active, but not with short term debt. Just don't do anything like that with short term debt. It's like if it can cash flow at seven and a quarter, and I can get the seven year loan on it, then I'll do

Mike DeHaan: [52:31] it. Yeah, absolutely. So I guess for the average investor out there, I would say like the average investor that is established and doing deals, what do you think they should focus on over the next little bit, I guess, to be prepared for the next opportunity?

Aaron Amuchastegui: [52:47] Yeah, the two ideas. So to cure boredom, you could still do flips right now with the idea, when we did our flips from 2009 to like 2011, the market was actually falling every month. Median prices were going down every month. But our business plan was we would buy for 70¢ on the dollar, we would fix and we would sell for 90¢ on the dollar. And we would essentially beat the market. And we would make it turnkey because the only buyers that were buying were first time home buyers and they don't have the $4,000 to paint it afterward. They needed a house that they could actually move into and not have to do any fix up. Way different than two years ago. So that's the business plan. Turnkey models, first time home buyers if you're gonna flip houses. And you have to only do it if you can buy it at a rate that you can fix it fast enough. Now it's like that race too. If you can fix it for a week instead of a month in a falling market, that derisks you, and then to where you can sell it below market and still get it. So if you're buying wholesales off market deals, that is possible. But focusing on, like the house that I have that we've had to drop 20% on in the last two months, it's not a first time home buyer market.

Aaron Amuchastegui: [53:49] A mid level, average market, still in a hot area in Austin, but it's like dying. Whereas the first time home buyer markets are still selling. So that's what I would focus on for like quicker flips. The only time I'm gonna do a long term hold and be adding to my portfolio is if one, if it's in the bottom third, and if it cash flows at today's long term loan rates. If someone's gonna buy an apartment or a commercial deal, it better be at least 30% below what it would have been in May 2022. Because of just the cap rate thing. So if you're getting it for 20% below, you are way overpaying. If

Mike DeHaan: [54:29] they're

Aaron Amuchastegui: [54:29] like this thing was worth a million dollars May 2022 and now we're selling it to 800,000. If it's multifamily or commercial, no way. Even though it looks like a seven cap. You're like, hey, it's a seven cap, it's an eight cap, it's a great, great deal. You're still way overpaying and it might take an extra five years before you actually get your value out of it.

Mike DeHaan: [54:46] That's great advice. That's awesome. And are you a proponent of everyone saying accumulate as much cash, pull all your lines of credit so the banks don't take them away? I know it's been a big conversation in the go abundance crowd. I've heard, you know, talk about David Osborne's office doing that a lot of the other people just basically getting all of their lines into cash, their liquidity, and all their liquidity ready just up the belief that if they do that, the bank's a lot less likely to call things.

Aaron Amuchastegui: [55:13] Yeah, so that's why we're selling our 150 houses. I had a bank line of credit call it after I drew it and they didn't have a reason to. And we were supposed to redraw and they said you got two weeks to give us $600,000 back. So I do think you should pull this stuff, but you better have it ready because they can just as easily, so there's all these other things that we put that are in bank loans that people don't think about. And it's this extra stuff. Whatever line of credit you have, it probably says you're gonna make over $1,000,000 a year on such and such, or your income is gonna stay at this, or your debt to service ratio is gonna be this. There's all this fine print that we sign in those documents. And we had another friend in GoBundance recently where every month the bank is saying to us, they say, Send us over your P and L, send us over your bank statements. And he sent over his. And in his case, he wasn't doing the rule of the thing of putting the deposits in the right account. And they're like, Oh, if you're not gonna follow the rules of using our bank as your depositor, now we're taking your loan away even though you're not in default. And he had a long term 4% loan that they called. And it was not supposed be called for ten years. They'll do the same thing when you're sending over, don't just send over your P and Ls and bank statements anymore, make sure you're within what the guidelines are. Because we also run stuff at a loss at different times in real estate.

Aaron Amuchastegui: [56:30] If you send that thing over, the bank now has the ability to say, you were supposed to be covering a 1.4% debt service ratio. You didn't, now we're calling it due. So I do think you should call your lines and get your cash ready for stuff. I think there's gonna be some banks that are failing. Think about the bank in second position on that commercial property in Portland. Have a $25,000,000 loan in second position. It's going to zero. So it's a $25,000,000 loan on one asset that that bank's gonna lose, and mid sized banks, that'll hurt all of their liquidity, all of their ratios, everything. It's a good trick, but if you do it, put the cash somewhere where you can actually move it to a different bank, but like a savings account or checking.

Dan Austin: [57:11] Don't buy a Lambo with it.

Aaron Amuchastegui: [57:12] Don't buy a Lambo. Right. Buy the Lambo, but just know you might get called or you might have to sell it. Say one thing that you said was I do a bunch of cool stuff, right? And if people don't follow me on Instagram, you should. I try to show the balance of all of it. When I went broke the third time, I remember thinking like, man, there's so much stuff I could have done with the money, and I did a lot of stupid stuff with it. But I didn't regret any of the experiences or any of the memories. So no matter what, I have the belief that, knock on wood, I don't think I can go to zero again. I've done pretty good now. But money's temporary, and all this is temporary, and we could lose all of it at any minute. And so you better make sure that you have a whole bunch of fun memories with it. And I do stuff to the most epic level, the most VIP crazy experiences ever to make sure that I have a bunch of crazy memories. Because if I die tomorrow, my friends and my family will have all these fun memories we did. Or if I go broke tomorrow, then I'm not gonna be like, oh man, should've gone to the club last week and I should've saved an extra $20 instead of going on that trip. The reality is when you're gonna go broke, you're gonna go broke.

Mike DeHaan: [58:19] That's a good point.

Aaron Amuchastegui: [58:21] You're gonna spend the rest of your money no matter what. So like as you have it, you gotta live big.

Mike DeHaan: [58:26] Yeah, so yeah, you heard it here first guys, pull all those lines and just blow it on sick life experiences, that's totally fine.

Dan Austin: [58:32] Well, if you're gonna go broke, right? Yeah. Go with the bank.

Mike DeHaan: [58:35] Awesome. Well, thanks so much, Aaron, man. This has been a really awesome conversation. I'm under respectful of your time here. It's funny. I I say before the show, we go thirty five to forty five minutes. Usually, it's because most people get boring after about thirty five minutes and we call it, but that was a really fast hour, man.

Dan Austin: [58:49] I think we got another two hours in this here.

Mike DeHaan: [58:51] Yeah, I know, right? Honestly. But no, we really, really appreciate it. So where can people find you, follow you and reach out to you if you'd like them to do so?

Aaron Amuchastegui: [58:59] Yeah, My favorite place to meet any one of you guys and chat is on Instagram. So it's aaronamuchastegi. If you get to Aaron, A A R O N A M U C H, it'll find me after that. I love chatting with people on there. I've got a book called Bidding to Buy. I make like $2 every time somebody buys it, but it has all of my secrets in it. It takes like three or four hours to read it. I also teach some classes and stuff too where people come to my office or we record them and people can buy the courses. I'm having a lot of fun building out these masterminds and things like that to try to teach people stuff. But yeah, go follow me on Instagram, ask me questions about real estate. And I have a podcast called the Real Estate Rockstars Podcast where I also do a lot of my market predictions and things on there. Any of the big bets that I did, I love to tell people, is all the big bets I did, I call them out and I tell people along the way. So when I was buying all that real estate in January 2021, I told everybody on my podcast, I told everybody on my Instagram story, and when I buy certain stocks, I tell people along the way, and if people would've just followed along and done the same thing, I don't hold back. I don't keep my stuff secret. So go find me on there, go talk to me, you'll see what I'm doing, and if you trust me, you can follow along and play along with me.

Aaron Amuchastegui: [1:00:13] Absolutely.

Mike DeHaan: [1:00:14] Awesome. Well, thanks again for coming on the show, Aaron. And you guys, definitely go and give him a follow on Instagram. He is one of my favorite follows, and he posts such incredible stuff about not only just real estate and the economy, but he really does do a bunch awesome things like, I know you're really into like your different concerts and electronic music, and you're always like up on the stage, you're always floor side at Spurs games, you're just living it out, man. It's so rad.

Aaron Amuchastegui: [1:00:40] Good luck.

Mike DeHaan: [1:00:40] Really, really appreciate you coming on the show, and hopefully we'll meet you in person at a Go Bunnings event here sometime soon.

Aaron Amuchastegui: [1:00:46] Mike and Dan, thanks for having Glad me to get to meet you here. We definitely need to spend some more time in person, and thanks for tolerating me for an hour because I knew I'd have to talk fast, but we still... Could've kept going for sure.

Mike DeHaan: [1:00:57] Oh, yeah. That was incredible. So... Awesome. Well, thanks so much for coming on, Aaron, and thanks for listening, everybody, and we'll talk to y'all next week.

Speaker 2: [1:01:04] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.