Fernando Angelucci – Founder of Titan Wealth Group, talks to Neil and Brittany Henderson, the hosts of The Road to Family Freedom podcast. Fernando shares information about how he got involved in real estate with very little money, what it took for his expansive growth, how he makes income with real estate wholesaling, as well as using the Airbnb arbitrage model, and investing in self-storage facilities.
Read Full TranscriptFernando Angelucci [0:01]
Another great thing too is what people don’t realize. And this is true of all marketing, not just in real estate is you have to touch the potential client multiple times, they say usually be anywhere between seven to 12 assume different articles seven to 12 times before they’re willing to do business with you.
Brittany Henderson [0:18]
I’m Neil and I’m Brittany, we are a family on a journey towards financial and location independence. Each week, we interview successful real estate entrepreneurs about their chosen investment strategy, and rated based on how much money it took to get started, how long it took to educate themselves, how passive it is, and whether or not they could do it from anywhere in the world. Welcome to the road to family freedom. If you like our show, the easiest way for you to give back is to leave us a rating and review on iTunes, head on over to road to family freedom comm slash review for links and instructions on how to do that we would be so grateful. All right, and that’s out of us. Let’s hit the road to family freedom. Our guest today is the founder of Titan wealth group. He got his start in real estate as a wholesaler and he’s now helping investors buy into Self Storage using syndications. Fernando, welcome to the road to family freedom. Thanks for having me, Neil. Of course, of course, it’s great to see you again. So let’s get right into it. When you started off with real estate investing, what was your chosen strategy? And why did you choose that strategy?
Fernando Angelucci [1:31]
Yeah, so I started off wholesaling properties in Des Moines, Iowa. For those out there that don’t know soon as I put a purchase agreement on a property, and then I assign my purchase rights to another buyer for a fee. So I The reason I started with that method was it doesn’t take a lot of capital. I think I started with 1500 dollars on a mailing campaign. And we can circle back with how I got that 1500 dollars gets a crazy story. But what really led me to get into this was when I was 16 years old, I read Rich Dad, Poor Dad. And from that moment on, I knew I wasn’t going to be an employee, I was going to start my own business. At the time, I didn’t know it was gonna be real estate, even though the book used real estate as the main example. Yeah, and then so went to college, both my parents are from Brazil. So not going to college wasn’t an option. I wanted to, you know, be a business owner. You know, my dad said, go to college, get a degree. And then that way, if the business thing doesn’t work out, you can always fall back on your engineering degree.
Brittany Henderson [2:36]
So so let me sort of reiterate what wholesaling is you, you go on you market for houses, you look for the owners, you get the home under contract, you essentially agreed to buy it correct?
Fernando Angelucci [2:50]
Yep. And then there’s money.
Brittany Henderson [2:52]
Yep. And then you go and find another buyer to buy it for slightly more. Correct. And so you can then you collect a wholesale fee, which hopefully is hopefully is more than what you what you’ve got. Right. And the key is that you’re not really having to the most typically, you’re having to put down his earnest money. You’re not having to put down a deposit, deposit the earnest money, it’s the end buyer that you’re selling it to is that’s putting up all the capital.
Fernando Angelucci [3:25]
Yeah, so when I started in Iowa, I was using as little as 100 bucks for earnest money. And now in Chicago, just good. It’s a competitive environment, we go anywhere between 1000 and $3,000. For this one,
Brittany Henderson [3:37]
I’m still learning a lot about real estate investing and different things. So I’m kind of like the newbie on the podcast. But whenever people talk about wholesaling in my brain, it’s like, lots of properties at the same time. Do you do them in like chunks? Or is it really just like one property and one buyer?
Fernando Angelucci [3:55]
Yeah, so we don’t really mess with portfolios very often just be it’s a lot of underwriting and it’s a lot of capital needed, especially from the earnest money side, but then also for our buyers, you know, they’re very picky about what they do and what they don’t do. So right now, it’s just a lot of one off properties every once while we’ll get small portfolios and owners retiring is three or four properties, but nothing crazy. Yeah.
Brittany Henderson [4:22]
Are these being sold to like flippers, or what kind of
Fernando Angelucci [4:27]
both? Yeah, so we, about 60% of our deals are fixing for deals. But we do get about another 40% are buying hold sometimes with tenants already in place, sometimes they’re vacant, and the industry’s going to put a ton in place after rehabs it it’s kind of the way that I like to go just because passive income you do the work once and then it keeps paying you out for the life of the asset. Whereas the buy and hold arm them sorry, the fix and flip, you do get these nice, you know, really sexy big chunks of of change. But you have to constantly be working. And my goal is to be retired by the time it’s 35. So I don’t want to be managing, you know, contractors. There’s a lot of good contracts out there. But there’s also a lot of bad ones that if you’re not, you know, watching them like a four year old, they’re going to take advantage of you.
Brittany Henderson [5:19]
Well, you know what watching four year olds is like, they’re kind of jerks. They can be they can be and then all sudden, they’re sweet. And
Neil Henderson [5:31]
they’re like you to the contract.
Brittany Henderson [5:35]
I’m not going to cuddle, not gonna cuddle with my contract. So we’re big believers in beginning with the end in mind, like a destination. And you just mentioned that, but can you tell us about where real estate is taking you? Where’s your destination?
Fernando Angelucci [5:53]
Yeah, so the big picture is I’d like to be able to travel for six to nine months out of the year. Instead, to do that, I’m going to need passive income that’s coming in monthly. Originally, I was started building a portfolio using single family and multi family homes. But more recently, I’ve been shown the light of self storage facilities and how they truly are passive. A lot of people use the word passive rental properties. But for the landlords out there, they know that it’s not, it’s not very passive unless you have a amazing property manager that is willing to take, you know everything on the chin.
Brittany Henderson [6:29]
Alright, so we’ll get into the self storage as well. But I want to I want to zero in I want to keep sort of talking about the wholesaling. wholesaling is the strategy to use when you’re getting started in real estate where you’re just starting out, and you have no money. And that’s obviously what you did, how much knowledge did it take you to get started?
Fernando Angelucci [6:49]
Yeah, it took me quite a bit of knowledge. So kind of going back to that story is foreshadowing I was working out in Iowa for a fortune 50 company. And and I had read a few of the Kiyosaki books he has other ones other than Rich Dad Poor Dad, where they they kind of hint at these different strategies that we use, but they don’t really go into depth for explained explaining how to do them. But then, one day, I decided to quit my job and had about three months runway in the bank account. So that’s groceries and rent. And, you know, Google must have been following me because all of a sudden, this little ad pops up that says, you know, free Robert Kiyosaki event this weekend in Des Moines, Iowa, lunch will be provided. And, you know, I was like, Hey, I already got to start saving on groceries. So pretty much sounds good. And if it’s not what it turns out to be, then at least I got a free lunch out of it. And you know, it’s one of those things where you go to the free event, then they upsell you two or three days, and then the upsell you to master classes. So I went and I decided that I was going to, I was going to take the master classes. However, the price tag was extremely high, it was about 30,000 dollars for the five classes that I want to take. And I took basically market segregation and analysis, I took a wholesale class, I took a lease options class, a marketing class, and then a commercial properties class. So I didn’t have $30,000. So what I did was before I truly quit, I still had a pretty good credit score, I think was like at 77 or something. And I went out and I applied for 64 credit cards in like an hour and a half. And so
Neil Henderson [8:29]
don’t try this at home, because
Fernando Angelucci [8:31]
there’s much better ways of the 64 I believe in the first round, 12 of them got approved in a way till they all came. And then I did they come with these cash advance checks. And I cash advance $97,000 into my checking account. So that’s how I started that was my startup funds for the company. Right, so so it’s 30, grand me went to the classes. Now looking back, I wouldn’t have done that. And I know I’m kind of jumping the gun here on one lessons. But now what I would would have done and what I tell you, I mentor a lot of new wholesalers as well, what I tell them is find a wholesaler out there, that’s already where you want to be not too far ahead. So not a guy that’s wholesaling 500 properties a year, but maybe a guy that’s doing, you know, 10 to 30 properties a year, and just offer to offer your time to him or her. And in exchange for the knowledge. I actually did that in tandem with my classes. And I learned a lot more from my mentor than I did from the classes.
Brittany Henderson [9:42]
Yeah, I mean, class classes and mentors, we obviously think are important, and they have a place. And at the same time, when you think about it, a $30,000 price tag is like the same as like a semester or a year in college, it was a lot of money. And if you’re not feeling like you’re getting out of it with the knowledge that you need, I mean, like I had that situation even with like my nutritionist certification that was like five grand I got out of it. And I was like, Hey, I know a lot about food, I don’t know how to actually coach anybody about it. So now I need to do another one, and probably would have been good to just like get with another nutritionist and basically do the one on one with them. Because that’s a lot of the skills that really, you know, are the most helpful and useful. But
Fernando Angelucci [10:31]
what I find is that, you know, there’s, there’s no need to reinvent the wheel in these classes. I don’t regret that I did it because it it caught me up to speed really fast. But they’re just basically teaching what’s already in books that you could buy on Amazon for 10 bucks. And then the combination of the book plus a mentor, like my very first activity I did for my mentor when I was wholesaling was I woke up at five in the morning for him to go put door hangers on two doors, and I just asked him, Why am I putting these door hangers on doors, he said, this is how we find the off market sellers. This is one of the strategies and every time he would ask me to do something and I would always ask what why am I have no problem doing this? But why am I doing it?
Brittany Henderson [11:15]
That’s amazing. That’s amazing. Is there a book that you recommend as far as like wholesaling goes that you feel like that $10 Amazon buy to get started?
Fernando Angelucci [11:24]
Let me get back to you. Do you guys have like show notes or something? Yeah, we’ll do a show notes. I’ve read some great ones. I’ve read some really terrible ones, too. So my bookshelf is actually in the other room. So
Brittany Henderson [11:34]
I don’t want to walk away. We’re not going to talk about it here as well, because I don’t want to get Fernando in trouble. But he has the most ridiculous audible strategy around. We’ll talk about it offline. Okay, I want to hear about it.
Fernando Angelucci [11:51]
Yeah, so one of the things I can say is, I love books. I’m a voracious reader. And now the average listener because you know, I’m trying to audible has an on advertised plan where instead of paying the whatever it is the 16 bucks a month to get one book at the beginning of the month. You can pay like a flat 200 or 210 bucks, and then they give you 26 credits on January 1, or whenever you start. I was crushing through books, and I couldn’t wait a whole month to get the next one. Yeah, that’s it something super cool if you if you check it out. Yeah, we will reader but I listened to a lot of books.
Brittany Henderson [12:27]
That’s cool. Yeah, we got like, we’re like grandfathered into like an older rate. I feel like store now. It’s about 20 bucks a month and we get two books. We get two credits a month. So I guess it’s probably similar to about what yours yours is just you’re paying up front. You’re getting them. Yeah. That makes sense. And you don’t have to like wait for we just we have such a backlog of Yeah, I’m mostly listening right now. Yeah, but he is a drive. And then I was like a stay at home moms. Like I didn’t listen to them as much for a while because I didn’t have a job. No. Get all kids. It’s fantastic.
Fernando Angelucci [13:02]
Yeah, I have like maybe 150 books in my audible. I mean, you’ve seen a Neil so there’s not in there.
Brittany Henderson [13:09]
I love it. I love it. No, that’s awesome. Alright, so I actually just want to touch on something briefly about wholesaling that I always thought always comes to mind is that so often, like it’s, it’s thought of as a beginner strategy. And it was the easiest strategy because you don’t need any money. And I actually think that it’s, it’s it’s good in that way. But it actually it’s a lot harder than it looks because you need to know a lot know how to market for deals, you need to know how to negotiate, you need to know how to evaluate underwrite a property. And you need to know how to come up with sort of construction, like what it’s going to cost to rehab a place. And then you need to know how to like find, and buyers. So it’s, it’s I think it’s still a good beginner strategy for somebody who’s motivated, he’s got time and things like that. But it’s something you really need to go in with your eyes open that, that it’s it’s hard and it’s hard work the hard the wholesalers I know, bust their butts spoiler. When we do our scorecard at the end of this podcast, the time and knowledge Monica might be a little Well, how much as far as like, you know, how long did you spend on that? mentorship? Like how long were you doing that before you really started yet,
Fernando Angelucci [14:29]
so I quit my job. And then within I think within maybe six weeks or so, I wholesale my first property. And so I found it off of a mailer that I did. So at the time I lived downtown Des Moines. So I would walk over the courthouse and I would physically pull records off of their terminal for probate cases at property attached. And it was crazy how much I was learning every day because I don’t even know what to do is I walked in and had to talk to like six different people how to use the terminal and the campuses which we over other people, I finally learned how to do it. And after four hours a week, you know, I would come with together with a list of maybe 100 names to mail to in that county. And I would send out the mailers and at the time I was doing everything myself, I was printing the paper, I was stuffing it, I was licking the stamps, putting it on there. And I still have my time. Everything timed out. I can do 100 letters, like from beginning to end in an hour and 47 minutes. And the reason I tell myself is once I started hiring people to do a format and they wanted to make sure that they were performing every two hours, you know?
Brittany Henderson [15:38]
Yeah, pro tip use a sponge on here.
Fernando Angelucci [15:44]
I learned the hard way. Yeah. You know, I that’s how I started and I got a deal. But I didn’t have any buyers. So this is when I went to my mentor mark. And I said Hey, Mark a deal. Now what? And he said I’ll find your buyers, but I get I get 50% of the fee. That’s it. Okay. So he helped me find a buyer. After two weeks, I wholesale the property for five grand and I kept 2500.
Brittany Henderson [16:10]
Alright, well, so usual is how you how you find out that first deal. How do you safely finance your deals now? hopefully more safely? Yeah,
Fernando Angelucci [16:19]
yeah. So we have a pretty aggressive strategy in our business, a little over 50% of gross revenue goes back into marketing costs and earnest money funds. So and now our you know, our science fees are a lot larger. I don’t even know this is bad to say, but I don’t even get out of bed unless I’m making 10 grand. Personally, on the new. We’ve we’ve had some knockout deals where you know, in a week I flipped a property made 80 grand on one.
Brittany Henderson [16:50]
Wow. You said assigned fee. is better? Your cut, basically.
Fernando Angelucci [16:57]
Yeah. So the assignment fee is the fee that you get for signing your rights over to the new buyer.
Brittany Henderson [17:03]
Thank you. So that’s that’s
Fernando Angelucci [17:05]
how we finance a lot of our marketing for the wholesale side. When it comes to actually acquiring properties. You know, the nice thing about being a wholesaler is you are a jack of all trades, you you basically a landlord, you’re a flipper, you’re syndicators, you’re a marketer, you’re a business owner. And once all those things start to run in tandem and run efficiently, you get the pick of the litter, I mean, now we’re sending out close to 5000 letters a week. And we get so many properties, I get 80 calls a week, or more, you know, 80 to 100 calls a week, and I get to pick through and I find the good ones. But if there’s one that’s like really cream of the crop, you know, I could keep it for myself. And that’s what I used to do. I no longer do that, because I’m selling all my properties to invest in, in self storage. And we’ll get to that later. But yeah, used to do. So it’s nice because you get to first look, and you always get it at cheaper prices than anywhere else you can find it.
Brittany Henderson [17:57]
So you know, you sort of alluded to how much time would you say wholesaling your wholesale endeavors take you on a daily basis.
Fernando Angelucci [18:06]
Yeah, so it takes me a lot of time, it is very time intensive job, I have a great team around me, which helps. So but it doesn’t reduce the amount of time I spend in the business, I just or I guess now instead of spending time in the business, I spend time on the business. So instead of me doing the calls with the sellers, I have an acquisition manager that does that, for me. Instead of being me being the one that’s you know, logging everything on the computer into our CRM, we have a lead manager that does that for us, that allows me to, to open up my time, so I can go meet with investors go raising money, you know, I spend probably 60 to 80 hours a week working on the real estate, the various real estate businesses, but a lot of that is like, I don’t look at it. Like, as if it was work, you know, I have a three hour meeting at the bar and I’m drinking with an investor. Like that’s a good time, you know, it doesn’t feel like work.
Brittany Henderson [18:56]
So, you’ve got, you’ve got a little bit of a team in place. Are there any systems that you’ve developed to kind of, you know, keep things moving?
Fernando Angelucci [19:06]
Absolutely. So on the wholesale side of things, we use a back end CRM called investor fuse, shout out to Dan and Lowes over, over there, their systems awesome. It helps me track everything. Not only do I get key performance indicators, KPIs, as people like to call them, but I can see how the business is doing with just a one screen snapshot, how many calls that I get this week, this day, how many are being converted to appointments, how many of those appointments be converted to contracts, how many of those contracts are being converted to showings for investors, and then how many of those showings are converting into actual deals and checks in my pocket? It helps a lot. The problem with wholesaling is a lot of guys, they start scaling too fast, and deals start falling through the cracks. So these back end systems are great, because they, they make sure that you don’t forget anything, you have to physically check a box they saying, you know, I did the research on this property. And then once you do that, then it brings you to the next next page, it says, Okay, did the research Did you submit the offer, here’s a way that you can submit that offer through our backend CRM. Another great thing too, is what people don’t realize, and this is true of all marketing, not just in real estate is you have to touch the potential client multiple times, they say usually be anywhere between seven to 12 or 13 different articles seven to 12 times before they’re willing to do business with you. So what is it touchpoint it can be them receiving my letter and then calling me and then talking to me or talking to Brian, or any one of our team, Stephen. And maybe you put them on a, you know, a follow up campaign where they get emails and text messages from our system automatically as if it were sending it to them. So they feel like it’s personal touch. You know, hey, is Fernando just checking in. I haven’t heard from you in a week. just wonder if you still looking to sell your house or your multifamily property or self storage facility, whatever it is. Yeah. That’s extremely, because before I switched over to using the CRM, I was just doing everything on Excel. I just had an Excel sheet, and I was losing deals left and right. And I remember one time taking an audit and calling a lot of the deals that I lost. And I another investor swooped in and took the deal, you know, 48 hours, 72 hours after I was supposed to make an offer, and I lost it. Right? So timing is super important. And making sure that you have something that tracks everything that you’re doing. And once you start scaling it and team members tracks everything they’re doing to make sure nothing falls through the cracks.
Brittany Henderson [21:35]
Do you guys do any like social media sort of work? I’m just curious.
Fernando Angelucci [21:39]
Yeah, we do a little bit. I’ve tested multiple marketing strategies. I know some people do have success with social media. But I’m a I’m an old man at heart. I love it just it works. So well. I mean, when you get a letter from us, it sets us apart from everybody else, because it’s a handwritten letter, you know, it’s a number 10 envelope, white security envelope. It’s got a handwritten blue address, handwritten return address, it’s got a life forever stamp on it, you open it up. And then it’s a professional copy. It has like our you know, logo and our website. And so if they want it, you know a lot of people now before they do anything they Google you are Google your company. So it’s important to have that presence online. And we do. But we don’t get a lot of leads through that. And when we did make a large push through social media to get leads, we found that they were lower quality leads a lot of time wasters, a lot of tire kickers, because very easy when you’re on you know, on the computer at night, just be like, Yes, I mean offer and click through like 16 different wholesalers websites or buyers websites. So we just found that the quality of lead is much higher through our direct mail, and then through our referrals. Another thing that it’s hard to build up, but once it starts building up, you really start to the power is your professional network, you put your referrals networks in the beginning, nobody knows who you are. And so knowing you have to go out and fight and claw for every deal. You know, now, I have deals emailed to me constantly, the attorneys, you know, bankruptcy stuff, probate people, nursing homes, other buyers, I have buyers that will buy properties for me, and they remember buying a good deal for me, and then maybe they either got caught in a bad place with one of the properties, they want me to get rid of it for them, or more likely, you know, they go out and they make offers on three properties thinking one gets accepted, and all three offers get accepted, they only have the funds to do one of them, they call me and then I wholesale, the other two. And everything we do, I like the way I look at businesses, everything should be even. So if somebody brings me a property, you know, most wholesalers and other buyers, they say all will pay you a referral fee of you know, 100 bucks or 1000 bucks, what we do is we’ll give you half our profits, whatever we make on that deal will give you half. And that’s why a lot of people send me their deals first. And they’ll say one of the largest networks in Chicago. So just the most exposure. Right now I think we have a little over 6300 buyers on our list just for the Chicago market. And then
Brittany Henderson [24:08]
you mentioned you’ve hired you have an acquisitions manager, are there any other employees you hired or new virtual assistants that you use the data?
Fernando Angelucci [24:16]
Yeah, so here’s kind of like the growth of the company in and how you should start hiring people to be most efficient. So first off, it’s just going to be you by yourself usually right? Then you start getting enough volume, where you can’t handle all the leads that are coming in yourself. So you’re going to need someone to either answer the phone for you, and then do the backend system. So that can be done by a VA. And we call that person on lead manager. So they’re the ones that make sure that the relationship is nurtured. Following up getting, you know, gathering information, you know, the best use of my time now is not to plug information into a computer, I should be out there raising money. So the wee manager is the one that is going to handle all your back end CRM process is for you, and schedule appointments for you and tell you what point is to go on to. So that’s the first the first person you should hire is a lead manager, once you get to that binary can handle all the phone calls yourself, then it’s going to get to the point where your lead manager scheduling so many appointments for you, you’re not gonna be able to get to all the showings at same time, because some of them are scheduled for the exact same time. So this is the next person you hire is your acquisitions manager, your acquisitions manager is the person that will physically go out to the property meet with the seller build the rapport, this person needs to be a salesperson or the lead manager could be a virtual assistant, you know, in the Philippines or in you know, wherever they are with cheaper labor, you can get them anywhere between four to 10 bucks an hour, the acquisition manager has to be an in person, super sales, shark, okay, they need to be able to be super personable, I found that females are actually better at building rapport than males, just because right off the bat, it’s less threatening, especially when you’re meeting with you know, we we do a lot of probate deals. So probate deals are when someone passes away. And they have an estate to settle with creditors. And usually it’s one person, and it can be someone, there’s an elderly, and it can even be, you know, say an elderly woman. So they don’t want just some random guy just showing up if they haven’t, if they don’t trust you. That being said, our lead manager is a guy, but he’s a great guy, he’s super nice. And he’s he’s a shark so that that acquisition manager, they have to be very sad, they have to be quick, they have to be good at negotiation. One book I make every employee read of ours is never split the difference, it’s one of the person to person I’ve ever read, they need to be able to just build a connection as fast as possible. And then the second part of the acquisition manager is they have to be good with numbers. Because on the on the fly, they’re going to have to walk to the property, take notes, put together a construction bid. Hopefully before they go to the property, they already know what the end value of this property is. So then once they figured out what the construction value is, the rehab costs, they can just back that number down and make an offer on the spot. The ability to get contract signed, the most motivated that seller is going to be is when you’re there in front of them, and they’re going to sign the contract. While you’re there. If you have to leave to run numbers and then email them back. We’ve lost deals because of that, you know, we came back, like I said, we’re supposed to make an offer 72 hours later, we go to make the offers that already signed a contract or with an investor that came two hours after you did to my property, it’s like I had in my offer was higher, she would have made more money with my offer than the other investors she went to. But I didn’t pull the you know, we didn’t pull the trigger on time. So that’s gonna be your acquisition manager, that team right there. So you an acquisition manager and a lead manager right off the bat, that trifecta can last you a long time. Once you start kind of bottleneck in yourself, again, your system start breaking Your time starts breaking, that’s when it’s time to what I think is time to either hire a partner with an integrator. So I have a partner, his name, Stephen, where he’s the best thing that ever happened in my business, we combined our company. So there’s a book called, amen. There you go. So he talks about how there’s two types of people. You know, there’s the visionaries, and then there’s the integrators. And I know traction touches on this as well. So if anybody out there is looking for a way to run their company, an actual system to run the company, traction is wonderful. So I’m a I’m a visionary, I got millions of ideas constantly floating around, but I like to start a lot of things, but I don’t finish a lot of them, right. So you need somebody that can finish the things that you start. So that’s where the integrator comes in. Or some people call it coo Chief Operating Officer, that’s probably the next person you want to hire. And then you just start making those teams and then just increasing levels. So then from there, then you have a acquisitions department, where there’s a department head and the department head looks over multiple acquisition manager will have a you know, lead intake department that looks over multiple lead intake people, then towards the end, you’re going to use I do all the marketing yourself. I’m a little anal retentive about this, I’d like to do my own marketing, but eventually, I’m not gonna be able to do this. So we have to hire a dedicated marketing person that does all our social media, that’s going to do all the mailers do all the you know, scrubbing for lists and the finding of, of different opportunities where we can expand into. And I think right there that with that, those four or five people I described, your business is probably already grossing 10 million a year or more. So it’s, as I say about real estate is you can you can keep it super lean, you know, yeah, wholesaling business alone, we grossed anywhere between half a million and a million a year. And we did that with three people.
Brittany Henderson [29:38]
That’s awesome. Yeah, I was gonna say that if anyone needs a mentor, they should probably contact you.
Fernando Angelucci [29:46]
So I it’s funny, Stephen hates when I do this, but I do this on every podcast that he wants to call me. My number is 630-408-8090. You can I’m very generous with my time I found that the most people I help, it usually comes back tenfold perfect example is. Recently I took on another wholesale mentee. And he started rocking it after worked with me for six months, and now he’s bringing me deals because he doesn’t have as many cash buyers as I have. So I The reason I offer this up is because truly it’s a selfish thing to do. Because I know if I help more people become real estate investors. Eventually there’s gonna be a deal they can take down and we’re going to call first they’re going to call Fernando first. Yeah, right.
Brittany Henderson [30:28]
Yeah, we were just talking about this with the guests. We were interviewing yesterday sort of the give and get, he really took like a leap of faith and and just started giving money to charities and things and eventually sort of had that karmic give back where he got an opportunity and was able to then like feed his family. Yeah, you know, more support me. Yeah. Paul Palmer. He’s awesome. He was awesome.
Fernando Angelucci [30:51]
I know, Paul, very well, he actually spoke to him yesterday.
Brittany Henderson [30:58]
is lovely. Yes, it’s great guy. Awesome. Alright. So obviously, what you’re doing right now, is pretty location dependent with the wholesaling. If you get a team in place, would this be fairly location independent if you weren’t doing so much?
Fernando Angelucci [31:18]
So we, as we’ve been transitioning to the new sides of the real estate business to be closing down other markets, but at the height we were, we had Chicago running, we had Indianapolis running, we had domain running for Lauderdale, and Dallas Fort Worth all with great teams. They were chugging out deals. But now that we’re we’re moving more we’re not away from wholesaling. But wholesale. This is one of the things I tell a lot of new investors is they a shiny object syndrome, they want to do multifamily, and they want to do fix and flip and they want to do wholesaling. And what I tell people is that is possible, but don’t do it all same time, like master one, then you can add to your repertoire. So it took me about five years to truly master the wholesaling business before we decided to move into other businesses. So now we close on a lot of those markets, or we let you know the acquisition manager say hey, this is your company now, you know, just pay us out a small fee. And this is all yours. So that’s what we did with most of our markets and then just kept Chicago for ourselves. Because even though it is super cold right now and snow outside. Yeah, so then and then now we moving into we do Airbnb arbitrage and self storage, development and acquisitions.
Brittany Henderson [32:34]
And obviously, the goal is to have that location independent since you said you wanted to travel.
Fernando Angelucci [32:40]
Yeah, it’s it’s, I wouldn’t say that it’s easy. But if you have the systems in place, and you find people you can trust it is it’s not hard to operate in, in markets that you’re not in. Okay. keys that you really have to screen, screen screen and and make sure you trust the person, even if the person is an all star and resumes insane. But you just sit down with him overview and just don’t feel right. don’t hire that person. Right. Yeah. So yeah. And this is why I love real estate because it is truly one of those things where you can work from. I was telling you guys right before we started recording, I was in Thailand the last month. And checks are still coming in while I was in Thailand. Right? Because I had a team. I didn’t have to physically be here.
Brittany Henderson [33:26]
Yeah. So do you think you could push that beyond four weeks right now today? Could you go longer than that? or break down? How long? How long? Can you push that?
Fernando Angelucci [33:40]
I think right now I can I can leave the business with very little, you know, babysitting, I could probably get away with probably four to six months. And I was I was close because as I was traveling, I’d come across people that are like I’m traveling for two years. Maybe I should join you. I look over at Stephen. He’s like, don’t you do it? Okay,
Neil Henderson [34:01]
Fernando Angelucci [34:02]
Especially the whole setup is we have all the all the systems in place. The only reason I can’t really do that right now with the other businesses because we’re starting them out. So I still need to get all the systems in place for the for the Self Storage.
Brittany Henderson [34:14]
Yeah. We, one of the first people who ever introduced me to self storage is a man by their therapy, Eric Hemingway, and we’ve interviewed him on a previous episode and he he took his he and his family, six kids on a sailboat, a catamaran in the Mediterranean for three years. That’s one of the children was born. He was born although I think they stopped it we were they they stopped in like, Israel or something. But they were they had the baby in Israel. Yeah. Okay, then they did. Yeah. I sort of have this like half fantasy about getting on a sailboat for a couple years. It’s not going to be like follows people on YouTube. And this is a phenomenal YouTube channel called sailing, low vagabond, and it will make you it will make you want to go and sail are also like 20 something. Don’t have any children. They do now.
Fernando Angelucci [35:12]
Yeah, it’s funny because one of the Robert Kiyosaki books he used an example of a guy that traveled around the world in a sailboat for like a year.
Brittany Henderson [35:20]
Yeah, yeah. Maybe
Fernando Angelucci [35:22]
children to homeschooling? Yeah, yeah. Never know. You never know.
Brittany Henderson [35:26]
Yeah. I would like to do the travel. I just I don’t I don’t know. I could probably it depends on where we’re sailing. I mean, Eric and his family they like there was one where they like went across an ocean for lady went to sail across the Atlantic. And and I just, it, it sounds like magic for me. But if you want to, like sail around the Mediterranean, and other places, I can maybe get on board there.
Fernando Angelucci [35:53]
You should talk to my partner, Stephen. He’s a big selling and thesis as well.
Brittany Henderson [35:57]
No, he doesn’t need to later later.
Fernando Angelucci [36:04]
Look at it as a you know, a networking. So we’re always looking at ways that we can increase our you know, they say your net your net worth is your network or your network. True. And people have sailboats have a lot of money, because you’re not cheap.
Brittany Henderson [36:20]
Whatever, baby. Grow your beard. Yeah, learning to sail. Yep. So in regards to wholesaling, what do you think are some of the more critical skills and a new investor needs developed
Fernando Angelucci [36:38]
yet? Number one is you need to know how to do construction costs. That is, by far the number one I remember the very first deal I tried to wholesale and I failed, is found this, this big Victorian style house was completely in disrepair, I didn’t know what I was doing. And I got under contract for something like $20,000. And it when the investors started walking through in the email, I told him that the rehab cost is going to be like $56,000. And when they people started walking, people would walk in, and within four seconds, they would just walk out and just leave and I was like, something’s out there. And so finally, I started following up with them. So what’s going on there, like that was a $200,000 rehab project, that’s 56,000. But I found the sheets that told me it is like now you need to actually know how to do construction costs breakdown. So I was lucky because I The reason why I was doing so bad as I was using like these systems, they had like these pre printed construction costs, she has a one page sheet. So it was like very bare bones. Instead of just doing what I knew part of my education, my formal education, when I got my engineering degree is I did a lot of construction classes, h fac, electrical, Foundation, drywall, roofing, stuff like that. And so we I went back and I created an entire repair cost estimate sheet, it’s like six pages long, it has literally anything that you can think of is on there. But for those that don’t have that type of background, what I recommend is you become real friendly with a contractor. And kind of the quid pro quo would be a contract come out, do these bids for me, show me how you do these bids. So I can learn. And as I wholesale them to these investors, I can put into my marketing email to the buyers saying, Hey, here’s the construction bid, the contractor that did this bid is willing to do the work. So they don’t even have to find a contractor to do the work for them. Now, a lot of us the pros, they already have their own contractors, but even the guys that are doing 50 deals a year flips a year, you know, their contractors come and go contractors are it’s a hard space, the hardest part of the real estate business, whether you’re a wholesaler or rehab or a landlord. So I would say number one is knowing how to do construction breakdown costs. Number two, is going to be marketing because you need to deal also construction, ality doesn’t matter. And then number three is negotiation. Once you have the deal, how do you get under contract? Right? At a price that makes sense where you can make money?
Brittany Henderson [39:10]
Yeah. Because every every every property has a home run number. It doesn’t matter what what it is, you know, every property is got some number where it makes sense. And the problem that so many people run into is they buy properties at numbers, that doesn’t make sense. You’re never going to make money.
Fernando Angelucci [39:26]
Yeah. So it’s, it’s one of the problems that we’re facing right now to go back. For those that were in the industry during the last recession. 2016 2008, you started to know things were getting wrong or getting bad before they were getting bad because everyone in their mother was a realtor. Everybody was becoming realtor. Right. So that’s, that’s why I’m starting to see the same thing again. But now with wholesalers. So I consistently am losing out on deals because there’s wholesalers that are locking them up at prices that don’t make sense, you know, they came off of some whatever course they’re locking the presses that don’t make sense, I lose the contract. And guess what, 3045 days later, that seller calls my acquisition manager and says, Hey, they weren’t able to close on this deal. Can you do this deal? at same price? Is that the reason they weren’t able to close this? Because the price is too high? Right? Yeah. If you want to know it has to be at, you know, XU. Yeah. And so at least that seller had the option to do that. One of the biggest things that I’m always worried about is the main reason I got into this is yes, I want time freedom. And to get time freedom, I need to make money. But also, there comes, you know, you’re helping people out of tricky situations. So the biggest ones that are really time sensitive, is if you get somebody that has a pre foreclosure, right. And if you can’t close in time, their property gets auctioned off, and they lose all their equity. So that’s one of the areas where it’s not that I’m mad, that there’s this influx of wholesalers, I just wish they would spend more time at, you know, really being realistic with the sellers. And this is one of the reasons why anytime in my market in Chicago, I come across a wholesaler, I always offer them as like, Hey, man, if you need or woman if you need help, my information is almost free. It’ll cost you the cost of a beer or six and take me to a bar and I’ll teach you everything. I know. I’ve done that multiple times. And I have four or five wholesalers that I helped, you know that I mentored and now they’re doing deals with me. And they’re doing deals without me, which is even better. That means that their businesses are starting to grow. And I don’t need to, you know, hold their hand through things, Real Estate’s one of those things where it’s, it’s all about mindset. Yeah, you can either be abundance, they have an abundance mindset or a scarcity mindset. The scarcity mindset will look at that and say, Hey, I’m training my competition. So everyone’s competition, right? Where, but I like to say that and I’ve tried practice abundance mentality, I say, hey, these are my potential partners, not competition, right. And that’s what has I have learned over the last five years is just give give give, it comes back tenfold. In the last maybe two or three months, I’ve probably already made 50 grand off of deals that were brought to me by other wholesalers I taught.
Brittany Henderson [42:16]
That’s awesome. Yeah. So is there anything that you haven’t already mentioned? Because you have given so much knowledge, which is great, is really exciting, because it’ll be helpful for someone out there. But if you could hit like a magic reset button, is there? Are there any systems or anything that you can think of that you would kind of like put into place earlier? Do over?
Fernando Angelucci [42:36]
Yeah, so right off the bat. Okay, so a few things. lifestyle wise, I wish I would have started waking up a lot earlier than I did. You know, now I wake up between 430 and five o’clock. And that’s not even the early set of some of the people that I work with, I know people have get up at 3am. And you’re able to get so much work done in those first four or five hours 4am hits, and then your phone starts ringing and emails start coming in and distracting you. So right off the bat, I would have reset my entire schedule. You know, rolling out of college, I only had a real person job for 13 months, I got out of college, I worked for Fortune 50 company for 13 months, and I quit. And in that time in college was waking up at like 10am. And maybe you know, and you waste a lot of time that way. So number one would be wake up early, and then get a routine in place. If you guys listening out there have ever heard of the Miracle Morning, it’s a great book, I suggest everybody do it. So I started off my days by I wake up us anywhere between four and five o’clock, I go get coffee or tea immediately I go make coffee or tea immediately it’s kind of get me refreshed. And then I do a little bit of meditation, or whatever you want to call it self reflection helps me kind of call my mind and prioritize what I want to do for the day, then I read or listen to books, because if you don’t make time for it, you’re never going to do it. So I forgot who told me this. But if you read 10 pages a day, that’s not hard, 10 pages, in a year you read 3650 pages. And if your average book will say is 300 pages, that’s 10 books that you read in one year, just by spending 2030 minutes for me because I’m a slow reader but for others out there that can you know speed read, you could crush a lot more. And then making sure that in the morning to go to the gym. There’s something it doesn’t even have to be I even though I do heavy exercises, power lifting. It doesn’t have to be that, you know, if you just go get the blood flowing, bring extra oxygen to the brain, you make better decisions, you’re in a better mood. You’ve had a flush of endorphins go through your body. When you’re in a better mood, you’re more collaborative, you’re able to do more deals, you’re able to negotiate better bet you’re able to connect with people so worked out and then and then eat, eat. Well, you know what I first started this business when I had my real person job. My job was to dry I drove eight hours a day to for an account. So I would just constantly be eating on the road, which is the worst kind of food you can eat right? Fast food and fried. You know, I was in Iowa. So the big thing that I had all the time was fried pork tenderloin, like deep fried bread, pork tenderloin that like number on your, what people don’t realize is, you know, something crazy, like 90 or 95% of your endorphins come from your gut.
Brittany Henderson [45:31]
Yeah. Don’t tell her twice. Yeah.
Fernando Angelucci [45:36]
You eat well, it puts you in a better mood, and you’re able to be more efficient and effective. So morning routine, number one. Number two, I should have brought people on to the company much sooner. And what a lot of new business owners think is like, Oh, well, if I bring someone in, that’s less profit from me, I get a smaller piece of the pie. But what we don’t realizes that that pie is now three times as large. So even though you get a smaller slice, you’re still getting more pie, right? So I wish I wish I would have brought on my partner when I started the business. And then I wish I would have hired my acquisition manager within six months to a year of starting instead of I think I hired Brian, like two or two or three years in, after writing was losing deals, right. So bring people on set number two, and then number three, making sure you have a system that keeps you accountable. So that’s not only something for the digital stuff, or the you know, the actual lead tracking the CRM, but also having people to hold you accountable. Be a partner or be to, you know, Facebook community or a men’s group, or whatever woman’s group or whatever it is somewhere where you can purchase the goal. And then the next time that person sees you, they say, Hey, remember that goal? What did you do? And if you didn’t do it, you feel really shitty? You know? It’s it’s great to have somebody to hold you accountable. I know there’s a lot of people that they say, hey, never have partners. I think those are people are coming from a scarcity mentality.
Brittany Henderson [47:19]
Yeah, yeah. me go down the rabbit hole like habits and go with like Gretchen Rubens model of the four tendencies. A lot of people are what she calls a blind jurors who really struggle with inner expectations. So they can do lots of things for other people, but the minutes for themselves and when you’re working for yourself, anything you’re doing for your job as for yourself, they really require out or like an external accountability source. And that’s a lot of times as a nutritionist, that’s kind of where I’m working from working with a lot of a gliders who just they know what they need to eat a lot of times, but they just don’t have the accountability there. It’s so it’s, it’s kind of the same spot. But unfortunately, I think a lot of people also that get into business also aren’t obliges at the same time, and then have to find the right kind of accountability that doesn’t trigger some of their other issues. And speaking to the rebels of the world out there.
Fernando Angelucci [48:13]
It’s funny cuz I, I’m very intrinsically motivated. I’m a very driven person. I’ve always been that way. Yeah. However, I, I give myself excuses sometimes, and what I found one of my good friends, and actually, now he’s a business partner in the Airbnb property business. He’s the one that got me into shape. So let’s go start working out. And what we found out is I respond really well to negative reinforcement, as opposed to positive reinforcement. So you’d show up at my house at five o’clock, he’s like, get out of bed. You know, he’s your soft, like, you gotta gotta go to harden you up here, you know, but you know, it’s all about find out what works for you. Yep. Oh, yeah. That’s, so that’s what I say, number one morning routine, waking up early. Number two, bringing people on, and holding accountable number three, and making sure that nothing’s falling through the cracks by having some type of you know, lead management system. And then I’d say, number four, which I should have done started doing so much faster than I did is start networking. And I mean, real, real networking, the pay to play stuff. Yeah. What I found is, you know, when you go to these free real estate groups, yes, those are great. But guess what, everybody else in the room has no money and they’re looking at you for the same thing. Then I started joining these like, country clubs, and where you got to pay to get in these networking groups, these mastermind groups that you have to pay to get in, guess what, that’s a barrier, a $10,000 entry fee to join a mastermind that is a barrier to people that you shouldn’t be networking with, because you know that there was a network up, right, don’t network down network up. So if you want to network up, you got to go where the money is, and unfortunately, places that are free to get in. There’s not a lot of money in there. Right? club, you know, we’re part of the Chicago Yacht Club as well as fees involved right? University clubs and other one so the networking side of things and then just be diligent about it. You know, I there’s a book trying to learn what it’s called things like never eat alone. wonderful book, and I I try to do that as much as possible. Without getting fat. I try to eat with somebody investor, a private money lender, a wholesaler, on its lawyers, anyone that can help build my businesses, some type of way. And then not to mention you learn so much from these people. What I find a lot of newbies doing is they try to reinvent the wheel when it’s like the people who’ve been doing this since people have been doing this since people have been doing this, you know, wholesaling, this is not a new thing. You go back to them, depending on your age, you know, back to the late night infomercial days with Carlton sheets talking about his no money down no credit strategy that that’s wholesaling. Right? was it called that back then, but that’s what it was. So there’s, there’s no need to try to build the business from scratch when you can just go talk to other people that have already done what you’ve done. And kind of going back to what I said before mirroring that. You want to learn from people that are ahead of you, but not too far ahead of you, right. I haven’t wholesale
Brittany Henderson [51:20]
carrot, I call it close carrot and close carrot.
Fernando Angelucci [51:24]
Cool. I like that I’m gonna have to steal that Neil close the carrot. Yeah, cuz like, if you haven’t wholesale, even one deal, talking to a guy that’s wholesaling. 500 deals a year, you’re not going to get anything out of that you’re just gonna be confused, and it’s going to maybe then, you know, this motivates you, right. So if you’re if you’re looking to wholesale your first deal, go find someone that’s wholesaling. You know, 10 to 30. If you’re doing 10 to 30, go find someone that’s doing 100 to 300. If you’re doing 100 300, go find someone’s doing 1000 to three sales, right? Yeah, I always just say, Go try to learn from somebody that’s five years ahead of you. Not 10, not 15, not 20 years inexperienced, but five, just five years ahead, even though you’ve learned so much. And you can implement.
Brittany Henderson [52:08]
Yeah, awesome. Gotcha. So, you know, we’ve talked a lot about your wholesaling. But obviously you’re you’re moving on to We know you’re moving on to bigger and better things. And you mentioned two of them self storage, and Airbnb, with rental arbitrage. Can you briefly sort of walk us through what you’re doing there, and maybe sort of why you have gravitated towards that over wholesaling. And just as a like, I think that will probably have you back on for like your b2b arbitrage and self storage, once you kind of get further in, or once we get further into our podcast, because I think that I think there’s probably so much that we can learn from you. And interesting, I think it would be we don’t really go into it. So we’ll get it. We’ll do another couple of podcasts with you later on, hopefully, and we can go deeper. So really just scrape the surface.
Fernando Angelucci [53:03]
Yeah, so So I do want to correct you on one thing. Yes, I’m not I’m not doing these things over wholesaling, I’m adding to wholesale. The things that I’m doing over is I am no longer being a landlord. So I have stopped buying single family multifamily rentals. And I’m actually selling all of my single family and multi family rentals. And how I’m replacing that passive income is with self storage and Airbnb. So I’ll start with the Self Storage cuz I’ve been doing that one a little bit longer about three years. And then I’ll go to Airbnb, which I just started about six months ago. So on the Self Storage side, the reason it was crazy, I was down in Indiana for the like Indianapolis real estate Expo. I’m walking through the different breakout rooms, because mine ended early. And I peeked my head into a room that had Scott Meyers in it. So Scott Meyers as soon as I put my head and he said the word triple digit cash on cash return. And I was like, All right, let’s, I’m going to go to the front of the room was sit down, and I’m going to I’m going to see what this is all about. And he just started making so many great points and all the pain points that I had from being a residential and multifamily landlord, tenants toilets, trash, Self Storage does none of this. So storage is a metal box built on concrete slab, there’s no running water to the boxes, there’s no electricity for the most part unless you have contracting units. But let’s get into the weeds a little bit. The management is a lot easier than managing people, the eviction laws are a lot easier. So instead of eviction, instead of it being eviction, large tenant law, its lien law, property law. So you know, Chicago is one of the worst cities in the US for evictions, we had somebody, we started the eviction on one of our units, because that person hadn’t paid for three or four months. And it took something like 13 months to legally get her out. Legally, the courts sided with her even though she was stealing from us, right, she was living on our property without paying rent. That’s a nightmare. On the flip side, you have self storage, which is they don’t pay their rent, guess what the gate is locked, you can’t even get in your keypad entry code doesn’t work, you can’t even get into the gate now. So you try to get you climb over the gate, you get through unit, the unit is double locks, got a managers lock on top of it. So they can’t even get to your stuff. You want your stuff you got to pay me. So after them being late for three days, and us trying to work with them, if they if they don’t work with us, then we start the process, we put a notification in the local newspaper, do that twice. And then we auction off their stuff. And this all happens in less than 28 days. Right? We hold an auction, I don’t even need to find the buyers. I just I just call an auction company. They bring their self storage auction buyers. I’m one day I’m hoping to get on that show. What’s it called Storage Wars. But hopefully not though, cuz that means I have to evict somebody. So 28 days as opposed to 38 or as opposed to 13 months, right. So I don’t lose any revenue. And then when the eviction happens, the so in our multifamily property that was talking about the 13 month eviction, they destroyed the unit, they destroyed all the drywall they left the water running any damage they could do because they’re spiteful, they did it. And that cost me a ton of money to repair. Right. And it’s in a storage unit, not only do they not even have access to it after the they’re late on rent payments, but what are you going to do? It’s a metal box on concrete, like, what are you going to do to it? You know? So number one, right? Number two is leverage multifamily single family are risky in the eyes of banks. So right off the bat, if you’re trying to get a conventional loan, you’re looking at 25% down, right? No problem. So Self Storage across all real estate asset classes is, is has performed the best in both up and down economy. So during the recession, self storage as a whole drop only 3%. residential properties dropped 22% across Yes, on average, right. So the reset recession tolerant banks love that. So they’re going to give you better terms and they’re going to be a lot more flexible on rate and down payment. Something that kind of feeds into this as well as that self storage is considered a businesses small business. So you qualify for SBA financing, that’s based financing allows you to go as low as 15% down, and then you can get the if you can negotiate this get the seller to take back a second position, you could get into a property with no money out of your pocket or very little maybe 5% down, right. So now instead of taking down a million dollar multifamily property, where you’re going to need $250,000 in cash alone, not to mention interest reserves and all the suppose you could take down a million dollar self storage facility with five grand 50 grand right. It’s a lot easier. The nice thing about self storage financials was that like I said, it’s very recession tolerant. So when when recession strikes, because here in the United States, in some parts of Europe, we’re very materialistic, we would rather downsize, right. But instead of selling our possessions, we store them you know, you can’t throw away your four year olds are drawings. Right? You’re going to keep those forever, right? Where you going to put them eventually in a storage unit, right? And then same thing and up and coming when it’s an academy. Everyone’s making money. What do you what do we like to do United States you just like to buy shit. So what are you going to do with all that stuff, we’re going to put it in storage facilities. And the craziest part is we were running analytics. We’re working with Marcus and Millichap. And they had a great presentation for us. We found out that you in the beginning we thought most of the Self Storage tenants are the ones that live in like a high rise condo with like no room. It’s not the case we found like 69% of our tenants have live in a single family home. And like a portion of those had garages and basements they had attics and plenty of spaces to store stuff but what happens is you know, you have a certain amount of space you end up filling it with stuff, right doesn’t matter how big your residence is. So that’s another reason I really like self storage and then the passive income you know, a lot of these facilities people either mailing checks or they now we just purchased one and we did a we’re doing a value add on it. It’s actually a million dollar facility that we bought, they had no systems in place. We added the ability to pay with credit card debit card with a CH you can pay by going to like 711 and deposit money with their system that they haven’t go straight into your account. As far as the passive income goes like it makes so much more sense to me then the single family and multi family stuff. That being said, if you still want single family multi family Chicago I will find it for you I will wholesale you that I personally will not buy them anymore, right? And then same thing with the Airbnb. The reason we started looking at Airbnb arbitrage is because of the sheer and net effect that we got on our income. And you know, like I said, as a wholesale, I’m able to cherry pick the best of the best deals. So I’m going to use some of my best deals rental properties as an example some of my best rental properties I’m netting after debt service I’m netting 400 to $500 a month per door after debt sir everything man after cowpox all that says this is money into my pocket, right? So that’s really good. Most people say aim for 200 to 300 bucks a month net on single family homes in the Chicago market. And you’re doing real well. Just to compare that to Airbnb on Airbnb, we’re netting between 1200 and 1800. net per month per door. So this is one of those things where I was like, it just made it so much sense. And I think this is one of those industries that is really revealing analyzing real estate, you know, it’s very low barrier to entry, especially if you do the model I do, which is the arbitrage model. And the income that it produces is astounding. Yeah. So like I said, I I saw the numbers that the Airbnb was producing, right 1200 to 1800 bucks net per month. And it just made a third of the cost of those rental properties. I bought those brown properties for roughly 45,000 each, it costs me about $8,000 to get a arbitrage unit up. So that’s first month’s rent to deposit and furnishing and supplies, right? So it cost me a third of the capital up front, but I’m tripling my income. Yeah, that’s amazing.
Brittany Henderson [1:01:46]
What is Airbnb arbitrage?
Fernando Angelucci [1:01:49]
Yeah, so what I do is I instead of buying a property in Airbnb and out, I rent it from a landlord, allow that landlord to take all the risks of you know, rising taxes and insurance Branson, I have a fixed, I have a fixed rent expense, right. And then I go and I relist that property on Airbnb and rent it out by the night or by the weekend or whatever they decide to, to book it for. Yeah, so there’s a couple reasons I did this one. Like I said, I live in Chicago, the taxes here are atrocious, and they go up almost every year. Same thing with insurance, you know, it’s constantly going up. All of a sudden, I started hearing whispers and murmurs, and now they’re trying to get it into the Illinois or into the Chicago law that they want to do rent restrictions, they want to fix rent, so that they will not allow landlords to increase the rent, even though their expenses are increasing. That’s crazy, right? So instead of me just saying, Oh, I hope that doesn’t happen. I said, I figured I’d go on the other side. So now as an Airbnb arbitrage, investor restrictions are good for me, because that means my base expense will never go up. But guess what’s not gonna be restricted. The Airbnb prices are going to continue to go up as as time goes on. So our our sell to the landlord, because, you know, landlords are traditionally old school, and no one likes change. Everyone’s resistant to it. So they hear this Airbnb and like, well, what is you know, what if somebody destroys my property, or this and that, whatever. So here’s my sales pitch to them and say, number one, I am more financially capable of covering the rent than your typical, your typical tenant, okay, so we typically go for two bedroom, one bath and two bedroom, two bath units, usually in apartments in the city of Chicago, that costs us anywhere between 1500 and we negotiate down to about 2000 bucks a month in rent, okay. So most of the people that are applying for this, this call a $2,000 a month rent, their income is maybe 5000 a month, I can show them my income from all my companies, as well as the income coming from the other Airbnb. So I had to say, hey, usually you want somebody have you know, $5,000, you know, gross a month paycheck? Like, here’s 25,000 does that make you feel more secure that I can pay the rent? Yes, it does, right? Number two, your average tenant one year tenant, they are going to do a deep clean on the property maybe once before they move out, right? I am getting your property professionally cleaned three to five times a week. Okay? Number three, the use in a boot abuse of your your appliances is much lower. Most people coming to our Airbnb or come from out of town or even out of state and country, they’re coming to Chicago, Chicago is known across the world for being a great place to eat. Right? everything, all the restaurants we have here are insane. No one’s going to use the oven at the Airbnb, they’re going to go out and eat in Chicago, right. So now now we’re talking physical dollars in your pocket, because now you don’t have to replace your appliances as often. So now, you know, you’re actually netting more money by renting to me. On top of that, you have maintenance fees and stuff, right? So you know, servicing the filters of furnaces, or, you know, painting whatever it has to be, I offered to give them anything under $300, I’ll take care of it. And to make them even more comfortable. say here is my list of contractors that used here, their licenses, they’re all bonded, and they’re insured. So you know, so now again, putting more money in your pocket. So instead of spending $300, if the furnace goes out, or what have you, I’m covering it, okay. And then the last part I tell them is, hey, if this works out really well. And I’m able to be profitable, I will sign the long term lease, I’ll sign a three year lease, no problem. And now as many landlords out there know, every time someone moves out, and you have to do a turn on apartment, it costs two to $3,000, painting, cleaning, you know, whatever the tenant left having to get it out, throw it away. And if you own more than one property, usually you have to hire somebody to haul away that stuff. Because you know, have the time to do it yourself. So now I’m saving you an extra two to $3,000 a year. And I’ll if I make money at that location, I’ll sign a three or five year lease, especially if I can lock in my rent price, absolutely no problem. Or even if they want to put in rent increases, smaller rent increases into the lease. So that usually will, will convince them, you know that they should rent to me as opposed to a regular long term tenant. So yeah, so the biggest thing I look for on the Airbnb is I was trying to stay around local touristy stuff I have seen people try to just they find cheaper rent in other areas, but then they don’t get as much volume. So we’re all in downtown Chicago, we have stuff right within walking distance of Wrigley Field for the Cubs, right? And then everything else is down by the museum campuses in the south loop. So if somebody is here to go look at the museums or to experience maybe even the South Side go to you know, committee to see the sax play very close to our locations. I was telling Neil during the break here that I learned a lot of lessons. So we started a group we got our first unit, August 15. That unit is above a bar. The reason the landlord could not rent it to a long term tenant other than people that work in the industry, people that work in bars, because you asked your the bar until 3am. You can hear the music and everything right? Yeah, get a huge rent discount for you in that location. a two bedroom usually goes for about 2020 200 we got it for 1575 a month because it was above the bar, right. And we learned some harsh realities, it is above a bar. So in the in the beginning, we were getting some not great reviews. Even though in the listing, we said it’s above the bar. But now what we do is we just are extremely explicit in all caps. In our listing, it says this is above a bar you can hear the bar until a closed at two 3am. So now we just have a different type of tenant now we have 10 they’re coming into basically party and they love that there’s a bar, right, they can just walk downstairs in their pajamas and be at a bar, right? That’s, that’s the Airbnb site. And that’s the reason I love it. It’s just a reduction of risk, you know, mitigating a lot of downside risk by, you know, locking in my expenses. And then the sheer ability, the cash on cash return is over. 100% right? Because it Yeah, if I let’s say, let’s use the low end number of Mickey 1200. net per month. And it only cost me $8,000 to start the entire Airbnb, I’m already getting all my money back within eight months. So if you extrapolate it out to a year, that’s you’re looking at what 140% cash on cash return something crazy. When those rental properties like if you get a you know, if you leverage it, you know, with a loan that’s really aggressive, you can maybe get like a 30, you know, 15 to 30% cash on cash return. And that’s like if you’re doing really I get most people really like hitting 10 to 12%. And I’m yeah, triple digit returns, right?
Brittany Henderson [1:09:06]
That’s awesome. Well, listen, we we could do an entire show, easily. And we will do an intro show just on Airbnb arbitrage and just on self storage. So we will have you back and we’ll talk more about it. Thank you so much for for spending time with us today. And you’ve already given us your phone number. But if any of our guests want to reach out to you, what’s the best way they can find you?
Fernando Angelucci [1:09:31]
Yeah, if you just Google my name, I’m like all over Google. Thanks to Stephen. He’s a SEO genius. You go to our website, Titan wealth group.com. That’s titanwealthgroup.com you can check us out there. Hit us on all the social media platforms, find Titan wealth group or find myself you know, Fernando Angie Lucci, you can give me a call, you can shoot me a text message that truly is my cell phone numbers. You can hate when I do this, but I’m just I’m doing it now just to make a man but call me seriously, I I’m very abundant with my time. So if you have a question after this podcast, just give me a call shoot me a text message. If I’m not able to answer, you’ll get a text message back saying hey, I’m on a call or on a meeting. I’ll call you right back.
Brittany Henderson [1:10:16]
Okay, that’s awesome. Well, thank you so much for your time. Yeah. Thank you guys. I really appreciate it. great talking to you. Alright, so that was Fernando Angela G. appreciate his time. So how much knowledge did it take him to get started in wholesaling? He I think he said like, a few months? I mean, it depends on how much it took him to get started how much it took a district getting good at it. Yeah, yeah, I’d say I’d sort of say maybe two months, kind of, you know, I’m sure it took him longer, a lot longer to master it. And he probably say that he’s still mastering it. But I would say just to get started, it took two months. And as he the cautionary tale that he made was that what he really needs to narrow down nail down was construction costs. And I’ve I’ve seen this with wholesalers that I’ve met before as well that they just don’t really know how to estimate what the rehab costs are going to be. And so they don’t they don’t get what they have. It’s not a deal. Yeah, yeah. So you need to make friends with the contractor. Yep. smuggle a contract. All right, money. How much money did it required to get started? Or does it required to get started as a host wholesaler? Well, the big you know, the reason it’s such a popular strategy with new people is that it’s advertising something that you can do with it doesn’t take any of your own money. I will say in my experience, and I think this sort of born out with what Fernando was saying is that he needed money for marketing. And he also I, we’re not going to include the cost that he spent on the mentor, he spent only $1,000 on a mentor, but I would say you’ve got to have at least $2,000 in marketing, or you’re just going to be doing what they call driving for dollars where you’re just driving around and you know, knocking on doors. And you know, normally what a wholesaler is doing is sending out a lot of mailers. In order to get those costs down. You’re going to have to start driving for dollars and just talk get perfect targeted. So I think he about two grand is what Yeah, yeah, I I that that sounds like that right. Time. How much time would you say he spends on his wholesaling? We, we didn’t really talk about specifics on that. But he said he spends a lot of time doing things. And I think he’s narrowing it down in narrowing it down. And also at the same time, he’s increasing the amount that he’s doing or how has in the past increased the amount based day as he shuttled tasks off to other people. So he kind of kept it high at a, you know, full time jobs sort of time situation. So I think we’re looking at this in the lens of family person who maybe already has a full time job, the larger scale trying to do a lot of these at same time is probably not the it’s not going to be feasible. But, you know, if you’re just trying to do a few here and there, then and you have some help, and you might be able to make it work in the wee hours between working and family. Yeah, I would say if we’re going to go off of what Fernando was talking about what he does, he said 50 to 60 hours a week. Yeah, and I would say now he is doing more than just wholesaling. Now he’s now doing self storage. He’s doing Airbnb rental arbitrage as well. So I would say at least 40 hours those were devoted to wholesaling. Yeah. So it’s a it’s not a passive, passive. No, well, and it’s, this is a tough one, because for a lot of people it is it seems to feel like a good beginning place. And if the people who we think are listening to our podcast or listening, it’s maybe not the best fit for for them time wise, unless they can afford to upfront start with a team or a partner or some other sort of situation that makes it so they’re not doing quite as much work. Cool. Alright. So location, how long could he survive without actually being in the vicinity of his business? Well, I would say now, he’s gotten to the point where he has enough systems and team in place that he was able to go to Thailand for a month. He just got back from Thailand, so at least a month and then we pressed him an issue. He said six months? Yeah. I would say for him, yes. Six months, I would say for a wholesaler who was getting started a week. Like you the moment you stop working the moment you stop making income, so yeah, yeah. Alright. Well, that was Fernando Angela Lucci. And again, we’re covering his wholesaling primarily, and we thank him for his time. And if you liked this podcast, we would really appreciate it if you take just a few minutes and leave a review for us on iTunes. It’s really simple to do. Just go to road to family freedom.com slash review for links and instructions. Thanks for listening. We’re doing this all again next week. Until then, safe travels.
Three Key Take Aways from this Episode
- In marketing, you have to touch a potential client, 7-12 times before they’re willing to do business with you.
- As a wholesaler, it is vitally important to learn how to estimate rehab costs. If you don’t know how to estimate rehab costs, get in touch with a good contractor to help you.
- Hire team members as soon as able, starting with an acquisition manager.
What you’ll learn about in this episode
- What was Fernando Angelucci’s strategy when he started with real estate?
- What is real estate wholesaling?
- How many properties and buyers does Fernando Angelucci tend to deal with?
- Where is the destination that real estate is taking Fernando Angelucci?
- How much knowledge did it take Fernando before he started with wholesaling?
- How long did he stay with his mentor before striking out on his own with first wholesaling property?
- How much time does Fernando Angelucci have to spend on wholesaling each day?
- What systems has he developed to keep things moving smoothly?
- What type of team does Fernando have?
- How long can Fernando get away from his business at a time?
- What elements are key to wholesaling?
- What types of routines are part of Fernando’s growth?
- Fernando talks about going from being a landlord to adding self-storage and Airbnbs to his business.
- How much is Fernando netting per door with the Airbnb arbitrage model?
Help Us Out!
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Resources Mentioned in the Show
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