Table of Contents - Flipped from a J.O.B. into Flipping with Jose Fernandez
Dave Debeau [00:00:08] Well, hey, everyone, this is Dave Debeaul with another episode of the Property Profits Real Estate podcast. And today, it's my pleasure to be interviewing our special guest, Jose Fernandez, all the way from New Jersey. And Jose is a full time real estate entrepreneur. Kind of got thrown into the whole real estate thing a few years ago after being laid off from his job. So I think he'd been dabbling in it up until that time and he was forced to jump into it full time, which has turned out to be a very, very good thing. And Jose, Focus is primarily doing, I think, some sells or flips. And he also has a portfolio of long term buying old properties, focusing on multifamily properties. So I say welcome to the show.
Jose Fernandez [00:00:55] Thanks, Dave. Thanks for having me. I appreciate the introduction.
Dave Debeau [00:00:58] My pleasure. So, Jose, I kind of give a little brief background there, but why don't you tell us a little bit more about that story? Because it sounds pretty interesting how you got into real estate this year.
Jose Fernandez [00:01:09] So I never thought about investing in real estate until I met some friends, some people that were already in the business. And I'm sure, as you know and a lot of people in your audience know that, you know, there's always those advertisements that come across, learn about real estate investing and do it with no money or credit. And I had yeah, I had seen those
Jose Fernandez [00:01:32] around, but I never really paid
Jose Fernandez [00:01:33] attention to those because no one I thought they weren't real is like, how do you really buy houses without using any money or credit? I was very skeptical. Number two was I didn't have time because I was working full time and I had a cell phone, a computer repair business that I didn't really know what to do. I just in terms of the business, I didn't know how to run the business. I just wanted to fix my cell phones and computers and make money. But I had started doing that to, you know, supplement my income because I didn't want to work for somebody for the rest of my life to the 40 year, 40 or 50 year plan. And I also needed to do it because when I graduated college as an engineer, I was twenty eight here in the US. So it wasn't the best time to go out there and start and get a job right after college. So I had to supplement my income somehow. And luckily for me, I was invited to one of those presentations at a time. I say luckily now because it turned out for me the way I did, but very skeptical and very neglected to go to the meeting. But somebody asked me nicely and I said, OK, fine. And then I was introduced to people that were already investing in real estate and educated myself. And from there I still continued to work and still have myself cell phone, a computer repair business. But like you mentioned before, I was dabbling, right. I was trying to do it. I was like, well, this could be a good idea. And I would look at houses here or make calls around calls here and never really got into it. Had a lot of excuses in my mind now that I look now behind. But I still was working full time and the cell phone and computer repair business and then life. When I got married during that time frame, we had a newborn baby. We upgraded to a bigger place. And lo and behold, as soon as all that happened, boom, just like that, my job made me off. And yeah. So just like that, my job leave me. Also, during that time I had I was really reflecting on what I was going to do next, you know, am I going to continue to look for another job? Am I going to go back to work right away as an engineer, or am I really going to give this real estate thing a shot, something that I was dabbling for the last two years? So I decided, you know what, let me take this six months to a year. It's going to really give focus, full focus on this business, because I wasn't necessarily needing to go get a job because I still had that cell phone. A computer repair business kind of was like my fallback. My part time turned into my full time. And luckily, I always had the cushion there. And what happened was I just had to have, you know, wasn't going to let my wife down the baby down. All the things that we had just were looking to accomplish as a new married couple. And your family wasn't going let them down. So you know what? Now I got I got to burn the boats and go make this thing work and took me from the time I got laid. It took me about six months to get my first fix and flip project. And from there we just been able to duplicate the process one after the other, one after the other. And that was five years ago when we did that first transaction. And since then, I haven't had to look for another job and we've been doing this full time.
Dave Debeau [00:04:36] So what got you into doing the fix and flip strategy in the first place? What is it that you like the most about it?
Jose Fernandez [00:04:42] Well, first of all, I don't really enjoy particularly Mexican flipping. What brought me into that concept was the fact that in my market it was pretty difficult for me to find that one deal. So the thought of putting it and selling it just for five, ten thousand dollar profit to me was like, well, then I have to really work on another couple of months to find this next one. That put me in a position where, like men like I mean, they got to be a better way to monetize this property. And even though I had to put up some money, which at the time I didn't use is still I it was true what I learned. I didn't use any of my own money to do that transaction. And we made a good chunk of change there. We made about we walked out of that closing with over 60 grand in that first transaction. But the reason was because of that, I didn't want to just sell it off and then wonder what was going to happen for the next couple of months if I found another deal and do the same thing. So I might as well use some of the resources that I had accumulated that I had access to to do that transaction. And at the same time, while that transaction was going on for the next one, that was my strategy behind that.
Dave Debeau [00:05:53] So but is your primary strategy fixing and flipping ever done?
Jose Fernandez [00:05:58] Yes, just from the first one primary minister has always been fixed, flipping from there from that one property. You just built it up from there after that accident.
Dave Debeau [00:06:08] So what kind of volume of deals are you doing on average in a year these days?
Jose Fernandez [00:06:13] So the last three years we've kind of been on average about four to five a year. So every quarter we have a new fix of the project. We're in the process. We're under that three hundred thousand dollar annual income by business partner and I, we split that. But you know, that business model, good income.
Dave Debeau [00:06:33] So I'm not familiar with the New Jersey market. So what kind of price range are you looking at for properties?
Jose Fernandez [00:06:40] So we really started off in the beginning with the two hundred thousand after repair value and we're right now in the four to five hundred thousand after repair value. So we kind of upgraded our circle, but we prefer to be in that two to three. Fifty middle class. Middle class. Yeah, that's what we really prefer to be.
Dave Debeau [00:07:03] So if your property values three hundred thousand after a fair value, what do you typically I know it's all over the board, but what are you typically trying to get that property for when you purchase it.
Jose Fernandez [00:07:13] So we want to be into after the repairs and everything is done into the house, the house is ready to list. We want to have at least twenty to twenty five percent equity into the property. Yeah, that that makes for a good a good opportunity to make some money, anything under that. It puts us in a bit a big risk for breaking even or not making enough for the time that we're working on it. And potentially if something happens, you know, losing out.
Dave Debeau [00:07:40] So are you guys swinging hammers or do you have a crew that does not
Jose Fernandez [00:07:44] know me and I've never done that before and I never wanted to do, which is the reason why my business partner is the one that handles a lot of the construction site. I never had any experience in construction. So when I first the first fix and flip that happened, we did our first fix and flip. I've never done anything with that kind of work before in my life. And luckily for me, I had somebody in my network that had construction experience for a long time and was kind of like in the same position as I am in terms of getting into this business. So we started talking and we got serious about it. And then that's how we started going after these properties anymore.
Dave Debeau [00:08:23] They kind of like the marketing guy finding the deals kind of guy right. Kind of stuff. Is that your specialty?
Jose Fernandez [00:08:29] Exactly. So, I mean, the acquisitions person and the handling, the marketing and the outreach of the clients and streamlining the process. And obviously we convert back and forth on what we're doing and those kinds of things. But at the end of the ones we have the deal, it goes into his expertize, like, OK, well, you know, during the transaction. Yeah, well, during the transaction, the closing process, we're trying to figure that out. So that way when we hit the closing, we already know what we got to do.
Dave Debeau [00:09:00] You know what your plan is.
Jose Fernandez [00:09:01] We're not wasting our time on areas.
Dave Debeau [00:09:04] What do you finding is working best these days for finding these kind of priorities? Because I imagine and I could be wrong. So correct me if I have I imagine you're really focusing on folks that have distressed properties or they're in distressed situations and they need to sell pretty quickly. What do you find works best for finding deals these days in your area?
Jose Fernandez [00:09:26] So absolutely. When I first got started investing in real estate, I think this is one of the rookie mistakes that everyone makes when they get started is they just talk to anybody that wants to sell a house. Right. And that's what I was doing the first time when I was dabbling. I was just talking to anybody that had a for sale sign outside or talking to realtors about properties, anything that looked like a fixer upper. I was talking to them, but they want to top dollars. Those people want to top dollars. And what I started focusing on eventually was people that needed to sell their properties. Like you said, they were in those distressed situations. So that kind of switched the business. That was a turning point for my business. And the way we do that is we focused. Only on people that are going into foreclosure, every foreclosure process, people that inherited houses and anything that has to do with vacant properties, we do a lot of driving for dollars of vacant properties. So, I mean, our primary strategies are people in foreclosure and people that are inheriting properties.
Dave Debeau [00:10:25] What is the size of the market area that you're focusing on?
Jose Fernandez [00:10:30] The size? We we focus on a couple of counties in New Jersey. We don't just focus on one city because the in the city that I live in is a relatively it's not a huge city, but it's not a small city either. So it's about two hundred and fifty thousand people in the area. And it's heavily, heavily saturated with competition here because I live on the other side of the river from Manhattan. So we have people from all over New York City that want to come into this area, people from this area. So it's just like a very competitive market. So we spread our marketing into about three different counties. But within those three different counties we cover, I mean, I don't know the number of cities over the top of my head, but we market to like 30 to 40 cities in this particular area where we are. And we don't do deals in all those cities. But when somebody kind of races, their hand is like, hey, listen, I need to sell my house. And I live over here as I call to go over there and pick up a deal and we'll do our research and we get it done.
Dave Debeau [00:11:34] Yeah, OK. Well, it makes sense. So you're reaching out to people that are in foreclosure. You're reaching out to riving for dollars. You're looking for vacant properties. You're looking for people that have inherited properties. Things work a little bit differently in the States than they do in Canada. So are you able to find lists of those kind of people or how are you beating the bush and finding folks that are in foreclosure and an inherited properties?
Jose Fernandez [00:12:00] Yeah, so we we do it the old school way. The list are available in the courthouse. First we started off doing it myself where I would go to the courthouse and compile a list and prepare the marketing pieces and send them out manually and all that kind of stuff. And now what we have is we have virtual assistance to help us do that. Luckily for us, a lot of the towns that when I first started investing were only that you had to go physically to the courthouses. Now, a lot of those upgraded to online, online, online, this thing. So, yeah. So ever since then, we hired assistants to kind of go into those public records, scrub those that information, the same thing that we trained on how to do that. And they automatically just inserted into our marketing system. And what we do at this point is kind of oversee the process that they're doing and set up the marketing, the pieces. And that's where we are with the process. And a lot
Dave Debeau [00:12:57] of it is newshole. Direct mail is is what works and still working like gangbusters. You know, it sounds like you've got a really good marketing machine set up, typically. How many touches are you sending out? How many stations are you sending out on average before you get a call? I know it's all over the board, but
Jose Fernandez [00:13:19] you mean for a specific person? I mean, we send our marketing pieces are about for every one that comes in our list, we send for anywhere between three to six marketing pieces, depending on city, location, property. There's all different categories that we have. But we we go between three and six touches, four postcards and the average we get anywhere between two to three calls a week in our system. And our average transaction is about anywhere between two to twenty five hundred dollars in marketing spend on marketing spend.
Dave Debeau [00:13:54] Well, that's not bad because your your average profit on a deal is five figures.
Jose Fernandez [00:13:59] Yeah. Oh yeah. Tens of thousands. Yes. Yeah. Direct mail system. We worked really hard in twenty nineteen to get it to that point which has freed us up into twenty twenty exploring a lot of stuff online.
Dave Debeau [00:14:13] Interesting. Hats off to you. I love, I'm a marketer myself at heart, so I always appreciate people that are doing good stuff when it comes to marketing. So hats off to you for that was a time flies when we're having fun. So if people want to find out more about you, more about José Fernandez and and what you're up to with real estate investing, what can they do?
Jose Fernandez [00:14:34] Well, for me, they can either find me on Instagram or they can go directly to my page on Instagram and learn real estate investing with underscores in between. And my website is Learn RBI with Hosie dot com. Very simple
Dave Debeau [00:14:50] accent. Thank you very much for sharing some of your experience and your wisdom.
Jose Fernandez [00:14:54] Awesome day. Thanks for having me on here. Today was very fun and I hope to talk to you soon in the future.
Dave Debeau [00:14:59] Likewise. All right, everybody, thanks for joining in and we'll see you on the next episode. Bye bye. Well, thanks very much for checking out the property profits podcast and you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.