From Sleeping in His Car to Making $4,000/Month Cash Flow

If real estate investingReal estate investing feels out of reach, like something people with money do. This episode might change that. Sebastian Rodriguez was sleeping in his car, had maxed out his credit cards and barely spoke English, yet he was able to build his own rental portfolio in just six years.That’s right. Sebastian started from zero, but now he owns 13 doors that bring in roughly $4,000 a month in cashflow. And today we’re uncovering exactly how he got there and how you can do the same no matter your starting.This is the Real Estate Rookie podcast. And I’m Ashley Kehr.And I’m Tony j Robinson. And let’s give a big warm welcome to Sebastian. Thanks for joining us today, brother.Thank you guys for having me here. Happy to be here and happy to share my story.Yes. So take us back in that moment when you were working jobs just to survive and at one point, even sleeping in your car, what was going on through your head about money and just the future in general?Yes. Wow. What was in my head going in my head, I was in survival mode. I got to do what I got to do. I feel like it was yesterday. I can still see those days and feel that no time has happened in between, but I was focused on my number one priority was only to learn the language I needed to understand where things are located. I just moved here. I didn’t have any network, any language was a big barrier for me. So I needed to understand how to move around, how to talk to people, how to get a job, how to get a house, and it’s really scary when you can communicate properly. So my biggest focus again, was understanding and learning the language. I did everything possible to just pick up the language as fast as I could. Two years down the road, I was able and I took the leap of faith to start talking to people to quit the jobs when I needed to just be in the back washing the dishes and not talking to anyone.I wanted to be in the front facing the, at least making the mistakes. I said it wrong, it doesn’t matter. I will learn how to say it. So back then again, it was so focused on how to survive, how to stand on my own feet. Also, I had a little bit of the victim mentality because this is hard. This is difficult. Why did I do this? Why did I move? I had a good life. I was comfortable in my country. But I believe that all of that took me through a better position when I could start learning and seeing that the future wasn’t just like that. It was just the stepping stone and what I needed to do in that moment. So I think that the struggle was worth it and it taught me a lot. But yeah, my focus number one was just to learn the language and understand the city where to go to get stuff.Sebastian, when you first moved to the States, where did you land? What part of the country were you in?Yes, I arrived to Boston, Massachusetts. Actually. I arrived to a place, a town here called Wooster. It’s about an hour from Boston, and this is exactly what I say. I arrived there. I didn’t know anyone, so I thought I was close to Boston. I got a job in Boston. I was working at night. So the transportation was extremely difficult. I didn’t consider that. So I was working in Boston, leaving so far away, I had to take the train every night. I had a situation there where again, I didn’t understand the maps and how the train works. Everything was completely new. So unfortunately I had to stay one night on the T station because I missed the train and I didn’t know how to ask for help or I didn’t know how to afford at Uber $50 because it was too far away. So things like that is what I go back and say again. I say I was just focused on how to stand on my own feet, how to understand where I’m living, where things are located. After that, I moved closer to my job. I start living in the same place, in the same area. So things got a little bit better. But yeah, that’s Boston, Massachusetts,And Sebastian. Crazy story that you had to sleep in the train station. But I guess what was that turning point for you that took you out of I’m just trying to survive and learn the language into actually thinking about building wealth.The goal, the priority was always to get a better life, to improve the life. When I was able to jump into the bank again and enroll into my banking career and be able to speak a little bit better, I realized and I start paying attention again to the money. So I was able to build a little bit of comfort in terms of the income and that gave me time. So it’s only wait three times to get value in life time, money or knowledge. So I built the time. So I started learning about real estate. I started understanding more how the money works, the cycle of the money, going through books and podcasts you guys every single day. And that gave me the vision of like, okay, this is not it. It’s a better path. It’s a better way to do things. So that turning point was probably when I, as Ashley mentioned, maxed out my credit cards, lost my apartment, I was sleeping in my car, I had nowhere to go and I had no family.I can’t just go and call my cousin, my aunt, Hey, can I crash into your couch? No, I can’t. So that moment I was like, okay, I need to do something. At the same time, I found my life partner and when I got engaged, things got serious and I’m like, okay, I can’t just provide, I can’t just live like this. I need something that is going to give me a better future. Whatever it takes, I’ll do it. So that’s when I, after struggling and understanding stocks and other type of investments, I used to lend money, but real estate was the best way that I found that was real. That was something tangible, something that you can play a long-term game, not just something that you’re getting and on quickly. So that’s when I understood and I decided to go all in into real estate.Now that you’ve realized that and you’ve come to that point in your life, what were some of the first action steps you took when you decided real estate was going to be your wealth generator?Many. One of the first ones was to delete the victim mentality and changing the typical, I’m coming back from work, I’m tired, I just need to go to my couch and watch Netflix. No, that needed to change. I could also watch Netflix, but an hour prior that I could just analyze two deals. So one of my rule number one since long time ago was to analyze two deals every day. I will go through MLS, I go and pull two addresses, see the market and then start understanding. I didn’t know anything, but little by little I was like, oh, I kind of know what a house will go from that area. I kind of know what the taxes look like. So those type of small habits, the change in my day by day, oh, I’m tired, just going to go home and sleep. No, you need to put 110%.Now the schedule is way different. So now I can relax a little bit better, but back then it’s all in. I dunno. Another really good habit is like reading. I was never the person who used to read and take a book and it wasn’t my biggest, I dunno skill, but after reading a few books and paying attention to the podcasting and stuff, I’m like, wow, this book is like the recipe. Just follow it, follow exactly what it’s saying and it’s going to work. It’s going to happen. So I believe those two habits were big, big in my, I dunno, back in the time when I was struggling.Today’s show is sponsored by base lane. They say real estate investing is passive, but let’s get real chasing rents, drowning in receipts and getting buried and spreadsheets feels anything but passive. If you’re tired of losing valuable hours on financial busy work, I’ve found a solution that will transform your business. It’s base lane, a trusted BP pro partner base Lane is an all-in-one platform that can help you automate the day-to-day. It automates your rent collection, uses AI powered bookkeeping to auto tag transactions for instant cashflow, visibility and reporting. Plus they have tons of other features like recurring payments, multi-user access and free wires to save you more time and money, spend less managing your money and more time growing your portfolio. Ready to automate the busy work and get back to investing. Base Lane is giving BiggerPockets listeners an exclusive $100 bonus when you sign up at base lane.com/biggerpockets. Okay, welcome back. So you’re hustling, you’ve got the mindset and then comes the big leap, your very first property. So this was in Philadelphia. Walk us through that first Philly deal step by step. Just the purchase price, the rental cause a RV and what the numbers look like todayJust before going into the deal. I will say that that was the struggle. Number one, while I was analyzing deals, I realized that I couldn’t afford a house in my market. So that was my first big wall that I had to figure it out how to overcome. Because of that, I start saying, okay, this is not it. I need to find a way to invest somewhere else. And the good thing about the states is that you guys can do things over the phone. You don’t need to go there. It is really good in that sense. So I found the book, long-term, long distance investment and I just follow what the book said. I found I picked a few markets, found Philadelphia as the one that is as good in my research and then I start putting offers there. So it was another, I will say another level because you start analyzing against something out of state.So now your picture, your satellite view is even bigger because it’s not only just the house and you can fix everything because you’re right there. You need to trust the agent, you need to find the contractor. So things get more complicated. But the deal, how it looks like we bought, we land on our first property on MLS $64,000. The property was just full of trash and smell. But here’s one of my rookies, I don’t know, advice smelled like money. The house was full of trash, full of bad stuff. It smells bad I know. But once we clean it up, it was in great condition. We put only $7,000 we rented out right away. That was through the pandemic time. So we got an excellent rate, like 3%, something like that. The rent was around $950 and the mortgage back then was around $450. Today the property RV is probably around a 180. The rent is $1,200 and we still hold a note and I’m going to hold a note forever. I’ll never refine on that note. That was my first deal.You’re renting this property two today for $1,200 and your mortgage payment is five 50 and I’m assuming that’s escrow too. So insurance and property taxes.Correct.Wow, that’s incredible. And you only put $7,000 into the rehab of this property too?Yes.Well, that’s a great first deal. Did that get you addicted then to this market?Absolutely, absolutely. But also really big learning lessons from that deal. It’s the first door that we bought and through this door we learned how to evict someone, how to help someone. One of the tenants passed away and we had to deal with all, I didn’t have any of those situations even close to my worst case scenario. So again, it’s not only, this is what I always say, perfection, speed, beat, perfection, I didn’t know. But if I wouldn’t bought it back then I probably wouldn’t have it today and I wouldn’t experience all of that and I wouldn’t learn and earn all this I knowledge. So I think that’s the most important is take action and do it right. As long the numbers look well look good, and you’re safe, just take it and learn. You’re going to learn a lot.On that note, Sebastian, and you’re kind of hitting it on my next question. There are a lot of rookies who are listening right now who have listened to the podcast, who’ve watched the YouTube videos. They read the same book that you read. They’ve analyzed deals, but they’re still stuck in analysis paralysis. What do you think you did that allowed you to go from not only only investing in your backyard, but investing long distance, but being able to find the deal and actually pull the trigger on something? What were you saying to yourself to say, I’ve actually got to move forward. I got to stop just listening and watching.One of the first things that I will say is everyone has to be able to measure their risk. I am a risk taker person, or at least I able to manage some type of pressure and risk. Other people can’t. That’s completely okay. But when you’re in the analysis paralysis, you probably know ready to pull the trigger because you’re scared of something. So measure the risk, run the numbers, see what’s the worst case scenario and think about that. Never be super positive, oh, this is going to run three times higher because my renovation are going to be better. Probably not be conservative, be positive, but be conservative. So if anything goes south, you still okay, you still able to learn and move on. The most important thing is make sure that this is when you say, Hey, you going to be a real estate investor? You want to buy a property?Feel that hell yes, that fire in you. Yes, I want to do it. If you do it like that, no matter what challenge you face, you’re going to be able to fix it, work around. But since the beginning you feel like, yeah, maybe no, maybe this is not my right. You clearly is something. There is some type of risk that you don’t want to take. Don’t take it. Maybe you can be, I know a silent partner in a syndication, you can always find a strategy or a way to invest, but if you feel stuck there and you can’t pull the trigger, maybe step back and see what other options you have. Where do you feel more comfortable taking some of the risk and work around. Maybe down the road you’ll be more willing to take riskGoing forward. Did you have to change your buy box or any of your criteria because maybe you would find that golden deal and that wasn’t working anymore? Explain those kind of next steps. Explain those next steps to explain your buy box, your strategy going forward after that first deal.Yes, that’s a great question. Something really, really important that I will, if anyone can take something out of this conversation is understand your market. You need to know where you buy, even if it’s far away you can’t see it. So you need to understand where you’re buying through these five years, six years of investing. At the beginning we were just forcing to happen. We were all in. We were like, buy any property, we don’t know, we don’t care, we just just want to do it. But I realized that that’s not the right approach. You need to understand what you’re buying. You need to run your numbers. So if you are focused on your buy box now today I only buy raw single family house under 1300 square feet, three bed, one bath with a basement in a specific zip code, 1 19, 1 44. Those that to reach that point, it took me five years because before I was just, okay, it’s a deal here, but maybe here and also here and my contractor was going all around. All of that counts. So through these years of investment investing, you will find better markets if you keep repeating the same. So stay on the same single family house for quite a while. Don’t go single family house, 20 unit building, commercial building. I probably wouldn’t recommend that. Some other people do it and it work for them. That’s amazing. But if you want to do it a little more conservative, understand first what you’re buying, building the buy box. That’s my number one priority.And Sebastian, I appreciate you saying that it took you five years to land on the very specific buy box that you have right now because I do think that your buy box will change and adjust and get tighter as you do more deals. And for all of the rookies that are listening, you don’t necessarily need to start with a buy box that’s as specific as what Sebastian has right now where he said, row house, single family, three bedrooms, one bath, basement, this very specific zip code. If you can, great, but just know that you can build that specificity as you start to do more. And Sebastian, I’m assuming that the reason that you have such a tight buy box is because you spent enough time looking at other deals and you found what actually works in your specific market. So I think that’s the lesson for the rookies that are listening is the more you do, the easier it becomes to identify what your buy box should be.If you guys need help creating your buy box too, we actually have a worksheet for you with just a huge list of all the things you should think about. Do you want a pool or not? How many bedrooms is your range? What age of house do you want? All of these things to kind of give you an idea of what to think about when you’re building out your buy box. And you can go to biggerpockets.com/rookie resource and you can find it in there, the buy box template.So Sebastian buy box is one of the things that maybe was not necessarily a mistake, but something that’s evolved for you. But I guess were there any other mistakes from that first deal that have changed the way that you’ve invested since then?Yes. The other one is not be prepared for what it comes. So I was only focused on like, okay, I want to close in a property. I want to make sure that we close and once we close what didn’t have the contractors line up on time? I didn’t. So it took me a lot of time working through that property. So buying the materials, we had to hire two different general contractors and things started going south and all of that cost me money holding costs every month I have to pay for that mortgage, I have to pay for that property. So the ability to understand, to see or have a vision of what you’re going to do, but have a specific plan and a step by step is really important. Okay. Building SOPs. We closed today, we just closing a property last Wednesday. We closed on Wednesday by Thursday we need to get a new locks. It’s the SOP no, next week, no, the next day. The first time we didn’t do that. So contractor calls they like, oh, I’m sorry, someone came to the house and I stole everything. How do you know? Sure, that happens. It’s a hit on me. But again, it’s a learning experience. Oh, okay. I’m not going to do that twice. So having a specific building those SOPs or step-by-step what to do when it’s also really important for the business. No, just focus on let’s put the property and that’s it.So Sebastian, you touched a little bit on like hey, having the crew lined up on as soon as you’re closing on a property. What else has maybe changed about your rehab process from that first deal to how you operate todayIn terms of the rehab process? This is funny because the first time we used to, for example, paint being clean and do other stuff before we do the electrical. So stuff like that is where we need to understand how to do it, what goes first. So electrical, HVACs, pulling permits, all that stuff has to go first before you even start working again. I learned that through the hard way and we had to pay some fines and got fine from the city some violations. So that also, again, it’s more like thinking what’s the business after, not just focus on the property. So you need to have buy the materials in bulk that will save you a lot of money. Understand the timeline, the time that the property is going to be sitting after you list it for sale or how the refinance process works or who’s going to be your hard money lender or the person who’s going to so many, I will say everything changed. I do not operate as the first property that we bought that was far away.We have to take a short break, but when we come back we’re going to find out more about private money machine that actually started to fuel your portfolio right after this. We’ll be right back. Okay. So Sebastian, you’ve proven the model works, but scaling from one deal to 13 doors requires something bigger and that’s capital and relationships. So what was the very first conversation you had when you tried to raise private money? How did you approach it?That’s a great question. It’s something really interesting. As I mentioned before, it’s only three ways that you can add value to someone. Money, knowledge or time. Back then my first door and up to today, we still are partners, but we started being friends. So back then I was just had the time. So I started getting the knowledge. I had zero credit, zero money, nothing. But my partner had everything else. So I start analyzing those properties, I start finding the opportunities and then I show it to him. He says, yes, let’s do it. I didn’t approach, and this is what I always say, you can’t approach this conversation as like I’m begging you for money. You have to understand what you’re doing, be confident on yourself, but also showing us an opportunity. This is the opportunity. Do you want to take it another big lesson here?If it’s No, it’s okay. Think as a no yet more nos that you go through closer to the yes. So 20 people will tell you no, the 21st or the 21, I’m going to tell you yes. So be real. Having those conversations is typically scary because the approach is like, oh, would you lend me some money? Do you think you can help me with this? Those were the conversations at the beginning. But again, because I was clear, transparent, honest with this friend, he was seeing what I was doing and he saw the value in me and I gave him what he didn’t have the time he was working crazy hours. So we match up and we say, okay, it’s an opportunity here for both. It’s a win-win, let’s move on. And since then today we have a great portfolio. We still do business together. We still put properties under his name, under my name now that my credit is better. But to be honest, I bought probably the first four or five properties. Everything with his money, his down payment, his credit, everything was him. So those conversations are, I don’t know, just confident that yourself, believe in yourself, you’re doing something good.Sebastian, you just said that this partner funded your first four or five deals, all of their capital, their credit, but you also just told us that you came to this country not speaking the language you knew absolutely no one slept in your car. How did you go from that to actually meeting someone who had the means and the willingness to fund your deals? Where did you find this person? Because if you could go from where you started to in a very few short years, having someone fund your deals, and there is literally no excuse for any other person listening to this podcast to not be able to raise money. So how did you find that personAt the bank where the money is? So this is the thing of relationships. So once you know what you’re doing, you start helping talking to people and you share what your thoughts are, what your approach is. So I had the ability of, my unfair advantage was being in the bank, you could come to me, I could see how much money you have in your account, what’s your credit, what’s your, I could see everything. So if I see that you were successful, I’d be like, how do you make this money? What is your business? What did you do for work? And I was able to ask them those questions because they needed me. So it was like a unfair advantage. I start working with them asking a majority of the people, real estate, real estate, real estate. And I’m like, how do you do it? How? Let me understand your transactions. And I just focus on these people. Quick tip, where to find these people. I had so many good conversations at the gym with wealthy people because someone, a mentor of mine taught me that it’s better to pay a little bit better monthly membership if you go and have this conversation with these people. So it’s also surrender yourself with, you could find money, you understand, take your phone. It’s a really good book from you guys.How to raise private capital. That’s my number one. One byMatt Faircloth, I think.Yes. And I had the opportunity to talk to him in a mastermind class that we had in. It’s just true. You go, I go through my phone, I get an opportunity, I go through my phone and I start looking number by number one by one. If I present this to Ashley, what she will say, well maybe yes, no, maybe no. Okay. And then take these people and the opportunity, someone will say yes. Like many times the big scarcity I will say is the money in my head. The scarcity is like, I want to keep this relationship and it’s fine if I pay you the money, even if I lose your money, you can sue me. You can have a real estate asset that you can get. You’re not going to lose. But my goal is to have you as relationship. We could do really good things.So it’s not just the money, it’s that what else you offer to this person. It’s many people in the bank industry, not only in the bank industry, but because I make them there that they don’t have the time. They have tons of money in their accounts, they don’t know what to do, and they prefer to put it in a CD for 18 months at 4%. And I’m like, think about all their things. FDIC, insurance, all this stuff. Why do you hold all your money there? But again, that person doesn’t know that you know what you know. So you need to always tell everyone what you’re doing, share what you’re doing and be truthful. Don’t get advantage of anyone. That’s the most important.Sebastian, sounds like part of what you’re saying is just getting into the right rooms with people. And you’re saying you were fortunate because in your just work that you did, you got to have a lot of conversations with wealthy individuals. You joined a more expensive gym. We’ve interviewed guests in the past, you joined country clubs and they would play tennis and golf there, and that’s how they met some of their private money lenders. But you meet these people, how do you actually go from, Hey, we’re having a conversation about, oh, you’re successful. You are a wealthy individual to can we potentially partner on something? So the very first time you reached out to that partner, what did that look like? Was it at the bank where you guys were just there in the office? Did you exchange contact information? And what did that very, very first actual solicitation for partnership look like?Yeah, we were friends at the bank level. We worked together at the bank level. He was higher in position than me. But the approach, again, the approach was never like, Hey, I need some money, or my approach was always like, my goal in life is this. I’m working to get there and this person could see it, just see it next to me. I wasn’t even asking him or telling him, would you be interested? I was just sharing who I am and be truthful. But if you want a specific example, this is something important through another bank friend, he recommended me, someone that I didn’t know this person. She didn’t know me. We had coffee once I shared all my information, all my portfolio, show her everything that I did, and this woman gave me a hundred thousand dollars. I didn’t know her again, I didn’t even go to that meeting asking for money.I was like, Hey, she might be interested in what you do. I’ve been talking about you a lot, blah, blah. I’m like, oh, thank you. Let’s have a conversation. It’s more like I was like, Hey, let me help you. What do you want? What are your questions? She’s just like, Hey, I love what you’re doing. Would you let me be part of this? And I’m like, ah, sure, why not? Right? So again, it’s probably the vision. How we see it is like, oh, I need this, I need this. No, you don’t need that. You need to become certain person. You need to have certain habits. You need to be doing certain things. Then the money money’s going to come, then the person’s going to show up. That’s pretty much what I think.Now that this woman in particular, anybody, I guess when they’ve offered you the money, how do you actually make them feel secure in the deal? What are the next steps after they say, yes, I want to invest with you? What does the deal analysis look like? What information do you give them so that they actually feel secure in the investment?Yeah, no, that’s a great question. The most important is, again, transparency. Second, a deep, deep down into the what the property looks like. The numbers, comps, rental comps potentially are the potential rehab or cost on the renovations. The whole project, this person saw it. We had monthly or quarterly calls, depends on what she was looking for. In some point it was quarterly. It just letting her know how the deal goes, what are we doing, what are the next projects coming up? That’s how we handle it. But what I show is everything, to be honest, I don’t try, I even show, Hey, this is how much I’m going to make. Are you okay with it? And that also bring me a really important point through these, a few partners that we had. We understand that not everyone can be the partner, right? Maybe the person was interested at the beginning but it didn’t have the same goal.Or they have another idea on how much, again, they get upset of, oh, you’re making all the money. Okay, well you’re a silent partner. You want to be most into the investment. I can do that too. But you have to put in, so sometimes you also understand what vision and what they’re looking for. And at the same time you can say, yeah, maybe we are not the right fit for each other. Maybe we cannot work together. So I think the lessons that we learned, I learned through raising money and talking with people about, Hey, give me your funds. I’m going to do this. Are you comfortable with it? And the number one, I dunno, way that everyone feels comfortable is like these people typically understand who I am, where I live, what my career. Exactly. As you guys say, I came here no long ago, I’m doing this, this, this, this is me. If you feel that you trust me, let’s do it. If you don’t feel that you trust me, that’s okay. Again, it’s a no. Yet you’re going to call me in the future. I’m a hundred percent sureFor somebody who’s listening to this and has no money, no experience, and they want to take their very first step. So what should they be doing today to start building out a private money machine just like yours?I will say, changing their habits, becoming a person who, if you are able to talk to anyone, you can add value to anyone. So you need to be an expert in something. You need to understand finances well, or understand, I don’t know, rehab or construction or something. You need to be an expert in something. So that will be my number one. Learn something really well. Be an expert on something. You can share that with someone else. So go to meetups, go to join a mastermind, talk to people and share your goals. That’s also really important. Many times you see people with the same goals. So there we go. You found a partner. You guys can work together maybe if you don’t actually partner up in a deal, but you can be accountable. And that’s also really important because this is a long journey and you need friends, you need the community. You need bigger packets. You can’t do this on your own. It will be impossible. So I think that’s having a budget or understanding what you are in terms of are you bankable? Can you get a loan? Is your credit okay? Is your income good? Oh no. Okay, so find the person who can provide you that. What can you provide for this person? Oh, this person doesn’t have time. I have time. I feel that masterminds and books and changing or becoming the person that you want to become or you want to be is the right approach of anyone could do today to start changing their lives.Yeah, Sebastian, it’s great advice. And I think one of the biggest takeaways from your episode is that it doesn’t matter where you start. You couldn’t have started from a more challenging position. And yet even with the challenges you faced, you were still able to go out, build the network, build the portfolio, and achieve something pretty incredible in a relatively short period of time. And I think a lot of that success comes down to the fact that you focused on, Hey, what is the value that I can provide? First, understanding what your value was, and you said at the beginning it was time and your ability to acquire knowledge. Those are two things that a lot of people listening currently have. Time and the ability to acquire knowledge. And as you did those things, you simultaneously focused on expanding your network. And when you break down that way, time, knowledge, and network, those are the three things that someone needs to build the foundation to then scale their portfolio more quickly. And I don’t even know if you even realize how simple of a formula you’ve built out, but when I heard you going through your story, it’s like, man, if we could just get more people to focus on those three things, time, skills, and network. Dude, I love your story, man. Congratulations brother. It’s amazing.Well, Sebastian, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out more information about your journey?Absolutely. Absolutely. You can find me on Instagram as seba Romy oh nine, I think it’s my, in my email, RS Investment Group, number [email protected]. If you got my phone number too, I don’t care. 6 0 2 3 9 4 4 9 9 9.Well, there you go. You can go ahead and give him a call or shoot what text. Well, thank you guys so much for joining us today. Sebastian, thank you for bringing your knowledge to the rookie audience and sharing your story. I’m Ashley, he’s Tony. Thank you guys so much for listening.