Brett:

I am excited about our next guest. He's a licensed California real estate broker that has acquired his certified commercial investment members that were called as a CCIM designation, and it's really, for those who are recognized experts in the broker-brokerage valuation investment analysis. He prides himself on locating value-added properties that maximize his client's investment yields. He specializes mostly in the Southern California area, but we'll learn more about that and he's located in Long Beach. He is the president of Sage Real Estate. Please welcome the show with me. Juan Huizar, Juan, how are you, sir?

Juan:

Brett, good morning. Thank you for having me on the show. Super excited.

Brett:

For our listeners getting to know you for the first time, would you tell us a little bit more about your story and your current focus?

Juan:

Got it, I'll try to be brief here, Brett. Part of our title is from working the fields to work in the deals, in my world. I get people who tell me, like Juan, “I can't get started, Juan, it's too expensive to buy an apartment building in Southern California is outrageous.” There's no return on the cap rate and the yield is too low. Why would I ever buy? How can I get started? There are all these concerns. I can't do it and I hear that all the time. I can't do it and I just want to share this story A little bit about me, my family comes from Mexico, a small rural town, Codina, Zacatecas when I was four, migrated to the US crossing the border illegally, because that was the only way that my parents could provide a better living, housing and education opportunity for us. My parents only had a sixth-grade education. I started my life in the Central Valley of California, and there in the summers when I was eight 9, 10, 11, we would all have to work in the fields picking garlic. I'm learning to work hard in the sun. If anyone who's listened to the show is familiar with Avenel Kalinga, L'amour in those areas in the summer, when it is the garlic pick picking season, we're at 100 plus degrees.

You're working out there. It's hot. Sometimes there's no water. But we had a family of eight. We all had to work. My parents did not speak English. My mother did not drive and so everyone had to do their part, fast forward to today. The reason my parents came to the US was they wanted us to get an education. All eight of us, all eight children, four boys, four girls have degrees from various colleges. We're talking UCLA, UC Santa Barbara Cal Poly San Luis Obispo, Fresno State Long Beach State, and so we're really living the American dream. When I talk to people, and I hear this negative, leave California, it's too expensive. California is going down the drain. Do you guys know how fortunate we are? For a couple of reasons, one, we live in the US, and to be American is the best thing you could be given as a gift. Okay, it is to be an American, and because in America, we have opportunities.

And the reason I share my story is to let you know that someone who comes from Mexico, who's an immigrant, who's worked in the fields, who has had to work hard, learn English, and deal with a lot of kinds of uphill battles. It's possible for that person to get some success, and a lot of the success that came for me was through apartment ownership. The number one thing that we teach we preach here is building wealth or apartment ownership. When you're talking about wealth creation and all this stuff that you do in your show, that's hand in hand with what we teach, what we preach, we do sell apartment buildings. Our main focus at Long Beach, to be specific, is a few years ago, we decided that we were going to niche out our market and we decided to become the fourplex market leaders. No one, no other firm before me has sought out to be that So not only did I create my own game. I made the game. No one's focused on four-unit buildings. We know all the sellers. We know the buyers, and where the market leaders are when it comes to four-unit apartment buildings. That's a little bit about us.

Brett:

What a background, what a story, and which leads us really to the next part where I want to dig in a little bit more about your personality as well and your background and your gifts, and the question is this. I want you to go back to those early days. It can be high school, can be junior high, and I believe we've all been given certain gifts in this life and these kids correct it to be a blessing and help to others. People call them welcome strength superpowers. I believe in their God-given gifts. I'm just, what are those one or two gifts you believe you were given, and how does it help how you help and bless people today?

Juan:

Relationship building. I'm able to build rapport quickly. I'm sincere, naturally, so I don't come off easily or I hope I don't have a lot of people come up to me. I have the ability to motivate folks, even when I'm not trying to write, a lot of people will reach out to me for advice. Sometimes it's fitness advice. Sometimes it's not even about real estate. But I've had this ability to build rapport with people from a very early age, and when we're talking about junior high, one of the things was that I was a newspaper boy. On top of working in the fields, I was a newspaper boy delivering the Hanford setting on the Fresno bee from age nine to 18. The only reason I left my newspaper route was that I had to go to college, otherwise, I would have kept it forever. I loved being a newspaper boy, but news beats a newspaper, what you do two things, sales because you have to increase the numbers of subscribers, and so there's a lot of door-to-door knocking. That helped me become who I am today, and then two was customer service. Certain customers want the newspaper, in their backyard, on the porch in a certain location, and doing work in the fields, being a newspaper boy, you realize, a couple of things. I think I realized that I was a businessman early on; I got a degree in accounting; I realized that I was a businessman, and then, looking back, I'm like, I was a newspaper boy selling newspapers door to door. That probably has helped my career with what I'm doing now in real estate.

Brett:

Relationship building, building rapport, motivating others, being an entrepreneur, and all of the above, this is really cool. We're going to dive into the best-kept secret to moving from early humble beginnings to working deals, and what is that, and by the way, you can find Juan Huizar and it's spelled a little differently. If you're listening, watching this on YouTube, it's HUIZAR is the last name H, U, I, Z, A, R, and you can find him at SageREGroup.com, that's sage, SAGE RE GROUP dot com. Juan, talk is the biggest secret to these fourplexes. I think that's a good place to focus on, niching down to a specific product type to be able to add maximum value. Tell us about the why behind that, and here's the current opportunity for yourself and your clients.

Juan:

For anyone getting started, the four-Plex is the perfect place to get started when it comes to buying multifamily units, and the reason for it is 30-year financing. This is the best way to describe this. In Southern California, and I can't speak to other states. Here's what we have in Southern California. The four-plexes they're expensive. Do they make financial sense? Absolutely, you buy a four-Plex, if you're lucky, maybe you qualify for an FHA that is a little difficult. If you're really lucky, or if you've served our country, you qualify for VA. The amount of money that you need to get in for a four Plex is very little, which is a very good thing. Now the best part is qualifying for a 30-year mortgage, and so the best way to describe this is the biggest expense out with any property is going to be the mortgage right, and so when you get a 30-year mortgage, you are capping your biggest expense, okay, that's a great thing to do. It's never going to change, like a watch, when you get a commercial loan, they're going to give you that loan for five 710 years, then it's going to change, guess what the markets different the interest rate, you don't know what the interest is going to be down the road.

You do with a four-Plex, you do with a triplex or duplex. But let's just talk about four for now. You're going to cap your biggest expense, the smart thing to do, and the one thing that doesn't happen. The one thing that we have in Southern California is we have a housing crisis. When a tenant moves out, typically a landlord could adjust the rent to market rents, and so you cap your biggest expense, but the income is never kept. Okay, it's not kept, and that is where we see growth, and that is where we see two types of things. One cash flow, maybe not in the first couple of years. But ultimately it will come.

But the biggest growth in all of this is appreciation. What we have in Southern California is on average, listen, on average, a property's going to double every 12 years. Okay, we are seeing the appreciation of 6.7% year after year and that's on the purchase price and that's compounding over and over and over again, and so let me tell you something, Brett, because this idea just came up because I do teach this often. It's almost as if, if you take the risk of buying your first property, it's like money grows on trees. It really is because outside just managing and dealing with some maintenance and some tenant stuff that you can live with, that's part of the business. It literally grows on trees, guess what, it's going to double. You paid a million. You're gonna make a million. If you paid a million, you're gonna make a million dollars. How do you become a millionaire by a fourplex? It's very simple. It's not like Wall Street. Its stocks go up and down. It's none of those two very simple things.

Brett:

Got it. I'm going to try to encapsulate that the first thing is a 30 year fixed financing. You're able to qualify for that one to four units. The government has some really cool stuff like FHA lower down payment, especially if it's owner-occupied, then it's like house hacking, which made me know there's so much we can do, we can touch on versus commercial, which is five units and above right now you're having to qualify in a whole different realm, higher down payment, fluctuating interest rates, yet some of those are typically five to seven-year fixed, right, and then it's adjustable, and or the loan is amortized over 25 years or less, and then sometimes you have a larger, larger payment. Whereas if you're on a 30, year 30, year 30 years fixed 30 years am you lower payments, and I also like to touch on the fact that you now have inflation that's rapidly going, and so if you're borrowing it the fixing at 3%, for 30 years, and you're paying over a 30-year amortization, guess what, tomorrow's dollars or next years or five years dollars from now? It's going to work in your favor. Any thoughts on that one?

Juan:

All I could say is the biggest hedge for inflation, I repeat, the biggest hedge for inflation is real estate. Nothing else will beat that, if you're buying real estate, you're putting yourself in a good position, not just for you, your family, and when you're gone. I mean, let's talk about generational wealth. I mean, that's what you're creating when you're buying real estate. Beautiful.

Brett:

The last thing he talked about is that your income is never kept. You might have tenants, especially in California, with rent control laws, especially in Los Angeles. I have a six-unit complex down there right now. Some of these tenants have been there for 20 plus years, and the rents would be somewhere around 2000, and they're renting for, 795, and they're never gonna leave, and people are writing to cash for keys. But when and if they do leave, that rent, obviously can be increased, and so that's, that's a beautiful thing about the income never kept, and so having some staying power, having some reserves, going into it with the long-term view, and then if I buy it at a million, it's going to be within about 10 years. If I can hold on and keep even if the cash flows are minimal in the beginning, is that a fair summary?

Juan:

For anyone listening. Is this is my thing, for anyone who tells me when I want to work with you, but I wanted to cash flow, and I wanted to do this, let's figure out how much money you're going to put in. I don't care about making $12,000 a year and cash flow when if it goes up by 6.7%, which historically it's been doing, that's $60,000.

I'm okay with making zero if I'm going to be making 60,000, and then on top of that, the next year will be more so cash flow to me is not that important, and it could be that sometimes it depends on age, but cash flow to me is not, or anyone who calls me and says, I'm looking at Texas, I'm looking at Ohio, and nothing wrong with those states. But what's important? Do we want to build massive wealth? Do we want to make a million dollars or do you want to make $12,000 and if that's the case, it's pretty easy to me, I want to make a million dollars, and so that's why I invest in states areas that appreciate and we know because it historically it's been doing so it's done in the last 30 years, it's going to continue to do in the next 30 years?

Brett:

I like the way he put that right and I do think its cash flow is king but appreciation can also be king I think about saying not in my world.

Juan:

Well, let me just say I understand, cash flow is not King. Cash Flow is not king. The biggest misconception out there is that cash flow is king appreciation is keen. Appreciation woven will truck that cash flow is the smallest piece of the pie when you're factoring a decision in an investment, the smallest piece of the pie. When does someone say what cap rate do you buy? And I'm like, That doesn't matter. I'm not worried about what I'm worried about, what it's going to be worth 20 minutes, 2020 years from now. That's what I care about. It makes me a couple of 100 bucks a month. I don't care. I guess for me, it's much, much different. I see. We look at our graphs and we track all the trends and we look back to see what happened 30 years ago, 10 years ago, seven years ago. We're like, it's obvious appreciation is where wealth is made, not cash flow.

Brett:

I like it. See, I cuz it is definitely a little bit different than what most people are saying, but be California you're at, and that's probably why you specialize later. Let me ask you this, what fourPlex do you say no to. Is there like give me that, what do you say no to or do you give me a break. Break that down for me.