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0:00 Hey, welcome to the high with this podcast. I'm your host Daniel Martinez. Today I have a special guest returning if you haven't seen his episodes, go check it out. Raymond show, Jeff. This is our, our, our episode were called deal breakdown where we cover cool, interesting stories. Right now, Raymond, what's your cool, interesting story you have for us today? 0:23 Hey, Daniel, thanks for having me, man. So cool, interesting story. I mean, I don't know if it's interesting or frustrating. I guess it depends on, you know, which side of the fence that you're on. But I'll tell you about a mixed use property that I bought in Pennsylvania many years ago. And turned into a complete disaster. So I had a specific amount of cash. And a friend of mind said, hey, you know, I'm going to be moving to Philly. And, you know, I think there's, we're looking at an 18 to 20% return if we do some deal like this yada, yada, yada. Long story short, it ended up being a mixed use building came with a liquor license and a existing restaurant inside this building. So I bought this deal. And quickly had my ass handed to me for lack of a better term. My my buddy, who was with me in this deal, his family was all in construction. Well, I had two attorneys from Chicago, one attorney in Philadelphia all looked at this to make sure everything was clean, title, all that kind of good stuff. Long story short, we bought a property that was allegedly one pain, it ended up being two pin, so two different actual properties, lumped this one in this sale. There was a pending lawsuit from the city that everybody seemed to have missed in this sale. Oh, nice. And then my buddy who was managing the deal in fill in Pennsylvania, Philadelphia. He started construction on this, and he opted not to pull permits. Well, we got shut down by the city for two years. I paid cash for the property. There were renters in the apartments. And I mean, I don't even know how to say it. Like it was just a shit show, man, we ended up having to a higher architects hire structural engineers, we had to hire specialists to divide this property into two pins, reassign pins, get different tax IDs, like it turned into a complete night mare. And I had all the professionals, right. Attorneys, legal counsel, architects, engineers, all these people. And we ended up getting through all of that we ended up getting the restaurant opened, and I had never intended to necessarily open the restaurant side of it. But at this point, I was so deep, I was either burn the whole thing down or open it up. So I ended up opting to open it up. It went well for a couple months. And my buddy and his brother ended up running the operation and food was out of control. Labor was out of control, and it was just hemorrhaging money. So long story short, I ended up closing it down making that decision, fire sailing everything. And I lost a ton of money, let alone time on the whole deal. What's interesting about the story aside from I'm an idiot, is right like I should have stayed in my lane, in a lot of ways. But I also I trusted somebody who I thought that they knew what they were doing. And I was sold a bill of goods that they knew what they were doing, only to find out they had no idea what they were doing. And I did not.my I's and cross my T's like I will take full accountability for everything on this. Right? Like literally I burned a lot of zeros on this entire transaction over time. I mismanaged it. I didn't have the right people even though I thought I did. I didn't ask the right questions. Yeah, I mean, there's a lot of takeaways from this deal that I will not do again, like I got into a property out of state. I got into a situation where I felt strapped and obligated to make force decisions on what I needed to do the people involved but also be for the deal itself, knowing at some point I'm gonna have to get rid of it. And I wouldn't be able to get rid of it in the condition that I bought it in. Yeah, so many things, man, like I don't even know where you want to start if you want to get into anything with that, but I have 4:55 a few questions. So I've come across properties with tube numbers. And I've seen like crazy stories where a dude bought a tax tough sale auction and it was like he thought it was a house ended up being a little strip of land that was 10 inches wide. In between of a duplex. 5:15 Oh my gosh, that's crazy. 5:18 Yeah, there's a whole story. I seen it. I don't even know what state it was in and he bought a tax sale thing. He doesn't get a house for a few $100. But it was literally 5:27 you got an easement. You got a full strip 5:29 of land that you can barely walk on. So how big was that secondary live. 5:38 So the total property, I don't remember the lot size, but the square footage of the entire property was like 2200 square feet, like its footprint. 5:48 It's small enough to overlook that secondary property. Yeah, it 5:54 was. It was on a corner on like a five Street intersection, it was super funky to begin with. And the guy who was running the restaurant, it turns out the way he had the restaurant setup is that it looked like it was one restaurant, but it wasn't. He had a catering company that was servicing a cafe. So literally, the catering company was in one address, the cafe was assigned to another address, and he was having his catering company serve the cafe at the other address via like a cart delivery through the back door. Like, dude, it was crazy. The whole thing was a shit show 6:34 that this is probably the craziest story I've ever heard. I'm not gonna lie. 6:37 Oh, man, the details. The details are insane, like of this whole thing. And, again, I take full accountability. Like, I did not know what I didn't know. I didn't know what the people that I hired didn't know. And the fact that literally three real estate attorneys one local two out of state that helped me put this whole thing together. missed so much, man, like so many red flags that should have been obvious were just missed. So I don't know if they were hidden or the right questions weren't asked. Like, I mean, dude, this was almost 10 years ago at this point, but 7:15 it's funny now. It was 7:16 a disaster. It was a learning lesson, right? Like, okay, well, we'll do that again. But how 7:22 long do you hold that property for before you had to like fire sale it 7:30 the total deal from data purchase, the date of sale was six years. 7:38 And this is the crazy part about something like this. Like, sometimes if you're gonna take a loss, you just got to cut that loss early. 7:46 Yeah, and the truth is, 7:47 I should have however, some stuff had to be solved before you can even cut that. 7:52 There were some there were so many moving parts that I have I had to solve, right? Because is it Philly specifically? Like if you have a building, and then you're issued a liquor license, that liquor license is attached to an address? Yep. Right. So again, just a lot of moving parts that I had to clear out and then the way the deal was structured, and oh, man, it was a disaster. 8:19 That is the craziest one of the craziest deals I've ever heard in my life. I'm not gonna ask him how much money he lost, but it's probably a lot of zeros. And 8:27 I don't have enough tissues, bro on my desk to answer that question. This that's crazy. Because then in less than 8:35 100, that is, real estate is not all rainbows and unicorns, you're gonna get, you're gonna have to eat some dirt sometimes, and it's not going to be fun. And just be prepared. Real estate attorney cannot protect you from stuff that is hidden under the floorboards. Because once you pay them back to yours. You'll see. Yeah, as much as I call real estate attorneys. I talked to like three in one day the other day, and I'm just like, this is nice to have, but I'm sure something is still gonna happen. Now I know something's stuck. When everything you think is going right there's always something that you get thrown around. Oh man, this is that. This has been a crazy episode. I hope you all learned something. And this is as much as a deal can look good. The pro forma sometimes it's not pro forma. 9:34 No, ask questions. And if it's not in your lane, find somebody whose Lane it's in. 9:41 That's a good tip right there. I think we'll be with that. Berkey we'll find you online. 9:45 Raymond show seth.com ra y mo n DSJOLSETH. Thank you guys for letting me share. 9:54 That is a crazy story. Please stay tuned. I like doing these. These are these are fun. Not From my perspective they're fun but not from his 10:04 That is crazy. Hey, if I can help somebody learn. Yeah. 10:07 And that's the word. That's what it's all about. And I'm really glad you mentioned the story because a lot of people are afraid to talk about their ELS. And ELS is what people learn from and I hope if you are looking to buy something in a major city with a liquor license, like hopefully think about this, like, man, there's gonna be more things on top. This is why like me, personally, I hate staying away from the city. Because the city, they always have more add on stuff you don't even think about that you've never done an adult before you're going to deal with in the city. This is why I don't deal with in the city. And Ramin sent me some deals that were in the city and I'm like, I don't want that. I like the city. One of the reasons why I don't like the city, because they just complicate things. And it's, I understand why they do it because they have to deal with a lot of issues internally. They just added regulation and regulation and curveball and curveball, and it's just a giant mountain that you have to climb whenever you're dealing with stuff like that and I get it. But I'm just stuck in the city. This is a good reason why. 11:08 Stay in your lane. 11:10 stay in my lane. Okay, Joseph. So go like share with a friend. Go subscribe. I hope you enjoyed this one. I did. We'll see on the next one. Thanks, guys.
Host/ Ceo/ Speaker
I have been an entrepreneur since 2018. I come from a regular home just like most people. My dad worked on the roads in the Chicago area for over 30 years. He always taught me to work with my brain, instead of my body. Your body can only take so much abuse. I learned so much from my father. He always pushed me to work smarter and not harder.
I have owned and operated a trucking business for 2 years. I started learning real estate in 2019. Fell into the Data & Skiptracing business in 2020. My partner Anthony & I started Hivemind in 2021.
I have done a ton of different jobs coming up from painting, to door-to-door sales, telemarketing, truck driving, and loading trailers. What I learned most is that I want to stay in the digital business space. The leverage you can have delivering digital products to the marketplace can yield limitless possibilites.
I started The List Guys in 2020. It is a data and skiptracing service. We provide seller and buyers list nationwide. My clients have been getting great results and I am proud to help people killing it.
I started the Hive in 2021 with my partner Anthony Gaona. It is a real estate and business mastermind. It also comes with a all in one CRM, that can host unlimited websites and users.
Starting the Hivemind has been an amazing journey so far. Seeing one of our users make his 6 figure month in June 2021 leveraging our software, I know there will be plenty more to come!
Ray has had the privilege of founding over 45 companies with 40 failures, 5 successes and multiple exits. With 30 years in real estate investing, the majority of these companies were founded through real estate, while not being industry related at all.
Ray is the host of The Agent Podcast which caters to real estate professionals, and hosts The Chicago Podcast, which caters to his local community. He has been in various industries including LED lIghting, consumables, consumer electronics, cabinetry, construction and many more. He and his wife operate a husband and wife real estate team in Chicagoland where he and his 5 kids and 3 dogs live.
Today, his focus is 100% in real estate through real estate sales, investing, coaching, his podcast and books dedicated to serving agents.