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0:00 Hey, welcome to the next episode of the hybrids podcast. I'm your host Daniel Martinez. Today as a special guest, Bremen show Seth. I got his name right for the first time out of all sorts. So please take note of that. Raymond. See, I've been listening today. This is our episode called deal breakdown, cover cool, interesting stories. If you have not seen the other episodes, please go back and watch them. There'll be somewhere around this episode. Please go watch them. He provided a lot of value across each one. This is probably the last one I'll release. So go check it out. Might have an apple podcast in a few months or a year. Who knows? But please go watch his other episodes. Raymond, what is your cool interesting story for today's deal? Breakdown? 0:40 Hey, Daniel, thanks for having me back, man. So I bought a property on a private racetrack 0:52 No, man, this is real. So I joined a automotive Country Club. And it is a country is like a Golf Country Club. But for racers, right, like racecar drivers. Okay. So I joined this club, it had you know, like initial dues, and then an annual costs, right? And I'm like, okay, cool. So I joined this club, and then I'm like, Oh, cool. Well, oh, they have real estate here. Right? Well, let me take a look at this real estate and see how he's doing. And okay, so I checked it out, I looked around, I'm like, well, I need a place to keep my car anyway. Right. So I might as well have a place and I can bring my kids here. This will be fun and long story short, I joined this country club. I bought this property. This property was one of the first buildings that was built when this country club was built. In this property, it was two guys who went in on a partnership and built this building, but then they put a wall down the middle of the building, but it was one building. Okay. So when they had, it was like a good ol boy agreement. They had like no real paperwork. Okay, and the way that this worked is so that the country club, it was built on like 400 and plus acres, this whole country club, it had two different racetracks, a go kart racing track. Like, you know, a main house, if you will. And then there were vendors all around the outskirts, so the track like literally like race, car mechanics, race, car shops, that kind of stuff, tire vendors, you know, gasoline pumping station, like all that kind of good stuff, a cafe in the middle of it. And what ended up happening is because of the way these guys had structured their deal, there was literally like, no paperwork, that one of them got the bill for the annual taxes and the annual dues, and they just split it and all that kind of stuff. So now, I come in with the guy who wants out who's selling it, and there's nothing there. So I had to start completely from scratch and rebuild this deal from the ground up. Well, on this 400 acres, the way they get away from actually functioning and being built in tax, like a municipality lease, this is how I understood it, is they do 99 year leases. Okay? So here's this steel building, sitting on a piece of property on a 99 year lease. Okay? I see your face, man, this is just getting better as it goes, right. So I call my, my attorney, my business attorney and he's like, you know, we're gonna need like, Mike, one of our real estate experts. And on this I'm like, Okay, fine. You know, like, how much is this gonna cost me he's that guy like, you know, 1012 15,000 Okay, cool. That's fine. Let's get it done. Gordon paper it. Long story short, it took about three months to get this deal done and papered and the last thing I was ever told that this was going to be like, 1215 grand, right? Dude, I got a bill for $50,000 from my attorneys, pretty cost, just attorneys cost. The whole deal was 600 grand. Yeah. Okay. $50,000 on all this stuff that was papered, literally and Dude, we form like three LLCs. And then there were LLCs with sub lease agreements for the parts of the building. And then we had this other LLC for the 99 year lease and this partnership and I looked at all of this paperwork and then I'm like, Jesus, like this is a nightmare, like an administrative nightmare, right? Because I ended up with well, we ended up with three LLC is one that was a partnership that held the 99 year lease, then we each had a new LLC, to actually hold the building from the LLC that was holding that like all of this structure. And I remember thinking, you know, I called my attorney and be like, Man, last time we talked, this was like, 1215 grand. How do we get to 50? Like, I'm not paying you 50 Yeah, I know. We ended up coming to a settlement. He wasn't happy. I was happier, but I still wasn't happy because it was, I remember correctly, at least double what I thought it was going to be. But it wasn't just that cost. Now it was the LLC costs. Now it was the accounting costs. Now it was who's keeping track of all the books. Now it's who's filing all the taxes, right? So one deal structure can get so complicated that when you're looking at the cash on cash return, and in this case, it was for enjoyment, right? Like, it was. Yeah, it was leisure. And it was like, ultimately a business write off like marketing, automotive, blah, blah, blah, blah, blah, bring clients there, all that kind of good stuff for the business I was in at the time. But there are so many levels that you have to start asking questions as you get into different deals, that you really have to understand the structure and what does that structure gonna cost you? Write like, that becomes an important question. Because before you know it, something that may cashflow you 100 grand a year may cost you 60 grand a year to operate. And if you're not prepared for that, where it's only going to net you 40 grand, is it worth it? Right, and that's a stupid example. But it's a real example. Like, what is actually worth it, let alone all the other things that go with it. Right? And what's in all of these contracts and reading all these documents and being familiar with them, and like, I'm not a contract guy, man, like I don't want to be. That's why I hire lawyers and professionals and all of this stuff. And well, let me tell you another fun piece of the story. Later on, and I'm like, Hey, I have all this space. I should like suddenly, some of it to other guys who want to keep their cars. Right? And guess what? I go to sublease the space and start talking to my other buddies at the track or people that I know that want to store their cars there, only to find out that the track owners and operators, they get a piece of anything that I lease out to anybody as part of this deal. I was never told about that. I never knew about that. I never read that fine print. Now that's on me again, I'll take accountability for all my mistakes. It's my responsibility. It's in their contract, not mine. But their contract. Right. So you start thinking about all of those things now Oh, least this due to space for a grand right a month? Yes, five cars that will help me offset the cost. Well, now I'm only getting 500. Because other 500 goes to the, you know, guy taking the chunk out of it. Right. So again, my point is, there's so many levels, to different deals that can be done on one of my episodes, I talked about a multi use building I bought in Pennsylvania, that was a restaurant with a liquor license, and that was its own crap show. But even here, like thinking about this building, right, like, there was no structure. So I had attorneys create the structure, which got expensive, but then managing that structure got expensive. And before I knew it, I was hemorrhaging money on something I was just trying to do for me and my family and my buddies to go have a good time. It was never worth it. I wish I would have never ever done that deal. I would have been much better off paying one of the guys there to just leave a car there and show up and use it and do the thing. But I didn't know what I didn't know. And it was like I was a car guy, man. Like it was a dream to have a shop on a racetrack like literally, I put on my fire suit, get in my car, go fill up and go hit the track and go do laps right like a racers dream. But all of the bullshit behind that. Dude, it was not worth it. It was so much work and such a bad use of cash. 9:00 Wow, I think you're gonna win an award. I'm not gonna make an award just for your stories. I've only heard of racetrack like condo type things. Yep. Same thing. I've only heard of that. And I heard it for like f1 type stuff. But it seems like you have like a private. Where is this property at? 9:21 It's called the Autobahn Country Club. It's in Joliet, Illinois. It's a cool place, man. It's awesome. Like it really really is. It's cool. They did a really good job executing it. It's super family friendly. I'm a big fan. I just wouldn't own a property there again like that was a mistake. The Julie 9:38 I've been to Julia I know her Juliet is 9:42 outside of Chicagoland raceway. 9:46 I used to work in Joliet Okay. for like a year. Yeah, so 9:49 it's off like the 355. Yeah, Ed, actually. 9:56 So I've always like I've always wanted to do the rechecks stuff because I enjoy fast cars too. And listen to the story and treat me and treat me a couple different ways I just said I've heard of I've heard of the apartment condo things. And if one has, I've heard of like, all that stuff. And I'd like never like, I'm not there yet. 10:18 Well, when you get there, let's have a conversation. 10:20 I'm not there yet. But it's a cool thought. But like the subleasing and like, I understand, like, the difficulty of paperwork, and attorneys, because I've dealt with stuff like this, but not to that extent. And I understand, like, the maintenance of businesses, and paperwork and bookkeepers, and like, it's not that it's a heavy load to carry. It's just, it feels like a annoying thing that's tied to a string on your ankle, and you want to 10:52 get expensive. And I guess my point, if anybody walks away from this episode with one thing is that remember, there's a cost to doing business, everything, everything. Yeah, yeah, there's a cost to everything you do. So whether you're buying an apartment, building a single home, a single family, home, a single family portfolio, there's always cost there to be accounted for. And they're carrying costs, they're legit carrying costs over time, right? Whether it's a home and you have maintenance, or the home comes with a pool, and then you're gonna have to maintain that pool or the pool equipment. You know, there's all of these costs there to think about. So when you're committing to something, just ask the right people so that you know what all those costs actually are. And that's going to help you decide whether or not you should do that deal. Right? Like if I would have truly understood what all the carrying costs for this was. I would have never done that deal. 11:47 Yeah, that was the sound. That's yeah, I would have found 11:51 another way to do it or to get the outcome, right, because there's always a different way to get the result result that I was after. 11:58 Yeah, and you got you got it. 12:01 I got it. Yeah. I enjoyed it for the four years that I had it like I'm grateful like I have great memories, great images. I had a golf cart rode around with my kiddos, you know, like, kids got to go and some race cars and drive go karts. Like it was fun, man. I did. I enjoyed it. But it was a bad use of money, specifically my own money. 12:22 Oh, man, this like I said, I think you're gonna win an award for the craziest stories for me. 12:27 I'll take the award, bro, I got more. 12:29 I'm have to make one just for you. I've never had, I've never felt the need to create an award. So I heard your stories. 12:38 All right. I'll look for my award. I'll send you my address. 12:44 Oh, man, this is such a it's such a cool story. But for everybody listening. I this is this is why I know it's a thing too, because I literally I signed a contract in my attorney about two weeks ago. And he sent me an invoice for 14 $50 and we had a 10 minute conversation. That's what happens. happens in this business. When you when you when you need sound advice, you got to pay for it. And it doesn't seem like it's worth it. But it's worth it because he might save you $100,000 In the long run for for 13:10 you $450,000.10 years from now you have never 13:15 for me, it's just payment for 50. And like, Okay, is it good? Yes. Okay, and she has rescue hails. Let's go okay, we're gonna sign and that's that's the that's the price of doing business. But you always need those checks and balances because they could save your ass 13:29 100% and assets contract. 13:33 So I appreciate this episode and that way because there's underlying costs that you may not even fathom if you're not at this level, but they're there. And they could add up and just be aware. Online, and please don't forget us a little bit so they have been great. I enjoy. 13:51 Thank you guys. Thanks for listening. 13:54 Raymond show Jeff sauces. 13:57 Raymond show set.com ra y mo n DSJOLSCTH. 14:02 link will be below please go check it out. Thanks for sharing it. He's also podcast host agent podcast. If you don't have those the episodes please go check them out. So much value so much insight given for me personally. And it's been a great series of episodes for Raymond here. 14:21 Thanks, man. Appreciate it, man. 14:23 At least part go like share, go share with your friends. I hope you enjoyed it. We'll see on the next episode. Thanks guys. Bye bye
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.