Robert Leonard  01:22
Let’s start our conversation by talking about your story. I remember the first time I heard your story, I thought it was very inspiring and motivating. Walk us through your background and how you got to where you are today.

Diego Corzo  01:34
Yeah, so let me just start by saying like where I am now, so that it makes sense when I share a few of the challenges and stuff like that. So I’m 29 years old. I live in Austin, Texas. I own 12 rental properties right now–a few in Austin, a few in Tennessee where I do Airbnb, and a couple in Florida where I do out-of-state investing. And the passive income that I have right now covers a lot of my monthly living expenses. So I’m quote unquote a little bit of on the financially independent side, right? But even though this sounds great I’ve had to go through a lot of obstacles, a lot of challenges, the main one being that I am a Dreamer and a DACA recipient. So that right now, being the end of 2019, it’s a very hot topic with immigration and all the policies. So my background is that I came from Lima, Peru when I was nine years old and then we came here with a tourist visa. And after a couple of months, our visa expired which meant that we became undocumented immigrants because we decided to stay.

Robert Leonard  02:42
How can others that are listening to the show today get into the mindset that you’ve had as you face all of those obstacles? Obviously, it wasn’t easy and you never let it get to you. How can someone believe that they can overcome anything and succeed just like you have?

Diego Corzo  02:57
Yeah, it comes from the mindset that like the US is a land of opportunity. That was one of the things that my dad told me–the US is a land of opportunity but it is up to us to find it. So I always knew that no matter what there was always a way. And I was always hungry enough to make it happen because I’ve seen like, the sacrifices that my parents did, they are nowhere close to some of the sacrifices that I had to do. And knowing that having the perspective that with enough work and with enough sacrifices one can achieve that–their own version of the American dream. It’s definitely been a challenge. But it all started with like the mindset, right? That no matter what kinds of challenges, I always had a ‘why’ that pushed me forward. And having the mindset that ‘if the door of opportunity is locked, I go through the window’. That is a mindset that basically set me apart. That no matter what, I will achieve my goal.

Robert Leonard  03:56
I really like that. That mindset of, ‘if the door doesn’t open, then go through the window’. I really like that. What was your ‘why’? And how can somebody develop their own ‘why’?

Diego Corzo  04:06
So for me, my ‘why’ was my parents. When I look back, my parents left their home country of Peru, they had to learn a whole new language, they had to go through all of these obstacles, they have to leave their whole family, and that’s when the four of us moved here to the United States. So, everything that I do is for them. And it has to be strong enough because if not, then people will quit too easily. And that’s why a lot of people after one or two tries, they’re like, you know what, this is not for me. Or like, real estate investing is not for me–I lost money in my first deal, I don’t want to touch it anymore. So I would say write down the different things that you think are important for you. And ask yourself, Okay, why is this important? Can you go a little bit deeper because like if you go a little bit deeper that’s where you will find out your true ‘why?’.

Robert Leonard  05:01
Did all of the hurdles that you faced just when you came to this country, did all of those hurdles make it easier to overcome hurdles in real estate? Because I’m sure you didn’t have perfect success in real estate. I mean, nobody really does. So have those hurdles helped with real estate and overcoming those?

Diego Corzo  05:16
They have from the perspective that like, the hurdles that I had to pass in the past, that I had to experience in the past, are not as hard now. Like it’s like, okay, now in real estate okay, I may have lost some money, or I looked at some of the hurdles or some of my mistakes, right? I don’t see them as a failure. I see them as like a class or something that I can learn from, right? So for example, as a realtor, I’ve had to pay for like a fridge for a buyer once. It was $600 and it was because I made the mistake of not including it or like we had to negotiate it but I forgot to include that in an amendment. And so like, instead of me being like, Oh man, I lost $600, or like, being pissed on myself for that mistake, I’m like, okay, I took a $600 class on not making the mistake of not putting a fridge in the amendment. So it matters how you have the perspective. I believe that perspective is the most important thing in life because the perspective allows you to ask the questions, right? One of the things that has helped me through all my obstacles that I’ve had is I ask myself, okay, instead of asking myself why is this happening to me when I take the victim mentality, I ask myself why is this happening for me? And when you ask yourself why is this happening for you, you get the empower mentality and you begin to look for options rather than problems. And my goal was to by [age] 35, own 10 properties, because of the skills that I got, the connections that I made, my mentors, and I just took action. I was able to get to 10 properties by 27.

Robert Leonard  06:57
I’m glad you brought up the mentors there at the end. That was actually going to be my next question. How important has it been for you to have mentors or just really being surrounded by high achieving people?

Diego Corzo  07:06
Yeah for me, I would say it’s what has given me the opportunity to learn from their mistakes and to exponentially grow. Because the way that I see it is if I can learn from somebody that has 20 years of experience, I can learn from all of their mistakes and achieve what they have been able to achieve in maybe five years. So that has been the opportunity for me and those mentors. They sort of increase the standard of conversation, the standard of the goals, the standard of what I wanted out of life. And because they increase my standard and I hang out with them a lot, that becomes my norm. So now I’m having different level of conversations and different levels of questions, right? So the accountability that comes from that, from my mentors, I got really fortunate to, when I was 23 years old, I found myself in a room with 15 millionaires and I was one of the only ones that wasn’t a millionaire. My net worth at that time was $25k. And I was with guys that were $10 million, $40 million. And I told him my story and they were like Diego, we want to help you become a millionaire. And since then, because of the fact that I’ve surrounded myself with them, they told me what to do. But the key when you have a mentor and you’re a mentee is to take action. A lot of people don’t take the action and then for that a mentor is like they wasted their time.

Robert Leonard  08:37
How did you get around those people and how did you get those mentors?

Diego Corzo  08:42
Yeah, I got super lucky. I heard a podcast similar to this, right? It was about real estate and they mentioned about the importance of having a mastermind group–the importance of surrounding yourself with like-minded people, and I reached out through Twitter. This is like the craziest thing because a lot of people will not reach out on Instagram or on any kind of social media because of fear that people are like, Oh, they don’t have time. Well, this guy did answer my tweet. Then he created his own podcast called, it’s the, ‘Real Estate Rock Stars with Pat Hiban’, and he reached out to me through Twitter. We connected and then I asked him what’s a GoBundance. I tell them a little bit about me, they say some mastermind for millionaires. I said, I’m not a millionaire yet but I want in. And fortunately at that point, they were like super early in creating their mastermind group. And I got super lucky that they allowed me to be in. And now they have like 200 people or more that have a net worth of over a million dollars all the way to $100 million. And what’s great is that by me, they continue to help me out. They continue to see me because I, like, I help them out, I bring them value, and they give me value, and then I take action. So for me it’s like, they get rewarded. They feel like they see that their time was worth it if the person that they’re speaking with and that they’re giving them their time to give them tips, it’s that they have to take action.

Robert Leonard  10:14
Yeah I mean, to your point, if they’re spending all this time and energy and resources on helping you and then you don’t do anything with it, they’re not going to be helping you for very long. And like you said, it’s going to feel like they’re going to be just wasting their time. So yeah, it’s very important that if you are working with somebody and they’re helping mentor you for free or even if you’re paying, you got to be able to take action on what they’re teaching you. Otherwise, you’re not going to have a good mentor for very long.

Diego Corzo  10:39
Exactly. I totally agree. And then one of the things that is very important is when you’re surrounding yourself with a lot of these people, it’s very easy to compare yourself and be like, man, they have achieved so much, right? But one of the things that I’ve always told myself is that everybody’s on a different chapter in the book called life and I cannot compare my chapter two to somebody else’s chapter 10, right? And what I’m telling you now is not something that I created, right, like the two question and the four question, right? That comes from Tony Robbins. But it’s like, it’s all these things about being hungry to learn and being a student of life, right? But by not comparing myself to others and not being like, Oh my gosh, they have it so easy and all of this stuff. It’s more like, Okay, what can I learn from them? What can they teach me and what can I apply in my life?

Robert Leonard  11:36
I mean in reality, a lot of people and like you were, you’re a chapter one, two, maybe three, and these guys are not on chapter 10 or 12, they’re on chapter 100, right? I mean, they’ve had a ton of success. So yeah to your point, those aren’t apples to apples comparison. You can’t look at that life and try and compare yours to it. You have to rather take a mentality of how did they get there? How can I use their experience and quickly read from chapter 2 to 99 or 100, wherever they’re at. How can I use their experience to quickly scan through that information to get to where they are quicker than than they did?

Diego Corzo  12:08
Exactly.

Robert Leonard  12:10
I know you highly recommend house hacking as an initial investment strategy. So what is house hacking?

Diego Corzo  12:17
Yeah, house hacking is the real estate strategy where somebody can buy a single family home and live with roommates or they can buy a duplex, triplex, or quadplex and live on one side while they rent out the others. The benefit of this strategy, it’s because you’re going to be living in the property, is that you can buy a home by putting low money down with an owner occupant loan. So there’s programs where you can buy a home by putting zero to three or 5% down, and it allows people to buy an asset with low money down, and start building equity, and start building passive income, and reduce their expenses.

Robert Leonard  12:58
Is that why you recommend this strategy to new investors?

Diego Corzo  13:02
I do. And to give you an example, I bought a home in North Austin for 170. And I rented, it was a four bedroom home, rented out to three roommates where I lived in the master. I rented out each room for 500 and it was for 550, and my mortgage was 1350, which meant that after they paid for my mortgage, I still had an extra 300 bucks. And I use that extra income to pay for my car payment. So that 5% down that I put in a home which was like $8,000 back then, cost me to live for free and pay for my car payment by having other people pay for it. And because I didn’t have any student debt, I didn’t have any other debts, that gave me the leverage to be able to live for free and any money, any income that I was making to multiply that into more properties.

Robert Leonard  13:56
So what do you look for in a property to potentially house hack?

Diego Corzo  14:01
If it’s a house, I usually recommend getting a home that’s two stories, four bedrooms, so that you can live in the master and rent out the other three bedrooms. And the reason why I say two stories is because two story homes usually have at least two and a half bathrooms. So while one of the roommates is taking a shower upstairs, the other roommate can go downstairs and use the restroom there. And I usually recommend getting a home that’s, if it’s a single family home, at least 1800 square feet so that the bedrooms can be large enough for a queen bed. I’ve done this multiple times. So I begin, so I know like, when I walk into a house, I can already tell if it’s going to be a good layout for house hacking or if it’s not going to be a good layout. And then, there’s multiple strategies depending on how the buyer, how the investor wants to invest from the perspective of, I want to buy a new home that’s remodel or that’s brand new, and I can put the ads on Craigslist or on Facebook, whatever, and find roommates. But if it’s a brand new home, it’s going to rent out quick. If it’s a home that needs rehab, like if you’re going to do the BRRRR strategy where you’re going to be buying it and rehabbing it, and stuff like that, it might take a little while for you to build that passive income. So it all depends on your strategy. Because if you’re handy and you already know how to remodel a kitchen or change out the floors, paint, awesome. I don’t know anything on the handyman contracting side. I can sell you homes but I do not know how to rehab anything. So, I’m that kind of person that just gets rehabbed, like remodel or brand new homes to house hack.

Robert Leonard  15:48
And that’s a good point because I know when I first got started in real estate, that was one of the first limiting beliefs that I had. I didn’t think that I could be involved in real estate. One, because I didn’t think I had enough money, I thought it was only for rich people. And two, I’m probably one of the least handy people you’ll ever meet. So, I didn’t think I was able to be a real estate investor. I thought we had to be able to do the work ourselves. And I quickly learned that those two limiting beliefs were not true. From what you talked about the house hacking strategy where you only put zero to 5% down and then you don’t need to be a contractor to buy investment properties.

Diego Corzo  16:19
Exactly. And the benefit of also starting with house hacking is that you can live in that house, right? Now that you’re living for free, if you were able to save $10,000 in one year while you lived in your apartment or whatever and now you’re living for free, you can save probably double that for year two and then you can move out of your first property and repeat the process again on your second property. And that, that’s how you’re able to snowball this process because you can get a home every year or every two years using the owner occupant loans. Now, quick tip here too is I usually recommend getting a conventional loan, that’s 3 to 5% down if you’re buying a single family home. But if you’re getting a multi family, I always recommend getting an FHA loan because they account for the income from the sides or the one side if you’re getting a duplex, they account for that so that you can qualify for that amount as your income and you can buy one by putting down 3.5% down.

Robert Leonard  17:24
So, why that dynamic there? Why the distinction of conventional for a single family and FHA for the multifamily? Does multifamily conventional not consider the income from the other units?

Diego Corzo  17:36
Yes, conventional on the multifamily, they don’t consider the income and if you’re going to be living in the property, they requires you to have 15% down. So it makes it like, super hard, right? Because here, like, if you’re buying a $300,000 duplex, you go from needing 9k or 11k down to needing like 30k or like 40k to be able to buy that property.

Robert Leonard  18:03
Yeah I mean at that point, it’s a little better than you know traditional investment loan but it’s really not that much better. I mean, 15 to 20% is not a big discrepancy there. You’re not getting that major benefit of being an owner occupant.

Diego Corzo  18:16
So if you do have the cash, sure. But because with FHA loan, the PMI stays on the loan, well stays with you for the duration of the loan. So you have to consider that. Which is why I always tell people it’s like, in a multi family it’s not a big deal but on a single family home, conventional loans are always better. The benefit of even if you do want to get a multi family with a conventional loan is that you do get the owner occupant interest rate. For example, right now as of December 2019, and it’s super important that we say the dates in these things because interest rates change quick. Right now, for an owner occupant you’re looking at a 4% for a single family home. But if you’re an investor, you’re looking at like 5%. And I’m giving you rough numbers, right? Because like, I helped two people buy a home this month and their interest rate was 3.6%. So just as a rule of thumb, it’s usually 1% lower for an owner occupant and an investor.

Robert Leonard  19:22
What’s also interesting to note is that you’re doing this in a very expensive market. I read recently that Austin is one of the most fastest growing cities in the US. And so, you know, along with that comes property values that are increasing rapidly. So what I think is interesting about that is that it shows that people, you can do this in an expensive market, you know. Essentially, wherever you live, you’re able to do this strategy.

Diego Corzo  19:46
Yeah, and I always tell people that they should take their competitive advantage, right? Like, they have to choose their competitive advantage, so or their unfair advantage in any market. For example, here in Austin, renting out by the rooms in a four bedroom home allows me to make $2400 gross on or like 24 to $2600 gross on, where if I put in a family, I will be making $2000 maybe $1900, right? So it allows me to cash flow a little bit more. And of course it does cost. I mean, it does take a little bit more of my time, right? Because I’m dealing with, with showing the places, showing the rooms and all that stuff. But right now, at age of 29 I’m in hustle mode. I’m still not in, in like I’m going to chill by the beach and hang out. I’m still building. I’m so passionate about everything that I’m doing. And I don’t see it stopping anytime soon.

Robert Leonard  20:49
So you mentioned that people can do this multiple times. You mentioned that you could live there for a year, essentially, save up all your money since you’re not having a mortgage payment and do it again. How many times can somebody do the strategy?

Diego Corzo  21:02
So I would say, from what I have read it’s usually four times. Well, it’s like four to 10 times. That’s what I see. Right now, I’m about to get my third owner occupant home. And, but the rest that I have, I have a couple of properties that are on conventional loans in either my name or my LLCs, so for right now, I think it’s between four to 10.

Robert Leonard  21:31
And so where does an investor go after that? What strategy should they look into? And what steps should they take?

Diego Corzo  21:36
Yeah, so one of the best ways is that once you buy your first or your second house hack, you’ll see that your income begins to snowball a little bit. Because you’re still living for free, now your cash flowing maybe like five to 800, let’s just say 500 bucks from the first house, you’re still living for free in the second house, and you’re still saving what you were saving in the past. So then now, you can while you live in your house hack, where there is single family or multifamily, you could get another loan, a conventional loan, and put down 20 to 25% on another property and keep that solely as an investment. And then the year after, you can get another owner occupant and save more money and then buy yourself another investment property putting 20% down.

So it allows you to snowball, and of course, there’s various strategies, right? And what I did is I partner up with people a little bit because of my immigration status–I couldn’t qualify for loans in the beginning. So I had to create the LLC, have them take out the loan in their name but have all the funds and have the property managed by the LLC. So I just had to get creative, right? At the end of the day, like I had my goals to get to 35 properties and I was going to make it no matter what. I was going to get resourceful and creative to make it happen. So then, from that perspective, that’s when I found out also about out-of-state investing, and my brother, he happens to be a wholesaler in Jacksonville, Florida. So for anybody hearing the podcast, if they do want to meet like wholesalers and stuff like that, I always say that what’s really important as an investor is building your team. So working with an investor, friendly realtor, having a loan officer that knows about different deals, different loan programs, and then they’re writing specter. And if, and if you’re investing in out-of-state or even in your area, not just buying homes on the MLS, I would always say, find one or two really good wholesalers that are not just in it for the money but that are that are sending you good deals that, that they underwrite.

Robert Leonard  23:52
So what is for somebody who’s just hearing this term for the first time, what is wholesaling? And how has your brother become successful doing that?

Diego Corzo  23:59
Let’s say that there’s a property that’s worth $100,000 on the market, on the MLS, right? Now, somebody will send out mailers or go door knocking and say, Hey, I know that you need cash now because you call me because I send you a postcard or something that says that we can close in a month or in two weeks, cash, I can buy your home for $60,000 in two weeks. If they say yes, then you put it under contract. And then you find yourself an investor that would buy that home that’s worth $100k–but you can sell it for $70k or $65k. And when they close, the wholesaler didn’t have to put any money out of their pocket, but they make the spread where the seller keeps their $60,000 and then the wholesaler will keep whatever spread there was between the $60 and the $70.

Robert Leonard  24:54
Is this a good way for a new investor to get started if they don’t have a lot of capital to begin with?

Diego Corzo  24:59
It is. It’s because now, it does require time. If you can hustle it’s totally doable. Because it’s one of those things that if you’re there at the right time, then it’s totally doable. It’s basically you putting yourself in a position where you can help somebody that’s in need. Or maybe like, if the father just passed away and they live in California, and the house is in New York, as an example, the son may not even know that the dad owned the property in New York. So he’s willing to take cash really quick and be able to sell that property, right? So if you as a wholesaler can find those deals then it’s totally doable. And my brother started, he actually dropped out of college to do wholesaling under a mentor. And now he has his own business with another business partner. He’s only 24 years old, and he has 14 employees. So he’s also killing it.

Robert Leonard  25:59
Wow. How is he able to scale that business so fast?

Diego Corzo  26:02
So right now his business overall is making around six figures a month now. He really did it by keeping all of his expenses super low for himself. And just reinvesting it back into the business and systemize it. So a book that I always recommend is The E Myth, and that book teaches people how to systemize a business and how to see it from not just like a lifestyle thing, but to systemize everything so that you’re building a business that if you go away for whatever reason, it’s still making you money. So my brother just reinvested a lot of the profits into the business–into hiring employees, creating the systems, putting them in place, to now it’s just running a lot more smooth.

Robert Leonard  26:51
Let’s talk about your investing operations out-of-state. What does that look like? How do you invest out-of-state?

Diego Corzo  26:57
Yeah, so my brother was a wholesaler, he found a couple of properties over there and he put me in touch with two property managers, right? So that’s also, that has to be part of your team as well. So your investor friendly realtor, a wholesaler, and a couple of property managers, because I don’t want to take the phone calls from a house that I may not have even seen in the past or that I’m not near there. So the property manager is the one that finds me the tenants and they charge me like, I think it’s 9% a month. But that’s how I’ve been able to manage the properties over there in Florida. So in Jacksonville, I own a quadplex, two duplexes, and I just sold two single family homes that I had over there, but I’m keeping a few of them multifamily.

Robert Leonard  27:47
Were you buying those properties after your brother was able to see them? Is that how you were vetting them? Or are you buying them sight unseen or are you just relying on your team to see them for you?

Diego Corzo  27:56
Yeah so my brother, he’s the one that walks in, and he’s the one that will tell me Okay, Diego, this is a deal that you should buy, it looks good. So then I’m like, alright, we’ll do the inspections. We can put it under contract, we’ll do inspections because I always recommend doing all sorts of inspections so that you know what you’re getting during the due diligence period. And then from there, if I need to renegotiate a contract, I will. But it’s just making sure that I am aware of everything that happens. Now, if I was investing in Austin, buying my first investment property, I would manage it myself for the first year so that I know about the home, I know what to expect. And if you really wanted to, then you can put a property manager in place. But on out-of-state, all of them have their property managers.

Robert Leonard  28:49
One thing that’s interesting in there is that, that I want to mention is that I actually invest out-of-state as well. So I live, we talked about this before the show, but I live just north of Boston, and actually my rental properties are in Texas. Not in Austin, but in Texas, about two hours west of Dallas and I actually managed them myself without a property manager. So, I mean, I definitely think having a property manager is great for a lot of people. But like you said, I wanted to get that experience of the first few years to learn the properties and then maybe down the line, we might transition it to a property manager. But for now, I like being able to do it myself and with the right systems and systematizing the business, I’m not taking any calls in the middle of the night. I’m not doing anything like that we have a system where the tenants place maintenance requests. It’s not me doing all of the calls or anything like that. I’ve just been able to systematize the business so that I’m able to save the money on the property management fee.

Diego Corzo  29:43
Yeah, and how old are those properties?

Robert Leonard  29:46
On average, maybe late 70s, early 80s. So not super new. I’ve actually never seen the properties in person. I’ve never even been to the cities they’re located in. But it goes back to having a good team. I have an investor-friendly agent who’s actually an investor himself. And he was able to go to the properties and look at them for me. Now, how has having your real estate license helped you as an investor? Would you recommend that investors get their real estate license as well?

Diego Corzo  30:14
I would recommend, so if you want to be a realtor part time or sell a couple of homes, I would say yes. And if you’re going to be investing and buying more than two or three homes a year, I would say it’s totally worth it. If you’re only going to be buying one home a year, or every 18 months, I would say it’s not worth it from the perspective that there’s fees. So for example, to become an agent here in Texas and in Austin, there’s a class that take that costs like $700, $800. You need to pay another $300 to take the exam, to do the background check, you need to pay MLS fees, that can be another $1400 every single year. So it’s like, you have to measure that. Okay, is the 3% that I’m going to make in commission, would it be worth it? So then by the time that they take part of the commission for dues maybe that brokers requires office dues too, you might not take much. So it depends you have to ask yourself why you’re doing it.

Robert Leonard  31:18
Since you’re doing a lot of your investing out-of-state, I mean, you have some in Austin, but since you’re doing a lot in Florida, having your license in Texas isn’t really benefiting your investing business, right?

Diego Corzo  31:28
If I wasn’t a realtor, full time, I wouldn’t have my license in Texas.

Robert Leonard  31:34
Yeah, so you’re doing that as another business because you enjoy real estate. You’re passionate about real estate, you want to build and do that as another business, you have your investing business that’s almost separate from your real estate agent business. Let’s dive into analyzing specific potential investment property. What type of neighborhoods are you looking for and why those specific neighborhoods?

Diego Corzo  31:57
Yeah, so looking back with the way that we are in the market right now in 2019, in 2015, 2016, I invested in Jacksonville, Florida in C minus areas, I wouldn’t do that right now anymore. I would invest so now, for example, if I’m going to be investing out-of-state, I’m going to invest in B areas. There because right now the way that the market is right now it’s getting a little bit high, I want to get some good quality tenants in a good quality home. It doesn’t have to be an A home but I just don’t want to be in those C minus areas where the tenants may not pay and then I’ll have to evict them. And then it’s gonna cost like $2,000 to fix a property again. And then evict another somebody else in like nine months and stuff like that, I don’t want to deal with that. So for example, I bought a couple of homes in Florida for $24k in C minus areas and now I was able to sell them for $50k. I wanted to get rid of them. So, now I’m going to be investing in B areas.

Robert Leonard  33:08
For someone who might just be hearing these types of classifications for the first time, can you break down what you know what a C minus area is, a C plus, maybe a B, B minus was? What does all of those gradings mean?

Diego Corzo  33:19
Yeah, some people may have different ways to look at it. But the best way to see it is an A area is highly desirable. They may have new homes, maybe not this new, but it has the best schools. People are willing to pay extra just so that their kids can go to those schools. And those areas are super expensive. B area is going to be more of an area where the schools are fine. It’s so close to a lot of different things but the homes are still good. Like, it’s not great, but it’s good, and anybody will be comfortable to live there. And then the C minus areas or the C areas are areas where people might be walking a lot around the streets. There may not be any HOAs and then they have some trailers right there on the street. Or you go into a subdivision and there’s cars, old cars in the grass kind of thing, and you’re like, Okay, I don’t want to really live here. Or they might have like, all the streets may just be packed and packed with cars. Those would be areas and where the homes are super old, they’re not well taken care of. Those will be more like C to C minus areas, or maybe even D areas.

Robert Leonard  34:40
Yeah, so as you start getting down close to C minus, you’re really getting close to that D, D plus area, which is not necessarily the best areas to be investing in. I mean, you can make some pretty good cash flow and you can get low price properties which is good for a lot of new investors but what is often overlooked is that those are generally pretty high risk areas. And on paper, the returns might look really good but when it actually push comes to shove, and you’re actually buying and renting out that property, if you don’t end up getting the rent because the tenants aren’t of high enough quality to be able to afford the rent, then those returns don’t actually materialize. And essentially, you just own a property that isn’t getting those returns that you expected. So you mentioned you don’t go any lower than, you’re looking for more B now. Would you do anything lower than that, if you’re local? Or do you really stick to a B, B minus area?

Diego Corzo  35:32
So right now, I’m sticking to B minus to B areas, right? Okay. When you invest in a B area right now, people that used to live in the C areas, and now they’re doing well, they have some money saved, they would go to B areas. And if the economy comes down, A people, A tenants would go to B areas. So it’s sort of like, that space, like those homes were in a good economy. The C people are becoming more B types of tenants, which is great. And then if the economy goes down, the A people are totally comfortable with going into a B area. So it’s sort of like the safest for you also long term.

Robert Leonard  36:22
Eventually, when things do turn, I feel like it’s a price point where a lot of people can still afford it–they’re comfortable living there, the amenities are good, location’s good. Perfect. It’s not the best, but it’s good enough. And so that, you know, when things do turn those into higher B class or even A minus class that may have a spouse or an individual in the home, lose a job, they’re able to still afford that level of income and still have a safe place to live. Let’s talk about another strategy and that’s flipping. Do you do any flipping and if not, why?

Diego Corzo  36:52
Funny enough, I haven’t done any flips but I am a lender on a flip currently in things in Port St. Lucie. (*inaudible*) and two business partners, we gave $150,000 to a flipper down south. He bought the property with our cash. We put a (*inaudible*) on it, and we partner up in a way that he’s putting all the renovations with his own money and his team. And then we are getting a return on our money. We’re not sharing profits yet. I told him that for the first one. I just wanted a good interest.

Robert Leonard  37:32
Why aren’t you doing any flipping yourself?

Diego Corzo  37:35

I don’t know. I haven’t done the education for it. There’s always a learning curve, right? Whether you’re investing or becoming a realtor. Flipping for me, unless you systemize it very well, it’s like a job. And right now, because of the fact that I don’t like renovating things myself, like, I don’t know anything like that, I just don’t want to take that time. I’m making pretty good income as a realtor. And that’s sort of like my business slash my job. So I’ve chosen, like there’s so many ways to make money in real estate. I’ve chosen the streams of being a realtor and making money there, and being an investor and making money there. And for example, my brother who’s a wholesaler, like, I don’t want to do any type of wholesaling at all, it doesn’t interest me either. My brother he doesn’t want to do anything with as a realtor. He’s like, I do not want to work with first time homebuyers, or I don’t want to deal with emotions. My brother is more like this is the deal, these are the numbers, take it or leave it.

Robert Leonard  38:42
Yeah I mean, that’s really good that you guys are aware of what you’d like and you’re using your strengths and your passions to build your business because if you tried to do wholesale, you’re not passionate about it, and you probably wouldn’t have success because you’re not willing to put in the work, and the effort, and the drive, because you’re not passionate about it. The same goes for him to be a realtor. I mean, I think it’s so important that you mentioned that flipping is like buying or essentially building another job because it’s so true. A lot of times when people go into real estate, if they’re not flipping originally, and they’re going into rentals, they’re doing it because they want passive income. And then they start thinking about flipping and then they realize that flipping isn’t really a very passive way to get income. It’s a very labor intensive process. And it essentially is a new job.

Diego Corzo  39:26
Yeah. And I mean at the end of the day, you can see it even with the amounts of taxes, right? Like, if you flip a property, you’re getting taxed as if it was your job. Like you’re getting taxed 25% to 30%. If you’re an investor, I believe that you’re taxed like 15%. So, and as a realtor, you’re still taxed as an active person. So you’re still taxed at 25 or 33, whatever your bracket is.

Robert Leonard  39:52
As we round off the show here, Diego, what is the number one piece of advice you’d give to someone listening to the show today?

Diego Corzo  40:00
I would say something that I learned from Pat Hiban, was to just get to first base. A lot of people are stuck in analysis paralysis trying to hit their home run on their first try. And I am all about just get to first base. If you make a mistake, awesome, you will learn from it. But if you get to first base and then you try again and you get to second base, and then third base, you will learn enough so that you can hit home runs in the future much easily.

Robert Leonard  40:31
Yeah, I think that’s great advice very, very infrequently will your first deal make you rich. It’s really about just taking action, getting started, get that first deal under your belt and then it really just snowballs from there. It gives you the confidence and wherewithal to know that you can move forward and do more deals.

Diego Corzo  40:49
Yeah, because just by starting now, that gives you the opportunity to already start building your team, to already start networking with people, to know exactly what to expect, running the numbers and going from there.

Robert Leonard  41:04
And it even builds your credibility. I mean, one deal isn’t, you know, isn’t a massive thing, but just even being able to go to an investor and say yeah, I’ve done a deal and here’s the case study of it. That lends a lot of credibility to that potential investor that may want to you know, invest with you or sell you a property. You know, even just that one deal really lends a lot of credibility. So Diego, thanks so much for coming on the show. For those interested in learning more about you connecting with you and just learning all that you have going on, where’s the best place for them to go?

Diego Corzo  41:34
They can reach out to me on Instagram they can follow @realdiegocorzo and they can also check out my website diegocorzo.com or househackingclub.com.

Robert Leonard  41:49
And I’ll be sure to put links to all of that in the show notes so you guys can go and check out all that Diego has going on. Diego, thanks so much, I really appreciate it.

Diego Corzo  41:57
Awesome, take care.

Robert Leonard  41:59
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Outro  42:32
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