Maintenance Man to Millionaire with Glenn Gonzales

Full Transcript

       Taylor   0:02  

What's going on everybody? This is the passive wealth strategy for busy professionals podcast. Thank you for tuning in, really jazzed about this one. Today our guest is Glen Gonzalez from obsidian Capital Group. Glen wrote the book maintenance man to millionaire, because that's what he is. He's the maintenance man who became a multi millionaire. By investing in real estate. He went from being an apartment maintenance manager to now owning 4500 apartment units. Just awesome. He's a great guy to talk to. we share. He shares a lot of the lessons that he learned along the way that allowed him to make that shift and get on to the owner side rather than just being the employee at these properties he was working at. We learned about it again, his story of making that transition, what he thinks about the market today and just so many awesome lessons. You guys. If you're somebody out there a busy professional, who either wants to actively invest in real estate or passively invest, and needs those lessons from someone who has just a ton of experience in real estate in multiple market cycles, you're gonna love it. For those of you who don't know, I'm your host Taylor load. I'm a multifamily real estate syndicated real estate investor, I buy multifamily real estate with passive investors and split the return. love bringing these lessons to you. Hope you're enjoying the show. Without any further ado, here we go with Glenn Gonzalez. Glen, thanks for joining us today.

Glenn Gonzalez  1:36  

Thanks, Taylor. Glad to be here. Glad to be part of your show.

Taylor   1:39  

Happy to be talking with you. For the folks out there who don't know about maintenance man and millionaire. Could you introduce yourself to our audience, please

Glenn Gonzalez  1:49  

bear thanks, Taylor. My name is Glen Gonzales. I started in the industry about 30 years ago in the apartment industry and I started as a maintenance guy on that accident wasn't even by choice. I was going to college full time and going to and working full time. my wife at that time had got a job as a leasing consultant. While I was at work, she called me today and they're really behind on work orders. Do you want to come help out a little bit and I thought it would be a temporary thing. I'm like, Sure, I'll come help. I did. one day led to a week and then a month and then a couple months and a few months and before you knew it, I was working maintenance and I quit my job at the Marriott. As I was a waiter all things were going to college. Like a lot of people do. Before you knew it, I was a little jealous of the people that were working inside Taylor, all the leasing agents and the managers they're like talking on the phone and showing apartments. I'm out in the cold picking up trash and calling paint. Letting people in after they get locked out in the middle of the night enough. Like I want their job. That's how I got my foot in the door in a multifamily. I'll go into more detail later on the show, but that's kind of how I got started. But,

Taylor   3:13  

you know, thankfully you progressed to where you are today. Can you tell us about where your business stands right now?

Glenn Gonzalez  3:21  

Sure. I'm currently the CEO of obsidian capital. I have a couple of partners on there. We syndicate deals and we matter of fact, we have a small 50 unit deal that we're raising money on right now we're going to build brand new construction. That deal it's very interesting because people are like, Are you nervous about what's going on in the economic environment?'' Ironically, we've made decisions months ago that we would raise money from investors and pay cash for a new construction build, rather than going and getting a construction loan. Wow. that and effort pan loan origination. fees and appraisals and you have to pre pay some interest reserves with the lender while during construction, add up all that stuff. we're better off just giving all that to investors. we're going to host an apartment complex, free and clear with no debt, and the investors will do very well. That was all before all this disruption with the virus hit the economy. Now banks are a little unsure. I mean, I'm glad that we'd made that decision way back and we're giving preferred returns to investors, and they're losing money in the stock market. it's really not a bad time, everything, right? People are looking for deals. Wow.

Taylor   4:38  

So those investors are going to be saying, Can you take more of my money out of the stock market and put it in real estate?

Glenn Gonzalez  4:46  

Yeah, yeah, we even have people that have their own self directed IRAs that have put money in the deal and we're still doing the raise. But yeah, there's people like can I put in my, my Roth IRA with Sure you can. it's kind of fun. But to answer Your question, I built the portfolio up to about 4500 units, and own my own property management company and we managed 2000 units for a friend of mine. we had under our responsibility under property management, 6000 units 4500 units of which my business pardon I owned, and that was just knocked recently, we started selling some of those buildings because we felt like we were at the top of the market and the previous partner that I had that own those he wanted to go do his own thing and I wanted to go do my own thing. the best thing to do is we just sold off the assets and it's turned out to be pretty good. starting from maintenance man to I was, uh, I finally I didn't tell you the story, but maybe I can go for it. I told the regional manager to come visit while I was a maintenance guy and I'm like, I want to be a manager. They get to talk on the phone and work on the computer and I don't know that I want to keep you know, painting apartments and fixing toilets the rest of my life. Like, well, that's all well and good. But aren't you the maintenance guy? I'm, again, the maintenance guy. like, Okay, well, if something comes up, don't call us, we'll call you around. I know, right? But hey, you got to raise your hand and ask, right? And that's what I did. Well, a few months later, they called and said, hey, you're not gonna believe this, we got a new property contract and it's only 60 units, it can't really afford a full time manager, or a full time maintenance, we were thinking maybe you could do both, like part time manager, part time maintenance, I'll take it. That's how I got my foot from being a maintenance guy into the management door to being a property manager. And, and that was a big learning experience for me. My hat's off to you know, very effective property managers and hats off to my maintenance friends out there. if you 've realized over my career, you can't have a successful property manager without a successful maintenance guy and vice versa. They go hand in hand. anyway, I stayed in that role for a little while and learned a lot, actually. Especially what a bad maintenance guy was apartment complex. They and they signed a lease one of the forms they used to have to fill out back in the day was this move in condition report, right? I want to make sure everything works, right. Well, they would fill it out and turn it back into the manager. I look at it like, oh, man, one of the burners doesn't work on the stove, or quarter, man, the toilet seems to be running a little bit when they move in so full. It's not right. I better go fix that. Yeah. I would go back to the apartment after they moved in. I was hoping nobody would be home knocking on the door when maintenance came in. there they were like, Hey, what are you doing here? I'm like, I'm here to fix some of the work orders and like I thought you were the manager like I am. But I'm also the maintenance. then they're also like us so you got this ready before we moved in. I said yeah. Then we both realized at that moment that we both came to the same conclusion. I wasn't a very good maintenance guy.

Taylor   8:02  

Oh man.

Glenn Gonzalez  8:04  

He knew it I knew it anyway so a little awkward but anyway but I learned a lot right that's where I learned that you know you're not going to be successful if the unit's aren't made ready and you know bad reviews and moving experience and everything else so I had the opportunity I turn that property around it was doing very very well financially. The boss asked if I would go visit another one of the properties that we managed and not in any official role but just kind of go over there as a peer and talk to the other manager and see why her occupancy wasn't doing very well. I went talk to the manager and came to find out I was talking to the leasing agent at this point. At least he had no personality whatsoever. Taylor I mean, talk on the phone dry as can be. as we were visiting, I told the manager I'm like, man, they are your leasing agents. Very good. Not very good. She's all offended. What are you talking about? Of course, you Good. I'm like, Yeah, like no personality. I said, Don't take my word for why you don't hire a secret shopper and see how she scores like I will, I mean, she was out to prove me wrong. got a little secret shopping report. It kind of said the same thing, inability to connect with the prospective residents or didn't follow up or had no personality, things of that nature got a very low score. I told the manager I said this is part of the reason you don't have very good occupancies because you got the wrong person doing sales.  when I found out about Taylor, the reason she wouldn't make the changes was because the leasing agent happened to be her very best friend. Ah, and so like I told the other manager, I said, I, I'll be honest with you, if you don't make a change there, they're probably going to fire you and make a change there. Because as a manager, you've got to be able to make those hard decisions. you're too close to your best friend and your best friend's gonna get you fired. Sure, she needs to change I hired another leasing agent and, and found another role somewhere else for this for this lady and her occupancy started climbing and it went right where all the other competitors were very healthy market and, and my boss call I Hey, good job on that I mean, impressive it turned around and thank you. that was my foot into becoming a regional manager someday I had my property oversaw and then I had some responsibilities on others. I kind of did that until I rose to the top, I was with the fee management company and became the director of operations, which was a little company that was like the number two, the owner and me is the so the president of the company and the owner of the company, and then the director of operations, which was me, and it wasn't a very big company. But my boss was also my mentor.  he said, if you're gonna stay in this industry, you got to get a real estate license because we do female management you gotta get your CPM designation from the Institute of real estate management, CPM designation. Superior listeners certified property manager from iram. I did those. then as I was doing all the things he told me to do, I things were going well, and he fired me. Oh, really? I know. I'm like, why are you firing me? He's like, I realized that I was holding you back from your best potential. Wow. Like, so you're gonna fire me because you're holding back from me? Why don't you just give me notice or something. He's like, you're too comfortable. He's like, You're like a resource, you'll get another job. I was pretty upset until I got another job paying me more money than I was making as a director of operations of that property. that was for a management company that did development and tax credit. I went from fee manager to owner developer manager tax credit and got a great experience there. I took that mentor's advice, his name was Dale and applied it again after I was with that company for six years. went and got another job with a route out of Seattle. I was with a real estate investment trust equity residential is one of the largest is still one of the larger rates in the United States and worked as a regional manager for them and in the Pacific Northwest. my career was I mean, I was all in. I mean, I wanted to be really good at what I wanted to do. As a matter of fact, in my book maintenance man and millionaire, one of the first chapters talks about the value of you, and that's what I was kind of living with. I wanted to perfect my craft. I wanted to be really good at what I wanted to do. While I was in property management I had a lot of success. I was on the board of directors for the Apartment Association. I was later nominated and elected the President of The Apartment Association there and so I was busy and I was loving what I was doing. But Taylor at the end of the day who was making all the money, the big money

Glenn Gonzalez  13:00  

Somebody I learned years from, it was the owners, right? I was the manager, the company and I was crossing T's and dotting eyes and leasing apartments, but the big bucks for those people that own the apartment complex, and that seemed so far out of reach for me. I was a W two employee. I had five kids, my wife had three, I had two and I was paying child support. And, Wow, I didn't have two nickels to rub together. But I came across the deal. I knew that if I was ever going to break into the ownership side, I had to figure out how to own these apartment complexes. I found a little 60 unit deal. Then I went to my second mentor, John Gibson. He also donated his time to the Apartment Association. I said hey, John, I'm looking at this small deal in Tacoma, Washington. We look at it because you're you, you own a lot of apartments and you're really smart and I trust you and you're a good friend. We looked at it like you know, the number Seems solid, you'll probably do, okay. I said, Okay, just Okay. Is it really I got a better deal, like you have a better deal. Whereas that is like a little 44 unit deal that I've completely neglected that I've owned for years. why would you neglect one of your own apartment complexes because it's 44 units. I've owned it for years, I could care less about it. I'm building these brand new class high end apartments and on the water, and I'm like, yeah, we'll look at it. sure enough, he was right. It was like a gym. Right? Totally neglected. Units weren't made ready. The manager was smoking weed.  it was just, it was just a disaster of a run property. I said, You know what, I'll buy it. We agreed on a price which I thought was extremely low. He said he would carry a note back for me, but you know what he said to me Taylor's, like, you need to come up with $150,000 you know, and for me Didn't have $150,000 that can't really be some. Yeah, he might as well have asked me for $10 million. I mean, what the heck. But then I started doing what you do tailoring what other people do to go talk to investors.  You know, I talked to my boss, who's a super smart lady, and one of the vendors that we did a lot of work with. I said, Hey, do you guys want to go in on this apartment complex with me? We got to come up with some money down payment. I've already got the financing lined up. It's a great deal. they both went and looked at it independent of each other. Like, yeah, you're right. We could turn this thing around and fix it. Let's buy it. I said we need 150,000. We can go into the partners, a third, a third, a third. You put up 75,000 and you put up 75,000. I'll put up zero. we'll have the down payment. they're like, Well, that sounds great, except for your math doesn't really work. I said they're like so how does that work? People you, you want to be equal partners but you don't want to put any money in it. I'll be, I'll be honest, I don't have any money. I found the deal found the financing. I know we're gonna make a lot of money you guys get paid before I get paid.  you know, if we make a profit, you'll get your investment back and then we'll split it after that a third, a third, a third. Okay. guess what Taylor that little 44 unit deal. We bought it. We sold it about 18 months later for a million dollars more than we paid for it. That was my very first syndicated deal with two people who had to raise $150,000, and made money. That was the most money I've ever seen in my entire life. That's what got me hooked. I was hooked on buying and being in real estate from that point forward. it opened my eyes a little bit but I was still although that was a great deal. A lot of things happened back then.  I lived in Washington and made some money on them. My wife's I bought and invested into rental properties. Then the crash of 2008-2009 came. I had leveraged everything my house I lived in, I had an expensive house and I was driving fancy cars with big loans and I got laid off from my job. I'm like, now what? So not only did I get laid off my job, but 10,000 people at Microsoft got laid off their job and Boeing laid off 10,000 employees and Washington Mutual went out of business. remember those days it just, it all came tumbling down. I went from Wow, this is great, too. Whoa, is me.

Taylor   17:36  

And Taylor, if you want to stop at any point, ask me questions you do because I feel like I'm just rambling on here. Well, yeah, it's, uh, your story is very captivating. Right. Part of me is curious whether you think that right now with the Coronavirus pandemic, whether we're on the precipice of what happened in 2008 in those times, given your perspective?

Unknown Speaker  18:02  

You know?

Glenn Gonzalez  18:04  

That is a great question. I think I go back and forth and back and forth on my, my feelings on them. I'll tell you what I'm struggling with. First of all, me personally, and my wife and my kids are all grown because of what happened to me back in 2008 2009. I now live my life much differently than I did back then. I live in a more conservative home than I did back then, even though I make more money now, and I paid off my house, my cars, I if I can't pay cash for a car, I don't buy that car. things have changed so much that now that we're facing this potential crisis, economic crisis, I'm not as worried now, because I'm not going to get laid off my job because I have real estate and I've stayed out of bed at a debt and so I feel differently now. That's just my own personal situation. Others are not in that same situation. they were today where I was back in 2008 2009. with that said, I worry a little bit about people who have purchased apartments or commercial buildings in the last 12 to 13 months and paid a very high price tag or a low cap rate going in thinking that the economy will carry them and rents will continue to grow, or they would renovate units and push the rents for 150 or 200, or even more three or $400 more in rent. I think that this current situation is not going to allow that to happen, which is going to blow up some people's business plan that had put together those deals. A better about a year ago, a year and a half ago, I had syndicated a deal up in Forbes Worth and we had raised enough money from investors to put it in a savings account for a rainy day fund. I told the investors we would have a working capital X amount of dollars and they all seem a little nervous that they said it seems a little excessive to have that much of a cushion. I told him my experience that I had back in 2008-2009. I said, it's always better to raise a little extra money and have a rainy day fund and then to really just do the bare minimums. thank goodness I did that because those same people that said to me, hey, Glenn, that seems like a stretch to have that much extra working capital. Now are calling me saying Thank you. That was wise. Because if my residents don't pay rent, or I'm only able to collect, call it 60 or 70% of the rent because the others got laid off. I can cover the mortgage payment and have that checking account for three or four or five months. still be okay. I really protected the investors, by doing that makes it more difficult to raise money and makes it more difficult to raise and find good deals when you're over funding a little bit, but that was a strategy. Glad we did it. Now, today, right? Are there opportunities today, like I said, we're building a small 50 unit deal in North Austin. we partnered with somebody that's going to build it for cost instead of marking it up as a contractor to build it for. He wants to be our partner. we said, you build it for cost, we'll give ownership. not only did he write a check, as an investor, he also was billing for the cost of the partner. we're able to buy that and get it built with no loan in this environment, and investors will still get a preferred return on their money. there are opportunities there but you've got to kind of leverage around the current environment.

Glenn Gonzalez  21:52  

You know, I'm not putting together any value add deals, I'm not even looking at any value add deals.

Glenn Gonzalez  21:59  

Let me backup for Second, too, and that other deal that I was talking about building, it's a no frills property. A lot of properties that have come out of the ground have beautiful swimming pools and big leasing offices and workout facilities and gated communities and lots of activities.  not that those are bad or terrible investments or anything. But really, when those people want to save on rent, they want to go stay somewhere nice and live in something maybe a little more affordable. Nobody's building the class when I call Class B, new construction, or a new property with less frills. That's what we're building. A friend of mine, built one and he only built 20 units, about a mile and a half from where our project is. He leased that sucker up in six weeks. Right? Yeah, so he could do that with 20 units. We could certainly do this with 50 units. pretty excited about that. But that's just kind of navigating, navigating around this current environment.

Glenn Gonzalez  23:01  

I think that

Glenn Gonzalez  23:04  

Honestly, I think that the economy is going to struggle for a little while. For every, I spoke to a wise gentleman that put on a podcast and said, You know that he could find 10 articles that say that we're going to bounce back very rapidly through this, and he'll go pull them. He says, I can also find 10 articles that will say, We're going into a terrible recession slash potential depression, you know. He's like, so who knows, right? I mean, who knows? My personal belief is that people would just stay home and quit spreading it to one another, we'd all be better off and quit running around and spreading it to each other. it's true. Just everybody do your free to listeners, just do your part. It's just temporary. It could be just temporary if we just do our part. So

Taylor   23:54  

Well, at the end of the day temporary is just a timescale right? If you Fast forward, I don't know, two years from now you will know this is all going to be in the rearview mirror. But we don't know what the next two years are going to look like. that's, that's the question. I'm glad you mentioned your experience of being conservative and what some people would consider. I don't agree with this. But so what some people would consider, like you said, kind of over raising for your deal just to have extra working capital. I'm glad that you quantify that too, because that was going to be one of my follow up questions. What do you consider conservative enough? How long do you need to be prepared to say cover the mortgage? What occupancy levels would you really look at because let's be real, nobody has underwritten their multifamily deals for a pandemic or nobody is working. That's right. Nobody in the world underwrote for that.

Glenn Gonzalez  24:54  

That's right. if they underwrote that none of the numbers would work. Right. Yeah,

Unknown Speaker  25:00  

exactly. You're never gonna buy anything.

Glenn Gonzalez  25:03  

So yeah, it's just a really interesting time I put 170 units under contract recently also up in Dallas, and that property is only 70% occupied. We found some investors that want to go in, we're just going to pay cash for that property. Wow. it can go down to 60%. It can go down to 40% and would still be okay. Because we have no debt. But our basis and that's, I think the question that you have to talk about in today's environment. You've heard the phrase you make your money when you buy it, right? That's so you look at the basis and you go in and how much are you getting the real estate for net net after all in cost? And that's the number you look at, and see if you can weather the storm on that number. That's kind of what we're doing today. we're Leveraging around the banks because I think the banks, some of the bridge lenders are sitting on the sidelines or they're becoming ultra conservative or they may charge a little extra in interest because it's a risky time. all of those variables make it very unfavorable to Taylor, you and I and other syndicators that are putting deals together. My advice is Be patient right now. There will be deals that come to the table from the people that are overpaid. There'll be deals that will weather the storm because folks had either raised rainy day funds or their basis was okay, right. they can go through that. But there's also Taylor, a very interesting variable that we've never dealt with before. That's this $2.2 million stimulus that's kind of helping people stay employed to keep paying paychecks. I was surprised Taylor, at our property in Fort Worth, we'd already collected probably 90 to 95% of the rent. for the month, well by the fifth, and we were amazed. that occurred on two or three of my properties. maybe the worst hasn't hit us. But they were made available to us, Fannie has made them available to borrowers. Freddie made available to some forbearance. if you've been affected by the by the virus, and you can show that you've been affected, then they're going to give you some forbearance and are going to forgive you of your mortgage payment, you got to pay it back within 12 months, but but there, they didn't have that before in 2008 2009. People were getting foreclosed on, and they were taking properties. that's not occurring right now. None of that's going on. It's a wait and stay, or just kind of wait and see what happens, I guess is what I'm trying to say. anyway, I don't know if that answers anybody's question. It's listening to the show. It's like whether he's rambling. But is he saying anything? Nobody knows. Taylor. Nobody knows. So

Taylor   27:57  

I think that's true. i always write as nobody knows. Nobody knew in 2007 what was going to happen in 2008? And nobody knows right now in 2020? What's going to happen for the rest of 2020? You know, we're taking proactive measures to flatten the curve and you know, all of that, but we don't know how bad it could get. But to me, it seems the most prudent action is to prepare for a pretty rainy day.  not not hope for everything to be alright. not plan on that, I suppose.

Unknown Speaker  28:38  

Here. Yeah. Yeah, what's

Glenn Gonzalez  28:41  

going on? So,

Taylor   28:44  

enjoy? Hey, I want to. I also want to ask you if we talked about mindset. This is gonna be a pretty hard topic shift on the show, but we've talked about mindset on the show a lot. you've clearly, from my perspective, it seems like you've made some pretty major mindset shifts in You know, moving from being the maintenance man to now 4500 units, so that's incredible.

Glenn Gonzalez  29:06  

Go ahead and say for maintenance man and millionaire that's man and millionaire millionaires

Taylor   29:09  

always understating it. Let's be real multimillionaires.

Glenn Gonzalez  29:14  

Yeah, but it doesn't rhyme right maintenance man has an M man isn't an M and I guess multimillionaire does

Glenn Gonzalez  29:21  

Wish I could have read. I'm gonna read. That's gonna be the nuts and

Unknown Speaker  29:24  

bolts and there you go.

Glenn Gonzalez  29:27  

It's man, the multi millionaire Volume Two by Glenn Gonzales. Perfect.

Taylor   29:32  

Perfect. I like that volume too. Yeah. But in making that, that mindset shift you were rewinding to back back to in that first deal where you're raising money from your two ambassadors each at 75,000. you're not putting in anything what did it take to really think that you could do that there's a lot of people are going to say, well, they're never gonna, here's gonna invest that 75 grand and that's an underdog I put anything in or I don't have anything. How am I gonna get it done? Like, there's a lot of mentality.

Glenn Gonzalez  30:09  

Yeah. Yeah. Let me talk a little bit about what you're asking about. I mean, how do you get the confidence to go and ask other people for money, their money, that aspect, that small deal? 45 units 150 grand, I told those investors Look, I don't have any money, but I'm good at what I do. Right. I brought the value that I made, I was good at property management. I had a lot of experience at that time. I start off as a maintenance guy. I showed him I said, this thing is going to be profitable. I backed it up with like, you guys can get paid before I do.  you know, when you take other people's money, investors money, they put so much confidence in you, not just by what you say, but also by what you've done and who you are and your character. those two people knew that I wouldn't take a dime out of that deal until I made sure they got made whole. They knew that they knew my personality. That's how I treat not just those investors, but all investors. I would forgo some of my own profits these days just to make people whole if I needed to. I will tell you this, even in today's environment, now, things are a little differently. I invest money in every deal, that little ground up deal that we're building. I very, we've already put in half a million dollars of our own money just to get it started. just to get it through, well, gosh, we're in it. 750,000 now paid for engineering architects, and fees to the city, all that development fees. We paid all that before a single investor. you know, if you're good at what you do, and I talk a lot about that in the book, actually I talked about what you bring to the table is really what allows you to do ask investors for money is because of what you bring to the table and hopefully you bring your best you to the table. Hopefully you're perfected your craft, and that you know what you're talking about. you're not just pretending. There are a lot of investors or syndicators out there that are just pretending to know what they're talking about. They don't actually know what they're talking about. That's, I feel bad when investors come across some of those guys that just are kind of pretending to know what they're talking about. So

Taylor   32:34  

interesting. competence, competence, confidence, character. All prior, we're really hitting the alliteration here. You got the mmmmm and the book title, and all those C's and in the skills but

Glenn Gonzalez  32:49  

that's gonna be volume three tailored and you can write the foreword for me, dude, I love it. Man,

Taylor   32:56  

yeah. Nice. Well, I know, no matter what What type of real estate folks are getting into whether it's syndication or passive investing in syndication or buying a single family or whatever? You know, I really bet that getting that first deal done, I think is the hardest one. Yeah. Yeah. stepping over that hurdle.

Glenn Gonzalez  33:17  

Yeah, I suppose. I got a story I could tell you, Taylor, I partnered with a single family house with my mom, and my stepdad. the stories in the book also, because you'll get a read. It's funny, but I was renting those. I was that manager in that little 60 unit deal in my first property management deal. I was a part time maintenance guy and part time manager. Anyway, somebody next door neighbor came over to me because they were their friends and said, hey, look, we built a new house and we haven't sold our old house and we really need to sell this one really bad and it has an assumable loan. Do you want to buy it? And I went and said, Well, how much do you want for it? They discounted it quite a bit because they wanted to sell it really bad. But I knew how much I got a rent for. I did the math and I'm like, Oh, we can assume his loan and put some money down and I need $12,000. But remember that that's when I was a college student. I was going to school work and kind of going to school full time and working full time. I like this is a good deal. I can't let this go. I call my mom. I'm like, Mom, I found the greatest rental property single house. These guys are selling it at a discount because they're, they've got to get rid of it. Want to go emo with me? And my mom said, Sure. Sounds like a good deal out. We need $12,000 she's like, I have 6000 bucks. I'll be your partner. Am I Great? my mom had her 6000 but guess what did I have? 6000? No. we needed 12; she had six; I had zero. I said mom Can I borrow my half from you? And she laughed and she's like, I don't have $12,000. I only have $6,000. My mom was a nurse at the time and, and my step dad worked in just miscellaneous jobs and, and I was starving college student. I'm like, well, mom can just put it on a credit card. She's like, I could do that I can get a cash advance on my credit card for 6000. Wow, I did the math and I said, Well, how much is that going to cost? And she's like, let me call my bank. Sure enough, the rent that we collected covered the mortgage payment, and the cash advance credit card payment had about $150 left over. I'm like, this is a great deal. We rented it for about a year, year and a half and then the tenant gave notice. I called my mom. I said Mom, the tenants are moving out and my mom just panicked. Taylor said what are we gonna do? I had all my money tied up and got a credit card. I couldn't make a credit card payment for my mom to sell the house, but in the hot markets we sold the house and so we made $40,000 on that credit card and my mom got six rounds. We had $40,000 to split. I gave my mom $20,000. I kept $20,000. That was like the best. I mean, when you're a college student Taylor and you got a check for $20,000 My mom had never, I mean, she'd been working for years as a nurse. She'd never seen a check for $20,000 you know, so my mom thought I was brilliant. Anyway, sometimes, like you said you could be in a single family, you'd be flipping houses. But I think the moral of that story is I knew the numbers, right, I had been renting these townhouses out there as I was the manager. I knew how long it would take to rent and I knew what I could rent it for. Because to some degree, I was an expert at my craft. I kind of knew what was going on in that house right next to where I was running. These townhouses, so I knew I knew we could make money on that. my mom trusted me, I guess my mom can trust me. Other investors can trust me too.

Taylor   37:13  

Nice. Yeah. You don't want to definitely don't want to lose your mom's money. You don't want to lose anybody's money. Yeah, especially your mom's money.

Glenn Gonzalez  37:20  

Yeah, she would still love me, but investors wouldn't.

Taylor   37:25  

That's true. Well, that's awesome. Right now we're going to take a quick break for our sponsor. All right, Glenn, I've got three questions asked every guest on the show. Are you

Unknown Speaker  37:34  

ready? Bring them on, and let's hear him.

Taylor   37:36  

All right. Number one, what is the best investment you ever made other than in your education?

Glenn Gonzalez  37:44  

So let's just talk about real estate for a minute, right? I think the best investment I ever made in real estate was on a portfolio of eight apartment complexes that I bought from one gentleman His name's Ed. He and I had been friends for over a decade and When he and I got to be friends at 70 I told him I said, if you ever want to sell your company call me and I'll buy it from him. he's like, haha, I'm never gonna retire because he was like the sharpest seven year old I'd ever met in my life. Shut up. 10 years later, he turned 8080. Then on his 81st birthday, something happened physically. He started rethinking what he's going to do with this portfolio and his company. He called me and we struck a deal. I bought 1500 units from this one guy, and, and syndicated every one of those deals. He allowed us to stagger the closing right there at home and then we closed all eight in a six month period. It was very nice that he allowed me to do that. But you know what that investment was? It was an investment in a relationship. All my deal. All the money I've made honestly has come from relationships. That guy that told me about John Gibson, he was sitting across the table from me that had those 44 units. He was My friend, he was my mentor. That relationship made me and my boss and the other guy that we put in 75 we made a million bucks off of a relationship. Well, I'll tell you those eight deals that this guy had sold us, we ended up selling that portfolio probably two, two and a half, maybe three years later. we probably made off of that. Our cut right not including our investors. The average IRR for those deals was probably in the 30 to 40 range. Surely, we are now one of them with an 86 IRR, and one of them was a 25 but the average 35 to 40 IRR. Those eight we made millions of dollars as a sponsor on that our investors made millions millions of dollars, but that was from a 10 year relationship. Taylor, my best investment I've ever made is in relationships with people in this industry that I'm in for years to come.

Taylor   40:01  

Nice. I love that. On the other side of that coin, we have the best investment what is the worst investment

Glenn Gonzalez  40:08  

your worst investment. I had a business partner, we'd grown the company large enough to where we had to divide our responsibilities. I had been syndicating and putting deals together. But because I had so much experience in property management, we now had 300 million in assets. I had a business partner, I'm like one of us has to take the lead on acquisitions, mergers and the other needs to take over the asset management and property management. I don't care which but you know, I need your help doing one and I'll do one. This is for like, he wanted to do the acquisition. I said, Okay, I'll focus on this half. Well, he put together a deal in Oklahoma, and I flew out there as part of the due diligence and he'd only been there once and looked at everything on paper and I and I came back to Mike Duda this deal in Oklahoma, you came to the wrong side of the tracks. I mean, the rents that you really Want to project getting? Aren't the rents in this sub market? I mean, you're using the wrong concepts and is like, Dude, it's okay.  we've already raised the equity, we already got the debt, you know the deal. You're just nervous. I'm like, plus, it's way out of state and, dude, anything we make on acquisitions, fees or construction, we're going to lose on this deal. He's like, Don't worry, I'll take full responsibility. Well, we bought that deal tailor. we lost our shorts on that deal, because we did not underwrite it properly. And, in his own words, we already raised the debt and the equity and that's not a reason to do deals. painful, painful, lost, all of 100% of our money that we put in, and probably four or 500,000 beyond our initial equity. man lost on a deal so that was the worst deal ever. I won't say the name of it. I won't tell you when but it was painful.

Taylor   42:03  

Well the lessons live on so hopefully it hopefully it was early on and not, not later on. My favorite question at the end of the show is what is the most important lesson that you've learned in business and investing? You know, what can I can

Glenn Gonzalez  42:21  

I share with you a story, let's hear well, okay, so I'm selling a deal to a guy named Tom, it's up and it's up in Fort Worth. About a week before closing, the chiller breaks if you've ever owned a property with these big chillers and boilers, they're just they provide heating air tissue for the entire property right. This was really old, so it died. I had two choices, put a bandaid on it and close the transaction or come clean and disclose that it's broken and just by the guy at noon and so I called the broker first. The brokers like what I said that chiller broke is that you got to get fixed. I said that if I fix it it's gonna break again in the near future. He just said great deals because the buyer had already put up non refundable, earnest money. at this point that non refundable earnest money was less than what it would cost to replace this chiller. Wow. I said, I'll just buy the guy a new one. they broke like what? I said I was buying a new one now. I'll order it. I'll put the money in escrow and it just seems like the right thing to do. My business partner at the time was pretty furious. It's not with obsidian capital's previous business partner. He's like, we're not going to do that. I said, Dude, it just seems like the right thing to do. What if we were buying that deal and somebody put a bandaid on it and we were stuck with a broken Killer a week after closing, I mean, I would hate to be that guy. He's like, Look, he's got non refundable, non refundable, earnest money, just sell it, put a bandaid on it and move on. Like, dude, I don't feel good about that. I told the broker, I upset my own business partner. I told the broker, we're going to buy the guy, new one, and we're going to close and we ordered it already. It won't be installed till after closing, but I put 50% down on the chiller and the other 50% how to put in an escrow with closing.

Glenn Gonzalez  44:34  

And the broker said,

Glenn Gonzalez  44:37  

in all these years of doing real estate, he's never heard somebody willing to do that because they would negotiate something right. the buyer sent me an email and said, I don't know who you are, and I've never met you. But I'm already impressed with you. I was always sad and we closed the transaction. That broker actually wrote the afterword. On my end, he told that story. It's the afterword. He even put here the story of blowing his office is a true story. I'm his witness.  anyway, but let's fast forward a little bit after closing a month or two later, I met a mastermind meeting in some state with a big Meetup group. we were going around the room doing introductions. before they got to me, this guy stood up across the table. He's like, I don't really want to introduce myself. My name is Tom, who I want to introduce is that guy sitting over there, and he pointed at me, and I'm like, I don't know this guy. You know? What's he gonna say? I was a little nervous. You know? It's like, yeah, we're thinking who have I offended? You know, it's like, oh my gosh. he's like, I want to introduce you to Glenn Gonzalez. One of the best sellers I've ever met. He sold me the Westwood apartments and that guy bought me a new chiller a week before. Closing and, and I realized who he was and he knew who I was, but I didn't. I didn't recognize going to never meet him before. The reason I share this story is because you said the most important lesson that I've learned in business is to do the right thing. Just do the right thing. Doesn't matter whether you're a buyer or a seller, or a lender or an appraiser or maintenance guy, or a host of a show, just do the right thing. life will work out. Okay. That's the most important lesson I learned in business. I love that. I

Taylor   46:38  

i love this story. I love it. It came around. That's awesome. That's, that's fantastic. Well, thank you for everything you've shared today. If folks wanna learn more about you, they want to get a copy of the book. Where can they find you?

Glenn Gonzalez  46:51  

Great.  Taylor, my email is Glen with two ends at obsidian capital co.com So obsidian capital koat.com, and you can email me directly. If you want a copy of the book. You could just go on to Amazon type in maintenance man, a millionaire, or you could type in my name Glenn Gonzales and it'll pop up. If you have buyers that buy my book and they want me to sell it, sign them. I'll meet him somewhere in sign and we'll have a smoothie somewhere.

Unknown Speaker  47:24  

After the after the Coronavirus after the

Taylor   47:27  

asset. We gotta maintain proper social distancing, but it will be over someday, it will be this too shall pass. Yes, exactly. Well, Glenn, I really appreciate it. I love your whole story. I love all the lessons that you shared today. I learned very well from stories. I really appreciate that a lot of your lessons are in story format, so that it really rang true to me. Thank you for joining us today.

Glenn Gonzalez  47:51  

Thanks for having me. I really enjoyed it. I appreciate you very much and thanks for posting these shows and letting your listeners partake of all the stuff that you do. offer to them. thanks. it's my

Taylor   48:01  

great pleasure to everybody out there. Thank you for tuning in. If you're enjoying the show, please leave us a rating and review on Apple podcasts very big help. If you know anyone else who could use a little bit more passive wealth in their lives, please share the show with them and bring them into the fold. Thank you for tuning in. Once again. I hope you have a great day and a great rest of your week and we'll talk to you on the next episode. Bye

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