Raul Luna is one of the hardest working individuals I know. I truly admire his approach to how he conducts his business and carries himself personally. He was gracious enough to spend some of his valuable time with our Snowball Meetup audience to share some nuggets of wisdom and ways to do creative deals.
Raul started in the restaurant business and transitioned to real estate after realizing that’s not what he wanted to do. He started investing by doing some “subject to” deals, where you take the property and the loan with it but because you wouldn’t normally qualify for the loan so you don’t officially notify the lender. He was open about the mistakes he made, such as holding properties under his personal name or not having tail coverage insurance, which could protect you from future lawsuits when you’re selling a business, similar to errors & omission coverage.
The most consistent thing I hear Raul preaches is taking action. He believes it’s better to do a lot even if you know only a little. Too many people know too much and fall in the trap of analysis paralysis, ending up doing nothing. To know and not to do really is the same as not to know. If you commit your whole self all in, you will find the real estate deals.
Speaking of deals, Raul’s team is sending out over 10,000 mailers per month, contributing to the most of the deal flow. Referrals is their 2nd highest deal source, followed by some here and there off of the MLS, wholesalers, or online ads. His average acquisition costs is $17,000. So the next time you think your marketing doesn’t work or want to give up, you probably just hasn’t been consistent enough. Keep going!
Raul also brought 3 case studies of creative deals. There are many ways to make a profit in real estate and often the good deals are not found, they’re created:
Flip turned rental
Raul was able to get a property in east bay from consistent follow up. After cosmetically fixing up the place his capital gains tax was going to be over 50% so he decided to turn it into a rental to 1031 exchange it later while getting the depreciation expense to offset his other income.
San Francisco cash for keys
Because of rent control, you can’t evict tenants for no reason. Social and economics debate aside, this hurts the value of the property because tenants are paying below market rent. It’s also hard to fix up an unit while it is tenant occupied, hurting the marketability. Raul was able to negotiate a relocation fee with the existing tenants in a building, thus significantly raising the value of the property.
Commercial apartment value add
Raul found a property in Los Banos by bookmarking it on Loopnet. After it had gone in and out of escrow a couple of times he made an offer to acquire the property. He put up some ghost ads to test the rental market and see what kind of responses he gets a different price points. Due to the lack of apartment rental units Raul was able to increase the NOI and therefore the value of the apartment dramatically.
Check out Raul’s company Properties 180. If you are looking to do more deal in real estate, whether you’re new or seasoned investor sign up to join our Meetup group and you’ll be the first to know when a new meeting is announced!
