In this episode Joe Mendoza joins the show to explain how to keep a positive mindset even in the midst of a storm. We all experience set backs and failures, the most important thing is using failure to grow and learn. Aaron and Joe also define success to them which is not all about the money. Jump into this episode to build your real estate knowledge and learn how to create the life you desire.
Mr. Joe Mendoza is a passionate entrepreneur and started as early as 13 years of age doing multiple small businesses where he learned very early about management, marketing, sales, and accounting. Combined he has more than thirty years experience in coaching and business.
His coaching started early in multiple sports and evolved into professional business coaching where he leveraged his talents and helped hundreds of business owners, C-Level executives, realtors, and various entrepreneurs through his experience, knowledge, teaching, consulting, and coaching. Many of his clients have achieved 20% to 200% revenue, expansion, and profitability growths in a single year!
Mr. Mendoza is a founder of multiple companies, a licensed California Real Estate Broker, an Accredited Investor, a Certified Fund Manager and also has many dignified roles such as Vice-President, Real Estate Advisor, Business Strategist, Managing Partner, Acquisitions Manager, a successful Syndicator, and a proven Worldwide Business Coach.
Mr. Mendoza sets the bar high for his clients constantly pushing them to exceed what they thought was impossible to achieve. He knows how to effectively listen. He openly asks the most impactful and insightful questions triggering “blind spots” and creating a rewarding awareness that helps his clients realize what may be holding them back causing major breakthroughs via accountability, homework, exercises, and learning.
He holds a Bachelors of Arts degree from San Diego State University and has a high passion for contribution volunteering where needed in multiple activities that either of his two children participates in from Boy Scouts of America to various sports and has sat on multiple non-profit Board of Directors.
He currently resides in San Marcos, California, is very active in the community, is an active entrepreneur, speaker, business leader, and investor.
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Joe Mendoza: In today’s marketplace, you got to be wise, you got to really understand your numbers. If you’re going to get into real estate investing not speculating, you got to know your ins, your outs, have multiple exit strategies, know your existing cap rate, know your exit cap rate, know your cash on cash returns, and work with a pro like yourself, Aaron. I would invite the audience if they have a W-2 job, is find a great mentor, a great coach.
[music]
Aaron Fragnito: Ladies and gentlemen, welcome to the Passive Cash Flow Podcast. I’m your host, Aaron Fragnito and we are here today with a special guest, Joe Mendoza. Say hi, Joe.
Joe: What’s up? Good morning.
Aaron: He’s on a beach. He’s got his cocktail there. He’s living his best life. Joe, is that a real beach behind you?
Joe: I wish it were. [laughs] No, it’s not.
Aaron: One day, my friend, one day. Joe Mendoza, what do you do?
Joe: I appreciate the opportunity to be on your show and meet your guests here. I’m a real estate broker, investor, also coach. I wear multiple hats. I’m very, very passionate about giving back. For whoever’s watching the show, I wrote a couple of books recently, one’s on mindset, one’s about investing in real estate.
I’ve been a coach for roughly about 10 years professionally. People pay me for my words of wisdom, my experience to call them out on their BS. I do invest. I’ve been investing since– almost 20 years now. I could share the first go around, Aaron. I wanted to think I was an investor, but I truly was not. I was more a speculator. I got very, very lucky with the appreciation of the California market. Millions of dollars just speculating. Here we are today. I’m still in the game. I never left. I had to change my ways, and here we are.
Aaron: It’s funny. I feel like some of my first investments, I almost got saved by the market as well. If the market did drop out at that time, although I started investing in 2012, which was a great time to start, probably the best time to start investing. I have a number of holdings that I bought around then. I saw a guy for great prices, otherwise, I just maintain them over time buying the right areas, and they just go up. They’re very forgiving real estate on the right areas there. You got started 20 years ago, investing in California, it must have been a very different market back then. What did you get started? What type of real estate?
Joe: Very much so. I started with single-family. One of my first homes ever, check this out, Aaron, I bought for 205,000, it was a five-bedroom. Leaving my mom and dad’s house into this property, I was a little nervous. Taken on this a couple of thousand-dollar payment. When I sold it, about two years later, I sold it for about 270,000, I thought I hit the jackpot. As you may remember or not, you or the audience. That property kept going. It went all the way up to almost 600 plus thousand, at the peak of the market. I look back on it, like, “Oh my God, why did I sell it?” [laughs]
I started in single-family. That was one of many stories where the price tags got bigger and bigger. I bought a property in downtown San Diego, it was on the 31st floor. I bought it for 450,000. I waited two years because it was just dirt. I put my deposit in there, waited two years to finally have it completely finished. By the time it was finished, I literally closed escrow, threw it on the market, threw it on MLS, and I was able to get a buyer for $650,000. I made over $200,000, not even owning or moving into that property.
Again, it was speculating, the timing was right. There were lots and lots of properties where I made an upwards of 200,000 or more, and I was just killing it. Again, that was speculating. One of the biggest takeaways, I will share words of wisdom is, don’t do that [laughs] because in today’s marketplace you got to be wise, you got to really understand your numbers. If you’re going to get into real estate investing not speculating, you got to know your ins, your outs, have multiple exit strategies, know your existing cap rate, know your exit cap rate, know your cash on cash returns, and work with a pro like yourself, Aaron.
I would invite the audience if they have a W-2 job, is find a great mentor, a great coach, somebody to partner up with first or maybe forever because if you truly want that passive income, some people go into this thinking like they’re going to get passive income, but they, in fact, give themselves another job, because they don’t understand the game.
Aaron: Yes, that’s what I did. I would read the books about real estate, and then I’d watched the videos. I went to some courses, they never got me to pay like the $20,000 package. I outsmarted them, but I did do like a four-hundred-dollar weekend course, which I get a lot from. That’s the way you got to do to grow. When you go to the $400-weekend course, that’s a good bang for your buck, they actually give you a ton of information, they give you so much. You’re like, “Oh my God, I need to buy the $25,000 course because this $400 course was such a good return on my investment. Imagine if I put 25”.
Unfortunately, education doesn’t work like that. If I learn how to flip houses, it’s great, but then if I go learn every other spectrum of real estate, that doesn’t mean I’m going to make money doing it. That’s exactly– I started as well, with buying real estate, thinking it would be passive cash flow check for me. My first income property was a five-unit and I had flipped some houses, I was selling a bunch of houses, a realtor, developing a team, working my butt off. I was like, “Man, I want passive income. I want to sit back in a lawn chair and let the money come to me”.
I bought a five-unit and leased the entire building up to temporary rental assistance TRA tenants that had six months leases, but pay top dollar, all I paid upfront. I’m living high. I got the unit leased out and then in six months comes and none of the tenants were able to properly renew the lease and pay their rent on their own. I ended up having to evict the majority of the building, figured out how to prep tenants properly, how to work with the right tenants, how to manage the building the right way, and over time develop demand in my own management company after hiring and firing a few of them.
That was a lot of work though, collecting that rent, managing that building, it was far, far from passive income. In fact, there’s the building right there you can see behind me, there it is. Look at that beauty, store front andfive apartments above it. I figured out from that experience, I said, “There’s a gap between what the talking heads are saying, and what reality is.” It’s not passive income. It’s a full-time job.
Management companies stink and needs to- once you get a lot of real estate, develop your own management company to have it done the way you want it, in my opinion. That’s what I figured out and we developed a company to bridge that gap, I’d say, over the last 10 years, as you do know here, Peoples Capital Group. You got start with single-family homes. You lucked out, you make millions of dollars. What happened though, when the market crashed?
Joe: Great question. Let’s keep going with the story. I was doing single-family, then I started getting into plexes, then you’re right, instead of making a million dollars a year, Aaron, I actually, for a little embarrassment, I want to say I got a little bit greedy because I wanted to make 10 million to a hundred million. I started learning about syndications, conversions, land development, raising private capital, and I started to do all that.
Luckily, Aaron, luckily, I started to see the writing in the walls, and I started paying close attention. I started like, “Hey, here’s your money back.” I was responsible to give people’s monies back. Meanwhile, I was trying to really salvage my portfolio. One person stopped paying me rent, then another person stopped paying me, and another one, and then all of a sudden I had five doors that I had to pay.
I was, unfortunately, a little overly optimistic back that at the time, where I had a pretty liquid bank account where I said, “Hey, do you know what? I’m going to sustain. I’ll be alright. I’m going to go ahead and work it through.” These few months turned into few years. Meanwhile, my savings were getting very, very depleted. I was getting rid of property. Sometimes not by choice. I went through a very humbling experience, and pretty much had to start all over. I did and luckily, my wife still rock. My kids are very solid and they stayed by my side. They were like, “Do you know what? Who cares? It’s just all material stuff.” I had to start over, roughly around 2014.
I literally had to start all over, started to regroup, and had to work on my mindset. That was a big part of my success. A lot of the nuggets I share in this book, how I had to pull myself out of that, lack of a better word, craphole because I was depressed. I had some crazy thoughts, and I also shared in that book. I know there’s people probably listening to this, that are probably even going through that adversity. What I would speak to them is keep the faith. Keep your faith, garbage in, garbage out. You got to consume good stuff to reprogram, and then start surrounding yourself with great people.
I started to rebuild my portfolio, start the slow and steady and very, very cautious way and started accumulating single-family property again. I got into some passive investments, some [unintelligible 00:11:33], some syndications. I even started investing in some business and some stock because I understood the stock market, and I made some pretty good money there. Right now, I’m doing all right. I can’t complain. There’s a target mark, I think, for everybody, where you want to hit that number, so it could be on the beach. I’m building up towards that number.
I also want to share with the audience, Aaron, a lot of these folks don’t begin with the end in mind. You got to ask yourself, “What is my end goal?” Because you’re going to keep going, keep going, and keep going. If you’re going through this journey, and you’re dissatisfied, there’s a certain reason for that because you’ve got to ask yourself that most powerful question, “When’s enough enough? When’s enough enough? Is it a hundred dollars? Is it a thousand dollars? Is it $10,000?” You start playing this game, and some people will think that, “Hey, have many millions of dollars, I’m going to be happy.” Well, that’s immaterial and it might lead to depression and unfulfillment. What gets you fulfilled is very, very important part of that equation.
Aaron: Absolutely. I work with high net worth individuals all the time and lots of different walks of life in the fundraising industry in the syndication space, as you do know. I got to say, money and happiness are really not all that correlated. In fact, some of the most successful wealthy people I met that I really idolized at first, and not all of them, a lot of them have fantastic lives but I did recognize that one person in particular years ago, who I always thought a mentor of mind when you really got to figure out how often he spends time with his family, how often just go on vacation.
I remember one day, we’re working together on something and he’s like, “I haven’t ate food since eight o’clock this morning”, and it was eight o’clock at night. I’m like, “Man, you got to take care of yourself.” I find myself much more doing the same thing, skipping meals, skipping vacations. This August, I was going to go on a vacation with my wife. We usually like to take one or two weeks off. We actually travel to Major League Baseball parks. We’ve been to like 15, or 16 Major League Baseball parks, and it’s a great way to see a city.
We got these awesome road trips and a lot of fun. We didn’t get to do that this year, with the corona going. I just said, “Let me stick around. Let me focus on building my business and just making sure there’s no fires to put out.” There’s always going to be a fire to put out. There’s always going to be another challenge. There’s always going to be a thing to fix on the website.
You have to make your hours say, “Hey, wait a minute. I have to take care of myself. I have to feed myself. I have to see my family, see my friends. Tomorrow I’m taking a Saturday off. I’m going dirt biking with my buddies in Eastern PA. We got a group of like eight or six of us, ATVs and dirt bikes.” That’s my fun time. I like to do. I do that since I was a kid.
You got to have those days, and I think people in our line of business, we strive so much for wealth and success. It is based on numbers. In America here we have this culture that’s keeping up with the Joneses. I get sometimes into that space a little too much, that guru self-help space, and you have to be careful and recognize that, “Hey, what works for this guy might not work for you.” Find that medium where your mentality is, you’re happy going into the office. You wake up, you’re looking forward to the day.
I remember when I was an agent and I hadn’t figured out yet how to do 40 transactions a year without wanting to kill myself. It was really hard. I’m working seven days a week. My phone’s ringing at 10:00 at night. You’re only as good as your last deal. I was hiring agents who sat around the office and didn’t sell real estate while I paid for their desk fees. I was hiring the wrong assistants who couldn’t follow directions. I was screwing up. I was learning how to build my business working way too hard, I said, “Wait a minute. I need to find out how to go. What was my goal originally? Oh, yes. Passive income”.
Here at PCG we have written on the board, what’s our goal? Our goal is 65 million in ownership over the next four to five years. Maybe we’ll get to 55 or shoot. Maybe we’ll get to 75. Who knows? It’s a goal, it’s on the board. We’re getting there one brick at a time. It’s so important to have that end goal in mind. I got to say, my real end goal is to not have to work seven days a week and never be one of those successful people that never sees their family because that is not success to me.
Joe: I totally agree. I totally agree. You got to work hard, you got to play hard, you got to have that fine balance in between because I’ve met some very, very, very successful people who were very unhealthy. I believe health is wealth because, why have all that money and you could barely even walk? You have all these health issues and ulcers and what have you, what’s the point?
Aaron: Yes, exactly. I’m guilty of that myself. I do this thing where [unintelligible 00:16:54] work so hard, don’t eat through the day and then I just crash at 6:00, 7:00 and I end up eating a bag of candy on the couch at 10:00. It’s like, “Oh, I used to have an exercise routine but I really want to answer this email. I really want to get that loan application. I can’t do my exercise until I do that. Now it’s 9:30 and now the phone’s ringing and forget exercising”.
I’m definitely guilty of that. In fact, I made a rule myself. This winter I want to ski three days a week. That doesn’t mean a whole day of skiing, that means I’m going to wake up, start answering emails at 7:30 to 9:00, go to two hours on the slopes, and then get back to work. I’m going to look 10 minutes [unintelligible 00:17:40] so I can do that. That’s been a dream of mine, a goal my whole life to actually have a manageable schedule where I’m not just working 12, 14-hour days, because I’ve been doing that for years. I love what I do, I have such passion for it, but I got to say you get to a point where you recognize, “I’m starting to burn out”.
Joe: Unfortunately, that happened to me a couple of times in my career where you go burn the candles at both ends and you’re not managing your health. I literally got burnt out where I was drinking seven cups of coffee a day and still not feeling good whatever. I had to hit the reset button, go through some cleansing, and literally physically burned out. That was a lesson learned for me that, “Hey, you got to have that find balance”.
Another example I could share with you, Aaron, is I have a client that’s very, very successful. When I took her on, she was actually depressed. making multiple six-figure income, I knew there was a void in her life. I said, “Hey, what did you used to do as a child? What did you like doing?” Her thing was riding horses, having a horse. I go, “You know what? Let’s set some goals.” She could easily have [unintelligible 00:18:59] right there, but I go, “No, let’s tie it into your production, and let’s tie it into this.” She ended up getting that horse. She lives a very fulfilled life. She competes riding her horses.
And, check this out, Aaron, her business exploded even more because she brought that void in her life back. She is having the time of her life. Now her next goal, I go, “Hey, you talked about let’s get a stable of horses. Let’s work on that.” It’s one of these things that gave [unintelligible 00:19:31] a little bit where you got to have that happy medium. I’ll be like, “Hey, what are you passionate about?”
Aaron: Absolutely. The same way I look back what made me happy as a child, it was usually skiing or dirt biking which I try to get plenty of both. My horse would be a motorcycle or something like that. A few more horsepowers, but about the same thing.
Joe: With like 400 horses, right?
[laughter]
Aaron: I wouldn’t get that, but yes. Probably like 120 horsepower.
Joe: There we go.
Aaron: You don’t want to kill yourself. You got to take it easy.
Joe: We’ll work our way up.
[laughter]
Aaron: My God, yes. Exactly, man. You have to have those goals. I find that when I am mentally ready to go for the day well fed, well exercise. Had a full seven hours of sleep, then I am able to really just perform on that peak level that I know I’m capable of as an entrepreneur. Once you’re performing on that level and your business is booming, then times change and you relapse maybe from that way and you’re not performing at that level, you do notice it.
I know in March and April, I had just raised a million dollars. I was about to close on a three million dollars building which we’re actually now closing on come Monday. Very exciting time. It was tough because the corona came, we had to put everything on pause. I, just like you, send back investors money, say, “You know what? We’re actually not going to buy this right now because we don’t know what the hell is going on.” In March, she was like, “What is going on? I think the world’s ending.” “No, it’s not. The media is telling me it is but they’re always wrong anyways.” Basically, we went ahead and sent back the funds, put the deal on pause, very stressful time.
Our business soldiered through. We did find good investments, we have a good management company, but boy that was a scary time. My mental health is so related to your business. I couldn’t believe when my business was struggling. Not really because of anything we did, it was a macroeconomic situation. I think we handled it fine and came out even stronger. Holy mackerel, my emotional system just nailed. It’s sore to get out of bed when your business is struggling through something you can’t really control. I think I was depressed for a few weeks. It’s though.
Joe: Like I said, I’ve been there done that in 2007 to 2009. I literally hit that rock bottom where it was really hard to bounce back and I really had to do some things. I would call them like, [unintelligible 00:22:17] talks about the miracle morning or some start to create those non-negotiables in life and say some prayers. If you’re a spiritual, whatever. This is a day that the Lord has made, let us be grateful and be glad. Start to say these different prayers or affirmations and pull yourself out of it if you’re going through this coronavirus pandemic and you’re getting furloughed and what have you, there’s another world out there where you could reinvent yourself.
Real estate, I got to say, is one of those golden opportunities. We’re like, “Man, you could really start to control and shape your destiny. Just partner up with the right people. Read a lot of great books. You don’t have to buy those boot camps like you said. There’s a lot of education in books and YouTube videos and podcasts.” But the most important ingredient take massive, massive action.
Aaron: I 100% agree. Also, faith is so important. I do have faith. My wife as well. She’s really instilled that in me, she’s very spiritual herself. Every morning she puts on a pastor we like to watch, we have a couple of different guys on YouTube we like. It’s really nice because I wouldn’t have put that on. I would probably put on some stupid political talking head or something that really pisses you off because that’s all that YouTube stuff is, just to get you riled up, get you to click on it. She’s great like that.
We start with some spirituality in the morning, just being grateful, recognizing that, holy mackerel, this whole year has been a year of change and growth for everyone. My wife got furloughed in March, we moved up to Vermont to enjoy our properties up here just for a couple of weeks to get away everything going on. Then we recognize that, holy mackerel, the short-term rental market up here is just lighting up right now in June. We actually built out her infrastructure and her hospitality management business there and opened up people’s capital groups, infrastructure to buying properties up there some more.
It’s been a complete change which six months ago, if you told me I’d be living in Vermont, spearheading the next chapter of PCG, I’d be like, “I wish, but I can’t do that because I live in an apartment in New Jersey. I could never make that change.”2 We’re like, “No why can’t you make that change?” Figure out and things really fell into place nicely. Obviously, we’re not investing up there because I like to see we’re investing up there because the numbers make sense and the market took off and we’re like, “This is a great thing, we better jump in on this.” It’s really been a nice blessing overall. I got to say, we’ve come out of this stronger.
Joe: Nice. Where there’s adversity, there’s opportunity. You just got to look at those opportunities. Investing in passive real estate, what’s going wrong with this property and how could I do a value add to create forced appreciation or increase the NOI?” You’ve got to look at those properties from that angle and the opportunities will be created. Not so much you’ll try to find them creative.
Aaron: People always say, “How do you guys find these deals? We say good deals aren’t found, they’re created.” It’s all about negotiation my friends. It’s all about negotiation. I was at a property the other day, I was like, “It still doesn’t make sense.” He’s like, “Well, I own it out.” I was like, “Let’s talk about seller financing”, which you don’t want to call it seller financing. If you’re talking, you want to say, “Let’s talk about ways we can help you pay less taxes on this transaction”.
Joe: That’s right.
[laughter]
Aaron: Seller financing. It sounds like a favor. A seller’s doing you a favor.
Joe: It’s crazy how some of the brokers out there, commercial brokers sometimes still don’t understand what that is.
Aaron: I love the brokers that tell me, “It’s illegal to wholesale”, or, send me a deal, “Hey, you could buy this for 300,000 put 100 into it, and sell it for 400. It’s a great deal.” I don’t think you understand how the deal is. We were allowed to knock realtors because we’re realtors, but we should not.
Joe: That’s right. We’re realtors.
Aaron: [unintelligible 00:26:55] we love realtors and brokers, they make the world go round. We love them. We love you. All right, Joe. Well, how can people learn more about you and get their hands on this book? You have a couple of books here.
Joe: Yes, I have a couple of books. Those watching on YouTube or video what have you. Make It a Comeback is, again, about mindset. If you’re having some challenges or you want some secret hacks. I’ve invested in probably over 300,000 with mentors and coaches and training and masterminds, what have you. I shared a lot of those nuggets there. Flex with a Plex. I’ve been a realtor, I’ve been a realtor a long time. I talk about how to make it as a realtor, how to make it as an investor. It’s a little bit of a blend of my personal story. You could find both on Amazon.
Best way to reach out and get ahold of me, just go to Joemendoza.com, with a Z. I give a lot, a lot of tips, some hacks, some nuggets in there. If you want to reach out to me personally, you could reach through me via that method. I’m all over social media, Instagram. I have my own podcast as well. That Erin was on the show as well, The Real Estate [unintelligible 00:28:98] Show. Find me there as well. Thank you.
Aaron: Awesome, Joe, awesome. Looking forward to seeing that episode with us, that’ll be great. This will be out shortly as well. Thank you so much for joining us, Joe. Here is great to get to talk to you again here. Of course, for our listeners, my name is Aaron Fragnito. I’m the host of the Passive Cashflow Podcast which is hosted by Peoples Capital Group. Sponsored by Peoples Capital Group where we work with passive investors to buy apartment buildings in North Jersey and short-term rentals in Southern Vermont. The investors get to enjoy all the benefits of real estate without doing the heavy lifting day-to-day, which Joe and I just explained how it can actually drive you to depression.
I think we defined how hard it can be to be a real estate operator. If you don’t have your ducks in a row and your systems in place personally as well, then it can be a tough business for you. I think we gave some good nuggets of advice here. Thanks a lot to Joe for joining us. To our listeners who want to learn more about Peoples Capital Group, you can go to peoplescapitalgroup.com as well. Stick around for another episode every two weeks now [unintelligible 00:29:12] episode of the Passive Cashflow Podcast. Thanks a lot.
[00:29:22] [END OF AUDIO]
