🎙 Passive Cash Flow Podcast EP.188 | How To Avoid The Stupid Tax
If you’ve ever wanted to learn real estate from someone who’s seen it all—booms, busts, and everything in between—today’s guest is your guy. Luis [Lou-eee] A. Belmonte [Bel-mawn-te] is a seasoned real estate developer with over 40 years of experience. As principal at Seven Hills Properties, he specializes in retail, multifamily, and industrial developments. A founding partner at AMB Property Corporation (now Prologis), Luis is also a U.S. Navy veteran and author of Real Estate 101, Street Dog MBA, Street Dog Negotiator, and Street Dog Manager. Welcome, Luis!
Contact Luis at: LBelmonte@7hp.com
See his books on Amazon:
Street Dog Manager (Street Dog: Business & Negotiation Mastery)
Street Dog MBA (Street Dog: Business & Negotiation Mastery Book 1)
Street Dog Negotiator: Tales From The Trenches (Street Dog: Business & Negotiation Mastery Book 2)
🧠 Topics Covered:
00:00 Intro & Why This Episode Matters
00:28 40+ Years of Real Estate Experience
02:11 Lessons From Every Boom & Bust
04:21 Institutional Money vs. Real Control
07:51 Trust, Fiduciary Duty & Investor Alignment
10:44 Today’s Market: Where the Real Opportunities Are
15:04 Office, Retail, Apartments — What’s Actually Undervalued
18:04 Capital Cycles, Timing & Following the Money
22:33 Advice for New Investors in a Tough Market
26:26 Building the Right Team & Partnerships
29:33 Books, Resources & Final Thoughts
📚 Enhance Your Investing Knowledge:
Learn more at https://www.peoplescapitalgroup.com/
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💼 LinkedIn: https://www.linkedin.com/company/peoples-capital-group
⚠️ Disclaimer:
This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:28:01 – 00:00:47:19
Aaron Fragnito
All right, ladies and gentlemen, welcome back to the Cash Flow Podcast. I’m your host, Aaron Frank Nieto, and we have an interesting guest today. We have Louis Belmont, who’s been around a lot longer than I have. You know, if you ever wanted to learn real estate from someone who’s seen all the booms and busts and everything in between.
00:00:47:21 – 00:01:12:23
Aaron Fragnito
Today’s guest, is your guy. Louis Belmont is a seasoned real estate developer with over 40 years of experience. He’s a principal at Seven Hills Properties, specializes in retail, multifamily, industrial developments. He’s a founding partner at A and B property Corporation now. Prologis. Louis is also a US Navy veteran and author of Real estate, 101 Street Dog.
00:01:12:23 – 00:01:19:18
Aaron Fragnito
Ma, a NBA street dog negotiator and street dog manager. So welcome, Louis. How are we doing today?
00:01:19:20 – 00:01:21:20
Luis Belmonte
Great. How are you?
00:01:21:22 – 00:01:36:11
Aaron Fragnito
Pretty good, my friend. Pretty good. I wanted to have you on the show here because I know with, years of experience comes wisdom and, I’m a young man myself. I think I’m young. I’m 38. But I’m getting up there. I’m starting to feel like.
00:01:36:12 – 00:01:38:13
Luis Belmonte
A mere child. A mere child.
00:01:38:15 – 00:02:01:21
Aaron Fragnito
Yeah, I I’ll take that. Thank you. Thank you. And, but, you know, I got into real estate around 2010 and a pretty dismal market, so I definitely saw a bust then. And I saw a boom during the Covid era and many years, kind of even leading up to that, and years after. So, and now I feel like we’re in a bit of, a bit of a, I wouldn’t call it a bust, but I guess a bit of, you know, prices are down from where they were a few years ago in commercial real estate.
00:02:01:23 – 00:02:11:21
Aaron Fragnito
So, learned a lot from each cycle. But I can only imagine what you’ve learned, from the cycles of real estate you’ve been in. When did you get started in real estate?
00:02:11:23 – 00:02:34:18
Luis Belmonte
Well, I did my first deal, in 1964. I inherited a little duplex, from my father, who tragically passed away young with cancer. And, I had to sell it when I went in the Navy and, sold it to, a local, woman real estate broker, of whom there were very few in those days.
00:02:34:20 – 00:03:01:10
Luis Belmonte
$8,000, $800 down. And I packed the paper and then, went off to war. And then I got in the business, full time and, the under 1967, a friend of mine and I did a few deals, a buyer and fixing up beat up apartment buildings and then and, 1970, I got married and had a need for regular income.
00:03:01:10 – 00:03:30:11
Luis Belmonte
So I went to work for a New York developer who built warehouses all over the United States. And I spent the next 35 years, building, buying, selling, rehabbing, financing and leasing warehouse buildings. Originally in Northern California, then all over the United States, Mexico, Japan. Singapore. So, I’d built, a probably $20 billion worth of warehouse buildings around the world.
00:03:30:13 – 00:03:51:05
Luis Belmonte
And, when it came time for me to retire from corporate life at the age of 64 because I was too old to be an international road warrior, I resurrected a little sideline business that I had going. And on that Seven Hills properties and, we built a, our balance sheet by doing, build a suits for Walgreens.
00:03:51:05 – 00:04:17:03
Luis Belmonte
We built 30 of them, built them and sold them. And, so, unlike most developers today who are, indentured servants of institutional money, of some kind, we actually have our own equity. We have a we have a few investors who are friends, but mostly we put up our own capital and do our own deals. And, you know, we keep it small and, and, that’s what I like.
00:04:17:03 – 00:04:21:04
Luis Belmonte
We have real control and we’re not reporting to anybody.
00:04:21:06 – 00:04:37:06
Aaron Fragnito
Yeah. That’s nice. That is nice. Yeah I, I work with a lot of limited partners, a lot of investors. You know, I have over 100 people that invest us and you know, people I sell you start your own business, you’ll be your own boss. Well I’ll tell you when you have 100 people investing with you, you have 100 bosses, you know.
00:04:37:06 – 00:04:49:15
Luis Belmonte
So when you’re when you’re investing on behalf of pension funds and university endowments and private equity, you have massive bureaucracies to what you’re reporting, which, gets old after a while.
00:04:49:17 – 00:05:04:21
Aaron Fragnito
Yeah. Yeah, absolutely. I’m working with a large fund of funds right now that has a large endowment from a teacher’s pension union. And, you know, I, I’m starting to see the bureaucracy, but there is a lot of capital to be, and access to if you have that relationship in place, you know.
00:05:04:23 – 00:05:31:12
Luis Belmonte
I will do a little aside here and say, if you’re dealing with the institutional money, it’s a different business than dealing with individuals, and and portfolio management is a huge deal. And, and, if I was in that business today, I would go out and recruit from that little tribe of institutional people. Someone who can spend their time relating to them and making them feel comfortable.
00:05:31:14 – 00:05:58:21
Luis Belmonte
And when, when Amb went public, we were on, an investment advisor. We, we invested on behalf of, pension funds and endowments, and we had something like 105 customers, and we did a roll up because we decided that we should go public because the institutions were too slow to move on, opportunities we saw. So we decided we needed our own capital.
00:05:58:23 – 00:06:27:20
Luis Belmonte
And we put out a big offering, that, told our investors that they could hand us the keys to their property in return for stock at our company. At 85 of them said yes. And the reason they did is they had confidence in us because our portfolio management department had had had kept them on top of everything all along, and we had gone out of our way to be a good fiduciary.
00:06:27:22 – 00:06:48:19
Luis Belmonte
So they trusted us to hand us their properties. And in return for our stock. So it is that is the key to institutional money is to have people who stay with them all the time, hand-hold them show up at the same meetings, and are part of the institutional tribe.
00:06:48:21 – 00:07:17:04
Aaron Fragnito
Absolutely. Yeah. I mean same thing when you’re investing with LP capital as well. Communication, communication, transparency reporting, you know, financial reports, rent collections so on. And making sure your tax returns are done quickly and effectively. Notes go out on time. But I know it’s on a whole nother level with institutional capital also. And your, kind of, at there when, you know, you have to make sure you’re bending over backwards for them sometimes, but that that’s the absolute.
00:07:17:04 – 00:07:24:23
Aaron Fragnito
Yeah. And, you know, I always say, good operator can make a bad deal into a good deal, and a bad operator can make a good deal into a bad deal. So.
00:07:25:00 – 00:07:26:02
Luis Belmonte
Absolutely.
00:07:26:04 – 00:07:28:17
Aaron Fragnito
Absolutely. Yeah. Yeah.
00:07:28:19 – 00:07:51:07
Luis Belmonte
You know the that the and being a fiduciary is a very serious thing and putting the, interests of your clients ahead of your own is very hard to do because a lot of people are just there to collect fees and eventually you get a misalignment of interest and your investors understand that, and they stop trusting you. And then everything’s over.
00:07:51:09 – 00:08:19:13
Luis Belmonte
And kind of one of the most interesting things of a guy I used to work for who runs Prologis, the smartest guy I’ve ever met in the business. One of his big moves and and and we handle after we went public. We also handle, institutional money in partnership with them. And at one point, and I, I and I closed down fund that was, I think it had a seven year term with three one year extensions, which is kind of the way those funds go.
00:08:19:15 – 00:08:43:16
Luis Belmonte
And year five, he perceived arbitrage and the market prices were frothy. So he sold off everything, thereby walking away from his fees. But he generated a 20 IRR for the clients. And magically enough, they all reinvested. So, even though it looked like he was doing something that that hurt him and helped them, of course, in the long run it helped him.
00:08:43:16 – 00:09:00:06
Luis Belmonte
But but it’s it’s important to think like a fiduciary and say, I am the steward of this money and we’re not working for me. We’re working for them. And if you do that, then you build a trust which allows you to raise money almost at will.
00:09:00:08 – 00:09:18:09
Aaron Fragnito
Absolutely, absolutely. You know, and that’s it’s so important to put your investors first. I mean, at the end of the day, without your investors, what do you have? Right. You have nothing. I mean, it’s a we can’t buy real estate. So yeah, we’ve done the same thing. You know, I’m there even there’s a time, when we got started fixing and flipping houses years ago, this is like 2015.
00:09:18:15 – 00:09:30:07
Aaron Fragnito
We had a big high end flip, and, we hired the wrong contractor. They gutted the place, and they’re like, oops. We underestimated the repair budget by 50% or 100%. Yeah, yeah.
00:09:30:09 – 00:09:34:23
Luis Belmonte
And then we had 50% debt and double the time. But that’s a remodel, I guess.
00:09:35:01 – 00:09:55:12
Aaron Fragnito
Yeah, yeah. So we ended up having to hire another contractor. Then the basement got flooded and the guy didn’t do a great job. And kind of everything that could go wrong did go wrong, sold for less than we thought. And, just ended up taking a huge hit on it. So what we did was we wrote a check to our investors at the closing table to make sure they got the 12% annualized return we told them they were going to get.
00:09:55:14 – 00:10:14:09
Aaron Fragnito
And, we took it on the chin and learned a good lesson, many years ago. You know, so we make sure our investors never lose money. Now, of course, the at the end of the day, you don’t want to lose money either as an operator, but we make sure that, you know, if we’re not meeting our market and we’re going to make good on that to our investors, if that means of giving up our equity thing, we, we do that.
00:10:14:09 – 00:10:31:07
Aaron Fragnito
Obviously, we, don’t have a lot of deals anymore that they do, that we’ve learned from our mistakes of the years. But, that that was definitely a great lesson in putting your investors first. And actually, a lot of those people reinvest in us, even though they knew we took a huge, loss on that deal. They said, wow, you guys really came through.
00:10:31:07 – 00:10:36:07
Aaron Fragnito
You paid us off, and we’re going to, reinvest in your next opportunity because, you know, you’re good businessmen.
00:10:36:09 – 00:10:38:15
Luis Belmonte
That’s what it’s all about. Trust.
00:10:38:17 – 00:10:44:12
Aaron Fragnito
Yeah. Yeah, absolutely. So are you still active in the business now or what are you up to the, these days?
00:10:44:14 – 00:11:04:03
Luis Belmonte
Well, we’re we’re coasting a little bit because my partner, who’s, 20 years younger than I am and does most of the work, his, daughter has gone off to college, so he and his wife are empty nesters. So they’re doing a lot of traveling. But, we are still active. We have, two large, low income housing deals.
00:11:04:05 – 00:11:28:06
Luis Belmonte
Those are, you know, that’s a daily battle. And we have a little industrial deal, and we have nine little shopping centers. So we have, tenant turnover and and defaults and all kinds of stuff, evictions, that go on. We, we recently did a deal where we saw, an opportunity to buy a building in bend, Oregon, at a really attractive price.
00:11:28:06 – 00:11:49:19
Luis Belmonte
And we called a couple of our investors and said, we’re putting up half the cash you want. And so we bought that deal all cash because we don’t like the interest rate climate. And basically we spent, the bulk of three and a half years refinancing everything in the portfolio because, I thought interest rates were artificially low.
00:11:49:19 – 00:12:12:12
Luis Belmonte
I thought that inflation adjusted interest rates near zero made almost no sense. And kind of the high point was one my former boss borrowed 500 million pounds sterling, for seven years at -80 basis points. So. And I wrote him an email and I said, you know, if they’re paying you to take the money, why didn’t you borrow a billion?
00:12:12:12 – 00:12:42:02
Luis Belmonte
I mean, it’s just insanity. So, we went out and refinanced everything on our system fixed and long, which was, you know, needless to say, a whole lot of work. So that was our big push. And then, we’ve been looking around for mispriced stuff. I’ve seen a couple of opportunities, that I had, but the time frame was too long because at my age, I don’t want to do a deal with a 7 to 10 year time frame that exceeds my life expectancy.
00:12:42:02 – 00:13:01:05
Luis Belmonte
So, so, but we’re still looking around and and we do deals. And I think my partner will be kind of finishing up with the travel bug in a year or so and will be back in business again at once. We see where interest rates stabilize, and we also have a couple of deals for sale that we’re calling out on the portfolio.
00:13:01:05 – 00:13:07:09
Luis Belmonte
So, you know, we’re doing a little bit, but we’re costing more than we were before, let’s put it that way.
00:13:07:11 – 00:13:33:12
Aaron Fragnito
Sure, sure. Yeah. I’m seeing prices, very attractive these days. About 20% down from maybe two years ago. Sure, the cost of debt is higher, but the prices are great. Rent has grown significantly over the last few years, so I’ve seen some great opportunities here in the North Jersey market where we buy and sell apartment buildings. How are you seeing the same thing in the warehouse space in the in the, retail space as well?
00:13:33:14 – 00:13:56:20
Luis Belmonte
I would say, there’s very few bargains in warehouse space right now because it’s the it’s the heart field. And, and the demand drivers are of all the product types that demand drivers are the best. There are some reasonable deals in retail. We’re in the neighborhood retail business. I mean, if you want to buy malls, you can find some bargains.
00:13:56:20 – 00:14:16:04
Luis Belmonte
The question is, can you pull them out of the ditch? But there are some people who are buying malls and finding ways to pull them out of the ditch. A malls are are probably a little underpriced because those are the ones that are going to survive. But B and C malls, you gotta you got to have the appropriate repositioned strategy to make it.
00:14:16:04 – 00:14:38:16
Luis Belmonte
But there’s money to be made there. Neighborhood retail. We’re in secondary and tertiary markets and there are there’s, there’s deals that have gone under managed. So we’re not buying them at a particularly good cap rate. But there’s a whole lot of upside for active management. So we’ve done a couple of those deals and made out very nicely.
00:14:38:18 – 00:15:04:00
Luis Belmonte
I would say in the apartment sector, I haven’t seen any screaming bargains. In, in California, especially in coastal California. I did a couple of deals in the valley, fix them up deals, with, with, active investor. That came out just fine. But, you know, places were pretty beat up. The bargains are at office space.
00:15:04:01 – 00:15:24:14
Luis Belmonte
I mean, office is on sale. The high rise buildings in San Francisco are selling for $0.20 on the dollar of replacement cost. And it’s it’s got to be a hump to get them back producing. And it’s going to take 5 to 7 years for supply and demand to get back and balance just the way it did with retail when Amazon came along.
00:15:24:14 – 00:15:47:17
Luis Belmonte
I mean, we started out with 3200 regional malls in the United States. We’re going to end up with 800. I mean, that’s a contraction. And, so, you know, 15, 20% of demand disappears. You’re going to have trouble in a sector and there are going to be selected bargains. And that’s what happened with office space. Work from home is here to stay.
00:15:47:19 – 00:16:11:19
Luis Belmonte
It’s, it’s and there was a little surplus office space to begin with. And now the demand is down and you got out and people are shrinking. There was a lot of over hiring going on in the tech sector, so it’s going to take a number of years for supply and demand to stabilize themselves. And if you’ve got the intestinal fortitude, you can go make a hell of a deal, buy it in an office building.
00:16:11:21 – 00:16:34:19
Aaron Fragnito
At People’s Capital Group, we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern New Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth.
00:16:34:23 – 00:16:52:08
Aaron Fragnito
So find out if you qualify at People’s Capital group.com. Yeah, I’ve seen some good, deals in that space as well here in Jersey. It’s certainly on sale. And Tri-State area as well. We don’t really dabble into office. It’s not our cup of tea. You know, we do just feel like, apartment buildings are more recession proof.
00:16:52:08 – 00:17:10:18
Aaron Fragnito
People are always going to need a roof over their head. And there’s such a shortage of housing here in North Jersey that the, rental demand is very strong and rental growth is strong, but it is hard to find a good deal. You know, we’ll look at a over 100 properties to pull the trigger on one. And it’s definitely, an underwriting task to go through all these different opportunities.
00:17:10:18 – 00:17:31:06
Aaron Fragnito
But we tend to buy 1 or 2 good deals a year. And, the value adds where it’s at. You know, I’m a big fan of value add investing. And, speaking of institutional capital would never make sense to me is I see why I don’t want any value add. I don’t want any class C or class B, I want the core core plus class A real estate.
00:17:31:08 – 00:17:37:12
Aaron Fragnito
And I say, and they want that, you know, 18 IRAs as well. Yes. That’s a hard,
00:17:37:14 – 00:18:04:07
Luis Belmonte
It’s it’s it’s a fantasy. I mean, it’s just not there. But you know, the the thing about what I’m one of my former partners used to say big money runs in herds, usually in the wrong direction. So I will give you a little example. So, we when I first went to work for A and B, we were a small shop, a startup, and we did industrial and neighborhood retail because the big dogs didn’t want to bother because the numbers weren’t big enough.
00:18:04:07 – 00:18:23:11
Luis Belmonte
And, you know, if you’re making a 1% fee, you make a whole lot more money at a $100 million deal, and you’re doing a 5 or $10 million deal. So we were just fill it in a void in the marketplace. And and everybody was mad at the advisors because the advisors were working the appraisals to keep collecting fees.
00:18:23:11 – 00:18:44:10
Luis Belmonte
And the investors weren’t making any money. So, we, we put out a fund called the Current Income Fund because the problem was not much cash flow was coming out of most of the institutional advisors. So, you know, so we hit the window and I and the finance business is all about windows. They open and they close.
00:18:44:10 – 00:19:00:12
Luis Belmonte
And so you got to figure out which window was open. So if you go make a presentation to an institution and they’re looking for that kind of product, you’re going to you’re going to do a deal that no matter how good your deal is, if they’re not looking for that kind of product, you can’t pry money out of them.
00:19:00:12 – 00:19:25:18
Luis Belmonte
So we put this fund out. It was, I think, and I forget the exact numbers, but we were trying to raise $200 million. We ended up raising 350 or 400 because everybody was rushing into current income. And and we had what was called discretion and a box. People committed to invest when we sent them a call for, for cash if, if the deal was inside the box that we put out.
00:19:25:20 – 00:19:26:13
Aaron Fragnito
Yeah.
00:19:26:15 – 00:19:54:11
Luis Belmonte
So, so, you know, and we, we called all the investment, we bought the property, the fund went fine. So it’s time to do the next fund. We use exactly the same box. But by then Wall Street was co investing with it, with, with the institutional investors and gutting the IRR. They, they put, they put a big loan on the deal and then put their money and, and then put the investors money at, at the last minute so that it was only in for a year or two.
00:19:54:11 – 00:20:13:17
Luis Belmonte
And, and come the IRR and took a big fee. But but in any event they were pretending to co-invest so and they were working value and and this is like 95 when the market was still in the toilet. So we took the same box and we went out. We called it the Value Added Fund with exactly the same box.
00:20:13:17 – 00:20:34:10
Luis Belmonte
And that fund was oversubscribed, too, because we were in the midst of the value and went go being open. So that that’s the trick. And I was once accused at a professional gathering of being someone who spent my life, standing in front of the big wave of money, appropriately dressed and at first I thought I’d been insulted.
00:20:34:10 – 00:20:53:10
Luis Belmonte
And then I thought about that. I said, yeah, that works for me, you know, put on my suit and tie and get in front of the big wave of money. And so, the capital markets are all about windows and my view. And so that’s, and and then the flip side is the value where deals I’ve been around are all about the execution.
00:20:53:10 – 00:21:22:06
Luis Belmonte
Do you have the right contractor? Do you have the right cookie cutter plan to upgrade the units? Can you execute in a hurricane? You can, rework the tenancy. Can you get it done on a timely basis at a decent budget? And then are you set up so you can wait for the market? So, the, you know, the one of the first deals I did, we did a flip deal, and by the time it was time to sell it and our loan was coming through the market had gone to hell in a handbasket.
00:21:22:08 – 00:21:44:09
Luis Belmonte
And I didn’t have a plan for surviving for a couple of years until the market was better. So that’s the reason that the institutional funds have the extensions on them. So if you got a seven year fund, you don’t get trapped in a crappy market. You can ask for an extension. And so any time you do a deal, you’ve got to have an exit plan, which includes being able to wait.
00:21:44:11 – 00:21:59:09
Aaron Fragnito
Yeah. Yeah. Exactly. Yeah. That’s why we allow flexibility in our funds as well. We obviously have a timeline. We try to refinance at the end of year three. We want to sell by the end of year five. But if the market’s really hot when it comes time to refinance we’re going to sell. You know the market’s not great when it comes to sell.
00:21:59:09 – 00:22:06:12
Aaron Fragnito
We’re going to probably need to wait a little bit to to exit properly. So it’s not a bad strategy. Yeah I see I see why you do that.
00:22:06:12 – 00:22:09:20
Luis Belmonte
And you have to be ready if the financing market isn’t there.
00:22:09:22 – 00:22:33:11
Aaron Fragnito
Yeah. Of course. Absolutely, absolutely. Yeah. Now, That’s interesting. Lewis. So I appreciate that feedback. Now, you’ve been around a while here. So what, what words of wisdom do you have? Or nuggets of, you know, people that are kind of getting started in, real estate investing and trying to make their waves here in this environment with higher interest rates.
00:22:33:11 – 00:22:43:12
Aaron Fragnito
You know, prices can be decent, but, well, we’re just in general not taking for getting the market. Just, the whole strategy of, building wealth and real estate. What words of wisdom would you have for them?
00:22:43:14 – 00:23:14:22
Luis Belmonte
I would say two things. Number one, you got to realize that recessions are part of the deal. You know, I’ve been through, depending on how you define I’m 7 or 8 and have gotten better over time, but that’s when the opportunities come. So you have to run your business such that you can survive the recession, that your debt service is under control, that you have a fallback plan that you that that that you aren’t forced to refinance against a wall, all that stuff.
00:23:14:22 – 00:23:42:06
Luis Belmonte
And then you have to accumulate cash or commitments or investors so that when the time comes, you can buy and, and and again, in the immortal words of my former boss, big money is made in real estate by those who have cash when nobody else does. And, and, you know, that’s the, that’s the key is are you ready to take advantage of a recession and survive the recession?
00:23:42:08 – 00:24:02:06
Luis Belmonte
That’s because, I mean, we always overbuild it, you know, that’s just the way it is. That’s that’s what America is about. American capitalism is about if some is good, more is better, and we find a way to screw it up. The other thing is the learning curve. Any time and there are people who tell you they got a golden gut, that’s horse manure.
00:24:02:06 – 00:24:25:09
Luis Belmonte
Nobody’s got a golden gut. When you go to a new market or a new field or start something new, you’re going to pay a stupid tax. So what you need to do is acknowledge that and say, okay, I need to start small. So, you know, do little deals in the beginning so that when you screw it up, it doesn’t sink you.
00:24:25:11 – 00:24:59:07
Luis Belmonte
And, and and learn a little at a time or take in a partner that knows what they’re doing and be prepared to reward them if you succeed. So I did deals all over the world, but I didn’t walk into Tokyo or Singapore or or Memphis and start doing the deal. I went to town to find the best builder in town, and then I checked out of their level of reliability, their track record at, completing deals, and I went and picked the pick of the litter and said, I got money.
00:24:59:13 – 00:25:23:07
Luis Belmonte
You got knowledge, would you like to be my partner? Or I went to Mexico and and I interviewed a lot of partners. Have my sidekick spoke Spanish, but we never told anybody that. So he could kind of see the conversation that was going on among the people. And. And I picked someone who didn’t know squat about the warehouse business, but who was politically connected, which is the most important thing in Mexico.
00:25:23:07 – 00:25:51:19
Luis Belmonte
So when we did our first big industrial park, the president of the country came and cut the ribbon. You know, that’s my idea of political juice. So we picked these people for their political nose. And I said, here’s the partnership. I’ll teach you how to build a warehouse. You teach me how to deal with the politics. So, or if I’m a passive investor, what I’m doing is checking the credentials and the the track record and the integrity of the person who am.
00:25:51:19 – 00:26:15:04
Luis Belmonte
I’m entrusting my money, you know? Is our handshake good? Because I can’t rely on the paperwork without hiring a lot of lawyers. And have they executed projects? And they executed projects under difficult circumstances? How have they handled recessions? How have they handled investors when things don’t go well? It did. They were good. They waived their fees. Did they write a check?
00:26:15:06 – 00:26:25:23
Luis Belmonte
So, again, it’s a learning curve. Nobody starts into something new without paying the price. And you need to be prepared to pay the price.
00:26:26:00 – 00:26:48:12
Aaron Fragnito
Well, that’s some great advice. So I appreciate that. And, I’ve had a good partner for many years here. Seth Martinez, who handles the operations, end of the business. And, he’s very good at managing our our staff and our the nitty gritty and making sure the trains run on time and the contractors, and I’m more of the people person I’m going to marketing, branding, public speaking, capital raising and fly relations.
00:26:48:14 – 00:26:59:04
Aaron Fragnito
And so we really complement each other’s, weaknesses there and our strengths. So that that’s a very good point. I like the stupid tax, too. I think I’ve paid that stupid tax, a number of times, so I yeah.
00:26:59:04 – 00:27:22:06
Luis Belmonte
I have it. We all right with with old age that doesn’t necessarily come wisdom, but you get scars and you know, the scars are the wisdom. So, you know, lessons learned if you my, my books, Street dog MBA is all about telling a story of something that went wrong. And the lesson I tried that I thought I drew from that, from that debacle.
00:27:22:08 – 00:28:05:16
Luis Belmonte
And it isn’t always necessarily something I did wrong. It was being in the wrong place at the right time or, you know, the market changing, that, that, that nobody anticipated or a law changing. And so, you know, that’s what the learning experience is. And, and the you just you got to be humble and, and then when you’re building a team and, and at a big time development is like, being the conductor of a symphony orchestra, you know, you’re not out there pouring concrete, but you got to pick the right architect, the right engineer, the right soils engineer, the right loan broker, you know, the right, a market research person.
00:28:05:16 – 00:28:27:02
Luis Belmonte
So I need to pick people that are different than I am. And, and, and that means maybe picking somebody that I don’t particularly like or want to hang out with, but they have a skill set that I don’t. So you know, and most people, when they hire, they want to hire somebody that’s like them because, you know, they look in the mirror and they say, well, it’s a good person because they see a similarity.
00:28:27:06 – 00:28:42:13
Luis Belmonte
What I want to see is a difference. I want to see somebody who’s good at what I’m not good at, because if I hire somebody like me, they exacerbate my strengths. But they also exacerbate my weaknesses. So, you know, I’m looking for people who are different.
00:28:42:15 – 00:28:57:13
Aaron Fragnito
That’s great. That’s it, that’s it. You know you got to partner up your weaknesses and you have to know your weaknesses to pick the right partner. You know I remember when I was going to start in real estate, I partner with someone who had just filed bankruptcy and I had no money myself. I had good deal flow.
00:28:57:15 – 00:29:13:23
Aaron Fragnito
And but he was not an honest businessman. And, when I partnered with an honest businessman, Seth, who I’ve been in business with now to today, over, 11 years. He had just sold a medical billing company, so he was very liquid. And, that was important, you know, to buy a lot of real estate to get us started.
00:29:13:23 – 00:29:21:22
Aaron Fragnito
So. And I a good deal. Flow is a realtor. So, it’s important to partner your, your weaknesses, but you have to know your weaknesses first to pick the right partner there.
00:29:21:24 – 00:29:27:09
Luis Belmonte
You have to be ruthlessly honest about what you’re not good at.
00:29:27:11 – 00:29:33:00
Aaron Fragnito
Absolutely, absolutely. So, Lewis, how can people, get in touch to learn more about what you got going on these days.
00:29:33:02 – 00:30:10:07
Luis Belmonte
Al Belmonte at seven hp.com is my email. I’m happy to answer questions. You write off the names of the books I’ve written about the real estate business, and, they’re on Amazon Kindle or paperback. They’re cheap. I don’t make any money selling books. I assure you. After Amazon takes it scrape, I get a few cents. So I’m just here trying to sell ideas and and the, the, I think the negotiating book is, is, an important source of how to approach a business situation.
00:30:10:09 – 00:30:32:23
Luis Belmonte
And I think the management book is the same thing. If you’re running an organization, what’s the appropriate approach to to having a successful organization? And, and, and as I said, Rob, Real Estate one on one is, is about kind of the basics of the business. And, and Street Dog MBA is basically stories about mistakes I have made.
00:30:33:00 – 00:30:37:13
Aaron Fragnito
Okay. That’s great. Yeah. We’ll put those books in the show notes. And what are those three books again that you wrote?
00:30:37:13 – 00:30:57:22
Luis Belmonte
Well, there’s, there’s there’s four books, there’s real estate, 101 Street Dog, MBA, street dog negotiator and street dog manager. And, and they’re they’re short books. They’re, they’re they’re full of anecdotes. They’re, you know, hopefully you get some laughs and some lessons and a little take home value.
00:30:57:24 – 00:31:01:10
Aaron Fragnito
Yeah. All right, Street dog Lewis I like it I like it. All right.
00:31:01:11 – 00:31:08:02
Luis Belmonte
Well I, I got a great cover. I will show you this is not my design, but,
00:31:08:04 – 00:31:22:01
Aaron Fragnito
Yeah, yeah, it’s funny with the dog. Yeah. That’s good. All right. Great. Well, thanks for coming on the show, Lewis. I really appreciate it. We’ll put the, those, and links to the book there and your, companies in the show notes as well, for our listeners.
00:31:22:01 – 00:31:38:13
Luis Belmonte
And if someone has a question, I’m, I’m trying to answer. And, as one of my former partners, used to say, not always right, but never uncertain. So, you’ll you’ll get a frank answer. Any question you ask.
00:31:38:15 – 00:31:55:04
Aaron Fragnito
There you go. I like that I like that honesty is key. Transparency is everything. Absolutely. Yeah. To our listeners. So if you’re enjoying this content, the passive cash flow podcast, we come out with a new episode every single, every two weeks. And, we have interesting guests here, like, our friend Louis Del here on the show.
00:31:55:04 – 00:32:17:01
Aaron Fragnito
And, we, talk about business investments, real estate strategies, attack strategies and so on. And, you know, just try to really interesting guests. So if you’re getting value from these episodes, I encourage you to share with a friend and, like the episode on the platform that you’re listening or watching on. We’re on YouTube. We have different masterclasses and podcasts on there as well, tons of content.
00:32:17:01 – 00:32:32:11
Aaron Fragnito
So if you’re on YouTube, subscribe to us, wherever platform you’re listening on, hit that subscribe button. Hit that like button. Make sure you get our next episode that comes out every two weeks. And, we appreciate you listening here to the Passive Cash Flow podcast. Thanks a lot for coming on the show, Luis.
00:32:32:13 – 00:32:34:23
Luis Belmonte
Thanks a lot. It was a pleasure to talk to you.
