Updated: Jul 4, 2020
Today on the Passive Cash Flow Podcast we meet the second half of Peoples Capital Group, Seth Martinez. Seth handles the operations of PCG and is highly experienced in real estate investment / management.
Learn about Seth's story starting with a humble beginning, building a business in healthcare, selling the business and transitioning into real estate. The Passive Cash Flow Podcast is for beginner or experienced investors. Learn how you can diversify out of the stock market, own a part of an apartment building & start earning Passive Cash Flow! Peoples Capital Group has been helping passive investors build wealth in NJ real estate for 10 years. Visit www.PeoplesCapitalGroup.com to find out if you qualify to start earning passive income and pay less taxes via investing in real estate. IRA's and 401K's are accepted. -- https://www.facebook.com/peoplescapitalgroupnj/
Aaron Fragnito: All right, ladies and gentlemen, welcome back to the Passive Cash Flow Episode 7. This is Meet Seth Martinez, the 2nd Half of Peoples Capital Group. Say hi Seth. Seth Martinez: Hi, everybody. How are you doing? Glad to be here. Aaron: All right, very good. Seth runs the operations of Peoples Capital Group, he makes sure we're repositioning the buildings for max value, max cash flow, and he really compliments my weaknesses and I compliment his weaknesses as a great partner. If you want to learn more about us, you can go to peoplescapitalgroup.com where there's our bio or information on the properties we own and manage and properties we've flipped it wholesale and that's on peoplescapitalgroup.com. You can learn all about our company and Seth Martinez and Aaron Fragnito. Today, we're going to talk about how Seth got started. A lot of you are curious about how we went from zero to a hundred doors in about five or six years together. Seth, talk about what sparked your passion to a real estate. What's the story? Seth: Sure. Well, I spent my 20s, not in real estate. I spent my 20s in New York City in a healthcare business that I started with my brother. After selling that in 2009, didn't know what I was going to do. Basically had to find a new profession and I read Rich Dad Poor Dad and that opened up a whole new concept of business, money, investing, and assets. I wish I had known that in my 20s because I realized that I did everything the wrong way in my healthcare business from managing employees to delegating and just to thinking about time and assets and things like that. I took a year off from a sale of the business, did a little consulting, and decided to go into real estate again after reading the book, and found a good realtor by the name of Aaron Fragnito. He started selling me some properties and we realized we had the same goals. Started a business. In 2013, we incorporated Peoples Capital Group and here we are today. Aaron: Excellent. That's a great story. I think the Rich Dad Poor Dad part, it's so important. Every podcast we do here, we hear about that almost and it's really started a lot of people. Talk a little about how you-- you actually had paid for some coaching at one point. I know some people paid for coaching, other people don't, some people work for other people that doesn't. I know you had to invest a little bit of money there. Do you feel like you got a good investment, therefore, the coaching package? Tell them that story. Seth: Sure. Right around that time after selling my business and reading Rich Dad Poor Dad, I saw an ad on Facebook for Rich Dad Poor Dad seminar. Somehow they knew I read the book, which was interesting, but glad I saw the ad because it led to a lot of thing. Some good, some bad, but overall good. One of the things was an event. I went to a free one-hour event and at the end of that event, they offered $1,000 weekend, two or three day weekend but they said, if you buy it today, it's 200 bucks. I bought it today and I went. If you had told me going into that three-day weekend that I would spend another 200 bucks or anything even close to that, I would say no chance in heck. At the end of that three-day weekend, I ended up spending $26,000 for education, a CD, and some software. That was a big investment. Aaron: I'm always amazed when I talk to people and they say, "Well, I could invest in real estate, but I invested all my money in some books and CDs for this company." Whether it be Rich Dad Poor Dad or flip this house or whatever it is. It's really a shame because I think that's such a high price to pay to learn information that really a lot of it you can get for free or you can get free out on the internet. You can get also in places like Barnes & Noble, go buy a book at Amazon. That's how I learned and yes, everyone has their path. Sometimes investing in materials and getting a professional quality material in one place. It's important getting inspired by the salespeople there, whatever. It makes a big difference to get you going and motivate you. That's important. Maybe there's a price premium, you pay for that but if you can read a few books and learn off and inspire yourself, that's definitely the way to go. If you have only $30,000 or $50,000 to work with, I personally don't advise anyone putting that into some type of coaching program and then being left with no money to go buy real estate because it does take money to start real estate. I had saved up $20,000 myself. We had bought a six-family property together, and that's how I was able to start building my passive portfolio along with you here years ago in New York. If I had invested that money in coaching, who knows, but I don't think I would be here. It took me a long time to save up that 20,000. If you go to these events, a lot of times the weekend for $300 raise a great investment. Seth: Yes. Definitely, $300 may be up to a thousand dollars, but when it gets to 10,000, 20,000, 30,000, 40,000, sometimes more, a lot of times, they're just selling you something. You've got to make sure you do your due diligence and some people say wait at least 48 hours before making a big decision, a big financial decision. They don't really give you that time at the event. They give you about an hour to think about it. That's the way life goes. Aaron: Yes, that's tough but it's all right. Everyone gets inspired in different ways and that's important to get inspired and have the material to go ahead and start analyzing properties and making offers and working with investors. Something we do here at Peoples Capital Group is we do the learn and earn program where if you're hungry to learn more and kind of get the documents we make offers with, get the documents we use to work with investors, and the spreadsheets we use to analyze these in-depth department buildings. Then we give you that. We give you a folder with all these documents in an editable form. We don't sell it to you, we won't charge you for it. It's something we include if you're investing with Peoples Capital Group because we're working together and we want to educate you on, not only your investment, but how this industry works and how we work with the different parties and the documents we use, and these spreadsheets we use to make these decisions and facilitate our transactions. It's pretty cool with the learner because people can invest their money in a building and start making return on that money instead of investing it and getting just some coaching and some products. There is a value to both. Like I said, the $300 a weekend that a lot of these gurus offer actually is a great investment. The reason it's only $300 is because they're trying to fill a room and sell to the room. If you spend $300, then you'll likely spend more on whatever product they're selling, especially after they inspire you to do so. The $300 weekends are great, but when you go there and realize the upsell and realize you're going to be sold, basically a bag of goods. If you really want that product, go online and you can usually find that on eBay or Amazon or a site like that for a discounted price and you can get these packages of books and CDs that people buy at these events and spend thousands and thousands of dollars on. You could find them unopened on the internet, on eBay because people buy and they get inspired and it's an impulse buy. Everyone has impulse buys. I was on vacation the other month and I ended up impulse buying into some type of vacation package. It's not a timeshare. It's a vacation package. Listen, I was on vacation, I was feeling good, they made me an offer. I said, "No way." They doubled it. I was like, "All right, fine. I'll buy some weeks." Seth: If you waited longer, they might've tripled it though. Aaron: You're actually right. Everyone has those investments they make, you're excited about the product, the salesman deserves a sale. I'm such a sucker for a good salesman. I've had those buys and I'm going to use those with vacation weeks though. You'll see. I'll get my money's worth. It was a good investment, I swear. Anyway, so you bought the product and then you said, "Okay, now I've got a fire under my butt." You sold a medical billing business. Talk a little bit about how you got started with entrepreneurship though as a small business owner with your first business and then converted into the second business of real estate. Seth: Sure. Well, I always liked the idea of being a business owner, but I didn't really know how to go about doing it. I graduated with a psychology degree and after about a year, I realized that's not really going to take me anywhere unless I become a psychologist, which I didn't want to be. Went back on an MBA. Right around that time, I had a business opportunity with my brother to start a medical billing company and we had a software package that we had the opportunity of buying. We bought it. It was on a server and basically took the server, just a couple of computers that we got at a discount with the software, put it on a U-Haul truck. We drove up to New York from Philadelphia, put it into our apartment which we were renting out with some college friends, and started a medical billing business from our apartment. Over five years, it grew pretty well, especially the first three years. Years four and five plateaued and realized it might be best to sell. We sold it after about six years. That's the time when I started looking at other options and got into real estate. Aaron: Nice. You sold that, you came out with some capital, you're able to get started real estate. I was a realtor. No one else would take Seth's offer, they were too low. Seth: That's right. Aaron: I didn't mind presenting those offers to sellers. Nothing embarrassed me. I thought it was really cool how this guy was still in real estate. He's better at the management of the operations, analyzing buildings. I'm good on the branding and fundraising, the public speaking and then we really complement our strengths and weaknesses, but at the same time, we can also cover each other's roles as well, which is what's important about good partnerships, so you can enjoy those vacation weeks that you paid for, for some reason in Cancún. Basically, that's good to hear that story and remind me of your humble beginnings to where we are now looking at our real estate on the wall here at our PCG studio. As you got started buying real estate, what are some tips now that you own a similarly in our portfolio you obviously built pretty quickly, what are some good tips you have for other people out there looking to get started with this? Seth: That's a good question. I would say that understand the difference between a passive investment and an active investment. One of the things they did not teach us too well in the $26,000 education program was the difference between a passive and an active real estate investment. Instead, they taught us that- well, buy a piece of real estate, rented out and if you collect rent every month, that's basically passive income. Aaron: Sure. Sounds about right. Seth: If you're actually the one collecting the rent or signing the leases or taking the contractor calls and tenant calls, then that's an active investment. It's not passive. Understanding the difference. Passive and active is very important. If you want to be an active investor, go forward. It's got a lot of upside. If you want to be a passive investor, try to find people you can work with that can make that happen for you. That's one of the things we do at Peoples Capital Group. We make that available to people who don't want to be active investors. Aaron: That's exactly. We found a really need for that because out there, you go to these guru seminars and they say, "Yes, buy real estate and collect rent. That's passive income." We started doing that and we, right away, realized that was complete BS. Managing real estate is a full-time gig. Even with a management company, we own our own management company. We have amazing employees that make sure our real estate's managed to the T, but managing that management company is a work in itself. It's every day. Seth, every day here's working with Lena, I'm overseeing everything as well. Basically, even working with a separate management company where we hire third-party management companies, that was even more work because we had this trust and there was going to be less performance. The management companies, we hired more performing properly, we had to hire create our own man for company over the last five years or so. We had one manager company that was stealing money from us. We had another one that just completely over-promised and under-delivered and they were a huge national brand and we couldn't believe it. We're like, "How are you guys the top tier of property management? You can't even keep 25% of a less than 24 hours of vacancy." It's crazy. We really had to fix that problem by creating a solution ourselves and with property management or to reposition apartment buildings more aggressively and properly. It's not passive income. We create a process where people can actually invest passively actually just put their money to work in a building. We show you an opportunity that's been vetted against 400 other buildings that will say no to, bring you the one perfect building that we've looked at. Hundreds of others spent thousands of dollars to get there. Years of relationship with brokers and wholesalers to bring you one opportunity that is vetted and good. It's really a service and it took some money to create the platform, the service for people, but I'm glad we did it now. Now that we are able to brand it properly and get in front of the right people, there's definitely some good feedback. People are really reacting well to it. You can see our fundraising is exponentially growing over just the last months early. It's incredible. You got into real estate that way. We bought the six-unit and we built our management company there. It's words of wisdom there. What do you think would be also your tips, just like wealth tips in general because you were able to exit the business that you built up so just for small business owners and entrepreneurs out there, do you have any general tips? Seth: Basically if you sell a business or if you come into certain amount of money at work, you've been saving it and you're looking to invest it and beat the stock market or beat some other investments out there-- Stocks, like I said, CDs, savings accounts, bonds, real estate can beat all of those if you do it right. You can do it actively or passively, you can do it right either way, but know what you want. If you have the time to invest actively, do it. If you want to save your time and spend that time on your own self or your family or more quality life where you're not working, like I said, try to find a company or a person that will do the work for you and you invest the money and they're the active investor and you're the passive investor. I guess just know what you want to do with your money and if you want to be active or passive with it. A lot of people don't make that distinction and they end up spending a lot of time just investing and not really having a clear plan. Having a clear plan at the beginning are very important. Aaron: I do see a lot of people misguided sometimes by gurus that are selling weekend to learn about what they're doing. At the end of it, they're like, "All right, so should I go buy an apartment building and personally guarantee a mortgage and raise capital and deal with the management company or should I invest in what you're doing?" The person who's selling you the class or whatever, they're always like, "Well, you could do either one." One's going to cost you $20,000 from my books and CDs. The other one's going to-- you can invest $50,000 and then make this or that. It's confusing. Sometimes you meet people who can't decide which one to do. They're so different to do one and be in to do what we do is crazy work. It's crazy hard. Seth: It's a full-time job. Aaron: It's every day. You can't analyze buildings, do syndication and I don't know how you could and work at 9:00 to 5:00, let's check Superman. It's really a ton of work to build a brand and run the operations to repositioned an apartment building, which is basically a five-year flip. It's a long-term flip. It's not like you're just putting some fresh kitchen cabinets and hiring a broker to find a buyer. We're maintaining these buildings long-term. It's really an investment of our time and it always boggles my mind how people can offer those two products or services in one conversation. One guru event, he'll say, "Hey, you can buy apartment buildings. First, you guaranteed mortgages, manage management companies, reposition properties, be the operator and here's my book and how to do it for $20,000 or you can invest with us. I think that's a confusing message. Seth: Sure, I can see that. Aaron: The more we look into these syndicating companies that compete with us, the more we recognize, a lot of them are selling two things that are very, very different. Because of that, I meet with people that go to these events and they come to sit down with me. I said, "Here's the building. It's a passive investment." They said, "Well, can I manage the contractors?" I said, "Are you experienced in managing contractors?" "No." "Are you available during the day?" "No, I'm only available at night." "No, you can't manage the contract." Basically, it's confusing as far-- When you go to an event and people said, "Yes, you can do this. It's easy to do. Just buy this book or CD." It's confusing to people because it's not how it works. Seth: Don't forget the coaching too. Aaron: Oh, the coaching, the long-term coaching. How much money these guys really making on the buildings themselves as they got to sell these books and CDs. Anyway, I'll digress. I'll digress. Listen, everyone's got their model. I'm not going to knock these gurus and they probably do know what they're talking about. They're probably darn good salesman. Maybe I'm just hungry, I watch more just like them. At the end of the day, Mr. Martinez, I'm glad we were able to team up here and then partner our-- we just say as far as tips on finding good partners. Just last tips for the listeners and anything else. Seth: Finding a good partnership is very hard. The numbers are somewhere around one out of 10 works out. Even 95 out of a hundred fail or 99 out of a hundred fail. Finding a good partnership is really, really difficult. When you find one, you want to cultivate it, keep it going. If you're having trouble finding one, then you can partner with us because we become partners in a sense with our investors. We've been partners now for going on eight years. That's an important part of the business, having a good partnership if you want to do that. Aaron: Heck, yes. I've had my [unintelligible 00:18:51] bad partners as well. We'll save that for another podcast. Guys, you all learn more about how to be a passive investor and put your mind at work and start getting mailbox money, tax write-offs, and not have to do anything. Start putting your money to work with a small minimum investment of $30,000 up to millions of dollars, whether you're just getting started with your IRA and want to put your IRA to work, or you're a multimillionaire with tons of capital in the stock market, want diversify, little bit into real estate passively with a class B, class C apartment buildings in North Jersey. Go to peoplescapitalgroup.com, learn how you can become a passive investor in some nice apartment buildings in New Jersey here, right outside of Manhattan. Go to peoplescapitalgroup.com and subscribe for more podcasts every week. Have a good day.