Navigating the Real Estate Landscape

Mike Hambright (00:33)
Hey everybody, welcome back to the show. I’m super excited to have my friend Aaron Amuchastegui with us today. ⁓ He has an amazing background, has pivoted a whole bunch. And I know there’s a lot of folks in our industry right now that have pivoted or have been forced to pivot, or maybe you just wanted to pivot because you thought the grass was greener on the other side. But he has an amazing wealth of knowledge to share with you today on what’s working and what’s not working. We’re going to talk about where we think the market’s headed and much, much more. So Aaron, welcome to the show.

Aaron Amuchastegui (01:00)
Hey Mike, good to see you again, man. It’s been a while since I got to see you in person, but I love what you’re doing. I always love your content and grateful to have a chance to come on and talk to you.

Mike Hambright (01:08)
Yeah, good to see you buddy. I always appreciate it. So ⁓ that’s why I do the show. Actually, I mainly am catching up with, you know, old friends and new friends and stuff like that. And I just kind of found like all the time I’m thinking to myself like, man, I haven’t talked to so and so and so long. How’s that been that long? You know, and I’m like, well, rather than just like, if you if you reach out to somebody, usually you’re like, hey, can you jump on a call and catch up? Like, it works sometimes. Sometimes people like, I’m so busy. I’ve got this going on and that going on. Everybody’s busy. Right. And so

If I kind of position it as like, hey, can I get you on the podcast? People are like, oh yeah, I’ll find a way to make that work. So it’s a two birds with one stone. We’re going to create content and pick it up.

Aaron Amuchastegui (01:42)
Yeah, you and I get to catch up and people get to listen into it.

Yeah, perfect.

Mike Hambright (01:49)
Yeah, yeah. So hey, ⁓ you have just an amazing background of and you’ve been through a lot. And so maybe kind of tell us your backstory a little bit before we kind of start to dive into the rest of the show.

Aaron Amuchastegui (02:02)
Yeah. The, yeah, I was, I, I grew up like really small town in Oregon. My dad was a, was a general contractor. Right. So I’ve always just lived and breathe real estate.

There were times I like thought I had other interests. thought maybe my career was going to go somewhere else. No matter what happened, it just came back to real estate, to construction, to development. Like I have, it’s always had like, it’s entrepreneurial type spirit, right? But anytime, even when my dad was doing stuff, I’d be like, why, do you do it this way? Why do you do it this way? you know, I went to, went to school originally to go work for my dad. I was going to stay in the family business. The, I ended up, going down to, know, Cal Poly. like, I was first in architecture major.

a construction management major and I graduated in 2005 with a degree in construction management in Southern California.

And for anybody that like knows real estate history, well, that is the Mecca of times to be involved in construction because it was like this crazy real estate construction boom. needed new superintendents, project managers. I graduated the top of my class. And so like fresh out of school, I’m making like 120 grand a year running construction developments. And it was such a strange time because we were, we were like golfing two days a week because we would build the houses in like 60 days. They were all pre-sold. It was really a bad expectation.

of what life was going to be like in real estate. Because I’m like, I’m like young 20s at the time, I got my degree, now I’m running someone’s business, like this is great, this is easy. So, and I’ve had a whirlwind of experiences since then, but that’s how I kind of got started and got started at probably like one of the easiest times in real estate and then realized it was gonna be a lot different after that.

Mike Hambright (03:37)
Yeah, but you have this foundation, you have this base that you can always come back to. think that’s one of the challenges that a lot of entrepreneurs don’t have. My son actually just turned 18 a couple of days ago and I’ve been talking to him. He’s not going the traditional route. He’s not going to go to college, which is fine. But I was like, you need to have a skill. Like you need this foundation. And he’s like me, ADHD and kind of all over the place. like, but you need to have a skill that is kind of the foundation of what you have. And I think

As entrepreneurs, we always want to go try something else or do something else. And you’ve done a lot of different things. But you kind of need to have this base that allows you to go test stuff and not sink the whole ship if it doesn’t work out. You’ve got a foundation. And from there, it’s like, OK, now go test some stuff and see if anything sticks. Eventually, something will stick. There’ll be some stuff that doesn’t work. But you always have a skill in a business that you can come back to that’s the foundation of everything. mean, do you agree with that?

Aaron Amuchastegui (04:08)
Yeah.

Yeah.

I mean, it’s, that’s really been my story, like really early on the, discovered like foreclosure house flipping investing. And I discovered it before anybody else did. And I got really, really good at it. And I, I learned about like the hard work and the steps and all the processes. And what’s funny is, that’s like probably like where people like start in real estate. And then there’s times I’ve grown these big portfolios and done something, but I always end up having to go back to that foundation. When there’s times that are adjusting, it’s like, Hey, when I was, when I was worth nothing, when I was able

Mike Hambright (04:57)
Yeah.

Aaron Amuchastegui (05:01)
to build it to something big, that’s what I did. So when something changes, going back to that foundation of figuring out kind of where your skill set is, where your knowledge is, the only thing that makes it tougher over time is like age and energy. I mean, and I guess what I want to say about that. meaning like when I started doing foreclosures, I didn’t have any employees, auctions were every day. ⁓

You know, in California. And so I would drive 40 houses a day and I would like door knock them and I would show up and I’d hand off letters. And then that night I would comp houses and then I would do title and I would show up at auction for like five hours the next day. And then I’d buy like one house. I’d go change the locks and I’d start driving houses again. And it’s this amazing, like cool entrepreneur story that everybody says, like, if you put in the hard work, you get it to happen. And that equation always works. But that was 20 years ago. And so like,

Mike Hambright (05:49)
Yeah.

Aaron Amuchastegui (05:50)
If I want to go buy some foreclosures next month, it’s going to look a little bit different. Now the foundation and the skills are, know I need to get drive reports of every house. I know I need to comp everything. I know I need to do this, but I’m not going to be the one doing the 14 hour days anymore. Because I don’t have the energy like you got to. So not only do need a foundation, but like for your son, especially, or for people that are new or like the, I don’t want to say we’re old because I still have great energy and I focus on my health. But when I was 20, I had way, when I was 20, I had way more energy.

Mike Hambright (06:03)
Right.

I did it.

Aaron Amuchastegui (06:19)
Right. And so you need to try so many things when you first get started, while you have the energy to do it.

Mike Hambright (06:24)
Yeah, we talked about that a little bit upfront. We’re like, look, there’s just stuff that you used to do. Like I, I still work very hard, but it’s not as physical, I guess, as like much of a hustle. Cause you just start to realize as time goes by, like there’s certain things you’re just not willing to do anymore. Or maybe you can’t, I you got, you got family obligations, you got business, you got employees, like you’ve got a lot of a more complicated life now, you know, than, than we did when we each was starting, right?

Aaron Amuchastegui (06:50)
Right. I’ve got four kids and I like to kind of have some hobbies. And so it is a lot harder to, to, do the rest of that. But yeah, it’s a, it’s interesting. So you always need the foundation and then hopefully at the beginning, hard work and grit and like determination outweighs skill and knowledge. And then somewhere it should transition to like more skill and more knowledge and a little bit less of the grit and hard work.

Mike Hambright (06:54)
Yeah.

Yeah.

Yeah, so let’s talk about maybe some of the phases of your life and your experience, because you started off with lot of foreclosure activity, had the background in construction, and those things have kind of come back into play a little bit here and there. You’ve acquired and started several other businesses, info type companies, data companies, and stuff like that. So maybe let’s just go through the way that you look at the kind of phases of your business career so far.

Aaron Amuchastegui (07:38)
Yeah. Well, then we’ll do, we’ll do the cliff notes because there’s been way too many podcasts and talks of, the long stuff. But like, if I was going to break it down, like 2005 new graduate running a new home building company, didn’t think life could get better. Right. This was like building new home development stuff was selling. were golfing. Life was easy.

2008, I get a call from the boss and says, Hey, we just laid out, laid off 70 out of 75 people. And if you can move to Sacramento by Monday, you can keep your job. Meaning if I could, if I want to be one of the last five and like my pay got cut from 120 grand a year to 60 grand a year. And it’s like major. all of a it was like, everything was perfect to like moving my family. had one little baby at the time to Sacramento to help the home builder kind of like work its way out and do some bank workouts. So that was like first reset of like, Oh my gosh, this is really, really

hard.

For the next year, we spent a long time doing some bank resets. Like we tried to, we, the home builder, we tried to pivot and like do some commercial construction stuff. Like we started bidding on like commercial hotels and things like that. We actually got some bids and we actually like won some projects and made some money doing that. And it wasn’t super sustainable and, then discovered foreclosures. So like foreclosures nine. It was kind of like trying to figure out like, what is that? There were, there were a bunch of bank owned foreclosures, but nobody really knew what auction was. We tried to buy these.

bank owned foreclosures and nobody would sell them to us. The agents had their favorite people, so we didn’t get to buy anything. ⁓ then I discovered the courthouse steps. We discovered that some stuff happened before. Yeah. The first time we bought was, was totally scary because there weren’t books on it back then. Nobody was telling you how to do it, anything like that. And there was like 400 houses that sold the first day and there was only two guys standing there at auction.

So when people make memes about the crazy opportunity that was, was ground zero. was there at the beginning and I think I was the first person to like do that at scale. ⁓

Mike Hambright (09:29)
And this

was still, this was still in Sacramento at that time.

Aaron Amuchastegui (09:32)
This was in Sacramento at that time. So now it’s probably like 2010. I had the knowledge from running a bid, a big home builder. And I was like, Hey, I think this is a new big opportunity. I started meeting people and raising money and built this kind of mini hedge fund and said, Hey, this is like even easier than building houses. Like it’s the same process. have sales and marketing teams. have acquisition teams, we have construction. Now I didn’t have teams at the beginning. It was me for like a first year, but by the time 2011, 2012 hit from 2009, 2012, I bought and sold a thousand houses.

Mike Hambright (09:56)
right?

Aaron Amuchastegui (10:02)
in Sacramento, all with investor money. had a team of like 40 employees again, and, um, and our own real estate teams and everything. within three years, a thousand houses is a lot, right? You’re talking 30, 30 houses a month consistently and just cycling those things through.

Mike Hambright (10:13)
Yeah.

Aaron Amuchastegui (10:19)
So that was amazing. So that was like first chapter of like crazy success. I didn’t have mentors like you. I didn’t have people to get advice from. I was making a crazy amount of money and nobody told me like, you should save some of that and you should, you should like be careful and do a long-term investment. I thought I was, it was crazy. I was super humble and sad when I got, when like, we got like kind of laid off in a way.

Mike Hambright (10:30)
you

Aaron Amuchastegui (10:39)
And then I got super successful and I was no longer humble. I was like, Oh, I, I did this. I was the one that made it. I wasn’t praying to God anymore. I was like, I did this. It was, I’m a perfect person. Um, Blackstone came, came in a lot of other people, but Blackstone was who I talked to. They came in and got into that business in 2012, 2013. They put me out of business pretty quickly. So all of a in 2014, I had this season where I was like, okay, last year I had a couple of million dollars in the bank. And right now I’m out of business. I had to fire everybody had to lay everybody off. I’m such an idiot. How did this happen?

Mike Hambright (10:43)
Right.

Aaron Amuchastegui (11:08)
How did I go from flipping a thousand houses and have nothing to show for it? So that was like the second reset of like, my gosh, what do I do?

Mike Hambright (11:15)
And back then you were not keeping you weren’t were you keeping any rentals at that point yet or that was the. Yeah.

Aaron Amuchastegui (11:19)
I, I wasn’t keeping any rentals. I had,

it was really hard, Mike, and it was really hard in the sense. And I think this probably happens to every real estate investor. You buy a house for a deal and you’re like, I can flip this house right now and make $20,000 or I can make $200 a month. And you’re like, and you’re like, I’ll buy a rental later. I’ll buy a rental later. Biggest mistake from 2009, 2012 was I didn’t keep a lot of rentals and.

Mike Hambright (11:36)
Right.

Aaron Amuchastegui (11:45)
The year when I was like super broke and dying in 2014, my mantra kept being like, man, if I would have just kept a hundred of those houses as rentals, I’d have been set for life. And so I kept.

Mike Hambright (11:54)
Yeah, hindsight, right?

I think about that all the time. We have a rental portfolio in Dallas and and it was mostly acquired from 20 2009 to I don’t know, probably 1314 and and I was but but I sold fix and flip hundreds of houses, you know, several hundred houses and I’m like, man, I should have just kept them literally kept. If I had kept them all, I would look like a amazing genius right now with all the appreciation. Everything that’s happened, of course, at the time, you know, I kept

10%, maybe. But that’s hindsight, right?

Aaron Amuchastegui (12:24)
Yeah.

Yeah, well, at least you kept 10 % like real estate. My experience has been in there have been like get rich quick opportunities, but it’s mostly a get rich slow. But the cool thing about the get rich slow is if you do that mindset, it’s, it’s pretty low risk. It’s like pretty simple. So like, so 2014, I had all these like, God, if I ever had another chance, what I would do different. And then 2015 on a random whim, I end up in Colleen, Texas for an auction.

Now the, was like down and out. was broke, but I had some money from a line of credit left. I was there. I flew in to go send you try to buy an apartment complex. It’s a, it’s a long story about why I got a lead on that. Why even ended up in Colleen? I’d never been to Colleen, but it was the first time I had like insider info on here’s a rent roll and there’s an apartment going to sale. And I’m like, I’m going to go try this. And I, and I flew out to Texas.

And I flew to Dallas and drove to Colleen because I was so afraid of flying at the time. The, didn’t want to have two flights. I stood at auction and, and the auctioneer ship.

Mike Hambright (13:22)
You can’t even fly

in to Kareena, you have to fly to Austin, guess. maybe there’s a small region there. Yeah.

Aaron Amuchastegui (13:25)
Yeah, Austin is closer to clean. There is a regional and

clean. I’ve never flown into clean though. I mean, for years I live in Austin now, but for five years I flew out to Austin every month and ⁓ and I never flew into clean. It was never like I’m going to do that. Austin’s just easier. So I so I find myself at this auction auctioneer comes out opening bid for the apartment and I get too afraid.

Mike Hambright (13:36)
Yeah.

Aaron Amuchastegui (13:51)
To bid. She essentially says like an opening bid is 300,000 and I have enough money for it. And I get cold feet and she just goes going once going twice sold and I sit there and I call my wife and I’m like, I, I, I got scared. I couldn’t do it. I hadn’t been successful in two years. And so the guy that had bought and sold a thousand houses at auction was afraid of like, what if I didn’t do my homework? And so I’m sitting there sulking going like, this was my big opportunity. And while I’m sitting there sulking, another trustee showed up.

Mike Hambright (14:12)
⁓ well.

Aaron Amuchastegui (14:19)
And he sold like 40 houses and nobody was standing there. And I was like, Oh, this is my big opportunity. This is it. This is like SAC. This is like Sacramento 2009. It was Colleen 2015. So then I started coming out every month, but the, this time I did the Blackstone model. did the thing I told myself I should have. I would fly out and buy 10 houses a month. I would flip like one or two to pay my bills and I kept everything else as a rental. And I would.

When, when COVID hit and I did that with investors with hard money, with everything. Like when I say how many rentals I own, it’s not that I own them all and they’re in cash, but it does say like it was significant numbers. did like 10 houses a month and 10 houses a month when COVID hit in 2020, there were 500 houses that I owned a portion of in central Texas that the, ⁓ that were all held as rentals. ⁓ we know what happened and the funny thing, the funniest part about it might.

And this is like just kind of the lucky journey of life and real estate. I came to Texas because I didn’t want to have the big rise and the big fall that California had. was like, the market in Texas has been steady forever and auctions are happening here. I’m going to buy the prices are never going to go up here, but it’s going be nice and stable. Well, in 2020, 2021 prices in Texas went through the roof like they did everywhere. And I had all these houses. Yeah. Especially Austin.

Mike Hambright (15:26)
Right.

Actually, I’ll.

Aaron Amuchastegui (15:35)
So we had 500 houses here. Then by the end of 22, we had, uh, we had 800 houses under management. Now we have about 700 houses under management. So that was like cycle number two of like six, seven years of like really, really hard work was like just hitting singles, hitting singles. Life was pretty good. All of a 2020, life took off and that long time bet, uh, really paid off.

Mike Hambright (15:57)
Yeah. Yeah. And, uh, you know, and we’ll talk about like since then, even because obviously I think when COVID hit, cause obviously I run investor fuel. mean, I, I kind of advise and work with hundreds of, uh, top real estate investors and everybody was scared. was a period where like nobody, everybody was scared. You didn’t really know what was going to happen in life or certainly in business. Right. And, and then it ended up being an amazing run from 20 to 22. Like you could almost do no wrong as a real estate investor, I guess, unless you were,

without getting too political here in a blue state with rentals. And there were a lot of people that didn’t have to pay rent and stuff like that. Like that was a bad time, but appreciation wise and home value wise, it was an amazing ride. And there’s, I know people that sold like soon as COVID hit, they like sold everything that ended up being a big mistake.

Aaron Amuchastegui (16:46)
Yeah. Dude,

talk about a weird time. And then, yeah, there were plenty of areas in the U S where.

Mike Hambright (16:49)
Yeah.

Aaron Amuchastegui (16:52)
Almost at random, good smart investors were penalized at no fault of their own because of like, who would be said because of moratoriums and things like that. And it was hit and miss and Texas was pretty good. Although there were a couple of counties in Texas that were like, you can’t do any evictions for a year. Like there was one of the, one of the, one of the courthouses in Dallas, like in one, in one neighborhood, we couldn’t do an eviction no matter what. Whereas in Colleen, it was fine. So it was, it was an interesting time. Funny part about like, just, just the way that the brain works and the way like all of us do the best we can.

Mike Hambright (17:00)
Right.

Yeah.

Aaron Amuchastegui (17:22)
And doesn’t matter how smart we are. So like, yeah, June, July of 2020, I’m fire selling everything I have that’s vacant. I’m ready for the next market crash. And so I’m selling stuff below market just to get rid of it. And I’m terrified. And I’m thinking like, okay, foreclosures about to go crazy. And I just bought a big house like March, 2020. I just bought this giant house and I was like, my God, I can’t believe I just bought that house. The world’s over. So for six months out, the world was over. Well, didn’t really end.

And by the end of 2020, prices were way up. then, so January, 2021, I had this crazy opportunity, this big moment. The, in January, 21, everybody, everybody kind of was scared. That was a really funky time because, uh, Biden had just gotten elected. We had just seen this huge run up from COVID. And I remember people thinking like, Oh my God, prices just went up 20 % in the last six months. Like we’re going to crash again.

And it’s really slow and we just had new elections. So January 21, nobody’s buying any houses. Nobody’s buying any real estate. It was like a weird couple of months and people were really uncertain and lenders were uncertain. And another mastermind I was a part of, everybody kept saying like inflation is going through the roof. Debt is cheap by as many assets as you can. And we saw that as a big opportunity. I remember emailing, I texted my agent like February 21 and I said, I need to buy $35 million in real estate in the next like 45 days. Um,

Mike Hambright (18:29)
Yeah.

Aaron Amuchastegui (18:40)
And we wrote offers on every single listing in bell county, full price. We didn’t even do auctions anymore. Just like full price and everything we ended up, we ended up getting in contract on a bunch of new home developments. And, this was like February, March 21, by the time the homes were done in October, we were in contract for like two 62 80. They were, they were appraising at 400,000, like the days that we were buying them. So it was, so that was a really interesting time because it was like, it turned out like,

It made anybody look like a really good, strong investor. Anybody that got invested in or interested in real estate got, was almost like me graduating in Oh five and being like, this is really unfair expectations. I’m golfing two days a week and this is easy. I feel bad for people that got into real estate between 2020 and 2022, 23, because it was, it was too easy. It was so easy. Like we all looked brilliant. Like the, it was, it was really wild.

Mike Hambright (19:17)
Yeah.

Right.

It was really the market, right? Yeah. Yeah. So let’s let’s talk a little bit like if you if you could go back, I mean, with with all the experience you have there, like talk about some of the key lessons learned, like kind of going forward. Like you have a lot of knowledge. I mean, that’s one of the benefits of I don’t know if any, you’ve been doing this for a little bit longer than me. Actually, I started in 08, started real estate in 08. So I’ve had some people referring to me as like

Aaron Amuchastegui (19:31)
Yeah.

Yeah.

Yeah.

Mike Hambright (19:57)
the old guy like I’m the old I’m the old head and stuff like that, which ⁓ I don’t I think when I say it, it doesn’t feel like a compliment. But you have knowledge that a lot of people don’t have. And so if you could, you know, share that knowledge of lessons learned, obviously, it’s like, keep some as rentals. ⁓ Wherever there’s a fire, there’s an opportunity, there’s a there’s a kind of corresponding opportunity with any, any bad things that are going on in the market. But

Aaron Amuchastegui (20:02)
We have mixed reviews on that, huh?

Mike Hambright (20:26)
Kind of share some of your key lessons learned ⁓ from all your experience.

Aaron Amuchastegui (20:29)
Yeah.

I’m still, I’m still learning some now, but yeah, we have, we have, we, have been at this a long time and like, there’s so many pros and cons have seen so many different markets. And the only frustrating thing is when we make the mistake twice, right? If you see something happens like 10 years ago, I’m like, man, I’m not going to make that mistake. And then you make it again. A few big things I’ve seen like take out people like take out brilliant, brilliant people.

Mike Hambright (20:33)
Yeah, for sure.

Aaron Amuchastegui (20:54)
One is like, no matter where you are in your business, one of the most important things to do is like pay attention to your cashflow. Meaning that should be simple, right? But when I was flipping 30 houses a month, there was like so much money coming in. I was like adding people, adding people, adding people, but I wasn’t paying enough attention to really know. Like there was always money to pay the bills, but I wasn’t paying enough attention to really know as it started to slow down. Like.

my gosh, I should be cutting people actually lost money this month. I’ve actually lost money four months in a row. So like knowing where your cashflow is, because it becomes, we can have all the equity in the world in our real estate. Right. But if we get some vacant houses, we get some stuff moving out, we get some delays and we don’t have our cashflow covered. People lose really, really bad assets. So one is like track your cashflow no matter what. ⁓ another is like the, the idea of like the buying rentals versus it’s like.

You can, you can work, you can either for delayed gratification is the idea of why would you hold a rental instead of flipping it? Cause it takes a lot longer. If you buy a house, you fix it, you put a renter in it. And if in six months you refinance that you do that whole bird method that takes a long time. And then the crate, like I remember sitting in 2019, I was managing 500 houses and I’m like, I have 500 houses that we own.

And I’m barely making any money and the, and which was like this profound thing, but it was the long-term. like delayed gratification with the idea that the, if you find something that works, knowing it’s not a one is it’s not always going to work forever. I remember thinking like when I was flipping 30 houses a month, like, Oh, like worst case scenario, Blackstone comes in. only flipped two houses a month. Like I’ll be fine if I just flipped two houses a month, but 30 went to zero and 30 went to zero over a nine month period. And so one, if you find something that works, it’s not, especially in real estate, it’s not actually going to work.

forever. So don’t plan on that cashflow being forever and try to see how you can how you can, you know, do some stuff for next time with the idea that like sell stuff when you need to like right now I’m selling some assets that have a lot of equity because I need cash. Well, the cool thing is that because I have those rentals instead of flips, I could have like flipped them years ago and had the cash then but I probably would have spent it or invest in something else. So real estate isn’t as liquid as it was. But like if you have these long term rentals, they’re good. They’re good. The other

A big lesson that the that now I’ve seen three times and it’s a little frustrating. I caught with our hand in the cookie jar a little bit in 23 is the is low rates happen like once every 10 or 15 years, right? Like the and early 22 January 22 people were saying, oh, we think rates are going to get lower. There was a lot of people that were saying we almost signed this like a like this crazy arm like

Like on one of our apartment complexes that was like, we’ll give you like a 3 % now, but if it goes up, it can like cap at these different things. ⁓

You know, forever is a long time and real estate’s a long time. And we never thought we were going to see a crash again. Like we saw an Oh five and someday we probably will. And then we never thought rates were going to like go up so fast again. And sometimes they will. So the other thing that I’ve seen has caught in a lot of people is like not doing long-term debt fast enough. None of us could have started our business without hard money, without expensive investors, without things like that’s how we all get started. Like when we all get started, like I had to go to somebody and say, you put up all the money, I’ll give you 80 % of the

Mike Hambright (24:07)
Right.

Aaron Amuchastegui (24:11)
profit,

like I’ll flip a house for 20 grand and I’ll get, and I’ll keep two. That’s how I started, right? They were getting the bulk of it. Eventually I got to, you know, do more, but the, but you want to get rid of that expensive debt as fast as possible. We, we still had a lot of expensive debt in end of 22 and 23 when rates really started going up. And, um, so that’s, so that’s another side. then great. The big, maybe the biggest lesson for people is like operating in the gray, right?

Meaning in real estate, I have seen so many people operate in the gray. They’ve got eight projects going on. They each of them has an investor cash comes in for this. I’m going to borrow money from this entity to this entity to go pay a bill or whatever. That happens. Like the people do it. Almost everybody has done it in one form or another. I’m going to borrow money from a buddy. Do this. ⁓ so there’s like, that’s, that’s like an example of gray area. Another example of gray area is charging like exorbitant fees.

for like people like, Mr. Investor, like, ⁓ I’m going to raise this money. You’re going to pay me this fee no matter what, when the market’s great, they don’t care. But when the market falls, everybody always comes back. So one, like don’t operate in the gray area at all. Because the it’s really hard once you do to like not want to go further. And I’ve seen great, great men get taken down from this because when the market changes, like the gray area, nobody cares. Even if you tell your investors, you’re up in the gray area. They don’t care when they’re getting paid a ton of money.

But when the market adjusts and it always will, then they come after you for that. And it becomes so it’s hard to explain for non real estate people. And maybe even some of your listeners are like, I don’t understand what that means. That’s great. If you don’t understand what operating in the gray area means, like, like that means you’re, you’re a better investor than a lot of people that I’ve seen. The last thing with partnerships that I would say, ⁓ that was a big lesson, I think it’s important is aligned incentives is the most important thing now.

Mike Hambright (25:53)
Yeah.

Aaron Amuchastegui (26:03)
Meaning like any one of my investors, any one of my funds, anything I’ve ever done, not, not ever done now, anything that I’ve done the last five years, I won’t get paid a dollar unless my investors get paid. Right.

The I don’t have a fixed fee thing. I, when I would raise money for stuff at the beginning, there was like all these fees and it was hard to balance that I do profit split everything now. And there’s none of my overhead covered because I don’t want there to ever be a question. Like I only get paid if they get paid where a lot of people have gotten in trouble is when you don’t have aligned incentives, when people are incentivized, like raise money or when people are incentivized to buy projects or when people are incentivized, like hit refinance, like that doesn’t actually help the project. So aligned incentives means I only get paid if my partners get paid. That means.

No matter what I have their best interest in mind and if something goes bad They can’t say I didn’t because I knew I was only gonna get paid if they get paid market markets go up and down

Mike Hambright (26:52)
Yeah, there’s no way for you to win and there’s no way for

them to lose, but you still win.

Aaron Amuchastegui (26:58)
Yeah. And the, because that’s, we saw a lot of people raised money in like 22, 23, and they would raise a hundred million dollars and they would charge a 5 % fee, which is normal at standard, but they’re all getting sued right now because the market went down. They’re like, Oh, you got paid this and we didn’t get paid anything. And so it’s not, and it’s not even that did anything wrong. It’s not that they didn’t disclose anything, but when you have aligned incentives, then, then people get less angry.

Mike Hambright (27:11)
right?

Yeah, yeah. So with your experience Aaron, what do you your market is a little bit different than many, I guess in Austin, but but you also work with people and you have your ear to the ground kind of nationwide. Like where do think we’re going from here in the real estate market?

Aaron Amuchastegui (27:37)
Yeah, it’s been a I mean, so a month ago, I would have said, I think we’re just going to see a lot of the same for the next couple years, meaning

It’s kind of boring, but it’s kind of normal and you can at least see what’s happening. We, uh, in a lot of markets, we saw a big rise in pricing in 23, 24. saw some, you know, medium prices correct and go down in most markets, not all markets. There’s like, there’s a few markets I’ve studied that have kind of gone up for various reasons, but then now it’s kind of back to that standard, like, okay, we should see some three to 5 % appreciation every year. This is normal. We’ve got a lot of, a lot of the markets have five, six months of inventory. Kind of normal. It’s kind of like, you got to work really hard to sell stuff. Um,

There’s no, there’s no get rich quick. There’s no easy button. There’s no simple, but it’s still a very cool industry. I think we’re going to see that for the next kind of two years, because there was just, there’s been so much talk over the last couple of years of like rates aren’t going to go down again. There’s no reason to push them down. have this weird balance of inflation. one caveat that may be changing my opinion on that is in the last two or three weeks.

There is so much tweets and social media and stuff of the fed chair. We’re going to force him to resign. And if not, we’re going to arrest him for fraud now. And when you look into like what they’re making a claim of, it’s really like blackmail is maybe the wrong word, but it’s really close to that word with the idea that like he said that, there was a, I don’t know the actual numbers. We’d spent X dollars on this remodel.

And then you do the math and it’s $10,000 a square foot on the remodel. And they’re like, my God.

Mike Hambright (29:11)
Yeah, it’s like 2.5 billion

to remodel the Fed headquarters or something like that.

Aaron Amuchastegui (29:16)
Yes. Right. So you’re, it’s exactly right. So they said that they go, my God, that’s $10,000 a foot. You have committed fraud. And so like, we’re going to come after you unless you quit. So the, I, he obviously, and then there was all these things like, ⁓ he quit. quit. He didn’t quit the fed chair did not quit, but I do think that I, so I will not, I would, a month ago I had told you, I’d be surprised if he doesn’t stay in the fed until retirement. Now I’m thinking.

Mike Hambright (29:44)
which is

May, by the way. So I think it’s coming one way or another.

Aaron Amuchastegui (29:46)
Yeah, which is a year from now.

Yeah. So it is going to come one way or another, but now I actually think there’s probably like a 60 % chance that in the next 30 to 60 days, the fed chair will get replaced. And I do think because of the politics, they will start to drive rates down. So I think, ⁓ and then it takes, if you look at some historical stuff, it takes about another six months after that to where it really gets fired up. But if we get a new fed chair in.

I hate even counting on like stuff to go up because the reality is we should plan on business. Like if you’re to make plans for business plan on it, staying the same and make a business that works. Even if, even if prices don’t have huge increases, make a business that works no matter what. Right. And as if prices aren’t going to go up, provide value. Now, if the fed lowers rates and people jump into the market and we get this boost, like we’ve seen historically six months after the, you the fed lowers rates and things like that, then it’s going to be gravy on our business.

Mike Hambright (30:22)
Yeah.

Aaron Amuchastegui (30:36)
But the, I think, so I think the market’s going be pretty stable, but I think there’s now there’s probably a 60, 70 % chance we’re going to get a well needed boost because real estate was punished more than real estate investors were punished more than anybody else in the last three or four months with or the last three or four years with like trying to correct inflation. We got, we got crushed. The average person didn’t, it was really unfair, like smart people.

Mike Hambright (30:36)
Mm-hmm.

Right?

Aaron Amuchastegui (30:58)
Smart good friends of ours, like you probably had similar experience to me. They were like good investors got crushed because they missed because they misjudged what interest rates were going to be and things like that because the cap rates change. So I think that like people should operate a business as if nothing’s going to change. But now I think there’s a better than not chance that we are going to get a boost. We are going to see more people come in. We are going to see the rates get lowered a bit. I would much prefer inflation.

Mike Hambright (31:24)
Do you would prefer inflation? Yeah.

Aaron Amuchastegui (31:25)
I prefer inflation. would. It’s

a because we have real estate because we because we have assets like we were we were we could plan for it.

Mike Hambright (31:31)
Right, that’s the trade off, yeah. But you’re

also holding a lot of real estate too, which is good. So for those that are real estate investors, that they’re not holding assets, like the inflation doesn’t, it just makes it harder for them to acquire new stuff, but it doesn’t help them build wealth because they don’t have assets, right? Yeah.

Aaron Amuchastegui (31:48)
Right. Exactly.

Like, so I’m, so I’m biased when I say like, I wish I had inflation, but I think people, if, like there’s investors out there right now, they’re like, what can I do for opportunities? Right. So if you, think now.

Mike Hambright (31:52)
Right.

Aaron Amuchastegui (32:00)
After the corrections that we’ve had in most markets in the country, if you’re not at the bottom, it’s we’re going to see again in our lifetime, you’re within five to 10 % of the bottom. And really that’s the best you can time pricing. That means if you can buy a house for 300,000, like maybe there’s a chance that if you really time it perfect, you can get it for 270, but there’s, you’re within five to 10 % of the bottom anywhere in the country. ⁓ and so for a long-term hold, long-term business, people should buy assets right now that they think can work thinking cashflow. In fact, I know for sure 10 years from now.

All the real estate that we have will be worth way, way more. Right? Like the, don’t know about three years or in about five years.

Mike Hambright (32:34)
Yeah, I did that conversation with somebody else.

I’ve said a few times if I could go back, I saw I’m in the Dallas market. If I could go back, mean my whole business when I started was direct to seller marketing. So in 2008, 910 and many years after that we were buying houses for 50 to 60 % of ARV less repairs like it was deep. I mean real deep buying the type that you don’t really get to do much anymore. And.

You know, but if I go back, like we would buy a house for like 30 grand, put 30 or 40 into it, sell it for one 15, like retail, right. In the Dallas market. And I’m like, if I could go back in time right now to 2009, 10, 11, 12, and literally just buy everything on the MLS full retail price, you were doing some of that. ⁓ you talked about two full retail price. Like I would look like an, held it. I would look like an amazing genius right now, but at the time I thought that was like,

the dumbest thing I never heard, right? And so the question is, like, well, 10 years from now, will we say, hey, if I could go back to now the median price point in Dallas is probably 300 K. If we could go back 10 years from now, will I say if I could just go back to 2025 and buy everything on the MLS at 300 K or under full retail price, I would do it. And I think the answer is probably yes, because I don’t think even if they adjust rates and stuff, like we got a lot of debt here, the dollar’s being destroyed.

And I don’t think inflation is going to stop. It might go up and down, but I don’t think it’s stopping.

Aaron Amuchastegui (34:05)
I think you’re absolutely right. think 10 years from now we’re going to go.

Yes. Like the people there’s the memes and jokes all the time. Like in 2009, I should have been buying houses instead. was like in diapers, right? Like this is another one of those moments. Like there again, we’re within five to 10 % of bottom, which if historically, like you can’t guess closer than that. Like we might’ve already hit it, right? We might be off the bottom a little bit going the other way, but I think no matter what, if people can buy the real estate and cover the payments on it, come up with some sort of a business plan that even breaks even on the payments. Real estate is about hitting these single low

risks, maybe it’s by a rental that just barely cash flows, right? As long as you’ve got some money in savings covered or something else like that in 10 years, you’ll wish you had more for sure.

Mike Hambright (34:48)
Yeah. Aaron, thanks for joining me. If folks want to connect with you, we didn’t talk about some of the other stuff. I know you have some data company, some other products, something like that. How do folks connect with you and learn more about what you do?

Aaron Amuchastegui (35:00)
Yeah, no, this is this has been fun at the time flies. Thanks for having me come on the place where I loved to know the place where I first met you was on Facebook, which was funny. So I saw you on there. I followed what you were doing and then I got to meet you in person at the at the mastermind out in Florida. But the but Instagram is my favorite place to talk to people. So people come on Instagram. It’s Aaron and much of Steggy. Luckily, I have a unique name and kind of a lot of interaction on there. So if you just type Aaron A R O N A M, it will find me. So it’s Aaron and much of Steggy. Crazy long name. You message me.

Mike Hambright (35:04)
Yeah.

Aaron Amuchastegui (35:30)
talk to me, I make friends on there. I meet people on there. I interact. ask people, I’ll do advice to people. Um, you know, we, I help people. talk about real estate all the time. I talk about the new construction stuff we’re doing. own, uh, a foreclosure data company. help people buy foreclosures. I wrote some books on it. I have, I have all sorts of things that I love talking about that we didn’t get to do today. I think foreclosures are a big opportunity again, but like come, you guys come find me on Instagram. I’ll talk to you there about anything we didn’t get a chance to cover today.

Mike Hambright (35:58)
Yeah, that’s that’s the doorway into all the other stuff, I guess. Yeah, awesome. Well, thanks again for joining me. Everybody thinks we’re joining us today. There’s a lot of at the end of the day. I think what’s important ⁓ and I think Aaron would agree with this too is you gotta surround yourself with people that have been doing this for a long time that have seen the ups and downs that have kind of ridden the cycles that know where the bodies are buried and know where the opportunities are at. And so if you’re newer and newer to the business, we’re obviously trying to talk to a lot of folks that are more high level investors on this show.

But no matter where you are in your career, you really have to get together in the right rooms around people that are having conversations like this because you can look like a rock star, but your lessons can come from people that learned the lessons the hard way and it didn’t have to be you necessarily. So appreciate you guys a bunch for joining us today. We’ll see you on the next show.