Hey everybody, welcome back to the show. I’m excited to have my buddy, Marc Ruiz, on the show. He’s an affordable housing provider that rehabbed over 500 houses and does a lot of new build constructions too for affordable housing. Let’s jump into the show!

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Mike: [00:00:00] Hey everybody. Welcome to the show. I’m excited to have my buddy mark here with me today. He’s an affordable housing provider. That’s uh, rehabbed over 500 houses and does a lot of new build construction too. For affordable housing, we’re gonna be talking about affordable housing today.

Professional real estate investors know that it’s not really about the real estate. In fact, real estate is just a vehicle to freedom. A group of over a hundred of a nation’s leading real estate investors from across the country meets several times a year at the investor fuel real estate mastermind to share ideas on how to strengthen each other’s businesses, but also to come together as.

And build more fulfilling lives for all of those around us on today’s show. We’re gonna continue our conversation of fueling our businesses and fueling

Marc: our lives. I’m glad you’re here.[00:01:00]

Mike: Hey, mark. Welcome to the show, buddy. How are you?

Marc: Hey, Mike, I appreciate that.

Mike: How are you? Good, good. Uh, so glad to have you here, looking forward to talking about this. You’re just up the road here. I’m in Dallas. You’re up the road a little bit in Tulsa. Um, by Texas measurements, that’s just up the road. So we can say that.

What are you about four hours away, three and a half, four hours. About four hours. Yeah. Yeah. Awesome.

Marc: So three and a half hours to Dallas and about another hour to get into Dallas.

Mike: Yeah. It depends on where you’re going, like in Dallas. That’s right. Um, uh, so let’s talk, tell me a little bit about your background.

I mean, you’ve been in real estate for a long time. You’ve done a lot of things. Tell us a little bit about your background and kind of how, how you got to where you are today.

Marc: So, uh, short version, I, I started wholeselling houses about 18 years ago. Um, Got into full construction doing flipping about 15 years ago, I’m a flipper by trade.

Um, and as we, we got actually did so [00:02:00] well with flipping that I created tax problems. So I started getting into rentals and as we did the rentals and I started doing numbers, we shifted towards affordable housing, lower income entry level stuff, because bigger isn’t always better, right?

Mike: Yep. Yep. And so, and now you’re, um, you’re doing some new build stuff, which we’ll kind of get into that, I guess in a little bit.

So we talked a lot upfront and I know you focused a lot on kind of entry level stuff, affordable housing, first time, home buyer stuff. Not necessarily move up stuff, not big stuff. So why, why is your focus specifically on, um, kind of entry level, I guess, affordable housing?

Marc: Well, In the beginning. So the biggest reason is, is audience.

I have, I have a more, a larger pool of people to buy my product. You know, when we’re, when we’re doing flipping, you know, I noticed that, you know, when we’re in that low hundreds hundred and a half, that they would sell as soon as we put ’em on the market. [00:03:00] Um, and you know, as my, as we evolved, I thought that, you know, you’re higher end stuff.

You make more. It’s more exciting. And it turns out that it’s, you know, when you’re above two 50, you have a different clientele. People. With that kind of money, you know, they, they’re more particular, they’re more sophisticated. They’ve done this before and, and they, they have the money to do what they want.

So they don’t necessarily care about what you’ve done to the house or the remodel of the work that you put in. So, uh, we didn’t sell ’em as fast. And as a result, we, we held on the money. It didn’t turn as fast and it just, it, it turned out to not be worth the effort. So. Our model, we based on volume more or less.

I mean, we, we get in, we get out and we, we make our may make return and we go, um, we also, when I started doing rentals, the more expensive the house, the higher, the debt service. Um, the higher, the debt service, the higher, the risk. I mean, [00:04:00] I’m, I’m not gonna lie. I, I like to be, you know, warm, warm and fuzzy, you know, when I, when I have lower income houses, I mean, if, if it goes vacant, I don’t have as much of a mortgage payment to cover, so it’s less stressful.

Mike: So, yeah. Yeah. And obviously with entry level houses, the kind of. The rent per, uh, value of the house is just better at the entry level than it is. You know, say, say, you’re trying to rent out a million dollar house, obviously, tho those typically don’t cash flow, the ratio of kind of value to rent just isn’t as good as it is on

Marc: entry level stuff.

No. And you know, like if you look at like broken a, a suburban house, you know, 200, $300,000 house, I mean, you’re, you’re lucky to debt service at a, or a rent ratio of a, what is it? The 1%. Yeah. Or you have a debt service at 1.2. I mean, you, you make just enough to cover the bills and you’re depending upon appreciation in appreciation and DEP appreciation, you’re not really making any cash flow.

I look at the, the, the smaller [00:05:00] houses, like if we, if we’re at the a hundred thousand price point or even under, um, My, my rent ratio is almost two, I mean, two and a half. I mean, a lot of my houses, my north Tulsa houses, you look at I’m minimum for less than a hundred thousand dollars. Typically closer to $70,000.

My mortgage is, you know, average three and a half taxes insurance, a hundred bucks. I’m my hard cost on that house. Monthly is four 50. My average rent is 8 5900. So I’m double the. Yeah, of what my, my, my expenses are. Yep. Um, so that was appealing to me. I followed the money in, I followed numbers in. Yeah.

Mike: And I think for us as entrepreneurs, once you, sometimes we, when you start to reach a certain level of success, is that real estate, investor and entrepreneurs.

Sometimes we lose touch a little bit with the fact that honestly, the average American. I something like 70% of Americans have less than a thousand dollars in their savings account, [00:06:00] something like that. Right. They have very little, uh, safety net there. And so to be able to provide, you know, nice housing, cuz you’re building a lot of this stuff now at the entry level point of the market is, uh, is in high demand just because, you know, everybody can afford that.

And I think you said it up front, it’s like. You know, if you’re the McDonald’s of housing and, and you can’t eat at, uh, Outback steakhouse anymore, or, you know, anywhere else, like you can only go if you’re, if you’re kind of at the low end, you can’t go any lower that that’s, that’s the nicest properties you’re gonna get.

And the lowest price points.

Marc: Well, and I, I have this joke. I mean, I’m, I’m a bottom feeder and I’m very okay with it. Uh, I, I like, um, full remodels, you know, I don’t like maintenance, so I, I actually go for the, the dirty, the nasty, the, the, the ugliest house on the block. And, you know, when you’re in the suburbs, those houses aren’t great.

But when you’re in a like low income, [00:07:00] um, section eight, Area, those houses are bad and yeah, when you go in and you transform that house from being, I mean, literally inhabitable, uh, to the nicest house on the block, you’re making a difference in the neighborhood. Yeah. Um, but you know, our, our, our mission became very simple.

As we believe everyone should have a nice place to live, and we want the places that we work to be better for us having been there. Yeah.

Mike: That’s great. Let’s talk a little bit about the model and I know you can control that a little bit more with when you’re building them. Right. And so I know you transitioned a while back from rehab to rent, to more of a build to rent, uh, model.

And I think some of that is over the past few years has been constrained inventory, right? Probably a little bit of that too, but also you just had more control over the quality and the maintenance and stuff like that. So kind of compare those models, build to rent versus

Marc: rehab, to rent. So the, the rehab.

you know, five years ago, 10 years [00:08:00] ago. I mean, we could pick house, we could walk down the street and buy houses. I mean, literally people were just tossing them at us. It was, no, it was no issue, but as the market got crazy the last few years and you know, it, it. And surprisingly, you know, inventory shortages, it just became so competitive and people were paying what I consider stupid money for stuff.

And I just refused to do that. So, you know, in, in my career I’ve always identified trends and I don’t like to do what’s popular. I like, I, I make my money doing what other people don’t want to do. So I, you know, when full gut remodels got popular, I moved in north Tulsa. We started doing affordable. you know, once inventory dried up on the south side, people started moving into the low income areas.

So, and my model, I, we always did full gut remodels and we did that for two, two reasons. One, uh, it was easier to find them and get ’em cheap two. I don’t like maintenance. You know, when you, if you [00:09:00] try to run maintenance outta cash flow, you’re star to just, you you’ll eat up your eat up your monthly profits.

Real quick. Yeah. So our, we, we go in and we would replace everything. We do take it to the studs, rewire, REPL, HVAC, roof, window siding. I mean, new house. Um, so the evolution to build rent was actually pretty simple because when it became harder to buy, no one was buying lots. So we could go buy lots for a few thousand dollars.

and, um, then we figured out how to build a house on it. Now, building a house is a whole different animal. There is a whole, the, the permitting process, the procedures, the inspections, the requirements, the insurance requirements. I mean, it. For doing almost the same job. The [00:10:00] expectations on the contractor are dramatically higher and you have to get certified at this point.

It’s like, it’s, it’s crazy. How mu how difficult the government city, the city, every county makes it to build a new house versus a remodel. And. I’ve also figured out if you buy an existing project, you leave one wall standing, it’s a remodel. Uh, but you get into the permitting process and it, you get into it, the city, government, and the, the, the politics behind it is makes it more cumbersome.

Yeah. But at the end of the day, it’s a, literally a brand new product. We have. We don’t, you know, we don’t have to worry about what’s behind the wall because we put the wall there. So we have little to no maintenance. You have no cap, no capital expenditures. Um, and people [00:11:00] we figured out because we started off doing the bur you know, I, I would buy ’em remodel, ’em rent, ’em refinance them.

I owned a construction company. So we got to the point that we were remodeling them faster than we could refile. So we started selling turnkey as a necessity when we made so much money selling turnkey that we, we turned to the build to rent model. Um, so I mean, there’s people like new houses, right? And this is people like to live in new houses and, and investors like to own new houses, cuz there’s a sense of security.

There’s a lot less concerns of what could go wrong. Mm-hmm

Mike: yeah. And likely stay longer and all they have more retention, uh, and all that stuff too. I’m sure when it’s a nicer house and, and, and if it’s in an area with a lot of older houses, then you have a newer house. Like people are more likely to stay, cuz they don’t want to have to move out into an

Marc: older house.

Right. And then, you [00:12:00] know, we doing, um, affordable housing. We, we learned a few tricks. I mean like when you, when you’re on a, you use. Like voucher systems, uh, section eight welfare, those kind of things. They base the rent based off of bedroom. Count how many people you can fit into the house. So everything’s four bedrooms, two bath.

Cause you know, I maximize our rent. Yeah.

Mike: Yeah. That’s right. You control that a little bit more. So let’s talk about a little bit about the, um, impact that interest rates are having on you, cuz I know when you’re in the rental business and if you’re bringing more on obvious. Um, rates impact us because your properties typically don’t cash flow as much.

So talk a little about how the impact that’s having on you and, and what are you doing to kind of combat that.

Marc: So, you know, the, the most, well, the first impact is the houses we’re selling. Um, you know, over the last couple years, we know that pro [00:13:00] uh, material costs have skyrocketed. I mean, I know building costs have.

Went up probably 45%. It’s crazy. Hmm. Um, fortunately with the increase in material costs, we had the, in the shortage of inventory. So we had increase on values. So our, our values. Matched our, our cost increase. So we were okay. Um, what I was not prepared for was the interest rate, uh, increase, cuz that, that priced out most of our buyers.

Um, you know, when your house goes from 180 to two 20, that’s not a huge jump on the value side, but it’s a pretty significant jump on the, on the. Debt service side. And then you add what two points? Two, two, 3% interest. I mean, the interest is nearly doubled. I mean, the money was almost free for a long. Yeah.

Uh, so people were stretching out and this counts on both the entry level, the home first time home [00:14:00] buyers who were buying more house than they could afford. And then also impacts the, the smaller investor who’s, you know, squeezing every dime out of, uh, a deal they can and they over leverage themselves.

So, you know, you, you have less people who are able to buy. So we have to figure out how to make our product cheap. . Yeah. Yeah. And how our case, we started building smaller houses. We, we started targeting tho those lower numbers. I mean, we have, we had to find a way to keep those houses under 200,000 to make the, the rent, uh, the debt service make sense.

Mike: Yeah. Yeah. And I’ve seen in, in the Dallas market here, I’ve, I’ve seen, um, you know, ads and stuff, or usually on the outskirts, more, more outside of town where there’s, uh, some of the builders are building like way smaller houses. For the same reasons, right. They have to, they have to find a way. So they’re more affordable cuz they’re on the outskirts and they’re more affordable because they’re, they’re going back to like some of the ones I’ve seen are like 14, [00:15:00] 1600 square foot houses, which I think for the past several years like builders, um, just weren’t building smaller houses like that anymore.

You know, I’m talking about the large

Marc: builders too. Well, you, when you think about it, you spend majority of your money in bathroom kitchens, you know, your plumbing, your electrical, your heat and air. You know, those are things that, you know, a few hundred square feet. Don’t don’t change a lot. Um, so it economically, when you’re building, you know, on a per square foot basis, it’s cheaper to build a bigger house, but at the end of the day, um, when you’re looking at a total value.

I mean, you have, we had no choice, but to bring it down and, you know, the only way we could do it was to chop off a bedroom shave 300 feet off. I mean, and it, it saved us $25,000 on our, our build cost, which saves $25,000 on our sales price. Right. Uh, because you know, we, [00:16:00] we, we do, we do a, quite a bit of volume.

I mean, we, we look, we, we, on average, we’re building five to 10 houses, a. You know, we, we have a fairly sizable operation between the, between the new construction and the remodels. We have at least a dozen projects going at any given time. Yeah.

Mike: Yeah. So, and the vein of, uh, of affordable housing, I know you also own some mobile home parks and stuff like that.

Let’s talk about kind of mobile home parks versus, um, versus traditional houses from an investor’s standpoint.

Marc: So mobile home parks. I, again, I like. Large returns. You know, when we, when I, when I joined the cash flow group, when I’m looking at multifamily properties and I’m looking at a six cap, five cap, you know, these, these crazy numbers to me, you know, in my mind, I come from affordable housing where if it’s not, you know, if it’s less than 15% return, I don’t want it.

It’s not worth my time. You know? So you, you trying to, [00:17:00] they’re trying to convince me to go buy something at a seven cap. I’m like, I just don’t understand. Mobile home parks is a, the multi-family solution to low income, more or less because we’re able to get, you know, 16, 18 caps. You know, I, I bought my first mobile home park a year ago and we bought it at a 16 and a half cap.

Wow. So, I mean, it it’s simple, uh, money returns. I like double digit returns. I don’t want, I’m not. Oh, and I like the value. Add the other part of the multifamily or the, the, the mobile home parks is it’s faster than buying one at a time. Sure. Cause there’s only so many houses you can buy at once, which is why we, I was drawn into multifamily because we’ve been doing houses for, you know, oh, 18 years.

So it’s just, you can’t buy ’em fast enough at some [00:18:00] point. So right. We, we, we looked . I, I like mobile home parks also because they’re very easy when I say easy. There’s, you know, most of them what our model is is we go in and we look for. The mom and pop the operator type mobile home parks that are not maximized that are not run like a business.

And we come in and we pull some easy lovers. You know, I, I like the ones that have, you know, half empty park because I can go get new trailers, bring them in, rent them. And I mean, you wanna talk about quickly increasing income, you know, your dramatic in, you know, dramatic, uh, value add. just by pulling a small lever.

Yeah. Um, and it’s not a lot of work. I mean, just go find, you know, find some trailers, bring ’em in rent, you know, hook ’em up and rent them. Um, and then there’s, you know, there’s other option, you know, you go in and you going into remodeling trailers is less appealing. We we’ve done several remodels on trailers and it’s much like [00:19:00] remodeling a house, um, on a smaller.

Unfortunately, it’s not much cheaper and it’s more cost effective just to go buy a trailer and put it in place. Yeah. Yeah. Um,

Mike: and mobile, mobile home parks. Are they, are they in the Tulsa area as well? Your mobile home parks? Are they in the Tulsa

Marc: area? Um, we have one in moggy, which is about 45 minutes south on, on the way to Dallas.

Okay. And then, uh, the other ones in, just on the east side of Oklahoma. okay. Uh, just off I 40. So they’re, they’re both within, near, they’re both about an hour. Well, 45 minutes and an hour and a half. Yeah.

Mike: One of the, the things that I, I had somebody on my Flipp nerd podcast, like years ago was a mobile home investor and they really blew my mind, uh, when they told me that.

Uh, and I, I, I looked, they did my research on it too is true. That something like 10% of homes in America are mobile homes. Like I, I just blew my mind that it was that high. You. But they’re. So I guess when you see a park they’re super, they’re super condensed. Like there’s a lot of homes there. And [00:20:00] then of course there’s tons of rural areas and around lakes and stuff like that with tons of mobile homes.

And so it was just crazy that when they said that I was like, that can’t be true. But in fact, I think it is well.

Marc: And, and if you look, especially in Oklahoma, Texas, this part of the country, there’s a lot of. They’re all over the place. I mean, they, and they blend in very well. You don’t, unless if you’re not looking for ’em, you don’t notice half of them right now, the, and you know, the other thing like was appealing with mobile home parks.

You look at like, you look at multifamily, you look at your apartments, you know, your average tenant turnover. They stay, what one, maybe two years, if you’re lucky. And even with the housing, we found that most people or stay between one and three years. On average mobile home parks. Most tenants stay 13 years is the average.

Wow. You have a lot less turnover.

Mike: Yeah. Cause where else are you gonna go? I mean from an where is she gonna go? Well, unless you go upstream, but you’re not gonna go downstream, I guess. Right?

Marc: Well, and there, there are some [00:21:00] nicer mobile home communi and that’s what we, we look for as we go in and we make, you know, a, a better place to live, like everything else.

We believe, you know, this mobile home fits so well, what we do because we we’re allows us to give people nice places to live, you know, affordable housing options that they wouldn’t otherwise. And then also with the mobile home parks, we have options. We, we have, you know, we can rent ’em, but we do a lot of rent to own in mobile home parks.

In fact, I have one park cuz I I’m I’m I’m I’m always curious on what make things tick and I’m, I’m very big on education. I mean, I’ve, I’ve done. I, I, when I’m in into something, I learn as much as I can. I have the, the Mo park is pure rental. I have a hundred percent control of the park. The Hart park is rent own.

Everything is on a, uh, lease option. So I have no maintenance and there’s pros and cons [00:22:00] to both. And I I’m, I we’re gonna have to kind of tally here at the end of the year to see which one is actually more profitable. Um, but they, they each come with a different set of challenges, but you have more options.

Um, I like the rent to own model because it gives people an option to, you know, live the, live the American dream of home ownership that they probably wouldn’t otherwise have. I mean, you, you granted, I mean, it’s a trailer on a little parking a little lot, but it’s their lot. Right. You know, people take pride in that.

Yeah. Um, but on the other hand, It is also their property. So I just can’t go on there and clean it and mow it and throw the trash away like I do in T Moge. So I. I mean trailer trash is a real thing, man. yeah.

Mike: Uh, mark. So you’ve be an investor for a long time now. And you’re a member of investor fuel our cashflow [00:23:00] group, which is our multifamily group.

And, um, you know, would you mind just sharing a little testimonial of what it’s like to been around for a long time? You you’re kind of an old dog, you, you know, a lot in the industry and just the value you’ve gotten out of being a part of

Marc: investor fuel. So we joined investor fuel 18 months. Uh, it was spring of 21.

Um, we, I, I like investor fuel for several reasons. One of the biggest is so I’m here in Tulsa and I, there’s not a lot of people who play on the level that we do. So I don’t have a lot of a large peer group, so to speak. Um, and in Tulsa, I am definitely the big fish and small punt, and I enjoy that. Don’t get me wrong, but.

it’s not challenging. There’s not, you don’t have a lot of stimulating conversations and relationships and you don’t have those people who force you to level up. So my favorite thing about investor fuel is when we get together, it’s all [00:24:00] about the contribution and helping each other and, and kind of, you know, raising each other.

So I go into a room where I’m no longer the biggest fish. and I, it forces me a outta my comfort zone. B also I’m a student again, you know, because I’m not, I don’t know everything I think I do, but I don’t. Uh, and I, I realize that there are people doing a lot more than what I do. Um, you, but you know, here in my local market, I don’t see that.

So it’s nice to, uh, have people to relate. yeah. Now also, you know, working with Corey, I mean, the reason that we shifted from, you know, north Tulsa houses to mobile home parks, cuz we want, you know, we want the multi-family, you know, I, it, I came from the single family world and you know, the biggest difference in the biggest thing I’ve learned in investor fuel is, you know, single family is [00:25:00] a.

Single individual sport, so to speak, you know, I can go and work. I can do a lot of things. I can do it. I can do it. I can do it. Uh multi-family and either mobile home parks included is a team effort. It takes a group of resources. No one person can do it. And I tried, I tried trust me. I’ve tried. Cause I don’t play well with others.

Uh, it, it becomes a much more of a team environment, a team sports like you, you’re not gonna win a football game by yourself. I don’t care how good you, how good you could throw that damn ball. So the, the connections, the relationships, the, the level up, I mean, I guess, you know, every time, every time I come to the meeting, I learn something that makes me money, saves me money or, uh, increases my game.

Mike: awesome, man. Well, thanks for sharing that. And that’s, and that’s what it’s about, right? Is we, sometimes we, I think most people in our group are, are [00:26:00] heavy hitters in their market. And then when they come together, you know, first off two things, one is, it gets you outta your comfort zone cuz you you’re, hopefully you’re not the biggest person in the room.

If you are then the room isn’t right for you. And two, even if you, if you are a, uh, you know, a good size operator. um, one little bitty nugget that kind of comes outta nowhere. They didn’t even expect you weren’t even there looking for, could have a dramatic impact on your business. Just like you hear one little thing and you’re like, wait, what?

I never even thought of that. It was right in front of my face, but if I put that in my business, that’s gonna save me 50 grand a year or more, or help me make another a hundred thousand dollars a year or

Marc: whatever it is, whatever might be well. And you know that, and, uh, the biggest thing that I’ve taken is actually time.

Um, and saying no, and eliminating a lot of the things, you know, simplifying my life. Hmm. You know, like the million dollar meeting, uh, couple weeks ago. I mean, that was my number one thing is I just, I gotta simplify me and I’m I’m involved with too much. Yeah. Not that I’m not gonna do ’em I just gotta find [00:27:00] ways of me doing less.

Right. Yep. Yep.

Mike: Awesome, man. Well, mark, if, if folks wanted to connect with you some. Whether they’re in the Tulsa area or anywhere else. Uh, where can they go to learn more about you or how to connect with you?

Marc: Uh, Facebook’s the easiest way. Uh, you follow me mark Rus, R U I Z. Um, also where Tulsa, R R E I a. Um, I don’t have a website.

I’m not very, I’m not on, um, any other social platforms. I try to actually try to hide. I, I try to blend you as much as

Mike: I don’t, but I, some, some days I want to, I need, I need to hide more. So I’m trying to do more. I’ve actually my wife and I joked that I’ve become more introverted over time. And that doesn’t, that seems odd for somebody that hosts a podcast and does big events and all that.

But I’m like, I think it’s because every time I open my mouth, I get new tasks. So I’m trying to let talk, talk less, cuz I don’t need more to do.

Marc: Yeah, no, I, I try to blend in um [00:28:00] it’s yeah, yeah. It definitely, um, it’s amazing how, when people figure out what you do. I, I still get messages every day. Like, I wanna take you to lunch.

I wanna pick your brain. And like, you know, I wish I had time. I just don’t. Right. It’s like, but at the same time for, you know, what we do, especially with, uh, the multi-family, um, and this syndications, like I have to put myself out there. This is why I’m on the podcast, because I’m not, I’m this isn’t part of my comfort zone.

And I’ve only done a handful of these ever. Yeah. Uh, it it’s counterintuitive for me, but. I have to get comfortable raising my game, which is, you know, why we’re here. Yeah. Yeah.

Mike: Well, you did great. So, mark, thanks for sharing your story with us today. And some of your insights really appreciated, buddy.

Marc: Hi, thanks.

Mike: Yep. And guys we’ll add, um, some links down below for, uh, you can connect to market if you want to and learn more about, uh, investor fuel, by the way, if you haven’t, if you haven’t talked to us about investor fuel, we’d love to [00:29:00] talk to you. Our next meeting, actually coming up here, uh, at this point we’re, uh, just a little over a month out.

So we’d love to talk to you about, uh, come and do the next investor fuel and see if it’s a fit for you. Until the next show, have a great, uh, have a great rest of your week. And we’ll see you guys soon.

Marc: Are you an active real estate investor? If so, and you want to latch onto the power of surrounding yourself with over a hundred of the nations leaving real estate investor. All committed to building stronger businesses and living richer fuller lives. You should jump on a call with us to learn more about Investor Fuel simply visit investorfuel.com to get started.[00:30:00]