Buy-and-Hold Lessons, 2007 Survival, and Avoiding New-Investor Traps

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Show Summary

In this conversation, Gino Fronti shares his insights on real estate investment, emphasizing the importance of a long-term perspective and the need for a reliable experience in short-term rentals. He discusses his business model that includes acquisition, management, and the creation of a legacy through real estate. Gino also highlights the significance of building relationships and leveraging other people’s money to grow in the industry.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Gino Fronti’s Website
    • Gino Fronti’s Phone no: (818) 652-9739

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Gino Fronti (00:00)
  You’re looking at gurus that are online, trying to tell you that you can get rich in the next six weeks doing real estate and Airbnb arbitrage and all these other things. Say no, no, no, no. And, ⁓ careful with section eight. I’m not saying section eight is a bad thing. I’m just saying careful. I wouldn’t make my first investment section eight. That’s for advanced investors, right? Airbnb advanced investors, like all these people that are talking about.

  Airbnb and Airbnb arbitrage and section eight investments and all this as your first investment. That’s nuts. That’s absolutely crazy.

  Quentin (02:08)
  Welcome to the Real Estate Pros Podcast y’all know it is it’s Q Edmonds and I’m super excited to be here I’m excited about it had a little part because I’m thinking about my guest. I mean my guest he is a professional He’s a professional businessman. He got a couple different things that he’s involved in But of course we’re to talk about the real estate, right? And so this guy’s doing some beautiful things and compo

  Cabos and Lucas. ⁓ and I can’t wait for y’all to hear what he’s doing in the short term, in the space. And so I want to introduce you people to Mr. Gino Fronti. How you doing today,

  Gino Fronti (02:40)
  I’m doing great, man. I just really appreciate you having on the show today and looking forward to just having an honest conversation and whatever comes up, comes up.

  Quentin (02:48)
  That is man. Listen, same here. We love authenticity. I’ll be honest with you, we love transparency. And I just love because the listeners have a chance right now to look at things through your lens. We have different people worn and I love when everybody brings their personal experience to the stage because it always makes sure the scope is broader, is widening even more because we got so many people that do so many amazing things. So.

  I’m so excited for you to be here to talk about what you’re doing. I’m excited for you to take the listeners and the viewers into your world. And so that’s what, that’s what I want you to do, man. Take us into your world. Tell us what your main focus is these days. I want you to tell us what market you’re operating in. I guess I kind of stuck it in there a little bit. And then also maybe give us some history about how you got started down this path, man.

  Gino Fronti (03:37)
  Yeah, I mean, I guess I’ve been involved in real estate my whole life. You know, I started, my dad was in construction. He was a general contractor for 50 years, focused on marble and granite specifically for about 25 of those years. My uncle was a cabinet man. So there’s nothing I know that’s not related to housing and real estate in some way, shape or form. And, you know, my dad said to me, says, you know, as you start buying real estate, he says, don’t make the mistake I made. I said, well, that’s interesting. What mistake was that?

  And he said, I’ve bought and sold 16 properties. I’ve made money on every single one of them, but I have nothing left to show for it. He said, I use that as revenue and income and I spent it to live on. So he said, so don’t sell anything you buy. And so I became a buy and hold investor rather than a flipping opportunity investor. And I flipped a couple of properties along the way, just not because I meant to, because I didn’t like it for a buy and hold. I bought it as a buy and hold.

  I held it for a year or two. The market went up. There was things I didn’t like about renting that property and I exited for that reason. but by in general, I’m not a flipper and which is weird because I’m a contractor. So why wouldn’t I be a flipper? Well, because that’s a full time job. And so if you’re doing it as your profession, excellent, perfect. That’s great as a profession, but don’t dabble in flipping. You can’t dabble in flipping.

  Quentin (05:49)
  love it, man. I think that’s great nuggets. think your dad gave me some really, really solid advice. And so, you know, you and I, we talk backstage. I’ll let you know, ⁓ you can let the people know if you want to, if you want to, other things that you’re involved in. But I know you wear a lot of hats. You got different things going on. I guess my question is, especially when it comes to this real estate piece, it’s not always easy in this climate. So what’s been the key to keeping your machine running smoothly, sir?

  Gino Fronti (06:16)
  Yeah. So, ⁓ look, just know you’re make a lot of mistakes. ⁓ and so the reality of the matter is you just like any business, right? So I run a mortgage practice today. ⁓ when I bought my first property, when I was 22 years old, I didn’t know what I was doing. And so I went to lending tree and I got some loan officers off of lending tree to do loans for me. And by the third loan, I realized I was getting shafted.

  And so I went to a friend of my dad’s who I said, Hey, don’t you do loans? And this is in that era, like the 0203 era where it was just wild. Anybody and everybody was doing loans. And he says, yeah, but you’re a smart kid. And your dad helped me when I came to this country. He’s like, I’ll introduce you to the owner of the company. You do your own loans. I was like, cool. So I just, never thought anything of it. And then I ended up building a pipeline within weeks of people that needed loans. And I became a loan officer.

  And so I became a loan officer and eventually I dumped construction. was so successful in loans that I dumped construction. I also became a real estate agent. So I managed a team of realtors and loan officers that were all operating in that era. Well, needless to say in 2007, everything melted down. And so there was a time to make change. And I had already acquired three properties by that time. And thank goodness I did because one of the things that happens is if your income disappears,

  And this is, this is going to get ugly. Let’s, tell you the truth, right? It’s not always pretty. So if your income disappears, but you have a significant amount of real estate holdings, not all of them go in foreclosure at the same time. So in 2007, when everybody was going through the financial crisis and foreclosures, I was able to rob each one of my properties to pay Paul. So Rob Peter to pay Paul to be able to play the shell game.

  And move income from one property to another property. And the moral of the story is I was able to keep them all. Right. It was not easy, but I was able to keep all those properties, even through the financial collapse. So one would go into foreclosure and I would take all the rents from the other two to pay the one off. And then that one would be current and then we would steal from that one to pay the other ones off. So it’s not all roses. It’s not all roses, man. Real estate can be hard, but it is gratifying over time. And I love to say get rich slow with real estate. If you’re

  You’re looking at gurus that are online, trying to tell you that you can get rich in the next six weeks doing real estate and Airbnb arbitrage and all these other things. Say no, no, no, no. And, ⁓ careful with section eight. I’m not saying section eight is a bad thing. I’m just saying careful. I wouldn’t make my first investment section eight. That’s for advanced investors, right? Airbnb advanced investors, like all these people that are talking about.

  Airbnb and Airbnb arbitrage and section eight investments and all this as your first investment. That’s nuts. That’s absolutely crazy.

  Now, can some people get lucky in a good market? Could it work for them? Sure. Look, in the last three or four years, anybody could have made money in real estate. What about now? What about now that it’s becoming a balanced market? What about the challenges that multifamily was faced with? What about the challenges the commercial has been faced with?

  Property values and rents are down 25 to 30 % in commercial and, and, uh, multifamily. How are you going to endure that? Did you put away some nuggets or did you distribute that as as a GP? If you were a GP on a project, did you distribute all of it out to your LPs? And now you don’t have enough money to survive with lower rent and higher vacancy. But these are all things you learn over time. When these are all things that’s just, you take the punches, you make the mistakes and you learn over time that it’s, just, there’s a lot to it.

  Quentin (09:47)
  Yeah.

  Gino Fronti (09:56)
  There’s a lot to it. It’s very complex.

  Quentin (10:33)
  Absolutely. No, man, you’re my type of person, man, because I love talking to people like you because one of the section action next section I was on go to it talks about when things get real, right? Like you said, every moment is not it’s not always pretty. And I tell you, you know, if people have been watching, they know I set it up. I’d be like, there’s times when moments get brittle. There’s time when things go sideways. There’s time you have to pivot because we have to normalize the journey. Right. It’s just not about talking about this success.

  How did we get here? Let’s talk about the journey. Let’s talk about the rocky times, the ups and downs. So, man, I’m so glad you pulled that out. And I can tell you, professional, you’re not gonna take my job, Gino. I’m gonna tell you right now, man, you ain’t gonna take my job, but I can tell you’re professional. Because I’m like, man, I don’t even gotta prompt this guy for the question. He’s already transitioned. So.

  Gino Fronti (11:21)
  Well, look, I was an AM radio talk show host for 10 years. I hosted real estate and finance show for 10 years. And then I went on American dream TV and I’ve been on travel channels, CNBC, and a lot of those. And we’ve had all the big channels, all the big networks. And we have an event that we put on with some of the biggest speakers in the nation. mean, Barry Habib is one of our close friends. We had Gary V. We had Ryan Sirhan. Like we had a roster.

  Quentin (11:24)
  Yeah.

  Gino Fronti (11:48)
  roster of amazing speakers. This year, our keynote speaker is Tom Ferry. So I live, breathe and die real estate. Everything I do is real estate, finance, mortgage. and I run a team of mortgage professionals that had reached at the peak $1.5 billion a year, which is 350 loans a month going through our operation. So there’s very little in housing that I haven’t seen throughout the last 22 years.

  Quentin (12:13)
  Absolutely. Nah, man, your experience definitely come shining through in the nuggets that you’re dropping. And honestly, talking to you, your perspective, really separates the people that just dabble to those that’s in it for the long term, right? And I can tell, you know, through your success, with your connections, is that you’re in it for the long term. And so I guess my next transitional point, the next question I want to ask, what are you most focused on scaling next? Like, what’s the next real goal for you?

  Gino Fronti (12:40)
  This is my baby right now. So yeah. So, ⁓ what’s interesting is, ⁓ I got turned off by multifamily in the United States. I got turned off by short-term rentals in the United States. ⁓ the amount of legislation, the amount of governance, the amount of people up in my business, ⁓ trying to make me fail because I can’t raise the rent. I can’t do this. I can’t do that. I can’t it. Like I wake up in the morning. I need a new article about something I can’t do as a property owner with my property.

  Quentin (12:42)
  Hoooo

  What’s your problem?

  Gino Fronti (13:10)
  And

  with my own property that we own, there’s all these things that we can no longer do. And, because that, that starts to make you feel like, do I even own this thing? Right. At the end of the day. So look, I keep all those properties, right. Because, you know, as we started earlier today, like I’m going to buy and hold what I already have. I just decided to no longer acquire more and invest more time here. Now disclosure, there is one more property I will buy in the United States. Cause I own from the freeway.

  Quentin (13:13)
  Right.

  Gino Fronti (13:39)
  the first three contiguous properties. If I need the fourth one to own from the freeway to the corner, and then we can tear it all down and build 200 units. So that will happen in the U S portfolio. That’s something that’s, it’s already been 22 years. Like I call that my 40 year plan. It doesn’t matter. Like, so when I say, think about real estate long-term, I mean, mean, 20, 30, 40 years, think about, forget about even thinking, taking any profits yourself. Think about building a legacy for your family. And so.

  Quentin (13:47)
  Yeah, ooh.

  That’s it.

  Gino Fronti (14:07)
  So that one will happen in the United States, but we took a visit for my 40th birthday to Cabo San Lucas. And, we had the most incredible experience. We rented a house and it was hosted and we had a, I wouldn’t even call him a Butler cause it wasn’t like that. It was super cash, but he was my concierge. And so we’re like, we need to, and he brought tequila. We need ice and they brought ice.

  Quentin (14:24)
  Yeah. Get concious,

  Gino Fronti (14:30)
  We need, I was like, I want Argentinian cuts of meat cause I want a barbecue. And all of a sudden Argentinian cuts of meat and Argentine wine showed up. Like anything is like having a magic genie at my property so I could get whatever I want. And I said, man, what if we could do this for other people? Right? What if we could do this for others on a consistent basis? Because you and I both know that one of the problems with short-term rentals is the lack of consistency throughout.

  It is wild. mean, I’ve been, pulled up to a property in Oregon. This just happened to me like six, maybe eight weeks ago. I pull up to a property in Oregon. It’s totally unacceptable by the way. I left my house and drove 22 hours in one shot to get there.

  Quentin (15:12)
  Mmm.

  Gino Fronti (15:55)
  Three o’clock in the morning, family and kids in tow, mother-in-law and all. Code doesn’t work. Can’t get it into the house.

  What do do? No, my wife was going to be in tears three o’clock in the morning. was like, well, we’re gonna have to go run a hotel. Well, we can’t. There’s an event. There’s a whole place sold out. That’s why we got an Airbnb six months ago. We got lucky. Okay. My son just started pushing buttons and because he has fat fingers, he figured out the code. There was a typo in the way that the host put the code in and the master bedroom door didn’t work. And one of the windows didn’t close and there was just all this stuff. And I’m like,

  man, this is not a professional host, right? So what we’re building in Mexico is a professionally hosted portfolio of properties that you can rely on the brand that you’re going to have the most amazing experience and no matter which one of our properties you stay at. And so we’d like to acquire 25 to 50 properties in Cabo San Lucas or Baja California South, let’s call it. We’re going to do Todos Santos, La Paz, Los Bariles, all the different areas there that are within our ecosystem because that’s where my construction crew is.

  So I don’t want to go too far that I can’t send, deploy the contract, the construction crew that took me three years to build. So, but, we’re building down there and we’re building a reliable experience and why 25 to 50 properties. Once I hit 25 properties, you can become a Marriott Villa. Okay. And at 50 properties, we can exit and sell the intellectual property for more than what the properties are worth.

  Quentin (17:17)
  Mmm.

  Yeah

  Gino Fronti (17:27)
  Okay, so there’s multiple streams of income here for investors. So let’s talk a little bit about investors. Do you want me to keep going or did I prod any questions?

  Quentin (17:34)
  Oh, keep

  going, baby. No, you rolling now. Come on, But thank you for the professional courtesy of Axe, and I appreciate you, But I’ll keep going,

  Gino Fronti (17:40)
  I know I could just talk, you know.

  Alright, so check this out. So what I learned over the last seven years of thinking there was three years of business planning and now there’s been three years of execution. We’re in year seven.

  The acquisition company is going to acquire properties, rehab them, perfect them, operate them on Airbnb and VRBO for six months, and then hand them off and get acquired by the holding company. Okay, so now I’ve got an acquisition and development company. Then I’ve got a holding company that’s going to hold the real estate asset. Then I’ve got a management company that manages the companies in the holdings. And then I’ve got an IP company that holds the intellectual property to all of it.

  to the brand name. Okay. So it takes four businesses to operate this one business, right? To do it right. And, ⁓ and the reason for that is there’s two different types of investors. let’s say you’re a little looking for cashflow. Okay. If you’re looking for cashflow, you belong in the development company. The development company pays eight to 12 % depending on your, on your amount of investment. And that’s just a note.

  All you’re doing is letting that company borrow money and we’re just paying you on the note. You’re not an investor in the property. You’re not an investor in the business. You’re literally looking for cashflow. We’ll take your money. We’ll develop the property. have a rock solid exit strategy because our buyer is sitting right here waiting for this property to be perfected so that we can acquire it into the holding company. Now, if you’re younger and you’re looking for a long-term investment,

  And you’ve got the 10, 15 years to wait for us to build this property of 25 to 50 portfolio. Then you invest in the holding company. And, uh, one of the things that’s interesting about when you, uh, the holding company is when you trade a group of properties as a whole, uh, the private equity firms that are looking at acquiring properties of this nature, they understand the, hard it is to put together a prop 25 to 50 single family residences. So they pay a premium.

  of 30 % above market value on these homes. So now you’ve got cashflow during the duration of the 10 years, less cashflow than in the debt fund because it’s less risk. And then you’ve got the holding of the asset. So you have appreciation over the next 10 to 15 years. And you’ve got the plus premium that PE firms are going to pay on the acquisition of the portfolio. And we will only sell the portfolio along with the intellectual property.

  Right. And so there’s, but you can’t invest in the intellectual property unless you’ve been an investor. That’s the restriction. Unless you’ve been an investor in the portfolio or in the development company.

  Quentin (20:23)
  Yeah. Bro, are you talking about the hack? Talking about having a system, man. Bro, you building a whole ecosystem and I absolutely love it. Man, that’s me.

  Gino Fronti (20:36)
  He said, what am I excited about? And

  it just ranted for like 10 minutes, you know?

  Quentin (20:39)
  Listen, come on, man. Like, I absolutely love it. Again, man, thank you so much. You’re dropping these nuggets, man. And again, you’re showing your expertise. You’re showing that you’ve been in it for a long time. And it’s coming shining through, Everything that has different hats that you play is playing a role when you thinking outside of the box and being able to build something that I know is going to be absolutely sustainable. And so thank you, man. Thank you for just the gift of you just sharing this with our audience. again, taking this into your lens.

  So I think one of the last questions I want to ask you is about relationships, right? Because we’re not islands, right? We can’t do anything by ourself. So I just want to know when it comes to like you building your relationships and growing your network, what’s made the biggest difference for you?

  Gino Fronti (21:25)
  man. Every relationship plays a part. Just like, you know, I woke up one day and when I was building this, said, man, I was so dumb. said, all these years I tried to do it all by myself and I didn’t use other people’s money. said, man, if I was just using other people’s money from when I started, when I was 20, I’d have thousands and thousands of doors now. But then I had a reality check for myself and I said, but who would give you money? You didn’t, you didn’t have the experience. You didn’t.

  You didn’t have the track record. You didn’t have the portfolio. You, you couldn’t prove that you were the right guy to take somebody’s money and improve it. so I would say every interaction has value. Every relationship has value. Now, also you have to be very, very wary of crabs. I don’t know if you ever heard about the crab mentality, but people will try to bring you down. they will try to bring you down because they feel insecure around what things that you’re doing. So if people tell you you’re crazy, good, keep going. People tell you you’re going to fail.

  Quentin (22:21)
  Yes, sir.

  Gino Fronti (22:22)
  Good, keep going. That means you’re onto something. Cause if you don’t go into a space where people are fearful, then that means there’s not enough opportunity. And so I think fear is where the opportunity lies and you have to have good advisors. You have to. So I actually found really good advisors in my attorneys. I think having close relationships with an SEC attorney, with a business attorney, ⁓ those have been very valuable relationships.

  Don’t be afraid to spend $700 to $800 an hour. Uh, because that’s, that’s, think that’s some of my better relationships have come from referrals from those people. Um, and most recently I joined a capital raising group with Brad Blazer and, uh, and, and Brad will be introducing me to family offices and RIAs and so that I’m not going one-on-one with investors like I am right now, but I’ll be able to reach groups and I’ll be able to reach bigger capital. So if you’re looking to raise like 2 million bucks to buy a

  six unit apartment building, you can do that with family. If you’re raising, if you’re looking to raise $250 million, you need family offices and RIAs. You need institutional dollars. And so I couldn’t do that by myself. And so I hired Brad to help us do that.

  Quentin (23:35)
  Beautiful man. Man, I love it, man. I love it. I mean, 20 minutes has went by pretty, pretty fast. Man, you dropped some amazing nuggets, man, and just some things for us to think about. just thank you for letting us into what you’re doing, what you’re building, the way that you’re building it. And so I got to say, man, I really, really appreciate the wealth of knowledge that you shared. And so listen, before we wrap, if someone wanted to reach out to you, connect with you, maybe collaborate.

  Learn more about what you’re doing. What’s the best way from the reach out to you.

  Gino Fronti (24:06)
  Text me 818-652-9739. Even if you’re stuck on a project, if you need help, just call me. Just call me, text me. ⁓ like I’ll help you. Like I was once in your shoes. I can almost guarantee I was once in your shoes or worse and I can help you through whatever challenge you have. Or if you’re looking at an opportunity and you just want to, you know, see if somebody else to take a second look at it. I’ll look at that. and not today cause we don’t have time, but if you’re really young.

  I have a 4-3-2-1-10 strategy of how you can acquire 10 doors in five years.

  Quentin (24:42)
  So there he is, Mr. Gino Fronti. Sir, thank you so much, man. Thank you for your time. Thank you for your story. Thank you for your perspective. I know our listeners found a ton of value within this episode. So again, man, thank you for your time today.

  Gino Fronti (24:55)
  Alright, thank you. Thank you for having me on. It was a blast.

  Quentin (24:58)
  Absolutely. Now, listen, everyone else, heard him. You’ve heard the story. You heard the value. You’re walking away with it. How about you be able to come back and get more value? You can do that. All you have to do is subscribe. That’s all. Hit the button and we’ll let you know when we live. It’s that easy. Listen, we want to see you on the next time. So hopefully you’ll do that for us. And Mr. Gino, thank you again.