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Show Summary
In this episode of the Real Estate Pros podcast, Johnny Macias shares his journey from financial struggles to becoming a successful real estate investor and educator. He emphasizes the importance of financial literacy, overcoming limiting beliefs, and the need for practical education in real estate. Johnny discusses his diverse portfolio, including residential, commercial, and sober living homes, and provides valuable insights for aspiring investors on how to start their journey in real estate. He highlights the significance of understanding financial tools and strategies to build wealth and navigate the current market effectively.
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Investor Fuel Show Transcript:
Johnny Macias, TRL (00:00)
Exactly. Yeah, you know a lot of people would tell me, know, it’s easy once you make your first million dollars Well, I call BS on that right? It was harder than hell to make the first hundred thousand First I had overcome the limiting to beliefs, right? I’m not good enough. I’m not smart enough I don’t come from a wealthy family then once we overcome those limiting beliefs Then we have to bridge that financial literacy gap understanding your taxes understanding leverage understanding your credit report and cost segregation and tax strategies and you know, so that’s I knewKristen Knapp (00:09)
Yeah.Johnny Macias, TRL (00:27)
I was gonna get back in real estate right after 2008. But I also had that very honest and vulnerable and responsible conversation with myself to say, dude, you gotta figure this stuff out. You gotta educate yourself on what we’re doing here. And that’s where I started. That’s where I restartedKristen Knapp (00:38)
Yeah.Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Johnny Macias, who is a real estate investor, landlord, and the founder of the Real Estate Ladder. It’s an organization closing the financial literacy gap, helping real estate professionals build their first three properties. So thank you so much, Johnny, for being here.
Johnny Macias, TRL (02:31)
Yeah, glad to share this space with you today.Kristen Knapp (02:33)
Awesome. Well, I’m so excited to get into the real estate ladder. You have such good education to share for everyone, but let’s start at the beginning of how you got into this business.Johnny Macias, TRL (02:42)
Yeah, know, like many of us, I grew up without that financial backing, right? I grew up with a single mom, you know, and I always knew I wanted to get into an industry where I would be able to create abundance, right? So I had the opportunity of buying my first fourplex at the age of 21. You know, I had the opportunity of buying my second property when I was 22 years old and my third property when I was 23. However, without the financial and real estate education behind me,You know, I, like many of us in 2008, I’m dating myself here, you know, like many of us in 2008, you know, I ended up foreclosing on my first three properties, right? So I tell people, real estate didn’t fail me at that point. My lack of financial education failed me. So, you know, like many of us, when we don’t have that, when we don’t come from money, the very first thing we do when we get money is we go out and we blow it.
Kristen Knapp (03:18)
Yeah.Absolutely.
Yeah.
Johnny Macias, TRL (03:32)
Right,so was 23 years old, was wearing a Rolex, I was driving a sports car, the phrase is, fake it till you make it, I never made it. I crashed with everybody else in 2008. So that was my first crack at real estate.
Kristen Knapp (03:40)
Yeah, I think that…I think
that’s such a common experience that people can relate to, especially being so young, at 23, of course. So you’re really helping people have the tools to set themselves up for wealth.
Johnny Macias, TRL (03:53)
Exactly. Yeah, you know a lot of people would tell me, know, it’s easy once you make your first million dollars Well, I call BS on that right? It was harder than hell to make the first hundred thousand First I had overcome the limiting to beliefs, right? I’m not good enough. I’m not smart enough I don’t come from a wealthy family then once we overcome those limiting beliefs Then we have to bridge that financial literacy gap understanding your taxes understanding leverage understanding your credit report and cost segregation and tax strategies and you know, so that’s I knewKristen Knapp (04:02)
Yeah.Johnny Macias, TRL (04:21)
I was gonna get back in real estate right after 2008. But I also had that very honest and vulnerable and responsible conversation with myself to say, dude, you gotta figure this stuff out. You gotta educate yourself on what we’re doing here. And that’s where I started. That’s where IKristen Knapp (04:31)
Yeah.I think that’s a very profound way to look at it because I think a lot of people in your situation might have said something like, oh, well, the market just sucks. Real estate isn’t for me. But you were able to say, no, this is still a good opportunity. I just need to change what I’m doing.
Johnny Macias, TRL (05:39)
Exactly. Yeah, change my mindset around money.Kristen Knapp (05:42)
Yeah, the mindset is huge. think a lot of people have limited beliefs in just how much they think they can earn.Johnny Macias, TRL (05:48)
That’s, you’re exactly right on that, yes.Kristen Knapp (05:51)
Yeah,absolutely. So walk me through how you got back into real estate and kind of what your portfolio looks like now.
Johnny Macias, TRL (05:57)
Yeah, you know, like many people, I was able to get back into homeownership as a primary, using the primary residence and occupying my first property. And like many homeowners, I had the opportunity to leverage my property, right? Pull home equity line of credit out. However, and this is kind of where my mortgage background comes in. One of the largest mistakes that I see, you know, clients do is they leverage the asset to pay off debt.Paying off debt can be a strategy, sure, but I always tell my clients now, debt isn’t your problem. Lack of cash flow is your problem, right? So for me, my wife and I had a conversation around…
If we’re gonna leverage our house, right, and we’re gonna pull out $50,000, let’s create more finance. Let’s create more abundance, more wealth with this. So we started buying properties and flipping properties in 2012. And like many people, right, you would flip a property and just roll the money back over until another property and kept rolling. And then that brought us to right around 2017, had the opportunity to build in with a real estate developer here in Colorado and had an opportunity to kind of leverage that.
And then right around 2020, we’re cashing out of this developer and I realized I don’t have any investment properties. don’t have a portfolio. I want cashflow, right? So we started, my wife and I started making the decision to start buying rental properties and then kind of pivoted into…
Kristen Knapp (07:09)
Right.Johnny Macias, TRL (07:18)
Some commercial real estate recently is my most recent ad. So today I own residential, commercial, multi-family. And then I also have the opportunity where my niche is I invest in sober living homes, drug and alcohol recovery homes.Kristen Knapp (07:31)
I think that’s so wonderful. mean, and you said that it comes out of just a need in the community, correct, with the sober living facilities?Johnny Macias, TRL (07:39)
Exactly.Yeah, I’m at a place in my life spiritually where I want to help people that want to help themselves, right? And let’s face it, know, the drug and alcohol, you know, drug and alcohol in our country is a huge pandemic. It’s affected many of our families, including mine.
Right? So if there’s an opportunity to create a win-win, to be able to buy an asset, be able to provide a safe place for individuals to be on that road with recovery, and there’s an opportunity for me to grow my portfolio and cashflow at the same time, yeah, that’s a no-brainer.
Kristen Knapp (08:07)
And how do you go about occupying those residences?Johnny Macias, TRL (08:11)
Yeah, so in my case, I work with a national organization. And then essentially what we do is I’m a landlord investor. So I will buy the asset and then just create a master partnership agreement with them to lease it to them. So they will actually run the organization. They run the memberships. They self-manage. And then they call me up and say, hey, we need two more in this area, or three more, or who do you know in the 400 miles away? And then that’s kind of how it started.Kristen Knapp (08:36)
That’s incredible. mean, yeah, it definitely is a win-win. It’s so impressive. And I know with your business, you’re expanding. You have your real estate division. You have your property management division. You have a lot of stuff going on.Johnny Macias, TRL (08:43)
Yes.Absolutely. And that’s why we wanted to really leverage out the real estate ladder. You know, the real estate ladder is focused on teaching consumers and investors, you know, the niche of buying your first three properties, right? But doing it with using trusts and LLCs and understanding cost segregation and bonus depreciation, understanding how to use business credit, you know, understanding your taxes, understanding your, you know, how the mortgage is a financial tool. That’s what we’ve identified as, you know, the missing link for a lot of us.
And that’s what we focus on at the real estate ladder.
Kristen Knapp (09:52)
love that you have such great well-rounded background. mean also just learning from your mistakes as well. I think it’s a really relatable story and it’s something that people can really use for themselves. With the real estate ladder what are some comment lor… I mean if someone’s getting into real estate investing for the first time where’s the best place to start? Do they start with an LLC or how do they kind of begin the journey?Johnny Macias, TRL (10:16)
Yeah,I would say honestly, if somebody’s looking to get started in real estate investing, the very first thing they gotta do is they gotta buy a primary residence. And that’s the main focal point of the real estate ladder, right? Because as a primary occupant, they’re playing by a different set of rules than the common investor. As an investor, when I buy properties, and yes, we have access to no income DSCR loans and things like that, right? But we’re constantly being asked to put 25 or 30 % down.
Right? And we have higher interest rates. A lot of those loans come with prepayment penalties. So if you understand the tools that an owner occupant has, low down payment, down payment assistance, you know, to be able to buy and owner occupy their first property, that’s where it all starts with the real estate ladder. So we always tell our students and our clients, we got to get you in house number one. Right? So whatever’s holding you back from house number one, we got to address that. Is it your credit? Is it your finances? Is it your down payment? We can have a conversation around that.
Because once we get into house number one, that is the most common way for somebody starting out in real estate to buy that first property. The LLCs and the trust will come later, right? But I think that the foundation is you gotta get into the asset.
Kristen Knapp (11:26)
Yeah, and I think even like going off of that, I think people are even just scared to have a financial conversation in general. I think it makes people really nervous and nervous to talk to people about what their assets are and equity is. So how do you kind of flip that script? How do you get people comfortable with just the general topic of finances?Johnny Macias, TRL (11:46)
Yeah, thisis that this is that vulnerability part, right? So I find it awful ironic that 20 years ago, I ended up foreclosing on my first three properties, three foreclosures, two car repossessions, and IRS judgment filed against me, a personal bankruptcy, right? So the universe or God has a has a strange sense of humor that 20 years later, I would be teaching people how to buy their first three properties. So I think it starts the vulnerability and connection, right? ⁓ There’s actually a fact out there that consumers are
Kristen Knapp (12:08)
Yeah. Yeah.Johnny Macias, TRL (12:16)
more willing to talk about their intimacy more so than their finances. Right? So that people self-identify with their finances. So I feel that, you when we’re having these conversations, if I can kind of break the ice and say, hey, listen, let me give you my background, right? Made a million, lost a million, made it again.Kristen Knapp (12:20)
Mm.Johnny Macias, TRL (12:34)
You know, then it kind of breaks the ice that when somebody tells me, you know, maybe we have some credit blemishes from a recent divorce or, you know, maybe there is, you know, some, some closed accounts or collections that happened during COVID. They, somebody lost the job. There’s no judgment passed here. So I, I always tell people your credit, especially is just a mathematical algorithm. It doesn’t mean you’re a good person. doesn’t mean you’re a bad person. We can provide that the education around understanding that mathematical algorithm.Kristen Knapp (12:54)
Mm-hmm.Absolutely.
Johnny Macias, TRL (13:01)
to start manipulating that and increasing our score on our own.Kristen Knapp (13:05)
Andwhat would you say to someone who doesn’t feel like maybe they’re qualified to own a home or invest in properties? Like, what do you see as like the minimum financial requirement?
Johnny Macias, TRL (13:16)
Minimum financial requirements, I mean, here’s the thing. With mortgage programs nowadays and where interest rates are coming down, I mean, there’s cheap money out there. But this is.You know, this is where a lot of the financial education comes back to us. You know, I feel that I’m gonna come from I that most of my life I took financial advice from people that were my poor friends, right? And a lot of times my friend group at that time 20 years ago, we would go around and we would measure, you know, how much of a tax refund we got, right? If you got 2400, I got 3200. And that friend group,
would constantly say, you know, lie to the IRS, don’t claim your income to the IRS, don’t file your rental income. you know, as a matter of fact, if you claim all these significant losses, you can actually get a tax refund. And now I tell our clients, that’s what the poor mind person does, right? Because wealthy people understand that if you don’t claim your income, you don’t have documentable income. If you don’t have documentable income, banks aren’t gonna lend you money.
Kristen Knapp (14:05)
Right.Right.
Johnny Macias, TRL (15:00)
So now,right, when you understand the tax codes, IRS publication 936 and 527 and cost segregation and bonus depreciation and all of these tools that are available for us as investors, it’s heavily weighted for us to be an investor and use these tools to help leverage into a greater portfolio.
Kristen Knapp (15:18)
I mean, I love all of that. It makes so much sense that you’re doing this and helping people with the financial literacy. Because normally, what do people do? Just they go out and learn it on their own? Is that kind of how it works? Or just never learn it at all and don’t know what they’re missing?Johnny Macias, TRL (15:33)
Yeah, so withthe real estate ladder, we have an avatar, right? Our avatar is actually a cartoon character. They’re John and Sally is who we call them. And John and Sally, they have a household income of $120,000 a year respectively. They have decent credit. John and Sally have the passion to want to create generational wealth, break that financial poverty loop. But John and Sally are a little different. John and Sally read books like Rich Dad, Poor Dad.
Kristen Knapp (15:53)
All right.Johnny Macias, TRL (16:00)
They watch, you know, HDTVs, Flip This House and Property Brothers, right? They listen to podcasts like this one. You know, they’re constantly seeking that education. essentially what we find is, you know, our client base, we’re looking for them if they’re looking for us.Kristen Knapp (16:08)
Yeah.And do you find that a lot of people or some people might be a little confused? Because I think with so much information that’s accessible on TikTok or AI even, I think there’s maybe a lot of misinformation being thrown out or conflicting information. Do you see that from a lot of the people you work with?
Johnny Macias, TRL (16:30)
No, not on my side, no. But one thing that I do encourage is don’t take financial advice from anybody who’s not doing what you want to do. So being a real estate and mortgage professional of 20 years, I still meet real estate agents today that will tell me, I’ve been an agent for, I’ve been a broker for 20 years. And they don’t own properties. So I always kind of look at this as, why would you not build wealth?Kristen Knapp (16:38)
Great. Good advice.Johnny Macias, TRL (16:54)
the most common way that has been proven in our country, right? So yeah, just because somebody’s been an agent for 20 years or is a mortgage lender or doesn’t mean they know what they’re doing.Kristen Knapp (16:58)
Yeah. ⁓Of course, and I would love for you to just in general go into the opportunity with real estate. think particularly right now people are a little confused or they have trepidation entering the market because maybe a quote unquote bad market. What would you say to people who are a little nervous?
Johnny Macias, TRL (17:22)
Yeah, dothe math, right? So, you know, I’m gonna come from IA again. I had an opportunity, I leveraged one of my investment properties, I pulled money out at 12 % interest, and I specifically say the interest rate, not because I have bad credit or it was a bad loan, because usually I get a gasp, right? I want people to have that gasp when I tell them that I borrowed money at 12%. Because, you know, when you go to your credit union and they’re offering you 8 % on a HELOC, I mean, do the math. In my case,
does the math make sense? So if I borrow X amount of money at 12%, and that money in my case allowed me to buy two more properties this year, right? So was able to buy or open up another sober living home, and then I was also able to buy my very first commercial property. So when I did the math, what the payment would be by borrowing that money, and what the cashflow would be with adding these two properties in my portfolio, the math mathed. So I tell people, if the math mathed, do the deal.
Kristen Knapp (18:16)
Yeah.Johnny Macias, TRL (18:16)
Right?If you have the confidence and you have the education and you have, you know, the investor blueprint and you have the team behind you, then you can make that decision at that time. But no, I wouldn’t, I come from the mentality of I want to know what I’m going to do with the money first and what the opportunities are before I sign on the paper. And if the math doesn’t make sense, don’t do the deal. So I think it just comes from education.
Kristen Knapp (18:36)
Yeah, and I think,yeah, and you touched on something briefly where education is such a big part of it, but also you have to do it at a certain point. You can’t just keep learning and keep pushing it down the road that you will do it next year, do it next year. You have to actually take action on what you’ve learned.
Johnny Macias, TRL (18:54)
Exactly. Yeah, and our founding affiliates here at the real estate ladder, they all own three properties or more. I tell them, guys, before you can go out and talk about land trust and now all season all this, you need to do it for yourself. Right. How are we supposed to build credibility if you don’t know what you’re talking about? And again, I’m not a licensed tax preparer, you know, but you should understand the tax code. Read IRS Publication 936, read IRS Publication 527, understand cost segregation.Kristen Knapp (19:01)
That’s amazing.Johnny Macias, TRL (19:20)
at least familiarize yourself with these terms so you can have a credible conversation with your CPA. And if your CPA doesn’t understand this and doesn’t know how to leverage this, might be an opportunity to have a different relationship.Kristen Knapp (19:26)
Yeah, exactly.Of course, yeah, I think people often just rely on other people like, ⁓ my CPA is handling this rather than learning the things themselves. So I think that’s really important. Well, I think, I mean, I think the real estate ladder has such a, like you guys are going after such a important white space in the market. I think that even just today, you’ve been able to give people lot of inspiration on how to get started and, you know, practical steps to kind of wrap this all up. What would be a piece of advice you wish you learned earlier in your career?
Johnny Macias, TRL (19:41)
Yes.Kristen Knapp (20:02)
that you can just share with us.Johnny Macias, TRL (20:03)
⁓ Don’t take financial advice from people that aren’t where I want to be, right? Also understanding the assets. Remember assets are things that put money in our pocket. Leveraging into the right asset for the first one. I think that would be a big piece of advice. And just get started. That’s why we say start with the primary residence. ⁓Kristen Knapp (20:21)
Yeah.Johnny Macias, TRL (20:21)
You know, we actually use an acronym with our coaching that we call the ideal investment, I-D-E-A-L, income, depreciation or deduction, equity, appreciation and leverage, right? Look at your investments from that. Is this creating income that does allow me depreciation or deduction? Is there equity? Am I building appreciation and can I leverage?And if it checks those boxes, move forward on the investment. Take the step, bet on yourself.
Kristen Knapp (20:49)
Yes, amazing. Well, thank you so much for being here. I think that people learned a lot from this. Where can people find you in the real estate ladder?Johnny Macias, TRL (20:52)
Nice.therealestateladder.com. also on Facebook. We’re growing. You know, we’re launching our own podcast as well. So I would say in the next 30, 45 days.
Kristen Knapp (21:01)
Wonderful.that’s so exciting. I mean, you’re great on the podcast, so I’m sure it’s going to be an awesome podcast.
Johnny Macias, TRL (21:09)
Thank you, appreciate that.Kristen Knapp (21:10)
Fabulous. Well, thank you so much for being here, Johnny. And thank you everybody for listening. Hope you learned a lot and got some inspiration. Yes, we will see you back next time.
