From Video Rentals to Real Estate Success

Daniel Borrero, Jr. (00:00)
I used to feel guilty about it. I see here so many real estate investors say, well, in 2008, I lost everything and I came back from it. I didn’t lose everything in 2008. Actually, 2008, in my situation, for my business, it was a blessing.

Because before 2008, I’d walk into a room with other investors and everybody was always so over-leveraged in my opinion back then. And everybody was telling my brother and I that we weren’t growing fast enough, we weren’t leveraging enough. And it just didn’t make sense to me. I don’t have a problem with leveraging, I have a problem with over-leveraging. And

Michelle Kesil (02:07)
everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’ve been looking forward to chatting with. We have Daniel Borrero, who’s been making serious moves in the real estate investing space. So really glad to have you here with us, Daniel. I think our listeners are really going to take something away from how you’re approaching

Daniel Borrero, Jr. (02:09)
Thank

Michelle Kesil (02:34)
the investing business. So yeah, let’s dive in.

Daniel Borrero, Jr. (02:39)
Yes, thank you for having me. greatly appreciate it and I’ve been looking forward to this interview.

Michelle Kesil (02:44)
Absolutely. So first off, people who may not be familiar with you and your world yet, can you give us the short version? What is your main focus these days?

Daniel Borrero, Jr. (02:56)
So the focus constantly is changing, right? Because depending on the market conditions, right now it’s a long-term hold. I’m not looking to do the fix and flips because the numbers truly don’t make sense. But I’ve been pretty much in every aspect of this business because I’ve been in the business since 1989. And it kind of sounds funny when I say 1989. It’s like the 19th century, you know? So it’s like having said that,

But yeah, my focus right now is literally on a long-term hold to make sure the numbers make sense.

Michelle Kesil (03:24)
Amazing. And what markets are you operating in?

Daniel Borrero, Jr. (03:27)
Currently we buy in New York City, and within New York City there’s five boroughs, So we are concentrating in Brooklyn, New York, primarily in Park Slope, Fort Greene, and then we do buy on Staten Island occasionally, if the numbers make sense. And we do concentrate in Northern New Jersey as well as in Central Florida.

Michelle Kesil (03:46)
Amazing. So how did you get started in this business? Like what’s your story?

Daniel Borrero, Jr. (03:51)
So I, when I graduated from college, well, let me go back a little further. I always knew, I was very fortunate in life in the sense that I knew I wanted to be self-employed. And in essence, I just didn’t know what that self-employment was gonna look like, if that makes sense. I always knew I wanted to be wealthy, but I didn’t know how I was gonna get there. And I thank God every day I actually,

wasn’t born with a silver spoon in my mouth, because I think that gave me the desire, the fire in my stomach to move ahead. So when I graduated from school, I worked and I worked crazy overtime to generate enough money to open up my first business. In addition to an $11,000 loan from my dad,

I opened up my first business in 1985, which was a video store rental. And I knew absolutely nothing about videos. But I knew it was something that I could make

where it was an necessity in that particular neighborhood. And four years later, I bought my first building, literally a half a block up. And then from there, it just grew. And by the way, I still own that property. It’s a two-family pre-war construction building. paid 72,000 Alpsford, and today it’s worth about 2.5 million. So, you know, and then the thing was growing up in the neighborhood,

I noticed that all the storekeepers eventually would buy the buildings that were in. They were paying rent in and then they would eventually buy the building across the street or down the corner or next store. And then I noticed that when they retired, they were retiring really well. And I thank God every day as a kid, I was able to pick that up. So in college, I realized I wanted to be a real estate investor. I just didn’t know what it entailed.

Because in college, what do they teach us? They were teaching us, I didn’t realize this until the end of my sophomore year was to go work for somebody like me, not for me to be me. But you know, it two years, at the end of two years, I was like, I’ve already put two years in, let me finish. So what I did was I essentially opened up that video, so it was called Mr. D Video. And I was there actually 23 years. And the story evolved from video rentals to beeper service to cell phone service.

And during those years, I just kept buying more property, more property, more property. And the goal was to buy anything that I could afford to buy within walking distance of that store. I didn’t want to spend time in a car. We didn’t have cell phones back then, so I couldn’t conduct any business while I was traveling from building to building. Essentially, that’s how we started.

Michelle Kesil (06:59)
Amazing. Yeah, that’s such a fascinating story. And yeah, I’d be curious to hear like how you went from that starting point to so much expansion, like what has been the key to achieving the success that you have.

Daniel Borrero, Jr. (07:15)
So I always tell people one of the key things is who your partners are. You don’t have to like each other as much as you have to trust each other and respect each other’s integrity, right? And that goes for marriage as well. I tell people, I dated my wife for seven years before we got married. And when people ask me why so long, says I needed her to make sure, I needed to make sure she understood that living with me was gonna be difficult.

You know, I remember telling my wife before we got married about a year before we got married was if you want a husband is going to be home with you watching the 11 o’clock news in bed, don’t marry me. If you want a husband is going to be home every night having dinner with you at 6 o’clock, don’t marry me because while I’m here with you, I can’t be out in the street making money, right? I can’t be having meetings. I can’t be walking properties. I can’t be running my business. I can’t be overseeing my employees. And then when I am home, I need to be at my desk.

Doing all the paperwork and organizing and coming up with my plans to keep everything organized. So, you know, and to this day, I’ve been married with going on 38 years. So I say to, you know, one of the my key successes is my wife, you know, without my wife and I, you know, we were pulling the wagon together. Because if you have one horse that goes to the left, another horse goes to the right, the wagon goes nowhere. So, you know, we had those deep conversations prior to getting married.

And hence it’s worked out very well because we were very clear with each other and what our expectations were in life.

Michelle Kesil (08:39)
That’s really beautiful. love that answer. Amazing. Yeah. So in terms of like your business growth and yeah, just like holding this big container, what has been like the key to keeping that machine running smoothly and going and growing?

Daniel Borrero, Jr. (08:43)
So.

Wow, there’s so many different keys to it.

That’s a question. So let’s start from the beginning. Essentially, when I got to about 10 buildings in Brooklyn, primarily in Fort Greene, Brooklyn, I realized I wasn’t scaling fast enough. And one of the reasons I wasn’t scaling fast enough was because the acquisition costs in New York City was tremendously high and I had to come up back then because of the economy. I had to come up with at least 30 % down. I was going with no income check loans, no income verification loans. Today they’re called DSCR loans.

⁓ so, you know, the interest rates, my first building, my interest rate was 17.9 with six points from green points savings back. I mean, that’s how create, you know, today’s terms. That’s really crazy, but the numbers still make sense. so the reality is that if we don’t learn how to pivot, if we don’t learn how to adjust, if we don’t learn, you know, how to change

our short-term goals to achieve our long-term goals.

We’re not going to get anywhere, right? One of the things I realized when I turned 30 was I was really depressed with myself because I hadn’t achieved my goals. I wrote a letter to myself when I was 18. And I read that letter and I was like, oh my God, I’m nowhere near this, right? Well, it took me about six months to realize one, the goals was unrealistic. Two, the goal didn’t have a plan. So it took me about six more months to develop a plan, a 10-year plan.

with goals within that plan. So I had a one year goal, three year goal, five year goal, seven year goal, then the 10 year goal. But I had to understand that there’s things in the economy and things in my life that I can’t control. I can’t control if my parents get sick or if I get sick or I can’t control the economy. So the plan’s gotta be like a palm tree in the wind where, you know, it bends with the wind, it doesn’t break so that you could adjust and still keep

keep that 10 year plan and that 10 year goal in effect. So what’s been my, what’s helped me succeed besides of course, picking the right partners, not only with my business partner, but my life partner is learning to develop plans, goals, having a goal and developing the plan and then making sure how to execute that plan. But always understanding that the execution may have to change according to things that we can’t control.

Michelle Kesil (11:48)
Yeah, that’s a very valid point. yeah, that leads into what I was going to ask you next. Yeah, every operator I know has a moment where things get real. Maybe you had a deal go sideways or you had to make a fast pivot. And I would love to hear a moment like that for you if you don’t mind sharing.

Daniel Borrero, Jr. (12:08)
Look, you know, I gotta say, and

I used to feel guilty about it. I see here so many real estate investors say, well, in 2008, I lost everything and I came back from it. I didn’t lose everything in 2008. Actually, 2008, in my situation, for my business, it was a

Because before 2008, I’d walk into a room with other investors and everybody was always so over-leveraged in my opinion back then. And everybody was telling my brother and I that we weren’t growing fast enough, we weren’t leveraging enough. And it just didn’t make sense to me. I don’t have a problem with leveraging, I have a problem with over-leveraging. And

those are the guys that went under.

Whereas 2009, 2010 to 2017 is when my business was booming because we didn’t go through that hardship. didn’t have any more. Our personal mortgages were paid off. Our personal cars were paid off. We had no credit card debt because we saw this coming. Right. It all makes sense to us. So when they were just trying to come back from their glory days, we were actually developing

the days that we’re currently living in right now. But the biggest challenge, that aha moment for me was probably when I first became a landlord in New York City and I got smacked up by the tenants, two tenants in particular that educated me like, hey, yeah, this may be your property on paper, but I’m the tenant and we’re not going anywhere. We’re not gonna do anything you tell us to do. So, know,

That was an extremely challenging moment in my career because I had to humble. I had to humble myself and then understand, hold on a second, there’s laws involved here. It’s not like I thought and I need to familiarize myself with those laws and then of course adhere to those laws and then do things accordingly. So my biggest challenge was one that aha moment for me was, you know, my tenants educated me.

And then as a result of that, developing a plan and a process and procedure on how to vet prospective tenants so I don’t have those problems again. And by the way, that’s an ongoing learning process because the environment is constantly changing with those laws. So, you know, before I go and invest anywhere, first thing I do is I sit down with a housing attorney, tenant landlord housing attorney in that area. I’ll pay that $350 consultation fee. I’ll go into the

County website and the state website for the Department of HUD and get familiarize myself with the tenant landlords. And then whatever questions I have, I’ll have them ready for that attorney when I sit down with them. And then that’ll determine if I’m gonna buy in that area.

Michelle Kesil (15:33)
Yeah, that’s super valuable advice to do your due diligence.

Daniel Borrero, Jr. (15:37)
Yes.

Yes.

Michelle Kesil (15:38)
Amazing. So let me ask you this. What are you most focused on solving or scaling next?

Daniel Borrero, Jr. (15:46)
What I’m looking on scaling right now is again, on maximizing my potential profits in all of my rental properties currently. So in this business, right, we’re either fixing and flipping or we’re doing long-term holds. There’s times when the fixing and flipping is so profitable, I don’t have time to do the long-term holds. But I do know when I’m not doing the fixing and flipping, I’m going to literally bring all of my existing properties

to the best shape that I possibly can and run most efficiently as possible. So that when my concentration goes back to my fix and flips, that side of the business is running like a fine oil machine. And that includes developing the right team and understanding that team members change, no matter how good that team may be, because life changes, right? Contractors, for instance, as long as good contract I’ve ever had was seven years.

A good contract that lasts between five and seven years and not because anything bad happens, but sometimes they think you can’t live without them. Right, so they gotta be changed out. Sometimes they may get sick. Sometimes they may go through personal things in their life that affects their work. Well, it’s the same thing with any member of your team. So just like a professional baseball team, even when they win a World Series, may change out some of the players the following season. You have to understand that too. That that’s going to happen in your team.

Michelle Kesil (16:59)
Yeah, absolutely. And how do you find your team members or like choose who is the right fit?

Daniel Borrero, Jr. (17:07)
So we’ve developed.

As a result of growing up with my dad doing, you know, his own work. My father, my father had a bodega and everything he did in the bodega was done by him, right? Eventually he bought a house and everything was done by him. So I had, I had knowledge of how to use tools. So I could look at a carpenter. I could look at a painter. I could look at a plumber and know if they, if they know what they’re doing, just cause they have really nice tools doesn’t mean they know what they’re doing.

Right? Just because they’re charging more money doesn’t mean they know what they’re doing. So it’s all about knowing the process on how to get things done. You don’t have to actually be the professional at it. know, one of the places I go to directly to find part of some of my team members, for instance, let’s say I need a plumber and I’m in a new area. I’m not going to go to Home Depot and wait for a plumbing truck. I’m going to go to the plumbing supply house and I’m to be there real early in the morning.

And I’m going to watch who’s there who’s who’s moving quickly in and out. How are they dressed when they open up their vans and their trucks? How organized they are if they’re cursing if they’re smoking right? So I’m looking for personality traits and then I’ll approach them. But why am I going to the plumbing supply house? Because that’s where you’re going to find the plumbers who are really looking to work at 7 in the morning so they could be at the job by 8.

You know, I don’t want a plumber that’s going to Home Depot. I want to plumber’s going to the real plumbing supply house and picking up quality material. Same thing with electricals, same thing with painters. I’m going to go to Sherman Williams early in the morning or Benjamin Moore. I’m going to watch and I’m going to listen. And that’s one of the things that that I use to determine whether who I’m going to speak to and who I’m going to interview. Same thing with realtors, right? I’m not going to. I’m going to look up a realtors history.

Because if a realtor is just buying single-family homes, that means they’re end-user realtors, which are great, but I don’t need an end-user realtor I need a realtor that understands the market for multifamily Right or whatever that commercial property that may be looking for or the condos I’ve been I may be looking for I want a realtor that understands that market like the back of their hand

Michelle Kesil (19:05)
Yeah, that’s so valuable. I think that a lot of people can really take something away from, yeah, just being so conscious and aware of how people behave and their actions and how they show up versus what they say they do.

Daniel Borrero, Jr. (19:21)
precisely, know, personality matters, right? I want to make sure that whatever we bring into the team is not going to have a conflicting personality trait. Right? So it’s not only the skill set, it’s also the personality trait.

Michelle Kesil (19:33)
Yeah, so important. Now, I know a lot of people listening to this are either new in the industry or looking to level up. And I think they’d benefit from hearing this. When it comes to growing your network and building relationships, what has been the most supportive thing for you?

Daniel Borrero, Jr. (19:53)
integrity, you know, you don’t have to be. OK, so building your network is is essential. Putting yourself in rooms that are bigger. Then the room that you’re currently in. So if I’m making $100,000, I don’t want to be in a room other people making 100,000. I want to be in a room. People make it 500,000. Right, I want to know how, because they’re going to learn their personality traits. I’m going to learn.

how they think differently. I’m gonna learn the conversations that they have that are different than the conversations I used to have in that $100,000. Now, the thing is, it is very uncomfortable.

going into a room where you’re probably like economically the lowest person there. But you gotta get over that uncomfort. And if you’re uncomfortable, that’s actually a good thing. Because when you’re comfortable, then you’re not growing. But the biggest thing is integrity. That’s what I’m looking for in people’s, before I do business with them. There’s times I’ve walked away with deals that, from deals that I could have possibly made a lot of money with.

But I didn’t trust the person on the other side of that table. And even they’ll say, well, we have contracts. well, the contracts only as good as some, it’s like a marriage. It’s only as good until someone’s not happy, right? And then you gotta go through that divorce process and it costs a lot of money and a lot of time. And I’d rather spend that money and that time down avenues that are more profitable. pick the people you choose to do business with wisely.

Michelle Kesil (21:12)
Yeah, relationships are everything in this space. All right, so before we wrap up, if someone wants to reach out, connect with you, maybe collaborate or just learn more about what you’re doing. What is the best way for them to reach you?

Daniel Borrero, Jr. (21:12)
Yes.

Yeah, so you could ⁓ reach me at DanielBorreroJR at gmail.com which is my name below DanielBorreroJr at gmail.com or you could feel free to give me a call believe it or not I do pick up my phone 347-386-7097

Michelle Kesil (21:43)
Perfect. Well, listen, I really appreciate your time, your story and your perspective. We need more people that are doing things outside of the box. So thank you so much for being here.

Daniel Borrero, Jr. (21:55)
No, thank you for the invite. I greatly appreciate it.

Michelle Kesil (21:57)
Absolutely. And for those of you that are tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Daniel, who are out here building real businesses. And we’ll see you all on the next episode.