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Show Summary
In this episode of the Investor Fuel podcast, host Michelle Kesil interviews Diego Herra, an experienced investor who has transitioned from flipping properties to wholesaling. Diego shares insights on his journey in the real estate market, the importance of building a reliable team, and strategies for navigating market changes. He emphasizes the significance of networking and leveraging market knowledge to succeed in the investing space. The conversation also touches on future goals for Diego’s business and advice for new investors looking to make their mark in real estate.
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Investor Fuel Show Transcript:
Diego Herra (00:00)
So about five months ago, ⁓ I saw that the market was going toI think our team did a pretty good job of predicting. ⁓ So in Northern California, we experienced about a 13 and a half percent reduction in last five months. ⁓ We were pretty good on the spot, reading the tea leaves, seeing that it was going to go down. We talked to pretty much every one of our investors.
and we pivoted our business knowing that the market was going to go down. So one of the first things we did was we looked at everything we had and said, Hey, what’s our even Steven number or what’s something very close to that that we can reduce down to to get it sold quickly. We did that. ⁓ probably say about nine out of 10 investors listened to us. ⁓ they were happy with the results because they got out of it before that time.
Michelle Kesil (02:26)
Hey everybody, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’ve been looking forward to chatting with, Diego Herra, who’s been making serious moves in the investing space with flips and wholesaling. So really excited to have you here on the show today, Diego.Diego Herra (02:51)
going Michelle it’s a pleasureMichelle Kesil (02:54)
Awesome. Yeah, I think the listeners are really going to take something away from how you’re approaching your investing business. So let’s dive in. Just first off for people who are not familiar with you and your world, can you give a short version of what your main focus is?Diego Herra (03:13)
We we do a little bit of both so we I’ve been a realtor for about 24 years we’ve been flipping properties for 10 to 12 years and We recently within the last year. We started wholesaling so we’ve flipped over 500 homes and We have a good system. We have a team of seven so we have acquisitions we have VA partners and we haveour contractors to help us as well.
Michelle Kesil (03:46)
Awesome. And what markets are you operating in?Diego Herra (03:49)
So we cover such a huge area. It’s in Northern California. So anything above ⁓ Merced all the way up to Yuba City and from San Francisco all the way up to the foothills. So we have multiple contractors we use that cover every one of those areas.Michelle Kesil (04:07)
Awesome. And what has been like the key to keeping this business running smoothly?Diego Herra (04:15)
You know, we have to make consistent choices every day. So we’re always looking for properties. We’re always, I would say we do a good job of keeping in contact with people that we work with. So wholesalers that we work with, agents that we work with. We always have deal, our deal flow comes from the leads that we get. So we always have a good pipeline of leads.Michelle Kesil (04:44)
Awesome. And yeah, how are you like getting these leads? Can you expand upon that process?Diego Herra (04:52)
Yeah, so we send out postcards. buy PPL leads. We will doFacebook ads. And then there’s partners of either realtors that we’ve worked with in the past or wholesalers that also send us deals. We look at auction websites, your auction.coms, your hub zoos. So we’re absolutely everywhere.
Michelle Kesil (06:04)
Awesome. Yeah, and how did you get started in this business?Diego Herra (06:10)
So I’ve been a realtor for a long time, for 24 years. So I’ve gone through the market being in different cycles. So 2008 was a market crash. Regular real estate didn’t make any sense anymore. So that’s when I first started to get into doing flips. Started doing flips for investors that I found along the way. I mean, that was a necessity since the regular market was dead.So I started to do ⁓ some flips with people that I knew and went from there.
Michelle Kesil (06:48)
Awesome. And yeah, how did you get from that place of just starting to do flips to where you are now? Like what has been that journey?Diego Herra (07:01)
You know, a lot of it’s classes, taking classes, learning more, learning scripts, ⁓ doing KPIs. So figuring out where your money’s going to create those leads, how much something’s costing you. And then I couldn’t do it without my team.Michelle Kesil (07:21)
Amazing. Yeah. And what is your team supporting you with? Like what are kind of the roles that you have on your team?Diego Herra (07:28)
⁓ Teams,unfortunately, I have ⁓ Keoni is kind of my technical ⁓ guy. also does the controls our marketing budget. Drushan is our systems and process guy. And then we have ⁓ another guy that works with our VAs. We have another guy that we have a TC that helps us. So I mean, we have ⁓ team members for every aspect of the business.
Michelle Kesil (07:58)
Amazing. Yeah, that’s so important to have that team and that support. So I know that you mentioned that you’re transitioning from doing mostly flips to more wholesale. Can you expand upon why you’re doing that and what that looks like for you?Diego Herra (08:17)
Yeah, sowe’ve been a hammer for such a long time. by hammer, mean that, you know, when we saw a flip, we want to take it down and do our own rehab and put it on the market. ⁓ Because of how the market’s been changing and it’s just taken us longer to, once we flip the property and put it on the market, it’s taken us longer to sell the property. ⁓
we’ve thought to in order to reduce some of that, let’s wholesale some of the properties that don’t quite make sense for us or tighter margins. So let’s wholesale those properties and so far it’s starting to work.
Michelle Kesil (08:58)
Awesome. So where do you kind of see your business going? What are you working on scaling to?Diego Herra (09:08)
I think it’s something where we will probably add a lot more VAs to our system ⁓ to make more calls and ⁓ hopefully we start doing more wholesale. So we’re probably doing one to two a month now. Eventually I’d love to do one a week. And then right now we’re flipping about 50 homes.Michelle Kesil (09:27)
awesome.Awesome. Do you have any like specific action steps or strategies to get to that next level?
Diego Herra (09:41)
Yeah, we’ve already started doing that. So we’ve taken some more classes on people that specifically focus on the wholesale side of it. I don’t know if I should name some names, but ⁓ we’re working with some pretty well-known people to help us. We’ve already a part of Masterminds. There’s people that we know that are wholesalers been doing a while.So we’re using their knowledge and experience to help us as well.
Michelle Kesil (10:42)
Yeah, that’s awesome. I love that. So let me ask you this. ⁓ Every business has moments where things get more real, maybe a deal goes sideways or you have to make a fast pivot. Would you mind sharing one of those moments you’ve experienced in your business?Diego Herra (11:06)
So about five months ago, ⁓ I saw that the market was going to tank. I think our team did a pretty good job of predicting. ⁓ So in Northern California, we experienced about a 13 and a half percent reduction in last five months. ⁓ We were pretty good on the spot, reading the tea leaves, seeing that it was going to go down. We talked to pretty much every one of our investors.and we pivoted our business knowing that the market was going to go down. So one of the first things we did was we looked at everything we had and said, Hey, what’s our even Steven number or what’s something very close to that that we can reduce down to to get it sold quickly. We did that. ⁓ probably say about nine out of 10 investors listened to us. ⁓ they were happy with the results because they got out of it before that time.
I mean,
So one of the things I do every day is I look at the MLS. I look to see what’s gone active, what’s gone pending, any price reductions. And we had a pretty good idea that market was shifting. So, I mean, there’s some of the properties that, hey, we’ll make 5K on this. And that ended up being the smart move. know, let’s say 20, know, looking back can be 2020. So we look back and absolutely made the right move.
Decisions on almost everything by reducing at that time Yeah, you’re not gonna make money on everything And the same time as a lot of people so I predicted you know when the markets going up is like ⁓ I bought at a X amount return and I knew was going to be higher now, that’s that’s part reason why we Make sure that we have such good numbers. We buy it. So if it does shift ⁓ We’re not gonna be killed as much and we’re not
counting on any upside. We avoid properties that ⁓ don’t quite make sense. Like during that time, we were avoiding luxury properties because luxury properties are the first thing to go down. So at that time, the conversation with our investors was like, hey, we’re not looking at any big properties. So big properties for us in our area is probably anything about one five.
So we won’t look at anything big because if the market went down, it’s not just 10, 15K, it’s several hundred thousand dollars. And we’re very smart to do that.
Michelle Kesil (13:37)
Yeah, absolutely. That’s an important thing to note and to be aware of. So what are some other tips that you can maybe share that you’ve learned throughout your experience for people that are maybe newer in the investing world?Diego Herra (13:55)
If I would just, if I’d start today, let’s say I was an agent or an investor. want to start today. I would first, I wouldn’t buy a property that I’ve never been to the city or sold the property. I would start with the areas you know, first. So if I, if I live in San Francisco, I would start with San Francisco properties. If I lived in San Jose, I would start with San Jose properties, areas that I know I could drive to. And then once you kind of,learn that market backwards and forward. You know what the type of rehabs people are doing, ⁓ the type of how long sales are taking. ⁓ Then at that point, then you can expand. You can’t get to where we’re at and start working 10 different markets. It’s impossible. You have to start by really known area. I think I’m pretty confident in saying that we know the areas that we work with.
I have a joke that we make in our team is if we don’t know the name of the city someone sends us
then it probably doesn’t make sense for us to do it and often times wholesalers will pick up properties anywhere ⁓ so they’ll give us a random city that we’ve never heard of it probably doesn’t make sense for us to work there
Michelle Kesil (15:55)
Yeah, I think that’s good advice. Definitely something important to note. So what is like that next big goal for your business? Where do you see your business heading in the next years?Diego Herra (16:10)
⁓ I think I’d like to get to a business where we still do our flips. ⁓ We have a completely wholesale team. the other thing that I already do is we do property management as well. So just different businesses under our big umbrella.Michelle Kesil (16:31)
Yeah, amazing. ⁓ That’s so important. Yeah. Are you guys doing property management for like the rent? Yeah. Okay.Diego Herra (16:41)
Our investors. Yeah, so rightnow we manage about 72 different properties. That was something our investors already wanted us to do. On top of that, when we go to a purchase appointment, if it doesn’t make sense, then we can help them on the regular real estate side of it. Not all the deals that we ⁓ find make sense ⁓ to buy at a ⁓ flipping purchase price.
Maybe the house is already completely decked out and we can approach that seller with different options. And that’s when we’ll help them list the home.
Michelle Kesil (17:18)
Yeah, absolutely, that’s important. Awesome.Diego Herra (17:21)
Yeah,we’d like to, we really like to give ⁓ the sellers that we work with, we give them other options agents can’t do. So we have relationships with contractors because of our flipping business that if we run into a property, it’s not really flippable, but they do need like paint carpet. Our contractors will paint it and carpet it. And then they’ll wait for the clothes of escrow to get paid on that. So that’s something a lot of agents can’t do because they don’t have our relationships.
Michelle Kesil (17:52)
Yeah. And speaking of relationships, when it comes to building relationships and growing your network, what has made the biggest difference for you?Diego Herra (18:05)
⁓ I think it’s being very consistent. So our contractors are all, all contractors are busy in the winter. I’m sorry, in the summer, but in the winter, if they have someone that consistently gives them business, then when it comes to summer again, they make it, make sure that they go out of our way to ⁓ go out of their way to help us because they know that we’ll still give them business in January, February months.Michelle Kesil (18:36)
Yeah, are there any other maybe strategies or networking events that you guys work with to grow your business?Diego Herra (18:47)
We’ll host acouple per year. Yeah, we host a couple per year. We will have them come to one of our flips that we do. ⁓ We also have one either at our office or we’ll do a partner up with another wholesale team to do an event. I say we probably do about six, about six to eight a year. That’s something we probably could work on. And that usually either we find new investors
that want to work with us or we find wholesale partners that want to sell us properties. one of the things that, one of the services that we provide is any wholesaler that needs like, hey, Diego, I know you guys have sold a house in this area. Do you mind helping me run value on something? Right? There’s no guarantee that we’re going to get anything out of it, but I’ll help them with the valuation.
because I’ve been doing this a long time. I have a pretty good idea where valuations are, especially if it’s markets that we’ve worked with before.
Michelle Kesil (19:50)
Yeah, absolutely. I love that.Diego Herra (19:52)
So I think whatever market you’re in, you want to have a lot of gravity, right? That people will see your flips, they’ll go to your events, right? Because of the gravity that you’re bringing to the market, they’re gonna run across you no matter what.Michelle Kesil (20:13)
How can someone increase their gravity?Diego Herra (20:18)
You know, one of things is that I feel like certain generations are shy from asking for help. I’ll ask, you know, I’ll see a house on the market and I’ll know that flipper and say, hey, how did you get that property? You know, what did it cost you to rehab it? I love the countertops or I love the kitchen cabinets. Where did you get those cabinets? Most investors, most agents, they don’t care.they’ll give you the info. I feel like a lot of people are afraid from that. And then I never like to reinvent the wheel. So if I see someone do a flip project and I think to myself, man, that is fantastic. I like that color combination. I’ll just use that color combination because I’ll know that, hey, that particular comp sold for that. So I’m going to use the same exterior colors that they use, as long as it makes sense in the neighborhood.
Michelle Kesil (21:16)
Yeah, absolutely. I think that is something that everyone can implement asking for support and yeah, trusting that you don’t have to create things from scratch when it’s already been done. So I love those points that you’ve made.Diego Herra (21:33)
I like,so I got a great analogy I use is I was watching this, ⁓ this is years ago. I was watching a show with my wife. each contestant had to make a dress by the end of the week. At the end of the week, they made a dress and all these designers showed up to look at all the dresses. The one that I thought was crazy was like Target was there. And I’m like, what? You know, had Dior and, ⁓
Michelle Kesil (21:35)
Sure.Diego Herra (22:01)
I can’t name any fancy companies but the end was Target and Target was there as well and Target likes to they’ll take something that’s really fancy and they’ll create a Target version of it. Alright so designer jeans $1,200 Target brand 30 bucks you get the same type of look but a much cheaper price well if you’re selling a $1.2 million house you could do the designer stuff.But at a $300,000 price, you could kind of copy that idea, but still get the same type of vision.
Michelle Kesil (22:41)
Yeah, that’s true. That’s a good point. People don’t have to kind of like settle on their vision when it comes to price. Like there’s always ways to make it, you know, similar.Diego Herra (22:58)
Yeah, so it’s ⁓ you can definitely add some, there’s a new trend that I see coming. It’s small luxury items in like inexpensive houses. So like a very common one would be a pot filler. Do you know what a pot filler is? So behind your stove,Michelle Kesil (23:20)
I don’t.Diego Herra (23:24)
you can have a basically a sink that you can fill up your pots with water instead of going to the sink. Well, that’s a luxury feature that they’ll, you know, ⁓ million dollar houses will have. That’s something we can add for about $800. So we want that particular kitchen to feel luxury. We can add just a small luxury feature like a pot filler. So for 800 bucks we can add, ⁓ and when someone sees it, most people haven’t seen it at a,$400,000 to $500,000 price, they won’t see it popular. But if you sell luxury homes, that’s something that you’ll probably commonly see.
Michelle Kesil (24:04)
Yeah, I think that’s really cool, amazing. So before we wrap up here, if someone wants to connect, reach out, learn more from you,where is the best place they can find you?
Diego Herra (24:18)
SeeMyCashOffer.com. ⁓ We do a lot of business in Central Valley. ⁓ We’re under the Diego Buys Houses brand. And then we also sell real estate under Realty One, Group Zoom in the Central Valley.Michelle Kesil (24:36)
Well, listen, I really appreciate your time, your story and perspective, so thank you for being here.Diego Herra (24:43)
All right, thank you.Michelle Kesil (24:44)
Yes. And those of you tuning in, if you got value from this, make sure you’ve subscribed. We have more conversations coming with operators just like Diego who are building real businesses and we’ll see you on our next episode.
