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Show Summary
In this episode of the Real Estate Pro Show, host Erika interviews Milton Andrade, a seasoned real estate investor. Milton shares his journey from aspiring doctor to successful real estate investor, discussing his focus on residential properties, market trends, and strategies for finding value-add opportunities. He emphasizes the importance of building relationships in the industry, offers advice for new investors, and shares insights on managing cash flow and equity. Looking ahead, Milton expresses his interest in commercial real estate investments.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Milton Andrade on Instagram
- Milton Andrade’s Phone Number: (954) 629-995
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Milton Andrade (00:00)
Multifamily should be the first thing you buy before you even buy your, you know, your primary residence, let’s say, because you want to take advantage of the low down payment financing options with FHA.one of my first investments in multifamily, I used an FHA loan.
I bought it with about $20,000. I got the seller to pay the closing cost. ⁓ And ⁓ that property today is tripled in value and ⁓ produces a very steady stream of cash flow ⁓ that is today probably a 20 % capitalization rate ⁓ on my money.
Erika (02:07)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m excited to be joined by Milton Andrade. He’s been making serious moves in the real estate investing space. Milton, it’s awesome to have you on the show today.Milton Andrade (02:22)
Thank you for having me.Erika (02:24)
So let’s jump on in for our listeners who don’t know your world yet. Give us the rundown. How did you get started in real estate?Milton Andrade (02:32)
Well, actually I had the fortune of my family being in the real estate space growing up and so it was natural for me to ⁓ really love it and join and take advantage of the beautiful city that I live in in Miami.Erika (02:50)
Yeah, ⁓ was there a particular moment for you that you knew this was gonna be your lane?Milton Andrade (02:57)
Well,you know, originally I wanted to be a doctor, so I was ⁓ really studying for that and the MCATs and I wanted to make a little bit of money for those very expensive applications. So I went to work at the family office and I started… ⁓
really enjoying the lifestyle, the deal making, the ability to kind of be your own boss. And ⁓ I just felt like I was more naturally inclined to that. so medicine became less of a focus. And I really liked the hustle and the grind of real estate.
Erika (03:30)
And when it comes to today, Milton, what kind of markets are you active in and what kind of properties are you focused on?Milton Andrade (03:39)
Well.Right now, I’m predominantly focused on ⁓ residential real estate, ⁓ multi-families, and single-family homes in the right neighborhoods that would cash flow well. But the single-family space here in South Florida, I think, still has some potential because there’s a lot of properties that have very low rents and have been ⁓ not maintained or updated. But meanwhile, now the surrounding area can definitely absorb much higher rents
with a quality product. And so I’ve been looking for multifamilies in areas like Miami Beach where Normandy Isle, for example, you can still find some good deals where we could then renovate the properties, bring them up to market rent and increase the cash flow. So it’s more of a value add opportunity that I’m looking at.
Erika (04:32)
Yeah, absolutely. ⁓ you know, with the market changing over the years, how do you adapt to that? And what kind of advice would you give to our listeners?Milton Andrade (04:43)
Well, I think you have to have a little bit of ⁓ insight as to where the neighborhoods are going. And so if you’re studying trends over the last 10 or 20 years, it’ll give you a better understanding of where the particular area is headed. I also look for ⁓ large major players. ⁓that are moving their businesses to the area. one neighborhood that I really love is North Miami. And if you look at the Biscayne corridor between 125th and 135th ⁓ here in Miami, you see a lot of ⁓ major players. You have Whole Foods that came in. You have Alta. You have a lot of international tenants that have made their way there. But if you also look over the causeway, you have Ball Harbor. You have Surfside. And so if North Miami is still one of the most affordable neighborhoods, being so close to all of this,
you know that there’s going to be good movement in that area. And ⁓ I’ve doubled my money ⁓ on properties there. it’s really looking, taking a bigger picture look of where is this located and where is it heading.
Erika (06:34)
Yeah, you know, looking for those big players, I’m assuming you find some competition too. So what’s your go-to strategy for finding those deals, especially off market?Milton Andrade (06:46)
Well, I really look for value add opportunities and I use ⁓ some software that will help. I used PropStream in the past, but now I’m using PropertyRadar, which really gives you insights on the owners, right? I can filter ⁓ high equity ⁓ potential sellers, people that have been in their properties for more than a certain amount of time, that have a certain amount of equity, that are at a certain age. And then ⁓ I ⁓ go after them.from a real estate perspective first, and then I can look at them as an investment. So first I try to see if they’d be open to selling their property, if I could help them get the most for their property. And oftentimes I’ll find people who never really thought about it, but now are maybe open to the idea. And so I’ll go and I’ll look at the property as an investment first, if that would work out. And if not, then I would ⁓ list their property for sale.
But oftentimes I’m looking for divorces, I’m looking for probates, I’m looking for empty nesters. And so I can use this software to kind of narrow that down, build my list, and then target these particular properties more focused.
Erika (07:56)
Yeah, that’s really helpful. On the flip side, when you’re evaluating these properties, are there some non-negotiable red flags that you look for and how does that play in with your decision making?Milton Andrade (08:10)
Well, I may want to stay out of areas that have re-occupancy inspections depending on the price that I can get the property at just because if it has a lot of unpermitted work, it’s going to be much more expensive to fix now that the city already has it on their list. So I may want to avoid, I may want to avoid those. I like more of the…Properties in original condition where people have lended them for 30 or 40
and may not have actually upgraded them. So the properties are old and outdated, but they’re not broken and they’re not ⁓ out of code. ⁓ Those are the properties where you’re to be able to get a very good deal on ⁓ and you’ll be able to ⁓ improve them and really make a difference. And that’s why I look for value add. What can I do to make this property better and more ⁓
more appealing to a renter or to a buyer. And that’s, that I think is a winning strategy. If you can do a value add, you can have an exit strategy of renting it or selling it.
Erika (09:13)
With the Valium adds, is your approach to do a lighter rehab, a heavier renovation, or do you have like a formula when it comes to determining what’s the best fit?Milton Andrade (09:25)
I preferably would want to stay away from the intense capital expenses like a roof, plumbing, ⁓ et cetera. And so if I find a property that may be in original condition in terms of flooring, bathrooms, kitchens, but the roof was done, but the plumbing was done, that’s going to be something that I would focus on more because there would be less intensive ⁓ capital inflows that would need it. And also, ⁓ we could really focusall the improvements on the aesthetic, which would be ⁓ faster for
higher ROI. Better bang for your buck.
Erika (10:40)
Yeah, absolutely. With doing those rehabs or just the deals in general, I’m sure you’ve had a moment where things got real, like a deal going sideways or you had to pivot. Do you have a moment like that on your journey and a lesson you can share for our listeners?Milton Andrade (10:58)
Well, I used to not do home inspections because I would be more focused on getting the right price for the property. And I did buy a property one time. And when we started doing the rehab, I opened up the ceiling and the amount of termites that fell out was ⁓ really insane. ⁓ I kind of got lucky because it looked worse than it was. Luckily, old wood is really hardwood and is durable and lasts much longer than a lot of the new wood.⁓ But it was ⁓ quite an eye-opener of maybe I should do a more thorough inspection prior to taking the deal. But I was more focused on price and luckily it worked out, but that’s something that really needs to be more of a priority.
Erika (11:44)
Yeah, yeah, and I know a lot of people here listening are earlier in their journey and are looking to level up. I think they benefit hearing this from you. When it comes to building relationships and growing your network, what’s made the biggest difference for you?Milton Andrade (12:03)
Honestly, treating people ⁓ well, right? I don’t have any enemies in this business. And when you’re working with a realtor on the other side, and when you’re speaking to neighbors and you’re looking for an investment opportunity, if you are an ethical person ⁓ that’s easy to get along with, that can make the other person feel like they’re being useful and you’re coming to a win-win situation, you’re going to go much further. Being in real estate, ⁓23 years now in South Florida, can safely say I don’t have any enemies. ⁓ Because a lot of people who over-promised and under-delivered have had to get out of the business or move away because they burned too many bridges along the way.
Erika (12:49)
Yeah, absolutely. And for you, was there a specific tactic or event from a network that has helped you, know, land deals or partnerships?Milton Andrade (13:01)
Well, the way I look at it, everybody has to eat. you you have to make it, you have to make it favorable for, you know, the family that owns the property, the seller, the retiree or the agent that brought you the deal. You have to give them a little bit of skin in the game so that they would want to work with you now and in the future. And I’ve had ⁓ investors come to me before and go, hey, know, find me the deal and then I’ll list it with you.and they did that to me one time where they found the deal. I found the deal. I brought it to them and then they cut me out. They never got any more deals. And so ultimately, you know, you know, be a man of your word and people will respect you and keep coming back. And so I’m very hesitant to work with investors who ⁓ don’t want to pay.
are really just looking for the lowest bottom price and don’t really want to establish a relationship where we’re going to work on more than one deal. Because it doesn’t make any sense for me to make you rich on one deal that you’ll never come back to me with because I can do that deal myself. But I’m happy to share as many deals as possible with people who are constantly looking to have a lasting relationship. So ultimately, you got to look past the first deal and know that it can be many deals.
⁓ if you are treating everybody with respect.
Erika (14:24)
Yeah, absolutely. With your experience in the game, Milton, if you were to start investing now and it was, you know, if you were someone brand new, what would you do differently today?Milton Andrade (14:39)
Multifamily should be the first thing you buy before you even buy your, you know, your primary residence, let’s say, because you want to take advantage of the low down payment financing options with FHA. Like if you’re a veteran, you should be looking for VA. ⁓ And you should start with multiple units ⁓ of four units or below, because that’s still considered residential, where you could be able to buy a property,you know, with very little money down. when my, my, one of my first investments in multifamily, I used an FHA loan.
I bought it with about $20,000. I got the seller to pay the closing cost. ⁓ And ⁓ that property today is tripled in value and ⁓ produces a very steady stream of cash flow ⁓ that is today probably a 20 % capitalization rate ⁓ on my money.
And it’s because I didn’t look for comfort. I looked for a deal that would improve over time.
looking at the right neighborhood, looking at the right unit mix and looking for something that I could ⁓ say house hack, right? And so getting over the need of having the beautiful luxury condo or the beautiful big house for yourself, the first purchase really should be the multifamily investment. And then you can use the ⁓ low down payment financing options to go from your first year, second to your third and your fourth. Because if you start with,
a multi-family with an FHA mortgage, within two years, you can get a single family home with 3 % down or 5 % down. And then you can do this again in another two years, moving from one property to the other. So you’re basically keeping the primary residence financing that you’re going to be able to really take advantage of a lower down payment and a lower interest rate. ⁓ And so it’s like, you got to play monopoly in the beginning so that then you can be in your
big house, that mansion that you may want that is paid for by those investments. But you have to, you have to do it the first time is the only time that you can use that FHA option for a multifamily. And there is even a further hack. If you work from home and you can, you can work anywhere, you can live anywhere. You can move from one city to the next. I think it’s got to be at least 50 miles away from the first.
And you could use your FHA again in a different state. ⁓ So there’s ways to do this that are legal, ⁓ that are fine, you you’re using the financing correctly because banks will let you move up, right? And so you can do 3.5 % down, 3 % down, 5 % down, 10 % down before you have to get to 20 % down. And then everything else on a DSCR is 20 % down, 25 % down. But meanwhile, you’ve got four cash flowing properties.
that you’ve moved from one to the other over the years. And so if you set up that foundation, you’ll be bulletproof.
Erika (18:19)
Yeah, that’s a really solid plan. ⁓ you have quite a lot of deal volume yourself. So when you get to that point, how do you manage the cash flow without stretching yourself too thin?Milton Andrade (18:35)
You don’t want to pull out too much of the equity. You want to make sure your properties stay cash positive. And the reason why I like multifamilies is because you’re really very rarely are going to have 100 % vacancy. You’re always going to have more units kind of helping to pay. ⁓ And then how do you handle that is don’t over leverage yourself. know, some people were using the burr method in the past. know, buy, renovate, rent, refinance. Well, that’s still good.But don’t pull out so much equity that you’re not making any money and this is just paying for itself. You want to make sure that these investments stay in the asset column and don’t end up in the liability column because your payments are higher than the cash flow or the you now you have a capital improvement that’s coming up and you’re not going to have any money to make it and that’s going to then cause a catastrophe down the line. So leave enough equity in there to have the sufficient cash flow to cover itself.
with reserves for capital improvements and for a rainy day. And so if you’re not too greedy to pull out and scale up too fast, you’ll be in a much better
Erika (19:45)
Yeah, yeah, and I’m sure with having things in place right that you know you can you can focus more properly on the next thing. So that leads me to ask you, Milton, what do you have on the horizon next? What’s the next real goal for you?Milton Andrade (20:01)
I’m looking to start investing in commercial real estate that has a business aspect to it. So like I want to get into a laundromat, a car wash, something that we’re going to own the real estate and the business aspect, maybe as part of a smaller plaza. And I’ll be looking in areas that are starting to develop. Like, because if you imagine if you got into like the city of Weston, for example, in the nineties, you know, when it was just being built and just being developed.you’d be a multi-millionaire today if you just held on to some real estate. So I’m looking for areas that are currently under development, maybe on the west coast of Florida where you’re getting a 20 % discount on properties today, and looking to find a commercial business and building in those areas where I could manage them offsite and remote and basically just watch it, appreciate it, and value.
Erika (20:57)
This is really exciting. Are there any challenges that you foresee with that goal in mind?Milton Andrade (21:05)
Yeah, the whole remote part. might have to actually ⁓ stabilize the property and it may require me to take more time away from my current home and post up over there until I get it ready. So I don’t want it to be too far away or at least it can’t be too inconvenient to get to. But establishing the right contacts in those areas will enable me to ⁓ be able to do that. So maybe finding something with management in place.Erika (21:35)
Yeah, absolutely. Well, Milton, before we wrap up, if someone wants to reach out, connect with you, collaborate, what’s the best way for them to reach you?Milton Andrade (21:45)
You can find me onat Milton Miami Realty or call me direct anytime. 954-629-9952. I’m still communicating via phone. ⁓ So I know different generations communicate differently, but you can still call me. I will pick up.
Erika (22:03)
I love it. Well, Milton, I appreciate your time, story, perspective. It’s been awesome having you on the show today.Milton Andrade (22:11)
Likewise, thank you.Erika (22:13)
And for our listeners, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations coming up with pros like Milton who are building fantastic real estate empires. We’ll see you on the next episode. -
