“You only need a small axe to chop down a big tree.”

-Nico Salgado

 

Nico Salgado has a BS in Business Bargaining and Management and a minor in economics. He also holds a master’s degree in Spanish language education, and has spent the last 17 years as a Spanish teacher. Apart from being a teacher, he has been investing in real estate. He’s an entrepreneur, coach, mentor, and leader. Nico began investing in real estate in 2012 with a single family development project and has scaled to owning 194 units as a general partner. He also hosts a bi-weekly Meetup group titled The Multifamily Investors Network in New York. Nico also hosts the small acts podcast where he interviews industry leaders and multifamily where he believes it only takes small acts to build a lasting Empire.

 

In this episode, Trevor and Nico discuss:

  •   How this Spanish Teacher, avid surfer, woodworker and traveler hop into real estate investing.
  •   How to build a team from different locations.
  •   The property type or asset class best for multifamily space.
  •   The difficult challenges of a real estate investor.
  •   How losing $60,000 taught Nico and the team.
  •   How to overcome the negative mindset from an expensive and painful learning experience.
  •   How to build your personal brand and community from scratch.



Listen to all our episodes and leave a review: HERE

 

Subscribe: Apple | Google Podcasts | Spotify

 

CONNECT WITH NICO:

Website | LinkedIn | Instagram | Facebook

 

BOOK RECOMMENDATION:

The 7 Habits of Highly Effective People | Who Not How

 

CONNECT WITH TREVOR:

Links:

Website | Instagram | LinkedIn | Facebook


Email us: Trevor@podcastingyou.com

Full Transcription Of Today’s Episode

Trevor Oldham  00:45

Hey, everybody, welcome back into the real estate investing exposure podcast. I’m super excited for today’s guest, Nico Salgado. Nico has a BS in business, bargaining and management and a minor in economics. He also holds a master’s degree in Spanish language education, and I spent the last 17 years as a Spanish teacher. But that’s not the reason I brought him onto the show today. Apart from being a teacher, he has been investing in real estate. He’s entrepreneur, coach, mentor, and leader, Nico p investing in real estate in 2012, with a single family development project and has since scaled to owning 194 units as a general partner. In addition to that, he also hosts a bi weekly Meetup group titled the multifamily investors network in New York. Nico also hosts the small acts podcast where he interviews industry leaders and multifamily where he believes it only takes small acts to build a lasting Empire. Nico, super excited to have you on the show today.

 

Nico Salgado  01:46

Hey, thanks, Trevor. I’m excited to be here too, man. I’m glad we got to make this happen.

 

Trevor Oldham  01:50

Certainly, and for our audience out there that’s listening in. And they may not know of you, this is the first time they’re learning about you. I love you just to hop into a little bit more into your background and really what got you interested in real estate investing?

 

Nico Salgado  02:02

So I’ve always had an interest in real estate, right? And it’s where you know, people say that right? I’ve always been interested in real estate, but I really have been even as a little kid, you know, I would save money. Every dollar I would get I’d save and I would roll it up into this weird little role. And my dad would say what are you going to buy?” and I’m going to buy a house. Eventually, years later, I bought my own house, obviously. But then in 2012, I had the opportunity when traveling to buy a piece of land down in Nicaragua. And I did that for the purpose of really building a vacation home. And I wasn’t very clear on what I was going to do with it. But we built a vacation home. It took a long time to build because of the bureaucracy down there. But had a vacation home built and now actually just got it finished to where we’re converting it as an Airbnb. What excited me about that project was the fact that I spent about $65,000, all in buying the property and painting and building the house. Now we aren’t actually on the market for 130,000. So it’s basically doubled in value. And you know, just simple things like that. Besides the fact that it excites me. There’s the possibility of earning money from it right. So now I can be creating a stream of income monthly through Airbnb rentals. And also it is appreciated. So at some point, if I wanted to sell it or take some money out, I could do that as well. So that’s been very exciting. Now, what happened in 2018 was I had another Revelation where my then wife at the time we were living in our house and our taxes here in New York, went way up. So like we went from paying $4,000 a year to paying $12,000 a year. Now how could I possibly manage that when I was already basically living paycheck to paycheck? And I said this is not right. Something has to change. I need some source of income. There’s no more hours in the day because at that point, I was working my teaching job. I was coaching various sports. I was doing a coaching program in the morning before school, I was mentoring teachers. I was teaching teacher classes and then throughout the summers when I’m supposed to be off I managed a surf camp. So there was so much there was not enough time in the day. So I ended up doing two things. One was I started a small business, a small side business making woodworking items. I created a little wood shop in my house and I was selling cutting boards and small things that I felt were easy to give away or deliver to people across the country and still earn some money. So while doing that, I realized this is just another time consuming activity. And I don’t think so because I was doing everything from making the cutting boards, finding the customers, packaging them, selling them, recording everything. bookkeeping, there was just too much for me to do amongst everything else that I was doing. I said I need something that is going to be paying me when I sleep. What is that real estate fell back on the idea of Okay, we bought this property in Nicaragua, it has appreciated. We can utilize this property in Nicaragua to produce income for us. We don’t pay anything for it. It’s all paid off. That’s what I needed. I needed more money. So I began looking at duplexes here in New York where I live. The minimum price at that time in 2018 19ish was about 700,000 for a duplex, meaning the barrier to entry was very high. Right? I couldn’t just, you know, I would have to come down with a very solid downpayment for that, and then I’m only getting two units, and then I wouldn’t have enough, it would take me maybe 10 years to save up enough money to do the next one, right. So that was not a viable solution. I spent about a year looking for things like that, and it just didn’t, I found quickly that it wasn’t going to be something that I can handle or be scalable. So luckily, I found the Jake and Gino community online when searching through bigger pockets, and they turned me on to multifamily. So in 2019 November, I signed up with the Jake and Gino community. And they, it was like a rocket ship of success from that point on, it was like drinking through the firehose of information, education knowledge, my mind was exploding with possibilities, ideas, just enthusiasm, the crew that I was talking to was just overwhelmingly generous to me. I just felt like I joined the right family. So I started creating a multifamily investing business, which takes so much time and effort. And if you’re not really going to do it, you know, if you’re going to do it, maybe a couple hours a day or a few hours a week, you’re not going to be successful. So I ended up giving up a lot of stuff, I quit the sporting programs that I had, and also kind of worked out because a few months after I joined the community COVID hit and I really couldn’t coach anyway. So I was like, This is perfect. That’s why I was working from home that spring. So this is perfect. I had plenty of time to work on my real estate business. That summer, there was no surf camp, I couldn’t manage the surf camps. So again, I was just working on the business. So what I did was, I focused on building a brand, I created a company called the small x communities. And small x has to do with the idea of you only need a small axe to chop down a big tree. Now as long as that acts as sharp, as long as you keep sharpening that axe, you’re going to be able to chop down or take down the biggest tree. So communities come into play because we want to own apartment communities. I want to have investor communities. I wanted to have communities of people where I can connect with and grow with and partner with so there’s a variety of communities involved with this small acts community idea. So I started looking at plenty of deals right and and I chose a market like most real estate investors do. Mine was Tampa. I chose that market for a few reasons. But one of the main reasons is that it’s a huge, hugely popular, very successful market for real estate, especially multifamily. And I found it to be extremely competitive, but I didn’t let that stop me. So I spent the following 18 months from when I signed up with Jake and Gino in November of 2019 to basically about a month ago, searching for the you know, properties down there. And I submitted a ton of offers, I underwrote a ton of deals. And I never wanted any of the offers or any of the deals. And it came to a point where I decided, you know, this is that I’m kind of just doing the same thing over and over. And if I don’t change my tactics, I might never get a deal. So I decided to go to a different market. And that’s where that takes me today. I ended up creating a new team in or keeping some of the same team members but taking on some new team members in a different market. Now we’re focusing on Birmingham, Alabama, along with Tampa. long winded answer. There’s plenty more where that came from. But let’s kind of pick that apart maybe.

 

Trevor Oldham  08:50

Yeah, no, that’s, that’s interesting that a journey from investing in Nicaragua, and then having that play out down the road. And then now looking at these other potential properties, the ones that you’re looking at in Tampa, and then now Birmingham, and let’s say there’s someone in our audience that’s looking to get started into real estate investing. And so there’s someone like yourself, but they’re in New York, in New York, it’s not like Connecticut, Pennsylvania, those states like that are like right next to New York, Alabama is quite a bit away. What was that like putting that team together and looking at a state to put together deals or to find properties?

 

Nico Salgado  09:22

Great question. And thank you for kindly grounding me to bring me back to that. Because when you are an out of state investor like I am, I’m not going to be investing in New York. However, I may in the future. We could talk about that later, too. But I’m not going to be investing here. My focus is Florida, Alabama, and maybe some other states at some point, but what you’re going to need are some key team players. So first of all multifamily investing isn’t something that you should do on your own, although it’s possible, right? But ideally, we would specify and become experts and one avenue of being one team member. For example, me. I enjoy The acquisition phase. So I enjoy finding a deal, underwriting the deal, submitting the offer and negotiating. After that I kind of lose steam and I want to find another deal. It’s just what I enjoy. Now, I need people that are going to be boots on the ground in those markets. And this is an essential, probably one of the most important team members to have. So what I did was, I contacted people in the Jake and Gino community, like, luckily, I’m in this community and we have a list of people who are investing where and who lives where. So I found this one guy, Grant Puri, who lives in Alabama, he lives in Birmingham. He was born and raised there and he invests there. He joined the Jake and Gino community about a year ago, a little over a year ago. And he just closed on his first 20 units. So I said, You know what, since I’m focusing on Birmingham, I’m gonna call this guy up. I called him up, and we had a great conversation. Now there’s two of us, right? So me and him and I decided to say, You know what? He has all the relationships down there. He’s got the connections with the brokers, why am I going to waste my time now to rebuild all the broker relationships, let him maintain those relationships, I need to focus on something else and become an expert in that. So what I did was I then contracted this other partner who is also in the Jake and Gino community who specializes in direct to seller marketing. So he has been very successful with single families and he’s based in Colorado going directly to the seller where he’s found so many great deals and he’s done fixin flip, but he’s also looking to get into multifamily. So I’m we’re taking him in his process, this guy, Jake, or escovitch, we’re going to use that the same techniques and the same process that he’s used in Colorado, in Birmingham, we have our partner grant down there who’s boots on the ground who can shoot over to any property at any point. And the grant is covering all the broker relations down there. He’s got connections with every single one, he goes to golf with me and goes to coffee with them. He’s got that down. Jake has got the direct to seller campaign almost down, we’re working on it. And then I have my partner Luis, who has been my partner for a long time now in Florida, who does underwriting now. When I say he does underwriting everybody on all of our teams, we all do underwriting but we need somebody who is fast, efficient and good at it. So he is going to be our chief underwriter. So all these deals that we get, we pass over to Luis, he underwrites them, we get a thumbs up or a thumbs down to then further take a deeper dive in it, and perhaps submit an offer. Now, we have one more partner, my partner Shane, so Shane has been my partner for a long time too. And Shane and I are going to tag team the investor relations side of things, because we’re going to be taking on the capital raise being that I have the most well known brand on the team at this point. So I am now creating a system where I’m going to be filtering investors through Shane and I am going to be communicating with investors getting to know what their needs are to understand a little bit more about what their investing goals are. And we’re going to be prepared for a syndication. So with this team of five of us, we think we have all bases covered to where we can take down a deal that is anywhere from five units to 150 units down in Birmingham.

 

Trevor Oldham  13:18

certainly helpful to know and just as a side note through I guess, with this conversation, but do you happen to know Tim Lyons loved I was on the phone with Tim Lyons this morning. Yep. Yep. So Tim, I’ve been working with Tim for our company, we help get people booked on podcasts and I was working with Tim. We sort of struck a deal where I gave him a nice reduced rate and still got to get paid a little bit, but in return he’s been actually mentoring me. I’ve been sending him deals and I’m not going to him on the phone. I know that he was in the Jake and Gino community. And then obviously, he’s based out of New York as well. So I just wanted to see if you knew him said Is it is funny,

 

Nico Salgado  13:51

funny, I love and so I actually called him this morning. Like I sent him a text this morning and called me right away. We talk frequently. And my question to him today was based on investor conversation, does he have a script ready for investors because what I’m doing is I’m making sure every single person on our team is going to really really step up their game in their little specific area. So Luis is going to be taking new underwriting courses to be the best underwriter he can be. Jake is going to be meeting with this other guy who has been very successful with direct to the seller in the Jake and Gino community with multifamily. I need to meet with people who are capital raisers, because that’s what I’m going to be doing. So awesome. I loved him.

 

Trevor Oldham  14:29

I’m in and now going into the deals that you’re looking at in the multifamily space. Is there a certain asset class you’re looking to do, say A, B, or C or you’re looking to do value? What is sort of your philosophy when you’re looking at these properties and potentially making an offer on them?

 

Nico Salgado  14:43

Yeah, great question. So we’re always looking for some sort of value-add play, whether that be through physical renovations or through a management error that you know we can rectify. We look for BNC class properties. One of my partners Jake has always been kind of in the D space. Very successful with a single family but, and he’s not afraid of that. But the rest of us are a little bit hesitant about that. So we’re going to be focusing on B and C class properties. And we’re looking for a 15% bump in rent. So if we can get a 15% bump in rent, we would consider it whether that be like I said, to renovations or through management errors that people are making. Yeah, so B and C class properties, meaning a typical 70s and 80s, but preferably 80s. And newer, for certain reasons, meaning like, the plumbing prior to the 80s, could be very costly to fix and things are going to you could witness that whole capex tsunami where things start going wrong, prior to the 80s. But we’re not opposed to looking at.

 

Trevor Oldham  15:43

And as you’ve been a real estate investor, and you’re getting into all the aspects of it, what do you think the most difficult challenge you think you’ve experienced all I’ve been an investor?

 

Nico Salgado  15:52

absolutely the most challenging and most difficult has been to remain consistent and continue pushing forward when it was 12 months before I got my first deal. And I didn’t even find the deal, I was invited on to the deal. So it’s very difficult, very competitive, and very frustrating. Now, so many people give up. But if you give up, you lose, you can take two, three years to find a deal. That’s fine. We have to say, I was so excited and so energetic in the beginning to just get a deal, I would have bought a bad deal. And we really just have to remain patient. But I didn’t mention it to you. I did get a deal in Tampa actually a couple of months ago, but it was the wrong deal. And we ended up losing a ton of money on it. I don’t know if you want to hear a quick synopsis of what happened.

 

Trevor Oldham  16:39

I Yeah, that would be perfect. I mean, not to sound excited. I think it’s always interesting just to learn, you know sometimes about the deals that don’t go as well as planned. So I love for you to hop into it.

 

Nico Salgado  16:50

Yeah, it’s a lot. It was a huge learning experience. And we made so many mistakes. So first of all, this was a wholesale deal. So we got this deal from a wholesaler, not from a broker, there was there were 20 units, but there were five quad plexes, since they were quad plexes, meaning they’re four units, not five or above, we had the opportunity to go with a residential loan and do a residential appraisal. And because it was a wholesale deal, we had to close within three weeks, and we had to go hard with our money on day one. We put $50,000 down knowing that we weren’t going to get it back, we were sure that we were going to be able to close this thing. It was basically a $2.25 million acquisition. We found the partners, we got everything in order. And we got so ready. Within the three weeks, we nailed this thing. But the day before we were going to close the appraisal came back, not what we expected. Because it was residential, you have to base it off the comps. The comps didn’t show I mean, the purchase price was fine. But what we were looking for after renovations in the post renovation value just was not there. Now had we gone a commercial appraisal, we would have been able to show the income meaning the noi to value the property. We didn’t do that because we were pressed for time and the commercial appraisal took a little bit longer. So we thought we were going to be fine with the residential appraisal. And we were not we ended up losing just under $60,000. Between the team then and now. Now this wasn’t a Jake and Gino fault, either because you would think well, I have coaches and mentors. How come they didn’t tell you? Well, they did tell me. But unfortunately, I brought it to them. I brought this deal to them after we went hard. And I shouldn’t have done that. I was too eager to go hard with this money and just get this deal locked up because it was a great deal. But after we went through the underwriting with one of my coaches, he was like, Well, I don’t know about this, this is kind of risky because of X, Y and Z. And, and he’s like, I don’t think it’s going to appraise and we were like oh boy, here we go. And I didn’t eat for those the next two and a half weeks. I was just terrified and nervous. But look, I mean, in the end, we were going to be moving on from it. And I know we learned a lot of lessons on that one.

 

Trevor Oldham  19:04

And 60,000 that’s no small amount of money, you know, after losing that, you know, I would say potentially scare some investors and take out more money and put it into other deals. How are you able to sort of overcome that mindset? And did you sort of use it more as a, I guess, a very expensive and painful learning experience.

 

Nico Salgado  19:22

So it was a very expensive and painful learning experience. But the key here is that this is what it takes to be a successful multifamily investor now as an indicator, meaning I’d syndicated one deal and I raised capital from investors, this is going to be the same thing now. And we had the investors lined up. We had two investors that put in 200,000 each. They didn’t lose any money. Because this is how syndication works. We the operators, the general partners, we put out all the risk capital, and this is part of why we need to get paid when we do a syndication and when we do a joint venture. Let’s say we’re running the deal and we’re putting out This risk capital, we need to get reimbursed for that or compensated for that, because this is part of it. We’re the ones who lose money. Nobody else lost money on this.

 

Trevor Oldham  20:08

Now, I want to hop into sort of your personal brand and the small community and what that experience has been like building up that personal brand and, and sort of building up that community from scratch.

 

Nico Salgado  20:19

Yeah, the whole like, thought process behind it was I am not rich, I’m a school teacher, I don’t have much money, how am I going to compete with these big dogs? How can I do it, and I was like, I just need to educate myself. And that’s where the thought process of the small acts came in. I can be this small, small fish in a big pond. As long as I educate myself, as long as I sharpen my axe, there will be a way for me to get into one of these deals now. I began just calling myself small acts and, and putting my name out there and branding myself as Nico Salgado, you know, with the small x company behind me, but most people know me as Nico Salgado. And they see my face all the time, you know, on social media and I, and I really try to be consistent with how I market myself and my company, and also my image. So I began my branding by wearing a suit and tie, right, I don’t know if you remember that this is like over a year ago, and then I said, You know what, that’s not me. And it’s, I’m okay, presenting myself who I am to my investors, because it’s going to be a handful of investors that want to partner with me, and I don’t want to fake it. I will never go play golf with somebody to earn their business, it’s just not me. I can be genuinely honest, I can take you surfing, we can have a great time, I can play music with you, I play in a band. And I’m knowledgeable. So if you are that kind of person, that’s the kind of investor that I want to attract now. So I recently rebranded myself, I changed the color scheme, a little bit of my posts and my marketing material. And I also kind of loosened up myself, I’m not wearing a shirt and tie anymore, I’m just wearing a regular t-shirt. Now it’s, as I normally dress and, and people have taken very well to it. So people are, it’s gaining a little bit more traction than before, people are reaching out saying, I really liked what you’re doing with your brand. Let’s set up a conversation. And that’s just how it’s gonna be.

 

Trevor Oldham  22:03

How it’s perfect, just staying true to who you are. And it’s always green. I want to hop back a little bit into New York and potentially investing there and down the road, I can tell you that my fiance’s is from upstate New York, not down by the city more as she’s not in New York City, but more up towards Albany and looking at I’ve intentionally looking at properties around her. And I never realized how big and how expensive the property taxes were around her compared to what it is in Massachusetts, where we currently reside. And I can definitely attest to that being expensive. But I’d love to hear your thoughts on if you were to ever potentially invest in New York. What are your thoughts on? I guess, being in your local area?

 

Nico Salgado  22:40

Yeah, it would be upstate New York, where I would invest now. It’s about three and a half hours from maybe three hours for me. When I was growing up back in 1998. I went to college in Albany, and we rented houses over there. And I said, This is awesome. I wanted to do this. So I talked to a few of my friends who were working in construction at the time. I was in the business school there and I talked to one of my teachers and we were discussing how I could possibly potentially buy these duplexes, rent them out, etc. I never followed through with it because my professor, you know, kind of steered me away from it saying it was hard and this and that, and I believed him or whatever. But then he also mentioned that the same Professor also mentioned to us the largest growth county in the United States was at that time Saratoga. So Saratoga Springs, which is like an hour, maybe maybe 3045 minutes north of Albany was and still is a very huge growth market. And it’s very popular. They have the old race track there. I used to go there every summer and work. Now, I didn’t focus on Albany, or the Albany area. Troy’s connected to those, though, you know, those counties up there. But one of our Jake and Gino members has been very successful. He owns hundreds of units up there. And he’s still focused on whether they’re still acquiring our units there. And I’ve been having a few conversations with him with the idea of potentially partnering with him on something up there. So I’m not knowledgeable enough about what I bring to the table for him. I would help him with his marketing, and I would help him potentially raise some capital. Not that I’m good at raising capital. Not that’s what I enjoy doing. But that would be my way into a deal with this guy. And you should definitely get him on your podcast. His name is Bill Hamill. H a m e L. He’s a great guy, really knowledgeable and a heavy hitter up there in the Albany area.

 

Trevor Oldham  24:23

Yeah, no, I appreciate that. I know all those areas. I’m getting my fiance getting married in Rentschler next year. And then I’m actually going to Saratoga this year for my brother’s bachelor party. Oh man, in about a month, we’re going to have to go up to those races. So definitely familiar with that area. And thank you for that. I’ll definitely reach out to bill. It’s always nice to talk to people I know. I know the area but Nico. This interview has been great. I just wanted to ask you a couple quick questions before we end the show today. From your opinion, where do you think that the real estate market is going in 2021 and beyond.

 

Nico Salgado  24:59

Sorry to say I’m asking the same question to everybody, because I want to know everybody’s opinion. But it seems to me that things are slowing down. I mean, since 2012, the real estate market has been freaking booming to the point where it’s like, if we were to think that this boom could continue, we might be considered crazy. However, given the population shifts and the amount of millennials and then what is it, the baby boomers that we have, those populations are huge, and they’re not looking to own, they’re looking to rent. So the rental apartments, communities should be doing fine. So my hypothesis is that within the next year or so, rent increases, and things like that should flatten out, just like we thought would happen with COVID, although they didn’t necessarily flatten out. And we’re going to see kind of like, not necessarily, I don’t think the market is going to dip, meaning I don’t think the real estate market is going to be getting any worse. But it’s going to kind of flatten out for a while. But slowly, slowly continue to get better. My hypothesis.

 

Trevor Oldham  25:54

I think that’s an excellent answer. And then for those listening in our audience, do you ever have a favorite real estate or business book that you’d recommend for them to check out?

 

Nico Salgado  26:03

I have a lot. I love books, and I roll through them because I’m on the audible app, and I listen to my car when I’m working in my woodshop. But this first book is not necessarily business related. It’s called Stephen Covey’s book, The Seven Habits of Highly Effective People, which would make you a great human being all around and it doesn’t obviously tie into business. It does tie into relationships, which is what we’re in, we’re in a relationship game here in the multifamily space. And then the other book is who not how which I love. And this is really what I’ve been focusing on in the past few months finding the who, meaning I used to try to pick up everything and learn everything myself and I found I became an expert at nothing, but I was good at everything. Now I’m looking for who, not how to do this for me better than I can do it so I don’t have to learn it.

 

Trevor Oldham  26:52

Those are two excellent recommendations. And Nico, the last question of the day is working on finding you. 

Nico Salgado  26:58

Yep, the best place to find me would be my website. So smallaxecommunities.com. So it’s a small a x e communities.com. There you can find my podcast, you can find all the information about me with my email, my phone number, you can give me a call and email or however you feel comfortable reaching out, you can book a call, whatever is good for you guys out there. 

Trevor Oldham  27:22

Awesome. I’ll make sure to include that in the show notes for today’s episode. For those of you who are listening and Nico, thank you so much for coming on to the show today.

 

Nico Salgado  27:30

Awesome. And Trevor, thank you so much for having me.