(0:00:00) - Real Estate Investing After Losing Everything

(0:06:16) - Real Estate Investing Strategies and Evaluation

(0:11:22) - Short-Term Rentals and Mortgage Business Conversation

(0:21:46) - Investment Property Loans and Financing Options

(0:26:20) - Inventory and ADU Impact on Housing Market

(0:34:56) - Finding the Right Real Estate Agent

(0:40:32) - Prioritizing Appreciation in Real Estate Investing

Vikas Gupta  1:13  

Hi, everyone. On today's episode, we have Julie Aragon, the fearless, not your mama's loan officer. She went from accidental house hacker in 2004, to losing it all in the 2008 crash. Now she manages over 25 units in Los Angeles. And she has a team and technology stack in the mortgage brokerage world that leads the industry and she's ranked among the top 100 mortgage brokers nationwide. Julie, welcome to the show, in your own words, can you tell us your real estate journey?

Julie Aragon  1:43  

So it started out so I grew up in Los Angeles, and you know, very, like blue collar community, my parents still live in the home I grew up in, and you know, they owned their home. But it was kind of a thing of like, you know, you just buy a home, you pay it off, my dad actually never even drove. So my parents are from the town I grew up in. And for us, like, you know, moving or buying property that was not, we were never taught that. So I got into the real estate space at 20 years old. I was in college and I had a friend of mine who said you should become a loan officer. And I thought, well, that's a stupid name. What is what do they do? And then I found out, you know, as mortgages. And so that got me in the world of real estate. And so yeah, after a couple years, I bought my first property in 2004. And yeah, it's been a wild ride.

Vikas Gupta  2:30  

And that first property that was the house hacking, yes, so

Julie Aragon  2:33  

I had a client that would it was like December 2004, we were in escrow. They're gonna buy this cute little house, and they got cold feet. So I looked at the appraisal. And so this is cute. It was like a Spanish style three bedroom, one bath. And I wanted to get out of my mama's house, I had a boyfriend, like I need some space. So I bought the property. And at that time, you know, I had a real estate license because you needed one to do mortgages back then. And you I use my commission as part of the down payment and so out of pocket, it was very little down, just kind of being scrappy, and you know, getting the seller pay closing costs. And yeah, I got in there and put an ad up on Craigslist found two lovely girls to help me pay the mortgage. And it was good. It was a good first step to buying and it allowed me to get some appreciation. You know, after a couple years, like early 2000s was still a good market. Then what happened was, I started effing up because I didn't have that financial education. So then I did a cash out refi on the property. And then I bought this huge house that like I had no business buying at 23 It was like had a pool I think it was four bedroom. One, I think was nearly one three, like for a child, this house. I always say like roommates could not save me that was a terrible idea. And eventually lost everything and and I actually crashed and burned a few years earlier than most people like I I was done by 2007 like lost it all short sale foreclosure. But it was a good lesson that was young. So I learned you know what not to do the next time around. And then

Vikas Gupta  4:10  

he decided to get back into it. That's pretty impressive. How did you get back into the game?

Julie Aragon  4:14  

Yeah, so So I never left the industry right, I was always kind of still doing loans and after a couple tough years of rebuilding my credit and and my self esteem. And so it took a while and I actually if I look back, I probably waited a little bit too long to get back. I didn't buy another property until 2015. And after a event like a foreclosure you can buy FHA Three years later, but for me, it was you know, had a lot of debt to pay off. And, and just, you know, kind of getting things back in order. So I really wanted to stockpile a lot of cash. And in the end, I wish I wouldn't have I wish I would have been bold and like, you know, read the books had the I didn't need to wait as long as I did because I missed opportunities and deals in 2011 and 12.

Vikas Gupta  4:58  

There's one thing you mentioned that I think if you could go into a little bit more detail on might be helpful to folks who are less less than to know about the mortgage space. Can you share a little bit more about when you said, after a foreclosure, you can get an FHA in three years?

Julie Aragon  5:14  

Yes. So So I love FHA financing, especially if your plan is to become a real estate investor and house hack and, you know, keep this property long term. I love why FHA three and a half percent down on a duplex. Now I know in some areas, you can do three and four unit if it passes, you know, a certain test. But in our area, really, it's like duplex, and FHA is a great product because they're a little less judgy on like the lower FICO scores. So if you are coming off of a past event, like a bankruptcy or foreclosure, you can get back into the market much sooner on an FHA loan versus a conventional loan. So another three and a half percent just makes it a lot easier. 3% down.

Vikas Gupta  5:58  

Got it. Oh, I thought you're talking about the rate. And I was like, wow, someone's reading three and a half percent today.

Julie Aragon  6:03  

But yeah, that's when I got back in the market, it was that it was a duplex during a half percent down. And at that time, so you know, I was allowed to use the rental income on the secondary unit. And that helps me with qualifying what I wish I would have done is bought in the best area that I could afford. I didn't I actually bought because again, I was scared. I didn't want to be poor again, you know, so I was like, I bought in an area that it was affordable. But the schools weren't the best. And it wasn't an area that it would have appreciate. Or it didn't appreciate the way if I would have just had a little bit. Yeah, so that's the thing. Yeah, so I bought that property. And then after that we hung I hung on to that refinanced out of that FHA loan, which is great, because now the mortgage insurance comes off. And then I held that property probably for six or seven years before doing a 1031. And the beautiful thing about that story is so that initial downpayment in 2015, was $17,000. And then I did a 1031 months later, and like 2020, I was able to add value to another duplex in an area closer to the beach rental income was better. And it also had more opportunity to like convert an age and build an adu. And so now I still have I have that property. And it's appraised probably like a million dollars, over $7 million in equity in that property. But it started for me, in my mind, it started from that 17,000 Like it never would have happened.

Brandon Hall  7:34  

So talk to me a little bit about, you know, the shift in mindset of going through. Oh, 708 and then getting back into real estate, how did you convince yourself that you still wanted to do real estate? And maybe even people around you that watched you go through a 708?

Julie Aragon  7:50  

Yeah, so I didn't want that big fat primary residence anymore. You know, like the big fat house, like I didn't want that anymore. I wanted to have my housing expense in check, and something that would appreciate. And at that time, also the mortgage business was on, you know, we were doing very well. And I really needed tax deductions. So I think for me, that was kind of like the shift of, you're not buying it for you to live in. And I was single. And so I just I had a different mindset of like this, we're gonna do this for the next 1015 years, and then have a something to show for it.

Brandon Hall  8:24  

And so for my second question, how did your strategy change? So I mean, you it sounds like you've downsized the primary residence? Are you still buying similar types of properties on the investment side, or like he just mentioned the adu piece like, like, talk to me a little bit about how maybe you would have analyzed the deal before Oh, seven and how you analyze the deal now.

Julie Aragon  8:43  

So we're still buying multifamily. So we own nine multifamily properties. And it's a mix of duplexes triplexes, and a few four units. So the portfolio is a mix of long term and some short term. And so for me, the strategies and appreciation play, you know, we're buying in nice areas, rents are high schools are good. And, but some of the properties have long term tenants. We have one lady that's been in the property 40 years, her parents she grew up there. So, you know, but it's two blocks from the ocean. And it's like, okay, well, we're not going to kick out old lady. So, but there's an opportunity to create a short term rental. So then that allows us to have the property cash flow to where we need it to be. And then just let it depreciate.

Brandon Hall  9:32  

Interesting. So when you are acquiring property, how are you evaluating the markets that you're getting into?

Julie Aragon  9:38  

We are investing in Long Beach, so we're not really going outside of Long Beach. This is where we live. And so that's really all I'm focused on. I know the zip codes I like.

Brandon Hall  9:49  

So okay, so So you're in Long Beach, because you've been there for a while. You understand the streets, the neighborhoods, the school districts, things like that. Yeah, if you had to go somewhere results, how would you do it? Like, let's say you couldn't invest in Long Beach anymore? How would you pick a new market? Like what are the things you kind of mentioned some of the things you'd look for? How would you evaluate a new market?

Julie Aragon  10:10  

I would find a great realtor that's invested themselves that that markets to other investors, I would, I would try to find as many people that know that market, I feel, you know, I know the financing side and the best way to structure deals, but what areas are up and coming and you know, we're rents are good and and especially because we like the short term rental of one of the units that have, you know, decent rules and regulations on the short term rental side. That's what I would focus on. Yeah,

Brandon Hall  10:38  

I mean, that's good. You're you're playing to your strengths, and you're covering your weaknesses by pulling somebody else in.

Ad  10:43  

If you own rental units, but don't want to pay for expensive software, check out Azibo The smarter way to manage your rental properties. With Azibo. You can automate rent collection, find quality renters, simplify accounting and tax prep, get a bank account designed for real estate investors, and save on rental property insurance. All of these services are free through Azibo. Join 1000s of real estate investors who trust Azibo to manage their rental business in one convenient platform. Sign up today@azibo.com slash H R E. That's az ibo.com/h R E.

Brandon Hall  11:21  

So if we switch back to the short term rentals, you mentioned that you create short short term rentals How are you doing that? Because because California has some pretty gnarly short term rental regulations. Right. Like how do you navigate those regulations?

Julie Aragon  11:32  

Yeah, so when Long Beach I don't know about city of LA but Long Beach is pretty liberal and we were able to create them one in every multifamily so.

Brandon Hall  11:41  

Okay, got it. So so you're buying multifamily? You're putting making one unit, a short term rental? Got it? Do your tenants complain at all about that?

Julie Aragon  11:49  

You know, they haven't our tenants have been really great. And they like I think they you know, because people come from all over the world. They've got stories, and I haven't thankfully had any of our long term tenants complain.

Brandon Hall  11:59  

And so when you have one short term rental in these multifamily properties, what does that do to your returns?

Julie Aragon  12:06  

So it's about two and a half times the short or the long term rental rate.

Brandon Hall  12:10  

Wow. And you're getting that pretty consistently?

Julie Aragon  12:14  

Yeah, we're occupied about 80 85% on all five units.

Brandon Hall  12:19  

Nice. Now, I saw recently on Twitter that there's an Airbnb bust. Coming. Have you have you heard about?

Julie Aragon  12:27  

I haven't, I haven't in law, which is great. Because you know, people that want to go see La Hollywood, but then also want to go to Disneyland. It's very central. And yeah, but I haven't I haven't seen that.

Brandon Hall  12:39  

Not to scare you. I have an RV. I have an Airbnb, too. And I don't think there's a bus coming. But there's a lot of people on Twitter talking about it recently. So yeah, I don't know, I guess we'll see.

Julie Aragon  12:48  

And, you know, I have options, right? So I can go midterm and go to those traveling nurses or we can stick it do long term, because long term rents will catch up over time, but short term I can I can hang onto a property and just let it depreciate.

Brandon Hall  13:02  

Why not make the other long term units? You know, obviously not not kicking out the the tenants that have been there for a while and that you want to keep but as those units turn over sounds like you can't make them short term rental because of the regulations. Could you make them midterm rental? So

Julie Aragon  13:16  

yeah, or we could but I might do one midterm. But you know, it's definitely more work. We have a property manager for the long term stuff, the short term, I run with, you know, the help of hospitable and all these other tools. So it's not a ton of time, but I don't know, maybe we also run two businesses. So it's kind of like, and I have a two year old. So got to manage everything.

Brandon Hall  13:37  

Oh, wait a second. How do you manage all that?

Julie Aragon  13:40  

I know. It's pretty, pretty wild.

Brandon Hall  13:43  

What is your what is your tech stack look like on the like the management side? Because it sounds like you're doing yourself managing everything?

Julie Aragon  13:49  

Yes. So we use hospitable and then really just hospitable. And no one's like shake smart locks. And I have a cleaner. That's amazing. But that's it. We haven't got into some of the like, there's some short term rental gurus I follow that got this, you know, huge stack, but like I right now trying to just run the mortgage business. We're not really digging into a lot of the techie stuff on the short term side, besides hospitable Oh, and price labs.

Brandon Hall  14:20  

Yeah. So you've got price labs connected to hospitable, which then pushes to both Airbnb and VRBO.

Julie Aragon  14:28  

We're not on VRBO. But yes, right now it's just Airbnb.

Brandon Hall  14:33  

What do you like most about hospitable? Or what's a feature that you really feel like anybody that's getting into the short term rental space should be aware of what their tech stack?

Julie Aragon  14:42  

Well, I think hospitable for sure. Because of of all the messaging, like if I had to do that, and maybe Airbnb has gotten better, where some of that messaging can be automated. And with me, I'm very much like an email and marketing nerd. So the fact that I can create these like custom flows and stuff I enjoyed.

Brandon Hall  15:02  

So for somebody that doesn't know what you mean, by all the messaging, can you kind of describe how hospitable works with messaging?

Julie Aragon  15:08  

Yeah, so whether, you know, when somebody first does an initial booking, maybe you've approved them for to book your place, and then 24 hours later, it's like, okay, so you didn't book you know, just those kinds of messages from the first morning, like, hope you slept like a baby, gotta check out this coffee shop, you know? So all of those like warm, fuzzy things. That's what we do with it.

Brandon Hall  15:31  

Do you have any of the, I forget what they refer to it as, but basically like the messages that go out whenever it receives any sort of keywords like Wi Fi, for example, do you have any of those those automations set up?

Julie Aragon  15:44  

We don't we actually have it in, in the messaging it has. It's like kind of all bulleted out with everything. And then there's a guide. So everything's right there. I know. There's some really cool digital guides. Two, I haven't dug into any of that. But there's so much you can do.

Brandon Hall  15:58  

I use hospital two and can definitely attest to the messaging aspect. The automation is great. The one thing that I haven't explored, like I said, though, is that there's this whole like other side of hospital at least I don't think I missed speaking here. That apparently if your tenants are like messaging you and they're like, hey, ah, FAK or Wi Fi, if that's in their message, you can auto send a message back that's like, here's the Wi Fi instructions, or here's how to change the temperature or something like that. So I haven't really played around with that. But

Julie Aragon  16:26  

and you know, what would be perfect for it's because we have had, I don't know if you had any experience if you use the slick and code. Do you use that for your locks?

Brandon Hall  16:35  

I know where you're going with this. I did not do enough research when I was setting all my stuff up. I use Lockley, which is similar, but it doesn't connect.

Julie Aragon  16:44  

Okay, well Schlag had a real problem or wherever hospital was using for the API, whatever. So codes weren't being generated. We have, we had two people middle of the night one at like, 3am couldn't check in, which is my worst nightmare. And why I say like, I don't want to do it, you know, because you don't want people sleeping in their car. And we were looking into that exact thing, though. Somebody messages locked out at one in the morning. And then we have like, here's the instructions for the emergency lockbox. That's around the you know, corner. So I did see hospital had some like aI thing they just pushed maybe that's part of it.

Brandon Hall  17:21  

Got it. Interesting. That would actually be a really cool automation. Yeah, I haven't had that problem. But I've been doing all manually, I guess, set up my my locks manually. And then I go and I message them on, I've got a canned message on hospitable where I add the new code. And every once in a while I see like, oh, you can connect to this specific SmartLock. And it's all automated. And I'm like, Ah, do I want to spend two hours replacing all my locks? That's the question. So really, just laziness is keeping me back from fully automating everything. But that's cool. That's really cool. Yeah, I would love to switch gears and kind of talk about the mortgage business if you're open for that. Yeah, sure. All right. So when did you get into the mortgage business? 2000 to 2002. So you went through Oh, seven? Wait, what was that? Like?

Julie Aragon  18:10  

Um, I mean, it was scary. company I worked for just shut down. And you know, I remember I think it was like September, like Fannie, Freddie. All of that, you know, we didn't know there was no lending. You know, we didn't know what was gonna happen. It was scary. I had no money, no credit, like terrible credit. It was. Yeah.

Brandon Hall  18:31  

And today, you run a mortgage business, correct? Yep. So what made you decide to get into entrepreneurship?

Julie Aragon  18:40  

I think I was born an entrepreneur. I always, when I was just bossy could never, you know, you can tell me what to do. And then as a kid, just kind of out hustle. You know, I always imagined myself with a briefcase. When I was a kid, I love to mail. So you remember like on the commercials, like call for an informational video about the Bowflex? And I would call the 800 number and I'd be like, Julie, what are you ordering? You know, because I loved I loved marketing. I loved packaging. I loved how like, it made me feel. So yeah, I always knew I wanted to be in business, but I didn't know what that would be. Right out of college. I had like, I would call those ugly yellow signs. Like we buy houses and I remember sitting in a guy's house like that was teaching young people to go knock on doors and get people to sell their house and it's like, all this feels weird. And we had a year. So tried a couple different things like some MLM I think I looked at like prepaid legal, and I was like, oh, not, not really for me. So yeah, when I got in the mortgage business, it really felt like something that I could be good at, because I liked solving a problem. And with mortgages, you know, there's so many different things and you kind of have it's like a chess game. You have to think, you know, five steps ahead. And especially, you know, when the crash happened, it was like, people were scared, right? Because they saw you know, people that were buying Ain't got time. So really giving them all the info so they can make a rational decision not like based on fear or emotion or headlines. And so I just I liked that, that I could be a part of that.

Brandon Hall  20:14  

Very cool. Do you remember what your first job was? Just curious?

Julie Aragon  20:18  

Yes. It was passing out towels at a tennis club. Because you know, West End tennis club and Taurus?

Vikas Gupta  20:27  

I do. I do.

Julie Aragon  20:30  

Yeah, so I passed on towels for about a week. And I got fired. Because I wasn't cheery enough, I guess.

Brandon Hall  20:38  

Why do you have to be cheery to pass out towels?

Julie Aragon  20:42  

Yeah, no, I don't think the club's members like.

Brandon Hall  20:46  

Yeah, that's funny. I always like to ask entrepreneurs what their first job was, was curious. So what do you feel you do in the mortgage business, in your business, that's a little bit different than maybe what you've experienced as an employee, like what what differentiates your business compared to other places that you've worked,

Julie Aragon  21:05  

like I was saying about being kind of a, like a marketing nerd, and really caring about the experience about everything from when the client first finds us to how we communicate, especially in the mortgage space, it's very, it's very dry, people feel like they have to present themselves in a certain way, you know, just boring language. And with us, we make it, we make it fun, we're very good at what we do. But we don't take ourselves too seriously. And I think people appreciate that. We're gonna give them the facts, but we're going to do it in a way that they can understand. We're not trying to, you know, talk over them, we make it in really simple terms. And so I think that's what's made us successful.

Vikas Gupta  21:45  

Do you specialize in investment property loans? Are you doing primary residence, or both?

Julie Aragon  21:52  

I do a lot of primary residence, we do have a lot of investors, because we've been doing it so long, we have clients that come back, especially now when I talked to my past clients, who have a ton of equity in their home. And maybe it's lazy, it's not working for them. And some of them have children that are now coming of age getting engaged, that kind of thing. So having those conversations of, you know, okay, baby boy just got engaged, like, what if we can help him buy his first property? You know, you gifting him three and a half percent for the FHA, and we talk about, you know, maybe doing short term rental on that second unit to help them pay for it. So I think the clients appreciate that we are, are thinking of things that that they didn't think of on their, like my parents, you know, they just never thought to buy rentals, like,

Vikas Gupta  22:35  

who does that? How different are sort of like, how differently do you have to think or communicate around the investor side versus the primary residence side? Like, is it is it? Is it less emotional, it feels like it'd be less emotional, but I mean, it, perhaps not, I'm just curious, I don't know

Julie Aragon  22:51  

if it's less emotional. I do think when I'm talking about investment property, especially like, as an investor myself, I have more passion around it, because I see how it's changed my life and how my daughter's life is changed, you know, from these decisions. So while it is just a property, and they're not going to live there, what it can do for them, and their family is emotional. So I like to try to show them all of those things, especially like in our market in LA, we've got a lot of clients that have high w two wages, and they're at the highest tax bracket, and they don't think there's another way, this is just like, well, this is a good, you know, I get source you income. But what, what can you do? And when I show them, well, here's what you can do? And wouldn't it be nice if you could save in these taxes, and then that allows you to buy another property every couple of years? Because then maybe you know, your spouse doesn't have to work or it can be a choice or you know, these kinds of things. So, yeah,

Brandon Hall  23:52  

can you talk a little bit about financing options? I know that to buy larger deals over the past few years, you've really had to use floating rate debt bridge loans, that type of thing, especially if you get into the large multifamily space. So can you talk a little bit about when when should somebody use floating rate versus maybe fixed fixed debt? I don't know how much of that you'd necessarily experience or if you've got an opinion on that, but I'd just be curious from somebody that's in the space.

Julie Aragon  24:19  

So I focus on one to four unit residential, I'm not doing anything above that. And you know, really large deals like that,

Brandon Hall  24:28  

trying to ask about the current market conditions with with lending. What Where do you feel we are in the cycle? I guess? Everybody always likes to talk about a big bust. I am personally anti bust because I don't think we have enough inventory. You know, demand has stabilized but the reality is that inventory is at like what all time lows or something so I don't think we have enough inventory to see major price drops or anything but I just be curious to hear from an insider or somebody that seeing this stuff every single day like what your thoughts are on the current state of the market.

Julie Aragon  24:59  

Yes. So we right now we have 65, pre approved buyers that are looking for homes and can't find them. Our clients are making offers. And they're they're not always getting accepted, because there's a lot of other people so that well, it part of me maybe part that wants to buy more properties wish there would be a bust. I don't see that happening, at least in my market.

Brandon Hall  25:20  

And so the the 65 pre approved buyers, roughly how long? Maybe you don't have a good feel for this or maybe don't have data on this. So just tell me if you don't, but if so, prior to this, I'll call it like insanity that we're experiencing. What is the typical time to go from pre approval to offer accepted? And what are we looking at now? How is it changed?

Julie Aragon  25:45  

So it's kind of hard to answer because it depends on your agent. You know, I've got certain agents that I know, they've got a pre approved buyer, and they're gonna give them an escrow, like this month, because I've got the network that you know, there Hustler, that kind of thing. Yes. And sometimes I have agents and like, I'm gonna use this family friend like, oh, shit, did they do this part time because you need to get somebody that can really, you know, that knows how to get offers accepted, that knows how to have really good terms that makes your offer stand out, and then working together with a mortgage person that gives that listing agent the confidence to, you know, say, Okay, pick us. So it depends. But I would say, you know, during the craziness of 2020, and 2021, we had people that couldn't, you know, we're looking for a year, and then prices continue to go up. And you know, rates were all time lows, so they were just getting outbid with people that had so much cash that could pay hundreds of 1000s over. And you know, it was kind of sad, like back then you couldn't get an FHA offer accepted in my market. Now we're seeing them a little bit more, which is nice. But yeah, it was hard for a lot of buyers.

Brandon Hall  26:49  

That's fascinating. Go ahead.

Vikas Gupta  26:52  

Yeah, no, I was just gonna say like, I echoing what you said, Julie, got an agent, my wife and I had a fantastic agent, which is how I think we were able to go from let's look at houses to close in eight and a half weeks. Yeah. But ya know, like, I'm in Pasadena, it's still it's still an absolutely bonkers market, the house next door sold in two weeks all cash, the house across the street 18 offers in five days, it's still wild, even even with mortgage rates at six, six and a half, seven.

Brandon Hall  27:25  

Everybody's keep saying that, Oh, the housing markets gonna crash. But the reality is, the only way the housing markets gonna crash is if we add a flood of inventory to the market. And so then people go like, Oh, well, it's all the Airbnb is like, like all those people. But it's like, yeah, but even if every single one of the Airbnb people liquidated today, you still would not get back to regular inventory levels. And I don't think that's something people are really wrapping their minds around. And frankly, like, it took me I've been following housing analysts for probably about this past seven months, this year. And I kind of had like a decent understanding of supply and demand and how it all works. But following these guys over the past seven months, has really opened my eyes to just like how weird this market is, like, we just don't have any inventory. And so you're not, you're never going to see I mean, I shouldn't say never, but you're not going to see a crash. There's no inventory, because there's always gonna be buyers. You know, if we if we figure out how to flood the market with inventory for duration, meaning that you do that for a long period of time, not just a one time all my Airbnbs are liquidating. And then next month, we're right back to that inventory. If you can figure out how to do that with duration, ie let people develop, which I know is always controversial, but that's the reality. Like if you don't have any new units coming online, you just you don't your demand will always always outpace supply and that's how you get to these these unhealthy markets where you got 18 bids going, even if the rates are at 7%. It's it's crazy.

Vikas Gupta  28:54  

Yeah. And in these markets, Long Beach, Pasadena City most the city of Los Angeles, right, like, even if they can build inventory, snot, like there's empty plots of land sitting around if you want to start a home, if you want a detached, single family or duplex. where's it gonna come from? Right, like even if they if they do bring inventory to market it's it's apartments and condos because there's just there's no land left.

Julie Aragon  29:21  

Right? So it'll be interesting with the new laws and the adu. So, you know, my understanding attached duplex, you can build to 80 use on that lot. Well, you can get financing right as it stands today, you can get financing on a multifamily with one adu but if you do too, you can't. So like as those rules start changing, too, you have to think like so that's what I'm looking at is if I can find a duplex on a large lot, and it's attached, and then you know, just buy it now and I don't need to have 400,000 to build it today. But down the road if Freddie Mac's are changing their guidance where they're think okay, well, you know, we'll allow these like split lots and all these things that you can do later. Like I think that's where the money is going to be made to find the right lots to develop later.

Brandon Hall  30:09  

How are they changing their because I heard about this adu law in LA? How are they changing their infrastructure to support that, like, I can just imagine these neighborhoods that are all single family homes, then all of a sudden these adu start popping up? Doesn't that lead to like a lot more congestion? Or what's you guys are local? What's your take on that?

Julie Aragon  30:29  

I don't think there's a lot they can do about it. Because at the state level, you know, they've kind of clarified, you know, the cities can't hold things up and not make decisions on it. So I think there's gonna be a lot of hits

Brandon Hall  30:40  

first, probably not to cut you off, but probably because we're looking at the inventory issue, right, because they're just like, we need more inventory. Yeah,

Vikas Gupta  30:49  

I think for California to have any future, it needs supply. So I'm generally in favor of like anything that's going to make it easier for people to develop and bring supply online. I think from an infrastructure load perspective, maybe it's a forcing function to get the state of the cities to get their shit together. Right? Like it reality is that it costs I mean, it we're nowhere near as bad as New York, but it costs us like a billion to $2 billion to lay down a mile of right light rail, like it shouldn't cost that much. But it does. But for the amount of money, we're investing in light rail, like if we were able to build it, at the same efficiency, like the French or the Spanish built it that we would have twice the network. So you know, and then you look at things like this high speed rail debacle that was projected to be $30 billion and open in 2018. And now it's looking at $110 billion, and probably never going to open. So I think to say that, hey, like, we're not going to build housing, because we can't figure out how to do the other things. So like, it's you're gonna put the state into doom loop. Like, I think it has to figure out something so I'm pro supply that hopefully the other stuff gets figured out. But But I think, like, you know, it's it's kind of absurd how much it costs to live in these markets

Julie Aragon  32:08  

in rents, not cheap. You know, I think for me, because I do this every day, and I see how people are, you know, their rent is continuing to go up. They feel like how out of control you feel, you know, especially if you have kids in school and you don't know where you're going to be able to stay in that area and stuff. So if I can help somebody see how they can attain homeownership with lower downpayment, and again, maybe using something like an adu to subsidize it a little bit to make it more affordable. They're just like, at least they're in control. You know,

Brandon Hall  32:42  

what I did with my very first so I after college, I moved up to DC and I lived in an apartment building for two and a half years, three years and then bought a three unit property lived in one unit and rent it out the other two and that was one of the best decisions I think I've ever made. I made almost no money actually doing it. When it was all said and done. I think I ended up like I sold the property ended up like losing 10,000 bucks after closing costs and stuff. But that was multiple years later after after I'd stood my business up and it was profitable. Because what it allowed me to do by moving into this triplex and renting out the other two units, I cut my monthly living expenses to zero, they, the other two units were covering the mortgage, I got enough cash flow that the mortgage is covered and utilities are covered. And then I didn't have to pay for parking anymore. So like my, my monthly expenses were nil. And that was the point where I was like, it's time to launch this CPA firm that I run today. But I just figured, you know, worst case, I've got 12 months to figure something out because I don't have to pay for my monthly there's nothing monthly aside from food that I have to pay for at this point. I remember my dad telling my dad I was gonna launch this business his biggest concern was health insurance. I was like well, you know, I'm a I'm a healthy 25 year old I think that's my not my biggest My biggest concern is making this insane career move at 25 years old and hoping that it pays off. Thank you dad. But yeah, it just gave me the confidence to do it. And so in to your point you just you get a lot of control. And when you start when you especially in a place like LA I don't know what the metrics look like out there and this is back in 2016 when the market looked a lot different than it does today. But man that was that was an awesome decision and like I said like I ended up sold selling it at some later point they sold in like 2019 and ended up losing money after closing costs. But what did it enabled me to do was incredible throughout the whole period. So yeah, I like that you kind of help people think through how do I actually get control of the situation? But it's gotta be tough out there because I know that those I know. You know, a triplex out in your areas like probably what two and a half $3 million dollars something crazy.

Julie Aragon  34:48  

Yeah. For like one and a half for Yeah, at least one of

Brandon Hall  34:53  

the half. Okay, okay. Sounds as I thought. So, Julie, I want to circle back to something that you said a few minutes ago you said that the Real Estate Agents are closing deals. How do you identify a great real estate agent? So somebody's listening to this and they're like, Man, I want to get into the real estate market. And I thought I was priced out of LA but maybe now I'm going to start looking at some duplexes. triplexes quad plexes where I can live in one unit and rent out the others. Maybe I'll add an adu. This all sounds really good. Help me subsidize my monthly cost. Now I gotta go find an agent. I've never done this before. So how do I find how do I know? So I'm interviewing three different agents? How do I know who the killers are? How do I know the one that's gonna get me? Get me that deal?

Julie Aragon  35:33  

I would say first you should start getting pre approved. So you should find a good broker. And then because you want to know like, Okay, what is it that you're looking for? Is it that single family with an adu? Or are you gonna go the duplex or multifamily route? Once you identify that, then either your broker might have good recommendations or you can look on Zillow, most realtors are kind of still on Zillow in some form. And it'll show you recently closed transaction. So if you see they've closed deals in your area, they likely have a bunch of other realtors that know them and like them, you know, listing agents on the other side, I would really pay attention to what, how many deals are closing a year that they're not part timers, and that they're selling properties that are similar to what you approved for.

Brandon Hall  36:16  

Okay, any other like characteristics that you would look out for? In terms of responsiveness, communication? Are there any signs that like, what what are some of these other kind of qualitative traits that you should be looking for before locking in with somebody?

Julie Aragon  36:30  

Yeah, I feel like you can kind of, I don't know, like, for me, it's my gut. Like, I can talk to an agent and see like, do they know their market? You know, like, do they know what the home sold for in their area? They really just you have to be an expert right now. So many people got into the real estate business in the last five years. They just weren't experts. So people that I think very local, like know that market is important. Yeah, that's probably the big one.

Brandon Hall  36:54  

Do you recommend like asking about prior to deal flow? Is there any way that you can get data on that? Like if I'm if I'm just a regular consumer trying to get into real estate ownership? How can I vet people that how do I know that they have done the deal flow that they claim to do?

Julie Aragon  37:11  

So Redfin now shows you if you're on the, you know, the listing after it closes, it shows you both agents. So that's nice because you can kind of again, Zillow will show you some data to on recently closed, or if you see like for us I because I have this Buy Box of like multifamily in a certain zip code, and I heart everything on Redfin. And then I see like, oh, who closed that deal. And then I know that I know the investors or the the real estate agents, I should say, that actively cold call property owner, they call me all the time and you want to sell and like no, but what do you got, like you know, so I'm so looking for agents that are aren't calling for, to get listings for the kind of place I want to buy. And then also like for us, kind of what I do is I will say I like properties with self esteem issues. So because I'll go in a heart everything I like if I see a multifamily. And then Redfin will shoot up the notification, I think we bought two or three properties like this word, like I heard something, it might have been like a little bit out of my range, or it wasn't quite ready because we're finishing something up, and then it pops up, like fallen out of escrow. And then I swoop on in figuring out what was wrong with it. And right when the sellers like a little bit bruised, and then make my offer. And so that's been really great. Also, I look and see if they're out of towners, like if the listing agent is either out of the area, or not really like a player or a property manager. Because then like okay, their full time gigs property management, they're not going to be a fierce negotiator. So then all make my offer and I have been able to negotiate some really good deals.

Brandon Hall  38:49  

Very interesting. Did you say properties with self esteem issues? All right, explain that. I want to know more about that.

Julie Aragon  38:57  

So just it whether it's, you know, like on the rebound, like they fell out of escrow, maybe the one property we bought where the tenant had been there 40 years, she's accumulated a lot of stuff. There was no picture no interior pictures of the property on the MLS. I'm like, Oh, this is a good sign. If you're not showing me the insides, something's wrong with it. So looking for, you know, maybe the people with a lot of cats or a lot of stuff, because people you know, a lot of people that are buying, they might be buying for their primary residence. And so they can't sometimes they can't look past all the shit. And for us, it's just yeah, but there is less emotion about properties that maybe need a little bit of work. Yeah, really that and then the out of area. I'm very a listing agent is a good one. Cool. Well, thank

Vikas Gupta  39:39  

you so much, Julie. This has been a fantastic episode. So far. We have three closing questions that we'd like to ask all of our guests to wrap each episode. So if you're ready, we'll go with question number one. What is your favorite book and it doesn't have to be real estate related.

Julie Aragon  39:55  

My newest book that I'm so excited to dig into is called tough titties by law. or Belgrave, she is my favorite copywriter. And she just came out with a new book about a week ago. And it's just like coming of age in the 80s and 90s in New York City. And it's so nice to call it like loser Sex in the City. So I really love just good copy and storytelling. So that yeah, that's a new phase.

Vikas Gupta  40:20  

Got it? Great. Well appreciate the recommendation. And it's good to get sort of a changeup from the self help and finance books, we've been hearing a lot about good going into the summer as well. Question number two, you've touched on this. You've touched on on appreciation, but our sort of question is, what do you prioritize in your real estate investing cash flow? Or what do you think is most important cash flow or appreciation?

Julie Aragon  40:43  

Yeah, for me, definitely appreciation, you know, I have a business a job. Now I don't need the income to live on. And if I know, you know, a property is going to appreciate, let's say, in La 6%. For me, in my mind, I know, okay, it's gonna double every 12 years. So like, I just do the math, and that will always outpace any cash flow I could

Vikas Gupta  41:05  

get. Great. And then question number three, is there any other advice or anything else you'd like to share with the audience that you haven't had a chance to yet?

Julie Aragon  41:14  

If you're thinking about about investing, just sometimes we can like overanalyze and like be in BiggerPockets forums and just like, get caught up where we never make a move or just like researching having that team, again, that realtor that specializes in what you want, and that mortgage broker that can help you see how you can afford it. Just even if it's messy in the beginning, and even if it's not like you're you know, you don't knock it out of the park on that first deal, but you have like the confidence, I just think like, Yeah, I wish I would have bought more properties back in 2010 versus being scared and not not doing it. So just just do

Vikas Gupta  41:51  

it. Great. Well, thank you so much, Julie. It's been fantastic having you on the show.

Julie Aragon  41:55  

Thank you.