Mauricio Ramos, Co-Founder of Two Ten Management, joins us to discuss strategically exiting his W-2 job, how he got started investing, scaling into large multifamily real estate, and much more.
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Mauricio welcome. How are you?
Hey, doing great, Devin. Thanks for having me, appreciate it. It’s an honor.
Yeah, absolutely. It’s yeah a real treat to have you in the studio here. And this is your second appearance, I think, on the DJE podcast so appreciate you jumping in.
Yes sir, thanks.
For those that maybe haven’t listened the old episode or aren’t already investing in your deals or whatever the case is, how about a little background on how you… just your background in general, where you grew up in, and then how did you get to real estate and buying these apartment deals now?
Absolutely, absolutely. So my name is Mauricio Ramos. I grew up in Mexico. I’m originally from Yucatan in Mexico. I grew up in Matamoros, went to school all the way through high school in Mexico. Came to the U.S for college, went to Texas A&M, graduated as a civil engineer. Did about 10 years of construction. About into year seven of those 10 years of construction, met my now business partner, Adrian, and he introduced me to real estate. And then we I started going to REIAs here in San Antonio and learning about it. When I learned about real estate and the cashflow and stuff, I was like, okay, I think this is a way that I can get out of my W-2 job forever, and I can switch into real estate and retire early. So I started doing a little bit of just training, changing my mindset, read some books, Rich Dad Poor Dad, Cashflow Quadrant. Then my very first deal was this mobile home. I just bought a mobile home-
Just one mobile home, not the park, just the home.
Did the land come with it? It was just one mobile home.
At a park, right.
Okay. And in an existing park.
In a park.
So bought it, cash, fixed it up and then seller financed that out. And then the buyer kept him paying the land, right, for the lot.
And cashflow, right. Law the first deal, find another mobile home, did that to, did the same thing. Now I have two mobile homes and two down payments, right? So…
So you were owner financing those, you’re taking what? Five, 10% down on on the sale price.
And then what kind of an interest rate, a higher…
Higher, 10%, 12% for three years.
What kind of a renovation are you doing on a mobile home, floors and paint?
It’s basic floors, paints, light fixtures, door knobs, faucets.
Okay. So like a house. It’s like a house-
Similar to the house or kind of what we do in an apartment even.
Yeah. That’s true. It’s pretty simple renovation. Do you still have those?
Those two first ones have been paid off.
Because this wasn’t 2017 so those have been paid off now. And along the way, I got a third one, which is still paying.
Excellent. Excellent. Let me go back to your meeting with Adrian, your business partner. How did you guys connect? You’re in construction and you’ve got this background and everything, which I think we can dig in a little bit later. That’s probably a great background to have for the business we’re in, but you weren’t already doing real estate investing until you met him. How did you guys connect?
So Adrian was my intern. I was a project manager for a construction company. And I would get interns for a semester or something from UTSA, Adrian went to UTSA. So I would get interns and because the company participated in internships with the school. So Adrian was my intern. He was there for about a year and he was doing already some wholesaling. So he introduced me to it. We did some door knocking together. Never really got a deal out of the door knocking, but it was a hell of a training because getting myself out of my comfort zone.
Oh yeah, that’s some real work.
Knocking on people’s doors and getting doors slammed in my face, but really getting comfortable with those nos, right.
So then he left and he continued doing wholesaling and then I continue my training on multi-family and then that’s when I bought my first 10 unit. We wholesale a house together, $30,000 wholesale fee split in half, 15-15. I took my half and bought a 10 unit apartment complex in Pleasanton, Texas. It was $12,000 down, 0% interest, and 20 years to pay a thousand bucks a year.
This is owner finance, the seller finance it to you.
I like it.
Yeah. It was a disaster. But with my construction background, I wasn’t so scared about it because I knew I could do it, I knew budgets, I knew contractors. So then with that, I wholesaled a 24 unit here in downtown San Antonio, which you’ve had to buy here in the [crosstalk 00:05:16]
I remember that deal, I love that deal. And you should see it now.
They’ve done a great work.
That was a six-figure wholesale for me so that really put me into kind of the next level. So with that one, I was able to say, all right, I think I can do this full-time. And I put in my notice, worked for a few more months and then quit my job.
And at that point, Adrian realized multi-family was the way, so he came to the dark side and that’s when we started working side-by-side together. We bought a 16 unit together, which we brought 4 investors. Then we bought a 32 unit together. We brought seven investors than a nine unit, which was a seller finance. All these last three in the valley, in the Rio Grande valley, Texas.
We created, after those deals, we decided to create our own management company, which is Two Ten Management, which is the company that we brand now. And now we manage the properties that we own. After that, we bought a seven unit here in San Antonio, that’s a mixed use on the South Side. And we bought a 88 unit apartment community in McKellen, which unit [inaudible 00:06:35]. And we’re managing all that.
Recently we closed on a 42 unit also in McAllen, great location, very clean property. Honestly, we have to do very little to it, just a few updates, but it’s running great. A lot of room to grow on the rents.
And we also bought a retail center in Brownsville with the whole… It was a great location, it was a great price, and with the whole SpaceX hype, we decided to buy it. And it’s been a great property with a little bit of a different animal with the triple net. But it is a great property and fast forward to now, we have a 279 unit under contract we’re working. In not working on.
Outstanding. It’s such a great progression to see. And you’re not an anomaly. Right. I mean, we hear these stories. We know people that do this, that start out with a house or something small and then a small multifamily, but then you kind of, once you get some momentum, like you said, law the first deal you get that done. Now you’re closing these multi-million dollar deals. I’d love to see it. I mean, that’s my story to kind of start small, figure it out, maybe make some mistakes at a small scale.
I mean I got to the point where I didn’t want to own 300 houses. There’s got to be a better way to do this, right. And that’s kind of the natural progression that people go through is to get into this multi-family stuff. A couple of big decision points for you that that I went through as well and want to see how that went for you. One was quitting your job. Was that really scary or were you like, well, I got a big fee here and this it’s easy to leave the job. That’s a big commitment, both logistically and just kind of mentally and emotionally making that leap because that’s a security blanket for most people, right. How was that process for you?
Great question. And it was definitely a hard transition mentally because, for the last 10 years, I had been receiving a nice check every two weeks. Every other Friday, I would be getting that nice check. I’m civil engineer, right. I had a good salary. So going from that to no check, right. After I quit and then 2, 3, 4, 5… actually, there was one check, right. After I quit, I got one more check, but then after that no check, right. So that felt a little like unstable.
But at the same time I had a little cushion with that big check that came in. And also when, we quit, right after we quit, actually I think a week before we quit, we put that 16 unit apartment community under contract. So at least when I quit, I wasn’t starting from full scratch.
We had already a deal going on. I had my 10 unit that we were working on. I had those two mobile homes creating a little bit of cashflow. So I had a few things going on. It was definitely a leap of faith.
But I knew that for the last three years, I had been doing good as a part-time so I had faith that I would do better when I would go full-time but it was definitely a leap of faith.
Yeah. I love it. I love all of that. That’s exactly how it happened for me. I was two and a half years of really doing both, very intense. But also building up passive income, building up experience, building up connections and all that stuff so that when I did make the transition, probably one of the scariest things I’ve ever done, but it was a three-year process. It was not an overnight decision.
And I had the same philosophy. If I had all my time and energy, I’ve already made it work to an extent with very minimal time available with family and job. The thesis was if I had all my time and energy, this thing could probably really go somewhere. So I love it. So congratulations because that is a huge step. Second piece, the management company, it’s a big decision. We start management companies for control and for profit, for NOI and the project level, nobody really starts it to get rich owning a property management company. There’s a lot to it. What was the decision like for you starting your own management company and what was that process like because that’s a big transition for sure.
It was a big decision for us. There’s an interesting story when we decided to pull the trigger, but we bought the first property, we had a third party property manager local to McAllen. There were charging 8% and they were very slow in the process of leasing. And they were just more interested in collecting rents and getting their 8% and that was it, right. So they weren’t really geared to work with an operator, like what we do, right. Full on remodel, a lot of work going on every day, a lot of contractors in and out.
Right. A lot of CapEx dollars getting signed.
Right. So we felt like we didn’t get the support that we were trying to get. Then we bought the 32 unit and then we tried to negotiate a better rate with that first company. And they didn’t want to go down on rates so we found another guy that would take over both for a lower rate, 6%, and kind of the same situation. I mean, it was a little frustrating. We couldn’t get them to lease units and we’re trying to push rents and no, you should rent for less. No, we know we have a good product and we know where the highest in the market, but we know we can get it. And I mean, sure enough, they would try to mark it for couple of weeks and then Adrian would go down there and lease four units in one weekend.
Man. I mean, everything it’s there. We have a good product, the market can buy it, we just need to sell it, right. And so we just got frustrated. I was traveling, this is October a year ago. I’m sorry, two years ago I was in Jerusalem and I had a call with Adrian and we bought boats. I mean, Adrian said, “Hey man, let’s just do it ourselves. I got it. I can do it, but let’s just do it. We can get it going.” So that’s when we said, all right, let’s do it. We created Two Ten Management and we started managing our own and it all started with Adrian and his right hand, Christo. And I mean, now we have eight employees.
Oh, fantastic. Yeah.
And we just manage every property that we own, and like you said, it’s for control. We are in a market that we’re pushing, for the most part, we’re the highest in the market, but we have the best product. So nobody’s going to sell the product like we can because we believe in the product, right. So that is also a very big advantage of having that management company. Yeah.
Yeah. 100%, 100%. Somebody’s got to really push this thing and have an owner’s perspective, which is a challenge with third party. Now, third party can work, but that’s great. So you made the leap it’s up and running, and how has that impacted your acquisitions now, knowing that you’re going to put your own management company on it, right?
It’s helped when talking to sellers. They ask who’s going to manage it and hey, we have our own management company. We’re going to bring in our own system, we have a little machine already working. So we’re going to bring our culture and our systems in place. So that definitely helps on the acquisition side. It also helps us… We have a better budget in a better vision of expenses, right, in a much more firsthand expense budget of what we can do when we’re underwriting it for a property. Either it’s in McAllen or San Antonio and, if we need to, maybe we underwrite at four, right. But if we need to put it at three to make it happen, well, we know we can do it, right. It’s our own company.
Just make the decision.
Right. And also having that economies of scale of, now we have a few properties so now we’re at a point where we can hire a lead property manager or a regional, right. And then have one, maybe senior property manager, look over two or three properties and then a couple of assistants. And then you start relieving some of the pressure of that payroll line item, right. Instead of each property on its own and then you have to pay the third party, you can move those pieces around to your convenience and not be so heavy on the payroll line item for each specific property.
Right? Yeah. That’s a huge advantage. It’s also nice too, when you’re going in to buy a property, you’re not relying on… I mean, we had third party management for a while and then we’ve had our own management company now for a while, which we, now that it’s up and running, vastly prefer. A lot of times with third party management, you’re getting a budget from a business development person who’s trying to win your business. They’re not going to run it, they’re not going to be on the hook for that budget. They’re going to try and just close the deal, win your business. Whereas if you’re looking at a PNL or a proforma for your deal, you guys actually have to deliver on that. And it just closes the gap when you’re looking at deals and trying to build that out. So talk to me, Mauricio, about how you got your experience on small versus big, right? I mean, you’ve done one-off deals, houses, smaller apartments that you manage, and then now getting into properties that are 80, 100, 200 doors, how has that contrast been for you?
It’s been a great lesson to learn at the same time. I feel like we’ve enjoyed the ride into growing and being able to see from the 10 unit to the 16th, to the 32. And like you said, maybe if you have a mistake, it might be a couple thousand dollars versus if you make a mistake on a 200 unit, that might be tens of thousands or even more, right?
So we’ve been able to learn that in, for example, in the property management side, figure out our systems on a 32 unit, and a 16 unit and I bought a 100 unit portfolio and now, a couple of years later, we’re going to buy a 279 unit. And we’re not afraid of managing that, right, because we would have gone into that first, we would have freaked out to manage that property. So now we have our system put together and, you just need to hire a few more people, and then go full on and we can acquire this bigger properties and at the same time manage them. Of course, it is true what they say about it is the same amount of work to buy a 10 unit or 32 unit. Same loan, you have to go through the same process versus the 200 and some units, right.
That’s a hundred percent sure, but I really think there’s value in… more power to the people that go straight to the big ones, but I think there’s value in learning on a… You don’t have to go on a 10 unit, but maybe learning on a 60 or 70 unit and then grow into the bigger units. And at the same time, having those units at the beginning under your belt helps you have better conversations with brokers, lenders, other sellers, other buyers.
And that 88 unit, when we bought it, was our largest at the time. So talking to the seller, that wasn’t our very first one, right? It is our largest, but we have a few and we’ve done this before. Same with a lender, right. They knew we were in the market, that was our second Fannie loan in the market. So they knew was our largest at the time, right. And you came in and held a [inaudible 00:19:28]. But the lender wasn’t already familiar with those and they knew we’d been doing this for a few years. So it helps to have those little ones, but it is pretty similar amount of work to go on a smaller one than to go into a bigger one.
Right, yeah. And a little shout out to Adrian, your business partner. He was on the DJE podcast, I believe it was episode 100. That’s one of the best stories. We don’t have to hash it out here. Oh my gosh, that deal was maybe one of the craziest deals that I’ve ever been involved in at all and I’ve seen some crazy stuff. That was awesome.
I don’t want to steal it from him. If you have them again, I want him to tell the full story, but for this 279 unit, there’s a similar story.
Oh my God.
A broker was trying to get it from us when we’re in the LOI process. A broker was calling the owner left and right, every five minutes and the owner was ready to go with the broker for a little bit more. Adrian had to fly…
Pulling out his old tricks. Knocking on doors I bet, right.
Adrian had to fly to LA and knock on his door, unannounced, and got the contract.
The guy’s got… He’s fearless.
He’s fearless. I love it man.
I let him tell the full story later, but we had to pull one of those again.
Oh my God. Okay. I wasn’t aware of that. We’ve got to have him back on and tell that story.
And got him back with a PSA sign.
Yeah. That’s awesome. I love it. Well, I can’t wait to dig in on that and I agree that there’s this progression, right. So bigger is better, right? For variety of reasons. But if you’re getting into this business, it’s difficult with no track record, to talk to anybody. Lender, investors, even, right. You’re buying 150 units, have you done this before? If you could say, well, yeah, I did a bunch of houses, I bought a 10 unit, a 50 unit, a 70 unit. Now we’re doing a hundred. It’s like, oh.
Everybody likes that story. Okay. You’ve, you’ve gone through it, you’ve kind of built it up. And that’s important. It is possible to start bigger out of the gate. For sure need to have the right team if you’re going to do that approach. So talk to me about your overtime and, you got to have the team, right. You’ve got your, your legal team, your property management company, your business partner, lenders. How about investors? How have you grown that over time? Because now you’re doing deals that really require millions of dollars of equity on these projects. How have you guys treated that and scaled that over the years?
That is a great point and definitely there’s been a great evolution in there. The very first deal that when, we brought the… my 10 unit, it was on my own, right. All my money. And then I doubled it up, doubled up. But I got to a point where I needed to sell because I wanted my money back, right. So you can only do so much with your money. So we brought-
That’s a good point. Even if you’ve got investible capital, let’s save a million bucks cash to invest, well, that’s one $4 million deal. That might be a 40 unit apartment complex, which is fine, but then, I mean, that’s a million dollars cash and you’re going to lock it up in one deal and you’re done. And that’s why we turned to syndication to go do more deals. So, right. So you pulled your money out of that, wanted to continue to growing
Right. So in the 16 unit, we brought foreign investors, which, I mean, one of my coworkers in the last construction company I was in, we worked together and he knew me professionally. So they say your investors are going to invest with you either because of what you’ve done in real estate or what you’ve done professionally on your previous W-2 life, right. So this guy’s invested with us because of what I’ve done in my previous W-2 life, right. Professionally in… A little bit about the deal but mostly about us, right. And another investor was really putting faith into us, in the project. And then on the next deal, we’ve been able to also bring sellers along the way, right. So on the next deal-
Which is rare, you don’t see that a lot. That speaks highly for you guys, that the sellers are coming on board.
Coming back. Right. So on the 32 unit, it was right after I wholesaled 24 units. So the seller of the 24 unit invested in the 32 unit, right, because he liked us. We had repeated investors, we had another really good investor that we had met in Brownsville and we wanted to buy his property. We couldn’t buy it, it was too large at the time, 500 units portfolio. But we connected really well. That was mostly Adrian and Adrian had him invest in this deal. So put in together some money. We went into the next deal. And as we grow, it start… We had meet up in 2019. So we connected with a few investors there. So there’s a few investors that came out of all those meetups.
And then there’s a point where your inner circles, right. You try to gather money from there and then you go to the next circle, which is friend of a friend, right or my brother, my uncle here that has the money and start expanding that way. And then of course, going into seminars, right? You go to seminars, you meet all these people that, if they don’t know you, they might not invest with you, but as they start seeing what you do, right, you get them into your social media and they see that you buy this 32 units, this 16 unit. They see what you’re doing.
And they say, hey, I like what these guys are doing. Then the next deal comes on board. Boom. They want to invest in that deal because they’ve seen your track record on your previous deals, right. And between friends and family, sellers, seminars, and just as we expand here in town, doing what we do, we’ve been able to expand our investor pool. And at the same time, partnering up with people like you and Abel and other very good investors that have also great pools of investors that we can partner together in getting to this bigger deals together.
Right? Yeah. I love it. That’s a great overview for anybody looking to raise capital, right? I mean, it sets that inner circle of friends and family, work colleagues, that kind of thing. Sellers, you don’t hear that a lot, but kudos to you guys for getting your sellers to invest back in your deals. I love it. And that’s how it goes. And then over time, the snowball starts rolling downhill. It gets bigger and bigger, referrals and you go full cycle on deals and things like that. It’s of my favorite parts of the business, getting people into syndication. Because I was talking to a guy who was a financial advisor in a previous career last night. And we know what financial products people have out there and a lot of its garbage. So a direct investment in a deal, not that real estate is going to be perfect forever or whatever, but for the most part, it’s a pretty solid set up.
As people are evaluating your investment vehicles, right? Is it stocks, bond, crypto, real estate, whatever, real, estate’s kind of always going to be an important piece of that. So being able to structure these deals and we think, we talked to a lot of investors, you and I, and our network, but 99% of the population that has investible capital is not doing this. So there’s a whole lot more people to talk to there. What do you guys see for the future? What’s your focus for the next couple of years and what kind of deals you guys want to be doing? Where do you want to take the company, all that good stuff.
So our goal for… 10 year goal, it’s something like Blackstone, we want to be a big firm. Similar to something like Blackstone in the next few years. We are about to have 500 units in our portfolio, by the end of the year, we’re closing this one.
So two or three years, our goal is to get to four or 5,000 more units, keep growing within San Antonio, within McAllen and slowly expand in Texas and internationally. Definitely, there’s a few projects in the horizon in Mexico and more of touristy places in Mexico.
San Miguel de Allende, Yucatan, and, the Riviera Maya, the Mayan Riviera. So that’s definitely in the horizon. Keep growing, keep growing the management company that naturally, organically has to grow as we have more properties. We have to hire more people and start to delegate a little bit of kind of what we do. Then you hire the bookkeeper, right, and you start hiring the investor relations, and then you start growing the team. Stilt tight, we don’t want to have a huge overhead.
Right. It’s a balancing act.
Right. But keep it tight and effective.
Yeah. That’s exciting. And you guys kind of have… Getting momentum is just so difficult and getting those first deals done and those first set of challenges. But now that you guys have that momentum, not that it gets easy, but you’ve got experience, you’ve got investors, you’ve got deals you can point to, there’s nothing preventing you from continuing to grow that. So that’s exciting when that momentum is already going, you can just grow it. What do you say to yourself or somebody in your shoes when you’re just getting started, right, and dreaming about maybe doing big deals or whatever the case is, but hadn’t done it. I was there. You were there. Somebody listening is there. What do you say to that person?
It’s not that difficult. I mean, you just have to change your mindset, educate yourself and take action. And then you have to continue doing all three as you continue. You have to continue educating yourself, you have to continue going to seminars, reading books, learning from podcasts like yours, continue to learn what’s what’s happening, right. The changes in the loans and the changes in the law, and then continue going to seminars and take action, right. Continue taking action and always stay sharp. Go bigger faster, of course, right.
Then you just take action. You don’t have to, I think I probably said on the last one, but I think is really true. Don’t worry about how you’re going to 1031 out of a property that you haven’t bought. Worry about the loan, worry about insurance, worry about your investors. Step 1, 2, 3, right, getting to it. Once you’re in step three, you figure out four or five, six and goes slow, right, and just a few steps at a time. You don’t have to figure out the whole thing, right. I see a lot of people that get paralysis by analysis and just, oh, well, how am I going to 1031 out of the property. Don’t worry about it.
Right, right. Should I start a management company when I’m at a thousand doors? It’s like, eh, get one property.
They get hung up on what color to use in a business card, right, and they cannot go pass that, right.
Is whatever it is, you fix it as you go, but get started, just take the leap, get started, start making offers. And a lot of people are like, well, when the offer gets accepted, then what? We’ll figure it out then, right, just send the offer, right.
Right, right. I love it. That’s all good advice. I’ve found the kind of a common denominator of people that are successful in this business have very proactively put themselves in the right room with other people doing it. It’s a challenge of having a W-2 job to say your career or my old career, you don’t have those role models. You might have a role model for your boss or your boss’s boss, but that guy’s working a lot. And he’s not probably building this kind of generational wealth that we can potentially build a multi-family. People that have been successful multi-family, they go to conferences, they sacrifice the weekend, they put that time in, they get around those people that are doing it very intentionally. And then over time of intentionally being around those people, you just kind of start to really become your peer group. It’s a very powerful effect there of intentionally being around the right peer group.
100% right. You are the average of the five people you spend time with. So that’s it, make sure you’re spending time with the right five people.
That’s right. Yep. Couldn’t set it better. Well, Mauricio, if somebody wants to connect with you, learn more about your company and what you guys are doing, how can they do that?
Feel free to send an email to Mauricio at two 10, the word two the word ten, mgmt, like management, dot com. You can go to our webpage twotenmgnt.com. We have all also Instagram, Facebook, Two Ten Management, you can look us up there. Rolls around social media as well. Feel free to send a message, email, and we’ll be happy to connect
Outstanding. We’ll link to the website in the show notes. If you’re listening to this, you can just click through and go to the website and you guys are great social media follow. Adrian’s always doing something, but Adrian’s out there, you guys are out there on social media, showing the projects, right. A picture’s worth a thousand words. I love following you guys’ projects. So those of you listening do that too. And Mauricio, thank you. Love to catch up. I can’t wait to see what you guys are doing. We’ll have a podcast again with you in another 18 months and see what’s going on then, but wish you continued success.
Absolutely. Thank you, Devin. It’s a pleasure like always.
All right. Talk soon.