Money You Should Ask
For those who have a real estate investment dream but don’t know where to start, author, investor, & realtor Michael Dominguez stops by. Michael shares how investing in simple quality homes with additional dwelling units transformed his wealth. He is an award-winning sales representative, member of the RE/MAX Hall Of Fame, and founder of Doors To Wealth Real Estate Group, a team of realtors focused on educating and assisting people with investing in real estate.
Michael has discovered a real passion for helping others build their wealth to experience the choices and financial freedom they desire.
Bob and Michael discuss how transforming your mindset can set you up to see real changes in your net worth.
I was the little kid that I said, I want to be a millionaire.
I was very entrepreneurial in my younger, preteen, and teenage years, and I kind of lost it later on. And I guess we’ll talk more about that later on. But yeah, I had a lot of positive upbringing as far as education early. It’s funny when you’re 16 years old or 15 years old and people ask you what you want to be when you grow up and people say they want to be a policeman and a fireman, I was the Smarty little kid that I said I want to be a millionaire. And that’s what I would tell. And I didn’t know how I was going to do it. I thought I’d run my own business and such like that. But as I went into my 20s, you get a job, you meet a girl, you get a raise, you get a promotion, you start moving on. Eventually, you get married, you have a kid. And before you know it, you sort of look back and you say, Holy shit, what the hell just happened? I’m now in the system, and that’s kind of what happened. And so my entrepreneurial spirit was essentially on life support in my 20s and 30s because I was just so focused on my day-to-day life without one of the things you talk about.
Take action to improve your financial intelligence.
The biggest difference between the wealthy and the not wealthy of the successful not successful is their financial intelligence. And what I learned over the years was the more I learned about financial intelligence and I started to learn. I read books, I started to go to meet-ups, I started to hang out with other really successful people. And over time, it just became almost just the natural next step was to start doing the right things, to start building your wealth. So had I just simply said kept my fingers crossed and thought, this too shall pass, I probably would be working today and I wouldn’t have written this book. But the fact that I started to take action and started to make a real difference in my life, started to fall into place the right way.
Focus on quality properties in quality neighborhoods that appreciate in value.
There’s so many examples throughout history where people started a project and they didn’t know how it was going to finish. Honestly, the best answer I can give you is that if you are starting this journey of financial education, you don’t know all the answers right now. That’s part of the whole fun of it. And you start with some of the low-hanging fruit options and this is something we could talk about forever, but there are certain things that one could do. And then if you start to build on that, things just start getting easier over time. It doesn’t get harder. It actually gets easier, especially if you buy the right type of assets. And again, some of the things that I often hear, people that have never bought real estate other than maybe for their own home, is they’re afraid of all of the horror stories of being a landlord and such like that. And I’m not going to lie to you and say there’s never, ever going to be an incident. But if you really, truly focus on quality properties in quality neighborhoods and that are appreciating in nature, you could actually seek out quality tenants and have long-term buy and hold quality.
And that’s kind of the model that I did. I didn’t buy in the worst part of town and the cheapest property in the worst conditions. I bought many cases, a really great property. And my wife and I, we’re spending a whopping two to 4 hours a month on our portfolio right now, and it’s bringing in after all of our expenses are being paid. We’re at the point of making $5,000 a month in income just from those properties alone. And it’s paying down the mortgage.
The Goldilocks Principle, what’s just right for you.
I did not write the book for somebody to buy their 37th property. That’s not who I wrote the book for. I wrote it for someone to buy their 1st, second, and third investment properties. If your goal is to own seven multiplex buildings, obviously there could be some value in my book as well. But it wasn’t written for you. It was written for the guy or the girl that’s looking to buy that first property, whether they’re looking to move into it themselves and live in one unit and rent out another, or they’re looking to have two or three rental suites and maybe have a second maybe have a third property. Some of the success stories I chose and I did this with intention. People had bought as little as two properties, two properties. They say that it takes them one to 2 hours a month to deal with these properties, and it’s given them a seven-figure net worth as a result of those two properties with some time. That’s a lot better than a lottery.
Finding quality tenants that help make the landlord experience pleasurable.
We all hear the horror stories and Uncle Joe tells you not to invest because his friend once invested and lost a lot of money. But if you go in with a lot of intelligence and buy the right type of property and the right type of tenant profile. Even during the pandemic, my clients had between three and almost 500 units. Actually, I think about it. And we had almost a 99% penetration rate. And it was that good. And we had no vacancies. The rents went up, the prices went up. It was a very good scenario.
I just can’t stress it enough about selecting the right tenants, because otherwise, you’re stuck with a nightmare. I’ve had people that know how to work the system and be able to stay in the property for a year, especially in California. I had a client who she bought a property, had two amazing tenants and said, oh, this is so easy, took a line of credit against that property, went out and bought two more, got really bad tenants and lost everything because she just thought it was so easy. She didn’t actually know she had a good thing, and she was a bit naive. But I just find that’s a major thing.
And the other piece that I find that I always had to worry about, and Thankfully, I had enough smarts to stop and check it out. But I had a property. They called me and said, there’s a leak. We sent out a company, one of those national companies, $20,000 to fix the plumbing. Sewage is leaking under the house. There’s all these crazy things, tenants freaking out. And I said, look, I’m not going to authorize $20,000. I’m driving back from Vegas right now.
Owning a home, a financial asset, or monetary liability?
My advice to you is just to start doing the research, but be ready to take action and move forward. You are going to have some hurdles along the way. But the one thing I can share with you is of the hundreds and hundreds of clients that I’ve worked with over the years, the ones that have held onto their assets in good markets have all made money 100%. And I can’t tell you that that’s the case in the equity world. Certainly, real estate has a chance to have some real long-term wealth. The people that have lost a lot of money are the people that are speculating, people that are buying negative cash-flowing properties, and the people that are buying properties where the tenants aren’t paying the rent.
Why is it so important for you to help other people learn about buying property and being able to have financial freedom? Why do you care?
It’s one of these things that I was really fortunate in that when I entered into my 40s, I had some mentors along the way that were some really successful people. And I grew up, I guess, with a bit of a me versus you mindset where I thought that if I had to make money, you had to lose money. And I quickly started to learn that the people that had some incredible success weren’t necessarily kicking me down on the ladder of success, but they’re actually reaching back and pulling me up a couple of rugs. And I always appreciated that because in some cases, I paid for some coaching or paid for some mentorship, but they didn’t need to do that. They weren’t making money off of that, really. They were doing it because they were trying to pay it forward to me. And so I always had that in the back of my head that if I ever built a level of success that I would pay it forward to the next generation. And I did that in my local market on a pretty good basis. And in a local standpoint, I’ve done a lot of seminars and coaching, but I thought to really nationalize that I should write the
And I wrote it with a lot of my mindsets and a lot of my analogies and cartoons and silliness because that’s just who I am. But it’s meant for that person to get them moving that first, second and third property. If you’ve already got an asset, like a house with some equity, or even if you’re looking to buy your first property and start to move forward, there are a lot of ways to build some significant wealth through real estate.
People underestimate what they can accomplish in 10 years.
One of my favorite things I always like to share, and we kind of talked about it already. But people tend to overestimate how much they can accomplish in one year, but they tend to underestimate what they can accomplish in ten years. This was a quote by Bill Gates, but really something I followed for a long time. A lot of people, they want to change their life in like an hour and a half. But in one year, you can do some differences, don’t get me wrong, but in many cases, it takes you as much as ten years to make a real-life change. But if you go in now with a ten-year plan, you can make a significant difference. That said, if you sort of say, well, I’ve got seven more years in my ten-year plan, you’ve got to start now if you want to make it happen in ten.
It doesn’t mean you might not get there a little bit quicker, but if you don’t start working towards it and start taking those steps and it is so incremental. And I do think, especially in the culture of today, it’s trying to get from A to Z, trying to get there with no work without putting in this. You got to put a little sweat, you got to put equity, you got to get your hands dirty and make that choice that you’re going to see it through because most people do not have amazing success by just wishing for it. And then three days later it arrived.