Housing Market: CRITICAL Warning & What to Invest NOW

hey what's going on guys this is Daniel one half 
of the Kwak brothers and in today's video i'm   super duper excited uh because we have my very 
dear and near friend of mine mr Jerome Maldonado   man what's going on baby what's up danny how are 
you today i'm doing excellent man it's a great   day because we get to you know it's not every day 
we get to record a video together i know you're   all the way down in new mexico so it's it's good 
to have you man no it's exciting you know we've   been talking about doing this for a long time 
and we've been talking about doing it live and   in person and we're covered it's restricted our 
ability to get together as rapidly as we wanted   but um it's it's fun and i'm excited to be here 
with you yeah i agree man so let's go ahead and   get right into it you know because there's a lot 
of things that we could talk about in regards to   commercial real estate now do us a favor jerome 
i know you've got a pretty long extensive resume   and experience in the commercial real estate space 
but but give us some highlights of who you are who   is jerome maldonado you know and why should 
people listen to you well to kind of go back   and share a little bit of my business experience i 
i think it's the longevity of everything that i've   done you know and really my upbringing i come from 
super modest upbringings like like most of the uh   professionals that i surround myself with and 
really strive to push in business it wasn't   even real estate um and i think that most people 
can relate to my story because um i didn't come   from being like a straight a student and 
um somebody that just grasped this stuff   um you know i worked hard going through school and 
even going through college and i struggled a lot   i just found a means um to be able to go out 
because i desired to go out and make more money   and i found a means in business to go out and 
generate capital but i also realized that in   business there was a big roller coaster that you 
ride with up and down markets and i didn't know   any of that growing up because i wasn't taught it 
and so just common sense said i need to invest in   an asset that holds steady whether my businesses 
do well or not and that's really how i got into   real estate was just investing initially 
into one house then it went to two houses   and then because of the need and the growth of my 
business i got into buying a commercial building   and since then 20 years has passed and we've been 
in so much diverse sectors of real estate um you   know what's funny is that people will ask me to 
go what area of real estate do you specialize in   and i was telling i specialize in any real 
estate that makes me money and so um we've had   some multi-diverse areas i know there's some guys 
that just focus only on multi-family or just on um   single-family homes uh we've truly been in retail 
in office for the vast majority we've been in land   uh development atlanta acquisitions for years for 
over 20 years and we also multi-family and now   we're in the warehouse sector and industrial space 
and so we have i have a real broad uh perspective   on a mass sector of real estate commercial 
real estate more so than anything yeah and   you know having said that you also get to 
work with a lot of cool people um so having   said that man it sounds like you're the right 
guy you're the perfect guy to ask this question   but let's first start with some some generalities 
what do you think's happening overall in the real   estate market well as i pick up the my phone and 
i look at cnbc um as i look at fox news and look   at all the big guys and i see all the reports 
that are coming out i can't help but um also   um feel saddened by the the large companies 
that are getting affected but not only the   large companies all the employees like yesterday 
i just read that regal theaters is going to be   closing down something like 500 and some theaters 
affecting over 5 500 employees that'll be out of   work and out of jobs and um i take a look at um 
and articles that i read continuously how there's   mass distress in retail and in the 
hospitality space people aren't traveling so   hotels are in distress and so i look at this 
i say okay where can i position myself where   i can help people benefit and in doing so myself 
and our companies also benefit and so anytime i   look at the distress sectors i automatically pivot 
towards those areas because i know where there's   mass distress there's also opportunity and so 
those are the the true sectors that we're really   going towards right now is um is the mass 
distress sectors but it's not only the mass   distress sectors what's really important and i'll 
tell you that 90 percent of success you could have   all the strategies in the world you can have 
the perfect recipe for success but if you   implement those strategies at the wrong time 
you may have no success at all or even failure   and so i always tell people that you have to 
exercise those strategies at the right time so   when you look at it you go okay what's growing 
right now what's booming right now and as you   and i sit here over a computer doing a live 
chat an interview i sit back and go e-commerce   and technology has taken over the world right so 
i look it back when i opened up my business in   1995 where i was running around paperwork 
to clients or running them through a fax   machine and the ease of the fax machine was what 
really was our saving grace right in those days   and so i was still running around with a pager and 
i just looked at the evolution of technology from   1995 to 2020 and then i look at 1996 till today 
where the internet was implemented and e-commerce   and online shopping is was back then where it 
is now and i can't help but say okay i have   got to position myself in a fashion or i can take 
advantage of that booming market the only problem   is i'm not a tech guy i'm not a computer guy i 
struggle with that stuff so how can i position   myself to take advantage of it and i sit back okay 
i can position myself in the real estate sector   to be able to take advantage of that stuff and so 
i think that right now with the mass distress of   hospitality of retail um the movie theater sectors 
all of that stuff there's opportunity for us to   take advantage and reposition we pivot a little 
bit so that we can make gains in those sectors   yeah and and you know you're absolutely right and 
this is a question that i've been getting a lot   you know a lot of people have been asking me you 
know daniel is it a good time to buy right now and   you know generally my answer number one is well 
it depends what are you buying you know but number   two generally speaking with the with where the 
market is you could say no for a lot of different   asset classes right now because you know as as the 
saying always goes and you tell me all the time   jerome it's you never want to catch a falling 
knife you know you never want to try catching   something that's on its way down now having said 
that however like you just alluded to there are   many opportunities right now that are present 
that you and a couple other partners are taking   advantage of so in your opinion you know what are 
what are the three things that people should stay   away from right now and not buy and what are three 
things that you know people could buy and have a   lot of great opportunities to make some money 
so in the same sense it's kind of a double-edged   sword because the question some of the same stuff 
that i'm going to recommend that you guys buy i'll   also caution you guys to buy some of the things 
i'm cautioning you to buy if you buy correctly and   reposition i mean encourage you guys to buy um and 
so one of the things that we're doing is if you're   trying to purchase anything that has to do with 
retail or office right now and and put it back   and utilize it as retailer office you're buying 
for you're buying the wrong real estate you're   gonna you're dying you're gonna die in the 
industry and it's gonna cost you financially   and so right now i'm cautioning people um from 
buying any type of retail or office if you're   trying to re-stimulate that sector because those 
those sectors are obvious that they're in mass   distress right now on the opposite end of that 
i'm we're purchasing a lot of retail but not for   retail usage we're purchasing it to be able to 
go in and reposition it when i say reposition it   we re-zone the retail into whatever we're looking 
for right now industrial and warehouse space is   what's big the biggest opposition that we're 
getting is the city of municipalities coming in   saying well hold on here they just envisioned 
all these mass 18 wheelers coming through   and this big massive 450 000 square foot shopping 
center turning into this distribution plant   right like you see walmart and these distribution 
plants just on the outskirts of major cities well   essentially that's what we're trying to do and now 
those are the moves we're making with large retail   space because we can pick them up 90 discounted 
on the dollar from what they were selling for 15   years ago and so with that type of uh depreciation 
and cost it gives us a lot of versatility   as to what we can do with that real estate to 
make it functional so if the city comes in to us   and says hey we don't want to have all this mass 
square footage and say okay well why don't we take   10 or 20 000 square feet leave it storefront 
retail and position it with verizon stores   or we put in restaurants and eateries and 
we do some entertainment establishments   and then the rest of the square footage we utilize 
as industrial warehouse based so repositioning   in that fashion if you're buying retail or 
distressed office space is incredible and   you don't even have to go in and buy large square 
footages for the people that are listening to this   and they're sitting back just scratching her going 
i can't afford to buy 450 000 square foot shopping   centers you don't need to you can go in and my 
first building i ended up purchasing it for 250   000 it was a modest um 7 700 square feet and i'll 
tell you that those buildings are still available   at that same price even 20 years later because 
they're distressed there's not a lot in there   you um there's not a lot in the retail sector and 
so you can purchase these small properties for   less than a quarter million dollars a real modest 
down payment you'll be surprised how many people   are willing to do owner financing for you where 
they become the bank finance those deals for you   and you can position yourself for a very modest 
down payment restructure that that property and   then benefit from the rents on that and they're 
going you know they're doing really well right now   um the other the other sector that i would 
stay away from uh right now would be single   family home investments at least for in the 
moment the market is over stimulated right now   and i already felt the over stimulation of the 
residential market in 2019 before covid and so   what i tell people is anytime you see the mass 
majority of people running towards a sector of   real estate or anything in business you should 
pivot 180 degrees and go the opposite direction   and so i'm really cautioning people right now if 
you have inventory take advantage of the moment   if you're in a position where you 
need to get rid of that inventory   diminish your inventory and start putting money 
back into the bank and it's a great opportunity to   relieve yourself of debt real estate or inventory 
that you don't need so you can reposition   but not a time to start flipping homes not a 
time to start investing in single family um   dwellings the market's just way overstimulated 
you're gonna get stuck in properties yeah and   i'm so glad you mentioned that because you know 
jerome you're a guy and and correct me jerome   you've been in real estate now for a while over 20 
years 25 years what are we looking at here yeah i   purchased i've been an investment in real estate 
since 1999 so uh 21 years i've been buying real   estate that i've invested in rental properties 
about my first property that was a single-family   home that wasn't a rental my own property which 
i still consider that part of my real estate deal   it was back in 1997 and so well over 20 years 
of real estate experience in 21 years of solid   commercial real estate experience where i've been 
investing yeah and i'm sure even before 1997 you   know you had your nose in different investment 
vehicles you were learning you were reading you   know and you were studying you know so i mean 
you're talking about 25 years of being involved   in the space and you know that means a lot coming 
from you because you you've been there done that   you've seen what markets can go through and 
you know for me i actually it's very ironic   i literally just made a video the other day 
about how you know that there is a housing   crash potentially coming and how there's a lot 
of youtubers out right now saying that it's not a   big deal that it's okay to buy single-family homes 
and for you to say that it's very very reassuring   it's refreshing so you know time to pivot here 
because this video is about commercial real estate   let's say that you got a guy watching this 
video right now you know let's say he's young   let's say he doesn't have a whole lot of 
money maybe he only has about 20 30 40   maybe if he's lucky 50 000 saved up and uh what 
what advice would you give to that individual   and he's watching this video saying well i 
know there's a potential opportunities coming   i know there's a crash coming what do i need to do 
today what are my action steps for me to be where   jerome is at yeah so that's a great question and 
um and i'm gonna tell it in a simple story as well   look if you have twenty thousand thirty 
thousand dollars you're in a perfect position   you're in the exact same position i was 
in when i first got started in real estate   i would tell you to really focus on maybe one or 
two different sectors right now i'm whole gone in   in industrial warehouse space because i know the 
need for it um you open up and you just google   um how much warehouse space is going to be needed 
over the next 10 years to service e-commerce   and you're going to have google pull 
up all these articles about how there's   well over a billion square feet of 
warehouse space is going to be needed   over the next five years alone so five years 
in addition to that how much more is it really   going to be needed is going to be 2 billion is 
going to be 1.5 billion all i know is going to   be billions of square feet and so you have to 
kind of position your mind where you say okay   the timing is right i've got to take advantage of 
least as a part of a small sector of that if you   could find yourself a six thousand square foot 
seven thousand square foot warehouse building   that doesn't one thing that's nice about 
industrial warehouse space is that there's   not a lot of expense to running and facilitating 
it so i love my family i know the multifamily has   been the big investment deal for most people 
for a long time and i always tell people it's   multifamily is great we own it we own a lot of 
it and we still buy more of it but for a lot   of people getting started unless they're investing 
like the small four plex small aplex six plex it's   a really hard industry to to grow in initially 
on the forefront you have to mass a small fortune   to be able to continue growing and the way you do 
that is by getting into involved in some sector   of real estate that can help you grow and so the 
biggest thing is if you have an empty building   the value of that building goes down substantially 
so for example we just purchased a 7 700 square   foot building that was owned by donuts up in the 
northeast up in virginia and it's a simple little   building we ended up picking it up for a little 
over two hundred thousand dollars um we leased   the property it didn't need much work we had some 
handyman go in some heating and cooling systems um   do a little bit of landscape cleanup and clean 
out the the facility i think for less than five   thousand dollars we got the property running 
and we leased it for thirty five hundred dollars   triple net so for those people who don't know what 
a triple net lease is it's when the tenant takes   financial responsibility for all the expenses 
on that property they pay the property taxes   they assume all the responsibilities and liability 
for all the utilities property insurance so forth   and so on so it literally puts you in a position 
where you have almost no expenses on that property   except for the structure itself and so they even 
pay for the parking lot wear and tear on the ass   faults and so your expenses are extremely low when 
you lease a property in a triple net lease so we   took a more modest lease because we could have 
pressed for an extra 500 a month maybe 600 a month   but i said you know what if they take 100 of 
the financial responsibilities on the property   i can lease this property for 3 500 a month 
triple net i have no expense on that property   and so since we purchased that if you purchase 
that property on a note let's say you have a 200   000 node on that property right now if you own 
or finance it typically people that are owner   financing they usually pay about two percent 
over prime which would put them at about six   percent maybe even seven percent interest and 
so if you finance a deal six seven percent your   interest payments on that property are less than 
two thousand dollars a month and so your cash   flowing over fifteen hundred dollars a month every 
single month so your your roi on your investment   and your cap rate is sitting right on your cash on 
cash return is sitting right about fifteen percent   and so when you stop and you think about that 
okay what is the stock market there what is my   bank account bear you know you sit back on real 
cash on cash return on your investment to be   able to get 15 plus re return um annually 
on your on your money is just unheard of   but it can be done right now with warehouse based 
if you shop right so for the new people coming   in you've got to simplify things mentally and 
this is where most people fail in real estate   is that they tend to complicate everything and 
they feel like they don't have enough knowledge   and to your point you know i didn't go out and in 
all honesty i really didn't pick up a real estate   book for probably 10 to 15 years into being in 
real estate i really took a simple concept when i   was in business i was in direct sales and network 
marketing and we use training centers to be able   to build our distributorships in direct sales 
and network marketing and we fill them with desks   and so i put as many desks in that office as 
humanly possible so if you think of like a   telemarketing office it was almost the same type 
of concept except for each desk i looked at as 500   so every desk i have that office equivalent to 
500 in what i call desk rent so i'd go facilitate   a lease on an office space that maybe cost me 
five 2 dollars a month with all utilities paid   and i would lease each desk for 500 500 500 and if 
you didn't have enough money to cover 500 i would   lease you half a desk for 250 and another 
half a desk to another distributor for 250   and i might have you know 15 desks in that office 
and so i have several thousands of dollars every   single month coming in and rental income and 
literally that's how i lived and survived in   direct sales so when i got involved in real 
estate not knowing anything about real estate   i took that exact same concept i bought a 
retail center that was 7 700 square feet   i parked my business in 800 square feet the the 
commercial real estate in the back of the property   to store all our equipment because 
we were in the construction industry   and i leased the rest of the property and so 
i was able to go out and facilitate about 16   800 900 square feet of rental space that i was 
able to bring in returns of almost like 5 000   a month in rental income my payment was about 
1300 a month i found an owner finance deal on   that first property i bought and so if you look 
hard enough you'll be surprised so if you sit   back and you think okay i have bad credit or 
i have no credit or who what bank is going to   lend to me because i have no experience the thing 
that's great about owner finance deals is i would   shop if i was a newbie for deals and i would 
look for only deals that are owner financing   get in for a low down payment of your 20 30 000 
that you have figure out a way before you buy   that property how it's going to cash flow for you 
get creative on it and then just position yourself   to implement what you're going towards so if it's 
warehouse space what do you need to do to make   that into a warehouse sector space that you can 
go out and lease it or give yourself multi-tenant   options there is some office space detail in your 
neighborhood take advantage of the rents from   but i would really keep it simple and i would 
just keep the real estate simple and i would look   for owner financing that was that would be what i 
would starting all over again yeah and you know by   the way for all you viewers if you need a resource 
to learn about owner financing you can pick up   this book of course zero to 75 units.com the book 
is completely free you know i sent jerome a copy   with the signed copy of course you know and he you 
know he called that day and said hey i've got it   in my bedroom reading it now so much appreciate 
you jerome for all the viewers get the book   i want to conclude this video jerome by asking you 
one last question and you know i think you could   really add some insight to this but what do you 
think you know there's a lot of wrenches in the   air right now you know there's a lot of balls in 
the air there's the election there's this pandemic   that's happening there's a lot of issues going 
on with housing um but from the commercial real   estate standpoint with all the things that's going 
on and all the craziness what do you speculate   could possibly happen or more likely happen based 
on your experience in the next three to six months   okay so i'm going to give you two insights 
on this to conclude that this sector   now look large corporations they don't do 
their annual budgets and their five-year   10-year projections based on the elections 
okay the world the united states is going to   be fine um the election is going to be fine we're 
going to have a hiccup in the marketplace um it   always happens election years are always tough 
people become a little bit more conservative   um and so i would say make your long-term 
perspective goals for the next five years   based on what your goals need to be and what i 
mean by that is you need to focus on a plan first   and foremost and not worry about the election not 
worry about any of that stuff now with that being   said we still have corrupt the coronavirus that 
we're the pandemic that we're still battling right   now and with that in with all of what's happening 
in that sector you got to realize that there's   opportunity and i know that people tend to focus 
on the negative that is always publicised it is   publicized publicly on all of the networks and all 
of the news media and so what i'm telling you guys   is turn the television off relieve yourself of 
all the negative news and press listen and read   the articles in the sectors that need stimulation 
so i get just as much positive reinforcement on   stuff as i do negative reinforcement and so i'm 
telling you that if you go in and you look at   what a mass need of industrial warehouse space 
is you need to people need to focus on taking   advantage of that billion square feet what if you 
can position yourself where you take advantage of   three or four small buildings and all you take 
advantage of is 50 000 square feet of of of   of warehouse space and based on that you make 
yourself an extra 200 000 a year in simple   cash flow and people need to get away from the big 
numbers they need to simplify things because think   about how two hundred thousand dollars a year 
is life changing for the mass majority of people   listening to this right now ninety seven percent 
of every viewer listen to this video right now   think about how two hundred thousand dollars 
a year would change your life and so if you   just simplify it and say okay i have a five year 
goal to get my acquire four simple properties and   those four simple properties are gonna bring me in 
someplace between four thousand and five thousand   dollars a month in cash flow and i'm going to 
work over the next 10 years to pay those off   that my friend is life-changing and that is a very 
simple perspective it can take place right now   but don't focus on the problem with the pandemic 
the elections focus on a solution there's a   mass need to service e-commerce it's a huge 
industry it's a multi-trillion dollar industry   that is where the focus needs to be is resolving 
the solution finding a solution for the problem   of the need that is not currently available of 
mass warehouse space rooftops the uh millennials   people that are going to be needing more 
rooftops as theirs as they continue to mature   and get into married families so forth and so 
on and so those are the sectors people need   to focus on and i'm glad you bring that up 
you know especially in the commercial sector   because the last two three months you know i've 
been telling people in the housing market sector   pretty much the same thing you know is be 
prepared you know don't don't don't watch   the news or anything like that but but be 
educated and where you know where things are   going right in the housing market and build those 
relationships with those bankers build your team   you know get your attorney get started get 
educated so i'm glad you and i are the same   in that regard so jerome thank you so much man 
for being here taking your time to explain to us   what's happening in the commercial real estate 
market what you're planning on doing with it you   got anything exciting going on man what's going on 
yeah i mean we got a lot of going on you know we   have the event uh coming up it's the real estate 
domination 2020 event um for those people who   are in need of some education um this is 
an event it's a gift from me to the people   that that are looking to aspire to invest or 
people that have already invested and want to   scale their business to the next level um 
i i have a great network of professionals   you and your brother included and so i'm excited 
because every single individual that i bring to   these events it's a it's a virtual event we're 
going to go live in las vegas unfortunately we   couldn't and so we are going to bring that 
same magnitude of information to everybody   out there virtually what's really cool is that 
we were expecting about 350 to 500 people live   now we're going to have several thousand people 
that are going to be able to join us live   virtually for the event which people if they're 
the convenience their own home can join us and   here's what's cool about it is that we have people 
like you and your brother that kind of come in   talk about owner financing how you guys um scaled 
your business from literally nothing to where   you're at today which i highly respect and one of 
the reasons that um i love the collaboration with   you guys we have people like todd all so those 
people that want to scale their their portfolio   to something bigger or are interested in finding 
about hard money lending todd runs a 70 million   a year publicly traded company um and you know the 
information that he can give you on syndicating   how to get hard money lending on deals that'll be 
available to um people like brad there's his story   very similar junior brothers where he started with 
nothing utilize cards and credit just finance his   deals to teach people how to clean their credit 
how to go out and move and develop their credit   so they can use credit cards to go out and 
invest in real estate utilizing zero percent apr   and zero percent finance credit to be 
able to go out and start their portfolios   we have my good friend um owen gibson 
uh a 25-year plus veteran friend of mine   that was in direct sales with me leasing death 
space like i was who got into the mortgage banking   industry and he's going to be talking about how 
people can dissect money and pull money from   their current dwellings their current investments 
and reposition capital grow their portfolios um   and then we got uh who else do we got we got 
dean who exercised the burst strategy we're   gonna be bringing in my good friend sean maloney 
who started his brokerage three years ago and now   he's running one of the largest brokerage firms up 
in the northeast and he's just had massive success   he had to get a landscape company went into the um 
brokerage industry and he's in residential uh he's   in residential real estate brokerage firm and he's 
just killing it and so he's going to be bringing   the systems and the systems that he uses and the 
systems that he set in place to the table for   those people that want to learn how to make money 
in real estate we're bringing a dean to the table   and nadine is awesome she nadine is a wholesale 
queen she has killed it in the hospital mutual   friend of ours too we spoke we all spoke together 
in dallas she did yeah we sure did and in fact the   respect level that i have for you guys i share 
with nadine because i've seen what this woman's   done and she's referred properties to us she's 
wholesaled some properties up in north carolina   to us and uh it's just it's been incredible and 
so just the network of professional colleagues   and the real the real push behind the event 
is to really educate people um with one of my   good friends and business partners tai lopez and 
what he's and i have partnered to do and so for   those people that are in real estate don't know 
who ty lopez is he's a big internet influencer   and most people thought that's all he was was an 
internet influencer lo and behold um he's started   his company like mentor box farmer's cart and 
knowledge society and many others not only that   over the last year he's him and his other 
business partner alex mir have went out and   they've acquired big american brands that we all 
know company pier one imports model sporting goods   linen things dress barn the franklin mint you know 
and a few others that are under acquisition right   now and so what's exciting is ty and i partnered 
up and we created a company called esr and it's of   e-commerce supporting real estate um i'm the ceo 
of the company and what it is is we're we found   a way for e-commerce to support the purchasing 
of industrial warehouse space and ty is going to   talk about the benefit to revitalizing these dead 
american brands you see companies like jc penney's   going into bankruptcy and um you see some of 
these other like sears roebuck and company these   have name recognition but haven't went online 
and they're dying brands there's we're he's   revitalizing these brands bringing them back to 
life through the means of e-commerce but who house   and store the products and so we're going to be 
you guys how walmart does it how amazon does it   and how all these other brands are in need of the 
exact same thing over the next 10 years how you   can take advantage of a piece of that and profit 
from it long term and so it's a no salesy it's   an all-new event it's november 6th 7th and 8th 
and i'm excited to bring it to you guys and it's   totally free and i'm excited we're going to put 
the link in there so you guys can for the event as   well yeah we're excited and like jerome said we're 
gonna put the link in the description and you know   and we're gonna we're gonna have other individuals 
on our youtube channel you know in the next coming   weeks uh people that will be speaking uh at the 
event you know we're working on getting tai on   here to share his wisdom you know and then we're 
gonna promote the event and of course he's going   to be there as well we're going to be speaking 
so jerome i'm really excited to be part of the   event you know uh we're honored we're humbled 
and we're going to have some fun but thank you   again for being part of this video and uh we'll 
see you guys in the next one thank you i really   appreciate you having me really really honored to 
be here thank you to all the guests and everybody


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