Acquisitions and Negotiations are tough for a lot of investors, especially those just starting off or looking to grow their business.
Recently I got the chance to talk strategy with Richard Montaño, CEO of LIV Capital Group.
LIV was founded in 2009 and has managed over $100 million in real estate investments in just a short time – while earning his investors between 14-56% in annualized return on investment.
Those are some impressive numbers, so I asked him for a little bit of background.
He’s been in San Diego real estate for about 10 years, and his wife Marissa has been a broker for a little bit longer than that (check out their other company here: Fit Properties).
Currently Richard is building a bunch of luxury construction in San Diego and promoting the concept of Crowd Funding for investments, along with a film they made about the foster care system.
With so much happening, it’s easy to lose focus. We started our conversation on acquisitions.
This interview has been edited for clarity.
“Acquisitions in general is a full time job for multiple people,” Richard said.
“We basically go out and we have a defined set of criteria that we look for.
“We do value add – properties that we can put a few bucks and sweat equity into and have some money left over at the end for us. We sell those units or keep them as a rental.
“Other times we buy a property and entitle it – we might get it re-zoned and get plans approved and just sell that [future development potential, since] that is a marketable commodity.”
Richard and Marissa have made a lot of connections over the years, and “those networks pay off,” he said.
“Word of mouth and referrals are our best forms of acquisitions. By getting out and sharing those kind of deals, closing them repeatedly, we’ve created a track record that we’re a true buyer. We’re born and raised here in San Diego, and that helps our network a bit.
“We also look at the auctions – they have been very tough lately. We go in and have to pay cash, plus we’re competing with lots of other investors who are competing to do the same thing. We all have the same equations and the same numbers, so it all comes down to who will take the risk to buy the property.
“We’re also working with different agents, both in our office and out in the market.
“We know what we’re looking for and we have set criteria. We don’t waste our time looking at everything, we get a good book of items presented to us, and we can say yes or no quickly. We know how to pull the trigger.
“Once you have a track record and a network, a lot of people will contact you and try to sell you something.
“You gotta really filter thru the deals that you’re not focused on, for example I’m looking for residential rental and for resale, 50 units or less. If it doesn’t meet that criteria, do you really want to focus on learning that new criteria or go do something else? You’ve got to focus and not waste your time.
“I have a pretty good memory, and I do see a lot of deals come back around. There are some groups or individuals that own assets and they get set on a certain price. They’ll work with any broker who will tell them they’re right [on price], and the deals go around and around.
“Sometimes they come around enough and we can put it together.
“In fact, that just happened – a guy has been trying to sell for 4-5 years, I offered him the same thing I offered him again and he finally conceded and we put it together. Most of the time it doesn’t happen that way.”
Keep an eye out for part 2 next week, where Richard reveals how he funds his deals and delivers some ninja negotiation tricks.
