Ep 07: REI MBA - Investing in Commercial Real Estate in the Current Market
Born and raised in the Dominican Republic. Juan started working in the restaurant industry at the age of 10 in his native DR, cleaning bathrooms & floors, cutting onions & tomatoes, selling popcorn & cotton candy until he emigrated to the United States in 1997 at the age of 16 in search of better opportunities.
Putting himself through college while working full time and going to school full time and is a graduate of the prestigious Walt Disney Leadership and Hospitality College Program. After college Juan focused in the banking industry where he learned valuable business skills and got a role as a manager trainee at the age of 22 from one of the largest fortune 500 financial institutions, Bank of America, where he worked his way up to run Denovo operations (startup branches). Responsible in opening Denovo Branches, Juan was involved in project management, setting business processes for each new branch, hiring talent, marketing and growing the business. In 2010 decided to pursue his passion and opened State Café & Grill with his wife Melanie and shortly after, Don Juan Mex Grill was born. Today, the Don Juan Mex Grill brand has grown into a multi million dollar business with locations throughout northeast Pennsylvania (Lehigh Valley). He’s an active commercial & residential real estate investor & enjoys spending his free time reading, eating & traveling with his family. Being a big believer in the power of education, Juan and his wife Melanie, have established the Don Juan Mex Grill scholarship fund to assist underprivileged promising graduating high school students who are pursuing higher education and/or technical school in the communities they serve. "The future belongs to those who prepared for it."
You can reach Juan through this website: https://juanmartineztalkbusiness.com/
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Interview Transcripts
Hello, ladies and gentlemen, welcome to RealEstateInvestorMBA.com If you've been following our program, you know, my co-host, Jeremy Moyer who's over there and we try to bring guests from all over the Lehigh Valley community and surrounding. We're super vocal about how much we love the Lehigh Valley and Juan Martinez is here. Juan, Thank you! Thank you guys for having me on. Yeah for sure. We got to give you a little bit of an introduction. You know, I'm a big fan. We'll talk about that in a minute. But Jeremy, would you mind introducing Juan? Absolutely, welcome Juan. So Juan was born and raised in the Dominican Republic. He started working in the restaurant industry at the age of 10 and in his native Dominican Republic he was cleaning bathrooms and floors, cutting onions and tomatoes, selling popcorn and cotton candy until he emigrated here into the United States in 1997 at the age of 16 in search for better opportunities. He put himself through college while working full time and going to school full time and is a graduate of the prestigious Walt Disney Leadership and Hospitality College Program. After graduating college Juan focused in the banking industry where he learned very valuable business skills and got a role as a manager trainee at the age of 22 from one of the largest Fortune 500 financial institutions, the Bank of America where he worked his way up to run the Denovo operations. Responsible in opening these branches Juan was involved in project management, setting up business processes for each new branch, hiring talent, marketing and growing the business. And then in 2010, Juan decided to pursue his passion and open State Cafe and Grill with his wife Melanie and shortly after Don Juan Mex Grill was born. Today, the Don Juan Mex Grill brand has grown into a multi-million dollar business with locations all throughout the Northeast Pennsylvania. Also right here in the Lehigh Valley. He's an active commercial and residential real estate investor and enjoys spending his free time reading, eating and traveling with his family. Welcome Juan to the podcast. Can you kind of give us a you know, give us some more details about, where you came from? And also, why here in the Lehigh Valley, how did you come to this location, and just share with the audience? Yeah, it's absolutely. I was born and raised in the Dominican Republic. You know, growing up, America was always the dream. Coming to America, you know, there's more opportunities here and you know, like I always said I'm always so grateful for the opportunity. This country has provided me on my wife my family. You know, I'm one of the things I do. I always have the American flag, everywhere, just as a reminder, you know, just being grateful. My restaurants have the American flag, you know, just again it's a reminder of gratitude, of everything that this country has afforded me and my family. So yeah, you know eventually at the age of 16, I was able to make my dream become a reality and my family emigrated here to to America, New York City. And then eventually my father got a job as a mechanic. He was a mechanic by trade here in Allentown. And that's when the entire family, you know, we got a little apartment and we all moved in. And from there, you know, we just being in the community. I went to; I graduated high school here, in Whitehall. I went to Lehigh Carbon Community College locally, Muhlenberg College locally, DeSales University locally. And eventually after college I got into the banking industry and I moved throughout the country, you know, Philadelphia, Chicago, I was a banker out there. And I eventually decided the Lehigh Valley was the place to be and grow a business. You know deep down, I always wanted to be an entrepreneur and own real estate. You know, that's something that, my mother growing up, she always wanted her own home and for some reason, you know, because the financial circumstances, you know, they never got a chance to own their own home. So that always was ingrained in me. I was like man, you know, I'm in America now and by the time I'm 30 years old, that was my goal when I was16 years old, I want to have five properties. So, you know that stayed in me, you know, you've seen Mom always wanted to get a piece of her own home and you know, and not being able to achieve that. So like right now I'm living that dream, her dream through what I do. Can I interrupt you real quick? So I have, I feel like I can share this on that and in the podcast I talked about how my father kind of introduced me into real estate...the immigrant mentality and things like that. And we've had a couple guests that before they talked about real estate, they talked about the mentality and things like that. And I see you and you know, Juan, whatever, I don't care what I say on this. Like you built me... by me watching you on Facebook. That was like something and I read about you in the Morning Call and you know things like that, you know. And a lot of people talk about, hey, I want to get a property, I want to get a property. Can you talk about like what you have to give mentally to kind of do what you had to do? Oh boy. It's a lot. You know, there's a lot of mental sacrifice. There's a lot of personal and financial sacrifice and you have to have the right mentality. You definitely have to have the right mindset because you know at the beginning I remember going back to 2004 when I first bought my first investment property. You know, it wasn't easy, you know, I had a boss. I was gonna buy a Jetta... Volkswagen Jetta, that was my dream car when I had my first. This person, his name is Steve. Steve, what's up man? Like Juan before you buy that car, I want you to read this book. And he said don't buy the car man. Don't go to the dealership on Saturday read this book and this book was 'Rich Dad, Poor Dad'. Nice!! He gave it to me on Friday. I started Friday night. I didn't go out. I didn't go to the bar. Usually my routine was go out, hang out, you know, the chicks and all that. I stay home, right? I read this book. I'm like 21 years old at the time. And I choose to devour that book over the weekend. And I think I read it twice. That's exactly what I want to do. And I'm so grateful that this person came into my life and kind of like pulled my ear and say hey before you, you know, put your little money into an asset that's just gonna depreciate in value right away, look at this and get ready and instead of putting your money in a car, let's put it into real estate. And then he goes back; it hit a button because I remember thinking about my family, my parents, you know being first time immigrants and always wanting that house, right? So I committed to that. That Monday I came back and I say Hey, listen man, thank you. I'm gonna still drive my (older car). So I could put a down payment on a house and within six months I bought my first investment property. So even though you know that first house I was still living in an apartment with my parents, I bought that house and I rented it out. Nice! And that was my first deal. I was 22 years old. That is crazy, it's amazing. Yeah. I want to jump in right here because I think we touched a bit on something that's really important, Juan that you just said. Tejas and I, we're going crazy interviewing a bunch of Business Leaders and developers and investors here in the Valley and we've asked what advice would you give new Real Estate Investors that are looking to get started and the commonality of what we're seeing is you need to get your mind, right. You need to have the mindset and you just mentioned that. How important do you believe that is, for new investors to get the understanding of financial literacy, understanding of just broad concepts and then to develop a strategy and execute on what they want to do? Right. So when it comes for me, when it comes to business and real estate investing, it's all about having the right mindset. Not only when it comes through educating yourself financially, in the financial aspect of the transaction, but also you know, what sacrifices are you going to, are you willing to make now? Okay. What are you gonna give up? Because you have to give something up. Alright, whether it is going out on weekend, whether it is delaying that purchase of a car or the iPhone that you really want. How could you you know delay gratification? That's the biggest thing, you know that helped me be where I am. You know anybody that's new, any new investor is, Hey... spend time, you know whether you know, I know it's exciting and you just want to jump in right away, but really understand the financing aspect of real thing investing. Because once you have a good grasp of it, you could look at it, no feelings involved, because you cannot have any feelings. It's all about the numbers, you know, lay it down, look at the spreadsheet. Does this make sense financially? All right, then, you'll make your decision to move forward. And I think, new investors, you know educate yourself, you know that mindset of it is five to six months, but thats all I'm going to do. Try to understand what it takes, you know for a deal to make sense with the numbers. Because once you get that, you know, the sky is the limit. Once your bankers or investors know that you understand that piece, you know, they're feel comfortable and you know deals will start, you know, there's an limited amount of deals. It's just your time. So I'm gonna jump in now. So I'm going to I'm going to continue with your story so, you know years ago you made your first investment decision. And then I'm just going to try to cut some of the story. You know, your credit was good. You had one property, you had a good Banker. They like you, you showed cash flow and then you know, you got another one, or the next thing happened. Can we go to how you took over pretty much the, Mexican restaurant business in the Lehigh Valley because that whole, going from you know, owning a couple rental units, then doing all of that, you know, you had to make some major jumps. And your first restaurant must have; it had to have been your hardest, in my assumption. You know. Now we all just know you. Like we see, we see that you clean up the highway. I see the Don Juan on the side of 22, like all the little things that other people may not pick up on them. Like this guy has infiltrated the entire market and can you share some of that? How did you get your pieces in place? Get to that point to the first restaurant? And then from the first to the second must have been insane. Right. So what are the things that a lot of people don't know is they see me as that Juan Martinez, Don Juan Mex Grill, the restaurant and the guy that you know owns the restaurant. I got to the restaurant business, you know, because of investing in real estate. I am an investor first. And, so while I was growing and building my professional knowledge, I was buying properties, right. And my first restaurant was actually a real estate investment. That was in Chicago and I decided you know, I want to start buying more properties in the Lehigh Valley. I was doing banking assignment and I came across this commercial property in Easton and that little town of Easton was similar to the town where I was living at the time in Chicago. It is a town called Lincoln Park. 20 years prior, Lincoln Park was the town that oh my God. nobody goes there. Crime was very high, you know just a lot of prostitution and drug addicts and things like that on the streets. You know fast forward 20 years, you know, you couldn't buy a place in Lincoln Park under $900k to a million dollars and that was back in 2007. Okay, so I started scouting opportunities, you know what town in the Lehigh Valley, cause I went to college here and I knew a little bit about, where can I grow my real estate portfolio, right? So I started looking in Easton and boom I found an opportunity to get a commercial property in Easton and that was you know, the intention was to lease it out. But my wife and I decided you know, what... Let's go with it. And let's open a restaurant. You know, I grew up, working in restaurants, you know us as utility person, cleaning, doing whatever needed to be done and my wife has some waitressing experience and that's how State Cafe started and the beginning of our restaurants here back in 2010. So from there, you know, you just, I kept building the business, utilizing my knowledge that I have gained in the banking world, you know, talking to mentors and you know, just learning. And I wanted to grow this thing into something big so it will allow us to you know, acquire more real estate in the process. The restaurant and the real estate goes hand in hand. They want help the other and you know, when the restaurant goes facedown for whatever reason, the economy, you know is now the real estate that carry us. And, you know, without the real estate, I would not have had the restaurant. That makes sense. Yeah. Juan - so evaluating commercial deals today, are you looking at things differently? Are you adding additional metrics in the evaluation or you just looking at from, as kind of like mentioned, like from a business plan, overall business plan structure deal; deal-to-deal? Is anything changing or what's your secret sauce? It is going back to looking at the whole picture, looking at the numbers, okay. That is very simple for me. All right, you know, it's basically put in a spreadsheet, looking at the finances and seeing the area and say okay how much value can I add if I acquire this piece of property? Okay, you know, these are the the local rent. This is what they're currently getting. Okay. These are my taxes. These are my expenses. How can I expand on this and make it even better and add more value to that property? So, you know for instance, you know, one of my latest project, you know, the acquisition. They were bringing $6,700 a month on gross revenue and, you know within six months, you know, I say, okay, how can I increase that? You know what I did I almost tripled that. I brought the rent to almost $21,000. Wow. Six month and we're only 50% occupied. So what I'm looking at deals, you know, I'm looking at. Can you share where that... can you share where that property is exactly? Is it in the Valley? It's in the valley. It's in the valley. Okay. Yeah, it's one of those commercial deals I recently made. But uh, that's what I look for. How can I add more value? Okay. Realistically not with my feelings. Not what I feel but facts right. You look at the spreadsheet. You start running numbers, you know. As a Real Estate Investors, I think the biggest thing is get obsessed with numbers, you know, I pull out my iPhone and you know, my calculator goes in right away, you know. And I started, you know running scenarios looking at different things, you know, it's a way of looking at the number. That's great. I'd like to dive deeper into that specific deal Juan. We can talk in generalities, but like if you can share like what you bought it for like if you had to do rehab to it. What type of...was it restaurants or was it retail? Was it apartments? Just to kind of give the listener base an idea of like a live deal of what you're going through right now. How you're you know getting it up to the best use. Absolutely. So, you know, it's a property, heavy industrial, so heavy industrial so you could do many things. You know, you have restaurants, you could have storage, you could have retail, you have medical office. So, you know, the acquisition was $1.1 million. All right, I immediately, you know, we put in about $200,000 to do some you know quick, and you know loan impact. Improve the facade of the property, you know, the parking lot, you know improve, you know, putting new windows in, improve the electrical and then you know, I immediately once people started seeing the improvement, you know, I was able to increase the rents through the current market rate They we're leasing, you know way below market rates because the previous owners, you know, they didn't have the energy to make the improvements at the time. And within six months I, you know, I like I said I brought it, the rents from $6,700 a month to close to $21,000 dollars a month within six months. You know that point, you know, we did our refinance to continue to improve. The property got appraised that a 3.5 million. 3.5 million?!? 3.5, yes sir. So we're only occupying under an acre...0.8 of the property. So I'm gonna be looking to develop into self storage facility. All automated. I'm excited because that's going to take it like from $3.5, to you're talking about $6-7 (million). Easily. You know once you put you know 300 - 400 units. Was that off-market? Just curious. That was an off-market deal. Yes. It's beautiful. I want to be respectful of time. But I gotta bring this up as a business owner with the family. I think we all have kids. And Juan you have a secret weapon that many people may not know but behind every strong man is a strong lady, but your wife is a Realtor, very respected in the community. I've worked with her before and I just want to bring up, you know, you're not just somebody running around, you know doing real estate. You're actively, you know, you're at that point now that you can share your knowledge and help people. Can you just talk about how you and your family, you know, how do you do it? Because you got to see your kids and it's difficult and there's stressful things and unexpected things and I just wanted you to comment on some of that if you don't mind. Absolutely. You know, my wife I mean, she's my partner in everything we do and very supportive, you know, from the very beginning, she's always been my backbone. You know, like believing everything that I believe in and giving me my full support, her full support in everything I do, you know. Along with her, you know, we build what we built together and it's a beautiful thing, you know. Just having that support from your loved one, that just means a lot. And yeah, man. And to have a loved one that also you can run your plays by and things like that like. I do this, you know, some people may not get it but I have to do that with my wife. She's an objective person. She actually works at Muhlenberg in the psych department. But yeah, I think that is important for people to understand to, you know, like you're teammates, you know and your advisors. Because you had bankers or I don't know financial advisors and things like that that you know, maybe gave you an opinion or something that you might not have seen. Things like that. Right. Right. Absolutely. So Juan this is the last question and this is the worst question to ask you. We do this with everyone on the show. It's always what is your favorite restaurant in the Lehigh Valley My favorite restaurant. Boy, you know, I got a I got a few that I regularly go to. You know, I love going to see my boy Mike Pichetto over in Easton. Third and Ferry (Fish Market). You know, just very hospitable, you know, very welcoming environment. I have my favorite restaurant The State Cafe and Grill over Easton. Bill, he's the owner there. My tenant...I love it. Then what's another one that I really really enjoy? You got to say Don Juan, right? Of course, of course, Don Juan, I'm here every day. Thanks for answering that. You're the first restauranteur we've had on. Juan, do you want to share how to get a hold of you? I mean we see your stuff in the Morning Call, online everywhere, you know, there's a lot of people coming to the community like if they wanted to take one of your classes or something like that. Is it just the Juan Martinez business talks? Yeah. juanmartineztalkbusiness.com. You could get a hold of me through there. You know, we help you know, aspiring and an experienced entrepreneurs and business owners, you know, just do any coaching? I mean, you know just to bounce ideas based on my experience and what I've done, you know. I've seen a lot of different scenarios. I know what it's like to you know be down feeling like everything is crashing. I know what it's like to you know, overcome those feelings. I know what it's like to you know, I've been exposed to a lot of situations so, you know if I could share with people, it'll be great. So that's the best way to get ahold of me. That's what we love about you. We know you are very genuine and you share it. So I would I would like to say we want to have you back on the program one day and we're just excited to see the next thing you do. Sounds good. Awesome. That is the legendary Juan Martinez who have been feeding the Lehigh Valley and is amazing in the real estate world Jeremy Moyer, my co-host and this is Real Estate Investor MBA. Check out all of our information online and thank you, Lehigh Valley for the support. Thanks guys.
