Episode 624-Ron Faraci

Gabe Petersen (00:02.492)
All right, welcome back to another episode of the real Satan festing club. In fact, this is the first episode of 2026. You guys you will usually send these these episodes off about you know, two to three weeks after we record and so even your guys real time this is the end of January but in live time when we’re recording this this is January 2nd 2026. So I hope you guys had a great

New Year’s a great holiday with your family with Christmas everything it was great for us. I ate way too much food and I’m actually excited to get back into the grind of it. So here we are and welcome back to another episode. We got a good one for you with Ron for Archie with us on the podcast from Bulletproof lease Ron the Bulletproof lease is a 31 page residential lease specifically for low income housing which is what Ron excels at. He had a

long career. He’s actually retired down in St. Augustine. We were just talking about that area, how beautiful it is. And side note, I did not know Ron told me that is the oldest city in America. Who would have thought in Florida that they would have the oldest city in America. But that’s what we’re here to talk here to talk about Ron’s career in low income housing and boltproof lease. So Ron, thanks for hopping on the show.

Ron Faraci (01:14.894)
Gabe, thanks for having me, man. It’s a blast. I’m excited to be the first guest of 2026. It’s to be a great year.

Gabe Petersen (01:20.858)
There you go. And yeah, before we get into it, you know, I’m gonna we’ll get into your story, but I want to just take a second and talk about that St. Augustine fact. How did you learn about that? And what where where did that come from?

Ron Faraci (01:28.142)
I know well so 1565 is when it was yeah which is pre-dates you know Jamestown it surprises a lot of people because you know Florida you know strip malls 20 years old is considered ancient here right not in St. Augustine yeah and they lean into it so it’s a cool city yeah they really lean into that title

Gabe Petersen (01:35.836)
1565.

Gabe Petersen (01:44.772)
Yeah.

Gabe Petersen (01:51.921)a
Yeah, well, she learned something new every day. That’s for sure. So yeah, I told you before we got on here, we always like to start with stories. We like to hear how people got to where you are. It sounds like you’ve had a long, long career in real estate. Now you’re down there in St. Augustine. So why don’t you take us to the beginning of your career and tell us how you got here.

Ron Faraci (02:10.882)
Yeah. So my story is not that exciting. mean, I’ll be 60 next year, so I’m a little up there. And my wife and I got our start in Los Angeles decades ago. We’re from Connecticut, but we moved to LA, two broke kids, you know, and just figured if we’re going to be poor, let’s be poor with palm trees. That was our thinking. So we moved to Orange County, California, and, you know, the abbreviated version, I got a lucky break early in life and ended up going to work for

at the time, a very small company today, a multi-billion dollar company. you know, my, my boss was one of the founding team members of the Home Depot. And yeah, so it’s like, I was a commission only sales guy, you know, nothing like that. But I kind of got to learn a philosophy and it changed my life. And that was when my passive income exceeds my monthly obligations, then I have a credible claim to financial freedom. That’s, that’s a pretty big word salad, just to say,

Gabe Petersen (02:48.903)
wow.

Gabe Petersen (03:06.107)
Hmm.

Ron Faraci (03:08.782)
I just need to create some passive income. So, you know, spent years there, did very well. And then I wanted to create passive income by buying multifamily buildings. But of course, you try to do that in, you know, most of California, certainly Orange County, you’ll go broke quick in terms of cash flow. It doesn’t pencil out. So we packed up like the Beverly Hillbillies and moved back east because in the Northeast and a lot of areas of the country, but specifically Connecticut.

you can really buy these small multifamilies that just the cap rates are, you know, nine and 10, GRMs of, you know, three and a half. And, and, and, and of course you’re going to earn it, right? Cause it’s low income housing. And I think Willie Sutton said it best when why did you do that? Well, that’s where the money’s at. Right. So, and so we moved there. I took a job, a corporate job. And then in 2007, 2008, when the economy crashed,

Well, America was on sale and the numbers were just insane and what you could buy these things for. But while the property values were declining, one thing that didn’t decline was rents, right? So for every 1 % tick in the home ownership rate downward in this country is a million new renters. can’t buy. So yeah, so in bad times, you know, specifically then it’s usually a pretty good time to be a landlord because the values are declining.

Gabe Petersen (04:25.182)
wow.

Ron Faraci (04:33.838)
Well, the rents are, if not accelerating, they’re stable. So I quit my job because, you know, the only way to get my 401k was to quit my job. So I think Tony Robbins said it best, if you want to take the island, burn your boats, right? So I just went all in. I mean, pushed all the chips in and said, well, I’m a high school educated nobody, but I’ve amassed a little bit of money. And so I paid the taxes, paid the 10 % penalty because I wasn’t 59 and a half.

And so my pile got 40 % smaller. So I just started buying. I didn’t know what I was doing. My wife still had a job, so I was able to get a mortgage through her. So we were just putting 25 % down. And after three or four buildings, I was broke. And I thought, well, it was a good run. And then I joined my local REIA, the Real Estate Investors Association. And that’s what everybody should be doing, by the way, in the beginning of their journey. Join your local REIA.

Gabe Petersen (05:08.571)
Yeah.

Ron Faraci (05:32.686)
And they taught me how to buy without banks. And I was like, wait a minute. I thought I had to go to a bank. Thought I needed tax returns and W-2s and all this stuff. And then when I learned how to do that, then I just went crazy. I bought everything. And did very well, made every mistake in the book, I gotta tell ya. But my wife and I ended up at our very peak, owning and managing close to 800 units. And they’re not sexy, I mean, to be clear.

But they’re high cash flow, high headache, all that comes with that. So you can’t let it get away from you. So I did that for a number of years. And about seven or eight years ago, I actually bought the RIA that I joined. The owners, my original mentors, they were getting up there in age and wanted to pass the torch along. And I was along with a few other people were under consideration and

You know, me and my partners, I should add that I had two partners. We bought the RIA and it was cool because that was the first time in my life that I kind of got to move the needle on changing people’s lives. And that’s just never something I thought I would care about. And sold that about six months ago, along with most of our properties a few years ago when we moved here to Florida. And so about six months ago, and I sold all my properties and I sold the RIA.

Gabe Petersen (06:46.597)
Nice.

Ron Faraci (07:00.46)
and I’m sitting around with nothing to do and my wife’s like, you gotta find a hobby, you know? And we’re blessed, we live in a kind of private lagoon here. so I started a TikTok channel. I think I’m the world’s oldest guy on TikTok. And I don’t know what I’m doing, I don’t know how to edit a video or nothing. So I started doing a TikTok video on tips and tricks for low income landlords. know, all these little things I’ve learned over decades.

Gabe Petersen (07:05.071)
you

Gabe Petersen (07:15.516)
you

Ron Faraci (07:27.566)
Find the master water shut off for your building, wherever it is. In the northeast, it’s in a basement. Midwest, it’s in a basement. Find it the day you close in a building and paint it bright orange. Because one day, a tenant’s going to call going, there’s water leaking. What do I do? Go turn the bright orange handle.

Gabe Petersen (07:43.984)
That is actually I’ve never heard that as a tip, but that is really, really smart advice.

Ron Faraci (07:47.833)
I’ve got hundreds of those. I do them on TikTok and it’s kind of taken off. so people were like, well, how do get a hold of your 31 page lease? I don’t know how to sell online or anything. So I figured it out and blah, blah, blah. So, you know, I’ve been doing that. It’s a hobby. And yeah, so here I am on the podcast with you today, Gabe.

Gabe Petersen (08:09.626)
Nice. I love it. I love it. That is a very unique piece of advice. Not something that I don’t think I’ve ever heard before, but it makes a lot of sense because you want your tenant to be able to actually turn off the water when there’s a water leak or else that small problem could become a very big problem. Yeah.

Ron Faraci (08:23.694)
Or even a contractor. Yeah, right. So think about it. If you’re not at the property, which you’re probably not, and you get that phone call, try to describe to a tenant, especially if you own multiple buildings, where that one magic handle is in a room full of handles. Right? So, you know, and just all kinds of things like that. You know, I just did a video the other day on my TikTok channel. If you have a drug problem, right, and in low income housing, you get a lot of drug dealers.

You know and that’s usually manifested that you can see Telltale sneakers hanging from the telephone wires, right? That’s one of the telltale signs and you know years ago had

Gabe Petersen (09:02.436)
Why is that? I do know that as a fact, but why is that?

Ron Faraci (09:05.078)
Yeah, because it lets the public know it’s kind of, it’s their sign they’re hanging, if you will, right? Hey, buy drugs here. You know, yeah. So I had this building years ago and I’ve learned this from another landlord, but years ago I had this problem. So I did a video on it how I got rid of all the drug dealers in my building. And how you do that is you send a letter to all the tenants in the building, dear valued tenant.

Gabe Petersen (09:13.421)
Interesting.

Ron Faraci (09:30.88)
I apologize in advance, but we have partnered with the local law enforcement agency to train their canine drug sniffing dogs. So they’re going be in the hallways, know, day and night, they won’t come into your apartment, but they’re going to be everywhere. So we apologize about the inconvenience and well, they’ll just scatter like cockroaches. know, they’ll go somewhere else. Yeah. just, yeah, it’s funny. But it works.

Gabe Petersen (09:47.165)
That is hilarious. That’s really smart. Yeah. Yeah, yeah, yeah. No, those are, you know, when you are dealing with, you know, less savory customers, or less savory tenants, you really do have to come up with smart solutions to the problems. And that is, that’s a really smart one. I like it.

Ron Faraci (10:10.422)
Yeah, you do have to in that business. Otherwise, you’ll go broke pretty quick.

Gabe Petersen (10:15.514)
Yep. So through your story, there’s a lot of things that you touched on and I want to go into. Just real briefly, you talked about buy without banks. Let’s talk about that. And then you talked about you had about 800 units. So what we and they’re all low income. one of the big topics that comes out of that for me is how do you do the asset management by redoing still not, you know, pull your hair out because you know, I own mobile home parks, I know it can be a big problem.

Sometimes you’ll have issues that don’t generally come up with class A apartment buildings. And so how do you reduce the headache? And then your REI that you met REIA, Real Estate Investing Association. You both were a member and an owner. And so I’m curious what the differences, what the benefits are. So let’s start with the first one there. At the very beginning, you mentioned you learned buying without banks. That is a very important topic for real estate investors. You’re going to, like you mentioned, and I learned very early on, you can buy maybe

Ron Faraci (10:45.891)
Yeah.

Gabe Petersen (11:09.926)
two, three properties, commercial properties with your own money, and then you’re dry. You got nothing left. You got the cash flow coming in, but you don’t have the, you know, one million, two million dollars that you can put as a down payment. And so you need to come up with creative solutions. So what were your solutions? How did you figure out how to buy without banks?

Ron Faraci (11:16.472)
That’s it.

Ron Faraci (11:26.712)
So, and you nailed it, Gabe. You simp, there’s a hard stop here. There’s no such thing as a very large landlord that goes to banks on a consistent basis. And so you don’t only want to get creative, you need to if you want to scale. So how I did that was primarily owner financing, seller financing. I asked the owner to be the bank and that always elicits a bunch of weirds, like.

Wait a minute, so it’s just like a handshake deal or something? gosh, no, this is real estate. There’s lawyers and deeds and mortgages and promissory notes. And the one thing that I always try to hammer home to people is understand this, there’s no difference, no difference between a seller financing mortgage and a bank mortgage, if you will. No difference, zero. And that’s what people don’t understand. So primarily owner financing.

I was less sensitive for cashflow for interest rate. I bought a building once at 18 % with 10 year financing and people are always like, are you crazy? No. Yeah, I you might as put it on the credit card, right? So I did that all the time because I don’t really care about the interest rate because for two reasons. Number one, who pays that? Not me. You know, the tenants pay for everything. Of course, am I going to keep that financing? Of course not. Right. So I’m going to raise my NOI and

Gabe Petersen (12:25.233)
my god, that’s crazy. That’s like credit card debt.

Ron Faraci (12:45.678)
And for every dollar at an eight cap, let’s say for every dollar I raise my NOI is times 12. Right. So whether I save money or make money, NOI doesn’t care. So at an eight cap, every dollar I make or save is times 12. Right. So, so I’m highly incentivized to for six months to lower my expenses, raise my revenue, my NOI shoots up to here. Then of course I’m going to run, not walk to a bank to refinance out of that 18%. You know, so

So I use interest rate in order to gain control of the building because I own the building now.

Gabe Petersen (13:14.566)
So.

Gabe Petersen (13:19.578)
Yeah, and I kind of want to highlight that because that is something that I have just I mean, just recently kind of realized the value of I’ve, only bought one property with bank debt everything else I bought seller financing, but I have I’ve fought tooth and nail to get low interest rates. But it means I lost out on a lot of deals that I could have closed had I been more willing to increase the interest rate. But what you just said is is the crux of it. And I feel like that’s something that I wish I knew earlier is you can give

Ron Faraci (13:39.928)
Right. That’s right.

Gabe Petersen (13:48.86)
you know, the owner of a property to seller higher interest rate if you know you can increase the NY you know if you have a plan.

Ron Faraci (13:55.179)
And that’s the key. If you know, you got to know your exit if you’re going to do that. That’s right. Cause you’re dancing on a wire there. So you got to know your exit. Yeah.

Gabe Petersen (14:01.476)
Yeah. Yeah, that that makes a lot of sense. And so when you do that, how you know it all you always have to have a plan. There’s it’s not going to be instant. got you know, six, eight months, a year, two years. If it’s a really big problem.

Ron Faraci (14:09.998)
That’s right. And you’re just hoping to pay for that six months or so is not lose much money, right? But forever after that, as opposed to paying more for a property, right? So because your basis is forever. So so what interest rates temporary, I don’t have to keep it. Now, of course, there’s things you want to know. So if you’re going to do that, you want to try to negotiate, make sure your mortgage doesn’t have a prepayment penalty, right?

Gabe Petersen (14:38.652)
But these are all things, I mean, if you’re negotiating with the seller, these are things with a bank, you can’t do that. With a seller, you can go to them and you’re like, I don’t want to prepayment penalty. don’t want it to be collateralized. I want it to be collateralized only by the property. You these things can be negotiated with, but if you’re talking to the bank, they’re not going to, they don’t care.

Ron Faraci (14:39.298)
You know?

Ron Faraci (14:44.334)
That’s right. Yeah.

Ron Faraci (14:58.218)
at all. That’s right. you know, another advantage to seller financing is so, so Gabe, you acquire, you you said mobile home park. So you have, let’s just say, keep the number simple. You got a 10 year note with a seller at a reasonable interest rate and you get five, six years down the road. You could call him up and say, Hey, Ron, hey, listen, I got another five years left. Happy, you know, to keep going. Or I got a little bit of extra money here. You want to just call it a day. I’ll send you the money. You know, you can buy it at a discount.

Can’t do that with the bank, you know, and I’ve done that numerous times, you know.

Gabe Petersen (15:32.38)
I just processed what you just said and that makes a lot of sense as well. I haven’t even considered doing that on the notes that I own, but it makes a lot of sense because if you’re talking with a seller and you do, you we have notes that are 10, 20 years even, you can approach them and just say, hey, do you want all this money right now? I’ll give it to you at, you know, 10 % discount and then you’ll save that 10 % on the purchase price. Really smart, I like that.

Ron Faraci (15:49.218)
Yeah.

Ron Faraci (15:55.31)
That’s even more. That’s exactly right. You know, and so that was a primary methodology in which I did acquisition. Another one less or so, but another one was master leases, which is never done. I can’t understand why master lease with or without an option.

Gabe Petersen (16:14.196)
I have, sorry, I didn’t mean to jump in. I’ve attempted to do master leases multiple times and I’ve had a lot of pushback from owners. What’s your experience? How do you get them actually to accept a master lease?

Ron Faraci (16:26.12)
Yeah, so it’s really just a sales job at that point because you think about it. So I always look for things on the market for 60, 90 days. So it’s not selling. And then I’ll approach them. And a highlight to an offer would be, know, Gabe, listen, I can give you, you know, if I want to make the cash flow and I want a 20 year lease, the way, right? So I want a 20 year lease. So if I want more cash flow, I can dangle an option to you as the owner saying, well,

You’re asking $4.95 for this six unit. Well, how about if I option it for $5.95, but I need three grand a month as my payment to you. the owner thinks $5.95. You know, that’s a hundred grand more than I’m asking. Well, I may not, I probably won’t option it then, but I have the option to option it, right? So I can option it tomorrow, next year, 20 years or never.

Gabe Petersen (17:03.472)
Mm.

Ron Faraci (17:18.202)
But I’ll dangle a high option number to appeal to your sense of greed. But how do I get you to do it? It’s like, hey, Gabe, listen, you’re trying to sell this building. Your current NOI is $4,000 a month. So how about if I just give you the $4,000 a month? But here’s the thing, Gabe. You don’t have to worry about any repairs, no vacancies, none of it. The only thing you’ve got to worry about, Gabe, is where do I send the check every month for the next 20 years? $4,000. And guess what, Gabe? You still get to depreciate it because it’s your building.

You know, so you get all the tax benefit with none of the management and guaranteed rent, you know. Now, of course, I need to make the spread. the owner is typically, you know, Gabe, you’re responsible for your roof, your foundation. It’s your building. So to get the headache, and we can close this up Thursday. We don’t even need a lawyer. It’s a lease, you know. So blah, blah, blah. But you’re right. You have to kiss a lot of frogs to find your prince.

Gabe Petersen (17:47.174)
Hmm. Yes.

Right.

Gabe Petersen (18:14.051)
Interesting. I like how you mentioned the depreciation there because that is, mean, if you can, especially if they, the, if the owner hasn’t owned it that long and it’s still a lot of depreciation left on the building, that would be a good incentive to, to give, you know, give them the tax value.

Ron Faraci (18:27.944)
Or, yeah, you bring up a good point. Or how about if they have owned it a long time? Well, if they sell it outright, well, they got to pay all that back. Even in seller financing, by the way, they got to pay the depreciation in year one. You can amortize the gain, but you can’t amortize the depreciation recapture. So if they’ve owned it a long time, they may be better off not selling it because depending on a lot of variables, they may have to write a check to the IRS. That’s a big number. And ask me how I know that because I paid it.

Gabe Petersen (18:40.283)
Hmm.

Gabe Petersen (18:57.199)
Yeah, we’re actually I’m doing that right now. And I was originally going to give seller financing for this deal that I’m selling. But then I you know, I went through all the numbers and I was like, No, I just got a 1031. This the taxes are just just horrible, just horrible.

Ron Faraci (18:57.878)
You know, so.

Ron Faraci (19:10.988)
Yeah. So, so I’ll tell you, I did the same thing. So when I sold a lot of buildings about two, three years ago, I sold five buildings in one year and I held the note on four of them, but here’s how we did it. So, so I’m the bank and so I never thought as I was acquiring these things, I never thought, well, I’d sell them that way. And I got to tell you a couple, a couple of things that, so, so I sold them, just focused on one building just to keep it simple. So, so a six unit I sold with

seller financing, I owed $160,000 on the building. That’s my mortgage. So how can I be the bank if there already is a bank? Well, I don’t want a second mortgage. Second mortgage is useless, right? Because you can’t foreclose as a second. So what I did was I asked them to put 160,000 down. And of course, I used their money at closing, so I never got the money, to pay off the first mortgage. But I did a 40-year mortgage, so I’m the first position now.

I did a 40 year mortgage at 6.9 % with a 10 year balloon. So the reason I did 40 years, because remember we can do anything we want now, right? So I did 40 years because it keeps their payment low, so they get good cash flow, but also their payment to me pays off almost no principal, right? Cause it’s such a long amortization. So when they pay me off in 10 years or probably nine years, they’ve paid off almost nothing, you know.

Gabe Petersen (20:14.491)
Mmm.

Gabe Petersen (20:36.712)
Why not just do interest only?

Ron Faraci (20:39.015)
I could yes, whatever you want to negotiate. Yeah. Yeah, be interested. Yeah

Gabe Petersen (20:41.499)
Interesting. Nice. So yeah, that’s always a really important topic to go over, especially for if you’re new and you’re just getting into real estate, knowing and understanding your options knowing that you can do seller financing is so important, both on the buy and the sell side. But let’s go to the next question that I had, which is about actually, let’s talk about the REX, I feel like that’ll be a shorter conversation. But it is interesting because, you know, I’ve been to plenty of reas I actually started this podcast because

COVID hit and I’d been going to these Rias and I wanted to continue to network, but I couldn’t. And so I just started a podcast, which I really enjoy. And I always suggest people, if you want to do a podcast, do it because it’s a lot of fun. But with those Rias, they are very valuable. It’s great to be a member, to connect with other people, both to see what they’re doing and to kind of have them rub off on you and to get deals done. Cause there’s people there that are gonna bring deals to the table. So you owned one as both a member and an owner. What are…

What do you see as the benefits to both sides? Why would somebody want to purchase a RIA or start one of their own?

Ron Faraci (21:45.411)
Yeah, so depending on the RIA, I mean, it’s a business, right? It’s got a profit and P &L. You know, so we bought it as a business. It’s revenue generating value. Yeah, so it depends on the RIA. About half the RIAs out there are nonprofit. You know, they just get together and at a restaurant over coffee and just talk. Well, the other RIAs are, you know, they’re profit. You know, we change lives, we do good, but there’s a profit. So, you know, we had a coaching program.

Gabe Petersen (21:56.624)
And that’s just membership fees, right?

Gabe Petersen (22:14.373)
Mm.

Ron Faraci (22:14.486)
you know, membership, obviously. So we have monthly membership and yearly membership. And CT RIA in Connecticut was the fifth largest RIA in the United States. people don’t realize that. And also speakers. So when speakers come and sell their product, a RIA gets a percentage of that. So, but there’s also overhead, right? It costs you two grand to rent the big ballroom for that one night, you know, and all the other overhead. So it’s a legitimate business, but it’s in the business of changing lives. And I got to tell you,

I probably could count hundreds with an S of people’s lives that we changed, some of them generationally. And that’s, I got to tell you, that’s a cool experience to kind of be on the front lines of watching people go from driving a forklift to two years later, they’ve replaced their job income because they bought three buildings without a bank, you know, and

That’s a cool thing. so when I sold it, there was part of me that was like, man, I hated doing that. But it’s in good hands with this investor group. So it was a neat experience. It’s a lot of work though too.

Gabe Petersen (23:26.915)
Yeah, do you would you recommend someone say they’ve been in real estate for a couple of years, they’ve gotten their feet wet, they’re they’re kind of getting the lay of the land. They want to be networking more, would you suggest that they start their own? You know, real or meetup group or whatever, know, group based.

Ron Faraci (23:44.066)
You know, if there’s gap in the marketplace, like if you’re in Des Moines, Iowa, and I’m not saying there is or isn’t one in Des Moines, but if you’re in Des Moines, Iowa, and there’s not any centralized local meetup that, and if you feel like you can add value by doing it, absolutely start it yourself. If there’s an existing one that’s fairly robust in your area, then perhaps you’d be better off just joining that one and mining that, you know, human database, if you will.

Gabe Petersen (23:48.217)
Mm.

Ron Faraci (24:12.266)
It should be required if you’re an investor, you should at least get to know your local REIA because as you’d mentioned, that’s where the deal flow is. That’s where you can meet your eviction attorney, your closing attorney, your private lender, your hard money lender, and just partners and plus deals. So yeah, day one, hour one, join your local REIA.

Gabe Petersen (24:33.465)
Nice. So my last question that I wanted to bring up was, you know, asset managing the 800 units. However, we are already at 25 minutes into the show. It is a 20 minute long show. So I do have to us on to the quick question around. I’ll probably sprinkle in some questions regarding that that topic, but we’re going to move on to the quick question round. Are ready? All right, it starts with education. One of most important parts of real estate is is getting a good foundational education.

Ron Faraci (24:45.112)
I love it.

Ron Faraci (24:53.87)
Go for it.

Gabe Petersen (25:03.819)
So if you could point to one educational anything, could be a book you read, a conference you’ve gone to, mentorship program you’ve been a part of, anything. But just point to one educational content that you felt helped you the most.

Ron Faraci (25:17.486)
You know, for a paradigm shift, I’m going to say rich dad, poor dad, which probably a lot of people say, with good reason. So that would be my answer. I had a paradigm shift and a mindset, not so much real estate, but just in general mindset.

Gabe Petersen (25:30.031)
Yeah, yeah, that many people say that one, but for good reason. And like you said, it’s not what won’t tell you how to do real estate, but it’ll tell you why you want to do real estate. I read. Yeah, my that was the first one I read to you it really lit a fire under me. Alright, next question is for your younger self. Let’s go back to the Ron who was just getting started. can’t remember back in 2005. I think you said go back to him look. Yeah, go back to him. Look him in the eye. Give him one piece of advice. Move forward.

Ron Faraci (25:32.898)
Bye.

Ron Faraci (25:37.422)
Yeah, that’s a way to put it.

Ron Faraci (25:51.828)
Yep.

Ron Faraci (25:58.963)
probably one piece of advice is to not take it so personally in your younger years. know, rent is a day late and I’m seeing red. you know, it’s going to be a long life if you take it all personally. the person who shows the most emotion is the music, brokest one in the room.

Gabe Petersen (26:17.519)
Yeah. Yeah. And then I feel like that really just comes with experience. Eventually, you get hit in the face so many times, you’re just like, whatever, I’ll get over it.

All right, next question is about the the US. It’s a big place. There is a lot of opportunity out there. Give me the single Metro you’re most excited about investing in today.

Ron Faraci (26:41.166)
So if I were, you know, I’m out of real estate, but if I were to start back in, I’d probably go where the numbers make the most sense. I’d probably be in the Midwest somewhere, Indiana, Ohio. I think what you’re going to see is a migratory pattern to the lower cost states. You know, as people can’t afford houses, even Florida, people are leaving Florida, it’s expensive. So people want to have climbed the housing ladder.

The place to do that is in the Midwest and you get to Ohio and things like that. It’s, it’s the numbers make a lot of sense. The laws aren’t too egregious against the landlord. So that would be probably where I would begin my search and see where I end.

Gabe Petersen (27:26.811)
I actually I just watched a video, a YouTube video a couple days ago about Big Sky, Montana and about how that that city has gone from, you know, 30 years ago, 40 years ago to today. It is just it’s so unaffordable. Yeah, yeah. And the median house prior that I think that medium house price was $880,000, which is just crazy for such a small like

Ron Faraci (27:43.118)
bartenders are stealing their cars. Yeah.

Ron Faraci (27:49.538)
Green app.

Gabe Petersen (27:56.135)
Yeah, that’s Anyways, moving us on. This is about lessons learned. Not every deal we get into goes the way we expect it. In fact, pretty much every time something’s going to go wrong and that’s when we get to learn a lesson. So go back to your career. What was the deal that went a little bit sideways for you? And then what was the lesson you pulled from?

Ron Faraci (28:14.838)
I bought a building one time, sight unseen. I was on vacation. The numbers made a lot of sense. So I pulled the trigger. Then when I put my eyes on it, and this was in the beginning of my career, I didn’t realize what I was getting into. So go deep. And I was very comfortable buying, you know, I’d walk it, you know, and I’m comfortable buying it based on that, you know, structurally and all that.

But not seeing it, yeah, don’t do that. Yeah, I messed up on that one.

Gabe Petersen (28:45.521)
Ha ha ha.

Gabe Petersen (28:49.55)
Yeah, the lesson there is like, and we’ve, we’ve said this many times on the podcast is always stick to your due diligence checklist, make sure every single one of those things are checked off. because you know, you don’t, the buying is where you actually make the money. And if you don’t go through that checklist step by step,

Ron Faraci (28:57.218)
Yeah.

Ron Faraci (29:06.126)
Yeah, deal fever, right? So deal fever kicks in. You’re like, I got to buy more deals, buy more deals. And so you start relaxing your standards. And that’s what I did on this one.

Gabe Petersen (29:14.704)
Deal fever. I haven’t heard it referenced like that, but I like that. That’s happened to me so many times when I really want to close a deal. And it’s just like, finally you look at a deal and you’re just like, man, I haven’t closed one in X number of months. Let’s do it. Yeah, you got to be wary of that. That is a hard one.

Ron Faraci (29:31.266)
Do it.

Ron Faraci (29:35.694)
Yes you do.

Gabe Petersen (29:37.42)
Alright, on the flip side of that, sometimes things go right and it kind of sits in your mind as one of your favorite deals. So go back to that deal for you. What was it and step us through it.

Ron Faraci (29:47.183)
Well gosh, I’m gonna give you the last deal I ever bought. It was two years ago from my couch in Florida. I bought an eight unit building in Norwich, Connecticut. So that means it’s commercial, eight units. I had to go to a bank. They couldn’t hold the note. So okay, I go to a bank, but an unemployed guy in Florida, no problem. That’s commercial financing, right? That’s the beauty of it. So I bought it.

For $360,000 immediately had to evict. Yeah, good deal. But that’s because the city shut it down because the sewer backed up. So I had to evict five of the eight people then it was back online. The owner got it back online, but five people weren’t paying. So I evicted them, rehabbed it, got the rents up to, with a partner, it’s the only partner I’ve ever had. He brought me the deal and he did a great job. Brought the rents up to $8,700 a month and then sold it for $680, I think.

you know, within six months and I didn’t do anything. I was down in Florida. So yeah, it was an odd deal, you know, but I was in a position to be in position. So I took advantage of it.

Gabe Petersen (30:47.142)
Nice.

Gabe Petersen (30:54.298)
Nice. And that just kind of shows you like the, the good deals are not going to be stabilized. They’re not going to be, you just buy it and it sits there. They’re going to have problems. They’re going to have a backed up sewer. They’re going to have low, low occupancy for whatever reason. and you got to solve the problems and that’s where you make your money is solving those problems. So never, never, never shy away from a problem, but, make sure that that problem is baked into the price.

Ron Faraci (31:04.687)
That’s right.

Ron Faraci (31:11.311)
That’s right. Well, that’s.

Ron Faraci (31:19.851)
Yeah, we don’t run from the problem. We run to them. That’s why we make what we make.

Gabe Petersen (31:26.214)
I like it. All right. And that leads us to actually, this is the second to last question. First, we want to talk a little bit about, and I’m not sure if this is entirely relevant to what you’re doing today, but I like to ask it anyways. AI is now it’s a new thing in these past couple of years, and I’ve been trying to implement it in as many places as I can responsibly do so. So I like to ask my guests is how are you using AI in your business today to make your business work better?

Ron Faraci (31:54.713)
So I’m not really using it my business today, but I do have a quick example. So I have been doing some hard money lending on mobile home parks. And to go, I have the lawyer doing the paperwork from the other side, but I use AI to go through the legal paperwork and identify things. Now, I think we’re in its infancy, so I’m double checking AI’s answers and cross-reference Gemini with Chad, with Claude and all that, but wow.

I wouldn’t want to be in law school today. Yeah.

Gabe Petersen (32:26.032)
Yeah, I we’ve that example has been brought up a few times and I absolutely love it for legal review. I’ve given this example before but we at one of our parks, we had a cell tower company approach us wanting to put a cell tower on and we were like, this is great. They sent us over the lease and I I’d never set my eyes on a cell tower cell tower lease before and so I just threw it into perplexity and I had to review it and then I threw it in the chat and I threw it in the

Claude and into Gemini. And I, you know, tried to get an understanding of where, what the problems were, you know, from the owner’s perspective, from our perspective, what we should be negotiating. And it did a great job. I, we eventually reached out to a lawyer as well, but they just, you know, they were, they parroted exactly what the AI had said. And so it’s the, yeah. Nice. All right. Last question. This is for the listeners.

Ron Faraci (32:54.893)
Yeah, cross-referencing.

Ron Faraci (33:07.309)
Yeah.

Ron Faraci (33:14.773)
justify their bill.

Gabe Petersen (33:21.22)
You’ve given us a lot to think about. I’m sure people want to reach out, get in contact with you. This is a two parter first. Tell us about Bulletproof lease. Tell us about that business and then how can people best get in contact with you?

Ron Faraci (33:35.123)
Bulletproof lease is exactly how it sounds. It’s the actual lease I used in my portfolio. It’s 31 pages. They initial 50 or 60 times. How sad that you need a 31 page lease these days, right? Some insurance companies use it. Some lawyers use it now. So I copyrighted it and I sell it on my website, BulletproofLease.com for And people think, well, that seems like a lot. It’s like, well.

Listen, you spent hundreds of thousands on a rental property. Call up your real estate lawyer and see. Draft me a 31 page lease and see if that doesn’t cost you at least $10,000.

Gabe Petersen (34:06.384)
Yeah, and so for.

Gabe Petersen (34:16.088)
And for in the self storage industry, I also own self storage facilities. the, like the, the Texas self storage association, they sell their lease. I want to say it’s five or $700. but you have to pay that annually. You don’t get to own it. You, you have to, you’re renting the lease. I think it’s 500.

Ron Faraci (34:27.823)
Wow, that just went up.

Ron Faraci (34:33.399)
goodness. No, if you buy my lease, you own the lease. It actually comes in words so you can alter it. Because listen, there’s 10,000 different laws throughout the country, right? Laws, customs, and traditions vary everywhere. So you need to be able to edit it for your local situation and you can. So yeah, BulletproofLease.com. I’m become kind of big on TikTok, I guess. TikTok, I don’t even know what it is. Bulletproof lease. I don’t post a video every day, but almost every day.

I just try to do these little micro tips like I gave you every single day. Some of them are stupid, but they work. So that’s me in a nutshell.

Gabe Petersen (35:08.124)
Perfect. All right. Well, I will put that link in the show notes, the link to the TikTok channel and to Bulletproof lease. Pretty easy to remember though. Bulletprooflease.com. So if you guys want to reach out, all you got to do is click the little more in the description. It’s going to pull down that full description in there. You can find Ron’s links. All right, man. That wraps it up. Thank you very much for operating on the show.

Ron Faraci (35:31.257)
Gabe, thanks for having me, man. It’s been a blast.

Gabe Petersen (35:33.538)
Absolutely. For everybody who’s with us today, thank you guys for showing up. You are the reason we do this. So if you guys have any questions, reach out to me, Gabe, through real estate investing club.com. If you guys want to support the show, just leave us a review, a comment, anything like that. Other than that, I hope you guys have a great week. Keep rocking real estate and I look forward to seeing you on the next episode.