Podcast Episode 103 Transcript

Episode 103: Reinvesting Sports Betting Winnings Into Real Estate with Federico Aristizabal

Are you ready to bring your real estate game to the next level? My name is James Prendamano. I'm the CEO and founder of Prereal. And over the past 25 years, I've closed over a billion dollars in transactional real estate. Each week, a meeting with outstanding investors, high performing individuals, and visionaries operating in the real estate space. These are the people that are actually out there in the real estate game right now getting it done. This podcast aims at bringing anyone's game to the next level. This is the Prereal podcast. Welcome, everyone, to the Prereal podcast. We're going to switch things up a little bit today. We've been so heavy on what's happening in the economy and the multi families and where the next opportunity is and interest rates and inflation and all that insanity that we're trying to cope with. We're joined by Federico Aristizabal. He got an amazing story. He's a sports analyst, real estate investor. He has a sports site that we'll get into a bit, and he's using the proceeds from that to fund his real estate passion. So, Federico, thank you so much for taking the time to join us today. Yeah, thank you, James. Excited to be here. Yeah, same here. I think we're going to have some fun in the episode. So why don't we first talk a little bit about your background? Where did you grow up and how did you fall into let's start with the sports stuff. How do you fall into the sports stuff? Yeah. So I was born in Colombia and I migrated here when I was five years old. I've been a sports fan my whole life. I played baseball early on and played soccer my whole basically teenage years. Throughout the time, me and my dad got into basketball and football pretty heavily. We go to Heat games in the office, a lot of games, a lot. And I started developing this curiosity towards sports betting. I saw basically this ad once I was on Facebook, and it was Bovada, where they provided basically sports lines and sports bets. And I basically dabbled into it and deposited a couple of bucks. At the time, I was working at Wingstop. It was my first job, and at first it didn't go too well. But I'm the type of person that I'm curious and I like to find out who's the best at something, and I dive into that. So I did that with the sports side of it. I found Billy Walters, which arguably one of the best ones to ever exist. He got banned from every casino. They didn't allow him to bet because he was so good at it. And I started seeing what he was doing, started developing trends, started talking to buddies that was into it too. And in college, I was doing it more consistently and my friends started noticing that I was doing really good at it, especially my fraternity, because they were the ones that were in the books and they started selling all my plates and I started noticing I had something going and I started selling plays there through my buddies. So we had basically a sales team, but not officially officially, but basically they sold my pigs. And that's how it worked. I graduated college, Florida State, 2017, and I got a job at Morgan Stanley. Took the whole 9th to five route. And the first seven months of Morgan Stanley I was studying for my Series Seven and 66, so I didn't really have time to think of anything else. After the seven months came along. I wasn't really too fulfilled with that area doing the whole nine to five. And I knew there was more to life, at least for me. I knew I could make more with sales or starting my own business. And I dabbled into the mortgage side of it. Didn't really work out, didn't like it. And that's where I started doing real estate. I started working in this brokerage called New Western Acquisition as a wholesaler. It's called Disposition Agent at the time, and at the time it gave me more freedom because it was 1099 to start this page. The idea actually grew when I went to see Tony Robbins and Gary Vee in person, and they started explaining how ecommerce was anything, how it was going to grow and people should all get into it. And so I was like, man, why not? Let's give it a shot as a side hustle, as a hobby. Not really thinking much of it. And it blew up. It blew up out of proportion more than I thought it would. And now I have a team of twelve assistants, people getting leads for me, a sales team, a marketing team, and growing, and all the money I get from that I invested in my business or into real estate. That's a lot of ground to cover there and a hell of a lot of initiatives that you not only undertook, but you've had amazing success. The sports gaming site was featured in The New York Times. I mean, you're renowned here. I have a couple of fun questions and we'll get into the heavier stuff. So back in college when you're identifying your picks or your plays, was it a particular sport? MLB and NBA. MLB and NBA. And did you begin to see an opportunity to use technology in the application? In the application, yes. So it was a group of us at first it started and one of my buddies is an engineer background, and he created an algorithm. So basically this algorithm, what it does is it creates our own lines. Las Vegas comes out daily with lines, and my algorithm creates its own lines. Typically, just a long story short, anytime I find a big discrepancy between their line and my line and everything checks off, then the bigger the play. But yeah, I use technology and I utilize a lot of my buddies at the time. That's remarkable. Over a million dollars in earnings from 2017. You start this page, which again, I guess you're telling the world like I tell the world, hey, real estate ideas and tips and trends and market shifts that are coming. You're doing this on the sport side and it explodes, right? So can you talk to us in a little bit more detail? I'm curious. You go and you see Gary Vee. You go and you see Tony Robbins. You put up a page, right? And then what? Like, was there a mentor or somebody that is helping you along the way here? So I started off and I started taking courses. One of the most influential person and course I took was Tai Lopez, because he taught you. What really took it off was Facebook ads and Facebook marketing. And I started taking classes on that, on how to properly promote, how to write my captions. It was all me at first. And then as I started making money, I started hiring people to do the websites and the things I don't know how to do, particularly along the way, I did get coaches and mentors, but not to start off. I invested in that to help me grow, because there was points in time where I didn't know what to do and there was no growth. And at the time I had no business background. It was my first time really doing this. So, yeah, I got a coach and he guided me through Facebook ads and how to network a little bit better, and my personal brand, and a whole bunch of different ways to grow my brand. So the gaming site, is that legal now in every state? No, not in every state. So it's, to me, very interesting because it's one of those things where each year there's more and more users, each year there's more states legalizing it. I'm currently in Florida and they legalize it here for a bit. I think it was about two months, and then a judge ruled it down. But it's trending that way. Every state I believe in the next five years will have legal sports betting. Well, I tend to agree. I personally think it's ludicrous that there's regulations that prevent that at this point, but that's another story. So the venture starts to take off. Did you go to college for marketing or no, no, my college background was economics. This is fascinating and it's such a testament to we talk about this a lot on the show. There's nothing that you can't do today if you're willing to put the time and energy into researching it. There are so many resources available out there to help you and no marketing background whatsoever. And now you've got this site. How many users are you guys seeing a month there? So, right now we currently have over 1000 members, 1200 to be exact. And I started a new community through my personal brand because my packages tend to be a little expensive and I tend to target bigger clients, people that have bigger money to bet with. So I started this community now where it's a little more an all in one community. It's in discord. It's not just sports betting, it has real estate, it has the challenge. I'm currently doing the 75 part challenge. I'm not sure if you're familiar with it, but it's a challenge. 75 days regular workout, you can't drink, you got to have a diet and so on. So it's pretty cool because I developed this community and now everybody's interacting and I did a contest within the challenge. So if everybody completes it, or whoever completes it with me, I give them $100. So I'm trying to grow that side, that community side. But I believe by the end of the year that community should have over 1000 people. And in AFsports, which is my main page, I have 1200 something. Unbelievable. Yeah. So on your page, if I'm not a member, can I go and place wagers? Or is it you join and then you give the tips and you place the bets through the portal? Yeah, you don't place the bets through my site or you have to find your own book or be in a casino. My site is primarily designed for you to buy a package a day, a week, or you join the community and I provide you with picks for the time frame that you buy the package. Now, do you cover fantasy sports? Not too much. I go into detail, I give little tips, but it's not necessarily something I'm telling you, hey, put your money here. We do dabble around with the group and talk who we're going to take and who's doing good and who not. Yet in that sense it's fun. But no, I don't really give pics on that. Amazing stuff, man. And what sports are you covering on the site? Your tips are geared towards what sports, so it's pretty much all American sports. MLB, NBA, college football, college basketball, college and NBA, NFL. I don't really touch hockey. Not too familiar with it, not too good with it. And soccer, surprisingly, I grew up playing soccer and I know soccer back and forth, but I do not touch soccer either, or tennis or golf, really. Just football, basketball, baseball. And the information that you're providing, is it more centered around anomalies that you're finding in the lines or is it centered around the advantages or disadvantages that you're seeing in particular match ups or particular events? So there's a lot that goes into it. Primarily the lines that we come up. It's a big part of it. But for example, let's say tonight, well, not tonight, but the final Celtic Warriors that's going on right now. There was a trend, for example, for game three, and it was Scott Foster, the referee. The Celtics were seven and one when he was refereeing. My line gave me warriors particularly, so I stayed away from it just because of that trend. A lot goes into whether umpire, reps, line ups, a lot goes into it, but every piece of information is important. I typically wait till the very end to send my place probably like 30 minutes before the game starts just to have every piece of detail I need to know. It's amazing to me how integral and how many elements that go into that type of an evaluation. Folks that are not familiar with it would never dream of things like you're saying a ref has a certain trend or did the team's plane get delayed the night before and there was an issue. There's so many factors that go into it. That's amazing, man. Congratulations on that. It's outstanding. So you're doing this and you say, hey, I want to now start playing in the real estate game. So you mentioned a couple of things. There arbitrage wholesale for everyone's benefit. Define let's start with arbitrage. What is real estate? Arbitrage? So arbitrage in the sense of airbnb is basically not everybody has the funds to go out and buy a property. I have the capital to do that. So I guess the more effective and cheaper way to go about it is to find owners of properties that are interested in renting the property out. Now, when you do all your due diligence, look at the numbers. Basically. For example, property I'm looking at, Fort Lauderdale, I'm about to sign a 24 month lease. The rent that he's charging for the property is $3,700. And the property itself is projected to bring anywhere from $9000 to $12,000 each month projected. Obviously there's a shock in the economy, so we got to be a little more conservative. So let's say just because of everything that's going on, let's say $7,000, that profit margin each month is what I'm making. And in a sense, it's just like I said, it's easier to acquire a property if you don't have the funds to buy right away. And here in Fort Lauderdale and South Florida, properties are off the roof right now. It's an easier route to take, folks, for those of you that are interested in getting into the game but you haven't sourced your first down payment or you're not quite ready to make that move. What Federico is explaining here essentially is a lot of times there are property owners that either are not willing to deal with the hassle of like an Airbnb or deal with multiple tenants. They've got a mortgage and they want to be able to cover their mortgage plus a few dollars, depending on the individual circumstance. And here comes Federico and says, hey, I'm going to sign this lease for the next twelve months. You don't have to worry about it. The payments are going to be there. And based on his algorithms, his market research and opportunity, he knows that he can never take possession, never actually go into the apartment, but then go ahead and put it on the internet, reach folks that are willing to pay a premium for it, particularly in this case in an airbnb instance. And you get to keep the spread. You don't own the house, you don't have to deal with the mortgage and the taxes and the insurance and utility, all that other nonsense. You're just a tenant that's essentially subletting and keeping the spread. It's interesting that you brought arbitrary up. We do a lot of commercial real estate here and with what's happening in the market now look, retail has undergone what we call the retail apocalypse way back in 2008, nine and ten, a transformation. And there's a lot of vacant space, candidly in a number of markets. And we think that there's a huge opportunity instead of having to go out, we're looking at a building now, it's $15 million. Instead of having to go out and source a huge chunk of capital doing exactly that. Master leasing. The asset ownership is happy because they're getting the number that they want every month and at the end of 49 years they get to keep it. We're experts in retail and leasing, so we're going to come in and sign the deal up. The owner gets X and we get to keep everything on top of it. And at the end of the 49 years, the property goes back and we don't have to come up with any of the money down. It's a really model. You also said you were doing work and you were a top performer as a wholesaler. So let's do that again, explain to the audience what wholesaling is about for sure. So after Morgan Stanley, I did a mortgage gig, which didn't really work out. And so it was funny how it works, how life works at times because I just went in my break and I was just fed up because they promised they were going to promote me and they didn't. And I sound like I didn't open it for real estate gig. And I've always had an interest in real estate. I had read books on flipping the bigger pockets, books for example. And I applied, they gave me a call, I went and interviewed and got hired. So it's new Western acquisition and they throw you in the fire right away because a, it's a 1099. So you don't make any salary unless you sell. And you got to learn the ins and outs of real estate to start selling, which typically takes around two to three months for you to gain investors for you to gain the knowledge of how to analyze the property and all that good stuff. So I started off the first couple of months, struggled also that's when I started as sports too, but I was trying to get a sale and manage that at the time and that's when things really started getting interesting for me in the sense that's when I started waking up really early, started waking up at 04:00 a.m.. And that's when things picked up because I had time to, in the morning, do everything for my page and then the rest of the day at Properties Real Estate. So started off, my first sale came in in months, three months, four. I had three sales and then month 5678 and I was there for eleven months. I started ranking up anywhere from five to seven deals a month, which typically every sales or disposition agents in the office was averaging anywhere from two to three, max four. So right there I basically learned everything about it. And after month eleven, I felt that I could make more doing it myself and starting it by myself. And so I did. I left the brokerage and I started doing by myself, primarily with three investors that were really close. And those next three years I was building a sports and wholesale at the same time. And then I started getting into flipping after I build up my capital, but specifically wholesaling. What do you mean by wholesaling? Let's explain to the audience exactly what that is. Yeah, so basically what wholesaling is, let's say, for example, what I did, for example, that really was effective for me was put signs at night. So what I would put were signs outside in the street and said, I buy houses. Cash. Typically what that attracts is the seller that needs the cash as soon as possible. And here comes me. I'm the middleman, let's say, that has the buyer in the back end, which was the investors that I brought along from the Western acquisition that I rated by the property cash to flip it, to rent it, whatever they want to do with it. So I negotiate terms with the seller and I asked for a price. I basically tell them that we could close in a week to two weeks or whenever they're ready. Cash, no inspection. I usually try to get one or two days in inspection, but if I can't, I can't. If I know I have the buyer on the back end, then perfect, we'll go through with it. So typically, let's say I negotiate the property for $85,000. Then I go to my investor and I sell it to them for, let's say 95, $100,000. And there are two ways to go about it. You could go and double close in an office, or I typically just assign the contract. You assign the contract to the end buyer, which is my investor. They do see the fee that you're charging them, but typically if they're going to make money on the deal and the numbers work for them, they won't really care. So I only had one issue once when they saw my fee and we ended up talking it out. But the numbers work for him. So I wanted to make the most I could on the deal. But yeah, that's basically what wholesaling is. Yeah, I learned a long time ago you don't count what's in someone else's pocket, brother. If the deal works for you, that's all that matters. So what Federico is doing here is finding sellers typically distress sales. We target delinquent taxes. That's the one that's worked for us. And there's a ton of sites out there, folks, that have all sorts of information, information that you couldn't even imagine that they chronicle, but they do. And you're able to pick lists and really get hyper focused in your data and in your targets. And in many instances he's not even closing on the property. He's finding a piece that for example, let's say the market value is $100,000. He's buying it somewhere probably between 25 and $50,000. Then he's wholesaling it to an investor still at a discount to market. Right. So that investors probably buying at around 70 or $75,000. You keep the piece in the middle and if it's an assignment, are you getting paid at assignment or are they holding you up until you close? It depends on the deal. Typically I try to get paid at assignments. So he has contract with the seller, he assigns it, which you have to make sure folks, you have assignment rights in your contract. He assigns it to his investor and the investor takes the piece down. They end up closing. You take your piece in the middle and the investor still has a lot of upside on the back end of it. And people right away say to me, well, why doesn't the investor just do that? It is an easy guy. It's a lot of hard work, it's a lot of research, it's a lot of rejection getting out there and finding the people. Into many investors, time is their absolute most precious commodity. They don't have the time to go do that kind of homework. So if you could provide a healthy pipeline of wholesale deals, again, they're buying it at a nice discount to market. So their margins are still there and they're happy to do it. Exactly. And typically investors are more worried about making their money work and having deals come in and signing on the deals, renting the property out. And then there comes people like me, which I'll start off the time. And that was a great way to start a real estate network. Grow your connections and learn everything about it. Because you'll learn everything about it when you wholesale. So you've got 1200 members on the sports site. You've closed over 200 transactions on the real estate side. One of the goals that I understand as you moved into real estate was to pay off your parent's house. Yes. Big goal of mine, it's been writing it down that I'm going to pay each Christmas off for the last four years. And is that something that you think is in reach? It is. I think this is going to be the year. Very excited. Try not to ruin the surprise. That's amazing stuff, man. Bless you for it. Your personal brand. You're spending a lot of time building the personal brand. You have a podcast coming up? I do, yes. I'm actually in that process right now of getting eight to ten episodes up. Not up, but recorded before I launch it and getting all the logos and all that done right now. But yeah, I'm excited for that. It's going to be called Winning Ways with Fred. Say it again. Winning Ways with Fred. Winning Ways with Fred. Yeah. I love it. I understand you also have he's a great follower on Instagram, by the way, guys. And as always, all the links will be below, but you'll find everything there from stock tips to real estate tips to sport tips. It's a really interesting platform there. I've never seen all the different disciplines pull together in one spot. What's the big picture look like for you? What's tomorrow, what's the day after that? Where do you think this thing goes? I believe that sports betting is growing exponentially, right. And I believe eventually down the line, as I build my data and my customers, I'll be able to sell it off or sell a portion of it. So a big sports book like drafting or fan duel, not necessarily saying I'll do it, but I can see that being in the future now. Right now, my day to day and what I'm focused on is growing. It. The community that I have. I really want to let it be self sufficient, and I want to add a little twist to it. So it's not just about me and my picks there. I've added two other sports analysts there, basically for sports that I don't do, golf and tennis. So now people will have different channels to choose from. One of my good friends that I worked with in Morgan Stanley, he's still there, and so he's the one that handles the market side of it. It's not like he's giving you necessarily tips, but he's guiding you. So he posts the charts, the Spikes chart, which attracts the SMP, and he gives you basically trends and indicators of what's going to happen based on the chart. So it's more educational in that sense and not really tips the real estate out of it. I post a lot there, my projects, what I'm doing, how I analyze it, post all my spreadsheets and all that. But that's what I'm really concentrating on, growing that community. I think it could be a big impact down the line. I want to add Yoga, my monthly yoga instructor. Add yoga, health and wellness things, weights basically help them improve their mindset and their day to day lives. So that's the bigger picture on that side. And with AFSports, which is my main page, with Sports Only there, I'm growing my sales team, and the idea behind it is to continue growing and growing and growing it and be the face of sports betting. Is your passion more in the sports side or is it more on the real estate side? James I think my passion, and I've come to narrow this down, is helping people. And one thing that really excites me is really the community, because the community, yes, it's sports picks and sports is awesome. It's my passion. I've watched sports all my life. Right. They're always going to be there now in the sense of the sense of the community. I love it because people are interacting and motivating each other. Like that section that I have on the Challenge, not everybody hits the gym there, or used to not hit the gym every day. Now they are and they're motivating each other. So it's cool to see that in a way, that community is making an impact and helping others. So I think that's more of my passion and what I want to focus on, and then the money I make. Obviously, I love real estate. I'll continue investing in it. I do have a partner up in Tampa. He runs his brokerage there too. So on that side, he basically funnels in the deals. I still get deals too, but it's not my primary focus to grow right now. And on the real estate side, is there any particular typology, multifamily, airbnbs? Is there any specific discipline that you're focused on? Right now we're looking for airbnb or multifamily. That's the goal. Right now we're looking to add anywhere from two to three multi families from six to ten doors each year and continue growing. That now my future in real estate is I want to continue investing and building my portfolio primarily in multi families and eventually down the line, going into apartments and commercial and down the line I have a big portfolio, have the residual income, basically feed my lifestyle and continue pumping on, growing my personal brand and trying to get more reach to help people grow. Look, we're headed into, at a minimum, uncertain times in the economy. Is it your sense that the sports site will perform better or worse as the economy shifts? I had a little taste, and I can't say it's the same, but when Covid hit and sports really went down, at that point in time, I had to figure it out. So I started doing soccer, small plays, but surprisingly, it grew more in that time. Not sure why. I thought it wasn't going to work out at all, but it did. I think as long as you're providing results, people are going to buy your package and stick with you. That's the thing. If you're providing results in the industry, people continue following and buying your packages, which I do long term. I'm not saying I'm perfect. I'm not saying I went every day or every week. I have losing week and losing months too. But in the long run, I profit and I have, and my clients know that, and that's what has helped me build the clientele I have. So we'll see. I believe we'll continue growing. Do you have any desire to become like, a syndicate in real estate or a fund? Do you want to start a fund at some point? What's the big picture plan there? Yeah, so down the line, my idea is I have three types of packages the community, which is $75 a month to help you start building your bankroll and be in the community. Then my AFSports packages, which I charge $500 a week and $200 a day. And then I have my VIP group, which is the big ticket item. And that's the goal, to get people to the big ticket item or find the wheels, I guess you could say, within my group that have the funds to invest in higher end packages. And down the line, I do want to create some sort of funds where I can get capital and start investing in bigger projects. Yes, that's actually something that I've already talked to two of my clients about that. They're in the banking side, but they've seen what I'm doing and they're in both the community and in the AFSports. And they've been following me now for I've had them as clients for almost three years. So yeah, that's an idea for the future. Amazing ambitions, tremendous amount of success at a young age. Congratulations on all of it. Where's the best place for folks to find you? So my instagram is Federico, at least four. That's a little long, but I think you'll have it in the podcast info. And my sports page is called AFSports. AFSports with two S at the end. Those are the best ways to find me. Well, as always, folks, all the links will be down below. Federico, thank you so much for joining us today. Best of luck, man. Great stuff. Thank you, James. As always, everyone, please stay safe.