Podcast interview—Crazy Sh*t In Real Estate
Alejandro’s interview on the real estate podcast of Leigh Brown
Episode 340, “Injecting Patriotism into Real Estate Investing"
Key takeaways to listen for:
Why are most people moving to the US east coast?
How have the evolving government regulations impacted real estate?
The reason real estate is a highly emotional business
A lesson on customer service in the real estate world
Podcast Transcription:
Leigh Brown: Hello friends, I'm Leigh Brown. Welcome to Crazy Sh*t in Real Estate, which might be one of my most favorite episodes ever. So prepare to share this episode with your normie friends, because I have Alejandro Szita here. We're talking America, we're talking mortgages, we're talking customer service. I mean, it's an all purpose episode. Get ready to get fired up. I'll see you on the other side.
You’re listening to Crazy Shit in Real Estate. You’ll be amazed at all these wild but true situations that others have found themselves in. Because on this show, you’ll hear uncensored, unbelievable stories from the world of real estate. I’m Leigh Brown. Let’s dive right in.
So thank you for coming on the show.
Alejandro Szita: You’re very welcome, Leigh, thank you so much for having me.
Leigh Brown: I'm very interested to find out where you are. Obviously you're not in Hungary since you just gave that away. And let us know what you do in and around the real estate space.
Alejandro Szita: Well, I'm a real estate broker and I'm a mortgage broker in Southern California. And I specialized on doing mortgages for the self-employed, the entrepreneur, and the successful artist, which are the hardest to qualify for some reason
Leigh Brown: Because the government is afraid of self-employed people, because we have learned how to carve our own history and our own future out. And so they're scared of us, and then they make mortgages hard. But before I let you move off of that self-employed topic, and you might have lots of things to say, I'd love for you to pipe in a little bit about the change to the tax law where there are sick and family leave tax credits for self-employed people. Are you sending your people back to their accountants to amend their 2020 and 2021 returns? Because I just got mine amended to pick up those credits.
Alejandro Szita: You know, in my experience, of the self-employed people that we have worked with, they usually don't take those credits.
Leigh Brown: They should.
Alejandro Szita: I know they should.
Leigh Brown: That's money in their pocket.
Alejandro Szita: Yes, I completely agree with you. The returns are very complex. You know, I remember the last one I did, this gentleman had a 100 page, no sorry, 125 page return. And many times, like you said before, we cannot use the tax return because the self-employed take so many deductions and that usually the return is not good for the loan. So usually we don't use the tax return. Only in about 10% of cases we do that.
Leigh Brown: Well, but you're, anybody listening to this, if you're self-employed, especially if you have a corporation, a pass through entity, an S Corp, LLC, a C Core, you need to be talking to your accountants because there have been changes to the tax laws. And remember, tax credits are money back in your hands, which you could then use for your down payment on a mortgage, which helps you qualify for the note. We should always remember that. And by the way, it's your tax dollars anyway, they're printing money up there nonstop in DC and it's our money. But anyway, how did you wind up doing mortgages in addition to doing real estate? Or did real estate come first? Which one was chicken or egg?
Alejandro Szita: Well like, you know, real estate has many topics and it has many areas as you know. You can be a listing agent, you can be a buyer's agent, you can raise money for a real estate project. You can just do advice, you can do loans, you can do residential, you can do commercial and so on. And initially I just wanted to do mortgages and then here in Southern California, my broker said, you know, if you want to do mortgages, you need to get a real estate license. So basically I had to get a real estate license. I wasn't planning on using it and it was just an accident that I ended up using it and really loving it.
Leigh Brown: Well it's actually pretty common in real estate that people wind up in it because they don't know what else to do. They get a license and accidentally sell a house and suddenly 20 years later, here they are successful and kind of don't have any idea of how they wound up here, except that realtors are very good at communication and relationships and figuring things out when they have no idea what's going on. So what part of Southern California do you serve?
Alejandro Szita: I serve Los Angeles, Orange County, San Diego County. And I now have some clients in Northern California. And recently we got approved for Florida, so we can do Florida as well.
Leigh Brown: Well of course you did. People are leaving California and going to Florida and also to North Carolina. So I guess you may as well serve all the ones that are immigrating outta your side of the coastline and coming over here to the Atlantic side. And we're glad to have 'em, most of them. And so let's talk about that for just a second. Why do you think so many people are moving to the East Coast right now? Is it the tax burden? Is it the government burden? Is it frustration over covid policies or is it all those added together?
Alejandro Szita: You know, it's a little bit of all of those added together. I come from Chile. I remember in 1973 when the socialist governor was overthrown. I was about seven. I still remember the planes flying down my house bombarding the presidential palace. My brother and I were at the window wanting to see it and my mom was screaming at me and grabbed us and made us hide under the table. So to me, this is very real, you know? And the reason I came here to the United States is because I didn't want to be in that scenario again, you know? So you asked me a very personal question and if you don't want me to say anything, let me know because I'm not very politically correct.
Leigh Brown: No, I wanna talk about this because this is a real topic that very few people want to say anything about because they don't wanna offend anybody. But if we don't defend this country and explain very carefully what's happening and what the impacts could be, I think a lot of folks are gonna be caught off guard, because they really believe that the best is always going to occur. But the best only occurs if you keep the worst out of the primary position. So I wanna hear more about what you've lived through.
Alejandro Szita: Well, I completely agree with you. People are leaving California. Not just California, Oregon, Washington State, another state. Because basically in my personal opinion, and you know, like I said, you know, this is very politically incorrect. The local governments have forgotten their heritage, in my opinion. You know, when I came to the US many years ago, I remember this very interesting experience. I always believed that I was free. Children were okay, you know, but I remember when I went to get my first social security number, and then the first thing I found out is that in theory, you don't have to have a social security number. This is a voluntary thing because really the government doesn't have a right to have a number appended to you. Now, this may seem weird to younger people, because today there is a lot worse that is going on, but that stopped in my tracks.
Alejandro Szita: And I went, what? You don't have to have a number appended to your face? Because in the system that I was born in, that was like an obvious fact that it is like that. And I believe that people today think that way. But that started to open my eyes. And I can tell you this, I have lived in Europe, I have lived in South America, I've lived a little bit in New Zealand and Australia. And I can tell you that nowhere else in the world that I know of, there is this feeling that you are a sovereign individual and that the individual is prime and has a precedence or has a bigger importance than the actual collective. This reasoning that we have to sacrifice our individual liberties for the collective sounds good, but it really doesn't work.
It propels you to the wrong path economically, financially, socially. And like I said, it sounds good because we as human beings, most of us, we basically have good intentions and we want to help our fellow human beings. You know, this is what we naturally—except the very few that are completely crazy, you know, but those are very few. And you cannot get rid of those. This is how life is. But in reality, if you pursue, in my opinion, and again this, today it is politically incorrect—a few years ago, this would've been called something patriotic. But if you follow what the founding fathers laid down—which is amazing, that in the 1700s they had the foresight to do this. If you follow what they laid down, your life financially, economically, socially, would just be successful. That's all you have to do. You don't have to reinvent the wheel again. And, but that's where we are today.
Leigh Brown: I'm so glad that we went down that little rabbit hole. And I'm gonna guess, have you ever read Ayn Rand's book, Atlas Shrugged?
Alejandro Szita: Yes.
Leigh Brown: I thought you might, because there's a lot of people that get angry about that book. In fact, I don't know if you saw it, but Aaron Rogers, when he was interviewed on Peyton Manning's podcast, a copy of Atlas Shrugged was behind him. And Blue Checked Twitter [i.e. celebrities on Twitter] went nuts because they saw that book. And of course in the book, I don't agree with the fact that she was an atheist, but it's okay, we don't have to agree with everything. But she talks about the virtue of selfishness. And it's so fascinating to realize that if I'm looking out for the best, or for me, that entails the best for people around me. But if I look out for only the best for other people, I'm gonna start being lazy. Because a collective is going to always sink to the lowest common denominator, which is what's happening in the public schools when we take away the high flier sense of achievement.
And we just say, nobody should have to do math and nobody should have to do really good hard work. So I'm, I love that we chatted about this and frankly, it's the cornerstone of real estate. Because you know, as living in all those other countries, there is no such thing as private property rights. And in the US what we have for property rights is constantly under attack because there's always somebody who thinks they know better than we do, what we should do with the property that we own. So I'm curious as to how your personal history and what you've seen of tyrannical authoritarian governments has impacted how you serve your clients through mortgage and real estate.
Alejandro Szita: One of the things that I can tell you, there is one story that I would like to tell you, because to me it was life changing. When I was like seven years of age, I went to my dad. I had read something on the newspaper and I said to my dad, hey dad, is it true that I don't even remember what it was, but this is what I remember. I asked him the question, is it true that this and this and that? And he usually would answer my questions. They would be very interesting questions. He was an engineer. He was from Hungary, he had traveled to many countries and his answers were always very constructive to me. But this time he just looked at me and he said, where did you get that from? And I said, well, I read it in the newspaper.
And then he looked at me again and he said, do you believe what's in the newspaper? And then that was shocking to me because I never thought that I should not. That thought had never entered my mind. And the moral of the story is not that the newspapers lie, because they do, but that's not what I'm trying to say. It is that he basically told me, without these words: you have to look, you have to evaluate the information that you are being given. Don't take it as a given, simply because the source seems a learned source. So to answer your question, this is what I learned and it was hard for me, is that if I'm in a real estate transaction and the buyer or the seller or my borrower wants me to do a certain thing that I know is not ideal, in the past I used to try to force them.
And then I realize, no, this is their transaction, this is their money. I'm gonna do my job. I'm going to advise them as to what I believe they should do. But if they decide to actually discard it and still do what they want to do, I'm just going to like, I'm going to support them the best I can, even though I personally don't agree with it. And I'm going to go ahead and do what they want to do. This is how real estate ties into this. The individual has precedence over the actual collective and he's paying me. So he wants me to do this, I'll do it.
Leigh Brown: We all need to learn from your dad. It's the whole Reagan phrase of "trust but verify", right? You can believe what you're rating, but you should always ask more questions and go one step deeper, which is what a true real estate professional does is, all right, so we see the disclosure documents, now let's go verify with the county what the zoning actually is. Let's go check the water and sewer situation. What are the monthly utilities? And many of our clients asked us these questions. And the great realtors are always out there one step ahead of 'em asking additional questions and not just believing what they see. And frankly, the mortgage side saw this big time in the last recession, because we had all those stated income loans and no doc loans. And people told lies because they could get away with it. But your best mortgage brokers were never in jail for fraud. And they were never tangled up in that stuff because they all went one step deeper. So high five the dad, because he gave us a good lesson for the day, and make sure that you tell him if he, you still have your dad. Is he still alive?
Alejandro Szita: No, unfortunately, he died in 1982.
Leigh Brown: Okay, so dad, we're talking about you today and it's all good. All right. So of course, we are way off track today, but this is now one of my favorite episodes of all time, and I didn't know you were gonna give me the good patriotics then, Alejandro, you're my favorite. So I'd love to know what story you came to the podcast to tell today, because I know my audience is into the things in real estate, the angles that they've never expected to hear about. And frankly, we've already given 'em a little of that. But I know you came with a story to tell. So what do you have?
Alejandro Szita: Yes, I have many very crazy stories, but I was thinking which one to tell you. And it's gonna be this.
One thing that I have to warn you, and you already know this and your audience already knows this, but real estate is a highly emotional business. Even a mortgage broker. It's not about the numbers, it's about people's perceptions, people's goals. And this is the story. I met, because I speak Spanish, you know, I come from Chile. I met these investors, you know, from a Latin American country. And they asked me to get them a loan on a 12 unit complex they had built. They had built these beautiful townhomes, you know, high-end luxury homes. And they had sold a few, the project had taken a little longer, you know, they needed some money and they asked me to give them a loan as a project. And I started to do that.
In the middle of getting them the loan for the project, they said, hey Alejandro, do you do residential loans too? And I go, yes, of course I do residential loan. As a matter of fact, most of my loans are residentials. They go, you know, we have a client in one of the units, can you get them a loan? Because if you get them a loan with the money that we're going to get from the sale, then we don't have to do this big expensive loan that you're looking for us for. And I said, okay, I'll talk to him. I talked to him. This person is a VIP, he's a fashion designer, he's a rapper. And then he, you know, I have never met a better rapper before. My dad, by the way, my grandfather was a fashion designer, so I had a little bit of a, yes. But he has a completely different culture, a completely different type of working hours, and a completely different set of values.
The loan was very, very, very difficult. And then in the process of doing the loan, he, my borrower, now got upset with the developer, my client. Very upset. They're really got at each other's throats. So I said, you know what? This is not working. I just need to go in person. I need to diffuse the situation. When I went to see the borrower in person, I met his realtor. His realtor is suspicious of me. He's going, why is the developer's lender coming to see my client? So he thought there was some kind of an ulterior motive. So I had to gain his confidence, his trust. Just to make a long story short, the loan was extremely complicated. The seller, my client, called me one day, and he said, Alejandro, I don't wanna do this. I don't wanna sell it to him. He's this, he's that, blah, blah, blah, blah.
He started to rant on the phone, scream on the phone. I wanna cancel the transaction. And even though I'm just a loan guy, you know, I'm not the buyer's agent, I'm not a listing agent, but because I'm a realtor too, I said, hey, you can't do this. You already signed a contract and the buyer, as much as you don't like him, he has not broken the contract. There is not a contractual reason why you can get rid of him. And this went on and on and on for like two or three months. It was so terrible. But because I knew the investors, I don't know if you're following me so far, this is getting a little complicated, but because I knew the investors of the project, I started to talk to the investors too. And to make a long story short, at the very last minute when the whole hell had broken loose, when the seller, my client and the borrower, my client also, were like at each other's throat and screaming at each other and threatening each other and so on and so on, the loan got done.
Leigh Brown: Of course. So did they make up after closing happened?
Alejandro Szita: No.
Leigh Brown: Did that investor ever back that seller again, or were they hesitant about them with everything that felt like it was out cost purposes?
Alejandro Szita: The investors were very happy because they got money too, and this is a beautiful project, but unfortunately they went a little bit like avant-garde, meaning that they built in a neighborhood that is up and coming, but it wasn't up and coming yet to the level of quality that they did. So they were the most expensive in the neighborhood, not just by a little—by far. So that's why they had a little bit of difficulty selling the units.
Leigh Brown: Gotcha. So in looking back, would you have represented that borrower again or do you wish you had let somebody else handle them?
Alejandro Szita: No, I'm very glad that I'm representing the borrower because you know, this is when the opportunity comes from the unexpected corner. What happened is that I ended up befriending the buyer's agent. We became such good friends. We've done four transactions so far together, and we're a wonderful team now.
Leigh Brown: So you took all the rough scenario and with a lot of communication, held everything together, most importantly with your professional colleague.
Alejandro Szita: Yes, but you know, this has happened to me from the very first loan. I remember the very first loan, I used to live in San Diego, I was driving north. This woman calls me, she starts to insult me over the phone. But very quickly, I'm gonna tell you another story if I may, which I will never forget. I was like 12 or 13. My dad had traveled to the US, we were in a store in South Florida. He was buying some kind of electronic equipment and we had to wait, because the salesman at the electronic store was on the phone talking to an irate customer. And you could see that the other guy on the other line was insulting him really badly. And I never forgot how this professional salesman, he didn't get upset. He said, I'm sorry Sir you had that experience. Please bring it back. We'll gladly refund your money. And then please talk to me, and we'll give you another unit. And he had to repeat it over and over and over, over all the insults of this other guy. And that marked me. After I saw that, I thought, wow, this is how you have to behave when this happens to you. And this has happened to me many times because real estate is highly emotional, you know.
Leigh Brown: It is. And especially in today's world where people are already on the thinnest level of grace they have left. They're so frustrated about everything and then people, me included, like I lash out at the thing that frustrates me at the wrong time. But that experience that you had watching that man manage somebody who was so angry they couldn't hear that he was offering them a solution, man, that's a life lesson for everybody. If you just get quiet for a second, you may find the solution is being offered. And we have to remember that in dealing with real estate. Because as you've said a couple of times, it is a highly emotional process. And I think sometimes realtors forget that, when we get in the thick of trying to win and handling all the details, that client is going to live there in this residential property and lay their head down there to go to sleep at night. And if you're an investor, your tenants are gonna sleep there at night, and people wanna have somewhere that's safe and secure where they can make it theirs for a long time. So I love that you've given us a couple of different angles there. So Alejandro, if anybody's looking for a real estate broker or a mortgage professional in Southern California and soon to be in Northern California, how is it best for them to find you?
Alejandro Szita: The best is to email me. Go to info@prosperitylending.us. Info@prosperitylending.us. That's the best way to reach me.
Leigh Brown: I notice you're smart enough not to put a difficult to spell name in your email address. So well done, well done. And that's Alejandro's detail, y'all. And so all of his contact information, including that email address are in the show notes for this episode. So if you click on the link, you'll have all of his information so you can connect, ask questions, and talk to a professional in the Southern California market who absolutely understands how awesome this country is and might help you regain a little bit of your own love of country. In the meantime, give him some love down in the comments. A whole string of American flag emojis is a very appropriate thing. If you wanna toss Chile in once in a while, we're cool with that too. And make sure you've subscribed for more. Hit the bell so you don't miss an episode. We'll see you next time over here on Crazy Sh*t.
