Real Estate Investor, Mentor, and Entrepreneur
Mike Cantu has been a friend of The Norris Group for almost 30 years. Along with having a portfolio of well-located rentals, Mike has been a very successful flipper, land developer, and on occasion teacher and mentor to investors. His disciplined approach and the willingness to keep learning set him apart from all other investors.
The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
Episode Notes:
Narrator This is The Norris Group’s real estate investor radio show, the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever changing real estate market hosted by author, investor and hard money lender, Bruce Norris. The Norris Group proudly presents our 14th annual award winning event I Survived Real Estate industry experts join Bruce and Aaron Norris to discuss evolving industry trends, real estate bubbles, inflation, and opportunities emerging for real estate professionals all proceeds from the event benefit Make-a-Wish and St. Jude Children’s Research Hospital.
Bruce Norris Thank you for joining us. My name is Bruce Norris and today our special guests is Mike Cantu. I’ve known Mike for almost 30 years along with having a portfolio of well located rentals. Mike has been a very successful flipper, land developer, and on occasion teacher and mentor to investors, from my point of view is disciplined approach and the willingness to keep learning set him apart. So Mike, welcome back to, to our radio shows.
Mike Cantu Thanks for having me, Bruce.
Bruce Norris I’m always interested to know if as a kid, people were entrepreneurial. So, did you have an entrepreneurial side of you that was early? And you could say yeah, that’s well that’s not everybody’s doing this. You were entrepreneurial from along from early age.
Mike Cantu Yes, I was Bruce, but it was having necessity not by choice say I never got an allowance as a kid and I have friends that lived south of the school I went to that were much better off, they had allowances and nice stuff and I was kind of wanted some of that asked my dad for an allowance and he thought that was hilarious. And instead I got a used lawn mower with an invoice for $40 for the parts and three addresses and explain that that was my new allowance. So, I started cutting grass that was probably in about fourth grade and somewhere around that same time. Yes, I sold candy at school, I would take my 25 cent lunch money go to 711 and buy packs of Starburst and he got 12 pieces in a pack and I sold them for a nickel apiece so I converted lunch money and then I was able to trade Starburst for the lunches anyways so I got the best of both worlds. I got my lunch and I got some money out of it.
Bruce Norris Was there someone in your life that you watched be entrepreneurial? Or is this was like there was a seed in you?
Mike Cantu That these were all light bulbs going off enlightenment hey, if I do this, maybe I can do that. And yeah, I besides the candy selling I work a straight and aluminum can drive I had a friend I had the bike I made a stick with a nail on the end of it duct taped it together. I supplied the trash bags, but he did the, he climbed into the dumpster. I would ride them over to the apartments on the handlebars of my bike. So, he did the dirty work. I supplied everything had the idea. And he smashed them up and then we turned them in and it wasn’t quite a 50/50 split. His mom came over after a whole summer and asked why he only made that much money, which was I’m embarrassed to say but it was about 10% of the hall. And I explained that I was the boss he was the worker and explained to her how business worked.
Bruce Norris And, and, you in what, what grade?
Mike Cantu Fourth grade. That was, that was fourth grade. And then we, there was a huge apartment complex, probably a good four or 500 units. And then I got the idea that we’re going to do a bottle drive. And it was only for returnable coke bottles and we came, I came up with a pitch it was something about the Colony Park Youth Basketball Association fall season, new uniforms, and equipments. Oh, I wanted a basketball so that was legit. And we did the bottle drive made lots of money spent a lot of it on Slurpees and Yo-Yos and stuff like that, that you bought in elementary school.
Bruce Norris Was there…
Mike Cantu I didn’t… Go ahead.
Bruce Norris I’m just curious. Did you, Did you recognize anyone else in your class with the same bent?
Mike Cantu No, no, nobody was doing that. That, that was I thought I was on to something I really didn’t care to share with a lot of people. I thought I’m gonna build this one for all it’s worth.
Bruce Norris That’s just amazing. I mean, honestly, that that’s amazing. I was that was definitely not part of what I would I viewed. I didn’t know anybody like that. And it took a long time for me to figure out that I could actually work for myself instead of someone else. But I don’t think you ever have. You’ve worked for Mick Blackwell for a very short length of time.
Mike Cantu And then we became partners.
Bruce Norris Yes.
Mike Cantu I did. I did go through a series of jobs in about a four month period, there must have been six or seven of them. And I realized I’m not cut out for any of that stuff. That was my 16 somewhere teenage years. I went through some strange period there. And I thought, no, none of this is for me.
Bruce Norris Where did the skateboard skill come in? And how did you end up getting on the national team?
Mike Cantu I went surfing when I was in seventh grade. And I absolutely loved every second of it. But I lived an hour from the beach. And so when I got home that was out. And I thought next best thing is going to be skateboarding. So, I put together a skateboard and my dad helped me make it. The first one came from a pair of roller rink skates that we dissected and I wouldn’t became obsessed with it. I, there was a point where I think my feet were stuck to the grip tape of a skateboard on average, about eight hours a day. So, it was transportation. It was entertainment. It was passion. It was I thought this I, can go a long ways with this. But it was never intended to be a professional skateboarder that’s just ordered ended up.
Bruce Norris And how did it end up like that?
Mike Cantu I was asked I, I was at pipeline skatepark and Pepsi had put together a Pepsi skateboard team and guy that I had met Stacy Peralta asked me if I want to be on Pepsi skateboard team, I told him I was just started my junior year of high school. And he said, that’s not going to work. So I looked into it and I ended up taking the high school proficiency test and passed it so I didn’t have to go to school and off I went to be a pro skateboarder.
Bruce Norris So, you got to graduate basically in your junior year?
Mike Cantu No, I got a proficiency diploma that basically said I had passed the test covering everything that they teach you in high school.
Bruce Norris Okay.
Mike Cantu And at that point, Bruce, I thought I knew it all. In fact, I think I told somebody I know everything there is to know now except two things. And they haven’t been invented yet, so I’m not going to worry about it.
Bruce Norris Okay.
Mike Cantu Well, that was a bit of arrogance. And then by the time I turned 18, Bruce I thought I, the life had beaten me up good. I’d been out on my own for two years and I realized I didn’t know anything.
Bruce Norris Now your dad’s, your dad wanted you obviously to learn how to stand on your own two feet. And you and I had many lunches together. One of my favorite ones is about your dad was when you, you didn’t make your bed.
Mike Cantu Oh yeah. Oh yeah. I grew up with military discipline. There were seven kids and two adults in an 1100 square foot house you made your bed military style after you got out of it. If you ever left for school without a bed being made, you came home to no sheets and pillow and no need to ask about it because you’re not getting it you’re sleeping on a mattress. And you do that a few times and there’s first thing you do is get out of bed make your bed to this day Bruce I make my bed. Not, not to honor my dad or anything but for a sense of accomplishment. Get out of bed did something. Okay, I can check that one off.
Bruce Norris And you have a few of those things. I know you you have an exercise routine that follows shortly thereafter, some type.
Mike Cantu It’s about an hour after waking up. I have tried for years and years Bruce to get out of bed and start going and oh no, I have to go through this metamorphosis from a waste of skin into a human being that takes us some coffee and newspaper and just little wandering around so it takes me a while to pull it together.
Bruce Norris That’s funny.
Mike Cantu If it starts at seven by nine o’clock though I’m done with the whole metamorphosis. I start and I end up as a driven capitalist heading out the door.
Bruce Norris When did you get to meet Mick Blackwell and what was your first contact with him? What did you do with him?
Mike Cantu A friend of mine that I skateboarded with, he was a few years older than me. He was actually dating Mick’s daughter and he was a carpenter. And I went to work with Pablo to frame a house for Mick that was my first exposure to Mick and I put in an honest day’s work and he hit me up to work for him for the weekend. And that was one of my first exposure to the real Mick. That’s when he said, we only work half days around here. And I thought I like this guy. And he said, it doesn’t matter if first 12, the last 12, or the 12, right out of the metal half days. And that was absolutely a true statement. First day of work for Mick. I put in an honest 14 hour day.
Bruce Norris And how, many, how many, how many years did you stay with him in that position?
Mike Cantu Less than one actually, just a few months that I had been exposed to real estate and I realized that Mick was a real estate guy. And I did more talking and asking questions that made probably didn’t work. And he would actually tell me, you’re not allowed to talk until and it would say like 10 o’clock or something. And I kept looking at my watch, then going it’s almost question on questions about everything. The first job I worked for him on, he was building a Fourplex, and I asked all about the numbers. And he said, he paid 5000 for the lot, 25,000 for all of the materials he did 100% of the labor with the exception of maybe 10% of it is all in Austin was $30,000. I asked how much they rented for. And I believe it was 350 a unit. And I was doing the math I think and I can live in one of these units free, use to have the rents to pay all of the expenses and actually get paid to live here. So, my first plan, my first real estate plan was to actually build a Fourplex I was on a mission to get $30,000 together so that I could build a Fourplex never have to work again and live happily ever after.
Bruce Norris Okay, I just enjoy some of these early goals if you will, because you’ve kind of dwarfed them but that was like It’s like getting your goal list and you have your retread tires that you want to get…
Mike Cantu Yes, the one that still humors me Bruce is I read Joe Karbo’s Lazy Man’s Way to Riches and he had to put your goals on a 3X5 card and I figured if I’m going to be a businessman all businessmen wear suits and I have a card still to this day one of the original ones that says I might cancel them the proud owner of, not one but two business suits. Figured I was going big and I could rotate them and I never did get that suit Bruce never got it.
Bruce Norris But you did get those tires out of hock.
Mike Cantu I did, I did I put the 20 down on the for retreads at J&J tire had a $40 balance within pay the second 20. And I remember picking them up, I gave the guy a 10, a five, five ones, and they put the tires on and the way I went, two days later, I was driving down the freeway, and I heard that flap, flap, flap, flap, flap noise. And part of my tire was coming off, but McDonald’s was having a promotion to where if you bought a steak sandwich that they had at the time, you got a steak knife. Now I can’t imagine giving away a night, McDonald’s now but they did back then. And I had one in my glove box and pulled her over on the freeway carved off a big piece of rubber that was flapping and jump back in my car and away I went. But it all worked out.
Bruce Norris And pretty cool. When did you start you started being a partner with Mik so when he was still building, so I know you guys got, you got involved in developing land and, and mostly did you buy, you built new homes at that point?
Mike Cantu No, originally, what I was working for Mick, we had a falling out and I shoot back at your, I Survived Real Estate a few years ago is kind of a long story. But we did have a falling out and I ran back into him at Connolly’s hardware store. In the meantime, since our falling out, I had gone to a real estate seminar. I met a guy there that we became partners. And we ended up buying three properties. So, when I ran into Mick at the hardware store, he asked what I’d been up to I proudly puffed up my chest and said I’ve been real estate just like you. And we had a brief conversation now we had not when I said we had a falling out when I saw Mick he was on a different aisle than I was. And we were talking over the display and making cleared it out so we could communicate. And he says let me come around the other side and we’ll talk well, I knew he wanted a piece of me in the worst way. So, was he came my side that went the opposite way. And we just traded sides and I said come on. ‘Why don’t you want a piece of me?’ And he said ‘You’re darn right I do.’ So, it could have been interesting in Connolly’s and WD 40 aisle. But at one point he we talked for about a half an hour in different aisles and he laid the groundwork, he says, ‘Well, you know, I’ve got some money if you’ve got a good deal, give me a call.’ I called them the next day we went to a courthouse steps foreclosure sale where the high bidders opening bid was 13. We paid 16 and some change. And we now had a fixer upper in San Bernardino. We were off and running.
Bruce Norris And over the, over the course of the next three decades, how many such transactions would you say occurred?
Mike Cantu Um, Mick and I did several 100 deals together. And it got to the point where Mick was slowing down, he had his apartments and probably 60-70 houses. He started slowing down, I was speeding up. So, we never parted company, but I, I became independent of him. But throughout my buying career, Mick was always first in line for wholesale deals. And for many years, the number was 18, 18 to 24 deals a year he wanted from me, Mick would typically, his goal was to keep one house a month, and to flip one house a month to fund the house that he kept.
Bruce Norris Okay.
Mike Cantu So, I had a built in buyer and didn’t always get top dollar out of them. In fact, I never got top dollar out of them. I was had to leave a lot of meat on the bone, but it worked out good for both of us.
Bruce Norris But what was the year approximately when you were starting? When you had like say that conversation at the at the Connolly’s?
Mike Cantu I was 1983.
Bruce Norris Okay. ’83 Wow.
Mike Cantu 1983 I went to real estate seminar, April 17 and 18th of 1982. That was the Robert Allen no money down seminar that I went to with my roommate. We sat in a class for two days learned 101 ways to buy real estate. And I remember on Sunday evening, on the way home, I asked Chuck, I said, ‘Hey, any idea what that mortgage thing they talked about all weekend was?’ And he says no, I was hoping you know. So, we learned 101 ways to buy real estate, but I did not understand the mortgage concept.
Bruce Norris Okay. By the time 89 90 came around, you and MC had some land developments, correct?
Mike Cantu Yes, we had gone to the high desert. And it started off mining a couple of two and a half acre lots building spec homes they sold. I was very interested in what the other entrepreneurs were doing up there. And the typical was to buy five or 10 acres, split it into two and a half acre lots and either build on the lots or sell the lots. The sum of the parts was greater than the whole was the theory there. And that led to a big subdivision. It was 140 acres, I think we did 54 two and a half acre lots. That was big learning experience. I had done I was doing some other developing at the time. I thought that was my future. By the time I got to the end of that project. I never wanted to develop anything ever again.
Bruce Norris The cycle changed. When did you realize that was, it wasn’t going to work as far as the cycle wasn’t going to allow it to work?
Mike Cantu Um, that was about the time Saddam Hussein was ready to blow up the world and the economy just grinded to a stop. And that was the one factor I hadn’t put in there. I thought I, it was my first experience going into a down market, I had no idea about cycles and real estate that I knew it was a long winding road to get to the finish line. And I was within sight of the finish line. But the, it felt like my car ran out of gas to where I could see it, but there was gonna be tough road to get there.
Bruce Norris You and Mick had an interesting conversation. Because lots are pretty much the worst inventory you can get stuck with in a downturn. And you, you had quite a few of them. And you had you also had financing on them as I recall and…
Mike Cantu We did and it was all private, private financing. It was a very large amount, and I was concerned over it.
Bruce Norris And Mick that, again you know, I’ve had the privilege of lots of lunches so that I know some stories in it. But I think it’s important for people to realize the character behind the success. So, you had, you had all this private debt. And you guys didn’t, you guys didn’t go anywhere.
Mike Cantu No, I have no idea how we’re going to get out of it. And I had mentioned the word bankruptcy to Mick and his face just watered up like a piece of tin foil. And he leaned in to me and said that we promised we signed a note and it starts off with the promise to pay and these people sacrificed to set money aside for a better tomorrow and entrusted it to us and we’re not going to disappoint them. And he said it very matter fact later I thought well that options off the table. So, we worked it out everybody was made whole and that was an 18 month period that shaped the way I did business for the rest of however long I’m in business for.
Bruce Norris Yeah, probably the best thing you ever tackled. Because you gave, you gave yourself no other option but to solve it.
Mike Cantu Right, right and make that there. Anything short of making everybody whole was not an option.
Bruce Norris Yeah, that’s, that’s very cool. And you don’t sell land usually in that market. So, you got creative.
Mike Cantu Oh, yeah. So, ran a perpetual ad in the LA Times. That said, ‘Custom home sites for sale, or will trade for anything of value.’ And nobody bought any of those lots but I did trade off a whole bunch of them, got a lot of interesting things. got quite a few vehicles. Got a big Winnebago with the slipping transmission. I got a Cessna airplane with a blown motor. I sold the airplane before I bought it. It was at the Apple Valley airport and the mechanic there agreed to buy it. My whole plan was to take an unsaleable item converted to anything that was saleable than liquidate that for cash.
Bruce Norris That’s where the phrase is take what you have, to get what you need, to get what you want.
Mike Cantu Exactly use what you have to get, what you need, to get what you want. The what I had was dirt that was unsalable. What I needed was something I could liquidate what I wanted was cash.
Bruce Norris After, after that, we entered into the REO phase, completely different world because we didn’t have that phase. It didn’t seem like between 83 and 89. So, how did you adjust what you did as a buyer?
Mike Cantu I went after the REOs. I hooked up with an agent and worked with John for many years. I was his only client. I did all of the homework I would that was back when they had the Multiple Listing book. He got the book but I would go through it, cut out everything I was interested in, put it on a page go look at it, do the numbers and John’s entire existence was filling out offer forms. And I ended up during that stretch bought about a little over 300 houses with John as my agent, kept a few of them, retailed a bunch of them and wholesale some of them.
Bruce Norris Okay. When did you start keeping a fair amount of rentals was that always part of your plan?
Mike Cantu Um, Mick forced me into it early on and looking back. Mick had income from, Mick have lots of income from his apartments from his spec home building and he was still a plumber that did copper re-pipes Monday through Friday, up until about six till noon. So make plenty of money. I would bring these deals to the table Nick would talk me into keeping it then I’d run out of money. And Mick bought a lot of my half ownerships and he always said the same thing every time I’d sell them half a house and say you know Mike, I will write you a very small check for a very large piece of your future and it would hurt me I would say it that way but I thought okay, but this gets me gas food keeps the lights on and got to do what I got to do. But we kept stuff early on. And first year I was in business I had rentals and I’ve been a landlord ever since and next year, spring of next year is 40 years as a full time real estate entrepreneur.
Bruce Norris That’s a long time four decades, seen, seen a lot of, a lot of ups and downs in that 40 years too.
Mike Cantu Yeah, so nice Bruce, I spent the morning going over some deals, made a deal, working on a very interesting deals. So, I still love the game. I love playing the game.
Bruce Norris You and I talked about just seemed like a week or two ago. And we were just chatting and I started taking notes off of what you were saying. That’s how good some of it was. And I never do that. I never do that. Well you said one thing was really interesting about you know, obviously you don’t need to make a living that way but you still love the game but you said something that you still are enjoy the climb. Is that how you said it?
Mike Cantu I’m most comfortable in the climb. That yes I, long ago got to a point where I could do anything I wanted. See, Bruce, that’s always been my entire goal in life. And I’ve set lots of goals. But as I drill down deeper, they all come back to the same thing. And that’s basically waking up and being able to do whatever I want to do. And I love the dealmaking part of it, and I had been planning my retirement since fourth grade. And when I got to the point to where I could retire, I thought, well, now what do you do? It’s going to be no different than what I’m doing now. Because I thoroughly enjoy what I do.
Bruce Norris Yeah, that’s, that’s pretty amazing statement. Do you have a preferable cycle to buy in? Do you prefer the REO agent, and the lender on properties or the talking to the people that own stuff?
Mike Cantu I much, much prefer a one-on-one, Bruce. I like solving problems. And I am constantly going after the root of the problem and what it’s going to take to solve the problem. I said, I was working on an interesting deal right now. And it involves a life estate that everything revolves around brother staying in this house for the rest of his life. And yeah, I was doing homework on it this morning. I’ve done several drafts of and so I’m, it’s unchartered territory for me. I’ve been educated on life estates, but I don’t know the details. So, I found that absolutely fascinating this morning, and then all of a sudden, two hours later, I’m still reading and I thought what happened? So I do get passionate about stuff, and I love solving problems. So, I much prefer a one-on-one with the seller.
Bruce Norris Okay. Well, there are markets like this one where that’s basically all they’re, all there is. But okay, well, let’s, let’s start from the beginning. How are you sourcing the seller, the potential seller?
Mike Cantu How am I? What do you mean? How am I sourcing?
Bruce Norris How are you? How are you getting them to contact you?
Mike Cantu Okay, okay. Bruce, I’m still a direct mailer. And I’ve always been a house buyer, not a home buyer. So, I don’t like dealing with owner occupants. Early on, I used to door knock and bought foreclosures, stuff like that. But it always bothered me, there’s a big difference between a house and a home. And I prefer the unemotional house side of things to where it’s not the residents. It’s not the roof over the head is always kind of fallen on my heartstrings when somebody gets in trouble. And it really bothered me when I’d be sitting at someone’s kitchen table, and I’d come up with four or five solutions, and me as the buyer was never the number one solution. And if I didn’t share that with somebody, it just weighed heavy on me to where I felt like I was lying by omission.
Bruce Norris Okay.
Mike Cantu And then I overcame that by throwing everything out on the table, and they’d always run off and take choice number one or two that solve their problem and left me nothing. But I felt better about it. But I realized this is going nowhere. That’s not my calling, being the do gooder in life and solving everyone’s problem and starving. So, I moved out of that arena. And I’d much prefer buying a vacant house or rental house. Not, not owner occupied.
Bruce Norris How, how has, have the mailer changed over time. Do you, do you play with changes? Or if you got one that you got?
Mike Cantu Absolutely, Bruce, and I get more mail now than I ever have a day doesn’t go by. I’ve had two text messages today. I had a cold call this morning. I had at least two cold calls yesterday to where I’ve never done anything except direct mail, and then follow up with phone call. And it’s, I’m not a stranger when I call them because I’ve already mailed to them.
Bruce Norris Right. And you’re the one that’s making the phone call. There’s no intermediary person.
Mike Cantu Oh, no, no, no, no, I get the virtual assistants with strong accents that are hard to understand. And I had one the other day to where I said I’m a seller. And then she said the next thing she says is ‘how many bedrooms?’ and I said ‘property profile will disclose all of that’ ‘how many bathrooms?’ And she just kept going down a script and I said Look, I’m a live seller and you’re about to get hung up on. You want to take notes and she kept going right through the script. And I told her ‘Have a nice day and that was the end of that.’
Bruce Norris Wow. And you were just trying to see what they were what they did with with the lead?
Mike Cantu Yes. And I do have a house that I keep throwing out to people. And I’ve yet to get an offer on it. Bruce, I’ve thrown the address out at least half a dozen times to cold callers. And there’s plenty of equity in the house. I’ve yet to get an offer. That’s interesting. I think they’ve got system set up. They’ve got people calling people texting, but I never got a price.
Bruce Norris No one, no one ever asked you what you want for it?
Mike Cantu Oh, they always ask me that and they say you’re the buyer, give me your best shot. What do you want to know?
Bruce Norris Okay.
Mike Cantu You called me. And I’m always curious Bruce, as a buyer, I like to see how other people operate. I’ve got a string of text messages from one outfit, they are trying to buy something from me in Huntington Beach, which they would have to pry my cold dead fingers off of get it away from me. But I think we’re up to 37 different texts, then somewhere a dozen texts ago, they said, ‘Would you like an offer?’ Yes. And still nothing yet they just keep sending texts.
Bruce Norris Okay. The odds of, if you could give me numbers, let’s say out of 1000 mailers, what what would be the number of phone calls you’ll probably get?
Mike Cantu Now, that all depends Bruce a nicer area, the nicer the area, the less phone calls, the worse the area, the more phone calls, the more targeted your list. I like a target specific list. Everything falls into one of two categories owner occupied or non owner occupied, but you can break down the non owner occupied way down into several niche categories. tailor a message towards that and take it from there.
Bruce Norris Okay. So, after you do that, let’s say you’re you’ve done your targeting, if you send 1000, mailers, what percentage response?
ike Cantu Anymore, I’m gonna say zero to eight.
Bruce Norris Okay. I guess you know, I want people to realize that that’s, it’s going to be something that you have to realize it’s going to be an expensive journey until you get a deal and then obviously it pays for it for many months.
Joey Romero Well, that’s gonna do it for this week’s episode of The Norris Group real estate radio show and podcast. Be sure to tune in next week for part two of our interview with real estate investors, Mike, Cantu. See you then.
Narrator See ISurvivedRealRstate.com for event details, information on all our generous sponsors, and to connect with our speakers.For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.
Aaron Norris The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
