BiggerPockets Money Podcast - 339: From Sociology Major to Seven-Figure Agent Commissions

Episode Date: September 26, 2022

Everyone knows that real estate agent commissions are hefty. Those who have sold a house in the past few years may look at their settlement agreement and wonder where those tens of thousands of dollars really went. It’s not hard for a new agent in today’s world to lock in six-figures worth of real estate commissions within their first few years. But, not many agents, even uber-experienced ones, have been able to hit what Pat Hiban has. Pat was one of the first “billion-dollar” real estate agents. Unfortunately, the “billion dollars” doesn’t refer to commission checks, but it does refer to real estate sales as a whole. This is doubly impressive when you factor in the decades when this was achieved. Pat sold homes in the 80s, 90s, and 2000s when home prices were far less than they are today. So, you could consider Pat an inflation-adjusted “trillion dollar” real estate agent! But how did Pat, a sociology major without any connection to real estate, reach such heights within a few short years? And, a more important question to ask, why did Pat give it all up at the peak of his career? What was worth more to him than making seven figures and bringing home huge commissions every month? He gives hints as to why he left it all in this episode. And, as one of the newest BiggerPockets authors, you can pick up his books 6 Steps to 7 Figures and The Quitter’s Manifesto today! In This Episode We Cover Everything you ever wanted to know about real estate agent commissions and broker splits Why so many new real estate agents fail during their first few years Leveraging out your work, hiring employees, and scaling a business instead of building a job Real estate investing basics and the downsides of taking too much depreciation Quitting a lucrative career and the financial moves to make that ensure a successful transition The six steps to reaching seven figures for real estate agents (and any other entrepreneur!) And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Mindy's Twitter Scott's Instagram Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Check Out Mindy’s 2022 Live Spending Tracker and Budget Click here to check the full show notes: https://www.biggerpockets.com/blog/money-339 Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 339, where we interview billion-dollar agent Pat Hybin and talk about success as a real estate agent through hard work and tenacity. It's kind of a little secret that most agents don't think about, but you build on a success up, not from the ground up. So if you sell a house in a certain neighborhood, you don't want to go market a different neighborhood. You want to go to that exact neighborhood and be like, I'm a neighborhood expert. I mean, people will hire people just because they sold one lousy house in the neighborhood, and they think that they're, like, been around for 100 years, and it's their first listing. But they don't know.

They just have that social proof because this house sold. Hello, hello, hello. My name is Mindy Jensen. And joining me today is my sensible, pragmatic co-host, Scott Trench. What a straightforward introduction, Mindy. Scott and I are here to make financial independence less scary, less just for somebody else. to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting.

That's right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own brokerage career, will help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams. Scott, today is an exciting day if you are a real estate agent, if you are interested in real estate, if you are thinking of becoming a real estate agent, or if you're just looking to generate a lot of money in a new career as we talked to Pat Hybin. Like I said earlier, he is a billion-dollar agent. We are going to discuss what exactly this means. It's actually pretty impressive and get tips on how he became such a successful agent over the course of 20 years. Yeah, I mean, it's a phenomenal

journey. This is hustle. This is grit. This is not something that's unrepeatable. This is something that if you're willing to work hard and go through the grind and the slog of getting started in those early years, you can achieve at a certain point. It's perhaps easier to achieve today than it was when he got started in his career track. Yes, I am going to hit billion-dollar agency before he did year-wise just because houses are way more expensive now. And I think that's a good goal, Scott, billion-dollar agent. Mindy Jensen, billion-dollar agent. But yes, you know, you hit the nail right on the head. This is super repeatable and this is work.

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of billion-dollar agent. That's billion with a B, by the way, selling more than 4,000 homes, totaling more than $1 billion in volume. So clearly he came from a long line of real estate magnets, right? That really wouldn't make for a very interesting show, now, would it? In today's show, we're going to dive into just how he was able to become so successful with nothing other than his hard work to get him there. Pat Hybin, welcome to the Bigger Pockets Money podcast.

Mindy, Scott, hey, it's good to be here. Let's have some fun. Let's have a lot of fun. Let's talk real estate agency, specifically billion-dollar agency. Now, I'm not quite there yet. What does this mean? What do I have to get to to be a billion-dollar agent? Well, you know, here's the thing, Mindy, it's volume, right?

So if you took, you know, if you took, you add up all the volume of all the houses that you sell. And when it becomes a billion dollars, then you can label yourself a billion-dollar agent. Back when I first started, they had a club called a million-dollar club. And it was only the select. it was like the top 20 in the zip code or the top 20 in your hometown were in the million dollar club. But eventually over time, it became like a joke. It's like, damn, I sold three houses and I'm in the million dollar club. Nowadays, you sell one house and you're in a million dollar club.

So it's the same thing probably that's happening with billion dollar agent is that, you know, when I rung the bell, there was only a couple of us. And it was such a buzzword. And now there's probably tons of. of them. You know what I mean? There's probably, there's probably agents that have become billion dollar agents in a year somehow, you know, just by selling these Hollywood Hills homes, you know? Now, that's a true statement. So adjusting for inflation, you're the first trillion dollar agent. One of the first trillion dollar agents is where we're at. Yeah, let's, let's mark that. Let's make that official for someone else takes it.

Pat Hyben is the first trillion dollar agent when adjusted for inflation. Well, well, let's, let's Let's start from the beginning. How did you get into this business? You know, was this the career path you had chosen for yourself as a kid coming out of high school college? What did that look like? And how did you get started on this journey? He came from a long light of real estate magnet.

Scott, I just said that. Yeah. No, that's kind of funny because, you know, a lot of people have thoughts nowadays of, you know, following their passion and going into knowing, right, knowing what they want to be. and I was never that kid. I didn't have any idea. Matter of fact, I went to two years of college without a major. I was undecided.

And then the guidance counselor called me in his office the end of my sophomore year. And it was like, son, you need to pick a major because you're going to be a junior. And you can't be a junior without a major because you've already got enough credits. I got all my credits. And I said, well, I don't want to be a five-year. you know, I don't want to be a five-year student, so what can I do and get out on time? And he said, history or sociology? He said, history is 10 classes, sociology is nine classes. I said, I'll take sociology. And I became a sociology major. And that's how I graduated. And so I really didn't know. And I

didn't know. And even when I got out, I thought, you know, maybe I wanted to be a probation officer, because that kind of matched up with sociology, kind of like, you know, thought it was interesting. But then I come to find out that, you know, they had a long waiting list of when they would hire. They weren't really looking to hire. I was 21 years old when I graduated because I'm an October baby. So, you know, they didn't want to hire me. And they probably weren't going to hire me. Plus, it didn't pay much money.

And I had always had like a chip on my shoulder of authority figures. And I had always hated my boss. And so I really wanted to do something where I didn't have a boss. And lucky for me, I got turned down on a lot of sales jobs. I tried to get into sales and I just kept getting turned down. Couldn't get a job. And so believe it or not, I went where there was a barrier of, you know, least resistance.

And that was real estate sales because anybody could get their license and get into it. And that's what happened. And I didn't, I wasn't a guy that's like, oh, isn't this a beautiful kitchen and isn't this a cool fireplace and look at this. I never, and my whole career as an agent, I never probably, I probably said that once, but I hated myself for saying it. I just wasn't that guy. I was more about, uh, these commissions are really fat.

Like I'm making $2,500 a commission instead of $250 a commission like my friend, the car sales. or $25 a commission like my friend who's selling printers or whatever. And I just saw the money in it and I saw the freedom in it. And that's the truth. Awesome. And so how long did it take you from graduating college to deciding that you're going to get your license and begin that career path? Seven months. I tried a couple of things that didn't work. I tried this like timeshare type vacation sales thing. And I wasn't that good at it because it was very canned. And it's funny story.

This is true. The guy who I was working for when I left to become a real estate agent says, well, if you can't sell vacation packages, you're not going to be able to sell real estate. Well, that proved true, of course. Yeah, yeah. What was your lifestyle like during that period while you were kind of figuring your way? Were you kind of just, you know, we're just living really frugally?

Was it tight? Was it hard? Was it, were you kind of finding your way? Well, yeah. So I'm from a family of five kids and all within like five years of each other, it feels like. And my mom had a rule. She had a six-month rule. She was like, if you go to college, you get six months when you get out.

If you don't go to college, you get six months before, you know, you get 18 and a half and that's it. And then you got to get the hell out. And so I lived at home for a little bit. And then, yeah, then I found a place to rent. I had three other roommates. You know what I mean? I had this little tiny eight by eight room with three other roommates. And I was a real estate agent out of that room.

I had a two-door Toyota Seleka. Like I was bootstrapping it big time and got a couple sales to get a four-door car. so I could actually take people around and not have to, you know, meet me at houses. That was the thing back then is putting people in your car, putting people in your back seat. You were like an Uber driver. I don't think they'd like to do that anymore. Walk us through those first few sales. What were those like?

That's a great thing too. So my first year in real estate I made $13,200. And I still have the like $1099 for that. And I got rookie of the year. Million dollar agent. Yeah, right. I think so. I think so.

I think it was. And what year was this? This was 1988, was my first full year. So, you know, all buyers, almost all buyers. I had one listing, and guess who gave me the one listing? And I'll never forget this. My dad. My parents were divorced and my dad was living in a condo that he, one bedroom, one bath

condo and then he got remarried and they moved out of town and he had it with another agent and he gave me he fired the other agent and gave it to me um about halfway in my first year and the funny thing is it sat on the market for seven months and to this day i'm grateful to my dad because he never harassed me and it's like how come it's not sold what's going on and what happened was i ended up selling three other condos in the development because of that listing because people would call on that listing. I'd tell them it was priced at 54,900 and they'd be like, that's too much. And I'd be like, oh, there's three other ones in the 40s. Do you want to look at those? And it'd be like, yeah. And then I'd show them and sell them. Never told that to my dad either.

But finally his sold, you know, after I sold out the rest of the condo development. and then all the rest were just buyers I just picked up. They used to have something called floor duty. And basically what it was where you volunteered to be a secretary. There was no secretary in the office. You volunteered to be a secretary. You sorted the mail. You did all kinds of stuff like that.

And then when someone called in and says, how much is one, two, three, umpty-ump street? You said it's $1179. Is that in your price range? And you basically tried to get them to come into the office. and show them other houses. And I just basically just volunteered myself to sit there all the time and be the secretary and get paid leads for it. If you had to estimate, how many hours were you working per week in that time period, that first year, second year, early years? So when I first started,

I was substitute teaching. I think when I was getting my license, I was substitute teaching at like $50 a day. and after I sold my first house, I think I quit substitute teaching. But after that, I'd say, probably 60, I don't know, I don't think I even kept track, right? I didn't really have, I had a girlfriend, my wife now, and I had friends, but not as many friends as I had in college, right? It kind of went back to my old friends, so my high school friends. So it wasn't like I was, you know, I had like stuff to do every night. I think I was pretty, I think I was pretty focused, actually. I think I probably worked 60 hours a week and made, you know, five cents an hour or something, you know.

Well, and let's look at what we've got now versus what was happening back then. I wasn't an agent in 1988. So I don't know what commissions were, assuming they were around the same as 3% that we're at right now. Your $54,000 condo for your dad netted you a whopping $1,600. $100 and $1,600. Everybody was on a 50-50 split. Like it wasn't even negotiable. Like you couldn't even go and go be like, hey, can I get 55?

Like the broker, that was it. You know, the broker was like, everybody's on 50-50. If you don't like it, leave, you go down the street. And it was, the brokerages that were pretty much antitrust factory. Like they all, they all conspired to go 50-50 and that's not higher. And then an interesting part of history, then rematch. came in and they like dropped the bomb on that. They like exploded that. And they were like, hey, we're 100%. And everyone's like, what do you mean? And then only after maybe 10 years of

remax ruining that for the other brokers, then they started offering, you know, 6040, 70, 30, 80, 20. For those who are not agents, what I think you're saying, Pat, is that if you earned $1,000 dollars in commissions, your employing broker would take 50% of that. You'd only get 500 after that. And you're doing all the work. And today, that's unfathomable, right? Most agents would never go for anything close to that at this point in time. But that was the reality, that's what you're saying is the reality back then.

Yeah, that was the reality back then. And it's kind of come full circle today. It's the same thing but with teams. You know, so now the teams have become the broker. Like the broker I worked for was called Grimpler Realty. and it was a lady named Mary Bell Grimpler, right? And she was like, at the time, I mean, she was probably my age now, but when I saw, when I looked up to her back today, I think she's probably 85 or something, right?

But she was probably in her 50s, but her name was Mary Bell Grimpler. And she had like, you know, five offices and she had like 20 agents in each office. And that was it. You know what I mean? And she, it was Grimpler Realty. And that's the same thing as her having a team nowadays. So being the broker would be the big money generator because she, I don't want to belittle what she does, but she just sits there and waits for you to sell the house and then collects 50% of your commission.

This is, right. That's why I didn't get licensed for so long. I did not want to give up 50% of my commission. And now that there are different opportunities and different options, I did get my license. I am not making $1,600 when I sell a house. Now I'm making $16,000 when I sell a house. So I'm on your heels, Pat. I am a million dollar agent already. Yes, congrats. Put that on your card. Walk us through what you think you did differently in those initial years to become a successful

agent compared to your peers at that point in time. This is a great question. So first of all, like I said, my first year, I had one listing. It was my dad's condo and then probably 12 or 15 rentals and buyers. Even sold a couple mobile homes. Like, you know, I was just junkyard dog in it. And my second year, same thing, junkyard dog in it. Whatever I could get, if I got, if you gave me a lead, a scrap, you know, I would hold on to that thing and hound you. If you told me, and the funny thing, this is very hard to find nowadays.

but if you told me we're going to move in a year and a half, that was a great lead for me. And I would call you like every month religiously and just be like, you know, getting closer, getting closer because it was the old adage buyers or liars. And a year and a half meant nine months. So I'm going to keep calling them, right? So two years I did pretty much all buyers. And then everything changed in my third year. because of my third year I took a program called Sweathogs by Floyd Wickman.

He's the father of Gino Wickman who created the traction and all those books about the EOS system. That's his dad. So he created a course which was like a boot camp. And he said, forget about all buyers. I only want you to be a listing agent. And he said, what I want you to do is go to the office and pick up the book. We had a book back then called a crisscross directory and it basically had everybody's name on every street and every phone number.

And you were allowed to co-call and just call them and ask them had they thought about buying or selling a house. And he had a script and he just pasted the script up on front of the desk. And, you know, at that time I was 23 and I would just do what I was told. And I did it. And lo and behold, I got a couple of listings. And you had to go back to his class every week. And if you didn't get a listing at his class, you had to wear a dunce hat, sit in the corner.

And on the dunce house hat, it said, no, but I will. That's how hardcore this was. And I think by the time that class was over, I had like eight or nine listings. And then I realized that you never had to wear the dunce hat. I never wore the dunce hat. but I used to drive the class with like four other agents from my office and they all had the dunt at because they wouldn't do it like they just wouldn't do it like I'd get there at nine and I would just start calling and they would show up like three or whatever and chat and then they'd make like

five calls I'd make like 500 and so what happened was I saw that if I was the listing agent I was in control. Like I had a thousand, 10,000 other agents that worked for me suddenly, right, that were going to sell this listing for me. All I had to do is put it in this cool thing called MLS, right? I mean, at the end of the day, we all know, and there's a lot of agents who won't admit this, but everything is going to sell if you price it right and put it in MLS. And so I knew that. He taught me that. I got listings, priced them right, put them in MLS, all these other agents sold them for me. Lo and behold, I think I made $24,000 my second year. My third year, I made $83,000. And then my fourth year, I went over $100,000. And every year then, every year after that, I was a listing

agent. I was always having way more commissions from listings and buyers, and I just never went back. And I think that that was a huge lesson. And I think it's a lesson that these agents don't learn fast enough these days. So let me pull out two things I'm noticing here. here. One is hustle. I'm going to make 500 calls compared to the other the other hoax in the team. And the other, you have not said this, but I'd be interested if this is true, is this idea of funnels or control of your numbers, right? You're not making 500 calls just to hustle, right? You're making 500 calls because you believe that if I make 100 calls, X percent will turn into a lead, X percent will turn into a listing, X percent will turn into a commission. Are those two hypotheses true on my end? Are those backdropping what we just said? Yeah, but yeah, but we didn't even calculate the numbers back then. Basically, his rule was call until you get an appointment. And so like literally I could call until one. And if I got an appointment at one, then I'd be done. If I didn't get an appointment, I'd have to keep calling. And the funny thing about that is it worked. Like, like he had these things called fair trades. And what a fair trade is is something that I'm going to all. offer you to come over and tell you what your house is worth. So I'm going to give you a trade.

So I'm going to give you a net sheet of all the Maryland closing costs down to the penny that are going to show you not only what you would sell for, but what you would actually net after your mortgage is paid off, all the transfer taxes, dock stamps, blah, blah, blah, blah, blah, blah, right? And that's kind of, like a lot of people don't understand that. So that's kind of a fair trade, right? or you give them a detailed list of everything they need to do to fix up their home to get it ready for sale so they don't put a nickel in unless they get a dime back out. Would you like that list?

A market analysis is a list, what you can get. You know, there's like 10 fair trades that you could offer. And the whole idea was just keep offering these people fair trades until they let you come over. And then your day would be done. But, you know, they, chances are they weren't going to let you come over if they were never thinking about selling, at least sort of thinking about selling. And man, when they, even if they just thought of sort of thinking about selling, it usually meant they're going to move some point in the future. I got their name, number. They've met me. They know me. I'm an agent that they

know now. And if I'm calling them every month saying, hey, how you doing? They ended up using me, you know, just because I'm that guy. They know. And also, I was. willing to come over and meet with them and give them one of these fair trades. Does that make sense? That's awesome. I love it. So there wasn't really a funnel. I was wrong about that. It was more, I'm going to call until I get an appointment. How many days did you go without getting an appointment? Yeah, the only thing we kept track of is the names and numbers of the lead. You know what I mean? And a checkmark next to people I've already called so I don't call them again. What's the latest you had to stay before you got an appointment with this method?

You know, I don't remember. I'm sure there were days where I didn't get one. But his, thing was you had to get one within the week. So I doubt there was a week where I got seven of them. But I think by the end up, by the time it was all said and done, there were probably weeks where I had multiple appointments. And then he would, you know, he would honor the people who got, you know, multiple listings and multiple listing appointments. And it was good old fashioned sales motivation. And it worked very well for me at such a young age. I ended up taking that boot camp every like year for like the next four years and it's kind of like so diana kakowska from keller Williams was in it and and then she eventually um created bold which was basically you know some

some say is a copycat off of it um um but it's kind of like everything in american business is a copycat off of something else so it it let's say eventually merged into to bold uh if you've heard about that and that's kind of the idea behind it okay so i've been agent for, I think, eight years now, but I've been investing in real estate for 20 years. I feel pretty entrenched in, you know, real estate in general. I work at bigger pockets. I have a comment about this because what I'm hearing you say is that you did the work. What I'm not hearing you say is that so many agents, what is the, what is the stat like 90% of agents today won't be around in two years because they're not making any money. They're not, it's like it's not working for them.

There's this huge misconception that being a real estate agent is super easy. You go and get your license and then just, bam, people come at you with all of their listings. Like, you're just going to sell all of your friends' houses. How many real estate agents do you know? Like, maybe not you, Pat, you kind of don't count because you know so many real estate agents. But the people that are listening in your daily life, how many agents do you know? You have to, like, choose among your friends, which of my 15 real estate agent. friends would I list my house with? No, you don't. You have to go to the one that is the best. And Pat is

the best because he puts in the work. His coworkers would call five people and get five noes and stop. And getting a no sucks, right, Pat? I mean, when people are like, don't ever call me again, that doesn't feel awesome when you pick up the phone and you're like, hey, I'd like to talk to you about selling your house. And they're like swearing at you or, you know, stop calling me or slam the phone down, you know, back when I remember the 80s, you had to slam the phone down and it hurt your ear and, you know, but you're doing the work. And that is like across the board, if you want to succeed, you have to do the work. Whatever it is you want to succeed at, if you're not going to do the work, then you're not going to succeed. It doesn't just fall into your lap. That's not how life goes.

I think everybody these days is, I shouldn't say everybody, but I think there's a problem nowadays everyone's kind of delusional in the sense that they think that everybody knows them. Like literally I meet agents that have sold 10 houses and they think that like everyone knows them. They talk about like their reputation. Like you don't have a reputation. Like the guy that sold a hunter houses last year probably doesn't even have a reputation. There's no such thing. You know what I mean?

Reputations come and go so fast. It's like like they, you know, oh, I don't want to. everyone might see it on social media or everyone might think, no, they don't, no one, people don't think, like they look at social media for like three seconds at a time. You're like one of, like a thousand people that they might look at on social media. There's a couple of agents I know now that are, have done really well with social media. I'm sure you guys have probably interviewed them, but they have to be kind of have the same mindset I had. You have to think, I don't care what anybody thinks, what I'm doing at any time.

I could be looking whatever, you know, in any way, shape, or form. And I don't care. I'm just going to fill myself all the time. And that's what tends to work for them, not someone who always has to think about rejection, just someone who's only thinking about being on social media constantly, just like I was always thinking about calling and getting a listing appointment. Yeah, I think there's this concept of a grind that accompanies this any level of success, really in any profession, this years-long slog of consistent, repeated action with the winning formula, and you just continue it over it. And that is what drives success, not your reputation, like to your point, which if you stop doing it for a few years, you're out. You know, you have to restart over with something else almost entirely. It's really hard to get that engine turning back on again. I think for a lot of folks, once they, once they, once they, stop it or leave it. And so, well, let me ask, let me test that. Did this slog, this grind,

this pattern of success continue after year four? What did the next few years look like after that? So, yeah, that's a great question too. I think I've reached a point where I remember Remax had this thing called, because I eventually went to Long and Foster. I went to, I've been at, you know, my course of my career, jump ship like five or six times like most agents, right? So But I remember being at Remax. I had a broker name was Leslie Rock, and they had this club called, I think it was Platinum Club. It was where you earned $250,000 in commissions.

And for three years in a row, I made the Platinum Club, but it was like 257, 258, 258, or something. And she noticed it. I didn't notice it. I just figured, oh, I made Platinum Club again, you know, whatever. She noticed it and she sat me down and said, do you realize that you've come within a couple of thousand dollars, three years in a row? This is uncanny. And I said, I didn't even notice.

And then she goes, well, what are we going to do to get you out of this rut? Like out of, you know, to get you to the next level. And I found that the way to do that was leverage, you know, i.e. building a team. team, things like that. And it was good timing for me because I was married at the time and then I had, you know, like I'm just making this up. I think my daughters were like two and four or something. And so I needed to start spending more time at home anyways. And it all came together. And then I just started building a team. And that's that that's kind of where all that started. Then I leveraged. Then I started hiring buyer agents to take away the buyers from me. And then the rest of

is history. Awesome. That first year you put together a team. Many agents I know who start their team find that their income, the take-home pay goes down that first year, or at least in the first few months, because they're giving away the commission to the team member to a large degree. As you find the same was true for you, and how did you kind of overcome that mentally, if so? Well, I'll tell you what's guaranteed to go down, and that's your profit margin. So your margin is going to drop significantly. Now, the question is, again, do you care that your margin goes down? You really only care if your adjusted gross income on your tax return goes down, right? Because at the end of the day, it's your Ibida, right? It's what you're

left with. And there's different opinions. So I have, this is a true story. I have two good friends. One guy's a broker and an independent broker in Florida. I think he has like 150. agents. Every agent's on 100% split and he makes like $595 a transaction, right? Most of his money is coming from mortgage and title, right? And he makes a lot of money off mortgage and title because his agents use the mortgage and title company. He doesn't care what his margin is. He doesn't care what his margin per deal is because there's nothing, right? It's basically zip. He loses his money on the deal. I know another guy who does a lot of high-end houses and he only has two people on his team. It's a highly focused team and his philosophy is keep it small and keep it

all. And he makes like 90% of every deal after all his expenses are paid, right? And he's selling a couple million dollars houses he just told me he sold an eight million dollar house so that's like 240 grand he'll probably keep 220 of it right so like it's but he does all the work but he's okay with that hustle part of it like he's he's addicted to his phone but he knows that's part of the deal right he's very professional about it um so i don't think either of them are wrong and if i compared their tax returns they might be similar uh but my point is you just have to you just have to know what your game is and not go back and forth. I think a lot of agents try to go back and forth a lot and try to say like, well, you know, I want to make a lot per deal, but I also want to pay my

agents high split and have a million agents. Probably it's not going to work like that. Did I make sense? Absolutely. Volume and volume or rate, right? It's what we want is the total amount of profit at the end of the day and you can increase volume. You can increase rate. In a perfect world, you can do both, but not always. Pat, you just made a really good point. You said your friend who said keep it small and keep it all is addicted to his phone. And that's a side that we haven't talked about yet about being a real estate agent where if you're going to be successful, unless you're going to spread that out amongst your team, you're going to give up a lot. You're going to give up nights and weekends because that's when your clients can see houses because they have a job and they

have a family themselves. And you're going to be on your phone all the time. I mean, now that we have pocket phones, we are always available and you don't get time off. And even when you're on vacation, you don't get time off. And I mean, if you want to sell a house, go on vacation because that's what it's up. That's another weird thing to talk about because like when I was veering off from being addicted to real estate sales and I was addicted to real estate sales, it was an all consuming job. For me, it consumed me. And that's what made me good was I was consumed by it. Like, I didn't want to lose that deal. I had to take that call.

I had to show that house because, you know, at that time it was 8 grand or 10 grand or whatever. And now it's 16 grand. Like you said, it's like, it's like, how do you turn down a $16,000 cash phone call? Like, right? All they want you to do is bring them to a builder model and sign them in. Like, you have to say yes. You know, it's so hard. So it was easier to spin off.

I think when I was spinning off. Now everyone's addicted to their phone. You can sit there, Mindy and say, oh, yeah, he's addicted to his phone. Well, guess what? My wife isn't a real estate. But she's addicted to her phone. My kids are addicted to their phones. Everyone's addicted to their phones.

I mean, you're going to do that. We might as well not be false profits, right? I mean, who's not addicted to their phone? So the question is, are you going to be addicted to your phones for something that's going to make money? You're going to be addicted to your phone for TikTok or something that's just going to, you know, serve you no purpose at all. Like, what are you replacing it with?

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I'm not an astronaut. I don't need an astronaut. Audiences have spoken. Project Hillman. is an awe-inspiring masterpiece. So, I met an alien. If you've fallen out of love with going to the movies, this one will bring you back. Ryan Gosling, in the first must-see movie of 2026.

Project Hail Mary, only Beaters March 20th. So let's hear about the next phase. You start a team here, and I imagine you're still working long hours. But at some point, you part ways with this business. Can you walk us through that shift and why you left being an agent and, you know, how you thought about investing as part of that journey? So I started investing. Like, I bought my, like, I think that first year when I became a listing agent, you know,

I was like 23 years old, that's when I bought my first house. I house hacked it. I rented it to two nannies from India, the basement. And then I rented to my buddy from elementary school, bedroom upstairs. And then eventually I kicked them out. And my wife moved in. And then we moved out to something bigger and had kids. And then I kept that as a rental.

And then I bought another rental in her name. And this was all when, you know, my salary wasn't looking good or whatever. Let's just say my tax return wasn't looking great. But then I stopped, and I think that was a mistake. There was probably about 10 years in the 90s where the real estate market did not really change. It didn't get worse. It didn't get better. Real estate investing was not a thing.

Like bigger pockets would have had no chance. Like there was only like five guys around that invested in real estate. It just wasn't a respected asset class. It would have been like maybe gold is now. Like you meet somebody on a plane. do, I invest, I buy and sell gold, right? That's boring, right? You know, that's how real estate was.

Nobody bought and sold, nobody, you know, did it. And so I could have bought 10 houses. I could have bought 10 houses at the exact same price for 10 years. The same house on the same street didn't change 10 years, but I didn't. So I put all my money in the stock market, like everyone else, it ran up in the 2000s. I remember the day I became a millionaire. I put this in the book, six steps to seven figures. My wife and I took a picture, like our Microsoft money account went over a million dollars.

It went to like a million and $12. She said, where do you want to go to dinner? I said, I don't care so long as it doesn't cost more than $12. And what year was this? It's a true story. That was 1999, maybe, I think. Awesome. Yeah.

And so we ate at home. home we had cheese steak subs and budwiser and um and and and then uh and then the market crashed and i was margined out which means you borrow money like i had a 1.2 million dollars in value but i was borrowed like 70% of that so you know i had more stocks than that some would say that's kind of how a lot of real estate investors are now. Just in real estate versus in stocks, but, you know, real estate doesn't move downwards as fast as stocks do, obviously. But it all went, it went all of my 1.2 million went all the way to like 300 grand in one year. And I don't think that would happen in real estate, but it wouldn't.

Never has. But so anyways, so then I just said, you know what? screw the stock market, I'm going to buy more houses. Then I started buying rentals at University of Maryland College Park. I bought seven houses. I went, I had a mentor and there were these houses for sale for like 150,000 and they would rent for $2,400 a month to college kids because they were coming out of the dorms. And of course, the dorms always charge, you know, astronomical amounts. And he looked at the numbers and he said, wow, those are great numbers. They, you know, it's like the 2% rule instead of the 1% rule.

He said, I'd buy 10 of them. So literally, I bought seven of them within like a year and a half. And then I started just buying other houses, bought some in Baltimore City and rented them Section 8 housing. And then at some point, I decided to start buying commercial real estate and I bought a shopping center and I bought, I met a couple other guys. and we started buying multifamily projects before anybody was syndicating. I think we bought like three of them.

And then we bought a fourth and then we decided to syndicate. And it was like pulling teeth. It was like calling people and sending them FedExing them a brochure and like getting on phone calls for hours with people who want to invest 50 grand in your apartment complex. Of course, now we have an email list, and I think the last one we did, we sold out in like 12 minutes or something ridiculous. But anyways, that was about 10 years ago. That was more than 10 years ago. And now I have about 2,000 doors of apartments. And so anyways, kind of telling stories that are sort of related to your question.

But around 2010, I think, I just got sick. of it, Scott. But what happened was everything changed. It's important to pay attention. I think what I'm saying here, because a lot of agents lately have been asking me what they should really look for to determine when things have actually changed in this real estate market. And I tend to say the number of units. That's what changed for me, the number of units. And what the number of units means is the number of settlements. Doesn't matter the number of buyers. number of sellers, whatever, it's the number of settlements. It doesn't matter the days on the market, you know, what percentage of prices drop. It's the number of units because like I had, I think we

were averaging like 45 settlements a month and we had a certain amount of bills to pay and I started profiting at, let's say, 40, right? So the last five sales were all profit to me. Well, I remember one month I went from 40 some sales all the way down to 16, like the same year, you know, in May I sold 42, let's say, and then in June I sold 16. And it didn't get much better. And then it was hard. And we were shoveling water out of the boat. And then basically in 2010, I went to my most loyalist agent and longtime guy, Mike Sloan that was with me.

And I said, hey, you want to take over. I'm done. And he said yes, and he kind of took over. And that was the beginning of my mental process where after that I just checked out, you know. So the catalyst was an overwhelming amount of work, but also just this like boom and bust from your business in terms of settlements. And just getting tired of that probably tons of hours and then emotional turmoil and anxiety about that part of the business. Is that right? Yeah, it was just terrible. It would have been like being at the best part of your life and then there's a shooting or something. You know what I mean? And I turn on the lights and the cops come in a fire department. I mean, it was just bad. You know, it went because so I had a really high profit because it was all me. Like it was all, I was responsible for everything. You know, there was no partners or anything in it. I had a great statement not too long ago. They said, capitalism without bankruptcy is like Christianity without hell.

And it was sort of like that. Like I had gotten a fruit of capitalism, and I was making a ton of money more than any money I made in my life. I had a mortgage company, a title company, everything I touched turned to gold. And then all of a sudden, the downside of capitalism happened. And I was responsible for it all. So I wanted to get out of there as soon as possible. And I liken it to like going to Vegas and winning at craps and pulling all the money, to myself and running up to my hotel room and putting it on the bed and watching a movie.

And I just wanted to take all the winnings and get out. I didn't want to wait for the market to come back. Does that make sense? Yeah. So, I mean, it sounds like you had a big boom up until the housing crash and even really a year or two into the housing crash, but it eventually started catching up with your business and just was a miserable experience. running a real estate business in that time period with lower transaction volume and all that other

kind of stuff. Yeah. I mean, I'd like to, it might be a more better for my ego to say, oh, yeah, well, I quit at the top, you know what I mean? But it really went like that. The universe was coming to me and it wasn't fun anymore. I wasn't as excited. I didn't like coming to work. You know, I tell a story. It was probably before everything, but the right this is when I knew the writing was on the wall that I was eventually going to get out was I went on a listing appointment with actually Mike Sloan my partner at the time um and fell asleep oh my gosh oh my are you like showcasing the bed um did that that help at the listing no it's one of those ones you know how you like kick the curb sort of thing you know when you

like and i like i don't know i think i had some pasta for lunch this lady was really hot in her house. It was like 3.30 in the afternoon. It was like prime nap time. And I just was like, and I kicked a leg of the table. And she was like, you fall asleep. And I go, I went to the bathroom and put water on my face. And then I came back out and I did it again.

Like I was like, like, like, you know, it was like, you know, like, you know, like you catch yourself, like sometimes if you're driving, you know, and you catch yourself. Did you get the listing? No, no. I didn't even call. I didn't even follow up. I'm not following up. I was like, I lost that one.

And that was the last, last appointment I ever went on. And that was one of the writing. That was when I'm like, you know, it's just not fun anymore for me. Well, one more thing here on this. So this is a great catalyst for leaving the business. How did you, what did you, what did you, how did you set up the rest of your portfolio to transition, kind of this day and night, I'm in, I'm out. And what did life look like before and after? The technical answer is obviously you want your expenses to be paid by the passive income

of your real estate. Now, the tricky part that no one talks about, David Green brings it up, but a lot of people don't talk about is like when you're doing single family homes, a lot of times it's inconsistent. You could have one of these great single families, and then the next thing you need a new roof and a new air condition, and in the next three years you don't make a profit. So I had a bunch of single families at the time, and I was just starting to get into commercial.

But I think more than anything is I just had faith in myself. I wouldn't say that I had like this perfect balanced portfolio that paid every bill. I think I had been through the stress of having a lot of things that I signed personally come off the books for me. Like I signed for a big lease. I signed for a copier that it was like $5,000 a month just for this massive copier that we did postcards with and stuff.

I just signed for. We had a bunch of vehicles that I had signed for. And so coming off of that. Just not having that liability was a big relief. But I did have some passive income. But more than anything, I just had faith in myself. I knew that whatever I chose to do, it would work itself out. And I'd figure it out.

And that's all I can really say is I just had faith. I just had faith in a universe and faith in myself. I love that. I mean, you think about people today who are thinking about, I just want to walk away with that. and they think their portfolio needs to generate these returns. I mean, where is it going to come from? Right?

You have this, if you have a stock market portfolio, if a million bucks in there, you're going to get 2% dividend yield on a good day, right? So that's 200 or that's 20 grand a year on that. And if you have a rental property portfolio of single family homes at a, you know, five or six cap rate, absolutely, right? You're going to have that same problem. Even if you have a million bucks there, that's supposedly 50, 60 grand a year on paper, but then when you're roof, when you account for CAPX,

which is not included in these cap rates, that's going to eat up your cash flow and is to a significant degree each year. So, I mean, what can you do here? I think it's you got to know what you want in your life. You need to have, ideally, I think, a strong cash position. Did you have some cash set aside, like a significant emergency reserve when you walked away? Yeah, I did. I've always been kind of a numbers guy. My mom was a math teacher, and my mom is 88 years old and she logs into her Merrill Lynch account every day. She's, it's something that she does.

I inherited it from her. I've always been a saver. I've always been, you know, I'm just obsessed with, with money. Like, I'm constantly moving money around.

And I think it's served me in that, I think about it so much that I do sell stuff. And a lot of people, you know, they don't sell. Like, you know, they don't cash out. And then they just kind of go up and down with the markets. And I'm always cashing.

I'm always kind of like if you had a bunch of furniture in your house and you moved it around every month. It sounds kind of crazy. But I have a lot of capital events. Like I just had, I just sold a shopping center. I just sold an apartment complex we have in Georgia and we bought another one in Florida. You know, I'm just constantly doing stuff like that. But what comes when you do that is you have to pay attention to all your numbers.

So I'm always updating my numbers and I'm always logging into all my different accounts and looking. So yeah, I did have a couple million bucks to answer the question. Let me ask you a question about this concept of selling. You know, one of the things I think that people struggle with. So I'll use myself as an example. I have five properties here in Denver. They've done very well.

They've gone up. Like you mentioned earlier, I'm leveraged, probably similar to the way that you were leveraged on your margin portfolio that you said earlier, right, with probably like 60-40 debt to equity on those properties. But if I, here's my problem. If I sell, which you could say, hey, I would love to reposition some of that. But then I've got to swap my low interest rate mortgage for a much higher interest rate mortgage or I got to trade out of that to, you know, essentially a he lock, you know, or something

that has a big balloon payment or a very short amortization period in the commercial space with that. So do you think that in the, it's a little easier for folks that, you know, once you get past that level of residential investing into the commercial world, that the buying and selling component of that really becomes more of a more of a manageable game than the long term, I'm going to buy this or the 30-year mortgage set it and forget-it approach in a single family or small. multifamily space. I think you're correct and you're thinking like, like the one of the things I did, which I write down as one of my mistakes is I had a whole bunch of those mortgages like per house Fannie Mae mortgages on a bunch of the houses that I had and then I paid them all off.

This was probably like right around the time we were talking probably like two thousand. and probably the worst time to do it, probably like 2011, 12, whatever. I thought everything was going to, whatever, I'm going to pay everything off. So I paid everything off. And then like a couple years later, things started coming back. I wanted money to invest. But I couldn't get them because they were all in LLC. So I ended up getting like a commercial note that has since, you know, I've had to refinance several times.

And it's always at like five point something else. and, you know, and amortez, I, you know, a five-year balloon. So anyways, if your properties are all on those Fannie Mae, 30-year mortgages, those are the ones that probably you should just keep forever because there'll come a time when you won't be able to get, not only that rate, you won't be able to get something for 30 years, especially if you decide to put it in the LLC, then you're really screwed because then the next time you go around,

you have to get a commercial loan because your LLC doesn't make enough money to qualify. Does that make sense? It is hard to trade real estate right now. People are stuck because of what I just described. Right. I would love to be a seller in some of these places, but then I'm either going to have to pay this huge capital gain and then redeploy the assets. Something else I'm going to get a way worse debt. I'm going to get way worse debt terms on than my Fannie Mae 30-year fixed rate mortgage.

So. Yeah. Yeah. And the more real estate that you own, the more cost. segregation and depreciation that you get, and suddenly your tax returns become so bad that you can't qualify for a regular Fannie Mae mortgage anyways. That happened to me for like three years in a row. I was buying so many apartments and stuff and so much new real estate that it ruined my income, and no one would give me a loan. So for those listening, what Pat is saying here is,

Pat was clearly a real estate professional. So that means that losses, depreciation, for example, on rental properties can count against active income. So he could buy rental properties and lose $200,000 in depreciation in a year. Not only that, but when you buy an apartment complex and start moving into the bigger assets, cost segregation allows you to do bonus depreciation. This is a topic we've covered in various videos in the Bigger Pockets YouTube channel. So you might have hundreds of thousands of dollars in losses and actually be getting tax credits as a real estate professional in those periods.

You've got to be careful because you're going to pay it all back on the back end whenever you go to sell those properties unless you continue the game of 1031 exchanging and continuing to buy new assets in perpetuity. But it's a really powerful tax benefit. Now, that's not true. You don't get that. It does not apply if you are a accountant or a lawyer or, or something like that and you're not a real estate professional, then you're only getting passive losses, which are still valuable but have slightly different connotations there.

But that's an awesome tidbit. I want to clarify what Scott is saying, real estate professional. Each one of those words is capitalized. This is an actual thing. I think it's a, what, like a tax designation? This is something there's a lot you have to do to qualify to be a real estate professional.

you can't have a full-time job if basically you can't have a full-time job if you are a real estate professional. Lots of hoops to jump through, but it can be very, very, very beneficial when it comes tax time. So if you think you're a real estate professional, talk to your accountant who will most likely slap you down and say, no, you're not. If you are, yay. Because, yeah, I was like, I work at bigger pockets.

I'm a real estate agent. I have rentals. Like, why am I not? Why don't I qualify? and they're like, here's 17 reasons why you don't qualify. They get a different accountant. I mean, it's the best thing in the tax, United States tax system. It's, you know, it's the reason why Donald Trump's tax returns to show that he didn't pay any taxes because he's a real estate mogul.

Yeah, this is a cheat code here. And Pat, let me ask you this as a direct question with this. Do you think that your wealth accumulation began exploding when you started purchasing these rental properties and taking advantage of these depreciation benefits to shield that active income from taxes. Yeah, yeah, absolutely. I've just been so fortunate to, you know, I'm a real estate agent since I was 21 years old. So like it was never a question whether I qualified for that designation. And it's just so awesome. It's like people don't understand it. Like how could you, you know, how could, how could you not have to pay that much in taxes? It's just the way it is. It's all legal. Yeah.

Especially when your net worth gets a little bit bigger, you know, a couple multiples of your annual income. I bet you're able to purchase properties and essentially offset nearly all of the active income you're generating as a real estate agent, even in that 250 plus range with that, which is a fantastic. I mean, this is the real, so we build a business and you grind it out for those first 10 years to build that net worth and that portfolio. And then these advantages begin just coming in to help scale that portfolio to the next level with that as the, as you're able to shield that active income from taxes with this. So I think real estate professional status is a great opportunity to explore for folks like Mindy, folks like Pat and folks that are thinking about leaving their full-time job but have a big real estate portfolio and intend to buy more because of the depreciation offsetting your active. income. Yeah. So Pat, you've recently brought two books into the Bigger Pockets family here in the last 30 days, which is pretty remarkable. So not only are you a successful real estate agent, investor, family man, general life success story, but you're now, you know, published author a couple times over. Why did you bring those books into the Bigger Pockets family? And can you tell us a little bit about them? Absolutely, yeah. I mean, you guys were,

you're a dream come true for me for both of these books. Like, I'm good friends with Matt Faircloth from, he's a member of Obundance. And, you know, we were talking, Tim Road and I were talking to him about our newest idea of a book at that time, the Quidders Manifesto. And he's like, well, hey, let me introduce you to the Bigger Pockets family. And, And, you know, his wife has a book with you and she really enjoys it. And, of course, we know Erin Amuchistegi and David Osborne and a bunch of other authors that you guys publish. And so we're like, yeah, let's investigate it.

And so let me tell you a little bit about that book. First of all, that around that same time, say 2010, when I kind of gave my business over to Mike Sloan, I met a guy named Tim. Road who had retired at 40 years old. And I met him and I asked him what he did for a living and he said, I ski. And I said, what? And he used to be a top agent himself. And he basically taught me how to remove this identity that we've, that we grow. You know, if you're a doctor, a lawyer or a real estate agent, you grow an identity. I grew an identity.

I was like a, you know, I was a local celebrity in my town. And I had a huge identity that I just gave, eventually just gave up on, or gave away, or walked away from. And he taught me how to do that. And so when I started hearing about the great resignation and all these people quitting their jobs in COVID, I called him and I say, hey, Tim, you are my mentor, I'm your mentee. We both quit our occupations right in the middle, kind of where we probably shouldn't have in most people's minds. Let's write a book about it. And as we talked about it, we decided to write a very tactical book, not a strategic book that is encouraging people to quit, but a book that's only made for

people who've already decided to quit and just don't know the steps to go through to do it. And that's the quitter's manifesto. Awesome. Could you give us a quick highlight of some of those key steps for folks who are interested in learning more? Yeah, absolutely. So, you know, basically we've set the book up, Scott, like this. So we know that quitting is terrifying. The reason that most people don't quit is because they're scared.

It's kind of like going to a cliff and looking over the cliff. If you took 1,000 people to a cliff and they all looked over the cliff, one guy would jump off, one guy or one girl would jump off and create a parachute on the way down. That's what you call entrepreneur, right? The other 999 might take a selfie and run, right, and say it's scary. So we said, okay, what's going to get those people to not run away from this scary, scary, scary cliff? and so we thought of it like a circus where we would build we would teach them how to build a safety net like a trapeze artist has at a circus so a trapeze artist grabs a bar and swings to the next bar and swings to the next bar and swings the next bar and swings the next bar and if they fall they land

on a safety net well the book quitter's manifesto is basically a whole bunch of trapeze bars that the reader can grab onto one by one and we teach them how to it's a little bit of the book. how to build a financial safety net at the bottom. So if they drop, they land on a safety net. So now that they've got the trapeze bars and the safety net, they can go ahead and move forward. And this, you know, the steps range from building a quitting team, which is a group of people that we actually give you little outlines in the book so you could build a team to quit with, people that are going to help you quit all the way up to something called a soul-sucking meter, which is basically a decision-making meter that helps you decide whether or not you're ready to quit or not.

And yeah, and the book's done so far, it's done extremely well. And we're very excited about it. Awesome. Well, it's a great read. We're very excited to have this in the bigger pockets lineup and look forward to sharing this as many people as possible. Pat, that's not the only book that you've written. I mentioned several books here. Can you tell us a little bit about six steps to seven figures as well?

Yeah, so absolutely. So that's a real exciting one. So in 2011, after I essentially decided to get out of the real estate business, I decided to write a book. And it went through several versions. And I sat down with Gary Keller at Keller Williams Realty, who's written, you know, so many bestsellers, the one thing among many other real estate books. And he looked at everything that I wrote and he's like, Pat, the only thing people are really going to buy that's real important to them or what they really want is your story.

Kind of like how you and I just, how the three of us just chatted, right, but put it in a book. And stories like that. And he said, you got a ton of stories. So I sat down and I put him in a huge book that was chronological. like year one, year two, year three. And then he said it's too long. You got to make it more of an airplane read. It went from 400 pages to 200 pages to 200 pages.

And I was able to put it into six steps, six simple steps that any real estate agent could do where you could go from selling no houses to selling 500 plus houses a year. And that was actually went on to make the New York Times best. bestseller list. It made the USA Today bestsellers and Washington Post bestseller list. And that was a very exciting journey. And then about a decade passed. And it was a classic, but it wasn't, you know, killing it like it did when it was on the bestseller list, of course. And so you guys came to me and you said, hey, why don't we do a remake? So I said, okay, what would that take? So we decided what would take is a chapter about how I quit, like the steps that I took after I, you know, made a

million dollars, what steps did I take to actually get out of the business? Because the worst thing to see is like an 87-year-old woman knocking on Fisbo doors, right? Still in the business. We want agents to eventually get out of the business and quit and retire. So what it took to quit and kind of like another chapter about what I'm doing now and what I've done since I've quit. So I took a couple of months and I put my nose to the grindstone and I wrote two new chapters, kind of like two and a half new chapters. And I brought them to two bigger pockets publishing and they read them. They said, man, this is great.

And we package together. And now we have six steps to seven figures new and improved with two new chapters. and it's very exciting. Awesome. And we're obviously incredibly excited about both of these books. Could you give us a quick rundown for those who have not read six steps to seven figures, what those six steps are for folks that are brand new to the title? Sure.

The first step is basically it's a firm. It's most people come out with really big goals. and I learned early on to come out with little goals. Like a little goal would be kind of like what we were talking earlier rather than be the agent of the year or rather than sell a million dollars, it's call until you get an appointment or make 50 calls a day or five calls a day or whatever that is.

The second step will be track, which goes to what you said, which is track, that which is measured grows, right? And, you know, there's a million different ways you can track. And I kind of go through like different ways I've tracked things as an agent over the past 25 years or so as an agent. The next one is mentors and masterminds, which is basically find people who have proven themselves in the real estate business and kind of just copy them. Right?

is just copying other agents, which I did my whole career. And then the next chapter is act, right? And act. Act just means take action on it. You can't just act as a difference between everyone else that took that class and me. I actually took action on it and they didn't, right? The Dunn's hat or no Dunn's hat. Exactly.

Exactly. And then the fifth chapter is Build. And Build is most people's favorite, believe or not. It's kind of a little secret that most agents don't think about, but you build on a success up, not from the ground up. So if you sell a house in a certain neighborhood, you don't want to go market a different neighborhood. You want to go to that exact neighborhood and be like, I'm a neighborhood expert. I mean, people will hire people just because they sold one lousy house in the neighborhood,

and they think that they're like been around for 100 years and it's their first listing. But they don't know. They just have that social proof because it's how. house sold. And you could do that with school teachers. I tell how I did it with school teachers, how I did it with police officers, how I did it with million dollar homes, just taking one success and then building and saying, oh, I sold a house to Officer Jenkins, Officer Smith, and Officer Pinkney. And they're like, oh, really? You're my agent. Boom. You know, so build. And then the last chapter is invest, which is just basically shows, talks about everything you guys

talk about it bigger pockets, which is, you know, don't just, as you make more money, don't just spend more money on watches and bigger houses and more cars and more things. You know, keep your expenses similar and save. Do like my mom does and save money, count money. Make your goal, this is how much money I have today, this is how much I want to have at the end of the year. That should be your goal rather than I want to have three Rolex watches. And that's kind of the, those are the six steps. Well, it's a fantastic book. We're very, we're very grateful that you've decided to publish with bigger pockets and look forward to

sharing it with as many people as possible. My pleasure. I'm excited. Like I said before, I've been an agent for a while. I've been involved in real estate for a long time. And I started reading the book to prepare for this show. And I'm reading and I'm like, okay, okay, you know, what am I really going to learn? I could not turn the pages fast enough. It doesn't matter how much time you have been an agent. If you're a new agent, if you're an older agent, if you think you know everything like me, you're going to learn so much from this book. It's like a masterclass in being a successful real estate agent. I really loved that book. Where can people find out more about you, Pat? You know, here's the thing. This is funny. So I have a new website. It's called hyben.com.

It's the same website I used to have my real estate houses on. And I just had it updated. So just go to hyben.com and everything's on there. Awesome. Thank you so much for coming on today, Pat. It's a great, it's a pleasure to talk with you. And we're very grateful for you joining the Bigger Pockets Publishing World. Thanks, guys.

I really had a lot of fun. And to me, this is enjoyable. I've been talking about the Quitters Manifesto for like 25 podcasts in a row. So to do this was very refreshing. And if either of you guys are ever on vacation or sick or you need to stand in, you know, reach out to me. I love talking. So I'd love to help out if I can if you need me to.

Okay, Pat, this was a delight to talk to you today. Thank you so much for joining us. I had such a good time talking to you, listening to your story and getting this personal masterclass on being a successful agent. Okay, Scott, that was Pat. hyben, a billion-dollar agent, I think that that cannot be stressed enough because that is really impressive when you're selling $50,000 houses. His book, Six Steps to Seven Figures was, I'm not kidding, I could not stop turning the pages.

I could not, I really do think I know everything. And then I read this book and like, oh, I could be doing that, I could be doing that, I am doing that, I could be doing that, I could be doing that. It's just a fantastic book if you want to be a successful real estate agent. It's literally the step-by-step, how-to, I did it, you can do it too. Yeah, I mean, that's awesome. And so is Quitter's manifesto. I mean, it's just a step-by-step guide to overcoming a lot of those challenges that surround

the idea of actually leaving your profession. We build up this concept of financial freedom for so long in our minds and build this these portfolios. But it's really not even about the portfolio when you talk to hundreds of people that are across hundreds of people I've communicated with, and I know that you've met as well, that are struggling with early retirement in a non-financial sense, not just in the context of their portfolio allocations and the cash position and those types of things we'd like to talk about here at BP money.

Right. I mean, Carl struggled. We had hit our number. We had doubled our number. And then he's like, oh, I don't know. I don't know. It's hard. What if?

What if syndrome really, really does hit everybody. So, yeah, that's an excellent book as well. I do want to call out two great nuggets we got from today's show that I really thought were powerful. One was the concept, you know, he's talking about buying and selling, right? And, you know, most of the time when we talk about building wealth at bigger pockets, it's in the context of buying. And why is that? But because the vast majority of people who are, you know, interested in this business are getting into it, right? I'm building my first 100 grand in net worth, my first million, my first whatever, 10,000. And I need to use that net worth to buy an investment and begin

investing in accumulating assets. And he was talking about how not enough people talk about selling, right? And I think that's a great point. I mean, when you have a large portfolio and you've got a big business, asset allocation, redeploying your capital, all that kind of stuff makes a lot of sense. But it's also very hard for investors like us, us being all of the people who are listening and myself included, who invest in single family or small multifamily real estate with 30-year fixed-rate, Fannie Mae mortgages. How do you trade out of one of those properties, right? And I've been looking at this and thinking about this with my own portfolio. If I sell, I have to pay significant capital gains taxes, or I have to 1031 exchange, which involves

me swapping my great mortgage for a worse one, most likely, right? Or if I cash out refinance, I'm doing the exact same thing and pulling, taking out my great mortgage and replacing it with a much much worse one. I've talked to some accountants recently and heard about creative things like buying, selling your existing portfolio and then doing a cost segregation analysis on the new purchase to offset most of the capital gains taxes. But I think that there are not a lot of great options right now for real estate investors who have 30-year mortgages on single-family rentals or small multifamily investments other than to hold on for dear life, right? And just continue holding. I'd be really interested if other folks had opinions on that that were contrary to that

and wanted to discuss those. So I'd love how you think about selling and trading real estate and accounting for the tax challenges, which are good problems for all of us who have been investing for a long period of time. But I think that's an really interesting point there. Absolutely. And I will post this in our Facebook group, which can be found at facebook.com slash groups slash BP money. So please join the conversation. How do you think about selling properties and reinvesting your assets into higher cost and higher interest rate investments? Honestly, Scott, my thought is, why do you have to sell? I don't, but I just thought about it in the context of trading that real estate.

And it's like, if I wanted to sell, I would have to really believe in my alternative investment because I'm going to be giving up a lot in order to do that in the form of paying taxes right now and exchanging my great mortgage for a much higher one. So if I want to avoid the taxes, I'd have to really believe in the next piece of real estate over and above my existing portfolio. So I'm not going to sell. I'm happy with my current portfolio. But it's a challenge for a lot of folks there who have experienced that appreciation

and don't have an alternative to deploy it into. So the second big point, though, was the real estate professional status. Real estate professional status, again, is a tax designation that says that if you are a real estate professional, for example, a real estate agent, and you would do that as your full-time or primary job, you work a certain number of hours at it, then you can use the depreciation from a rental property, the passive losses that real estate often produces to offset earning earned income. And that can be a major tax benefit when deployed appropriately.

And that advantage compounds considerably for real estate investors when their portfolios begin to balloon to multiples of their annual income, because you may be able to offset all of your earned income or a huge percentage of it with that depreciation. So a really, really super powerful tax benefit and interesting concept there for folks to explore. And I'm sure there's going to be a great discussion around that as well. And we will post that question in the Bigger Pockets Money podcast, Facebook group as well. Facebook.com slash group slash BP money. Okay, Scott, should we get out of here? Let's do it. From episode 339 of the Bigger Pockets Money podcast, he is Scott Trench and I am Indy Jensen saying,

thank you for listening.