BiggerPockets Real Estate Podcast - 179: Doing the “Impossible” by Buying 100+ Units in His First Two Years with Dale Hensel

Episode Date: June 16, 2016

What stops most people from achieving massive success through real estate? Money? Cheap properties? Knowledge? According to our guest today, it’s fear. That’s why we’re excited to introduce you to Dale Hensel, an investor who’s done everything from single family to multifamily to notes and a LOT more. You’ll be amazed at the simple way Dale used his “ignorance” that something should be hard to build several large, successful businesses — including one real estate company he took public! In This Episode We Cover: Dale’s very first house that he bought in 1996 How hitchhiking led him to figuring what he wanted How he achieved 250 apartments in two and a half years! The need for being confrontational in this business The cool story of how he got started as a landlord How he added multiple properties just because he has no money What exactly a “wrap” is The 3 important pieces of paper in a real estate transaction The benefits of not knowing what’s “impossible“ The difference between performing and non performing notes A discussion about his public company And SO much more! Links from the Show BRRRR Calculator Books Mentioned in this Show Rich Dad Poor Dad by Robert Kiyosaki The 4-Hour Workweek by Timothy Ferris The Millionaire Fastlane by MJ DeMarco Tweetable Topics: “I didn’t know that it was supposed to be hard or impossible, so I bought 250 apartments.” (Tweet This!) “I don’t have a filter that says ‘Well, they did it, I can’t.” I have filter that says, ‘If they did it, so can I.'” (Tweet This!) “Take measured, gentle risk until you can push yourself a little further, and realize that you can go a lot further than you ever thought!” (Tweet This!) Connect with Dale Dale’s BiggerPockets Profile Dale’s Facebook Page Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 179. And so I didn't know that it was supposed to be hard or impossible. So I bought it. I had like 250 apartments running around being a landlord. It was a lot of work. And then somebody said, oh, you can't do that. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing, without all the height, you're in the right place. Stay tuned. and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dorkin.

Host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. Hey. What's going on, man? Not much. How are you doing? I'm good. How are you doing? I'm all right. Did you see the mark on my face?

Check us out. I'm going to come towards a camera. Do you see right there and right here? Dude, you were born ugly. What are you trying to show me? I got nails. in the face today by my buddy we were playing rocketball. It didn't whack me right in the face.

Wow. Yeah. Wow. Yeah, that was, yeah, I think that kind of looked that way before, man. I mean, might actually be an improvement. Yeah, maybe my little black nose here. I don't know. We'll see.

Yeah. It didn't break. It didn't break. No, I'm not going to cry. I'm not going to. Yeah. You take over. Oh, man.

I was playing racquetball and my buddy beat me up. No, man. I thought I was going to have like this entire black eyes. Yeah, those metal records do not feel good when you get hit by him. No, they don't. No, I'm sorry about that, man. Yeah, I'm sure you are. All right, yeah, moving on.

Yeah, let's move on. You know, you got a cool show. Very cool show. I mean, this guy's motivating. Yeah, he's motivating. He's super high-end yet super, like, relatable. I mean, like, he's done everything from single family houses, apartment. He bought, like, what do you say, 200 units in his first couple years.

Yeah. Without even knowing what he was doing, never read a book. Because he didn't know that he shouldn't. He didn't know that's not how it's done, so he just did it. Took a company public. I mean, this guy's crazy. So you'll love it. People love it.

Yeah, that's awesome. But before we get to that. Yeah, let's bring today's quick tip. All right, today's quick tip is we have officially launched the new burr calculator by rehab, rent, refinance, repeat. It's a strategy. We talk about a lot here on the podcast. We talk about a lot on the Bigger Pockets webinars. And we now officially have a new calculator that will help you analyze deals.

So how it works is there's simply three pages, one, two, and three. And page one looks like the rental property calculator. Page three looks like the rental property calculator. But page two actually gives you the ability to input a original loan, like when you first buy the property, maybe using hard money, private money, whatever. And then the ability to put in a refinance loan, something you refinanced later on. and you can put all that in and it calculates all this cool stuff out. You can see your kind of your cash on cash return, your cash flow, your overall return,

all that good stuff, both before and after the refi. So if you're into Burr investing like I am, you're going to love this thing. So check it out at biggerpock.com forward slash kelk, biggerpock. Biggerpock.com forward slash kelc. Check it out. Yeah, that's awesome. You know, we're always doing cool stuff here at Bigger Pockets. I'm so proud and, you know, it's great.

So definitely get out there and check it out. With that said, before we bring in today's guests really quickly, guys, this is show 179 of the Bigger Pockets podcast. If you are loving these shows, you know, listen, we try to put on an amazing show every week. We don't always nail home runs, but I think we do a pretty solid job all around. Every one of the home run, Josh. Unfortunately, I'm stuck with my co-host, Brandon, and, you know, that makes it difficult. But, you know, I think we do all right together. I really do.

So, if you do agree with us, please jump on. You know, any of these platforms where you're listening to the show and leave us a rating or review, it would very much help us out. That would. That would. That would. And so, you know, iTunes is probably one of the most powerful ones. So obviously, we would love for you to focus there.

That said, have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. The lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a program to help prevent that. With their new express rental loan, you can close in 10 days or less. And they still offer their price beat guarantee. So you can get great pricing and a timeline you can count on.

Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy,

brand new construction homes, 10% below market value, and the best markets across the country, without making real estate your second job. That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. You've upgraded how to buy properties, but did your insurance get the memo? When investors start scaling, insurance can't be an afterthought.

Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays, or properties mid-rehab. That's where blind spots can creep in. NREG works exclusively with real estate investors. They understand portfolios, how risk compounds as you grow, and why insurance should protect your upside, not just a checkbox. One uncovered claim can undo years of progress. Before your next acquisition, review your insurance.

Talk to NREG and get investor-specific coverage from specialists who actually understand real estate at NREG.com slash BPPod. That's N-R-E-I-G.com slash B-Podd. Let's get them. We've got today, we've got a guy for you. Dale Hensel, Dale, Dale's got a crazy awesome story. This guy, like, hitchhiked around the country for a year, was a commercial fisherman in Alaska, just, you know, getting buying properties because he didn't know he shouldn't be buying properties the way he was buying them. Not that he shouldn't, but, you know, a lot of people abide by these rules that you've got

to start one way and go another path. And, you know, at the end of the day, there is no one path. And that's what we try and harp on here on the show is, you know, whatever works for you is going to work for you and you find your own path. And anyway, so Dale, he's inspiring. He's energetic. And he's done some amazing stuff. So definitely listen to the show.

Definitely link up with him on the show notes at biggerpockets.com slash show. 179, and I strongly encourage you to connect with him on bigger pockets through his profile. So, all right, Dale, welcome to the show, man. It's good to have you here. That's great to be here, guys. Sweet. So you've been in this game for a while now, correct? I'm not calling you old here, but, you know, been in this.

Yeah, I think he said that before. Well, earlier, 96, though. 1996. Okay, well, earlier before we started, you said something, and I was going to make an old joke, And I was like, I don't know you good enough to be making fun of your age yet. So I won't go. But you're not like 70. You're what, 68?

I mean, what? Keep going. See how far are we going. All right. I'm 46 this year. No, okay. All right. I mean, Josh is almost 46, right?

What do you, Josh? Like, I don't know. 40. Okay, well. So you've been doing this since 1999. You know the guy who teaches math, aren't you? I don't do math. Come on.

You know, if I was the guy who taught math, you'd be flunking. All right, so let's talk about how you went from night. How did you start? What was your very first deal? My very first deal, I bought, you know, this is kind of a deal, but not really. My first house I bought when I was about 23 to live in and everything else. I was up in Alaska part of the time and down in Idaho part of the time. So I bought a house to live in.

So that was my very first deal. But I didn't really start buying real estate until about 1996. Three years later, I was about 26 years old. And I bought a 15-unit apartment complex. The very first thing was that I was. I bought besides the house I lived in. I didn't go for houses. I just went straight to apartment complexes. Why is it? I didn't know any better. There you go. Too stupid to know otherwise, right? Yeah, I just, you know, there was an opportunity. I had a chance to buy it. I said, I'll take it,

and I bought it. So I didn't know that I was supposed to do single families and then apartment comp. I didn't know there was any rules to this stuff. So I just did what, what opportunity was in front of me. By the way, for those people listening, there aren't rules. And so there's not a you should. There isn't. You're absolutely correct. I think that was the biggest thing for me to learn was, well, I didn't think there was any rules. And later on, I found out I was right.

So it was awesome. Yeah, despite what lots of people will make you believe the people who want your money. Follow my step-by-step plan and you'll be fine. Hey, I want to rewind for a second because we're going to obviously dig it on this property. Sure. Tell us about who you are. Like, how did you, you know, you're talking about a lot of. I know a few things about you, but I think our audience doesn't.

So what's your background? What got you? What were you doing professionally at 23, 26? And why real estate? So when I was about 19, I spent about a year and a half hitchhiking around the U.S. because I was really curious. Mostly I was curious about what's like the lowest common denominator that makes us all people? Or how are we?

That was just a big curious thing. So I was very curious at the time. And I just took off on the road and learned a lot on the way. It was awesome. I don't recommend it for most people, but I had a blast. But I learned really quickly, you know, the world is not as big of a scary place as I originally thought it was. It's out there and big scary stuff. But when I got out there and was doing stuff, I thought, well, this is kind of cool.

People were people, and most people everywhere were pretty much the same. When I was about 21, I hitched up to Alaska, Alaska. And I was living in the woods for a couple weeks, walking the docks. I wanted to go fishing on a boat. That's what I wanted to do. I'd heard about it. It sounded cool. So I just head checked up there and was hiking up and down the docks every day going, hey, do you need help?

Do you need help? Do you need a deckhand? Do you need? And somebody finally said, yeah, get on the boat. First boat was the worst, right? 90 hour work weeks, I made 90 bucks for the whole month. It was terrible. It was just awful.

I lived on the boat. It was just, but a couple of the guys in the fleet saw that I, you know, I had a pretty positive attitude. So they hired me on and said, hey, well, you know, you come work for us and it turned out to be great. And I spent the next five years in Alaska on and off doing various fisheries. I've done almost all the fisheries up there, a little bit of crabbing, a little bit of halibut, salmon, dive fisheries, all sorts of really cool fisheries up there. And when I came back to Idaho in about 2005, I think, 2006, I was working as a repo guy,

bill collector, and I was kind of realizing that 10 bucks an hour sucked compared to what I was making in Alaska. And I didn't really want to keep being broke. So I started looking around and found a guy who knew about apartments and he taught me a few things and I started doing them because I just didn't know there was, you know, I didn't know there any better really. I didn't know it was supposed to be hard either. So I jumped in. The short version from there is I spent a lot of years doing, being a landlord, buying up more apartments that eventually I moved to Dallas, bought more apartments. That's a funny story in itself. I then took a company public in 2002 and started buying up non-performing mortgages in bulk from banks, and I bought a lot of those, and I sold my position

off in 2007. I started the public company in 2002 because I figured banks were going to crash. This is kind of like pre-big, big, the big short type movie stuff. I just, I knew that they were doing the same things, stupid loans that they did back in the savings and loan days, except they were doing it more nationwide and on a larger scale. So I wanted to have cash available to buy lots of non-performing loans. Built a nice system, built a nice company, sort of semi-retired. drove from Texas to New Mexico, where when I sold my position, I was like, I don't want to live in Dallas anymore, moved to New Mexico in Albuquerque. And on the way over, it was the day that Lehman crashed. So I left there. And I got here a lot poorer than I had left Dallas with 12 hours earlier.

And I'm like, what the? I still took about four years off, got back into real estate or got back into doing businesses about 2011, built a huge online business. I started buying up foreclosures last year again. I was like, okay, it's time to get back into real estate. I've taken a few years off. And so I'm buying up some commercial and now we're doing assisted living. So that's kind of like a really quick summation of everything I've done. So you can dig in anywhere you want. Yeah. Well, let me start at the end. How many deals total have you done now, like if you had to guess? So in about 2007 alone, I was doing, we were buying sometimes as much as two, three hundred houses a week all over the country in big packages from banks. So I never went back and actually

counted those. So those were a lot. But, you know, last year we bought up 43 houses in about seven months just to kind of get my team built out here. So we bought up about 47 houses on the foreclosure side. We bought four assisted living and we bought one large commercial building last year. So that was just last year. I don't really know. I'd never really counted, but a lot. 250 apartments when I started. I bought those in about two and a half years and then lots of mortgages. and then occasionally people would just give me houses that I'd buy them. 250 units in the first couple years. Yeah.

When I was 26, I bought up about 250 apartments. Whoa. And I didn't know what I was doing. It didn't have any money. I didn't start with any money. It didn't have any good credit because I had gotten divorced. And so I didn't know that it was supposed to be hard or impossible. So I bought, I had like 250 apartments running around being a landlord.

It was a lot of work. And then somebody said, oh, you can't do that. Thank God I didn't hear him early. Yeah. Who's this we? You keep talking about we? Is we just you and the company as an entity? Or is we,

do you have partners? In various deals I've had, sort of like the public company is, I would always refer to all of our shareholders as we. Sure. Various times I had partners. So I'm just used to referring to we, but it's usually me and maybe somebody else,

maybe not. Nice. Yeah, I used to do that when Bigger Pockets was pretty much me and no other staffers. And it was a way to make it look like, we had a big old team. We, bigger pockets. You know, yeah.

Right. Well, that's awesome. So let's, I want to kind of work my way forward. I know Brandon jumped to the end, but I'd like to kind of go back to the beginning because, you know, I think it's kind of hard for people to grasp like buying hundreds of houses and weak and packages and dozens. I mean, I think it would help to kind of get us to that point. You obviously didn't have the capital or resources to do that when you first started. So the first deal you did was this 15-unit property back in 96. Tell us how that deal came about, and then let's kind of move from there forward towards the next bunch of deals that you did.

Sure, sure. So the very first one I was working as a repo, bill collector guy, right? So I kind of grew up non-confrontational. My whole family was very non-confrontational. When I got out there in the real world, I realized that that's not the best model of the world to run with. And it didn't really provide me what I was looking for, and I was always trying to avoid confrontation. So one of the best things that I ever did, although I'd learned from about 20 to 26 to start being confrontational a little bit, was pick up a job as a repo guy, bill collector, because you can't be non-confrontational and be a bill collector.

You kind of got to get after people, and you've got to come into their place and say, I'm taking this stuff. So it was a really good experience for me, and it actually prepped me for being a landlord later. I didn't realize that at the time, but it was perfect. During that time, I was also interacting, well, I knew where a lot of the apartment complex is, were because I was going and visiting people and trying to, you know, collect money in these various apartment complexes. So I met one of the owners there and I said, well, someday I want to buy 10 houses because I have a house now and I have a couple roommates and I realized that at the end of the month I had more money than I didn't. And it was all more money than bills. It was awesome.

Only 100 bucks. But I thought if I had had, say, 10 houses, I could make $100 per month and that would be awesome. I'd have income coming in, whether I was working or not. And I told this to this apartment guy and he kind of laughed. I think at the time he had five or six hundred apartments. And he said, do you really want to do this? I was like, absolutely. He says, get in the car. Let's go over. Look at this place. He drove me over to this 15 unit apartment complex, totally run down. It was full of a lot of drug dealers and just it was, it was a really sketchy place. And he said, you want to buy this? I know the guy who owns it. We can set it up. Here you go. He needs to get rid of it. His wife doesn't like it. And he's not paying attention to it.

I was young and I was invincible. And I said, sure. So he drove me over to the guy's house. Then we went over to the escrow company. And we had looked at it at 9 o'clock in the morning. And by noon, I owned it. And he says, no, no money down. We're just going to give this to you.

Run it like this. Pay these payments. Here you go. Done. And I was like, wow. So by that day, I went back over and introduced myself to everybody. Knocked in all the doors and said, I'm your new landlord. And you owe me rent.

So collecting rent suddenly wasn't that bad of a problem. Bill collector job. Bill collector job. Bill collector. Right. I was like, you got to pay me. So I started to collect rent. And of course, I was kicking out the drug dealers. I was kicking out everybody else. You know, I went in there one day. There was some guys cooking meth. I'm like, I'm bringing my cop friends over here in 24 hours. Went back the next day. The place was cleaned out. That was my first eviction. I didn't even know what it was. I didn't even know what it was. And so what happens is over the next three or four months, I'm kicking people out. Of course, it tightens up your cash flow a little bit. Keep making. the payments, pay all the bills, and then I start putting people in there and cleaning them up and painting the place up, and it starts getting better tenants. And suddenly, wow, I'm making almost as much as I'm making up my regular job. I'm going, this is, this is kind of cool. I need another

one. So I called up that guy who had showed me the first one. I said, I need another one. And he goes, I know another guy who's selling one. It's too small for me. It's 16 units. Why don't you go, let's go look at this. So we did. And, you know, it was very similar. It was like, hey, you know, I want to sell this and my wife's doing this. I want to do this. But you need to give me $15,000 down for me to sell it. I went, I don't have $15,000. I've been putting it into the apartment complexes or the last one. I don't have $15,000. So I asked the guy with the apartments, I said, how do I get $15,000?

And he gave me a phone number. He says, I don't know. This is an old guy who has money and he loans it. I call him up, see if you'll loan it to you. So I called up this guy. I didn't know it was supposed to be hard. I didn't know there was like this big money. I call him up, says, hey, I need $15,000 to buy this apartment complex. And he said that you, you know, you do that sometimes. And the guy, I hear this little feeble voice on the other side of the line that goes, sounds good to me.

And he was 93 years old. And he'd been owning money most of his life. And so I drove up to him and his wife's house, sat and had tea with him for a couple hours and talked to him and told him what I'm doing. And he's like, I used to buy whole towns up in Wyoming, if it's Wyoming. then why. And so he told me, this is back in 96, so he was 93. So he went back a ways.

You could probably buy a whole town of Wyoming at that time. So he loaned me 15 grand. And the next day, I went over to the escrow company, signed all the paperwork, and now I had 31 apartments. It was awesome. And about that time, my boss came to me and says, listen, you're kind of doing this thing where you're like, you're trying to do all this work for me. And you've got like 30 apartments running over here. How about if I just lay you off so you can go do this?

And I was like, yes, because I hate you. Right? Yeah. I hate it. And I said, all right, fine. He gave me a couple weeks severance. And I thought, and I went home and I sat around for a little bit and I did my math. And I go, well, if I have to clean up this other apartment, I'm going to take all this

cash and put it in there. I can't afford to, you know, run these apartments and have and live and take money out yet. I can't do that yet. So I realized that I needed to buy more apartments to be able to not go get a job. So it was either get a job or buy more apartments. Well, since I had no money, the best idea was to go get more apartments so that I didn't have to go get a job. And then I would have enough time. Very logical thinking, of course.

To me it was. You have to buy more properties so you could have money to not be broke. Well, that was my thing. Duh. Yeah. Right? This is where total ignorance was on my side. Because if somebody had said,

sat me down with a pro forma and everything else. I wouldn't have done any of this stuff. No, I was like, I need to buy more apartments if I want to keep, if I want to have time to work on the current apartments and make enough money. So I can't get a job. I need to buy my apartments. So this time I called up somebody else and says, do you know anybody town who's selling an apartment complex?

And I made three or four phone calls. And somebody said, yeah, this guy's got a 44 unit apartment complex. And it's kind of rough, but it's like your other two. Why don't you talk to him? Went over, talked to him. We worked out some weird hinky deal. No money down. And he's like, yeah, my wife hates this.

I'm way out here in this other town, and I don't have time to run this, and I'm doing this. And he was just overwhelmed. And so I picked it up from him. And suddenly I had 44 more apartments, so I didn't have to go get a job. I could afford to not get a job. And I did the same thing I did the other two, which is suddenly painting the places and kicking out the bad people and managing them all. And, of course, that allowed me to get, you know, cash flow going and everything else, which is great. And so about six months later, and we had a whole batch of mess.

heads moving to town, I guess, or something. And I had to kick out like 20 people out of all my apartments. I'm like, ugh. And my mom was working for me at the time and said, Dale, we don't have enough money to eat because she was painting the houses. And I go, you're right. I need to go buy more apartments. And so it was the funniest thing.

She told me in the morning, she says, we don't have enough money to eat this month. What are we going to do? Because we just kicked out a bunch of people and it was going to cost us a bunch of money to fix them all up to rent them out because they'd been torn up, you know. So I had a Jeep that was paid off at the time, and I go, so I started calling my friends, and I found another 44-unit apartment complex with a triplex that this guy owned. He says, I got to move down the road to another city because Albertson's just promoted me to store manager, and I've got this 44-unit apartment complex, but really my wife hates living

here and hates doing this stuff, and I got to move, and can I sell it to you? And I was like, sure. How much do you need? He says, well, I need about five grand to move down the road. And I'm like, hold on. So I drove my Jeep over to one of those title company places, and I said, I need five grand. They gave it to me. And I drove back, gave him the five grand.

We went up to the title company, closed that day. And I went around afterwards, he said, well, here's a list of all these people that I just haven't gotten any rent from because he was kind of non-confrontational too. And he wasn't a bill collector. He wasn't doing very well at this because he didn't know how to ask people for money. So I got the keys and I ran around, knocked on all the doors that day. It says, hey, you owe rent. See this page right here? you owe this rent.

And they were like, oh, yeah, yeah, I got some here. By that day, I came back and told my mom, I got $3,500 from all those money I collected from over there because I borrowed $5,000 to buy that apartment complex. And my mom said, I got to paint more apartments. So that was how. Yeah, I know. That was her response. It's like, I got to paint more apartments.

And I was like, absolutely. Can I slow you down for a minute? Certainly, certainly. Okay, because this, this, I mean, you've got me. Yeah, I'm sure anybody listening to this is now their head is spinning. We got the first 15 unit, then we got the 16 unit, then we've got this 44. About six months apart. Then another 44 units, six months apart.

It's just one to the next to the next, the next. Bam, bam, bam, bam. This guy who doesn't know his head from his ass is just acquiring units at a pace unheard of. And it's amazing. And so I want to kind of step back a second and ask about how we actually made these deals happen. So the 15 unit deal, you met the owner, the guy was just done. He wanted to get out. He gave you a no money down deal. He wanted to unload it. So what did that look like? I mean, he, tell us, you know, what was the structure of that? Okay. So we did a very, it was in Idaho. So we did a very simple rap, right? So we created a wrap. There was an underlying mortgage on the property. Can you explain what a rap is? Sure, a rap at the time, I didn't understand it, but I can explain it pretty well now. A wrap is there is an underlying mortgage. He owed the bank X number of dollars.

And he sold it to me for X plus. He owed $80,000 on the property. He sold to me for like $200,000. And what we did was we created this paperwork that said, Dale owes this guy $200,000 and he will make, I can't remember, $2,000 a month in payments to this guy every year for the next 30 years. And behind it, in the escrow company, it says, of that $2,000, you know, $7,800 a month goes towards

the underlying mortgage and the rest goes into the gentleman's pocket because he had all this equity. And so he sold it to me for 200 because he'd owned it for years and years. And he'd paid it almost down to about 80. And so that was the wrap. It was paperwork that was inclusive of the underlying deed of trust or the underlying mortgage from the bank yet didn't violate the deed on sale clause. So the gentleman owner financed it to me. And we wrapped a prior mortgage into this deal.

So all I had to do is write a check for $2,000 per month. And the escrow company would send the mortgage, the $800 and the taxes and whatever else was necessary. And they would send the balance to the gentleman who actually sold it. And so that's what a wrap is. It's inclusive of any additional liens, mortgages, contracts, et cetera, on the property. And we're creating a new one that if anybody were to look into the title, they would see this new sale, this new lien. and they'd be like, okay, there's this much owed, and it's inclusive of additional liens and mortgages in the whole deal. Does that make sense?

Yeah. Well, when he offered this to you, I'm assuming you didn't know what the hell he was talking about, correct? He didn't really either. I'm assuming you just signed it and said, all right. I read it. Yeah. I read it. So if he didn't know what he was talking about, who put this business together, who kind of formulated the rap?

Was it the escrow company? The escrow company. The escrow company keeps attorneys on staff, and they also are usually pretty familiar with the rules of the state. And so they will create a – they complied with all the rules. So they said, here's how we transfer ownership of the property, the deed, and how we secure that ownership against collateral or collateralization that is security for the person who you owe money to. Because there's really three pieces of paper in real estate transaction. There's the deed, which denotes ownership. There's the I owe you, which is the promissory note and says, I promise to pay, and here's what I owe you. And then there's the collateral agreement that says, if you don't pay, we're going to come back and get the deed.

And that's either the mortgage or the dea trust depending on the state. So those three simple pieces of paper are really all that are fundamentally needed in this transaction. And how else you or what else you combine in here is simply contract law or the state laws for various compliance reasons, things that you have to disclose, etc. But fundamentally, what we have are those three pieces of paper, and then they just wrapped a nice little contract that spelled it out in pretty simple words what I had to do to keep the deed and subsequently pay it off in the future in a real simple format. Pay this for this many years, and here's your principal and interest, and there you go, which is the IOU plus the interest rate, right? So when you talk about these wraps, I mean, like today, like I wouldn't generally recommend an investor go out and find somebody who has a mortgage and just go and do a wrap on it. because I feel like that could violate the do-on-sale closet list today. Was it different back then?

So it's state-dependent, right? And this is 1996. So a couple of things have changed since then. Dodd-Frank, law, et cetera, have really, and plus a lot of banks have gotten smart to this kind of transaction. So over the years, they've really changed their thing, so they beefed up their due-on-sale clauses. And they've really beefed up what they consider a sale.

I mean, people who use land trusts now usually typically do, use them for avoiding the due on sale clause. And you can do a real estate contract, which is we didn't really sell it to you until the last payment. And that's not a due on sale clause. I looked at my own mortgage a few months ago. And the do on sale clause, I mean, it listed, it was like half a page. And it listed everything from a, you know, a rap to a lease option to, I mean, it listed

everything that you could think of and said, you can't do any of this. And like, they're getting very, very specific now. So just something for people to listen to. who listened to this. It's great. This is 20 some odd years ago. Yeah. Yeah.

But I mean, it's clever. What I love about your story, I mean, like, is that you didn't know it wasn't possible. And so, like, you just did it. I mean, there's a famous story. I'm sure you guys have probably heard it before, but like some, like, some, like, at Harvard, Stanford, something like that, some big school. And the professor put this question on the board that was unsolvable. And the whole class was just for, you know, supposed to see this unsolvable thing.

Well, the one kid wasn't there for class today. He showed up late. He sees the question. He goes home and in two days. solves a thing, turns it in. And it was an unsolvable question because he didn't know it was impossible. And so he was the first one to solve that thing in just two days. It's very similar to the Gordian knot problem that Alexander came up against. It requires lateral thinking, you know, so it's just like if I'm too broke to eat, I should buy more assets that pay me. I mean,

I just think laterally instead of I can't, right? I can't. It's not really in my vocabulary. So, you know, that's, it's a more, it's definitely more of a lateral thing. thinking issue than anything else I found. Yeah. Right on, right on. So I'm assuming you probably use wraps and other techniques to finance future properties. But before we kind of dig on that, man, these deals, I'm going to say, for lack of a better term, they all fell in your lap. I mean, they didn't necessarily fall in your lap. You had to work for them, right? Well, that's part of the thing is the viewpoint that I have had most of my life allowed them to fall into my lap. Actually, it just allowed me to recognize what was sitting there on the ground that most other people would look at and see this big barrier of I can't.

I want to ask you on that specifically, I mean, the route that you took to kind of overcome that I can't, right, was to go and literally just ask other owners, other investors, like, hey, what's out there? What's available? Right. Is that a sustainable method for acquiring deals? Yes, and here's how I've done this, because I've done it in more than one place in my life. I look at somebody and say, they're doing something like you guys, right? Wow, you built this huge podcast and this website and you have all these visitors. If I came to you guys and said, so how do I build an authority site around a specific topic?

You guys could probably recollect some of your mistakes and some of your greatest moments pretty quickly. And I don't have a filter that says, well, they did it. I can't. I have a filter that says, if they did it, so can I. And so it's more of a fundamental process. And so I've asked, I didn't know how to take a company public. I didn't go to school. I didn't go to college.

I'm not a college kind of guy. But I'm not necessarily uneducated. I went and I asked a couple guys who had taken companies public. And I said, how do I do this? And they said, well, here you do. And they drew it out really simple. And I just followed the simple map. And it was really pretty quick and easy how that worked.

I was surprised that it worked so easy. I was like, why? What's the problem here? I had the same perception towards that as I did towards acquiring apartment complexes. Or this building or some of my other buildings in Dallas or some of my pastilles. I just go, well, I just asked somebody else who did it and then I did it. It was awesome. Yeah.

No, that's great. It's a filter. What? I was going to say, you know, I think I've followed a very similar path in building what we build. I mean, I've never done a podcast before. I don't know what I'm doing. I see other people do it. Let's try it.

Let's see if we can do it. we're doing. Hey, never built a community. I mean, like, I think most, most successful people that I meet, you know, are breaking barriers. They're doing things that, I mean, look, people have bought real estate before, before you did, but, you know, everybody has to learn somewhere, right? And you can systematize a process, but, you know, in order to kind of differentiate what you're doing and create something great, you've got to kind of go out on a limb and try stuff out. And so that's what you're doing. That's what great business people are doing.

I mean, that's what allows, you know, great ideas to come forth. And, like I said, like some of the smartest people I know and some of the most successful business people, I know real estate or not, I will talk to them. These are people running companies doing, you know, tens or hundreds of millions of dollars in business. And I'll say, hey, do you know, it's one of the questions I love to ask. Do you think you know what you're doing? Do you feel like you actually know what you're doing?

They're like, I don't know. I know the basics. And halfway through, never. Yeah, we're just kind of, we're figuring it out, right? Make the best guess and see what happens. You got to try. You've got to start is the key. Yeah.

I think that, so here I had to talk with a friend of mine recently about this exact thing. And why is it that I can do this and other people have a hard time doing it? And I said, you know, I look at risk differently than a lot of people. I'm willing to fail and take the risk. And I don't think that the risk is the same level of scary in my head as it is in their head. And here's an example. When I was younger, I would take these risks. I'd take smaller ones at first, and then I'd take bigger ones, and then I'd take bigger ones.

And I'd realize, wow, worst case scenario, I skin my knees. And I fell down and I went, oh, damn, that hurt. But it didn't crush me. It didn't take away my birthday. Nobody came and ate me. Nothing came out underneath my bed. Big fears. Yeah, these are big unconscious fears that say, oh, if you do this, you're going to end up in jail,

or you're going to get eaten or something's going to have something terrible. And the brain is really geared to keep you alive. It's not to keep you happy. It's not to make you rich. It's geared to keep you alive. And if it scares the hell out of you, then it's doing its job. You're still alive. Great.

It wins. It's not trying to keep you happy. And you have to look at it. You're doing a good job. You're awesome. Let me try to scare myself a little bit further and see how far I can go. And you realize, wow, this is not nearly as scary as I thought. So I think it's a lot of schools and everything else.

I see a lot of these young kids today who come to me and go, well, I'm terrified of this. My family says this. And they have all of this proof, whether it's from society or YouTube or from schools or from the parents. They say, don't take risks. It's scary out there. And I'm kind of the opposite. I'm like, take measure gentle risks until you can push yourself a little further. And you realize that you can go a lot further than you ever thought.

Yep. And it's not going to be that scary. Awesome. People love to call real estate passive income, which is an. interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the

details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade, and if you want to learn more, visit BiggerPockets.com slash retirement. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG.

They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPPod. That's N-R-E-I-G.com slash B-Podd. If you think property management is expensive,

try mismanaging a vacancy or an eviction or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. Good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment.

They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score. And they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. I love it. Cool. Well, hey, let's move on a little bit because, man,

I feel like we could spend like a month talking to you about your story. So you went about all these multifamilies, and then you took the company public, and then somewhere in there you said you were doing notes, correct? Oh, yeah, non-performing notes. Yeah, I want to talk about banks. I want to talk about that because, you know, we've had a couple note guys on the show,

but it was quite a while ago. We haven't actually done a show on notes in, I don't know, a year or two maybe. So let's just cover some basic stuff about notes for people who might not note that. even is. So first of all, what is a note and then what's performing versus non-performing? Okay. So for the all practicality, for the real estate market, a note is the mortgage that somebody typically goes and gets on a house. When you go to buy a house, if you don't have the cash, you borrow it from someplace. Okay, typically a bank. You can borrow from private people or

whatever, but let's go with a bank. And a bank makes a loan to you. Let's say it's a $100,000 house, you put $10,000 down. They loan you the other $90,000. Well, the bank wants its money back plus it's VIG, its interest over the next 20, 30 years. And the bank makes its money by loaning money and getting its interest over time. So when I say a note, there's usually separate components that make up a note. Like I said earlier, there was three pieces. There was the deed or the ownership. Most people think that like in a foreclosure, the bank owns the house. Technically no, they have a security interest in and have the right to grab the collateral or grab the ownership from you if you violate the agreement that you have, but they technically don't own the house.

You do. So if you own the deed, right, that's the ownership, and there's a lot of different deeds. Deeds always transfer ownership. There's like a quick claim deed. There's warranty deeds. There's sheriff's deeds. Those are all forms of ownership or ownership transfer. The next piece is also known as the IOU or the promise to pay, also known as sometimes just the note. It's the promise that you plan to pay this person on given terms over a period of time. Like, I will pay you back over 30 years, the $90,000 at $600 a month at X interest, and on this rate and schedule that we both agreed to. The final part is the security interest in the deed or the ownership of the deed, well, ownership is still yours, but the security

interest in the property, the deed, to guarantee the promise to pay, the IOU. And that is either a deed of trust, which, depending on which state you're in, or a mortgage, again, which state. So there's deed of trust states and there's mortgage states. And the way that they enforce that is dependent on the state rule. So if they enforce, if you don't pay, you violate the IOU, well, they go after the deed, the ownership. And so they have a mortgage. They go after that and say, you have violated this agreement. We are going to go through the state sanctioned process to take the collateral or the house away from you.

And so we can resell it and hopefully get our money back. So that's a note for all practical intents and purposes of what we're talking about. By the way, you said you didn't go to high school, right? No, I went to high school. I didn't go to college. You didn't go to college. Oh, okay. Yeah, well.

You know quite a bit. The same thing applies. I mean, you're, you're, you're, exactly, but you're a very, very smart guy. And I love, I love it. I think it's awesome. I mean, it's just irrelevant of college or anything like that. I just think your capacity to explain things is very, very good. Thank you.

I've been doing this for a little while. So here's the thing. Now you have this note, and banks loan this money out so that they can make a profit. But the problem is that because they borrow money from the Federal Reserve, they have what's called a loan loss reserve in their bank where they say, we have to put up a certain amount of money against potential losses on the loan so that we can make sure we don't shortchange the Fed. And the simple thing was, I sat with a couple bankers back in 1990, or yeah, no, 2000. one right after 9-11 and said how does the banking system look at this stuff and they explained all of this to me and they told me about loan loss reserves and the math behind it and everything else fascinating stuff I was wow so once they under gave me all the rules and this is something I

think this is a really key thing of how I've been able to do the things I do is that I look at the rules of whatever game I play in and I master the rule set that if I'm in this game I master that roll set. So I get it inside, outside, upside down so that I can understand it, whether I'm violating them or find loopholes. So I found this loophole. Okay, so loan loss reserves cost banks money whenever they're not getting paid by these notes because they have to put more and more capital up against it, which means it reduces the amount of capital they can lend out and it reduces the amount of profit they can make over time. So I started asking the questions, well, do they want to sell these things at 100 cents on the dollar? Do they want to, I mean, how do they

get their, what happens when there's, like, the property gets bulldozed and it's not worth what it's owed on the note? And so they were explaining to me the whole rule set and I went, wow. So I started calling some banks. I didn't know it was hard. I didn't know it was supposed to be possible. I just picked up the phone and started calling banks and I started getting tons and tons and tons of mortgages, long lists of mortgages to buy. Oh, okay. So I started in my local area and I ran around and looked at these properties and was, then I didn't know anything about title research. So I went in, started reading tons about title research, went in and started looking up these properties and going, oh, I see where this note was created. And then to prove, so here's how title works briefly, is when you have these agreements in place to make sure that somebody doesn't sell the house and run off the money, they use, they record the actions in the deed records of your county and say, this bank put money against this house and this person owes this money.

So you can't come in here and just take it and make it disappear. And so it's a record. Everybody can see it. It's a record of how all of this stuff interacts. And you can see it in kind of like a timeline. Hey, on this date, this guy filed something. Then it sold here. Then it filed something.

So I started looking back into the history of these notes and these houses. And I started seeing the patterns. I go, oh, I get it. I understand how all this stuff transacts. So I called the banks and said, the first things I bought were second notes, second liens. Because that's the first list of notes I got. I just by calling people up. And I started buying some lists.

I had about $40,000 in cash at the time, and I bought up about, geez, almost $400,000 worth of notes. And I thought this is kind of cool. And I went and knocked on people's doors because I'm not afraid of that. I said, hey, I'm your new bank. And they would like. Before you go there, how did you use $40K to buy $400K notes? Well, okay, so good question. I would look at a property and I would see that the property was worth $150,000.

it had a $80,000 first lien and it had like a $40,000 second lien. Okay. And the $40,000 second lien was typically for an action that the homeowner either wanted to do or whatever. They like put in a pool or they did a major remodel on their house and then they were just kind of like, well, I can't afford to pay the second. I'll just pay the first. So by doing all of this research, I was able to only identify the ones that had the biggest, juiciest potential returns. And so I only went after those. And I called the bank and said, you got a $40,000 second.

How about $1,000? And they're like, uh-uh, we want $4,000. And they said, all right, here's $4,000. And I'd transact with them, and I'd get the mortgage, and I'd get all the paperwork. And I'd be like, cool, I'm a bank now. And I'd go and knock on their house, and they would go, ah, piss off. And they would literally slam a door in my face. You can't do anything to me.

Okay, fine. So I'd get my attorney, and he'd go over and file a little. foreclosure action and they would freak out. And I said, listen, I'm really easy to work with. Here's the thing. Pay me four grand down and maybe 300 bucks a month will restructure it and they're like $3,000 down.

All right, fine, $300 a month for the next 15 years. I'm like, okay, fine. And then I would restructure the notes so that they were suddenly paying mortgages and I'd get almost all my money back really quickly. This is cool. So just like with the apartments, when I see an opportunity, I don't

time is not my friend. Time doesn't this sit around and go, hey, Dale, take as much time as you want. It's like if I don't get as many as these as possible, the opportunity may be gone. So I get really fast. So I went around and bought up a whole bunch of notes for this $40,000, a couple thousand here,

a couple thousand here. And I ended up buying about $400,000 for the notes. And I worked them out. And suddenly I'm like making all this money. I'm like, this is awesome. And then a couple of them didn't like me, and they refinanced me out. I was happy with that.

Yeah, you make money anyway. Yeah, right. The full value of the note, right? I did it even better. And then, of course, this was right after, or shortly after 9-11, I started looking at the banking industry, and I downloaded the Federal Task Force research book. I don't even remember what it was called. This is like 90, this is a long time ago, about the savings and loan crisis of 1986, 87.

And I read through that, and I go, why did this, basically the federal government asked, why did the savings and loan crash in Texas and surrounding states happen? Why did this fail? And they laid out all of these reasons. And a lot of the reasons were poor credit on the borrowers, insufficient collateral, crooked appraisals. The bank wanted to do this too fast and wanted to make the money too quickly. And so they were more concerned about banking fees than they were about collateral. And literally, it listed out a litany of actions that if you would survive 2008, you would go,

holy crap, they said the same thing again. I mean, it was like 2008. So I looked at this. I said, well, I think there are going to be another bank crash in 2002. And I had gone to a bank and I said, look at this. I got, I bought $40,000 for the notes and it's $400,000 worth of performing paper now. Isn't this cool? Could you give me a line of credit?

And they go, I was like, what, a bank doesn't want to buy a bank, another bank's bad debt? Okay, fine. So I wanted to get access to larger capital markets so I could be there with a big bucket of cash when the market's crashed. And I figured it would be like, you know, the savings and loan crash. it'd be this big and it would be a certain number of states and there'd be you know and everybody else would be fine you know so i basically said okay i'm going to build for this and of course it was way bigger yeah no no 10 15 times it's huge and so i had built for that the derivatives market blew this thing way out of proportion but the point is is that i had started to build for that

and one of the ways i went to talk to a couple financial guys who are who did really well in dallas And I said, how do I have access to a lot of money? One of them said, why do you take a company public? And I go, what's that? And he said, well, you go sell stock in the stock market and you take your company public and you get investors cash and go do what your business plan says. And you know someone who's done that? He said, yeah, that guy over there.

So I went and talked to him. And I went and raised about $500,000, bought a publicly traded company, move my company into it, move assets into it, started raising money, started buying non-performing loans and started raising money so I could build the infrastructure out to buy a lot of loans. And, you know, everything from collections to loan servicing to compliance to all that stuff. So we ended up doing all this. I did this just because I didn't know how hard it was. And so we built it from 2002 to 2007.

And then I sold my position to a hedge fund. And they go, we like what you built here. We think there's going to be a crash. And I was like, great. Really? And so they bought my position out. And I went and retired for a few years. So that was kind of an off-track thing, but what was your original question?

Why are you so cool? Well, I want to know, so you bought a, I want to know a little bit about public company. I mean, you said you just went and bought a public company. You raised 500 grand, bought a public company. What did you buy? I mean, how does that, I mean, what kind of company do you buy? There's certain, so every time a public company fails, it doesn't disappear. It doesn't go poof into the air unless you, like, file a certain bankruptcy action that dissolves the company entirely.

But it typically doesn't. So what happens is as companies fail, this is way back in the day, back in, you know, the 90s and 2000. You're talking about pink sheets, right? Not necessarily. OTC. You know, you can do OTC and whatnot. And once you hit certain measurements, you could move to Amex, which is no longer around, or NASDAQ or NYS or something. But you could buy pink sheets and you could move your company into them. And if you had a great story, you could raise money.

And so I had a good story. people were like giving me money. It was great. The thing is that what happens there is, it was back then a airline in 1978 had failed. And somebody picked it up

from 19, I don't know, it bounced around from it. Somebody finally picked it up and cleaned it all up. So it had a zero zero balance sheet, zero liability, zero assets. And they sold that for about 400. We bought, I don't remember exactly, but basically you buy the majority number of shares. And then

you do a transaction and you reverse split it, and then you move your company inside of the other ones. It's called a reverse merger. They still exist, but the rules are totally changed in that. So at the time, I didn't know, I asked the guy, it's like, this is just around Enron. I was like, how do I not go to jail? He says, oh, it's real simple.

Don't lie, don't steal and don't cheat. Is that it? Funny enough, that's it. He said, you can lose money. Just tell people. Don't lie about it. You can have a terrible business plan. Well, don't steal some, don't steal other people's stuff.

like their money or whatever else. And don't cheat. Okay. So that was a pretty simple rule set to follow. So I just said, well, let's do that. So we did. And I approached it from a very simplistic approach of no lying, no cheating, no stealing. And right about that time Sarbanes Oxley, Sarbox came out.

And we were going through all of the ugly of Sarbox. And we were on the front end of having to eat that ugly elephant. And, oh, it was no fun. But did it, ran the company, grew the company, learned a lot, buying up pools of loans started by getting other investors to come in, and we had like hundreds of JVs who do joint ventures on pools. And one of the cool things was, is we realized that there was a lot of people who want to buy these loans but couldn't, didn't know how to call the banks or go upstream.

So we started buying large pools, and we would take a pool and we would chop it up. We'd take like a third of it. We'd keep it. We'd take two thirds of it. We'd chop it up and we sell it out to all these local guys and say, hey, Here's the thing. We'd buy a loan for, say, 25 cents on the dollar, or a note. We'd buy it for about 25 cents on the dollar because it's non-performing.

Non-performing just simply means the person who's supposed to be paying isn't. And it was costing these, I think I read somewhere as a statistic, it was costing banks an average of $25,000 per non-performing loan in terms of manpower, non-payments, well, not even non-payments, just manpower, attorneys, foreclosure, boards up, everything else. And it was just costing them enormous amounts of money every year. were picking up these non-performing loans for 25 cents on the dollar, turning around, selling them for 40, 60, 80 cents on the dollar, depending on where they were and everything else. And so we'd slice and dice them, hand them back out to the people, and we would have enough income from that that it would pay sometimes for our remaining value of non-performing loans in a joint venture.

So not really simple, not really, a little esoteric, not really simple, but very effective. Fascinating. Wow. there you go. And there's lots of ways to make money on this. I mean, you talked about a few exit strategies. I mean, you take it performing, have them refi you out. I mean, they're all sorts of different pathways. So it's notes and themselves have various exit strategies, obviously. Well, the best thing about what we could do is we could do things the banks couldn't do because of the laws, right? First of all, banks don't want to know, don't want you to know that they're

willing to take less money. Hence, you know, short sales are such a pain. They make it such a pain is such a barrier to do these things that you really nobody want you say short sales and everybody shutters everybody from the real estate agents to the banks they go oh short sales now but they'll sell to another financial institution and since we were public they would be like are you an accredited investor and we'd say well you know we're public they're oh good here's here's a bunch of stuff hey i got my friend over here he's got a bunch of stuff too and hey bob bob you got that list i mean seriously it'd be like and so we were buried in opportunities every day and it was a very fast market too. You can't be like dragging it out. You can't be, you know, trying to massage the deal.

They just go, yeah, you're dragging it out, get out. We would get a pool on Monday. By Wednesday, we could do our auto pricing and by Friday we'd make a bid. And then we'd have all next week to fund. So the next Friday, we would fund. So we're talking like pool, bid, due diligence or offer an accepted due diligence fund. And it was like, holy crap. So we were doing that just over and over and over and over. And if you're like taking longer in two weeks to get everything done or even three or four days to get your bid together, they're like, yeah, you're not a player. Get out. So a lot of the guys who get into that space, it's just, it's kind of hard for them to do it. And you go, wow, I'm looking at $80 million of loans. They run around going, oh, I'm cool.

I got $8 million worth of loans I'm looking at. And I'm just kind of going, yeah, they've already probably, how long has it been? Yeah, it's two weeks. They're done. It's sold or it's going to be sold. But essentially, the thing is, is that with the way to, we could do things that the banks couldn't was simply we could, because we bought it cheap enough, we would say $80,000 loan on your house, miss, how's this? We'll whack $20,000 off. We'll take all of the $30,000 you owe in back payments. We'll pay for the taxes. You go refinance this at $55,000. You can have a brand new loan. And because we're reporting to the credit reporting agencies now, because we had the loan, we will, you know, why don't you dispute this and then we can do something and your credit looks

are good enough to do this. Or get your son to do it or get your daughter to do it. And instead of an $80,000 mortgage with a $30,000 a rearage, we've got like a $55,000 go home. You win play. Or we can say, start making payments. We'll drop your interest rates to zero. We'll make your payments $200 a month for six months. And then we'll raise them to $400 for six months. And then we'll go back up to your normal payment. There's $670 a month for the next 15 years. We'll take all this stuff, put it on the back. We could do crazy creative stuff. Because you could buy it to achieve. Well, yeah, because we had lots of room in there.

And so our internal rate of return was like approaching 60 to 80% or sometimes because of that one. That's not bad. So that's why we could do that. There's a lot of exit strategies. All right. Awesome. So, I mean, this is, this is fantastic.

Obviously, you're rocking it and you've been doing some amazing things and lots of different strategies. And I think I like. I like to think that I've got a similar quote-unquote story, which mine has always been too stupid to not quit too stupid to keep going. You know, like, I don't know that I can't do this, but apparently we can and we're going to do it. And it's amazing. And it's, you know, I mean, certainly we don't win on everything, but you just keep trying and hit base hits or you get some grand slams and you keep moving forward. Cool.

Yeah, well, let's move on and we'll get to our world. famous fire round. It's time for the fire round. So the fire round, these are questions we ask every guest. They're different questions every week because they come directly from the forums, but we ask it every single week. Now, let's get to the questions. Again, these are real questions from real people asking the facility, if you can help. Number one, my tenant just gave me notice that they're moving. But then a day before they're supposed to be out, they said they need a few more weeks. What should I do? So they're probably not going to physically move. And if you went and did court and everything else. I would just show up and say, write me a few more weeks with a rent right

now. Write me a damn check. You want to stay? It's kind of like the hotel. You don't get to stay there for a few more weeks while you're figuring out whether your hair is drier enough. Write me a check. Cool. All right. Number two. All right. I'm trying to get my second rental from free and clear sellers. How should I approach them to see if they'll do seller financing? How's your taxes? So I usually ask somebody who has free and clear. So let me just ask a quick question. Have you talked to your CPA about what your finances would look like if you took a lump sum now versus any kind of payments? If it's going to be, if you're going to get a lump sum tomorrow and you're going to have to give up almost half of it to the government or a big chunk of it because it will affect your income, then let's see if we can't work something out. It's tax advantage to you, tax advantage to me or finance advantage to me, and it would be beneficial for everybody involved.

If that's the case, if we can work something out, then you could keep more of your money from tax. taxes, don't have to throw it out the window to the government, hope they catch it. We can work something out like that. And if you hold on to this note for a certain period of time, there may even be an opportunity if you want to sell it later or sooner to sell the mortgage into the secondary market and you could get all your cash for most of it, small discount possibly. And it won't change anything for me. Would that be okay with you guys? I love it. I love it. I've not heard that quite that approach put that way. I really like that was okay. Are you convinced Josh? Are you going to

sell them your house. All right, number three. What do you, what do you think about sheet vinyl flooring in a rental? Sheet vinyl flooring. Well, it's a pain to clean up and rip out after the next tent it tears it up with their dumb dog. So, you know, I either, okay, I have two approaches to rentals nowadays. I either hold them for long term, which means I'll spend just a little bit more on flooring, like, and make it, you know, bomb-proof flooring. I use like oil-based paints in a lot of bathrooms because it's bomb-proof paint. I use a little bit better materials in the flooring because it's bomb-proof flooring. I like to see that if I'm doing long-term. If I'm just doing this because it's an interim thing while I'm getting ready to sell it in a year because I, you know,

I moved out of the house. It's my friends or it's my old house. I have to rent it for a little while before the market turns around. I go vinyl flooring all the way. I prefer the lick and stick because frankly those little squares you can like slap them down. They look ugly. But they and they come up easy and you can replace them fast. So I prefer licking stick if it's a short term. I prefer bomb proof. It's long term. That's just my opinion or that's just my experience.

Okay. Cool. Good answer. All right. Last question. I think I know the answer. I think you've actually answered it. But how do you go about introducing yourself to inherited tenants?

Send letters call, knock on the door. See all of the above? They all work. A lot of times I'll even call somebody and say, hey, congratulations. I don't know. You've just won. No, I will go knock on anybody's door. I have no compunction about that.

It's absolutely okay. And a letter is very impersonal. If they're millennials, so here's a really quick thing. If they're millennials, I'll send them a letter and email because they don't mind that kind of very distant communication style, right? Emails, text, letters, that's fine. If they're in their late 30s, 40s, they're more gen X, Gen Y, I'll go knock on their door. And if they're older, I'd definitely knock on their door. So anybody but millennials, I'll just knock on the door.

Millennials, I'll send them a letter or email or something like that. Perfect. Cool. Awesome. All right, well, let's move on to the final segment of the show, which we lovingly call our Famous for. All right, these questions are the same every week. We ask every guest to this, and we're going to see what you have to say.

Number one, what is your favorite real estate book? You know, this is going to be bad, but I haven't read a good real estate book in a long time. All right. So I'm hesitant. The very first one I ever read that made an impact was rich dad, poor dad. It's not a real estate book, but it made me go, oh, there is some, you know, there's something more than what I know now. And that was a good introduction. But I'd already had 200 apartments by the time I read that book.

Sure. So I didn't, you know, so Gary Keller wrote some good stuff, but I don't have a favorite real estate book, unfortunately. That's all right. Fair enough. How about business books? Any business books that just grab you? you recommend to people? Yeah, so there's a couple.

I would think that one of the best business books I'd read in a long time. So this is kind of funny. I read Rich Ted, Poor Dad, and I went out and bought a bunch of houses. This is after I had a bunch of apartment complexes, and I thought, maybe I'll buy some houses. This makes sense. Try that. So I did that. I read four-hour work week, and I went out and created an online company that created like,

I don't know, a quarter million dollars a year for me on autopilot. I thought that was cool. I said, hey, build a muse. So basically, so basically every time. I read a book, I just would go out and do it. The last one I read was called Millionaire Fastlane, MJ DeMarco, yeah. Yeah, yeah, yeah. I read that one and I went out and built a company and scaled it up to like 40 million a year online. And I was like, oh, that was cool. And so I'm looking for my next book, really. All right. Well, I'll send you something soon. That's awesome. That's great. That's great. All right,

what do you do for fun? Sounds like a lot. So I, yeah, I love what I do. I love what I do. I mentor. I do. I do. I businesses. I do a ton of stuff. So I love what I do. My wife has some hobbies. I kind of support them. She has this chicken thing where we keep buying chickens and they keep getting eaten by it to coyotes. So we're like feeding the coyotes through like a secondary channel of chickens. That's a good. We used to have a lot of chickens. Now we have fat coyotes. So I support her chicken habit and now we have goats and and it's just it's just amazing so we got a little farm and that's kind of her hobby thing so I support that I like getting on a tractor and driving around and moving dirt I don't go figure this is like so primal you just get on the tractor you move dirt around

it's just like I can do it all day and just be happy just moving one pile from one place to another but if it's on the farm it's on the tractor I'm happy as hell I the rest of the time I mentor people I do business, blah, blah, blah. So that's my hobbies. Where do you live, by the way? I don't know. Where are you at right now? So I'm just outside of Albuquerque, New Mexico, in a place called Corales, New Mexico.

And it's, you know, it's a little rural. I mean, it's literally like 10 minutes outside of Albuquerque. So it's pretty much a bedroom community. But it's, you know, a couple acres, got a little farm, things like that, you know, came out and bought it after moving from Dallas. Dallas was like too much people, too much stuff. I just wanted to, like, tone down after selling a company. So we live in a little farm and I have an eight-year-old daughter and she moves dirt with me and is awesome.

So even though I do really, really complex high-end financial stuff, it comes down to at the end of the day I want to go drive a tractor and move dirt around. So it's kind of funny. That's awesome. That's awesome. Well, cool. Well, my last question of the day and the last of the famous four is what do you believe sets apart successful real estate investors from all those others who give up, they fail or they just never get. started. I think a lot of people, they're just so scared for themselves. They are just so terrified of what's not really real, but what's in their head, that they stop. They don't go

further. They're just stuck. And I think everything that's stopped, almost every business person from being successful is they think too small. Well, they think small because they're scared of thinking big. They don't do an action because they're scared. They don't follow through and grab an opportunity when it's presented to them because they're afraid of what might be. They're happen and I think that is like the older I get the less afraid I am frankly it's just like after swimming with whales and sharks and all that stuff in Alaska you know my fear is gone and so I just now nothing really scares me except for my daughter so she scares the hell out of me but but everything I think the biggest thing is is that fear is totally imagined and you're just

the worst case scenario is not nearly as bad as you think so go out and try it screw it up you know get permission to do you have permission to just go fail go do that they're so afraid of failure that's what i think stops up is fear yeah it's great answer great answer all right before we let you go where can people find out more about it or can they connect with you you got a website social media anything like that i do have a facebook page i set up it's called who is zend dolphin or you can just type in zend dolphin and find me um that's my page it's you know i keep it definitely separate from my personal i don't do much on social media, but you can reach out to me there. I do respond to people there. I can also give you my email. Don't do that. What's that? Yeah, I don't know. Terrible idea. Yeah, yeah, terrible.

Dale at Haloriver.com. It's one of our management companies, so it's pretty easy, Halo River. And yeah, I mean, people are always welcome to reach out to me, asking questions. I'm pretty happy to, you know, help people out. So, perfect. And he's also on Bigger Pockets at Bigger Pockets. username Zen Dolphin, right? Yeah, Zen Dolphin. Same thing. Yeah, pretty consistent. All right, Dale.

Well, it's been a pleasure, man. Thank you so much for coming on the show. We really do appreciate it, and we look forward to hearing from our users from their thoughts on how things went. The show notes can be found at biggerpockets.com slash show 179, Biggerpockets.com slash show 179.

And if you've got any questions for Dale, feel free to post them there. And hopefully he can jump in and help you out and answer them. and that's it. Well, thanks again, Dale. We really do appreciate it, man. Yeah, absolutely so. Thanks, guys.

Hey, thank you. All right, guys, that was Dale Hensel. Big thanks again to Dale. Great show. Wow. Brandon's going to go and build an old age home, right? I might go build one of those group homes or something. Yeah, it's just refreshing to hear this, like, I mean, just the 20 years of business.

That's 20-some years of business of, like, I don't know, where he started from, like the fact that he didn't know what he was doing, but he just moved forward anyway. I love this stuff. I love stories like his. I'm really hungry, so I'm going to go and buy an apartment building because I don't have money to feed me. That's one way of looking at it.

It is. It's, it's, you know, that view doesn't work for everybody. And so the beauty is, again, not one view is going to work for everybody. And, you know, if I tried that, I'd probably feel. failed miserably and, you know, die of starvation, whereas Dale comes in and he's got just a different way of thinking and it works for him. So I love it. It was awesome, inspiring. I'm very excited. And I am sorry that I've spent the latter part of an hour staring at that bruise on your nose. Man. Yeah, you know, get over it. It is not pretty. Yeah, you know, I'm getting

better though. I won three games out of eight today. I usually lose like almost all of them. But today I actually won three out of eight. So I'm almost at even with my partner here that we play with. Nice. That's awesome, man. That's awesome. Well, cool. Let's get out of here.

Hey, you guys, it's been great. Hopefully you learned a lot. Check out the show notes. And if you're not already active on BiggerPockets, please jump on the forums at biggerpockets.com slash forums. And jump and engage with guys like Dale and other successful real estate investors in our community. Until next time, I'm Josh Dorkin.

Signing up. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. On the host,

an executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information

presented in this podcast.