BiggerPockets Real Estate Podcast - 267: From Professional Soccer Player to Rental Property Investor with Nat Borchers

Episode Date: February 22, 2018

How does a world-class soccer star set himself up for a lifetime of financial freedom? Rental properties! That’s the story on today’s episode of The BiggerPockets Podcast, where we sit down with Nat “The Beard” Borchersto learn how he built a sizable portfolio of rental properties while traveling the country (and the world!) as a professional athlete. Nat shares his humble “hammer-swinging” beginnings, as well as the systems that today allow him to live a life of freedom while others manage his units. Don’t miss a moment of this powerful and hilarious episode!   In This Episode We Cover: Nat’s background as a professional soccer player and his first deal His current number of properties What exactly a 1031 exchange is Expert tips for finding deals How to use social networking to your advantage Specifics on a recent deal How he found great prices just an hour and a half from his area How to increase the rent Commercial loans vs. traditional loans Sub-metering a property The story behind why he hires property managers His 28-house portfolio deal And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Money Show BiggerPockets Events BiggerPockets 1031 Exchange Guide The 1031 Exchange Ultimate Guide for Real Estate Investors (blog) BiggerPockets Landlord Forms True Submeter BiggerPockets Podcast 131: Investing in Multifamily Properties in a HOT Real Estate Market with Serge Shukhat AppFolio Mindy’s Twitter Profile Mindy’s Instagram Brandon’s Twitter Profile Brandon’s Instagram Books Mentioned in this Show How to Work a Room by Susan RoAne How to Win Friends & Influence People by Dale Carnegie Built to Last by Jim Collins The Book on Tax Strategies for the Savvy Real Estate Investor by Amanda Han and Matt MacFarland Defensive Real Estate Investing by William Bronchick The Compound Effect by Darren Hardy The Lifeonaire by Steve Cook Fire Round Questions What questions to ask when choosing a Property Management Company Someone who makes you very uneasy! Tenant is subletting on AirBnb, what should I do? Whats YOUR Metrics for Buy and Hold investments? Multi-Family Purchase Inspection Tweetable Topics: “Today, you don’t find good deals. You make good deals.” (Tweet This!) “Nothing ventured, nothing gained.” (Tweet This!) Connect with Nat Nat’s Personal Website Nat’s Twitter Profile Nat’s Instagram Profile Nat’s Facebook Page Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast. Show. I don't even know what number this is. Every time. Every time. You don't even know how to read. Show 267. I had always had it in my mind.

Okay, you have to buy a house with 20% down. You have to go to a bank. You have to check all these boxes. That's the only way to do it. And then I started meeting people who had been doing it differently. And then next thing you know, I'm able to do deals a bit more creatively. And that's where things really just started to click for me in real estate. 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. 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 is going on, everyone? This is Brandon. today's host of the Bigger Pockets podcast. And I am a lucky man today because here with me as my amazing co-host is Mindy L. Jensen. Thank you, Brandon.

I am not Mindy L Jensen. I am Mindy S Jensen. We did that once before. And I thought I remembered it would be an L. But maybe that's because my mom's middle name is L. Not that I think of you as my mom, but. Isn't Rosie's middle name L? It is, Rosie Louise.

Yeah. I could almost be your mom. You could almost. I am 16. Thank you very much. How's it going? How's life? Life is going really well.

I am having a great time. Our new show, Bigger Pockets Money, is really taking off. And isn't Guy on Fire on there on Monday? Guy on Fire is on there on Monday talking about real estate. It is actually a real estate-related show. This time, he tells us how he is using real estate to further his financial independence goals. So it was a great episode, and you should listen. you should listen, Brandon, and anybody listening here who likes real estate should also listen to.

Maybe I will. But today is not the guy on fire episode. Today, we have Nat the Beard Bortures. Do you just make that nickname up just now? No, that's his, like, if you look up Nat the Beard Bortgers, it's all over the place. Yeah. I didn't know that. He's, he's Nat the beard.

Have you, you remember what he looks like? He's got this huge beard. He does. It's an impressive beard, unlike some. I hope you're referring to your own beard that you wore for the first like five minutes of the show that if you're watching on YouTube, you'll see it. Yeah, it is itchy. This gets itchy.

Here we go. I'll give you a sneak peek. Okay, thanks. Oh, there you go. And do you remember why I bought this beard in the first place? Because you dressed up like me for Halloween. I dressed up like you for Halloween. Yeah.

Yeah, that's awesome. All right. So other than that, yeah, today's show is fantastic. I mean, I love his story. Nat is a, was a professional soccer player, football, if you're over in other parts of the country. And, world. Other parts of the world. Other parts of the world.

And he's got just a cool story of like buying rental properties, having somebody else manage them, scaling his business from one property and then something more, something more. Super cool. So anyway. 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,

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at NRE.com slash BPPod. That's N-R-E-I-G.com slash BP pod. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, You start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network.

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Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Let's move along to today's quick tip. Quick tip. Sorry, I didn't know you were going there. Really delayed. I'm going there. Today's quick tip is very, very quick. We talk about in the show about connecting with people in your local area at meetups.

So do me a favor this week. Go to biggerpockets.com slash events, E-V-E-N-T-S, which I screw up in the recording later. I say the wrong URL. You'll hear that. Mindy yelling at me. But it is biggerpockets.com slash events and find it this month. That's what I want to challenge you guys to do. Especially if you're an introvert and you don't like doing that. I'm going to challenge you. Go do it. You'll find an event. In fact, I'm going to be hosting like a few just events here while I'm in Hawaii for the next few months. So if you're in Hawaii in Oahu, come hang out with me at Starbucks and check biggerpockets.com such events to find out when and where. Oh, I am going to host an event. I just discovered this about five minutes ago when you brought it up.

I'm going to host an event in Portland at the end of March. I'm going to be there for my husband is running the hop hop half marathon. So if you're looking for a run, come out and join us. If you want to meet up and talk real estate, to be determined or to be announced. To be announced. to be announced. But yeah, that sounds like a lot of fun. I don't get out to Portland all that often.

So that'll be a lot of fun to meet some Portlandians. I think that's how you would say it. I would tell you to go to like voodoo donuts, but now you have one of those in Denver, so it's not as cool. I do. I do, but I still have to go to the original. Yeah, it is pretty sweet. Yeah.

So I would like to further challenge your listeners, our listeners. Our listeners. Not only do I want you to go to an event, I want you to talk to somebody, walk up to them and say, what kind of real estate do you? Well, you don't just walk up to them. What kind of real estate do you do? What do you do? Walk up to them.

Hi, my name is, what kind of real estate investing do you do? Perfect. Oh, I do this. Oh, that's great. That's what I want to do too. And then you just made a best new friend. Besties. New best friend.

BFFFFs. Forever and ever and ever. Okay. All right, moving on. We got to do this show. Are you ready? We have to do this show. We should bring that in because really it's his show, not ours.

Yeah, there you go. All right. All right, Nat, welcome to the Bigger Pockets podcast. Good to have you here. Thank you so much for having me, guys. Excited to be here. I'm excited to have you. So Mindy tells me you're a sportsing guy or something.

You're some kind of sportsy guy. Is that correct? He's a sports fan. Yeah, I used to play professional soccer. So I had a professional soccer career for about 14 years and just hung up my boots about a year ago. Wow. Wow. What's that transition? I know we're going to talk about real estate investing, but I don't know. What's that transition like? I've always wondered that from somebody who plays like for a career. They play a sport and then they stop. What was that like? I mean, it was tough for sure.

A lot of sleepless nights trying to figure out, okay, what I want to do next? And, you know, what does life look like, you know, when you go and do this job for 14 years? And I mean, it's really, I looked at as kind of a part-time job because it wasn't, you know, you're not going to clocking it at nine, leaving at five. You know, you're really clocking at nine, leaving at, you know, 11 most days. So I had plenty, plenty of time to figure it out, though. And I mean, that's really where real estate came in for me. Well, let's talk about that. So very first deal, was that pre-leaving soccer or was that post? So first deal was in, uh, in 2005. So I was living in Denver, Colorado. I'm sure you guys,

Mind, you know where that is. And, um, I've heard of it. Yeah, I was, you know, I had, you know, heard a lot about real estate investing and I pulled rich dad poured that off, dad off the shelf and read that cover and, you know, really was thinking, wow, you know, what the heck do I do after I'm done playing professional soccer? Because it's an industry where you literally have to retire when you're in your mid-30s. I mean, if you're lucky to play that long. So I was like, I got to figure something out for this next step. So when bought a house with a friend of mine, we partnered on the deal, I got to go back and say my first

professional contract was $11,000 a year. So it wasn't like I was making a ton of money, but I got a $5,000 bonus my rookie season. And I used that to as a down payment on my first property in Denver. And it was an estate sale. I think we went in there. We there was like, it was really the height of the market back in 2005. and we got in with an institutional investor. Somebody was trying to buy it all cash,

and my real estate agent convinced the sellers to sell it to two guys who had never done a deal before. So I was pretty excited. That's awesome. So this is back in 2005. So you bought at the height of the market. What happened to that deal? Did you still have it?

Do you hang onto it? No, so I, you know, what we ended up doing it. I mean, the house was in a real state of disrepair. And every day after practice, I'd come home and, you know, we'd do a little bit of work. You know, I'd be like laying subfloor with my buddy, laying tile. And just, I mean, it was a hodgepodge of repairs we had to make. And I remember thinking, man, I can't do this for a living because I'd come home from practice to be tired.

And then I'd go and I'd try to rehab a house. And it was like, what am I doing with my life? I feel, I feel awful. I'm like tired all the time. So, you know, we ended up getting the house ready to rent out. We lived in it for a period of time. I moved on to go play soccer in Europe. up and I rented out my room and I kept the house, I think, till 2013 and then sold it.

So you did all the work yourself? You did most of the work yourself? I would say we did a majority of the work. We had to bring in our skilled labor guys for the electrical and, you know, we had some plumbing stuff. But we did most of the stuff ourselves. You know, the tile work, that was actually pretty fun. We did all the painting work ourselves and we refinished the hardwood floors ourselves. So we got down and dirty. It was a good time. The electrical isn't really all that hard. You could just do it. That's a beginner project.

Yeah. I don't trust myself. These fingers aren't very nimble. That's funny. Electrical is funny because I feel like electrical is better than plumbing in my mind because electrical like it either works or doesn't work. And if it doesn't work, it just burns down your house. So like you know pretty clearly I feel like if it works or not, it just a little bit more

dangerous, you know? It just burns down your house. Whatever. It's a minor thing. You have insurance. That's what your insurance is. for right. I'm just, I'm kidding to everybody, by the way, don't, don't do your own electrical. I've actually done a lot of my own electrical back when it was okay to do. They actually changed a lot to

make it not okay for landlords through their own electrical size. I know, such a bummer. I know. So my method. I will, I still, you know, replace a light here and there if, uh, yeah, I can call up electrician and have them come over and replace a light for like 250 bucks or I can just do it in like eight minutes. So, you know, I didn't say that out loud, but I may still do a little electrical. We'll have to cut that. Good for you, man. I don't do that stuff in. Yeah, I actually don't. I haven't done actually a bit of like labor in a while. And I wanted to actually go there with you.

Like when did you get out of actually doing your own work or did you ever? That was the first and last time. I think I really ever did it. So, you know, after after moving on from that deal, you know, I just started doing, you know, doing more deals. And, you know, like I said, I went to to play soccer in Europe for a couple of years. And I owned property over there, believe it or not. And then came back to the States and in the Salt Lake City, which is where. I really started, you know, I joined up with ARIA and I started learning about, you know,

more creative ways to buy properties. And, you know, I had always had it in my mind, okay, you have to buy a house with 20% down. You have to go to a bank. You have to check all these boxes. That's the only way to do it. And then I started, you know, meeting people who had been doing it differently. And then next thing, you know, I'm able to do deals a bit more creatively. And that's where things really just started to click for me in real estate. So I want to touch on this minute because you brought up a really, really good point. A lot of people, they just assume that this is like, just like this box. You're like, you have to check. And that's what a bank wants you to believe, right? Like, I hear that from new people all the time. Oh, I can't do real estate because

I don't have, my debt to income is too high. Or I can't do real estate because of this or whatever, because some bank told them that they couldn't do it. But I love the fact that you said you got around other people who were doing it and all of a sudden you realize there was another way. I think that's such a key part of trying to succeed in anything, but especially real estate investing is find those people, go to those real estate clubs, meet people, to throw on a plug here, go to biggerpockets.com slash meet everybody. Not meet everybody, just slash meat. And like, there's like, I was there other day actually. It's like a free site, a free page in bigger pockets where people like just posts to their meetups. And there's like a hundred, at least 100 meetups around the country,

like right now, like that are coming up here in the next few weeks. So there's probably one in your area. And if not, start one. Like, it's such a good way to network with people. So, okay. I'm going to jump in here and correct you because meat is not. Not. Oh, oh, you're right. Events. Bigger pockets. Bigger pockets.

Yes. Bigger pockets. Whatever. Same thing. Wow, Brandon, maybe you should spend some more time on the site. Yeah, maybe I. Luckily you have me. Too much, too much sun, apparently. All right.

Biggerpockets.com slash events. You can go there and you can learn some good stuff about meetups. All right. So I want to fast forward to the indie career and then go backwards. Just so people get an idea of what you've done so far. So can you give us like a layout. of your big, your investments as a whole. Like how many units do you have now or what type of investment do you do mostly today?

What does your business currently look like? And then we'll go back to the beginning. Sure, sure. Well, I look at real estate. I used to look at real estate a lot differently than I do today. I used to look at it as, okay, I got to get a certain number of units and a certain amount of cash flow. I look at it more of it as a revenue from a revenue standpoint.

And there's a certain amount of revenue I want to achieve. But currently I've got 24 units. And I think I've got about, you know, comprise. of about 16 or so properties. So there's some duplexes, some, you know, the sevenplexes in there. And I'm on a contract on 28 more houses that I'm going to close on March 1st. So I'm kind of at this stage in the game where I'm like, okay, I'm going from here to here and just really experiencing a lot of growth. So then a lot of that is 1031. A lot of that is just seeing appreciation in the Salt Lake market. And my current market is Salem. And that's where I'm,

I'm doing most of my deals. Okay. So you said 1031. Can you quickly just tell us what a 1031 exchange is for those of us who don't know, like Brandon. Yeah. I've heard Brandon's never done a 1031 before. I have never done one.

Brandon's never done anything. He's a big faker. Yeah. I can tell. He seems that way. He's not beardy Brandon. I know that. I'm very less beardy, Brandon today.

Yeah. You should feel way worse, Brandon. I'm, I know. I feel like, I know, normally I've got the longest beard in the room. Today I am I am coming up short. Wait, can we, can we say something real quick? We got to get this out of the way. So before I got on BP, before I talked to Mindy, I had this idea in my head, Brandon, that you were like five foot two, that you were just like this little short guy who was out there like a little fifth week doing deals like talking to everybody out real.

Wow. Wow. Like a chihuahua in the purse. And now and then maybe he's like, did you know Brandon's like six foot five? He's like really tall. I was like, and a half, six foot five and a half. I was like, no way. I don't believe that.

That's not possible. Really? It just doesn't go with like your voice, man. So. That's funny. I, apparently I need to talk like this. Hi, my name's Brandon. You do need to talk like that.

You'll scare. You'll scare. And a half. And a half. You know? I got to be a friend. I'm sorry. I got.

Angelic is the word you're like just Timberlake at the Super Bowl. Everybody wants to, you know, talk to you and be around you because you have that voice. Yeah, I'm not going to lie. That's not the first time somebody said I'm just like Justin Timberlake. I mean, I get that a lot. I don't know if it's the way I look and just the way I sing and the way I dance. I don't know.

I'm guessing it's none of that. Okay, so we're going to go back to 1031 and talk about that, right? Yeah, that's what we were talking about. Because I have, I just did. I just did one and it was, it was hell, but it was fun. So what is a 1031? Yeah, so a 1031 exchange, I think, is one of the greatest, wealth generators ever made in the history of the tax code, whatever you want to call it.

So a 1031 exchange basically is a way to defer a gain from the sale of one property into the purchase of another property. And so, for example, you can sell one property. Let's just say you bought it for 100. You sold it for 200. You can take $100,000 of that gain, not pay any taxes on it, and buy, let's say, a 10, you know, unit building for $500,000 with $100,000 down. And not pay any taxes. And not paying taxes. And I didn't understand it until I did it.

And for me, it was more about income stream. It was about taking this small little income stream that I have from this property that was single family and just multiplying it by like four or five. And it was a great way to leverage. It was a great way to tap that equity. And I just see so many benefits in doing that. And I think a lot of people, they get to a lot of people, they get to a certain point in real estate investing and they don't want to go any further because they're comfortable. But I think if you want to get to that next level, I think the 1031 exchange is a great way to go.

Yeah, that makes sense. You know, the thing that killed me with the 1031 exchange was the the, the 45 days. So they gave you 45 days to identify a property. You have to pick the property. And people who have been listening to the Bigger Pockets podcast for the last year probably know my, because every week I would report like how it was going. Anyways, I actually got my, I ended up selling one property, bought two and I got it under contract there for like I, I, I identify it or whatever on day 45 at like 7 p.m. Like it was like my last day. And I did not know if I was going to get it.

I could not find a deal. I could not find even anything to identify. You don't technically have to have another contract to identify, but I wanted to like know what I was buying because you can only identify three unless you get some other random rules. If you guys want to know more about that, we're going to put a link in the show notes of this page to a couple articles about 1031 exchanges. So go to bigger pockets.com.

So what are we at, Mindy? 267. 267. So show 267. You can learn a lot more about 10301s. But yeah, they are a fantastic way to grow wealth, to scale up and to kind of, I like to say you're partnering with the government. The government's like here, I know you owe us a bunch of money, but you've been pretty good with that money. So why don't you take it and put it in your next deal? I'll partner with you. And then then they're like, we'll get our money later. And then next time they're like, hey, you did a good job again. Why don't you take it again? But they just give you that stupid 45 day identification and six months to close. Anyway, weird. So I want to make a correction. I said you pay No taxes. You kick the tax can down the road. Eventually, you're going to have to pay taxes unless you die. Unless you die.

Unless you die. Which is actually kind of the best choice because then your kids, your kids get the property not at what you paid for at value, but at what its current value is. So then they're only paying capital. Like it resets the tax basis or the cost basis. What basis does it reset? One of those bases.

So basically, basically i yeah basically i however that is so as long as long as that tax code doesn't change i mean my plan and maybe it's your plan too now my plan is just to keep buying properties in by 10 319 into more and more passive properties so like eventually i'll just 1031 into like a shopping mall or something you know that's just like or amazon warehouse whatever that's popular in 20 30 years from now and like just ride out like a 4% return whatever until i die and then my my kids will just get the the the full amount with no tax due that's my thinking and why not i mean you you can do it in perpetuity, right? You can just keep doing it as long as you want to do it.

And as long as you have the energy to go out and chase a deal and put it all together. And it's fun for sure. And all you have to do is die. Like you said, Mindy, and everything's good. Yeah, just plan on dying. That's how you end your 1031 exchange saga. So you said chase a deal. How are you finding these deals?

You told me before we started recording that you just closed yesterday on a seven unit property. How did you find that deal? Yeah. Well, I'd have to go back to Salt Lake City and mention that I took a boot camp back in the day from a good, you know, he was a mentor now. He's a friend of mine, Matt Atkinson, and he is this mortgage broker does a lot of, you know, the financing side, but he's a real estate investor as well. And he just did this, you know, this six-week course. We went in every Monday for a couple hours. We just cold called people.

And, you know, we did it for sale by owners. But we did it also. of we called people landlords who were like tired landlords who were renting their houses on Craigslist or on Zillow. And it was just a great way to find people say, hey, like you're renting your house. That's awesome. What would you think about not having the headaches of managing said property and we could maybe put together a deal? And it was an amazing way to find properties. There were obviously we, you know, we got hung up on plenty, but we also got a lot of deals. And, you know, that's when the creative side of things kind of kicked in. It was like, do some leave.

optioning, you know, do some contract for deeds, do some seller financing subject to things, all ways to buy properties with, you know, little, no money down. I love that. I tell people this all the time, that strategy, and I love hearing that it worked for you. You know, like the idea of, like, especially if you have no money, you can't go and send out thousands of dollars in direct mail. You're just getting started, let's say, and you're like, well, how do I find a deal? It's a competitive market.

I always tell people, but just go on Craig's list every single week, pull a list of every mom and pop landlord who's listing their properties for rent. You can tell who's the landlords and who's the property managers. because usually much crappier ads. And then, like, they give you their phone number, like, right in the ad. Like, it doesn't get any easy. It's like, here, call. I'm a property owner.

And most landlords suck and they hate being a landlord. Like, most people are just really bad at being landlords. So, like, yeah, you might get hung up on nine times out of 10. But like, that one out of 10, they might be like, yeah, I might be interested. And then out of 10 of those people, maybe one of them is going to sell your house. It's just a giant funnel. So, yeah, I love that that worked for you. No, exactly.

It was, it was, and it was, you know, I'm not a big fan of cold calling. You know, I can't just sit down and just like bang out cold calls all day long. But I, you know, there is a ton of value in just calling somebody, introducing yourself and saying, hey, you know, are you interested in this opportunity? And, you know, you don't have to give them a hard sell. You don't have to be shady about it. You just go in and say, hey, you know, this is, you know, what I'm presenting to you. What do you think about it?

And if they say no, at least you asked. I mean, that's the biggest thing. You have to have the courage to ask. And what's the worst thing they can say is no. They're not going to come over and shoot you. They're not going to kidnap your child. they're just going to say no, maybe they hang up on you. Maybe they say a bad word.

You're going to hear a lot as the landlord. You're going to hear a lot of bad words. So, you know, toughen up your ears. But and just getting comfortable calling people and talking to people because there are a lot of people that are just introverts and they don't feel comfortable. Just calling some random person. What's the worst that can happen? Yeah. I'm actually reading a great book right now.

I don't know if you guys have read. It's called How to Work a Room by Susan Rohn. It is a really good book. It talks about how I think there's a lot of people out there who can say, are themselves introverts and, you know, they really, you walk into a room, right? And, and you're nervous. You're like, what do I say? What do I do? I think everybody gets that feeling because a lot of times we walk into rooms, right? As real estate investors, we go to these meetups or Rias and it's like, everybody's a stranger. Okay, what do I say? How do I talk? How do I conduct

myself? And it's just a great way to get out of that, you know, get out of your comfort zone and go smile and just meet somebody and have a good conversation and just practice networking and practice talking to people. It's just such an important skill as a real estate investor. Yes, absolutely. Can you share any tangible tips that you've learned over the years about doing that? Like somebody right now, let's say it was in that exact position right now. They want to go to a real estate club. They're nervous. They're an introvert or they just don't like big groups. Like, how do they, what do they do to break the ice? You know, I think, you know, how to win friends and influence people is one of the best books I've ever read. And it's just about asking questions.

And everybody wants to talk about themselves, right? Everybody wants to say, hey, this is me. This is what I do find, you find somebody's passion, you just talk about it. If somebody's at a real estate investors association, meaning they're there to talk about real estate and they're probably proud of the fact they've done a deal or they've structured it this way or that. And you just ask them, okay, how did you do it? You know, what motivates you? Where are you from? You just kind of get on that road and then all of a sudden, you know, you've made a connection. You made a relationship. And you're not doing anything other than asking somebody questions and trying to just pick their brain a little bit about what they did to be successful.

Yeah, I love that. The question thing is like, well, my go-to. Because I'm kind of an introvert in big groups. Josh always makes fun of me for that. You've seen me at parties. Come on. You just stand in the corner and be tall so everybody can see you. That's exactly what I do. I stand the corner. You do not because you're introverted? Yeah, of course I'm introverted. Oh my God. No, you're not. You keep using that word. I do not think it means what you think it means. It's funny. I think in the book, Susan says something about 80% of us think we're introverted. When when you look at most people, you think, oh, that person is not actually introverted, but they think they're introverted, right? They have in their mind, oh, I'm introverted. I don't really like to talk to people that much.

And it's hard to talk to people sometimes. But, you know, when you get out there and you get that positive vibe going, it's, I think it's a lot of fun. Man, I just put this on my, on my, I think it was Instagram or Twitter the other day. Like, when I go to Walmart, like I will, like, I try not to. But when I go to Walmart, I will wait in line longer if I have to in the self-checkout, just so I don't have to talk to anybody. Like, I, if I could just go through my entire life about talking to people, See, that's why I say like deep down, like I have to force myself.

Now, Skype call is great because I can talk all I want and you can't do anything about it. And there's only three of us, you know, forget about the hundreds of thousands of people listening. But yeah. Don't forget about the hundreds of thousands of people listening. I appreciate you listeners. Send hate mail to Brandon at. They appreciate you too. All right.

So I want to on, on derail this a little bit. No, this is actually really good. But I want to mention one more thing about the Craigslist thing, is that when you're calling somebody, a landlord, whether or not it's Craigslist or you just meet them at a real estate club or whatever, like people love new investors, like if they're not annoying. And what I mean by like, let's say you're an experienced investor. And somebody calls you and said,

hey, I'm brand new to this thing, real estate. And I'm really looking to get my first deal. And, you know, Bob said to talk to you or I saw your information on Craigslist and you look like you know what you're doing. And, you know, can I talk to you about that for a minute? Like very few people are going to be like, no, sleaze ball and hang up the phone. Like people like helping people when you're earnest about it. So like use that. Like that's such an amazing skill like you have is being a newbie if you're a newbie.

Like, yeah, use that. I mean, I'll even use that. Even though I'm not a newbie. Like when I get around people who are more experienced, like, I'm like, I'm never like bragging. Like, oh, here's what I've done. And what I just like, I'm like, oh, man, you're awesome. You've done amazing stuff. Teach me.

And then they love that because like you said, everyone likes talking about themselves. So absolutely. And I go back to that 2008 is when I started going to that that RIA. And I was sit in the front row. I didn't know anybody there because of course like I'm playing professional soccer. I've got this bubble I live in. And then I'm going to this like new place where it's all these new people. And I have no idea what the language is like. I have no idea what the deal rate in term financing. I have no idea what these terms are these people are talking about. And then I just kind of started learning. I started, you know, slowly networking. And, you know, I tried not to be too annoying with my questions like you said. And I've got some friends in the game and they're helping me,

you know, somebody's helping me find a deal over here and somebody's helping me finance it over here. And it's like, you know, it's just a relationship type of the thing. Yeah. So you, you touched on a couple of things that I really want to point out. You said, I have no idea what the language is like. I have no idea what the terms mean. That's really big. That, okay, first of all, that's a huge clue that you're a newbie is when you don't know the language. So, you know, the first time you go, maybe you don't talk to a lot of people. Maybe you just, sit there and listen and, you know, come to bigger pockets afterwards and look up all of these terms and figure out what they mean so you know what you're talking about. But also just,

you know, listening to what other people have to say when you don't have a lot to say. My favorite question when I go to a meetup is, oh, what kind of real estate investing do you do? Again, because people like to talk about themselves. And it's a nice icebreaker. In real life, nobody gives a frog's fat backside about real estate. How many people do you know that Like nobody does. Is that a phrase? It is. Wow.

Trademarked by me. But nobody. Good job. Well, I actually use a different word sometimes. A toad's fat backside. But I mean, nobody cares. I'm driving down the road. I'm like, oh, look at that house and look at this.

And my kids in the back, I don't care, mom. All my friends are like, yeah, that's great. And you can tell that they totally don't care. So going to one of these places, you know, finding an experienced investor who also has all these people in their life that don't care about real estate, it's nice to be able to talk to somebody. That's one of the reasons why so many experienced investors are on bigger pockets because they found their tribe. So if you really like real estate, go to these places and talk to these people. They want to talk to you. And I mean, I've never turned down an opportunity

to help somebody who's new to the game, especially, especially there's a lot of young investors out there who are like trying to figure, okay, what do I do with, you know, this money I have or how do I position myself to retire early in life? You know, how do I do this? And I'm like, I'm all about helping you do that because that's what I'm doing right now. And that's been my dream for so long. And it's like, nobody's going to turn you down who, you know, who wants to see, I want to see more people in real estate. I want to see people understand it more. I want to see people invest in it more because I think it's just a great way to achieve financial freedom. Yeah. I totally agree. Cool. All right. So I want to go, let's go into some specifics. So you,

You mentioned you just closed on a property. I think that was before we said recording. But can we talk about that? What did you just buy? Yeah, so I just bought a 7plex here in lovely Salem, Oregon. This is where I do my investing now. I live up in Portland, but this is about a 30-minute drive down here to Salem. Can we talk about that for just a second before we go in the deal?

What's the average purchase price around in Portland? Because I hate people complaining about Portland all the time. Yeah, so purchase price for three, four-bedroom house is around $400,000. Now, what's it in Salem for a similar house? 285. So by driving a half hour, it drops that price dramatically, where people say, I can't invest in Portland. I live in an expensive city.

I can't invest there. I better sit on the couch and watch TV every day. You figured out a solution. Yeah. Well, and I've heard you guys talk all the time about, you know, investing in markets, you know, outside of the area you live in because a lot of people do live in these markets where you just can't find cash flowing properties, right? And literally, I looked, I spent a lot.

long time, you know, looking at markets around here. I looked at Portland. I was like, this is crazy. I'm not going to be able to do my business in Portland. I looked at, you know, north in Vancouver. I looked, you know, some other areas. And I found Salem and I found a great team down here. And it is just a great place to do business. And very, you know, very much speaks to the cash flow business I like to, I like to build. Awesome. So tell us about the property. Where did you find it? How did you find it? What'd you pay for it? Yeah. So it's a sevenplex. Every single unit is a two-bedroom, one bath. We've got about 1,000 square feet in each unit. And each unit has one car detached garage. Purchase price was 815. I found the property from my real estate agent.

He's the one who found it for me. And I've actually found a lot of my deals recently just through him because he's just, he's a stud. He finds really great values for me. And I don't have to crank on the phones all day long. So was this one listed on the MLS? Yes. it was. Okay. It was. Yep. It was. Okay. And so what do the units rent for each? So currently, you know, my, my play has always been value ads. So I always find these, I think most people do. They find these properties that have been just, you know, not taking care of. They've been beaten down. It's, it's mom and pop, mom and pop owners, you know, people who don't really know what market rents are. And that's, I mean, the biggest value I always see in knowing your market is knowing your rents.

Like if you know your rents, you really can drill down and, okay, what's going to be my return on investment in this property? So, you know, in this instance, I think all the units are renting for somewhere around $700 a month. And market is between $1,200 and $1,200. So, you know, so you know, obviously one of the units is already rented for $11.50. And so we know that there is a market for it. And then a couple of units, one unit is vacant. Another unit, I think we're going to have to deal with a problem them in terms of maybe an eviction, which is going to always be fun. But the rest of them are currently rents. We're going to have to give notices and try to increase the rents. Are you going to increase the rent? Because this is something I always question when I buy a property that's under rented. Do you jack it up on

everyone to get it to market rate right away, assuming you might lose some or do you leave them in place? And when they leave, you raise the rent or do you do it gradually? How do you view that? Yeah, that's a great question. And I would say the conservative, me back in the day, would have just increase gradually, but now I'm at a point in time where I've already factored in, okay, I'm going to have a significant amount of vacancies, and I'd rather deal with the vacancies initially and raise those rent to market versus, you know, gradually deal with, you know, lower rents for the next six months to a year. So my focus for the next month or so is to get these notices out to the tenants, let them know that we're going to increase these rents. And,

you know, a lot of the units are not in great shape. So we're going to have to go in and, you know, get the paint in the carpet and get them fixed up to run out to, to, market. Yeah. And I, you know, I think that the answer to that question also a lot depends on, you know, where you're at in life. You said like earlier, maybe it wouldn't been different. When I started out, yeah, I would, I didn't have the money to just have everyone leave suddenly and go in and remodel seven or eight, you know, seven units. Like today, my investing is a little bit different so I could. But interesting note about that. Like, so I told, I sold my 24 unit apartment building. That was a 1031. I sold it, what, six months ago now. Anyway, my average rents were like

530, probably on average, where I'd been raised. And I'm, we're pretty good about raising rent. Just like, you know, I, I don't know. I let people who were there. I just slowly raised their rent by 10 or 15 because I didn't want people to move. I just kind of maintained a good investment. Anyway, the guy who bought it, the day we closed, he went and delivered notice his jacked. Everyone's rent up the 595. Nobody moved. And so like he just immediately like day one increased his cash flow by like, whatever that is, 24 times 50. Like crazy. Like, and I'm like, dang it. I should have totally done that. And here's what and here's what's awesome about that is, is I look at real estate is there's so many different ways to make money in real estate. And

it's like a lot of times you're not taking from somebody to to pay yourself. Like, you obviously needed to get out to do 1031 exchange, right? So you were able to take your gain and get into something else. He was able to take an asset. He thought wasn't performing where it should be. And he was able to make able to make it better immediately. So it's like it's almost like a win-win, I think. You know, if you're if you're really looking at it from the number side of things. And I think that that's what's great about that story. Yeah. Well, and what's cool, yeah, again, like people, oftentimes they think that real estate is a win-lose situation, whatever, but like, I was tired of

that property. Like exactly what you said, like it worked out to a win. He got exactly what he wanted. I got exactly what I wanted. He had the infrastructure in town because he had his own management and his own maintenance people. I had like three employees under him owned a bunch of other apartment. So he could run it way more efficiently than I could. And so like he even, I would say he even probably overpaid. Like I would not have paid what he paid. because like I would have to, you know, I have different infrastructure. So again, like there are ways to, to, and that's why to go back to wrap to the conversation we had earlier, when you talk to people on the phone, you're not necessarily taking advantage,

you're not trying to take advantage of them. You're trying to figure out, is there a win-win that we can come up with? And most real estate investors get that. And so don't be afraid to have those conversations. Maybe what is a great deal of you, you know, isn't to somebody else or vice versa. So, yeah. Yep. So I want to talk about these rents and the leases themselves.

You have seven units. And how many are vacant currently? So we've got, I believe we got one vacancy. Okay. One vacancy. But we've got also, we got one tenant who hasn't been paying rent for the last, I believe, month and a half. So we've got to, and the leases are, you know, a lot of these tenants have been in this,

in this building for years and years and years. And some of them even paid non-refundable security deposits, which I don't think is even legal. So that's one of those situations. Their leases, I just don't think are. airtight like they should be. So we're going to have to go in and we're going to have to really tiptoe around this and make sure we do things right. Hey, Mindy, if somebody, if there's a landlord out there who wants to have an airtight lease, a good lawyer reviewed lease that's state specific, how would they go about doing that, Mindy?

Wow, Brandon, that's a really good question. I think they should go to biggerpockets.com slash LL forms to get a state-specific lease for their particular state. And we sell them in 15 states right now, but we are ramping up to do all 50 plus Washington, D.C., which, conveniently enough, has different laws. Are you in Oregon? Are we in Oregon? I don't know. Let's go over here to biggerpockets.com slash LL.

Oops. I don't know how to spell L.L. L. Spelled L.L. There's actually two L.L. Brandon, I don't know what I would do without you. We're not currently in Oregon yet. But we will be.

I'll send you a letter when we are. We will be. Okay. So anyway, so you got seven units. Yes. Currently and one. We have five more to discuss. We have five more to discuss.

So you said they are they on month to month leases? Are they on annual leases? Like are they all? Can you raise the rent right now? Because I would like to point out to people who may not be aware. Once you buy the property, you have to honor the lease until it ends. Yeah. So they're all month and month leases right now.

Oh, perfect. So you can. With 30 or 60 days notice, depending on your state's landlord tenant laws, you can raise the rent. 60. Oh, yeah. That stinks. It's only 30 here. Yeah.

So Oregon is very tenant friendly. So there's something I've learned as I've invested more here in Oregon versus Utah, which is much, much more landlord friendly, you know, is that, you know, the tenants have a lot more, you know, in terms of, I guess, rights. And it's just more difficult to move rents up. And you're seeing even in Portland, it's crazy. some landlords are having to pay tenants moving expenses when they take over some of these properties just based on some of the new laws that have been moved through the legislature. So it can be a kind of scary as a landlord. Definitely you have to know your laws.

You definitely have to know your laws. Okay. So you bought this property for $815,000 and you put zero down. Did you do this with no money and bad credit? No, no. So in this particular instance, I use my own. money for the down payment. It was about $170,000, you know, with the finance fees and everything like that. And I have a, you know, what I've built up in the past year or so is a relationship

with a portfolio lender. And so this is a commercial lender. And this is something I'm not really familiar with because before I was always buying these properties, either, you know, doing seller financing or doing conventional loans with, you know, like a broker, mortgage broker. And, you know, Fannie, Freddie-May type of loans. And so going into the commercial loan area is so much different because they underwrite their own loans. They're able to keep the loans in house. And they don't have to be inside that box that some of these Fannie or Freddie brokered loans have to be in. And it's like they could just do so much more. So I'm getting, you know, 80% loan to purchase, which, you know, is great. And it just really so much. There's so many fewer documents

to sign when you're going to close and it's just so much easier to do. So why did you get a commercial loan on this sevenplex, Nat? Why did I get a commercial loan on the seven bucks? Because it is five units or more. Any property that is considered commercial multifamily is five units or more. And anything one to four units is residential. And so once you get outside of that four unit area, you have to move up into a different kind of a loan. Okay.

So a traditional load just wasn't even an option. Correct. Okay. That was a very, yeah, that was a very softball pitch right there. Mindy, nice job. Not everybody knows that, Brandon. I know. It's good.

I mean, you don't know anything. You're educating people. I've learned that multifamily over five or five units are greater now require the commercial loan. You know, you learn something new every day. Okay. So you have a mortgage. What is your pay?

Oh, so I want to say, I don't know if I told you this, Brandon. I told that before we started recording. I got a letter recently from a fairly frustrated listener who said you never go over the numbers. and I want you to go over the numbers. I want to hear these numbers so that we can start learning. So that's why we're doing this. Did I already say that? If we were sounded every angry, angry letter, I would not be on the show anymore.

Brandon's home address is one, two, three, cool streets. Brandon sucks. Get him off the show. He sounds like a five foot two. I don't know, whatever you said I was. Chihuahua on a purse. Chihuahua on a purse. Get that guy off the show.

Matt Borsuch is my new favorite guest. Okay, so let's talk. So let's talk. So your payment is how much roughly and where does the numbers break down on this? Yeah. So I have a loan for five and a half percent. And my loan payment is principal and interest is about $3,700 a month. If you throw in my insurance and you throw in my taxes, I'm all in about $4,500 a year.

Sorry, a month. A month. Yeah. year, that'd be great. That'd be awesome. Do you have, I'm assuming you pay water sewer garbage there. Is that separated? Can you separate it? Yeah. So I pay, I pay a water sewer. Tenants are responsible for garbage. Okay. Have you considered submetering or trying to somehow outsource that to the tenants? Yeah. So in the unit that is rented, that, that tenant is actually paying the utility bill. I think it's an extra 50 bucks a month. They're actually paying that in their lease. They're paying $11.50 plus $50 a month. But we haven't, we haven't separately metered. that's a good suggestion though. Yeah, there are there are companies that will, yeah, like,

submeter your individual units, obviously, but. What does that cause? It's not much. In fact, there was a, oh, I wish I could give them a plug, but I can't remember their exact name. I think it's called like true meter or something like that. They hit me up on Instagram actually kind of randomly. I'll get a link to it and put it in the show notes.

Anyway, they've got actually like this cool device that actually attaches directly to, like, the toilet, the sink, the, the shower. Like, they've got these little like Wi-Fi enabled submeter and things. So you don't have to do any major plumbing. You just unscrew the line. Anyway, that was kind of cool. But yeah, I can't remember their name exactly. So I'll just put a link in the show notes.

But it was very interesting model. But otherwise, some people do it just on the hot water heater. If the water lines aren't separated, like in a lot of multifamilies are not separated, so everybody shares, you just put it on just the hot water heater. Or like you said, like you're doing, you just charge a surcharge. Like, hey, 50 bucks a month. I've actually found a lot of success with that because I don't have to do any work at all plumbing-wise. And you still get the advertised a lower price.

So do you get anybody complaining? Oh, I don't use $50 of water. Do you? No, never. Brandon, I never have either. Okay. Never have. We had a really interesting episode, Bigger Pockets podcast number 131.

You can get there, biggerpockets.com slash show 131 with Serge Shukot, who has, he talks about submetering, he talks about submetering a property. And he's got some really great tips in that episode. I really like that episode a lot. Yeah, I do too. That was legit. Sometimes I find that like, so I bought a fourplex for my daughter a few years ago or 18 months ago when she was born. And it was my, her college education, right?

I've told that story a million times here. But what makes that property so good and cash flowing, the cash was like $1,000 a month. The reason it's so good, though, is because every unit is separately metered and they all pay their own water, sewer, garbage, electricity. And so like my, like my expenses on the property are so low on the properties where I actually. to pay water sewer garbage. Like that's sometimes more than the mortgage payment in my area. So, yeah, that can, that can turn a deal from like, well, you go find a deal on the MLS and you're like, well, that's not a very good deal. But then just thinking, well, what if could I submeter those and transfer that over? All of a sudden, a mediocre or not such a good deal could become a

home run deal just by creatively thinking, how can I, you know, do things like that. So that's such a good. That's such a good point. I mean, if you come in, you can see, you see the opportunity, obviously, to add value just in terms of rents, right? Rent so low, you can just already immediately increase rents. You can add, and then obviously there's another value add when you can just, you know, hey, I'm going to attack on another $50 a month for this utility charge and obviously increase my income for this property. And that's something that the owner hadn't even thought about before. Yep. Yeah, just, you know, sometimes like today, like, I would say this, today, back like eight years ago, right, when 2007, eight, nine, when the one seven, nine, when the owner,

the market was really, really horrible, right? Like, you could find good deals that are just around. They were just like lying around. You just find them. You're like, oh, there's a good deal. There's a good deal. Today, you don't find good deals. You make good deals. Right? So you have to think, like, how do I make this a good deal? You like that quote, Mindy? I do. I like that a lot. I'm going to tweet that later. You can tweet that later down. Yeah, so you don't find good deals anymore. You make them. And so you make them by thinking, I mean, how can I add a bedroom to this? How can I add a water charge? How can I, you know, increase the rent? Like you said, remodel, add paint and carpet. What I find is that. What I find is that.

especially in today's economy, tenants seem to be willing to pay more for nicer stuff. Now, that won't always be true. I'm sure when everybody gets scared that the sky is falling, then people tend to be a little more conservative. But right now, I mean, tenants are paying crazy amounts just because it has nicer floors because everyone's feeling confident. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have.

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book your free demo at bill.com slash bigger pockets, and get a $100 Amazon gift card. That's bill.com slash bigger pockets. Cool. All right. So what do you expect after you're done remodeling this property, all the units are up to par, you got it all managed,

you know, streamlined, everything's working. What do you expect it to cash flow? Yeah, you know, so I'm hoping, you know, to cash flow somewhere, you know, between three and two and three thousand dollars a month on this thing. So, you know, I mean, if we're getting eight, seven, eight thousand dollars a month in rents, you know, we should be doing pretty well there, obviously, you know, but I obviously committed a decent amount of capital to it, you know, $170,000, you know, expecting to get, you know, a decent return there. So

do you have a number that you look for in a return? Like, do you say, hey, I need to get at least this much per unit or this much percentage? Yeah, you know, I, I like to get double digits in my returns. And I mean, I look at real estate as a form of arbitrage. right. I'm always looking and saying, okay, we can, you know, I'm borrowing from the bank at 5% when I'm expecting to get at least 10%. That 5% that I make in between the 5 and the 10, that's mine. And, you know, that's one of those things where a lot of people, I think, they don't really think about that side of things before they do a deal. You know, they're just looking at, hey, just the basic, you know, you look, looking at your rents minus your debt service.

You think you have that cash flow. No, there's a bunch more to it. And you have to make sure you really know those numbers so that you can figure out what your profit margin is going to be. Perfect. Love it. Love it. So let's go over to the 20 units that you're thinking about by, 20 houses. Is that what you said? Yeah. Oh, you got something first, Mindy? I do.

I want to know if you manage this property yourself or do you hire it out to a property management company? Yeah. So I learned a long time ago that property management wasn't for me. I've got a story to tell about that. I was playing professional soccer in Salt Lake City and it was the night before game. And, you know, I'm always really adamant about my preparation before game. And so I, you know, I have my pre-game dinner. You know, I watch my TV show.

I go to bed. And it's like 11.30, my phone rings, right? And I'm like, look at it. You know, expecting, you know, not to answer it. But of course, it's a tenant. And it was a tenant from this triplex. I just purchased a Hispanic tenant. And I speak passable Spanish.

And this tenant spoke no English. So they called me and they just were beside themselves like, blah, blah, blah. So I heard something like Fuego, which means five. And I'm like, what? Fire. And they're like, ah, they're like, did something about electricity. And I was like, oh, my God, I got to get, I got to get down there. So like, I didn't even think like, hey, like call 911 or anything.

I just said, I'm coming down there. So I just like, get out of bad. I put on my clothes. I just raced down at this triplex. And I show up there and I don't see any smoke. There's no fire or nothing there. And I go to the unit. I'm like, what's going on, guys?

What's the problem? They're like, well, my, my electricity doesn't work. What they were trying to tell me. I was like, really? you're your electricity doesn't work i was like well where's the where's the electrical panel so we we go we try to find the electrical panel and it's nowhere to be found like there's just it's this like kind of you know additional unit that was added to this property and there's no electrical panel like can't find it so i then i have to go to the unit next door knock on the door and say hey you know um

i've wake them up of course it's a friday night and hey can you guys let us in we go into the unit And sure enough, their panel actually works for that other units panel or electricity. So, and they had just tripped a circuit breaker. So we just had to flip the circuit breaker on. And that was that. And I was like, after that experience, I was like, I'm done this property management thing. Like, I'm taking calls at 1130 at night. I'm like ruining my preparation for a game.

And, you know, it's time for me to move on from this thing. The most important question, though, is did you win the next day? You know, I played like crap, but we won. Okay. Yeah, I have a similar, like, story. I mean, just, I had a tenant call me. The only middle of the night call I've ever had, it was like one in the morning. The tenant called me and said there's water leaking all over the place.

And I ran over there. It was only a block from my house. This is my first year ever as a landlord. And I ran over there. And she was just doing dishes and like at one in the morning. And the pipe underneath, like the drain line underneath just came disconnected. So if she would have just stopped doing dishes, then there wouldn't be water everywhere. But of course, she doesn't know that.

So like I go over there, I just shut the water off and I turn around and just walk back out. I was like, I'll be back tomorrow. Mike, Mike drop. Yeah. Yeah. It's like it's so funny though. I look at property managers now and they're like kind of like the, I don't know, the middleman between you and tenants.

Like they manage all that information, right? They manage all those calls and you just get to see like the report. You just get to hear like the big stuff that happens. And it's like such a refreshing thing when you can scale up and not have to manage your own properties. It was so refreshing for me. So now I've got a really good property management company here. And in Salem, it takes care of my properties. And it's just such a relief not to have to worry about it.

Awesome. I love it. All right. So now let's move over to these houses. You got them under contract? You're looking to or how does that work? Are they actually all houses and how did you do that? Yeah.

So it's a portfolio deal, a 28, two-bedroom one bathroom houses. And it's been a roller coaster of a deal. I got these things under contract last June. Oh, wow. went through months and months of due diligence. So I've got a really good property inspector. And we went through these these units just with a fine tooth comb. And there was a lot of issues with them. So, you know, we ended up having to get some, you know, concessions on the seller side. I ended up in order to take this thing down. I had to sell four of my properties in Salt Lake

and a 1031 exchange to make sure this whole thing would work. So I was under the gun with that 45 days and the 180 days to close. And so basically where we're at now is the sellers. He, he, needs to fix up the properties to, you know, what we think are, you know, good enough for us. And then we're going to close on those properties in March, on March 1st. Awesome. Well, congratulations. I mean, who sells 28 houses in one shot and why do they do that? And where did you find it?

Well, that's a great. That's a great question. It's a unique deal for sure. It's not, you know, a 28 units under one roof. It's actually 28 different bungalow houses, which is kind of weird. But it's a sixplex here, a sixplex there, and then a 16plex over here. So they're all on, you know, three different tax lots. And it's just the way they were built.

But it was a guy who he had owned these properties for a long time in his, you know, in his family. So he kind of had him passed on from generation to generation. And he got to a point in time where he was like, you know what? I'm done with this. He's got some partners. He's in on this like family that he's like, you know, I'm ready to move on from and just want to get this thing done.

He has the capacity, believe it or not, to fix these properties up for me before. I buy them. So the roofs are all be brand new, new hot water heaters, new sewer lines. So like the bones will be really, really good. So I'm not going to have to, you know, go in and do those major expenses when I, when I take them over. So then let's talk water, sewer garbage again. There's separate houses. So are the tenants already currently paying water sewer garbage or can you shift that to them? So that is, that is where this deal is, is a lot better than the sevenplex in terms of the expenses. They, they each pay for their individual, you know, water, sewer, garbage, all that stuff. Yeah, you know, these are one of my favorite types of properties to buy are these

little, like, groupings of bungalows, you know, these little, like smaller houses that are usually in a group. I've got a few of those now, and I love those things. Because, yeah, typically tenants expect to pay their own water sewer garbage is not weird. They're usually sub-metered for that reason. And it's like next step up from an apartment, but not quite like a standalone house. So I usually get better quality tenants in those as well. Absolutely. Yeah. I think there's something to be set about having your own space, you know, not sharing a wall. Yep. And these are, these are really recession-proof types of products. You know, you're talking about two-bedroom, one bathroom house that's going to rent between $900 to $1,100 a month,

maybe more. And, you know, there's a big segment of the renting population who can afford that. And so if you're looking forward to, hey, you know, we got this big thing coming. We don't know when it's going to happen and what it's going to look like the slowdown. You know, this is a, I think a great place to be because it's really a forward. You're not in this luxury housing where you're trying to rent for two or $3,000 a month. Awesome. Awesome. Well, I guess my last question before we move on to the fire round, unless Mindy, you got anything else.

I just want to know where you're headed next. Like, what's your future look like? Yeah. So, you know, I'm a big fan of goals. I just posted an article about, you know, big, hairy, audacious goals, be hags. And I got that from a Jim Collins book built to last. And I think that's, you know, and when I started out in real estate, investing, I was like, okay, I'm going to buy, I want to get 10, 10 doors, 10 houses, and I'm good, right?

And so I got there and I was like, all right, I want to get 25. I'm going to be good, right? And so I'm almost there. I'm one door away. And, you know, with this next property deal, I'm going to be, obviously, you know, head and shoulders above that. So, you know, I, I just want to, I like real estate investing. I like being a part of the game. I like the relationships. I like the cash flow. and I like just being able to have that financial freedom, right? Being able to say, hey, I can do whatever I want with the time I have. You know, I have young kids and I'm not trying to go out and work 80 hour a week so I can miss this time right now. You know, I really want to be with them.

And real estate, you know, can provide that for for anybody. And it's definitely giving me that luxury. Yeah, that's awesome. I love that. Mindy, anything to add before we move on? No, I just want to reiterate what he just said. Real estate can provide that for anybody. That is so true. Real estate is accessible. You know, there's all these people that say,

oh, I can't do this. Like you said earlier, I can't invest in real estate because of this, this, this. No, you can. It may be not in New York City in Manhattan or, you know, downtown San Francisco. I don't know any of those places. But, you know, it's accessible. You just start with one. How many did you start with? What was your first purchase? A single property? Single family property in, in Denver, Colorado. And, you know, moved on up. And it's, it's amazing. You just, it's like running a marathon, right? You just got to get, you got to get going.

Get your body moving. Get out there. Get off, get out of your bed and, and just get started because it's a long race for sure. But you, you get there eventually. And we've all seen this, this appreciation, you know, in the last, you know, 10 years that we've been in this game. And it was scary, you know, in 2008 and 2009, 2010, when we saw this downturn. But you stay with it and you just make sure that you're buying. with a game plan and you see the results for sure.

Are you going to be running the hop hop half marathon in Portland at the end of March? Hop hop half marathon? I've never even heard of that. Well, maybe you should look in the paper. There's the hop hop half marathon happening in Portland at the end of March. And I know this because my husband is running it. It is. All right.

I'm going to have to say what's up. Carl. Carl. Mr. Jensen. Yes. Carl is. Yeah, that's cool. Carl will be there.

Janey Roth will be there. Brandon, you should come down and visit, you could show Nat just how long your legs can run. That's true. I think I could run faster than Nat. I'm actually, you know, I'm an athlete unlike the guy who sits on the couch all day over here. Yeah, I heard you been trying to get a little, get the heart pumping a little bit, Brandon. I'm attempting to get some work done in my life. Oh, are you going to be anywhere near Portland on March 31st, Slacker?

Probably not. Who knows? Okay, never mind. I am going to be in town then. Oh, you guys should go hang out. Yeah, we should go have dinner. I'll take you to a cool place that has really nice views. Ooh, I like really nice views.

Portland and the food is tremendous. I like that too. Maybe there should be a bigger pockets meetup while you're in town as well. And people could find out about that at bigger pockets.com's as events. They could. That's a great idea. Maybe I will do something. Maybe I will.

That would be an awesome idea. maybe Nat could attend. Maybe he could. As long as I don't have anything going on, I'm there. Awesome. Well, we'll talk offline. Okay. All right.

All right. Let's move on and head to the world famous fire round. It's time for the fire round. These questions come direct out of the BiggerPockets forums, which of course people can get to and ask questions free of charge any time day or night at biggerpockets.com. com. That's forums. But number one, what type of software to use in your company to manage your business?

I'm keeping that kind of open-ended question because, you know, it's, it was a little more specific than that. But we'll just say in general, what softwares do you use? Well, my property management company uses Atfolio, which is great for rents. I mean, I'm really not too software, I don't know, oriented. I like Microsoft Excel. I'm a spreadsheet kind of guy. I hate Excel. I got a degree in accounting, so I'm all about that.

Oh, that's interesting. a degree in accounting. I didn't even think to ask. I'm sorry. A degree in accounting, that's interesting that you would apply that to your numbers

and become a real estate investor. Do you have any interest in being an accountant or doing any sort of like accounting stuff? No. I did an internship for Pricewaterhouse Cooper's when I was in college. It was right before I got, I started playing professionally.

It was not something I enjoyed. We were like on an audit team. It was like clock in at like 7 a.m. Clock out 7 p.m. during tax season, it was just miserable. I was like, I don't want to do that. So you don't want to do my taxes this here? Are you sure?

How much will you pay me, Brandon? $100 flat fee. Yeah, I think you got a lot of, there's going to be a lot of forms and a lot of dots to connect, man. There are a few things. I feel bad for you. You may owe some money. I might mess up your depreciation stuff. You very almighty.

Well, I'm glad you when you had that a really hard decision between playing professional soccer and being an accountant. I'm glad you went with soccer. That's very noble. So moving on. Question number two. Moving on. I want to go back to what Nat just said. He said I might mess up your depreciation schedule. I want to give a public service announcement to all of our landlords out there. If you are not currently depreciating your properties, you need to start. And I don't know how to do that. I rely on my accountant. I would not try to give you advice. We have a delightful book called Real Estate Investing for the Tax Savvy. That's the book on tax strategies for the savvy real estate investor.

Come on. Thank you. I made that title. Come on. This was written by an accountant, Amanda Hahn. So, yeah, if you don't know, if you don't know that you're supposed to take appreciation, the government doesn't care. They're going to assume you did anyway.

So make sure you depreciating your properties. Okay, next question. My husband and I are thinking about investing in our first multiplex and plan on hiring a property management company. When doing our research, what would be some key things to look for, questions to ask, et cetera? I'd like to ask my friends and mentors at bigger pockets. What are good questions to ask when choosing a property management company? Well, I think for me, when I look at a property management company, I'm looking for experience, number one. I'm trying to figure out how long have you been in the game?

Number two, do you own property as well? Are you aware of all the issues that can go on with being an owner? I think that is very, very important. And number three, you know, how savvy are they in terms of, you know, understanding market rents and how much, you know, work do they do to figure out what market rents actually are? Because that's the number that, you know, it can vary from neighborhood to neighborhood, place to place, you know, one side of the tracks could be $500 a month. One side of the tracks could be $700. So more experience, the better.

Definitely the more better understanding of the market, the better. Good answer. And kind of a related question here. How often do you call your property manager and, check in. Well, since we just took over our sevenplex, we'll probably have a lot of conversations this week, but I would say in general, every couple weeks were on the phone and at the bare minimum once a month. Oh, you know what? That's really, that's a great question, Brandon. Good job. Thank you. Thank you. I'm good at reading. I think that is. Thanks, whoever answered that,

asked that question in the forums. No, that is a really important question to ask because how often do you call them? Do you just wait for them to call you at least once a month? That's great. Okay, you heard it here from Nap Orchers. Let's see. Do we want to talk about inspections or metrics? Let's talk about metrics in California, my local market. I'm having trouble deciding which metric to use for buy and hold investments and what I consider a good percentage for metrics like IRA or cash on cash return. I'd like your input on what metrics you use and what percent or number you look for in your investments. That's a great question. I think that varies from investor to investor. I used to care a lot about a lot of different numbers. And I've really come to terms with a few key indicators for me. And that price to rent ratio is one of the biggest for me. I think just the amount of rents I'm going to

get per month in relationship to the purchase price is huge. And I typically want to get that to somewhere around 1% if I possibly can. So if I'm buying a $100,000, single number, family property, I'd like to get at least $1,000 a month in rent. I think that's a big one for me. Cash on cash return is also a big one just trying to figure out, okay, if I'm buying this property and I'm putting all this money into a down payment into the rehab, you know, what am I going to get back, you know, in year one with my rents? And I think that that's another, another big one for me. But I try not to, you know, I try to get too lost in the weeds there. I think we overcomplicate things. And I mean, even having my accountant background, it's like, God,

I could just fart out a spreadsheet and have all kinds of different numbers on it and make myself look smart. But honestly, those are the two biggest numbers I look for. And then you have to manage the income and the expenses. And those are the two biggest things where you can lose or win. Perfect. Yeah, perfect. I would look for, yeah, mine's cash on cash return. And cash help per door, I look for both of those because like sometimes you can get a really good cash on cash return when you put like a dollar into a deal.

If you're really creative about it, let's like, wow, I'm making a 200% return, two bucks a year. It's like, oh, anyways, I look for, yeah, it's like on a multifamily, I look for $100 per month per unit and a 12% return. But that's like my numbers, right? And somebody, like you said earlier, you like double digit cash on cash. Yeah, exactly. Like, but somebody else might be fine with 7%. That might be fantastic because they're earning one right now. Or you might want 20% because you're buying, you know, a bunch of crappy properties in Detroit.

You might like, you know, 18% might be too low for that kind of risk. And I think to that point, Brandon, I think, you know, when you go to meet with other investors and you hear about deals getting done, I don't think you should ever be intimidated by people who, you know, say they're doing getting better deals than you. Because I think that, you know, I did early on. I was like, man, like, how did you get that deal or man, that's, you know, it doesn't matter. Like, that's great for him. I'm happy for him. You know, I don't want to count his money. I want to do things, you know, the way I do things, right? It's more important that I get the returns I'm looking for. And I find the deals I, you know, I want to find. Because he could be buying in a neighborhood that's, you know, I want to find. Because he could be buying in a neighborhood that's, you know, like blah, you know, and he gets this a great cash and cash return, but he's also dealing with five evictions and a shooting, whereas, you know, you're over here in this other neighborhood and your cash and cash return may not be as good, but, you know, your rents are, you can account for your rents a little bit better. They come in every month. That's such a good point. People should like rewind the last 30 seconds, say that little like back button and listen to that again because that was solid. Yes. All right. Cool. That was great advice. Don't compare yourself to somebody else.

Exactly. Yeah. I really like that. And let's all remember. remember too that people talk about their good stuff a lot more than they talk about their bad stuff. Like I talk about like, like, the four points I'm about for Rosie is fantastic. Like, that's such a great deal. I talk about all the time. But I don't really talk that often about, I don't know, like the flip I did last year that I made like $7,000 on because I'm like, yeah, it was just kind of a lame flip. I'm like, I don't talk about it that much because I'm not proud of it. So like, you know what? I think you should talk about that because people have this idea that you're some brilliant investor who never makes a mistake ever. And they need to know

the truth that that's just some facade. It's a total facade. Brandon has no idea what he's doing. No, so, okay, I'll tell the story real quickly. So, yeah, I made like seven grand on a flip. And it was like, I didn't have to do any work, so it's still seven grand. I don't want to scoff at that. But like, it was a ton of work.

But two things happened. One, I bought the deal in a massive rush because we were filming for that TV show pilot thing that I filmed for that never actually worked out. I'll put a link to that if you guys want to see the trailer or the pilot or whatever you want to call it, the sizzle reel, I guess what they call it. I'll put it in the show notes. But anyway, yeah, it was kind of fun. I mean, we found for a couple of these, but I needed a house to work on.

And, like, I had a week to find something. So I bought it from another investor I knew that, and it wasn't a great deal. So anyway, first reason, I didn't, I had horrible motivation for buying it. The wrong motivation for buying it. But secondly, once we got into the deal, our entire plan was to remodel this back area and turn it into a two bedroom one bath. Additional two bedroom one bath, so it would be a four bedroom house instead of the two. Anyway, we went to the county because it was in the county area to go get permits.

And they're like, uh, nope. That wasn't permitted when it was built. that back section was never permitted, you have to tear it down to the ground and rebuild it if you want to do anything in there. And they're like, and so like all of a sudden my plan to turn this two bedroom one bath into a four bedroom two bath was just completely cut off. And they're like, no. So I turned it into a two bedroom one bath with a garage. And the only thing that saved me was the fact that the market has been insane. And so lesson learned, always check if there's weird additions onto a property and you're thinking you're going to do something and get permits for

it check before you buy it and make sure that the spot is actually the thing that you're buying is permitted because that was a that was a blowah yeah that same thing happened to me my current house yeah I bought this house with this weird addition and I said oh I want to put something on top of that edition they said that edition doesn't exist oh contrary I'm standing in it right now the room's over my head see yeah yeah yeah so there's one of of my, there's one of my not so awesome deals, but you know what? I don't know. Anyway, moving on. Let's get to the famous four. All right. Hey, everyone, we need to take a quick break here. You notice a little microphone sound change because now I'm back on my good microphone. And we had a lot of tech problems

with this show, actually. And so we actually lost about three minutes of recording right here. For whatever reason, the sound just cut out. And we lost the first three answers to the famous four. Famous Four. Famous Four. Luckily. We got to see. sing it, Brandon? We do have to sing it. That was really good, Mindy. So here we are. The night before the show comes out, editing and putting together the show, and we find out that we don't have it. So me and Mindy here, Mindy and I, is it me and Mindy? I don't know. Mindy and I. Mindy and I are. Luckily, Mindy wrote down is the answers for the first three that the book, business book and whatever. So Mindy, tell us what was Nat's favorite real estate book? Nat's favorite real estate book is called Defensive Real Estate Investing by Bill Branchick. All right. Wow.

I've not read that one. I haven't either. But we're going to put a link to all of these in the show notes at biggerpockets.com slash show 267. So if anybody wants to go check it out, we'll have a link to it. That we will. All right. The second question of the famous four. And by the way, again, we'll bring that back in here on question four.

We got question four, just not the first three. All right. Question number two, what was Nat's favorite business book? A Compound Effect by Darren Hardy. I don't know. Maybe you've heard this before? I have. It's a fantastic book.

I've read that like five times. And as I said, when we recorded it, I told, like, now this is like one of my favorite personal development books, if you can call it that. Like, it's really just, it's unbelievably good. I recommend every single person on earth by it. In fact, that's probably the number one most gifted book that I give. That one in life and air. Anyway, good book. Oh, wow.

Okay. Well, that's good to know. That's a ringing endorsement from Mr. Brandon Turner. Ringing. Is that good? That means good, Brandon. Okay, good. It's ringing.

I'm ringing. All right. Number three, what is Nat's hobbies? Nat's hobbies are running and playing with his kids. I know. I'm not a big fan of running. But when we originally recorded this with Nat, I told him, hey, I'm going to be out in your area in Portland, the Portland area. Portland, Oregon.

Portland, Oregon, not Portland. Maine, although if you're going to Portland, Maine, you can say hi to the Mainers up there. Portland, Oregon, at the end of March, there is a hop, hop, hop, half marathon that my husband is going to be running. I am going to be cheering him on from the sidelines. But on March 29th, I'm going to have a meetup in Portland. This was your suggestion. You're like, hey, you should totally do this. I'm like, oh, I guess I'm going to do this. And then it turns out that all of that was lost. So, but I'm very excited to have a meetup. up at Bunk Bar in Portland from 6 to 8 on March 229th.

So if anybody wants to come out and say hi, I would love to meet you. And that is 2018 in case you're watching this show or listening to it like five years in the future. That is 2018. So I'm sorry that I missed you. We can play Brandon. Sorry, future self. We're talking to people in the future.

That's the coolest thing. All right, let's get to actually Nat's answer to number four because you don't want to hear me and Mindy talking about Nat. Let's hear from Nat directly. All right. Let's jump back to the recording. Okay. Anyway, last question from me of the day.

What do you believe sets apart successful real estate investors from those who give up, fail, or never get started? I think it's just like Richard Branson says, nothing ventured, nothing gained. You have to go out and just have to do it. And I think it's scary when you haven't done it before. But, you know, once you get a deal under your belt and you realize it's not that hard and you just kind of just keep going. And I think that's the mentality you have to have is just every single day, you check that box. did I do something to progress in this real estate investing thing? Am I still making offers?

Am I still learning? I think those are two key things to always keep in mind if you want to keep progressing in this game. I love that. That's great. Where can people find out more about you? Well, I have a website, natborchers real estate.com. You can find me there, and I'm all over social media as well.

My handle is Nat Borchers for, I think, everything, Instagram, Twitter, clever backslash nat bortures for Facebook page as well Mindy so yeah you can you can find me that I didn't I didn't say beardy nat or beardy beardy bortures at all I should though I think that should be my new hashtag right see actually it's a great idea beardy beardy bortures how do you spell your last name B-O-R-C-H-E-R-S just like it sounds all right beardy burchers first that works if you've got a real beard. Throw a beardy in there. So beardy Brandon doesn't work?

Come on. You said it. A little beardy Brandon. Kind of mustachey beardy, Brandon. All right. I'm closing the show out. Nat, this has been fantastic. I love all this stuff.

So thank you so much for joining us today. And maybe we'll get you back on the show when you get up to those million units. You're going to someday get, I know. Thanks, guys. It's been a pleasure. Okay. Bye, Nat. Thank you.

Bye. All right, big thanks to Nat Bortchers. Am I saying that right, Mindy? Matt, the beard, Borchers. Fantastic show. Super cool guy, super cool beard puts mine to shame. He's like the true beardy forchers. But anyway, no, I think that was super cool.

So thank you for actually, Mindy's the one that petitioned fought for getting Nat on the show. And she did all the hard work of tracking him down on Twitter and all that. So good job. Yes. So back to the beginning of the show, we gave you a quick. tip to go out and meet somebody at a local event. I want you to tweet or how do you say it on Instagram? I don't even know. Graham. You can gram. Graham it. Obviously that's not my favorite. Gram it. Tweet or gram it that you have that you have gone to an event and that you have met somebody.

Do you do hashtags on Instagram? You do. Hashtag event challenge. Now Brandon is active. challenge. Brandon is at Brandon at B.P. on Twitter. I am at Mindy at BP on Twitter. And Brandon, and I am also at Mindy at BP on Instagram. Brandon, what is your Instagram? It's Beardy Brandon because that's easy to say. That's why I showed up.

Beardy Brandon. I just feel weird now that Nat is so much more beardy than I am. He is. I'm like less beardy Brandon. But yeah, beardy Brandon anyway, check it out. Follow us on Instagram too because I am such a, like, Instagram, like 15 year old girl. It's great.

I love it. I spend a lot of time on there. Okay. We want to hear about your event. Yeah. Let us know. Yeah. That'd be great.

All right. I'm going to getting out of here because you know why? You're in Hawaii and it's surf o'clock. Yeah. It's surf o'clock. I have actually, I've been here for two weeks now and I have not surfed yet. In fact, I was going to go with Doug yesterday. But it was like thunderstorm and lightning.

And I was like, so I'm going to go third. Thursday now. Understorms and lightning are very, very frightening. Mama Mia, mamma mia. Anyway, all right, thank you guys for being a part of the show and listening. And if you enjoy it, make sure you leave us a rating review over in iTunes. It helps us a ton. And make sure you share this on your Facebook if you want as well.

You can find the YouTube video over on YouTube. And that's all I got for you. So for BiggerPockets.com, my name is Brandon. And this is Mindy Jensen. S. S.T. Bye. You're listening to Bigger Pockets Radio.

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