BiggerPockets Real Estate Podcast - 268: Acquiring 20 Long-Distance Rental Homes (on a Military Salary!) with Rich Carey

Episode Date: March 1, 2018

Many people feel that because their local market isn’t great for rental property cash flow, they can’t invest. Don’t tell that to today’s guest, who for the past decade has been doing just that—even while working full-time in the U.S. Military! Today’s guest is Rich Carey, who shares with us his strategy of buying rentals in one location, despite living in many different places across the world. Rich also discusses his strategy of NOT using leverage, instead choosing to buy properties with cash instead, which has allowed him to maximize his cash flow and has given him true financial independence. Rich’s story is inspiring and highly educational, so set aside time today to listen to the whole interview. We think you will really like this one! In This Episode We Cover: How he bought his first property while assigned in Guam Tips for flipping new construction Why you should consider switching investing style after a flop Why you shouldn’t buy a house, unless… Advice on long-distance house flipping What you should know about partnerships and trust His experience investing in properties in military bases A discussion on leveraging properties The importance of having a frugal lifestyle Hiccups on his first property and valuable lessons from it How he manages his properties out-of-state And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Money Show Introduce yourself to the forum Leading Landlord BiggerPockets Podcast 230: Real Estate Investing as a Side Hustle with Grammy-Winning Producer Seth Mosley BiggerPockets Landlord Forms BiggerPockets Podcast 223: How to Become “Set for Life” Through House Hacking, Frugality, and Maximizing Your Income with Scott Trench BiggerPockets Podcast 035: Quitting Your Job, Lifestyle Design, and Being a Traveling Landlord with Paula Pant Books Mentioned in this Show The Total Money Makeover by David Ramsey Set for Life by Scott Trench Long Distance Real Estate Investing by David Greene Rich Dad Poor Dad by Robert Kiyosaki Fooled by Randomness by Nassim Nicholas Taleb Fire Round Questions What extras do you add to your lease Recourse against property manager for fraudulent repair billing? Tenant wants to buy my house Tweetable Topics: “You can pay off a mortgage pretty fast when you put your effort into that.” (Tweet This!) “I don’t believe that you have to wait for things to crash then invest everything.” (Tweet This!) Connect with Rich Rich’s Personal Blog Email Rich Learn more about your ad choices. Visit megaphone.fm/adchoices

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your home for real estate investing online. What is going on, everyone? This is Brandon and Mindy. Hosts of the Bigger Pockets podcast. Like that, I changed that. Now we're equals today. Anyway, here with. Here with nobody.

How's it going, Mindy? That's good. Oh my goodness. That was terrible. It was amazing. So today on the Bigger Pockets podcast, we got kind of a cool interview with the guy I'm rich.

We'll introduce you to Rich here in just a minute, everybody. But it's a cool show. Rich is pretty awesome. Before we get to that, Mindy, what's new in your life? We've been talked in a while. Well, I don't know if you know this, but Bigger Pockets has a new podcast called Bigger Pockets Money, where we do kind of the same thing, but we focus on money instead of real estate. Although in the, I think we've recorded 10 episodes now, like six of them have real estate

ties because real estate is just a really great investment. Real estate is really a really good investment. Well, cool. So you can find us on all of your favorite podcast players and also at biggerpockets.com slash money show. That's what I've been doing. That's not allowed to the quick tip, but it's not the quick tip. The actual quick tip. Quick tip.

It's very, very quick. If you've not yet done a new member introduction on the Bigger Pockets forum, in other words, introduce yourself to everyone. Go to BiggerPockets.com slash new member right now. BiggerPockets.com slash new member and fill out your introduction. Let us know who you are and what you're looking to do in real estate. It's a great way to network and to get your name out there. So biggerpockets.com slash new member. That is a great tip.

And kind of piggybacking on this is post a picture of yourself. This is a professional networking site. We hosted a huge meetup in Denver last year. And it was so nice to see people. And they would come in and I'm like, you're Al Williamson from the leading landlord because I recognized his name, his picture. and his, because he has a logo in his pro membership signature. So put a picture on your, on your site of you.

I know there's a lot of, you know, privacy issues and whatever, but people just come here because they want to talk about real estate. So share who you are. All right. That was a good second quick tip. Quick tip. I like it. Two.

All right. Well, Mindy, you want to feel really, you want to feel really bad about yourself right now? I would love to feel really bad. But you want to see, you want to see how good life is right here. Brandon. Look at that. Where am I talking to you from? That looks like palm trees. They don't have palm trees in Washington. I know. I finally made it to Hawaii. I just had to break about that. I'm at the Disney Alani resort right now. But not, we're just here for four days. And then I'm going to be staying over in Kailua for a few months. So that'll be fun. I'll be reporting. I'll be reporting. I'll be

live from Kailua the next few months of the podcast. So that'll be fun. Yeah, I'm jealous. Although I will say today it's 65 degrees in Denver. Okay, fine. Yeah, actually I can see behind you. It looks pretty nice. So let's bring in Rich. I think that's a good time to do it. Actually, before I do that, I want to say this. I'm kind of excited. This is nothing related to real estate whatsoever. But Mindy, remember the song I put out recently. Remember the baby one? Remember the baby song, which made me cry. Thank you. Good, good, good. So quick backstory and then we're going to get on with us. So Seth Mosley, which we had it here on the podcast back episode two, I don't know, in the 200 somewhere. He's the Grammy winning. music producer guy that is also an amazing real estate investor. Anyway, Seth actually invited me out to his studio in Nashville and he recorded a song that we wrote together and recorded. And it was for my little girl, Rosie or about Rosie. So anyway, I thought it'd be fun. I'm going to actually throw it at the end of today's podcast.

So after the music at the end, I'm going to give it to our editor, Dave, and he's going to upload it there. So if you want to hear the song that I wrote, it's kind of cheesy, but you might like it. It's not cheesy. It's beautiful. And also just NS. not say for NSFW because you're going to cry. Brandon is such a sweet song.

And also Seth Mosley was on Bigger Pockets episode show 230. So that's biggerpockets.com slash show 230. All right. Well, thanks. Anyway, so yeah, let's go there. I just thought it would be kind of fun to share what I've been working on and kind of a mutual thing with me and Seth. That's very nice. Okay.

So enough about you. Let's talk about today's guest. Yes, today's guest is awesome. also. Today's guest is Rich. Carrie is an awesome dude. I've met a couple times through the FinCon conference that I go to every year. Rich actually when I met him, he told me he owned like 20 houses and he owns them kind of in a unique way that most people don't in that he has no mortgages. But he's not like a multi, like he he works a very steady normal job called the U.S. military. And today he talks about how was he able to buy 20 houses on a military budget, so to

speak very, very cool stuff, very applicable for anybody who doesn't make hundreds of thousands out of year, just average American. Oh, and he invests entirely out of, not just out of state, out of country. So, so much good stuff. Long distance, real estate investing for sure. Like long distance. He's currently in Korea. That's if you look at a globe, we're like literally halfway across the globe from Korea. That's where he's buying and managing and owning all these things. So very, very cool stuff. So with. Without further ado, let's bring them in. All right, Rich, welcome to the Bigger Pockets podcast.

Good to have you here. That's awesome to be here. Yeah, this should be fun. I don't know a whole lot about your story, but we did get to connect down. Where was it, Dallas? Is that we all? You were in Dallas, yep, FinCon. And San Diego.

And San Diego. That was my second FinCon for me. Yep. Yes. There we go. So you do real estate. That's the word. I do real estate.

Yeah. Wait, wait. For a while here. Yep. Aren't you stationed in another part of the world? You can't invest in real estate long distance. It is a little bit harder. So I'm in the military.

I've been in the military for the past 18 years. And currently I'm in Korea. So I'm in South Korea right now. You can't invest in real estate if you're in the military. You can't invest in real estate if you're in Korea. Well, that's the end of the show. All right. All right.

Thanks, Rich. Okay. So what time is it in, if you're in? career right now. What time is it there? So 542 a.m. These are kind of my first word spoken and I'm just trying to wake up here. And is it Wednesday today? It's Wednesday. Yeah, Wednesday. Wow. We're talking to you from yesterday. Oh, that's right. No, that future. Tomorrow. Tomorrow. I'm in the future. We're yesterday. We're yesterday. We're yesterday. We're in the future. Yeah. Yeah. Yeah. Weird. This is. All right. So from the future, tell us what it's like. What's the weather like in the future.

All right. So let's talk about your real thing in the future. Yes. All right. So how did you get into real estate? Let's talk about your very first deal. Okay. So I was in the military and my first assignment was actually in Guam, which like most people have never heard of, but some small island like out in the middle of nowhere in the Pacific. And I was very eager to get into real estate, but Guam is a place that has typhoons and earthquakes all the time. So I decided not going to buy. So that was in 2000. In 2001, I eventually ended up moving to Washington, D.C. and I bought. a townhouse in Alexandria, Virginia. And that was just going to be my primary residence. That's like the first house I ever moved into. And it was $280,000 for a townhouse. And I thought for sure that it was the worst decision to my whole life. I mean, you know, to me, that was like

way, way, way too much money. Didn't sleep, you know, it was like crazy. I thought for sure I was, you know, ruining my life, but bought the house. Did you buy that with a traditional loan? Were you in the military at the time? It was pretty typical. I had enough money saved up. up to put 10% down and then I financed 10% at, you know, 7% and then the rest was a 5.5 30 year fixed. Okay. Okay. Yep. So you bought this first house. Yep. So I bought that first house and then, you know, I ended up moving away in two years and ended up turning that into a rental. And that rental, it rented out for about 2000 a month. I had that house for a long time. I sold it in 2016. But it rented out between 2000 and 2,400 a month.

To be known from like the 1% rule, that it's not like amazing numbers. But it was a decent rental and a way to get my, you know, sort of feet wet. It was a start. I think the thing that sort of got things going for me, though, was when I bought in 2003, thinking that that was the risk of stake in my life,

it was only about a year later that, you know, I guess the net worth of the house or the prices in the area shot up. And so it was worth about, you know, 400, 450, two years later. And I realized very quickly, like, I've got to go out and buy more houses like this. You know, I'm making money. So I kept trying to go out and buy more houses. Ended up, I felt like they were rising so quickly in price that I didn't. But I ended up getting into a couple of other things that we could probably talk about. I ended up flipping new construction, which turned out to be an interesting experience. And later on ended up flipping houses while

living in Japan. Okay, yeah, I want to take about both those things. There's like, there's a thousand things I want to talk about. I want to do the new construction one first because I read that in your, in your application. What do you, what did that look like? Why would you flip, I'm assuming you flipped a new build. Did you go in and renovate it? Okay.

So I don't know how often you guys have ran into flipping new construction. Never. But it's not, it's not something that I hear. Okay. Well, that's not something that I hear a lot. The way that flipping new construction works is, first of all, it's something that I'll say right after bat. I don't think it's a great idea.

It's one of those things that everybody does when, you know, when the markets are skyrocketing and everybody's making money and you're kind of like, oh, look, everyone's making money. So I'm going to do that. And what happens is you go to pretty much like this, you know, massive empty lot where houses aren't built yet. And there's just a trailer. There's just like a trailer there. And you go to that trailer and it's got like the little model of what this area is going to look like once everything is built.

And you go in and you buy the house before they've started construction on it. But you just put a deposit down. You've bought that house at a set price before they've broken ground yet. And in my case, I was able to buy one of the first houses, one of the first townhouses, and this is near Alexandria, Virginia, in attractive homes that was going to have like, you know, 150 homes. So I'm like number six out of 100 something. And I'm also an N unit, which is also desirable. You pick all your amenities, you know how when you buy a new house and you get to like pick all the cool sound system and the granite and do all that fun stuff and the expensive,

you know, extra paint and, you know, vault ceilings and all these other fancy things. So you do that. And then the idea is you've locked in your price a year later, it's finished. And since things are still appreciating by the time. time it comes to market, you just turn around and sell his new construction to the next guy and you just take that large profit. So you never move into it. Okay. And you're not rehabbing it. You're just, okay, so I heard about this in Florida in like around the same timeframe where people were buying these condo buildings that were just going crazy. And then they had issues in, what was it,

2008, 2009. They were just walking away from them and entire condo buildings were built, but nothing. Yep. So how much money did you make on that? So let's see. I think I did this in 2005 and a lot of people had already made money doing it. So I should have known better, but I didn't. And what happened was by the time it was done, what I realized was the prices had not gone up. They had stayed about the same. And I was very nervous. And I was like, uh-oh. And so I did two things, put my house up for sale and put it up for rent. I'm going to try to make money somehow or at least not get in trouble somehow. The problem with putting it up for rent, there was no takers, I couldn't get anywhere near

covering the rent except for a couple of offers for Section 8. And the people that wanted to rent for me that were Section 8, they had plenty of money, actually. They had a lot more kids than I wanted to live in the house. They had a lot more children than I felt comfortable moving in. but they were going to have plenty of money. And it's something that I looked into. I actually ended up like meeting the family and not feeling very comfortable with that particular family and decided not to do that.

And then what I ended up doing was getting with my real estate agent and offering like a bonus to the seller. I think it was a $3,000 extra bonus to the seller. And I said, look, please help me unload this. I'll take a loss. I'll break even. Because my original plan was to make, you know, make $50,000 or make more. I said, I'll do anything to skip me out of this. They got me out of it and they made about $10,000.

But what ended up happening to the rest of the houses in that tract of homes, there wasn't one person in the tract of homes that was planning on living there. Every single person was flipping new construction. Most of them, most of them ended up being foreclosed on. And, you know, most people got into a lot of trouble there. So I was lucky. I was lucky to get out of that. It was a good lesson.

Did you go back and buy it to foreclosed? No. That would have been smart. I was moving on. I moved to Monterey, I moved to Monterey, California, which is, which was my next assignment. And what I did in Monterey, though, or what I almost did, almost got myself in trouble again. I wasn't, I mean, I couldn't tell that the bubble was bursting. I just knew that that particular purchase didn't work out that well. And I was still kind of riding high from how much money I made on my first property when it came to appreciation. So I wanted to do something. I wanted to buy another house. I wanted to find a way to be. money in real estate. I didn't really know any other real estate investors yet. I don't know if

bigger pockets even existed at that time. I don't know, 2000 in the five, six time frame. Probably not. It did, but not in the current iteration. Very small. Okay. And, you know, I hadn't met other investors and I hadn't met this world on the internet or anything. So I was in Monterey and it was the top of the market for sure. And I went to buy or rent a house and I was close to buying. and they had convinced me that I had found a good deal in Monterey, California, $900,000 for a two-bedroom, one bath right next to the ocean. Whoa. Oh, right next to the ocean, though. Right next to the ocean.

And I was, you know, this close to buying it, kind of pulled out at the last second. I was starting to get money from, you know, friends and family and finding a way to make the down payment work and decided not to do it. Now, a lot of people while I was at that assignment, I was there for three years, ended up buying a house, maybe not like I, maybe not like right by the beach like me, but maybe inland a few, you know, maybe 30 minutes or an hour. There are a lot of military members, you know, who otherwise had very good credit that ended up walking away from their homes or being in a lot of trouble. Some people that bought in a city called Salinas ended up buying. And then two or three years later, it was worth almost half by the time they left. So that was just a very bad time market. Yeah, that was right around the very top. Yeah, it was.

Can I ask you a quick about, like, you know, people who are listening to this might be in the military or maybe who just move often? You know, the strategy where you move to an area, you buy a house and then you get shipped to another area and buy a house there. I mean, that's worked really well for some people. Do you recommend that or like or not, you know, because you would have been in trouble or is it just because you were looking for the million dollar house on the beach? Is that what would have got your trouble? I'm really glad you asked that question because I think it's the biggest, mistake that people in the military make. I think that everybody in the military knows somebody who has made a lot of money by buying a house at every location that they've lived, or most

locations that they've lived, because they probably don't buy one when they, you know, when they're in Guantanamo or something, but most locations they've lived and then they could. Yeah, right. It might be fun. I love a place in Cuba. That'd be great. And then they retire and then, And, you know, and of course, maybe it had, you know, maybe the timing was right and the appreciation was right. And, you know, they tell everybody they know. And, and hey, you're here about so and so that made a fortune and because they bought a house at every station. But that's, I believe that that's a rare case. I believe there's luck involved. And more than not, you're going to see people that got themselves in trouble doing that. I'm somebody who believes that you don't buy a home at a

certain location. And I'm the kind of person that doesn't buy a home in the military, especially this is the case. You don't buy a home unless the numbers look right for that house to be a rental when you move away. And that's how I evaluate home sales. And so I'm looking at first at the 1% rule and I'm kind of using the 50% rule and running the numbers at least at the beginning, am I going to even be close to buy a house around here? And so there's, and I could get to this later, but when I moved to Montgomery, Alabama later in my career, I rented a house in Montgomery, Alabama, but I ended up buying six different houses while I was there, you know, as investment properties, even though I was renting the house that I was living in. And the one I was

renting would have made a good, that wouldn't have made a good investment property. The numbers weren't right. Yeah, that's fascinating. Because, you know, like, I think people oftentimes think that you have to own your house before you can start investing in real estate. In fact, I get that question quite often from people saying, you know, well, I'm renting right now. Should I buy a house for myself first and then buy investment properties? You could go that route. But there are There's no rule. There's no law. There's no even like ethical or like logical reason to do it one way or another. Like, you know, we actually had that argument with Grant Cardone back a few months ago here on the show when he was saying don't buy a house, period, just rent and then buy rental properties. Right. And I don't think that's horrible advice. I think that there's there's a strong case to be made there.

Yeah, it's true. So that's kind of how I feel. I mean, it might be different if you're not in the military and you have a chance of staying in a certain location five or 10 years. but if we're in the military, my advice to everybody is going to be, don't buy a house unless you're living in a house that you've already ran the numbers on and already determine that that house is going to be a great rental once you leave. Like you've bought it to be a rental. That's fantastic advice for anybody who's looking to buy a house. I mean, unless you're, like, rich enough to not care. And if you lose a bunch of money, who cares or whatever.

But like generally speaking, if you're going to buy a house, yeah, every house have ever purchased. I've looked at it and said, could I rent this out and at least break even if not make some money as a rental because I know that I'm not going to stay there forever. I don't think I've ever stayed in a house more than three years. And if the market sucks, well, I'm going to have to rent it. I'm not going to sell it. And that's what it is. So yeah, that's an excellent piece of advice. So you're not, I want to clarify, you're not saying don't buy property. You're saying don't buy property until you have run it, run the numbers as a rental. Don't get in, don't get stuck with a house that isn't going to work as a rental. That's really, really great advice. I love that.

You mentioned that you flipped houses in Japan. from Japan? Yeah. The houses weren't located in Japan. No. Okay. How do you do that? Yeah.

So the way I did this, first of all, like, I'm not handy. I don't walk into houses and like, you know, know how to tear things down and remodel and all that. So I was a partner in this deal. I was the, I guess the money of the financing behind the deal. When I was in Alexandria, kind of one of my neighbors there, he was my, My neighbor ended up becoming my sort of property manager for the Alexandria Virginia house that I owned. And he was a real estate agent. And we ended up partnering up.

I used to drive, he used to kind of drive me around every time I was visiting Alexandria, Virginia. For me, it was the hopes that I would find another investment property in D.C. to purchase. And he was a real estate agent. And eventually, I couldn't find a deal that I was happy with. And he said, Rich, I flip houses like with partners. but like I'm like tapped out financially, but I have more deals than I know what to do with. He says, you know, if you want, I mean, I'll, you know, I'll flip the house. I just need you to put the house in your name.

And, you know, we're just going to split everything 50, 50. And he said, and what I'm doing is I'm flipping houses in our neighborhood, like where you're, where our townhouse is. He lived across the street from the townhouse that I owned. And he said, and he says, I'm keeping the property, you know, values up in our own neighborhood. Like, you know, with, I'm buying like the worst houses, the foreclosure. and we're fixing them up to make them the best houses in the neighborhood. And then we're selling them.

And I really liked that idea and actually so did everybody else in the neighborhood. But I'll admit, though, scared to death. I was scared to death that this guy was going to take my money and somehow like, you know, move to the Philippines. I didn't know what was going to happen. I mean, I knew him, but being in Japan and having to have somebody like go into your house and gut it and, you know, you see all these bills coming back. and forth and emails and, you know, sign this, sign that. I was scared to death. But I liked him.

He, you know, we worked together on a lot of things. I knew him from the neighborhood. He had a great reputation. So we flipped a house together. I think a lot of the details on my flips are on my website, but I believe the first house that we flipped made about $18,000 profit. I didn't do anything. I mean, all I did was buy the house, wait a few months and sell the house and take a check. That's like all the work I did. And we did that, I think six times over the course of a few years. And I made good money doing it. And it ended up being a very good partnership. But I'll admit, though, that's like, I mean, I looked at the deals with him and we talked about them, but really it was his expertise in my money. And I'll also caveat this by saying,

made a decent amount of money. I put some money in my pocket to do future things in real estate. it's pretty speculative. I mean, I made money, but, you know, I could have lost money just as easy. I stopped doing it because I was happy with the amount of money I was making. And some of my deals lost money. I didn't want to start losing money. And I didn't want to lose big because he felt like he was stepping up. I mean, I think he's doing three, four million dollar deals now. He was stepping up. And I wasn't ready to step up with him because I wasn't there and it wasn't that comfortable, not being involved more deeply in the deal when there was that much money at stake. And I eventually found a new opportunity in Montgomery, Alabama, where I was purchasing

houses there that I felt, you know, had good cash flow. And I kind of wanted to take my money and move it to that opportunity instead. So, so that's my experience flipping houses. So how did you write your partnership so that you were protected? Did you have a first position lien or you said you had the property in your name? I guess, I mean, first of all, I guess I didn't necessarily, like, we didn't have a lawyer do anything fancy. I don't really know if he was really that protected, but what happened was I owned the house. So the house was always in my name.

So I don't, I guess if you look at it kind of logically, I don't think that I was ever not really protected. I owned it in my name. And then he used all of his own money to pay for the construction, you know, to pay for the remodel. So he had his own money into it. I guess what could have happened is, I guess what could have happened is, I suppose that I could have sold it and like not paid him back. I suppose that would have been a possibility.

I would over lots of different possibilities in my head. And it didn't seem like, to be honest, there were that many ways that we could screw each other over. You'd be surprised. Well, and I think, okay. I think, I think this is what, like, what I like about how you set this up and a lot of people don't look at partnerships this way is like you were both invested in,

the deal really well. Like you both had skin in the game. A lot of people come to a deal and they're like, okay, I want you, you know, partner to buy the deal and I want you to fund the deal and I want it to be in your name and I want you to do all this stuff and I want to have no risk on my part. You're going to do everything. Yeah. That's a scary thing.

And I get 50% of the deal. Or I get, I saw a thread. There was a thread yesterday in the forums. I want 68% of the deal for literally doing just what you said. I found the deal and I need somebody to bring everything in. So no, that doesn't, that doesn't work that. Yeah. I mean, you might find, you might get lucky and find somebody who was willing to do it, who trusts you enough because they invest in in you as a person as a character. But like,

that's really hard. Like you got to figure out what can you bring to the table. I mean, even if that means you're the guy in there swinging the hammer. Like that's what I did. I had other people bring the money, but I swung the hammer. Now today I bring other people in, but I'm running other parts of it. I'm managing the property or whatever. But yeah, to me, people just want their cake and eat it too. And it's tough. Right. Yeah. So let's move to those It's Mobile Alabama properties. You said you bought six there. How many do you currently own in Mobile? Okay. So it's actually Montgomery, Alabama. Oh, Montgomery. I'm sorry. That's. It's Montgomery, Alabama. And I bought six in the 10 months that I lived there. And then I moved away and lived in Stuttgart, Germany for the following three years. And then I purchased, I can't do the math. I purchased enough to have 20, right? So what is that? 14 more?

14 more. Yep. I purchased 14 more. And then to clarify what I have exactly, I have 20, but I have two in my wife's IRA, and I have two in my IRA. And then the rest exists in an LLC that we have. And so that's how we own all. Are they all there in Alabama? All of my houses are in Montgomery, Alabama, yes.

Okay. And do you have any other ties there besides you just moved there once? Yeah, that's the same thing, yeah. Yeah, so what happened was, yeah, I don't have any other ties there. I had one assignment there. I was there just for a military school that a lot of military officers, a lot of Air Force officers ended up going to. And I was there for 10 months.

And while I was there, I just ended up meeting another military officer who had been there for a few years already. And he said that he already owned four properties and they were cash flowing well. And then at this rate, you know, he was going to like, you know, be able to retire early. and that really struck a curb with me. Like, wait a second, what are you talking about? Because I had the one rental property just in Alexandria, Virginia, that wasn't really like, it wasn't really cash flowing that well.

And I was still, you know, looking very hard for another opportunity. And so I kind of, you know, was very excited when he said that he had found something in Montgomery, Alabama, because I did not move to Montgomery, Alabama, thinking that that was going to be the place where I was going to buy houses. Alabama's an affordable place. What are you paying for these, or what did you pay for these properties? I was paying, yeah, ish. The first property I bought, which I know I've heard you guys talk about this on your show a lot.

Their first properties are a throwaway property or, you know, your learning property. My first property, I paid $30,000 for it. And I think the first six properties, which were by far my best purchases, just because of the timing, between $30,000 and $45,000 for those first six. and then the remaining ones, I've paid between probably 40,000 and 60,000 for all the remaining ones. You paid between 30 and 40 for the first six properties and then between 40 and 60 for the remaining 14. Is that because they were appreciating or were you buying in a different neighborhood? I think that the time period that I was there, that year that I was there, when I bought six,

happened to be just an amazing time to buy. So they were appreciating. Once I left, they were going up in value. And I think it was one of those things where it was a too good to be true thing. And while I was there, I was hesitant to buy faster. I mean, I could have bought 10. I could have probably about 15. And we haven't gotten into this yet, but I was paying cash for these.

I wasn't using loans. I mean, I could have bought a lot more. But I was worried. I mean, I was kind of like, what if, you know, what if the tenants are going to crash the place? What if the market dies here? What if the military base closes? You know, like, what if things just don't work out? Like, I did not know what to expect.

I was new to all of this. So once I left and I had like an income coming in for about a year, I realized that I was making a lot of money from these rentals and that I should have bought a lot more. And so I, and then I just kept buying. So I'm going to jump in here real quick. I'm wondering about the military base fear. Yeah.

Before we go any further. So I'm looking at a deal right now. Now, actually, that's in a military town in Arizona. I'm doing putting together a deal. And it's an area where the primary employer is the military. And so that's the biggest fear I have with it, is what if the military leaves? What if the, you know, the government shuts down spending? How do you overcome that fear?

Do you overcome that? How do how should people look at that kind of a situation? Again, totally selfish question, but. Oh. The military is all over. You got to look at it. First of all, again, we haven't gotten into the side of things that. I'm sure we're going to talk about it soon.

because I believe that it is unusual that I don't use any debt and that all my houses are paid off, you know, and that people are always telling me like, well, what's wrong with you? You're going to make more money if you use debt, you know, and in the long run, you'd have a bigger net worth if you did. I could tell you one thing, though, is if I have all my houses paid off in Montgomery, Alabama, and there are two military bases there, if the, those bases were to shut down, if they were just to come out on, you know, the list of the bases that were closing, that would be really bad for anybody who owned 20 houses there. In my case, I think that, I mean, I would just be guessing, but I'm guessing that rents would go down, I don't know, 30%. That's just a guess. 30%, that's a guess.

And I think that my vacancies would go up a lot too. They'd go up from like, I don't know, eight or 10% to like 20%. In my case, though, that would not be catastrophic. I would not default. You know, I would not lose my homes. I would be annoyed. I would, it would be less money for me each month. It would bother me. Now, if I was highly leveraged, if I had, you know, used one property to finance the next and pulled the money out and been highly, you know, highly leveraged in the deals, I could lose it all with the military moving out of my town. And so, and I, and of course, you could just, you could be somewhere in the middle, right? You could have a certain amount of equity and have a certain cushion where you could absorb something like that. It's almost like when the market fell out, right, in 2008. Could people absorb that or not? I think if your military base moved away, you would be experiencing something like that only in your town. And you'd have to be able to absorb that. And you'd have to have enough equity to do so and cash reserves to do so.

And I think that's how I would look at it. And hopefully you have like friends in the military, right, that are sitting on the right committees at the Pentagon. And you'd have a heads up on something like that. So I don't know. I'll check for it. I do have that. I do, I have a lot of friends that are running the military, you know. Good. Okay. So this question comes up in the forum a lot. I hope that's a helpful answer. At least that's my two.

It was. It was very helpful. It was very helpful. Like be more conservative. That's the great answer. Yeah. And this question comes up a lot in the forums. Should I highly leverage or should I pay off all my properties? And I think it comes down to what makes you comfortable. If you are leveraged to the Hilt and you can't sleep at night, then that's not a good investment. If you are, you know, totally cash paid off, how much money do you need to live? Do you need a billion dollars every month coming in? No. So if you know your numbers and you know, you know, what you need to make this work, pay off what you want and leverage what you want.

And it's what you can sleep with at night. Yeah, true. I mean, I think for me, you know, I've got 20 houses that are paid off. And I'm going to, and I'm planning on retiring or as a good chance I'll retire at the 20-year point, which is, you know, just two years away for me. I'm going to have a retirement that's, you know, roughly an extra $3,500 a month after taxes on top of the, you know, income that I'm getting from my rental properties. That's enough for most people. Should be. It's plenty, right? Now, now if I want to stay, if I want to stay at the Disney resort in Oahu, every time I go,

though, I might need to start, I might need to start leveraging property. You might need to, yeah. And to be quite honest with you, I'm considering doing that. I mean, I have no debt. I have zero debt of any kind. And I'm around a group of people now, you know, and I've been around these people for a while now, who are doing bigger deals, you know, and better deals and more complicated deals. And of course, everybody's using debt to do this. When I'm back in the States and when I have it, and I don't even have to be in the States to do this, but I think I'll just feel better when I am, I may put a little more time into this. I may. decide, even though I've quit my normal, you know, nine to five, you know, paycheck job, I may decide that I want to get into using debt, you know, to get into some of these bigger deals and increase my cash flow. But for now, I'm very happy where I am. And that's what you need to make. I think that makes a lot of sense. Yeah. It is. And I think like Mindy said, it is a lot about like, can you sleep out well at night? But I would even expand like, you know, back in 07, like everyone thought, and everyone's sleeping great because in their in their heads, right?

The market was always going up back in 06 and 07, right? So everyone's like, I'm getting so rich. It never goes down. Yeah. And, you know, like the way I look at the leverage thing, and not that you ask my opinion, but I'll give it anyway. Like, I want to be conservative in everything that I do. That's why I do what I call burr investing, which is where I buy fixer uppers.

And I want to build a massive amount of equity, usually 20 to 30, at least 20, but hopefully 30% equity in any property. That way I had that cushion in case something goes wrong, at least a 30% cushion. the market dropped 30% I'd be all right. Even if it went under, every property I buy has to have cash flow as well. That's a requirement. I want good cash flow, right? That's how I look at it.

And some people, that's not conservative enough. Some people, that's way more conservative. They're buying stuff at, you know, break even point because I think the market's going to keep going. And who knows? But I would rather like, I would rather make less money in my future, but be more secure than be the guy that leveraged to the hill to made more money with the, you know, a 30% risk of losing it all.

Yeah. Yeah. Can you sleep in night, Brandon? Except when your baby falls out of the bed. Yeah, except for one of the baby falls out of the bed. Yeah. So true story. I told Mindy and Rich this right before we recorded.

But yeah, this morning. So we're at the Disney Alani resort on Oahu right now. And they have two queen beds. I hate hotel rooms. I have two queen beds because then like, I don't know. It's weird. Like when you put the baby. So she's in the bed, right?

And she's 18 months old. Anyway, so we woke up at 4.55 this morning with a thud and then wailing and screaming as Rosie woke up very rudely with meeting the floor with her face. But, you know, no permanent damage that I can see. I'm sorry. I'm not laughing at her. I'm thinking of the many times that my kids fell out of the bed and woke us all up with a big thud. Let's get back to Rich because this is not the Midian Brandon show.

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Hiring Indeed is all you need. Rich, you said you're not financing these. How are you getting $30,000 to put down on these houses? And $40,000 and $60,000. This is another question that people have. That's why check the military doesn't pay, you know, a million dollars a year. It's not the most lucrative career choice. So I've got, I've got a lot of these people in the forums.

that sounds rude. There are many members in the forums who ask the same question. How do I get started investing with no money? And well, if you don't have money, how do you get money? So Rich, how do you get money? Okay. So you guys have had Doug Norbitt on the show, right? You've had Doug Norgman who's in the military. We've not actually. We've not. And I thought you had Doug on. You haven't? No, I've asked him. No, we should though because he's got a real estate deal. He's my surfing guru. He haven't had a man. All right. So anyway, I'm, you know, but you, I'm kind of a member of this whole like fire community, you know, and that choose FI, you know, the whole like, you know, be frugal and save your money and put it in index funds. I know what you're talking about. Right.

Okay. So what is fire stand for, by the way? For those who don't know. Financial independence, retire early, right? And so sort of on top of, you know, being a real estate person, I'm also kind of a finance. nerd. Before I came into the military, I also worked for, I worked for Fidelity Investments as a stockbroker. Interestingly enough, I technically still work for them. I'm on a military leave of absence. For 18 years? Stretched out a little bit longer than they expected. They call me every

two or three years and ask me what's going on and I send them my new military orders and they're kind of like, okay, you know. So anyway, so I'm in the fire community and I've been very frugal. entire career. I've been a big saver and a big investor and the things that I invest in are pretty basic. I mean, I put my money in the S&P 500 DivEx Fund, right? Like, that's what I do. I don't play with stocks. I don't, you know, I don't play games with charts and, you know, craziness like that. I've always been very frugal. And another thing that I, that I do or did that is unusual is I paid off my primary mortgage on that $280,000 townhouse in Alexandria, Virginia. I paid that off in six years.

So I had, you know, that paid free and clear, which also brought an additional cash flow once it was paid off. How did you pay that off in six years? I just, I guess that's a good question because that's what everybody would ask. First of all, the money from flipping the houses was going into paying that off. Okay. But also, let me think about that. No, it was paid off before.

It was paid off before I flipped houses. What I did with that was, again, putting money into the index funds. That money was growing at the time and it was making good money. And I was just like taking all of my extra money. Again, people in the fire community, the financial independence of tire early community, a lot of times they'll try to live off of less than 50%, you know, of what they're making. And we were definitely doing that. We were living on, you know, quite a bit less and put all the rest into investments.

And in my case, it wasn't, we weren't investing yet. We were just paying off our mortgage. So we're the kind of people that, you know, don't buy new cars, you know, don't take fancy vacations, don't buy fancy nice furniture, don't buy Gucci bags, right? We don't do what our friends are doing. We don't go out to dinner that often. We don't go out drinking. When we go to restaurants, which is rare, we don't get appetizers, we don't get dessert, we don't get alcohol. All of this money is.

going into paying my mortgage off. All of it is. And then my wife was working an extra job to her. When she was in D.C., she was working as well. We just paid it off. I mean, people don't think it's possible. It is. You can pay off a mortgage pretty fast when you sort of put all your effort into that. Right. And you're making additional principal payments? Yeah. Yeah. Which, so for people who don't know what that means, your mortgage payment is constructed of principal, interest taxes and insurance and you're making additional principal payments, which reduces the amount of interest that you owe, which is a great way to pay it off if you are of the pay it off mindset. I am not. I like having a loan on my house because I have all that money to then play

with. And we're actually refinancing to take more money out so we can play with it. But again, it's something that makes me sleep at night. I can cover my mortgage payment. So it's not a big deal. Right. So I paid this loan off and that that gave me, you know, I mean, I own the house free and clear. And then after I had it paid off, I have more money coming in every month. I have a larger portion. I wasn't making very much money on this rental with the mortgage of $1,600 a month because I was only getting about $2,400. But once it's paid off, I'm making a lot more. And then I'm also putting my money into investments now. By the time I get to Montgomery, Alabama, I've got a decent amount of money in investments and money saved up and money from flips. And so I was able to buy those six houses in cash with that money. And then when I realized how well this was going financially for me and how great a market this was for rentals, I decided to double down on it and that I just better keep doing this. And so even though I moved, you know, I was moving away, I was setting up a system so that

when I left, no matter where I moved in the world, I'd be able to keep buying here. and I put my house on the market in D.C. So that I could have all of that cash to just keep buying there. Okay. That's kind of, that's what I did. $260,000 get you a lot of houses. Well, no, it was, it was 400,000. Oh, that's right.

You said that. Oh, that gives you even more houses at $40,000. That's like 10 houses right there. That's exactly. It's 10. And now the other thing, too, that I like to note is when I first bought that house in in Alexandria, Virginia, it shot up to about $450,000 in less than two years. And I felt like the smartest guy in the whole world, right? I was, I was brilliant. I'm a brilliant, you know,

a real estate investor. But if you think about it, I'm a genius, but if you think about it, I sold that house. I don't know how many years later, 2003 to 2016, for $400,000, I sold it in 2016. If you do the math, it didn't really make that much money. In that period, of time from 280 to 400, the fact that it didn't really grow again after that two-year jump, I mean, the appreciation wasn't really that great when you spread it out over that time frame. So appreciation can be pretty amazing in those spurts if you know that that's when you should sell. But over the long term, it turned out not being that great.

In fact, that amount of money in the market would have done a lot better. Now, you could also argue that that amount of money with leverage, you know, would have done better as well. Yeah. Well, what I love about this whole thing is like, I mean, I'm a big Dave Ramsey fan. I like Dave Ramsey a lot for a lot of things. I mean, he's, he's militant against debt on real estate. And I tend to go a lot more into leverage. But like generally speaking, like, especially from a budget standpoint, like when you live

conservatively and you don't go and spend lavishly, like, I mean, I'm always amazed at people like who make $20,000 a year and they're broke. And then they make $40,000 and they're broke. And then they make $80,000 a year and they're broke. And almost every American lives paycheck to paycheck, no matter how much you make $20 to $200,000 to $200,000 a year. I mean, I know a guy that's making 250, 280 or something like that last year. And he's broke. Like he's consistently broke and has no money with paycheck to paycheck.

And I wonder why. And I go to, I go to dinner with him. And he bought like a $400 bottle of wine for dinner. And I'm like, that's crazy to me, you know? But then people look at me. I'm sitting at the Disney resort where I paid $400 a night for this hotel for four nights. Right. So people think that's crazy for me.

right. So like everyone just lives to their, not everyone, but most people live to their limits. So I love the fact that you said, you know, no, I'm not going to do that. This is where I'm going to draw that line. To put a couple of plugs in here real quick, first of all, Dave Ramsey's book, Total Money Makeover, no affiliation with it. I think it was fantastic. It helped completely change my mindset about money and finances and budgeting. It's amazing what you can live on, like in a small amount when you focus on it, right? You've seen that.

Right. It's amazing what you don't miss when you give it up. Like, oh, I could never live without fill in the blank. And then you try to live without it. And you're like, oh, you know what? I don't really miss that so much. There's, I mean, obviously food. Yes. Who needs food?

So Scott Trench wrote a book called Set for Life, which is also very much like in that fire community sort of thing. Like how do you live on half your income or less than half your other? Even less, you know, and Scott talks about a lot of different strategies in there. So if you guys want to pick up that, go to bigger pockets. com slash set for life. S-E-F-O-R-L-I-F-E. And then I don't remember there's something else in there.

But oh, David Green. Yeah, he wrote a book recently on long distance investing. It's called Long Distance Real Estate investing. Hey, Mindy's got a picture of it on the screen. That's a whole ton of tips and tactics for how to invest at a long distance. Things that I'm sure Rich has done, which I want to get into here next. Yeah. But last thing I want to point out is you did not invest in, you did not buy 20 houses

clear in a year or in two years. Like this is a career that you've built over time. Right. So like I think people oftentimes will listen to a show like this and go, 20 houses free and clear. There's no way I could do that. Right. But like it started with one purchase. It started with a $280,000 house and then being consistent. It did. It did. I mean, and I think the I mean, even though I think the 20 houses I bought, I think they might have been purchased in about a period of two years. That wouldn't have been possible without having bought the $2,000,000 house at the beginning and then paying it off and then having that cash to use later. So that's kind of what made that possible.

And then all the experience that I got along the way, I flipped the new construction, which didn't go that well. I flipped houses, which I made money on, but I lost money on sometimes. And on my first property in Montgomery, Alabama, I had like a lot of, you know, from my perspective, I've heard worse stories on your podcast, but I had like a lot of really bad things happen to me on that house that, you know, some people would have said, forget this. I'm not investing anymore. I want to know about what bad things happened to you.

I mean, I don't, you know, I'm not. I'm not. I'm not delighting in your tragedy. But, you know, what I've heard a lot is that having these mistakes shared really helps you learn. I mean, every real estate investor I know has gone through the school of Hard Knocks and everybody again is going to go through the school of Hard Knocks. But what did what, what are the, like, what's the worst thing that happened?

So I, I guess when you, when I, when I, compare it to what's happened to other people. They're not that bad. But when it's, when it's happening to you and it's like, you're money. It's like, oh my God. So when I bought the first house, um, again, I'm just, I'm not experienced. And the people that, that were sort of, they were kind of helping me. There were other people that were kind of of holding my hand through this process. And they, you know, kind of like, they helped me find, you know, the real estate age that I should use and the property manager and kind of like when I was, you know, I don't, you know, I don't know how to use to fix the, who do I fix the, you know, fix the,

Fixed the AC. Oh, you can try this guy. Well, but I still kind of felt on my own at times. And I was buying the first house and did the walk through. The guy that I used for the inspection, you know, he came in and he inspected the house and I got, you know, like the report and I looked through it. And we closed. And then when we start when I walked in and started like cleaning up and looking around, there was a big pile of trash in the middle of one of the rooms, just a big pile of trash in the middle of like a kind of an add-on room. And I'm like, it's kind of weird that they left this trash in the middle of the room, but I'll clean it up. And when I moved it, what I realized was that there was a huge bump in the floor, okay, like two feet high. Somehow they'd put the trash there

to cover up the fact that there was like a huge protrusion in the floor. And the carpet had come up like almost two feet in the middle of the room. And this wasn't caught by the inspector. Because the trash was there. They won't move anything. It was, it was like a, if I remember right, it was a Christmas tree, like a Christmas tree just like laying down on top of it or something. And it was like, you know, it was like July or something. So and like some, just some random trash. So yeah, there's just a large kind of like camel's hump in the middle of the room. And nobody knows why. And. And. And. I was, to say that I was freaked out was like, I'm just like, okay, what's going on with this house?

What did I buy? Like, how, you know, what is this going to cost to fix? 10,000, 20,000. Like, I had no idea. I bought the house for 30,000. I had no idea what it would cost to fix. And I think the hard part was over the, maybe the course of the next two weeks, having different people come over, lots of different people. And getting numbers between, you know, five and $20,000.

of their estimate to fix whatever is wrong with this. And the tricky part was like nobody was going in and like figuring out it was wrong. They were just like guessing what was wrong and giving me random estimates. Eventually, somebody came along, took out a sledgehammer, peeled back the carpet, smashed it. I mean, just like right in front of me. Just like smashed it. Started like pulling back concrete and it's like pulled up some large route.

And he's like, oh, it's a root from a tree. And he's like, he's like, I'll, you know, repore the concrete. and do this and that. He's like a thousand bucks and we should be good. And I'm like, oh, a thousand bucks. Like, you know, I can live with that. But that was like a two-week process. What also happened later was the house was vacant for a while once it was finished, took a little while to run out. Again, this is all due to an experience. And when somebody, when the tenants finally moved in and they went to turn the water on, I got a phone call that the water was running into the front yard and that something was wrong and there was no water

running in the house. And so I sent the plumber over. The plumber called me up and said, somebody came and stole all the copper plumbing out from under the house. Oh, no. And so I think that was about a $2,500 fix. It was a $2,500 to rewire all the plumbing from out and under the house. Oh, man. And so this is kind of my, you know, this is my start to real estate investing. I think I also spent $2,000. This is a, this is a cat lady house. And so there was a, um, like, The house smelled like cat piss. And it had like these hardwood floors under the carpet that I thought would look really nice. Get rid of the carpet and like let's make the hardwood floors look nice.

But I kind of overdid it. I spent $2,200 kind of like refinishing the hardwood floors. And it ended up looking like the governor's mansion, right? Like I didn't need to do that. I mean, I found out later you could spend like 200 bucks doing this. I spent like 22. I had like six, six coats of, like, wax on a recycling. I mean, I just, I didn't know what I was doing.

I spent way too much money getting this house. I think I spent like, I don't know, 15,000, you know, putting into it instead of the, you know, probably the, you know, 5,000 I could have put into this house. So that was my first house. And there were a few other small things. But I remember my wife saying like, well, you know, I guess that's it. You're probably, you're probably done investing. And I'm like, no.

I'm like, we're going to put, we're going to put two more offers in. I'm going to put two more offers in. I want to buy two more right now. And she's like, seriously, we're going to keep going? And I'm like, yeah. And both and both the next two houses ended up being excellent buys. To make up for that copper pipe thing, that is soul crushing. I had copper.

I actually, my husband walked in on the guy who was stealing the copper. So he only got a small amount. So he walked in and the guy was in the basement stealing. copper and he ran out the basement door. And then Carl was like, why is there water on the floor of the basement? Like, we had moved out and we were getting ready to sell it. And that is soul crushing, even if you get like four pipes gone. It's just like, I feel so violated that somebody was in my house, even though it's not even my house anymore because I'm moving. So yeah, I can imagine. And kudos to you for recovering from that because that is really like, I just bought this house

and somebody stole all the copper. That's a big deal. Yep. Yep. And you know, you're like, you're worried about trying to make the numbers work and, you know, and these mistakes you're making keep piling up. And you're like, you know, I mean, you're like, geez, what am I doing? You know, I'm no good at this. I'll never make it. I'll never make it as an investor. And you're doubting yourself. And like, and you're also thinking like, if this is happening now and this happens every time I buy a house, how am I going to make money?

Well, guess what? It hasn't happened every house. Those have been the exceptions. I had a problem with squirrels once. Squirrels got into the house. And that ended up being kind of expensive, getting rid of the squirrels. But stuff like that has been kind of the exception and not the rule. And even with the fiction.

Yeah. More of the exception in the rule. What I find is that it kind of averages out. Like if you own one rental property, you might just get a luck of the, you know, the luck of the draw and you get a really crappy one. Or you might have a big problem like they still copper pipes. But when you have 10, 20, 30, you know, properties, they kind of average out. You have a few problems here and there, but mostly they work all right. It's actually a really good reason why a person should go bigger and not just put all their eggs into one rental property.

If you can buy a bunch, it averages out and it's not too bad. I think people hear the horror stories oftentimes, but they're fun to tell, but they don't happen that often. No, it's true. And I think what you said about having several properties, it's very true. I found that to be important for vacancies. I mean, if you have all your eggs in one basket for you have one property, right? And it's got like a mortgage on it and you have a very small cash flow. if that happens to be vacant for four or five months, that could be very painful for you.

You're coming out of pocket to pay that mortgage for four or five months in a row. If you've got 20 properties, there is almost zero chance that 20 properties are going to be vacant at the same time, you know, for four or five months. And if they are, you're in big trouble. So yeah, that's something I like about having several properties. The one thing that makes me sad about your story is that you did. have a place to go where you could discuss this with other real estate investors who had this experience and could have given you some encouragement. It's too bad. A place doesn't exist like that. I wish there were one and I can't think of any off the top of my head right now, except for the

actual form I'm speaking in at the moment, which I guess is bigger pockets.com. Yes. Thanks for the plug. I've heard of that site. Oh, good job. All right. So I want to know, before, we get out of here and get to the fire around stuff. I want to know, like, how are you currently managing your properties? I'm assuming you have a property manager, right? Yes. So how do you, like what, and I'm talking, again, this is a selfish question because I got, you know, out of state properties now. So how much do you do with this? How much interaction? How often do you call your property manager? How much you just let it ride? How much do you rely on just the computer printout that you get from whatever their management software is? Kind of can you walk us through your, your current

management. Yeah. So I'm managing from out of state, right? And in my case, from out of country. And I knew I was going to do that. In my case, it's a little more unique because I lived in the place. I lived in the place for a short time where, you know, I had the properties, but then I knew I was leaving. And I also knew I was going to add a bunch more properties. So I kind of set up my management company kind of for that situation. And what I mean by that is, I spoke to my managing company about adding properties to, you know, my existing six. And what I told them that I needed from them, which is unusual, is that I said, you know, what would really help is that I'd like you guys to be involved in the make ready.

And I mean, the make ready is usually like just painting, you know, painting and getting it ready for the next move in. And I said, I want to keep adding properties. And these properties are going to need work. Like, you know, I want to buy properties that, you know, I can add value to, right? That are kind of maybe they have termite damage or maybe they're tore up by the last tenant or whatever, whatever it may be. Need a remodel of the kitchen and the bathrooms. But that's going to require some supervision and, you know, a decent amount of construction and remodeling. I need you guys to be involved in that.

I need you guys to supervise that work and be involved in that. And they're kind of like, well, we don't do that. Like, that's not what we do. We want to get this stuff from you like moving ready. And I said, I know, but I'm going to buy like a bunch of more properties. And, you know, if you can do this for me, you know, I'm going to go from like six to at least 10, maybe more. You know, and I'm going to, this is my plan to make this like a lot bigger. And they were very reluctant, but I said, let's just try one and see how it goes.

And I kind of talked them into that. So that's been very helpful. I mean, I was gone. You know, I was in, I was in Germany. And I ended up buying some. houses that needed a lot of work, they ended up supervising the work. And they have all the contacts. They have contractors that work for them, I think, very cheap.

And they just add on 10% onto that price and pass it on to me. I'm totally happy with that. And that's kind of how we worked everything, is that they acted as, you know, in that role for me in addition to being my property manager. And also I built up a lot of trust for them in the time that I was there with them, just realizing that they're a very good property manager company that's trust and, you know, cares about, you know, saving money and not, you know, not ripping me off and all that. So that that relationship with the property manager, me being gone is extremely important.

And the trust is kind of what's key, I guess I would say. Does that answer your question or do you want me to clarify? It does. Yeah, trust is key. It is. And I like that you have the managing your rehab stuff. I actually found similar that property managers that I've known tend to have better contacts with the contractors, better relationships, better contacts, better prices,

then I can get. I mean, most contractors in my area now are telling me $50, $70 an hour for like brand new handyman. And I'm like, I'm not going to pay you $70 an hour to go and, you know, but I, they're still doing $25 an hour or whatever for my property manager. And so I'm finding actually way cheaper going just through my property, even with that fee. Like, anyway, that's a, it's a good point.

So, cool. Yeah, go ahead. If you know, one more thing I wanted to bring up to you is, you know, if you're trying to do this from afar and you're. you're having problems with your property manager, problems with your real estate agent. I found that, you know, I've fired property managers. I fired two property managers, not in Montgomery, Alabama, but in Alexandria, Virginia. And I've fired real estate agents.

I think that's something you have to do as a, you know, real estate investor is you have to, when you start seeing problems with the service you're getting from a real estate agent, you know, who you're trying to use to buy properties for you or from a property manager, If you're not seeing like, if they're, you know, if you're not seeing the numbers that you should be seeing or you're not getting, you know, they're not answering the phone. They're taking too long to rent properties out. Like any of those things, you need to have like really good communication with them. Let them know what the problem is and give them a chance to correct it. And if they're not correcting it, you need to figure out, you know, you need to like take your business somewhere else or, you know, I mean, that's probably what you have to do.

Take your business somewhere else. You've got to fix the problem. Don't be afraid to tell people what you need from them. they're making money off of you, don't be afraid to fire them and move on to somebody else. Because, I mean, this is your business. This is your livelihood.

You can't afford to waste time. Exactly. Yeah, give them the opportunity to make the change. And then if they're not making the change, they don't want your business. So don't give it to them. There you go. All right.

Well, actually, last question before we move to the fire round. What do you see your future? You mentioned earlier you were thinking about retiring maybe in a few years. Yeah. Do you plan on buying more, wait into the market crash? What's your thought? All right. So I totally don't believe in the, you know, wait till the market crashes thing that everybody

likes to talk about. I mean, I'm just going to keep investing as makes sense based on what I see around me. If the market crashes and I can, I think that's hard to see when you're like actually in a market crash. It's hard to know where you are in a crash until. I get, I agree. You're several years away from it. And you're like, oh, if I would have bought then, I'd be rich.

But if I can see that, I mean, I guess if I can, based on my experience, have been having been through a few cycles in life. If we're in a crash and it's seeable, if that's a word, I suppose I'll try to get and do some purchases. But I think I sort of brought it up earlier. I'm at the point now where I was very comfortable with these paid off properties and I kind of felt like, yeah, this is enough. But as I get more exposed to other real estate investors, I kind of have this feeling that after retirement, what I want to do, I want to do more with real estate. I have my 20 paid off properties and it's enough to live off of. I'll be comfortable, but I want to scale up. I want to find a way to invest. I'll probably find a way to invest out

of state, you know, and get into some bigger deals, you know, find a way to do multifamily, find a way to partner up with some people. That's in my future. And I find, and I want to do all this part time. How much of that is for money and how much of that is because it's funded being real state. I would say it's probably 90% of the fact that it's just fun. I mean, I love this, and I've loved this since I was a kid. My grandfather was a general superintendent. He was in charge of these large jobs, you know, of homes. He would build them all. He wasn't the guy that owned him, but he was the guy that was in charge of building all of them. And I loved walking these tract of homes with him when I was a kid.

even when I was older, I just loved it. And I remember thinking as like a 10 year old. I remember thinking in California as a 10 year old, boy, I wish I could buy a house right now because imagine what it would be worth when I was 18 years old. And that's what I thought when I was a kid. I just love real estate. You know, this stuff is fun for me. Well, neither of us know what you're talking about. No, I always I would say like, I mean, like, I mean, I don't know. I said no matter what, I will buy real estate because I just enjoy it. You know, I just think it's a, it's a fun thing. So very cool.

one of these questions actually that you talked about relates to the first fire round question. I'm going to ask you in a minute. So let's get to the world famous fire round. It's time for the fire round. All right. Today's fire round questions come direct from the bigger pockets forums as always. You can get to the forums that going to biggerpockets.com slash forums. They're fantastic.

I owe all of my success to them or at least a good chunk of them. So let's help out some people from the forums, Rich. Number one, somebody said, and this is actually very related to what you just said. They said, I want to wait for the next big buying opportunity. I don't think I'm going to wait more in a couple of years. You know, am I just being pessimistic? What do you think? I shortened that question.

It was a long one. Okay, yeah, they want to wait for the next buying opportunity. All right. I'll tell you that, and this is me as a real estate investor, and it's also me as a, let's say, also an investor in the sense I'm a stockbroker and someone who's read all those books as well. I just don't believe in that mentality. I don't believe that you wait for things to crash and then go in and invest everything.

There's deals to be had all the time. Just look at your investments like right now. You might have to go somewhere else. And I'll go ahead and plug that like other book for you. Where is it? Where is that other book? The long distance real estate. I listened to that podcast.

And it's also, there's a lot of similarities between what, what me and him do, the way that he leverages, the different people. people on his team. You don't need to wait until things dropping your area to buy. Find out where prices are good. Find some people you trust in that area and like make it happen, you know, buy a house there and go for it. That's my advice. Okay. I love talking about leases. We are in the middle of getting, I've been reading leases for all 50 states and Washington, D.C. Because we are starting to make these available to our members. We sell leases at biggerpockets.com slash LL forms. We're adding all the states. Was that a plug?

No, that was a recommendation. If you need a lease, I can help you out. Mindy approved. We don't plug on this show, Mindy. I'm sorry. I'm sorry. So what are your forms? LL forms. What are your favorite add-ons to add to your lease? Do you have an addendum to your standard residential lease. Okay. So luckily, I have, I mean, I have a management company, right? And so they pretty much handle all the lease stuff. And I guess one of the things that about leases that I think was important to me is like,

I'm not a huge fan of pets. And so for me, it's pets, for me, pets like, I'm willing to maybe wait longer to not, to, to, to not have pets in the house. But I mean, this is, this is kind of a personal thing. But there's been a lot of cases where, and again, this goes with like the benefit of having a managing company that you like trust and know. A lot of times they'll come to me and I'll say, and this goes to many different addendums, they'll say, look, you know, in this particular case, we think that you should let this family, let's say have a dog. They have this type of dog and we think it's fine and we're going to put that into the lease and sign it. I'm going off of this managing company's like, you know, 10, 15 years of experience and making an experience.

and making an exception of something that I normally feel comfortable with. But I guess my point is I tend to go with my managing companies experience in cases like that, not knowing a lot about leases myself. Okay. That's fair. All right. All right. All right.

Cool. All right. Next one comes from Geryl King. He says, Hey, everyone, I've been pulling my hair out, not literally,

trying to figure out where to get started with building my business. I'm based in L.A., originally from Bakersfield, which I visit often. My biggest problem right now is choosing a mark. and being able to afford the marketing cost. I've been researching and hearing to do so many things. Some say get a website, business cards.

The other one says, don't waste your time on that. Go focus on deals. From what I've heard, direct mail is a good way to get started, but it's expensive because it takes such a massive volume. I've got a budget of $500 a month. Anyone in L.A. or other big cities have advice or input on what's working for them. I think he should do. So he's talking about getting started just in real estate, doing something in real estate?

Yeah, exactly. Yeah, expensive market, not a lot of budget for advertising, he needs to find some deals, but it's an expensive market. So it's hard to find them. Well, I can tell you that I've been successful with direct marketing myself. I mean, in the way that I did it was, you know, I did the mailing. We did the mailings ourselves at home. And I got an 11 and a 7-year-old.

And we, you know, I did up the letter myself, you know, and signed them all myself. Like folded up, put them in envelopes, mailed them out to the people. And I just like used a website where I just kind of like pulled all the three bedrooms, two baths and the areas that I like. in Montgomery, Alabama, you know, got the address list, handwrote them on, which I believe, you know, helps, I think that helps like people want to open up the letter. We hand wrote the address, put like a normal stamp on it, came from like a normal person. And we sent that out five or six times.

And I've bought a few houses that way. And it's kind of, and I just kind of explained who I was. It was like, Rich, you know, I used to live in the area. You know, I was in the military. And it was very effective. And I think it was very cheap. And I got some really good deals doing that. Perfect. I like it. I do too. All right. Last question, Mindy, right? I started. I started and you. Yeah. Last question. I am new to bigger pockets. My question is that I'm starting out with no investments anywhere. Should I get a loan for a home to house hack or should my first investment be in, or should my first investment be in a rental?

Okay. So house hacking or straight rental. Or straight rental. Right. I love house. hacking, right? I mean, I think house hacking is great. House hacking is, I wish I could have done it myself. I think sometimes, I think you can do it if you have a family, but if you're, if you can pull off a house hack, like that is the way to go. And I think I know even for people that are in the military, I believe that with a VA loan, which is available to people in the military, you're able to get a multi-unit property with your VA loan. So you can get a duplex, I think you can get even a three or a fourplex with a VA loan. and turn that into an awesome house hack.

But if you can find a way to do that conventionally or whatever in your personal situation is, house hacking as, you know, the way to start off where you're there to manage the second or third and fourth property kind of next door to you is absolutely the way to go. That's, isn't that what, is this name Scott Trench? Isn't that what he did? Yep. That's what he does. Yeah.

Yep. Yep. Yep. Yep. That's awesome stuff. Yeah. It is. That's, you just build so much equity so quickly.

if you are into paying off your property. You build so much money. I mean, you can, Scott paid nothing to live. He was getting, I think his mortgage. And in the place that he was in, he had an FHA loan. His first payment was like $1,500. And he was bringing in 1850 or $2,000 or something. So it wasn't super cash flowing.

But he was paying nothing. He was living for free. Yep. I think Paula Pant is kind of a popular real estate blogger who is, who's Dunhouse, and she did very well. Kind of the same thing. If you do it right, you live for free.

But even if you don't quite get the numbers that great, you're still subsidizing what you're living for. And you're living on site to take care of things. So I love it. Yeah. It's a great, great investment choice. If you can't. My very first rental was a duplex.

And I just moved out and then it kept it as a rental. I still have it today. And actually, I paid that property off recently because I wanted just more. I have fact, I've paid off three problems. Yeah, cool, people paying things off. So it does happen. So it does happen. What's happened? Besides me.

Well, like to, you know, we didn't, I didn't, I didn't go into it a lot there. But yeah, basically I am paying my properties off right now. I'm actively trying to pay my property off and kind of following the Dave Ramsey, like, debt snowball. Like as I, as I pay off more properties, I now have more cash flow, which then I can then pay off more properties, which then I get more cash flow. And I'm trying to knock out everything over the next 10 years. So by the time I'm 40 roughly, I'll have 100 units that have almost 100 units right now.

I'll have everything paid off in 10 years from now. It's kind of my plan. Right. And 100 units paid off should be plenty to. survive well one thing I wanted to explain about my properties being paid off is like when I had six properties that were paid off it didn't take too long I mean it might have been a year like it took a year for those six properties I think it was a year maybe longer 14 months to purchase a seven so six cash flow properties could purchase seven but now that when you have 20 it only takes five months for 20 properties to purchase a 21st property so there is definitely a huge snowball

effect that happens it's kind of like almost the same as compound interest but with houses. Yep. Yeah, compound cash flow. Yep. Somebody tried a book called Real Estate Snowball. That's a good idea. I'm going to do it.

Now, Rich, you can do it. Rich, right it down. Real estate snowball. All right. All right. Let's get out here and get over to the last segment of the show, which we lovingly refer to as our Famous for. These are the same four questions.

We ask every guest every week. And let's see what you got to say. Number one, what is your favorite real estate related book? Real estate related. It's a huge cop out, but it's because I think it was the first book to talk about it, rich dad, poor dad, right? And it's because it wasn't just real estate. It was, it's because it was a mindset for money and a way to think about, you know,

money shouldn't work for money. Money should work for you. That applies to investments, but that also applies to real estate. And that's why I love that book. Me too. It's a book that is, what is that the most, recommended book on our, on our podcast. I'm sorry.

I would say it is, which made me not want to pick it, but that's my favorite. If it's your favorite, it's your favorite. It's the most recommended book for a reason. Yeah. But I got another one that I'm curious how much you guys have heard. So ask away. Okay. Is it a real estate book?

No, no, no. I'm talking about the next question you're going to ask. Oh, okay. What is your favorite business book? fooled by randomness by Nassim Taleb. Have you heard of that? I've not read it. Okay.

Fooled by random. Fuled by randomness. And really it's just about, it's about chance and how we really, I think how people kind of overestimate the role of chance in our lives. And I think his whole premise has a lot to do is like Wall Street, the fact that there are people in Wall Street that make their money. predicting what the market's going to do, you know, and the fact that you, a lot of people will pay people money to, you know, invest their money for them. And I think he would pretty much argue

that all of that is totally useless. You know, nobody can predict where the market's going. Nobody can tell which direction stocks are going in. But he doesn't apply it just to that. He applies it to many different facets of life. It's the most fascinating book I've ever read and had a large influence in the way that I look at money. Oh, great. Super cool. Yeah, I got to check that book out. Highly recommended.

What are your hobbies? What do you like to do when you're not doing real estate? So when I moved to Japan and my son turned five, I taught myself, I already could ski, but I taught myself and my son how to snowboard. And I kind of haven't stopped with that. You know, we just keep snowboarding. And unfortunately, when he was about nine, he surpassed me in skill, which is kind of scary. But we moved to Germany, again, benefits of being in the military.

Moved to Germany and got to do some really cool snowboarding there, like in the Swiss Alps and, you know, in Italy and Germany. And we're going to try that out here pretty soon in Korea. So that's a big hobby of mine. I'm a big runner. I love watching movies, love reading books, love real estate. I kind of love this whole FinCon community, which I think you're both involved in. That's something that kind of came into my life about two years ago.

And then I started up like a little blog and that's kind of become a hobby for me as well. I think it's not fair that your name is rich when you talk about money. That's right. What's the name of your blog? My blog's name is rich on money.com, which I think is a, I'm happy with that name. I think that's a great name. I have fun with it. I was worried about finding a name and happy when I found it.

That's awesome. All right. So my last question of the day, what do you believe sets apart successful real estate investors from all those who give up, they fail or they never get started? I think I told my story that I kind of wanted to tell to illustrate the point. And that was it's working through,

it's getting past fear. You've got to work through the fear that you have. You've got to not let it stop you from, you know, continuing, that sort of fear of failure and then recognizing that you're going to see tough things are going to come up. You're going to have things that scare you. You're going to have things that are unexpected. And instead of letting that cripple you and stop you, you need to have this attitude of, I have so many resources out there. Like, I'm going to plug your, I'm going to plug bigger pockets. You've got bigger pockets. You've got friends. You know, you've got websites. You've got

books, figure it out, get past it, and get on to your next deal. Love it. Yeah, love it. That's great. Where can people find out more about you? So I think you kind of just help me plug my website, which I appreciate. www. www.

rich on money.com. And then I'll just give out my email email address, Rich Carey, R-I-C-H-C-A-R-C-E-R-C-E-M-E-M-E-M-E-M-E-E-M-E-E-M. is also where I can reach me by email. And I just have a blog where I kind of blog about what I'm doing with real estate. And it's a hobby and come take a look at it. Awesome, thank you. All right, Rich.

This is fantastic, Rich. Like, I don't know, there's a ton of good stuff in here. So thank you very, very much for coming on here. And yeah, I look forward to kind of seeing the next phase of your life as you do some much fun, some fun real estate. Hey, thanks for having me on this. This is huge for me. This is an amazing podcast.

So I really appreciate you guys having me on. Thank you so much. Thank you. Okay. We'll talk to you soon. All right. See you. Okay.

Bye. Bye. Bye. All right. That was our interview with Rich Carey. That was awesome. I really, really liked that guy a lot.

Every time I talk to him, like I feel like I'm, I don't know, I learn and I'm inspired to go do a better job at my real estate because he's, he's a good investor. He's a good investor. And he's a generally or a genuinely nice person. He is.

I agree. He's not snarky at all. And that was a great show. Yeah, unlike some people. Yeah. Like, I've been telling you about how like, you know, I pay off a few properties. Like he's actually one of the inspirations for that when I was talking to him at FinCon. And he was talking about that.

I just kept thinking like how nice that sounds not to have a bunch of mortgages. Even though, yeah, I know mathematically it's, you know, you make more return when you have leverage. And I get all that completely. But just like this piece of mind to have him paid off. I'm thinking 10 years from now, if I can have them all paid off and be 40, well, 42, and have them all paid off, that sounds pretty nice. So anyway, thank you, Rich, for inspiring me to tackle some of that mortgage debt. And yeah.

Yeah, that's, like I said earlier, that's a big question in the forums. And it is a big question. It's what you're comfortable with. There is no right or wrong answer. There is no right or wrong answer. Okay. Well, huge thanks to Rich for coming on and sharing his story with us. Yeah.

Well, let's get out of here. I got to go do some beach stuff because, you know, Hawaii. So. Okay. Well, I'm going to go do some work stuff because, you know, job. But you enjoy, you enjoy your life, Brandon. You do you. And I will.

I was up at 5 a.m. this morning writing because people at bigger pockets need to know the truth about real estate. So I write the truth. So thank you for saving the world. So this is actually the beauty of living temporarily anyway in Hawaii is that like I like by noon, it's like three o'clock Denver time, five o'clock, right? Like east coast time. Is that right? Yeah.

So like, it's like crazy. So like I can be done by like noon and then like the rest of the world is kind of retiring anyway. So like I can, you know, it's 12.15 right now. I'm going to go hang out on the beach. Well, it's 315. So I am going to say for bigger pockets.com. This is Mindy Jensen 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 investors, 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. So many years was her and me. We had all but given up on turning two of us to three.

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