BiggerPockets Real Estate Podcast - 274: “Because of These 3 Simple Rules, I’ve Bought Over 600 Units and Never Lost Money” with Paul Morris

Episode Date: April 12, 2018

What rules govern your real estate investing strategy? For most, it’s a tough question to answer. But not for today’s guest, Paul Morris. Paul, co-author of the bestselling Wealth Can’t Wait, has been investing in real estate for more than twenty years and has never lost money, all because he abides by three simple rules. Today, Paul also discusses the power of mindset in building wealth, the key to investing in emerging markets, and much more. This episode will surely inspire, motivate, and educate you to continue your journey toward financial freedom. In This Episode We Cover: How Paul got into real estate investing Using syndication to do your deals The types of properties he is buying Stick with what you know The three rules Buying where you know How to buy in an expensive area The 24-hour city What’s the barrier of entry on real estate? What is an emerging neighborhood? An interesting story about a keynote speech What is hard work? 10x your goals How we affect others and vice versa Living life to the fullest Hire people who will love you And SO much more! Links from the Show BiggerPockets Forums House Hacking 101: How to “Hack” Your Housing and Get Paid to Live for Free BiggerPockets Money Show Tiger21 Mastermind Group BiggerPockets Podcast 254: Tim Ferriss on Real Estate, Becoming a Top Performer and His Tribe of Mentors BiggerPockets Podcast 226: From “D-Student” to $400,000 in Annual Rental Property Cash Flow with David Osborn Books Mentioned in this Show You Can’t Teach a Kid to Ride a Bike at a Seminar by David H. Sandler Wealth Can’t Wait by David Osborn & Paul Morris Set for Life by Scott Trench The War of Art by Steven Pressfield The Influential Mind by Tali Sharot Fire Round Questions I just bought my 1st deal… now How soon can I buy my 2nd property? Is there a waiting period? Where can I find a private lender to fund my real estate deals? Tweetable Topics: “You can’t do everything on your own.” (Tweet This!) “You buy where you know.” (Tweet This!) “The thing that stops people form taking action is the fear of loss.” (Tweet This!) “Your net worth will never exceed your self worth.” (Tweet This!) “What got us here will not get us there.” (Tweet This!) “There’s a lot more hard money out there than there are good deals.” (Tweet This!) Connect with Paul Paul’s BiggerPockets Profile Paul’s Website Paul’s Instagram Profile Paul’s Twitter Profile Paul’s Facebook Page Email Paul Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 274. I had a metaphor because I was living in New York City and Alphabet City back in the day was if you walk there, you'd get killed and police didn't take a call to come to Alphabet City. Like, oh, forget it. And then one day I drove through Alphabet City and all through as bad as it was, I saw this young guy coming out with a cello strapped to his back. And I was like, when the cello, you know, right? when the cello is coming out of the place, that's when you know to buy. And that place was still a dump. It was 10 to 15 percent turned. And now you couldn't buy an alphabet city no matter what. So there are these little indicators, but I wait for it to turn. Here's the tricky part about waiting for it to turn.

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 Turner. Today's host of the Bigger Pockets podcast here with our co-host of the day, Mr. David Green. How you doing, buddy?

I am great. I just got back from Hawaii. I am refreshed. I had an amazing time having my mind blown, spending time with Brandon Turner. and I am currently nursing some sore ribs from nursing and some sore legs from hiking. Wait, sore ribs from surfing. Okay, yeah, that's right. You did surf with me.

It was fun. You know the waves of crap. We paddled a lot. I paddled in the ocean and pretended to surf and got some sore ribs from it. But surfing sounds cooler than I went to Hawaii to paddle. This is true. No, we had a good time. Today's actually, I'm going to go right in today's quick.

Because today's quick tip is very simple. Like if there's somebody in your life who is just like, you guys are on the same wavelength and you, you enjoy spending time with them, take a retreat together. Go do something that's out in the world. Like David and I went surfing while we're out there in the water, we're just like mastermining and talking and having a really great time. And for like a week, we came up with probably 100,000 ideas over the past week of just things we want to do in life and real estate and business and a lot of stuff. So anyway, that's my quick tip is find somebody that you are that you just jive with and go out and do something amazing with them. Go and enjoy life with them for a little bit.

I mean, I'm not talking about a one hour a week call. Like those are great, but go out and enjoy life with them doing some activity, whether it's a vacation, a trip, go hunting if you're like in the Midwest or go surfing if you're in Hawaii. One of the best things that today's guest shares is that it is not hard work if you enjoy doing it. So I went to Hawaii and everyone said, what was it for business or was it for fun, right? And it was kind of both because even though we talked about business the whole time, I had a blast the whole time I was doing because it doesn't feel like when you're around people that you really like and you're talking about something you enjoy. So that mindset shift, you know, I tricked myself into working for a week and had the most fun I've ever had while doing it. And I love, love, love that way of thinking. I do too.

I do too. So we'll get into that today. You guys are going to love this show. I told the guests after we hung up from recording it. This is probably one of my favorite shows we've ever done. I think guys are going to love it. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow.

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23 people just got hired through Indeed. worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. I think we could probably just jump into this. We did a quick tip, right? That's really all we got. So today's guest is Mr. Paul Morris.

Funny thing, actually, this is the second time we recorded with him because I lost the recordings from the first time because I had a computer crash on me. Anyway, got to learn to back things up, apparently. But anyway, Paul Morris is an incredibly high-level entrepreneur, business owner, and real estate investor. Has over 600 apartment units right now. And he's got this thing. He's like never lost money on a deal ever, which is amazing.

He's also co-author of the book, Wealth Can't Wait, which he co-wrote with David Osborne. other guest that we had on the show a while back. And man, he just got like so much today. Make sure you guys pay attention again, obviously to the three rules. That's what we, you know, the show is titled about the three rules. Pay attention to that life changing simplicity yet pro like simple yet profound. The way he talks about emerging markets and defining where you invest, that could change your

entire investing future forever. And lastly, like we end this conversation talking about how to succeed without hard work and sacrifice. And yes, that is possible. Wait to you hear how he talks about that. So without further ado, why don't we just jump into the interview? Let's get to it. All right, Mr. Paul Morris, welcome to the Bigger Pockets podcast.

It's awesome to have you here. Yes, thank you. Thanks for having me. I really appreciate it. Yeah, this should be a lot of fun today. So, you know, I know a bit about your story. And in fact, this is our second time recording this podcast because the first time somebody here, myself, lost some of the recordings come my computer crash.

But anyway, so, but I want to go in a little bit. We're going to go a little bit different direction today slightly than we did it even last time, because now I know some cool stuff about you. So I want to start, though, at the very beginning. What was your first real estate investment? Like, how did you get into this investing game? What'd that look like? Well, one of the things, it was a little bit of a rich dad, poor dad thing where I had an uncle,

really my dad's first cousin. My dad and his first cousin grew up during the Great Depression. And he was really the only person that I knew in my whole, you know, my whole awareness who was very wealthy. And he did it through real estate. So it took a while and I watched how folks did it. And then eventually with a partner, I bought a duplex. I fixed that duplex up.

We bought it at auction. It was in terrible shape. We fixed it up. We rented it out for a while. And we eventually sold it to a friend who still lives in it. So most of the real estate that I've done is not fix and flip, but it's always been value ad. That was the first deal I did.

It was 25 years ago. Okay. All right. So then what came next after that? Then I just began. I saw how it could work. My business partner and I looked at that particular deal. It was very inexpensive and yet we used every dime that we had saved to do that. And so it was in the process of looking for more deals like that without really have any money to do them. That then got me into something which seems to be a lot more sophisticated in that syndication. Syndication is really just using other people's money to invest in real estate. So we found that. some more great deals and we used friends and family money to get us into it. So Paul, is that what you're doing now? Are you basically like doing mostly syndication type deals? So interestingly, and it's fairly, it's not that uncommon of a course, but I used other people's

money when I had no money. And then I kept doing that and investing slowly over time. And then as soon as I started earning enough money where I was actually making quite a bit more than I was spending. I had more money to invest. I would find great deals. I'd be like, oh, well, why do I want to put investors in this? So I went for a long period of time doing it on my own. In addition to that, one of the things that I found was it's the reason why people don't do syndication is that there's a lot of paperwork. There's a lot of accountability. When I invest my own money, I do things a little differently than when I invest other people's money because I have such a higher standard. It's a higher standard to attention to detail. So the deals that I've done on my own, I've made

just as much money, but I haven't crossed all the T's and dotted all the eyes like I would if I were investing somebody else's money. So I went through a long period of time where I had my own money. And so I'm like, oh, well, I'll just do my own thing. Now I've gotten to a point where again, I look back and I try and learn lessons from all these things. I'm like, wow, you know, If I would have kept using syndication, my portfolio would be five or ten times larger. So I'm back at it because now I have even more deals through my network of, you know, 4,500 realtors that work in the offices that I own, 10,000 realtors that work in the offices that I oversee as a brokerage owner.

And that gives me a lot of access to deals. So now I'm doing the, okay, well, hey, this is a great deal. Certainly one I'd like to do on my own, but I can't do them all on my own. So I'm back to syndication. Okay, so let me go back to that. You mentioned like brokerages you own. You're not an agent though, right? Like you're not out there selling real estate.

How does that work? Yeah, that's correct. So I was a lawyer. And it was something I really, you know, it's by most people's estimation, a great, you know, a great gig. It's like, oh, well, I went to a fancy law school. I did well there. I got, you know, the sort of golden ring is a big firm job.

And that lifestyle for me is really awesome. So you can make a lot of money. You're married to your chair. It's not entrepreneurial at all. You're just giving advice while other people do things. So I got out of that and then started investing in things that were in alignment with my core business. So my core business where I really wanted to go was real estate investing. There's a little bit of a lesson in that for sure. And that's that when I look at other opportunities right now, I know great investors invest in all different sorts. sorts of things. For me, I stayed very close to my core competence. So as I was always interested in real estate, real estate sales and brokerage really is different than real estate investing. But you can see it's same, same subject matter. So I said no to lots of really interesting, cool things. And when I had the opportunity to invest in a brokerage, I was like, huh, okay. So this really makes sense with what I'm doing. Fascinating. I didn't even know that like, I didn't even know you could like invest in a brokerage without being like it's it's a weird concept like you're

just going to buy a brokerage and basically you're just buying a business that generates profit and so that very cool that's correct recently uh very recently uh i bought a piece of a dental practice and as random as that sounds really my yeah my nephew my nephew and his fiancee moved to la and bought a dental practice and i helped them through the process another thing that's very cool because we talk a lot about education or I've had a lot of education. Some folks have had great educations like mine. Other folks are out there with no education and I will tell you this. Just going through that process again recently, it reminded me that there is no educational process that will teach you more about understanding a business than what my nephew and I went

through in buying this dental practice. So my nephew, very well educated dentist, he doesn't know anything about business. I have lots of business education. When we went through the process of buying that dental practice, it was, you know, it was a total education. And I'll tell you one funny thing is there's a book, there's a book that I didn't read. That could be our theme. Lots of books that I don't read. And the title, the title gave it all away. And it was, you cannot learn how to ride a bicycle and a seminar. Okay. So think about it. You know, you can really teach a lot of the concepts, but until you get on that bike and start pedaling and try and figure things out and, oh, how did this work and how did that work very much. I mean, you could, you could even do a case study, okay, on buying a business.

It's still not the same as the midnight hour. My nephew calling me going to like, well, wait a minute. What about this thing and that thing? And I didn't know all the answers to it. And I've been doing this a long time. I love that. I love that philosophy. Paul, you're clearly one of the most brilliant and talented business minds has probably ever been on the bigger pockets.

podcast. Can you tell us a little bit about what kind of properties you're buying and how you're arranging your syndications? Are you doing houses, apartment, commercial? Like, what are you into? That's a great question. And thanks for the preface with that. I, you know, I think you say that's all your guests, but that's okay. So, you know, one of the things I do is I really, I really do stick with what I know. And I've been doing this a long time and people will pitch things to me. and I literally don't understand them. Okay? And so when I get the pitch, I'm just like, yeah, I don't get it.

I have to remind myself like, wow, I'm well educated. I've been doing this for 25 years. It doesn't mean I know everything, that's for sure. But there is this Warren Buffett thing of he's a very smart guy, you know, 10 times, thousand times more experienced, 10 times smarter perhaps. And he doesn't invest in stuff that he doesn't understand. So if I don't understand it, I'm just like, okay, this might be great. Generally, it's not.

But I stick with what I know. And I'll give you- But Paul, everybody's making money in Bitcoin right now, so I should go invest in Bitcoin, right? Funny, you should say that. You know, I waited until the Bitcoin crash. And then, you know, my nephew and I, we each put five grand in Bitcoin. I can assure you that it could go up a thousand per, whatever it goes up or down, It's not going to make any difference in our lives.

We just didn't want to be left five grand so I can say it wasn't left out of the party. There you go. There you go. So let me, yeah, let me sort of directly answer your question. So I look at deals where I really understand what I'm getting into, what I'm going to add to the deal and what it's going to be worth at the other side. And so any deal that I do, I can literally analyze, you know, they say on an envelope or a napkin, and that's really true. You know, I use a little, I use what I call buck slips, which is a little piece of paper. And it's just very basic.

It's like, what's the cost now? What's the return? What value am I going to add? How long is it? How much is it going to cost to add that value? How long is it going to take? and what do I end up with on the other side? So I'll give you, and I'm very, obviously, I'm very experienced at this,

and I'll give you a counter example so that hopefully it will assist your listeners on what to stay away from. So I'm always looking for deals. So that's one of the practices, is look, look, look. And one of my key players brought me a deal. It's a development deal. He goes, okay, well, the piece of the guy owns the land, you know, it's really probably worth six and a half million. He wants about eight. You know, you put another 15 million into it.

And on the other side, it's worth like $40 million. I'm like, that pencil's out. Like, you know, here we go. Okay. How long does it take 18 months? But that's a very complicated development deal. And it's outside of what I do. So under normal circumstances, I would say, huh, that's very interesting.

I'm just going to pass. But I didn't want to pass because there was so much upside in it. And trust me, I have a lot of a year's experience and I really went through this deal and it sounded, you know, there were a few, there were a few variables that I knew I would have to check a lot deeper for sure, which would have saved me, okay? But I said, you know, I am interested. I don't want to just say no to this. And I went to a guy who's a friend of mine who's a massive developer. And I brought the landowner in and all of his stacks of paper and all that stuff. And we sat down. And within, in 10 minutes, the developer was like, okay, this is a terrible deal. You know, and so it saved me. I would not have ended up doing the deal. I probably would have wasted three weeks, three or four weeks.

I could have wasted up to $10,000 to $20,000 in due diligence, determining the things that were incorrect in that plan. So I stick with what I know. When you buy a stock, I believe that, and I'm very biased against it, so I'll just let you know that. I believe that we are too small a player to understand all of the market forces. You can read all the stuff you want to, and it's just not going to do it for you. On the other hand, when you buy a property, if you do, like, incredible due diligence would be you take the $300 property, inspection guy and you go, you know, I want the property inspection lady on steroids. I'm going to pay her

500 instead of 300. And before you know it, you know, that's real due diligence. You really know what you're getting into. So it's very different. Also the cycle of the cycle of stocks, like, you know, when I grew up, it was General Electric. It was United States Steel. I'm from Pittsburgh. United States Steel tried to shift their business into USX. Where are they now? So where is Apple going to be 50 years from now? Where are these now blue chip firms going to be 50 years from? I don't know, but I do know that property in Beverly Hills or property in West Hollywood or property where I live in Santa Monica is going to be worth a lot. I mean, something really different would have to happen for that to go down in value. So I love

how you shared that you really, really wanted to get in this deal. The numbers were appealing. It had that spreadsheet magic that you're just drawn to it like, oh, I want to do this. But you knew I don't understand this and I don't want to put the time that it would take to learn what I'm actually investing in order to know if this is a good decision. So you didn't just quit on it. You didn't just walk away. What you did is you went and found an expert, the developer, and said, does this look good? And his experience, he was able to analyze it immediately until you know, don't get involved in it, right? And I just think that too many people think they have. have to learn everything about everything

or they can't get into it. It's true, I agree with you 100%. One of the principles in my favorite book, Richest Man in Babylon is you never invest in something that you don't understand. But you may have friends that do that you can trust. And you can go to those people and you can find the right people and surround yourself with them.

They can give you good opportunities. They can keep you for making some big mistakes. One of the things you mentioned is that you've never lost money on a deal. And I can see why with some advice like what you're giving us right now. Can you tell us how on earth you have been able to avoid never losing or losing money on a deal when you've been in real estate as long as you have and own as you do. Okay. So, um, you know, in the headline, uh, the headline sounds amazing.

And when I use three rules and then I've told like really smart, amazing real estate investors. And they're like, oh my gosh, how's that possible that you haven't lost any money in 25 years? And when I tell them the three rules, they say like, oh, well, Of course, if you follow those three rules, you know, right? So let me, let me throw them at you. And that is, number one, you buy where you know. Okay. And so what that means for me specifically is I grew up in Pittsburgh,

spent a lot of time in Pittsburgh, spent some time in Washington, D.C., seven years in Washington, D.C., and I've lived in L.A. for 18 years. The only property that I own right now is in Pittsburgh where I've stopped buying and Los Angeles. Okay. And I had some property in D.C., but I sold it. So I really truly am buying only where I know.

The reason for that is there are market forces and things that we can experience and understand and learn about that we just won't know if we don't live nearby. There is that local knowledge. now really, really sophisticated investors. I've got lots of friends that are institutional investors. They fly all over the country and invest. Good for them. I can tell you they have lost money on deals before. And it may even be a limiting belief, okay, but I'm telling you for where I am, I can still find deals in very expensive cities like Los Angeles. So I'm not quitting on that until I run out of deals, haven't even come close. So sticking with that first rule.

The second rule is it has to cash flow. Now, as obvious as that is, you might say, hey, Paul, you told me you're buying in Los Angeles. Can I really buy something that cash flows? Well, in most instances, you can. When I marry Rule 2, which is cash flow with Rule 3, you'll see a little bit of an exception. And I'll go right into that. and that is I always buy value add. Okay?

And what value add means in the in the most, you know, exaggerated form is you buy the worst house in the best neighborhood. Now it doesn't have to be the worst house. It doesn't have to be the best neighborhood. But what it is is it's pretty close to the worst building or house in a good or better or emerging neighborhood. Nice neighborhood, crappy building. When you do that, by the way, your cash flow will go zero or negative.

So I will buy something that does not cash flow so long as I have a very short plan to turn it around and do a modest turnaround in a short amount of time that will generate that positive cash flow. So I'm never sitting with a building that's in a negative cash flow. I love that. I love that because, you know, like, I don't know, everyone tells me like they can't find any deals. Everyone's complaining all the time. I can't find any deals.

Can't find any deals. And like, you know, David, actually you said this other day. Like when people tell you that, like you ask them what they're looking at. And it's usually like, well, look at this really nice three bedroom two bath, beautiful house that my wife would absolutely love. Well, that's why you can't find any deals because you're not looking for the value at. I think that's golden. I think those three rules are like just.

just like they're so simple, but they're so like profound in that like if you just follow those, you're probably going to be all right. Like if you're smart about it and you follow those. And again, it doesn't mean you can't invest in another location. David's a big guy investing out of state. So people might say, well, David does it. Well, no, David understands a few markets really, really well. He buys where he knows. He buys cash flow and he buys value at. I buy in a few markets. I buy where I know and I buy things that value at. So like I follow the same rules. The times that I've lost money, which is technically twice in my entire life, I bought stuff that I didn't know in an area I didn't know and it didn't cash flow.

Like that was like I tried to flip some stupid house. Actually, both examples where I've, one of them, you can say I broke even over 10 years. But like the other one, I tried to flip a house. I didn't know the area. I didn't know the market. It didn't cash flow. I knew it wouldn't cash flow if I had to turn into a rental. I did it anyway.

Screwed up. So I think that's amazing. And I'm always, you know, I'm always learning. So I went to see a really, you know, multi-billionaire real estate investor named Sam Zell. I went to see him speak. And then afterwards, I went up and talked to him. And he made all of his money in the suburbs. And now he sold out.

It was equity. Equity was his fund. Several billion dollars sold out. He's still in the game. And I said, where are you looking now? And he said, only 24-hour cities because he believes that millennials want to live close to where they work in a vibrant city and they'll pay a lot more for smaller space. And I'm like, huh, okay, so L.A. 24-hour city. Pittsburgh, not a 24-hour city. That was a lot of places around

that I've looked at. And then even inside of L.A., where do I look? And I asked them another question. I said, well, I asked about a few other cities like San Diego. He's going, no, no, no, that's not a 24-hour city. And I said, well, let me ask you this. Because one of the other things that I do is I will look near an economic engine, okay? And an economic engine to me are good examples of them are schools and hospitals. Okay. So now if you're in San Diego,

which Sam Zell says is not a 24-hour city, and I asked them this, I said, wouldn't it be true if I bought right near a major hospital and school, wouldn't that be like a 24-hour city? And he was like, absolutely. So interesting. And one of the recent properties I bought, in L.A. And this will give you an idea of how can you still buy in a very expensive area.

One of the properties investments that I just bought recently was five units total dump. It's sort of underneath the highway. You know, it's not where you would want to be. The public storage is nearby. It's just completely, you know, I talked to an investor about it, and I sent him all the numbers, and he knows L.A. and he's like, I'm in, you know, and I'm like, okay, great, I make the offer. He drove by. He goes, I'm out because, you know, it was, like, he's like, no way. And my, my assistant who helps me a lot with the, with a small renovation, she was like, buy anything, you cannot buy this one. And I still bought it. But it was directly, it was directly across the street and it's rent control. And it was directly across

the street from a hospital. So it's total dump neighborhood in LA, complete dump. The place itself pretty much of a dump. And across the street from a hospital, I just know that that economic engine, that hospital is not closing down. It doesn't matter what the economy does. So people often say you should never buy in real estate where there's rent control. I've heard a lot of people say that. That's one of the rules, right? But you just did that. How do you deal with that? And why do you like rent control if you do? Okay. So all things being equal, right, I would say, I don't like rent control. when you get a little further into it and now you have to start sourcing deals, I buy rent

control all the time. And here's the reason why. Again, in the book, in our book, Wealth Can't Wait, there's seven pillars of how to build a business that builds wealth. And one of the pillars is barriers of entry. Okay. So as I tried to, you know, like these seven pillars work for any business. I'm trying to make them work for my own business. And I'm like, geez, I can apply them everywhere, but I just can't figure out how to apply them in real estate because the first thing I said, well, a barrier entry, it must be, well, what do you need to buy real estate? I guess you need money. So that's a barrier entry, but that's never a barrier to entry. So if you're an amazing deal, the money rushes to it. So what's the barrier of entry? And I will tell you,

rent control is an example of a barrier of entry. So that what happens is, and here's cap rates are a very fancy word of how much, you know, and it's probably like your listeners are way above this, but I'm going to tell you, I'm barely way above this, okay? So a cap rate is just simply, what rate of return are you going to get on this particular building? So it's like, oh, well, the building costs a million dollars, then you pay all of your expenses, and then your net on the amount of money that you put into it or an all-cash deal would be three, well, let's say, you know, would be 3%, like in Beverly Hills, 2.5%. So as the price increases, the return stays the same, but as a percentage, it gets pushed down, right?

So that question, by the way, brings out exactly why the three rules work, okay? Because when I go into something and it's a really nice, shiny building, I'd say it's a really nice building in an okay neighborhood. And it's fully rented and it's beautiful and it doesn't need any work. These are things that people like to buy. And let's say that returns even in LA a 5% cap rate where the market might be four and a half. Like, wow, that's a deal. Let's grab that. And when I see that deal, I go, no way, not interested. Because I'm not interested in 5% return. So I've got to find something. Now I look at this and I can use just that building that I bought across. the street from the hospital. It was literally on the market for two years. Every investor in the

world looked at it and they go, oh, I'll pass, I'll pass because they look at the rent roll. First of all, it's a dump. It's in a dumpy area. And they look at the rent roll. Oh, and there's this guy that's been in there for 20 years and he's paying, you know, $600 and we could probably get $1,500. How do we get them out of there? So that is the barrier. So, you know, all things being equal, here's a way of looking at it, all things being equal, I would like to walk down the street and have people hand me money, okay? That hasn't worked for me. Okay. So instead, what I do is I try and find things that have barriers of entry that I can manage. And rent control happens to be one of them. I find that the market overestimates the cost of getting people out of a rent control

apartment or overestimates the amount of time they will stay in before they move. Now, my business plan, some people have a business plan where you have the 80-year-old man in the apartment and he pays his rent four days late and I'm tacking the thing, you know, on his door to try and get him out. That's not the kind of karma I want in my life. I do not need that. I'll give that guy extra time. Okay. So I don't have to be, you know, even in rent control, I don't have to be a jerk to turn the, to turn the property around. You can buy them out. You can say, hey, you know, what would it take for me to relocate you? Maybe they say, I'm staying put. That's okay. So there's a lot of things you can do to mitigate an obstacle like rent control. But rent control is what chases away the easy money. Okay. So that's

what that's what, yeah, that's what happens. I love that. One of the things Brandon talks about all the time is that in today's market, you're probably not going to find a deal. You need to make a deal. And that's a Exactly what you're describing is you're looking for barriers to entry because it's going to weed out all the people that just want the easy, quick score. It's going to give you less competition, basically. I kind of do the same thing when I go look for homes. They're serious rehab projects, right? The people who are looking to get vested in real estate and they want to use a loan, they're not able to do it because they got to pay cash if you want to get this deal. And I eliminate 90% of my competition.

And it sounds like you've taken these business principles that you've understood, applied them to real estate. And you figured out, I want to find a place that's harder to get into because there's less competition. and I can use more creative ideas to make this work. Can you tell us a little bit about the numbers on this last one you bought just really quickly, what you paid, what the rent is, like how it cash flows and what you're going to turn it into? Sure. Okay.

And, you know, I'll, it's great. It's like a politician. You ask me a question. I'll just answer a different one. I'll pivot. I'll pivot from that only because I would really need the spreadsheet in front of me. And that will tell you a little bit about the way I do my business. You know, I really focus on the deal that I'm doing.

and then rehabbing it, and then I forget about it. So with the 600 units that I have, I know very little about and have not even visited many, many of these places. In fact, one sort of funny story is that I bought that five unit and I actually thought that I had bought the place next door. And I would drive by everyone a while. You know, I'd be like, oh, wow, you know. Now, my assistant knew which one because she was rehab.

She wasn't rehabbing somebody else's building. She was rehabbing mine. I took my business partner, childhood friend Eddie Crifcher, who I've been doing real estate with for a long time. I took him into the deal because he wanted to be in it. And I kept showing him the other property, which was a four unit. And he's like, huh, I can only count four garages. I'm like, well, I don't know where the other one is, you know. And so, you know, that just gives you an idea about that. But I'll, so I'll pivot, but I'll answer your question directly. I'll just do it on a deal that is more recent because those numbers are in my head. So, and this one,

particular was not a rent control building, but it was in an emerging neighborhood. And what I mean by an emerging neighborhood is, I'll give you a rule of thumb on the emerging neighborhood. So it's a neighborhood that's turning. And here's a, here's an important rule of thumb for the neighborhood that's turning. When it's, when the whole neighborhood is bad, okay, you can go in and buy things very inexpensively. But now I've got to predict when it might turn. Okay. So what I do is I wait until 20, 25% of the neighborhood has turned. And think about that. That's actually a lot. It means one out, let's say 20%, one out of every five buildings is already being turned. Okay. That means the fancy, you know, the lousy restaurant has been turned into the fancy restaurant. There's now like a cool

pub, you know, you now see people, I had a, you know, I had a metaphor because I was living in New York city and Alphabet City back in the day was if you walk there, you'd get killed and police didn't take a call to come to Alphabet City. Like, oh, forget it. And then one day I drove through Alphabet City and all through as bad as it was, I saw this young guy coming out with a cello strapped to his back. And I was like, when the cello, you know, right? When the cello is coming out of the place, that's when you know to buy. And that place was still a dump. It was 10 to 15 percent turned. And now you couldn't buy an alphabet city no matter what. So there are these little indicators, but I wait for it to turn. Here's the tricky part about waiting for it to turn. Before it's turned at all, you can buy stuff

very inexpensively. Once it's one out of every five or six houses have turned plus a couple of cool restaurants, now you go to buy a place. Guess what happened to the prices? Okay. They went up. They've gone up. They've gone up enough that all of the neighbors are like, did you see what they sold that play. Like, are they crazy? You know, so there's already the talk of you're nuts. They're nuts. Okay. But now I know that thing is turning. Now, when you get to a place that's 60, 70, 80 percent turned, then all the people that are selling have already built in so much into the price that there's barely any upside. So on my, on the street that I live in, that I live on in Santa Monica, you know, it's this cool street that has great views. And there's sort of all these dumpy houses

10 years ago when I bought it. But it was 25% turned. One every five or six houses, you know, you've got these gorgeous houses and then all these little dumpy houses. And right now, they're building a house across the street from me for actually just sold before it finished, right across the street for me for $8.1 million. Absolutely unheard of at the time. And the house right next door to me is being turned. We're way into the 75% at this point. And there are two houses for sale on my street. There's no way that you can go in and make a safe and phenomenal phenomenally great profit. The market has to stay good or get better. You've got to be an expert at building. You've got to do everything right to make a decent return. So that's the rule that I use

about when to get into something. So I'll give you this particular deal. It's in Long Beach, California, and it's a neighborhood where one out of every five houses, every five houses or buildings has turned. It is six blocks, because it's on Sixth Street, from the ocean. Now, from where you guys are sitting,

you'd be like, huh, California, Southern California, six blocks from the ocean, how is that not a good deal? But if you go, but if you went there a year ago, it's like, it's like Venice, California. I mean, I try to buy a house in Venice, California. I got knocked out of it in escrow. And while it was in escrow with somebody else, okay, because I missed it. I missed the deal. People were shot on the street in front of the house. I was like, wow. Okay. I'm glad I didn't get that one. That house is not worth a fortune. So, you know, Venice, California, near the ocean. So this is, I'm trying to get you

the mindset. And the mindset's very simply that when it's starting to turn, now's the time. So Sixth Street, Long Beach, and I just, I'm watching the other buildings turn. It's very simple. I can do an analysis of what needs to get done for the building to be turned totally around. And I can figure out how long that will take and how much I'll get on the other side. And because I was thinking about using other people's money, I would have just done it, period. And I did, by the way, I just bought it. And I'm like, oh, I think I'm a to syndicate this one. So I had to like really go way deeper into the analysis of it. So I talked to three property managers in the area and said, what would a redone apartment like this rent for? They go,

oh, 1400. Wow. Okay. And then and then I looked at comps myself. So I had realtors look at comps for me. And then because I wanted to be absolutely certain, I mocked up an apartment like it. and I actually ran a Craigslist ad. Like, hey, here's an apartment. Here's the size of it. And when the phone's ringing off the hook, I'm like, okay, I am certain, right, that this six months project will yield something at $1,400. So the math on that is very simple.

I buy the property. It's 24 units. I buy it at $3.2 million. You go, okay. And I bought it at about a four or five cap. So it was currently turning about a four and a half percent. return. And when I dug into that, they were leaving some of the expenses off, which they always do. And so it will really be like a two cap. So essentially, I'm overpaying for it. I still buy it

anyway. I know that it's going to cost $500,000 to turn it around. So I budget in $600,000, right? Now I'm at $3,000, and I redo all the rent rolls at $1,400 instead of $6 or $700. and it's through the roof. There's well more than a million dollars sitting inside of that property. I'm in the middle of that deal right now. I love that. So what I love about what you're saying is you understand the numbers. You know that they need to work.

And I'm sure in the beginning of your investing career, you were much more focused on the details of every property you bought. But in doing this for long enough of being successfully, what you found is that there are rules of thumb that if I meet this criteria, I don't need to stare at these numbers over and over and over to make sure they work. They're going to work, right? So you've focused on principles that you follow that will lead to success and you don't get caught up in the detail so you're not burning out from just analyzing property after property all the time. Can you share with us some of these principles or life lessons that you use to guide your day to day life?

Well, so one of them is, you know, I'm just not a detail person. So I don't get lost in the details. I will tell you a very good friend of mine. And I was always sort of jealous of the amount of due deal. that he did. And he hired somebody, you know, who runs this massive spreadsheet, the likes of which I don't even own in terms of analyzing deals. And I think that's great. The pros do that. And I'm not opposed to employing that. However, I don't get lost in those details because he found one that all this spreadsheet showed him that that was going to work and yet lost money on it.

And I was like, wow, how did that happen? And really it was because he bought an appointment. place that was near where he lived, but he didn't know the area. And then they changed some local ordinances. And before you know it, he had to get out of that deal to protect his money and lost a bunch of money. So, you know, that's a piece of it. And I do think that, you know, one of the life lessons for me is understanding your strengths and weaknesses and not even strengths and weaknesses, but the things you're really passionate about, the things you really care about and get more into the things that you're passionate about. So I'm good with numbers, but I get bored with the details. So I have a partner that's no smarter or dumber than me, but he has more

patience and he can look at those details. So that's what helps me do that. And the thing that stops people from taking action is the fear of loss, the old adage of how hard would you work to earn $20,000 versus how hard would you work to keep somebody from stealing $20,000 from you? It's just human nature. So I do a pretty quick analysis of the deal. and, you know, get into it and just do it. So that's one of the guiding principles is get off, get off your rear end and do some deals. It ties back to what I said before, which is you can read as many books, you can watch as many podcasts. And I really think you should.

I really do. But there's nothing like doing a deal to teach you. Yeah. That's so true. Yeah. So I want everyone who's listening to pay attention to that because there's things that hold us back from getting started and going forward. and you really need to identify what yours are, like what Paul said, understanding himself.

He knows he's a vision guy. He's a big picture guy. He's a principal guy. He can build this outline of exactly how he wants his project to go. But he's not a detail guy. He doesn't want to have to go fill in all the blanks and color it all in. But there are detail guys in the world who are just looking for something to build an outline for him so that they can jump in and they can color it in.

Find people who are good at what you're not good at and focus on what your strengths are. Find partners that are going to work well with just like what you said, Paul. And all of a sudden, real estate investing becomes fun. It doesn't become as scary or as intimidating or bring all this anxiety because you're not trying to do it all on your own. That's how you're going to be successful. If you're trying to tackle this and doing all the stuff you're not good at, it will just drain you so fast. Absolutely. Yep, for sure.

All right. So speaking of life lessons, I heard that you recently did a keynote speech called How to Succeed without Hard Worker Sacrifice. And you did this at UCLA's MBA school talking to these graduates. Is that true? Did this happen? Yeah. Yeah, it happened. And for a moment before I gave that talk, I was wishing that I could disappear from the planet for a minute.

You know, I was invited by somebody who's really cool and I didn't want to let them down. And we were having sort of it. It was a dinner. And I was the keynote speaker. And we were out in the courtyard. And there's, you know, a couple hundred people out in the courtyard. And the person invited me, introduced me the dean. And the dean was like, oh, so, you know, so what's your talk going to be about today?

And I said, well, how to succeed without hard work or success. And he just gave this like belly laugh. He went, oh, ho, ho, ho. And then he looked at me. And he goes, oh, you're serious. And I said, yeah, I am serious. I felt like saying, well, I was serious until just now. But now I could quickly change my speech.

And he's like, oh, well, this will be interesting. I'm going to make sure I, you know, sit up front and take notes. And then when we walked away, the guy who invited me said, like, oh, do you know so-and-so? And I was like, no. He's like, oh, he gave the keynote last year. He made $500 million in, you know, some sort of PayPal type of electronic transaction platform. You know, moved to Vegas, made $500 million. He gave a speech last year.

And his three takeaways were, or his takeaway was, there are three things in life. You've got business, you've got family, and you've got friends now pick two. And I was like, wow. It's kind of the opposite. And I was thinking also I could really help him out with that because after I heard that, I didn't want to be his friend. So, you know, he could already have his two. But it's really a mindset thing.

And the key to that was, you know, I grew up with a dad that believed in the value of hard work. And there is this thing about grit, you know, so I have, you know, I have a 14-year-old daughter. So I think a lot about what do we want to teach our kids. And it used to be self-worth. And what that is is sort of, you're this self-confidence thing where you believe. you can do something, right? Like, oh, I have the natural belief that I'll succeed. And then I'm a little kid, you know, and they're throwing the fastballs at me.

And I strike out. And I'm like, what happened? Like, I thought I could succeed. But, you know, so it's like life doesn't work that way. And what we found out is it's really grit. So it's saying like, hey, I know I can get to the plate. I know I can face this pitcher. And I know I can take a great big swing.

What happens? Not sure. Okay. So we've sort of gotten away from that thing. And it's a little bit back to the hard work piece. However, what I've found is that I define hard work as things that I don't enjoy doing. So I just did a retreat management retreat with my top managers and top people. And we had an absolute blast. And when we were totally done, we rented it. We had my house in Palm Springs and we rented a couple of houses and the guys that were staying with me. We were up till 4 o'clock in the morning talking about business. Okay. So we would have gone to bed at 1230 if it were boring or it wasn't what we wanted to do. So we love this. Okay.

And when you do something you love, right? So the magic zone is where passion meets ability, right? And so when I was a lawyer, I had the ability. I really did. I didn't have the passion. You'll never create these amazing things. and you'll never love life if you're not doing what you're passionate about. So I look at hard work as only things that you don't enjoy.

And you might say to me, well, what happens if you choose this position and you like, you know, maybe you love 50% of it. You're okay with 30% of it and you hate 20% of it. Well, what I do is I look at it as a package and I go, okay, do I want to do this or not? Yes. I choose this. And as soon as I choose this, now the 20% that, really don't like, I will either outsource it or create a system around it or just do it

until I can outsource it, create a system around it. And when I get to those things, I don't say, I have to. Oh, I have to do this. So it's the, it's the choose to, right? Yeah. Even when, you know, if I'm in a business meeting and I'm very purposeful about words, it creates our reality. Okay. So I'm in a business meeting, maybe a business meeting I'm enjoying them. I look at my watch. I'm like, oh my gosh, hey, I got to get out of here. I have to go pick my daughter up at the bus, right? I work toward never saying that. I'm like, hey, I'm really enjoying this. I go on and on. However, isn't it cool? I get to go pick my daughter up at the bus at 3.20 in the afternoon. Could never do that if I was at a law firm. So that's the,

that's the hard work part. Another thing that's interesting is I'm a, I'm a world-class procrastinator, okay you don't procrastinate there really truly is no such thing as procrastination because you don't procrastinate the things you love think about the thing you love to do the most and there's somebody you have to say david brandon get out of bed you have to like go do this thing you love you're like are you kidding you jump out of bed so creating your world and it it doesn't require that every part of what you choose you love but you just change that mindset around it so that's the that's the that's That's the have to. That's the hard work piece.

So in a way, when people look at me, they go like, wow, you work hard. I'm like, yeah, I do this stuff that I love to do with a lot of passion, a lot of intensity. And I'd be bummed if I had to stop doing it. And then the sacrifice piece is this. And I kind of define sacrifice as giving up something vital to have something else. That's what sacrifice means. So if I have to give up something vital to have wealth, of course I don't want wealth. You know, and so I do a lot of, I do a lot of talks with realtors.

And, you know, one of the things that I do, it's a piece in the book, too, is to 10 times your goal. And I say, hey, I want everybody to write down, you know, how much gross commission income they want to have, you know, in two years or one year. And that's a great cheat because it's a here and now time frame. and they'll generally 20 or 30% up their gross commission income. So if they're making 100 grand, they'll go, well, you know, in a year and a half or whatever, I'd like to make 130. And they can wrap their brain around that. And I go, okay, great.

And I say, well, what will stand in your way? And they're like, most of the time they say nothing. You know, like, oh, well, you know, a few little things. I go, okay, great. Now what I'd like you to do is take your goal, which is $130,000 in that instance. And I go, add a zero. They go, oh, wow. Now, okay?

Now I've got a person that's earning and used to earning and probably working pretty hard to pull in a hundred that has this vision of I'm going to have 130, right? And now what would it take for you to do a million three? And what would get in your way? So now I was trying to like get at the obstacles. And, you know, when they set out, when they when they plused it 20, 30 percent, I wasn't getting many obstacles to work with. When I did the 10X, the class exploded. It's like, you know, I couldn't write as fast as the reasons why they weren't going to make it. You know, one person, I said, what will stand in your way?

One person even said, God. And I'm like, wow, if you really are, right, if you're a real strong faith-based person and you think that God will stand in the way of you making a million three, how are you ever going to do that? Another person said, oh, well, you know, hey, I love. like money, but not so much, I'm going to miss my kids' sporting games. I'm like, whoever said you have to miss your kid's sporting games. There's somebody in the room, actually there was that wasn't at a million three, but they were at a million one that goes to all their kids soccer games. Now, they may be selling at their kids' soccer games. They may be using that as networking,

but they don't miss their kid's soccer games. So people are really literally setting it up so that it is sacrifice. So here's a very quick add-in. And I hope this will be a takeaway. One of things I love about your podcast and I really want to stay within it is, hey, let's share some great ideas, some great thought stuff, but I really want to give people things to do, okay? So that, oh, if I make this one tweak, you know, it can really change. So one of the things I've done is with any goal that I have, I've changed the word goal, by the way, to commitment. Okay.

That makes me like, oh, right? Because if I have a goal to lose weight, I'm like, huh. Yep. I'll still eat that chocolate croissant. I'll just work it off harder later. If it's a commitment, I feel differently about it. And the other thing I do is I add with ease at the end. So my next monetary goal is to hit $100 million in net worth.

And the brain looks for hard work and sacrifice. Okay. And so I just say, what do I need to do or be different in order to earn, in order to accumulate $100 million? net worth with ease. That's the question. I may not even have the answer to that question. But see, what I'm doing right now and who I'm being right now has taken me to this level that some people think is pretty cool. And if I think it's pretty cool, that's okay. Let's keep doing and being what we are right now. And it will lead us right back to where we

are. There's no judgment in that. That's fine. Stay the same. If you want a quantum change, then it's really who do I need to do or what do I need to do or be different in order to whatever it is you want. And then at the end, I just throw on with ease because your brain will search for answers to any questions you ask. So therefore, why not ask magnificent questions? So that's a great question for your folks. Should they choose to want that one? I love that. I think every single person listening to the show, yeah, should like rewind the last 10 minutes or five minutes and listen to that all again. There's so much good stuff in there.

And if you're not sure why you should go back and listen to that again, you need to listen to that like three or four times. Like there's so much in there. And that we've been here an hour if we unpack it all. So just go back and listen to that again because it was so good. But I really like the changing your goal from commitment or from goal to commitment with ease. I love that.

I love all that stuff. And I love when you work hard. Like when you love what you're doing, it's not hard work and sacrifice. It's what you love to do. The second thing I'll point out, or maybe third thing, is the whole like this limiting belief of like, well, I can't do that because people love to do that, right?

Oh, I don't want to be rich because then I'd have to lose my family. Who said that? Like, who made that rule up? Like, why? Like, where's that written? Right. So anyway, so many good things. I don't want to be a jerk.

Yeah, exactly. I don't want to be rich because I don't want to be a jerk. They're super rich or jerks. And some of them are, you know, I'll throw another one out there that folks love. And that is your net worth will never exceed your self. self-worth. Okay. So people go like, oh, wow, that's cool. And then again, in keeping with what I just said, you know, okay, well, wow, that sounds cool and that makes sense. What do we do about it? Right. And there's a lot of things we can do about it. And I'll just throw a few at you.

And one of them is changing the outside world a little bit. And that's just the folks who are around you. You know, and it's sort of a, it is sort of a cliche almost that your net worth is the average of the five people closest to you. And I have a great mentor, and I'm still learning. And again, people on the podcast might think like, oh, wow, you're in such a cool position. Well, I want to grow. That's where I am right now. I want to grow.

And I, and, you know, sorry to say it. It's like taking responsibility, you were talking about the 15 life lessons. Taking responsibility is definitely one of them. I will say that everything great that's happened to me is a result. Sure, there's luck involved, okay? Everything that's great that has happened to me where I am right now I'm responsible for and therefore can take credit for. And the flip side is everything bad that has happened to me.

And I have to, again, take responsibility for now. You can have bad luck. But I'm just saying, but good and the bad, we are where we are because it's who we're being and what we're doing, period. So when I want to change that, it's another adage of what got us here will not get us there. And that's hard for me. That's hard for me right now to let go of. I enjoy what I'm doing. I want to keep the same people around me. I want to do the same things. And to expect that I'm going to get much bigger doing that is I think it's just the folly that I was able to get through to get where I am. So the five people around you, just think about, you know,

are they positive? Are they doing things? There's so much evidence for it. I have some funny ones. You know, I used to, I used to say when I taught and people would love it, you know, because I always use the fitness and weight thing. And, you know, when I go on a diet, my girlfriend loses weight, you know, and people. Yeah. There you go. I love it. That's where you're supposed to laugh. Because when, you know, I do in front of a crowd, people, people, they love that, you know. And it's the The crazy thing is, it's true. Because when I'm not on a diet, I'm like, oh, I've had a hard day. What's my favorite thing?

I'm going to call the Chinese delivery with the Changpi chicken. It's deep fried, you know, candied chicken that I eat over rice. It tastes so good. I eat globs of it, you know. And guess what? She would never order it in a million years. But she orders it, but I order it. She eats it.

Okay. When I'm on a diet, now I'm eating salads. She's eating salads. She loses weight. So the people that surround you make a big. difference and that's the outside thing. On the inside, I will say that people overestimate their ability to change others. Okay? They overestimate it and they underestimate their ability to change themselves. If you need change in your world, work on yourself, the rest will happen.

you know, that's, that's pretty basic. Another one is, is, and I've said take responsibility, it's super important. Just practice it. Every bad thing that happens, just go, yeah, that's on me. And then try and figure out what you had to do with it. That's how you change it. You're not going to change it by changing somebody else. And negative self-talk is another one.

So I talk about all these great things, right? So what happens when we're on the diet, like I'm on the diet, and then I eat the croissant anyway? What do I say? Right? I can't believe I did that. I'm such a jerk. I never follow through. It's just like, oh my gosh, forget the croissant.

You're ruining your life with those statements. Now, if you, let's just take the eat the croissant. I didn't stop myself from doing it. I ate the croissant anyway. And my mind, this is a part in the book called first thought, second thought, my mind goes to, I'm such an idiot or I can't allow for that. Because sometimes you can't control that. And then the second thought you can control. You go like, wow.

And then I'll give you another tool on judgment. Rather than judging yourself and judging other people, here's a way out of it. And that is use the word interesting, right? Oh, yeah. And so, you know, I talk to gurus and they're showing me how to be non-judgmental. And I wonder, are they being judgmental of me being judgmental? You know? And so the workaround on that is just say interesting. So whenever you made a mistake in your past, you look back. First of all, I think you probably did as well as you could with the information you had at that time. But you can just say, instead of saying that's a terrible choice, you go, hey, that was an interesting choice. Interesting is a light and powerful word. And it's always true. Right. So that's how you're able to, it's very difficult. The thing that stops people, you can say take responsibility for everything, and the thing that stops people from taking responsibility is the judgment. And people who judge others harshly actually judge themselves most harshly.

So start with yourself, be light on yourself. When you make the mistake, just go, hey, that was an interesting choice. If you ever, any words that follow, I am are the most powerful words in human language. I am magnificent. That's going to change the way I feel about myself. I am an idiot. It's horrible. Have kids, right? It's poisoned the kids, right? You're a brat. Okay. One of the things is a very simple change. If my kid is being a brat, you know, and I lose my temper, it's, you know, on a scale of one to ten in terms of harmful, it's probably only a two for me to say, hey, you're being a brat. You are a brat is like a nine out of a ten or a

eight out of a 10 in terms of harmful. Treat yourself the same way. Take away the stop victimizing yourself and you'll be able to take that first step. People don't take the first step because they're so judgmental. What if I screw up? How am I going to feel about myself? It's going to be awful. So I go like, hmm, that was an interesting choice.

I make mistakes all the time. So get used to it. Move forward. I love that. I love that. Yeah, limit your negative. self-talk by saying interesting. I think that's super powerful. I heard you say that once before and I've been trying to put it in the practice the last few months in my life. That's an interesting

choice. So my last question before we move on to the fire round is simply like where when you die someday, this is going to be a deep question, right? When you die someday, what do you want written on your tombstone? In other words, what do you want your grandkids to remember about you? Like a short, simple like what do you want people to remember? So what do you want on your tombstone? And it tells you more about, you know, I wish I had a fancier thing to say, you know, but I guess not having a fancier thing, it'll just be more authentic. And that is a life fully lived. And the reason why that's what I would put on my gravestone is it handles a fear that I have. And the fear that I personally have is that I don't play a game big enough that I could be playing a bigger game

and that all the advice that I just gave folks on your amazing podcast that helps so many people that the advice that I've really truly given is advice that I need to hear. So don't talk negatively to yourself. Play a bigger game. What do I need to do or be different to have everything that I want with ease. And so when I get up to that point where really diving forward is going to most help me, I'm afraid of missing the tackle, landing on my face, getting up with mud in my face, and the runner just scored a touchdown where I could have made that amazing tackle. That's why I never got out of, I was a star in seventh grade.

I think we're all, we all think we're stars and seven great. Yeah. And I'll give you another, I'll give you another question too that, that, you know, I talk to as many people as I can. I'm always having a life of learning so that as soon as you stop learning, you're frozen. And I talked to a person who was a psychologist and then a sports performance psychologist and now executive performance psychologist. that was in this room of very smart, talented people. And she said, you climb a mountain top, you get all the way to the mountain top, and you stand at the mountain top. And what do you scream?

What do you shout out to the world? And just like, tell me right off the bat what you would say. That's similar to that. And my answer, I'm practicing right now with you in front of all these amazing listeners because I was embarrassed to give my answer

to that group of people. And my answer was love, me. It was like it was a little too weird and raw. And I talked to her about it afterwards. I think we all kind of like maybe change our answer because we were embarrassed. And she said, do you know that the thing that most executives say that I work with are, you know, the less nice version of screw you? I'm like, wow, really? And she's like, yeah. And I think maybe the drive that's taken them to that mountaintop is they have felt like, you know, somebody said they couldn't do it. People were holding them down. And so it's just, it's just good information. There's no judgment

in it, you know. And so I probably say love me because the youngest of five kids, you know, I'm seeking attention. And it's just good to know that. And that and knowing that helps me in business because one of the things that I do is I tend to hire people who will love me, you know, or people who I like to spend time with instead of that like hardcore analyst that's not that warm and fuzzy. In the analyst position, I need the woman that's like spreadsheet only and, you know, comes in, does her spreadsheet and leaves. She doesn't have to say like, Paul, you're so cool, you know.

But that's what I want to hire, right? Yeah. Yeah. Man, we went, man, we went deep. This is a deep podcast. This is awesome. All right. So I want to transition this over to the next segment of the show, which is lovingly referred to

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expensive, try mismanaging a vacancy or an eviction or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. All right. Let's get into the fire on. These questions come direct out of our bigger pockets forums.

And they're just short, quick answers to the questions that people are actually asking. Number one, I just bought my first deal. How long do I have to wait to buy a second deal? Is there a waiting period? There's not a waiting period. It would be when you can next comfortably without risking the first, without risking the nest egg or without risking the first deal, I would buy a deal when it can stand alone, when the first deal can stand alone. I love that.

All right. Next question. All right. Second question, where can I find a private lender to fund my real estate deals? Okay. So private lenders are easy to find. They have certain criteria, which is they generally want to be in first position.

They generally, you know, they're going to appraise the deal. I think there's a lot more money out. There's a lot more hard money out there. then there are good deals. Yeah. The question makes me nervous because if you need hard money to fund the deal, it sort of goes back to the first listeners question.

If I did deal one and it was going to take hard money for me to do deal two, I'd wait a little bit. You know, it just makes me nervous when people are using so much, the more leverage you use, the higher you can crank up the return. but also the faster people fall. So it's that, I believe in leverage, but I believe in smart leverage. Hard money scares me, and I've never taken a hard money loan. Nice.

Number three, what is your favorite real estate investment? Like, what's the one single, your favorite thing? Multi-family in an emerging area or next to a school or hospital. It would have to be a dump that dumps in multifamily, dumps are very easy and inexpensive to change. You carpet, you light, you take the door that's halfway off the hinges, you put a good solid door on, you put the camera in, security system, before you know it, you have sort of the nicest, cleanest, safest unit in an area where people want to go. That's my favorite, you know what I'm going to do? Because I didn't do it already in the podcast.

I'm going to give answer two on that. And the first, because it's a question I always get, I often get. And that's what's the first deal I should do because I can't afford a deal. And I live in LA and everything is so expensive. And I'm trying to follow your rules. And my next question of them is, do you own a house? And if their answer is no, then I take all those lessons. I go to an emerging area, okay, one that's 25 percent, you know, renovated. I buy a house because the lending criteria, unlike hard money, the lending criteria for your own home that you're going to live in, you're going to get the best rate, you're going to get the most money. It's going to be the simplest to do. And now you cannot afford the down, you cannot afford the, you can probably afford the

down payment because you need so much less to put in or you borrow it from a friend. And now maybe you have a hard time affording the payments per month. You fill it with, with friends. That's exactly what I did. I lived in D.C. I worked for the government. As a lawyer, I did not have enough money to support this beautiful 100-year-old townhouse that I bought, I could afford the down payment. And then I filled it with three friends that paid rent. And before you know it, I'm living for free. And I, you know, and I own this magnificent piece of property. So first one is do you own your own home. If not, go buy your own home. It's the easiest. And then second, go with what I said before. Love it. Brandon, if people want to learn more about how to do what Paul

just described, do you have anything you can recommend for them? Well, there is a lot of lot of books and resources on it, but type into bigger pockets over on the search bar. Type in house hacking. We call that house hacking. So in the nav bar, type in house hacking. Also pick up a copy of Scott Trench's book set for life. It's fantastic. A lot in there about house hacking. So all right, last question. David, do you want to ask it? All right, Paul. How do you think the new Trump tax plan will affect real estate investors and do you even care? Well, so the short answer is I don't know. probably I don't care. Maybe if I knew I would care, but it consistent with everything that I've just said,

I don't run around. And, you know, I'm not trying to time the market and I don't run around trying to figure out how all these different things work. I know that if you go back, you know, one or two questions before and I buy that, I buy that four unit. By the way, you can do a four unit that you live in, one of the units too. You buy the four unit dump, you know, next to the hospital in a pretty good emerging. neighborhood. It does not matter what the rest of the world is doing. You will do great with that

particular property for sure. I love that mentality. I love that. Well, cool. All right. Well, the last segment of the show is called our Famous for. But before we get to it, let's hear a quick word from Mindy on what's coming up this week on the Bigger Pockets Money podcast. Hi, Brandon. Hi, David. This week on the Bigger Pockets Money podcast, we speak with Joel Larsgard from Poor Not Poor. As a kid, Joel watched his parents work jobs they didn't like to pay for things they didn't need. They missed out on some of the priceless moments that life has to offer. They're filing for bankruptcy when he was 12 permanently altered his view about money. We discuss how that unfortunate event shaped his entire future and led him to pursue multiple passive income streams.

So he never has to go through this again. Okay. I'm going to let you guys get back to the famous four. Bye. All right. So make sure you guys check out the money podcast. It's awesome. And now let's get to the famous four. These are the same four questions we ask every guest every week.

Number one, Paul, do you have a favorite real estate specific book? Besides, I know you wrote a book besides your own, which we'll get to. It's not really a real estate one. Do you have any real estate related books yet? You know, one of the things is, you know, I don't really read a lot because I find it super boring. I listen to podcasts. I listen to your podcast. And I learned from going to seminars mostly.

I will say I'm reading a book now called The War of Art, not the Art of War. I love that book. Oh, yeah. It's all about resistance and breaking through resistance. It's super cool. I love the mindset books for sure. The power of the influential mind is one that I just bought and didn't read. I read the forward and it talks about how we really influence.

not through statistics, but we really influenced through emotion. So that kind of, that helps me with what I do. All right, very good. I know you're not a big book reader. So normally we ask what your favorite business book is. Would you like to share maybe a business leader that you look up to, someone that inspires you, like to follow what they teach? Sure.

So one of the things in my own book is there's, again, in one of my favorite sections, the seven pillars that help you to build a business that builds wealth. is there's something called modeling. And in modeling, what you can do to accelerate your thing right now faster than almost anything else is find someone who's doing what you want to be doing at a higher level and learn from them. And I'm going to give you a how to do that. Okay.

So one of the things, and I've asked some really important, busy people, you know, hey, I'd like to spend some time with you and ask some questions. They're going to hear that from thousands of people. I say, what do I need to do to earn the right to have an hour with you? I love that. I make sure I'm really prepared. And then I also come from contribution and figure out what they love, you know, like what kind of coffee do they drink or, you know, some cool little present that shows that I care.

And you generally will earn yourself an hour on that. It just, it works for everything. I told you, you know, I mentioned buying a business that I really know very little about. You can easily find a dentist that's crushing it, you know, in a different area, blah, blah, blah. Most of these people don't get a chance to really share their vision like you guys have given me the opportunity to do. So I would go with with modeling. Whatever it is, find somebody and you will and they'll give you, you know, 20 years of insight. Very cool.

Is there anything in particular that you look, like, a famous that you are like, yeah, that's the guy I like to follow. Again, it depends on what I'm doing at the time. So, you know, so Sam Zell was very important at the time. And I know this because I hear somebody speaking. I'm like, oh, I have to go run and talk to them. And I joined a mastermind called Tiger 21, which has, it has a very high bar and it's very expensive to join.

And I go toward the people that are doing things that I want to do at a higher level. take them out to lunch. It's a great, it's a great networking piece for sure. Perfect. Perfect. All right. Awesome, Paul. Can you tell us a little bit about what some of your hobbies are? What do you like to do in your spare time for fun? So right now, I'm working on becoming a nationally ranked table tennis player. Really? Really? That's awesome. Yeah, really, really. Yeah. People think like Forrest Gump or whatever and, you know, make a lot of fun of me. And I get that. I do these things really because I love it. You know, I was an intermead, I was a lousy intermediate skier forever, and I had this dream in my mind that I would become an expert, expert enough to go heli skiing. And it took me about,

it took me 20 years to be a lousy intermediate skier. And it took me probably five or six year, purposeful years of, you know, going with an instructor all the time, you know, feeling every turn that I do to get to the point where I did go heli skiing with my buddies and was absolutely terrifying. And I have no interest in doing that again. It was a great experience. I might wear out on the table tennis too, but one of the things I love about it is that it takes my brain totally away. You know, I have a busy cluttered brain. So it takes my brain away from everything else. If you don't have a thousand percent focus, you know, I will lose and have lost to the 65-year-old Japanese lady that I play with that just crushes me off the court. And I'm like, how is that possible?

You know, if I absolutely focus, I can get a few points from her. So, you know, so that's the sort of thing. And I always keep it light in what I love. I've been doing yoga for really adamantly for two years. One of the things I have heard, I recently, I saw, I saw Tim Ferriss on your podcast. It was fabulous. Let me to some more of his stuff. And he did this. thing where he interviewed all these smart people. And one of the things that the billionaires are the most successful people in their area all had in common was meditating. Meditating is very hard for me. So I'm working toward doing that. So there you go. Awesome. Awesome. And I love that the finding an activity in your life you can just devote 100% attention to. That's why I like surfing.

Like that's like the one. Yeah. I love it because I have to just be in the moment. You're present. And it's good for people that are busy. I love it. Awesome. All right. Last question of the from me, what do you think sets apart successful real estate investors from all those who give up, they fail, or they just never get started in the first place? So one of the things that we, and I so appreciate the opportunity to spend time with you guys again, and one of the things we talked about before was, you know, the shortest answer is to sort of stick toitiveness, you know, take the action and whether you, whether you succeed or fail or succeed but not as much as you thought you would, you learn a lesson. So pay attention to that.

One big thing for me is there's this thing called a vicious cycle, which we've all heard. What's a vicious cycle? It's like, oh, well, I make one bad decision, I make another bad decision. And you know, you may have heard the quote, how did you go bankrupt? And they say gradually, then suddenly, that's the vicious cycle. Well, the opposite is there's something that I call a virtuous cycle. And that's you take. a couple of little steps every day, and before you know it, you create something really magnificent. So, you know, I have, I own 600 apartment units. I did not do it in a day. I did it over time, and it was just sort of gradual, stay with it, stay with it, stay with it. So I think, I think,

especially in real estate, you know, if you have the billion dollar idea, you have the Grand Slam, go for it, but don't let it take you off that day-to-day game of, you know, of the virtual the virtuous cycle. And inside of that virtuous cycle, by the way, would be doing something really nice for yourself. Be kind to yourself and it will help you grow. I love it. I love it. All right. David, take us out. Last question. All right, Paul, where can more people find out about you? So you can, first of all, you know, I did this thing with Facebook when I was early on Facebook. I took every, you know, Facebook friend that, that requested me. And now, you know, I don't know. Most of them, I'm at five. Yeah. Yeah. I'm at five. Yeah.

Yeah, I'm at 5,000. It's taken a lot to like sort of call it back a little bit. On Instagram and Twitter, I'm at Paul Mark Morris, M-A-R-K-M-O-R-R-I-S. You can find me. And if you want some more materials, I've got, I have my 15 life lessons, and you could send me, send an email to www. morrisx.com. So Paul at MorrisX.com. And I'd be happy to send any and all of your listeners, my 15 life lessons for sure. And then on Facebook, I think it was Facebook as Paul Mark Morris also

or at Paul Morris X. And then what I would do is just in the little note write bigger pockets so that I'll know that we're really kindred spirits, right? And I'm like, oh, hey, who's this? And it says, you know, hey, heard you on bigger pockets or just write bigger pockets. And I'll be like, okay, cool. And I'll literally go in and take somebody out that I don't know and fill them in because I'd love to be in touch with folks that are like-minded. And part of my goal, it used to be to help all of these people.

Hey, I want to have a big impact on all of these people. And it just wore me out. So my new focus is helping the willing, right? If you're a personal trainer, you cannot do the pushups for the people, right? So I'm interested in being a personal trainer or a wealth personal trainer for somebody who's actually going to do the pushups. So if you're listening to this podcast and you're a big fan of bigger pockets, then I know you're willing.

And I would love to be in touch with you. I love it. And you also have a book out there called Wealth Can't Wait, right? We wrote that with David Osborne. Yes. And so Wealth can't Wait. You can find it on Amazon. and if you read it and love it and give me five stars, that would be amazing.

Again, send me a note, you know, sent you five stars and I'll send you some other cool stuff. If you like it. I liked it a lot and I'm going to actually go leave you a five-hour review right after this. So good deal. I love it. I'll hold you to it. Okay. All right, David, take us out.

So before I do, David Osborne is actually also a guest on the Bigger Pockets podcast. And we can put which show that was in the show notes. If you want to go listen to him, you'll find. find that there's a lot of similar areas between what he and Paul say because they spend a lot of time around each other and they build each other up and you become like the people, the five people you hang around the most. And as you talk, I hear a lot of what David says coming out your mouth and you guys are both so incredibly successful that just like listening to this podcast more is going to be like being Paul's friend and getting to hear him around. And it's going to have a big shift in your mindset, which is going to lead to success. And that's what's so cool about listening to people that have been so successful for so long. And they really just whittled down the parts of what made them successful. And they know what they know what. the secret sauces and they only spend their time in that. They don't have to go through all the trial and error of trying to figure it out. And the more that we can get into the mindset they have and the advice that Paul is given, that the quicker we're going to find success ourselves.

So this has been an awesome episode. I mean, my mind is like kind of blown right now. I'm going to take some time to just go over what you said and listen to it a few times. And there's so many good nuggets in here. Yeah. And yeah, I think that anybody who's listening to this episode right now, listen to it again, write down the things that affected you the most. And then go find a friend, send it to them, have them,

have them listen to it and compare notes and kind of like get yourself an accountability partner. Hey, I know that I have a problem with negative self-talk. I need you to let me know when you see me doing it and call me on it. Hold me accountable on that because that needs to stop. And then ask your friend, like what's holding you back the most and how can I hold you accountable? And that's how you're going to grow as a business person. Yeah, I love it. One of the things I'll do too is your questions were so great. And I've got some more stuff to add to it. I'll send it to you for your show notes. You know, there's a there's an article I just read in Harvard Business Review about self-awareness, which I think is so important.

I'll send that to you for your show notes so that your folks can find that as well. It's been such a pleasure. It's the second time we've done it. I think we did an even better job. So, you know, if you lose the tape this time, I think the third go around will be even better. I will not lose the tape this time. All right. Paul, this has been awesome.

Thank you so much. Very, very nice, Paul. Thanks a lot. Thank you very much. Okay. All right, guys. and that was our show with Paul Morris. Man, again, one of my favorite shows we've ever recorded.

So many actionable things like mindset changes in my life. I'm, again, like you said at the end of that show, like, I feel like I just got to go like reflect for a while and be like, okay, how can I put all this into practice in my life? I love that. Yep. I'm going to start taking every single idea that comes through my head that I want to go accomplish and throwing at ease.

Yeah, right. I love that. That was so good. Like at ease. Like, I'm going to go out and buy a mobile home park. I can do that. I can like get down lower. I'm going to go buy an apartment complex, right?

Those are like some goals I got. But like do I just go and put my head down and work harder and, you know, trudge through the dirt to get them? But what if we come at it from that approach at ease? I'm committed to buy an apartment complex of at least 100 units and I'm going to do it at ease. Now it just changes everything, right? I'm going to force my subconscious to come up with a way to help me achieve that goal without just working myself to the bone. So I don't get drained. I don't get too much anxiety.

I don't beat myself up and I enjoy life while I'm accomplishing my goals. That was one of the coolest things I've heard someone say. Yeah, I love that. And one other thing that we kind of just glossed over and we didn't have time to really dive into it. But he mentions this idea that, you know, if, if we're talking about if you love what you do, if you really love what you're doing, it's not hard work, it's not sacrifice, it's work, or it's like, it's fun, it's enjoyable, right? But then in that, he says something super profound. He said, like, obviously no event is going to be perfectly, you're going to love 100% of it, right?

Like, I might love buying an apartment complex, but I don't love every single aspect of it. So he said, you look at the as a whole. Do you love it as a whole? And then you take the parts that are in there that you don't love and outsource. it or systematize it so you don't have to like you might do it for a short while but like you don't have to do it forever like find the things you do love do the whole thing until you can get somebody else to do that part for you and then you're only doing things that you love all day long every day and I that's where I want to get to more of in my life and that's where everyone is going to be more

successful so like I said find someone to send this show to tell them I want you to listen to it and pick out the things that you love from it find the things that are draining you mastermind with that person get together say I need you to hold me accountable so that you to hold me accountable so I don't keep whatever it is. Negative self-top, ending up in the vicious cycle, doing parts of my job that I don't love, have them tell you the things that they want. Hold each other accountable and you'll grow together. So good.

So good. So with that, we got to get out of here. Mr. David Green, anything you want to end the show with? Any words of wisdom? You're always got lots of words of wisdom. Yeah, but I think there's so much wisdom floating around after that show. I don't know what more I could say. That was so, so good.

We basically get to stand on the shoulders of a giant and see from someone who's already done it and shorten our learning curve. So with that said, thank you guys very much for listening. This is David Green for Brandon, the Focus Surfer Turner. Signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online.

Thank you all for listening to the best of the best of the best. BiggerPockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participate. opinions are their own. Investment in any asset, real estate included, involves risk.

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