BiggerPockets Real Estate Podcast - 336: $900 to $4.5MM Net Worth by 34 with Robert Jones

Episode Date: June 27, 2019

Location, location, location! On today’s show, Brandon and David sit down with Robert Jones, a real estate agent and investor in Colorado, who has built a cash-flowing portfolio with millions of dollars in equity in an expensive market. Robert will blow you away with his knowledge on making deals work (even through the MLS) and choosing what to buy. You won’t want to miss his advice on buying properties with super low down payments, targeting ideal locations that attract ideal talents, and using agents to do the work of finding deals. You’ll also love his tips for creating systems so he can travel while making money and identifying the qualities of a good agent. Robert is extremely humble for having such massive success, and he shares his whole playbook for how he built a portfolio of 26 units worth millions before the age of 35. DO NOT miss this one. Download today! In This Episode We Cover: Turning primary residences into rental properties What are capital gains Should you rent or sell your house? Moving to a new house every year Taking 3 months off while having a real estate business Real estate to fund your life Being an agent or not How "The Stack" works And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinar GoBundance Audible Federal Housing Finance Agency BiggerPockets Podcast 280: The Key to Making Great Deals (Hint: Overlooked Properties!) with Mark Hentemann (Writer for TV’s Family Guy!) Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show, 336. As far as getting your feet wet, you just need to buy a house. And it doesn't even matter what it is. Just to overcome that initial fear and start your perceptual map, you just need to buy a house. 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 us. others who have benefited from biggerpockets.com.

Your home for real estate investing online. What's going on, everyone? This is Brandon, host of the Bigger Pockets podcast here with my co-host, Mr. David Green. What's up, buddy? Not much, man. I'm wearing one of my t-shirts I just bought when I was hanging out with you in Hawaii masterminding on the Aloha, buddy. Aloha, fancy, fancy stuff. And speaking of Aloha, today, we are actually doing our show here in Hawaii, sort of. You'll hear a little bit more about what today's show is set up. It's basically I've got our guest live in the studio with us.

He's coming in here in a few minutes. A buddy of my name, Robert, it's going to be an awesome show. I think you guys are going to love it. But David is still in California. So, you know, what's up in California, David? Oh, it's beautiful out here. The home buying season is ramping up, which is funny because we actually have a guest today, who's a real estate agent and a really good one.

And there's a ton of information about what to look for any agent, how to have an agent to find you deals, what to avoid. In addition to amazing advice on how to build wealth through real estate, which this guy's done a great job of. There you go. Yeah, it's pretty cool. So I'm pumped. I think people are going to love this episode.

In fact, today on the show, I know it sounds like he's coming in in a few seconds, but in reality, we already recorded this thing. But we are talking about all things like he talks about how he put together some no money down or low money down deals using something called cross-collateralization. We walk through that in-depth, how that's done. He talks about how he got this amazing deal. You're going to be blown away by his deal deep dive on how good of a deal was,

but how not good of a deal was when he first bought it. Also, let's see, his trip to the Caribbean, he spent three months sailing around the Caribbean, or Caribbean, depending on how you say that. Really, really cool story there. And then also why you may not want to become a real estate agent. He actually is a real estate agent, but he explains why you may and why you may not.

So I think those are all like really just good points that he makes today. So hang time for that. Before we get to that, let's get to today's quick tip. All right, Dave, you want to take it? Yes, today's quick. tip. We talk with Robert about the importance of finding your why. Look, here's the reality. For a long time, real estate investing was a niche thing that only a few people could get into because they had the knowledge that you didn't have. Well, the internet has changed that and bigger pockets

in particular has changed that even more. Now, there is no excuse for why you're not investing in real estate or growing your wealth through real estate because the information is out there and the knowledge is available. What holds most people back is bravery. Now, you could try to be braver just by willing yourself to do it, but that's not going to work for most people. What does work for people is having a very big why. Not the letter Y, but the word W-H-Y. What matters to you, what drives you, what are your goals? What is propelling you? What is motivating you? They're all words that are describing the thing that's going to push you through whatever, your fears, your excuses, or your concerns really are. So if you find yourself not taking the action that you know we're telling you that you

need to, don't beat yourself up about it. Sit down, have a long walk through the woods, Cal Newport style, whatever you got to do and ask yourself, what is my why, what motivates me, what drives me, and is it worth getting over the excuses that I have to stop me from taking action? Ooh, it's deep stuff. Well done. Well done. You ever head out on a trip, lock your door, and think,

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This is a fantastic show. So let's get right into it. Without further ado, let's introduce you to Robert Jones. All right, welcome to the Bigger Pockets podcast. Robert, how you doing? I'm doing great. How about you? I'm doing good. This is weird. I don't think I've ever done a podcast directly across from somebody. Very strange. I feel honored. Good. And David's over here.

So for those who don't know, David is actually in what California, Robert, our guest today, and I are here in Maui sitting across the table from each other, spitting at each other while we're talking. Yeah, it looks like you guys are speed dating. It's kind of creepy. We pretty much are. It's a good fit, I can tell you. It is, it is. I like long walks on a beach and real estate. How about you?

I like big bushy beards. And I cannot lie. All right. I like big beards. There you go. All right. So Robert and I know each other because I am good friends with his sister and brother-in-law. In fact, they're like two of my favorite people in the entire world.

Total digital minimalists, which is funny because we had Calum-Newport on. They're like perfect digital minimal. minimalists. And I look up to them a lot. But anyway, for years, Catherine, your sister has been like, you need to talk to Robert. You need to get to know him. You need, like, you guys are the same person. Yeah. And so we pretty much are the same person. Just I have a longer beard. You have a much more impressive beard. Thank you. I don't know if it's impressive or dirty, but whatever to do. All right. So we're going to go into your story today because honestly, I don't know that much of it, other than I know you do real estate and that you're kind of like

me, apparently. And David's here on the camera being awesome. So with that, how'd you get into real estate. Yeah. So I started in 2008, which fortuitous timing. Yes. Very good time. Good thing we didn't start in 05. And was in the car business in my previous career in the service side of things. Reached a very noticeable glass ceiling after multiple promotions. Car business like sign cars? No, in the service side. So if your car was broken, you came in, talk to me with the intent of managing and owning a dealership at some point. Okay. Oh, that's where you met your wife. Yep, met my wife at the dealership. He came into the broken car and the rest was history, as I say. There you go. I can't fix your car, but I can fix your heart. Yeah, something like that.

So yeah, hit a real noticeable ceiling. And growing up, I was always buying and selling stuff, started with bicycles, then trailers, then dirt bikes, then cars, then trucks. And my dad pretty much told me, hey, look at something with a larger profit margin. You're great at selling things. You're great at making deals, you should get into real estate. And really, just to shut them up, I went and had lunch with a real estate legend, Larry Kendall, the founder of the group of real estate. He's known nationally for real estate sales training and all that. Like I said, just to get my dad to shut up. And if you spend any time with that individual, by the end of lunch, I figured, hey, I should sell real estate for a living. Okay. So you became an Asian first. Correct. Yeah, I knew nothing about investing,

really at all. I didn't even know that it was a path that I could take. So decided to go into sales first and then quickly after that got introduced and eyes opened a little bit. That's cool. Yeah. That's cool. Okay. So, David, by the way, since David's awkwardly on the camera today or on the computer screen today, if you have anything you want to say, David, just yell at me or jump in.

But otherwise, I'll just keep asking some questions. Sure. Walk us through that journey from I'm now a real estate agent to now I bought a property, your first deal. Yeah. So, well, very first house bought when we were real young parents said, hey, you know, smart. people will buy a house. So about my first house when I was 20 before I got in real estate. That was the days, if literally you had a pulse, you can get a loan. Looking back at the deal, it was pretty illegal by today's standards.

So owned one house when I got in a real estate. Okay. Three to six months into the business, started doing an investment tour with one of our partners named Kevin. He ran a tour just teaching other agents about investing. And that's when things really, you know, light bulb came on, read rich dad, poor dad, and thought, hey, I can buy a house so someone else will pay for him. Okay. And it didn't click.

You know, you can jokingly call me a slow learner, but I asked the guy multiple times, wait, let me get this right. I can buy this house. Someone else will pay for it. And I get to keep the house. And he's like, yep. And I was like, okay, rephrase the question a different way. I was like, let me try this again.

I can buy a house without too much money down, someone else will pay for it. And I get to keep the house. And the third time I rephrase the question, he's like, okay, listen, dummy. This is the way it works. And that's all I needed to know. You know, I'm not a, I wouldn't say that I'm a hard details guy. But the core concept at that point, I went home and told Sarah, hey, we need to go out and buy as many houses as we can. That's awesome.

Where was this all at? So I'm in Fort Collins, Colorado. So I'm in Fort Collins, Colorado. So we're about an hour north of Denver. Nice. So those familiar with the market know there are price points a little different than, well, it's not David Green. You know, scale of one to, like, David Green's a 10. Yeah. Detroit's like a one.

We're probably like a hard six, hard six. It's hard seven. Yeah. What is that every price? That's even cooler that we started off talking about speed dating. And now we're rating you by numbers. Yeah. Yeah, our average single family price points about 425 right now.

Wow. Which is crazy for like the Midwest. Not that Colorado is the Midwest, but it kind of like it's, when I think originally before I knew Denver prices, I thought like Denver and Oklahoma City and Kansas City, they're all the same, right? But Denver is so much different, which again, just is more evidence why it's. so important to know your market and not just rely on like just general things. But why is that Denver and the surrounding that metro area? Why is that so crazy? Any do? You know, it's something we've

talked about a bit, the quality of life and the desirability of living there. The listeners, familiar if you're not, FHFA.gov is a website where you can look at since 1991. They track prices, quarterly appreciation, annual appreciation, five-year appreciation, and northern Colorado is an unstoppable machine. We've seen 363% appreciation since 1991, which second to DC puts us to the strongest market in the entire country. So it's, I think it's a combination of quality of life, desirability. Now we don't see the ebbs and flows that some other markets see, so we don't see the meteoric rises in a single year. But for sustained performance, I feel like we're living in the holy grail for real estate. Yeah. So walk us through the very first investment property then.

What was it? So we come from a pretty modest means as a lot of your listeners and people you've interviewed. My wife looked back at our checking account recently. And when we started in real estate in 2008, we had $900 in our checking account. And as a first year realtor coming into 2009, we couldn't use my income. So my wife at the time was working at the bank, making I think it was like $23,000 a year, something like that. Ballin. So, oh, no, we were just out of control.

It was, you know, we'd hit up the chilies like once a quarter. Share a meal, have water. So we talked to, you know, we talked about people that just keep hearing no. We don't like the answer, no. So we talked to one letter, no. Talk to another letter? No. Talk to another letter?

No. And we found someone that, yeah, they'd get the loan done under Sarah's income alone, which at that point in Fort Collins looking for a house under $150,000, it was quite challenging. So we found at the time the most affordable single family home in the city. It was listed $149,900. And the funny thing on that pre-qualification, the lender called me like three weeks in and said, hey, you need to pay off Sarah's credit card.

You know, she doesn't qualify the ratios. I'm like, okay. And I said, how much is it? 186 bucks. I was like, okay, cool. The minimum payment's $186. You said, no, that's the balance. The minimum payment's $7 a month.

And when we were that close on our qualifying. ratios. That's funny. So we bought the house, moved into it. So for us, you don't know what you don't know, right? So I didn't know anything about hard money, anything about portfolio loans or these more creative ways to get in real estate. I just knew that if I moved into the house, I could do an owner-occupied loan. I didn't need a big down payment and we could remodel while we're living there. So we did an FHA loan, which at the time, it was 3% down, not 3.5. I am a licensed realtor. So we were able to use my 3% commission. So we essentially got in the house for free. That's awesome. So we moved into the house and rented out my last house. That house cash flowed an entire $30 per month. Wow. Which I was stoked.

In my mind, I thought someone else, hey, they're buying me a house. Yeah. Fantastic. Then while living in the new house, we did a full floor-to-ceiling remodel while living there in 900 square feet, including replacing the plumbing in the house. So we had no plumbing for about two solid weeks, showered at the gym, peed in a bucket, and those character building attributes. Yeah.

So that was a lot of fun. I'm sure your wife loved that time. Yeah, it's great. Yeah. Okay. All right. So you did what a lot of people do. And I want to talk on this for a second because I think it's one of the best ways.

Two things you did, two of the best strategies for getting started with real estate. Number one, obviously the FHA moving, you know, moving to a house by house, three, three and a half percent down. Especially, and that alone doesn't mean it's going to be a good deal, right? But what you did, you bought a fixer-upper of something that needed to be a total remodel. And you did the work yourself? I did. Okay. So you used sweat equity.

You got in there. But then the second thing you did, which was cool, is that you turned that first property into a rental. And that's probably the number one way that I hear people get into real estate is, yeah, I just turn my house into a rental property. So do you advise that for other people today when you're talking to people, your clients or whoever that, yeah, turn your old property and rent? I mean, because you as an agent have kind of like you'd rather have them sell. Right. Because you are an agent. You get money.

No, absolutely. it is a so investment real estate is a big part of my business yeah uh for me building millioners building investors so it is if the property makes sense which most of them do especially younger clients of mine they're living in houses that would make good sense as a rental um so that is my absolute first and foremost advice yeah you know and even looking at tax strategies you still have three years to make a decision moving out of your primary yeah with capital gains rules so yeah i advise people to keep their existing home if they have the ability to. Yeah.

And the laws related to qualification and income, even for new landlords, that's eased up over the last couple years. So it makes that transition easier as far as qualifying for both mortgages. Yeah, that makes sense. There's more leniency there now, too, compared to a few years ago. And if people are wondering what that made about the capital gains thing, I'll explain that real quick. And you correct me if I'm wrong here.

Basically, the government says, hey, if you live in a property two of the last five years, you don't have to pay capital gains when you sell. And again, we're not CPAs. but the gist is you're not paying cap gains if you live in the house two of the last five years. It doesn't mean the immediate two previous years. It just means two of the last five. Correct. So I actually did the same thing recently.

I lived in a house for several years, sold it. I mean, I think it was $85,000 in profit. Well, I should say, I sold it. But there was two years in between when I stopped living there and when I sold it and made the $85,000. I still got to claim that two-year thing. I lived in there two of the last five. It just wasn't the immediate recent two. Correct.

So, yeah, so that's why you have a couple of years at a size. So, and a lot of people ask me that question, should I rent my house or should I sell it? And it's a hard, I mean, I like to say, yeah, you should just rent it out because it gets you in real estate. But if you're going to rent it out and lose 100 grand of taxes because, you know, maybe then you should have sold it and dumped it from some else. Right. So what do you usually tell people when they say, should I rent it or sell? Yeah, 95% of the answer is keep it as a rental. Yep.

You know, if they have the fortitude and the personality type, that it's going to work well. And again, it's a house that makes sense, which in our market, most houses will rent for what your mortgage is, especially if you got the mortgage a few years ago. And even if it's running skinny, if you only owe one, two, three properties, you can take on a little bit tighter deals as opposed to, say, owning 10, 20, 30.

So I think you could be a little more risk-tolerant in the beginning on deals that might be a little tighter. Makes sense. David, you got anything you want to jump in with? I have a couple questions I can ask if that's all right. Sure. Sure. All right.

So one of the things you said is that you guys wanted to buy as many houses as you could once you realize what was kind of being described as house hacking in a way. We can get a low down payment and we can rent out part of the house. You also, I want to make sure I cover the strategy you talked about being an agent and using your commission for a down payment because not many people talk about that. But that's an incredibly good strategy specifically for agents. But I wanted to ask, how are you avoiding over leveraging or the people who want to ask the question of, well, if you just buy a house every single year for the rest of your life, what if you get too many of them? what are you going to do if the market turns, stuff like that? Sure. So I can say over the years, our risk tolerance personally,

and when I say our or we, it's my wife, Sarah and I, who own all the properties. We don't have partners outside of our marriage. Our risk tolerance, yeah, well, way. So in real estate or otherwise, our risk tolerance has changed significantly. So when we started, like I said, we had 900 bucks in our checking account.

I did research what the implications were, for foreclosure or bankruptcy. Yep. And whether you foreclose on one house or five houses, it's the same punishment. Yeah. So in the very beginning, we took on a pretty significant amount of risk, and we were quite leveraged. I'd say the first five properties, we were 95% to 100% encumbered.

So we took on a pretty significant out of risk in the beginning. As we moved forward, as Brandon mentioned, through sweat equity, time in the market, appreciation, and just improving the properties, our equity position started growing. knowing pretty significantly. And once we started having more of a net worth than our income, you know, all of it started increasing. My risk tolerance has changed by doing those things. But again, buying on the front end, making your deal when you buy it, you know, we were, we weren't doing anything really creative because I didn't know what I didn't know at that time. True. So we were buying properties out of the MLS, just stuff where other people didn't see value.

But we'd try by the day we close, we want to have equity in it and then build equity. pretty quickly upon renovations and just cleaning the place out. Okay. Yeah, that makes sense. So can you walk us through like the rest? I mean, not the rest of your journey, maybe, but the next few years. I mean, you said you were buying properties. So like, what did that look like? What kind of properties were you buying? Were they all in Colorado? How are you financing them? How are you finding them? Just kind of walking through the next few years. Yeah, so we bought the first one. It was working.

You know, like I said, we were stoked about 30 bucks a month cash flow. Like, hey, this is sweet. We've got some extra money now. And, but again, I, I don't. didn't know about bigger pockets. I didn't know about these resources. So my perceptual map of what's possible in real estate was still pretty limited. So we became very well-versed on conventional loans and what was available in that marketplace. So initially, we decided, hey, we can move once every year, which I'm not giving advice related to owner-occupied lending laws and all that. You know, seek your own advice on that. But we were informed that if we lived in a property for a full year,

that was a safe ground. We intended. And we did. We absolutely lived in the property. We were doing everything by the books. So our goal initially was once a year, 12 months in a day. We'd go look for the next house. We'd move into it. So 2009, we bought our first rental property number two. A year later, we started looking. And we'll dig into this one a little bit more later.

But we did have a unique spot where we did an owner finance deal. And that was my first experience there. So two months later, we moved into that one. We bought a triplex. And we were in there for just a couple months remodeling it. And again, I didn't know the rules. We didn't know what we didn't know. and then the light bulb someone told me, hey, man, you don't have to stay here.

This is not a conventional loan. So literally like two, three months later, we found another good deal. Like, hey, we, there was no rules telling us we had to stay for an owner-occupied loan. So we bought another single family home, live there literally 12 months in a day, started looking for another one, went out about another house. Then we tried to owner-occupy a triplex for our fifth property. And that's in 2011 when the guideline changes shifted. and they added pending underwriter discretion. Interesting.

What's that? To all the conventional guidelines. They just added that cloud. So even if you fit in the box, it said pending underwriter discretion. So if it felt weird to them. So we got declined for the first time after a while because we were fit in the box. Like I said, we had a very skill blender that knew how to navigate through this. And we got declined.

But it was a killer deal we're under contract on. We didn't want to lose the deal. and we needed to come up, then shift it to an investor loan. So we need $90,000 in three days. Because the seller had a higher offer. He wanted to get out of a deal. So he wasn't adjusting dates for us or doing us any favors. So that was our first, I'd say we had done a hard money deal,

but our real introduction of considering more creative solutions and creative financing, where we got what I feel is kind of our first hard money, private loan. And I'll throw some big words here. we cross-colladalyze against a prior one in the portfolio because you can't use, on investment property, you can't do a first and a second. But you can, at the same time, concurrently, do a second against a prior property and then show that you have funds down for the current purchase and the current acquisition.

Okay, walk us to that again, because that's really, really good stuff and it's really deep. And so I want to make sure people understand the strategy. Yeah, so the, we're a few years in there. So we had other properties through our own efforts and through market appreciation that started having some equity. Yep. So we needed to come up with 90 grand. And this wasn't with conventional means.

I reached out to, and this, let me step back here. The hard money conversation I know is a, oh, you know, it's scary, right? Yeah. People don't want to go ask. They don't want to ask their friends for money. They don't want to ask your family for money. But this was our first opportunity to dig into that. And the phone calls were scary initially.

I'd say the first three were, and then they felt really good. Yeah. Because the people I started calling, anybody I thought in my entire database. Again, I didn't know there was guys online that did this for a business or there's places to find money. So I just called everybody I knew that I thought had money. And what I experienced through that is the people that I thought had money that didn't have the money felt really good. They felt proud that I thought they had the money. That's all, Robert thinks I'm a big guy, right?

Yeah. And then some guys did have the money. Some weren't interested. But again, grateful for the call. really, really gracious about it. And within a day and a half, I had three people that were willing to lend me $90,000. Wow. In second position against prior properties in our portfolio.

So we told them it would be a formal note. It would be a recorded note against that property. And it wouldn't exceed whatever their threshold was for comfort of total leverage against the property. So the investor we ended up working with, his threshold was 80%. Combined leverage. Okay. So we didn't have enough equity in one property.

So we put it against two properties. Nice. On that one. We split up, you know, 40 grand here, 40 grand there, recorded the notes, or 45. Suddenly we had her 90 grand. We bought that triplex. And what another eye opener for us,

we were planning on moving into it. And we started packing boxes. And then I had another one. You know, I'm a slow learner. It's, you know, we keep having these aha moments. Well, crap, we don't need to move into this. Yeah. It's not an owner-occupied loan.

Yep. So literally, we were packing boxes to move. move into the house and realized we don't need to move into the triplex. And something else. This is a legitimate investment loan. So two weeks later, we found a four-bedroom single-family house. And that one made more sense to the underwriter because it's a single-family home. It had a bigger bedroom count.

It had a larger yard for our dog. We could explain it in a letter to the underwriter. So I think two months later, we went and bought another single-family house. And then we bought another four-plex using the, you know, chasing our tail again with a private second against prior real estate. Let's see, yeah, we bought another fourplex, and then we bought a few more after that. As we're entering the journey now

where we did a couple more owner-occupied as our income increased, we started moving it a little bit nicer home. So those ones were easy to explain. And our tool belt, we had more tools for creative financing solutions where we started buying more intentional investment properties.

Even through all that, we still did nine moves in eight years, which it was moving a lot. Yep. Which I enjoyed. It wasn't that. People think, oh, God, that's terrible.

It was fun. Yeah. And if it gets you to where you're at, then why not do it? Exactly. You know, it's, my wife and I always joke around.

People meet us and they're, oh my God, your wife is a saint for her to put off with all that garbage. It's like, well, you know, our lifestyle doesn't suck now. So it's, you know, things have changed.

Where, and I'll like David, you jump in here a second, too, but I'm going, where did the boat, can you tell, where did living on the boat for three months come in,

into this story. I'm just curious of like where that was at and you can explain what that was. Sure. Yeah. So almost five years into my sales business, things were getting a little intense as far as hours worked, stress level, buying the rentals and all that. And we had set, my wife and I like to travel a lot. We want to travel a whole lot more than we do. And we started looking at properties to buy out of the country. We looked at Mexico and all their laws down there. We considered Belize, Nicaragua, Dominican Republic. and we started looking at, you know, as a foreigner buying property down there and started digging into that. And almost every resource we dug into, I mean, there's even one book my brother-in-law read that said,

if you're not okay losing 100% of your money, close the book and don't even finish reading it. And from a risk-tolerance standpoint, I'm, oh, crap, I'm not okay with that. So the risk-tolerance standpoint was part of it. And I thought, well, man, if we buy a property out of the country, we're going to get really sick of going there pretty quick. Yeah. You know, my wife and I like moving around quite a bit and we like exploring different areas and we didn't want to have just one place. And then online, I found some family that was living on a boat, you know, when YouTube was just starting to gain traction. I thought, wow, man, that's pretty cool.

So we set a goal like, hey, it'd be pretty awesome to live on a boat someday. And before we really cemented that goal, we thought we should take it for a test drive. So in 2012, like I said, five years into the business, we were at, I think five or six properties at that point. we decided to take a little sabbatical, which started out, hey, we're going to take a week off, which that's going to be vacation. It won't feel like a life.

It won't be real. Yeah, let's do two weeks. And then we talked to the guy we were talking to, what's, how about a month? We ended up leaving for three months. And we flew into Trinidad, just off Venezuela and sailed all the way through the Caribbean,

BVIs, USVIs, Spanish, Calibra, all that, and ended in San Juan. And it doesn't suck. You know, as far as a test drive, for our travel goal with our family because we have children now. It cemented in our minds. This is our goal that we want to achieve.

So how did you do that? How do you take three months off? Because you told me earlier, like, you just turned your cell phone off. How do you do that and own rental property and own a real estate business? And like, because I'm sure a lot of people listening right now going, oh, man, I would love to live in a boat. I would love to travel Europe for a few months. Or I would love to just go and sit on the beach for a few months. Like, whatever.

People want that sabbatical, that break. Yeah. But they couldn't even imagine, like, what do they do when the tenant calls and has a broken pipe? Like, what do you do? How did you survive that? Yeah, so three months, it was short enough, we could still ask for favors. And it was prior to where we had a lot of professional help. You know, on the real estate side of things with my business, that was challenging.

We, not challenging to manage, but challenging from a momentum perspective. You know, David, you're an agent, you know, if you're not beating the street and hustling and keeping up those contacts, the momentum that it was an expensive trip from that capacity. For the rentals, my mother, Stacey, was a saint. She was our go-to. That's cool. Our voicemails, both mine and Sarah, said, don't even leave a message. We're not going to call you back.

You know, now, we did communicate via email. Yep. But, you know, our financial principles as far as frugality and just making shooter things are handled appropriately, I can credit a lot of that to my parents. And my mom helped us when we were gone for that first. trip. Now, if you ask her, she will say she would never, ever do it again. It was not her favorite three months of the year. But again, we only owned six properties at that point, five or six properties amounting to probably 10 doors. Yeah. You know, so it was before it got a,

you know, a little more time intensive at least. But it happened. It was easy. Any big problems? We got an email. And any emergency, whether you're handling or someone else, if there's a a fire or flood, it has to be handled. Yep. You know, so whether I take the call or mom takes the call or a property manager takes a call, it has to be handled. You know, other issues that came up, anybody can call a plumber, anybody can call a handyman. Now, did we pay a few more bucks for some of those things? Maybe. And I didn't fix them personally. But the reward of the trip far outweighed any of those challenges. That's so cool. Okay. So in order to be doing all this traveling, which is the goal that

we all have is we want real estate to fund our life, not our life to be all about real estate. You have to put systems into place. And a lot of people struggle with this because they're playing at kind of a small scale. But once you get into some bigger numbers, more properties, more projects, systems become vitally important. Can you share some of the steps you took to systemize things so that you could be traveling and it didn't all fall apart? Yeah, absolutely. And I feel we're definitely still on this journey. You know, it's something we're still getting more skilled at. But we do have a professional property manager now that manages most of our units. And even through that transition, training the manager on what our expectations are,

what our budgetary limits are for certain problems that arise, where I don't want the phone call. So we are still in process of working on that. But helping facilitate that where, hey, if it's A, B, or C, handle it this way. shoot me an email just so I see it. But you don't need to call me. We can authorize these events. So on the management side, that is helped significantly. On the real estate side of things, it is a function of two things.

One, places where we do have communication, I don't mind taking the random phone call. You know, being in this business, if it allows us to travel more, I manage a lot of my business remotely if we are traveling for week, 10 days. If it's something that needs boots on the ground, we're in a, at the, at the, group, our company in Fort Collins, the collaboration between partners is almost unheard of in a real estate world. It's unique that we're all broker owners. So having the sense of camaradering people willing to help out. You know, I've got partners that'll just step in. They'll bust out of showing for me, you know, and be the boots on the ground. If an offer needs to be written an amount available, they'll write the offer for me. But again, remotely, if we have internet and

cell phone, I manage a lot of that, which I know that stresses some people out. They want to be on vacation. But if it gives us the ability to do more and travel more, that works for the shorter vacations. Yeah. Yeah, I think it's an interesting point. Like, I mean, obviously you don't want to take a vacation have to work the whole time, right? That's nobody's goal.

But then some people just won't take a vacation because they can't dedicate 100% of their time to vacationing. Right. I mean, I don't think I've taken a vacation in four years that I didn't do a Bigger Pockets webinar during the middle of it. Right. Every single week because it's such a valuable thing, both in terms of like helping people is something I like doing.

And it helps bigger pockets grow as well. And so, like, I do it every week. where in the world I am. Yeah. And it's okay. I mean, if I said, no, I'm not going to do a vacation unless I could do a hundred percent focused. Well, then I'm just not going to vacation.

Right. And I am working more and more towards the, trying to unplug completely like you did on the boat trip, you know, occasionally. And that's why, you know, David Green here is going to take over doing some webinars. You know, Jake, the new guy at Bigger Pockets is going to be doing some webinars. So, like, you know, we're working there. But anyway, I just encourage people who are listening to the show right now, you know, don't get stuck in that.

Like, I can't take a trip because, you know, I'd have to. to maybe do a little bit of work. The reason that I can take over webinars and Jake can take over webinars is because you systemize what you do. You broke it into chunks. You said, here's how it works. Here's a formula.

Now we can practice within that formula. And so we're good. And then you're like, okay, you've got it down. You can go do your thing. So systems create freedom. Yeah. Because you hear discipline creates freedom where we've all heard Jocco say that.

Well, discipline creates systems and systems create freedom. And now you're in the position where you can travel the world and enjoy real estate or you can create this thing that now you bring opportunity for me, to get in because you're leveraging me and it's a good chance for me. And so that's just why I'm a big fan of systems in general is they open up doors for many people where only one person

stood at one point. Yeah. And the, just the efficiency of having a team. I don't have a team in the conventional sense of these large realtor teams where, you know, showing assistance, buying assistance, all that. I don't have that. But I do have a full-time assistant with our company. I've got an entire escrow department, a marketing team and all these other functions. I mean, the week we're recording, I have two closings on Friday where we're going to make $21,000 bucks, while sitting in Hawaii. You know, again, it doesn't suck. It's great.

You know, so having my team members and the way they're trained, we can facilitate this and it's, yeah, it's fantastic. I couldn't imagine a better career. I mean, it's, we love it. Well, on that note, let me ask that question then. I mean, I'm assuming I know the answer, but we'll go out a little deeper.

Do you think new investors, or getting started, they have a job? Should they become a real estate agent? And I know the answer is probably, yeah, they should consider it. But then I'll even go deeper. What kind of person should consider doing it and who should not consider becoming an agent?

Sure. So if it's becoming a realtor solely to save the 3%. Yeah. My answer is a hard now. Okay. You know, if you're not full-time and in it, you're going to lose more than 3% on something you missed. Yeah. You know, you just don't have the depth of knowledge in your finger on the pulse of the market. And not even argue, the agents are selling five, six homes a year, you're not doing enough business to keep your finger on the pulse of the market. Yeah. If they want a career change and they want to do it as a career or a full-time investor where they're really actually. actively analyzing those markets on a regular basis. I think it's a very rewarding career, and I think it's fantastic. But if it's, oh, I'm going to get my license on top of my nine to five, just because I don't want to pay that guy three percent, I guarantee you'll lose more money. And for that sake, those investors looking for a realtor, you know, it shouldn't be the guy that has a good smile and you like.

It should be someone that's eating, sleeping, and breathe, and what you do. You know, the David Greens of the world that are investors and no investments and do a really high volume of business in that market to have your finger on the pulse. Because a lot of these markets, especially right now, we're on a cusp of, we'll say some changes at least. It's important to have the right guy in your corner or gal, you know, but someone that gets it. So I'm wondering, like, David, I'm going to turn to you and ask you kind of the same question. Like, do you, anything you want to add to that?

Anything you feel differently or the same? Like, who should become an agent? Who shouldn't of our listeners? That's a really good question. You should become an agent. you want to learn the business of selling real estate and earn money from selling real estate. If all you want to be is an investor and passive income is all you care about, getting your license will not help you. It might even hurt you in some ways because now you have to

disclose to people that you're buying the house from extra things because they may be taking your advice on the fact you're a licensed professional saying, well, I'll buy your house for 100k. If it's worth 300k, you don't want to get sued because they come back and said, well, when he said he'd buy it for 100, I assume that's what it was worth because he's an agent and he's representing me. but if you love real estate, you might like selling it more than your current job. And if you ask me, there is a huge, huge, huge gap in the number of agents that know what the hell they're doing. I mean, I don't know a nicer way to say it.

I became an agent because I was so frustrated with knowing more about real estate. That's a nice way to say it. Yeah. We see this all the time, you know, like they're just not good at their job and they don't care to be good at their job. And you hit it on the head when you said they're just a friendly guy with a nice smile and a nice cologne or, you know, a girl with a pretty headshot, doesn't mean they'd understand money or finances or what goes into a deal or how to protect your wealth or how to represent your interest.

I routinely destroy agents on the other side of negotiating because they don't even know what's in the contract. Not even, I'm at like half asleep and I'm beating them just because I know a few things that they never bothered to learn because instead they're out there working on their Facebook and making smiley videos, right? So if you love real estate, there's a need for agents who love real estate. That's kind of why I'm growing my team. Because I have all these people that come to me and they say, hey, David, I love real estate.

I want to sell houses and I want to learn it. And I'm like, great, we have clients who need someone who understands how to save them money. That's what our job is. We're like a lawyer in court trying to get them out of trouble or trying to help their case or get them money, not just a smiley person. So that is the person who should become an agent. You love real estate. You're passionate about it. You want to take what you learn for your own self and you want to apply it to your clients.

And if you do that, man, like the top is really nice. 80% of the business goes from the top 20% of the agents and you can make really good money. If it's just the thing your ho-hum about, stay far away from it because 80% of the agents have to split 20% of the business. That bottom 80%, they don't do hardly anything, and it's really hard. So thank you, Brandon, for asking that because I think a lot of people think, well, I want to get my license to save money on commissions when I have to sell a house. Well, you're assuming that you know how to sell a house, that you'll actually do it better than someone who's good at it and that you're not taking effect. All the fees you're going to be paying to hold that license for the entire time. And you got to pay your broker and all the other stuff.

So that is a really good point. A real estate agent, all they do is push a button to just put on the MLS. That's all you have to do with an agent. Oh, yeah, and open a couple doors and write up a contract. That's all there is. It's the office depot easy button. You just click it. Yeah, you just click the one button.

It's just like easy. Shipping Joanna Gaines Rock, so I want to sell real estate. Exactly. Yeah, you know, you hit the nail on the head. The, you know, the granite and stainless makes me feel warm and fuzzy. Yeah. While there is a desire for that from some clients that they want someone just to hold their hands, the finding someone that has a passion to drill down and have an edge of

education for what we're doing, like I said, that is 20% or less of the market. I mean, I know. I just had a conversation with a client who didn't want to pay a million dollars for a house that was listed at a million because she felt like it didn't have the finishes that a million dollar house should have. And when I broke it down by asking questions, it turned out, it didn't have granite countertops. It didn't have saying still points is what you just said, right?

And the houses that did were 1.2. 1.2 billion. And I was able to explain. Yeah. We're talking about $5,000 for counters and maybe another six or seven for cabinets and appliances. This is $12,000. You'd rather go spend $200,000 and pay it back over next 30 years with interest. And her eyes just opened up like, oh, my God, I never thought of it that way.

Hey, calling like three people and scheduling one contractor. That's hard. I mean, that's at least three or four phone calls. So, yeah, that type of thing is where people just don't understand the value that an age you can bring if they're good. But there's so many bad agents out there. We've created this problem for ourselves. Sure. If you own a short-term rental, here's something worth knowing.

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Yeah. So we, at the immediate moment, we've got 16 properties, 26 doors, which in our market, our price point, and then we're sitting on, we're just shy of $8 million market value. And about four and a half million in equity now, which I, you know, you guys talked a few months ago about I definitely will, yeah, we got lucky in the timing of the market. Yeah. You know, that didn't hurt. We're not all real estate gods by any means. You know, the market helped.

Yes. And granted, you know, a lot of sweat equity and all that stuff. Our cash flow, we, I still questioned whether we made the right decision. We refied about seven of them on to 15 year notes. Okay. In efforts to try to achieve some of these goals to retire or long sabbatical quite young. So our cash flow, we're about just over $10,000 a month right now net, depending on our maintenance month, about $10,000 a month,

which we don't use any of the real estate money personally at all. It's a completely separate machine. Yep. What do you do with it? Just recycle it into more properties? Yeah. Well, you know, depending, I jokingly say, depending on my financial midlife crisis, you know, we go from debt pay down to we're done buying properties and then we go buy a few more

and then we're done-time properties, and then in the last five months, we bought three more. So here we are, and now we're at 26, 26 doors, which, like I said, most of that's professionally managed. Yeah. So it's running pretty smooth. And it's good. Let me ask you this then. I mean, that's one thing cool about an expensive market is that you were able to, I mean, you're not expensive. Again, not in New York, San Francisco necessarily, but like the higher tier.

Yeah. You were at this level and then it, like, as the market goes up, I mean, okay, here's the way of explaining it. If you would have bought only $30,000 properties, right, and the market went up 50%, you've just gained $15,000 on each of those properties, but you have a $200,000 property and it goes up 50%. You've now gained $100,000 in equity. Now, the same thing works the opposite way. The market drops.

You can be, you know, severely under. So I want to talk a little bit about the expensive market thing. How, like, how do you? you invest in an expensive market? Are you still finding deals today? And what do you got to be careful of when you're in that market? Sure. Yeah, the numbers are definitely skinnier and significantly compared to some of the guys I hear in your podcast. You know, oh, yeah, I paid 80 grand for a place and it earns for 1,200 a month. And I think, holy crap. I mean, you know, they're talking to 1.5% the lever on rents, which is, or one and a half times, which you don't see. You don't think

Colorado. But like you said, you know, the leverage, and I never sell an appreciation. We want the numbers to make sense without appreciation of the spreadsheet. And that's what I told all my clients. If it doesn't make sense without this icing on the cake, we probably shouldn't buy it. But having that icing on the cake, the icing's really thick. I mean, we bought a lot of properties. When Sarah and I were considering in our more risk-tolerant days, I told her, I said, I just want more expensive real estate.

To a degree when I felt like I saw the riding on the wall, we didn't have a crystal ball, but I felt like the market was going up, and it was going to be marching up for a while. That was my strong belief. I just started buying more expensive properties just so we had more expensive real estate appreciating. Yeah. You know, so there's a few plays we made on 1031 exchanges where a tax deferred exchange into another rental property where the cash flow didn't change much, where the cash flow didn't change at all. Yeah.

But we went from, for an easy example sake, we went from a $200,000 house that rented for $1,500 a month, to a $400,000 house that rented for $3,000 a month. It was the same cash flow, but gross rents, I was increasing our portfolio and increasing our gross rents. Because for us, it's a long-term hold for sure. We're never going to sell any of these without replacing them in some form, ever, is our goal right now. So I figured if we could increase our gross rents, regardless of cash flow at the time, because we don't need the money.

You know, we use my real estate business, my agent business, business to pay our bills. So we don't need the money. So I wanted to increase dollars of real estate as well as our gross rents, which right now they're 39,000-ish, 39,000 in change a month, the gross rents, which, once the property is free and clear, yeah, that's awesome. I think we could probably figure it out. Yeah. And that, that seems your thing too about these higher-end properties is, I don't know if you found this way, but I've definitely found it. There's some irony in here as well. The more expensive a property is, the easier that property typically is for me to manage. Like my most irritating tenants are the ones that are in my $30,000 houses.

Yeah. My best tenants are the ones that are in my $1.7 million houses. Like, you know, properties. Like, you know, like, and like, Ryan. And so, like, for whatever reason, I just get higher quality people who have less drama on their life. Now, they maybe will demand a little bit more and they want a little bit nicer stuff. And that's fine because then the property stays nice.

So I would personally, this is where I, I'm at my event. Earlier on, I wanted cash flow above everything because I needed to get out of my job. That was number one. So I bought the worst properties. Didn't matter what they were as long as they cash flow. Today, I would rather get significantly less cash flow, but buying a market where I can have a way more expensive property and have way more chance for appreciation. Again, we're not saying, I don't think any of us is saying, buy a bad deal. It loses money. Right. Like that loses money every month. I don't want to lose money every month no matter what. Sure. But I would almost like take a break-even property in Maui over a property that made $500 a month in Grays Harbor, Washington,

where I was at before. Because that one property is, it's not going to be worth anything later on. But I'd rather, if I get truly like net actually break even on a property here where it means after maintenance repairs, property management, all that, I at least know that the mortgage is getting paid down. And the mortgage is a million-dollar mortgage getting paid down significant chunks every single month. And appreciation, even at 3% of a million-dollar house or half a million-dollar house, whatever,

that's climbing quite a bit over time, I should always win. Yeah. And that's just definitely a shift that I've had in the last few years. Well, and that for us, the value of gray matter, I call it. You know, even, you know, David, as good as systems as we all build, as the portfolios start to increase. And we're debating whether we're going to go to the next step and really exponentially grow here in the future. But there's only so much space between my ears.

Yeah. You know, for headaches. And like you said, just garbage. Yeah. You know, so we've got tenants, the whole spectrum in our market. We've got the most affordable rentals you can have, kind of are multifamily properties that rent for 900,000 a door, up to single family that rents for $3,500 a month,

which in our market, that's a very high rent. Yeah. And like you said, typically less headaches. And the applications on the $3,500 a month are just bonkers. Yeah. I mean, it's 810, 815 credit scores, a five-pound dog, no kids, you know, oh, yeah, you know, $5,000 deposit for the damage, no problem, all that. You know, they make three, four, five, six, seven hundred grand a year. Yeah.

Where at your entry level, you know, your section eight and all that, it's just different. Yeah. You know, and we do own the whole spectrum. But I can say as we've progressed in our investing, like you said, I have noticed myself shift towards, I don't have convenience as the right word or safety. Because the depth of the luxury market in our market, it's not that deep. Yeah. You know, so if we flood the market with too many high-end rentals, we're going to bring everything down. Yeah.

but there is value. I know investors listening will cringe when I say that I've bought five or six new construction homes, brand new from the builder. Really? To turn into rentals. Really? Now, we get very aggressive offers and we knew when their fiscal year ended specifically through a national builder. And we knew when they had to get units out the door and got two for $75,000 off two days before the end of their fiscal year and they had to post numbers.

So having that extra depth of knowledge. Yeah. But still, they were brand new homes. They had a warranty. We had the tenants call the warranty line instead of even calling us. You know, so some of that's, there's value to that. Yeah. And that's why you want a good agent, not just a smiley-friendly one.

Yeah. You know, if people actually run true, true, accurate maintenance allocations and not have their property just turn into a raging pile of crap over the years, if they run real numbers on maintenance, I think they'd be surprised at the gap. The gap between newer, not new, but newer properties compared to the 60s built piles of junk. You know, the numbers aren't as, the gap's not as big as you'd think. Yeah. When you talk to older investors that have invested in real estate and you ask them, what advice do you have for me starting off? Everyone I've ever talked to has said, location, location, location.

All this other stuff we talk about just goes right out the window from someone that's done it for 50 years. and they say buy in the right area with the best schools, the appreciation you get will trump any bit of cash flow that you thought was important and you won't have the headaches. And there's something to be said for understanding. Like I think Brandon and I had a conversation about this and we were both trying to work our way through it that you could literally go buy a $10 million mansion in Beverly Hills and lose a couple thousand dollars a month because the rent wouldn't cover your mortgage.

But if you looked at your tax savings and your principal reduction and your increasing rent and the overall value of that mansion going from 10 million to 20 million over 10 years or 20 years or something, you would make insanely more money than if you bought a handful of cash flow in places somewhere in the Midwest that just crept up. And when you get into that, cash flow is all that matters mindset. You miss the big picture of what you're describing, which is you built your net worth with a handful of property so much more than the people we interview that say, oh, I've got 110 doors out there somewhere where they don't get much appreciation and they have a ton of headaches because not all money is good money.

Some of it is just blood money, man. Like, you bought yourself a job. You did not buy an investment. That's also where we talk about the different phases of your investment, right? In the beginning, like in the beginning, cash flow is all that matter. I like to say cash flow gives you freedom, but appreciation gives you wealth. Right. So like the cash flow, like, again, I don't regret buying that the $30,000 junk crap house

that rented for $700 a month. I don't regret that because it helped me get out of my job. Like those properties got me out, which gave me the ability to start. are building more wealth. And as my investment in yours, I can see the yours is kind of the same way, it starts shifting. You can start playing a little bit more appreciation. So just because we're talking this conversation now, it doesn't mean everyone listening is like, oh, you know, screw it, I'm going to go and lose money on a Beverly Hills mansion. Right. Like, that's probably a terrible idea. Call David Green for $10 million. Exactly. Call David Green. He'll represent

you all that. He'll tell you it's a great deal. But there is something to say, in fact, just another day I was talking to a buddy of mine who said he just hung out on a boat with a billionaire, This billionaire real estate investor. And he got invited to some special masterline thing with a B. With a B. Yeah, billionaire. And the guy's advice was, well, basically what he said is back in the starting in the 70s and 80s, I just read a book that said location, location, location.

And I read one book. And I was like, all right. So I'm just going to buy in good locations. So he's like, I just kept buying properties in the best locations around the country I could find. And he made really good. I don't remember what he did. He had some actually job that made really good money.

He's like, every property I bought lost money, every single one. I would buy property that lost money. It didn't matter. It just lost money. But I just, I knew that one book told me to buy a location. So I just did. And today, all those properties are worth over a billion dollars. There you go.

And that's probably how it would work for everyone else, too. You gave such a, billion dollars. You gave such a good example. Those first cash flow properties that we're all buying, they get us out of the rat race. They get us out of the, my nose is in the grindstone. All I can see is my boss and small thinking. They're this little box that you step on that you can peek over the fence. And as you peek over that fence, you're like, oh, my gosh.

God, there's people that are making a lot more money than me that are not nearly as smart as I am, right? Look at that guy. He sits in front of his pool all day long. He doesn't even try. What is he doing? And when you get that perspective, that's when you can start taking advantage of these other opportunities. But you do need to get those first few deals, which do need to cash flow. And that's why we always talk about it. And Brandon has a perfect strategy for anyone who wants to do this. And he calls it the stack. Brandon, can you tell us how the stack works to do what we're saying? I guess, sure. So for those of not heard the stack, basically what it is. your idea you're, when you're first getting started, you buy a house, like a single family house,

maybe, or maybe a duplex, whatever. Then a whole year later, you double that and you buy a, no, you go from a house to a duplex. Now, if you've already bought the house, that was really hard to buy the house when you're getting started. So then you buy the duplex. And that was hard, but probably equally as hard as buying the single family. You got some experience, some knowledge, money coming in. Then the next year, a whole year later, you buy a fourplex, or maybe two duplexes, whatever. Don't get, everyone don't get caught up on the actual, like, specifics here. But then eightplex the year after, 16, 32, 64. And maybe it looks more like one, five, 10, 50,000, you know, like, oh, I doubt you're going to go from a 50 units, a thousand unit.

But whatever. The idea being exponential growth, the reason that's so powerful because it forces you continually outside of your comfort zone to scale exponentially versus what's, what's comfortable is I'm going to buy a house and then another house and another house. And it might take you 20, 30 years to get enough property to be able to make anything of it. But when you scale exponentially, it constantly pushes you outside that comfort zone. So anyway, I like that. You know, we felt maybe it wasn't size of units, but it ended up being to a degree. But our goal was to buy one house a year. Yeah.

You know, and then, wow, well, that's getting real easy. Well, maybe we should do two this year. Then we had a year we did two. Then we did three. And then we had, you know, a couple months where we did three. Yeah. You know, where, yeah, it just got easier and easier. And it could even be, like, the stack doesn't necessarily mean, I mean, you

number could be, you know, hey, I bought $100,000 of property this year. I bought $200,000 of properties next year. Then $400,000 a year after. Then, you know, there's a lot of ways you could look at it. Yeah, the key is growth. Are you growing? Are you stepping outside your comfort zone? And you guys definitely have been.

Yeah, we're at a cusp again where we've been comfortable for far too long. So we've got to figure out what the next step is. Yeah. And maybe next is just relax and go sail around the world in a boat. Yeah, yeah. Yeah, we taper down or, you know, I could see us going one of two directions, but they're vastly different. Yeah.

You know, slowing down, paying off or really ramping things up. Yeah. If Beardy Brandon needs a partner in a mobile home complex. Yeah. So it, but, you know, David, I want to backtrack. You mentioned location. We were adamant on that. Every single property we own except one is in Fort Collins.

Yeah. I firmly believe in our city and looking historically, not just, you know, warm and fuzzies, but looking at actual data of the performance we've seen. Because we have considered out of state and we've looked at other markets and I have some partners in my company that have invested out of, you know, out of state. And for all the reasons we just discussed. Yeah. I believe I've made the right decision.

we'll see if that continues to hold true. And on the stack, the first one, you just need to buy a house. Yeah, yeah, exactly. I don't even care if it makes money. Yep. Like, you know, that's a contradictory to bigger pockets velocity. I agree with it. Yeah, just get something.

As far as getting your feet wet, you just need to buy a house. And it doesn't even matter what it is. Yeah. Just to overcome that initial fear and start your perceptual map. Totally agree. You just need to buy a house. My brother, older than me, he owned a condo in Windsor that for a season. that for a season of like five years, it lost $200 a month.

It's a turd. I mean, it is, you know, by any metrics of looking at a rental, you think, man, this thing sucks. It still is positive if you look at all the benefits of hunting real estate with taxes and appreciation and all that. And now, just this year, he's a millionaire. Wow. You know, so even riding through a dog that went through a pretty cyclical market, you know, But that was one of his first rentals of getting his feet wet. And now he owns, you know, a good number of doors in Arizona and his kicking butt on owning what most people would consider a loser and take their chips and go home.

You know, oh, real estate sucks. I don't want to do this anymore because it didn't work out. Even though it didn't work out. It's still a winner. Yeah. Even though it feels like a loser. So I'd, I'd mean my advice to anybody. Just buy A house.

That's awesome. So let's shift a little bit. I want to get deeper into one of your properties, get people an idea of what that looks like. So why don't we go to the deal deep dive? All right, deal deep dive. This is the part of the show where we dive deep into one of your particular deals. So you got a deal in mind. I do.

All right. We're going to drill you on like seven questions. And I don't actually have my questions in front of you because I don't have my computer in front of me today. So I'm going to hopefully not screw this up. Number one, what kind of deal was this and where was it at? Yeah. So in Fort Collins. All right.

It is a triplex, a conforming legal triplex. For people that know Fort Collins, it's on Mountain Avenue. It's on about the most expensive street in the city of Fort Collins. All right. David, do you remember what that? How did, yeah, how did you find this deal? Yeah, so, you know, I jokingly say that someone had to punch me in the face, get the light bulb to turn on. It was through my real estate business. Okay.

It was one of my sellers who asked me to list this triplex, and I was just getting everything ready, getting ready to list it, going through. I'd sold another property for her. And at the time, we only owned two properties. My perceptual map wasn't very big. You don't know what you don't know. Yeah. And back then, there was a lot I didn't know. throughout the course of getting ready to list it, she had told me a few times,

well, yeah, and if people don't qualify, you know, I can help with the loan. And I just, you know, with my very limited knowledge at that time, I thought, oh, well, we don't want those buyers. Like, if they don't qualify, we don't want them to buy the house because that'll be a pain and the deal probably won't close. So by about the third or fourth time she said that and one of my partners said, hey, man, that's a pretty cool property. Can I buy it?

And then I went home thinking, well, I should. try to buy it. Well, I can't buy it. And I don't know if I thought about her. Sarah slapped me in the face and said, hey, dummy. She said she'll help with a loan. Call her and ask her if she'll help with a loan. So we called the seller, said, hey, you know, you mentioned your interest in the property. We said it's probably worth, at the time, I think we said it was worth 310, 315. I said, what if I give you 325 for it? And, you know, again, respecting boundaries of an agent, not letting the market, you know, property go to market and all that. But would you be interested in doing the loan. And she said, yeah, sure. We had a good relationship. And she said, well, how much money do you

have down? I said, well, that's the thing. I don't really have any money. Would you be interested in financing the whole property? And she said, great. I said, okay. And then she said, you know, what interest rate? And I said, well, I pulled up on the internet and showed the banks. I said, you know, the banks will lend me the money about X if I went out and got an owner occupied loan, which at that time we could have in that stage of the journey. So we did a 30-year fix, 100% finance triple X at 4.75. Wow. So at closing, we actually got paid.

Because of the tenant security deposits, pro-rated rents, and all of that. We got paid at closing to own a triplex on one of the most desirable streets in the entire city. And as far as framing perception of a win-win deal, the property when she owned it was grossly under rented. She was only getting combined about 1,500 a month in rents. And once we moved in, we did some immediate renovation. just personally. I was doing all that. And the first cycle, we turned it over, we doubled the rents. Wow. But our fixed payment to her was $1,700 a month. So she was making more money with no maintenance liability. So she was thrilled with the deal. It truly was, you know, win-win for her. We were stoked

because we got into a cool property on one of the most desirable streets in Fort Collins. And now it is built in 1885, which for us is quite old. So there's some different maintenance liabilities. But that property that we paid $325 for is now worth somewhere in the 900 range. Oh my gosh. And we are getting like $4,600 a month in gross rents. Wow. So it's... Do you ever talk to her and says she kick herself or so? We don't. But it's... No. We, you know, older, she was an older gal selling off part of the portfolio. That was more of a headache. Yeah. But it was one of those.

those things, again, the light bulb didn't come on. I just didn't know hard money was a thing or private loans were a thing. Or God forbid opening the doors in my brain to think, hey, I need to be aware of these things. You know what's crazy about this? There are people that would not have bought that deal because you said I offered $3.25 and she wanted $3.15. Yeah. Yeah.

That number would have just, no, I'm not overpaying for a property. Yep. No, it's true. Yeah. I agree, David. And that's one thing we have been skilled about in some of that areas, seeing the forestry of the trees. You know, what I tell all my investors,

if any deal we're looking at, I don't care if you're underpaying for, overpaying for, whatever. If any deal doesn't work over a number of $10,000 to $15,000, you shouldn't be invested in real estate. Yeah. And our price, you mean, you don't want to blow 10 Gs on a $30,000 house. I get that. But if you buy a house, for example, in Fort Collins market,

Northern Colorado market. And God forbid, the day after closing, septic system goes out and you have to pay 10, 15 Gs to fix it. If you're so pissed off that you never wanted to invest in real estate to start with, you probably shouldn't be investing in real estate. You know, I think you need to go in it with your big boy pants on or big girl pants a little bit and know that there are unforeseen challenges. You know, speaking of unforeseen challenges, we'll sidebar really quick. we've got a property, which was our first experience with methamphetamine. Oh, that's right. You mentioned that the other day.

I wanted to dig in on that a little bit. Yeah, so it was after we owned it for a while. We'd owned it for a number of years. We got notified of a police report of some bad stuff going on. And in the moment, it was a very unpleasant experience. And insurance doesn't touch it. Out of pocket, we spent $32,000 fixing the problem, which is a newer investor. That's a problem.

Yeah. You know, that's unpleasant. We paid for it all, and I had a number of investor friends and then my friends that don't invest. Oh, my God. How much do you regret buying that? Yeah. Idiot. You know, and we got a lot of like, oh, you're a sucker dude.

Like that just, so we paid $305,000 for the property. Today, it's probably worth $6.75. Wow. Yeah. I don't really care about $32,000. Yeah. And not just I'm flipping about a large amount of money. Yeah.

But again, seeing the forest through the trees, it's all good. Yeah. You know, it overweight. the headaches and the challenges. Anyway, back to the deal deep dive. Yeah. What else? Is there anything else?

You literally answered every single question. I pulled it up and I was going down. The only thing less is what did you learn from the deal? And you might have answered that when you said, I learned to see the forest, not the trees. Yeah. I mean, and it was really in that moment. And, you know, to really try to expand your perceptual map, you know, I mean, once you start, I mean, they talk about your reticular.

activator, like if you talk about a green Jeep, all you're going to see is green jeeps, right? You know, so I didn't know any about hard money. But then once I knew about hard money, it's like, oh, crap. Like, there's a whole different ball game here I'm not aware of. And even to this day, as we've done reasonably well, I know there's so much more than I'm not, you know, mobile home parks or apartments or syndications or all this other stuff that, I don't know, my biggest encouragement for the listeners would be there's so much good information available on bigger pocket. and other resources, if you're not taking advantage of it, you're an idiot. And you really shouldn't be investing. Because it's free.

There are so many resources now that if they were around when I started, I'm an idiot. I was the idiot. You know, I just didn't know there was this other avenue. I mean, wealth of information. So you don't need to go into it blindly anymore and just trip through it. You know, you can have a depth of knowledge starting. Isn't there a meme going around where he whispers it's free real estate? I've seen it's free real estate that's bigger pockets for you right there yeah you're exactly right

and I think what I love about your story the most that you just said is uh you you made so much equity on each of these deals even though you did what some people would say like what an amateur would look at is overpaying and instead you've instead of having to do this over 10 deals you did it over one deal you probably have very little headaches on a property that's 900,000 dollar property there the tenants are like top notch you don't have to deal with that. them very often. You could totally afford to upgrade that house with really nice stuff, so you get really good tenants. They probably don't call you very often when things break because they don't want to bug you. They fix it themselves. You just end up with the perfect investment as opposed to

the job of now managing 15 properties to get the same result, where it's a constant headache from the tenants that are asking you for everything every month. Yeah, if you could, if you're an engineer and you could design like a Canon laser printer that just shoots out $100 bills, it's that it's that property. Yeah. I mean, even being 100 and, what is it now, 135 years old. Yeah. Like I said, there's some different maintenance issues. It prints money. Yeah. I mean, we make net probably 2,500 a month off one property. That's crazy. Which, like you said, for the basic investor or the, you know, the first time investor, when we bought it, it lost $200 a month.

Yeah. Crazy. You know, just rents compared to mortgage, not even factory in maintenance. You know, they would have ran it through your whole calculator like, oh, my God, this thing loses $1,000 a month. Yep. You know, so it didn't, it didn't pen out just looking at it, you know, just by the numbers in a calculator at all. Yeah. But seeing the bigger picture, I mean, it's our favorite property. It's our baby.

That's cool. That's cool. I like that story a lot. That's neat. I also have a property that was like 18, I think it was 1888 or 1890. And that's one of my, it's not my favorite, one of my favorite properties. I really like it a lot. Yeah, there's a little bit more different maintenance.

I actually don't know, don't have bad maintenance concerns there. But a little bit, when they do happen, they're a little more expensive to deal with. Yeah, $10,000 dollar boil or. Yeah, yeah. It's like a little bit annoying stuff. But overall, like, man, that property just prints money for me too. So anyway, very cool. All right, well, we are going to move on. We're actually going to skip the fire round because I don't have any fire around questions

because I don't have a computer in front of me today. And those are the ones from the forum. So we're just going to bypass that completely and jump right into Famous Four. All right, before we get to the Famous Four, let's hear about what's going on this week over on the Bigger Pockets Business podcast. Hey there, Brandon. Our guest this week is actually a good buddy of you. and he's also a fantastic entrepreneur.

His name is Peter Owid, and after a roller coaster journey, he co-founded a really successful and really awesome meat snack company. He's going to teach us what it means to slow hustle, and we'll learn about how Peter has built a business that fits his values and lets him take control over his time, something we all want to do as entrepreneurs. So check us out on Tuesday. Now, back to the Famous Four. All right. Famous Four, these are the same four questions we ask every guest every week and we're going to throw them at you right now.

So number one, Robert, favorite real estate investing book. I don't know if I'd say favorite, but most impactful, rich deadport. I have to defer to everybody. Nice. You know, that's what got the, just the candle lit, you know, of, hey. Yeah. And for me, I didn't have, you know, my parents are amazing. They taught us, you know, all sorts of great things. but as far as a depth of financial education,

short of like, hey, don't go into a bunch of debt, you know, buy a house when you're young. Beyond that, I don't know that I knew the term asset and liability and some of those base foundation blocks. So it was instrumental in changing our thought process on that. Cool. Number two. Next question.

What is your favorite business book? I got to cheat and say a few. You know, Brandon and I were talking that I love Audible and that you can crank it up at 2X. speed so I can just cram so much more in. Pieces of a lot of books. You know, never split the difference. Chris Foss recently.

There was some gold nuggets there that were just exceptional. Brandon's delightful life, Heather Turner and the book on managing rental properties but bigger pockets. That for my business, I'm ashamed to say that I lessened more recently this year, but it will change my business in the way I manage my real estate business. in that the hours it's going to save me of explaining this to every single young investor I work with. Because I do. My business, I build a lot of young investors.

We've got a lot of young guys that are, I mean, I've got a buddy that owns 11 doors, another one with six, another one with eight. My little brother, Ben, 24 years old, is working on his fourth unit right now. Oh, no way. That's awesome. We've got a legal duplex finishing a basement kicking butt. For those young investors, again, you know, David talks about, you know, ramping up a high volume real estate business. Yeah. I don't have the time to go through some of that.

So that book, I'm excited. Oh, I'm going to go buy 15 copies to keep in my office. And just every closing, hey, read through this. If it doesn't handle the topic, give me a holler, we'll spitball through it. So that's exceptional. What else? There's an older book, Smart Talk, by Lutais. I don't know.

For mindset is very good. I mean, there's four-hour work week, parts of it. You know, if I could take 25% of each of these books and just jam them together, it'd be the unicorn of business books. Was that a coconut? just fell. The sky is falling. You gotta go get that, Ryan.

We gotta show these people what this is. That's hilarious. Yeah, like everyone's not all like sitting in my office here. Eltona here, thunk, dun, do, do, do, do splash. Like a coconut falls off a tree, bounces down. Into the pool? Yeah, into the pool. This time it didn't fall in the pool.

That's funny. It sounded like it might have put a check. Yeah, here we go. Look at this thing. Maui Fresh. Maui Fresh. We're going to have to cut this thing open later. Isn't that cool?

Here, my catch? It's heavy. Nice catch. All right. Anyway, funny. Okay. Where were we? We were talking business books.

Okay. So, next, David. Next up, what are some of your hobbies? Hobbies. I like working on houses. Nice. We like traveling like we talked about, venturing into sailing.

We're not big sailors, but we will be. Yeah. A lot of old man sports, softball, volleyball, mountain biking, you know, off road and all that stuff. We stay pretty active. Cool. Yeah. All right.

Last question for me. What do you think separates success? full real estate investors from those who give up, fail, or never get started. Probably grit. I mean, it boils down to, or, you know, I've heard it defined as, do you have a big enough why? Yeah. And your why doesn't even need to be real estate. Why do you want to invest? Because if you don't have a passion or does, I mean, everybody's, yeah, I want to make some money. Yeah, I want to be rich. But no one's willing to do what it takes to do it. If your why's big enough, I think you'll find out how. Yeah, and some bravery. You know,

taking that first step. Yeah. Just getting after it. Because there's no, there's no excuse anymore for education. There's no excuse anymore for ability. Yeah. You know,

in the land of the free in the USA and the knowledge that's available, those are not excuses anymore. You know, you just got to, you got to want it bad enough to get after it. I don't think we've talked about, I don't know if any of these ever used that word bravery before here on the show for that answer to that question.

Can you think of any, that ever been given, David? I can't. Nothing even close to that. Bravery, but I love that. Like, at some level, you have to be willing to just go, you know what? I'm scared.

I'm going to do it anyway. I'm nervous. I'm going to do it anyway. Yeah. Well, and if you're that guy like us that first rentals, you joined a real estate and a company, mind you, that the desk fee, well, with an office, $37,000 a year desk fee.

Yeah. And we had $900 in our checking account. You know, or if you're in that market, you know, if you're in Detroit or Kansas, wherever else, and you've got 50 bucks. Yeah. There's ways to buy houses. You know, you just got to get through enough,

knows to find the guy that says yes. Which, but if you're in that situation, who cares if your credit score gets screwed up? You know, like get after it. That's the time to take on the risk. Be brave. Be bold. Well, you gave an example in your deep dive of how you did that very same thing. Didn't have any money.

Made it work for the other person. Like all the pieces were in place because it was a great deal. You could add value to the rent. It was a really good location. You just went all out and said, whatever I got to do to get this property, I'm going to do it. And it wasn't even that hard. The agent was like, oh, yeah, okay. I can do that.

Yeah. I mean, you know, your self-talk is telling you, oh, this is a little bit scary, but like you said, everybody was stoked and smiling and laughing at closing. Yeah. You know,

it was, you know, be bold, be brave. Get after it. Or find a Y. If you don't have a Y, find a Y.

Yeah. Very, very good. Very good. So, David, all you take the last question and we'll wrap this thing up today. I like that, I like that find a Y.

We should write a blog post on that and put the cover of like alphabet soup. Like some got to get a spoon and they're looking for the Y the alphabet soup. Well, I was thinking, we should make a t-shirt. This is find your Y, and then you can do the alphabet soup. Find your Y. That's even better. That's why you're the marketer.

I'm in the marketer. Because then we can sell it for $20 and make $5 a t-shirt. If you want to sit around and watch dancing with the SARS, you don't need rentals, right? Yeah, you don't need. Yeah, who needs it? Just sit around watching dance with the stars all day. In your t-shirt. All right.

Last question. Robert, this has been fantastic. I've really loved you as a guest. I also think I should point out that you sound a lot like, I think Brian the dog from family guy. Fantastic. And we did interview Mark Kentiman, one of the producers of Family Guy. So if you ever need a job and he needs a backup for Brian, I think we could probably connect you with that.

Yeah, if we need some additional voice effort, you know, I can get some additional streams of incomes and Gobundon style here. There you go. I can do voice over Brian. That'd be great. God, you're like the perfect guest. Okay. For those who want to buy a house in Colorado, sell a house, or just simply learn more about your fascinating brain, how can they find out more about you? Yeah.

So I'm not on a lot of platform. but my website is easy. It's Robert for real estate. Robert F-O-R-R-R-R-R-R-R-E-R-R-F-R-E-R-E-R-E-R-Sate. So really easy. Robert for real estate, you can't forget it. It's stuck on my truck. It's on my scooter, my bicycles. My wife says I should tattoo it on my forehead. You should. Yeah, that way if you're looking at a mirror, you can see it. But yeah, that's easy. That's where I'm at. For real estate.com. That's it. Cool. All right. Well, this has been a fantastic show. Thank you very much for joining me in the C-Shed. Not the She-Shed today. said by the C-Shed. Yeah, the C-Shed by the C-Shed. And I don't know, I'll let David, you take it out today. All right. Thank you very much, Robert. This is David Green for Brandon Speed-Dating Real Estate Bachelor 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

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