BiggerPockets Real Estate Podcast - 357: $6M Portfolio Before Age 30 by Finding "Problem" Properties with "Meet Kevin" Paffrath

Episode Date: November 21, 2019

YouTube sensation alert! On today’s show, Brandon and David sit down with real estate investor and agent Kevin Paffrath of “Meet Kevin” on YouTube. Kevin is young and doing great with real estate from several angles! He's built millions of dollars in wealth through single family properties in Southern California and shares some fantastic advice that will help you do the same. You will love his advice regarding what he looks for in rehabs, what he avoids, and how he LOVES finding properties with problems! He also discusses how he found a deal holding an open house, how he avoids paying taxes on his profits, and how he was able to buy a house with his girlfriend while working at Jamba Juice! This episode is high-energy, fun, and full of great practical advice for newbies and experienced investors alike. In This Episode We Cover: Buying his first property while working at Jamba Juice How he bought with PMI, then removed it later Why he invests as an agent Why he tracks his net worth Common problems that prevent investors from building wealth Buying the majority of his properties from the MLS How he talks to other agents to get deals sent to him Finding a deal while holding an open house Why buying SFR to build equity then exchanging into multifamily is a great strategy Avoiding paying taxes Looking where others aren’t for deals How he still buys homes that get multiple offers Why he DOESN'T want cash flow right now A walk through of his latest rental Attracting quality tenants The best kind of relationship with real estate agents The problems he avoids in rehabs And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Pro Email: [e-mail] David's Instagram Brandon's Instagram BiggerPockets Podcast 108: Building a $350 Million Real Estate Empire Using the 10X Rule with Grant Cardone BiggerPockets Youtube BiggerPockets Meetup BiggerPockets Webinar Replay Check the full show notes here: http://biggerpockets.com/show357 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 357. The challenge isn't, let me get cash flow now. To me, it starts with let's get some net worth going first and some tools that are going to build us that network and then use cash flow as defense. 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. benefit it from biggerpockets.com. Your home for real estate investing online.

Hey, what's going on, everyone? This is Brandon Turner, host of the Bigger Pockets podcast, here with my co-host, Mr. David Green. What's up, David? Not much, dude. I had a great day yesterday. Got a lot of sunshine and some exercise out here in California. I got a... Oh, yeah, did you really like run like five miles? Yeah, I ran five miles after a workout.

It was really good. And then today during our recording, I got a message about a new flip deal. So I think I'm going to have three under contracted by the end of today, most likely. So that's a really good day. And we had an amazing interview today with a very successful real estate investor. We did. Yeah. Our guest today is a YouTube star, so to speak.

Kevin from Meet Kevin. A lot of you guys have seen his YouTube videos. He's very, very popular. All his videos get hundreds of thousands of views, sometimes millions. And he's just a bright, articulate, smart dude that can really, like, like, shares a ton of information about real estate investing, getting started and all that good stuff. We have a great conversation, but all sorts of stuff. I mean, everything from like why he actually doesn't like cash flow.

He actually says that. I don't really like cash flow. He goes into that. He goes into something he calls wedge properties. He goes into kind of his portfolio, like why he's not trying to be the next Grant Cardone. And it's really a phenomenal discussion. I think you guys are going to get a lot out of.

So stay tuned for all of that today. Yeah, I mean, that's what we got going. So before we get any further, though, let's get to today's quick tip tip. So today's quick time is very simple. Meet Kevin, Kevin from today show. Meet Kevin is a YouTube channel. And we also have a YouTube channel. So go follow both of us right now.

Go to YouTube. subscribe to Bigger Pockets and subscribe to me, Kevin. That's it. Here's the thing about traveling. If you buy food at the airport, burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can.

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If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called. the co-host network. While you're away, you can hire a vetted local co-host with hosting experience to help take care of things. Communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. Your home might be worth more than you think.

Find out how much at Airbnb.com slash host. Finally now we are ready to jump into this interview with Meet Kevin. Here we go. All right, Kevin, welcome to the Bigger Pockets podcast, man. It has been a long time coming. This is great. Thank you so much for having. me. I'm super excited. All right. Cool. So let's talk about you and your real estate journey. I mean, I know you're a real estate agent, but you're also invested in real estate. So how did you first get into this whole real estate investing thing? Absolutely. First thing was I got my license and I thought, wow, you know, how am I supposed to possibly get clients? It's 2010, turn to 2011. Nobody's wanting

to buy real estate. There are tons of properties to be bought. Yet everybody's fearful of this double-dip recession coming. So I'm like, well, nothing better than a salesperson going, I'm buying right now. So I bought a house. What do you buy and where? Yeah, so I bought a house in Ventura, California. And it was a $305,000 foreclosure. Of course, there were actually two cash offers on it. So it's like, ah, like how do you compete against cash with an FHA three and a half percent down renovation loan. And I thought, well, I really need a house so I can sell more houses, so I'll just pay more. That works. That definitely, it works in two. What year was this? You said 10? At 2011, when I bought and closed the property. So I mean, it's worked out very well

because, you know, even when we bought the place, it was a foreclosure. There was no kitchen. The bathrooms didn't have toilets. So at the time, when I bought it, I'm even paying 305 for it. if I put 50 into it, the day after I put the 50 in, I knew I could have resold it for 400, 425. So at least I felt comfortable that even in that market, I felt like I had a worst case scenario exit strategy. But that really helped me sell real estate. But then the cool thing that came out of that was, oh, my gosh, I'm making more money

investing in real estate than I am in sales because you start seeing that equity and that net worth built so fast. It's unbelievable. Yeah, that makes sense. Now, you said a renovation loan. What does that mean for those who are never heard that term before? Yeah, so this, and I don't recommend it really for anybody. It's like one of those worst case scenarios.

But this was an FHA, 203K renovation loan, which is basically where you go in with three and a half percent down. So on $305,000, $3.5% down, that was pretty small number, somewhere on what, $11,000. And then we borrowed about $50,000. for fix-up from the bank, which was bundled into our first loan. So really, we were putting about three and a half percent down on 355, which, you know, again, super small relative to us being able to now control. And that's my girlfriend at the time, Lauren and I, we bought this.

We each put together like our $8,000 that we had and we bought this. You know, for us to be able to control, going from literally, you know, Jabba Juice and Red Robin employees to brand new real estate agent and being able to control a three quarters of a million dollar property that we can fix up and have equity in. We're just like, wow, you know, day one, our net worth goes from, you know, $8,000 to like more than, you know, $75,000 after I fix them. It's like, whoa. So that and that excitement really helped me sell real estate because people like, you know, they meet and get an open house and they go, Kevin, what do you think about the market? Everybody wanted to know about the market.

They're like, what do you think about the double-dip recession? And, you know, I studied as much as I could about the market. But when I was talking to people, the biggest thing that people related to was, wow, you're an agent and you're buying right now. Yeah. So why did you say you don't think the renovation loan, you don't recommend it? Because I have my own reasons for it why it's good and bad, but what's the downsides? Yeah.

So the downside is of that $50,000 we borrowed, probably eight, at least eight of that, went to HUD consultants and extra bank fees, which is really frustrating because it's expensive, but it costs to doing business. So I can't really complain because it got us in. But the process is also a bit of a pain in the butt because they really want you to have a contractor that goes in there and does, let's say, the kitchen. Then the HUD consultant comes and says, okay, kitchen's done. Then the bank gives you, you know, more money. They give you like an initial draw, and then they'll give you the additional draws after you do work. But the problem is most of your handy folk, the drywallers, the electricians, the contractors,

they finish the job. They ain't putting bread on the table if they're not getting paid that day. So we actually sort of hacked it. And the way we did it is because it was a good deal, which I always recommend trying to find those below market value deals, I went to a client, my first client ever, whom I sold a six-unit apartment building for him. he said, hey, now that I sold this property, I have extra money. I go, I happen to need money.

Could you lend me 20 grand? And he put a second on the property because he saw the equity. He walked the property. He saw all our building materials there. He saw the struggle we were having with the bank. And he goes, I'll lend you 20 grand. So we use that 20 to do a bunch of work, get reimbursed from the bank. Do a bunch of work.

Get reimbursed from the bank. That made the whole renovation process way easier. but to do it legit. Tough. Yeah. Yeah. So I, I've never done personally a 203K. I've done an FHA, but not a 203K, except for I was the contractor on a 203K back in

the day, years ago. And it was hell. It was actually my best friend at the time. Adam was trying to buy a house and he was going to do a 203K. I mean, it took like nine months to get through all the paperwork and the hell. And to get paid from the bank for me, it was like insane. Yeah. If you don't have like a best friend contractor, it ain't happen.

So because you need the contractor to like bear all the pain basically. Like the amount of paperwork you need. Oh, they're like, look, not saying it's not terrible. If you get a good like a smoking hot deal, it's the only way you can do it. Hey, you know what? It's a tool. But if you can avoid it at all cost, please. Yeah.

Yeah. What I think a good use for that is. I mean, it's as I'm not saying it's easy or not hell. But so if you can buy the duplex triplex or. a fourplex, you can also do the FHA 203K loan with that. So potentially you buy that fourplex, get the 203K, remodel the whole thing. I mean, it's, again, it's hell to go through.

But at the end of the day, you could be into a fourplex that cash flows like an ATM machine for three and a half percent down total. So that, that I think is, it's awesome. It's just, it's hard to get through. You know, and that's a really good point. What's so wonderful about what you said there is, I think you're drawing a clear distinction, and it's so important because I think people on YouTube and on the internet, a lot of people, they're looking to get started. And they believe that,

okay, you know what? I'm going to start getting passive income tomorrow. And as if it's not going to take any work or effort or time to build a net worth to actually get there. And doing what you said, yeah, you know, sometimes when you get started trying to build a passive income, you have to go through a little bit of work. Imagine that. You know, people are like, well, Kevin, you know, you have to deal with fixing up your rental properties or re-renting them when they come vacant. Yeah. it just happens to also pay very well. So it's worth it. Not saying it's not work, but it's worth it.

Yeah, 100%. I'm so glad we started off with this topic because just yesterday, I had a, I'm a real estate agent just like you are, Kevin, and I also an investor. And I had a client who's like, hey, I'm going to buy a house. I want to use an FHA 203K loan. This should be a breeze. And I'm like, okay, I hate to be the bearer of bad news. But you need to understand that there's a principle that sounds like, yeah,

this is great. You're going to 203K loan. And then there's a reality. that you will hate every single thing about doing this, that there's such a pain in the butt. Nobody wants to do it. Like, Kevin, you hit it right on the head. You better hope that contractor is your best friend because the government has made it so hard for that to work.

It's almost a useless product for most people. And there's a lot of pieces of real estate investing that worked that way. You said another good thing, Kevin, that when people focus on, well, yeah, but then I got to do all this work. Yeah, that's why there's an opportunity there. Because if there wasn't work involved, somebody else would have bought it before you even found out about it, that when you get a deal, you are literally getting a problem. You're getting somebody else's problem that they don't want to solve. And if you're the person that can solve it,

then you get the fruits of your labor in. You really have to just accept that that is what you're doing. You get results in the gym because you work out. You get a paycheck from work because you bring them value. You make money through real estate because you do the same thing. And a two or three K loan is not always a great tool to do that. But Kevin, you highlighted what you should do. Okay. That loan sucks. It's going to be very, very, hard. How do I make this easier on myself? Let me go ask somebody for money. How do I know that they're going to be able to trust that I'll pay it back? I'll put a second mortgage on my house so they'll get a lien on my property. You took all the tools of Brandon and I are talking about and you creatively

use them in the situation to make this happen. Then you got the bug. You're like, this is great. I don't have to work a jamba juice anymore. I can actually have a job where I wear a tie. Tell me more about it. So what I want to know is did you become an agent because the real estate investing bug caught you and you fell in love with real estate or was it the other way around? Yeah, I mean, honestly, what you just said there is so on point. First of all, I actually took out a notepad and I wrote down, you get a deal, you get somebody else's problem. That is so understated. Now, you're going to get very well compensated for it often, especially you get a good below market value deal in real estate. But that's so great because it sets the expectation a lot more properly.

And yeah, I became a real estate agent first. And the problem, that I had was, you know, at 19, 18, 19, it's hard to convince people to use you as an agent. But for some weird reason, when you at 19, buy real estate, now people are like, this guy's 19 and he's buying real estate. Look at the Wiz kid. Yeah. I got to work with this guy. You know, like, and I mean, so it just, it ended up just paying dividends not only by being a good deal,

but also, in my opinion, if somebody's a salesperson of something, they better freaking own and invest in what they're doing. I heard, you know, sometimes I hear real estate agents, they go, yeah, yeah, yeah, you know, I sell real estate in the area here. And look, I'm not trying to bag on people, but whatever. Sometimes I do that. That's why I say, don't sue me, bro, right? But it's just what I feel.

Sometimes I hear real estate agents, they're like, you know, look, I sell houses here, but I don't invest here. I, you know, I buy reeds or something else. And I'm like, ah, what? No, it's the wrong message to be sending to your clients, first of all. And second of all, it's just, it's not congruent in my opinion. You know, if I'm going to legitimately go to a buyer and go, you should buy this. It is a good deal.

And if you don't, somebody else is going to get a lot of money buying it. I have to legitimately stand behind that as if like I would put my money on that deal, you know? Yeah. I think that's the key to like sales in general. I mean, every good salesperson I've ever known in any field, it's they actually believe in what they're selling. So if you're like out there's telling me, yeah, you should really invest in this type of property or you should really live here because it'll be a great. investment for you and your family, but then you're not willing to do it. Like, yeah, you just look like a, you just look like a liar.

So, yeah. Now, I mean, I granted, there are some people who maybe feel like they can't buy because they're like, oh, I live in Southern California. But, I mean, obviously you did it. You pulled it off, right? There's always ways if you really want. What, Jim, you know, the Jim Rone quote? Like, if you really want something, you'll find a way.

If not, you'll find an excuse. That's the thing. You know, people have every excuse under the sundown to get started. And, you know, honestly, I mean, I went live on Instagram one day. Somebody's like, you know, well, I live in Orange County. I can't find anything to buy. Everything's like $700,000. I pull up, you know, here I've got my iPhone on Instagram.

I pull up my laptop. You know, I go on Zillow. I go, show me everything that's a townhouse or condo under $400,000 in Orange County. Wow, here are 50 hits. All right, let's go through these. Oh, wow. Here's one that says it's a fixture upper. Why don't we set up a showing for that one?

Like, oh, wow. And it's a two-bedroom. It's a three-bedroom. You can houseack it. Like, ah, there's a. There are ways to solve your problems, people. Because what you're realizing is, what he's saying is there's nothing that doesn't require work that's underneath $700,000.

There's nothing easy that's under $700,000, right? And that's exactly what you pointed out. That was good. They all come with problems, right? Everything that's under $700 is a problem. And I'm not willing to inherit that. Yeah, I always like to push people a little bit too when they say they can't find any deals. I always ask them three questions, right?

Like, how many offers did you make this week? How many deals did you analyze and how many leads came across? your desk. Because if you can't find deals, it means you're not doing one of those three things. You're not doing those three things. And every time, I mean, I've never had somebody say, like, answer any of those with anything other than zero. Like, every time it's like, well, none, none, none.

I'm like, okay, well, now you know what your problem is. Like, let's just, like, like, how are you going to get leads across your desk? Oh, go to, go to Zillow and sort by cheapest or recently reduced or, like, there's so many ways to do this. It's just people, it's a lot easier to sit on the couch and watch the Bachelor than it is to sit and actually invest in real estate. And so that's what people do. They sit on the couch.

You're so right about that. And I think really one of the biggest things that stops people is, and it's almost the easiest thing to solve is get pre-approved. You know, just by the nature of picking up the phone and getting pre-approved, you now have a lender telling you, you know what, we should really work to pay off this car. And then you can afford this kind of property. Now you get motivated. Come on, you know. I think too many people are like, oh, well, I don't want to have my credit run because it might drop by score by six points. So let me, let me chime in on that.

Because, dude, Kevin, you're speaking my language. This is the frustration of every real estate agent, right? The first thing is your credit will drop. It will come right back in like a month or two. It's a temporary hit. The other thing is if you get your credit run, you have a 30-day window to continue to run it from other banks and it won't go down anymore because after the fair credit stuff happened after the last crash, the government changed the standards of how credit is run so that you can get multiple quotes and don't get ripped off.

The third point is I tell my clients this all the time. Getting a pre-approval is not just something you have to do to be able to buy a house, although it usually is if you're using a loan. It's like going to the doctor and getting your blood work back. And they say, here's the deal. Here's where your cholesterol is. Here is where your A1C count is. Here's where your protein count is.

We need to make these adjustments to make you healthier. Well, your pre-approval is a form of paperwork that you look at and say, oh, if I pay this off, I can borrow more money. I didn't even realize that my debt was this high on this interest rate. All that I have to do is move this thing around and I can get a better rate. And it empowers you now to have a plan to go forward. And like you said, Kevin, it motivates you. I think the reason people really don't want to get pre-approved is the same reason guys don't like to go to the doctor is we don't want to hear, oh, there's a problem.

You have something that you have to do. But it's so important because once you see that, it impacts you emotionally and then you start to take action. And that's what we can all agree here. Taking action is actually what's going to build you wealth and to help you grow. Now, Kevin, you're a unique person. I know you have a YouTube channel that is massive. You're known as a real estate educator.

You're very young. You give really good advice. I've listened to you on YouTube before. I think you have really good stuff. As far as being an agent, because we actually have a lot of agents that listen to this podcast. And we have a lot of people that work with real estate agents as well. give me some insight into what you've learned being a real estate agent similar to me that you didn't know before when you were just an investor what's some things in the industry that you see

that give you an advantage because you work selling real estate for a living that might benefit people who want to get into investing oh wow that's that's a really good question you know it's one that i i would say and okay so we'll go down this rabbit because this is a this is a big pet pave of mind for investors. Most of the time when people become investors, they or they start investing in real estate, they kind of, they turn into like Dracula's. I'm an investor. And everybody around them, bow down to me. It's honestly, you know, people, people for some reason become mean and aggressive sometimes when they're investors. And they don't treat agents well, escrow well, lenders well, electricians, plumbers well. They're the king of the universe,

is their own impression. And that may be true because investors create a lot of business for a lot of people. But what I found being an agent, so to answer your question, what I found being an agent is as an agent, my relationship with the other agents is what gets me deals, not because somehow I'm getting these pocket deals, but because when I call an agent, I don't even necessarily have to know them. But I call an agent and I say, hey, you've got, and I just did this this year. So I put my money where my mouth is. This guy's got, he put a listing on the market from out of the area, great deal, put it on the market for $650,000. I looked at the thing I go, this place needs $10,000 worth of work and it's going to be worth $775,000. And so I called them and find out, okay, you know,

hey, I talk to them, build some report. Wow, you know, it sounds like you got a great listing here. Tell me a little bit, what are the seller's motivations? And by getting a lot of the seller's to know him and talk to him and building a relationship, building rapport with him, I'm able to go from not knowing him, coming in as an agent like, hey, we're colleagues here, like, you know, tell me what's what's going on with the sellers, what's going on with these other offers? What are the problems? Why haven't you guys picked an offer yet if you have 10 offers? Oh, because of this, because of this, because of this? Well, what if I was able to make you an offer that checked off all these boxes, would you be able to sign off an offer, you know, tomorrow? And, and that's how I got a deal.

That's just one of the deals that I bought this year. But the big message that I'm trying to send with that, hopefully, clearly, is by going in, a lot of investors, they start with, well, here's an agent. I'm going to pick up the phone. Yeah. So what price of the other offers? Just tell me, tell me, where do I got to be? I got all this money ready to go. I'm pre-approved.

I got cash. Where do I need to be? And it's very off-puty to agents. When you come in with the mindset that you're going to be in the business for the long run, either as an investor or an agent, is your reputation. will travel as an investor to. And you treat people like, they're going to be there for a while. Let's work with people like their people. You'll actually end up getting more information,

which will lead you to getting deals. That's awesome. Work with people like their people. There's a tweetable, tweetable quote right there. All right, I want to go back to your story a little bit. Yeah. So you got that first deal, that first house. How did you get into actually your first like other,

other than your primary, your first investment? Let's talk through that. Wow. Yeah. So my first investment. So we closed on this deal. We fixed it up. A lot of people are fearful of putting less than 20% down because of mortgage insurance.

And they think this is the end of the world, which oftentimes when you do the math of mortgage insurance, it's really the difference of getting like a 4% rate to like a 4.75. It ain't that big of a deal. Like it doesn't change your life that much, especially if you're getting a good deal. But we did have mortgage insurance. And we also wanted to pay this $20,000 back that we had borrowed. So what we did is after we fixed up the power, property. This is a method you folks have heard from before. We did a cash out refinance and we

were able to refinance to a conventional loan, 20% down essentially because the equity we had in it. We were able to take some cash out as well. We got rid of our mortgage insurance. The rate stayed about the same and it didn't matter too much to us. So the payment went up a little bit, you know, $3,400, the payment went up. But we now had extra cash available to consider going shopping. So I remember the next year, the beginning of the next year, we finished that renovation somewhere around August, November. We finished that renovation. And I remember January, I was passing out flyers.

And I was thinking to myself, I got to find a deal. Like, I got to find a fixer. I was almost sort of driving for dollars. I just wanted to put that energy out there. I think I had just seen the movie The Secret. And I'm like, okay, if I put the energy out, I will get a deal. That's kind of what I thought. So I just had no idea where it was going to come from.

and I was holding an open house and in a neighborhood that I would gladly invest in, which I always recommend, you know, go work in the areas where you want to invest. Anyway, I'm holding an open house. And the neighbor across the street walks in and says, hey, would it be weird to have two for sale signs on the same street? And me as an agent, I'm like, ding, ding, ding, ding, ding.

Like, Otto, tell me more. Anyway, you know, long and short of it, I visit her house and I see her house and I asked her what she wanted for the property. I go, oh, gee, you know, what if I told you I had a buyer? You know, and that's how we got into our first investment property, which what was crazy about that was it goes sort of back to this relationship world and how small our investing communities can really be. Lauren, I brought Lauren by my, you know, my girlfriend at the time now my wife, to look at the property. Lauren gets out of her car, walks up the driveway. I'm on the top of the driveway with the seller. And the seller's like, oh my gosh, Lauren. And Lord's like, oh my gosh, Mary. Like they knew each other. Like, oh my gosh. Oh, that's funny. Now imagine if they hated each other.

You know, that wouldn't work well. Oh, Lauren. Why'd you bring her around? Yeah, good thing. So let's, it was a single family house. How much was this thing? Okay, so we bought this single family for $3.87. So the first one, I'll just backtrack quick. The first one, it was listed for $287. We, you know, we knew there were two cash offers. I go, the only thing I can compete on is paying more.

Which remember, when people are flipping, the person who can always pay more than a flipper is the person who's going to rent out the property. And then the only person who's going to pay more than that is a person who's going to buy it, live in it and fix it up. But that's a small percentage of people. Usually it's a big gap. The home buyers, they don't want the fixers. Anyway, so Botifer 305, we paid more.

We refinanced it. When we got our refinance appraisal, that was probably somewhere on $450 to $475. I didn't mention this. I didn't want to complicate it too much. We ended up getting a home equity line of credit as well because we were able to get that 20% loan, get our mortgage insurance removed.

Then He lock up to 90%, which gave us a little bit more money for fix-up. The second property was $387,000. It was probably worth somewhere around $475 to $5 with maybe $30,000 worth of work. Okay, that's cool. So what is it probably like that in this area? This is in Southern California, right? So what is it rent for in an area like that?

Yeah. So, you know, when we first rented that property out, we probably rented it for somewhere around 24, 25. Now it rents for 29. So rents have moved a little bit, but usually these deals, the only way they cash flow, and this is the case for a lot of areas of the United States, you know, a lot of rules don't work out here because each market is kind of their own. Most of the time, something like this, if you put 25% down on a good deal, good deal, 25% down should be somewhere around $2,300

month cash flow. So you're not really, you know, getting rich off cash flow. You're really making your money on the equity play of building. your network acquiring these fixer operas. Yeah. Yeah. I mean, it just shows that there's different strategies for different areas, right? Absolutely.

You know, and the other thing, too, that I personally like is, you know, just this year, for example. And obviously, as I've gotten better at this,

the deals have gotten better. But this year, I closed three purchases. One of them was $4.50 worth six. One with about 50, all of them about, and then the first two, about $50,000 worth of work.

So $4.50 needs, it's $50,000 worth of work, it's worth six. That's maybe $100, $200 a month cash flow after, you know, vacancy repairs, P-I-T-I, everything. And, you know, there's $100,000 of equity in that deal. Another property, $465 worth $6.15. And then that's $6.50 worth $7.75, that one only needing about $15,000 worth of work I talked about. So to me, I look at these three deals. I go, I just essentially increased my net worth $300,000.

And I paid zero dollars in taxes on that. And because I'm a real estate investor, which anybody can do this when they own real estate, I'll never pay taxes on that. Because if I go to sell, I'll exchange. And one day after I exchange my way and the government says, oh, Kevin, you're doing an exchange? No worries. Catch us later on the taxes. And I do that over and over again.

One day I'll have, you know, $9 million, $10 million, $20 million worth of capital gains that I'm supposed to pay the government. And, you know, let's say I sold them all. I'd have to pay a couple million, three million dollars in taxes. That would suck, especially in California. But if I don't sell and one day I happen to get hit by a bus, my children and family will get all of these properties with a stepped up tax basis and nobody will ever pay taxes on that gains. So because of that, I look at real estate, I go,

I just made $300,000 tax free. And people are like, oh, well, well, how can you use that money? Call up my buddy Bob like I did the first time. I go, hey, can I borrow $100 to go buy another deal? You said something I really want to point out because I think it's very valuable for especially newer investors to understand. When everybody starts off, they have a perspective of how real estate works and that it's usually cash flow is the reason that we do this. And there's many reasons that that's the case, especially just when you think about we came out of last recession, a lot of people lost real estate because they didn't make sure at cash flow, they couldn't hold it. So cash flow took this elevated position of the reason why you should invest in real estate.

but when you talk to people who have actually done it, cash flow is usually the least important thing they care about. I tell people, cash flow does not make you money. Cash flow is a defensive tool. It keeps you from losing a property. You're not going to make a lot of money. Are you writing that down too?

This is funny. Oh, yeah. So if you're going to have all these YouTube videos over the next couple weeks, I'm like, that's a defensive. I mean, that is, that's a brilliant line there because people think that, okay, I'm going to buy real estate and I'm going to sit on the beach at Tahiti

and, you know, drew my ties all day long. But to me, and this is a challenge I always pose to first-time investors. I go, ask yourself this. If you had a zero-dollar net worth and you had no assets, how hard is it to create passive income? You have to go work. It's hard. If somebody now, just to show the difference of net worth and cash flow here, if somebody now gave you $20 million of property

with $20 million worth of debt and does zero cash-fell? So literally, you're in the same place. The person that has no assets, no debt, no ass, no nothing, right? Zero net worth. Compared to somebody who has $20 million in properties, $20 million in debt, and zero cash flow, they're technically on paper, is net net the same place. But what's going to happen next year? This guy with $20 million in property is going to have paid down $500,000 of principal.

They're going to have appreciation. Tax benefits. You know, the tax benefits, the yin-yang, and, you know, the tax benefits, the yin-yang, and If they raise the rent on $20 million of real estate, boom, there's a lot of cash flow real fast. So it goes to show that the challenge isn't, let me get cash flow now. To me, it starts with let's get some net worth going first and some tools that are going to build that network and then use cash flow as defense. Single family real estate is it's somewhat easy and simple to build net worth.

You buy it for less than what it's worth and it's value based on comparable sales, right? So sometimes just buying an ugly house and making it a pretty house is all you had to do to build equity in the property, even if you didn't build cash flow. But that starts to build your net worth. And that's because single family real estate is not intended. It wasn't built for the purpose of cash flow. That's not why it exists. It was built for someone to live in it. We've Jimmy rigged it to make it work that way. What is intended for cash flow is multifamily property. Apartment complexes are designed to produce cash flow. And they're valued based on how much cash flow they produce. Like the metric that you use to make it worth more is literally to make it a more profitable

business. So if you understand that, it becomes very simple that you start off buying single family rentals, not for cash flow, but to build equity. You then exchange that equity into multifamily properties later, which is designed for cash flow. And it's a very simple process if you start with the end and work backwards. And you're pointing out something I'm so glad you are because I usually feel like I'm banging this drum and nobody's listening to me. They just don't want to hear it. Right. Like, you have all these properties. You're making so much money. I'm like, I'm really not. There's stuff that goes wrong all the time. You get this. many single family houses, you got to pay people to help you manage them. You're constantly

dealing with paper cut after paper cut. It's really annoying. However, you're building the snowball of equity that someday in one fell soup, I'll sell them all. I'll go 1031 into a handful of properties at cash flow really good. Most of my problems will be gone and I'll have cash flow. But my house has bought my cash flow, as opposed to the money that I saved up buying my cash flow, which is much slower. Bingo, that's funny you say that because that's literally, you know, people here, I'm just going to say, people hear Grant Cardone all the time to say, oh, you know, a single family, don't buy that, but only buy multifamily. You know, he made almost $11 million on a single family, which he was then able to take that $11 million in gains. And, you know, I'm not sure this

is the case, but it's presumed this was 1031 exchanged into $50 million worth of multifamily real estate in Florida. So take $11 million in gains in California, boom, here's your cash flow in Florida. One thing I do want to point out, too, on cash flow is a lot of, of people, you know, at least or people in their earning years, cash flow can actually be a little bit painful because you do get taxed as ordinary income on that, which is, you know, it's kind of frustrating, especially out here in California, man, like 45, 50% of taxes, it sucks. Yeah, yeah, it's true. But here's the point we have to be careful to make sure we say is that like, we're not saying, not ever saying go buy a bad deal that you lose money every single month on just because you want

a chance at equity, right? And so I've no people who are just like, I mean, I, I, unless, unless you're rich. I know a guy in Southern California who came to me and wanted to buy a deal. And it was like going to rent for $2,100 a month. His mortgage payment was going to be like $3,000 a month. And he's like, should I buy this deal? And normally I'd say no. But this guy makes millions of dollars a year in income from his business. So I'm like, okay, fine. Of all the people I know, if you're going to gamble on appreciation and you really believe in this property and that it's going to go up, fine. You're the guy that maybe could do it, right? Because you can handle it. But nobody else. Like no, like, and that's where it's just like, knowing yourself, knowing what you are capable of, what you can handle.

Like I don't care about a, like I would buy a property in Maui. Like I live in Maui, Hawaii, right? So I buy a property here and break even all day long. Why? Because I, one, I can afford it. And it's got to be actual break even. I'm not talking about mortgage same as my, you know, my rent. But like actual got to break even, fine.

Whatever. If I hold it for 20 years, the thing's going to be worth way more and my loan's going to be paid way less. And I've been have massive net worth from it. And then I can dump into multifamily. So again, yeah. Yeah. Well, you know, another thing that's so.

interesting. Just to kind of cap that because what you just said there is so perfect. It's like, you know, build that, build that net worth. And even in an expensive area like Hawaii, you're buying there because your, A, your income can support it. B, you know, the numbers make sense to where your repairs and vacancies cover are covered by the rent with everything else. But another thing to know is when people get started, you know, you want to go start in multifamily, 35% down. Because like, you know, we said here, the banks and, you know, multifamily being designed. for cash flow. The banks are going to require that cash flow and how do they get that? Out here, I go run the numbers on a multifamily deal. I got to put sometimes 45 to 50% down

for the bank to be satisfied with the cash flow. You know, on single family, it's like, sure, you put 3% down. Are you really going to be expecting cash flow right now, you know? Yep. Yeah. Okay. This is good stuff. And I think people are getting a lot of value out of this. At least I feel really good that we're sharing the truth about real estate right now and not the infomercial version where it's packaged up so that you spend $40,000 to buy this thing that, I mean, to make $40,000 in cash flow on these courses, that takes you like 70 years to do. It's shocking some of these really expensive programs. And sometimes I have people, they come to me, like, Kevin, I spent, actually, I went to a shooting range

and the trainer knows I'm a real estate investor. And he said, hey, you know, I'm looking into this, this $40,000 program that's going to teach me how to flip real estate using other people's money. And I'm like, holy crap. Like, I can tell you how to do that in the next 10 seconds. You know, like there is no shortage of hard money lenders. The shortage is deals. You find the deal.

You find the money. There you go. You know? Now you said, same a bill for $40,000 and have a great time. That's what we're all in the wrong business. Right now, we're launching the Kevin, David, and Brandon course on how to buy real, how to flip houses with no money. It's $40,000.

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Okay. I wanted to ask you, Kevin, can you tell us what your portfolio looks like and what your favorite parts of your own portfolio are? Yeah. So right now, I control $6 million worth of real estate. And it's all single family at this point. Every single year of my career, I've looked into acquiring duplexes, triplexes, fourplexes. I just every single time I'm shopping, like I'm shopping right now, I've got money ready to go,

I'm ready for my next deal. Every single time I go shopping, I will put on Instagram, I'll show videos like, here I am looking at houses, here I'm looking at multifamily. And every single time I go shopping, the multifamily stuff, gets at least in this area, so overbid. And I think it's because you have so much money, especially you look at countries like Europe, where they have, you know, negative growth rates. People are looking to pension funds, you know, insurance companies. Everybody's looking to dump money into real estate. Where is that real estate going? Or where's that money going? A lot of it's

going into multifamily real estate. They're not looking at the single family space. So a lot of these properties, they're having offers from institutional investors that it doesn't matter how much they pay. It doesn't matter how much a syndication pays for a 20-unit apartment building or a hundred unit apartment building in California because they make the money on how much money they have, they make their money on how much money they have under management and holding the property for the long term. The buy price doesn't really matter to them. And that's frustrating to me what I'm looking for undervalued real estate. In this particular area,

multifamily undervalued doesn't exist. Single family, on the other hand, only 11% of people looking at single family or investors. To me, it's like shooting fish in a barrel. It's the same way in the Bay Area. So I'm a real estate broker up here. We help people by helping them find houses. Everybody comes to me with what you said.

I want to find duplexes, triplexes, and fourplexes use the low down payment. It sounds great in theory, and at certain times it works really well. But what you just said is really important. everybody's playing in that space. I hear people complain all the time. How are they going to ever make money at that price?

And they don't understand. They don't need to make money. They just sold something and they have 900,000 that they need to put into play in at 1031 so they don't pay taxes. They can break even and save all the money that they were going to be taxed on. To them, it makes sense to pay that price. And when you get into your own perspective and you think about what you're wanting, it's very frustrating. When you step back and you look at the big picture, like what you're saying, you're making no money. on your money in the bank. There are tons of people who've raised a buttload of capital and they have

to put it somewhere and they can earn enough cash flow to break even or make a tiny little bit so that makes sense for them. When you're the little guy trying to get started, don't go compete with these people that have a ton of capital and a ton of experience and all these advantages over you. You've got to find the place to hunt where there's less people looking for the game. And that is absolutely single family. So what we do is we look for areas with like a split level single family house that can easily be managed like a duplex. It's got a finished basement and a top house. And maybe we put some drywall in the top part of the house and put a kitchen on the other end of it. And we just turned it into three units. Now, it's not technically a triplex because it's not zoned for multifamily.

You wouldn't be able to use the income from it to qualify for the loan. But if it's in a price point that you can qualify for, I can find you something that will make you cash flow and make that deal as opposed to just looking for something that's labeled a triplex that every other investor is getting in their search. And that's the way you got to be. You have to be different. You got to look in places other people aren't looking. Now, I completely believe we will hit a recession at some point. I don't think it's right around the corner like some people do, but eventually it will happen. And there will be the fish in the barrel. Those multifamily properties will be dropped in value. The investors will want their money out. The people will be selling them. They'll go to foreclosure. That's the time that you go by those

deals. Why not build equity in the single family space in the meantime so that your your guns loaded, so to speak. So when those opportunities come, you can move on it rather than just sitting around and complaining that, oh, it's so hard. The deals go so fast. That's a really, really good thing you just said there is find a way in your space to, you know, make your deals work and in your area that might be taking that single family. And you know what? Maybe you're your Airbnb being out the basement. You know, what we're seeing a lot of us, especially now with the new. ADU laws. People are buying, you know, fixer upper in our area, Midtown Ventura homes. These are like these little 1920s, 30s bungalows that have larger yards. And they go, let's

convert the garage into a legal ADU now. Boom. There's our cash flow, you know. And what a great way to get started. There's so many opportunities for people to get started. And really, things become a lot easier when you own your first place. Yeah, so much easier. So you just got to get started somewhere. So how does somebody who's just getting started? I mean, how are you finding deals in a competitive market, in an expensive market? How do you recommend, how do you find deals and how do you recommend newbies listen to this get started? Yeah, I mean, to me, there are dime a dozen opportunities. When I look statistically, I'll show the numbers out, we have about 1,000 sales per year in the city of Ventura.

And of those 1,000, I'd probably say about 10% need work and a fixers. and maybe about half of those are good deals, like great deals. So I just took 1,000 to 100 to 50. And now if I divide that 50 by 12, I get one deal a week that hits the market. That's very, very good and juicy. So for me, every single week, there is an opportunity that hits the market that I can be writing an offer on. That I look, I go, if I just get one a year, I'm doing it. really, really well. And there aren't that many people competing against me in a smaller

city like Vintura. I mean, the tour has 100,000 people. But the problem is most of the people in the real estate competition space, 89% of them, based on kind of what I see out here and stats that I can read online or research, 89% of them, the average homebuyers. They're not looking at these fixers, these deal a week that comes up. They're not looking at those. And these are MLS deals. I'm not even talking about doing anything like driving for dollars or the other ways that you can find deals. straight up deals that hit the MLS, being fast on them, being pre-approved, being ready to go, and seeing value where other people don't see it. Those come up easily once a week. And again, so 89% your home buyers, they don't care about them because the carpet's stinky. It's,

you know, got a little bit of mildew in the bathtub or whatever. They don't care. Then you're against the flippers, which just pay a little bit more than the flippers if you're going to rent it out or live there and you win. Yeah. Yeah, it's one thing we talk about a lot with like the birth strategy, you know, the buy rehab, rent, refinance, repeat. where it's like flipping, but you hold on to it, right? We talk a lot about you can pay more than the flippers when you're going to do a birth strategy because you're holding on to rent it. So is what I always say.

If there's somebody in your market flipping houses, anybody, if there's flipping going on, you can get into rental properties. Because if the flippers can do it, you can do it as well. Almost entirely, you can find a deal to to buy rehab rent and refinance repeat. You can find those deals if the flippers are doing it. If they're everywhere. And so people just love to have these limited beliefs of like, oh, I can't do that in my market. It doesn't work here.

That's just an excuse. what I mean, what you said is so brilliant. Literally, first of all, I mean, you said two great things. One, if the flippers are doing it, you can do it. And the second thing you said is everywhere has a flipper. Yeah, for sure. All right. So let's let's talk about.

So that's, what do you look for? I mean, like specifically those deals of the week that come up. I mean, you kind of mentioned a few things, but let's say like give some people some actionable, like this is what I look for. That makes me go, yes, I'm going to go and analyze this deal. Okay. All right. So first thing.

Let's see if I can pull something up here. The first thing that I'd like to do when I look for deals is, you know, usually it's got to be new. I've seen all the old stuff already. And a lot of the old things, the older listings, I've already tried to low ball. Occasionally I keep them on a list. I try to low ball and I get. I keep a dialogue going with the agent. That's usually the easiest way for me to do it.

Generally, though, the deals that I buy are the deals that they hit the market. I'm there the first day. They get other offers, but I don't get discouraged by the other offers. I see the other offers as, and this is maybe just a mind twist, but I see the other offers as my safety net. If other people are writing offers, other people see value here. And that's good. I know I'm going to be, again, like those homebuyers,

they're usually not writing offers on this. But let me show you what I'm looking at. So let me see if I could do this. So if I press this button, that button, we should have an example. So this is an example of a property that I just bought. And, you know, you go in here, you go, okay, there's no flooring. So the way the agent sold this property is it has to be cash only because they rip the

carpet off. I mean, the old asbestos tiles are here. You know, you got this kind of, you got the acoustic ceiling. You've got the older fireplace. You know, everything's kind of disheveled here. This is the kitchen. You know, everything about it. Most people are going to look at this and go, oh, gross, you know, it's old.

We got to demo everything. We got to tear everything out. You go, kind of walk over towards this way here. You literally have your blue bathroom tiling, which is kind of nasty too. And they even to match over here have, where is, there it is, a blue toilet. You can kind of see the blue toilet right there. I mean, just everything about it is just nasty. This is money to.

me. And the reason it is is because this place we bought for $465,000, we're going to put about $45,000 into it. And that's scraping the ceilings, flooring, removing the wallpaper, painting it, new light fixtures, outlets, door handles, you know, a couple new vanities. We're going to glaze the tiles in the bathroom, refloor. And then, you know, 40 will be gone after we repaint. We'll actually keep the kitchen cabinets and we'll repaint these instead. Because initially, people look at this and they go, oh, gross, look, they're terrible. I look at this. I go, this is hard wood. This is nice, quality stuff ready to go, as long as it's not water damaged or broken or whatever. I can make this work. Over here, for example, we cut in a range.

So we put a little 18-inch cabinet here and cut in a range right here. So now I've got my bill, my oven and my cooktop and I'm ready to go. So, you know, that's the kind of stuff I look for. When I see that, I go, I can play that game all day long. And I'll keep doing that. So maybe it's just because a lot of people go in there and they go, well, I'm going to have to spend $150,000 on it. I look at it and go, I don't need to spend $40 on it. What are you talking about?

Well, you're buying a problem. And the problem is it's ugly, right? That's it. It's not a horrible problem. Hey, whose house are you saying it's ugly? Yeah. It looks worse than it is, right? And you've got some experience.

So what you're seeing is, okay, this is a facelift. I just need to go put makeup on this thing. That's not a very big deal. So I love the fact that you just showed us a deal that makes a ton of sense. There's a ton of equity in there. It scared everybody else away because it wasn't pretty. Well, you can make it pretty. That's like the best problem to solve.

Yeah, exactly. I'm going to see if I can, you know, just probably take a second. I'll see if I can pull up a partial after that I have, but if not, no worries. But basically what I described to you is what we did. And yeah, exactly. You know, maybe it's just because I look at these deals and I don't go in there and I say, you know, I mean, my favorite thing buy. This is my definition of sort of your wedge deal. And it's very much like this deal. I go in, I open up, like everybody else, they're looking at all the nasty stuff and the smell and the lack

of carpet and stuff like that. I look at it. I go, I open the furnace closet. I go, brand spanking new furnace. I like this. You know, I look at the roof. I go, my roof is pretty good. We're going to put on new ridgecats for $1,800 bucks. That roof's going to kick it for another 10, 15 years. You know, and you look at the foundation. All the expensive things are good. Grounded, electrical. the expensive stuff is good. And, you know, the cosmetic stuff is, I think, what people dramatically overvalue. And that creates an opportunity to even get on the market deals

for a dramatic discount. I've had so many people I've talked to. I mean, one specific, I remember a friend of mine said, we walked into a condo and just took one sniff and we walked right out. And I was like, they were trying to buy an investment property. And they're like, we took one sniff and walked right out. And he was out like, you know, they were kind of proud of themselves because they didn't want to, like,

I'm like, no, that was, that was, that's my favorite thing in the world. Like, well, and condos are like the safest thing to buy if you think about it because you're sharing responsibility for the roof and the plumbing with everybody else. You know, it's like a great way to start. I don't know. Yeah. I got two condos right now that I'm flipping, but all hold them as rentals all day long, if I, if I have to, if the market changes. Because, yeah, I like the idea of the kind.

I mean, yeah, there's some annoying things you got to be aware of, but like overall. Yeah, the HOA is mainly primarily. So here's that question for you real quick. Oh, by the way. That's partially finished. It's looking awesome. Yeah, this is partially. So you can see these are the same exact cabinets.

We did a gas line here, so I have a patch added it. I just quickly wanted to show you. This is just a quick little shot of what that kitchen looks like now, where we painted the cabinets, you know, this gray. We put the hardware in. You can see the stainless appliances, the quartz countertop, new faucet. So this, all of a sudden, you get a regular homebuyer that walks into this. They're like, whoa, where do I sign up?

I like this, you know? Yeah, that's awesome. And of course, if people are listening to this right now, you want to, you should go and check out our YouTube page and see what Kevin's got shown here like the before and after. It's pretty remarkable. So I'm bigger pockets. YouTube.com slash bigger pockets. You'll see some stuff there. And of course, I mean, obviously follow Kevin as well on YouTube.

What are you at? Meet Kevin on YouTube. Meet Kevin. Yep. All right. All right. So here's a question for you. How does a new investor know?

Like you, okay, you and I look at that property, the one that you just kind of walk through the matter port there, right? Like you and I look at that and David and we're like, oh, yeah, Jimmy, great. We'll paint the cabinets here, like the flooring, whatever. We'll cover them with this. It's not a scary thing. But how does a newbie know something as cosmetic and not a scary thing? Or this is a tremendous rehab that they should not get into because it's like, it's going to be a money pit. That's a great question.

Really, the, and this is the first thing that everybody should do is buy something to live in. And when they buy something to live in, they start understanding, wow, these. these houses, they're really just, especially if it needs work and you start doing some work yourself, when you start doing things like, I'm going to put on paint. I'm going to do a little bit of, drywall. You know, maybe I'm going to have an electrician show me how and teach me how to change an outlet safely. All of a sudden, and that's exactly what I did when I started. My first deals, I did the drywall. I scraped the old tiles off the floor. I scraped the ceiling. I paint, whatever it took, I did it. And what it taught me was something that I thought, especially at 19 years old,

was an invaluable lesson that, wow, these houses are really just toothpicks and paper. It's not that complicated to deal with the cosmetics. But what it also showed me is, if you don't properly inspect the systems, those could be a lot more expensive. So by doing it, by owning the first property and surrounding myself, this is probably the more applicable for everybody who doesn't have the time to do the work, by surrounding yourself with professionals who know now you protect yourself. So you go into a house that needs work.

You say, you know what, I'm going to, I'll do some paint. I'll try drywall. I'll try some of these things. But now you bring in your real estate agent who also invests. What's going to happen? Your real estate agent's going to tell you, well, I invest in this neighborhood. And Kevin, you know what? We need to make sure that we scope the plumbing lines, not just from the outside to the street,

but the inside as well because these cast iron drains wrought out. Maybe they've been replaced. Maybe not. Let's look at that and see what our exposure is there. That's where you learn a lot really fast for free, basically, because your agent's getting paid by the seller. And then guess what? You do a home inspector. And the home inspector goes, ah, you know what, this electrical thing over here. This is a little janky. Okay, you're calling an electrician.

The electrician comes over. And even if you had to pay them, people are so fearful like, oh, well, no electrician is coming to talk to me. Have you tried this? You pick up the phone, go, hey, electrician, I've got some, you know, I need an electrician for about 30 minutes next week. I'm willing to pay $150 just for a site console on a property. I'll pay you right there on the spot, $150 if you can walk a property with me. I guarantee you they'll be there because it's like four times their hourly rate, right? So they're there. And now, wow, oh, I've seen these panels before.

You know what? These houses, they're actually wired pretty well, but we should change out the panel. This is really just an $1,800 problem for you. Wow, cool. Thanks. I knew nothing about electrical. now I quantified it with a number. It's $1,800.

Does that still make sense to my deal? So the two things. One, be willing to do some stuff yourself and learn and be exposed because if you walk in, you see stinky asbestos and lead and mold and all this, you're going to be fearful unless you're willing to try to expose yourself to understanding what does it actually take to deal with this and solve it. Second thing, surround yourself with professionals because you'd be surprised how much you can learn for a very little price.

Yeah, that is so good. Really, really good. All right, so this deal that we're talking about here can really kind of be, we always do a segment of the show called a deal deep dive. And really, this is kind of it. Like, it's the, it's the, what did you, you know, how did you buy it? You bought this MLS, right? Yeah.

Okay, so you bought this property. You already told us what you paid for it. You kind of watched it through all that. I mean, what's the long term plan with it? Like, where are you headed with it? Yeah. Is you going to hold it on the rental? Exactly.

So this property, if I don't refinance, because we bought it, far below market value with 25% down. This property will cash flow probably somewhere around $700. But I actually, like I said earlier on the segment, I don't want the cash flow. I could easily, you know, do a YouTube video or whatever. Look at all this cash flow. Even after, you know, $200 for repairs and vacancy or whatever and management expense, this that and all the other, the PITI, all this stuff. Look at all this cash flow. Just because I got a good deal with $700 a month. Wow, cool. I can spend it on whatever I want, you know. I don't really like that because it's a lot of taxable income for me. And I don't want that right now. So for me,

this deal, usually I probably only refinanced deals like 30% of the time. But this particular deal, because it does have so much sort of on the bone, I'll refinance it and probably pull out cash to where the cash flows closer to $200, you know, maybe $100 after repairs and vacancy and all of that. So I'll be able to take out a little bit of a little bit of cash and then I'll just go shopping for another deal. The plan is because I've renovated because I know how old the systems are and the quality of the property and the quality of the cosmetic remodel that we did, I look at it and go, I don't mind holding on to this for the 27 and a half years. I don't plan to sell it. Mostly, I don't look. Look, I'm a realtor, but I always say I sell real estate, but I don't sell real estate because I hate paying other realtors.

So, you know, even though I can represent myself, I just don't want to pay the closing cost. So I'll keep it for 27 and a half years. In the meantime, as values go up, I can pull seconds on it if I need to. I don't want to over leverage, though. I want to be safe. And I'll go shopping for other deals. Usually my, for portfolio-wise, I don't like to be any more than like 60% debt overall the whole portfolio. And right now I'm below that.

So I don't mind doing some refinancing. Okay. That's great. Great. Great. So where do you see yourself out in the future? Like, where's the next five, ten years look like for Kevin? You know, it's funny because I think our society says that, so there's a society-driven Kevin, and then there's like, the Kevin, you should do this. And so society-driven Kevin says, I got a 10x. I got to do a syndication of single-family wedge deals, meet Kevin Capital. I'm going to go out there and have, you know, a big team with 20 employees. and we're going to have a startup.

We're all going to start in a living room and then we'll be out in a warehouse somewhere or whatever. Everybody's hunting for deals and helping people, you know what? Well, we'll pay more than open door and Redfin now or whatever and just go crank it. There's that side, which is, I say that's a society-driven because it's always like, oh, you're 10x, 10-X, 10-x. But then I also come from a place of having been a license contractor,

having had 15 to 18 employees at one time, feeling that stress, seeing how little time I actually got to enjoy. myself, my family, my children, money. Like, that's a problem. So then there's, then there's the other Kevin, which is like, wait a minute, this is, this is such a good formula, just buying these simple, like basic little deals, building your equity so fast, renting them out, and then just enjoying life. Like, it doesn't take that much effort to do these deals, you know? So it's like, just keep doing that. I know that's more of like the boring answer, but honestly, that's just such an easy thing.

I'm one of those people, though, that I do get bored easily. I'm constantly like, what's next? What's next? What's next? And I think that's dangerous and risky because that could make me very unhappy. Where right now I'm in just such a happy place where I don't have to go crazy like that. Yeah, that's great answer. Yeah, I struggle with that as well. It's like, part of me it says, well, I should just relax and hang out and enjoy my time. And then I'm like, no, I got to go bigger and bigger and bigger. You know what made a big impact on me was Tim Ferriss said, I think it was on our podcast,

but also just on his own show, what if it was easy? So the question I'm asking myself all the time is, how can I get that thing that like the growth of a big company and equity, you know, like, you know, Brandon Capital? How do I do that but not have to do the 50, 60 hours of hard work, the Grant Cardone, hustle, hustle, hustle thing? And that's a hard question to answer. But that's what I'm exploring and trying to figure out right now is how do you do that?

Yeah, and I think in part it's a hard question to answer because it's relative, I mean, like, I'm not trying to say this about your goals. I'm trying to just in general. In general, usually it's very unrealistic. You know, people I think, they think, all right, well, I just want to work four hours a week. I'll have a startup and I'll be rich. He usually doesn't work that way. I mean, you know, you look at Elon Musk sleeping on the floor of his offices, right?

And I'm not trying to compare myself to him. But, you know, when I, in 2015, for example, the year I sold the most real estate that I'd ever had in my career and had employees and had all these other business ideas and stresses going on pre- YouTube. I look at that time and I go, yeah, there was money success, but it came at the cost of working 90 hours a week, not four hours a week. And I was really unhappy. Yeah, really, really good point. So yeah, really good. All right. Let's head over to the next segment of our show. It's the fire round. It's time for the fire round. All right, this is the fire round.

These are the questions that come direct out of the bigger pockets forums. And we're going to fire them at you and see what you got to say. So Jordan from, I'm not sure where he's from. But Jordan said this. Oh, I know. He basically says it in the question. Jordan said, where in California are people having the most luck finding cash flowing properties? I'm in Central Coast and it seems like the costs are simply too expensive to make the numbers work.

This is the sort of the generic scenario that we get all of the time. People look, they go, well, if I'm going to put 10% down on the deal, this isn't cash flowing. That's sad. I'm just not buying real estate. Of course, the two things, the only two ways you're going to get cash flow in Southern California, Central Coast or NorCal, anywhere along the coast, the only way you're going to get cash flow is one, below market value deals to where the cash flow that makes sense. Or number two, you put more money down.

All right. Very nice. This next question is from Sin Kai in New York City. I have never purchased a house in my life. So when, where does a buyer's real estate agent role and responsibilities end for the commission they get paid? I like this question. Is it their responsibility to arrange the city code inspection, the regular inspection, communicate with my attorney and title and closing company, etc.? Okay, interesting.

Yeah. So me, and every real estate agent is different. You're going to have, and I'm just going to say it because it's real. Usually what I found in my experience is the larger teams, the real estate agent teams, they're so busy that oftentimes they can't go to that level of providing more value to you. Not saying don't use teams, but I found a lot of the really busy agents where their phone is ringing off the hook with people asking to work with them. You know, you're going to oftentimes get a little bit of lesser. service, not always, but that was what I found.

Generally, what I found is if you find an agent that's not overly busy, invests in real estate, and maybe this is a unicorn, but invests in real estate and isn't overly busy, but is out there looking for deals for their clients, these agents can oftentimes provide you a lot more value. And these are people that you really, you know, the way the question was phrased and just reading between the lines here makes me think that this is somebody who's doing a cost benefit analysis on their real estate agent. They're going, okay, well, they're making this much money for my purchase. They should do this, this, and this and this. And I think it's the wrong way

to look at it. I think if you find that agent who invests and that agent that's working with you directly, it's not an assistant, it's not a team member, that agent is working with you directly. That agent, it should be a lifelong relationship for you. I have clients that I know their tax returns. I know their finances. I know how much money they have, how much their businesses make. And for these people, when they call me and they say, Kevin, hey, you know what, who's the plumber of choice this week? They could call me three years after they bought something. I'm there for them to help because I've created this relationship with them. And I think if you look at a real estate agent as a long-term money-generating relationship, then you'll look at real estate a lot better than what I'm worried

in the direction you might be going. Yeah, great answer. All right. Number three, the last month I've been getting my butt kicked with tenant complaints, repairs, high vacancy. What's a bad rental situation you've been through? And how could you have prevented it or what would you do differently next time? So they just said, I hope, yeah, what would you do? Yeah. How do you deal with just rough times?

Yeah, it's, you know, it's tough for me a little bit to relate to because I, I drive myself so crazy in my pre-screening stages, and I'm not saying that they don't pre-screen properly. But one of the things that I've found that I've loved about these single families is I'm buying median priced single-family homes, and I'm pre-screening people to where I know they have excellent credit. Maybe they own property somewhere else. They're gainfully employed. And they meet all of these criteria that I usually don't have headache tenants, A, B, I don't buy a property and rent it out as is. There are a lot of investors that I know they buy a property, they rented the way it is,

and then they say, oh, if something breaks, tenant can call me. Well, yeah, then you're going to have issues. And so those two things, the pre-screening of the tenants, the quality tenants, keeping the properties properly renovated is helpful, even if that means you have to rent slightly a little bit below market value rent, just to get a good quality tenant. You're now going to minimize that turnover. But the other thing, and this is possibly a risk, and I'm going to try to help in that scenario,

this is another possible risk. When I hear somebody saying and I question, phrasing the question, high vacancy, probably dealing with units. And one of the problems that I found in units is people get started with smaller units, like studios, like tiny things. These are always going to have high turnover. So you have three possible issues here that could be longer term things that you might want to solve. And that's making sure they're properly renovated, making sure you're properly,

you know, getting those higher quality tenants, doing the renovation to attract the higher quality tenants. It's high quality tenants don't want to live and craft. And then maybe increase the size of your unit. Now, once you have those three things solved, what do you then do when you're dealing with these, these rougher times? You suck it up. And it's called real estate ownership. I'm sorry. Like, it is what it is. You get in there and you fix the problem. Look, I've got an insurance claim on a property going on right now. I didn't want to have to crater a hole into a property to replace the sewer line. But guess what?

It's an insurance claim. I'm getting all new stuff out of it. I'm getting, you know, $35,000 worth of value paid for by the insurance company, which is spectacular. But yeah, guess what? It's a pain in the butt. I have to go over there and make sure they have the faucet I bought on Amazon, you know, which I usually don't recommend getting faucets on Amazon as a special circumstances. You know, I got to make sure everything's coordinated.

it's work, but it's still a good deal, and I'm still coming out ahead. Yeah, great answer. Awesome. All right. Last question. Which apps or on-laced tools do you use the most in your real estate investment business? Is there a specific system that once you set it up,

it save you a ton of time and headache? So I'm like the opposite when it comes to apps and stuff. I'm very anti, you know, I hate to say it, but I'm a very anti-state. spreadsheet. I'm anti, you know, programs. I'm like, I anti pretty much everything, tech, because when it comes to the deals, what I've found is when I go through with the spreadsheet, I oftentimes, in the past, I've misvalued properties because I wasn't able to incorporate kind of, you know, that what's the market doing at this time? And sometimes these intangible values in terms of my market valuations, in the competition and how am I going to make sure I'm not overpay?

Sometimes the spreadsheet can miss that for me, but also on my renovations, when I walk through a property, the way I do it is I create a new spreadsheet every single time. I take my laptop, I stand there, and I look around. What do I have to do? And I look, okay, panel, the roof, the flooring. And I write everything down before I ever even write the offer, I do a custom spreadsheet. And I just kind of write down, okay, I see I need to do outlets. I need to do this, I need to do this. And to me, rather than being focused on an app or program, I focus on the property itself. Now, I know sometimes that could be like, oh, well, you know, what if you don't think of something?

What if you don't see something? And I guess that's where you want to surround yourself with that circle that helps you, the agents, the contractors, the professionals. But the most important things that I do use in terms of apps are the Zillow Mortgage Calculator just solely because I see what interest rates are doing every single day. I kind of see that up and down. I like that a lot. And then usually, aside from the MLS, and as much as I'm not a fan of, of Redfin, especially in the realtor community. They're big competitors.

Their app is fast. So when you're looking for new deals, they're notifications for deals I have the MLS. Fast. So those are the two things I use. But outside of that, I don't use anything. All right. All right.

Well, good answers in the fire round. Now it's time for the last segment of the show. It's our famous four. These are the same four questions. We ask every guest, every week, for going on almost, what, seven years now or something like that? It's crazy. Let's hear what you've got to say.

Number one, actually, before we get to the famous four, let's hear from Jay Scott and what's going on this week over on the Bigger Pockets Business podcast. Hey there, Brandon and Bigger Pockets podcast listeners. This is Jay Scott, your host of the Bigger Pockets Business Podcast. This week on the business podcast, we have Gavin Steinberg. He is founder of a company called the Everset. Gavin was a multifamily investor who saw a need and then leveraged his network.

to launch his current venture, a subscription-based furniture business. Find out how he did it and find out how you can use your network to benefit your business in this episode of the business podcast. Now, back to your famous four. All right, thank you, Jay. And now, Famous Four, question number one. Kevin, do you have a favorite real estate, specifically real estate-related book?

You know, it's a tough one to answer because I've read so many. the difficulty that I found is markets are so dynamic that a lot of people will read books. And the nice thing is like, you guys have an excellent selection of books. And I've read some of your books on rental property investing. They're great. And they take you from this like place of zero knowledge to like a good baseline of knowledge, which I love. Like if you don't know real estate, this is so great.

you know, or, you know, if you have courses online or whatever, like, there's such great ways to go from zero to a good amount of knowledge. But oftentimes, I struggle a little bit with finding, you know, if I, if I only zone in on books, I miss my local market opportunities. And that's where oftentimes I try to drive people. I go, what can you do to get out there and get involved with a circle of people that are going to help you get deals? How are you going to find those agents that are out there hunting for deals. And that's usually my preference over books. Seriously, like your books, great. I'd like, so I like, I hate giving that answer because I'd like, I like you guys. You guys are awesome. Okay. But that's my answer. But no, I think if there was a choice

between reading a book or going to a local meetup, I'd go to local meetup all day long. I'd tell somebody to go hang out with real investors in your local market. And again, baseline, great, but get out there. All right. Number two, then, David, you want to ask it? Number two, do you have a business book that you really like. Oh, man. Yeah, so I really liked the good to great series. There's a good to great, built to last. And there's one more.

It's like a trilogy of books. I can't remember what it is. Yeah, it was like great on purpose or something. Yeah, yeah, exactly. Like those were really, really good. And they gave me some good perspective. I'm also a massive fan of Malcolm Gladwell, you know, A blink is a really, really good one.

And so things like that. Awesome. When you're not selling real estate, walking properties, playing with your kids, making awesome content, what do you do for fun? What are some of your hobbies? Wow. Yeah. What's funny, and it's probably a curse of being an entrepreneur, is you're almost always

thinking about work. You're always thinking about like, oh, is there a new redfin notification for a dealer, an LES email? Oh, you know, even, and this is a struggle. Even when I'm with my kids, I'm trying to. to have fun playing Nerf guns, which I love with them. You know, I still oftentimes thinking about, oh, you know, got to get some content or, you know, got to deal with this with the property or whatever.

Outside, like if I could just remove every distraction, which sadly lately I haven't had very much time for, things that I really like paintball and call a duty. I like it. That's really funny. All right. Last question from me then. what separates successful real estate investors from those who give up, fail, or just never get started?

What separates successful real estate agents from the ones that give up and fail? Well, you know, those things all relate back to almost the truth in any business of life. You got to be tenacious. You got to get through the crap. You are going to have bad deals. You are going to have hurdles that come up that say, I should not do this. Let me just make this very, very simple and go back to that first deal. So we started out this podcast by saying, I got this great deal.

It's really easy and exciting for me to talk about that in hindsight. But when I zoom into that deal, what I didn't mention is we started that escrow. I think it was like in February. We didn't close it until July or August. It was like a six-month transaction. And there were so many parts during that transaction where there's a Bank of America foreclosure at the time. There were so many parts of that transaction where I go, that's it. This just isn't meant to be. I'll never forget standing inside of the house.

And when I go inside a house to look at it, I usually lock the door behind me and I take the key inside. I'm in a showing and people will literally just stroll and oh, I thought it was an open house. Really? There was no sign. Anyway, so going back to that emotional, inside the house, the house is locked. And the seller, Bank of America is like, the deal's done. We've had it with you guys. This is only two months in. We're done. We're canceling. That's it. They put it back on the market. It's active. I'm in the house at the time. I was doing like, you know, inspections and meeting a kitchen contractor to, you know, work on some proposals. And so we're in there doing our due diligence. And the deals canceled. The other agents freaking out. And they're like,

that's it. It's over. At the same time, I'm in there. Two other people show up. And they've got this like investor vibe. Like they've got that investor look. And they're walking around here in California with their shorts and their t-shirt, their polo, and they're kind of like doing the look in the windows and like looking around at the eaves. And at that moment, the despair I felt, that utter defeat of like, wow, I thought this was going to be a defining moment of my life

and now it's trash, it's horrible, I'm a failure, was so, it's something I've never shared before, it was so miserable that it, you know, looking back now, I could look at that time and go, wow, I'm so glad I didn't give up. And I fought to get that deal reactivated and kept going. And that's the advice I'd give for everybody. Don't give up.

Even if you feel, don't give up. The beautiful thing about America is I could go bankrupt. And I wouldn't give up. I'd get an FHA loan in two or four years and I'd start over and do it all again. Awesome advice, dude. Well, this has been fantastic. Thank you for joining us today. Actually, I don't want to take David's last question.

You always worry about that. Brandon, you go ahead, man. I know. Nope, I'm not doing it. I'm not doing it. Kevin, where can people find out more about you? Yeah, meet Kevin on YouTube or Instagram at Meet Kevin. And I'm around.

I try to post daily. We'll see. That's awesome. Awesome. You have a great channel. And yeah, everyone go follow Meet Kevin on YouTube and Instagram. And very cool. Thanks, Kevin.

Thank you. All right. And that was our episode with Mr. Kevin. How did he say his last name? Pathraff? I believe so, yeah. Probably should. All right.

I just know him as Meet Kevin. So Kevin, yeah. It was an awesome show. I like that guy a lot. I'd have been following on YouTube for quite a while, and it was awesome to finally get him here on the show. Last name Kevin, first name, meet. There, yeah.

I don't think that's how it is. All right, so anyway, great show today again. Go follow Kevin over on YouTube at Meet Kevin, or just meet Kevin on YouTube and at Meet Kevin on Instagram. And while you're there, follow David Green at David Green 24 and Bigger Pockets at Bigger Pockets. All right, well, that's all I got today. I'm going to go get out of here. David, we're supposed to be closing on a 168 unit mobile home park portfolio today.

I'm just waiting for that email or call to come in. So we'll see him. Just another day in the life of my buddy, Brandon Turner. Just another day. Yeah, we'll see. So anyway. All right. Well, thank you.

Thanks, buddy. This is David Green for Brandon the Condo Desperado 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.

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