BiggerPockets Real Estate Podcast - 395: From Car Valet to $100k/Month... Seriously! with Thach Nguyen

Episode Date: August 13, 2020

Today: a no-excuses, American Dream story that will get you fired up to go hunt down a deal! Thach Nguyen is an investor and agent in the Seattle, Washington area. When he was a kid, his family fled Vietnam for the U.S... he later parked cars at a Chinese restaurant... and despite becoming a top-producing agent building a monster portfolio of paid-off rental properties, he's still hungry and shows no sign of slowing down. In today's episode, Thach (pronounced "Thatch") shares the lessons he learned during the Great Recession, his criteria for buying a "perfect BRRRR"... and why he says there's no shame in living with mom and dad to save money! Plus, the guys discuss the pros and cons of paying down mortgages, the psychological advantage of owning your primary residence free-and-clear, and Thach's favorite (free) lead generation strategy. We think you'll love Thach's energy; he thinks big and will motivate you to do the same. Give him a follow (IG: @thachnguyen) and let us know what you think of this episode! In This Episode We Cover: How Thach created $100k/month (!) in rental income Why he's focusing on the affordable housing niche Buying townhouses in Seattle, WA Buying a "micro-apartment" building in Oakland, CA And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Podcast BiggerPockets Podcast 356: 30+ Rentals (in a Pricy Market) Through BRRRR and Section 8 with Joe Asamoah How To Start Thinking Like A Big Time Real Estate Investor (Video) Tarl Yarber Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 395. Oh man, are you really actually making that money? He's driving up Banzh. They're living in his mom and dad's house. How is that possible? But they don't realize behind the scene, I was buying a lot of rental property, and I was actually accumulating them and getting them paid down.

So I get out of the rat race so I can actually start to invest more and sell real estate without having a gun in the back of my head. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com.

Your home for real estate investing online. What's going on to everyone? It's Brandon Turner, host of the Bigger Pockets podcast here with another phenomenal episode with a really, really engaging guest and of course a super engaging host named David Green. What's up, David Green? What's going on, Brandon? That's a very nice intro. You're in a good mood today.

I'm in a good mood today. Today we have a phenomenally awesome show, as of course we always do, but with a really cool guy. He named Thatch win. So Thatch, I met years ago, and then I followed it on social media, and he is just a bundle of energy

and a bundle of knowledge, like all wrapped into one bundle of greatness. And he goes into a ton of stuff today. Like, basically, I mean, he's like, I don't know, we talk about, lot of things, everything from like how he went from nothing to make it 100 grand a month in passive income. I did not misstay that. A hundred grand a month in passive income. We actually recorded this officially right before the coronavirus lockdown. So we held on to it a little bit longer

just so we could do topical shows about coronavirus during the height of that. Let me talk about how he got through the 2008 recession. Lessons learned there, including some paid off property stuff, whether or not you could pay off properties or not. And the elite acquisition strategy that most of you won't do and that he's still doing it today even though he's making a hundred grand a month. It's crazy. And he's got a perfect burr example during the deal, the deal deep dive toward the end. So hang tight for all of that. But before we get to that show, let's get today's quick.

Quick. All right, guys, we're going to put together a special type of podcast, a bigger pockets podcast in the near future where we want to hear from some of you. So here's what I want to do. I want you to go to biggerpockets.com slash. and let us know your story. What I'm looking for is stories of people who have listened to the podcast

started from basically nothing and now you have a pretty phenomenal portfolio, a business. You've got a cool story to tell because of what you've learned and if BiggerPockers was a part of that, let us know your story. BiggerPockets.com, such guest, and we might bring you on the show.

We might do a show with multiple different guests coming up here shortly of kind of success stories of the podcast. So if that's you, BiggerPockets.com, slash guest, let us know. That's today's quick tip. Quick tip. Here's why savvy real estate investors are obsessed with bonus depreciation.

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no-brainer. So visit costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. The lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a program to help prevent that with their new express rental loan, you can close in 10 days or less. And they still offer their price beat guarantee so you can get great pricing and a timeline you can count on. Fast, simple, reliable. That's Dominion financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. Here's the thing about traveling. If you buy food at the airport,

a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network. 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. I think we're ready to take this show on the road. Are you ready, David? Yeah. One of my favorite things he talks about, so be sure to listen for it, is what he learned coming out of

the last crash. So from 2008 to 2010, Thafts lost some money. And he took what he did wrong. He incorporated into his business now so that while he's building wealth, he's protecting himself from the downside. And I always love hearing from people that have that seasoned experience that have lived through more than just one, not even a market cycle, just one elevator ride up. So be sure to make sure you listen all the way through so you can hear some of that good advice. Truth. With that, let's bring in Thatch win. All right, Thatz, welcome to the Bigger Pockets podcast, man. Good to have you here. Finally, after many years of knowing about you. Oh, man. I'm honored to be here. Man, we've been knowing each other for a long time.

I missed you guys in Seattle last year. And it's excited, man, to play with you guys. Yeah, it's going to be fun. So let's hear about your story. I mean, I know a lot about what you do because of your social media presence. You've got quite the social media game going, which is awesome. And I definitely encourage people to follow you because you got videos about everything on how to do this stuff. But before people do that, they got to know a little bit more about you. So how did you get into real estate? What was that like? Well, you know, I came to Vietnam. My family evacuated in 75. My dad worked for the Vietnamese U.S. government.

When the Vietnamese communist invaded South Vietnam, you know, the government told my dad to leave. So my dad came home, picked all of us up, and we left on the last plane out of Vietnam with one suitcase, $100 for all eight of us. I was five years old at the time. We landed in Camp Pendenton in San Diego. We lived in the shelter there for a few months. got shipped up to Seattle, lived in the shelter there for a few months. Finally, we got our own little rental house, two-bed and one bath, little shack, but it's obviously a palace compared to living in a homeless shelter.

Yeah. And then I went to school like a normal kid. I graduated in 1988 from high school at Franklin. I wouldn't sure what I wanted to do, but my two older brother was in the aviation business, fixing airplanes, flying airplanes. So I thought that's the best thing to do, follow them. But I hated it. And that's one of the tip I always tell people.

man, you got to follow your own passion and you follow your own inspiration, not what everybody else around you was doing, right? So I was parking car at a Chinese restaurant and one of my friend, the daughter, the owner, was standing for the real estate license and she says, hey, that, you should do real estate with me. I think you got to give them out of you. I think you do well at it. And so I went and got my real estate license in 1991. I got my license and I got hired. I was 21 years old, youngest guy ever in Washington State. The first three years, I was like selling maybe two houses a year. And I finally got a mentor in 1994 that taught me how to do real estate, residential real estate. And I started doing well. I was door knocking 100 doors a day, five days a week for 10 years straight, basically how to find listings. And I didn't realize that was a key thing for me today. Because back then when I was doing, I was doing on a hundred doors a day, five days a week for 10 years, I was going out to focus on finding listings, talking to sellers. And that's how I made it. a lot of my money. And then during that process, I met a mentor that said, you got to own real

estate. You want to be wealthy, not selling real estate. And today, one of my message today is you got own real estate, not flip real estate if you want to be wealthy, right? Yeah. And so... Can you can you explain that real quick? Because a lot of people are listening to this. And, you know, hey, I just read the book on flipping houses, which I love that book. And I, I mean, I made some good money this year flipping houses. So what do you mean you can't get wealthy or you're not going to get wealthy flipping. To me, today, after doing this now for 30 plus year, flipping houses, like selling real estate, you're on this treadmill and you are running. The moment you get out the treadmill, you're not making any more income selling real estate no more. Well, flipping

houses is the exact same way. When you're on the treadmill running, when that treadmill stopped, then you got no more money. And let's be honest, why are we even flipping houses in the first place? Everyone to know, when they got into real estate, all got inspired somewhere somehow, because they want to own real estate sometime down the row. So, you're going to be flipping house. can actually live off a passive income. But they got caught up, in my opinion, basically comparing themselves to the Jones. Well, you know, Brandon flipped 20.

How is this? Well, I'm going to do 30. When David flipped 30, I'm going to do 50. And then now they're on this rat race, chasing who can flip the most houses? And at the end of the day, 20 years down the road, they realized I got nothing to show for all my work and I got no passive income.

So they got to keep running on the treadmill, even at 90 years old. Yeah, I can't tell you the number of investors I've talked to who are like major flippers. know, and they've been doing it for decades. And then they're like, yeah, I got to get myself some passive income because if I stop, I'm broke. Like I'm like, I'm living great now. I got a great car. I got a great life. I got a great house. But as soon as the market crashes or, you know, something slows down, like they're struggling. And so you looked at this and you said, look,

I want to build some wealth. So how did that, how did that start for you? I mean, you were involved in real estate pre 2008 crash then. And you're obviously involved today. So kind of walk you through that journey. Yep. So as I was selling real estate in 1991, In 1995, 96, I met a real estate mentor named Saul. And he said to me, look, you're doing well selling real estate. But if you really want to set yourself up for the future so you can work when you want to work, where you want to work, you got to own real estate. So go ahead and make your money selling real estate. Everyone got to make money somewhere so they can actually have money to buy.

So go ahead and just crank out selling real estate. I was at that time, I was 27 years old. I was listing about 10 to 15 homes a month. Wow. So I was making a million dollars at age 27 selling real estate, but what made my whole life jump when Saul says, take the money you make. And so buying real estate. And back then, you could buy rental property with 5% down, 10% down, not like today. And I was buying a bunch of rentals. And I remember one of my pivoting point was Brandon and David was, I was living at home and I was the top agent. And I wanted to buy a really nice house to live in. And my wife,

who's a really smart one says, honey, I think we should listen to us all and figure out how much passive income do we need to have so we can be out of the rat race before we do anything big. And at that time, it was like $25,000 a month of passive income. So I needed to get 15 rental house just paid off before I go buy something really extravagant like a nice house. So I lived at my mom and dad's house, man, until I bought 15 rental property. And I was making a million dollar selling real estate. And I remember a lot of people was talking about me. Oh, man, are you really actually making that money? And he's driving a band. They live. even in his mom and dad's house?

How is that possible? But they don't realize behind the scene I was buying a lot of rental property and I was actually accumulating them and getting them paid down so I get out of the rat race so I can actually start to invest more

and sell real estate without having a gun in the back of my head. And that's how it started for me. In 1997, I bought my first rental house for $105,000. And today, I bought that for $105 with $5,000 down. And today that property is free and clear and is worth $750 grand.

Wow. Yeah. So let's talk a little bit about that. I'm curious, I guess I want to go to, you mentioned I want to have 15 properties and I know I'm going back a little bit paid off before I buy something nice. First of all, I love that you were willing to sacrifice and forget about the everyone around you, right? This is a huge thing today.

Everyone feels like they have to like rise to some social media levels. Yes. Right? Like, well, they, you know, like, even like just the idea of owning a house. Like this, I'm curious. David, your thoughts on this because then you're an agent. But I mean, so many people out there like pushing you got to own a house. You got to go buy a house.

And investors will ask me all time. I don't even own a house yet. Should I still invest in real estate? Yes. Like, yeah, who cares if you're renting? I mean, yeah, I think it's probably financially smarter. If you look at the dollar in percentages and all that, the math, it's probably smarter to own.

But are you just owning something that's going to actually just hold you down? Because most people, when they go and buy a house, then they're like, how much can I qualify for? I'm going to go buy that house, maybe even a little bit higher than that. Right. fight with my lender over it. And that's that idea of I need to own a house is, I think, holds people back more than it helps sometimes. But yeah, I'm curious of David, your thought as well. And that's your idea on that.

Good, David. I just had this very conversation with the client yesterday who's saying, David, I think I want a house hack in the Bay Area, but I also want to go buy properties in the Midwest. There's some turnkey stuff I'm looking at. How do I know which one I should do? And they both have merits to them. All right. What I would say is that owning a property makes more sense than renting the house you live in probably 10 times out of 10 if you look at it over a long period of time. If you look at it over one, two, three years, that starts to be different. But the point of owning a house is not just to watch it appreciate. It's to lock in what your monthly payment's going to be. If you live in a

market like that or me, the Bay Area of Seattle, it's not uncommon for us to find people that are spending $25, $4,500 a month on rent to live in. Those same people could go buy a house, for $5,000 or $6,000 mortgage. And in five years, that will be less than the rent that they're paying, especially if they house hack. So if you can throw on in addition to that, you're getting rental income for your house, and now you're getting a mortgage interest tax deduction

that you weren't going to be getting before, and you're paying down principle, and you're getting appreciation, it starts to look really good. Now, here's another thing to consider. When you were renting every year, your rent went up. When you own a house, your payment stays locked in. Not only that, your tenant's rent is going up. So you're winning twice.

your rent isn't going up. Your tenant's rent is going up instead. And your expenses are staying locked in. When you factor all that together, to me, I don't know why anyone wouldn't house hack. The only time you shouldn't house hack is if you're in someone else's house hack so you can save money to get to your own. Buying a house straight up, just I'm going to go lock myself into a $6,000 a month payment can totally handicap you so that you can't go invest in other real estate. But if you do it smart, it's the opposite. It should accelerate how quickly you can save. And then eventually your price. has enough equity, you can take a helac on it, you can go invest that money. So that's the way that I would look at it. It's not, I don't like when people get into the binary method of,

should I buy a house or should I rent? Should I invest out of state or should I invest in my market? You've got to look at your own financial picture and find out like maximize and tweak what makes sense for you. If you live in Mississippi and rent is like $450 a month and you could go buy a house and it's $600 a month, it doesn't probably make a huge difference what you decide when you're in that kind of. But if you're like where Thatch and I are in, this is huge, thousands of dollars every month that's going to change hands depending on how you structure it. Yeah, I agree, man. You know, for my situation, I can't speak for all, everybody about the listening. My situation is I didn't have a problem living my mom and dad's house. And at that time,

Cammy, we wasn't married yet. She didn't have a problem living with my mom and DACA. We were all, you know, Asian folks all tight. And for me, I was in a hurry going out there in buying. And what I knew from my mentor was, man, get yourself set up so that you, you don't actually have to work. You can work when you want to work. And that was a tough sacrifice brain, like you said, you know what I'm? Because I was the top agent. I was the number one agent in office and around Seattle, driving a converter over St.

Ben, I'm 27 years old, and I live in my mom and dad's house. You can imagine the shit talking that was happening on the street, right? Yeah. But today, you know what I mean? They know where the respect is. You know what I mean? Because very few people can do what I did, you know what I mean? But I leave in my mom, that's out.

If you actually can live in your mom and that's house and you didn't care about getting out, stack your rental property. But I think the biggest thing for everyone listening is, it don't matter where you are right now. You got to really ask yourself, by what age do you want to have the option to work or not to work? And that's the first question. I think everybody should think about when I get into the investment game, right, into real estate. That's good. Yeah.

You know. Yeah. What are your thoughts on that, Brandon? Should you start buying rentals right away? Should you flip houses first? Does it matter how you structure it? Yeah. I think it goes out.

It's like that quote, it's more important that you decide than what you decide. I go to that all the time on stuff because people just don't do anything. I think flipping houses and I mean, house hacking, it all has a place. And that's what's so beneficial

about listening to a podcast, right? Is because you listen to a podcast and you hear a bunch of different stories and examples of this worked out really well for this guy. I'm going to go through this strategy. I mean, you got to make money.

Like you said that, you were selling real estate. Some people flip houses to make money. That's right. And that's fine. If that's what you want to do, it's a great way to make money if you're good at it,

if you have the right skill set for it. I'm so, like you just said, David a minute ago, this is what you should do. This is not what you should do. Like the idea that there is a path that that has already been written down for you that you like just haven't discovered yet.

You know what I mean? Like that whole idea that like, I don't know. That there is, it's black and white. It's not black and white. So, you know, learn as much as you can about everything. I don't know. What do you think? Yeah, I mentioned, I mentioned someone they asked that.

I get that question asked a hundred times a day on Instagram. Hey, if you're a husband and a wife and you got two kids and you want to settle down and you want to get into school district, go for it. Go get your house. buy it, get it, get a setup, and then go make some new money and start buying and focusing on building your rental portfolio, you know, but if you're a single person that you don't care living on your mom's out, you don't care hacking, do that. But you know what I mean? But the key is, if you want to get a house, get into it, but the key, if you want to to own real estate,

you got to go out there figuring out how to make cash for a company through the front door so you can actually buy it rental. Because if you only got enough money to do one or the other, you should have a problem because you've got to keep flipping, but you don't put your money from Parkinson want to make any cash flow down the road, you're going to be living in a flipping house for the rest of your life. So I think people, if you want to get into a house, if you, if it's a half to for your family, he said it, go by it. And after that, focus on building your cash flow. There you go. David, what are your thoughts? I was going to ask you that earlier, but what do you think somebody should do? I mean, it's the same kind of, it's not black and white.

One of my favorite things, Brandon, that you ever said was that all these different strategies we talk about on the podcast are tools in a tool belt. You can do it this way. You can do it that way, the more you have, the more jobs you can take on. I love that. And the problem is when people start to say, well, do I want to be a hammer guy or a nail guy? Now, you do want to niche down on one element and be good at what you're doing, okay? But there's lots of different ways to do the thing you're good at doing, if that makes any sense. You can be a house flipper that looks at those, you get that dealer-in-or-contract, you're like, oh, no, I'm keeping this one. I'm going to split it into two units and have a rental, like what Thatch was saying. I have

a very specific formula for how I build wealth. And it's super simple because I like to take complicated things and make them simple. I earn money, I amplify money, I invest money. Those three things. Earn it, amplify it, invest it. When the returns come back, that's an earning of money, then I amplify that, then I invest it. And at every level, I'm trying to increase that dollar. So if I can earn a dollar, turn it into $1.50 amplifying it, invest that and turn it into $1.75 or $2 by adding equity to my deal, that puts off cash flow, which becomes earning, and I run it through that cycle again. There's all kinds of different ways. You have to know the type of investing you're doing and how it fits into that formula. So Thatch and I, we both earn money by

selling houses. That's a way that we can build income. Then we take that money and we amplify it by flipping houses. I took my money. If that's all you're doing, earning amplifying, earning, amplifying, like Thatch said, you never get out of the rat race or the hamster wheel. But if you then take your earnings that have been amplified and you go invest them, now you're starting to build long-term wealth like what Thatch was saying. But you can do it way faster than the person who just earned and invested. They didn't amplify it. Or they didn't even earn. They just spent all their time looking for a deal. And they found this great deal, but they could have made $200,000 with that same time if they would have had a different element. So you take your skills,

you learn how to apply them, and then you create this ecosystem that starts to create wealth for you. And that's how you get to the point that's at where he's got this much passive income a month. He didn't just say, I'm going to go do this one thing and do it to get to $100,000 a month. He combined all these different ways in a method that causes money to make him money, caused this opportunity to develop that opportunity. And the end result is what he's talking about. And you've got to tweet your thinking if you want to get to that place. Yeah.

Well said, brother. Well said. Well said. Well said. All right. So, Fat, let's go back to you. Your story. You got in living with your parents, started buying these properties.

Now you said 15 properties. Do you pay them free and clear? Were you getting mortgages on them? What was kind of the story there? I accumulated the number of doors. I need it. So I know that if I had those minutes of the door, I'll get in like $25,000. Once I accumulated the number of doors and then I have, then I call it phase two,

which is I started to pay them off. Okay. Phase one, I accumulated, phase two, then I paid off. Once I got that out of the way, now I am out of the rat race. Now I can go ahead and increase whatever I want. I'm doing it because I want to do it. That because I have to do it. Yeah, that's cool.

Yeah, there's a lot of debate on whether or not you should pay off properties. Let's have that debate real quick here, or there's the discussion. Let's say you, like, you could pay off a mortgage at 4% interest, and then it's basically like you're making 4% of your money, which people say is stupid from a financial standpoint. But then the beauty of having them paid off is that nobody can come take it from you. Dave Ramsey all day long would fight for pay them off as quickly as possible

or just buy them for cash. That's right. So how do you look at the debate and where do you find yourself in there? Yes. So for me is I gone through the cycle now. This is this craziness going on right now. This probably not, maybe the fourth and fifth time I've gone through some crazy stuff.

By craziness, you're talking about the coronavirus to the threat to the economy. Yeah, the coronavirus, you know, I've gone through the 2008 crash. But the bottom line is you've got to have peace of mind at some point on this journey. If you always buy it to keep buying and leverage, you keep leveraging, borrow to get borrowing, right? And you don't ever have paid off. You don't really have the true peace of mind. I mean, why are we doing all this for, right?

Not to create more stress for ourselves. I will get older. I'm 50 years old. You get older, you want peace of mind. And so in my opinion, what I learned from my mentor is, figure out how much money do you need to live comfortably if everything was free and clear? And at that time, I say, if I had 25,000, every free and clear. So I'll be very comfortable. He said, well, let's make that the first benchmark.

Let's figure out how many do you need to have. And let's get those paid off out of the way so that you can have peace of mind. Then after that, if you want, you can grow how much more passive income you want. But your house is free and clear. You know what I mean? You don't have to worry about selling right now. There's a lot of real estate in Seattle right now that are scared to shit right now or even just in anywhere in through America. But in Seattle since we are the hot city right now with this virus, can nobody sell no real estate?

Well, imagine this go for two, three months. They are all going to go, you know what I mean, a broke, let alone what they're going to do. So I think at some point, the peace of mind is worth a lot of money. So what I love for my mentor is figure out of much money I need to have to be out of the rat race and then get that out of the way, get my heart. house pay. I live in a big house in Mercer Island. This house is like over $3 million. It's free and clear. Right. And I get everything out of the way. And after that, I go and invest and grow my net worth and grow my passive income because I want to. And it's fun now. It's not because I have to. That's to me. Now, I got a line of credit on all my property if I

never need to get to them. But the other thing that David, you said, why I still still real estate because that's new cash coming through the front door every single day. I flip houses. Not because the flip, I flip how does it bring the cash flow that come through the front door so I can ask you buy a good rental property. So that's the reason why I say pay off your property so you get it out of that rat race first and then after that you can have mortgage on the other property if you want to. You know one of my favorite books of all time. I've talked about it before on the show. It's called Life and Air. It's like a Millionaire with the word life instead of million. And that's the point that they make in this book is like if the goal of life is to get as rich as

possible to just like at any cost gets as much possible then we should play by certain rules like you shouldn't path your house if the goal of life is to get as is the number one goal is to get as much possible you probably shouldn't path your house because you know financially speaking you can get more the goal life is not to get as rich as possible it's not for me and not for you guys I'm sure but peace of mind is a pretty big goal of life so I'm actually I'm actually leaning towards yours now in the beginning I wasn't going to wait 20 years to get into real estate without using debt because like otherwise I'd still be working at a bank right now making 12 an hour, I wouldn't be where I am today.

So I don't regret using debt to get there. But yeah, I'm working to pay off properties right now because I want that piece of mind that comes from, okay, now once I'm like, no matter what happens, no matter, I'm good, no matter what. When I have that, then it, like, because yeah, I mean, all the flips and I write books, book royalties and even burst up, like all that's fun and great, but it could stop. Yeah. The economy could, and I don't want anybody having a stay in that.

Yeah, yeah. I would bet if we looked at when both. of you scaled your business the fastest. It was the point when you hit the peace of mind that comes from financial freedom. My bills are covered. For you, That's it was my houses are paid off. Now I can take risk without worrying all the time. And boom. It's just like any sport you play. When you're out there being aggressive and offensive without worrying about what could go wrongs when you play your best football or for a fighter, that's when they fight the best. And that's one of the reasons you scale so quick to get out of that. What if this goes wrong?

what if that goes wrong? Because when you get that, that monkey off your back, boom, big things start to happen. I get asked all the time, why do you still work if you're financially free? Why are you still an agent? And the short answer is, I don't ever worry about not making my mortgage payment when I've got fresh money coming in, like you said, that's to put into reserves. I've got seven, eight years worth of reserves built up that if the economy went terrible, I'd be fine. And I hear a lot of criticism of people saying like, oh, the birth strategy is bad because you over leverage. I think that's just people that don't understand it. Right. Leverage isn't necessarily the scary thing. It's not having enough money in reserves to make your payments if things go wrong.

Once I hit that point where I wasn't worried about can I not make the payment, that's when I scaled the most. That's when I bought the most properties and I made the most money. So there's a very strong argument to be made for, get that monkey of worry off your back, whatever it is for you individually. And then you'll watch your business take off. Absolutely. My mentor has been drilling in my head. The standard I want you to have at all time in cash reserve is a million. I mean, think about that standard. You know what I mean? So that's been still in my brain since I was young. But on this whole piece of mind, nobody knows peace of mind until they go through some crisis in their life. It's personal, financial, my dad, dad from cancer, you know what I mean?

So I know what it is. And having not have to worry about working or making certain bills. My dad, when he was dying, I had like probably almost $8,10 million around. And I wanted to tell the doctor, I told the doctor, man, I give him anything. all my money to save them and you can. So at some time, you always want to have peace of mind. And I tell you piece of mind is probably worth more than all the money I have, you know, even right now.

So people take that, you know, for granted. So you can actually have peace of mind building your business. You just got to know the right type of property. That's why I'm a big advocate of the bird. Dave, I know you wrote a whole book about that and I always promote it for you. When I talk about bird in Seattle, right, but you can build peace of mind going toward building big asset, big passive income. if you know how to buy right and have piece of mind on your journey there.

You don't have to wait. You know what I mean? You actually buy the number of property, get them paid up, then have piece of mind. And this is why I think the bird models are a beautiful model to do it. You can actually do it. Have peace of mind on your way to big success. So that brings up a really good point. I know that's that you survived the 2008 crash.

You mentioned that a little earlier. Can you tell me what your mindset was like before the crash, what you adapted to get through it and what it's like now? Before 2008, I thought that, hey, no big deal. you know, I'm making a lot of money through the front door. I'm bulletproof, right? Oh, the market in Seattle is good. I'm bulletproof.

Right? If you own a lot of rental property, I'm bulletproof. Well, I'm glad I got smacked because during that 2008 market, I was making a million dollars a year selling real estate. And I own a lot of single family home and some apartment buildings. And at the same time, I was building a 254 unit brand new apartment building in the midst of the whole thing. And that market, when it crashed, most of my renter, that live in the outskirts where the everyday blue collar, they lost their job.

So I had probably 10, 20 houses, units going vacant. And all of a sudden, I had maybe 20, 30 grand a month in vacancy. And I had to step up and start basically paying those rent. And then all of a sudden, during my construction of my big building, the market slowed down. And all of a sudden, I needed self-feeding that machine. And that was 100 grand a month. in that complex. And a lot of my rental property wasn't all paid down and paid off.

Now, my 25 was paid off, but I had a whole budget that was new that I did pay down and pay off. So now what I learned from that is as I'm growing my portfolio bigger, at a certain point, I stopped and I stopped paying some of them down again. Because if anything happened, right, I don't need to be sucking a lot of gas. New construction today, I got to really be careful on what I actually buy. and so I really, you know, I hate this favor. People say, go big, go home.

I think that's a stupid and guy-am comment out there, right? Because you just laying everything on the line, basically, just to have no peace of mind. So today, I have a niche. I do single-family niche. What I know, I do townhouse niche, and I do micro-apartments, and I do all in-field city. So when the market slow down, the in-city field is the last thing to get affected. And so I don't over-leverage myself today. When I do burr, I don't take out the equity out of my property.

I leave all the equity in it. I just take my down payment back out, but all the equity stays in all my birth property. So I don't mess with it at all. And those are the thing I learned in the 2008 market and what I'm doing different in today's market. You know, what you just said reminds me of a big argument we get in real estate. In fact, these arguments in real estate always irritate me because there's this presupposition that there's a right way and a wrong way.

Right. So you hear people say, why would you ever buy a townhouse or a single family when you could go buy 400 units instead? Right. And the answer is very similar. Especially in Oklahoma. Oh, now I'll lose it. Or even another country. There's a lot of that going on. Like, go invest in this country. But the

answer is there's pros and cons to each side. And we said something earlier in this, oh, it was should you pay down your house or should you go use debt to make more? There's pros and cons to each one. When you go use debt, it's an offensive move. You can scale faster. You can build wealth bigger. But at a certain point, when you've already jumped ahead in the game and you've got a big lead, it doesn't make sense to keep throwing long passes or throwing haymaker punches. At that point, you tighten up and you start to play defense and that's how you win. You got to look at where you are in this whole journey and what's going on around you to know how to make the right move.

Absolutely. And what you said is you're playing at a big level thatch, but you're still investing in townhomes. And for the people that say, why would he do that? It's because they're safer. They're more flexible. They're easier to pay down. You can sell them off a whole lot easier than you can sell a 400 unit building off. There are benefits to what you're doing.

And in this environment, you feel safer making those like singles and doubles, not swinging for a home run every single time. I would bet you that when the market turns around and we have a recession and all these people are foreclosing on their 400 unit apartment buildings, that's when Thatch is going to jump in to go by those. You can't get into that mindset of, well, this is the only thing I'm doing and why would anybody do this? And I always pay off or I never pay off.

I think you kind of have to look at what's going on around you and make the call based on what the environment dictates. Absolutely. I mean, I buy single family home today. I build townhouses. I build small apartment building. I got 100 unit apartment. We're building right now.

And downtown Oakland we're building right now. So I play it all the level. And to me, I don't have a precedent. What I buy and keep along the number makes sense to me. Right? And it's a big demand. Everything I buy it today has a niche to it. My micro apartment in downtown Oakland is a niche.

It's one of the most affordable price point you can get in downtown Oakland. So that's a very highly niche that I know that when a market turn, I'm still pretty safe compared to a luxury apartment in somewhere. What do you mean by micro-apartment? Micro-apartment are studio units at average about 300 square feet, and we make them efficient. We make them geared toward workforces, and we put them in an area where there's high demand for rentals, but high demand for affordable housing. Yeah. Yeah, I'm such a big believer in just affordable housing right now in that niche.

Yeah, I think when recessions happen, they compress from the top. I think everyone kind of sees like, yeah, it's the workforce housing. Like, these people need a place to live. And the downside is, of course, like, these people are also the ones that are potentially going to lose their jobs. But there's just so many people at that level that are just not being served right now. I mean, not many people are building micro apartments right now. Everyone's building these A class beautiful, because that's where, like, they can project out these amazing returns for their investors. Right.

If everything just keeps going up into the right. And it looks good on the ground. Mm-hmm. You know, it looks good on the ground. Yeah, you want to take all your people. Yeah, look how beautiful. We have a pond. We have a black swan in the front of it that's swimming around.

Not symbolic at all. When you really look at your ROI return, I mean, it's ridiculous. You know what I mean? On the micro, right? And all the building is always located in the heart of the center of it. And here's the thing. Yes, you're right. It can press from the top.

At the bottom, even if it had to go down a little bit, go down a little bit, it can't go down any further because you're already so affordable. Right now, a 450 unit square feet in luxury apartment in downtown Oakland, they go for three grand, right? and our 300 square foot unit, $325, go for $2,000. Yeah. And one better in someone's house is going for $1,500. See, at some point, you can't go any lower.

So you're pretty protected, you know, when you really know a niche. And what's cool to is if you do a good job, and this is a belief I have, if you do a good job of rehabbing or building like you're building, now you have a new product. So let's just say, let's just say that bottom rung does lose their job at a good portion of them in that rent. Well, that's fine because the people above them, the guys that are paying $3,000. right now. Like, they're just going to tighten their belt. Now when they have a choice of where they're going to go, they can go to an old 1950s building for 1800 or they can go for

2000 to brand new construction. And so that part of the, that part of the industry, I think, is going to fare a whole lot better. At least that's my. And I think, I think since we're on this conversation for the listener, these are conversations for all you out of listening. If you're ever going to have the mindset of owning investment property, really think about what niche do you want to carve out only rental. Don't just go buy rental to say you own rental. Don't just go buy rental so you can own rental. Don't just go out and buy property in Louisiana, Tennessee or wherever just so you're buying it. Really think about the niche. And for me, my niche is around affordable housing. A lot of my property are in area that is in high end area like Seattle, but it's geared

to affordable. So I am creating a real good niche for myself. So you're in that Oakland's my market. That's where I am all the time. I'm in the East Bay. And I know how much in demand that is. I see how much prices are growing. And you see the pressure people are having to be able to afford the houses out there. Affordable housing is where it's at right now. That's what everybody is demanding.

And really, the reason Oakland's growing is because San Francisco already, there is no affordable housing. So they're flooding over into Oakland because there's no more room. So that's just a good principle to look at when you're trying to figure out where to invest. Well, where is the place everybody wants to be that's too expensive? Find the place right next to that. and keep going until you actually get to where you can get.

That's kind of what Tacoma is to Seattle. Yeah, it is. It is. Seriously. Tacoma is the overflow from Seattle's crazy prices. Yep. Yeah. So if you were trying to figure out where should I invest in Washington, I would say, okay, well, Tacoma is blowing up? So what's right next to Tacoma? Is there a suburb right outside of it where I can go and I can find something to

house hack? The other point that I would want to make is that for people that are afraid to buy a house right now, there's going to be a lot of that. Okay, the COVID-19 has got everybody asking a million questions. People do not like uncertainty, so people are freaking out. But they're saying, should I buy? Should I wait? What's going to happen?

Your mind will never, ever be able to answer that many variables. The best computer in the world couldn't handle all that. So what I do is I just plan for the worst case scenario when I keep moving forward. If you go buy a four or five bedroom house in Oakland right now, and God forbid the market tanks, right, that that $800,000 house becomes worth $600 or $6.50. Well, there's a lot of people that are going to let their houses go because the market is dumping. We saw that in 2010. Where are they going to go?

They need a place to live. They're probably going to come rent a bedroom from you. And you're going to be the person renting out that $1,200 bedroom or that $1,000 a month bedroom. Now they're paying your mortgage for you. So even though the value of your asset dropped, your cash flow actually goes up, you save a bunch of money.

You can buy another property because they're cheap. And then when it turns around, you've got two houses that are going to go up in value much higher than what you paid for. There's always, always, always a strategy that you can implement, whether the market's up or whether the market's down when you think that way. When you think in a one-track mind, I buy low and I sell high.

I cash flow and that's all that I worry about. You get yourself into trouble. When you can kind of like flow with what comes your way, like what Thatch is describing, you won't lose money in real estate because there's, you know, if all the houses for closed people need a place to live. Right now we have the opposite problem. We can't get buyers into contract. It is super hard because every house is getting 20 offers.

This brings opportunity for people that might. have been in that position. And so that's why Thatch, Brandon, me have confidence to be buying because we're not just looking at this single track mind, buy a house just to buy a house. We're looking at all the variables. Do you mind sharing Thatch, like what your portfolio looks like now, kind of like what you're investing has grown to? Yeah. So today, I still buy, I still sell real estate today. And then I also buy houses, single family houses. And pretty much most of the house I buy are beat up houses and I fix them and I keep them as

Burr Properties. I built brand new townhouses in Seattle. I try to find property where when I build townhouses, I try to keep them. If they fit the Burr model, I keep them. If they don't come close enough, then I just go ahead and build them to sell them to keep more cash in my pocket. And I build micro apartments. So those are all my portfolio. So when you add all those up, I have over $100,000 property and I have over $100,000

a month in positive cash flow after everybody's paid out. Wait, wait, say that again. How much? Yeah, over $107,000 a month. Oh, that's amazing. Yeah. And what's crazy, Brandon, started from zero. I have no investor in most of my property.

The only big, the only investor I have in my property in Oakland, but all the other stuff, I don't have investors. So I do all this again from new cash coming to the front door. I get to keep all the cash myself. Yeah. And you know, I love this because I think what the big, one of the big hurdles that Brandon and I have, because we spent so much time putting our heads together,

trying to figure out, how do we help that newbie that's afraid get started? Because as you've seen that, once you have this much momentum, it gets so much easier. Deals come to you. You've already got contractors in place. Like this step just falls into your lap.

Okay, I'll go to this with this one, this with this one. But that's because you have momentum. Building that momentum is the really hard part. And one of the things that stops a lot of people is the whole reason that they were drawn to real estate investing was not to build wealth. It was to get out of a situation in life they don't like. They don't have confidence. They think money's going to fix their problem. They don't like their job. They don't want to change something about them. They think real estate investing is the magic pill that's going to make them happy. But the people that tend to scale the biggest like you Thatch kept working. You kept earning money to reinvest. You hedge the risks that you took with investing. In fact, I'm sure you bought a lot of properties in 03, 040, 0505, 06 that you wish you wouldn't have. And you kept them because you were working and you were earning money. There's something to be said for the person who says, I'm going to keep working. I'm just going to do a job I like now. I have freedom to go get

into a better position, a better job, or leverage out the parts I don't like and focus on what I do to scale. And I really think a lot of people shoot themselves in the foot when they get a tiny bit of success. And they're like, okay, I'm cashing it in. I'm throwing in the town. I go, I totally agree, man. Now, for me, I was parking cars at a Chinese restaurant, working at a body shop and selling and a bagger at Safeway when I got into real estate. Now, it was natural for me to quit though and go into real estate but today real estate is my vehicle flipping houses my vehicle building new construction you know a thing that I don't want to keep those are my view to bring new cash in the front door so I can actually buy good rental property with my own money

and keep 100% of my own property and my own equity and my own passive income but yes I see that all the time as soon someone get a little bit success they stop bringing new cash in the front door and what they do they go find an investor to put the money up they do all the damn work to get mixed It can be 40% of the profit, but most of the investors don't want to own long term. They want short term in and out. And so they got to keep flipping. They got to keep flipping. They got to keep flipping.

Then all of a sudden, 20 years go by and they go, when did the time go? I firmly believe as soon as we hit a recession, which could be right now from the virus, probably will be. We'll probably climb out of this and keep going. Nobody knows. But a lot of the people that are posting on social media, let me teach you how to make money in real estate. Do big deals.

I'm going to show you how to raise money and syndicate are going to be. be gone. We're never going to hear about them again. Their social media is going to disappear because exactly what you said. They just rode a rising tied up. They made it look easier than what it was. A lot of those people are critical that people like us that are saying, no, just keep working hard. Keep your foot on the gas while you're growing. Like, no, no, no, no, quit your job, pay for my program. I'm going to teach you how to do it. And they're going to be left. When the tide goes out, what's that Warren Buffett quote? When the tide goes out, you see who's been swimming naked. I love that quote yeah what's your thoughts on that brandon about brand new investor went out there raising

investor to do deals yeah i don't know i think i don't want to say people shouldn't do it right goes back to the black and white there's everything got their own thing uh there is a whole lot of people though today that are really excited about this idea of i got no money i don't have an experience i'm going to go out and do a syndication because because right now money is easy right and convincing people is fairly easy because everyone's like it's nervous at the stock going up too. Yes. It's been going up.

Yeah. So it's, I don't want to say easy, but it's easier to be a syndicator now than it ever has been before. But yeah, again, none of these people know. So I think if you're going to do it,

that's probably okay if you go work with somebody who's been there, done that before. And so you're part of their team and learning alongside them. Yes. But yeah. You know what it reminds me of? Do you guys remember when Texas Hold'em just like completely took off and everybody was just wanting to play poker and watch poker?

Yeah. Texas Holdom just became huge. It was on like ESPN. All of a sudden poker became a sports. I don't know how that part worked, right? But everybody wanted to play Texas Holden. So if you were a poker player, that was the best time ever to be good at it. Because all these schmucks that know nothing about poker want to come play and they're bringing

money and you're just taking it all, right? That's like when the real estate market's doing super good. You don't have to be that great. You just got to be a little bit better than the next person and you're going to collect everything, okay? But if you're the really good poker player now that we've moved on and now Texas Holden isn't the cool thing anymore, there's different stuff that people are interested in. Now it's really hard to make money playing poker

compared to what it was like then because there's not as much easy money flowing around. And that's something just to be aware of when you hear all these people saying, I did a ton of money. Look at my check that I just made. It doesn't mean real estate is a scam, but it does mean it's easier than normal

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All right. So That's before we get on to like the deal deep dive and the rest of the show, I'm curious, you talk a lot about burr. I know on your Instagram you talk about burr. Can we talk about it real quick in case somebody hasn't listened to this show before and they don't know what burr is? Can you explain what burr is? And kind of like, how do you know if a deal, like how do you know you're going to go and

burr a deal versus you're going to do something else with it? Like any tips you have on people trying to get into that world? Absolutely. David obviously wrote the book about it. So, you know, I don't know a lot of people ask me, you got a book. And I was like, no, but David Green got a book. Go get it over there. Right. But Burr stand for buy it as a fixer.

Rehab it, rent it, refinance it, right? And then repeat the process. Okay. So after all my experience on real estate and, you know, try to bring as much cash in the front door as possible, how do I get to a point where I can actually, buy more property. And of course, bird was the thing I learned from a mistake. I'm just doing a lot of deals. For me, today, after owning a lot of property, owning property in certain location, I realized

there is three ingredients, or I call it three component, in my opinion, to create my opinion of a true bird for me and a property I will keep as a rental. And it doesn't meet those three criteria that I don't keep it. Criterion number one, it has to meet the 70% rule. If a property is appraised for, if it's going to be an ARV, it'll be a million dollar. Purchase price and rehab price to be a minimum of 70% all in, right? If I don't meet the 70% rule, I don't keep it as a rental. If it's at a 65, I might keep it, I might flip it. Okay.

Number two, it has to be in an area to have good rent so that when I pull my down payment money back out and finance 100% of my 700,000, the rent has to be. has to cover all that and property tax and insurance and give me at least $500 plus and more. All right. If it doesn't be in, if it not in that area that can do that, I don't actually buy it because it's the area and I just sell it. And number three, it has to be in the area where I work where it appreciates every 10 year.

It double every 10 years. So if it doesn't double every 10 year for me, I don't actually keep it as a rental. I get rid of it. So I learned from all those life experience in the past that I have a home that I use. to own rentos in the Seattle area where after 20 years, it never even double. And when it's time for me to sell it, you know, I bought it for 150 and it was worth 175 after 20 years, right? And even so in that market today isn't that strong in Seattle. So I'm made a conscious choice that for now on, I'm going to sell those properties moving close into area where it has a better appreciation.

That's why today when I buy a property, I always look at me in certain area in Seattle. And so I get the appreciation. I only buy a certain area where I have good rent. And of course, I only buy property where I can create the value. I can get 30% margin. Otherwise, I don't keep my rental property. And that is my definition of a keeper. That's so good. That's when you first started where your where your criteria a little looser when you were first buying. Way loose. And that's what I wanted to point out. It's okay to do that, right? Because when you're starting, you're never going to hit a 70% rule, a margin on every single deal that you're looking at. You're not getting as good at deals. You're trying to build wealth. For Thatch, you've changed your criteria to meet where you are in life and what

makes sense to you. For the brand new person starting out, don't think I need to go hit Thatch's criteria. If you can, awesome. But for some of those people, if they're at 75% all in instead of 70 or even 80, it still makes sense to buy that deal. You see these things change as you grow. Because I was thinking, as you were talking, I have three criteria. My categories are the exact same as yours. Equity. cash flow, neighborhood. Those are the three things I look at. But our actual criteria within those categories are different because you're further ahead. It makes more sense for you to be there. And this just plays to our point of you can't just copy someone else's model and think you're going to go out there and do what they do. You'll never get anywhere. But you still can copy the

principles of what they're doing. Yes. Yeah. I would say if someone's new, definitely, you know, like Lorenz, my videographer person, I'm teaching them how to go out and prospect and find deals. And I teach him, if you're going to go prospect three, four hours a day, why go prospect in the area that don't have much appreciation or low rent? You might have will spend the same amount of hour prospect in the area that give you better return, better on your money. So it's just a choice. So if you're newer in the game, just figure what area has better rent, what area has better appreciation and spend your prospecting time there because he's still spending the same amount of hours anyways. And then the third point is that whatever you believe is possible, you're going

to attract. If you believe, that you can get 10% margin, you will always track 10% margin. If you believe that you can get 20%, right, you can get 20%. The whole key is, in Seattle, the average flipper, they make about 10, maybe 15% margin. And the problem is that become the reality in this game. And so I tell Loren, when he's new in the game, don't listen to that reality. Listen to the reality that someone like me telling you because now I'm brainwashed it with a different reality. So it's all exposure out there too. That's why I love doing these podcasts with people who are playing big because it's not that I have more experience, right, which I have gone through a lot of mistakes. And I tell people, you don't have

to make the mistake. You can live from other people mistake. And if you go find an area that have better rent, better margin area and better appreciation, start playing in that sandbox and you will find better opportunity. And you work your way up to finding better margin in that sandbox. That's smart. If anybody who wants to know more, go deeper on this, I know, like, Fats, you recently did a video with Tarl, who's a mutual friend of ours. Yeah, it's on the Bigger Podcast YouTube channel. It's called How to Start Thinking, like, a big time real estate investor. It was phenomenal. I want to recommend everybody. We'll actually put a link to it in the show notes as well for the show. But go check it out. Yeah, how to start thinking like a big time real estate investor. You can even just type that whole phrase into YouTube. Yeah, really, really good stuff. I wanted to ask you, Brandon, you're in a very similar situation. You're an expensive market, Maui. just like what Seattle is. You've got your hands in a couple different methods

and you're creating a synergy between all of them. What have you found since you moved to Hawaii? Like, how has your business changed and how has your mindset changed when it comes to what strategies you're going to use? Good question. So this goes back to what you were saying earlier. We talked about a number of times

is you can't just follow a formula or somebody's rule that says this is how it's done. I'm a firm believer that every single market you can invest in real estate. It doesn't matter. Every market at all time, doesn't matter. You can do it. but you can't always do the same thing that you were trying to do it five years ago.

You can't do the same thing that they're doing in the other market. I don't know if I could do what David's doing in Jacksonville here. I don't think I could do, but I could do what I could probably build micro apartments, maybe, but maybe not. Like, again, like everything's different. So I found some stuff that's worked really well here. And how did I find that by talking with people who were actually doing it? Because if other people are doing it, then my assumption always is I can do it and I can do it better.

That sounds a little bit arrogant, but like, all I mean by that is like, I will work harder and I will learn more and I will test more fail more in order to get to the end result more than most people will. And so if people are, actually, I got this from like the 10x rule, Grant Cardone's book. He's like, whenever he sees somebody doing something inspiring and great, he doesn't get jealous. He says, well, if they can do it, I can do it. Like, that means the opportunity exists. And so, you know, you see somebody with a huge social media following, don't be like, oh, they suck because they got a big following, get all jealous.

It's like, oh, it's possible in this niche to have that big of an audience. Great. That's where I'm going to go. So anyway, I'm not sure that answer the question, David, but that's what I did here. I found flipping condos has worked really well for me here. So that's what we're doing. We're flipping a number of condos. And in the past, I was like, I would never buy condos.

But in this market, it worked really well. And then I bought a triplex that is basically doing the Joe Asamoa strategy, who's a guest we had on the podcast, doing that strategy and going Section 8 with that. And that's working really well here as well. So I don't know. I want to point out part of the reason that it's working for you is you're taking the resources that Brandon Turner has unique to him and he's utilizing him. So Brandon meets people that want to help him.

we met Greg. We just interviewed him. I don't know if that show has come out yet or not, but he's helping you build a flipping business. That's at this point from all the houses that he's sold from as long as he's been in real estate, from the people to follow him, he has resources that other people don't have that he uses to help build his wealth. And before everybody says, well, that must be nice to be branded and that. I don't have that. You do have resources that we don't have. You have time to be boots on the ground. You know people that will reach out to you and talk about real estate that won't reach out to us because it's too hard to get a hold of us. There's things everybody has that they could use if they want to do this. When you're picking your niche,

ask that question, where do I have a competitive advantage? Where am I likely to get deals? The flip that I'm doing right now, my partner and I are each, we each made a hundred grand on this flip. It came from a friend who was in financial distress was going to lose the house to foreclosure. That is not a special David Green gets this deal that nobody else can get. That's because when it comes to real estate, they think of me and they said, what do I do? I'm going to lose my house. And we were able to step in and make a win-win for everybody. Everybody out here has that chance. I mean, if you don't have a friend, maybe that's the case, you should work on making friends. But there's always resources that you have at your disposal that you can use to help you with your

goals. Absolutely. I agree. 100%. Yeah. Hey, Fats, where do you see yourself had in the future? Like, what's the next few years look like goal was? For me is, I got a 14-year-old boy. I got a 12-year-old boy. And for me right now, I want, I'm just having fun right now doing real estate. I'm not doing it because I have to. I want to, in the next five years, I want to get to $200,000 a month in positive cash flow. My last, my 12-year-old Hudson's going to be in college here, probably to six and a half years. By then, then I want to do some 1031. I want to buy my house in Newport Beach and down in Maui next to you.

Nice. You can buy next door. It's a nice house. I just spent some time there last week. Okay, good. We'll be neighbors. All right. And then after that, I can,

You know, just work wherever I'm at. Right now I just got to stay in Seattle, be with my kids. But I'm just positioning myself again. This is, again, I'm thinking right now 10 year down the road, basically, how do I want to position my 10 years down the road? You know, I know my kids be out of college. So I'm just stacking my money, stacking my rentals. You know, I want to buy a beautiful home on waterfront on Mercer Island.

But again, a lot of people don't see this, I want to sacrifice because the waterfront house over here, it's going to cost me $10 million over here in Mercer Island. I don't even need it. You know what I mean? I got a nice house now. but I'd rather go ahead and stack more rental and get up to $200,000 so that when my kid get out of school

and now have a lot of option. And that was no different back then when I was living in my mom and dad's house for a good 10 plus 10 or 15 year when I bought my first house. So that's what I'm doing? You know what's cool about this episode hearing your story is like, you know,

on social media, I know you have a cool car, right? Like, what do you have? I got a Rose Royce convertible. I got a Ferrari 488. I got a G-Wagon Mercedes. I got a new Bentley coming here next month of my birthday.

All right. So you're a car guy. And just opened Pandora's box of cars. Oh, my question. Well, here's cool. It's like on social media, people might see that. And they're like, oh, wow. So Fatsch's got all this cool cars.

Like, I'm going to get that. If I jump into real estate next year. It's cool to hear your story. I mean, you've been in this for decades. You lived with your parents for a long time. A long time. You paid off all these properties. You're like, you earned those cars.

They didn't come naturally. So I have a quick question on that note. When should somebody do you think reward themselves with the new car, with the fancy stuff? and when should they say, you know, I'm just going to keep plowing it back into the business and wait until I have more. What's that point? I think that the first thing is, I think if anyone get on this journey doing real estate, especially they want to get into investment real estate, I think the first question that we talked about earlier, at what age do you want to have the option to work or not work, right? How many doors that would it take for you to actually have that?

So if it's $20,000 a month, on your journey going and making money and start accumulating enough doors and start buying those door and it even start to paying some of those down on your journey to your 20,000, right? Hey, if you're driving a Honda, you want to just get something nice, but you can't afford a Ferrari, go buy something nice,

going from a Honda to a Lexus, what I did. Right? Because it's not going to make that much of a difference. It's not going to change your life overnight, going from a $500 to a $600 car payment. But at least you're rewarding yourself. You know what I mean?

So you're going to be inspired to keep going towards your $20,000 a month and passive income, right? I didn't get my Ferrari, you guys, until 15 years later when I first decided I want to buy a Ferrari. That's when I got out of the right rate before I bought my Ferrari. And so that was my big ticket. But I did buy, and I went from my used Honda, and I bought a brand new Accra legend. And the menthol payment was $300 different, you know.

And I worked my way after buying a used Mercedes-Benz. That was, you know, $4,400 different. So I say reward yourself, but, you know, don't jump from crawling, trying to do a marathon overnight. Yeah. Yeah. And this goes back to what we talked about at the beginning of the show, right? Like, people compare themselves to other people's, like, what they're doing. Instead, I have to do this too.

And it just, it doesn't work that way. Everyone's got a unique journey. And if you go out and buy, let's say you get into real estate, you're super excited about it. And you jump in and you go buy that Tesla that costs you $1,300 a month. That's $1,300 a month more now that you have to try to generate. That's right. That's years potentially longer. You have to stay at your job because you're hampering yourself with this thing.

So if you want to reward yourself, then make it a reward. Don't make it a, I'm going to reward myself first and then try to out earn my reward. that's where I think people... Well, what that kept him safe was that he let his investments buy his toys. He didn't use his principal to buy his toys. It's completely different when your apartment building bought you a Ferrari than when you bought a Ferrari

so you couldn't buy an apartment building. And the other thing I really like that that you said was ask yourself, when do I want to be financially free? Because a lot of people with an amateur mindset will hear that and they will think, well, I want to be there tomorrow, right? But you probably don't. If I said to an overweight person, and how quickly do you want to be at a healthy body weight?

And let's say they're 250 pounds overweight. And they said in a month, there might be a possible way you could lose 250 pounds in a month. But I promise you they wouldn't do it. If it involved like getting up every single day, eating a grape and sitting in a sauna for four hours. Let's say that that was medically possible. The point is the strain that it would put on you

to accomplish a goal in 30 days versus a year is so bad, hardly anyone will ever actually do it. And this financial freedom works the same way. You can get there in a very short period of time if you went and knocked on doors for 10 hours a day and then hired VAs to actually process all the deals that you got your way and just went through mistake after mistake and people hated you and you screwed up a ton and you had no life and your social life fell apart. You can get there quickly. Nobody wants to do that. So there's nothing wrong with saying, no, I want to do it over a five-year period of time because that is a manageable

pace that I can handle and still enjoy my life and work it that way. Well, here's the thing. Most people wouldn't even ask that question anyways. The problem is if they always following and listen to people all the time about flip flip flip flip all they're talking about us when can i get my next flip yeah right the good thing is start from the ending in mind is when do i want to have the option to retire and then figure out if this flip is going to be a flip to generate new cash or this fixer house is going to be a good problem i can start keeping my rental you know after this conversation in this pocket i think for giving people an idea if you want to start having nice stuff down the road start start thinking like an investor more versus a flipper yeah smart dude all right well

What do you need in your business right now that our audience could help you with? Anything that you're looking for that, I mean, quarter million people listen to this right now, anything that they could offer you or bring you? I think for me, it's, you know, if anyone, you know, have any kind of, you know, house, land, a townhouse, you know what I mean, sites, apartment sites, you know what I mean, in Seattle, that you guys are looking for me to buy, you know, think of me. I'd be happy to look at it. If I don't like it, I can refer to other people.

If I like it, you guys can sell it to me. So that's my little niche up here. All right, very cool. Well, let's head over to the next segment of our show to learn more about something you've done. It's the time for the deal deep deep dive. Let's do it. Let's do it. All right, deal deep dive, part of the show where we dive deep into some particular deal that you have done.

Thatch, you got something in mind that we could dig in on? Yeah, you know, I'm thinking about it here. And I, after talking to Kevin, you know, he said that probably 40, 50 percent of the people are more beginner. Right. And so I figure out I keep something that I think anything. Anyone can do this. It's a simple property, but it takes a different thinking to do this deal versus a flipper mindset. Okay?

I like it. So what kind of property? We'll start with first question. What kind of property is this and where's it located? This is a single family fixer with zone single family zoning in area called Beacon Hill in Seattle. Right. All right. This is right up just right above the Boeing field.

How did you find this deal? Cold call. Cold call. Like, how long ago were you cold calling? I still call on door knock today, three days a week, four hours a day. Still today. I love that. $100,000 a month in passive income.

Still cold calling. Yeah, cold call door knock. I do it every day, still four days a week. That's awesome. They call it cold calling because you got ice in your veins. All right. How much was the property? Like, first of all, what were they asking for?

And then what did you get it for? Yep. So we co-call the guy. and it was a two-bedroom, one bath, 900 square feet with an unfinished basement, low ceiling, you had to go outside and get to the basement. Okay. When you say unfinished basement, for me as a real estate agent looking for house-hack deals, I get really excited, but my heart just started pounding.

Okay. The owner was, I just asked in 300 grand. Okay. And we talked about it, and then we eventually fell out of price at 285 as a fixer, as he is. and I bought it for that, 285, 2-bed and one bath, 900 square feet, unfinished basement. The basement was unusual because it was low ceiling, five feet,

and you had to go outside to get to the basement, and all down there was cross space and washing dryer. Okay. How did you negotiate that deal? Any tricks that you used? Nope. You know, when you're throwing off and cold call and meet the people yourself, I believe it's much easier to negotiate with the owner,

and it is to buy it on courthouse or everything else. And the guy was motivated to move. He wanted to get down to Arizona. and he wanted to sell it as if. The house is just really beat up. It's a hoarder house. And he's just like, hey, man, you know, $2.85, I'm good with it. All right, let's go.

Give me cash. He just needed 30 days after he closed to stay there for 30 days. And he wants that 3-tunit. And I came in like 365 and we landed at 285. Easy one of the easiest deal I can do because, again, I don't knock. No one else was out the door knocking, the co-calling the guy. I mean, no one else was there. And it was easy to negotiate.

Yeah, that's awesome. How did you fund it then? Where did the money come from to buy it? Yep. So basically, I have Harmony Lender. And so what I did was with the basement for people out of listening, if you have houses basement or upstairs or even detask garage, I had to figure how can I add value to this home. And the basement, I dropped the basement floor versus jack in the house up. I dropped the floor. So I created a six and a half, seven feet ceiling. And I put two more bed and one back downstairs. Now I made it an 1800 square foot home. And the total rehab was 140. So 285.

heard of somebody dropping a basement floor. Oh, yeah. That's clever. We do that all the time. Do you? I never knew that was a thing. You just, and what he actually gave a really good nugget there where he said instead of jacking it up, because if you're smart, when you hear that, you realize, oh, there's two ways to do it. I could jack it up or I could dig out the floor. Let's ask my contractor, which is the cheapest way. That's right. And dropping the floor is much easier, much cheaper. And so we can be reconfigured upstairs. We get it all out. We've made a staircase that go downstairs. So now there's home about a 285, 140 for rehab, and it's a total of 425. Okay. Now it's a 4-bam-2-bath, 1,800 square feet. And hard money lender at the time, right,

asked me to put down 20% of 425, which is 85,000. And then they financed the rest. But that's, I don't have $85,000, so I can't do this deal. And then people shut off this podcast, right? That's right. So what would you do if you had nothing? If you had nothing, okay, A, you have such a good deal. The most easy thing you can do is you can assign it with a month. This property was appraised after I got done for $700,000. So there's $275,000 equity in this house. If you know how to run the math and run numbers,

if you didn't have no money and you couldn't get no sorts of getting the way to put up the money, assign it for $100,000. You can make $100,000 right there on the spot. Yeah, that's awesome. Right? And if not, find someone with $85,000. right and then you know split the profit with them oh wow yeah i love it that's great right yeah that's finding somebody to bring the down payment and then split the profit i is one of my favorite

strategies of all time for no money down yeah as long as you have the deal that's what brandon says all the time you get the deal the pieces will work out on their own and by deal we mean a lot of equity that's what that's just saying you get you got it at a good enough price you could do anything you have every option that that at your disposal this is why i must i preach this all the time guys flipping houses to flip houses overrated in my opinion finding good deal is really where the where the money is at where the opportunity's at if if i would teach me how just go out there find deal like this they don't even have to flip how they can use to sign it to make a hundred grand and then move on all right and then when the next time they'll find a deal like this instead of

assigning or flip it uh fix it up and then keep it as a bird property all right beautiful okay so what did you actually end up doing with this deal So what happened was after I got it all done, I put $85,000, I was like, all done, the bank, I had to refinance from hard money into permanent financing. The bank sent down an appraiser, and they appraised $700,000. And so they said, I will loan up to 70% of the appraised value, which is $700,000, $400,000, $4.90. Well, I'm all in a $4.25. So I told the bank, I just want to finance $425.

And so they said, no problem. You got plenty equity in it. So they finance $4.25. So at 425 finance, I got my $85,000 back and the hard money got their money back. And so when I got that, I got no money in the property. I left my 275 equity in the property. I didn't take it out. And my mortgage after property tax and insurance, I rent this for $3,500.

And I make about almost $700 a month in positive cash flow with no money in the property. But I got $275,000 equity in the property. And that's anyone can do this deal. You just got to go out there and prospect the owner directly. Because you cold called, right? That's why you got it. I mean, that's amazing. And finding opportunity where you could add square footage to create the higher ARV.

And that's exactly what we're doing with my real estate business is I'm, I've got like four guys combing the MLS to see where did a listing agent screw up and say this house has 1100 square feet. But it has 600 square feet that wasn't permitted or wasn't included or could be added. That's why when when you said unfinished basement, my little antennas go, my reticular activating system's like, oh, I'm looking for those words all the time because that equals opportunity. So it's like we're saying, this is what we do to find deals for our clients. This is what Thatch did to find a deal for himself. You can find deals. It's not as simple as put a search into Zillow and have a house that's 50,000 undervalued, right? You got to do a little bit of work, but if you're willing to do the work, man, there's so much opportunity. This is

awesome. If you guys live in the city where you have basement, I like to go and when I do my criteria search, you know, for making my list of home to go out and doorknock and co-call, I like to find home with unfinished basement so I can go co-call them, and don't knock them. If a house has upstairs, that's unfinished, I like to go after those property. If a house has detached garage, I'd have to go after those. Those are homes that I can add value without cost me an arm and a leg, and I can make a lot of money return. Now, the beautiful part about this property is, after I got my money out of this property, I get $600 cash for a month, that's $7,200 a year. But the house is on a 5,000 foot lot. And in Seattle, just like anywhere else in the metropolitan area, any big city,

single family zoning now, if you got a backyard, they let you do a detat dwelling unit. So right now, I'm in the process of permitting a thousand-foot detat dwelling in the back. And when I've done with that building, cost me $2.25, I think it's worth $5.25. I'm going to get probably another $600 a month in cash flow on my dog do with no money out of that property also. And the land was free from me. So, that's cool. If you were not already selling houses, I'd be trying to recruit you to come work up with my team. because this is like we are sharing a brain.

This is exactly what we're looking for for our clients right now. Here's the thing. Anybody can do this. This is what I call basic, right, 101. But if you are flipper, you see this opportunity, you're flipping you get rid of it, and you never are able to keep anything. So when you got to invest with myself,

you think like an investor, you analyze like an investor, and you figure how can I keep this property? And this is how you create walk for here. Hey, Fetch, did you say you were paying $225 to build a thousand square foot, But okay, what does that thing rent for when you're, if you're going to rent that out? Yeah, they rents for about $2,200, almost $2,500 a month in Seattle.

So it's basically like better than a 1% deal. Pretty much. Off of a brand new construction that in my assumption is you're going to separate the water meter so they pay their own utilities. So like you're going to have like this. So here's what I want to make this point is that that strategy is something that works a lot, especially like California, you know, Seattle area, Hawaii. Like I think that's one of the most tremendous opportunities out here in Hawaii is like,

adding those units because out here I can build, let's say I can build a 600 square foot, two better than one bath with a huge, you know, because we have outdoor living. So huge lanai is actually like the livinger basically. It's like 600 square foot. I can build for about 150K. That'll rent for $3,000 a month. It's a 2% deal all day long in Hawaii. Like so like, but nobody does it.

Like it's so like rare to actually people to do that because it takes work and you got to go to the permit process. Well, the thing I don't do it, right? And because when you have a, when you're a. identity is a flipper. You have to flip to keep the identity going. If you're an investor, and that's your identity, you keep that going. Yeah. It's that saying to the man with the hammer, everything is a nail. Yep. When you look at it from that perspective, that's how you see it. Your reticular activating system says, nope, I can't flip it. I don't want to look at it.

Yeah. All right. Last question of the deal deep dive. I mean, was there any other lessons that you picked up on this thing that you can share, anything that people can pull out of it? I think that that's basic real estate investment. If you think like an investor, you always think like investor, you analyze it, invest. You look at the project through a different lens. If you think like a flipper, you always look through a lens of a flipper. And that's part of the biggest lesson. I think people could take away from that.

So expand your lens. Love it. All right, dude. Yeah, that was one of the best examples of a burr I've ever heard. So I'm going to ever, when the future people are like, well, what's bur? I'm going to be like, go listen to the deal deep dive on this episode. You will not have any confusion about a burr after you're done with that, that that explanation.

But they really want to see a real big burr, watch the, watch the YouTube one that me and Tarot did, right? Yeah. So good. Yeah, you and Tarrell, you guys do some good stuff together. So, yeah, check it out. Again, Bigger Pocket's YouTube page. You'll find some awesome stuff there. And now, it's time to head over to the last segment of the show.

It's time for the world famous. Famous for. All right, time for the world famous, famous for the part of the show where we ask the same questions to every guest that comes on the podcast. Question number one. That's, do you have a current favorite, real estate related book. Yes.

I love this basic real estate book for the basic people. The Science of Getting Rich by Wallace Waddles. I've never even heard of that book. Yeah, man. This is one of the most OG. I learned this from when I started real estate. All right. Very cool.

What about a favorite business book? This is all my favorite business book. What do you got there? Zappell. Delivering happiness from Zapples. Yeah, I've not read that one. Yeah. Tony.

You can make money and have. alignment, peace of mind, and purpose. Oh, that sounds like something Brandon would love. How did you not read that book? I've not read either of those books. This is great. Fatch, did you listen to every single episode of the podcast, find the only books Brandon hasn't read and go bring those here?

How'd you know that? I mean, how'd you know that? I've never seen them stumped twice. This is awesome. It's like someone just knocked out Muhammad Ali twice in a row. All right. So when you're not finding books that Brad hasn't read, which is a goal in out of itself,

What kind of hobbies do you have? I coach my kids, two of my kids' baseball team. They play 14 baseball, baseball, you, I love to be on their practice, their games. And then, you know, we love to travel, take the kids around the world and just have real life experience with those guys. And that's one of the things we love to do.

Sports, you know, developing those guys, mindset, personally, and everything, business. Like my kid, they love going to real estate sites. They love to go. They actually own washing dryer in the apartment building that we own. And they want to, every time we build more apartment building, they want to take their money and buy more washing dryer. all the unit. So they love to do stuff like that. We love to teach them stuff like that.

So that's what we do for hobbies and fun. What a great idea. I never thought about having your kids run the washer and dryer because then they go over to collect the coins. Yeah, it's fun, dude. It's awesome. Yeah, that's awesome. Like, I actually love laundry machines because it's such a simple, like for a picture of financial independence or financial freedom and passive income. It's such a picture of that. You know, because it's like, you buy this machine for $1,000. You put it here. You have to rent the space maybe or maybe you, you, you, you, you know, have a partnership, you make money, you go and collect the coins. Like, it's just such a pure picture for a young mind on passive income.

So very cool. All right. Last question for me. Number four of the famous four, that's what do you think sets apart successful real estate investors from all those who give up, fail, or just never get started? I think from what I realize from life experience is that they don't have a very clear end game on what they're doing it for, why are they doing it, and what they're doing it. and what their purpose are doing it for.

If you don't have a real clear end game, then you're not going to keep going when a time get tough or when you fall down, you won't get back up. So you got to have a real clear end game, what you're doing all this for. For me, my end game was to be out of the rat race and to work when I want to work, where I want to work, and to travel when I want to travel,

take whoever I want to take. And to me, that's freedom option choice. And for me, that was the thing that connected for me, that I felt very deeply connected. So when I were doing knock on a hundred doors today, people tell me to get off my porch. I didn't ask you to come to my house. I just basically turn around and go knocking the next door, even today. You know, as wealthy as I am today, when I'm doing off, I still get people say the same thing.

And you know what? Instead of, you know, being rude, I just, you know, I can even say, lady, I can really easy buy your home with no problem, right? But you know what it is? I just turn around and just keep going because I'm clear on the end game. So when you clear in the end game, you just keep on going. You know what? If Thatch has the humility to go door knocking and cold calling at this stage of a career, I don't think anybody could say, I don't want to go do that.

I'm too good for that. Seriously. All right, man. Awesome story. Yeah, that's why I do it because I love to do it, but I also inspire other people, right? If you're brand new, if I can do it, you can do it. If you're, you know, somebody to advance, if you need more cash with the front door, if I'm doing it, you can do it too.

So good. Absolutely right. Yeah. So good. Okay. So I'm sure there's going to be a lot of people that want to learn more about you, that's and kind of learn from you. What's the best place for people to learn more about you or how to get a hold of you? Yeah, the easy way is on Instagram. You're right? My Instagram name is at Thatch win and my

Facebook name the same thing. That's the two places that they can find me all the time. All right. And we will of course link to that on the show notes as well. So everyone go check out that. She's awesome. Follow them on Instagram and all the social media channels. It's actually super entertaining to watch you. I've been following you for a while. So yeah, you keep it you keep it fun. Thank you. All right. Well with that, time to get out of here. David Green, you want to close this up shop? Yeah, this was an awesome talk. I really appreciate that. I think a lot of people do too. This is probably one I'd recommend people go listen to twice and share with friends because

there's a lot of value that was packed into this thing. And I guarantee that you miss something when your brain was thinking about the thing we just said before. I'm going to go listen to this one myself because I really, really liked it. That being said, this is David Green for Brandon, the Maui Condo Flipper Turner, signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online.

Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or Amazon. Any other podcast platform, our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoke content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only.

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