BiggerPockets Real Estate Podcast - 398: 22 BRRRR Properties in Under 10 Hours Per Week with Tarl Yarber

Episode Date: September 3, 2020

When Tarl Yarber last appeared on the show (#189), we got a behind-the-scenes look at his monster house flipping business. He was doing a lot of volume, but here's the catch: he was stressed out and unhappy. Plus... with zero rentals to his name, he had to keep spinning the hamster wheel – "feeding the machine" – to make any money. Today's show is about a big mindset shift, and the systems and teams Tarl put in place to create a business that truly serves him, rather than the way around... and allows he and his wife to travel 200 days a year while working on his business rather than in it. We cover a lot of topics here, from high-level success principles to the specific real estate investing actions you can take – today – to adopt a more intentional and focused approach to building longterm wealth. Lastly – Tarl's an exceptional networker, and the guys discuss the importance of meeting up with other rockstar investors even if the pandemic is preventing you from doing it in person. So... how do you do that? Well, Tarl's hosting a virtual conference September 18-19, and he's offering a 50% discount to BiggerPockets Pro members (check your email). This isn't a series of webinars, either... You'll be able to actually meet up with other attendees through online breakout groups, so it solves for the biggest challenge most investors are facing right now. Follow this link to http://virtualwealthexpobp.com/ to snag your ticket today! In This Episode We Cover: The many advantages of the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) Strategy Creating multiple exit strategies when BRRRR'ing Why sketchy tax deductions can hurt your longterm wealth Designing your real estate investing strategy to fit your desired lifestyle How Tarl and his wife mapped out their vision on butcher paper Making a "To Do" List and a "To Don't" List Why businesses need to be able to "scale down" in times like these And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Podcast BiggerPockets Business BiggerPockets Bookstore BiggerPockets Podcast 365: Ret. Navy SEAL Jocko Willink on Embracing Discomfort and Leading Through Extreme Ownership (+ His Real Estate Investing Tips!) Virtual Wealth Expo BiggerPockets Podcast 189: 500 Deals, the $100,000 Wholesale Paycheck, & the Systems That Make it Work with Tarl Yarber BiggerPockets Podcast 395: From Car Valet to $100k/Month… Seriously! with Thach Nguyen The Notebook Check the full show notes here: https://www.biggerpockets.com/show398  Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show number 398. The key right now is most people build their business and then take their life and try to get their life to fit their business, whatever they have left over, right? Instead, why don't people do it the other way around where they figure out what kind of life do they actually going to live and then design their business to fit that lifestyle? 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, everyone? It's Brandon Turner, host of the Bigger Pockets podcast here with my co-host, Mr. David Green. David, welcome to the show, man. How you doing? Thank you very much, Brandon. I'm actually doing amazing. We finally got a little bit of relief from all the smoke that was in the the air. Thank you very much to all the first responders that are out there working very hard to keep these California wildfires under control. So I actually got to go for a run today. It's awesome. Haven't been able to do that in a long time. The other day, David texted me and he says,

I really wish I could go for a run today, but the fires and the smoke, it's really bad out there. And I said, is that what Jock would say? It made you feel a little bad. And then didn't you go running or was that just a lot? I did go running. I just held my breath the whole time to try to be somewhat safe. Okay, good. I'm glad I could guilt you into dying a few years. earlier. Let's get into today's show. So today we're bringing on one of our bestest besties friends in the entire world. And he's actually here in the introduction with us. That's right. Tarrell Yarber. Tarrell, what's up, man? How you doing? What's up? How's it going? David? I'm so happy to be your best friend. He said it publicly. I said, I said bestie. That's a little different. That's like

a weaker version of best friend. It's like what you say when like you're all at the bar and like, it's like, hey, we're besties. Yeah. And you're really not. But it's not an appraisal. It's a BPO. basically. Tarle, you are our best friend. And Taral has been doing a ton of amazing videos over on the Bigger Pocket's YouTube channel. Yes, he has. Yeah, they're really good and they're actually getting a lot more views than mine. So people, I need you to step up on my videos because, you know, I just feel a little sad sometimes when Taral kicks my butt on pretty much everything in life. If you're watching this on YouTube, Brandon wore the shirt that has the shortest sleeves possible to show off his bicep in a clearly scandalous effort to get more views online. And I want to point that out.

Clearly, I've been to do some videos today in this. I might even like roll the sleeves up a little bit more, you know, like the, you know, we're going to go. Handsome shirt today. But before we get into today's show with Tarrell, talking about all sorts of stuff, everything from Burr Investing. And I think I want to talk about today. I want to talk about how you, like, travel like 200 days a year. I know you like you and your wife work together like all the time. You just have an incredible life.

And I want to talk about your like crazy ropes course because you haven't invited me over yet to do that. And all that. But before we do that, I want to get to today's quick tip. And today's quick tip is brought to you by. Taril, Taral, what's your real estate quick tip today? Go. Okay. So I didn't know I was doing that, but I guess, all right. So in my business, in my personal experience, the number one key to my success has always been networking with others. It's how we found the best money. That's how we found the best deals.

That's how we find the best contractors. We learned the most. We meet people like you, Brandon, and other people like you, David. And unfortunately right now with what's been going on in the world, it's really, really hard to network because one of the best ways to do is face the face. So our business, we also run an events business and we run a conference every single year and we asked ourselves, how do we run a conference virtually, but yet still solve the networking part for most people because most virtual conferences is like a webinar, right? And that's all it is. And nobody wants to sit for three days at a webinar. So we asked ourselves that question. We were able to solve that. So with the help of bigger pockets, because bigger pockets is working with us on this event,

we came up with the virtual wealth expo bp.com. So everybody go to the virtual wealth expo bp.com. It is not just 40 sessions because it is of some of the most amazing speakers ever like Brandon Turner, David Green, all your BP friends out there. But we were able to solve the networking component. So you as an attendee can actually network with other people virtually in, like not in person, but face-to-face via cameras. You can set up your own virtual sessions.

You can go to your own networking sessions. You can network with whoever you want. You can set up your camera sessions. You can go to Zoom rooms, like through our community. It's really intense and really, really awesome with exhibitors and everything as well. And you can check it out. Go to Virtual Wealth Expo BP.com. And hopefully that'll solve your networking issues.

And sometimes you can meet the best people in your entire lives at events like these that can help take your business to the next level. Look at that quick tip. That was awesome. And by the way, so this event is because Bigger Pockets was going to do Pee P.C. And now it's not happening because New Orleans shut down and they won't let us come in. So this is kind of our replacement. for the year, which is kind of cool that you were doing this because Tarlin and I were just

talking. We're like, well, BP couldn't do the one in New Orleans and you were already doing the virtual one. Why don't we just do this one with you guys? So anyway, super thankful for you on that. So I forgot to mention too. This is September 18th, 19th coming up really, really, really fast. And if you guys want to network and you want to meet and do 40 plus sessions on all the real estate topics out there and you are a bigger pockets pro member, you'll get 50% off the ticket price. Now, bigger pockets, if you are pro member, is going to eat. email you guys and send you instructions if you're a pro member at how to get that 50% off. Don't email my company.

The bigger pockets will let you know right away in the next few days if you didn't already get the email notification. September 18, 19th, typically tickets are $149 right now. And the price will go up on the evening of September 10th to 175. So get your tickets before prices go up or get your discount if you're a pro member. Awesome, man. Well, thank you very much. That was a good quick tip.

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Banking services provided by Threadbank. member FDIC. And now I think it's time to get into the show because Taral, you were on the show a long time ago. And things have changed in your life. I know that because you and I are buddies and you were out here. And for the Maui Mastermind, we did a year and a half ago now. And, you know, I learned a lot about your business and what you've kind of gone through. So today's story is the hero's journey with Tarrell Yarber.

Tarled, who are you? How'd you get into real estate? For those who didn't listen to your last episode, which was episode what? 189. So it's probably the number one Bigger Pockets podcast ever. It's my favorite, personally. Show 189. It's the only one I've listened to.

I heard the other ones are good too. But 189, that was actually back in August 2016. So my wife and I actually just got back from our honeymoon. We just got married then. And we'll get into that a little bit. But basically how I got, if you want to hear the whole story, go there. But how I got started in real estate is I was a, I read Restap Fort out of when was 17.

How cliche. I know, right? So everybody reached out. But I read my 17. Yeah. Okay. And I knew I wanted to get rich. right so i wanted to i was super broke as a kid so i'm in a family all that kind of stuff and so i was always

like attracted to that so when i was 20 2005 i'm 35 now uh almost 36 the for when i was 20 i went to a it was called the real estate wealth expo and it was in 2005 in la there's 40 000 people there Donald trump was a keynote then he did real estate back then Robert kiyosaki was a keynote which is why i went because i was obsessed with robert kiyosaki but it was a massive sell-a-thon I knew nothing about like wholesaling single family, flicks and flip. I didn't know any of that stuff. All I knew was what Rich Dadport had said in the book,

but I went there just to listen to Robbuki. And the short of it is that I end up buying a seminar, right? I bought a seminar not on real estate. I bought a seminar in personal development on an American Express charge card that I had no money on, right? And I could not pay it. It was a $2,000 seminar or $1,500 seminar. And I had no money.

I was a broke college student. I was going to school full time, all this stuff. And I had to figure out 30 days because there was a charge. card. It wasn't a credit card. I'd have had 30 days to get $1,500. And I didn't have any money, right? That was more money that I've ever had in my entire life. So I saw a different breakout session called how to turn $10,000 in 30 days or less. And I'm like, well, I got 30 days. So, like, I'm going to go see what that is. And it was on wholesaling real estate assigning contracts. So it was how to basically tie up a property with 10 bucks as an earnest money. And then within 30 days,

I signed it for 10 grand, right? I'm in. So that was about enough. It was 900 bucks. And I buy that on the same charge card and I got $2,500, which today seminars are 25 grand, right? And yeah, I don't think that's a good deal for that. It didn't matter. Like, it's all perspective, right? It didn't matter if it was $25,000 or $250,000. $2,500 to me was the same thing. Right. Yeah. And so, and I went crazy and did everything those things said to do. And the only reason why I got into real estate was to pay for the personal development seminar. And it didn't take 30 days to make 10 grand. took me six months. And at the end of that six months, I did three, I did three transactions. The third one was a $100,000 assignment fee. And that then, by the way, it was a 60, 40

split. I got 60, another guy got 40 on it. How long does it take? It was 21 at this time. How long is it takes for a 21 year old to blow through 60 grand when they've been broke their their entire life? Not long. Three months. So I wanted, I had stuff inferiority issues. I wanted people to think I was rich. So I bought a BMW. I bought a BMW. I bought suits. I bought like, I actually, believe it or not, I had an alligator shoot, right? Like, I actually had that. It was just on the sturt, on the toe part of it. And I looked like I was successful and I wanted people to think that.

And I paid off all my debt, but that's the only good thing I did with that money. And then I never did a real estate transaction again until 2011. Wow. Got completely out of it. I hated every minute of it. So, yeah. That's the, that's the origin story. All right.

All right. So then bring us up to when you were on the podcast last time. What did you done up to that point? Where were you at in your life? What was life for Taro like then? So in 2016, so August, I was in a thick of our real business. So if you know me, especially back then, I was known for flipping, right? That's what I've been known for for a long time.

By then, we had done about 500 fixed and flips. And from between 2012 and 2016. And I just got married, right? I was working 60 plus hours a week, probably, at least that, if not more, sometimes. We had any time my team and I had 20 active real estate construction projects going on at any time for flips, single family flips. And we had only three team members. It was me and two other people, Nate and Serena, who are still with us today. And I had a revolving door on a project manager, right? So we can never find a good one. And then my wife did not work full time with us.

She was working her own full-time job. When we met, she had her passion and her career in a tech business. And I was like, so cool. I already had my real estate business. And we just lived our life that way. But we didn't see each other that much. We were like passing ships at night. We loved being with each other as much as possible. Like, it's the only thing we wanted, but we weren't doing that, right? And we just got back from our honeymoon. So we just spent two weeks with each other, like all the time is the greatest thing about our cell phones off, everything.

Our team could get a hold of us. It was chaos when we came back. Although, no, that's not true. They did an amazing when we came back. I had no rentals, right, at all. So 500 flips, guys, no rentals, zero. That's an important lesson that we're going to talk about on this podcast for sure. And also, I was not happy.

I had no idea why I wasn't happy, though. I just was not satisfied, right? And I had no direction in our business at all. My entire business plan was go get more houses. And that was it. And I had no reason why we're doing it either, right? We were just doing it to make money. That was it.

So that was me 2016 August when I was on the podcast. I sounded really good on the podcast too, but looking back, I'm like, man, like I was not a happy person back then. Yeah, so this is interesting because, you know, a lot of people are listening to the show right now, and they're at the spot, like, before that you, they got, like, they want to have that level where they've done 500 flips.

They want to be making a massive income. They want to quit their job to be able to do it full time. And you're saying that you were doing that and you weren't happy. Like, why do you think that was? Like, what was causing the discontentant? I hate it. Like, I don't like real estate. So I'm just going to throw that out there.

Okay. I didn't like it then and I don't like it now. So the, but one of the things that on a side note, right, which we can get into some of this maybe later, but I had a business coach back then tell me the reason why I'm good at our business, why I was able to. do as much as we did with so few people and why I was able to scale and build systems out and everything was because because I didn't like real estate, I would find out reasons to get other people to do things and reasons for me not to do it and build out systems around.

So that's a side note, right? I was not passionate about anything in it. I just wanted the money, right? So, but I didn't know why I was doing it. I just knew I was doing it for money and I thought I had to keep becoming successful. And I never suffered from like comparing to other people. That was not something I did. I didn't care about that. It was like this, for whatever reason, this belief inside me in order to be successful and not be broke, I need to make lots of money. Because I had this inner working in my head back then of like, don't be broke. Don't be like we were when we were kids. Like you have to make lots of money in order to do that.

And it was a driving force with no direction other than that. That was it. Just make money. And I felt that if I didn't stop, then I would be broke. I love that you share that. I think that that's so awesome that you're letting other people because I know there's someone listening or several someone's who if they ask themselves, why are you listening to this podcast? It's not that they love real estate. It's that they're unhappy and they believe this is

the pill that will get them out of being unhappy. And real estate can build you wealth. It can do a lot of stuff for you, but it can't make you happy. Nothing can make you happy. And I know those of us that are honest most of the time, we'll recognize that human nature tends to work like a pendulum that swings from one direction to the other. So you go from a scarcity mindset. We don't have enough. I'm not enough to alligator shoes at 21 years old and BMWs. And then it's very easy to say, oh, my God, that was terrible. Now I have to swing all the way back and like hate capitalism and make my own soap and then go back the other way again. Whereas most of the time you're talking about. I've seen this happen many times before where you're going to be happier when the pendulum

rest in the middle and you can look at everything reasonably and logically, objectively, and ask yourself, do I even want this? Is this what I want? It's very hard to see things that clearly when that pendulum swinging so far. Can you share a little bit about what happened that got you into that point where you had that clarity that you could recognize this isn't actually working for me? Good question. And actually, yeah, I'm so happy about where we are now. And the truth is most people that are at that point where they start building a business

and they start going and we know, the three of us know people like this where they just start digging themselves into a hole and they don't realize it, right? So they just keep going. They're building. They're growing. They're getting more overhead. They're hiring more people. They're doing more deals.

It sounds sexy. It's awesome. They got a company. They got an office. They get all the stuff. But they can't stop. And they have to keep going because they got to feed the machine. And when you do that too, it eliminates the chance also sometimes for some of them to have perspective and clarity and do any introspection because they have to keep moving 100 miles an hour or else they cat, like the machine catches up to them.

And I've seen a lot of house slippers go through that. a lot of wholesalers that do tons of deals, big marketing companies, but they got big overhead. And they got to keep going to feed that lifestyle. So luckily, at the end of 2017, we had a bigger team then, bigger overhead. We're doing bigger deals, but we had a whole bunch of stuff all at once kind of fall apart. I had a, I hired one employee who's one of our project managers who'd been with me at that time almost a year. And we found out he was stealing from us, right? So we let him go. brighter to that. We were letting him go for another reason. But that was like a kick in the gut because we felt like he was a family friend. We had some big projects of ours fail on us all at once.

We lost $86,000 on one single family home in Portland. This first property I ever lost money on, which, you know, some people lose money at $5,000. I was like, why did I lose money, 86 on one, right? We had a lot of little things that kind of came apart all in this, like, perfect storm. And even though we did more deals, more production in 2017 than we did in 2017, I made the same amount of money on both years, personally me. My company made more money, but we had more overhead, more stress,

more hours into it. And at the end of the day, I personally had the same reward doing less work in 2016, if that makes sense. And so it was a wake-up call for me to go, like, something's broken here, and I don't like this, and why do we keep doing this?

Because I thought of repeating another year, this sucks, right? So luckily, you guys just had Fats Nguyen, right? who was on your guys' podcast recently. He's a really good friend of ours. He had a little thing that he was doing, and I went to it and to go hang out with him. And it was like that perfect crystal moment.

I could have probably heard somebody say this 100 other times, read in a book and ignored it completely, right? And I probably did. But he said it at that moment. And he said, the key right now is most people build their business and then take their life and try to get their life to fit their business, whatever they have left over, right? Instead, why don't people do it the other way around

where they figure out what kind of life do the extra man to live and then design their business to fit that lifestyle? And I'm like, what? You could do that? Why aren't we doing that? And so it was like that perfect. It was like, aha, my wife and I need to sit down for a second and figure out what do we even want our lives to look like

because we never took the time to do that. And if I didn't have those failures at the end of 2017, and I actually got what we originally wanted on our business plan, I wouldn't have had time to even think about that stuff. We would have just been growing, right, and going. I would have still hated it more. So that was the aha moment. And at that point, my wife and I made my wife and I sit down for three Saturdays in a row with white butcher paper out. And we started mapping out like, what do we want our actual life to look like just next year? Let's just start with 2018.

What do we want 2018 to look like? because I've had a struggle with thinking long term for a really long time because I was like, I couldn't even think past six months or a month at times and stuff. And so we worked on 2018 and we said, what do we want to do most? What would make us most happy? And the number one thing was us being together. And that was it. We were one of those weird couples that actually like being together.

And we wanted to spend every day together if we could, but she worked a W2 job and I worked our business. And they're like, why do we doing that? Right. If that's the best thing that we want in our lives, why aren't we spending? time together, right? So that was one of the things. And we wanted to travel, right? We wanted to be more mobile in our lives. We wanted to be able to give back to charities and be able to raise money. We wanted to be able to run, like we do a conference every year right now. It's a virtual one,

but we love doing that for networking purposes. We wanted to do a certain amount of production. We wanted to start building wealth because we had no passive income, right? Actually, by 2017, we had three rentals, I think. But that's it, right? We're like, we love passive income. Why weren't we getting that. And so we started mapping out these things of what we want our life to be like together. And then we go, okay, what's stopping us from doing this? And I think the biggest thing that stops most of us is those goals, those dreams of what our ideal life was are a lot smaller than what the average definition of success is. And because it wasn't making multiple millions a year and building these big ass companies and driving rolls roises or any that kind of stuff. It was make enough money to

go travel as much as we want, right? Yeah. So why do you got to wait until you got 10 million in the bank or 100 million in properties or whatever that kind of stuff? You can do that. You can do that. Our friend Jay Martin, Brandon, like, yeah. He's, look him up, guys. He's great guy.

That guy travels the world. That's all he does. He sold everything he has and he just travels the world and does real estate. But he doesn't care. He just travels the world. That's it. So why not do that? Yeah, because that's success to him.

Yeah. It's not like the world's idea of success or something like the, you know, Hollywood's idea of success or whatever. And I think sometimes we just end up doing this like we get on this train because that's what we're supposed to do versus. like sitting back and asking like, what do you want? Because that's a hard question. You remember that?

Okay. I'm going to go real like a real. What's the phrase here? I'm going to set my man card on the table for a second and slide it away from me. But do you remember the notebook, the movie in the notebook? No, I've seen that. Okay. I'm joking.

You have seen it. Okay. If you have a wife, you've probably seen it. There's a scene where I think the character's name is Noah. It's preyed by what's the handsome actor's name? I can't remember his name. Ryan Gosling. Yeah, of course.

It's the poster. behind him. Anyway, I just remember the scene where he's screaming at this lady in the rain. I think it's raining because it's romantic. He's like, what do you want? And she's like, I don't know. He's like, what do you want? And like, I feel like there's this point in our life where like somebody needs to like shake you.

It'd be like, well, what do you want? Like my performance coach actually, Jason asked me that all the time. Like, what do you want? And I'm like, I don't, I don't know. And it sounds stupid because like, but when you really stop thinking about what do you want, Like, it's such an important question because then we can design, you heard the analogy before to piggyback on what you said about the rocks in the jar. Have you heard that right? Like, yeah, you're like, so for those that I haven't heard it, it's that you take, if you had a jar and you put a bunch of large rocks in it, you can fit like two or three big rocks in it.

And then it feels full, right? But then you could take a bunch of like smaller rocks and dump those and you fill a whole bunch more. Then you can take a bunch of little pebbles and fill those in and it feels full at every point. And then you can put sand in there. But what the question I have then is like, like you said with that. are you putting the big rocks like are the big rocks your life or is it your business because like you can put your your life in the jar first like this is the non-negotiables this is what I want I want to travel more I want to wake up with my kids and making pancakes every morning I want

you know to have a bunch of children I want to do this whatever the thing is you want to do and then you can fit in the business around that but if you fill your jar with business first or like all the whatever I'm going to do a million flips I'm going to make a million then you're sacrificed and you have to do a bunch of little rocks to try to fit in around that. But I want to add on to that though. That's okay if that's what you want. So that's like that's the thing that I think that's what you want. If that's what you want, forget what everybody else wants in that sense.

Like what do you want in your life to live? Right. And your that your happiness is most important to you, right? So why not figure that out? Now the good thing is that typically you're bringing other people along with you because they also want to be happy with you. and it might be in alignment with hopefully your spouse and kids and all that stuff too. But truth is, it's still your life to live.

So what is it that you want? If you want to build a big-ass business and that makes you happy, then go for it, right? If you want to watch TV all day and do absolutely nothing and you're not upsetting the rest of the world, then do that too. So if that makes you happy. But that's my belief. You know, I've thought about what you guys are saying. It's really big when it comes to financial freedom. People will describe the same principle.

Don't spend all your money and then ask yourself, what do I have less? to save. Carve out how much you want to set aside to save to plan for your retirement or your future to invest and then make your budget fit what you have left. And I've thought about how so many people get started, they get stuck before they get started trying to figure out what kind of investing should I do. Should I flip? Should I buy single families? Should I buy multi-families? Should I buy in high appreciation areas or should I buy in high cash flow areas? And you can't answer that question until you know what you want because the strategy that you pick should fit the lifestyle that you want. If you're someone who just wants to make five grand a month

and be done and just travel, that's a completely different strategy than if you're someone who says, I want to be in Beverly Hills and have this kind of a lifestyle. And that's why this is such good advice, because it almost doesn't matter what the thing that you're trying to figure out is, you got to find out what you want, right? We know exercise is good, but are you going to lift weights? Are you going to go run? Are you going to go swim? What kind of a body do you want? What kind of fitness do you want? This is a great thing to force everyone to think about no matter what it is that they care about in the world. And I think one strategy to add to that is sometimes it's easier to think about what we don't want.

And the first, just to eliminate all that and then do the opposite. So think about it with real estate. Okay, so you just said that, David, I love that you said that. If your goal is $5,000 a month or whatever, then you know what you don't want to do, right? There's a lot of things in real estate you shouldn't do that, right? So just get those off the table and just remove them. If you don't want to be full time in the business working 40, 60 hours a week, whatever, then there's a lot of stuff in real estate you don't have to do, right?

So if you just want to make extra income for your retirement, right, then that also changes what you don't do, right? And so, and that'll maybe help out. And what are you not willing to do too in the business as well? And that's kind of what we started doing in our, when we started shifting our ideal business system, because we were able to travel all over the world, do everything remotely from our phone, right? Have our teams do what they needed to be to be able to work through this. But that all came from mapping out specifically what we won't do. And so we don't do these things, which means other people have to do it or we have to eliminate it, right? It also is the same thing with buying strategy. We got really, really good at figuring out what we won't buy,

right? So that way, because we'd spend so much time analyzing deals. Well, if you're spending so much time analyzing deals, because every deal looks like a great opportunity and you're looking for reasons to buy it, well, if it's out of your buy box, right, and your specific buy box, why are you even looking at it? So it's a no, get it out the table. So that eliminated time dramatically because we just didn't look at certain deals anymore so we would stop wasting our time, right? So this is something I think every newbie needs to take, like, I mean, everybody, but especially if you're a new investor, like this especially, I think applies to you. Because in the beginning, it all looks good. It's all, it's like there's just like, you're at a buffet and there's

just good food everywhere and you just want to like fill your plate with everything. But one thing we talk a lot about a BP and I know TARL you talk about this well and you did this is really like getting your criteria nailed down. Like what do we do and what don't we do? For example, the multifamily book that I'm writing with Brian Murray right now that they'll be out like a year from now. But I talk about the crystal clear criteria. It's like what property types do you want to do, you know, really what, well, what strategy kind of begins with that. But then what property type, what location, like where are you going to invest? Where aren't you going to invest? You know, what, like, what condition do you want to buy in? You know, what makes it a good deal? What

profitability? What are you going to say go or no go on? It takes away a lot of the emotion in the, and the, I'm at a buffet looking at everything here. And you're like, no, I only eat things that are green. And I only eat things that are. that are, you know, vegetables. Okay, well, now that's a whole lot easier to know exactly. And then you can become so good at that thing, which allows you to work less. Agreed? Agreed.

And then when you get good at that, then you can add on. Yes, yes. Start. Yeah. Master one add on, then add on or stuff like that. I think that's the phrase. Yeah. And then you can start adapting from that and changing from that.

And maybe then one day you'll do multifamily, but you may be only want to start with single family and all that stuff. So who knows. So what did you change? What do you do and what don't you do? when you started making those changes in your life. So ultimately, and to make it this relatable, too, because we were at a different place,

like, and the, we'd already done a lot of business. We'd already experienced a lot of things. We've already gone through a lot of pitfalls, a lot of challenges, a lot of negativity, and a lot of rewards too. But ultimately, what it came down to was we had to shift, first thing we had to do is shift our belief, right? One was that high income is not always good.

So, and if you make, and trust me, I grew up super broke, right? So I'm not that guy that's like saying I know what it's like not to make high income. Like I really truly do. And we don't need to go into all of stories. I love every rich influencers are like, you know, everyone thinks too much about money. I'm like, yeah, it's because you don't remember what it was like not to have it. But I agree what you're saying because I'm the same way.

I'm like, you know, I remember being broke. It sucked. It's all I thought about, right? So it's the, it's, I didn't want to go back to that ever again. So the so but I had to build up that mentality of like, okay, I need to shift. We need to shift from let's stop being mentally not being broke and shift to like how do we build wealth in our life. So if we're going to build wealth, we can't keep flipping or we can't keep having it be the only thing we do, right, is flip. So we need to start keeping some of these properties.

So like let's change that. So how do we now develop our strategies to be able to keep some of these houses and start building up a portfolio, right, but also not make it to where we're dependent on overhead of having like a lot of staff, right? So if we need, we need to be able to here's a key. A lot of people want to scale their businesses up, but scalability is both directions. And I think people miss that part. If your business is only scalable up, but it's also not scalable down, that it's not a scalable business, right? So it needs to be going both ways because especially right now when COVID hit, right,

for people that were locked in with huge overheads and huge issues, and they couldn't get out of all that, they weren't scalable to scale back down, right? So we wanted our business to be scalable. So we figured out ways to be like, okay, how can we get more people on 1099, right? How can we leverage software more to be able to help us out versus physical people more, right? How can we eliminate the projects that require us to have a lot more hand holding, right, and a lot less and then be there? Like, also, another thing, we used to start, we were just on a simple, simple fact. We went from always hiring general contractors to the point to where we were subbing every single out as the general contractor, including buying materials, right?

Well, it's really hard to systemize that and travel the world when you're getting phone calls to buy nails from Home Depot, right? And so we had to give up some things. So we gave up saving money on construction costs, right, on certain things to make our business simpler. So I'm like, okay, well, we can get this house done for 50 grand if we stub out all these things. But if we hire a GC for these other items, then we'll get it down for 58 grand instead, right? So is it okay for me to lose $8,000 on this deal to literally have no time into it myself

when it comes to construction at that point, right? Yes, it's worth that sacrifice. So we started having to go through these motions to go, what will we give up? in order to have more freedom. I was willing to give up profit share to some of my team, which meant that when we did more properties, I made less money. But when we did less, I made more money because I didn't have to pay out salaries. If that makes sense, right? So we started going down that direction, so we could be scalable up and down. And also it gave rewards to our team to where they want to have some sort of ownership so that way they can

feel like they're not just check collecting a check. They actually want to see the business grow. They can take more ownership, which means less ownership from us, which means less work for us to do. So each one of these steps started getting more and more refined. And it's kind of hard to go into it too much on the podcast with saying, like, let's start with burs. Like, how did we get more burs and go through a step-by-step process to how we accumulate as many doors as we have right now? That's what you did, though, right?

You got having the burr? So yes, we started focusing more on wealth versus income. So wealth would allow us to have long-term free time. We stopped thinking about the short term, which is like, how do we get a million a year, right? How do we make a bunch of money this year? How do we flip a bunch of houses? And we started thinking long term, how do we get to $10,000, a month,

the passive income. How do we get to $15,000 on the passive income? How do we start building up our assets so that we can leverage them for cheaper financing, right? So we can stop paying 10% or 12% to hard money lenders or private lenders. So we started thinking like grown up investors for the first time in our lives. And because it's like we just did a 1031, like not about a year ago, our first 1031. And it was the first time I felt like a real old investor. I'm just throwing that out there as a side note. But how can we start treating this like a business where we're building up portfolio so we can have long-term wealth in our lives and sacrifice the short-term income, right, that was coming into it. Then we had to start something going to like, okay,

where are we going to travel, what are we going to do? What happens if something goes wrong? And we started using, finding different software tools to help us leverage our team and leverage our time so we don't have to physically be at these projects as we buy them, but still be able to buy them, whether we're there or not and still have the transactions still happen and still have the projects go on. So we had to go through all that kind of stuff, which is a lot of work, right? It is. So ultimately what we figured out is that if we're going to stay in this business in real estate, we had to actually start building wealth in it. And if I had to keep going down that path of

flipping over and over and over again, I was going to get out completely and never do it again. And so now, it was like that breaking point. Like we all have that like bottom, you know, level. Now, when I was younger, my rock bottom was negative $10,000 in the bank account for my V, right? But you can set that bar where your rock bottom was. My rock bottom was, I'm making too much income, you know, big problems to have, right? And having no wealth whatsoever. And I'm stressed out all the freaking time, right? And I hate what I do. And I'm ready to give up and quit and shut the whole business down. Well, it reminds me a little bit of like, you know, Kiyosaki's cash flow quadrant, right? Like there's like the four quadrants. There's the, I'm an employee of a

company, which you got out of being an employee and you got your wife out of being an employee. And then you just became a self-employed person. So now you just run a business and you're in it 50, 60, 70 hours a week. Nothing wrong with that if that's what you want to do. But you're still like, you're still working all the time. And then there's like the, what is it, the, uh, so the self-employed, well, that way it was employed. Business owner, investor. Yeah. Employee. Yeah. Employee. Exactly. Employee, self-employed business owner. Would you call yourself more at the business owner standpoint or now the more investor standpoint? I would say both. So on those aspects because it depends on which business. We have more than one

business now, but the, uh, but investor side, it depends on what we're talking about, but absolutely we still flip houses, right? So we still do. Yeah. So the, you know, one thing that, If anybody's looking to get into the bird strategy, I think flipping houses is one of the best ways to get good at it, in my opinion. And then it's an easy transition going from a flip to a burr. So that was a big wake-up call for us where we didn't have to change much in our business strategy. We still flipped houses. But the only big difference was is that instead of selling them, we kept them, right? And then we refinanced them and moved on.

And you got a dog. And we have a dog. You guys here, too. That's our firstborn. So, yeah. Nice. Yeah. He still likes the FedEx guy a lot.

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That's bill.com slash bigger pockets. All right. So I want to talk a quick about where you're at with your Burrs right now. Well, let me just this. What is Burr? So Burr's pretty, you guys should know that, right? You guys talk about all the time. The guy that wrote the book on Burr is here, David, Green. So it's a the man green. The man. Buy rehab, rent, refinance, repeat. Right. It's something that is coined by Brandon Turner. And then David Stollett and wrote a book about it. And now it's all over YouTube and videos everywhere. Right. Apparently you invented the real estate strategy. How does that feel, Brandon, that you

invented that field estate strategy? Well, I mean, I invented real estate in general. Like, I mean, it wasn't, it didn't, yeah, I invented real estate. And it feels pretty good to be the father of real estate, actually. That's why they call me the father of real estate Turner. But, okay, so it's like flipping. Ultimately, ultimately. I have a theory about people that give themselves nicknames. It's not flattering. I've never, never known a person that gave themselves a nickname that I had much respect for. that's funny. Of course that was done in Jess. Yes, but no, I gave, uh, yeah, yeah, I give myself the things all the time. That's where that whole thing started was I'd be like, yeah, that's why everyone calls me Brandon the whatever Turner. And then you started making that a thing on the show.

Anyway, keep going, Tarle. Sorry. So ultimately at the end of the day, right, a burr is you buy a, like the best bird, there's lots of burrs right out there. But if, if you just want to go straight into, like what's the best burr and the most widely, I guess, accepted is you buy a property that would technically be qualified as a flip and where you can it's messed up it's whatever it is and you can build equity into it and typically by building equity into it it's through putting some sort of like repairs to it you know construction whatever might be to make it a better property right new finishes cabinets countertops whatever it is so you buy it low right because it's messed up like a flip you build the equity into it to make it worth more get a higher after repair value in a rv right

and if it was a flip you would then put it on the market and you would sell it right However, if it's a burr, right, you buy it, you rehab it, which is what you did, and then you instead refinance it or rent it out, depending on what you want to do, which whatever order it is, rent refinance repeat, right? So you put a tenant in it instead and you become a landlord because of rental. And then you refinance it to get stabilized financing on it and also get your money back out of it if you did it right. And then you just do it over and over again. So this is a question I get a lot of times from people, especially new investors. They said, well, yeah, why would you, why would you ever do that? You could flip that thing.

and make $50,000. Why would you take $500 a month in cash flow when you could have $50 grand in your pocket? I love that you said that, because that was me for 500 and something houses. So the, and I'm not kidding you on that at all. My very first burr was, it's a property we still owned this day.

And I'm so happy my wife was smarter than me on this. But my very first burr was a property bought as a flip in Lakewood Washington. And it was a, it was easy. We bought it for 100 grand. We put about 65 into it. Right. And we could set, we thought,

we could sell for like $2.35 on the market. So we were going to make like 40, 50 grand after holding costs, all that kind of stuff. Well, I actually used the bigger pocket as per calculator at the time is the only, like, I didn't know how else to do it. I'm like, oh, what it would look like, we kept this thing as a rental because we didn't own any, right? And it said we could cash for like $300 a month, right? Maybe $400 a month, depending on what it was. And we kept it. And I'm like, well, that's kind of cool. But then we go to, I'm like, okay, let's go down that path and go do that. So we go refinance it. We get a tenant in it, all that kind of stuff. But when it came to the closing table, they wanted $6,000 for me to refinance this property,

right? So it was like $6,200 or $6,300 in closing costs that I had to pay out of pocket, right, for this thing. And I was on, this is the day of closing. I was about to cancel the entire transaction and cancel the whole refinance because this house was costing me money, right? I've never had a house do that before. Like, and I was telling my wife, I'm like, we have to put over $6 grand into this thing.

It's, this is a bill, right? and she's like, you're an idiot. And so the... And that's exactly, I'm sure what Grace said. Just like that. Yeah, because in reality, what ended up happening, the thing was cash flow, it was actually $580 or $600 a month in cash flow, right? So I think it was $600 a month in cash flow at that time.

It's gone up since then, which is $7,200 a year, right? So we had to put $6,200, it was like $6,300, $600 and cost back into it it because we were able to refinance everything out but that money, right? So we got all our capital out. We had to leave $62, except for $62, $600, and we're going to rent it out and get $7, $7,200 a year. annualized on it. But in my head, I'm like, we'll make 50 grand if we sell this bit. I said, we sell this thing right now. And the, I'm like, why would I, why don't I want to make

seven grand a year on this thing? This is dumb. And, uh, but I'm so happy that we kept it. Because today, right, so we thought it would sell for 230, two something, whatever then. Today, that thing would sell for $360,000 right now if we want to put it on a market, right? Yeah. I want to talk about the mindset that you had, because this is something so many people need to hear. It's very easy to follow your emotions when you're in a moment like that. You heard you got to pay $6,200. You were not expecting to pay $6,200. And then you interpreted that information as I'm being ripped off. This is a bad deal. And all the future information that came to you came from that filter. It was viewed negatively. Okay. And this happens to all of us.

It's very easy when you turn on the news or you look at a deal, whatever it is. You're getting information that's coming your way. Your filter plays a much bigger. role and how you understand it than what you're actually being told. Because, and thank God, you have a wise wife that stepped in and told you that you weren't being very smart. Because if you looked at, if someone came to you and said, hey, I got a deal, you can buy it for 165. It's worth $2.35. Just put $6,000 down and it's yours. Who in the world wouldn't have said, I'll take it immediately and I'll buy you a Tesla for your troubles or something, you know? And it cashless $7,200 a year, which means you're getting $120.20% return. You're making your money back in like nine months. Yeah.

That's exactly right. It's really just the lens that you are viewing that information from that makes such a big deal. And then if you also consider, I'm going to make 50 grand on it, but you think about the fact that there's way more risk, you think about the fact you're going to pay capital gains on that money and 50 grand turns into like 30 grand. Actually, really quick. Income tax. You don't pay short term. You pay income tax. But on the flips. But yeah, you know, you're right on that. You're paying high. And if you're doing really well, that's a really high percentage that you're going to be paying on that. That's like worse than capital gains tax is what you're getting at that. So it's not a true

$50,000. And then like you said, you're missing out on future appreciation. You're missing out on the cash flow. It's actually like a million times better to do exactly what you did. But had you listened to your emotions in that moment, you would have said, screw it. And I just, I see this happen so often with people who hear information. They make a knee-jerk reaction just like that. And they convince themselves, it's not something they should do. Whereas if somebody was looking at it a little more rationally, they'd be laughing, like, what is wrong with you? How are you missing the value in this? Well, I mean, like, and you're right on that because the mentality I had was something that you said earlier, Brandon, seven grand a year in cash flow, right? Or 50 grand a day. So that takes

seven years to make the same amount of money, right? And so in like, or seven or eight years, whatever that is. And so my head's like, why don't I want to say seven to eight years to make the amount of money today? But then you factor in what you said, David, you got taxes. You also will never make money on that house ever again, right? That's exactly, right? You're missing out on all the future appreciation. You just mentioned you made 100 grand or so in appreciation in addition to the $700,000. Yeah, there you know.

Yeah, because what's funny is it's not even a question of, do I want the $50,000 in profit that I would make or the $7,000? What the real question is, do I want the $7,000 a year and the $50,000 later? Without being taxed. Without being taxed very high at all because I'm going to have long-term capital gains

or maybe none of I $10.31, which we're getting a little deep there. But like, yeah, so it's all it is about delayed gratification. It's spreading out your payments over years and it's all that. Yeah. So what you last just said was both, right? So you get both. And that was the click for me. When I go, wait, that 50 grand is still there.

I could still sell it. I'm just choosing not to do it right now. So it's like a savings account for me. And that's kind of like how I shifted it in my head. I'm like, that is a savings account as long as the market doesn't crash and all that crap, right? But the long term, it should be fine. Long term is fine. The best thing about real estate is that if the market does crash, just wait.

you know, and if you can wait, that's the, the problem would be, is if it's negative cash flow and eating alive, that's the kind of stuff that you should get rid of right now. But for the, but at the same time, it's like, it's, it's, it's a savings account. That's how I saw it. So how many birds do you have right now in total? So since we started focusing in the beginning of 2018, now we went from, at the end of 2017, we had three, I think. And then we said, let's start keeping more. We made a good criteria for what that was. We said we're to still flip, right? But then, and I can go to that criteria later of people if you want me to. But at the end of, right now, we have 22 doors,

right? 22 single family homes. And they're all four full burs, right, since we started doing this. And they're all done to the nines. We don't do any kind of like, so every one of those has tile courts, laminated vinyl planking. It's the best rental in every single area it's in. And we do that on purpose. And we actually, we learned a lot for why we like doing that way in our market, right? It might be different. Why is that? Because I 100% agree, but why is that? Yeah. This is different. I want to be specifying for people. No, your comps in your market, your comparables. That is so important. What you hear somebody on this podcast do or what we do in our particular market might not be what you need to do in yours. So comparables

are everything for how far you actually build up your burr, your flip, your rental, whatever might be, right? So for us, if we, I do not want to keep one of my rentals if we haven't done everything on it, right? I want new roofs if it needs a new roof. I want new windows. If it needs new windows. I want new electrical, new plumbing. I want new courts. I want luxury vinyl planking. I want all that kind of stuff on it for a lot of reasons. One is I want the highest appraised value I can get for the property, right? Just like I would for a flip. Now, I would only do the LVP, luxury buy I'm the courts, all the stuff if the comp said that's what I needed to do to get the highest to praise value. So I want to be clear on that, right? So I'm going to do it all. So do that

because that way if I, for lack of a word, if I screw things up, I could sell it as a flip and make my money back, right? So that's one of the reasons why I do it. So it's out of fear and also business sense. So I have a double exit strategy on it. So that's one of the first. So that's one. way to. I get the highest praise value, which means I'm more likely to get my money back out when we go to refinance. Because depending on the lender you're at, you can get a 70, 75, 80% loan to value, depending on your lenders and all that kind of stuff to get your money back out on the property, right? So I want that. The other thing that it did is it got me a higher quality tenant, even if it's in not a good neighborhood for that area. So if it's a C neighborhood,

but I put a A property in there, I'm going to get the best tenant in that neighborhood, right? because they're going to want to take care of it. We can qualify tenants better and charge more rent. So we're also, a side effect we didn't realize is we were getting higher rents too because very few landlords in the neighborhoods we were in, we're doing any of the finishes we did. And we also took professional photos too, so that also added to it. And then last but not least,

we have no capital expenditures on our properties for any kind of maintenance or repairs and for any of the rentals that we have. The worst we've had was like there was a sewer issue on one that we didn't replace. And the second worst was we had a water heater issue. and that's it. So like that's it. And because we didn't replace the water here. So now we did.

Right. But that's so good. Yeah. Yeah. Yeah. I like to say like, because I do the same thing, I found the same thing. If I put above average quality, like the best in the neighborhood, I can go in a slightly worse neighborhood. But what I find is that you know how we have like A class C class D class neighborhoods?

We also have A class B class C class D class properties. And then there are A class B class C class tenants. Right. There's three things here. Right. So your tenant will be likely the average of your neighborhood and your property. That's what I found. So if you put an A class in a D neighborhood, you're not going to get an A class tenant.

Because an A class tenant's not going to go there. But you're not going to get a D class. You can probably get a B minus 10. So if you get a, if you're in a C class area, but you do an A class remodel, you'll get a B class tenant. You'll get a higher, a slightly wealthier, less financial problem tenant. And so, yeah, 100% on that. I do that on Burrs and any rehab I do.

I just try to do those little things because you've heard me say it before in the show. I'm sure everybody is like, like even C and D class tenants, they still watch Chip and Joanna Gaines. They still want the beautiful gray walls and they still want the fancy floating shelf or all those like the things that don't actually cost a lot of money. They just take a little bit of like thought. Like how do I make this a little bit better and how do I make it nicer to attract those those A and B quality tenants? Most people actually want to live in a nice place. And they want to take care of it. And so when they have a nice place, the right people that, the right tenants want to take care

of that place because they like how nice it is. And so, and we didn't learn that from a business plan. That was all on accident because you're talking, we just took a flip that we just did the exact same stuff we would have done on our flip. We just instead rented it out. And actually that's not entirely true. We did some, we did a slightly different flooring than we would normally do on our flips. But that's, that's it.

That's it. Everything's the same. I think that's a brilliant point that we kind of glossed over. is when you guys sat down and said, how do we want our life to look? You recognized, I don't want to be addicted to flipping. That doesn't mean you scrapped your entire business and you started a brand new thing.

You figured out a way that basically 90% of this project would be exactly the same. Find a fixer upper house, get it at a great price, go through a rehab at value to it. The only difference was at the very end, the last 10% was instead of going to an agent and putting it on the MLS, which is more work, I go to a lender and I refinance it.

which is less work and cheaper. And that was all that it took. A tiny pivot created a huge difference in the life that you guys now live. And that's part of that definition of when we mapped out what we wanted. We also wanted to not have to manage these things. Right. So now we do. My wife manages all of them.

But there's not that much management to do because we repaired everything on them. And we also, because of that as well, we also got a higher quality tenant. So there's less work, less issues. and we don't want to have to sit there and keep going back to them and fixing them up. That's why we don't own any rentals that are rent grade. We own none. I don't do the 20% down. Even our 1031 exchanges that we're doing now,

we're still burying them up, right, and fixing them up before we put people in it because we want as little effort as possible once we own them. If it came too much, then we would just hire a property manager, right? But right now it's doable, so it's not a big deal.

And I love how to kind of wrap this whole thing in a nice, you know, full circle here is all of the, this, this war time went out of the burying and the really high-end rentals, like they're doing a good job of it, is because you have a foundation in what you want and what you don't want. Like, you had that clear vision on where you're headed and what you wanted rather than the world's idea of what success is. You said, this is success to me and my family. And then you figure out a strategy by utilizing your own unique ability. Like that was your, you have like this rare and valuable

skill, which we talk about in the show multiple times is you have something that's hard to do, which is managing a rehab. You figure that out over years. So like, David said, rather than skipping it completely and going to a whole new niche, you just utilize that unique ability, that rare and valuable skill to get you a method of getting the lifestyle that you started with defining. And so I think there's just such power in that cycle. Exactly. Legitimately what you all and what David also you hit on too and Brandy just said was nothing has really changed in our business. We just got really specific and added one more thing on, which is the back end of the property. And it's, it also has. It also,

allowed us too that when we need cash, well, we'll still do the project. At the end of the project, we can look at it one more time and go like, all right, let's sell us, flip it, right? So because maybe it didn't cash flow. So our strategy now with the flips is that we and also with the Burrs is we have the exact same buying criteria on the front end for both. For us, if it's a flip, we want a minimum of 15% cash on cash return for a flip, but ideally we want a 20%. 20% is our target. Our minimum is 15, but 20% is our target. If I find any flip that's in our buy box and our geographic area with the type of rehab we want to do and it's a 20 plus percent cash on cash. It doesn't matter if it's a burr.

It doesn't matter for cash flows. It doesn't matter any of that. I'm buying the property because I'm going to flip it, right? But at the end of the project, when we reevaluated, we get closer towards the end of it, we're like, let's look at what the cash flow would be, right? What would it cash flow? What could we rent it out for? What would we refi?

Did we go over budget too much? So we have to leave too much in it, right? So for our, when we go to refinance, because maybe we budget 80 grand, but we're at 100 because we had to replace a sewer or something else happened that came out of it. And we go like, well, now if we refinance it, we got to leave a bunch of money in. So anyway, so we go through all that and then we see if it cash flows and if it cash flows, we keep it. And if it does it, we sell it a little bit. Yeah. So that's beautiful. You mentioned that you have over 20 Burr properties now. Can you share how you got loans once you got

past 10? Good question. And actually, we started getting different loans before 10. So the, for actually lots of reasons. But the, so what David's also hitting up there is the 10 has to do with the Fannie Freddie conventional loans, the max that you can have as a traditional mortgage conventional means. So basically your Fannie Freddie loans, go to your normal bank, your Chase, mortgage, whatever, that kind of stuff. And you can only have 10 on your record, which I'm not a mortgage broker, but they are changing those rules all the time right now. So for cash out refinances for your traditional conventional mortgage for your Fannie Freddie, I think allows you to do six. Fannie allows you to do four cash out. But if you have more than four on your credit

report right now for Fannie, they won't let you do any cashouts with Fannie. It'll all. And if you have more than six on your credit report, Freddie won't let you do any cashouts at all. So that's something that's changed. And that might have changed later, but that's what it is right now. So what we did once we started after we started getting these conventional loans. Let me back up one step, David. Sorry. The number one thing I've seen most house flippers messed up is they have really horrible finances. So I just want to throw that out there. Most house flippers have horrible finances and they can't get permanent financing on a house because their tax returns or chaos. They don't have hiding the money they're making as much as they can.

Like, ours just doesn't make sense to an underwriter. It's like it's too dirty. Like, it doesn't make sense. Like, it's the, they don't have clean books, right? And they can't prove that they're actual business. It looks like something that's just flipping houses, but they don't have a business, right? So they're not incorporated correctly, all this kind of stuff to make it look like, like, no, this is legit. So that's a real concern for house flippers that they need to overcome.

So the, I think that's the best, best advice I can give any house flipper right now is please stop and please get your finances figured out, right? So get them pretty. Go talk to the right people so that you can. actually thank yourself later in the future. So for permanent financing, though, if you don't qualify for your traditional mortgages and you don't have the right, you can do this both ways. You can go find a portfolio lender, which would be your local credit unions. And then you have institutional lenders out there, which be some hard money lenders also do institutional loans. And they will lend on the property and not look at you, right? So a lot of portfolio

lenders will still look at you as an overall business and person to make sure that you have, you know, good credit-ish, even though they don't care. about your credit. They just want to make sure you pay your bills. They might make sure that you make sure that you make sure that you make sure that you make sure that you actually file your taxes correctly and you're okay there. And they're ultimately looking at the property, right? And they'll give you typically different terms and they rate you typically on what's called debt service ratio more than what actually your income is personally your debt to income ratio is. And we might be going too much in the weeds on this. But basically portfolio lenders,

which are your local credit unions and then institutional lenders, which can help you a lot, but they're typically higher interest rates, and they have the least criteria for you, like a hard money lender. So instead of getting like a low, right now I think most investors can get somewhere into three or four percent on an investment property if they're doing normal conventional.

And maybe a portfolio lender might be in the high fours, and then an institutional lender might be in the high fives or sixes, so for interest rates. But each one has less underwriting requirements for that loan. And the best advice, the best thing I could tell anybody is rate equals risk. So the reason why your interest might be high is because you're more risky.

And if you might be more risky with the institutional lender, because they did less underwriting on you. So the more underwriting and the more financial colonoscopy that they do on you, the lower your rate could potentially be, right? Did that make sense? That's cool, man. Well, so let's wrap this up with where you're at right now in your life. I mean, like, you work in 60 hours a week.

You had this crazy, like, thought, like, you could design your life a different way. You got real intentional on what that looked like. You figure out a path to do it through Burr. You started getting collecting these properties. Like, what does it look like now? Are you traveling more? How many hours a week do you work on your real estate business? Like, what's that look like in your life now? In 2018 and 2019, my wife and I traveled 229 days. And each or total? I mean, total. Yeah. So, wow. The for, well, that includes, that's each, right? Because we both did it together, right? Okay. I mean, was that 229 per year?

Because that would be ridiculous. No, it wasn't 229 for a year because we actually like being home. Yeah, because you're never home. No, we really live in a nice place that we like a lot. So we built a Ropes course during that time period and are on our property. If you go on my Instagram at Tarley Yard, we'll see me doing stuff on that. It's kind of fun. But for the, so we did that. Can I just say rope's course is not what people are. They're probably like, it's not like a slack line on the bottom. It's like literally like, like 50 feet up in the air and the trees. Yeah. So it's it's a legit professionally built thing that I had a lot of fun building. So the instead of working in real estate. So ultimately we do that. Me personally, it's not that I'd work a lot in real

estate every week, somewhere between six to eight hours, maybe a week in real estate for myself personally. But my time in real estate actually comes in when we buy a project. So we've segmented, it goes back to what don't, what won't you do in your business? Like how do you, like what is that? So I figured out all the stuff that we won't do. But we also, one of the benefit, the biggest benefit my company got, but my wife and I decided to go in this direction is Serena, who works with us a lot. We sat down and we figured out what, if we're going to change our buying criteria, what is the biggest issues on all our projects that make it to where it's all our time, right? And how can we avoid that as much as possible? And we found that if we focus on the planning

session, the planning part of the project, before we do anything else, before we start demoing, ripping stuff out, going all over place, we just stop. We need a full plan for this project, full plan. And we spend the most amount of time on that, the rest of the project is super easy. And it takes like no effort for us to manage it because we plan it out, right? So we shift our entire business model to say, okay, my need in the business is to help with the planning part. And that's four to six hours on one project tops. And so if I, and that's it, then I'm out, right? I don't really need to do anything anymore for the rest of the project because everything else works.

If I don't do that or if Serena and I don't focus on that time period, that's when we start having issues and more time is needed into the project. And we get change orders and permit issues and red tags and all of something kind of crap, right? But that's a huge lesson, guys, if you guys are in that, is that spend. spend time figuring out the project before you actually go do it. Most of us have like a... It's the sharpen your axe analogy, right? So if you have six hours to chop down a tree, spend your first four sharpening your axe.

Changed our entire business and the stress level went down to almost nothing because we just spent extra time on the front and mapping out the project before we let anybody do anything. And even if it meant that we sat on the project for a month, right? People might get like, you know, stressed out about the holding cost on that. But what's the holding cost? Like, okay, let's say the holding cost is four grand a month, right, for that because it's an expensive property. But what's $15,000 of change orders going to do for you later when you don't know what's happening on the project? Like whatever, like just plan the project out before you go with

it. It's better. So we did that. But that's where my time comes in now. So I spend maybe about four to eight hours a week, maybe six eight hours a week in real estate. And that's it. And so, but that's all blocked in on how many projects we own and what's going on with it. And it fluctuates week to week. It's on the front end. That's awesome, man. That's really cool stuff. I feel like, I feel like this whole podcast was a book. Like we could be, we hand this over to Ghostwriter. They write a whole book about this. The Tarle Yarber Intentional Lifestyle Design Plan.

It's really good stuff. All right, man. Well, I want to get out of here because it's been, you know, an amazing show. And I don't want to like, I guess I want to leave people with a couple like actionable tips that they can do. So if you can just give one or two pieces of advice for people right now, what should they do? If they are in a spot where they're just getting started in real estate, they're trying

to figure out where the next step is, what they should do with their life. What advice do you got for them to kind of, to kind of, to go forward? forward. You could kind of summarize everything we talked about today. Pretty simply, like know what you actually, what do you want to do in real estate, right? And that's not that, that's a hard question to answer if you don't think of it in a different way. Why are you doing the real estate business? Is it because you want to do, you have $5,000 extra month like what David said in retirement? Is it because you want to build a big, huge business? Is it because you want to make seven figures a year? Right. When you have that figured out,

that should help you eliminate all the things that you don't do in the business. So if your goal is to have extra retirement income passively, right? Then maybe you should buy turnkey investments or maybe you should just invest for money on that side. And then you don't need to go, I need to go learn flips and wholesaling and like multifamily. You don't need to do any of that stuff, right?

So figure out what your niche is and what you want to focus this on, right? That's the first thing that you should do and so you can plan your business around that. Then know what you don't want to do, right? Everything that you're not willing to do in real estate. Are you not willing to put 80 hours a week into it? Great, don't, right?

So all those other aspects that you need to not know before you go with it. I would also say that if you're going to build a team, right, if you're going to end up building a team in your business and have people come on, you really, really, really need to get good at knowing what your lanes are in the business with your team. And that's a bigger topic. But the thing that's caused the most chaos in our company is when we didn't have clearly defined roles and clearly defined lanes for what people did. And every single task, there needs to be an owner for that task, right? Even though three people might be working on that same task, somebody has to own it. Because if nobody owns that

task, even though there's three people on it, it all gets, and it just, it's the point of finger game that happens there. Or they think about something else. We are hardcore on lanes on our team, right? My wife's entire charge of property management, 100% of it. And anything that once the property is like ready to get rented, I have nothing to do with it at all. And she can burn it down. She can put whatever she wants in there. She can leave it on the market for six months. It doesn't matter. That's That's her lane, right, period. So, and same thing with, you know, what I do in my business. So don't cross on to that.

It's so important when you build a team. Awesome. Awesome, man. All right, well, before we get out of here, let's go to the last segment of the show. It's time for our famous four. All right, this is part of the show where we ask the same four questions to guess every week.

And, of course, Taral, we've asked you him before. But they might have changed. So we're going to throw them at you right now. But before we do, let's hear what's going on this week around the Bigger Pockets Podcast Network. Hey guys, Felipe here from the real estate rookie show. Last week, we had Aaron Chapman, who talks about losing his job right before he closes on a deal, having to press through all those nose and figuring it out as he goes.

So make sure that you go back and listen to our show. All right. And with that, Tarrell, famous for number one, what's your current favorite real estate related book? Maybe an impactful one in the past or something that you've recently read. Okay, so the real estate related book, I'll be honest with you. like, I don't read real estate related books, but the one that's been the most impactful in my business actually was, believe or not, Jay Scott's how to estimate your rehab and the buy bigger pockets. I'm not doing that as a plug. That is legitimately the best real estate book

for me that I needed in my business at the time I read it. And so Jay Scott's how to estimate rehab. It's awesome. What about your favorite business book? All right. So I got three actually, sorry. But if you, if you're like at a virtual wealth expo with BP, like I'll go into this some more detail how we actually built out our systems. So, you know, just the we, that's what my main presentation would be. But the three books, if you really want to know how we live our life, the three books is four hour work week by Tim Ferriss, the one thing by Gary Keller, and then the checklist manifesto by Otukwanda. And those three books literally is my entire three bibles for how we run everything we do. Fantastic books, all three of them. Yeah. All right. Number three.

What are some of your favorite hobbies? When you're not running around on your rope course, of course. I absolutely love extreme sports. I am a ski patroler, right? But I don't ski a snowboard. So I'm a snowboard patroller, and we live 30 minutes from the resort we patrol at. I absolutely love rock climbing. I love building the ropes course.

That's my favorite things. Skydiver, scuba diving. I would do scuba diving over any other thing, right? And I see Ryan Murdoch there in Maui with you, Brandon. And he's there, and I'm like, I just want to be with Ryan all the time. I'm scuba diving. That's legitimately one of my big bucket list, which I think a lot of people would maybe think I'm crazy for is I want to go scuba diving in Antarctica.

That's like my top of the thing I want to do in my life. So, but yeah, I like whales too. Tarrell, how much would it really cost to go scuba diving in Antarctica? 10 grand, 20 grand right now? 20. So like 18, like, you guys are you got a trip. It's not like, let me just go for a week. It doesn't work that way.

So, yep, they're like actually take a vote. All right. Well, next time we have you on the show, I don't want to hear any of this. That's my life goal. I want to say, I did it. Now I have a new life goal. I'm holding you to it right here. Holding your feet to the fire. Fair enough. And of course, you got a new baby at home. So congratulations on that. Thank you. Very exciting. And last question for me. Last question of the day. Oh, wait. You got to say yours, Brett, Brandon. As I said, last question for me. Well, you started talking so much. I thought you'd already asked it. Why are you trying to cut me off here? All right. Last question for me. What do you believe sets apart successful, and happy real estate investors from those who give up, fail, or never get started. Well, we beat that, in my opinion, we beat that one a lot, like, throughout this podcast, but it's not knowing why the hell they're doing their business. And so they're going in the wrong direction the whole time and they don't know it.

So they don't know where they are on a map. They have no idea the direction they're going, and they don't know why they're doing what they're doing and the end reason for it. I was that person, like absolutely that person for why I was unhappy. and in my definition, I was unsuccessful because I wasn't living the life I actually really wanted. And so it took me time to, so taking the time to introspect, know exactly where you are on the map so that you can figure out where you really want to go and then be okay going there once you make that decision, even if it's what the society doesn't think is right, even if it's

what your neighbors think is silly or it doesn't matter. Like, it's what you want in your life. That's what matters. Wise words. Very wise. All right, Tarle, where can people find out more about you? Well, hey, we didn't talk about this yet. The Virtual Wealth Expo, I keep saying that, right? But did you guys know that if you're a Bigger Pockets Pro member, you're going to get 50% off the virtual wealth expo, BP.com, go to that, right? You're going to get 50% off that. You're going to see Brandon Turner, right?

You can see David Green. You see Brian Burke, Jay Scott, Carol Scott, right? Dave Van Horn, he's been on. I think he wrote a book too, right? There's all the most of the Bigger Pockets authors are going to be there and a bunch of other speakers and sessions that are going to be through there, plus networking with everybody. So if you're not a bigger pockets pro member, go get your ticket anyways, because you'll get a 20% discount on becoming a pro member once you buy a ticket on the virtual Walt Expo, BP.com. Check that out. And it's going to be good stuff. But they could find me there because one of the best things about networking at that event is that you actually get to see everybody at the event and request contact information and all that kind of stuff with each other. If not, you go on Instagram at Tarle Yarber, the only one. And also our company, fixated real estate is all over. It's also on Instagram and Facebook. But you can message me on.

Instagram or go to our conference and check me out there. I've heard you said that before. I'm the only one, the only Tarrell Yarber. I'm going to name my kid, my next kid, Taral Yarber, like legitimate name, just so you can never say that because I want there to be too. It's unfair that you get a singular name. It's fine. You know, we could swap social security numbers and stuff too, so they're great.

All right, we're good. Yeah, everybody, go to the virtual conference. It's going to be awesome. I'm looking forward to that one quite a bit. And thank you for doing something so that bigger pockets, you know, because of COVID. We didn't get to do New Orleans. So this is going to be awesome. So I'm pumped.

Yeah. On a side note, I did say pro members get 50% off. Be on the lookout for an email from bigger pockets. Bigger pockets will send all pro members how they can claim that 50% off. Don't hit up my company. Hit up bigger pockets. So they'll let you know. All right, cool, man.

Well, thank you so much. This has been really, really good stuff. I mean, it was really like high level. Like, how do we like build more happiness into our life by also building a business that supports our desires and our goals and something that everyone needs to definitely think more through. So if you enjoyed to this episode, don't forget the least. us a rating and review over an iTunes,

let the world know that you like this show. We're currently like in the top 10 of all business shows. It'd be cool someday to hit number one. I don't think we've ever hit that on the show. So the way we get there is by ratings and reviews. So thank you for doing that. Of course, follow Bigger Pockets everywhere at Bigger Pockets on Instagram and YouTube in everywhere else social-wise.

Join the new Facebook official Facebook group for Bigger Pockets members, which is kind of fun. And yeah, check out Tarl on Instagram and, of course, David Green and myself. So with that said, let's get out of here, guys. David, do you want to take us out? Yes, sir. Thank you very much for your time, Tarrell. It was a pleasure, as always. This is David Green for Brandon. Check out my biceps 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 height, you're in the right place.

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