BiggerPockets Real Estate Podcast - 45: Finding Your Unfair Advantage, Rural Investing, and Getting Started with Tom Sylvester

Episode Date: November 21, 2013

On today’s episode of the BiggerPockets Podcast, we cover a huge variety of really interesting topics with real estate investor Tom Sylvester (yes, that rhymes!) Tom has been investing in the Rochester, NY area for several years and has a great perspective on getting started, building systems to manage your business, investing in rural areas (or as Brandon says, “rrrrrurrral”,) and a whole lot more. Don’t miss a second of this excellent interview! Read the transcript for episode 45 with Tom Sylvester here. In This Show, We Cover Tom’s early lessons The advantages and disadvantages to rural investing Finding mentors and networking Talking with your spouse about getting started with real estate Getting started with real estate at a young age When is the right time to quit your day job? Red flags for problem tenants The $10 Toilet part that could have saved Tom hundreds of dollars And much more. Links from the Show Investing in Rural Markets: The Secret to Real Estate Investing Success? The Top 100 Ways To Make Money In Real Estate How to Get Started With $100 blog post by Tom Keyword Alerts How To Survive When Your Spouse Doesn’t Believe In Your Dream How to Start Investing In Real Estate at a Young Age (or a “Young at Heart Age”) BP Podcast 044: Creating Systems to Flip Houses While Still Employed with Michael Woodward Tenant Screening: The Ultimate Guide Cashflow 101: Using the Game to Define Your Investing Strategy Home Depot Toilet Fill Valve Dropbox App Books Mentioned in the Show The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach Rich Dad Poor Dad by Robert Kiyosaki The 4 Hour Workweek by Tim Ferriss The E-Myth Revisited by Michael Gerber The Book on Flipping Houses by J Scott The Book on Estimating Rehab Costs by J Scott What Every Real Estate Investor Needs to Know About Cash Flow… And 36 Other Key Financial Measures by Frank Gallinelli The Ultimate Beginner’s Guide to Real Estate Investing by BiggerPockets Tweetable Topics Find your unfair advantage in business and exploit it. (Tweet This!) What do you want your life to be? How are you going to get there? (Tweet This!) If you aren’t finding success – be persistent but change your tactic. (Tweet This!) Know the difference between a cheap property and deal. (Tweet This!) Connect with Tom Tom’s BiggerPockets Profile Tom’s Website: Tom-Sylvester.com Learn more about your ad choices. Visit megaphone.fm/adchoices

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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, everybody? This is Josh Dorkin, founder of Bigger Pockets and host of this, the Bigger Pockets podcast, here with my fellow host, Brandon. What's up, Josh? What's up, Brandy? What's up?

You're back from your Mancation. I am back from the Mancation. Absolutely. Yeah, I went to Vegas for three days of debauchery. I'm glad. I'm glad. I'm sure you had a good time while I was attempting to hold down the fort. Yeah, I still, I still worked every day, but no, it was, it was cool. You know, Vegas, I used to live in L.A., so Vegas was a weekend trip for us. And it's always nice to go back to, although I got to tell you, you know, they got to get, they got to make some changes there. I mean, they're, they're building that city out and they're doing some amazing things like city center is absolutely incredible. But it's just getting, the city's getting shadier, like the strip, shadier and shadier. I mean, there's more and more, you know, those little characters running around trying to, like, hug kids and get pictures taken.

It's like, you know, all the people giving you the flyers for the nudie bars and like, you know, every five feet there's somebody hawk in a bar. It's just, it's kind of annoying. It's, I don't know. Outside the casinos, it's definitely shady as hell. Outside the casino? It's shady. Now you go in this casino. Not shady at all.

I mean, the dark, smoky rooms, the kind of creepy old people. Although I did learn a new game, Baccarat, which is a fascinating game, the best odds in the house. And something I definitely recommend if you're a gambler, mini-bock is kind of fun. It's kind of fun. So check it out. But yeah, it was good. It was good. Thanks for holding down for it.

Yeah. Well, you know, the other big. The other big thing about going on right now is the no-shavenver. I don't know if you noticed my scruffy beard is, you know. You always have a scruffy beard? Yeah, I always, this is scruffier, though. I mean, this is like an inch long now. Look at this.

So, you know, it's funny because I always thought it was kind of fringy until I was, I don't know, the TV was on the other day. And I saw Matt Lauer was doing Movember. Oh, nice. You know, if you don't know what no-shaved November, it's in honor of men's health, I guess, and not the magazine, but actual. man health. I just want to look more manly.

I don't know. I don't know about health. Yeah, it's all about grown a beard and representing for dudes and their privates. Oh, nice. Yeah, yeah. Well, today we get to bring something back.

What do we bring me back? Are we bringing sexy back, Brandon? We are bringing sexy back, and we're also bringing back our quick tip. Because we've got a really good one. All right. So for today's quick tip, we're going to talk about a new feature that we end up talking about this a couple of times in the show, but I just want to harp on it.

If you go to biggerpockets.com slash meet or if you go to our network link in the blue navigation bar, you will see that we have redesigned that page. Now you can go on Bigger Pockets and find out who on Bigger Pockets lives in your area. So you can actually sort users by zip code. So you can say, hey, who's in my zip? Or you can see who lives within five miles, ten miles, I think 25, 50, and 100 miles. And, you know, it's a great feature. You know, we've wanted to do this for a while. And, you know, what that'll do is it'll allow you to basically better network with more people in your area.

You know, you think, hey, I have to go to a RIA to network locally. Well, now you just go to bigger pockets. Go to biggerpockets.com slash meet. and you can find out who all those local folks are and follow them, send colleague requests, and link up. Now, there is a caveat, of course. In your zip code, anybody and everybody can go and see who's there. However, if you want to see folks in outer ranges,

the 510, 25, 50, and 100 mile range, you do have to have a pro camp. So you can upgrade to pro at biggerpockets.com. slash pro in order to get access to that. But otherwise, we did want to make available everyone in your zip to all users. And again, you can do that at biggerpockets.com slash meet. So that's today's quick tip. And it's nice to have it back. Nice. All right. Well, let's get on to the show. Today, we are going to talk with an investor, Tom Sylvester. That rhymed. Investor Sylvester. Yeah, I wonder he's cringing right now. Anyway, we're talking with Tom Sylvester. He is a buy and hold

investor from the Rochester, New York area. And he is, he's really doing some good stuff over there in Rochester. So, yeah, I'm excited to talk to him. Yeah, it's going to be, it's going to be good. He focuses in particular on rural properties. Rural properties, yep. Yeah, yeah, rural properties and in Rochester, Rochester, rural, say that 10 times fast. No. Yeah, but Tom's got a lot of cool insight. We're going to explore. are a bunch of cool topics. So why don't we bring him in and get this thing going. Let's do it. Yeah. Tom, welcome to the show, man. Hey, guys. Thanks for having me. Yeah, thank you for joining us. This is going to be good.

You have a lot of a lot of good stories to tell I know. I read your stories on the bigger pockets blog all the time, so hopefully we can get into those today. Why don't we just start really at the basic like we always do? How did you get started with real estate? Yeah, so it's a long story, but I'll try to keep it relatively short. So when I look back, I was always an entrepreneur. When I was five, I actually created a candy store out of my bedroom, and everyone that would stop by the house would have to stop in and get some candy. That's awesome.

Buy it from the store in the bulk section, sell it off individually, and things just went from there. So, you know, I never was really a big reader, and never was really too much into, you know, the educational, or financial aspects of things. But when I got to college, someone gave me a book called The Automatic Millionaire. And when I read that, it kind of clicked. And I said, you know, almost done with school.

And I got to figure out, you know, what am I going to do financially for the rest of my life? And from there, I actually started reading a lot of different books. One of the big ones was Rich Dad, Poor Dad, you know, as everyone on the show has said. So that changed my life and changed the way I looked at assets, liabilities, and really just money in general. So I got out of school and I started investing in the stock market and I read as many books as I could. I thought I knew a lot and then realized I knew nothing at all and I could not control the stock market. You and countless millions of others including all the smartest guys on Wall Street. Yeah.

So from the stock market, I looked around and said, well, what else can I do to reach some of my goals? which one of the big goals was, you know, I wanted to have financial freedom and I wanted the ability to retire from a day job within 15 years. So, you know, when I was looking around to see what I could do to get there, real estate was a big one. And my wife and I had just graduated from college. We actually moved out to Rochester, New York, and I got my first job. And when we were looking around, we said, you know, we're living in an apartment right now and we're paying rent. Why don't we just buy a duplex and, you know, we'll have our mortgage paid for us? Nice. Chime in, Brandon.

Okay, I do like that strategy. I was going to say, I gave Brandon a lob right there. Yeah, there you go, man. Softball. Yes, thank you. Did you buy a duplex then? We did not. So when we looked for our first house, my plan was the duplex, and the wife said, I don't know about this real estate thing. So we ended up buying a single family.

Gotcha. And there was a little bit of a setback in my investing career because I'm like, well, if I don't buy, the duplex. Now we got this mortgage payment. What do I do? So I started looking around at local Rias, started talking to different people. And then I was driving home one day and I heard this ad on the radio for a free two-hour seminar for how to make millions in real estate. And I said, that's it. You know, this is what I got to do. So as probably most people on this call know, you go to that two-hour seminar and then they have an upsell. And that upsell goes to a three-day seminar. And then that's an upsell. And long and short of it, we ended up spending about $15,000 on the guru real estate training.

Wait a second. Hold on, Tom. Hold on. Hold your horses, buddy. That's not true. I don't believe it. It can't really be that way, can it? No, no. And the best part was, I put it on a credit card. Oh, did you make the call and increase the limit on your card? I did, you know, that was the best part about investing is you got to increase that limit on your credit card. All right, so you went in, you went to the one, got sucked to the next, to the next. How did that end up going for you? So looking back on it now, I was actually, I had enough knowledge after the three-day training to go ahead and get started. And that was a $500 training.

So between the time I did the three-day training and the time that we were supposed to go on and take these additional four trainings, I ended up finding a duplex in the newspaper. and I put an offer in and got accepted. Nice. Nice. That's awesome. That's great. So tell us, tell us about that first property.

So the first property, like I said, was in the newspaper. We had, I think they were asking $32,000 for it. We went back and negotiated down to $26,000. And we ended up purchasing it for that price. And one of the great things about that first deal was I had found bigger pockets a little bit before that. So we got the offer accepted. and I put a blog or a forum post on and said,

hey guys, can you analyze this deal, make sure I ran the numbers right? I had a whole bunch of people that came on and said, yeah, it's a great deal. Go ahead with it. As we went through the rest of the deal, I ended up posting two more times on bigger pockets just to say, well, there's a potential issue. Now we can't get financing because the bank's saying that this is a car loan size,

not a mortgage size. It must be rough to be buying properties in the size of a car loan. Yes. Yes, yes. So that was an unexpected issue. You know, the gurus always said, you know, go find the property and the money will be there. And we got to a situation where we had this great deal. People were telling me it was. And, you know, we couldn't find the financing. Gotcha. So bigger pockets actually gave some recommendations. We went out and found financing and we ended up closing that deal. Oh, fabulous. Nice. So 26K duplex. What did it rent for? 1150 a month. That's pretty darn good. Did it need a lot of work or anything?

No, so actually there were tenants existing in there. We put about $2,000 into it since then, but most of it was just cosmetic. The furnace roof, everything else is good. Wow. So what kind of duplex? I mean, what kind of neighborhood are you looking at to get a $26,000 duplex there? Is that ghetto or is that all right? So actually, it's the hometown that I grew up in.

Population is about 3,500. So I'm very familiar with the area and, you know, small, real town. Yeah. That's actually the same size of my town, I think. We have in my little town, we have 3,500 people. And we don't have $20,000. Downtown. Thank you, John.

Do you guys just want to have your own little, like, podunk town, like, you know, love fast here? Are we going to do another? I like small towns. Let's actually talk real quick on that, because you wrote a post on that on the Bigger Pockets blog the other day about investing in a small area. So do you think that's a good idea for other people to get into investing in rural?

Did I say that right? Yeah, we go rural. Real. They were mocking me before the show that they were going to make me say that, and they just did. Make you say what? So, Tom, rural, what are your thoughts? I mean, you're a fan, correct? Oh, yeah, big fan.

I think a lot of it is, you know, a lot of people think they have to go and invest a long-term or long distance, which, you know, you definitely can do. But there's another train of thought that you can always find something within your local market, you know, within an hour or two drive. So we actually live in Rochester right now, which is about an hour away. But there's a lot of opportunity in that small town. In that blog post I wrote, we talked about how you can build your brand a lot easier. You don't have some of the issues that you have with the bigger cities. So there's a lot of benefits to having that small rural area where you can really build that business and not just be another fishing in the sea.

Yeah, now that's great. And we'll point to a link to that in the show notes for the podcast. which you can find at biggerpockets.com slash show 45. Along those lines, are there any negatives, really, that would come from investing in a rural area? I could see, you know, potentially just being at a distant to hardware, you know, big hardware stores, big box stores. So maybe things like that. But, you know, what other issues might potentially be out there for rural? rural properties.

After dissing out Josh and then you go and do it. I'm sorry, Brandon. Yeah, yeah. Yeah, so there's a couple things. One is your pool of renters are a lot smaller. So we typically do buying holds. So, you know, you don't have nearly as many people that want to rent those properties. Also, the strategy that you choose has a big impact on that.

So in that small area, there's only a handful of investors. So something like wholesaling isn't going to work nearly as well as it does in a bigger city. So you really have to look at the strategy, what you're good at, what's your niche is and figure out, is that area good for you? That's great. Yeah. You know, one thing I find in my area is that because it's really small, and you know, there's larger towns around where I live, but just in general, because I live in a smaller area, I have a really hard time finding good contractors because there aren't 100 or 200 to choose from. There's like 15 of them to choose from. And I mean, on that regard, when you find a good one, like everyone knows who the good one is, and so it's easier maybe to find, but I don't know. I have a real hard time.

Do you find that at all in your area? Yeah, so, you know, you guys have talked a lot about contractors and how to find good ones. And one of the nice things with myself is I actually partnered with my father. My father's worked in construction for about 30 years. So he knows, you know, everything from plumbing to electrical. He's built three of his own houses. So he takes care of more of the contracting side of things. And when we first started, we were doing all the work ourselves.

And then, you know, I'm a big fan of E-Mith for our work week. And one of the big things I want to do as we built our business was do less and less of the hands-on work ourselves and hire more of it out. So my father has a lot of local connections. So he's, you know, he's the guy that knows who the good contractors are and who are the ones we are that we want to avoid. and he does a lot of that hiring those people in. Yeah, that's smart. I mean, it's nice when you have a resource like that to use. You know, speaking of that, there's something in business called,

what is it called an unfair advantage where like there are certain things in your business that you just happen to have that work well for you. In your case, kind of your unfair advantage is having a father who knew the business. And people will complain, you know, well, I don't have a father who knows the business. But, you know, everybody has an unfair advantage of some kind. and you just got to find what that is and to exploit it. Yeah, I mean, I think that's a very important thing. You know, everyone's got things that they're very good at and things that, you know,

maybe they're a little weak on. Take those ones that you're very good at or take those opportunities that you have and exploit those. Yeah. Yeah. That's great advice. That's great advice. Hey, so I want to jump back if you guys are down with your little rural love fest here. And, you know, maybe we could talk about some real, real things that people in the cities

actually care about. Yeah. Josh, how much is your house payment? What's that? How much is your house payment? Maybe you don't want to publicly say this, but I'll tell everyone mine is $380 a month. Yeah, mine is many times the $385 a month. And I do not live in a big house.

I live in a little 2,400 square foot house, which includes a basement in the city of Denver. So, yeah, that would be nice. But, you know, of course, I can go and walk, I don't know, let's see, half a mile to the train station to take me downtown in seven minutes and hang out in the big city. I could go to restaurants. We have, you know, I don't know, we have, I'm not going to diss on the rural people. I love my rural people. Keep listening to rural folks. Keep listening. I don't think you could take a little cow tipping though. That's true. You can't go taping out of cataping. You can't get bar fights quite as easy. I mean, we, you know, that's something

I really miss. I really do. It's an opportunity I just don't get. But, all right, so I wanted to circle back to the training stuff for a second because I believe you, you know, beyond just the training that you went to, there was, you know, you had experienced some of the negatives that kind of come with it. And maybe you can talk a little bit more about some of those, you know, the negatives that you experienced. Yeah, I mean, one of the big things is, you know, we all see a lot of people get started in real estate and a lot of people don't stay in real estate. And, you know, that's one of the final four questions that you have. And with that guru training, a lot of it is hyping people up and not really giving people actual knowledge. So you go to those courses and they give you just little crumbs and you grab that and you say, oh, this is great, but I don't have enough to get started. So one of the big things with the gurus is, you know, it doesn't matter how much money you're going to pay them, they're going to still upsell you.

So the next upsell that we would have had would have been this personal mentoring. And that cost even more than the advanced training, you know, advanced training in quotes that we received. So when I look at all the people that took that training with us, I don't know if a single one of them is still in real estate. And thankfully for me, I found bigger pockets and got the actual knowledge to do these deals, not. not just what we got from this advanced training. So what can, you know, because I didn't bring it up just so we can bag on those guys. That's so much fun, Josh. Come on. So, no, I mean, people listen to this.

There are people who are considering, who are listening to the show right now, who are considering going out there and spending, you know, going to a free introductory seminar. or they want to go to the 997 boot camp or the $5,000 or the $15,000. And so, you know, what can you tell those people about, you know, not as, you know, what to do there, how to, you know, how to walk away without, you know, blowing your wallet? Is it worth going at all? Or, you know, can they get anything out of these things that's going to help them? Or is there just a different route to take?

I mean, it's different strokes for doing. folks in my opinion. Yeah, you know, I think that's key. I'm someone who's very self-motivated. I can learn a lot of my own. I read a ton of books and it was good for me to go to the three-day training. It cost about $500. And what that did for me was gave me, here's the spectrum of real estate, here's all the different

types of ways that you can invest. And then I got to pick and choose from that and say, well, you know, back to Brandon's point earlier, what can I be successful at based on the experience I have and the people I around me. So going to that three-day training and spending that $500 was huge. But that's all I personally needed in order to move forward. And with the internet, with bigger pockets, with all these things out there, with your local real estate investors, there's so much information you can get that you don't have to go and spend all this money with gurus until you get that. Right on. Right on. And, you know, that $500, not to stick a stick in your back or anything

here, but that could have been saved by reading the ultimate beginner's guide to real estate investing on bigger pockets. And there's also a post that we put together. It's 100 ways to make money using real estate. And we'll link to both of those on the show notes for anybody listening because, you know, there are a ton of ways to get going. And, you know, if that alone is what you need to know to kind of figure it out, then, you know, we've got it available now for those folks.

and, you know, frankly, I'm glad you went to those seminars because, you know, they did help you out and they got you motivated and you're out and doing it and killing it. So that's awesome. And, you know, one of the things that I, people ask all the time on the forums, how do I get started? What's the best way to get started? What's my first step? And generally the advice I like to give is just to surround yourself with real estate investors, whether that's on bigger pockets or it's at a local, you know, real estate club or it, you know, however you can do it, surround yourself with it. And, I mean, the podcast, I think, are a great way to do it because you just get to hear different ways of investing. Because just like you said, Tom, you know, you got to figure out what works in your area with your certain skills and the people you have around you. And so, yeah, flipping might not work. Wholesling might not work. Whatever might not work. But the more you familiar yourself with it, the more you have a chance to find out what will work and then exploit that and make it work and become successful. Yeah. There's a post that I put on my personal bigger pocket.

blog before I started blogging for you guys about how to get started in real estate with $100. And with that post, it's a couple things you can do that don't cost a lot of money to really get you in and understand what is the spectrum of real estate so you can figure out, is this something for you? And if so, where do you want to go from there? And, you know, one of the big things with that is reaching out to those local people, go buy a couple local investors coffee, or I think you guys said before, buy them mistake. But whatever you buy and whatever money you put out there, it's going to come back to you way, way more. Nice. That's awesome. And speaking of that, I got to plug something.

As of last week at the time this show comes out, you will be able to go on bigger pockets and find local investors. You can, through the site, you've got to actually find out folks who are on the site in your zip code now. And you can also find people within 510, I think, what is it 510, 25, 50, and 100 miles of your area. So you can literally just jump on the site at biggerpockets.com slash meet

and start finding people in your area to connect with today. And so... I did that like an hour ago and I found like a dozen people in my town that I didn't even know invested. I did it. I was shocked too.

Yeah, I couldn't believe how many people in my zip code are on the site. So it's pretty awesome. But... That's the... That's awesome. And I just want to thank you guys. You know, Josh,

you put a lot of work into that site. And, you know, you guys keep adding the features. The keyword alerts, the podcast. You know, I started using bigger pockets several years ago, and I kind of stepped away.

And one of the reasons I came back and started writing for you guys and I'm very happy to do this is to, you know, give back because, you know, you guys have given so much to me. And there's so much free knowledge,

so many good people on that site that it's awesome to be able to help people back. Oh, thanks, man. Appreciate it. Appreciate it. All right, so I got a question that goes back to something that you were talking about earlier. You said that your wife didn't let you buy. And, you know, I think that's something a lot of people probably experience.

You know, I can see, you know, I knew when I was getting into it, you know, my wife was a little skeptical, hesitant. It wasn't my wife at the time, I don't think. But, you know, still was a little nervous about it. How did you go about convincing her that buying, what was it, that $26,000 duplex, how did you get her to agree? Did you buy her big fat stick in her or a diamond ring? What did you do? Yeah, so, you know, we talked about it.

And, you know, we had a lot of tough conversations. And one of the things that kind of kicked that into gear was, well, I spent all this money on the credit card. I better go do something to pay it back. Gotcha. But the big thing that really, I think that really convinced her was we looked out and we said, you know, what do we want our lives to be? What do we want our goals to be? And I think Brandon's talking about this before. Pick a goal out, say, 10 years and work backwards and say, how do I get that goal?

And what do I got to do in five years and three years and one year to get there? And we knew that we wanted to be able to have financial freedom. And this was one of the ways we could do it. Okay. And what advice would you have for somebody else who, beyond that, whose wife, might be skeptical, who may not have thrown 15K on a program already. It was just like, you know, they really want to do it. You know, I don't know.

I mean, how do you convince your spouse or partner to, you know, let you give it a shot? You know, anytime you go do something, whether it's starting in real estate, people that started a business, there's going to be naysayers. And a lot of people with real estate are naysayers. But if you look at those same people, they've never invested in real estate. So go and look at people that are actually doing what you want to do and talk to them. So take them and their wife out to dinner and say, what are you guys doing? Tell us how things are going.

And really talking to people that are doing it will help build that confidence. That's great advice. Yeah. You know, there's a post also. I'll just recommend that Seth Williams wrote it probably a month ago. But it was basically called, I can't remember the exact title, but I'll link to it in the show notes. But yeah, how do you deal with a spouse or partner who does not want to invest in real estate? It was really, really, really good, I thought.

So, yeah, again, I'll link to that in the show notes at biggerpockets.com slash show 44. That's actually show 45, but nice to try that. Slash. Someday, Brandon, I'll get that. Biggerpockets.com slash show 45. Someday. Ignore.

Ignore. Yeah, there you got. Hey, are rural. All right. Yeah, thanks. All right, let's move on. How about? So, since that first duplicate.

What else? I mean, what kind of came next? What's the rest of your story look like? Yep. So the first duplex actually bought with my cousin. I ended up partnering with him because I didn't have enough money for the down payment. And I wanted to partner with my father, but he, I don't think, really thought I was serious. You know, a young kid out of college wants to invest in real estate.

What's he getting to do? But once he found that I knew what I was doing, I got a good deal and I was serious about it. I ended up partnering with him. And we bought quite a few properties together. together, mostly buy and hold. And we've just kind of stepped up to a little bit bigger properties and now we're starting to branch out, you know, going into next year for that. Okay, cool.

And I read somewhere that you opened up like a, was a liquor store or wine store or something like that? Yes, yes. How'd that come about? So actually, when I was in college, my father gave me a phone call and best news you could ever have for a college kid is, hey, I bought a liquor store. Nice. Yeah, Dan. Yeah. So, summer's between college and on breaks, I started working at the liquor store. And being in New York, the Finger Lakes are actually a big area for wine.

So I learned quite a bit working at the store about the local area and then got to see the back end of the business and how things were going. So from there, I saw that a liquor store was available in the next town for sale. So I went and looked at it. They were asking too much money. And I said, hey, we buy real estate. Let's go buy. a building and now we'll get my liquor license and we'll open it up. And it took like a year, but we ended up getting it. And one of the nice things with that was being able to expand out. So now I'm not just held to real estate. I'm diversifying that portfolio into small businesses. Yeah, yeah, you know, that makes sense. I'm a big fan of, yeah, the diversification thing.

I just can't say diversification very well. All right. So I'm wondering, you mentioned earlier you were just out of college and you wanted to buy this your dad didn't think you were serious. And I was the same way right out of college I bought my first. So let's talk a little bit about investing in real estate when you're young. A lot of our listeners are probably under 30. What kind of advice can you give for people who might be in that age bracket? Yeah, I think one of the first things is just going out and getting educated. So a lot of people want to get into real estate but don't spend the time to actually learn the business and learn the financials that really go along with that. So there's that saying out there, you know, you've got to look at 100 deals, put offers in on 10 before you buy one.

And although you don't necessarily need to go on and look at 100 deals, you've got to start to understand what makes a good deal so that when you go and talk to a bank, you can put together that information to say, this is why this investment makes sense. Okay, but then I'm this fresh pimpled kid at 22. You are? Who, yes, I am. That's right. Who walks into the bank says, hey, I found a deal, and they look at you, you know, and they say, come on, kid, seriously?

Or do they not say that? You know, what's that all about? Yeah, so actually, we got turned down for our first deal with the bank. We went, showed him the deal. Everything looked good. And they called us back a week later and said, you know, you just don't have the assets. The deal looks good, but we're not going to be able to give you that long. own. So that's when we freaked out a little bit and said, oh, great, we're going to lose this deal.

And once again, I turned to bigger pockets and people gave me recommendations on there. We ended up finding another bank that would finance us. But what we've done since then is really gone to a lot of private investors. And what's great about private investors is you don't have to go through the same qualifications that a bank has. So one of my private investors was actually one of my teachers from the past. So he, knew, you know, what I was doing at school. He knew that I was credible. And when I showed him some of the information, you know, he really liked that. So it's, there's a lot of different ways to go about this. And it's just figuring out what works for you. You're not always going

to be successful the first time. But there's always a different way to get a good deal going through. That's awesome. I think that's the first person I've heard who's gone to their teacher. I've heard the mailman. I've heard the pool, the pool guy. My wife's lover on the side, but never never my ex-teacher. Now that's awesome. That's awesome. Are there any other tips that you might have for some of the younger people for just what they can do to get the ball moving?

Yeah, I mean, you know, if you're not having success, you just got to keep being persistent with it and try something different. So one thing that's always brought up is finding a mentor. So I like the recommendations of going out finding something. someone who's doing it and offering your services to them. Even if you're not making money, you're getting so much more in the education and then you have real hands-on experience to be able to then go off and do deals on your own. Yeah. Yeah, that's cool. For sure. So, you know, we talked about earlier about the unfair advantage. And I think as a young person, that is your

unfair advantage. And, you know, if you think about it that way. And the reason I say that is because when you go to an investment club and there's 50 guys around that are all 40 to 60 years old, you kind of blend in with everyone else. But when you go in you're 23 years old and you're like on fire and I mean, every one of those 50 year old guys looks at the younger guy and be like, oh, that was me. You know, I want to help this kid be, you know, I think that's a huge, huge asset that they don't people, young people don't play up enough. Yeah, you know, you hit the nail on the head with that. I have so many people that want me to be successful just because of that. They see this young guy who's out there willing to put work in and, you know, they want to give back, you.

You know, because they were in my shoes a long time ago. Yeah. And, you know, the second thing with that is being a younger person, you've grown up in social media. You know how to use the Internet. My background is actually in IT. So there's a lot of benefit I have to working with other investors where I can help them get their Facebook page set up, do some of that initial marketing. Some of the stuff they might not have the familiarity with. Yeah, that's very, very, very true.

That's very cool. Awesome. What are we? You're going to say, why don't we? and then you're going to ask him about his private investor teacher and how he ended up blocking him in and how that happened and anything else about private investors. That's exactly what I was going to do.

So why don't we jump back a little bit to where you talked about that teacher that invested with you. Can you kind of share how did you even approach that with him? I mean, did you just call him up and say, hey, you know, remember me from high school geometry? I mean, how did that work? Yeah, so I think one of the things that's important is to keep in touch with people you never know, and not just for a business aspect, but you never know when you're going to be able to help someone else out or they're going to be able to help you out.

So I kept in touch with that teacher. We actually met out for lunch one day. I told him, you know, he saw online that we were doing this real estate investing. I told them that we were looking at a deal in his town. He asked about some of the details and I walked him through it. And he actually offered, I didn't even ask. He said, you know, well, I've got some money sitting around if you want me to invest with you. So we talked through it.

And, you know, a week later, we had the money. That's awesome. And one of the big things he liked was not only was he making more money than he was sitting in a savings account, he was also investing in the local community. So we took a building that was vacant and renovated it, got tenants in there, and now it's not an eyesore to the community anymore. Nice. Nice.

So what kind of terms do you offer to your private investors, whether it's your teacher or somebody else that you work with? Yep. So a lot of it depends on the deal and a lot of it depends on what those people want. So there's some where we've structured monthly payments or interest-only payments. And then there's some where the people just said, go, I want my money to roll. And we'll do a lump sum payment at the end with principal and interest. So you could pretty much fabricate it however you want.

You kind of come out with your pitch and they either like it or they make modifications and you go from there. Yep. What do those rates look like? What kind of interest rates are we generally talking about? So we've had some down into the 5%, we have some at this point up into 8.5%, 9%. Okay. Not bad. Not bad.

You know, you mentioned something earlier that I want to touch on again. I never really thought about it in these terms, but about keeping in touch with people in your past. And then you mentioned Facebook. And I thought, I don't think enough investors do that. You know, like, I don't personally, I don't talk about my investing on my Facebook ever. And I know there's a lot of reasons why maybe you don't want to. But at the same time, maybe there is a reason. reason you'd want to because, I mean, you've got three, four, five hundred friends on your

Facebook page and each of them have three, four hundred friends. I mean, that's a huge network you have of potential people when they can see you succeed that they may want to partner with you. I don't know. I'd be curious to know how many people have found deals and, you know, actually work that way. Yeah, definitely. And, you know, even just beyond that, once people realized that I was investing in real estate, I've actually helped a lot of other people get started in real estate.

I never knew they had the passion for it. They took me out for coffee like I recommend, and now they're out being successful, too. So to me, that's awesome. Yeah, that's awesome. I think there's an advantage. You know, there's things you want to be cautious about, right? I mean, you know, you start publishing things and, you know, you may get some people out of the woodwork, right? You may get that old middle school buddy who is your chum and who, you know, sat in like,

hey, best friend, you got cash, or, you know, your second aunt three times removed. you know, tries to hit you up. But, I mean, you know, I guess that all kind of relates to how you deal with your family personally. If somebody hops out of the woodwork and it's like, I need money from you, you know, piss off. I do get that almost weekly, honestly. Like, I have old friends of mine that will come out of nowhere and just ask me for money, like all the time because everyone thinks I'm like loaded or something. And so like, like, because obviously I talk about real estate. Yeah. It's always like, I need 20 bucks, dude. I just, I just need 20 bucks. No, I need 20 bucks. Yeah, I don't know about that. I don't know. But yeah, I mean, I think that's the downside. But I think

if you, you know, by sharing stuff and blogging and putting things out there, I don't think there's really that much of a detriment other than, you know, the benefit is you're going to have a lot of opportunity potentially come to you. Yeah, I agree. Did you know your house gets bored when you leave. I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the

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Are you still buying in the rural areas? Are you buying in the city in Rochester proper? What's kind of the pathway? Yeah, so at this point we're still buying, mostly buying holds in the rural areas. But one of the things we're looking at in the next year is to possibly get up closer to Rochester in the city and do more flips.

So my father actually is no longer working a day job. And because he's got the construction background, he could be the GC on our jobs and sub-out flips that will actually give us more cash for the business. Are you still working a day job or are you full-time? Yes, I work a day job. Okay. So how do you manage all this?

I mean, you're a landlord. You're not flipping or anything like that. So I guess, you know, it just comes down to having good management. Is that right? Yeah, you know, I wrote a blog post about this a couple weeks ago about the benefits of having a day job. And a lot of times people get into real estate and they say, well, you know, I want to get into real estate, quit my job, whatever. There's a lot of people that have done that and been successful, but there's also a lot of people that are probably quit their job too early.

And one of the big things with having a day job is you have stability. You can grow that real estate business in your spare time without having to worry about how am I going to pay my rent this month. How am I going to put food on the table? And the other thing it's forced me to do personally is create processes. and then outsource those to other people. So I think you guys had James Ruinland for a million on, and he talked about when you're working that day job, you've got to have the integrity to actually work that day job and not do your real estate stuff.

So I take that very seriously as well. And every time I do something new, I create a process for that. And I say, how do I outsource this to someone else? So when I'm at the day job, I can focus on that. And when I'm home, I can focus on my family. That's awesome. Write that down, folks. That's a really, really good advice.

And I think it's better in this case, the better safe than sorry. I think better to leave your day job later than too early. Yeah. And we talked about that last week with Michael Woodward about how he left his job. But then he had to go back to it because the market changed a little bit and he didn't have that foundation. So that was show 44 of the podcast. So be sure to go back and listen to that. And, you know, one thing, because I work obviously a day job here on Bigger Pockets, you know, I spend all my time here.

I had to hire a manager, not only just a resident manager, but I hired an office manager to take phone calls, show units and all that. And I pay her $500 a month plus $100 per unit that she rents out. So if there's three or four units in a month, you know, she'll make a little more. It's very part-time, but it was enough that it relieved most of my stuff that I had to do. And so between my wife and my office manager, they managed most of the things. And you don't have to have a full-time employee. I think people think you have to pay $3,000 a month and benefits to have a manager to do something for you. But there's a lot of people at home who would love to work five, ten hours a week to help you out and make a little bit of side income.

So when do you believe the right time to quit your job is? Like when should a person actually do it and jump into it full-time? Yeah, you know, I think it's probably going to be different for each person. one of the things that I like is I wrote a blog post on Cashflow One-on-one and how I actually use that to help define my investing strategy and one of the great things out of that

is you want to build your passive income to be greater than your expenses once you do that in theory you can quit your job and still be able to cover all your bills so I think that's a good baseline that's awesome I like to think though I played cash flow you know there's two ways to play

I played it one they say you know as soon as your income meets your expenses yeah you know your passive income means your expenses, you can quit. And other people play, you have to have double the income in order to quit. I tend to lean more towards that. You want, things could definitely go wrong. And Josh just suddenly pulled his dog up into the interview. So we're going to have a four-person interview now. Yeah, he decided he wanted it in on the studio. So, yeah, it's all good. Nice. All right. So I guess do you have any other tips you can offer for kind of balancing your time

between finding deals and working a job? Yeah, I think the biggest thing, like you said, hire people. It's a big theme of, like, for our work week and E-MIF is really create systems and don't work in your business, work on your business. So everything I do, I say, how can I create a process that I can now hand off to someone else so that I don't have to deal with it? Yeah. Nice.

Smart. Nice. So how are you finding deals these days? You know, is it through the MLS direct mail? I know, I know. I know Rochester is very similar to my favorite town in America. Here we go. Basketball, Buffalo.

Now, that whole corridor is pretty similar. So, you know, deals are plentiful, I believe, and quote-unquote deals, right? Inexensive properties are plentiful. But, you know, I think the challenge is knowing the difference between a cheap property and a deal. That's a tweetable topic right there, Josh Dorkin. There you go, man. Look at you being insightful. Apparently, once in a while I come out of my shell.

So let's talk about how you're finding deals and maybe how you're identifying the difference between those cheap-o properties and the real deals. Yeah. So I know a lot of people on here talk about direct mailing and all the marketing they do. One of the benefits of investing in the rural town is the fact that I actually do very little

marketing. We found deals just people putting in the newspaper. We've had people actually come to us because they know we're investing in that town. We bought deals at the tax foreclosure auctions. So like you said, the deals, at least in my area, are pretty plentiful that we don't have to search too much for them. Gotcha. And what about the difference between a deal and a deal, a deal in a cheap property? Yep. So one of the reasons, once again, going back to that real town and why we like it so much is we're very familiar with the area. And we know when it deals good and when it's just a cheap property. There's actually a tax foreclosure auction that property sold for $7,500, which was pretty crazy. We didn't buy it, though, because we knew that the area

that property was in wasn't the area we wanted to invest in. And there was actually some issues with the house that didn't make $7,500 a good deal, even though it was very cheap. Yeah. So how would an outsider who's saying, you know, Detroit, man, $500 house, let's go, Rochester, Buffalo, you know, I don't know, Columbus, Ohio. Let me piss off everybody in the area there. Come on. What else could I throw out there? No, but, you know, how do I know that? Is it just having an intimate knowledge, intimate knowledge of the area, or is there any other way to figure that out? Well, first, I'm glad that now I'm not the only one that Josh is pissed off, so I feel I have a group connection with, you know, half a bigger pocket. The haters' pub. For me, personally, it's just knowing the area. You know, I wouldn't go out and invest in an area that I don't know. I know that, you know, people previously on the podcast have been able to do that with success.

But for me personally, I know the area and I know what can make a good deal. So I think that's a... Yeah, that makes sense. I think, and that can be applied to anybody, whether you live in a small rural area or a big area. I mean, I know my area, I know my town, all the surrounding towns, total make up maybe 50,000 people all together in my whole county. So if I can understand my county pretty well at 50,000 people,

go find an area of 50,000 people and make that your farm area. You know, just pick a small area of a city or pick one neighborhood. hood and make that your area, make that your small town, and just master that one part. That is my quick tip for the day. Yeah, quick tip. All right, cool. I was going to hop to the kinds of properties that you're investing. So you bought the duplex.

You bought the liquor store. What's next, man? You open up a pot shot or shop. Go move it out to Washington. I was going to say, I'm not. I'm not in Denver, so. But actually, my sister did just move out to Denver this past week, so who knows? That maybe in the future.

All right. They're open up everywhere. It's crazy. I can imagine. Yeah, we got four in my little town, four of them already. So, anyway. Wow. Wow.

Yeah, so what kind of properties are you buying? Yeah, so for a while it was duplexes. We actually bought one single family that we were planning on flipping, and we weren't able to flip that, so we're renting that out now. But mostly bigger multi-families. And then, like I said, we're doing some business planning, and we may look into flipping more in the next year. What kind of bigger multis?

Four units and up. So the building we bought where we put the liquor store was the first fourplex that we purchased, and it was a mixed-use residential commercial, which was a good way to get our foot in the door for some of the commercial space. And one of the things that I think people have said in the past is a lot of times you do just as much work for the bigger,

deals as you do for the smaller deals. And I definitely think that's an important piece of advice, but you have to understand what to do on those smaller deals before you can step up. And I think we're at the point now where we understand enough about the process that we can do those bigger deals. And what do those look like, the bigger multis that you've acquired? Yep. So the fourplex is the biggest one so far. Okay. Okay. But, you know, from there, we'll look in, like I said, to fourplex, it's enough. You mentioned that you tried to flip a house and it didn't really go well. Can we talk about that a little bit and what happened there? Because I've been there a couple times.

Yeah. So one of the things I think goes back to is, you know, the rural towns and what strategies work. For us, one of the things we realized was your buyer's market is so much, or your pool of potential buyers is so much smaller in a small town. And then really the biggest mistake that we made was thinking we knew what the ARV was when we didn't. So we picked up the property. We actually put the right amount of money into it. But we thought the ARV was about 20,000 more than it actually was.

So when we headed on the market, you know, it just wasn't selling. Gotcha. And that is, again, going back, that's another problem with investing in small towns is that it's a little bit harder I feel like to find an ARV. I mean, I got a house in my town that sold for, yeah, 110, another one sold for 170. And I have no idea. Like, they're the same house. Aren't you like your own comps half the time, Brandon? Well, multifamily's on my own comps, yes.

But single family, I don't know. I worry about that because if I'm going to go flip a house, I don't know if I'm going to be able to sell it for 110, 120, 150, 170, because there's been five sales of those style houses in the past six months. So how do you justify it? I don't know. It's tough. Yeah.

And that's where, like I said, we're looking at it right now. And if we get into flipping in the next year, we'll probably be up in some of the suburbs of Rochester, where it's, you know, a lot easier to find cops, a lot more potential buyers. Yeah. I think I'd like, I like to keep my buying hold where I'm at, but I wouldn't mind moving up to like Tacoma or Seattle for my flipping. It makes more sense to have more buyers. So, well, cool.

Are you going back to the buy and hold then? Are you managing your own properties yourself, like your dad, you know, taking phone calls or do you have a property manager? So we manage them ourselves, and it's actually split between my wife and my father. Okay. So my wife handles the call, schedules the appointment. and then my father actually does the day-to-day maintenance as well as some of the showings. Okay, cool.

I got you. And how's that going? Going well, I hope. Yep, going well. One of the key pieces was you didn't hear me involved in that at all. Yeah. So that was a great thing where I've been able to pull myself out so that things aren't hinging on me. Yeah, very smart.

So you go to work and they handle all the drama and all the maintenance and screening and everything else. That's a good way to be, huh? Fabulous. Yeah, I love it. I love it. And what about tenant screening? What is, do you guys have a particular screening process? What kind of criteria do you guys have said?

Yeah, so it was actually funny when you guys wrote the Ultimate Guide to Tenant Screening, which is phenomenal, by the way. Great plug, by the way. Which I will like to in the show notes. People want to check out. Wait, what show is this, Brandon? This is show 45 of the Bigger Pockets podcast. Anyway, sorry, continue. You were giving me praise.

So when you guys wrote that, yeah, when you guys wrote that, it's actually the exact same screening process we use. And, you know, three times, you know, income three times rent, checking backgrounds, checking credit. And one of the things that's big for me is really, I think you guys call it the stress quotient, but I call it the headache factor. So after I get through all the screening process, I just look, and are there any signs that this tenant's going to be trouble and really give me a headache? because I don't want headaches. But, you know, that plug, you know, the screening ad is amazing. So I would highly recommend any landlords. You don't necessarily have to follow each piece of it, but it's a great foundation.

Well, thank you. Yeah, I think it's great. I mean, yeah, to tout our own content. I mean, it really, I mean, listen, the goal was to take what was out there and improve it and come up with the absolute greatest piece of content about screening. tenants that's out there and I think we'd get that so you know check it out on the show notes at biggerpockets.com slash show 45 um cool so what what about red flags I mean what you know what would be the headache factor I mean is it is it a guy who drives up everything looks good but

his car's got a bunch of crap in it is it you know the tattoos on the knuckles what you know facial piercings what are we talking about like Tyson tattoos right there Yeah, Mike Tyson, huh? I actually saw Mike Tyson. I was in Vegas the other couple days ago and was writing the escalator the opposite direction of him. And that guy, man, everybody just, you know, everybody goes crazy when they see Mike Tyson. He's just a monster celebrity. Isn't that how it is when you go to conferences, Josh?

Everyone's like, it's Josh Doran. Yeah, that's because they think I'm Adam Levine. That is true. It's true. Anyway, red flags. What do you look for? Yeah, so a lot of times it's just the small things. So I had a blog post recently about walking through actually a tenant that we were going to rent to,

and there were just so many red flags that we ended up renting to another applicant. But one of them was we told her we would follow up with her in three days, and she kept calling us back in the meantime. Another one was she had to move very quickly. So in her situation, I actually believe her, and it was her landlord lived up, He had a medical issue and he had to move downstairs. Right. But, you know, anytime that someone's got urgency or anything like that, it's a red flag that,

you know, why do they have to move so quick? That's a great one. That's a great one. Yeah, there's usually a story behind it, right? Yep. Yep. And stories behind it usually equals a negative connotation in a lot of cases. So yeah, no, that's great.

So where are you at today? where are you at today? I mean, you know, you've got a bunch of, it sounds like you've got a bunch of buying-hauled properties. You've got this mixed use. You're, yeah, you've tried the flip thing, you know, looks like, sounds like you didn't get back into it. Are you, is your goal to just keep building the portfolio, the rental portfolio and eventually start to get into the flips and at that point or somewhere around then, you know, thank your, your bosses very much and move on on your own or what are we thinking? Yeah.

So, you know, I said at the beginning of the cast that my goal was 15 years and I want the option to retire. Okay. So I'm about halfway there. And I said the option because, you know, I'm actually very good at my job. So, you know, it's not that I'm necessarily going to leave, but I want the option to do it, which is great. That sounds like you love your job, which is awesome.

Yeah. And, you know, that's actually a good point. you don't have to get into real estate and think that you just have to leave your job. If you enjoy what you're doing, real estate can just be a supplement and it can give you options and opportunity for the future. Yeah, that's good. But for the next phase, I'm actually reading Jay Scott's two books right now, which are phenomenal.

You know, rehab or the book on flipping and the book on estimating. I think it's titled Bigger Pockets Presents. Flipping houses and bigger pockets. Those bigger pocket guys, they just got some good stuff out there. They do, man, they do, yeah. Like a half-hour commercial here. Those books are really good, man. Jay is a process guy.

He's like super anal retentive about really doing that. And the book is fantastic. Yeah, and you know, we talk about, you know, the money you spend investing in yourself. And those two books, I think, were combined, 50 bucks. Yep. And for the amount of, I mean, Jay's got a lot of experience and the amount of real-life information that he puts in there in the step-by-step process, one of the best 50 bucks I've spent.

BiggerPockets.com slash flipping book. Check it out. But let's move away from the commercial here. And this was completely unintentional, and sometimes it happens, as there's a lot of cool stuff on the site. But I think we might want to start easing into the next segment here of the show. It's time for the fire round. Fire round. Fire. What is the fire round, Brandon? The fire round is the part of the show where we throw some fiery darts at you while you get pinned to a wall. Sorry. Sorry. Oh my goodness. What show are you on? Circus, I was at last week.

All right, now the fire around. Your fantasy dreams, you know weirdo. All right, these are all quick question, quick answers that we get from the Bigger Pockets forums. So number one, this interesting question. It said, will tenants pay more if you roll the cost of different expenses into the rent? In other words, if you've got a property, let's say that you're fourplex. Could you charge your tenant for the water sewer garbage and just divide it between the tenants

and just add it to their monthly rent? you know, why or why not? Yeah, you know, a lot of it's the convenience factor. So if you roll some of those things in and the tenant knows they just have to pay their rent, they don't have to worry about some of the other stuff, they'll definitely pay more. Now, with that said, we in general like to put most of those charges onto the tenant because, you know, tenants like to keep thermostats at 80 degrees and I don't want a high utility bill. So they will pay more, but we try to push them back onto the tenants.

And I think that's a safe bet, especially for a new landlord's. to not do that because I personally have experienced the negatives of the 80 degree thermostat and sinks running all day, hoses running, you know, and those bills can get really crazy if you let that happen. I put a lockbox over my spiket at my apartment complex. I put a lockbox because they were washing their car like three, four, five times a day people were washing their cars. I mean, every day.

At the car wash. Down at Brandon's place, everybody. to come down, let's wash your car. I think that one lockbox, that $20 lockbox, saved me like $400 a month. It was insane. Oh, yeah. I mean, so a quick tip, we had,

yeah, we have to pay water in our town if we own the property. And we got an $800 water bill because one of the tenants' toilets was running and they didn't let us know. So at Home Depot, they actually have some of the parts you can put in there that'll make sure that it doesn't keep running. And I think it's a $13 part and it would have saved us an $800 bill. Do you know what that's called or can you I'll not sure off. Yeah, I'll give you a link.

Next question is, what app on your phone can you not live without? Can you live without? What app on your phone can't you live without? For me, I'd say Dropbox. So for anyone that hasn't used Dropbox, it's a cloud storage platform. So I can put documents in there on my PC, get them on my tablet, get them on my phone. and one of the things that I do is my father gets paperwork sometimes. So he'll actually scan it in.

I have a scan to Dropbox so that I can see it at my office without having to actually get the paperwork. Nice. Cool. All right, third question then. What do you believe is your biggest mistake you've made in your investing career? Biggest mistake would be not understanding ARVs enough. So in our first couple duplexes,

once again, same thing with the flip. We renovated it a little bit too much up front. We bought for cash, we renovated, and then we went to refy with the bank. And on those first couple properties, we ended up not being able to refy and pull all of our cash out. So since then, we have a much better understanding of the ARVs, and we can actually pull cash out when we do a refi. You have any quick tips on how to better understand ARV? So one of the big ones to be talking to local realtors, but we're at the point now, just like Brandon, where our own comps. So when we pick up a duplex, it's comped against our other duplex.

clicks. Gotcha. Right on. Okay. Next question. Let's say I own four homes and can't get any more loans. How do I proceed? So I mentioned it earlier, private investors.

And I think anyone that's been in real estate knows you start out with general financing or whatever, but to really grow, it's the private investors. Yeah, I think that's good advice. Another tip that somebody had given us on that question was to get the loans in your name, then your wife's name, then your business's name. and, you know, that on-un, kid's name, uncle's name. Yeah, good job. Yep, that works too.

All right. So next question, I'm going to a new location that I'm not real familiar with to look at properties to buy. What should I do first? Like, how do I get familiar? Yeah, one of the biggest things, and, you know, it doesn't cost a lot of money. It's just driving for dollars. So go up and down each of the streets, either driving or walking, talk to the neighbors. They're going to give you more information than you can get anywhere else.

Yeah, that's good. Good feedback. All right. Last question in the fire round. Tenet drama. Man, oh man, do I love tenant drama? Woo! All right. How would you deal with two tenants who absolutely hate each other and complain to you incessantly? That's a good one. A lot of times if tenants have issues, we end up typically what happens is it's not necessarily the tenants that complain to us, but they're not. neighbors will and we'll just let them know to call the police. So they handle it in a lot of cases. It doesn't bother you. You don't even answer the phone.

You give it to your wife and let her deal with the drama. You're a real nice guy, Tom. That's great. That's great. Pawn it off to the cops and say your wife. That's what you do. Outsourcing, right? There you go.

All right. Well, why don't we move into the final section of our interview? Something we like to call the Famous for Come on, man I'm surprised you guys I haven't outsourced that one yet I was going to

I just haven't got on fiber to do it yet Don't you like our operatic duo? I do You guys actually get on the same key sometimes which is phenomenal Sometimes we do Miracles happen All right, Famous Four

Let's start with your favorite real estate book What is it? Rich Dad, Poor Dad So, you know, I know that's the cliched answer, so I'll give a second one. You guys actually had him on Frank Gallenelli, cash flow and 36 other formulas that real estate investors need, whatever that title is. You know, I think the process of real estate is pretty straightforward. It doesn't take much to learn how to do landlording or whatever, but really understanding the numbers and what makes a good deal.

That book gives you step by step what the key calculations are and then examples for it. That's awesome. Yeah, I, you know, I love Frank. He's awesome. He is, he's probably one of my favorite people in the business. You know, the guy's like a, he's a Columbia professor who's teaching people real estate. I mean, you know, would you rather go to the guru who, you know, is, is done whatever they've done or, you know, Columbia professor who's mad scientist with the numbers and can teach you how to do it. I pick Frank. So, great book. Good guy. Check it out. Yeah. And also, you mentioned at the very, very start of the show. I just want to reiterate it here. You mentioned a book called The Automatic Millionaire by Stephen Bach. I want to just recommend that people read that book. It has nothing to do with real estate specifically. They have another real estate version of it, but the actual book itself was incredible. I thought a really, really good book. And I don't think anybody's ever mentioned it on the podcast yet.

So anyway, we will link to that in the show notes. But favorite business book, non-real estate. So once again the cliche to answer, e-myth and four-hour work week. Both of those are about, you know, how do you outsource, how do you work on your business instead of in your business? But I'm going to go and add some of my own thinking grow rich. It's a timeless classic, get you in the right mindset, and then how to win friends and influence people.

I'm somewhat introverted, but reading that book and really understanding how to communicate with people, I mean, real estate's a communication business. So that book changed how I look and at relationships and how I communicate with people. Nice, nice. Good choices, good choices. What about hobbies? You live up in Rochester, so you must like, I don't know, scaring, abandoned buildings. What do you do for fun?

I was going to say, I get sad every Sunday when the bills play. Oh, there you go. So I have my wife and two-year-old daughter, so they're in my world. I spend a lot of time with them. We actually have a home theater we built in our basement, so my wife and I do a lot of movies. I like to play video games, and then I like to golf too

when we get a couple months here that it's not snowing. That's cool. Yeah, right on. We should have a bigger pockets golf. We should have a bigger pockets online video game tournament. Oh, yes. For those people who play. We definitely should.

I don't know, what's it, like Xbox 27 now or something? Yeah, Call of Duty just came out last week, so hit me up. Yeah, Tom is organizing the Call of Duty tournament, make it happen. That's awesome. All right, final question. What do you believe, Tom, sets apart the successful investors from those who just come and go and give up? So I'll first give the cliched one that's been repeated, and then I'll give my own again. Persistence and consistency.

You're going to be successful. You just got to keep with it and stay on. it. But the biggest thing I think is understanding what your why is. And I tell people this all the time, you know, you look at people that are successful at losing weight. And typically they're successful because they have a strong enough why so that when things get difficult, they go back to that why and that overcomes any of the difficulty. It's the same thing with real estate. You know, why are you in this business and what does it mean to you? And when you have that eviction or when you have that crazy tenant, your why has to be big enough to get past that. And as long

as this, you'll definitely be successful in this business. That is terrific advice, terrific. Well, cool. Well, why don't we wrap things up here? Tom, where can people kind of connect with you and find more? I mean, obviously bigger pockets, but... Yep. So I'm all over, LinkedIn, Twitter, Gplus, so...

Cool. And you have a blog as well at Tom... Was that Tom... Tom... ...dashelvester.com. Perfect. Check it out. And definitely be sure to check out.

Tom's articles on his Bigger Pockets blog, on his blog, on the official Bigger Pockets blog, and everything else. Yeah, he's global. He's worldwide. We definitely appreciate having you on the show. Lots of great feedback. A reminder to those folks listening that if they've got any questions for Tom, definitely pose your questions in the show notes. He'll be there to answer them. otherwise. Definitely check us out on Facebook, on Twitter, on Gplus. You can definitely network,

link up with us on those places. And finally, if you haven't yet create an account on bigger pockets, jump in, set one up. You can network with guys like Tom all day long. He's there to help out and come spend some time with us. We got a lot of cool notes, cool links in the show notes this week. So make sure to check those out. And when you have a second, absolutely make sure to check out the new Bigger Pockets networking page at BiggerPockets.com slash meet where you can find investors in your zip code within various mile ranges of where you live and so on. So definitely you want to check that out to improve your networking.

Thanks again for listening. I'm Josh Dorkin. 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 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 E&K. Copywriting is by Calicoe Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information present. in this podcast.