BiggerPockets Real Estate Podcast - 788: From $26K/Year Paycheck to $70K/MONTH Rent Checks w/Lamon Woods

Episode Date: July 6, 2023

Lamon Woods used an ingenious rental property strategy to go from one house to over one hundred rentals in a small market without using almost any cash. This strategy is so brilliant that most real estate investors assume it doesn’t exist or they can’t use it in their rental property portfolio. Lamon luckily stumbled upon this way to invest, and now, he’s growing his real estate portfolio at a pace unfathomable to most landlords. But Lamon didn’t start as some rental property investing expert. He was making a low income, working a job he had no passion for, and looking for any avenue that could help make him more money. When his wife suggested that they buy the house they were currently renting, Lamon put up a fight but eventually went along with the plan. It wasn’t until he moved out and rented his first home that the real estate investing lightbulb went off. From there, Lamon realized how quickly passive income could replace his paycheck. So, he made it his goal to buy one house a year. The plan was working, but then Lamon realized he could purchase homes without using his own money. In fact, Lamon could take the properties he already owned and use them to grow his rental property portfolio even faster. Now with over one hundred units to his name, Lamon wants to teach other investors (like you) how to do the same! In This Episode We Cover: Lamon’s “infinite return” financing method that’ll let you buy properties with NO money down “Cross collateralization” and how to use properties you already own to build your rental property portfolio Knowing your real estate market and why over-improving will kill your cash flow  Replacing your paycheck with passive income and going from renter to landlord  Getting around your lender's seasoning period and how to use your equity WITHOUT having to wait  And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch BPCON2023 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram David’s YouTube Channel Work with David Henry's BiggerPockets Profile Henry's Instagram How to Use Home Equity to Buy Rentals 5 Reasons to Utilize Your Equity & How to Safely Invest It How to Invest in Real Estate with No Money Down (4 Rules You NEED to Follow!) Enter to Win a FREE Copy of David's New Book, "Pillars of Wealth" Connect with Lamon: Lamon's BiggerPockets Lamon's Instagram   Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-788 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 788. Outside of those first two houses, how much of your own money have you had to spend acquiring any of the rest of those assets? Besides my own personal land that I just purchased to build my dream home, I haven't put a down payment down since I've been on this journey. What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast here today with Henry Washington, interviewing one of Henry's friends, Laban Woods. look, this is a show that I can already predict is going to be one of our more popular shows. It's going to be spread all over the place so you are in for a treat. Lamon's story is simply fascinating. It's also heartwarming.

He's got a ton of information he shares that other people can follow. And he did it all in a market that a lot of people would have never even considered investing in. Henry, what are the parts of the show that you think that investors will get the most value from? Oh, man. I think there's two key parts that investors should pay attention to. one more practical and one more mindset. I think the practical is Lamont explaining how he uses what he calls or what's called cross collateralization to build his portfolio.

So he's essentially figured out a way to work with lenders and buy properties by leveraging other assets he has and not having to bring his own money to the table. And this is for some people, this may be something that they heard before, but a lot of people have never really thought to talk to their banks about cross collateralization or how they could leverage assets they have in order to purchase more assets. And so that strategy is fantastic. I think you're going to learn a ton about how to do that. The more mindset is I love how Lamon talks about how he went and spoke to his bank about

seasoning periods because I think that hangs up a lot of investors when they talk about using a strategy that involves a lot of leverage. people get scared about seasoning periods. I think it holds them back. But Lamont did something that I think a lot of investors need to do more of because he didn't just take something at face value. He went and he met with his lender to talk about these things. So I think please, please listen to those tidbits and those bits of information because it could really help you grow your portfolio. Especially in today's market, right? It's not as simple as decide to invest, save up money, pick your market, go buy a property, make money. Now there's a lot of people trying to do the same thing. You have to be able to see angles that other people don't see. So today's episode is fitting for the current market. Now, before we bring in Lamon, today's quick tip is simple. Remember that money is a store of energy and it comes in different forms. Equity is also a store of energy. LeBond shares a strategy of borrowing money to buy

properties without using it on the property that he is buying. We call this cross-collateralization. We will learn more about this in today's show. But you will think of strategies like, this and other ones when you understand that you have energy or wealth stored in many different investment vehicles, not just the cash sitting in your wallet right now. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures,

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and a timeline you can count on. Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. All right, let's bring in the month. All right, Lamon, let's dive into what your portfolio looks like right now. This is very impressive.

Currently, you have 107 properties with $70,000 a month in retroll. You've got two employees plus you and your wife, Alicia, an in-house property manager and an office manager. Side note, that's actually a pretty effective way to structure two employees. I'm like, wow, that sounds really good. And you're crushing it in real estate. I understand you and Henry know each other. Is that right?

Yes, sir. Yes, sir. Yeah, I know Henry. This is the second time. actually Henry's gave me a great platform to speak on. He invited me down to Arkansas, me and my wife and my boys, and we went down there. And it was a blessing to know Henry because he invited me, but it was a blessing. I got to bring some of my really good friends with me. And still to this day, they talk about that weekend because we don't get those type of weekends being at home,

being in like a smaller market. So it's like kind of limited pool of investors and stuff. So just it's good to be able to do something, but also being able to bring them with me, that would made me happy as well. So it didn't get an opportunity to be on this podcast or show that I started listening to in like 2014 a little bit, but then in 2015, I kind of really turned it up and really started listening, man. And so I appreciate Henry for that. And I'm good to meet you and appreciate you as well.

Thanks, man. Henry does have that effect on people. I frequently find myself waking up in a hotel room today, fondly remembering the last time I saw Henry just kind of brings, he's like, it's like knowing a human hug is what that is strong, masculine, warm, encouraging, everything that you need. So glad to know you guys know each other. Now, before we get too much into your story, I want to ask, how would you summarize your current real estate strategy? Right now, it's rebranding. You know, a lot of things I did in the past. So I was just, I call it survival mode. I was working a job making $26,8774,033. And I had a wife and

three kids. And I was just hustling. So now my strategy has changed. You know, I was just about a lot of properties in a rental hood, Section 8. We do a lot of section 8 and a lot of leased of purchase and stuff. So now, like now, I just bought my, I'm closing on some properties tomorrow. And I just bought a property last week that it rents for like $1,400 a month. So for me, you know, that's a step up in a direction. So right now it's changed when I'm buying properties with a high ARV, you know, and more margins in the rental spread for as the rent rates and stuff like that.

So, so you're saying when you first got started, a lot of the properties you were buying were probably more inexpensive and then they didn't have high margins. So you were getting low entry prices, but then renting them and getting a little bit of cash flow. And so now you're focusing on higher value properties that can make you a higher spread. Yeah. So right now, I mean, it's a long term. So when I first wanted to quit my job and got real estate, it was cash flow. I was chasing the cash flow.

I would change as much cash flow I could as possible. But now I've gotten like in a decent financial situation and stuff like that. there now I kind of like pull back and I can strategize more and I can breathe a little bit. So now I kind of refocus my energy and buying different assets for more for the longer term holds and some of the properties I bought in 2017. 18 when I first thought I've been selling off here. So like my door account changes. So like I might be at 115 then I might sell three or four of the ones that I bought for cash flow. And on those properties, I'm typically making 20,000 a door when I sell different between what the market is appraising, what they're appraising for. Now way higher than what.

When I bought them and now I owe like $20,000, $18,000, $15,000 to the bank. And I'm selling them for $35,000, $40,000 or so. And I'm able to make a spread and I'm taking it and just buying better assets. So it's curious, when you're looking at your portfolio and you said, I'm going to sell these ones, I'm going to use that money to buy others. How are you making the decision that these are the ones I should sell? These are the ones I should keep and then what you should go by. Basically, I create a spreadsheet and I'm emailing the bank getting released numbers on certain loan numbers. And I'm looking at, okay, I got a property over there in this couple mile radius.

And it'll praise for that. My friends are telling me, hey, because they are still buying. I call it the rental hood. They are really trying to scale and grow like where I was a couple of years ago. So they're still buying properties. And they'll tell me, hey, these property appraised for this. Then I go look at my address and see how old this, which is significantly less than what their property. So then I just sell.

And basically the ones, when I got to get in the truck and go over there that I hate going to, it's just time to dump them. I don't like going to them anymore. So it's time to get rid of. I love that. And it resonates with me right now because it's, you know, there's, there's levels, right, to investing. When you're starting out, you're trying to get in the game and you're trying to do it in the best way possible, right? Buying something that you know is going to give you a return. And sometimes we will take on a project maybe in a neighborhood we don't

love, but it's going to give us the numbers we want. Or maybe it's a class of property that isn't your favorite, but it's going to provide you the return you're looking for. But as you start to grow and scale your business in your portfolio, your time is also more valuable than it was before you started. And your peace of mind is more valuable. And so when something starts to give you a headache, man, I totally agree with you. I'm like, we have a duplex right now. It was a pain in the butt to rent. And then once we had the tenants in it, some of the tenants don't love the neighborhood. And so we have high turnover. And one of our tenants just gave us notice that they were leaving. And my first thought was sell it. Get it out of here. I don't even care. Like, I know I can make some money on it.

It's a phenomenal duplex. It's a rare duplex. It's a three-two, two-car garage. You don't have too many of those. And I'm like, get it out of here. I know it's a great asset, but I just would much rather not have to deal with the headache. My wife, on the other hand, is all about the holds. And so she's not letting me sell it. But if it were purely up to me, that sucker would be gone. So I get it. But what I like about you, Lamon, is you hustle for everything that you have. And you kind of got started. And again, I tell people like, this isn't a journey where you get to know all the steps before you start. You kind of have to take a risk and get started and then learn as you go. And your story is the epitome of that. And I think like people just really need to know and hear

your story because it's so inspirational. So can you talk to us a little bit about like before you got into real estate? Like what what caused you to find real estate and then how that led to you doing your first deal? Oh, man. I was, I was heavily. influenced by music. I'm a big fan of J.C. Rick Walters, guys, and they talk about being a CEO and stuff like that. So I was listening to that. And then I realized I was working the job that I just hated, you know, I hated waking up in the morning and having to go to that place. I had no desire no push and nothing like that. But I knew I had to pay the bills and I had to take care of the family, you know, so I had to do what I got to do. I was working at the Coca-Cola plant and I was

merchandising just going in stores and stocking the Coca-Cola, the Red Bull and different things like that and I just hated it. And I was making an $8.688 paycheck every two weeks. And we were standing in a rental hood. Our rent was $5.50. I was making less than $30 grand a year. And my wife was making less than $30 grand a year. And that's how we was able to afford. And my wife had an ideal one day. And she was like, hey, we should buy this property. We're doing a work on it. We rarely call the landlord, the property management company and report repairs and stuff we were doing myself. And I was like, you know, when you stay in a place, a less desirable area, your goal is not to buy a house and lived there. So when she came to me with that idea, I was like, man, like, no, I don't like,

I don't know what you're talking about. I'm not trying to do that. And she was just saying, we don't got to pay rent no more and different things like that. We're not ready to put some my own money in it and stuff. So it started to make sense. And I went to talk to my dad about it, talking to my mom about it. And I was still nervous. But my wife actually ended up going to pay the rent at the property management, Central 21, the property management company. And she just asked the property manager and he was like, yeah, my investor do want to sell. And they gave up price. The price was 15,000 and it's like you can get $15,000 cash and you can buy it. So what ended up happening was we ended up purchasing a property for some year. We've never got no income tax

like that in our life ever again. But we got enough money between my tax return, her tax return and a couple of dollars that we had saved up. We was able to purchase that property our right. And like I said, the goal wasn't to get into real estate. It was just so that we didn't have to pay rent anymore. And when we purchased that property, the journey kids kind of started from there. I love that. Our journeys are similar because my wife is the reason I'm in real estate as well. Like, when I bought my first house, I didn't have any money to do it.

I had to borrow the money from my wife's 401K. And so, like, her support is the reason that we are where we are. And so I love hearing your story. I also love that every time you tell the story, you know to the pennies, how much money you were making. That's how you know you were ready to get out when you remember to the pennies, what you were making a year. Yeah. So how did you get from owning the house that you're living in, even though you weren't quite sure you wanted to do that, to then buying real estate as a cash flowing asset? So we stayed in that property for like another year. Then my wife came home from

work with another idea. We started to have kids and we was growing up. I was like 24th and it turned 25. So my wife was like, we need to move in a more desirable area because of like the crime rate was really high in that area and different things like that there. So we moved in and we got an FHA long we went through uh moved in another property and throughout their process my wife has he's a little older than me so she has always been tapped in the credit i always thought i had bad credit because i just never used i had a cash truck and everything else i just had it was just like cash you know from you know working and stuff like that when we could afford to purchase it and uh uh she put me on the credit game so it was like the realtor was like well your credit's not bad you need to build a

credit profile so i had to go through the process my wife put me as authorized you user on her credit card. And she had been using credit card for years. So my credit started to increase. And we got approved for the FHA loan. And we moved into a more desirable neighborhood. And so the goal was to take the rent from that property and pay for the property where we was residing in a more desirable area.

And what happened was we got the house fixed up and we rented it out. And I got a $400 deposit in a $600 rent check. And I was like, man, I got $1,000. And I didn't know what I was doing. I got a lease for my uncle Doug. And I was like, I got $1,000 by telling some people, don't tear up my property, sign right here. And I gave them the keys. So I got in the truck with that $1,000.

And I was like, man, I got an $800 paycheck. $8 paycheck a week. I had to bust my butt for and work 40 hours a week. And I was just like, I took three minutes to do this. And I'm working 40 hours a week for that. So I just had this idea. And I was so excited. And I called my wife.

And I was like, man, I just got the money. I almost $1,000. I got in the truck and I was just excited and it kind of went from there. So when I grew up, though, borrowing money was like, it was like death. You was told don't borrow money. Don't go to the banks. If you got a car or something paid off because when I was growing up, I just heard people talk about how they want to pay stuff off.

You were here like your grandma or different people, I can't wait until their last payment on this or their last payment on it. So my mind was trained not to borrow OPM, not to go to the bank. So we bought their first property cad. So our goal was to save up. So we learned the thing about compound interest. So we bought their property cash, but that $5.50, we were paying the rent. Me and my wife would still pay that to the bank.

So it was accumulating. Like, we were still, because our finances were set up to still pay that. So we were still paying it to the bank, and it was saving over time, but we owned the property and stuff like that. And then we got to the new property, rented that one out. And I rented that one out. And I was like, okay, well, I'm going to try to buy one house a year. So I was going to try to buy one house a year. like we did the other than take the income tax and I got on YouTube bigger pockets and stuff and I

heard about wholesaling and I was like man what if I can try to do that and I could try to take the money we're saving and the money uh yeah we was a saving and accumulating for over a year and take the wholesale profits and turn that into buying one house a year but the thing happened was not call this guy my real estate guardian angel because this guy changed my life uh I got a property on a contract one time from uh calling some Facebook ad calling some for rent signs and one day and one day I was leaving, I had also got a second job in between the time to save up more money because my goal was really to buy another property. I'll write cash. And I called this, We Buy Houses sign and this young guy, and I in school to Hile, and I said the phone. And he was like,

I was like, he bought housing. He was like, yeah. And I looked at the phone. I was like, this young dude, you know, buy no houses and nothing like that there because he sounded like around my age. But actually, he was like, okay, I meet you there in 30 minutes. So I didn't think nothing enough. I didn't think he'll come. I went to the property. I text the seller and said, hey, I'm going to show the property to an investor. And she got it set up to where the property is unlocked like at 2 o'clock by the time I got out of work. And I went over there and what ended up happening. And this guy, this guy didn't buy the property because it wasn't in his buy box.

But me and this guy sit out there and talk for three hours. And he told me in a three hours span about leverage, OPM. He told me about his banker, the phone number, the email. At the time, he had like 77 properties. And he was like 33. And he had been an entrepreneur for the last few years. years. And I was like, man, so everything that that guy told me standing out there in front of that property for three hours, I took home and researched like crazy about every book. I went

on YouTube and they were talking about leverage, OPM, equity. And I just really went to college of real estate. And I always say that I went to YouTube University. I don't got no student loan debt. Like, I just researched everything that they got told me in that span of time. And then it came on from there. All right. So we all know that moment when we caught the bug. That's when you caught the bug and like it's like the matrix man you get pulled out of it and you're like now that I've seen it I can't unsee it and your brain switches into what do I have to do to do more of this. Henry kind of talked about his. Lamani talked about yours like when we're trying to teach people to get into real estate investing it's almost a race to get to that point we're like oh my gosh that I want to

do it all the time so what was your second deal what lessons did you learn on that one? The second deal it was a cash deal I had some money saved up and stuff like that and the following one year because I owned that property for a property. I were right, but I never went to the bank like the guy told me to do because I still had the fear of borrowing money. So we saved up money and we bought that property cash. And my dad, I usually typically get my dad to walk a property with me because he'd been doing construction and his knowledge for over 30 years. But I just bought their property because the price was so cheap and I bought it. And then when I went, got my dad, it was like, man, he walked in and he was silent. So I was scared. I was like, man, I had

messed up and stuff like that. So what ended up happening was that property needed to be rewired. It just needed so much work foundation issues. And I bought it really, really cheap. And I didn't have the funds because I was trying to do everything cash to really get their property off and running. So I bought that property for like six, six grand. And I sold it to a guy for like $5,000. But what that did was that property taught me what type of properties I want to buy moving forward.

So that property was kind of like I got an education from buying that property. So I lost $1,000, but I got out of a situation that would have been a money pit because I didn't have the means to get the property up and running. Yeah, man. That is a fantastic lesson. I'm glad you shared that because I think that's a lesson that we all learn as real estate investors. Every single one of us learns at some point what we don't want to buy. And usually it comes because we bought something that we didn't like. I had the same thing that happened on a property.

It was actually a 12 unit in my portfolio. the numbers were phenomenal. Like on paper, this was a fantastic asset. And it made me jump in and buy it. But I learned a lot about the tenant class I wanted to support. It made me learn a lot about what kind of repairs I do and don't want to do. And all of those things, I wouldn't have, like, I could have watched a video and learned that, but it wouldn't have sat with me.

So you lost $1,000, but really you paid $1,000 for, an education that's probably saved you way more than that going forward. Yeah, that's an extra important point to highlight in today's market. Because there's this pattern where as real estate gets tougher and tougher to buy, people start breaking their own rules. You start investing in neighborhoods you normally wouldn't invest in. You get into asset classes you normally wouldn't go into. You start taking on challenges and convincing yourself it's okay.

But there's a reason that that asset looks so good on paper. They were selling it at the price that they were. Because someone else had learned that lesson before you went in, right? And then I'm guessing you sold it, Henry? Yes, I sold it and it was the best day of my life. There you go, right? And now someone else is on a podcast somewhere, talk about this property that they bought and how it's like ruining their life.

It's like a haunted house, right? Literally. And when you're in situations like now where markets are really hard, it's very tempting to take the pressure off by getting into those really difficult locations. And it's not to say you can't do it, but like you said, Henry, that wasn't the type of repairs you wanted to make. wasn't the tenant base that you wanted to manage. There is a personality out there who will do very well, very savvy, connects with those people, understands what they're looking for,

how to make it work. It's just not for everyone. It's definitely not passive income. We're just going to set it and forget it like what you're trying to scale. So beware of the gurus of the people that are out there selling things that are using that method. Like, okay, come by in this market. You can get a cash on cash return of 65%. There's always a sucker out there who's going to take it, but there's a reason somebody's selling. That's a good question. always ask is why is someone selling this if the numbers are that great? Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore.

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Cost segregation guys is the go-to firm, having done over 12,000 of these studies. with $500 million in total depreciation identified. Head to Costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Lamont, have you had to have a couple experiences like that yourself where you got into something and realized like, oh man, I wish I never would have bought this? I'm having that late on because when I first started out that I was just hustling. You know, I was hustling trying to rack up with many houses to support me being out

the job and stuff like that. But as you come full circle now, I feel like I'm more of a real estate investor than a business man versus what I was when I started five years ago. It was just all about the grind, all about the hustle, doing all of repairs ourselves. And my wife spent every weekend doing our own property management. It was just, uh, so I could say, uh, since that deal, I bought a few years back where I sold it and lost a grand, but I got out of a probably was going to be a money pit. Um, now that I come back full circle years later, I got a better understanding of real estate and a better foundation, uh, behind me. I think about some of that stuff now, though, but I don't think I'll be

to where I'm at the day and have the capital and have the, you know, the resources I have today if I didn't buy some of that stuff five years ago to kind of give me in a position that I am in today. Yeah, it served its purpose. And I'm sure, you know, the run of inflation that we had, real estate price is rising. That definitely helped when you get a property that you want to get out of. Much easier get out of it if it's gone up and value than when it's staying the same and you're stuck in that quicksand.

So I understand you have some of an interesting financing strategy that you're using to continue stacking portfolios. Can tell us a little bit about how you're using cross-collateralization to pledge equity for future properties off ones you already have? Yeah, I realized that. So after I bought that property and I sold it, I finally went to the bank and met Mr. Jeremy Howe got, it's become a great friend, a banker and a mentor to me. And what Schuador told me about, I went to talk to him. And he was like, hey, we can get that house that you own outright appraised. And our appraisal came back. And I was able to borrow some money from what is worth. basically what I paid for it. And I took that. And so Scooter called me again one day. And I found,

he found a three unit package deal that was outside his buy box. He had no interest in. So I got it on the contract. I sent it over to the bank and stuff. And I got approval. I got an email one day where I was working and said I was approved for the loan. So I was waiting on them to say something about the down payment and stuff. But they, they emailed me a closing date. And I was telling my wife, well, they ain't said nothing about because I was listening to Bigger Pockers and these different podcast. And they was talking about the money you need to put down a 15%. So they, they They never said nothing about the down payment. So when I went to closing, we closed on the three properties.

And then I actually learned, okay, I was like, I wonder what I did to get the finances for these three properties. Then I realized I had collateral from their property that I owned that I bought our rights. So a light bulb went off. And I was just like, well, if I can do it once, I can do it again. And I've just been doing it for years where I buy property for significant less what they'll get appraised for from the 80% LTV. and I have some equity in there and they can roll over and cover the down payment for the next purchase. So I've been able to buy this real estate. So I use that strategy across collateral and I got lines of credit where I buy cash, renovated with the cash in the line of credit. Then I

refinance after the seasoning period. So I've been able to get into these properties with none of my own capital. So I look at it like an definitive return. Even when I bought doors, I probably shouldn't have bought. It really didn't cause me anything to sweat equity. Like to me, it didn't cause me anything because I just pledged equity from one property to the next. win and it's like an infinitive return because that's $800, $700 more in cash flow that I didn't have. So I just looked at it like that right there. So that's the way that I finance. I love that. I love that strategy, obviously, because I'm a big fan of leveraging small local banks to help you invest in real estate. And this is typically a strategy that some small local

banks will allow you to do. Now, not every small local bank is cool with it, but a lot of them are. So essentially, correct me if I'm wrong, what their bank is essentially saying is under either you already have a house, either that you have a loan with us on and it's worth way more than what your loan is, or you have a house that you own outright and you're allowing us to essentially put a second mortgage on it to cover what would be your down payment. And then that way, you don't have to come out of pocket for that down payment. And then when you go by the new asset, they do an appraisal on that new asset. and they understand that the new asset you're buying, you're also buying it for less than what it's worth. And so because you're buying a great deal and you have equity in other properties that you either have with that bank or are willing to pledge equity on a paid off property with that bank, that they're cool with letting you leverage that because you're essentially giving them access

to your properties. And what the bank is essentially saying is, hey, we think you're buying great. deals. That's great for us because we'll collect your interest payments. But if in the event you don't make your payments and we have to foreclose, then we would get the property you're buying and we get the property that you've pledged equity on, which we both know are good deals. And so there's very little risk to us as the lender. And it helps you grow and scale your portfolio. I hope I sum that up right. Yes, sir. Yes, sir. That's basically how I go and I go, the closing costs, the appraisal fees, processing fees all into the loan. And I go to closing and

me and my wife just signed and we got new doors and we're collecting cash flow after the renovations and we just move on. That's something I've been discussing more often as we've seen how much money has been created, the way it's meant inflation. Just kind of changing how we understand money. In the Pillars book that I'm writing, I talk about how money is really a storage of energy. So you go and you put in 40 hours a week at your job. They paid you in $835 and 33 cents or whatever it was of energy, And so you traded one form of energy for another, and then you can use that to go buy things from somebody else. And then they use that energy to go do what they want to go do. Well, there's more than one form that that energy can be stored in, right?

Equity is just the name we use for energy when it's kept inside of real estate. And when you understand that, like Lamont, you sort of intuitively got it. I got all this energy stored in real estate. It's similar to energy stored in a bank account. Now, it's not exactly the same because you can't go buy something with shares of equity. You can't go to 7-Eleven and buy a big gulp and say, I'll give you one four-thous percentage of this property equity. You have to convert it into dollars first. But when you understand that concept, it doesn't blow your mind to think about going to a bank and saying, I want to get a loan

to buy a property, but I don't want the loan on the property I'm buying. I want the loan on a property that I already have. What is the bank care? And so I love that you're sharing this. I love this strategy and like how you're kind of described, you get an infinite return. You could pull that. off for the rest of your days as long as you continue to manage this living, breathing entity that we call a portfolio. Henry, what are you thinking? What I do want to say on that is because a lot of people are listening to this. And if they are savers or they are, because there's two camps typically with real estate. There's like, you need to save the down payment and you need to put your money in the deal because you don't want to over leverage. Right. And then there's people that are like, yes,

I want to use other people's money to grow my portfolio, right? No real estate strategy comes without risk. And what I like that you are saying about what you do, because before we talked about how you're financing these deals with cross-collateralization, you talked about what you're doing with your portfolio. And it's that you are always taking a look at your portfolio and figuring out, where can I sell a property, gain some money, and then you're not just putting that in your pocket, but you're paying off other loans, right? So you're de-leveraging as you're

leveraging. So you're keeping your risk tolerance where you're comfortable at. And I think that's something that people need to pay attention to. He's not just saying, I just take out all the money I can and just rack up all this debt. He's very strategically looking at his portfolio and figuring out how to keep my risk and my leverage at a percentage that I'm comfortable with. And I think the other thing that people should think about is he also limits his risk by buying phenomenal deals. He's not saying he's going out here and paying retail value for every property that he buys and just buying it because he knows he can buy it with other people's money.

He's being very strategic about the properties you buy. And so I think buying good deals helps you hedge your risk. And I think always taking a look at that portfolio and figuring out how to continue to pay off those notes so that you keep your risk tolerance where you're comfortable with is important. And I think the other thing people are probably thinking is, what about seasoning periods, right? That's the question everybody always asks when you talk about leverage. So what about seasoning periods? Have you run into anything with seasoning periods or how do you handle that with your portfolio?

I want to take this, piggyback on you, what you just said. So sometime when I do 85% loan to value, I'm typically 80. But when I do, I have to have that capital working for me because interest rates are kind of skyrocketing and pretty high. So if I pull it out 85 to max loan to body, I'm paying one to two houses off. times. And I could double back and get a line of credit against old houses. If I don't use that line of credit, I got no payments. And with rent increases and stuff like that, that's just cash flow that goes into my pocket on a free and clear asset now. And when I want to do a bigger deal or something like that, I can go back and re-leverage that asset to get into something else. So that's

how I do it. And with seasoning periods, like I said earlier, when we was offline, when I pulled out I pulled out a big refite last year and I paid a bunch of personal debt off and a personal stuff off and paid my personal residence off. I got a six-figure line of credit and I added it with the line of credits I had on some more houses and I just totaled it up. I went to talk to my title company. I said, hey, if I get a property on a contract, could you get it closed and quick? And they was like, yeah, 72 hours, we can get it closed.

I did have a seasoning period with my lender, but I went to talk to him and said, hey, this is going to be my strategy moving forward. And I'm actually closing on four refies tomorrow. And this, the fastest it's ever went, this process took less. I'll say less than 30 days are right inside of 30 days and stuff like that. So I talked to them about the seasoning period. And because this would be my new strategy. And they kind of work with me on it.

So I'm able to get it moving. The fastest if I can get it renovated and get a tenant in it and I can show pledge and leases and et cetera, et cetera, and stuff like that, I can move forward with getting appraisal out and starting to refinance process. I love that answer. And here's why I love that answer is because I think people in general, but real estate investors, we always make decisions for other people based on what we think they're going to say or do. Right.

And so people may hear there's a seasoning period or people may hear, I can't do this because of my credit score. But they didn't actually go ask anybody. They didn't actually go do the research, right? They didn't actually hear from somebody that they couldn't do that. Right. And so, yes, you said, what you said was, yeah, my loan had a seasoning period. But I went and I spoke to my lender and I sat down and I explained my strategy and what I'm trying to accomplish.

And then you were able to get around it. I think most people, most investors wouldn't even think to do that. They just go, man, I got this loan. It's got a seasoning period. So I can't do anything until the period's up. Man, so I love that you didn't just take that answer and decide it was going to define how you're investing. You did the opposite.

And it's correct. I was afraid to do that. I was a, for my best friend, Jeremy, he was like, man, you just need to go talk to him about it. And he kind of gave me the confidence. And I was afraid because it was typically a 30 to 90 day seasonary period. But I was just like interest rates skyrocketing. I need to be a cash buyer so I can continue to get deals. I got employees. I got an office. I got bills. You know, I got to keep the deal flow and keep it going. So I kind of got outside my comfort zone and went talk to him about it and stuff. But I was hesitant at first, but I just kind of. got out my own way and went ahead, the conversation because I knew I had to keep the deals, the pipeline. I had to keep it going to support, you know, the people that work with me and different things like that. How important is it to know your market? Okay, you're working in a very niche market. What do people have a hard time understanding when you're talking about your market to investors that don't live there? Man, the purchase price. You can buy a property in my market for $25,000, put $10 to $15,000 in this worth $70,000. Like in this market, it'll rent out for a Right now, the rent has increased so you can get $700, $800 plus a month.

So, you know, when you talk to people that's in different markets and stuff like that, just because I said the price is this much for this particular property, that don't mean this a hole in a while. I live in an area where the average income is $19,000 and some change, you know, for people to try to support their family. And some people make it work. They got cars. They got $150,000 houses and stuff like that in middle class area. So that's the hard part and stuff like that.

Even when I'm talking to a new investor that I get the chance to mentor in the area, I always say, man, your house is worth more to you than it is to the appraisal. You need to know your market. I know you went in here and put a good labor of love in the property, but you probably have over-improve this thing or in you've paid too much forward. So I always try to get them to understand like the ratios of what you need to buy and what your rehab need to be and different things like that. And I take them to some of my properties.

properties that I got that rents for less than $800. I use indoor, outdoor carpet. I go in and use a for micro countertop. I use the Glacier Bay $30, $50 faucet. I got a different type of rehab with those properties. Then the properties I get $800 plus for, we do the 12 by 12 ceramic tiles on the floors and the washroom areas. We do the vinyl planks.

We do the ceramic tile on the countertops and different things like this. So it's like different ways that I rehab properties based on the return that I will get. and stuff like that. So I just try to tell people when they get in the market, you know, it's a market. So sometimes when I'm talking, yeah, I rental rates a list. Our property value is less and stuff like that. But, you know, if you understand the market, you can still make it work for you. You know, I've been at the job for four years. I was recently able to retire my wife and she's been out of the job for a year. So I've been putting it together and making it work. So just by knowing the market and knowing what I should pay for a property, what I shouldn't pay for a property,

and et cetera. Yeah, that can be a big problem, especially for out-of-state investors. When they see the spreadsheet, the spreadsheet doesn't tell the whole story. It tells a piece of a story. And then they go, you know, my market's expensive. I'm going to go buy over there because price and rent ratios are better. They have 1% rule deals. And then they got to do a rehab and they get a bid from a contractor that says 35,000.

And they go, that's like one bathroom in my market. What a steal. And then they spend way too much on the property. And it takes about 17 years before they get enough equity to pay for that rehab. that they went too big on. It's very easy to make these mistakes. Henry, have you seen the same thing in your market since you guys are both in kind of like niche

markets? Yeah. In my market, the price points are higher, obviously, than where Lamont's market is. But the values are the same. And I want to make sure that's what people understand that the principles, I should say, are the same. I think people probably hear your price points and go, well, this doesn't relate to me.

me because I can't buy a house for $20,000 or $30,000. And I promise you, it absolutely relates to you because it doesn't matter what the price points are. He's still not going out there and paying retail value for a house. He's going out there and figuring out how do I get these houses at a discount? And then how do I leverage the equity that I just got on day one to build and grow my portfolio? And those fundamentals apply no matter what your price point is in your market. Right. And so I want to make sure that people think less about the dollar sign he's talking about and more about how he's doing this because these fundamentals work across any market. They work in my market.

I do the exact same thing in my market. You asked about how that applies here. I am in the same way. We are consistently looking for how can I buy. How can I walk into equity on day one? And then how can I leverage that equity or equity I have? another property to help me build my portfolio. And then just like Lamon, we take a look at our portfolio and we think about, all right, what do we have? How can I monetize this and de-risk to a point

where we're comfortable? Or how can I take what I have and then move into a larger asset? Because part of this too is lifestyle, right? I may sell a property because I want to go buy something that has more doors under one roof, which means less maintenance than if I have 10 doors with their own roofs individually. And that helps with lifestyle. That helps with the time we have to spend on that deal or the time somebody has to spend at that property. And so a lot of it, too, isn't just about the money. It's about how do I get my portfolio to a place that allows me to have the lifestyle that I want? What would it be like to have a movement that had people quit telling you how many doors they have at every meetup?

and they started saying how many roofs they have. That's the real flex, right? How many roofs do you have two? Right. Maybe they have like 700 doors. But we all want to have those assets, not death by paper cut. I haven't too many difference. So like at some point, you know, I'm sure LeBond, you're as you continue to grow, you're building equity.

Do you have a plan in place for how you plan on transitioning into selling some of these and maybe 1031ing into larger assets where the management is a little bit easier? Yeah, yeah, because I understand with these properties, like I have a system in place that I got make it work. I have in-house guys, family members that work in-house. I have an in-house property manager that's paid by the hours so that cuts down on my property management overhead and my day-to-day task and stuff like that. And just looking at the properties and saying, you know, knowing when it's time to exit. So one day my plan is to pay some down significantly, which I have already had, like for me to be 35 years old, you know, debt-free personally.

And I got these properties that I got really low loaner values on that I can refinance. like I did earlier pull out a big water cash and leverage that into like a mobile home park or apartment building or I can just sell them off, you know, look at how much I owe and know, okay, I'm going to make $20,000 to $25,000 a door when I sell these 10 properties at a time. Like sale 10 here, you know, come back later to sell 10 here and stuff like that. So it'll kind of work itself out and stuff like that. So, yeah, I do have goals of being able to do that one day. But right now, just keeping it going to. going on, keeping it a little steady and stuff. Yeah, that's, I mean, you have the option to do that when you want to do it.

And that's what matters is that you are not in a position where you have to do things that you don't want to do or you're making decisions. You don't feel good about out of desperation. You're in the driver's seat. What you have works. If you decide you want something different, you can pursue that. If you don't, you don't have to. You can decide based on the age of your kids, the needs of the family.

I mean, that's what's so great about real estate is when you're working that corporate job, you do what the company needs you to do. It does not matter what you're really. relationship status is, what your kids happen to need, right? You serve at the hand of the king. And when you get into being an entrepreneur and owning these assets, to a degree, you still have to answer to people. When a tenant has something break, you have to figure that out. You have to look at the books and make sure things are going well. But you have much more control over when you throw yourself in, go into acquisition mode, ramp things up. When you sit back and analyze what you got

and kind of just trim the herd, make it go easier. It is a much, much easier way to live life. and it's cool seeing that you've sort of, you've crested that hill. So let's revisit your portfolio here. You have 107 units. I mean, that alone is a pretty cool thing to be able to say. $70,000 a month in rents. Congratulations on what you've been able to do so far. This is a great story.

You said your wife was able to retire. What's next for you guys? And what is your why? What's next? You know, that was a really big goal of mine. You know, that's why we made seeing the pay off some debt and do some things, moving some money around. And that was just a goal that I was chasing.

and stuff like that. So for us right now, we're just brainstorming. You know, I made a lot of mistakes. You know, like I said, I bought a lot of properties that my temperament at this age and life can't handle and stuff like that. So it haven't all been peaches and cream. That's a very nice and professional way of communicating what, Andrew and I know exactly what you said. My temperament at this stage in life is not conducive to these types of problems that elicit from a portfolio of such. Yeah. So I just, once we did that, you know, now we got time. We're in the office every day. We got time to brainstorming just always, I can't say do it the wrong way because of it led me to this point, but I could say do it a better way and having more knowledge and wisdom and experience under my belt. So the next step of the journey is just getting out, I want to go bigger.

We're trying to streamline everything. We got out of for years. We was doing our own repairs. So my output costs were significantly low and I was able to kind of like save up some and stuff like that. we did our own management and stuff like that. But when we realized, hey, we wanted the business instead of another job. And just being around Henry, Todd, Dre, and some other guys, I kind of picked up there with systems. And, you know, you want, in the beginning, it was like I quit a job to start another job.

But it was for myself. So I appreciated it. But at the end of the day, I wanted to kind of streamline things. So that's what we were working on and stuff like that and trying to set ourselves up to go bigger, invest in bigger assets. Yeah, the cash flow might be lower. But this property we're buying the day. it's a 20-year hold, a 30-year hold.

Like, we see ourselves holding this way longer than some of the ones that we picked up in the beginning and stuff like that. So that's kind of what we're going. Just trying to streamline everything. You know, for years, it was like a family-owned business. So now we got soos that we work with. We got people with contract work out to because the amount of properties, like, it's changed because now I'm kind of buying some.

Then I'm selling some. So the portfolio kind of balances out and stuff like that there. So just going through those changes that you learn five years in it. You know, I kind of grew. and evolved and just thinking and seeing things different at this point in my life. I love seeing your growth, man. I've enjoyed getting to know you over the past few years. I want to ask you a question I've asked you before, but it's been probably, man, a year

and a half, maybe two years since I've asked you, but it's, I think it's pretty cool. So outside of those first two houses that you paid cash for, when you really started growing and scaling your portfolio, how much of your own money have you had to spend acquiring? any of the rest of those assets. Man, I haven't put a down pay. None. I just, like I say, been buying cash and burn out. And I've been leveraging equity. I actually, it was weird. Last week, man, my wife closed on our dream land to build our dream home. You know, we believe in delayed gratification. So as we were scaling up our income, we didn't scale up our lifestyle income. We didn't scale up. So we, and I had to put a down payment down on the land. And it was weird because I'm used to going to closing without doing that. So when I read the hood statement, it said cash, to borrow a cash for however.

Yeah. So, and I was like, man, this is weird for me and stuff like this. So, uh, none, man. I just figured out a way to like, I just look at it, you know, some, it do have risk involved, but I just look at it as like instead of having debt equity in that sitting, I'm just going to leverage it to buy cash flow because my goal is from day one was to make as much cash flow a month as possible and stuff. So I haven't, uh, besides my own personal land that I just purchased to build my dream home, I haven't put a down payment down since I've been, uh,

on this journey. Well, Lamont, we appreciate you sharing your story, especially some of the creative elements of what you're doing. You sort of combined hustle with creativity, with ambition, with delayed gratification, all these great ingredients. And the end result was a portfolio everybody would love to have and a future that looks even better than where you are right now. So thanks for being here. Henry, thanks for finding Lamon or getting them on our show. This has been awesome. You have any last words you want to share with our audience, Lamon? Oh, man. You asked me early, my wife, just my family, you know, I always, my saying to my kids, and to me, as always, I wanted to figure out a way to upgrade the living, because I knew making

$800 and some bucks every two weeks, we weren't going to get it and stuff like that. So just trying to reach for the stars and give them the life that they deserve. And it's hard work, man. I'd have been under houses on top of rules, putting flooring down, sacrifice weekends when my friends came in town, couldn't watch football. I'm a big fan. And it was just hard work, you know, buying houses and then just jumping out the plane and figuring out how to fly later on.

I just say, man, assess what you're at in life and just go for it. You know, some people are going to agree to disagree and that's okay. But at the end of the day, you know, you're playing, you know what you're trying to accomplish in life, and you know what you're trying to do. It always ain't going to be pretty. You know, I tell you, it always ain't going to be pretty. But if it worked for you, keep it rocking and keep it rolling, you know. So for me, it just stand down, man, and just figuring it out.

And that's just exactly what I did. And it landed me upon why I met today. So if I can do it, no college, making less. combined household between me and my wife were less than 30 grand for each of us to where we at today, if I can do it. I just feel like anybody can do it because nothing was handed out, nothing was given. It was all just hard work and determination and sacrifices. If people want to reach out and find out more about you, where can they get you?

I'm on Instagram, 1-800-1-800-un-un-a-hust hustler. So I feel like my Instagram name is my lifestyle. I've been wanting to be a hustler since I was a kid, you know. So I do some posting on there and I'm always on a weekend DM and people back and stuff like that. So that's kind of the only social network that I kind of be on. So if somebody had any question, I'm always up for answering or taking a phone call and just trying to figure out how I can help somebody. Like when I met a guy, a scooter, I met him years back and he helped me. So I just look at it like paying it for it.

Henry, how about you? You can find me on Instagram. I'm at the Henry Washington on Instagram or you can go to www. www.henrywashington.com. There you go. And I am David Green 24.com. You want to check on my website or go follow me at David Green 24 on Instagram, Facebook, Twitter, wherever it is that you like to follow people. This has been great.

Appreciate you, Lamon. We're going to have to have you on again in the future to see how things have grown. But thank you guys. Go. Please do follow Lamont and Henry both. If you want to learn more about real estate investing, these are great resources to learn. This is David Green for Henry. Everybody's favorite Washington.

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