BiggerPockets Real Estate Podcast - 84: Getting Started with Creative Finance and Designing Your Ideal Lifestyle With Chad Carson

Episode Date: August 21, 2014

Today on the BiggerPockets Podcast we sit with Chad Carson, a full time real estate investor from Clemson, South Carolina. Chad brings expertise in a TON of areas including everything from fix-and-flips to creative finance, property management to buy-and-hold. This show explores how to use real estate as a means to design the lifestyle you really want. There are a ton of tips and tricks in this one, so dive in! In This Show We Cover… How to get started straight out of college The benefit of having a few key buyers vs. a buyers list The key is sincerity, hunger and enthusiasm   Getting your real estate license as an investor How to prepare yourself for future-changing markets The key to networking with financial partners Direct mail tips and strategies Lifestyle design through real estate The importance of the “why” behind your business 50/50 partnerships Property managing your own portfolio Creative finance strategies Self-Directed IRA’s Using court records to look up potential tenants An awesome example of an elevator pitch The importance of protecting your lenders And a whole lot more! Links Mentioned in The Show: The BiggerPockets Member Blogs See who is looking at YOUR profile BiggerPockets Pro Memberships  Tenant Screening: The Ultimate Guide Books Mentioned in the Show: Building Wealth One House at a Time: Making it Big on Little Deals , by John Schaub The Warren Buffet Way, by Robert G. Hagstrom The 7 Habits of Highly Effective People, by Stephen R. Covey Tweetable Topics: “Sometimes growing big brings a price you might not need to pay for the lifestyle you want…” (Tweet This!) “The minute you break people’s trust is the moment you lose everything!” (Tweet This!) Connect with Chad’s: Chad’s BiggerPocket Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast. Show 84. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dorkin.

host of the Bigger Pockets podcast here with Brandon Turner. What's up, Brandon? Hey, Josh. How you this fine afternoon? I'm doing good, man. I'm doing good. We just wrapped up recording the show that we're about to introduce. And it was one of our first absolutely perfect shows in terms of, yeah, we didn't mess up, which is great. Yeah, people don't know how much we mess up, except for Dave, who is our, you know, editor. He's the only one that really know is how much we screw up. So yeah. Well, kudos to Dave for helping us look better than we are. There you go. Yeah. Well, so yeah, things are good and, you know, just excited about how things are going. Bigger pockets is rocking. You know, life is good, man. Life is good. I'm getting my refinances all finished up,

wrapped up, and life is much more simple now. Yeah. Awesome. I like to hear it, man. And the summer's starting to wrap up. So, you know, we're all about to get back into the grind again, aren't we? Yeah, I never left the grind. Yeah, I didn't either. Vacation, I need a vacation day, Brandon. Can I take one? No, I've had one now, please? Nope.

Check the employee handbook. You don't get any. Sorry. Oh, man. You know, it's funny. The job of the boss is not any fun. Like, we're dealing with this stuff. And we've got these guys working for us.

Like Brandon, they're talking about vacations. Hey, I need Christmas off. And I need Thanksgiving off. I need New Year's. And I'm like, oh. Okay, yeah, of course. Yeah, that's reasonable. Well, I'll be working on Christmas and New Year's because somebody's got to do it. Somebody's got to do it. Yeah, well, you know, anyway, so that's the life of the boss, I guess. Quick tip. Yeah, let's please. Let's move on. Quick tip. Today's quick tip is

member blogs. Biggerpockets.com slash blogs is where you, our membership, can go and write blogs. And these blogs, you know, it's not where you're going to go and write and ask questions. It's where you're going to go and tell your story and share information, things you know and things you've learned in articles that you've written. And these blogs are really, really good way to build your name, your brand, to show that you are an expert, that you know what you're doing. It helps people out. It helps you out. It's great for pretty much everybody. You go to biggerpockets.com slash blogs.

You create a blog. And if your content is good, your writing is good. We might even pick you up to become a contributor on the Bigger Pockets blog. We also look to find guests for the podcast there. So there's certainly a lot of value that comes with it and with the visibility within the community. Come good things like deals, people wanting to give you money, all sorts of fun stuff. So check out the member blogs at BiggerPockets.com slash blogs. There you go.

All right. And today's pro benefit of the week. If you want to upgrade to pro, it's biggerpockets.com slash get pro. And you can watch me and Josh's cool video there. But today's pro benefit is you can actually check out who's looking at your profile. We probably mentioned this before, but just want to reiterate. If you are a pro member, you can see who's looking at your profile, which is really great because you can connect to these people who are already trying to learn more about you.

So Josh calls it prospecting warm leads. It's a really good way to put it. You're looking for people who are already interested in you. So reach out to them, send them a message, send them a colleague request, build a relationship, and they've already done have to work for you. So go check it out today at biggerpockets.com slash profile slash stats. There you have it. There have it.

Good stuff, good stuff. All right, let's get to the show today. Show 84 of the Bigger Pockets of Podcast. And you can find the show notes at BiggerPockets.com slash show 84. Our guest is Chad Carson. Chad's a full-time real estate investor from Clemson, South Carolina, college town. And he's got experience in fixing flips and lease options and buy and hold and all sorts of stuff. Primarily really focuses on buy and hold and flips. He's done, I believe,

close to 100 deals now. And he's got a really cool perspective on how to invest. And I definitely encourage you to stick around. It's not all about getting rich, not even getting rich quick or slowly. It's a matter of, you know, building up wealth through real estate. and also maintaining some semblance of lifestyle. And I don't know. I personally think it's pretty awesome how his business has shifted. Yeah, he definitely is kind of a lifestyle real estate investor. And I think it's awesome.

So people are going to love this very, very, what's the word, motivating? And it's great. I love it. So, yeah, let's do it. Let's bring him in. Awesome. And by the way, for those of you interested in who are listening, we also get into some really, really cool stuff about using private lenders.

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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 twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications. It can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip.

You can relax, knowing guests are taking care of and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. So here we go. Chad, welcome to the show, man.

It's great to have you here. Great. Thanks for having me, guys. I'm really excited about it. Awesome. Us too. Us too. All right, let's jump into this. How did you get started in the world of real estate investing? Well, I had to go back to college because I went to the university at Clemson University, and I was sort of, you know, like most post-grad graduate people, you're saying, all right, what am I going to do? What kind of career am I going to go into? And I was the pre-med route, biology route, and I started applying to medical schools.

And it's just something in the back of my mind said, I'm just not sure I want to go all these years at school. And then I had family members who were in medicine. They're like, don't do it, don't do it. And so I just decided to, I started reading my dad had some rental properties. So I grew up at least having it in my consciousness that you could be an entrepreneur and buy real estate. And so I read a couple books he had and decided that, you know, I own my car free and clear and I got a thousand bucks in the bank. Why not, you know, I have nothing to lose, really. So I'm just going to try to get started and buy some real estate.

And it just sort of went from there. I just kind of jumped into it. All right. So you had a thousand bucks in the bank. And you said, I'm going to become a real estate investor. How did that go? Very slowly at first. But, you know, I think my start was sort of, I would recommend it to other people because, you know, I was out of college.

You know, I didn't really have a whole lot to offer to the world. You know, I just read a book. I didn't know that much about it. But I sought out somebody who knew a lot more than I did. And my value proposition was, hey, I'm studying one little tiny niche. I think I've learned a couple formulas about how to buy properties, you know, the 70% formula and something like that. And so I talked to my dad, first of all, and said, if I went out and found deals, for you. Could we work something out where I could learn and earn a little bit of money, live at home

cheap? And he was looking to acquire more rental properties and a few flips. And so he took me under his wing and taught me what he was looking for. And so for me, that was a really awesome way to start because I could start with low overhead and I learned a ton and also made a little bit of money while I was doing that. So that's what I did for the first year. Nice. Just buying deals for him and picking them out and learning how to how to go out and find properties. Well, that's really cool. And obviously you were lucky that your dad was the guy and so you had some built-in advantages with that. But, you know, let's look at this from somebody else's perspective who's starting. You know, say I want to, I want to start being an investor and, you know, maybe I've got a little bit of cash, but I, you know,

like you, I don't really know much except maybe how to find or evaluate and find some decent deals. Do you think that's a good path to go and link up with somebody like your dad who's, you know, who's an active, successful investor? And, you know, and, you know, and, offer, hey, I'd like to find these deals for you. And I guess what I'm going to really trying to get at is what kind of deal did you strike with your dad? What did you end up getting? What do you pay you? Yeah, sure. I can start with that part of the question. I made $2,000 per deal. Okay. And so his objective with me, he said, here's my formula. This is not going to change. And this is what any experience investor would tell you. And I think there would have been other people

who would have done this if I would have talked to him other than my dad. But he said, I'll pay you $2,000 dollars per deal. So what you need to do is when you go make offers to people, make sure you use my formula and you subtract $2,000 so that we can build enough money for you to make a little bit of money. And so that would be the same thing I would do. And I did that when I, so I moved up, I was in Atlanta, Georgia, and noon in Georgia where he lived. And then I moved back up to South Carolina where I went to school. And I did the same thing when I started, moved up there. I found a couple other investors locally who I knew had cash, who I knew, you know, would go buy properties. And I like that strategy of finding one or two experienced investors to buy for better than what I have some friends who

try to do wholesaling and they would, you know, do the whole buyers list thing where you try to get 500 people on your buyers list. And I just, I just think it's, you're kind of working it backwards because you don't have any clue what a good deal is when you first start. Yeah. You need the mentorship more than you need the, you know, the buyers list. So I found that to be really effective for me, for me at least. And that sounds like a decent deal while you're learning. I mean, make a couple of that. thousand bucks on any opportunity that you bring. And yeah, it's great. Yeah, I was just thinking,

like, I wish people, I just want to kind of reiterate what you said there because it was so good. So many people come to bigger pockets and they want to be a wholesaler. And the first thing they say is, how do I build my cash buyers list? How do I find cash buyers? How do I find cash buyers? It's ridiculous, right? Because if you find the cash buyers, you're just going to look like an idiot in front of them because you don't know how to bring them a good deal. So like obviously, yes, that's part of the puzzle you need, but it's worthless without the other pieces. So I think that's right on. One more comment too.

Just about when you're new, and I said I didn't have anything to bring to the table, what I think I did have because with my dad and then I had a couple other people who mentor me after that was what I did have was sincerity and energy and enthusiasm and willingness to learn. And I found that for all the new people, whatever age you are, if you go in there with that attitude to your experience investors and find a way to really show them that you're sincere and show them that you're professional about this and you're taking this seriously, I mean, I think people are very receptive to that.

And once you get your foot in the door, one of the guys who I did that with, he always called me the young pup, and he was the old lion. Nice. He said, you know, the old lions need young pups to come there and ask them questions and build their ego and make them feel like they know a lot.

And so if you're new, I mean, people don't mind sharing. And if you can really build a formula that makes them some money and have a good value proposition, I don't think it's hard to find those people at all. Yeah. That's great advice. I've said that before in the podcast, too, and I'll say it again now, is like, if you are a young person investing in real estate or trying to get into the game, I mean, by young, I mean, anything under like 40, right? If you are like, yeah, if you are a younger. Yeah. If you are a young person, like, that is, like, people think that's a liability for them. I mean, they think it's something bad, but it's really not. That is your strongest asset you have is your, your youth and enthusiasm because the older, wiser investors just love that. I mean, I found it over and over in my life. They just, they love that. They just, they love that. And that I have and they want to share with me everything they know and they say, oh, I see myself,

you know, I see myself and you when I was that age. If only I had started then, I'd be so much further today. And yeah, so if you're young, if you're trying to get into investing, play that up. It's okay, you know, be the young pup. So yeah, I agree. I agree. Awesome. All right. So you, you started out, I guess you could, I mean, maybe you could call that bird dog in. Is that what you'd call that? Yeah, yeah, that was a bird dog. Okay. So you started doing that. How does that differ from wholesaling or does it differ from wholesaling at all? I think the distinction we talked about earlier, you know, and I don't really like the traditional wholesaling model, and it sounds like you didn't either, where you're, you're basically, for a beginner. I mean, if there are some,

I know some successful wholesalers, but they are very, very few. I don't know many who do it really well. So I'd say a bird dog is somebody who is an apprentice to an experienced investor, and a wholesaler is a person who has a legitimate, their experience, they're a marketer, they can generate a ton of leads. They really can't, they understand the whole business model from the beginning to the end. So I was a bird dog. And I think any beginner is a bird dog, essentially. You might get lucky in wholesale one every once in a while, but it's not a good business plan.

I don't think to go out trying to be a wholesaler from the beginning. Be a bird dog, be an apprentice, be a, be a realtor, be a contractor, do something that is along the whole chain of real estate and then find a way to learn that little niche. And my niche was learning how to find deals and market. That was it. Hey, Chad. So on the topic of bird dog, and I know you're not a lawyer, but there's, you know, there's certain debate on the legality of bird dogging.

And I don't know if you've got any perspective on that, but I'm just curious what your take is. And by the way, again, Chad, is this. He's not a lawyer. And I'm not a lawyer. And I'm not a lawyer. And Brandon's not a lawyer. Yeah, well, you know, okay. I was never going to be a lawyer.

Yeah, and you wanted to be a lawyer, Brandon. You never were going to be a lawyer. Okay. That wasn't happening. I want, my dad wanted me to be a lawyer. All right. My mom wanted me to be an astronaut and that wasn't happening. You can still do it.

Hey, that'd be cool. Yeah, you got time. You're young. Yeah. No, if I had to start over and this is the same situation I was in, I have my real estate license now, and I would say the easy way to get around, I mean, in any state, I believe, and you check with your lawyer too, but if you have your license, you can get a referral fee. And so I learned a ton with my realtor class, and I was very surprised how much of the

business I learned when I took the class and learned about local title law and things like that. It was very helpful anyway for a beginner. And then you can get referral fees without basing a lot of issues. So I think that's the way I would go. Yeah, that's a good idea. And I think there's a lot that comes with getting your real estate license. I remember, you know, when I got licensed in California, We had to go through this real estate principles class and, you know,

it really covered a lot of the basics that you probably want to know as an investor anyway. And, you know, I know we've kind of talked with a few people on this, but it sounds like you think it'd be a really good idea for any new investor to even possibly start that way, is get licensed. Yeah, I like it. I like that. And I didn't start that way myself. And I think you avoid a lot of issues.

You know, you'd have to get an assignment of a contract. I mean, there's just, if you're a beginner, you don't think you don't need to know all details, but you need to know it's more straightforward to get paid when you have a license. Yeah. There are definitely some hurdles and some things, disclosure's got to make, but I think those are far less important and difficult to overcome than the fact that when you don't have a license, you've got to go through, jump through a bunch of paperwork hoops and maybe legality hoops. You know, I don't know. That's debatable, but for me, it makes a lot of sense. So why did you get your license? I'm guessing, you know, when you got it, you were well past

bird dogging and doing other things, but what inspired you? you to get it ultimately. Yeah, I was getting requests for consulting, basically. People were putting a deal together and saying, can you look at this deal with me and help me analyze it? Or were you, you know, and I didn't, to me, when I read the state law on having your license, it was basically if you're a real estate consultant, you had to have your license. And so it was, again, it was for me, if I'm going to have a side income source with people paying me to help them put a deal together as a consultant, it makes sense to have that license, get paid. That's why I did it. Gotcha. And now that you have it, what other

advantages do you see coming from it as an investor? And maybe you could talk about again, you know, some of the advantages for somebody new and advantages for somebody who may be in the business for, you know, years, but, you know, hasn't quite gotten over to do it. Yeah. Well, for me, I'll speak just more, more experience, you know, being about 12 years into it now. I think it gives me an added security blanket sort of, you know, I'm a full-time investor. So, you know, I make my money from buying and fixing and flipping houses. It's sort of our core strategy. I also make money managing our properties. And so I have those two income sources. But, you know, when it goes up and down, all entrepreneurs know that. And I don't know what's going to work next year. And so it's nice to know

that I could then go and change my business model, do a couple listings next year, be a buyer's agent, a commercial agent. I mean, I could do something else. And it's just another, you know, it's just another thing I've got to make some more money because that's been the most difficult part of the journey for me is that you start off with a thousand bucks in the bank and every year, you don't know if you're going to make enough money this year, you're going to flip enough deals, well, what's going to happen? And so I think everybody needs to be thinking about plan B, C, D, and that's what it is for me. It's just a plan. I don't use it very much right now. I still hire realtors to list my properties because I think they do it better than I could. I don't show people

around the properties and take them around on the weekends. That's just not what I do. I'm a deal finder and putting deals together and talking to private money lenders. And I, do that really well, whereas the realtor thing I don't. Yeah, and that's interesting. I think most people would say, are you out of your mind, Chad? Like, man, you got a license? Why aren't you listing your own properties? Why aren't you dealing with that stuff? I mean, you're spending all this money that you can save and you got your license, but clearly for you, your time is better spent doing something else is probably the math that you've done, right? Yeah, yeah. And I think I just did a strengths assessment for myself. And I look at my time management that the best time I can spend in what I would say,

one of my strengths is when I'm sitting face to face with a seller talking to them about their problem, having a conversation and listening, talking to one of the, you know, and like you said, Brandon, somebody who's 70 years old and owns a house and here I am 33 or 34, I'm 34 now, talking to them and they, the fact that I'm willing to listen for two hours and just discuss it with them and they can see that I'm sincere, that is really good use of my time. because when I do that and you do that enough, I'm going to get a few deals out of that time. And I've made a lot of money on flips and I made a lot of money on rentals, you know, with that kind of time spent every day. I think that's great. I think that's great. You know, I think one of the things that Brandon has done most for me personally is encourage me of the same thing.

You know, and I think it's hard to look at ourselves from within ourselves. And I think it's a lot easier to have somebody come and help you out with that. And, you know, I've found that, you know, over the years, I've been so knee-deep within it that, you know, I've been too busy to realize that I'm really good at certain things. And I should be spending all my time and energy on those things and pay other people to do the things I'm not as good at or that I shouldn't be wasting my time doing. And, you know, it can be hard to come to that decision. And I'm personally extremely grateful to Brandon for that. But, but. Thanks.

Nice, Brian. Yeah. me, brownie points. I can't claim that I figure that one out of my own. I'm kind of blinders on as well, doing all the work. And then somebody, and it's mentors, you know, other people in your business saying, hey, what are you doing that for? You know, why are you spending your time trying to put signs out of your property or do some

of that? And I've got no problem. I think the other side of that is, is that I have no problem doing any stage of the work. Sure. I think people working for you probably respect that if you can do anything in the business. But at some point, yeah, I think you've got to. step above the business, look at it, and see which thing you're best at, and then focus on that. That's what we've tried to do.

Yeah, that's great. That's great. Instead of putting up your own fence, Brennan. For example. See, I like doing, you know, some things. And they're not the most cost effective. But there's some things I enjoy doing in life. And some things I just, I do because I can't find anybody else to do them.

But, I mean, that's a downside of me, right? Like, I could spend the time looking for somebody who can do them. but I don't a lot of times. But I don't know. I don't do my own work that much anymore. You know, don't feel so guilty, man. I'm getting good at this guilt thing.

You are good at the guilt thing. That's funny. So let's go back to your story a little bit and talk about you. You started bird dogging. You got into it from that one, got the mentors helping you out. What came next? How did you actually get into doing your own deals? What did that look like?

Yeah. Well, by the end of the year, you know, as happens with fathers and sons, you know, I start saying, dad, you ought to be doing this. You ought to be doing this. What about this marketing? He said, son, let me tell you something. Why don't you head up 85 and go to another town? I got this thing figured out.

And I said, you're right. Wow. It kicked you out of town, man. That's that joke, Chad. It was positive. I think it was outgrowing the nest. And take your crap with you. Yeah.

Get out of my house, too. That's what I'd save that money by then. And I had, you know, so I packed up the car and headed up the road. And so my idea that left. Hold on. on, hold on. He legitimately threw you out of town. He's like, this is a one investor town. No, no. It was a mutual business plan because he was doing me a favor, I think, by letting me work with him. But at some point, I knew that I had, I like to do my own thing. So I,

but what I decided to do, I had a friend from college who, whose father was also, had been in the real estate business, had mobile homes and some different things. And we had just chatted all the time about real estate and kept in touch after college. And so we had always had in the back of our mind that we might want to do something together. And so we, he was up in Clemson where I live now in the college town of Clemson. And so I moved back up there and we started a business together. And the idea, though, was that before I moved from Atlanta, we had our first deal under contract up in Clemson. So I'd been making offers in Atlanta and in Clemson and we bought an REO property that we were going to, it was just a fixture up. So my thought was, I know how to find the

deals now. I've got that formula down. I've got some marketing tools. All I needed to do, do is figure out how to get the money and I can do what my dad is just done. And so that was the next progression was to start fixing and flipping a few properties in addition to being a little bit of a bird dog or a wholesaler, which I had already been doing. Gotcha. So on that first deal, where did you get the money? Okay. Yeah, that was, again, another mentor, another relationship. So I had a professor at Clemson. When I finished up, I went back and took a few business classes. And I had one of my business professors during class would tell stories about real estate and what he bought. And so my ears perked up because I was interested in that. And I just, I talked to him after class and said,

you know, do you mind if I ride around with you? I think I think that's what I said. You mind if I just, you know, see some of your properties talk to you? And again, enthusiasm, you know, they see that you're sincere. And he let me start riding around with him while I was taking those classes before I even started the real estate business. So I just stayed in touch with him. and when I was getting ready to move back up and do our first deal, I told him, I said, well, I think I have a really good formula. Let me show you these deals I've done, I found for my dad. I think I can find some of these deals here in the Clemson area.

If I found a deal, how am I going to come up with the money? That was my question to him. Is there any way that I can partner with you or do something with you? And he essentially said, yeah, let's figure out a way that you find the deal, you manage the contractors, you do the work, you go get it sold. I'll figure out how to come up with the money. And then we're going to split the profit. And so essentially that's what we did.

He went to a local bank who he had a relationship with, and the banker said, yeah, I'll loan you the money. My friend who's the professor, I'll loan you the money. We'll put Chad and Tommy on the loan too. Not that it helps anything because you have no job and not much credit. That helped us just to get on the loan with him.

And then he put up the down payment. He put up the money for the fix up. and then we turn around and whatever the net net was, we split it three ways between all three of us. Nice. That's cool. That's cool. I've always been a big fan of that strategy of using partners to, even if they can't fund the entire thing, a lot of times a partner can fund part of it. So I'm a huge fan of that plan. I've done that a number of times. How are you actually finding, you mentioned earlier, you know, you kind of had a formula or a plan or a strategy for finding these deals for them. What was that like back then? And does that still work today?

Yeah, I learned, I started doing a lot of direct mail. And, Again, I see myself as an experimenter in direct mail marketing. I'm not a, you know, what worked five years ago doesn't work now. You just kind of keep adapting it. But I started doing your typical kind of investor direct mail list. Like I would do an out-of-town owner list, and I would just find a list of owners who lived out of town or owned a property in town and they lived somewhere else. And I would send them letters just saying, essentially, I'm interested in buying your house.

And I would do the same thing with an eviction landlord list. We were working pre-foreclosures some at that point. And so I just had three or four lists that I would send out letters to, and they would call me. And out of a certain number of those would work. A certain number of them would be pretty good prospects. A lot of them would not. And I would just go through those and screen those. And then the ones that were good, again, I go sit face to face, talk to them, see if I could solve their problem.

And so that was my little, I mean, there's nothing fancy about that, but that was my little formula to find deals. In addition, I'll add one more was MLS. So we would, our first deal that I bought up in Clemson was, was an REO property listed with a realtor. Okay. Okay. Nice. Nice.

So you've talked about, you know, primarily do fix and flip. Then you had talked about managing as kind of one of your means of driving, well, driving income. Are you managing somebody else's properties or are you also building a portfolio with buy and hold? Yeah. So we have our own buy and hold portfolio. Okay. And we just manage our own properties.

Gotcha. I think our business is we started trying to grow and do more. We thought about getting beyond this business model. But our business model is really being like a big fish in a small pond as a real just focusing solely on real estate investing. I have my license. I could go list properties. I could do that. I could manage properties for others. But fortunately, we've been able to do make enough money, keeping it nice and simple, working out of our house, just doing it for ourselves. And so I don't, you know, it keeps it simpler for me just knowing I'm an investor. I manage my own stuff and I've had to get good at managing my own stuff. But I'm not,

I'm not having to work. I'm not having to go out and find business for other people, manage a bunch of properties. I can keep a manageable number, keep it small. And that's been really important for us kind of lifestyle-wise because I, you know, I know I want to grow. I want to make more money, but I don't want to be, I'm not really interested in being the takeover the whole territory kind of business and having to be, you know, have the most sales in the whole area or the biggest flips or manage the most properties. I just want to do enough that I meet my goals and is moving me forward towards where I'm trying to get to personally. And as long as I'm doing that, I'm avoiding getting so big that it's taking all my energy and time and I'm able to travel a little

more. I'm able to at this point now have young kids. So be with your kids a little bit more. And that's as important to me as the kind of taking and doing a ton of business. That's awesome. I think that happens in every niche, especially, you know, just business in general, right? Like, we get into it because we have a why, right? We want to spend more time with our family. We want to travel more. But then the business takes over and the business becomes the why. So you want to get bigger and bigger because that's what you want to do.

And then you never get time to do things you originally got into the game for. And I know that's definitely what happened to us. I mean, so our deal was I did that first deal. The first year, we flipped a couple properties. We're doing okay. I mean, we were definitely scraping by. but then we saw some other, and you go to the seminars, and that was probably the, you hear people who were doing so much volume and you get excited about that. I saw somebody who's doing

50 deals a year and you run the numbers and it's like, all right, they're making $20,000 per flip and that's sort of what we're doing on some of our deals. So why not, you know, do a lot more business? And I didn't have any reason other than, okay, we could do 50 deals. That'd be great. and it was kind of naive, naive of us to think that. And so we started to turn up the marketing, do more business, buy more houses, but then you also have to add on more help to manage all these leads. You also have to get more contractors, and the more you have, the less you're managing each one well, at least less I was managing them well.

And so you start getting sloppy with your money. You start not being as efficient as you were early on. And it came to the point where in 2007, we had gone from, 2003 was when we started. So I guess about four years later, we ended up having about 47 closings on properties where we acquired 47 properties in one year. Wow. And some of those were just your buying flips, a good number of those. Some were wholesale deals.

Some were buying and hold deals because we started buying and holding at that point. But by the end of that year, my business partner kind of said, hey, we need to stop and think about this because we made good money on a lot of these deals, but we'd also had some that were not as ideal. Some were in less than ideal locations. Some I kind of got enamored by the numbers. Oh, they're going to give me great creative financing, seller financing. And so you forget some of the other fundamentals of the deal.

And so we had sort of an aha moment that, all right, put the breaks on. Let's start thinking about what we've done here. Let's start seeing what kind of business model we really want to be. And what used to your point, Brandon, we wanted to start thinking about what is the objective here. What are we measuring our success by? and we started going into this lifestyle conversation, started saying, you know, we really like playing basketball in the middle of the day for two hours. We live in a college town and we can go over to the stadium where they call it Clemson basketball team plays and play pickup basketball for two hours. That's about as good as it gets for us, you know. But that doesn't cost any money. And, you know, my wife and I wanted to go on a big long trip for a few months to Latin America and travel around. And that certainly costs money. But it was a quantifiable amount. You could figure out how much that's going to be. but what we couldn't do is when you're buying 50 houses a year, you couldn't get away from it. It was a big monster.

And so we thought about it and said, you know what? For what our specific goals are in the short run and long run, we can probably do this without being huge and doing all that. And that was fortunate that we realized it at that point so that we could kind of slow things down, be more deliberate. And we've been adjusting our strategy since then. Hey, really quick, is we and your professor still, or is it? No, it's the guy my friend who his father had the rental process. properties as well, college friend. So we have a partnership, own an LLC, and I own the business together, and we've done that from the beginning. Gotcha. What are your thoughts on that? I mean, investing with

your friends, like a good friend. Yeah, it's worked out really, really well for us, but I wouldn't, I think it's difficult to make that work. You know, I had a good example. My mother's a dentist, and she had a partnership with her brother, so a family member, you know, not supposed to do business with family members, not supposed to do business with friends. I had seen it work for 30 years for them and how, you know, if you really had some key things aligned, you had your integrity line, first of all, you're working with somebody who's not going to rip you off. That's kind of a given. But then also, are your goals aligned, are your, you know, spending habits aligned?

I mean, it takes a lot of things to make a 50-50 partnership work. And so I think most of them don't work that well. With my business partner, it has. And early on, particularly when you're growing and you need to have low overhead, I would focus. I would focus on finding deals. I would focus on getting the money. He would focus on managing contractors in the fix-up, and then he would focus on getting rid of the property,

selling them, renting, on whatever we were doing. And so we could sort of divide and conquer early on, and that was helpful for us. Nice, nice. You know, I just want to go back really quickly to what you were talking about with. You did these 47 deals in a year. First of all, how many deals have you done now, total?

It's over 100. and I think it's probably less than 200 is the total. So that was a big chunk. Since then, we've probably, you know, we've focused on three or four flips a year. We probably buy three or four new rentals a year. Some of those are multi-units. So we're doing a much slower pace than that at this point. You know, it's interesting.

You see and well, you hear a lot of people who are excited about real estate and they get in, they get the taste of victory, so to speak, and they get their first couple deals. And they're like, oh, I want to grow. I want to grow. And I want to be huge. and I want to be huge. And I think a lot of people don't realize that there is a cost associated with becoming huge. And, you know, I think it's important to stop and reevaluate what your initial goals are. And it's cool to hear that you guys did that. And you guys were killing it with 47 deals

in a year. I mean, that's fantastic. Holy cow. And you said, wait, let's put on the breaks. We don't need all that money. We don't need all that. We don't want to live that kind of life. And so, you know, part of what this show is about is, you know, I think exploring different methodologies and mindsets and ways to go. And I always think it's cool to point out little things like this. I mean, you know, we don't have to be the biggest and the best to be winners in the game of real estate. And I think sometimes it's easy to get caught up in it and forget about that. And so I'm really glad to hear you reiterate that. You know, let's build what we need. Let's get this. lifestyle that we're hunting for that we're looking for and do you know i mean shoot three four deals a year is a pretty decent lifestyle you're not busting your your backside uh working too hard and you're

making good money so you know what more could you want exactly yeah i mean i'm right i'm with you josh because and it takes a different evaluation though because i think it's so built in i know it was in my head i played sports you know competition you're competing with yourself but more than that what you hear around like you're saying you hear around is that you're you're you need to do more. You need to do more. You need to do more. You need to have more. And I think you need to have enough to make that meets your goals and that you're happy with. And that's really difficult to figure out. But one little trick we've been trying, and this is from your faith, I think it's your favorite book, right, Josh? It was the fairest book. Somebody on Twitter, by the way, yesterday sent me a tweet. It was like, Josh, when are you going to finish the book?

That was literally a tweet I got yesterday. I'm like, oh, my God. Really, guys? Yeah, I know. I know. Well, there's good and bad in there, but one of the things I really thought was helpful in that book was this idea that you have to build in measurement tools for more than just money. And, you know, you have money certainly a factor. You've got to have money to do what you're trying to do in life. But you also, more importantly, like with my trip and with playing basketball in the

middle of the day, you've got to equally treat, quantify time and mobility. Yeah. And how much time does it take to meet my goals? How much mobility do I need? If I want to travel around the world for four months or six months, you know, can I do that with my current job or my current structure or my business? And so I start thinking about that. And so every time you make a business decision, every time you buy a property, every time you hire somebody to do something else, you start asking yourself that, how does this affect my bank account for a time? How does this affect my bank account for money?

How does this affect my bank account for mobility? And you try to do your best on measuring all three of those and finding a balance point. And that's been, that was a big aha for us to try to just use that filter. You know, you're never going to be perfect with it. But at least it brings those other factors to bear because most of the time it's just money. That's all we're measuring about it. You're a good person or you're a successful business person by how much money you make per year. When in reality, that's not, that's important, but it's definitely not the only thing that's going to get you to where you're trying to go.

Agreed. I think that's awesome. I know, I know my wife, who's obviously much smarter than I am, has to remind me of that all the time. Like she's always telling me like when I'm like, hey, look at it. Like we went and looked at the triplex yesterday. $60,000 this triplex came on the market. And it was a great deal, I thought, right? I'm like, and we went like, like the first thing I said to her is I know we're not,

we're trying to take this year. I mean, we're trying to take this year off to not buy and to just stabilize and to refinance everything. I said, I know we're not really buying right now, but this deal is so good. And she just looked at me and said, we don't need it. We don't like, we don't need it. Why put ourselves to that extra hassle and that extra work? you know, let's just relax a little bit.

And I'm like, oh yeah, that's right. We're going to relax. It's hard. It's hard. Hey, I'm with you. We need like a 12-step club for this. I can't turn down a deal. I know. We'll create the slow down for them.

Anytime you feel like you're going too fast, or you jump on and we'll have everybody to tell you to slow down. Slow down, slow down. That's funny. I'm with you. I'm with you. Thinking about wholesaling or flipping your first property, but not sure where to start.

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which is much cheaper than learning the hard way. Yeah, well, cool. So today you said you're doing flipping, you're also doing rental properties. I'm assuming, are you managing them yourself? Yeah, so I do part of my, I have a management business that managed it for our holding company. And basically, I used to do all the management,

my business partner did too. And we hired a bookkeeper. That was our main big, you know, help was to hire a bookkeeper who started off doing part-time, checking the mail, you know, sending out doing paperwork, filing, stuff like that. And we just start off at a certain number of hours per week. And then we started adding responsibilities from there. So, you know, if somebody wasn't paying on time and this is the fifth of the month, you know, comes around, who's sending the letter to the Senate saying, hey, have you paid? And

so we built a system and we started handing off more and more and more to her. And she's been, you know, awesome. That's really helped us a lot to the point where now I'm not putting signs out for rentals. I'm not putting the Craigslist ad up. I'm not, you know, sending out the collection letters. I'm not following. So there's a lot of details. I'd say, you know, 80, 90 percent of the details that I'm not doing, but I'm still underwriting the leases. You know, somebody who sends an application. She prepares everything. And then I say, yes, that's going to work. No, that's not. And which I'll give a plug to your, your pre-screening article. I'm the exact name of it, Brandon, but that's, that's, I go,

by that almost all the time. Was that the ultimate guide to tenant screening? Yeah, yeah. That's really, really, really good. This has the pictorial diagram of how you figure it out. And actually we had a little system, but I had to adapt it after. I sent it to my business partner, my bookkeeper. I said, we need to do this. This is really, really good. Well, thank you. And I will link to that if people want to know what that is in the show notes at

BiggerPockets.com slash show 84. So there will be a link there to the ultimate guide attendant screening. You can check out my homemade infographic that I'm kind of embarrassed by because it's kind of ugly, but apparently it works. It works. Yeah, it's good. Well, cool. Well, I definitely love the idea.

I mean, we kind of do the same thing. We have kind of a bookkeeper sort of she answers our phones and stuff like that. So I like that idea too when things get too complicated and too much for one person to handle. It's a good way to get started with property management without actually paying a full property manager to do stuff. So let's transition a little bit to financing. I want to talk about how are you getting three or four deals a year buy and hold, especially? How are you financing these? Just going to the bank to get a loan or what?

No. And it was sort of an interesting story that goes back to the business. beginning when we first started is that, you know, I was, I just gotten out of college. I did not have a W-2 income. Neither to my business partner. He had an internet business. So I guess, Josh, you could probably know how bankers probably look at internet business. Yeah, they don't. They think they're, yeah, they don't, internet, what? Oh, you have a toy? Okay. Yeah, you want to borrow money? Yeah, go borrow from some of your internet friends.

Go get a Bitcoin, right? Yeah. But anyway, neither one of us were bankers. basically. So we went to our professor friend, he went to the bank. And so we certainly, we got one local bank who would give us loans. And that's how we did our first couple deals was we would go to the bank. They would loan 80% of the purchase price. But back to my professor friend, that's been the key all along is that I sort of stumbled upon that if you get mentors, the old lion, again, who's willing to help you out, it's one step away from wholesaling a deal to them to have them loan you money. And so what we started doing was that my professor friend would loan his IRA money as a second mortgage behind the local bank. So the local bank

knows about this. There's a portfolio loan, so they're not, you know, selling this off to Fannie Mae, Freddie Mac, that kind of thing. So they, my professor would, we still didn't have a lot of cash in the bank. And so he would loan the money for down payment and the fix-up. The bank would loan 80%. And so we started transitioning to more private funding, IRA funding. And to this, to this point, you know, I looked at it about a year ago, I think it was over 90% of the payments we make, both on our holds and definitely on our flip deals are all private money. So it's either like somebody who has an IRA who self-directs their IRA and they say, yeah, I'd love them to loan somebody on real estate.

I want to get a chunk of my portfolio out of the stock market. They would then loan it to me and they would be my bank instead of me having to go to the local bank. So we've never really covered this in depth and we probably should do a whole show on it at some point and that's the idea of self-directed IRAs. Maybe you can just give us a quick, what does that even mean? what is a self-directed IRA? How does that even work? And how can people use that or use other people who have one to invest in real estate? Okay, yeah. So let's start with it. Think about a person who has $100,000 at a regular traditional IRA company.

So let's just say it's at Fidelity, I guess. You had $100,000 and you had it in the stock market. Well, Fidelity will definitely not let you go buy real estate. You can buy S&P 500 index funds. You can buy mutual funds, that sort of thing. But what people I've worked with, they then have to transfer that money from Fidelity to a local, So there's either a custodian who lets you self-direct the money. And so what that means is you can self-direct the money into any kind of asset.

And it's not that it's illegal to do that. It's just that most custodians don't let you invest in something like real estate. They're very niche kind of companies that you can put your IRA money with. And then they do the paperwork basically for you. And so the example would be, I went to go buy a house. My professor friend had $100,000. I would set up a closing. and the closing attorney would contact his custodian and say,

hey, we need you to wire the money. Here's the information. So the custodian would then send the money. My professor friend never touches the money. It's still his retirement account. It's out there. And he's just choosing to put it into a different investment. In my case, it was a note.

He was basically loaning money, and I would give him a promissory note, and I would give him security by giving him a mortgage to the property that I'm buying. Yeah. Yeah. Makes sense. What kind of rates do you get from private lender? Are they similar to a traditional 30-year note, or is it a lot higher?

How does that work? It was always at a premium, so it's always going to be higher. But when I first started, I paid 10% interest. That was sort of my standard number. And you guys know, you know cash flow and deal analysis. That kind of number typically doesn't work for a buy-and-hold rental, right? So that worked okay for buying and fixing and flipping houses. because I was making enough of a profit on the back end that I could afford to take a chunk of that and pay it to my private investor.

And so I started off that way. But as I started transitioning more of my business to buy and hold, and I started getting more private lenders who were interested in working with me, I started my interest rates started going down on what I was willing to pay. And at this point, my standard is 6% is what I typically with the private lenders I'm working with now. And so I'll pay in either I'll pay them interest only in some cases or maybe a 30-year amortization. and then have a 10-year or a 15-year call or a balloon at the end so that I have to pay whatever I owe in 15 years. I mean, I think that's kind of the holy grail of buying, hold investors, right? Because you can't get loans from the bank forever or you eventually stop.

So getting private money long-term is really amazing things. So do you have any advice? I mean, I know you talked about getting, you know, the old, you know, the lions to help yet. But do you have any other advice for how do I track that in my real estate business and the people listening? How do we get people to lend us money at 6%? I mean, that's what I'm paying my portfolio lender is like 5 and 3 quarters. So, I mean, that's great. So how do we get that?

Where do you find the 6% lines? Yeah, give me his name and number and then. How do you find that? I'll do 6 and a quarter. I'll do 6 and a quarter. So if you're lending to Chad, just call me and I'll pay you a little bit higher. Nice. I like it.

You like that? I just don't cut you, buddy. Yeah, we got a competition going here. hitting more. This is cool. I mean, you know, some people have asked me that too, locally. And what I've told them is that it's not easy. That's probably not what you want to hear, but it's not easy to get because it's sort of a slow dance, the analogy I give. It's something where you remember I knew my professor friend for a year before we even talked about doing business. And so I would say if you want to just know, like, how do you even get started with that?

My strategy has been talking to as many people as I can, as often as I can, about what I'm doing. So I invest in real estate, but be deliberate about telling them what you do. And so what you might want to do is every time you talk about, you know, everybody's interested in real estate. They watch all the flip shows on TV. Everybody I know when they hear I do real estate, especially now as the market's starting to heat up a little bit, people are all, yeah, that's great. What do you do? And so you can take that energy and that interest from people and you can turn it around and say, well, here's what I do. I go out and find, you know, those properties in the neighborhood that need a lot of work and this kind of the worst house in the neighborhood.

Well, we'll go buy one of those. And what I do, though, is instead of going to the bank and getting the money, I have some other local people, private individuals who have their money sitting in a retirement account and is getting a half a percent in the CD. And they like to work with me and help me fund these deals. And then we figure out a way for both of us to make money on the deals that I buy. I think that's a terrific elevator pitch, by the way. So I hope people heard that.

And if they should rewind it and listen to it, you know. Learn it, record it. and practice it in front of the mirror about a hundred times. Because what you did is you, I mean, you emphasize this is what our company does. And you emphasize this is what's in it for you. Like, I mean, you didn't say it this way, but you're making half a percent on your money. And I could get you a lot more. That's like the subtle what you said, but you didn't say that, right?

And let them come to their own conclusions. I thought, yeah, I think that was awesome. Thank you. Yeah. But, you know, to have that conversation with somebody, you know, I might start off that way. They're not going to give me the money the next day. Even so. I've had a guy who's a partner with me on a deal now and has loaned some money.

It took three or four years before we finally did a deal together. And so the negative of private money is that it takes patience. You can't just walk into a bank, throw your application down and get it. The positive, though, is that, man, once you get that big boulder rolling, I've got stayed in one little small circle of people who are good friends, and we talk to them and we do business over and over and over again. And I was really lucky again that I was a young guy who listened to my elders giving me wisdom. So my first private lender, my professor, he gave me this advice.

He said, I think it was a Zig Ziglar quote or something. He said, if you make sure that me, but not only me, but anybody else you do business with, anybody else who loans you money, if you make sure we make money and become wealthy, you can't help but become wealthy. Yeah. You just kind of attach your destiny to your private lenders. And what that specifically meant for me, though, that there were some trying times of some of my private lenders where there were some deals that I had to eat and lose some money to make sure there's no way

my investor's going to lose money. There's no way he's going to be inconvenience. There's no way he's going to have a problem because he's number one. I'm going to be okay. I'm going to make money long run, but I don't want him to ever have to worry about it. And if they sense that from you, if they sense that that person is number one and you're kind of subverting your interest and your profit to them, that's sort of a rare thing too. And you have to earn respect from that person by proving that to them over time. And they'll bend over backwards and we're still doing deals. And people talk to them, what are you doing with your money?

I'm putting it with Chad. Or do you think he'll let me loan some money to him? Maybe. I don't know. He didn't have that many deals. You have to talk to him. And so it kind of builds upon itself over time. Yeah.

So let's get into this a little bit more because I love your approach. First, so how many private lenders are you currently working with? All right. I'm just thinking in the last three months. I've had two closings. and both of those. So I have two main private lenders. I'll say that.

So there's two main guys. All right. Two main, but I've had, you know, over time, I've probably had nine. Okay. Okay. And presumably you can probably go back to any of those nine or ten, and you have your preferred to, for whatever reason, history. But I want to hear more about subverting your own interests

for the interest of your lender because I think that's, first of all, I've never heard anybody say that before. and I love it and I think it makes a lot of sense. So I don't know, could you possibly give us an example of a situation where you actually did that and what did it look like? It sounds like you probably ate some real cheese there to, you know, keep the relationship and make sure that they didn't get hurt. Yeah, I can think of one.

So we had one where the lender loaned me money on a property that, you know, about a year later I realized I should not have bought this property. It was in a bad location. the numbers were okay, you know, but it was one of those, you know, you where you go for the 2% rule or something, but then you learn that the location stinks. And so you're going to have to, the 2% rule by the, I know I'm throwing terms out that maybe everybody's familiar with, but it's a good cash flow. But anyway, the location was not good. I wasn't going to be able to liquidate it fast enough. And so I basically sold, we're going to sell that property or get rid of that property,

but I'm going to take a loss on it. So I'm going to write a check at closing. I'm going to save up the money, or if I couldn't write the check, maybe I could figure out a way to, you know, I had $5,000 difference. I'm going to see if he'll loan me that $5,000 against another property we have, but whatever the case is, he's going to get all his principal, he's going to get all his interest, and he's not going to be penalized by my bad deal. I'm the one who made the decision. He trusted me to loan the money on a deal. He kind of, you know, he deferred to me. I'm supposed to be the expert. And so a very specific example, I'm willing to write a check to make sure my lender does okay. And I think that's, I'm going to really generalize here.

I think that probably is a rare thing. I'm guessing in situations like that, most investors might just say, well, you know, I got screwed, you get screwed, we're all screwed and good luck to you. And I'll go find another guy to lend me more money. Exactly. And I think I'm thinking of another example where I did the, it was a lease option deal, which is a little bit different, but it was where a seller was basically my bank. They were willing to let me make payments to them over time.

and the same kind of thing happened where I had tenants in there, the deal was not good. And what I did, though, is I went back to my, I said, I need to sit down and have a conference. We need to sit down and talk. And I was honest with them. And I said, I don't think the deal is as good as we thought it was. I don't think this is going to work. But I'm willing, I'm not going to make any money on this deal. I've already had negative cash flow for the last three years.

I've already lost money on it. But I want to make sure you're made as whole as possible. I don't know that you're going to made 100% whole, but I'm willing to donate my time, my effort. my energy to come out and sell this property as quickly as we can for the top dollar. And I met contractors out there. I made sure he got the cheapest paint prices to get the thing fixed up. I found a realtor who had listed at a discounted rate, who staged it. So I did all the things that would have intimidated. I could have just given the property back to that person. But I felt like if, you know, whether implicitly or explicitly, they trusted me to take on that

deal. And that's typically why people work with me is because, man, he seems like a solid guy. Okay. I trust them. I don't understand all the. details of this creative stuff he's talking about, but I trust them. And so the minute you break that trust, which is what my mentor told me, the minute you break that, you've just emptied your bank account because that's not, you've kind of messed up the good thing you had going. And so, you know, when you start, I know this happened a lot in the down cycle because I know a lot of private investors who got a bunch of properties back, a lot of hard money lenders. And the entrepreneurs who gave those properties back and just jumped ship and walked off, they lost a prime

opportunity to build a lifelong lending relationship with that person. Because if they would have stuck with them and said, look, I owe you the money, this deal went bad. I could have helped you and helped them out so that the lenders made whole. They could have had as much money as they needed for the rest of their life, probably at a better interest rate. And that's, I think, I guess you're right, Josh. I think it is rare. I'm not sure why, though. I don't understand how you, he's kind of short-sighted to see it that way, because business is about relationships. It's about having a few relationships who you really have a good, trusting, you know, working relationship with.

And that has been awesome for me, whether it's the business partner that I have, private lenders, it pays dividends over and over and over again. And it's a small world too, right? I mean, you, you buy, you know, by eating it got so many brownie points that that guy is going to then go and say, holy smokes, this guy, Chad, just lost, you know, a couple grand and you know he could have walked away but instead he lost an extra x amount on top just to make me whole man if you guys are sitting on your cash you got to give him your money you got to convince him to do more business convince him to do more deals because he is he's the real deal right exactly

word of mouth you got to get word of mouth if you and if you can't get word of mouth if you don't wow them with something and that's with money i mean we all think about with our own money we were it took us a lot of time to earn that money yeah it took this guy a lot of turn time to earn that money. He really needs that interest. And so if you, if you treat it as carefully as they want to treat it, then yeah, they're very good about telling other people about it. That's great. That's great. So what's your favorite type of deal? I mean, you know, you've done a whole slew of different types. What do you like best? I like the creative stuff. So we've talked about IRAs, but I really enjoy working with seller financing too. And this goes back to the holy grail of long-term

investing that Brandon was talking about is that, how do you buy a property that's just an awesome income producing property in a good location, how can you get that property and get some terms on your financing and allow you to hold it for a long period of time? And the way I've seen it is either an IRA investor or a private lender or even better is finding a motivated seller who's got equity in the property, like an old landlord who's owned this property for 30 years and is just tired of it. They're just sick of this property. I really enjoy that negotiation with them because I feel like it's a big benefit to the seller. if they like you and realize that, hey, I'm going to transition for being a landlord to now being the bank for this young pup again, you know.

And you can get really good low interest rates over 25, 30 years. I had a guy who sold me a house and it was just a bad condition house. He had it rented for years and years and years. And he was 82 or 83 at the time we did the deal. And he financed me a property over 27 years, I think. think. Wow. Wow. So the seller financing was, and so we had a, you know, he's 82 years old. Why in the world would he finance that? And we had a joke, you know, we're, you know, 27 years from now, we need to have a mortgage burning party, right? And, you know, laughing about it. But he did that

because it was part of his estate planning. And he said, you know, I'm going to have people inheriting this. And for them to get a big chunk of money is not necessarily the best thing to do when somebody inherits a bunch of money. So why not? And this was my argument, discussion with him after we had conversation was if you get a steady paycheck from me over the next 27 years and whoever inherits from you will also get that steady paycheck and that pay that you know $400 a month can pay their grocery bill for the next 25 years if you give it to a grandchild or somebody else instead of giving them a lump sum of $100,000, you're going to get this income and that I like that because that's not easy to do either you have to there's a lot it's a slow dance it's a long

conversation but when you when the end result of that is for me I buy a property in a good location with incredible financing. He's getting an income stream and that have to mess with tenants anymore. And we both, it's a really good win-win kind of relationship. And we both make, we both do well on that. Nice. That's awesome. That's awesome. Cool. Well, this is great. I mean, really, really, really good stuff. I really had one quick question left. And I guess it's, it's, what are you looking to do going forward? I mean, is it, it's to stay forward at three deals, four deals. a year, build up that buy and hold portfolio, and then, you know, sit and watch it, you know, eventually stop doing the flips? Or what's the strategy? Yeah, I have a lot of fun kind of thinking

about what I call it like a free and clear plan. And so I'm a big part of what we, you know, we went through the downturn and we had to really button up our hatches and cash flow was going out left and right. And so we, you know, we had sort of a delay and moving forward on this plan over a few years there. But the plan for us is, is the debt snowball or some people call like a domino strategy where you buy and flip some properties, use some of that money to pay the bills, but you're trying to still live simply and keep your overhead really low

so that you can save as much of every house you sell, save as much of that money as you can, and plow it back in to paying off some of the debt in your portfolio. So that the end goal, and we're getting closer and closer and closer to that, is have a certain part of the portfolio be free and clear, and there's a number there that you try to get to so that you progressively are increasing your cash flow and you're progressively decreasing the amount of stress and moving parts and overhead that you have

so that you kind of get, it gets a little bit easier, a little bit easier, a little bit easier. And that's sort of where I see the flips and selling a few of my rental properties is the engine to get those savings to then plow back and pay off some debt. Nice. That's kind of the same strategy my wife and I are looking at doing, especially just in the past few weeks, we've been thinking a lot about that of just simplifying and figuring out what properties we want to keep. what do we want to hold on to get rid of, you know, so anyway, I love that. Let's go on. I know how we could talk forever on this stuff and, you know, but let's go on to the world famous.

It's time for the fire round. All right, the fire round, these questions come straight from the bigger pockets forums and we're going to throw them at you and see what you say off the cuff. So number one, what hobbies are good for real estate investors to get involved in that might. help their real estate goals while still being fun. It's what hobby should people get into. Yeah, this is, this is a good one for me. I love walking neighborhoods. I used to be, I used to do more intense athletics and played football and kind of training, but my exercise now is pushing a stroller, a stroller around, you know, to a one-year-old and a three-year-old kid. And so I think there's nothing better, though, and investors don't do this enough is getting out in a

neighborhood that you're farming and just walk. And it's, you know, not in your car, not, you know, not looking on Google Maps like everybody wants to do. Get out and you get exercise. You can take your kids with you or your spouse with you or your significant other and you're looking at real estate and you talk along the way you stop and you see it for sale by owner. You see a vacant house. You talk to neighbors. I mean, you could if I just did that marketing strategy alone, I think I could buy a couple deals a year just walking neighborhoods in my town. So I think it's a pretty cool way to, cool side hobby to have. I love that. That's great. That's great. I used to do that as a when I was an agent, I was, I think one of the last agents walking the neighborhood in Los Angeles

and people thought I was crazy, you know, just knocking on doors and putting door hangers on and, you know, just, you know, you get to see what's around. You get to know the neighbors and people think, you know, you're personable and local and that's great. So, yeah, awesome. All right, so here's a good one. When do you think it's appropriate to call yourself a real estate investor? Hmm. Yeah, this is a good one. I think now I would say that you need to distinguish between being a real estate entrepreneur and a real estate investor. And this comes down to the definition of investing, I think, is having capital to put into an asset.

And so for me, I was not a real estate investor when I first started. I was a real estate entrepreneur. I could have been a real estate agent. I could have been a contractor. I could have been an inspector. What I was was a bird dog. I happened to be training to eventually become an investor when I started saving up enough money to actually have some money to buy something. And so I would say that's the true definition of a

real estate investor is having enough capital in the bank to put a down payment on a property and own a buy and hold rental or a note or something like this is kind of an investment. I agree. I agree. I think that's well played, sir. Nice. All right, good. All right. Number three, what is your best secret to winning negotiations? Do you have any good negotiation tips? Yeah, I think it's sort of counterintuitive, but, don't, you know, so much, I don't think I'm a good negotiator in the traditional sense of negotiation. If we were to go to like a, in South Carolina, they call them jockey lots, like flea markets or whatever, and you go out, I'm not any good at that.

You know, when we travel to Latin America and I feel, you know, you have to bargain, when they start the price at like 10 times what it really is or 20 times. And, you know, I'm just not a haggler. I call that haggling when you have to go back and forth, back and forth. For me, there's a book that maybe you can reference is called Getting to Yes. It was a Harvard negotiation project. And the idea that really stuck in my mind is that negotiations are where you sit down at the table with somebody and you listen to one another and you figure out if you can find a way that my needs can be met and your needs can be met in a way that is mutually beneficial. If not, you get up and walk away. And so that's been my approach. I'm, you know, I like,

I think being a good negotiator more about listening than talking. I think it's more about giving than it and figuring out a way, how can I make this deal work in a way that gets them what they're looking for? That doesn't mean you're a pushover. I mean, you've got to make a profit. Sure. But I just, I don't, I'm really kind of turned off by a lot of the traditional negotiation type of talk because I just don't think it's, I don't think it's the true term of what, what it's all about.

Fair enough. Fair enough. All right. Last question on the far round is, how do you find a good lawyer? that understands the investor mindset. I'm still trying to figure that out myself. Yep. No, I actually, I mean, my latest answer,

I have a local attorney who has been in the business for a long time. I think that's, I finally defined what I really wanted from a real estate attorney. And doing a closing, doing a traditional closing, that's not doing a title search. That's not the big deal. I think you need somebody who can be an advisor to you, who's seeing a whole lot of things go wrong in the real estate world, and who can help you build contracts to protect yourself from those crazy things that go wrong

that you have no idea can happen. And so I guess the only barometer to measure whether that person has that is, you know, talking, ask them stories about, you know, what situations have you seen real estate investors screw up and see if they know some? Because most attorneys I run into don't know about real estate investors. They do transactions with just typical closings. They're not used to any of the weird stuff that we deal with and don't even want to do that. So, you know, I found a couple that have been in the business a long time and have just, by default, seen some of those.

Even though they do regular closing, they've seen the weird stuff too. That's great. Cool. Really, really, really good. Cool. All right, let's move on to the end of the show. My favorite segment, we call the Famous Four. All right, the Famous for these questions we ask everyone.

Let's see what you got to say. Number one, what is your favorite real estate book? I should take some notes because I listened to some podcasts that. I better remember what this is, what's my favorite book. But I don't know if y'all have done this one on the show, but there's a guy named John Shob down in Florida who wrote a book called Building Wealth, One House at a Time. Yeah, I think somebody mentioned that once, but yeah, that's a good one.

Yeah, and so I like that book. It's a good introductory book, but it's also kind of plays what we've been talking about. You don't need to do 50 deals a year. You need to do one solid good deal a year, and that can make you super wealthy. And so it's more of a deliberate strategy. It's a very good philosophy. I like to look at the authors and people I'm learning from and see what does their lifestyle look like right now, and is that something I want?

And John Shob is a guy who has been in business 35 years, real estate investing, and very laid back, travels a lot, uses his, manages his own rental property still. And so you want to learn from people who've sort of gotten to the point that you want to get to. And that's, I like that book for that reason. It's a good tip. Right on. Right on. Right on.

What about business book? You already mentioned getting to yes. Any others that come to mind? Yeah, I've actually got two, if I can. Sure. One of them, I really like studying Warren Buffett just because I think it's very applicable to what we do and real estate investing. And there's a book that I have dog-eared and tagged is the Warren Buffett way.

Yep. Good book. And it's a good classic book. And so Warren Buffett has a, he actually, in his latest annual letter to his shareholders, talked a lot about real estate. And so it was very cool. He talked about two different real estate deals he had done, one buying a farm in Nebraska and one buying a property in New York City.

And it was just the fundamentals really, it was interesting to see how his investing fundamentals applied to real estate. And it would be very helpful for anybody who's interested in that. And that's one, Warren Buffett Way. And the other, though, I think having to do just mindset and some of these negotiation things we've talked about is the seven habits of highly effective people by Stephen Covey. That was the first book I read. and they got to college.

It was in the kind of personal development genre. And that was just, I've gone back and read that book over and over again and found a lot of good stuff there. Great. Yeah. Yeah. And I'm actually surprised. I think that might be the first time Buffett's been mentioned.

And Covey, it might be the first time somebody mentioned Covey too, which is fairly surprising. Yeah. Yeah. At least in a long, long time. Yeah. Cool. Yeah.

What about hobbies besides you got these two little kiddos, you're pushing them around? You play basketball. What else do you do for fun? Yeah, my wife, we like outdoors, so we haven't been camping as much as we like to lately, but as soon as the one-year-old gets a little bit older where she's not screaming and waking up the bears in the woods, we'll probably do a little bit more camping and hiking. Nice. We like traveling abroad, too.

My wife teaches Spanish, and then I've learned foreign languages, so we like to go abroad and kind of travel slowly and see, meet people, and learn languages, eat the food, you know, do all that. So that's another hobby we have. Oh, fantastic. Sounds great. My final question then is, what do you believe sets apart successful real estate investors from those who either give up, fail, or never get started in the first place? For me, it's been relationships. I've mentioned that, you know, kind of beat it to death today talking about it, but, and not necessarily in the relationships as in go in and network and get as many cards as you can at a networking event, although that could be okay. But what I mean is actually have some really strong business relationships with people who you add value to over a long

period of time. And I've screwed up a bunch of stuff and I've done some good stuff too. But the thing that I, the best thing I did was aligning myself with people who we could help one and have them over a long period of time, like the private investors, like contractors who ended up helping you out, like your business partner. You know, if you get a good core team and you treat each other right and build a team that works together well, I mean, that's pretty strong. It's hard to screw up, even when you do screw up stuff. That kind of picks up the slack for yourself as you grow. Nice, nice.

Great stuff. Great stuff. Well, Chad, listen, it's really been a pleasure. I've definitely enjoyed learning from you. And, you know, I know you're active on the site. You're active on bigger pockets. You've been blogging on our members' blogs and starting to really get out there. And I think you contribute a lot.

I guess where can people find more about you besides there or is that kind of a good place? Yeah, that's a good, that's a good point. I'm trying to post articles on there, and I enjoy writing and teaching. And I just have to say what you guys are doing there on Bigger Pockets is just awesome. So I refer it to everybody I can and say, if you want content,

and I'm just trying to contribute a few things there too and write some articles, and hopefully those are helpful for people who are kind of browsing, so you can just go to my profile on Bigger Pockets. Nice, and we'll link to that in the show notes at BiggerPockets.com Slash Show 84. All right, Chad. Well, thanks.

again and we'll look forward to saying you're on the site. We really do appreciate it. And good luck with those two kiddos, man. I got two similar age and I know the challenges. You see the rings under my eyes, don't you? I've been yawning this whole show and it's not because you're boring me, man. There's other reasons. Hey, young dadas, I understand. No problem at all. Thank y'all for having me. I really, it's been a pleasure. Hey, take it easy. Hey, take it easy. Bye. All right, guys. That was Chad Carson on show 84 of the Bigger Pockets podcast and thanks again to Chad for sharing so much of his insights. I know I learned a lot and I really, really love his philosophy. Yeah, I do too. Very much so. And me and him are, I mean,

we see eye to eye on so much stuff here. It just really became apparent. So yeah, definitely connect with Chad, whether it's on his BiggerPockets profile, come leave a message on the show notes page at BiggerPockets.com slash show 84. And yeah, just jump into the community. If you're not part of bigger pockets, jump in, start connecting, start learning, growing, and take your business to the next level so you can be like Chad. Awesome. Awesome. And of course, if you found this or any of our other shows to be of value, please help us out,

help spread the word, leave us a review on iTunes, the marketplace where I think we get the most of our earballs. I don't know if that's an actual word, but our listeners. But leave us a review and let me. people know what you think, you know, be honest and, you know, that certainly is appreciated. But that's it. Follow us around the various networks, Facebook, LinkedIn, G+, Twitter and so on and so forth.

And get active, participate, get out there, do business, do deals, network. And good luck to you. 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

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