Epic Real Estate Investing - Refinancing Mistakes Every Real Estate Investor Makes | Aaron Chapman | 1377

Episode Date: November 7, 2024

In this episode of the Epic Real Estate Investing Show, Matt welcomes back Aaron Chapman, a seasoned expert with decades of experience in the real estate investment world. Together, they dive into a range of thought-provoking topics that offer both practical insights and a deeper understanding of the current market landscape. Aaron shares firsthand stories from his recent adventure during a Florida hurricane, shedding light on the unpredictable nature of real estate investing and the importance of preparation. They also explore the unique, thriving community of *The Villages* in Florida, discussing its growth, demographics, and why it's become such an attractive area for investors.   Shifting focus to the broader economic environment, Aaron and Matt break down the complex effects of quantitative easing and tightening on the real estate market. Aaron stresses the need for investors to look beyond the typical metrics like cash-on-cash return and rent-to-value ratio. He highlights the importance of considering a property's full financial picture, taking into account factors such as amortization, depreciation, and inflation, which can unlock multiple profit centers and better long-term returns.   The conversation also touches on essential strategies for leveraging debt and refinancing properties to optimize your portfolio's performance. With the housing market facing increasing demand, but a significant supply shortage, Aaron offers valuable insights into how investors can navigate these challenges, stay ahead of trends, and capitalize on market opportunities. He emphasizes the importance of working with a knowledgeable team and remaining active in the market to stay informed and uncover deals that others might miss. Whether you're a seasoned investor or just getting started, this episode is packed with actionable advice for building wealth and protecting your investments in today’s dynamic real estate landscape. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-a.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. All right, please help me welcome Mr. Aaron Chapman. to the epic real estate investing show. Aaron, welcome back. Hey, man, how you been? Doing good, doing good. And I was good to see you in Tampa a while back. I imagine you got out before the hurricane hit.

Dude, they canceled my flights and all. You experience the whole thing, I'm sure. And then so me and a friend, I was either going to go straight to Cape Coral in my place down there or she's like, hey, I've got a buddy over in Ocala. So we'd rent a car, we went straight to Ocala, spent the night. We'd straight over to Orlando got off that. next day. Wow. Okay. So you didn't get out then. No, we made, I had no way out, but it was a cool adventure, right? I got the house of cool people over at the villages. The villages is freaking huge.

I couldn't believe how that place has exploded. What is the villages? So it's pretty much a city within a city outside of Ocala. This developer decided to start building these different developments that have their own city center, basically a 50 plus community. And you have multiple different motifs and so they're just these big, I don't know, man, to describe them. They're just little towns. They're all houses, but they got to city center with all the shopping and the entertainment and everything is a pretty wild place. Huh.

Wow. So you didn't get out. I was wondering, because I think the airport was closed about just a few hours after my plane left. Did you leave that same day? Yeah, I left the same day. But I was already scheduled, thank God. But I know around two in the afternoon, they kicked everybody.

out of the hotel room. Yep. Or it's getting out of the hotel period, not just everybody had to go. And I was like, wow, if I didn't have a plane scheduled, what was I supposed to do? And what are all these other people

supposed to do that are now getting kicked out of the hotel? Yeah, my plane was scheduled for the next morning at 5 a.m. Uh-huh. And usually, because Matt and I always have a thing that we're doing at the end of every event. We have like a ritual. And so that was the plan.

We're going to do it come hell or high water. Well, high water was coming. So it's always helping with it. So like, well, I guess we can't. You got both. I just been straight to the airport. They were shutting down, and I just went and rented a car.

So there were plenty to rent there. So ran the car and said, oh, we'll just figure it out. Worst case in the area, I can get myself down to Cape Borough and hang out with some friends. What's crazy is having another hurricane come right behind it. Yeah, totally. Did the airports open up in between the hurricanes? I believe they did, but you didn't have a whole lot of room there. Right.

Because I was supposed to go back. I was supposed to go back to Orlando for another event. I'm like, nope, canceled that one, and I end up in Mexico instead. And then I guess they moved that event this last week to, called I had to move that one, too. So it's just, it's wild. Florida just seems to be a rough place to hold events anymore. Yeah, I have a buddy that moved down there just the same time I moved to Vegas.

He's already been through three of them where he's had to like totally restructure his whole bottom floor and all three of those. Oh, wow. He's getting ready to leave. It's getting old. Well, we got that least test it. So I got a house that just got built with Cape Coral. and I got tested with two hurricanes coming through. Nothing.

Not a shingle was blown off, nothing. Things were great. And they had, hard-bust mile per hour winds that hit it from this last one. Nothing happened to it. We're all held up. Got a pool, got an enclosed with the cage,

dock. It's on a lake and all kinds of stuff and nothing. So they got a pretty direct hit, but nothing. Good work on shit, I guess, huh? Those guys know how to build out there. Yeah, apparently. I mean, they have to.

Cool. So I'm glad we got to. talk because I saw you on giving your presentation on the very last day and I really enjoyed it for many reasons. The content is good. You're smart guy. You're always good with that. But I don't hear too many people talking about it.

I talk about it over here and sometimes feel like I'm in a world all over myself based on comments. People think I'm absolutely nuts. Being the housing market, being investing in real estate and then everyone has freaked out a little over last year and a half over interest rates and who would buy real estate? now with interest rates so high. And I'm just like, it's such a small, narrow view of really what real estate is, what financing is, what the, all the benefits and the profit centers that real estate

gives you that really no other asset class does for the average American, right? Yep. I'm really becoming accustomed to saying over here, you know, this is a money podcast just disguised as a real estate podcast because where else can you park your money and get that many types of benefits? 100%. People are looking at it from the wrong angle. I think, and I blame us in the real estate sales industry or what we're dealing with right now. Because you go back pre-2016. Well, actually, just go right around the time that they started quantitative easing 2008, changed the landscape of real estate in our lifetime significantly. So you saw what happened. Their prices of real estate through them just bottomed out completely. People start jumping and becoming real estate investors. And in reality, opportunities. universe if you really want to get down to it because the opportunity is amazing. If you had capital, you didn't get completely erased by the crash in 2008. Well, then you get to where the ability to

cash flow and the cash on cash return and the rent to value ratios were like the prime metrics. That's what everybody's looking at. What's your rent to value ratio, what's your cash on cash return. That was how it was easy to sell real estate. We have a 14, 15, 18% cash on cash return. Why would you not buy? When your rent to value ratio was 1.5, right? 2%, things like that. Why would you not buy it? Very easy to sell. But we stuck with that narrative. And people came into the industry as a real estate investment salesperson or a real estate coach, things like that. When that was the main metrics they were using, anybody could have been that. Well, around 2016, I started kind of screaming, we got to change a sales pitch. It can't be about

cash on cash return. It can't be about your rent to value ratios because this is going to change. We're going to see the interest rates have to change at some point. They can't keep this up. You can't have mortgage-backed securities having this massive amount of capital because the Federal Reserve is not going to continue to do quantitative easing. Well, that started to fade out as far as even knowing what quantitative easing was. People forgot all about it. This is normal life. Everything goes in cycles and this is going to be the norm, these low interest rates.

And it's amazing how many people were not listening. Well, I was doing my damn this to try and position people to try and think about this in advance, and they just weren't. Well, now you have 2021 comes along and they do quantity of tightening. And there's no longer capital going into these pools. As a result, that interest rates started to jump up and jump up rapidly. Well, they're like, what do we do? Exactly what I've been preaching what we should do. Focus on how do you analyze a deal.

What makes a deal? The interest rates don't make the deal. The price doesn't make the deal. The cash on cash return doesn't make the deal. and rent-to-value ratio doesn't make the deal. The deal has to make the deal. So you have to look at all aspects of the deal. And if you do get a great cash-home cash return or you get a great rent-to-value ratio, that's the cherry on top of the Sunday. The whole Sunday is something more. And we need to explain what that is and help people wrap their heads around it.

Unfortunately, we've been preaching it as that that's the whole metric. Well, that's to me, the vanity metric. If you get that, which you will eventually, any real estate investor will get to that higher cash-harm cash return. You'll get to that higher rent-to-value ratio as things continue to go with your asset and you buy that business, but it's going to take time. They want it year one. No, you're going to get it year five,

six or seven. And if you're getting it there and all the other metrics line up and all the other things we talked about lined up, then you were ticking ass. Yeah. I mean, it's practicing or preaching to the choir, really. But I always kind of when I point out all the profit sense,

I'll point out the layman looks at appreciation. And you can tell that they look at appreciation because they're asking, is this a good time to get in? Am I got to buy low? be worth more next year type thing. And then the slightly more sophisticated person will look at the cash on cash return. Okay, what's the cash look like? But really, like you said, the whole deal, because now you've got the depreciation and the

deductions. I mean, just being an employee, like, you're totally crushed by the tax system, by owning a property. Now all of a sudden you're a business owner and your taxes are completely change. You get all the deductions. You get the depreciation. I mean, where else can you gain by losing, right? Yeah.

And then people. know it, but I don't know if they actually know it, is that when the asset buys itself, the tenant comes in and actually pays for it for you. There's such a huge benefit to real estate. My opinion, it's like what makes the difference between an income property being a great investment and your home being just really not an investment at all. It's just a nice purchase and it gives you a nice way of living. If that you kind of dictate your way of living rather than being held to, you know, the apartment or whatever. Right. People don't quite see it the way that they should when it comes to that amortization of the loan. They're so busy getting caught up in

that I'm in debt. And they get this idea, then the idea has been shoved down their throat, right? You got the smooth of the world. You got your grandparents. You got, you even got the lenders out there. Every other lender out there say, hey, you'd pay extra on your mortgage that you can pay it off in, say, 27 years if you make just an extra payment a year or I think it's 21 years. Or if you get a 15-year loan, give you all these things that paid off early. And my guys, quit listening to that, especially real estate investors. If you want to do that on your primary residence, fine, I disagree with it. But if you do it on your investment properties, the debt snowball and all these other things,

that is actually one of the poorest uses of your capital. And we can, let's do some math if you're cool with it. I'll show people. I totally agree. I've ran down the math, but I just kind of sum it up like this. By doing that and eliminating the debt, you're focused on retiring your money before you retire yourself. Oh, 0%. Well, the other part of it is you're giving it backroll.

It's worth more. People failed to remember that what inflation is done for us is positioned us so well in the real estate investor world that we are literally eliminating the benefits of inflation when we give it back faster. The longer you take to pay, the less you actually pay. So where the huge benefit comes, let's say you're buying a $200,000 house. I want everybody who's listening, get out your calculators and calculate this with me. Make sure I'm right. Hold me to this. $200,000 house, you're putting 20% down. A lot of times you can say, hey, now that I'm spending $40,000. You're not spending it. You're investing it. You're now moving $40,000 into this business to acquire the business.

And then the bank is putting up $160,000 or the mortgage-backed securities, whoever invested that is going to put up $160,000 for you to buy a $200,000 business. Now, you're going to have some costs associated with it. And if you're in a really, really crappy time in the market, the cost you can go higher. There's points. There's all these things. You're going to say, let's say you're at $10,000 in lender fees, title fees, appraisal, taxes, insurance, all these things, you're 50 grand in. So 50,000 invested, 160,000 in what some people

will think is debt. Hopefully your mind changes when we're done here. So now you're 50 grand in, you got a 160,000 dollar investment. Matt just said it buys itself. If you did the right thing, which is work with the right people, you know, Epic real estate, all the folks over there and they're getting the right operators in the area to run your business. And it stays reasonably rented the entire time you own it. As Matt pointed out, the tenant pays it off. So the is paying on this, giving you enough rent to pay for it, that means they're going to pay down that note, $160,000 over 30 years. Again, pay it off over 30 years through the full 30-year fixed plan.

That means you're going to receive averaged over 30 years, $5,33.34 per year is coming back to you in the amortization of that loan. That is 10.6% of your 50,000. You invest in 50. They're averaging giving you 10 to 53333 per year, which is 10%. 10.6% of your investment. You're literally growing your investment by 10.6% per year just by the amortization of the loan. Now, we live in an inflationary environment.

Because of that, our house pricing is going up. Kay Schiller, Black Mike, Core Logic has saved 6 to 7%. I'm going to knock that all the way down to 2.5%. I believe in any market, we could see a 2.5% appreciation fairly easily over a 30-year window. So a 30-year appreciation with 2.5% per year is equivalent to another 5,000. $5,000 per year. Your asset, your business grows by $5,000 per year just in it sitting there. That's another 10%. That means your investment of $50,000 just grew by $20.6% without a single dollar of cash flow coming into you and a single thing going on to your tax returns.

Now, let's get into that what you're receiving as a payment. Is it reasonable Matt? I'm going to ask you from the markets you're in to buy a $200,000 house and rent it for $1,800 a month. That's reasonable. reasonable. And is it very reasonable to believe that you should be able to at least get $100 a month cash flow off at $1,800 a month of rent on a $200,000 asset? Yep. People who call me, that sucks. I'm only getting $100 a month in cash for on. This is a shit deal. Exactly. This is why I'm bringing this up. If you're getting $100 a month in cash flow and you get to raise rents, rents are going up by five to six percent. If you're talking to Black Knight, Kay Schiller, CoreLogic, I'm going to knock that

down to 3%. $1,800. You raise your rents only by 3%. You're only going to see a $56 per month increase in your rent to your tenant. Again, you're not excited about that. Nobody is.

Who is also not excited is your tenant. They're not moving out for $54. They're going to go to dinner with their brother-in-law. The guy's going to stand on the table and pound his chest because he's a badass. He's going to have $54 per month raise on his three-bedroom house

where his brother-in-law is getting a $200. on his apartment. So your tenant feels good. They're going to hold you in better regard. That $54, though, is a 54% increase in your cash flow. 3% increase in your base rent is a double digit increase in your cash flow. Think about what your 5 does for you at a 3%. See that compound?

Here's where it gets sexy. Does the lender get raised the payment on the loan to pay inflation? No. Not at all. They're going to continue to have you pay the exact same dollar. amount. Now, taxes and insurance will go up, but your loan itself will stay the same for 30 years. What's interesting about the dollar's values is declining significantly. Now, I typically, I don't have it with me right now. When I present this on stage, I have an 1888 gold piece. It was minted

for $20. In the early 1900s, you could buy a hat, a suit, a tie, a shirt, a belt, a pair of socks, and a pair of shoes with that $20. Now, if you get a $20 bill, I can't even buy my socks I'm wearing right now with my $20 bill. Well, it's interesting as I could buy everything I just told you, a hand-tailored suit, probably not going to buy a hat, but a shirt, a tie, a belt, a pair of socks, and a pair of shoes for that gold piece. The gold does not become more valuable and the clothing has not become more expensive. The dollar has become worth less. So how does that apply to us here?

Now that applies is when you're paying the bank back on a $160,000 loan to today's interest rates, you'll pay over $400,000 of principal and interest. But when you recalculate the value of the dollars that leads your hands, based upon the inflation, every time you make a payment's worth a little bit less and a little bit less and a little bit less, and a little bit less, you're actually giving back $154,000. You give me back less than what you borrowed. That is why I keep telling everybody, quit paying your mortgage off faster. The faster you pay, the more you actually pay. And if you don't believe me, I got a calculator to do this. I was on a podcast.

It's got to be like five years ago, six years ago. and the professor of accounting at Kennesaw State University heard me talking about this. He arising, what do we really pay? He invited me to come speak to the students, which I did. Then they got together and they built a tool for me to actually calculate this out. Now, I took that tool, I created an act. I think you had a QR code up there, right? We had a QR code, but for some reason it wasn't working for folks.

So those who have an iPhone, you're going to download the QJO investment tool. This is what's going to look like when you download it. QJ. QJO investment tool. You go right to your app store. You will show up and you're going to have this pop up. Four different calculators. Upper right hand corner, you see that question mark.

I'll go to my website. Go here, click on that calculator. What does that one say on then? Just the mortgage amortization calculator. If you're listening and you're not watching, it's the mortgage amortization calculator. And then in the air, we're going to do the numbers I just said. It's going to show down payment percentage you put 20 or just price. You put 200.

Annual interest rate, I'm going to beat this up a little bit. I'm going to say 7.5 for right now because it's a little bit on the higher side. We'll talk about that because some people are doing DSCR loan. So we're going to calculate that puppy out. That means you're going to have a principal and interest of $1118.74. In the upper right hand corner, there's a calendar icon. You click on that and you scroll all the way to 2054. Save and close.

And then you can do, you'll get it to show total payments to date of $422,000. Then it'll show inflation adjusted payments. which are $152,466. You're giving back less money. So, any kind of somebody tells you to pay it off early, your only benefit in the banks, not yourself. What's really crazy about this, how often do you think, Matt,

do people refinance their primary residence? I'm going to guess every four to six years. Dead on. What was it? That was a total guess. I did not know the number. But it's the truth. Every 46 years,

they have convinced people to refinance. They give you a 30-year fix. And then the baking industry has figured out the marketing and a way of be able to convince people to refinance every four to six years. What's your first five years look like on your amortization table on the third of year fixed? Oh, almost nothing. It's all interest. You're not doing anything to the principal. So think about that.

I had a client of mine come to me with a $120,000 mortgage you paid on for 47 months. And I said, okay, you want to do a refinance? How much cash do you want? He goes, oh, none. It's my primary residence. I don't believe it. But if you're going to do a refite, I would advise you to pull cash from reinvested in some place.

Because, nope, nope. You know, my banker and my dad always said when the rates go down to a certain point, refinance. I couldn't convince him otherwise. He had paid, he went to the 48th payment, made the 48th payment. He had paid almost $38,000 in payments on this mortgage. But his balance went down just a little over $6,000. By time we are done with the refinance, out of the cost, at the prepaid interest and everything on top of the loan,

and to put the balance within $102 of the original balance. He had paid $38,000 but ended up at the exact same balance where he'd started out at. If he continued that practice, every four to five years for 20 years, he would have paid over almost $200,000 of principal and interest, but never affected his balance. That's why that's 100% why they convince you to pay it off early and convince you the interest rates of the thing that matters. It doesn't matter.

We just proved to you the rate doesn't matter. You're never really paying it anyway. You've got to get an asset you can keep reasonably rented the entire time. You own it. You can raise rents. And then we'll appreciate at least two and a half percent. And we haven't gotten to the depreciation, right? $200,000 or else is probably worth what?

Let's say $165,000. As far as the depreciable asset itself. Right. So let's do this quick mass, guys. We've got to have $165,000 as a depreciable asset for 27 and a half years. that means you're going to get $6,000 a year and write-offs just in the depreciation. Now, it's not a dollar for dollar. If you're getting a 30% of that, that's another $1,800, it's coming into your pocket as a result, that annually because that.

So we as humans get really influenced by the wrong folks. Just a run-of-the-mill property is going to give you 30% a year. Run-the-mill property. Run-of-the-mill property. Yeah, just barely cash flows. It's a 30% of year. And you divide that into your 50,000? that's another 3% that you're gaining on your money.

3.6%. We already got you at 20.6% on your paying down the mortgage and your appreciation at 2.5. Now you've got another 3.6 that you're getting in return, direct return because of the taxes, almost 25% before cash flow comes into play. Where else are you getting that? Nowhere.

You can map out, reasonably map the damn thing out. Because there's other people who say, well, if I invested here, at this point? Yeah, you've got into Bitcoin at seven bucks. Sure. But it's all these just pying the sky, close your eyes, throw the freaking ball. I hope they catch it in the end zone type of deals. This one is just mapped up for you. You've got to have the right team. Now, you get the right asset in the right neighborhood, and it just gets done. If you don't have a good team, you do not have the people at Epic working with you. You don't have a lender like

myself. I don't tell you all this stuff because I'm trying to sell you on real estate. You're already on this podcast because you get that. I'm telling this stuff because I need to know you to know how I think. If the other lender can have this conversation with you, you should not be working with them. I agree. And then you can take that. Okay,

so that's just one house in a bubble. What if you had two of those? Yeah. What if you rated what you also said, the one caveat to the refi, I mean, what if he just held on to the property for five years and refied the money out and used that money to buy another one?

And now you have two of those houses doing the exact same thing next to each other. I mean, And it gets easier than that when you consider that statement right there, Matt, what people don't think about. It's like, okay, so I pulled all this money on, but I'm going to reinvest it. Your calculations changed significantly because if you pulled the money from one of your assets, your business fueled the expansion of the business, how do you calculate return? You didn't put any money in it. That's not your money. If you pulled that capital, if you pulled out 50,000 and that bought you another home, and they started doing all the calculation we did, it's impossible to calculate because you have nothing invested in it.

The bank's money is invested. The house basically breeding itself, right? It's just compounding. So now you're making, it's impossible to come up with what would have been 20% if it was your money, but now it's not your money. So there is no calculation for it. It's an infinite return. Now it's just a headache of running it, right? But now you have a team that's running it.

Totally. Creating opportunity. You're creating businesses. You have people that have jobs. This is an incalculable thing. If people will just understand what that does. you're not going into debt. The loan itself is the greatest asset in the deal,

and it can compound and grow your business without a single bit of investment from you. So nice talking to smart people. So now if you just look at the asset of real estate itself, specifically the single family house, and you look at the demand supply imbalance that we're dealing with, and it's not improving by any means. I mean, builders are not building at a pace to catch up.

And so with that supply and demand abouts, and then this is not a political statement, but you've just had 12 million people come over the southern border in the last four years. Where are they going to live? That's additional demand. Then you take the corporate demand, that massive consumption. It's like, it's enough with just the people that were born here and in the houses. That's already an imbalance. But now we have more people that weren't born here and you have corporate. You just had Jeff Bezos come out of retirement to start his own single family fund.

In my opinion, there's not a big enough window here. I mean, there's not that big of a window to catch up. There's no time for people sit and get right with it. That's the other thing. There's still opportunity out there. And the longer people sit and wait for the rates to go down or this that's happened or for the election to happen, the less opportunity is going to be available. It's still there.

You still need to be jumping on it. But the window is closing and it is shrinking. Now, one thing that people are speculating about right now is that you have an older generation that is going to give to a point where it could be dying off in larger groups. And I know it's a kind of a macawad thought process that could be part of what happens as far as bringing about some inventory back

to where we can get our hands on it. The builders, I don't think they'll ever catch out. They're not going to catch up. We have too much going on as far as it's inflationary that's going to keep it harder for them to get the materials that they need. Housing is going to me. And for me, that's the benefit to being in housing

is because we're not going to see that massive drop we saw before. We were overbuilding for the demand back up to 2008. Now we can't build enough to meet the demand, even if a lot of people are worried about this, like, what if we have a presidency and he does, is able to somehow deport everybody? Like, we still have it in ballots. It doesn't matter, right? We have still have a massive imbalance. The thing that we're going to do that we're fighting right now is, hey, the only thing we kind of have to even really worry about is if the hedge funds decided to do a massive dump onto the market and do it at a loss. That would be the only thing. And I don't see them doing that not at a loss, but for some reason they did that to thrive prices

down. That would be the only thing that I would imagine to cause any sort of a headache. But if it does happen, here's the thing. Guys, if it does happen, one, you can't wait for that to happen. You can't wait for some miraculous thing to occur, to put you in a position to be better position as a real estate investor. I look at it as being a star football player sitting on the sidelines waiting for the perfect play to get on the highlight reel. What's interesting about that, the only people on the highlight reel are already on the field. So if you're waiting for the perfect time to buy right when the market's right, you better be in it now. Operating, looking, finding deals, ferreting them out, being an active participant on the field, and you

will be there when the highlight reel hits. And you will have accomplished that one time you get the perfect deal, but then you have all the great deals and some good decent deals. But then you have that one or two perfect deals and you're still winning. The problem is people are waiting for the one perfect deal. You'll never hit it if you're not out there. It's rare that I come across someone that's as passionate about it as I am and believes in it the way that I believe in it. I don't see the corporations doing a dump logistically. That's a very difficult thing to do.

It's not like you. You see that manipulation in the crypto world, right? They'll do a massive dump today. Everyone will freak out and then they'll just buy again tomorrow. That's a push of a button. liquidating the houses, I just don't see it happening. And I think they bought for a reason because they know we'll never catch up and people need a roof over their head and they're willing to pay for it.

And they'll pay for it and whatever currency exists. Like if the dollar were to collapse, like, okay, we're going to pay for it in the roubles or whatever. Or they're going to pay for it and goats and chickens, right? They're going to pay for it because they need a place to live. So that'll always be in demand. I think that's the play. You need to have an asset that will demand whatever currency of that time.

If we do have a dump with the dollar, everybody's going to be affected. But the people who hold the assets that others need or want are the ones that will be able to recover and then thrive in those environments. And be able to trade equity in current assets for more assets. Agreed. So what I was going with that is, and I'm saying this because depending on how you're listening to this, you may think, oh, this is just a couple salesmen want you to leverage their services. And I get that. I would totally hear the same thing. And I've heard things like, you know,

you hear the things on the weekend where the guy's selling his sports picks, right? And they're all excited and they're hype. They're talking about it. And it was like, well, yeah, you just want us to give you money to do that. I don't care if you get the money and get your lending from Aaron or if you buy the properties from Mercedes and myself. We couldn't facilitate it all anyway. This is like actually what's happening.

This is the reality of the world. Whether you work with us or not, that's not the issue. It's like I really, this is something I'm very passionate about. That's why I'm in the business I'm in. And I'm not a real estate agent, so I make nothing off of commissions or anything like that. I want people just to feel the sincerity that this is a real authentic message. And you're a good guy, Aaron, and that's why I'm really glad to have you on. And I know you believe it as well.

And I appreciate that. One of the things I sell more than anything outside of the real estate and I don't make any commission off the real estate, off the financing real estate is the infinite banking strategy. And I'm not licensed to make a single dime. I don't make anything. But I've been told that I, I sell more life insurance policies the whole life with the infinite baking strategy than even the licensed real infinite baking guys because I'm so passionate about it.

I think it's the holy grail to get started. I think that's how people should set themselves up and they go into the acquisitions and set up a family trust. I'm not a trust attorney. I don't make any money off that. I've structured all internally. I've built it all from my family. And I share it with everybody openly how we did it and how I'm going to pass us on to the next

generation. I am really worried about the next generation. I have my kids. They're adults. They all live in houses bought by the family trust. I have grandkids now and I'm worried about how are they going to have this. I'm worried about the structure of the world at the time that they become an adult. We don't worry about it now. Somebody doesn't stress about this. That's going to affect massively. I'm not going to let this thing go. I'm jumping up and down, screaming, spitting in the phone all the time. And it doesn't have to come to me. But I do warn people significantly if you're not working with the right people, you will get taken advantage of you. Too often, what you're to your point, oh, it's just a couple sales guys trying to pitch something. I get it. But I'm trying to pitch something to keep you engaged and keep you building something. I don't care about the first deal you do, you close. I don't care about the second or the seventh.

I care about number 12 because of me and Matt were successfully, get you to number 12. You have changed your life and you've changed our lives, really. You've changed my children's lives. That first one, if it doesn't look right, well, I will walk you away for it. I'll give you all the things that you need to know to ask. to walk away on your own. I'm not going to tell you to walk away.

I'll guide you, and you'll come to that conclusion on your own. If you said deal, you shouldn't do. Because if you do a deal number one, it hurts you, you're not going to deal to do two. You have to do five. You're not going to do seven. You sure, she, you need you to do it right. 157, 9, 12, all of them. Anything that hurt you hurts us.

I like it. I never thought of that before. It doesn't really impact me on the first or second deal. It impacts us on deal 12 and 15. and if one, two, and three ain't working for you, we're never going to get to 12 and 15. 100%. In fact, look at the people in our space right now. Think about the realtors that are working right now.

And God bless them, they're working their guts out. And the lenders, people in MySpace, the average lender is doing between one to two transactions a month. And if you're coming to him with a deal, you shouldn't be doing, but you ask him, hey, I'm not sure about this thing. It looks a little rough. What do you think?

You're 50% of his income that month? What do you think he's going to tell you? Everything he possibly can to make you close on that deal. You may be 160. of my income that month. It doesn't mean you're not important to me, but it gives me the ability to look at it through a set of eyes where I'm not concerned about bariting my table.

I'm concerned whether or not you're going to come back for deal number 12. I want people to really wrap their head around that. Often they think, well, Aaron's busy. Why would you even talk to me? Because I'm busy because I have a team that can handle all the nuts and bolts so I can add that conversation. I need to have that conversation with you. I train my team to have that conversation with you.

That's a good point to Eric, good note to end on. Aaron, if people wanted to get in touch with you, first of all, then go get the app. Yep. Q.J.O. Investment tool. It stands for the quit jerking off investment tool because that's what people are doing when they're running around looking for interest rates.

I like it. You can also just go to Aaron Chapman.com. And if for some reason it doesn't pop up, just Google me. There's only one bearded redneck lender out there. I mean Aaron Chapman. This is true. Awesome.

Appreciate you, brother. Let's stay in touch. We'll do it again. I'm coming back because I've got to launch my book, so I'm coming back to preach it. You got it. Thank you. Take it.

And that. wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for a boy, we got cash low. This podcast is a part of the C-suite Radio Network. For more top

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