The Iced Coffee Hour - Just Got Margin Called (Not Clickbait)

Episode Date: May 12, 2022

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Welcome back to the iced coffee hour. I got margin called. No, you did. No, you did not. Yeah, I did. What? Yeah. No, I don't believe you.

How much margin? I don't believe Jack. I don't believe Jack. I don't believe Jack. I don't think he got. No, I don't think so. No, I did. Yeah, I don't hold on to Robin Hood anymore.

I don't believe you. Wait, you're joking. You're joking. I'm not believing. I think Jack is joking. Believe me, man. What would people say? It's just like, you work with me.

And they're like, oh, yeah. Graham's co-host got margin called. I mean, how does it? I mean, I also have margin. What are you guys doing? You guys are messing with it. I know you're messing with it. I think you're messing with it.

So here's what happened, basically. I opened up a Robin Hood account. I have an M1 account. I have a Vanguard account. Those are what I use predominantly for index fund investing, which when I first was getting started was like 85 to 90% of my portfolio. I invested a thing it was,

I think it was $20,000 principal in my Robin Hood account. When I was like, you know what, I want to try trading out random stocks and like selling options and doing all of that like crazy stuff, right? Selling options, I still stand by. It's not crazy. But I wanted to do options in like individual stocks and stuff like that. And I grew that account very fast with like dogecoin selling options. And the market was very, it was in a bull run.

And I was doing really well off of that. And I brought it all the way up to $75,000, the $20,000 in probably a year or so time. Now, this is where I'm not. genius jack i know i know right this is where i messed up uh that's 70 000 or whatever i had not used margin yet and i was like you know what you know this is a good idea why not use margin if i'm picking out the stocks that have brought me to 75 000 just to put a little bit more in them so i decided to do that one of them was robin hood which famously graham told me not to invest in my And I bought it.

And then it plummeted. So I went in on margin and I bought some Robin Hood stock. And then the market started going down and it continued to go down. And yeah, I got margin called. Because of Robin Hood? Because of Robin Hood? All of your Robin Hood? Yeah, Robin Hood's gone.

Oh, wait, all of it? Yeah. Yes. Yes. We got to buy in right now. And I saved 500 bucks. Jack, I was willing to pay. For those who don't know, here's the bag story.

I was at the gym. How are you happy, man? Because you finally sold. Because you finally sold Robin Hood. I had been on you for months to sell Robin Hood stock. Yeah. Since it was like $30, I'm like sell. $20 sell.

$17, I offered you $500 to sell Robin Hood $17. I'd pay you. And then last night I said, how about this? I'll pay you another $500 right now to sell your Robin Hood stock. Maybe he didn't take it because he knew. He couldn't sell. No. Because he was already margin call.

No, you would have been margin called today because Robin Hood was down another 6%. Anyways, I got margin called and, you know, it is what it is. I'm fine with it because in the beginning it started out as plain money. It grew to a really sizable amount. So yeah, I was dumb by not selling like when I was at 30, 40, 50, 60, 70, whatever account value. But I just kind of held. I decided to diamond hands and hodle.

But if you think you're the exception, guess what? You're probably not. Just like I thought I was. Wait, why are you saying that? Just because you can't do it? Other people can't do it? Probably not. You're saying you're the pinnacle investor?

No, I'm saying because I couldn't do it. You know what? You know what the scariest part is when I had the monkey pick random stocks and the monkey made 40% in a year? That's a sign that like, hey, guys, maybe we should go to that. A monkey. Picking stocks out of a container. I mean, that's what we're dealing with here. And everyone's an expert.

When you look at the amount of finance channels that popped up in 2020 and everybody was Oh, I'm playing this and playing. Everyone's making money. Every day I'm becoming more and more like Dave Ramsey. When we listened to him speak the other day, he came to Las Vegas and did the- Tell people about that. Yeah. So he came to Las Vegas and I confronted Dave Ramsey in person.

Yeah. I confronted him. It's really nice. Really nice guy. Really nice guy. But he gave this incredible speech or he was talking for basically an hour. And when he came on stage, I was like mesmerized. Just like, first of all, I'm starstruck.

I'm like, that's him. Like, he's right there. I'll show the footage right here. Yeah, yeah. I was blown away. Like, that's him. But he's better in person on stage than he is in his videos. No comparison at all.

But in the video, or sorry, on stage, he brought up these props. And he talked about like the tulip mania and just like all the bubbles along the way. Like the California Gold Rush. The Gold Rush. Yeah, that was really interesting. Real estate, tech stocks. He covered everything. And, um, he covered.

People get excited over these fads, right? And they think that they're the exception. NFTs. You think that you can make a lot of money. And some people do. And that's the loud minority. And then other people, they limp in, they think that they're good. They think they're qualified.

Beanie babies, too. Beanie babies. That's another one. And then you get burned like I did on margin. Yeah. But his thing was that you're never the exception. This time is never different. And it's the same thing repeating itself over and over and over again.

And it will eventually crash to zero. or the market will always go back to the mean and we'll continue on. So you have, you know, the market trending upwards, but you have a lot of that in between. And I think 2020 was that in between. I mean, so I think it just goes to show index funds. It does. It's like the same buy and hold strategy. And that's why it bothers me, though.

Now I'm finally feeling good about it because for the last, throughout 2020, 2020, everyone is like, Graham, you say the same things every video, the same thing, just buy and hold buy and hold index funds and uh because it's become a joke now what do you do and when the greatest wealth transfer is coming buy and hold an index fund i mean even that's it even we joke about it i know like let me guess the ending of the videogram buy and hold index funds you know yeah but it's the truth and it works so what what happened what what did so you started what i got on margin i bought a bunch of apple stock because i was like it's apple it'll be fine and it was But what wasn't fun was my Robin Hood stock, my Palantir stock, which I went so heavy on, unfortunately.

But I was making a lot of money on it. That's the thing. I was making so much money. I'm like, you know what? I have access to all of this margin. May as well just put it back into all this stuff. And then everything plummeted. So what's your portfolio account at now?

Take a guess. Well, okay. I'll give you, I'll give you, you say one number and I'll tell you over or under and I will give you one answer. Well, you started with 25. Did we each get a number? Yep. And its peak was 75.

75. Okay. 45. Graham? I'm going to say 18. Under. Wow. Yeah.

Are you, it was, wow. Are you joking? No, pure obliteration in my portfolio. Fortunately, fortunately, that was still, like I said,

a minority of my investments. Vast majority in index funds, Roth IRA. Just the drop in the book. Haven't you learned anything? I feel like we've spent so much time together that you would know.

But all of my losses were basically unrealized game. It's not like it was actual profit. I'd never sold anything. But you started your account at 25. Yeah. So I had a little bit of obviously principle that I lost, yeah.

That's the good thing with Dave Ramsey I will say is everything he says won't get anyone in trouble. Like no one could ever be like, oh, I paid off my mortgage early and then I lost it. So it'll never come back to bite Dave Ramsey. Even though he's overly safe,

he'll never get in trouble by saying that advice. I think it's so funny when we were watching him, and he just takes time to pause, and he just chuckles, like about something. Oh, yeah. Yeah,

like people on this Robin Hood. No, no, yeah. It was a longer pause. The cryptocurrency. But you know what? He commanded the room. He commanded the room. The room was silent when he went up there.

Yeah. Really, I liked it a lot. I'd actually go back and watch him again. At first, I went into a thing, oh, this, this is going to be silly.

And then listening to him, like, this is really good. You know what's funny? I'm feeling I'm learning stuff. We, so Graham got invited. He didn't mention this, but you got invited by one of the people on Dave Ramsey's George. George. Yeah.

So we, not for anything like entitlement wise, but like Graham kind of assumed maybe there was some backstage or like there's a backstage thing. No, it was a meet and greet. And we like, we like, we're at the end of the lines. No, we're at the end of the lines. It's still cool. No, we were at the end of the lines. We were at the far back end of the, of the, whatever you call it, the auditorium.

Was that the first meet and greet you've ever been to? Have you been to another? I've never been to a meeting greet. So your only meet and greet was to meet Dave Ram. Yeah. That's cool. But it was funny because we showed up and Graham's like, I wonder if he'll recognize me. Like I feel like, like Graham and I were like, yeah, probably will recognize you just

because you're, you're so successful in the space. Didn't look like he recognized you at all. I don't think so. I mean, in his defense, a lot of people are coming through. Maybe he could have, but didn't want to like. you know, on stage. Or sometimes you're like, there's so many people coming in that, like, you just look at them halfway.

Like, you're, like, you're basically like tunnel vision and they're like, oh, like, come this way and then the camera and then, you know, that also could be it. But he also is probably not on YouTube. So honestly, I wouldn't be shocked if he didn't recognize you. I have, I'm like 80% sure, didn't recognize me. But the weird thing is he did comment. But then again, someone else could have access to his YouTube account because he did comment on one of our videos.

Yeah, I don't think that's Dave Ramsey going on. Realistically, he probably has an entire team. Not a bad idea. By the way, taking care of his YouTube account and doing all that stuff. And he just shows up and people are like, we're going to have people call in and you're going to talk to him or just discuss this financial event. And he does. Yeah. So I like him a lot.

Yeah. I was great. I like Dave Ramsey. But first, I want to thank our sponsor, Grammarly. Being a creator is exhausting writing scripts, emails and text messages. It's just really time consuming. Yes. But thankfully, we have Gramerly.

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Thank you so much, Graham, really, and back to the podcast. Back to the podcast. What are you doing tomorrow, Graham? Flying to Tampa. Why are you flying to Tampa? Why am I, I got the fight? I'm going to be so happy to get it over with.

Dude, what are your thoughts right now? You're about to fight one of the largest tech creators, Michael Reeves. He's your same height, same weight. No, we're not the same. same weight. So, uh, Ian sent me in Texas morning, said Michael waited in at 120. What do you weigh? What are you? What are you?

What are you? That's good for you though. That's good for you. I don't know if, I don't know how it works. Because I know there are different weight classes from like 120, 125, 125, 135, 1.30. You don't know what the ranges? I told Ian, I'm, I, I'm ranging between 125 and 130. I always have. He's like, don't worry. That'll be fine. And so I don't know if I have to get down

to 125 to be in his weight range. I sent it to Ian. He's like, oh, no worries. We'll tell him to drink some more shakes or something like that so drink some more shakes yeah i wouldn't worry too much about it if yeah if anything since you guys are at the at the lightweight it's easier for him to come up probably like a pound or two yeah uh probably that's my guess graham what what do what do you think are the chances you win versus him you know what sucks man is i had a actually like a i don't want to say a deep talk with with macy last night but i feel like i've put myself down so often with this that i've mentally just kind of screwed myself on the fight i i got way too in my head once i started watching videos of him boxing, I constantly just like put myself down. I'm not training

enough. I'm not good enough. And I worry that's going to come through in the fight in just the way. Because anyone who succeeds, stuff like that, they never think of that stuff. They're always just like, no, I'm just going to do it. And you had that confidence that makes you do it. And I'm worried at this point. I have not. But you know what? I saw a huge spark once you did sparring with somebody you did not know. And even more when you told me you got a bloody nose. Because here's the thing. This is a person that you do not know that you were sparring. I saw that you kind of had more of an uplift. And I agree.

I know what you mean. You put yourself down a little bit. But after that, I think I saw your confidence go up significant. I'm more confident after that. But it's easier for me to fight somebody I didn't know because I don't feel as bad. Oh, his name is Brian, by the way. We're fought. But I don't feel as bad hurting Brian because I just recently met him.

I like him. but if I hurt him, let's just say, it's not like I've known him for years, or it's in front of all these people who are fans of Brian. If I do something to Michael Reeves, you know, I don't want to... I think he would think it's cool.

Like, I just hate hurting anybody, you know? I honestly, I told my mom this, because she's like, how do you think he's going to do? And I'm like, I think I'll do well, but the one thing, it's hard for me to wrap my head around is picturing this in my mind. Graham and Michael in the ring Michael let's say just got hit in the face or something

Or he kind of slipped Dropped his hand for a second And he has his eyes and he's looking at Graham And he's kind of like dazed maybe And Graham going and just hitting him in the I could never picture But I have to do that I know you are such a softy

And I mean that and the most positive way That's true you are A very positive way Because I admire that because I'm a softy too Yeah so That's what I worry about But also it's it's So I have to overcome two things

hurting somebody else and believing that I could do it. And it's just tough. One thing that Ian said when we had him on the podcast was that what you could do, since it's five rounds, is you could struggle through three. And then on that fourth round, just decide that, hey, I'm going to go in. I'm going to attack. I'm going to be offensive. And I'm going to really get in there and do my best.

And then you could completely change it around in one round. Right? Just because the first three rounds have been bad for you, doesn't mean the fourth one has to be. And I feel like that that could apply to the first. the second, the third, the fourth, the fifth round, and just your overall mentality. It's like just because you've thought that for a while doesn't mean you could just, you know, switch around.

It will be hard. Maybe, I mean, we'll see. So what do you do if you win? What do you do if you lose? What does it change anything? I would probably have some regrets if I lost only because I probably could have pushed myself further, harder.

Does that mean you would be considering getting in the ring again? No. It's a one-off, one-off thing. So either way. Either way. If I win, it would be incredible. But then I feel bad winning at the expense of Michael, you know? How do you think he feels?

I honestly, I think Michael is just having fun. I don't think he's thinking this throw. I think he's just doing it. And that's what worries me. So why can't you do the same? Yeah, why can't you do the same, man? I don't know. Power through it.

I don't know. Because here's the thing. Realistically, let's say you hit Michael a little bit too hard. Gave him a bloody nose. I feel like he, I feel like afterwards, you've got such a good shot. After I met Michael, like, I feel like that's his personality. And he knows it's all my friend. And I would do, I would say the same thing to him.

I mean, Brian hit me right in the face, right in the jaw. He got one like this. And after I was like, man, good, good one. You know, but. Yeah. I mean, you know, it's about respect. And as long as you guys both respect each other, why not try your artist.

Okay. I know. Part of me wants to get, what is it called, like, like hypnosis? And like, just pay someone to, like, put me under and then hypnotize me to, Have you been hypnotized before? No. I have. Does that actually work?

I think, I think, yeah. I've never looked into the, to the science behind it, but I'll be honest. I'm a, I've looked into a specific types of hypnosis when I used to do magic, but that's very different than like hypnotherapy or whatever they call it. So I don't know. I'm pretty skeptical on it. But tell me about your experience. Yeah, my experience with hypnosis.

So I went to the state fair. I think I was probably 17 or 18 at the time. State fair. Yeah. And they would have, they would have these people that would come up and. perform on this like, I don't know, this platform, get an audience and everything. And then like every night at APM, they'd have like the hypnotist. And if you go in the audience and you're lucky, they pick you out of the audience to participate in her act, right? So I was one of 40 people or 30 people

that she brought up on the stage. And we all sat on these chairs. She started doing this weird, I don't know if she actually did that. I don't remember. It was like six years ago. But she started like talking in a very quiet and monotone tone. And she was like, oh, you're feeling very sleepy. She gets your heart rate down a lot. And then she walks. to everybody that's lined up in these chairs on the stage, and she grabs your arm and then drops it. And that's how she can tell if you are hypnotized or not. Because like some people leave their arm up there,

and it's like clear, okay, you're not hypnotized if you leave your arm up there. Or if you like bring it down really hard yourself, or if she sees movement, she wants to see like a very relaxed fall of your arm, basically, to see if you're hypnotized. Apparently I was hypnotized because she kept me up on the stage. She sent probably the other half down.

And then she instructed me to dance with someone. And I usually would have a little bit of trouble doing that just because it's in front of an audience and maybe I'll get a little nervous or something like that. But it was very easy when I was hypnotized. Hypnotized. They basically make you not care what anybody thinks. And it's not necessarily control. I feel like I could have not obeyed what she had told me to do. But I was in such an easygoing mental state that it was like, why not?

Why not do what she told me to do? And that was my experience with it. It's like she wasn't directly controlling me. but also she wasn't like not controlling me at all because I did what she said. I heard, yeah, I heard with that kind of stuff, you would never do something that you wouldn't normally be a, like if you were against something that you wouldn't do it even if you're at. I probably there were certain things if she had she requested me to do them. I could have, like, take off your shirt or. Yeah, I could have rejected that.

I wouldn't have rejected that. Maybe it works. Maybe. Yeah. But, hey, yeah. You're worth looking into maybe. I don't know. Graham

Are you doing okay man You just seem really stressed out of it No just because we're talking about the boxing That's all okay I know also this This recent drop in the stock market Has been affecting you a little bit In your portfolio

Because you told us Yeah what It's like I may have lost you know 60 grand or whatever But at the same time How much did Were you down of realized Or unrealized gain?

Probably one and a half million Oh my God From the peak, though. And you said at that point, when you were down $1.5 million, you were up $50,000 of unrealized game, right? From when you started investing. Yeah, because I had dollar, I basically started upping since about a year ago. Maybe a little over a year ago.

Oh, so it was way. Yeah, yeah. So because I was making a little bit more, I started investing heavier. Just on a regular basis. But obviously, you're buying all the way up and then buying all the way back down. So, yeah, negative like three. Your negative 300 grand. No.

So your overall experience with stock market investing is you would have been better off holding it in cash. It's hard to say because they have certain tax lots that are positive and certain are negative. So it's hard to say like if you pointed right now and said that, you could always look in hindsight and say I would be better off doing that or this. But I'm not bothered by it. I think right now I'm down like 2%, 3%, 4. I mean, somewhere, which in the big picture, it's not... You did the right thing technically. I mean, you dollar cost average in a broad index funds.

There's nothing wrong with that. Yeah. Oh, the other negative was that I sold off a good chunk in December to tax loss harvest. So I sold that, and then I put that chunk into the S&P on January 2nd, 3rd. It was after the new year. Yeah. Got it. Because I didn't want to hold too much cash.

Because that was probably an individual. stocks, which plummeted a lot more than S&P. Yeah, that's true. But, yeah. Yeah. And what is this all taught you? All of this crazy market, turbulence and everything. The same, it's just reinforced.

That is the same ideology. Yeah. I think if anything, real estate feels better because you don't see the fluctuations. So if there is a loss, it doesn't really matter as long as the property. It doesn't affect your actions. Correct. It's harder to sell and it prevents that impulsive decision. It'll be like, oh, I'm going to click a button and sell.

It's a lot of easier with stocks. So with real estate, when you're renting them, out, it doesn't really matter. So I wasn't going to sell anyway. So as long as they're rented, it's fine. How about you, Alex? How has this changed your perspective? Well, it's the entire market.

Yeah. Honestly, it hasn't really changed my perspective. I literally just invest into the S&B 500. That's it. But I mentioned yesterday on millennial money. I'm at a point where I'm considering pulling out some money just because we're looking to buy a house within the next year and a half to two years. But I'm going to wait.

wait till we kind of have a set time and then we'll make the decision then. So just because even though I would be pulling out, I wouldn't say like a loss, but like, you know, we're down. Yeah. It's still better for me to have that money and know that that it's there for the down payment for all the fees and just be safe rather than to leave it into the market. That makes sense. Yeah.

So, yeah, other than that, no, not really changing anything. I haven't bought any individual stocks and probably, well, huge, I should say huge amounts of big stocks. And it's like, I bought Netflix and I got pummeled with Netflix. Netflix is, but I'm holding. I'm holding. Yeah. What can you do?

Now is the easy part. I'm going to say, like this is the not worry part. Imagine if it's another 50% down from here. I can't imagine. 40% down. I don't have any individual stocks anymore. I know, but even. Are you kidding?

No, you're kidding. I sold everything put it in. But even index funds, Jack, let's just say it goes down another 40% for right now. There's nothing that says we can't hit $2,800. I'm building up a cash position right now, and I'm not investing it yet. I know I could continue averaging as the stock market's going down,

but I would way rather just hold it in cash right now. That's it. I didn't sell stock and hold it in cash. I'm leaving all of my invested money invested, but my income, I'm just building cash. I'm considering building up a higher cash position as well. I have right now about four months of emergency fund, but I'm considering building that out to six. Just because I want to be like, I don't know, with the way the last week has been my life has been a little bit crazy.

I had a pet passaway and stuff like that. And I don't know. Like, I just, I feel like there's a bigger sense of me to just prepare for like the unexpected, you know, because you don't expect stuff like that. And part of me feels like I should build it off to six. But realistically, between four and six, what do you guys think? Do you think that really makes a difference to build up an emergency fund? I was going to say you should have 10K. But before we go to that, we got to thank our sponsor Ladder.

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the podcast. You know what we do a lot on this podcast? What? Talk about my unfortunate misadventures or whatever. Oh, you're dating life? With girls. Yeah. And I think it's time to flip the script.

And talk about you guys. Because I know that your current significant others aren't necessarily the first ones that you've had, right? Right. Actually, no comment. I don't know. No comment. So you don't want to open up about this stuff.

However, it's expected that I do. Because you're, if you're dating, that's why. No, I'll talk a gram. I think it's fair. It's fair. What do you want to know? How many girlfriends have you have? Wow, this is spicy.

Zero to ten. Zero to ten. Zero to ten. So nine? So like nine and a half? Zero to ten. Okay. When did you have your first girlfriend?

17. And why did you like about her? Oh, God. I mean, a lot of things. She was great. Really nice. Same interests. Very smart.

She's very book smart. Like straight A student. I was not. So. What do you think she liked in you? Oh, man. I was a, I was in the band.

I was in the band. I was in the band. Like a band or like a rock band? A rock band. I was in the band, a school band. Oh. What were you doing in the rock band?

The band. I played the drums. And you thought that was attractive to her? Yeah. So we, yeah, we met. Did she go to your shows? She did.

Yeah. And how did you ask her out? Oh, oh, you know what? This is actually how it came to be. I actually, that's a funny story. We all went to a friend's house and I, they were trying to set me up with this, this other friend.

Her name was Olivia. And they were trying to set me up with her and I went on one date with Olivia so far. And I don't think she liked me at all. And I took her to the cheesecake factory. No, it's something cheap, man. I brought my own drink to pour in the water and we split something. We had this thing where we'd go to the cheesecake factory and split the nachos.

So we'd leave at like $12 or something. It was really cheap. So we did that. I don't think she liked me at all. And then this was the second day we were having like a whole bunch of friends over for a movie night. And Olivia came. And we just were not hitting it off. Or I was just like kind of into her, but I don't think she was into me at all.

And anyway, we were all in a group, and I had on that, like, the flip phone back then, my screen, like the background of the screen was a lotus. It was a yellow lotus. And I flipped it up. And then the other girl said, wait a second, is that a lotus? I'm like, you. I'm like, yeah, it's a load. She's like, oh, that's my favorite car. I'm like, you know lotus?

And we started talking. And then I just basically went from Olivia to the, who became my girlfriend. And how did you ask her out? How long did you know her before asking her out? I don't think I ever asked her out. So it was just kind of a gradual. Yeah, yeah. Well, what happened?

I left something at the house. And then she said, oh, well, we could just meet up tomorrow and I'll give it to you then. Was it her house? No, no, it was a friend house. But she was, yeah, she was spending the night there. And she's like, oh, we could just meet up tomorrow. And how long did you guys date for? A year and a half, I think.

Wow. So, you know. Almost two years. A year and a half. And what led to the end of it? Oh, man. Multiple things. First of all, I got really into real estate.

And I just became, I was, I was just like, very narrow-minded, very, like, just shallow when it came to stuff. Like, when I started going to real estate, it just created this huge separation between, like, what I was used to and, like, heist. Because she was a year below me. And so she was in high school. school when I started doing real estate. And once I got in that whole like working phase,

I could, I just like, I couldn't relate to the high school mentality. I totally get that. Like, I couldn't do it. And so she'd want to go and like, and nothing bad, but like hang out with her friends on a Friday night or a Saturday. And we, we were all like in the same friend group. But I would go there and I would just be like miserable hanging out with her friends. And they were the same.

But I was the one that had changed. And I just go there and be like, this is so stupid. Why are they talking about this? None of this stuff matters. And I was just like, I was so used to everyone else like in real estate. You wouldn't tell her that, though, that you weren't having fun? I think I did. I probably made her life hell.

No, yeah, I probably put her in some really bad positions. Normal stuff that I just, I couldn't get into and I couldn't fake it. And she could tell that I was not having a good time. And I think it put her in a bad position because, like, her friends could also tell, I don't want to be there. And then, you know, I think a lot of times it was like, I just want to leave, let's go. And it's like, that's terrible. You would say that to her? I think so.

I told you, man. I told you. But, you know, I'm pretty sure I did. Or I would be like, okay, well, what time can we leave? How about we leave it this time? And it was bad. It was bad. Yeah, so anyway.

But then when she was going off to call her. I think there was something that she went to that, or you know what it was? She went off to, she invited me to go with her and some friends to like something. And I said I didn't want to go. That was it. You just told her you didn't want to go? I would say, oh, you asked why?

I'd just say, no, you're going to have, I think in my mind, I'm like, she'll have fun with her friends and stuff like that. Like, I don't need to be there. But I didn't want to be there. And I thought, you know, oh, she'll have a good, good time on her own. But I think she wanted me there. And, yeah, then after that, we had the talk. Did you tie?

Oh, it's, um, afterwards I did. I think during it, I was just kind of like, kind of like in disbelief a little bit, be like, no, uh-uh, like she'll come back or she'll change your mind in a day. She instigated the breakup. Yeah, she did. Yeah. Have you ever broken up with any of your girlfriends or have you only been broken up with? Yeah, yeah, that was mine.

That was my only breakup. Wow. And then you went full real estate grind mode. Then I went real estate. I mean, that worked out. Worked out. So in the end, like, you know, I made so many mistakes with that that, like, I won't repeat the same mistakes.

I try not to. How did you speak to her any time in the last, like, five years? Maybe five years ago, four years ago. Probably. It would have been at least like probably five, four years ago or something like that. Yeah, but not like spoken. And I think this was just like over Facebook. Yeah.

I think it was just, oh, you know what? She got married. And I think I just, I sent her. And this was just like a genuine like, hey, because we had so many mutual friends that it would come up on my Facebook feed. I just said, you know, hey, hope all is well. I just want to say congratulations. Hope you're doing it.

Just an innocent sort of thing. And she responded back. Oh, thanks, you know, blah, blah. And that was it. Good. Oh. But yeah. So.

Yeah. I didn't expect that. All right. Neither did I. Alex. So I want to know about your first girlfriend. My first girlfriend? Like your first more serious one.

Okay. So I've only had one serious girlfriend other than my wife. And that was in high school. Okay. So I dated this girl for six months. And what do you like about her? She was into like nerdy stuff like me. Like we both like Harry Potter.

We both liked, you know, like video game. So it was similar interests. She probably liked the same thing about you? Yeah, exactly. We were in high school. And I just think we got into like, Like, it's so weird to explain, but we got into like the same routine. Like, like, literally, like, after high school, I would go to her place.

Just hang out till whatever, nine. And I'd go home. And that was life? That was life. And you guys didn't like that you were stuck in a rut, that there was no progression of the relationship, or maybe it caused you to, like, live very still lives? I don't know. It was really weird.

So she broke up with me, but it was really weird because, um, There were no, I'm a really easygoing person. There were no like problems. But it, for me, it was like all of a sudden. Like, like we came home on the bus because we're in high school. And like she just looked off and then we got to her house. And then, you know, we had the talk. And it was just very odd because like the week before, everything was normal.

It was like super odd. Super odd. Yeah. I, to be honest, I don't even know. Were you heartbroken? Oh, yeah, I cried so much. Yeah, my parents picked me. I had to call my parents to pick me.

I wish she told me before we took the bus home. She was probably just nervous. She broke up with me and I was heartbroken. And then I met Kelsey about probably a year and a half later in another high school because I moved. And Kelsey actually was the one who came on to me, which if you guys don't know, Kelsey is my wife now. And I did not date Kelsey because. I was a, I could not relate to anybody in high school, like, kind of like how Graham was saying, I was running my wedding business when I was like 16 and everybody was making plans to go to college. And I'm like, why am I going to get into a relationship now?

I'm working on building this business. Like, what if I develop feelings for this girl? And then she goes to California. Like, I'm like, so I told Kelsey in high school, I was like, I can't. You rejected her. Yeah, basically. And she would always ask like I felt so terrible because like she'd always ask like why and I'm just like I'm not in the like she thought it was her and I'm like it's not you. I'm just like in my head space like I'm not in the right head space to be dating.

And I'm so glad I did that because I mean you never know right. Like what if we dated in high school and then we broke up or whatever? And so yeah we I reconnected with her later and she became my wife. That's crazy. But there was an air in my life where I was like, Jack, a single, you know, going on casual dates and stuff. I wouldn't say that. What would you call them, yeah, what did you call them?

Rendez views. Rendez views. No, I don't really just. Hanging out in the hot tub with your roommate. Yeah, I hang out in the hot tub with my roommates. Yeah. No, I don't really go on. But I learned magic.

Yeah, and I'm sure that attracted like all. That was like, dude, I thought it was the nerdiest thing. Alex learns magic. Yeah. Dude, no, it was, it was, I, when I, when I learned magic, first of all, people thought it was stupid. And then, like, once you learn, like, cool stuff, then you immediately, like, everybody goes up to you, like, oh, could you do the thing? Like, I'm like, like, okay. And, yeah, I did take, I picked up this girl at the mall.

I was like, hey, like, you're really cute. You picked her up at the mall. Yeah, I was like, what time? Yes, I was like, hey, I was like, what time is your shift over? She said, like, 8 p.m. And I was like, okay, I'll be back here at 8 p.m. And I went and I picked her. you up and then we went on this day i knew nothing about it was fun and then uh then she even told

me uh she had two kids and we were like 19 or something yeah or something or 18 i forgot how old i was yeah and uh i was like oh like that's okay and then i took her on the second date and i took her and a kid's out it was like how old were you i was like 18 19 and she was the i bet they love the magic tricks and then i think she just wanted you to perform i didn't do that The magic tricks. No, but then, you know, after like going out, you know, on a date and she had a kids and stuff, like, she was nice. But, like, I was just that we were in completely different phases in my life. Yeah.

Yeah. So this is Jay Bay. He's a part of the private mentorship group that we host. And I just developed a relationship with him over the two years he's been in the group. And he is very smart in real estate investing, stock market investing, so much. And he was such an outlier in the group that we decided to have him on because he was in Vegas. And he's going to tell a couple crazy tenant stories because he has some really good ones. So let's just hear about this shenanigans that he's at with his tenants.

And yeah, cool, good to meet you. All right. So tell us the story. I'm curious. I'm really curious. I know nothing going into this. By the way. Graham knows nothing.

I know most of it. And it's wild. Yeah. So those are documented pretty well on my channel. I've had a few properties completely destroyed, which I think that would suggest that my screening process needs some work. But I'm learning, getting better. You think that's the solution? I mean, kind of.

I mean, I want to own responsibility for selecting the wrong tenant, of course. But sometimes you really just don't know, especially when you're renting to a Section 8 tenant. And my first inclination when I started investing in real estate was I got to do Section 8. And I think one of the things that drew me to Section 8 is that when you're first starting out, you don't really know how to do the analysis. You don't know if the numbers are going to work. you're thinking, I don't know how much rent I can get for this property, but I'm going to sign a mortgage, and I know I'm going to pay X amount of dollars. I'm really not sure if I'm going to get that much rent.

But with Section 8, they'll tell you how much you're going to get paid. It's right on their website, the payment standards. So then I was able to say, oh, I can get this, and it's going to cost me this. This is great. I feel confident. And it kind of let me feel good about signing these big stacks of mortgage papers. But when you get into Section 8, renting to Section 8 tenants, it's tricky because they're, there are good tenants and there's bad tenants, of course, like any market.

But it's a little bit more difficult to find the good Section 8 tenants. And I think because the things you would normally look for in a good tenant, you're not going to find within the Section 8 applicant. Because if they had like a great job and tons of money and a great credit score, they probably wouldn't need assistance in the first place. So you're down to like, oh, well, pretty good. that bad of an application, but you have to kind of go with your gut. And I've had a couple of people where I was like, I felt really good about them. They were nice people. Everything seemed well.

And then, nope, they destroyed my property, like really badly. What they do? I had one tenant that was living there prior to the pandemic. And then when the pandemic happened, I didn't do the inspections. So normally I do like several inspections a year to see how things are going. And Section 8 actually requires an inspection. But during the pandemic, they just said, do a self-inspection, which means you call the tenant essentially and say anything wrong. How are the smoke detectors? There's a little list and they just answer verbally. And then you're like, okay, all good. So I did that. Nothing was reported. And then the following year came, I'm like, okay, time to do an in-person inspection again. And I show up. And oh my God, so much damage. The place was destroyed.

there was the front door had been kicked in the door jam was broken the bathroom had a flood that was completely destroyed the vanity and flooded the floor there the kitchen was it's just it's hard to explain you would have to see it it was just so much waste committed on the property unbelievable amount of damage and the tricky part about it is with section 8 they'll they'll do some weird things to you like there are certain things that are considered uninhabitable and you have to get them fixed right away so they picked out a bunch of stuff after this inspection and they said you have 24 hours to get this fixed I'm like 24 hours so there was like six plumbing problems and none of the drains worked the front door didn't close and they tell me this and they oh and the funny part is

they mail like snail mail the list of things you need to fix. fix. But they told me on the phone I had 24 hours to fix it. I'm the only one not figuring out the problem here. I'm going to find out in three days that I had 24 hours to fix X amount of things. So anyway, they finally email me the list. And by this time, it's already like seven o'clock at night. And I'm looking at this going, oh my God, I have to, I need like so many people over here working. So luckily by this time, I had already made pretty good connections. I know like a lot have contractors and plumbers and various people. And I'm always really good to my people, by the way.

And this is a good reason why. Like whenever somebody does work for me, they're like, oh, it's $200. I'll give them $300, just more than they ask for all the time. And in this particular example, making good acquaintances because I treat people well, came back to help me because I had to call people after hours. And I'm like, you're not going to believe this, but I need all these things fixed by tomorrow. Like, really? So they come over.

I had two contractors and two different plumbers, so four people working. And we were there to like 12.30 or 1 o'clock in the morning. And we finally got all the things fixed on this list. And so that was just the urgent stuff. But then the inspection team says, all right, there's a bunch of other stuff you have to fix by you got 30 days or whatever.

Yeah, it was 30 days. And if you don't fix it, the property is going to be abated. and they sent me this sheet. And abatement is a situation where you're not going to get paid the Section 8 payment anymore, and you cannot collect the rent from the tenant for the portion of the missing rent. So essentially the tenant gets to live there free if you don't fix these things. It's just the most unbelievable situation.

So I'm thinking the tenant destroyed my property, and if I don't fix it within 30 days, the tenant gets to live there free. And here's the thing too. It's like, of course I want to fix the property. I don't want to have a garbage property or be a slumlord. But this particular tenant already destroyed it once. Why would I want to spend thousands and thousands of dollars fixing all this damage

when they could potentially destroy it again? And some of the requests seemed really unreasonable too, like too many weeds in the backyard. Well, they're in the least responsible for the land. I didn't cause the weeds to be there. Why am I, why do I have to fix that? And that was the situation I was in. So I fixed all these things anyway. And then this inspector came over and still failed me.

It was just like, I don't know what's going on. So the property got abated. But luckily I was able to evict the tenant because I was working on a side channel with a lawyer to get the tenant out. And it worked. Otherwise, I would have been screwed. Yeah. Yeah, now I had a buddy who had a whole building of Section 8.

I think it was nine units in Los Angeles. All of them were Section 8, and it had been nothing but problems. He wouldn't originally think the same thing as you that it was going to be guaranteed. They were all there. 95% of the rent came from the government and didn't have to worry about it. But my gosh, the problems that he had with that building. I mean, yes, the rent got paid. But he would receive calls every few weeks about incidents at the property.

there were like drug deals going on at the property there's a whole bunch of like illegal stuff gone on at the property a lot of infestations for bugs because one tenant there in particular was a hoarder and so section 8 would come remove it he would fix it but then a month later the same issue would come and then there'd be cockroaches everywhere from the one unit

yeah he ended up selling it I had this exact same problem. Yeah. Cockroaches everywhere. And it's not just a sanitation thing, but cockroaches can destroy stuff. They piled up in the stove, for example, in such masses that they leave droppings and, like, poop. And they filled up this stove, and it didn't work anymore. And I sent a repair man, like, because it was a pretty new, like, range.

I'm like, I don't know why it would be broken. So I sent a repair man, and he got there, and he took a picture. He's like, I can't fix this. This thing's ruined. Wow. Cockroaches everywhere. And what do you do? It's like...

Didn't you have also a tenant that hid a fish? Oh, so I haven't told anyone this story yet. I also house hack. I mentioned that. I started out house hacking. I still house hack. I have tenants right now living in my house. And normally, I want to say it's like 99% a great experience.

Most people that want to move into a room are just in some kind of transition. They're moving soon or they have... temporary job or their whatever but I have made some bad choices and this one tenant in particular stands out as like the worst tenant I ever had to live with so this guy shows up and he he speaks well and it just seemed like he had good rapport with me he says oh yeah I work at Pixar I'm moving to the area because I got hired as a digital animator for Pixar which is nearby in the Bay Area and I'm like okay that's it sounded like a great job and I'm all impressed and um I'm like, can I check your references?

Yeah, I'll get that to you. But I need to move in right away because my job's starting soon. And he had all these weird excuses. And at first, I initially agreed that I'm like, I don't like this. I'm going against my gut. I want to check the references, and he wouldn't let me. It feels weird. So I called him back, and I'm like, you know what?

We're going to go with somebody else. And he handled it like a champ. He's like, I totally understand, no problem. He was really mature and responsible about it. And I was talking to my wife. I'm like, maybe I judge this guy wrong. He handled that so well. So I called him back again.

And I'm like, I know this is really annoying. I'm all over the map, back and forth, but the room is open again if you want it. And so he moved in. And that was the biggest mistake ever. You should never go against your, if you have a bad gut feeling about somebody, I think it's best to stick with that.

It's like a red flag. Okay. This guy moves in. Okay. one rule I have in my house is I don't care if you want to smoke pot or whatever just don't do it inside pretty much legal anyway outside

just go somewhere I don't want pot smoke in my house so he starts smoking pot in the house like we wouldn't smell it and he's tacking blankets up over the door to try to cover the gaps so the smoke won't get out and he's putting thumbtacks in the ceiling

to try and cover up the vents he just insists on smoking it in the bedroom. And I catch him one time and I'm like, you can't be doing this, but he keeps on doing it. And he starts making so many holes in the wall that he decides he wants to fix the holes and he starts adding layers of paint

because I had some matching paint in the garage. He would go get it and he started painting over the walls and you start getting like this thick layer of paint over the texture, which is ruining the wall. You have to tear all that off and start over. And finally, I had enough because he was painting the door trim, He ended up messing up and painting over the hardware.

It's just the room's getting destroyed. And I'm like, you know what? I've told you multiple times. It's in the lease. Here's a 30-day notice because you won't stop smoking pot in the house. And that's when he lost it. He was so mad. So he ended up, I have some cameras around the house.

He ended up slicing the wire. And those are pretty expensive to replace because it was a long one. He sliced the wire to the camera. I don't know why he did. that or what he was thinking, but he was kind of mad. But I could actually see him slicing the wire with another camera that was, because they're wide angle. Right.

So even though it wasn't necessarily pointed at him, he was in there. And I found the footage. So at first I approached him. I'm like, why did you cut the wire? I didn't do it. So I showed him the footage. And he's like, all right, I did it because you're evicting me and I'm pissed off about it.

And so I changed his eviction notice from a 30 day to a three day, which in California, you might know that's legal to do if somebody's damaging your property. And then he was just like so mad. He's like, I'm going to do something to make sure that you go to jail. And he started like smashing things and calling the police.

So he smashed his room door and told the police that I was trying to harm him. And the police came over. I'm like, I told him everything. I'm like, here's what's going on. Here's video footage of this guy smashing his own door. Like, I have cameras inside. I don't know why he thinks he can.

Now, you have cameras in his bedroom? No, absolutely not. That would be really weird. How do you know? In the common area. Oh, the common areas. Got it. Okay, got it.

But because his bedroom door is off the common area, the door gets smashed from the inside. And then he comes walking out. He thought it would be fine to do inside the room. But it was really... Were you home when he was smashing the door? I don't think I was home when he was actually doing the day. So you couldn't hear him anyways? No.

But I came home in the door smashed, and he's calling the police. He's trying to tell them, like, he thought I would just get, like, arrested or whatever. Anyway, he's finally going to leave because he has no choice, and his efforts to cause more problems or failing. But on his way out, he gets some raw salmon out of our freezer. We buy these, like, Costco packs of salmon. And he hides salmon in multiple places around the house. And I'm on a business trip, and I'm away for, like, a week or whatever.

And my wife is trying to study. She was working on becoming a nurse, which she's a nurse now. And she's like, I'm having the hardest time studying. The house really stinks. I'm like, what do you mean? It stinks. And she's like, it smells like something died. Like, this is just terrible.

You have to come home. I'm like, a smell so bad that I have to leave my business trip and come home. It's like, yes. So I come home and I'm just like, oh, my. Did you leave your business trip? Well, it was kind of wrapping up anyway. So, yeah, I came home. and oh my god it smelled horrible like probably the worst smell i've ever smelled in my whole life

it was rotten fish so here's the funny part he hit it in multiple places but i didn't know that so i was looking around for this fish and i finally find some fish in the laundry room in the back of the cupboard i'm like okay i solved it and we throw the fish out and we're thinking everything's going to be fine it was just like residual smell but it kept stinking and like the next day i'm like what is happening? How bad is that fish? And we find another one in the closet. I'm like, oh, God, we have no idea how many pieces of fish there are in this house.

It's like this big treasure hunt, like an Easter egg hunt for rotten fish. I mean, it was nasty. It had maggots in it. Wow. Like, trigger warning. It was really bad. But the last piece was hidden behind the dishwasher. That was the hardest one to find.

He took, like, a piece of fish, and he had a cane, and he pushed it. back there. I only found it because I started reviewing the video to see what he was up to, and I saw him push it back there. So you have footage of him pushing the salmon behind that. Yeah. Wow. Yeah. So we got that out, and then the smell went away. Oh, geez. If I were him, I would have put it in like a vent. Or like, you know, like, yeah, but you got to put in an area where you're not going to like, you can't access it easy. So like vents, in the drywall. Oh, my God. You're giving so many potential. potential pad tenants ideas right now probably you could tape it underneath the table

so terrible it would eventually drop because it loses its consistency duct tape it there you go how is it to kick people out of your own house if you're living with them is that weird because that was something i've always wanted a house hack and that was something that was concerning to me it's like i move someone in and then maybe they start pulling something like that or they start hiding fish in my house. I'm like, yo, quit hiding fish in my house. Sorry, Jan. Get out.

And then they say, oh, yeah, I live here. Like, what are you going to do? And they live in my house. And it's awkward. It's like, you don't want to see someone that you've already sent the eviction notice to after you've sent them to eviction. Yeah, you've got to like eat in a common areas together, hang out. I've done that.

It's really uncomfortable. So that's actually a good point because one thing I never do with my house hacking is create like a long-term lease. It's always month to month. And the reason why is because if somebody's unhappy there, I want them to feel free to leave. The worst thing in the world is living with a person who doesn't want to live with you. So I'm not going to try to lock anybody in.

So I tell them from the start, like it's month to month. But then if you have to kick someone out, I would say, at least in California, it's pretty much normal rental rules. They get treated like a regular tenant, so they have all the same rights. But most people, if they're uncomfortable, if you feel uncomfortable with them there, they also feel uncomfortable being there. and they'll just leave early themselves. I've never had anyone stay like,

I hate you, I'm going to stay the full amount of time. Like every time this has ever come up, which is very rare, to be honest, they have voluntarily just left. That makes sense. I mean, most reasonable people would probably just leave. Yeah. Jason, thank you so much.

Thank you. I really appreciate you. Making it canceling your dinner plans to come on with us, the iced coffee hour. I really appreciate it, and I'll link to your information down below in the description. Fantastic. Thank you.

Great to be here. Yeah. Appreciate it.