All The Hacks: Real Estate
00:00:00.000 | If we're talking apples to apples of like you got a hundred grand,
00:00:02.760 | should you buy a hundred thousand dollar property in cash or put a hundred
00:00:06.320 | thousand dollars in the stock market?
00:00:07.800 | I would probably have put a hundred thousand dollars in the stock market,
00:00:10.380 | honestly, because like when you lose the leverage piece, you lose everything.
00:00:13.400 | But if you can use the a hundred grand to buy 500,000 worth of real estate,
00:00:17.120 | now you're going that your $500,000 deal is appreciating at 3% per year.
00:00:22.080 | So you're getting whatever that is like way better leverage on that. Right.
00:00:25.200 | And the loan's getting paid down and you get the tax benefits and you get the
00:00:28.960 | the cash flow. So you kind of combine it all together. And like, I mean,
00:00:33.440 | what the stock market, I mean, everyone's got a different number, right.
00:00:35.560 | But six to 10, somewhere in that percentage, or if you're Dave Ramsey, 12%,
00:00:39.000 | you say, but the stock market average is somewhere in that range. Right.
00:00:41.760 | Let's call it seven, 8%. I mean, like my real estate,
00:00:45.240 | like I don't buy anything that doesn't average me 15% or greater.
00:00:47.960 | Like I don't buy anything that doesn't do 15%.
00:00:49.720 | And that's after factoring in all of the crazy costs that come from owning real
00:00:53.800 | estate. Like that's, that's the number we, what we call underwrite.
00:00:57.000 | So we underwrite from a 15% per year standpoint,
00:01:00.880 | when we buy real estate for our investors,
00:01:02.880 | we're actually getting more than that. We're getting more like 25, 20 to 25%,
00:01:06.720 | but we take about a third. Uh, that's what my company does.
00:01:09.720 | So we underwrite from a 15% per year for our investors.
00:01:13.480 | Hello and welcome to another episode of all the hacks show about upgrading your
00:01:17.240 | life, money, and travel. If you're new here, I'm Chris Hutchins.
00:01:20.160 | I'm a diehard optimizer.
00:01:21.640 | I love doing all the research to help you get the best experience in life without
00:01:25.360 | an expensive price tag. And today I'm talking to Brandon Turner about real estate.
00:01:29.520 | And while I do own my primary residence at a fraction of a vacation home,
00:01:33.520 | I've never really dabbled with rentals,
00:01:35.320 | Airbnb's or any residential or commercial real estate projects,
00:01:38.400 | except owning some REITs in my investment account.
00:01:40.800 | But Brandon's taken a different path and it's worked out pretty well for him.
00:01:44.560 | He's a real estate investor with thousands of properties,
00:01:47.560 | hundreds of millions under management.
00:01:49.360 | And he's also the author of a few real estate books and has sold over a million
00:01:53.160 | copies. He's also a podcaster with over a hundred million downloads,
00:01:57.400 | having hosted the bigger pockets, real estate podcast for almost 10 years.
00:02:00.840 | If you're not familiar with bigger pockets,
00:02:03.120 | it's a massive real estate investing resource with millions of members,
00:02:06.280 | tons of content, books, courses, and more.
00:02:08.560 | So I want to use this conversation to do two things. First,
00:02:12.240 | Brandon is a fascinating person who's very intentional with his mindset on life,
00:02:16.480 | work, philanthropy, and more. So I want to understand how he operates,
00:02:20.080 | why he works with a performance coach, whether most of us should be doing that,
00:02:23.680 | how he's managed to be successful and still prioritize friends, family,
00:02:27.320 | and the quality of life. Did I mention he lives in Hawaii,
00:02:30.080 | so he's doing something right.
00:02:31.200 | But I want to start by brushing up my knowledge on real estate and learn who
00:02:35.120 | should be investing in real estate, whether I'm even on that list,
00:02:38.160 | how people should get started and ask some of the questions that have been on my
00:02:41.800 | mind for years and held me back from doing real estate in the past.
00:02:45.520 | [Music]
00:02:50.520 | Dude, that may have been the greatest interview introduction I have ever had.
00:02:57.000 | So I am, I'm psyched to be here.
00:02:58.560 | This is going to be a lot of fun and excited to talk to you not only about real
00:03:01.440 | estate, but can I tell you a quick story about how terrible I am at your world?
00:03:04.960 | Yeah.
00:03:06.160 | All right. So your world,
00:03:08.920 | the world of like points like that,
00:03:10.840 | that piece of your world of like hacking the point thing and the travel thing.
00:03:14.040 | So I spent half a million dollars on ads on Facebook over the past eight weeks.
00:03:18.200 | I mean, talking about what I was raising for going, I already know.
00:03:21.120 | And I didn't, I didn't use a credit card for it.
00:03:23.840 | Like that's how bad this was. Like, I don't think,
00:03:25.640 | I think we like hooked up an ACH something or a debit card,
00:03:28.640 | like half a million dollars on ads. And I didn't get anything for it.
00:03:31.880 | Like I could have probably like flown in a nice plane or something.
00:03:34.280 | So I probably have a lot to learn from you.
00:03:36.360 | Hopefully I can share at least some with you and your audience.
00:03:39.480 | Well, for anyone listening, if you're in that situation,
00:03:42.600 | the Amex business gold and the chase Inc business preferred are three and four X
00:03:47.160 | points on ad spend. So, you know, somewhere,
00:03:51.040 | somewhere between 1.5 and 2 million points are, are on the ground, you know,
00:03:55.360 | off in the ether. So, Oh, that's funny. Yeah. Terrible. Whatever.
00:03:59.040 | People listening will really feel that pain, but hopefully if,
00:04:03.360 | if you're spending money now,
00:04:04.440 | you'll be spending money in the future and we can correct that down there.
00:04:07.920 | There it is. That's it. I'm a big believer. I shoot. Sorry.
00:04:11.920 | I'm already taking over this show. This is what I do.
00:04:13.760 | I think I'm a big believer in like, I mean, I don't keep receipts.
00:04:17.040 | This is something that people are always shocked when they hear I don't keep
00:04:19.120 | receipts. Like, even though I could, I could deduct a lot of the stuff I do.
00:04:21.920 | I go to dinner. I don't, I don't do like the whole tax thing. I don't like,
00:04:25.200 | I go to a business dinner.
00:04:26.040 | I don't keep the receipt and people think I'm crazy. And here's why though.
00:04:29.160 | It's like,
00:04:30.160 | I'm a big believer in like going all in and using all available space in my head
00:04:34.760 | for two things.
00:04:35.400 | And that is like family and getting stupid rich through real estate. Right.
00:04:39.720 | So those are like the two things. And if it, if it's not those two things,
00:04:42.440 | like I just don't generally get into it.
00:04:45.000 | And I think that has been one of the things that's let me be successful in those
00:04:47.840 | two areas. Cause I'm only really focusing on two areas and not 50 areas.
00:04:51.560 | So points and receipts and all that stuff that I should be doing,
00:04:55.880 | I'm just not doing.
00:04:56.720 | So maybe I just need like a person in my life to run that part for me,
00:04:59.360 | but maybe I need to start that company.
00:05:01.160 | Maybe you do. That's a great idea. Do we just make a billion dollar company?
00:05:05.560 | Do we just become best friends? Ah, all right. Let's go back to real estate.
00:05:08.960 | What'd you want to know?
00:05:09.800 | So I'm a pretty thoughtful investor. I used to run an investment advisory firm,
00:05:14.320 | financial planning firm, and I own my home. I own some wreaths in my accounts,
00:05:18.600 | but I feel like I see people like you who've done a lot in real estate.
00:05:22.880 | And I always question whether I'm doing it wrong is,
00:05:25.480 | is investing in real estate outside of your home,
00:05:27.320 | something that everyone should be doing.
00:05:29.040 | The short answer, I would say, yes.
00:05:31.520 | The more nuanced answer is which way to invest in real estate.
00:05:36.400 | I think real estate belongs in everybody's portfolio.
00:05:39.160 | I think that real estate has so many cool things to it.
00:05:42.400 | It's not the only way to make wealth. I mean, stocks, they're great.
00:05:45.360 | I'm sure like bonds, I don't know, whatever those are,
00:05:47.600 | like all that stuff works, right?
00:05:49.160 | The thing that's cool about real estate is has so many different ways to make
00:05:52.800 | money within it that it, it, it can find its way to any person's portfolio.
00:05:57.400 | So what I mean by that is like, I was like, you know, whatever, 21 years old,
00:06:01.240 | I'm working at Coldstone Creamery, right?
00:06:03.680 | Like dissing ice cream and singing for tips.
00:06:06.200 | And I think I was actually like 19 at this point. We're going to Coldstone,
00:06:09.000 | like 19 singing for tips. Right.
00:06:10.440 | And I rent an apartment, a four bedroom apartment,
00:06:12.720 | and I rent out the other three rooms and I just live in the fourth room.
00:06:15.480 | And all of a sudden I'm like living for free.
00:06:17.680 | I ended up actually renting out my bedroom and I lived on the couch for half
00:06:20.640 | that year. And I started making money. So, I mean, like,
00:06:23.120 | like you can go that extreme and that's, that's kind of, you know,
00:06:27.680 | real estate investing. And then on the other side, like I own whatever,
00:06:30.120 | 7,000 rental units.
00:06:31.320 | I own a big company that buys apartments and mobile home parks.
00:06:34.440 | And I just run like a business over there.
00:06:37.440 | And so you take those two extremes and everything in between involving real
00:06:41.960 | estate, you can make money and you can make a lot of money. And so, yes,
00:06:45.600 | everyone should invest in real estate.
00:06:46.840 | The question is how and how is it going to work for you? What fires you up?
00:06:51.400 | What gets you excited? And what's your goals are?
00:06:53.120 | So I imagine most of the people listening are not looking to have four roommates
00:06:58.160 | and sleep on a couch. So we can, we can knock off that end.
00:07:00.560 | And I'm guessing that if they're listening to this,
00:07:02.920 | trying to learn about real estate,
00:07:04.040 | they're also not on the other end of trying to figure out how to buy their,
00:07:07.400 | their next 3,000 properties. So we find somewhere in the middle,
00:07:10.400 | someone who maybe they own their home.
00:07:12.240 | Maybe they've thought about buying a vacation home or a rental home,
00:07:15.120 | but they haven't pulled the trigger and they're trying to figure out what's a
00:07:18.320 | good way to get into this,
00:07:20.440 | whether it's just the learning side or the kind of experience through doing.
00:07:24.240 | Yeah. So one of my favorite ways to get into real estate,
00:07:27.280 | especially with those people who don't have a ton of capital to start with,
00:07:30.320 | right. Again, going back to why I love real estate,
00:07:32.440 | real estate is kind of like a, any business like a,
00:07:36.120 | in that it doesn't necessarily require a lot of money. If you sub sub,
00:07:40.960 | and what was the word you use time instead, right?
00:07:44.240 | So there's ways to like kind of hustle your way into real estate.
00:07:46.440 | So maybe it's not the living on a couch kind of idea,
00:07:48.840 | but there's a term we call house hacking. This has changed my life.
00:07:52.160 | House hacking. I've done it many, many times.
00:07:54.160 | It's where you buy like a small multifamily property.
00:07:57.000 | Let's call it like a triplex, like three separate units, right?
00:08:00.120 | And they're all over the country, all over the world. Every, every,
00:08:02.760 | every country's got them and you live in one of the units and then you rent the
00:08:06.200 | other ones out. Now you don't even have to be the property manager.
00:08:08.720 | You can even hire management. So you don't deal with the tenants,
00:08:11.040 | but the benefit is, is one,
00:08:13.880 | you can get into these deals for very low money down like 3%, 4%,
00:08:18.120 | 5% down when you're willing to live in the property for at least a year.
00:08:21.960 | So let's just say you're somebody you've, you've saved up 20 grand. Well,
00:08:25.320 | what's 20 ran grand really going to do for you, right?
00:08:27.480 | You throw it into the stock market and you make yourself 10% on your 20 grand.
00:08:31.760 | Okay, good. You're now making 200, you know, whatever that two,
00:08:34.880 | $2,000 a year. Like it's, it's not life changing money,
00:08:38.160 | but that same 20 grand, if you were to buy that, buy that duplex or triplex,
00:08:42.560 | you could be living for free and saving what you'd be paying on rent somewhere
00:08:47.440 | else. You can be saving a thousand, 2000, $3,000 a month,
00:08:51.000 | and building equity at the same time.
00:08:54.040 | So that's a cool strategy. And a lot of people like, well, I'm not, I'm,
00:08:56.560 | I don't want to live in a crappy duplex over. And so I live in Hawaii.
00:09:00.640 | I have an ocean view. My house is worth about $3 million. I got a pool.
00:09:04.880 | I got this crazy cool property here. It's a triplex.
00:09:08.160 | I rent out the back unit that pays almost half my mortgage.
00:09:11.720 | And if I wanted to rent out the other unit that I have, I could, and I'd pay,
00:09:15.960 | I would pay my whole mortgage.
00:09:17.280 | I'd be living for free in Maui looking at the ocean because of
00:09:21.920 | house hacking. So it's not just for people who are starting out.
00:09:24.240 | It's just a cool strategy in general, a cool hack, again,
00:09:26.880 | house hacking and you're the hack guy. So.
00:09:29.240 | Yeah. I mean, I actually ended up doing this without realizing it, uh,
00:09:33.080 | about a decade ago because we were trying to buy a home and we kept struggling
00:09:37.480 | with the fact that if you buy a two bedroom home and you're going to start a
00:09:40.800 | family, you're going to outgrow that home. And like the traditional advice,
00:09:44.320 | you know, when you buy a home,
00:09:45.200 | you pay real estate agent fees or someone does.
00:09:47.520 | And when you sell the home, the same thing and closing costs and furnishing and
00:09:50.760 | staging and all this stuff. So the general rule is like,
00:09:53.080 | if you're not going to live there for a long time or own it for a really long
00:09:55.920 | time, the transaction costs are going to eat you up. So we were like, well,
00:09:59.000 | we can't buy a place. That's two bedrooms. Cause we're going to move out. Uh,
00:10:02.320 | and so we found a place with three bedrooms with one of the bedrooms having a
00:10:05.160 | door to the outside. And we said, great, we'll turn that bedroom into a studio.
00:10:08.800 | And for the next five years, while we don't need three bedrooms,
00:10:12.000 | we're going to rent it real estate in San Francisco did so well that it ended up
00:10:15.320 | paying the whole mortgage. And then when we finally had our first child, we said,
00:10:19.080 | Oh, we need the space. We were done with tenants.
00:10:21.520 | And now we have a three bedroom. We didn't have to buy and sell.
00:10:23.760 | So that was our version of, I didn't know there was a house hacking movement.
00:10:26.520 | Now this guy from the investors podcast network,
00:10:29.520 | Robert Leonard wrote a book called about house hacking recently.
00:10:32.280 | So now it's become this thing at the time.
00:10:34.800 | It was just a way that I could subsidize the cost of my mortgage.
00:10:38.000 | You know, what's funny about this. So the word house hacking, uh, I actually,
00:10:42.360 | so I coined that and I'm not trying to just pat myself on the back.
00:10:45.040 | I was the first one to coin that years and years ago, like 10 years ago.
00:10:48.600 | And the reason why you can go back to the original article I wrote on it,
00:10:51.080 | the reason that I coined that was based on travel hacking.
00:10:54.040 | Cause everyone talked about travel hacking. And I was like, well,
00:10:56.000 | I'm kind of doing the same thing when I buy duplexes and live in house.
00:10:59.040 | So I call it house hacking just based on that. And the term just took off.
00:11:02.520 | And so, uh, really I owe a lot to your, uh, your world and your industry, uh,
00:11:06.680 | for that term. So really what I'm saying is we're all here because of you, man,
00:11:09.960 | definitely not because of me, but you are here because of me, but, uh,
00:11:13.640 | but, but I love that story that you just told, right.
00:11:16.960 | Cause it just illustrates one of the million ways that real estate can,
00:11:21.160 | can change your life or benefit your life in a lot of ways.
00:11:23.600 | And so you can buy nicer, like I wouldn't buy a $3 million house in Hawaii,
00:11:27.320 | but because I house hack, I can. And in fact,
00:11:30.400 | there's other cool things like my buddy actually rents for me,
00:11:32.640 | which is normally a terrible idea. I usually caution against that, but, uh,
00:11:36.040 | my buddy rents for me because he's back there.
00:11:38.240 | We started this company together to buy big commercial properties.
00:11:41.160 | And now we bought whatever, 7,000 units because of him being there.
00:11:44.960 | So it was kind of a cool, like the kind of ancillary thing is you kind of get a
00:11:47.320 | community vibe, which is sorely missing in America today. Right?
00:11:51.120 | Like we're also alone in the world.
00:11:53.640 | So now I kind of feel like I have my own little, like, like compound in a way,
00:11:57.880 | which is kind of funny, but it works really well.
00:12:00.160 | One of the key kind of mathematical reasons behind what you just said, you know,
00:12:04.720 | in house hacking is that you can get leverage and that that leverage,
00:12:08.640 | unlike the leverage in a brokerage account is, you know,
00:12:12.000 | not subject to a margin call. So if house prices go down,
00:12:16.280 | you don't get evicted, uh, you know, and if you ride it out long enough,
00:12:19.320 | you'll be okay. So that works really well.
00:12:22.040 | If you are ready to buy a new place,
00:12:23.840 | what if you're already in a home and you're not really looking to move out of
00:12:26.920 | it is getting into real estate.
00:12:29.360 | Is that just buying the duplex and not living in it is,
00:12:32.640 | is it buying a vacation rental property?
00:12:34.520 | Is that version of it as appealing when you can't live in it and something that
00:12:39.880 | the average homeowner should be thinking about as a way to invest their savings?
00:12:43.600 | A hundred percent. Yes. They should look into it. That said,
00:12:47.440 | most deals aren't deals.
00:12:48.880 | Most properties are going to lose you money by, by owning them.
00:12:52.120 | And so as long as you're willing to learn how to like run some simple math,
00:12:56.160 | and it's not hard. I mean like you can just go to YouTube and search like real
00:12:59.440 | estate, you know, rental property math. Like it's not super hard to do. Now,
00:13:02.840 | again, there's different strategies, different strokes for different folks,
00:13:05.200 | right? Vacation rentals are a phenomenal way to bring in a lot of profit.
00:13:09.000 | I mean, I got a condo here in Hawaii that one condo makes me $7,000 a month in
00:13:13.520 | profit, like one, one property. Right.
00:13:15.920 | And I think I paid maybe 150 grand like into it,
00:13:19.240 | like that I've got into it. And it's a million dollar property,
00:13:21.360 | but like that's a phenomenal return.
00:13:24.320 | Like that's going to blow the stock market out of the water. However,
00:13:27.600 | I have to manage that. I have an assistant who takes care of it,
00:13:30.000 | but like that's still a business based guy I have to run. So again, there's,
00:13:33.160 | there's different things for different people, but yeah, if you buy, I mean,
00:13:36.760 | imagine this, actually,
00:13:37.480 | let me tell you a story that illustrates a couple of points on why I love real
00:13:40.160 | estate so much. So when my daughter, whose name is Rosie, she's super cute.
00:13:44.480 | She's six years old. Now, when Rosie was born, like the week,
00:13:48.120 | literally the week she was born,
00:13:49.440 | we went and signed papers on a four unit property. It was a fourplex,
00:13:53.760 | located in kind of a rough area. Not like, not like I, you know,
00:13:57.480 | I'm going to get shot there, but like definitely not like a place I'd want to
00:14:00.560 | live, but we got this four unit property there and it was super cheap and
00:14:04.280 | disgusting and there was like rats living in it and a bunch of like people had
00:14:08.040 | broken in and stolen stuff. I mean, it needed a lot of work,
00:14:10.400 | but we buy this property and we fix it up.
00:14:13.120 | And then we put it on an 18 year payoff plan. It's a 30 year mortgage,
00:14:18.160 | which is pretty typical.
00:14:18.960 | But I actually went to like Dave Ramsey's like calculator online and was like,
00:14:22.120 | how much extra do I have to pay every month to pay it off in 18 years?
00:14:25.040 | And it was like 150 bucks extra every month.
00:14:26.960 | So I put it on this 18 year path plan.
00:14:29.840 | Now our mortgage at the beginning was 150,000 that I own in the mortgage.
00:14:34.480 | When my daughter is 18, we'll owe $0 on it.
00:14:38.440 | Now that property could make me no money for the next 10 or 18 years.
00:14:43.680 | I can make nothing off of it,
00:14:45.160 | but at very least my tenants just paid off a mortgage over the course of 18
00:14:49.400 | years. And now it's worth, it's, it's worth a lot more money, right?
00:14:53.120 | In fact, it's probably worth when I bought it, you know, 200,000,
00:14:56.960 | my mortgage was 150.
00:14:58.200 | I always said it'd be worth three to $400,000 when Rosie's ready to go to
00:15:02.240 | college. So now, so notice these are two things at play here, right?
00:15:05.720 | The property values tend to go up over time. Yes, there's dips and such,
00:15:09.920 | but based on just 3% appreciation over the next 18 years,
00:15:14.040 | it should be worth between three and $400,000.
00:15:16.320 | We will then owe nothing on it.
00:15:18.440 | So we've built now three or $400,000 of equity that Rosie gets to use
00:15:24.040 | for college. And this is a plan.
00:15:25.600 | I tell a lot of parents buy one rental house when your kids are young,
00:15:28.600 | put it on them on a 15 or 18 year, whatever mortgage,
00:15:32.000 | whatever it takes for them to go to college and their college is paid for off
00:15:35.320 | one property. So that's the loan getting paid down and appreciation.
00:15:39.960 | Those are two of the four wealth generators of real estate.
00:15:43.960 | So one of them is appreciation. Real estate goes up. Number two,
00:15:47.640 | real estate gets paid down when you have a mortgage, which is great.
00:15:50.040 | That's the whole leverage piece. Number three though, is the cashflow.
00:15:53.280 | This fourplex makes me over $1,500 in profit every
00:15:58.600 | single month. Now some months a little bit more, some a little less.
00:16:01.720 | If we have repairs and such, and that's after paying the property manager.
00:16:05.680 | It's like, I don't even deal with this property.
00:16:07.680 | It's maybe a minute every single month.
00:16:09.240 | So now I've got the third wealth generator is cashflow.
00:16:12.520 | Now Rosie doesn't get that. I get to live on, you know,
00:16:14.920 | I get to have a nicer car because of that. Right.
00:16:17.160 | I can use that for my life and that's why I love cashflow.
00:16:20.560 | So cashflow is a third reason.
00:16:21.680 | And the fourth wealth generator of real estate is the tax benefit.
00:16:25.840 | So when I make $1,500 a month on cashflow,
00:16:30.400 | I pay $0 in taxes on that $0 in it.
00:16:33.800 | You make $1,500 doing, you know, a W2 job, not you,
00:16:37.800 | but somebody does and they're going to pay 500 in taxes, 600 in taxes,
00:16:42.640 | whatever. So the tax,
00:16:44.200 | like not only do you have the three areas where you're growing wealthier,
00:16:47.600 | but the fourth area is that you don't pay.
00:16:49.720 | There's so many tax strategies for real estate investors that you typically will
00:16:53.400 | pay little to no tax as long as you're investing in real estate.
00:16:56.880 | So combine those four things together and it's a phenomenal return that I think
00:17:00.960 | can blow up any business, any investment,
00:17:04.640 | any way to generate wealth out of the water, completely out of the water,
00:17:08.200 | in terms of both how well it grows and the assuredness of
00:17:13.160 | which it grows.
00:17:14.000 | You can start a business and you'll get 10,000% return,
00:17:16.600 | but businesses fail all the time. Real estate's fairly stable.
00:17:20.600 | And it would be hard to lose when you buy right and you
00:17:25.080 | manage right. You said we're going to be friends. Maybe, maybe,
00:17:28.440 | maybe this is the pivotal moment here when I push back on a few things.
00:17:31.800 | So on the tax front, let's go in reverse.
00:17:34.120 | The reason I assume you're not paying taxes is because you're depreciating the
00:17:37.600 | property. And that's a huge piece of it. Yes.
00:17:40.360 | And at some point in the future, when you sell that house,
00:17:43.560 | having depreciated the value of it, if you were to sell that property,
00:17:47.600 | you would have much more taxes in the future.
00:17:49.920 | Whereas my W2 income that I invested,
00:17:52.520 | I would only pay on the gains if I went and invested that W2 income after tax.
00:17:57.200 | Yes. And no, but this is why I said,
00:17:59.320 | as long as you keep investing in real estate, you pretty much never pay taxes.
00:18:02.320 | So between a thing called the 10/3 exchange, which is awesome.
00:18:05.640 | And between a thing called cost segregation or depreciation,
00:18:09.480 | accelerated depreciation, all that stuff. And I don't,
00:18:11.880 | we don't need to go in the weeds on it,
00:18:13.560 | but essentially as long as you don't stop investing in real estate,
00:18:16.120 | it's kind of a treadmill. I will admit it as a treadmill you get on,
00:18:18.480 | but what most investors do eventually is they just get more and more passive
00:18:22.220 | properties.
00:18:23.040 | Like they start maybe buying the duplex that they're managing or the fourplex.
00:18:26.440 | And eventually they sell it and then they buy a, a share,
00:18:29.720 | a small piece of a huge shopping mall. And they just hold onto that for life.
00:18:34.200 | And then when you die, the taxes basically just get wiped out.
00:18:36.640 | The government says, okay, well you, you know,
00:18:37.920 | your children aren't going to owe any of that and they wipe it out.
00:18:40.440 | And so there are ways to pay nothing forever. Uh, but like you said,
00:18:44.780 | there is that, that said on that $1,500, first of all,
00:18:48.040 | I don't pay any self-employment tax or, uh, you know,
00:18:50.840 | any of the 15% that everyone else pays. Uh, and it's,
00:18:53.780 | so it's naturally lower anyway,
00:18:55.340 | but then the depreciation just wipes the rest of it out.
00:18:57.580 | Even if you did decide, you know, I'm getting off the treadmill,
00:19:00.340 | I'm selling these properties. You're still paying capital gains on that.
00:19:03.580 | You're not paying income tax. So correct. I'll give you that, you know,
00:19:07.220 | even in the worst scenario, it's still a better scenario from a tax standpoint,
00:19:11.180 | but, and go ahead, go ahead. No, I just say, but, uh, you know,
00:19:15.260 | there are future tax liabilities by taking the depreciation. Yeah.
00:19:19.340 | It's not as easy as like, you know,
00:19:21.960 | just you buy rental property and pay no taxes ever. Uh, it's,
00:19:26.200 | there's definitely a strategy to it and understanding how this stuff works is
00:19:29.280 | important, which is one of the reasons people should not invest in real estate.
00:19:32.720 | Let me argue why you shouldn't invest in real estate because it is not a button
00:19:36.080 | you press on an app. Uh, now there are easier ways to do it, right?
00:19:39.000 | So like I've raised, I don't know, uh,
00:19:41.200 | $250 million over the past couple of years from investors like you
00:19:46.000 | maybe who like,
00:19:46.860 | I don't want to go buy a duplex and deal with the toilets and the tenants and
00:19:51.220 | the termites and all that crap. Right. I don't want the trauma.
00:19:53.340 | So they just invest with me and then we go and buy it.
00:19:55.820 | So that's what my company does today is we, we do stuff like that.
00:19:58.580 | And this is not a sales pitch. You don't have to go with me.
00:20:00.140 | You can go with anybody. There's lots of us out there who do this very thing.
00:20:03.300 | You can still get depreciation. You get, still get some of that stuff,
00:20:06.060 | but it's much more of a push button sort of investment.
00:20:09.500 | Now your returns are probably lower than if you were renting out all your
00:20:12.160 | bedrooms and your house living on the couch, but you pay for, you know,
00:20:15.980 | you, you, you pay and you get what you want to put into it.
00:20:19.440 | Just like really any business. And one more quick point.
00:20:23.040 | The other cool thing about the tax depreciation stuff,
00:20:26.000 | not only are you not paying the like the 15% that everyone else has to pay,
00:20:29.440 | but I ran the numbers one time and it's one in one of my books,
00:20:32.720 | even if you were to just pay it anyway,
00:20:35.180 | at some point to settle up with the government,
00:20:36.680 | cause you deferred it down the road, down the road, down the road,
00:20:38.600 | because you are not paying it.
00:20:40.760 | You are using the government's money next time to buy more.
00:20:45.120 | So even when you settle up,
00:20:46.560 | you are far ahead of where you would have been if you just pay taxes like a
00:20:50.300 | normal person. Does that make sense? Because you're,
00:20:52.220 | that's the same logic that goes into tax deferred retirement plans, right?
00:20:57.180 | The reason why is that your money can compound before you owe that tax
00:21:01.100 | liability.
00:21:01.940 | And I did an episode that we will not get into all about kind of some crazy
00:21:06.540 | estate planning tax strategies.
00:21:08.220 | And part of the reason that those work is that the government kind of the rates,
00:21:12.120 | the government thinks things will grow are not the same rates that things
00:21:15.060 | actually end up growing in the markets.
00:21:16.500 | And so if you can defer taxes as long as possible,
00:21:19.500 | you can actually get an outsized return, compound interest, et cetera.
00:21:22.980 | And you briefly brushed on 1031, but I'll say my version of it,
00:21:27.700 | which is completely unsophisticated,
00:21:29.400 | but maybe that's easier than going down a rabbit hole.
00:21:31.700 | It's just that if you have a real estate property that increases in value,
00:21:37.380 | you can either realize those gains or you can roll them into another property
00:21:41.220 | and defer and defer.
00:21:42.320 | So as long as you're rolling in the gains from real estate sale to another real
00:21:45.600 | estate transaction, you can postpone and postpone.
00:21:47.840 | Exactly. So you buy a property, make a million bucks,
00:21:50.960 | dump it into a new property and the government's going to be like, Oh yeah.
00:21:53.960 | I would say it's like the government is like,
00:21:55.720 | is like your uncle who's partnering with you. They're like, Hey,
00:21:58.480 | you did a really good job with that investment. You made a million bucks.
00:22:01.000 | You know, keep, keep our money,
00:22:02.440 | just put it in the next deal and then put the next deal.
00:22:04.760 | The government's going to let you just keep putting in the next deal.
00:22:06.560 | Now there's a lot of rules with that, but that's essentially what it is.
00:22:09.760 | Historical property appreciation is positive,
00:22:12.500 | but historical stock market appreciation is more positive.
00:22:16.900 | At least if you comparing apples to apples, it's like the returns are higher.
00:22:20.860 | So, you know, how do you compare this to,
00:22:24.500 | I'm going to take all the money I have.
00:22:26.060 | I'm going to put it in a diverse index funds,
00:22:28.820 | including REITs or we can get to REITs after.
00:22:31.740 | And instead of paying down this mortgage each month,
00:22:34.840 | I'm going to take that cashflow and I'm going to invest it.
00:22:37.340 | I've said that mortgages are great for people who wouldn't otherwise save
00:22:40.640 | because it forces you to,
00:22:41.600 | but if you're disciplined and you took all that cashflow and saved it,
00:22:44.880 | how do you think that compares?
00:22:46.920 | You think real estate still wins every time or on average?
00:22:50.200 | I think on average it does. And it has, uh, when you,
00:22:54.360 | when you use that leverage, right? If you're,
00:22:56.160 | if we're talking apples to apples of like you got a hundred grand,
00:22:58.920 | should you buy a hundred thousand dollar property in cash or put a hundred
00:23:02.480 | thousand dollars in the stock market?
00:23:04.600 | I would probably put a hundred thousand dollars in the stock market, honestly,
00:23:06.940 | because like when you lose the leverage piece, you lose everything.
00:23:09.540 | But if you can use the a hundred grand to buy 500,000 worth of real estate,
00:23:13.260 | now you're going that your $500,000 deal is appreciating at 3% per year.
00:23:18.220 | So you're getting whatever that is like way better leverage on that. Right.
00:23:21.340 | And the loan's getting paid down and you get the tax benefits and you get the,
00:23:25.020 | the cashflow. So you kind of combine it all together. And like, I mean,
00:23:29.540 | what the stock market, I mean, everyone's got a different number, right?
00:23:31.700 | What six to 10, somewhere in that percentage. Or if you're Dave Ramsey, 12%,
00:23:35.120 | you say, but the stock market average is somewhere in that range, right?
00:23:37.880 | Let's call it seven, 8%. I mean, like my real estate,
00:23:41.360 | like I don't buy anything that doesn't average me 15% or greater.
00:23:44.080 | Like I don't buy anything that doesn't do 15%.
00:23:45.860 | And that's after factoring in all of the crazy costs that come from owning real
00:23:49.940 | estate. Like that's, that's the number we, what we call underwrite.
00:23:53.120 | So we underwrite from a 15% per year standpoint,
00:23:57.000 | when we buy real estate for our investors,
00:23:59.040 | we're actually getting more than that. We're getting more like 25, 20 to 25%.
00:24:02.820 | But we take about a third. That's what my company does.
00:24:05.820 | So we underwrite from a 15% per year for our investors.
00:24:09.660 | Now for that, right. Higher risk, higher return.
00:24:13.100 | Obviously like you're trusting some random dude from the internet,
00:24:15.960 | like to invest your money and hoping you get your 15% per year.
00:24:20.220 | So it's, it's maybe a little riskier than throw it into GE or
00:24:24.860 | Tesla, but I don't know. I could actually argue the opposite way. I mean,
00:24:27.940 | what do you think? Let's throw it back at you. Yeah. Dump it in the socks.
00:24:31.320 | I definitely, when you're talking, dump it into GE or Tesla.
00:24:34.840 | I feel like I I'm with you, right. That the volatility of any single stock,
00:24:39.040 | right. I was there. I almost thought you were going to go GM or Tesla.
00:24:42.000 | And then I was like, well, that's an interesting perspective, right?
00:24:43.960 | Like one, one of those two could go very different direction. Um, yeah,
00:24:48.480 | I mean, historically the challenge for me has been the push the button, right.
00:24:53.040 | To buy the real estate, you've got to find the deals.
00:24:55.320 | You've got to process the deals. You've got a deal.
00:24:57.320 | We had one tenant in a house, in a house we lived in.
00:25:00.280 | And that even felt like a lot, not because they were there, but because, Oh,
00:25:03.880 | the sink's not working. It just felt like a lot.
00:25:06.080 | So I think for me,
00:25:08.800 | I've always been apprehensive of buying real estate with all of the kind of
00:25:13.800 | craziness that comes with managing it and dealing with it.
00:25:16.400 | If it's not your primary residence and you would know better than me,
00:25:19.680 | I feel like the loan situation is harder, uh, in terms of, you know,
00:25:23.680 | you just don't get as favorable terms when you're not buying a primary
00:25:26.160 | residence. Uh, and, and that's kind of held me back, uh,
00:25:30.360 | the vacation rental, you know, if it's not a long-term tenant,
00:25:33.920 | then you've got a vacation rental.
00:25:35.160 | Now you got to put it on Airbnb or you got to put it somewhere and manage who's
00:25:37.840 | coming and what happens if there's a pandemic and no one wants to travel and
00:25:42.800 | all that stuff. So for me, it was just so much easier to invest in the markets,
00:25:47.720 | but you know, that doesn't mean I'm not interested because then I go, okay,
00:25:53.040 | well then I could just pay someone to do all this for me. Uh, like, you know,
00:25:56.720 | a company you're starting or anyone else. And then I'm like, Oh,
00:25:58.800 | but then the fees, maybe I should do it myself.
00:26:00.720 | And I kind of get stuck in this analysis paralysis of,
00:26:03.160 | I want to do this thing. I don't want to do the work,
00:26:04.880 | but I don't want to pay someone to do the work. Okay.
00:26:06.720 | I'm just not going to do it. And so I ended up just doing REITs.
00:26:09.160 | So I'm curious where you think REITs fall on the spectrum.
00:26:11.760 | Is that a form of real estate investing? Or do you kind of say, no, no, no,
00:26:14.960 | that's like the stock market version. Let's leave that aside.
00:26:17.920 | It is a stock market version.
00:26:19.560 | REITs typically have a very similar return as
00:26:24.320 | like the regular stock market, right? Depends again, which REIT,
00:26:27.200 | and which ones you're looking at and how you're measuring it. You know,
00:26:29.960 | you can manipulate data all you want,
00:26:31.720 | but typically it's not a whole lot better and maybe even worse than traditional,
00:26:35.640 | just stock market investing. So, but REITs are great. REITs are push a button.
00:26:39.680 | They are the stock market for real estate.
00:26:41.240 | You're typically buying large A-class real nice,
00:26:45.200 | like apartment complexes or, or shopping malls or whatever.
00:26:48.240 | And you're combining your money with lots of other people.
00:26:50.760 | And they're just very stable. Like no one, like just very stable.
00:26:54.160 | You're not doing anything fancy. You're not really having to work at all at it.
00:26:57.480 | Now, what we do. So at Open Door Capital, which is my company. And again,
00:27:00.640 | there's lots of us out there that do this. It's a similar model.
00:27:04.160 | You wire the money to us, you push your button and you're pretty much done.
00:27:07.720 | The way that we're different is we're, we're actively investing.
00:27:10.760 | Like we're not buying super A-class shopping malls for $3 billion and getting,
00:27:16.400 | you know, 10,000 investors all chipping their money on it,
00:27:18.800 | or 10 million investors.
00:27:19.880 | We're typically a hundred investors coming together, pulling our money.
00:27:24.240 | And we split profits a little different.
00:27:26.560 | So we just basically take the first seven or 8%. Like we always assume, like,
00:27:30.760 | if we're not going to get, get you at least a stock market return,
00:27:33.400 | then I shouldn't get paid. So there's not like the first seven or 8% goes right
00:27:37.160 | to our investors. Like you would get the first seven or 8% per year return.
00:27:42.400 | Anything above that, we then split. So typically it's like a 70/30.
00:27:47.200 | So I will take 30% of anything above your average stock market return.
00:27:51.800 | And then you would get 70% of that.
00:27:53.920 | And then at some point it might shift also to what's called a 50/50 at some
00:27:57.480 | point, if we blow it out of the water and do exceptionally good.
00:28:00.520 | That's our kind of like hope is that we get a 50% return for investors so that
00:28:05.080 | we make more money and that everybody wins. But yeah,
00:28:07.280 | so I guess the point being there are ways to invest completely passively into
00:28:10.920 | real estate, whether it's a REIT or a company like Fundrise which is kind of a
00:28:15.240 | middle ground between a REIT and what I do,
00:28:17.080 | or whether you're investing in a person you trust and know from the internet or
00:28:21.400 | from a meetup group or whatever. That's why, and because of that,
00:28:25.880 | I'll even make this point. Most rich people, when I say rich, I mean, like,
00:28:29.720 | you have disposable income in a significant amount of way,
00:28:33.520 | should not invest in real estate, like actively.
00:28:37.440 | Because at the end of the day, you go out there, you buy a rental house, right?
00:28:41.720 | You're, you're a month in,
00:28:43.520 | you're sitting at the dinner table with your family. You're, you know,
00:28:46.240 | asking your kids these questions about that. And then your phone rings, right?
00:28:49.080 | You pick up your phone and you're like, and they're like, oh yeah,
00:28:51.440 | my toilet's not working tonight.
00:28:52.800 | And you say those like four most dreaded words of every landlord and family,
00:28:56.200 | which is I'll be right over. Like, I'll be right over. Right?
00:28:59.200 | So now you're leaving your family, you're driving over there,
00:29:01.560 | you fix the toilet, you come back home. A week later, the stove's not working.
00:29:05.520 | Right. And then they didn't pay rent three months later.
00:29:07.920 | And now you've got to evict them.
00:29:08.880 | And so if you were to look at the average person who buys real estate,
00:29:13.240 | like out there, that doesn't love it. And they're not,
00:29:17.800 | they're just trying to buy real estate and they're putting a bunch of their
00:29:20.480 | money into it.
00:29:21.320 | I would argue you'd get a better return investing with a company like mine or
00:29:25.640 | a fundraiser, or maybe even a REIT, then you're going to get on your own.
00:29:28.720 | Because when you average in all those costs of owning a rental property,
00:29:34.680 | they add up. Now, over time, if you're fired up,
00:29:37.240 | if you want to be good at landlording, you want to be good at this stuff.
00:29:40.440 | You want to manage your own properties and you like it. Yeah.
00:29:42.640 | You can make it a stupid over oversized return.
00:29:46.080 | That's going to get you financial freedom in just a few years. I did it.
00:29:49.280 | I mean, I did it from zero. I mean, from the time I was 20 ish to 27,
00:29:53.480 | I mean, I was in it.
00:29:54.800 | Like I was changing toilets and painting walls and all that.
00:29:58.280 | And when I was 27, I was able to quit my job and what I call retire.
00:30:03.080 | It's starting with no money. I mean, starting with Coldstone Creamery. Now,
00:30:06.280 | you show me a stock strategy that is somebody can start with no
00:30:11.560 | money and in seven years be retired,
00:30:14.560 | like at, with that level of assuredness, like, and I'll be, I'll be shocked.
00:30:19.680 | I mean, it sure can happen, right? Buy Bitcoin, do the GameStop thing.
00:30:22.640 | Like you get lucky, but I'm talking about like that level of like confidence.
00:30:26.040 | It's rare. So if you want to be active, great. If you want to be passive,
00:30:29.760 | there's ways for you to do that as well.
00:30:31.560 | When I hear the word active and I think about how you talked about Reits buying
00:30:34.800 | a class, it made me think that is the real unlock in real estate,
00:30:39.280 | the ability to buy a property and fix it up more than it is to
00:30:44.600 | just buy it and wait and cashflow. It is like,
00:30:46.800 | is the true skill finding places that have the opportunity to put
00:30:51.640 | in less money than it will ultimately appreciate?
00:30:54.520 | Is that where the magic is? Is that what you look for with your company?
00:30:57.960 | I mean, there's a million ways that you can, you can pull profits up,
00:31:01.320 | but yes, if I'm getting your question, right.
00:31:03.160 | What I like to do is I like to buy properties that you can immediately bump up
00:31:06.760 | the value, and then it goes up gradually from there. Right?
00:31:09.880 | So imagine you buy, let's go simple math, right?
00:31:11.760 | You buy a hundred thousand dollar property that you can just make,
00:31:14.880 | look a little bit nicer. And now it's worth one 50.
00:31:17.080 | Maybe you got to put a little money into it or whatever.
00:31:19.200 | Let's say now it's worth from 100. Now it's worth one 50. Well,
00:31:21.920 | now it appreciates from one 50 upward. It's not starting at the hundred.
00:31:26.200 | So you immediately start at this high, new, this new high level.
00:31:29.000 | And then it goes from there. So that's one of my favorite strategies.
00:31:32.760 | We call that value add investing. So you immediately add value.
00:31:36.440 | That is not what REITs do.
00:31:38.120 | And that's why REITs get a lower return is because REITs typically would just
00:31:41.520 | buy a property that's already there. And they're just banking on, you know,
00:31:44.880 | 3% per year rent raises to make all their, their wealth.
00:31:48.360 | And it's a strategy.
00:31:49.600 | I hear lots of people kind of amateur real estate investors are,
00:31:52.280 | we're going to buy a place in a neighborhood that maybe we understand because
00:31:55.320 | we've lived here and we're going to fix it up and either ourselves or hire
00:31:58.600 | someone and then we're going to flip it is house flipping something that seems
00:32:03.080 | like such a great idea,
00:32:04.200 | but has a lot more cautionary tales than the average person knows.
00:32:08.640 | I mean, definitely, definitely does. Uh, it's super fun, right? I mean,
00:32:12.480 | who doesn't like to take something ugly and make it beautiful. Uh,
00:32:14.920 | but maybe a lot of people, but I love it. It's super fun.
00:32:17.920 | Like you feel like you're on HGTV and flipping things, but yeah,
00:32:20.960 | flipping is very much a business in every way.
00:32:24.080 | Like you go start a business doing a lot of things.
00:32:26.760 | Some people just happen to do it with a piece of real estate, right? And you,
00:32:30.040 | you fix it up, you make it better. You sell it for more money.
00:32:32.640 | The risk of flipping,
00:32:33.920 | especially today in this market is that when you're flipping in a market that is
00:32:37.600 | dropping, which is what we find ourselves in today.
00:32:40.200 | Now I don't think we're going to see a dramatic, you know,
00:32:41.720 | plunge 80% of real estate values,
00:32:43.640 | but when you're in a market that is correcting, you're trying,
00:32:47.760 | you're kind of catching the falling knife, right?
00:32:50.120 | Like you're buying it for a hundred,
00:32:52.120 | you're going to put 20,000 into it and you think it'll be worth 150.
00:32:57.280 | But what if it's not worth 150?
00:32:58.640 | Like what if it takes you longer to do the project?
00:33:00.440 | And now it's only worth 140, but you also went over budget.
00:33:03.360 | And so you had to put an extra 20 into it. Well, now you're broke even.
00:33:06.040 | And then you pay the real estate agent and now you're losing money.
00:33:08.880 | I've been there. I've, I've had one bad flip that, that I lost money on. Uh,
00:33:13.280 | ironically, had I kept that property,
00:33:16.240 | I would have made cashflow every month,
00:33:18.680 | probably between five and $700 a month on that property.
00:33:21.280 | I would have kept for the past nine years or 10 years since I bought it.
00:33:26.120 | And today I sold that property, ended up selling it.
00:33:28.240 | Those numbers actually were this property. I tried to sell it for 150,
00:33:31.720 | didn't sell, ended up selling it for 120.
00:33:34.440 | Today that property is worth over half a million dollars. So like real estate,
00:33:39.480 | one of the other things that's very,
00:33:40.840 | very helpful is that it is a very forgiving asset class in time,
00:33:45.800 | right? It's a very forgiving asset class. You can screw up on a lot of stuff,
00:33:49.000 | but as long as you can hold it, you get bailed out of almost everything.
00:33:53.000 | That's not dissimilar from the stock market, right?
00:33:55.320 | If you just hold through the down times and through rough times,
00:33:58.880 | you can survive almost anything.
00:34:00.400 | And so the deal with real estate is you just need to buy properties that you can
00:34:03.680 | hold. If you need to, if you're going to flip houses, great.
00:34:06.560 | Just make sure if something goes wrong, you can hold it to bail yourself out.
00:34:10.080 | So you said rough times, you know, depending on who you ask,
00:34:13.480 | we're either in rough times,
00:34:14.600 | we're on our way towards rough times or rough times are about to be in the past.
00:34:17.960 | But it is true that interest rates are pretty high right now.
00:34:23.000 | How does the current market affect what the average person should be thinking
00:34:27.760 | about doing when it comes to real estate investing?
00:34:29.760 | Yeah. I mean, interest rates are high. If you look at a five-year time span,
00:34:34.720 | right? But if you look at a 50-year time span, they're actually pretty normal.
00:34:38.000 | Whether or not they'll go up higher or lower, we don't know.
00:34:40.840 | Interest rates definitely affect the market. I mean,
00:34:43.440 | like that's what the government's doing, right?
00:34:44.920 | Like they raise interest rates as a way to slow down the economy or the
00:34:49.960 | inflation anyway.
00:34:50.800 | And so the government is actively trying to make house prices stop going up.
00:34:54.960 | So by raising interest rates, they do that. Ironically,
00:34:58.120 | we're in a really weird time right now where they are deliberately trying to
00:35:01.680 | raise interest rates to keep house prices from going up.
00:35:04.440 | But what happens then is it makes it harder to build new property and it makes
00:35:08.960 | harder to, for people to buy property. So where do all those people go?
00:35:12.680 | They go rent because they can't build a new property and they can't go and buy
00:35:16.800 | something. So they go and rent. Well,
00:35:18.520 | we've already got a housing deficit in America, a really bad one,
00:35:22.040 | which is why rents are going up so much.
00:35:23.840 | So now we've got this increased problem.
00:35:25.280 | The government is trying to slow down real estate prices and other prices from
00:35:29.120 | going up by raising interest rates.
00:35:30.560 | But what the effect it's having is it's driving rents higher and higher and
00:35:34.360 | higher. So who wins in that situation? Like who wins when interest rates,
00:35:38.920 | when, when, when the rents are going up dramatically and people can't buy as
00:35:44.000 | much. Flippers don't win, right?
00:35:45.320 | Because you can't sell a house when you're flipping houses as much,
00:35:47.440 | but when you own rental property and you have a fixed mortgage that does not
00:35:51.320 | change and your rents go up by 10%, 20% per year,
00:35:55.160 | it's the landlords,
00:35:56.640 | it's the rental property owners that are beginning wealthier and wealthier and
00:35:59.960 | wealthier. So it, are we in rough times? I mean, if you're a tenant, yes,
00:36:04.320 | it's going to get rough. I think the next few years,
00:36:06.240 | I think tenants are going to see their rent go up across the country
00:36:08.760 | dramatically. If you're a landlord, I mean, these are,
00:36:12.600 | it's going to be really good times for us in the next few years.
00:36:15.120 | I think that most investors are,
00:36:16.720 | and honestly that's what's propping up real estate values right now too,
00:36:20.200 | as investors, because we know that's what's happening.
00:36:22.320 | So we're willing to pay more for properties.
00:36:23.960 | I'm willing to buy property right now that breaks even because I know that next
00:36:27.640 | year rent is going to be a lot higher, not everywhere, but in a lot of places.
00:36:30.600 | So that's, that's what I see in my crystal ball. I could be 100% wrong though.
00:36:34.800 | But does the cost of the capital, right?
00:36:37.000 | If leverage is the magic that helps you get the returns,
00:36:39.600 | the cost of capital going up,
00:36:41.840 | does that eat into the returns or does it get made up for by rising rent prices
00:36:45.360 | or how do you even think about interest rates?
00:36:47.800 | Do you slow down a little bit right now or does it not affect you?
00:36:50.960 | Yeah, it does. It, they are, it is compensated by rent raises, right?
00:36:55.360 | So on one hand they're, they're compensating, you know,
00:36:58.160 | so it's not a big deal.
00:36:59.120 | But what's cool is that like interest rates can be refinanced and you could
00:37:04.640 | refinance your mortgage at any point. So it's not like, Oh,
00:37:07.960 | I'm paying 7% right now on my mortgage. Okay, fine. Well, in two years,
00:37:11.120 | they go back down, you refinance into a 5% or 4%.
00:37:13.800 | You're not stuck for life with that. But what doesn't typically in almost any,
00:37:17.760 | almost historically always go down as rents,
00:37:21.560 | rents typically go up because inflation tends to go up, rates go up and down.
00:37:25.120 | So it's kind of like dollar cost averaging.
00:37:27.880 | And maybe it's use a phrase that I don't fully even understand cause I'm not a
00:37:30.600 | stock guy, but like, right. When things go down,
00:37:32.480 | you just refinance to get the lower rate and then you lock in that rate for the
00:37:35.160 | next few years. If they go down again, you just refinance again. So it's,
00:37:38.960 | it's I don't worry about rates right now because rates are temporary.
00:37:42.520 | Rents are going up.
00:37:45.280 | Yeah. I mean,
00:37:46.040 | I've been seeing all the news about the highest 30 year fixed prices in a long
00:37:49.960 | time. And all I can think about is if I were getting a mortgage right now,
00:37:53.120 | I would probably not be getting a 30 year fixed right now. Right. I, my bet,
00:37:56.880 | and I am not an expert and I could probably be wrong,
00:37:59.400 | but is that in the next 10 years,
00:38:01.120 | rates will likely at some point be lower than they are now.
00:38:04.320 | So if I were buying a home today and this is not advice for anyone,
00:38:07.440 | but if I were, I would probably look at the like seven, 10 year, uh,
00:38:11.480 | adjustable mortgages where it's only fixed for seven or 10 years.
00:38:14.320 | And with the anticipation of being able to refinance in that window, um,
00:38:18.280 | which I think is just this amazing feature of a mortgage.
00:38:20.480 | Like the bank can't refinance on you, but you can on them.
00:38:24.280 | You can add on them. And that's why I, I, yeah, the 30 year mortgage thing.
00:38:28.160 | It's for me. Yes. If I can get a dramatically lower rate off a seven year arm,
00:38:32.520 | they call it adjustable rate mortgage, a seven or 10 year. Yeah.
00:38:35.640 | I like that idea. Here's what I don't like though.
00:38:37.320 | What happened in Oh seven Oh eight, right.
00:38:38.920 | As people have these adjustable mortgages for the same reason,
00:38:41.320 | like the, that we're having in today. Uh,
00:38:43.400 | and so they'd get the arm cause it was cheaper.
00:38:46.040 | And then the arm would shoot up when the market collapsed,
00:38:49.080 | the arm shot up to 28%.
00:38:50.960 | So all of a sudden people's mortgages went from a thousand to $5,000 and they
00:38:55.000 | lost their homes. That's, that has been changed. Uh,
00:39:00.000 | there are now limits on what an arm can do. A lot of people don't realize this.
00:39:03.120 | They think, Oh,
00:39:03.600 | I would never get an adjustable rate mortgage cause I don't want Oh eight to
00:39:06.000 | happen again. Well, if you look at the paperwork and talk to your lenders,
00:39:08.640 | yeah, most arms have a max what they can get to.
00:39:11.320 | And it's somewhere in the, like the 11, 12% range. So I, yeah.
00:39:15.400 | Could rates stay high forever? And then your adjustable rate,
00:39:18.000 | seven years from now goes up to 12%. That is possible. That is a risk.
00:39:21.760 | So if you really don't like, like risk, take a 30 year mortgage,
00:39:24.960 | you can refinance a 30 year mortgage too.
00:39:26.520 | But if you want to lower your interest rate and take a little gamble,
00:39:29.640 | that's what I typically do. Yeah. The arm's not bad.
00:39:32.520 | Yeah. Yeah. We had that.
00:39:34.000 | I built that into my model when I was like, which one do we do? I was like,
00:39:36.760 | well, you know, and, and by the way, because of the lower rate,
00:39:39.600 | don't think of the breakeven as seven years, you do a seven rate arm.
00:39:43.280 | You probably, because you're going to get a lower rate,
00:39:46.200 | you probably have maybe eight, nine,
00:39:48.080 | 10 years to refinance before it would have been a worse deal than the 30 year
00:39:52.560 | fix. You're right on it. Because for the first seven years you're saving money.
00:39:55.960 | So, yeah. And you can invest that in other things and all that. Yeah.
00:39:59.320 | A hundred percent. I love that. So one thing I've heard you say in real estate,
00:40:03.520 | it can be easier to do bigger deals, right? Like some of these huge deals,
00:40:07.640 | you know,
00:40:08.080 | compared to buying one house and fixing it up can be easier and, and you know,
00:40:12.960 | more profitable. So what does that mean for the average investor?
00:40:16.040 | Does that mean like forget starting with buying, I think for you, it was like,
00:40:20.320 | you know, you bought a house in Portland. Like is that,
00:40:22.320 | forget that as your first strategy,
00:40:24.080 | is there a way to kind of skip and jump into something bigger without
00:40:27.800 | necessarily needing to hire someone?
00:40:29.560 | Or is the answer to jump into these bigger projects,
00:40:32.400 | you need to invest with a syndicate or something like that.
00:40:35.760 | So you can definitely invest with a syndicate, right? That's totally fine.
00:40:38.640 | You get a good return that way. Hopefully, if you have a good person, right?
00:40:41.800 | A good company that you're working with,
00:40:42.960 | you should a person jump into a larger deal. For example,
00:40:47.040 | there's a investor named Grant Cardone.
00:40:48.880 | He's very popular on social media, millions of followers, very loud,
00:40:52.400 | an exciting guy, right? So Grant has this big thing. He's always like,
00:40:56.520 | don't buy anything under 50 units. It's stupid. You shouldn't do it.
00:40:59.520 | He's kind of a Dave Ramsey of the opposite side. He'll tell you,
00:41:02.040 | you're stupid if you, you know, if you don't use debt. So I don't,
00:41:05.760 | so the over here, we've got Grant saying,
00:41:08.200 | don't do anything small ever only by large deals because they're easier.
00:41:12.880 | And I've said the same thing. Large deals are easier,
00:41:15.200 | but large deals have require a whole lot more capital that may not be
00:41:20.640 | yours. And there's a big learning curve, right?
00:41:23.800 | So if I make a mistake on my that, let's go back to the flip.
00:41:27.200 | I said I lost money on the one flip I lost money on, right?
00:41:29.560 | So I lost probably $15,000 what I lost because the market wasn't as good as I
00:41:34.560 | thought it was. Maybe I didn't do as good of a job rehabbing as I thought.
00:41:37.680 | I took a lot longer than I thought I screwed up because I was new to flipping
00:41:41.720 | houses and I lost $15,000. Okay. Well, you know, I can survive that.
00:41:46.760 | I mean, I can, I can earn that back other ways.
00:41:48.480 | I bought a hundred million dollar apartment complex and I screwed up and lost
00:41:52.320 | 15%. Well, now I've just lost $15 million of probably investor capital or your
00:41:57.320 | own capital. So if you're going to going big is great.
00:42:02.200 | It is easier because you have smarter people at all the levels and the,
00:42:06.120 | the salaries for those people or whatever you want to call it.
00:42:08.640 | The way those people get paid is kind of baked into it because you're buying a
00:42:11.440 | business. Like if you're buying an apartment complex,
00:42:13.960 | you are not buying a real estate.
00:42:15.160 | You're buying a business that happens to trade in real estate.
00:42:18.120 | That makes sense to you. You have people, you have staff,
00:42:20.280 | you have processes systems and the bigger you go,
00:42:23.280 | the better those systems and processes and people are,
00:42:25.760 | which is why you want to go bigger when you're buying a duplex. I mean,
00:42:29.200 | who's changing your toilet. You're got,
00:42:30.480 | you got to call the plumber or you got to go do it. When you have a,
00:42:33.320 | when you own 1% of a billion dollar portfolio,
00:42:36.760 | that portfolio manager has people who take care of the problem for you. So yeah,
00:42:41.360 | bigger can be easier because you're allowed more people. You got bigger teams.
00:42:45.520 | And frankly, there's just more cashflow,
00:42:48.200 | usually to be able to afford and to pay for all those problems.
00:42:52.000 | This might be a naive question, but is it easy,
00:42:55.560 | even at the small level to hire someone to handle all of that,
00:42:59.400 | all of the problems with a rental? If, if I were to say,
00:43:02.400 | I want to buy a rental property in North Carolina, right?
00:43:04.960 | I'm not going to drive over and fix it. It's a multi-hour flight.
00:43:08.120 | Maybe even I have to change planes,
00:43:10.240 | but is it easy as a small time real estate investor to buy a property in another
00:43:15.000 | state and hire someone to manage it?
00:43:16.560 | Are they easy to find those people and vet those people?
00:43:18.920 | And does it eat too much into your returns that it makes it not worth it?
00:43:22.760 | It is so easy to hire someone to manage your rental properties.
00:43:26.360 | It's so hard to hire someone good to manage your rental properties, right?
00:43:30.880 | And so, I mean, there's a million of them out there.
00:43:32.480 | There's a million property managers.
00:43:33.800 | This is an entire industry of people who will,
00:43:36.240 | you can hire for 10% typically of whatever the rent is.
00:43:39.160 | They'll take care of your property. So you've got a property,
00:43:41.400 | the rent is a thousand dollars.
00:43:42.640 | They'll charge you a hundred bucks a month to manage your property for you.
00:43:45.200 | No problem.
00:43:46.040 | But their only incentive is to make sure the property doesn't go empty.
00:43:50.760 | And they've got a thousand other units that they're also incentivized to make
00:43:54.360 | sure they don't go empty. So it's not impossible.
00:43:57.240 | There are great property managers out there.
00:43:58.960 | I've worked with a lot of good ones,
00:44:00.320 | but I've worked with a lot of bad ones that are,
00:44:02.840 | they'll put in anybody and they don't care about you.
00:44:06.200 | They don't care about your property as much.
00:44:07.360 | So the key is due diligence, right? It's the exact same logic.
00:44:11.080 | Have you ever hired an employee before? I mean, you owned a company.
00:44:13.600 | So I mean, it's really easy to hire an employee, right? It's really easy.
00:44:18.280 | Just put a job description, guy walks through the door.
00:44:20.200 | They have a pulse, hire them. It's really hard to hire a good employee.
00:44:23.880 | And the way you hire a good employee is by
00:44:28.800 | testing out a few of them, knowing what you want, getting recommendations,
00:44:33.120 | looking at referrals, interviewing them, talking to them.
00:44:36.280 | And then if they suck,
00:44:37.280 | letting them go right away and firing fast and hiring slow, right?
00:44:40.520 | That whole thing, it's no different.
00:44:42.680 | When you hire a property manager to look up to your properties,
00:44:44.760 | you're just hiring a team member to take over your property.
00:44:47.840 | So don't treat it any like just because they say their property manager,
00:44:51.040 | it doesn't mean they're good. That's the bottom line.
00:44:52.920 | A funny analog to that is we have an au pair and we were
00:44:58.160 | asked this question after we interviewed our last au pair, you know,
00:45:01.280 | we probably did four or five video calls. We had her meet the kids.
00:45:03.880 | We talked about everything.
00:45:04.840 | We wrote up a guide to how we would want everything in our house to function and
00:45:09.440 | how we take care of our kids and the responsibilities.
00:45:11.280 | And then we got this email that was like,
00:45:12.920 | we have a few questions for you now that you've matched with your au pair one,
00:45:15.840 | have you and your partner both talked to the au pair? And we're like, yeah,
00:45:19.960 | of course. And then it was like,
00:45:21.280 | have you guys talked about childcare expectations?
00:45:23.520 | I was like, this person's going to live in our house to take care of our child.
00:45:26.000 | Of course, we've talked about childcare expectations.
00:45:28.040 | And then this whole thing clicked when we started hearing from our au pair,
00:45:31.920 | how so many of the other au pairs she was friends with had these terrible
00:45:35.280 | situations where the expectations were totally wrong. And she was like, Oh,
00:45:39.160 | some of them had a one 20 minute call. And that was it.
00:45:42.000 | And I just couldn't believe that people who I would imagine in their
00:45:45.240 | professional lives treated hiring with a really rigorous
00:45:49.480 | process. And then in their non-professional work lives,
00:45:52.800 | their job life, just hire people with a totally different thing.
00:45:56.000 | So it sounds like that same principle applies,
00:45:58.120 | whether you're hiring someone to manage your property,
00:46:00.080 | or you're hiring someone to watch your kids, interview them.
00:46:03.000 | Like you would,
00:46:03.640 | if you were running a business and trying to hire an employee,
00:46:06.080 | you want to work for you for many years.
00:46:07.840 | Dude, that is so good. Right. And this goes to one of my favorite questions.
00:46:11.800 | Like I think my performance coach once asked me,
00:46:13.560 | but I use it all the time in people. I'm going to,
00:46:15.400 | I'm going to get asked, ask it to you right now.
00:46:17.200 | It's exactly related to this.
00:46:19.520 | What is something that you do in your, in,
00:46:23.200 | in your strong area of life that you don't do in your weak
00:46:28.040 | area of life, right? Like maybe your strong area of life is business.
00:46:31.000 | So one thing you do really well is you hire people really well.
00:46:33.360 | You put them through the whole system and then you don't understand why your
00:46:36.400 | au pair is terrible. Not you, but people, right.
00:46:38.320 | Because they're not doing the things in one area of their life that they do in
00:46:42.240 | the other one. So if you want to improve the weak area of your life,
00:46:44.600 | just do the same stuff you do in the strong area of your life. Right.
00:46:47.920 | And so like, this is that idea of like, yeah, if you're the au pair,
00:46:51.240 | whether it's an au pair, whether it's whatever,
00:46:53.040 | like do the stuff that you know you need to do and don't be lazy about it.
00:46:57.000 | Cause that's why you're good at that one thing in your life.
00:46:59.280 | So I'll throw it at you. Yeah.
00:47:00.160 | What's something you do in a strong of your life that you're currently not
00:47:04.040 | doing in a weaker area of your life?
00:47:05.440 | It's funny because the creation of this podcast in some way was me trying to
00:47:10.800 | identify all the areas of my life for improvement and applying kind of the,
00:47:14.800 | the, the principles of them. So I think when I got started,
00:47:18.520 | there were a lot more, right? I was like, gosh,
00:47:20.240 | when it comes to health and eating, I was like,
00:47:22.760 | I know this is important and I'm not optimizing it at all.
00:47:26.600 | So we ended up just like eating quickly, making unhealthy food.
00:47:29.520 | And then we were like, Hmm, well,
00:47:31.040 | if I was at a company and I was trying to run this like a business,
00:47:33.640 | I would try to figure out if maybe there was someone else could do it.
00:47:36.560 | And so then we ended up outsourcing to someone local that cooks meals and drops
00:47:40.560 | them off. Like we didn't outsource to a chef in our house. That's right.
00:47:44.040 | We outsourced, you know,
00:47:44.960 | put an ad on Craigslist and look for someone, Hey, do you like to cook?
00:47:47.960 | Can you cook? Uh, and so I've,
00:47:50.320 | I don't know if I have a perfect example now because every time I find one of
00:47:54.080 | those things, I'm like, I attack it like this crazy thing.
00:47:57.240 | And then I usually end up talking about it on the show or making a whole episode
00:47:59.880 | about it or interviewing someone to try to figure out how to do it.
00:48:02.320 | So I guess maybe if I went through the list, I was like,
00:48:04.480 | what's on my list of things I want to talk to people about.
00:48:07.160 | I definitely don't feel like I've nailed, uh, you know,
00:48:10.600 | best practices for sleep. Like I, you know, I track my sleep.
00:48:13.680 | I do a pretty good job, but I don't feel like I've gone deep there.
00:48:16.480 | So an episode on sleep is one that's kind of imminently sitting on the back
00:48:20.440 | burner. Uh, there's probably a few other topics. So I would say whatever,
00:48:24.640 | whatever topics come up on the show in the next six to 12 months are things that
00:48:28.040 | I probably in hindsight, I'm doing terribly right now.
00:48:30.760 | Well, I love that you brought that example up, right?
00:48:32.680 | Like it's the example of like the fitness, like people are like, Oh,
00:48:35.360 | I'm struggling with my fitness. And I'm like, okay, well like, like,
00:48:38.200 | what do you do in business when you struggle? Like, Oh, you know,
00:48:40.360 | I read business books. I go to conferences. I, you know, go to meetups.
00:48:44.400 | I interview people. Okay. Why aren't you applying that to your fitness?
00:48:47.480 | Then go to maybe read a fitness book, right?
00:48:49.480 | Maybe go to a conference on fitness. I don't know.
00:48:51.240 | Like use the stuff that works that you know works and apply it to the areas
00:48:55.080 | where you're struggling with. So I love that you brought that example.
00:48:56.880 | Food and fitness is a huge one. Okay. We've talked about improving lives.
00:49:00.040 | You've mentioned mindset, performance coach.
00:49:01.600 | I have a lot of things I want to touch on outside of real estate,
00:49:04.400 | but I do have one question I want to get your take on. How do you, you know,
00:49:07.640 | I assume you're pro, you know, owning your own primary residence.
00:49:11.520 | So we didn't even talk about it, but I'm pro ish owning your own primary
00:49:15.640 | residence. I love it. There are reasons not to, but mathematically. Yes.
00:49:20.640 | I love it. Yeah. I mean, look, if you're not going to be in it for awhile,
00:49:23.360 | if you want the flexibility of being able to move all kinds of reasons, I am,
00:49:27.120 | I am not one to say everyone should own. In fact,
00:49:30.360 | I think there are a lot of people who think they should own that should probably
00:49:32.800 | be renting. Um, but, but, but let's say you're not opposed to it.
00:49:37.040 | You're not like, don't buy a home.
00:49:38.200 | So we've talked about a lot of different types of real estate.
00:49:40.240 | The one I'm curious to get your take on.
00:49:42.080 | I hear from a lot of people saying, gosh, you know,
00:49:45.240 | maybe I live in the Bay area. Maybe I live in New York or real estate's too
00:49:47.600 | expensive. And so I'm going to buy a vacation home.
00:49:51.560 | And I see so many people say, I can't afford this.
00:49:54.640 | So I'm going to buy a house in Tahoe.
00:49:55.680 | We have a lot of friends who said I'm going to buy a house in Tahoe.
00:49:58.120 | And to me, I've always been like, gosh, I don't, I don't want it.
00:50:00.960 | I don't want to manage a house in Tahoe as a rental.
00:50:03.240 | I'm not going to be there all the time.
00:50:04.720 | We ended up buying a fractional home with this company Picasso and that we now
00:50:10.160 | own one eighth. And we only go six or six weeks a year.
00:50:13.160 | It's been absolutely fantastic. It's exactly what we need.
00:50:16.000 | But I'm curious what you think about vacation rentals,
00:50:18.520 | time shares that whole side of real estate that we haven't really touched on at
00:50:21.880 | all.
00:50:22.520 | So there is, it's a great question. So generally speaking,
00:50:26.080 | I think that vacation homes are a tremendous waste of money when it's like,
00:50:30.800 | I'm going to buy a house that I can go visit as a vacation,
00:50:34.080 | because you're starting from the wrong angle.
00:50:35.840 | You're not starting with, I want to buy an investment.
00:50:37.560 | You're starting from an emotional standpoint of, I really like Cabo.
00:50:41.120 | I'm going to go buy a vacation house in Cabo. And then from,
00:50:44.200 | you're just screwed from the first minute you do it. And then, yeah,
00:50:46.480 | you got all the headaches of owning property. Oh, forget to,
00:50:49.160 | you got the threat to renew the insurance.
00:50:50.960 | So they sent the bill to the wrong place or, you know, the,
00:50:53.440 | the something broke while you were gone.
00:50:54.840 | And now the water leaked all over the floor.
00:50:56.200 | So when you approach it from, I want a vacation house because I like Cabo,
00:51:00.120 | I'm like a hundred, generally a hundred percent against that. I'm like, don't,
00:51:02.840 | like just go, go rent a place in Cabo.
00:51:04.800 | There's great houses and they'll clean up after you're done. Like, it's like,
00:51:07.960 | it's, it's way better just to rent a place. Now, if you want a,
00:51:12.000 | if you have a place you like going to all the time,
00:51:14.520 | a thing like what you did, a fractional ownership, I love that idea.
00:51:17.280 | Cause you still have part ownership,
00:51:19.000 | but you're not wasting the other 90% of your year that you're just not going to
00:51:23.120 | use it. So I like that strategy a lot when the numbers work out. But again,
00:51:27.480 | I would just caution people to look at like,
00:51:28.760 | are you really better off owning something or is it better just to go on Airbnb
00:51:32.240 | or rent a stupid house? That's different each time.
00:51:34.240 | So you get to have more fun. That's up to you. And then timeshare stuff.
00:51:37.880 | I avoid all of that. I don't like really much of any of the timeshare stuff.
00:51:41.920 | Maybe I'm sure some of it's good. I'm just not good at it. And I don't like,
00:51:44.800 | I don't like the shadiness of the industry that has been for the last 50 years.
00:51:49.960 | Now, the last thing though, is owning vacation rentals,
00:51:53.280 | like owning an investment that you buy as a Airbnb property or as a
00:51:58.280 | VRBO property, that can be a tremendous cash cow.
00:52:03.440 | Like I said earlier, seven grand a month, my condo,
00:52:05.480 | I got another one coming online next month between the two of them.
00:52:08.000 | That's 15, 14 to $15,000 a month in profit. I'll be making.
00:52:12.000 | That's like retire from your job,
00:52:13.960 | sit on the beach for the rest of your life kind of money from two properties.
00:52:17.440 | But it is a business. It is fully a business that requires systems,
00:52:22.640 | people, processes, the whole works.
00:52:24.520 | And it's also very heavily dependent upon service, hospitality.
00:52:28.840 | So if your tenant says jump, you got to say how high,
00:52:32.040 | or they'll give you a bad review.
00:52:33.320 | And then that reflects like poorly on you and you get less bookings and all
00:52:36.600 | that.
00:52:37.160 | So if you're willing to put into work to own an investment property that does
00:52:41.520 | vacation rentals, it is a phenomenal strategy,
00:52:44.880 | even better if you can manage it yourself.
00:52:46.680 | Like one vacation rental can give somebody complete financial independence.
00:52:50.280 | If you're willing to manage it yourself, one vacation rental,
00:52:53.240 | two vacation rentals will change your life.
00:52:54.880 | And you don't mean a vacation rental that you're like, I like to go to Cabo.
00:52:57.720 | So I'm going to buy it in Cabo and rent it out when I'm not there.
00:53:00.160 | You mean I'm going to treat this like a business.
00:53:02.640 | I'm going to buy a vacation rental wherever I think the best vacation rental
00:53:05.680 | market is. And maybe that's Cabo. I don't know.
00:53:10.200 | And you know, broadly speaking, whether it's, you know,
00:53:13.520 | real estate to invest in or vacation rentals,
00:53:15.440 | where do you even go to start to learn?
00:53:17.800 | Where is the most desirable place to buy right now?
00:53:20.160 | Where do you kind of collect that data?
00:53:22.400 | Or is there an obvious answer that I, as a, as a novice here, don't know.
00:53:26.080 | There's not, it's, it's very nuanced,
00:53:29.600 | which is why real estate is so powerful because it's,
00:53:31.400 | it's not an efficient market, right?
00:53:33.360 | When we talk about like efficient markets,
00:53:34.640 | like like stocks or whatever are very efficient.
00:53:36.840 | You can buy and sell real easily. Insider trading is not allowed, right?
00:53:40.080 | Insider trading is allowed all day long in real estate. It's great.
00:53:42.800 | I use insider trading all the time in real estate investing.
00:53:46.160 | Now someone's going to take that clip right there,
00:53:48.000 | cut out the last half of that and throw me in jail for it. But no,
00:53:50.800 | insider trading is totally out. So in other words,
00:53:52.200 | where do you have inside knowledge? Like what area do you know?
00:53:56.160 | I would argue that like your knowledge of an area is more important than the
00:53:59.920 | metrics of an area.
00:54:00.920 | Your knowledge of an area is more important than the metrics of an area.
00:54:04.480 | I know Maui Hawaii really well. I've lived here for four years.
00:54:08.000 | I moved here because I'm, I prioritize lifestyle over profit,
00:54:11.640 | but I still like once I got here, I learned Maui really, really well.
00:54:15.680 | So I can do really, really well here. You could not,
00:54:18.720 | like you would lose money almost for sure in Maui because you don't know the
00:54:22.000 | market. It's the market metrics are almost irrelevant in a large way. Now,
00:54:26.600 | there are, there are ways to learn more, right?
00:54:28.400 | There's a million blogs out there. I mean, bigger pockets,
00:54:30.760 | the podcast is on forever. They do a lot of occasional stuff. Uh,
00:54:34.480 | but just in general market research,
00:54:36.320 | I'm a big believer and find what other people are doing that are like,
00:54:41.160 | that's like what you want to do and just do it where they're doing it.
00:54:44.400 | Like you don't have to reinvent the wheel. If you're like, Oh,
00:54:46.640 | there's a lot of people doing vacation rentals in the smoky mountains right now.
00:54:50.800 | I can name at least 10 friends of mine that have smoky mountain
00:54:55.280 | vacation rentals. So do you think you could be number 11? Probably, right?
00:54:59.640 | Are you willing to learn the market to get good enough to make money in it?
00:55:02.800 | If yes, then do it. Oh yeah. There, there, there is no like one definitive source.
00:55:07.120 | It's like,
00:55:07.320 | this is where the best thing is because then everyone would go there and then it
00:55:10.000 | wouldn't be the best thing anymore.
00:55:10.960 | So what are you willing to research, look into, and then, uh, jump in.
00:55:15.240 | Okay. You mentioned bigger pockets, any other resources, books,
00:55:18.720 | things that people should go to if they want to go deeper than just this episode?
00:55:22.640 | Yeah. And you know, I, yeah, bigger pockets is amazing, right?
00:55:25.920 | So bigger pockets, I didn't start it. I was just on a podcast for a decade. Uh,
00:55:29.720 | but I was a young, like young real estate investor who found bigger pockets when
00:55:33.640 | I bought my first property and they have a massive forum. Uh, like again,
00:55:38.560 | they're not, they're not paying me to plug this.
00:55:40.080 | I'm just saying like this changed my life. Cause I,
00:55:41.840 | there was a place you could go and just be like,
00:55:43.720 | I'm looking into these smoky mountains.
00:55:46.240 | Does anyone know a good vacation rental spot in the Smokies?
00:55:49.920 | You'll get 50 people who invest in the Smokies to be like, yeah,
00:55:53.200 | don't do it or do it here. Watch out for this place. It's the,
00:55:56.400 | the forum is phenomenal for Q and a almost every question that could ever be
00:55:59.800 | asked is probably already asked in there.
00:56:01.360 | So you don't even have to ask it if you're an introvert,
00:56:02.920 | like you just want to go and read. Uh, but yeah, bigger pockets, amazing.
00:56:06.280 | The forum blog podcast, whatever. Uh,
00:56:08.800 | meetups are great. I love local meetups, real estate's an interesting community,
00:56:13.720 | just like the tech community, you know, like in a lot of cities like Denver,
00:56:17.560 | Austin, uh, San Francisco,
00:56:19.400 | you get really good meetups of like founders and entrepreneurs that get
00:56:24.200 | together because it's a lonely business to run a business by yourself.
00:56:27.080 | Real estate the same way.
00:56:27.960 | Every major city in America has meetups happening almost every night of the week
00:56:32.800 | somewhere. Uh, you can find a lot of them on bigger pockets.
00:56:35.360 | I think it's biggerpockets.com/events. Uh,
00:56:37.760 | you can find them on like meetup.com. You can start your own,
00:56:40.560 | but real estate investors getting together.
00:56:42.520 | You're going to learn so much more than if you were to just pick up my book from
00:56:45.880 | Amazon or somebody else's book,
00:56:47.360 | because it's real people in the area doing the thing that you want to do.
00:56:53.040 | I love it. Yeah. I mean,
00:56:54.080 | part of my foray into the tech sector in the Bay area was just,
00:56:58.000 | I arrived here. I didn't know a single person. Uh, and I was like,
00:57:01.040 | I just need to meet people. So I went to, there's this like SF new tech meetup.
00:57:04.960 | I would go to that and you know, there were just millions of them. And I would,
00:57:08.160 | and then I ended up hosting my own event, uh, which was another big part of it.
00:57:12.040 | And so I'm a big fan of, of meeting people in the, in the, in the flesh,
00:57:15.680 | which we are now, you know, much more getting,
00:57:18.040 | getting at least much more comfortable doing.
00:57:19.920 | [inaudible]
00:57:24.920 | okay. If that ending seemed abrupt,
00:57:27.640 | it was probably because it wasn't actually the end of our conversation.
00:57:30.840 | If you remember when I originally introed Brandon at the beginning of this
00:57:34.240 | episode, there was so much more than real estate I wanted to talk about,
00:57:37.600 | but I didn't want to release a two hour podcast on two separate topics.
00:57:42.120 | So instead in a few weeks,
00:57:44.200 | I'll put out another episode of all the hacks where I dig into the mindset
00:57:48.640 | Brandon used to build his massive real estate portfolio while also living his
00:57:53.320 | ideal life. We'll talk about setting goals, hacking, self-discipline,
00:57:57.600 | using performance coaches,
00:57:59.280 | finding the balance between audacious business goals and quality family time.
00:58:03.680 | And finally, all of his amazing Maui recommendations,
00:58:07.320 | which by the time that airs, I'll probably have gone and used myself.
00:58:11.400 | So definitely check that out in a few weeks because I already know it was
00:58:14.720 | fantastic. And next week we have an incredible conversation with Annie Duke,
00:58:19.200 | author of thinking in bets and quit. But until then, have a wonderful week.
00:58:23.800 | Please send me questions for the next mailbag episode where I'll cover life,
00:58:27.960 | work, non points, travel, and anything else you send my way.
00:58:31.680 | Chris@allthehacks.com. See you then.