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That's FijiAirways.com. From here to happy. Flying direct with Fiji Airways. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

Today my guest is Chad Carson, aka Coach Carson. He's a real estate investor and financial freedom advocate. And Chad, early retiree, is that the case? We're almost there. It depends on how you define it. But I feel pretty good about my life right now. I'll say that. Awesome. Well, welcome to Radical Personal Finance.

How do you define it? Well, I've been working on that for about 13 years and it's one of the reasons I got interested in your website and looking at it because I know you kind of pick apart the same thing about these different stages of financial independence. And I've sort of come to that the best definition I can give is that I'm climbing a mountain and at the very peak of the mountain is this idea that I'm going to have a large number of assets and those assets pretty easily produce passive income that pays for my lifestyle.

And that's sort of the general big picture. But what I found for myself along the way is that I've hit a lot of plateaus during that climb. And some of those plateaus have been, you know, I might not have 100 percent of the income I need, but I have half of it or I have three quarters of it or I have a lot of money in the bank and I can take many retirement for a year or six months.

And so I guess I've sort of had a hard time defining it because I've enjoyed the process a lot as well. And I think I'm getting closer and closer to the peak and the actual definition I want. But it's been fun along the way too. So tell us your journey.

Where did you start with working toward building financial independence? Did you come from a privileged background or where did you start? I did hit the ovarian lottery, as Warren Buffett likes to say. I didn't have a bunch of money given to me, but I had good parents who were very supportive and I played football.

And so I got a college scholarship to play football at Clemson University. And so that pretty much paid for my school and I got a school education for free. I didn't have any debt when I got out. And so in that respect, I had a clean slate when I started.

And sort of the fork in the road for me after college, I was a science major, biology. And I thought about teaching. I thought about medical school. I also thought about going some, you know, working for some Wall Street companies and kind of go the business route. But for me, the allure was always entrepreneurship and starting my own thing.

And so I got into the real estate entrepreneurship path, just sort of on a whim out of college. And I had to own my car and I had a thousand bucks in the bank and I just had to figure it out and scrap by. And that's sort of been my story for the last 13 years.

Being an entrepreneur, trying to make a living as a real estate investor, but then also building wealth and working towards that financial independence that we were talking about. Were you surfing late night cable TV and came across Carlton Sheets, his program? Something like that. Where did you get the idea?

Well, see, another reason I was fortunate is my father had rental properties growing up. And so he had some books on the shelf and I would, you know, I was perusing the books on a shelf during a break in college and noticed one of them. It was actually a Mark Haraldson book.

I don't know if he's kind of an old school guy from the 70s or 80s. And it was one of those just super catchy overdone titles, you know, like, you know, retire and this many years. And I said, oh, wow, that sounds great. I hadn't started working, but I really would like to retire.

And so I started reading it. But the good thing was I had all these books on the shelf. It was like a library that I could just absorb. And I'm a learner and I love to pick it up. And so I started reading and it really planted the bug in me because I'd seen my dad work in it.

And I never liked real estate growing up because he used to make us, you know, make us during the summer go clean out some of these foreclosure houses that he bought. And in the Georgia summers, Atlanta would be 90 degrees and there would be, you know, old deer meat in the freezer of these refrigerators that I'm cleaning out.

And I said, this is horrible. And who in the world would ever, I don't know why you would do this. And of course, when you get out of college and you start thinking about potential, you said, wait a minute, dad was actually pretty smart guy. And so I saw for a year I apprenticed under him and I was a bird dog where I just I said, you know, dad, I've read in the book that there are these things called bird dogs where I could basically find an experienced investor deals by hustling and going out, knocking on doors and sending letters.

And so he told me a definition of the type of deals he was looking for, the locations he was looking for. And I hustled and went out there and found them during that first year and bought deals. And I made a little bit of a markup on every deal that I bought him.

And that got me started. That was sort of went from there. So I want to talk about that start. But before we do that, do you have kids now? I do. Yeah, I have a three year old and a five year old. Do you make them go out and rake the leaves in one of your rental properties?

Do you anticipate putting them through the same thing your dad did to you? I'm so thankful to my wife because they're so much more helpful than I was as a kid. I said that this could not be my genes because I was complaining the entire time. And my kids are like, dad, can I help you?

Can I help you? So I think we'll we won't get to the deer meat in the freezer yet, but I think I'll let them pick up trash at the rental properties when we go on the construction site or something. I think that'll be the first step. It is like we joke about it, but for me, it's actually one of my primary motivators for investing in real estate is because it can be a really good family business and can provide you with a lot of ways to give your kids opportunities for meaningful work while exposing them to the process of investment.

And that's a benefit that many parents, if they don't have their own business or if they don't have something like real estate, it's tough to find work for your kids to do. But if you can put them to work and, hey, we're going to clean out this property, going to go clean it up, you can have hard work that's safe and still teaches them the lessons.

So I think it's a huge benefit of real estate. Absolutely. Myself. And you could use one of those tricks where you can have a 10-year-old making a couple thousand bucks during the summer and putting their money in or off IRA, right? Absolutely. Yeah. It's one of the fun avenues you could take with that.

It's without question one of the things that people should do. Bird dogging. Explain what – so I feel like this is a really good way for people to get into real estate and since you've actually did it this way, explain what a bird dog is and how somebody who's interested in pursuing your path might go about doing what you did.

Okay. Well, I mean a non-technical definition of a bird dog is for those who aren't in the south and do hunting. I grew up in the south and so bird dog is a little more intuitive. A bird dog in hunting would go point out where the birds are in the bushes and the hunter would then go catch the birds or shoot the birds.

And so that's essentially what you do. What I did as a bird dog was I would sniff out those deals and sometimes that would involve – one of my core ways that I've always done and still do to this day is just riding neighborhoods and looking for vacant houses.

And so I could literally, "Hey, there's some grass really tall in that house," and I would go to start sniffing around and knock on the door. "All right. There's nobody there. I'm going to knock on the neighbor's door, talk to the neighbors. Hey, I'm interested in buying this house.

Do you know who I can talk to about buying it?" And just start asking questions and getting involved. And I would start doing that. I'd start talking to realtors. I would send out some letters to different kind of marketing campaigns. And the point being though that a bird dog is sort of on the front end of the acquisitions funnel of buying these products of real estate.

And the benefit for a brand new person who's willing to hustle and who's got some courage to go knock on doors and talk to people is that you don't have to know all of the rest of the funnel of real estate. You don't have to necessarily have to know how to raise the money.

You don't have to know how to do all the negotiations. You don't have to know how to even analyze 100% of the deal. You need to recognize some factors of what's a good deal and what's not. But a bird dog is basically just pointing the bird out and then they bring in the big dog.

They bring in the investor who has the capital and the knowledge and the experience. And that person actually knocks the deal down and gets it. And you have some sort of arrangement. Either if you're a licensed realtor, you can make a referral fee, a finder's fee. If you're not, maybe you can figure out a way to get on the salary for that investor or find some other way, legal way to do that and make a small cut.

My cut was $2,000 for every deal that I brought the investor. And for that investor, that could be a very good investment because they're getting a deal they might make $30,000 on or have a lot of cash flow for many years. So that's a reasonable fee to pay. Yeah.

And so to just identify it from my perspective – and by the way, Chad, if you disagree with anything I say, please add your own perspective. You're the one who's actually actively engaged in this business. I'm a newcomer to the business. But one of the major benefits just to point out here is a core skill of real estate investment is finding deals.

But early in your career, as you explained there, fresh out of college, no money in the bank, it can be tough to have the money necessary or valuable to put together deals. And so you can – by working as a bird dog, going out and finding deals for other investors, you can hone and develop the skills of finding deals and then you can get paid for that work.

And the investors down the road, you always face this tradeoff of time and money. Young people usually have lots of time and not much money. Older people usually have a decent amount of money and a lot less time. So if you can bring a good deal or a fair deal to an investor who's got the capital to expend and they can do that without them – without it requiring them to have a lot of time off driving around neighborhoods looking for empty houses when they could have more productive uses of their time, you're performing a very valuable service, building skills that are important, putting together capital, putting together deals, gaining experience and getting paid for it all the way through.

So it is a way that somebody who literally you have no job, you just have a little bit of knowledge, you meet an investor or some investors, find out what they're looking for and you go out and find them deals, you can create a business for yourself starting from scratch.

Yeah. I mean you nailed it. You nailed the benefits. I'll give some caveats to this whole strategy because I think this idea of bird dogging and some people in the late night infomercials might call it – there's a business called wholesaling within real estate and I think it's a really good idea for a beginner.

For me particularly, the reasons that I thought it was an awesome idea was I was lacking in knowledge, I was lacking in money and so if I looked at my personal balance sheet, I had some liabilities there. I had a very small bank account of wisdom and experience and money but what I did have like you said is I had a lot of time, enthusiasm, I'm a quick learner and so I had to go with the strengths that I had and I was willing to communicate.

So on the flip side of that though, a lot of people are sold that they need to get started with bird dogging or wholesaling but really it's a particular skill set that a person who's a good bird dog has. So a lot of people who have never been in a sales job in their life or they don't have a lot of time or they look at their own personal balance sheet and they don't have those skills, then there's a lot of other ways to get started in real estate and it happened to be a good one for me but I think often that way of getting started is oversold a little bit because it has so many benefits because you're learning one of the key strategies of real estate is you have to find the deals and that's one of the bottlenecks for so many investors.

So it's a really valuable skill to do and I really built up during that year that I worked and with bird dog, I did make some money. I made $24,000 in one year which fresh out of college is not screaming but I could have done better in some of the other avenues that I was thinking about but the balance sheet, my personal balance sheet of skill sets grew enormously and my confidence and by the end of that 12 months, I made my father happy and he bought deals and I went on my own way and those skills that I had personally, I could then say, "You know what?

I know how to find deals. I'm very confident in that. I have systems that work. Now what's the next step up as a business model?" And for me, I went into business with a business partner up in Clemson, South Carolina. I moved up the road there and the next step was to find people with money to partner with me instead of me just giving them the whole deal.

So if I could go for example and find a person who had $100,000 and it was an investor who trusted me and was willing to work with me, it made sense for that investor to split the deal with me and so instead of making $2,000, if it's a $20,000 deal, now I'm making $10,000 and that was sort of – so that skill set I learned in the first year built naturally to the next level where I could make more money on every deal using that same skill that I built for the first time.

So to clarify, how long now have you been – how many years ago was that when you graduated from college? 2002. I'm doing the math backwards but I think it's about 13 years. So looking back about 13, 14 years, you have been engaged full time in real estate during the course of your career thus far?

Yeah. It's my everyday business and I've taken breaks here and there but this is the way I put food on the table for 13, 14 years. But you have not gone and worked a job, something like that to create capital for yourself. You've figured out how to build capital while staying involved in the real estate business.

Is that right? Exactly. I have a kind of parallel universe. I've been raising capital, making money as a real estate investor, buying and flipping houses, assigning deals to other people and then I've also bought rental properties and held long term capital assets in addition to that. So explain to my audience how you've done this and the reason I wanted to set those parameters is this is one of the challenges.

There are many ways to invest in real estate. Real estate is not magic. It's just an asset class that has unique characteristics but it does have some real benefits for wealth building and wealth creation and many people have built major fortunes through investing in real estate. And if I have a listener who let's say is working a corporate job and just simply purchases a house here and there on the side, they have some certain advantages.

They're relatively financeable. They've got stable income. They have something steady to fall back on. Perhaps they have a high savings rate so they can cash flow the properties, etc. You've taken kind of the cowboy approach though of actually figuring out how to make your deals where you didn't have any capital in the beginning.

The whole way along, your business has needed to give you a place to live, put food on the table and find and fund investment opportunities. So how did you practically tactically do this starting with nothing and building up the portfolio that you've accumulated? How do you do it when you don't have any money?

Yeah, good question. I think there's a couple major kind of factors that played in my favor. Some of them I wasn't aware of up front. I think I got lucky a little bit and maybe had some good advice from people. But one of the things was non-real estate related and I think it's something just personal finance related was that I've been fairly frugal.

And so when you start out at college, I basically would have lived in the back of my car if I had to make this thing work. But I never got to the big lifestyle. My money came in chunks. My first year of business, I didn't make any money until the second six months.

My second year in business, the same thing happened again. I didn't make any money until the second six months. So I got used to really early on having to live lean. And so during the times when I wasn't making any money, you just eat ramen noodles and you deal with what you got to deal with.

But then you make a lot of money and it comes in and you set that money aside and don't necessarily spend it because you know there might be another lean period. So I think that habit is that personal habit of living frugally. Living frugally has been helpful because there's been so many ups and downs.

I started in an up market and a kind of rising market 2003, 2004, 2005, 2006 and really had my growth period during those times. And so that frugality and the ability to go back to your roots was very helpful. But the second part of it, I think, and this is the part that maybe was a little bit fortunate, was because I was not bankable, because I had good credit but I didn't have a job, a W-2 income that I could go to the banks and borrow a lot of money.

It was sort of a blessing in disguise because, as I told you, the first year I had to learn how to work with other investors to put my deals together. And so my natural evolution was to start going to individuals and asking them if they would put up the money for my deals.

But partly because I just felt like that's what we had to do because I wasn't confident going to the banks and asking for a whole lot of loans, although we could get a couple, one or two loans with a local bank. So the strategy we used, we had to get really creative with our deal structuring.

And so that was good long run because most of our deals, if we had, when we started holding deals and holding rental properties, instead of owing money to a commercial bank that had a three-year balloon or a five-year balloon, we had loans with private investors or we had lease options with sellers or we had seller financing where the terms were with the seller instead of with the bank.

And so we were able to negotiate really favorable terms on our financing. And more than anything, though, we were able to have partners on our deals who, when things got bad, 2007, '08, instead of us having to go refinance a lot of loans at the worst time, we were able to sort of weather the storm.

And even though we had a good bit of leverage, I mean, we started with very little capital. And so we obviously had a lot of leverage. The kind of leverage we had was a little bit different than the traditional leverage you would look at. We had lower terms. We had lower interest rates.

We had private individuals who we could sit down at the table and talk to and say, "Here's the situation. Here's what we're doing." And so that's my second thing is that I think growing from where we did from scratch and not having a lot of capital to finally building some capital, in real estate, it's so cyclical up and down and the market's going to change.

The financing is such a critical piece of it. And you have to be as worried about the financing and the terms of your financing and who you're financing it from as you are the real estate deal you're putting together. I'd like you to expand on what it was actually like during those years, maybe talk about a couple of deals because I've mentioned this on the show and I've had John Schaub on the show and I know you're a student of Schaub's, at least you've read his books.

He emphasizes extensively why he prefers not financing with banks. And one of the major reasons is safety in difficult times where if you wind up in a difficult period and you need to sit down and work on something, you're much safer as an investor having your financing with other investors, other individuals because you have more options.

But that's not generally intuitive to many people. So explain what it was actually like during those years, describe some deals and what you had to do and why what you just said is true. Okay, sure. Yeah, I can remember one specific time. So 2007 was a very interesting year for us for a couple of reasons.

One is we grew a lot. We had 48 closings in one year. So we acquired 48, you had 48 times we went to a closing where we were buying property and some of those were multiple properties. Well, the theme was at the end of that year, we did well on a lot of deals, but we had enough, a handful of deals that were not as good and we kind of bit off more than we could chew.

And it was at a point where the storm clouds were kind of forming on the horizon. You could see things happening, the market's kind of softening up. And so at one of those points when we bit off more than we can chew, we had a deal that we basically needed some extra capital on.

We underestimated the amount of rehab that we'd have to do. That happens all the time, by the way, it seems like. Even experienced investors underestimate how much it's really going to take to fix up these properties. And so we're short some money and how are we going to do this deal?

You don't want to be stuck in an in-between point where you can't get it sold or you can't get it rented. And so you need that capital. And so we went to a person who had one of our early investors and said, here's the situation, we need some capital.

And we basically looked at some of our other properties and cross-collateralized. So basically, it took five properties and said, we have first mortgages on those properties. And would you be willing to loan a second mortgage on this property? If we had walked into a bank and asked them to do that, I mean, there's no chance.

They're not going to go in second position because that means if we go bankrupt, if something happens to us, they're going to lose. But this private investor, he liked us, he trusted us, but it had to be more than that. He had to feel like, I'm putting up money.

If you get run over by a bus, I don't want to lose my money. And so we put him in the types of situations where we said, if we have to, we'll de-do the property. We will give you, here's an appraisal on the property, it's worth $200,000. You're loaning us up to $120,000.

So the point is, we looked at each property. And he as an investor, as a savvy investor, was able to see that his risk was a reasonable risk. And he made the loan and got us through that. And so we paid him back off after we sold a couple properties.

So I guess the point of that, that's one particular story, is that you have a private lender can sometimes look outside the box a little bit and think about the deal and look really at the collateral. Because the collateral to me, even this day, if I'm going to loan somebody money, I want to know that they'll perform.

But as a real estate investor, my number one rule if I'm loaning somebody money is, am I willing to take that property back on the terms that I gave, on the loan to value, or the terms that I loaned them the money on? And if that's the case, if I'm willing to take the property back, then I'm willing to make that loan.

And so that's what his situation was. And so that's one of many benefits. But I think that flexibility and that ability to look outside the box on some collateral is one aspect. The other aspect is, and I never ran into this, but it was always kind of helped me sleep at night in the back of my mind, is that I often thought, what if the price levels dropped?

We almost had a Great Depression again, Great Depression number two in 2007, '08, '09. What had happened if the rents that I previously had at $1,000 a month dropped to $600 a month? I mean, that's possible. That's one scenario we haven't seen in our lifetime. And if I have a, all of a sudden, my $500 or $600 mortgage payment that cash flowed yesterday isn't cash flowing today, what do you do?

And in most cases, with a traditional loan, you're going to lose the property. That's just the bottom line. Well, there's a scenario, and that might still happen with a private lender, but there's a scenario I could think of, especially if I have a track record and trust level with this person.

I go to them, I sit down, and I'm completely transparent. I say, here's the situation. Our rent that was $1,000 a month is now $600 a month. We are upside down. If we keep on going at this pace, it's going to be ugly. And we just want to be honest.

And we're trying, before we ever have a problem, we want to talk about it. And we might be able to work out something. We're going to get creative. We're going to sit over the table at coffee. Maybe we can give that person equity in the property, and maybe they'd be willing to reduce some of the current cash flow in exchange for equity on the back end.

Maybe there's other things we can do for them. The point is, you can be a little bit more creative when you have individuals that you can sit down with. The other side of it, if you're having to sit down with a bank who's having their own financial trouble, they're calling in all their loans, the last thing they're going to do is be creative with you.

So that's another scenario. It should be intuitive. If you could sit down with somebody to whom you owe $100,000, and some of these deals may be much more, but a nice round number. And if you're saying, "There's a good chance I'm not going to be able to pay you this $100,000 back," they've got a $100,000 problem.

And when it's their money, they've got a $100,000 problem. They're going to be motivated to say, "How do I solve my $100,000 problem?" That's the risk that we take as investors and as lenders when we lend money. We're taking on the risk. And so we know if something happens, I'm going to have a problem.

When you're dealing with a bank, you're calling an 800 number. You're dealing with some mindless customer service rep that has no personal stake. They're still going to get their $62,000 salary this year whether or not this particular deal goes through. The guys at the top simply said, "Hey, this is what we're looking for," and they've got to follow the situation.

So you've got to beat your head against the wall until finally maybe you can get somebody with some authority to solve the problem. But if you can sit down at the table with somebody to whom you owe $100,000 and say, "Here's the deal. Here's the situation. This is usually someone who's going to be experienced in real estate.

They're going to understand the situation," you can work out a deal. You have the most opportunity to work out a deal that's a win-win for both sides where his $100,000 problem is solved and your $100,000 problem is solved as well as compared to the bank. Exactly. That's the attitude I've taken.

Fortunately, other than that one situation, I've never really had to call in favors of my private lenders. But the thing has been, and I've had them tell me this, they've been mentors as well. That was another benefit of having private lenders early on is that these are people who have accumulated a million dollars in some cases, several million dollars.

Here I am as a rookie investor. Who do I want loaning me money on my deals who can have an extra set of eyes other than somebody who's experienced and who's willing to give me advice and they're a mentor? I had all this mentorship along the way. The thing they always told me was, I think it was a Zig Ziglar quote, which I've loved, is that if you want to become wealthy, I'm paraphrasing, if you make your investors a lot of money, you're going to just by default make a lot of money.

They told me that and they said, "Look, if you take care of us," and I know it's self-serving for us to say that, "But if you take care of us and always treat your investors well, make sure they're made whole, you'll have zero problem long run making a lot of money for yourself." That exactly panned out.

That formula panned out, particularly with private investors because I've made some of these investors money year after year after year after year. Their retirement accounts have grown. They've had stability through a big downturn. They've gotten steady payments. There's been some deals where I lost money, but I made sure they were whole and they knew that.

That kind of trust and credibility is a really long-term valuable thing to the point where now we're in much better shape now. We've made it through those downturns and we've been going after opportunities for the last five, six years. When we see an opportunity, we have these same investors who've been through the storm with us.

When we see a big opportunity, we say, "Hey, got this opportunity." Sometimes it takes five minutes to put a deal together for several hundred thousand dollars of a loan or an equity stake. That's the kind of power that it's not only a doom and gloom kind of thing to protect you during the downturn.

It's also an opportunistic thing because think about when the best opportunities are in a real estate market. It's when there's very little liquidity in the financing market, in the bank. The banks are not loaning money. Well if you have this sort of recession-proof source of funds where you're taking care of several wealthy private investors, you can then go back to the till over and over and over again, especially during the chaotic times when they're kind of, "Oh, I don't know if I want to have my money here or there." Well, I've got this really good real estate deal that has a 10% cap rate.

It's in a wonderful location. You'll loan me 50% of the value of the property. So if something happened to me, you could take it back and be in an incredible position. You get these kind of relationships and you're protected on the downside, but you also have the ability to move really, really quickly when a good deal comes about.

That's something else that John Chavez talked a lot about is it's really difficult to move fast on the best deals if you have to go apply for a loan, get an appraisal, do all the inspection. That's just too slow for the way real deals work in real estate. This is how it works at the lower end and also how it works at the bigger end.

When people are experienced and they come across a deal, when they see the deal, they're confident of it. If they've got the track record with their investors, they'll write a contract right there and then go make phone calls for the money. The thing that I think is often a little bit opaque to people who haven't been involved in the investment markets on a personal basis yet, because many of my listeners are employees, many of them, their investing is constrained primarily to perhaps investing in a retirement fund at their job, things like that.

When you haven't been involved in the active markets or people actively marketing, it seems like finding money is going to be hard. All the local rich people that I have interacted with, they're always looking for a good deal. They keep lots of money set aside. You might reach them at a time where all their money is out, but in general, they usually take control of the money and they're looking for deals.

Your job is find the deal and the money will flow. What I've often seen happen as well is if you've got a good deal and you call up one or two investors that you might have worked with, and let's say that at the moment, the majority of their money is out on deals so they're not able to invest with you, they'll pick up the phone and call other investors because they're passing along a favor to somebody else.

"Hey, this is a deal." They'll put in a good word and they'll open the doors to other investors. That's right. Yeah, it's that first one that's the hardest, but once you convince one person with money that you're reliable and you know what you're doing, the second, third, fourth or fifth are a lot easier.

That's exactly the way it works. Yeah. Bring it forward, Chad. Are you willing to share with us what your portfolio and what your business looks like now 14 years later? Yeah, we can talk about that. You want to know what kinds of properties, what they look like? Yeah, what are your investment strategies?

What are you doing? How much are you owning? How much are you flipping? What has actually taken you 14 years to build it? What does your actual portfolio look like now? Right. Okay, sure. So for us, early on we were a multifaceted business. We did a lot of finding deals, flipping them, assigning them to other investors.

But over time, our long-term evolution was we wanted to be a buy and hold investor. That was our core strategy. That was also our lifestyle strategy. We don't want to be working a job all the time. And so we wanted to transition a little bit more of the passive part of the business.

And so for the last five, six years, more of our evolution has been we own single family and small multi-unit buildings, and we're in a college town. So most of our, I don't say most, I'd say over half of our properties are apartments typically on the lower rent end of the college town.

And you have some very luxurious, really nice apartments with pools and clubhouses and those sorts of things. We're more on the grad students and the people who are looking to pay their own way through college and a little bit more affordable. And so we like those older multi-unit properties, two bedroom, one bath, one bedroom that are walkable to campus.

They can jump on the bus. And so that's sort of our core purchase strategy that we're continuing today. And we have, it kind of fluctuates because we're buying and selling a little bit, but we have about 60 units that we self-manage. And so we have a business partner and I have done this business together for most of those 13 years.

And so we have a little management company of our own that works out of my basement and we have people pay remotely, pay online. We go, when we go sign a lease, we go meet at the local library. You have all the contractors, we just meet them on site.

And so we have a very lean management business, but we can handle about that much because we have one good person who works with us who we've sort of trained up to do, initially do bookkeeping and then she learned how to do some of our collections and then do more of our kind of turnovers and working with the contractors to get stuff done.

And so I'd say 90% of the work, our one kind of in-house person can help us handle. But if we get any bigger than this, which we are looking at a few more kind of bigger deals at the moment, that's sort of our lid on the number of properties we can manage with that structure.

And so we're probably going to go to third-party management with some local managers we've been cultivating relationships with. And so we'll have some more properties managed by these other companies. Why do you like the college apartments? Well, I mean, it started off because I was in a college town.

It was just sort of where I wanted to live and that was the best opportunity in our town, the most stable investment. We've been riding a fortunate demographic trend in our town because the college has been expanding. So when I graduated in 2002, the university had about 17,000 students total.

And now we have 20,500 or so, almost 21,000 and there's supposed to be more on the horizon. And so we've experienced zero, I mean, literally, maybe 0.3% vacancy over the last six years on most of our properties. And we've had increased rents the entire time. And so that's just been a fortunate, I didn't experience that early on when we first started doing it.

That's just been something you go through these waves or sometimes the things you have no control over benefit you. But I like the stability of college rentals. There's some quirks that you have to deal with. Everybody moves in at the same time in August. Everybody moves out at the same time as you have these turnover periods of one week where you're blitzing and fixing up, cleaning up properties.

But the positive side of that is we rent all of those properties for August and February and March. And so we've got 100% of our properties rented before August. And so we know which ones we need to hustle on, which ones we need to work on. And so that's sort of the demand for rentals is the nice, one of the nicest part about the college rentals.

Isn't it more labor intensive though? Yes. So it's a little bit, so compared to, we also have single family houses, regular three bedroom, two bath houses outside of the college town. That's a smaller percentage of our portfolio, but that's your typical John Schaub kind of investment. And we also have some single family houses in our college town that we rent to faculty.

And those are night and day in terms of how passive they are. I had one house that somebody just moved out of, they were there for four years. They took care of, of course, all the yard work. Occasionally we'd have to call somebody to do something, but it was very easy to manage that property.

These college rentals, they are more active. So it's more of a business than it is a passive investment. But at the same time, I could also, there are lots of investors here in town who hire third party management companies to handle a lot of that for 10% of the rent.

So it's not, there's more turnover, but at the same time you can build some systems and some models to handle that. How do you decide how much of your time to allocate between running the businesses that you're involved in versus finding more investments? If you are focused on building long-term wealth through an investment buy and hold strategy, you've got 168 hours in your week.

You could spend that time going and finding another deal. You at this point could finance it with other people's money and possibly find a cash flow positive deal. How do you decide to not pursue that in order to pursue your property management business or to not do a flip or not do a property management deal in exchange for going and finding the house?

How do you make that decision? It's gotten easier now. My answer to your question seven, eight years ago would be I do all of it and I just work 80 hours a week. But right now, I would have the business of flipping houses. I would have the business of rental properties.

I would just do it all and we brought on help. But currently, it's part of the evolution. My climb up the mountain has been I've looked at, and this is something I got from a Tim Ferris book back in 2007, but I look at my time and my money as two different bank accounts and equally important.

As we've made more cash flow from our rental properties, I've been willing to give some of that money to other people to let them do some of the tasks I was doing before. I might go from year to year and make the same amount of money even though our revenues in our business and our investments have gone up.

But it really has freed up my time immensely over the last few years. Most of my time now, we did one flip a year ago and so actively, we're not as active in the business side of the real estate now. We are more oriented towards the long-term purchases. Most of the purchases we're making are not going to make us a huge amount of money right now, but they're going to make us a lot of equity on the back end, a lot of steady cash flow coming in.

We're just building that cash flow because, again, going back to the frugality, you can cover most of your personal overhead with some of the steady rent that's coming in. That gives you options to not have to go do the active stuff. I've chosen not to do as much of the active real estate business, partly because I'm just interested in other things.

I'm writing a blog now. I've been building that business for a year. There's just been other interests and other things and family. That's been the wonderful part about this. That's the whole story of all this is that I haven't had to wait until I've been ultra-rich to be able to benefit from a lot of the lifestyle choices that come with that idea of being rich.

I've been able to choose and say, "I don't want to work that hard here. I want to work 20 hours a week in the active part of my business. I want to work 20 hours building the wealth." Then that's it. Maybe that changes from week to week or month to month.

At this stage, what does an average work week look like for you? I don't want the idealized picture. I want the actual legitimate picture. What does an average work week look like for you? Yeah, let's think about this week. I'd say 50% of my time right now, we've just purchased a couple of rehab units.

So 5 to 10 hours of my week are going out and making sure that the contractor and the teams are doing what I asked them to do in the upfront bid. You just have to be on site. Whether you're going to be on site or somebody else is going to be on site, getting out there and looking at the project, there's just always little things that come up.

So 5 to 10 hours a week managing projects. But those will be done in about a month and be rented out. So the next month, that 5 to 10 hours won't be there. So that's part of a week. Other parts are, we just did some marketing and some lead generation a month or so ago.

So I would spend another 5 to 10 hours a week just taking phone calls from people who are interested in selling their property, talking to them on the phone. Today I had a 30-minute conversation with a gentleman who called off a letter I sent and we discussed his situation, his property.

I asked questions. We went back and forth and had a conversation. And then we set up a time for me to meet with him when he's going to be in town. And then I'll go meet at the property. We'll take an hour or two, look at the property, go have coffee maybe, discuss the property.

And so that part of my time might be another 10 hours a week. And then the other fortunate thing I've been able to do is think strategically. I'm going and working on the business and what systems need to be improved. And so I'd say another third or quarter of my week would be looking at some of our payment systems.

I'm going to be leaving the country next year for a year and trying to manage our business from Argentina. And so how is that practically going to happen? If I'm not there, how can I pay my contractors? How can I deal with paperwork, sign leases, things like that? And so I'll spend time researching the paperless systems.

I'll spend time working on our talking to other investors, reading on websites like BiggerPockets, how other investors are doing it, and working on improving systems and making the business work better long run to be a little bit more passive, a little bit more systematic. And so that's been probably another third of my real estate business.

So between those three, managing projects and other people who are doing things for me, including my bookkeeper and people who work for me, and then looking at deals, acquiring deals, working on systems, those are the three things I spend most of my time on in the real estate business.

I'm doing a lot of writing, but my wife would tell you, we put the kids to bed at 8 o'clock and I'm writing from 9 o'clock until 12 o'clock sometimes, writing blog posts. My real estate business is sort of like my laboratory, and then I'm going and writing an article and saying, "Here's what happened.

Here's the mistakes I made." And so I love that juxtaposition of learning, going to a John Schaub seminar, learning what he tells us to do, going and practicing it, seeing if it works for me, and then going and discussing and kind of boiling down the results in an article and sharing it with other people.

So that's just a cyclical thing for me that helps me learn and do better in my own business. What is the real estate advice that you consumed when you were in your early 20s that you believed at the time, but now you look back on and would no longer believe or advocate for?

Yeah, I saw a lot of advice about nonchalance with leverage, being too not cautious enough, not careful enough with leverage. And I think that, and today I see that coming back a lot. I think that permeates not just real estate, but the entire financial spectrum. I don't think people really understand risk and they understand what can really happen and they usually project out what's happened for the last two or three years instead of 20 years in the future.

So I think particularly for new people and a lot of the real estate businesses has a lot of educational people, late night infomercial kind of people, you sell the sizzle and not the stuff that's scary because nobody would buy the scary stuff if you actually told them what was going to happen.

And so I think that I would learn strategies and I don't know if I want to get into the weeds of specific strategies. I can't, well I'm happy to, but there was something called like a buying a property subject to the mortgage and you would buy it and there was this enormous amount of things you need to think about with these subject to strategies and some of these more creative strategies and yet you'd go to a read a book or go to a seminar and they would say, this is a way you can get in without having to go to the bank, without having good credit.

And I just think that's really dangerous because my idea has been you have to master a subject, you have to really dig into it deep, you got to get advice, you got to get help and so I think that kind of selling people the surface level of knowledge is really dangerous, particularly when you're dealing with huge assets that have a lot of leverage.

I mean that's just asking for a lot of trouble for people and so I think that idea needs to be, a little bit of fear needs to be in people's head and I think that fear is healthy. I don't mind, I'm an entrepreneur, I like taking some chances and knowing that the upside is there if I take a chance and I think most people who are willing to get an entrepreneurship, if they can look at the risk with open eyes and they know what's possible, they can then make choices to either do what we were talking about earlier, only get financing that has some feasible terms and that has ability to have some flexibility or also maybe you just hustle more, maybe you decide I'm just going to sell this deal quicker or whatever it is, if you know that risk, you can deal with it instead of kind of having your eyes closed a little bit by some of the education out there.

What's the next stage for you with regard to financial freedom? Well I think it's continuing, I sort of compared our business to, maybe you know more about the stock market and businesses than I do maybe but my understanding of a lot of mature businesses was that as they grew, during the early entrepreneurship stage, you had to take some chances, sometimes you had to use some leverage but then as you grew, you became more and more stable on your balance sheet and so for me and my business partner, it's been strategically paying off certain properties, reducing risk, increasing cash flow and then on other properties, not necessarily paying off all the properties but on those other properties, shoring up the financing, getting long term, low interest financing to sort of hedge your bets for the future and so I think we're just, to answer your question, we're trying to stabilize and kind of be a nice solid base of cash flow and be able to handle all sorts of different situations that could come about but most of all, having that stability so that we can continue doing, exploring new things.

Real estate is very fun for me, I enjoy it but it's only part of the, it doesn't capture my interest 100%. I've got other things that I really like to do. My wife and I like to travel, I like to learn foreign languages, I like to teach my kids different things and be involved with them.

I'm working on a non-profit in my town to try to build a greenway through our little college town and I've become the president of that non-profit and I'm spending 10-15 hours a week on that kind of thing and so there's all sorts of fun uses of my time that open up and so that to me is the future of my business is that I want to spend 20 hours a week or 10 hours a week on my business and then have the other amount of time to do whatever else it is that I want to do.

Tell me about Argentina. Yeah, so we traveled there in 2009 and just love it. It feels like the western United States, big mountains, open spaces and we, my wife and I love speaking Spanish and we want our kids to become fluent and so we're looking at a couple of towns, we still haven't nailed down where we're going to be but it's either going to be Mendoza, I think it's kind of the wine region of Argentina near the mountains, lots of outdoor activities or there's some other towns, there's a city called Cordoba, Argentina and we just, I think we're exploring it and it's going to be a fun adventure but I think we're going to get an apartment and walk our kids to school every day, let them enroll in a local elementary school, get to know people down there, experience another culture.

That's just sort of our little, our thing and the opportunity to be able to do that, I feel really fortunate but it's just hopefully going to be an experience we can all look back on and say this has just been a fun growth experience for all of us. Jad, this has been awesome.

Thanks for coming on. You write at coachcarson.com. Coachcarson.com. Any other sites or resources you'd like to plug? Sure, yeah. I mean I write at biggerpockets.com as well. I have a regular monthly column there and so people can check, they're interested in real estate investing, sort of pick apart different subjects particularly with financing and acquisitions and so on both my newsletter at Coach Carson and BiggerPockets, I write a lot about that.

So, I'd love for people to connect there. Cool, man. Awesome. Thank you for listening to this episode of Radical Personal Finance. If you're interested in building financial freedom for yourself and your family, please subscribe to the podcast with our free mobile app so you don't miss a single episode.

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