Building a Portfolio of 64 Rental Properties While Working a Full-Time Job

0:05All right Zack welcome to living off rentals all right glad to be here thanks for having me yeah it's awesome to have you here man so Zach and I met at rcon which is the real estate Wealth Builders conference I've had a few people actually on here who were at the conference here recently and we really connected and have kind of shared experiences and shared values and so once I heard a little bit more about your story I thought you know it's kind of perfect for this community and you're from Ohio and it seems like everyone I meet from Ohio I like my best buddy from the armies and lives in Ohio so so yeah so I I just I know you've got a depth of experience in rental properties and always looking to learn new things and that's

0:54The type of people I like to surround myself with as well so I kind of want to walk through and deconstruct your path to living off rentals because I think that's really what helps people the most you know hearing somebody that's done it and kind of the the things that you recommend doing and things you recommend not doing and maybe some mistakes along the way too so so if you could kind of start off with a little bit more about your background and then how you first got into to real estate yeah so you know I followed the the traditional plan out of high school to college and went into engineering and Manufacturing Management program at the old General Motors Institute now kering University and it was probably mostly influenced

1:43My stepfather worked at at General Motors Lordstown here in Northeast Ohio and that was where all the you know the top dogs in GM came through there and all these you know Titans of of manufacturing engineering industry is that the Jack wel Welch days so back when it started it was much more it is it's like a high school there's 700 people 800 people wow it is two buildings and it it's very selective small and every three months you switch you go to school for three months you go to work for three months so it's at its time it was one of the few full-time Co-op schools and I hope

2:32That today there are a lot more of those because you come out with experience and specialization versus the traditional college program of we're spitting out hundreds of thousands of kids with just general education degrees very little experience and good luck you know go find a job and figure out what you want to do versus you know these these schools and it doesn't have to be a four-year program I mean even just like a two-year trade school it's just something where where you're getting a specialization and coming out with with targeted experience and and I heard that about GMI and I was like oh that's great because I really don't want to go to school like I want to work and you know oh I can do three months at a time and and so yep started there and engineering and ended up with the degree in manufacturing management which

3:21Was like two two and a half years of engineering and then the last two more focused on business and Manufacturing facility management and came out of there I had been co-oping at General Motors Lordstown but took an opportunity with dmer Chrysler up in Michigan and so moved up there U was working in Mexico back and forth on what used to be the PT Cruiser facility in Mexico and enjoyed that and again yeah just focused on what I was taught like get a job work pay off your vehicles you know just save your money and I started to look at buying a house and I remember you so this would have been 2003 2004 and

4:09In Royal Oak I'm like man these are $1 1880 $200,000 you know 60 year old houses and I was like you know what I I really don't even like living up here like all my family and friends are back in Ohio and I was like you know why don't I just I Look to come back to Ohio we can get you know get better value for housing and get out of the Detroit City metro area and so in 2005 is when came down to Ohio working for the timkin company and and Industrial focused on continuous improvement process Improvement supply chain there and I bought my first house in 2005 and got a lot more value for that $175,000 got a brand new build on about a quarter a quarter of an acre and still still focused

4:57On you know just working right working and saving maxing that 401k out which completely against now but yeah maxing 401k and and working and and saving and and I remember hearing at at the timkin company about some guys that were buying reyolds I was like okay you know what's that mean what's that look like I've never known anybody never heard anybody really talk about it but I came to find out that you know my boss had some duplexes and you know that these people throughout the company that would get their bonus and and had a decent bonus structure and they'd go out and buy a rental property or buy a duplex and particularly this one guy was really going hard he was you know taking out like credit card

5:46Cash advances and and buying these houses and and then you know rehabbing them up and then taking them to a bank and getting them refinanced out you know he could just put these things right around on Craigslist and and rent them right out immediately I'm like you know that's kind of interesting and I don't have any money though what I got I got 5,000 in the bank or something and I remember talking to my parents like hey you know would you give me a loan to you know I want to go buy this duplex or go buy that and thankfully because this would have destroyed the whole thing thankfully they said no and and I still remember the pretty bad duplexes I was looking at like these crappy city duplexes and I was like oh yeah but I can buy this for 40,000 I take a loan from my parents I do this and I can cash

6:34Flow $200 aside $300 aside and had they said yes at that time I I think it would have gone horrible and it would have been a mess and you know I would have been because they were the wrong properties yeah you know what I was looking at at that time just yeah I still remember those first couple I was looking at just the the type of tenant the type of property yeah and you they said no and I was like oh okay you know darn it what's wrong with you guys you don't see the picture and so you know a couple months went by and I got my bonus think I was yeah I was like a manager at that time in in supply chain I think or engineering and yeah I got $20,000 $22,000 bonus and

7:23I was still kind of looking at houses and I remember you know talking with Huntington bank and I could put like 10% down I was like oh man okay $40,000 house and only put $45,000 down plus killing cost maybe it was six or seven and they were giving me a 30-year fix at 4% or 3.75% and I remember I found one and like within the same couple days or something found another and we got them put them both under contract I remember going back to my mortgage broker like hey I know you approved me for you know whatever but can we buy two at the same time like oh yeah you guys you know I was married yeah so we had just gotten married and so she was on at two she had a W2 worked at timkin so we were dinks double income no kids

8:12So we qualified for financing and she's like yeah you know just it'll be a second 30-year fixed loan same 10% down and I got enough with that bonus and so I I remember you know we had found out we were pregnant and so here's my wife like Hey Okay we're having a kid and you're gonna sign on two more mortgages and and this is 20 this is 2012 okay and so 10 years ago we yeah yep we had signed you know so we were buying those two rental properties and I was leaving the timkin company for a job opportunity in Cleveland so we were selling our primary house we were taking a job relocation we were going to have to buy or build a new house as part of a a Rel location package for the

9:00New job and we're pregnant and yeah I think she was I think I one of my family members like was like hey just take it easy here like this is a lot you know make sure you guys aren't getting nothing over your head with just too many things going on and and so yeah we did it we closed on those those two rentals and they were both TurnKey one for 40,000 one for 50,000 I think I might have had somebody do like a little clean up at one but this was back when man the banks were putting in like new carpet and paint and they were doing them all up because you know there was just lots of inventory did you buy them from a from a bank so they were both foreclosures okay on the MLS yep both of them were foreclosures but you know one of them so one of them was a

9:502008 four bedroom two full bath stainless appliances single attached garage for $50,000 and that would cost 200 Grand to build today probably yeah it was now it was a lower price point because so it it was built on what used to be somebody's second parcel so the neighborhood itself was a 1930s 40s neighborhood then this parel got sold off and somebody built this house there tiny little lot but I mean great house like 2006 house to buy for $50,000 so yeah clean those both up rented one at I think the the $40,000 house was at $850 the the other house at 950

10:39And boom put folks in we started doing this relocation we ended up having to build a house because we couldn't find it and we it was funny so we had those two rental properties and we were living in h my wife's parents basement while we built our house in Copley and so that was our big joke was we both had master's degrees we own rental properties but we live in our parents Bas so we did built the house yeah you know we had to do that and that's where we had our first daughter yeah while we were living in our parents basement but it was great help you know her her mom was a retired nurse and so we had great help and I was driving up to the new job and outside of Cleveland and

11:28And that was it you know I looked at those two properties as college fund right that was all I could really understand about you know there was no podcast in 2012 or maybe there were but like it wasn't a thing right I didn't know of Bigger Pockets I don't even know when it was started but like there wasn't a lot of content besides like you know a lot of the schemy real estate programs there wasn't you know masterminds it's just just everything was at its infancy and so you just looked at like oh okay it's going to ke each going to cash flow you know $300 a month and I'm going to do that for 18 years and then boom that's that's College I don't have to worry about saving for college for them or you know weddings so

12:18That was what what it was and money involved I mean 2012 like looking back at the last decade that was like the the point right around the lowest point and it's just cin from there yeah what what so those those two properties just before we we move on from those what what are they worth now you think so they're both sold now and so I I do rent with purchase option okay so the tenants always have the option to purchase at that agreed upon price they're earning some equity and then they're also responsible for repairs under $500 so what that does is it really takes away 95% of what you get maintenance calls on right

13:07Clog drains just all the little things when they're responsible they're treating the property better they know that oh if I don't change my furnace filter and it clogs up and it blows the motor oh that's on me or if I just pull the furnace filter and don't you know don't worry about it now my my sensors are going to get dirty and that service call for the tech to clean the sensors that's on me you know so all the all the preventive maintenance goes on them with the possible downside being you go into a great Market that goes up 200% and and they have that locked price now where you have I guess a little more control is I give that price for four years and so

13:55If they go the four years I'll absolutely write them another contract I am not one of these predatory rent to own guys taking people's down payments kicking them out no we'll write another contract however your purchase price goes to Market yeah so if we've gone up 100% in four years which some of these folks have yep but we're carrying over your credits you're still getting all your monthly credits you've earned your down pay so a portion of the rent goes goes toward credit that they're accumulating yes nice yep so they're accumulating so it is it is better than I'm at Market rent too I'm not higher than Market rent so it is better than if they're just pure rental oh yeah but if they have the ability to get a loan oh it's it's far better for them to go get a mortgage and then 70%

14:45Of their payment or whatever is going to principal but four years is a long time to be able to you know most people go into these situations because they have are credit challenged but to turn around your credit in four years that's it's extremely doable if if you you know actually want to if right now that's the key if we get into more conversation on the number of folks and you know they need to take that that proactiveness and I have mortgage brokers I try and line these folks up with hey be working on their credit be doing things telling them but you can only do so much for them but that's yeah so that was what enabled me to be to still have full-time W2 and full full you know kids and family

15:34Oh but to your question on the price U so one of the tenants so I think it would have been the second tenants that went into that first property that 2006 four bedroom they closed on the property about three years ago at like 105 and I bet today that's 160 wow so you know they've done very well but even you know I bought it for 50 rented it for I think when they closed I had collected almost $100,000 in rent on it and then still sold it for you know more than double and then the other one that was purchased for 40 that was sold in December so just here four months

16:22Ago and so that one collected over $100,000 in rent since the 2012 and sold for 140 wow wow so $100,000 more and with with them covering the majority of the maintenance how much do you think you put into those nothing really besides a turn yeah I I get really no because so I can get I'm through a buyer's Consortium on furnaces so everything pretty much unless it's like a three-year-old furnace everything's getting I get a new furnace installed for like $900 so boom we're doing we're doing new furnaces you know roofs most of the areas I bought they got new roofs in like

17:112004 when a bad hail storm happened everybody got insur and all the roofing companies pounded here for insurance claim work so almost everything I've bought has had dimensional you know in that 2005 so those are good till another for another eight or eight or so years yeah I mean I can't think of anything probably the biggest single if we look at like the Paro would be tree roots in in sewer drains and snakes and having to snake and if somebody's only been in there a couple months okay I'll cover that $125 to get a grinder and grind that out but if somebody's been in there for two years you know they've got you know here it is and and what I tell them is is yeah rock salt

17:59You know you got you run rock salt down after they grind it it'll kill off the roots interesting I had heard that might take the tree but hey at least we'll solve that problem without having to get you a new sewer line yeah yeah I read that somewhere an8 bag of rock salt and just put down a couple pounds each month after they grind through it and it'll kill off those roots huh interesting yeah no that I I love that model I I had a guy named Bill Powers on one of the First episodes that I did actually and he owns like 200 rent to own type property Sim in a very similar model you know and it does kind of get a bad R because there's there are kind of predatory landlords out there who you know they know they're putting people in a position that they're never going to be able to turn their credit around in like a year or six months or

18:48Whatever it is and then they're taking all that money and you know so but if you do it the right way I think it is so a win-win for all parties I I I like that model a lot yeah yeah I mean I take a small I take a $2,000 and and I've had people coming to me that gave guys5 and $6,000 down and they only had 18 months 24 months and yeah yeah I mean that's what you know gives it a bad WP when you know if if you know this person just came out of a bankruptcy 24 months isn't enough and you just took their five grand and now you're gonna yeah so I just try to take it's almost just like a double security deposit it's it and yeah goes towards our equity and that's great yeah so that was those first two we found out we were pregnant again so

19:36Back to back which I don't know that I necessarily recommend to have 13 months in between but so yep we had another so a second daughter and what I'm trying to think where I was I think at that point is where I had found out about self-directing Ira okay because again I still didn't know much about like portfolio lenders and lenders that would lend for the rehab and and I didn't understand what real estate could do like I hadn't read I mean the books that were out there and there wasn't as much online so I was just like oh okay to get more money I left this big 401K since i' had been maxing that out and doing that whole routine and so in 2013 that's what

20:25I did I self-directed that and got it's about 250,000 into just a checkbook right self-directed Ira checkbook IRA and I went out and bought five properties in that I think couple rentals and then did my first we did the first flip and yep rehabed it up turned it around you did the flip through the self-directed IRA as well nice nice y and so yeah it's you know that's just a process of you report to the custodian you know annually and you'll pay tax on that at whatever those rates are when you start to draw it down which we know are going to be higher but it's just it's a way to to make a lot more than just sitting in the market yeah

21:14Right absolutely so yours a traditional not a Roth correct I see okay got it yeah yeah you would have mean there is something for that conversion right you pay all that I mean I you just pay the tax rate today it'd be like withdrawing it basically and switching it over I believe to to Roth which basically makes now it it's pre-tax going into your Roth but then on the back end after you know you grow it then it's all taxfree on the the back end yeah but everyone you know you gotta decide you know everyone's Situation's different so yeah so I think you know so I was like okay I'm done again but then I found I connected with a a local community bank a portfolio bank

22:03And I remember talking because I'd heard these other guys from Timken that I was still kind of connected with they were using them and I remember talking with him like oh yeah he'll he'll Finance the rehab you know he just they he sends a an appraiser out to say hey if a b c d if this list of things is all done what is the value of this property going to be and so you know I remember finding a property and you know it made sense to you know looking at the numbers I got a quote from a contractor and yeah put it under contract got the rehab list over to the lender and lender got their appraiser on it and this this is the first one that like blew me away because again up until here like I'm I just had either went up front with

22:51A 30y year fixed and put my money down or I had just paid cash for them but on this one is where you know I think I was buying it for 40 and I was putting 10 or 12 into it and he comes back with oh this thing's GNA be worth $90,000 yeah and so you don't have to take anything to the table we're cutting you a check for like $20,000 when I buy the house and I'm like what now like I knew you were GNA Finance the rehab but I don't even like the rehab's 10 and I'm going to the table and you're giving me 20 like how does that make sense and so I'm going to cash I'm going to pocket money up front and I'm gonna cash flow $500 a month

23:39Or something on this house so they were giving wait so they were giving you all the funds when you purchase the property before you even done the rehab and it's based on the appraised value of a rehabbed house yeah who was this a did you say a community bank or just yeah no a Community Bank they got four anches in Northeast Ohio and I mean is I haven't heard of like typically you know you get they don't do it anymore okay got it they don't they they they were being very aggressive and and they were right at that time you know between between me and and other friend investors in this area I mean they they put loans on two 300 houses just with like four or five of us so I know they had thousand

24:29Plus and you know they did very well yeah because it was you know the market now now they did have a change in leadership like two years ago and they stopped they stopped going into single families like that and you know I'm sure they looked at their portfolio base and said oh we've got a couple thousand you know akan suburb houses and but you know once I found that you know process with them I was like like oh let's just yeah so so I think that was when I and I think at that time too was when I found Bigger Pockets and just would lose my evenings just like you know going through every little form there and learning and then I believe was it on Bigger Pockets

25:19Where I was introduced to Grant Cardone okay and I mean right people have different opinions but like for certain situations man is Cardone fuel yeah and like that the 10x and Boba hit me at the right time to be like just pedal to the metal like pedal down keep going bye bye by and you know I got the right real estate agents I had the right lender in place I you know went through some rough experiences trying to find contractors on rehab ABS but found a phenomenal guy and the deals were still here and it was boom so I started taking down one a month I

26:07Think 2014 2015 were were 12 to 15 house years these are all rental it's like bur type strategy so using that financing got it yep and I think probably after the first year of doing that financing up front and doing some flipping and again we and we were living simple right we we still had both our jobs and we didn't touch the rental income and we probably lived off of we were probably living on 60 to 70% of our W2 income so we were able to take 20 30% of that plus all the rental income plus all the flipped income and that just became the snowball there wow and one working a full-time job too with two young kids

26:55I mean that is that's impressive you know people a lot of people I talk to like oh I hope I could get one this year one a month is Hardcore man it was yeah I mean I just I I went through that callousing of my mind you your hands get calloused and you can do more work well when you first start out oh my goodness I'm an eviction oh I got this couple and I got her boyfriend calling me her husband says he's Le like I got all these you know issue coming through oh my goodness what am I going to do with this house and these people and you go through those and you go into this house that this horrible situation happened and they left a dog and the house is destroyed and and it gets turned around

27:44Over the weekend and it's rented for $100 more than it was with a great new tenant now and you're like yeah oh man like and and that's oh I forget the chapter now chapter 13 10x I think fear false events appearing real and and that's that's how it always goes and still to this day I have to control that how how do you control that because that's that I still get that too like we just had a a property that was kind of borderline whether we should pull permits on and decided opted not to and of course that's when the inspector showed up shut it down and you know I'm jumping through all these hoops now and it's still like I I know that I've done a couple hundred rehabs now you know I know how it all all goes but I'm working alone and I think that's

28:32Part of the challenge is that you know I don't have like a a co-founder to talk to or bounce ideas off of it's just me like and so you know your mind just like you talked about it's like that fear that you know negative talk can can kind of like build up so how do you combat that and how do you recommend others do that hard question hard question to answer because you know I just went through it here recently with with Partnerships and loans and the things and yeah when that stuff's going on you're just you're churning and the worst for me is like at 4:30 a.m.

29:14You know the time when I when I used to get up for my W2 and work out to be in by 6 and so I you know I start turn stop tossing and turning and especially if there's something bad going on you know with with Investments all these things just start turning in your head you know I started to do medito that meditation app okay and very calming and refreshing to say did it did it help with that I mean I think the biggest thing that helps with that is just taking action on it because at least with me I want them to go away without getting taking control and taking action of it you know

30:03You got this situation with a tenant and oh my goodness like I don't I don't want to go sering notice I don't want to go what's going on like or are these situations and if you just pull the Mandate off take the action file the eviction go up there see the property call the partners and do a sit down like I'm tired of you avoiding me and doing this telling me this and and you just get to get through it because then you look back at it and you're like oh I'm so worried about all these things and okay it it all worked out and that's how it has generally gone and the thing at my point it's it's not it's it's more the

30:52Relationships and being disrespected that's more effective on me than money yes yes like I have a I have a large lawsuit against an investment that I did with some people here but it's handed off to the courts the attorney's got it and I I hardly I mean I think about it but it doesn't like it doesn't wake me up in the morning right but like tenant issues or partnership where I'm being like ignored and disrespected from a partner on something that's the stuff that that eats away at me so I I don't I don't know how do you get to those points like a couple of my friends where they're just ducks and everything just kind of flies off the back right

31:41It's tough you know I think you probably get to there's people who would be more concerned with with a money issue and less concerned about feelings and and relationships and being disrespected or you know I'm that way now those things and so you have to tailor your your next steps and your investment strategies around you know am I going to do less of those now where there's a risk where there'll be less risk of partnership issues and disrespect and you know those and and just you know more K1 syndications and more you know owning my own rentals to where it's it's all on me you know there's no partner involved to to screw things up and or have disagreements with and yeah so yeah I mean that's where I try

32:30To be this lifestyle investor I think that's Justin Donald's thing and that's kind of how I've been focusing on my investments now is that the lifestyle I want and but then you get shiny objects and oh this partnership could make a good a lot of money and yeah yeah I think that that perspective though is really important to recognize what it is that's that's keeping you up you know or waking you up making you think about it you know cuz I I same thing with me it's and I recently had a a contractor pull me aside who I've worked with for a long time and he's like you know I I know you're pissed off about this this property that got shut down and and he and I have very different mindsets around money and investing and time and all this stuff so I you know

33:19Initially I kind of was blowing off what he said a little bit but then I I paid attention to it and he's like you know what this is business like you're going to have these things you got to take the emotion out of it you know you're going to have to pay $10,000 more to a plumber now than you're planning to cuz you know they're making you do all this stuff and you know instead of taking it personally and you know saying oh you know the sky is falling say we're gonna make it up in the next one and just you know you gotta just remove that emotion and it's so hard to do so yeah yeah so I think then through you know like 2015 2016 just got up to I don't know in the 40 rentals flipping that's probably around then

34:07When I started looking at other things right it felt like ah this is this is enough rentals and let's let's slow down but I still have this huge desire to keep growing to keep building income I got a lot more into and at that that point right I'd taken the red pill from The Matrix and now opened up to oh man you know it's not about the day job and saving an egg that you'll drain down in in retirement it's about getting to retirement like within a couple years here and having all sorts of colors in my bar chart for monthly income coming in and now Tim Shiner said it you know great you legs under your table right you don't just want one leg under your table right you want 50 legs or 100 legs under your table and all these different things so that your table never you know never tip over and

34:57Oh well so I guess I skipped a big part so in 20 14 so this is before the big push so before we really started going I might have had four or five properties 2013 2014 I was let go so I lost our main source of income by far that was when yeah my wife was pregnant and we knew like with two young kids kids how much was she going to be able to work and yeah I remember being in tears like I was actually in a hotel room doing a training for this company and they didn't realize that they they forgot this whole conference was going on that I was teaching and training supervisors at when they were like oh

35:46Yeah your job was eliminated like oh what about all these people that are here at this hotel that I'm teaching good it was Private Equity that they don't know you know kneejerk reaction of of a quarterly Miss and over the weekend make decisions and that's how it funnel out on a Monday wow but I just remember like well it was bad like what are we going to do like you know we don't have nearly enough rental income was 2,000 a month, 1500 a month or something and kids and this and fortunately right I mean it didn't take but a day or two on LinkedIn and like everybody was like oh man yeah you know we're going to we want to interview you and different call connections and landed perfectly U but that was one of those experiences to like I can't I don't want this ever

36:34Happen again like I'm not gonna let this happen again and so you just you take that horrible experience combined with like Cardone Bigger Pockets Tim Ferris Robert kosaki and it's just like go go go go you know this is renolds is what I know I don't know any of these other things like I'm into now but I know Reynolds I know what it can do and so it was just foot down keep going and then to this point like where I was like okay let's look at other things and and started doing money lending so taking the flip you know flip profits doing money lending with that you know so now I'm building up like other interest income coming in and then bought a trampoline park as

37:23I started to watch Biz Biz by sell to look at businesses to buy and I got some partners and we went in on one of these big kids trampoline parks which you're probably the biggest hero for your daughters that's what this thing was it was a a fun three-year Venture for for my kids to enjoy and birthday parties and and that's all that it was and yeah we we we fortunately you know ended up getting out nice and clean just you know because of the real estate really we didn't own the building but we had the lease of a great great space and our landlord knew like

38:13Just partnership challenges business challenges employee challenges he knew like yeah we we weren't doing well and real happy and and and so he came to us with you know six figure offer I think was the first one was like 100,000 like to leave you know him and a tenant and they're like ah no you know we we owe more than that because we had the oh the eidl from from covid we took that economic injury disaster loan to help the park go and he's like oh well he came back like 150,000 and that's when we started to realize I talked with the commercial broker and they were like your space is one of the most desirable in all of the North campon Area because of the 30 foot ceilings the dock doors he's like there's

39:01A lot of people that would want your space and so so amongst the partnership we we talked and we're like okay here's what we want to pay off our debts get our principal buyin back out of this get paid off of all the equipment that we put in and and so yeah he he worked with that tenant and they came in and yeah they paid us just to leave to to break our lease and leave and that's what saved us from taking you know like a loss on it we end up getting out clean and it was a place for the kids for a couple years and it was unfortunate that we did have to close it for the community you know it's one less place but in this environment today with employees espe just I mean you probably were shut down for a

39:49While right so yep we were shut down and so that eidl made up for that shutdown you know to cover the debts and and some of the rent but then now you got that debt that you're going to have to start paying back we'd always had some challenges with staff and it's you know when it's upsetting to reflect back right when we were 15 16 17 years old the work ethic that I'm sure you had that I know I had when I worked at a drugstore or a golf course and just you worked right now we didn't have phones to distract us and be you know so it's tough to say we were that much better than than than the kids the efforts to work today but yeah I mean just keeping kids off their phones and working it's

40:38It was a a challenge there and so I'm glad to be done with it I don't think I'll ever be a part of such a heavily customer intrinsic business you know got it a couple hundred people through there on Saturdays and Sundays and customer issues employee issues broken ankles broken legs broken wrists broken arms lawsuits so so that was my first like real venture outside of and yeah glad I was like man if I I just need to go back and and focus but that took the three years up just until last year when we got out of it but the the other things I've been much happier with related to real estate is the indications is

41:27Where I've put the large majority of of rental income the house sales that I've been selling off these rentals focusing on really becoming like a professional hard asset investor now on the syndication side of all the different models different asset types different regions so that's been my putting the other syndications or you're passive investing just an investor got it yep y y and it's worked out really well yeah I mean I'm I'm coming to that point where they all start you know they start to trickle back right if you look at it in my mind you know I kind of tell people like I'm looking at these syndications like CD laddering right you've heard of the CD lading buy a fiveyear CD every year for five years and then boom every year

42:15You have a fiveyear CD kicking back to you so syndications generally are on a three to six year U payback whe whether it's through a refinance and your your principal and an estimated return amount are coming back to you and you're still staying a residual owner or the the sale the exit of that asset and it's a complete you know close out and all those funds so you know I'm now coming into yeah that year three year four of where I started going heavier into them and yeah I've been pumping that primer continue to pump it through this year and now we'll start to see all those things coming back and you know if I continue pushing in plus the proceeds that are coming back in you know that thing is just going to continue to

43:04To to grow and grow and grow which at this point of where I want to be from a passivity and just no stress yeah I mean that's probably the biggest thing that I definitely see myself continuing to focus on and and be active passive investor yeah so not throwing my money into a fund that's then you know I'm throwing my money into specific deals that I like the the asset type like car washes or Self Storage or I love the region like the Tampa St Pete MSA or the Dallas or Carolinas the heavy growth and then you

43:52Know really focusing on investing with the same sponsors that I really really like that I vetted out that I have the cell phone numbers of the head guys that I've met with been to their events you know that was a big thing that hit me from Brian Burke's book of the hands-off real estate investor was focus on doing more deals with fewer sponsors so once you've really spent the time to vet out meet and you know sign off on that sponsor right then just do more deals with them yeah you and that's that's generally what I've been doing is is doing most of the deals that the maybe the six different sponsors that I'm that I've been investing with now and those are across you know trying to get good diversity

44:41Of of different models from development versus buying existing assets and turning them around and then you know a mix of the refine and holds syndications versus the the sale syndications got it okay and and do you have like I've looked at some commercial deals recently but the thing that scares me is is the interest rates you know do you is that a fear for you like you know because obviously that dictates pricing a lot is you know the financing so so are you concerned about that or what's your thought on that most most of all the ones I'm seeing they have that locked in for like that three to five time frame

45:29And that's when they're they're either refinancing it and they're going to be refinancing it based off this new turnaround so you know like let's just talk you know doosa Capital right good great sponsor Matt Faircloth and yeah they've got these things locked in for this this rehab this turnaround right and then they'll they'll refy out go into a longer term likely a long-term fixed and then they'll hold that for another 5 to seven years versus like learn is another one that I like that is the they're the flippers right they're buying them repositioning them then they're going to sell these things in that three to four year and that's you know they're they're locking up a good term here for that three to four year hold to you know get get

46:18This thing sold at that same cap rate that they entered in at you know but now they've increased a 680 unit by $125 a unit so they've added $28 million in equity to the sale yeah got it okay yeah yeah I was always thinking about like on the the turn side you know if all a sudden the the the note comes due three to five years later and rates are now you know when they initially forecasted there it was like 4% now they're 8% you know so that that but I guess if you've created that much equity in the the property from the income St side of the equation then you're you're sitting in good spot think I think there's more risk in cap rate

47:08Compression not being planned into the deal then I think they know most of these they've got good either locked in or good plans on their their Debt Service rate over the duration of the ownership but the cap rate their exit cap R is where yeah I mean you don't know like 3 4 years from now you know if if 1031 go away right if 10 31s go away and this is way out of my my PID grade but if 103 ons go away I would assume yeah like you can't see things selling at three caps anymore you know in the large a class right that a lot of that money has to be it's getting put to work to avoid paying tens of

47:57Millions of dollars in taxes so I think that if 1031 go away I think you'll see a lot of the great asset that sell now in the in the low caps right they'll probably you know lose some of that and raise up a little bit and that's that could be yeah I think that could be a significant impact if something was planned to exit right at a four cap and now you know it has to exit at a five cap yeah yeah yeah you know no I mean it's obviously you're you're making calculated decisions and it's it you know but trust the sponsor right yeah exactly you know we can we can look and we can we can devise and formulate and and but you know it comes down to trust in the sponsor and

48:45When they're another you know one way to to make you know to essentially force that is the the co-investment to always make sure that they've got at least like a 10 % co-investment in yeah and then and the quicker deals you know most of the syndications I've done here in the last year have been development definitely seeing a a a more compelling return case and quicker paybacks on these develop you're developing that Equity into it versus having to pay these these rates today on existing assets and so I like these devel deals whether it's self storage car washes Kitty countries dayc carees in Texas that are blowing up

49:33From everybody moving there got it yeah that makes sense awesome so I I don't want to keep you too long here but I just so just to recap so I I think a lot of people who listen to this they are in a nine-to-five job they want to be living off rentals as the name implies and so if you kind of look back you you know you kind of talk through your whole progression and it was like slow you had like the four or five and then you lost your job then you got really on fire and you accumulated about 40 rental properties and then you started to diversify into the loans and the syndications and bought a business at what point do you feel like I mean you kind of left your job earlier than you probably thought you were ready to well I guess you you got another

50:22Job though when did you feel like you were yeah free enough to to leave your 9 to5 so I leveraged the ability to not have to work to get better easier jobs I made I made jumps here you know at the end right my whole background was manufacturing and Manufacturing is stressful right you got customer deadlines if you shut down customers you can be looking at enormous right fines to shut down a customer and you know I was in a private Equity company and I was just getting pounded by a Yos Sam head of operations just you know he had a toolbx with one tool in it just a hammer and so that's all he did he just pounded pounded pounded and I remember

51:10Just being like dude why am I doing this like I'm making three or four times what I make as a director of engineering and I'm you know I'm working all this I'm doing all this and just getting beat up so I was like all right I think I'm going to be done and then I got Comm hit on LinkedIn about going into Healthcare and my the guy who was hiring me was like man healthc care is a mess and coming from operations with A continuous Improvement background like you can do so much good here and it's it's not hard work like healthc care is is a mess and so that's when I jumped into Healthcare was also private equity and I I enjoyed it because these were these were people that wanted to do the right thing but they've just worked in healthcare and they didn't think like oh like it's an operation like it has inventory it

51:59Has processes it has outputs it has customers like you know and you need to look at it just like you do making an automobile or making a window or making a bearing and and so they were bringing in a lot of folks to help change it and another reason I took that job is because I wanted to grow my rentals down in that area so there there was two prong of okay I was tired of of more rentals up here in the north I want to grow down here in the south in the camp area and hey that that'll put me way down there and perfect and it it worked out great for the 14 months I was there a much lower stress job and I grew you know 10 Properties or something the last 10 to take me to like 65 or somewhere in there and and I remember you know just constantly telling my group of friends like

52:47Oh you know I gotta quit like why am I even doing this and they're like oh like you keep loans were so easy with a high W2 and everything you know we still just lived off that W2 and we weren't touching this thing that was just snowballing enormously and that's what I try to tell everybody is you know don't you know he I talk to guys oh you know I made $5,000 Wholesale in a house I'm quitting my job oh it's horrible idea like don't do that like live off your job for as long as you can and you know fortunately because I was addicted to the snowball I don't know when I would have quit but fortunately the day came private Equity again hey they they missed numbers and you know most these companies

53:36They need to keep the vertical right the people that run the business the people that improve the business right yeah we can get rid of you guys and and so the same thing happened and but just night and day from when it happened six seven years before right with three or four rental and I'm in tears and my wife's in tears and we're trying to figure this thing out to now oh my goodness like all right I got to get a cell phone and a laptop and I got to get insurance but like yeah it's retirement like it's time to retire and and so yeah I mean that's I guess my my piece of advice for people working is you got to do them both like you you got to keep that job because the hard it'll be very hard to get loans if you don't have a W2

54:25And you don't want to live off that income right now you you need to just keep snowballing and growing that income and you know and just put your vision together and that's what I always had I I was tons of kpis in my day job and so I had kpis for all my real estate of what I wanted to see the monthly income and and then after I moved you know after I expanded from rentals it's like all right you know I want to get 10 colors in my bar chart for monthly income right I want 10 different things this loan yep all these different things and now it's syndications and it's house sales and it's rentals and it's interest income and Ecom store income and all these other things that I'm Into You know just trying to diversify those but yeah I mean you got to keep it and let that stuff

55:13All snowball because as soon as you start to to live off of it is when it gets you know styed and stops and then you realize you can't get loans and yeah yeah it becomes all that much tougher yeah that is true yeah I mean you're if the longer you can you can hold out obviously the better position you're going to be in and yeah the financial picture changes I I actually it's funny I you know the VA loans one of the best loans out 100% financing and I don't even have it because I didn't get my house refinanced before I left my full-time job so it's like I've considered just getting a wt2 job just to get the VA Lo just to refinance into that because I've got a lot of equity that we're sitting on after a lot of the remodels that we've done on our land and stuff so

56:02But yeah that's that is true it's a great point you bring up and it's I mean that what a great illustration for people like you know the difference between being fired with four rentals and just starting out to you know hustling for six years and then you know it's like a blessing you know they're setting you free so that is that is awesome very nice well I I really appreciate this this has been really informative and really helpful for people who are like getting started to see the progression and what's possible because that's the hard part I think when you're first getting started is to know can I do this do have other people done this before they have it is possible it's just like you said putting the blinders on kind of putting your head

56:50Down and saying okay I'm gonna I'm gonna make it happen I'm gonna do one a month I'm gonna 10x this thing and figure out how to make it happen and getting through those setbacks so really really appreciate that if people want to ask any other questions or reach out to you what's the best way is it social media or yeah probably on LinkedIn yeah you know something we didn't get into you know I'm not a big I'm not a brand guy I don't have a brand I've I've contemplated and kind of battled like hey do I want to build that but you know I don't I I learned everything right by just absorbing content out there so I haven't wanted to create a training program to sell I've more like really tried locally to partner

57:39With folks provide money in partner in their business give them the mentoring the coaching and trying to build things here with people where I have the opportunity to to build but not the obligation of oh this is my company that I'm building and because I've just really become so protective of time now like family friends versus like wanting to build you know a brand and sell things it's like no I'll just keep buying the passive assets that allow me to have the the lifestyle and and I do love coaching and talking with people but I'm going to do it selectively locally and try to you know try to put my money with the horse too and not just you know try to teach him it's like no you got my money so you know I want to make sure you

58:27Succeed and putting my the skin putting money in the game right yeah awesome but yeah on LinkedIn they can find me on LinkedIn cool awesome well sounds good well I appreciate that and yeah I know people are really going to benefit from this and and we'll continue to stay connected and I'll be interested to see what's next for you all right was great yeah great being in touch yeah hopefully we get keep in touch and then again at rcon next year yeah absolutely all right talk to you soon all y bye