From Retail Manager Making $40k to Owning 300 Rentals

0:00You know my story $75,000 in debt predominantly credit or excuse me predominantly student loan debt and then I did make a a great investment as a 22y old and bought a brand new car that investment worked out quite well for me so and I was only me $45,000 a year so you know when you start all right 45,000 you start deducting off your student loans and deducting off a car payment and I didn't have enough money at the end of the day to even go rent an apartment I lived at home for a while and so you know I was talking to Joel about this I said Joel you know I know I can do this like you're giving me the confidence to do it I'm reading this book like I don't have a ton of money and he said hey you don't have to have a ton of money to get into real estate and for me at that point I thought you had to be well connected and

0:48I thought you had to have money to get into real estate you don't need either I mean you do need some people to help guide you you know like all right use this Bank you know this is maybe what you're looking at but you don't have to be well connected you certainly don't have to have a ton of money he said hey just get your hands on 15% that's all I needed to go down on on the loan was 15% now a lot is now at 20 25 30% you know it's a little bit different landscape now but I thought back to the credit card I have I said well you know I have a credit card from a local bank that actually allows you to take a cash advance off the credit card at only 7% so you got to keep this in mind this was a decade ago 7% interest that same credit cards mid 20s to 30s right

1:36You know much different landscape today than what it was then but in the moment 7% back then was a lot of money you know a lot of people said oh my gosh 7% interest you know you know let's not do that but I was like you know what I just want to get in the game and so that's exactly what I did I I pulled money off the credit card that was my down payment I pulled some more money off the credit card I fixed the proper proper up refinanced the house pulled my working capital back out and then paid the credit card off and I've just done that hundreds of times and I still have that credit card to this day I I kind of keep it I don't necessarily use it anymore right but I just kind of keep it as is kind of like you know what that's what got me started it's kind of cool so you did the bur strategy then where you you used that as the down payment then

2:25After that you fixed it up you rehabbed it or I'm sorry refinanced it and then you were able to pay back all the credit card that's right and and I had a little bit of money left over that then I rolled to another property I told people don't go buy a nice fancy car nice fancy boat with that money you know that's borrowed money you know that money needs to start making you more money right you know so yeah you know you always have to be kind of be careful about that as well yeah yeah yeah that's that's interesting and I think that's a great model the Burr model did you run into any I mean I think the the downside to the Bur model is obviously the risk of the rehab and I think a lot of people have intentions that they go into the first one and they're like oh yeah I'll just buy this cheap fix it up refinance

3:14Out all my money and do it over again but then they realize the rehab a contractor runs off with their money or it just takes longer than they expected and the interest acrise did you run into any of that and have to supplement that at all or did it go as planned pretty much for the most part it this plan you know certainly you know I I've had times over over the last decade where you know you pay a contractor and and they run off with the money luckily when I was first starting out I didn't have any of those issues you know so something might have taken a couple extra weeks or they might have missed a little bit of a deadline but it was nothing that would have been detrimental right you know it would have just been a small little setback but I do believe if you use this model you have to be very resilient and strict and be disciplined with

4:02It you know because I I also know people that have done the exact same thing but didn't follow through with it and so it was just an utter disaster and so you really have to make sure you do it the right way and I think if you do do it the right way you can be very successful at it the the great thing about this strategy my mentors used it other people's used to like it is a proven strategy if you do it correctly and if you you find the right vendors and and do that due diligence up front but the problem with the strategy is if you're missing any of those links you know it's not going to work out very well for you right I mean you have to really make sure that you have everything lined up and how' you find those early

4:51Deals that you could buy at a discount absolutely you know so great thing for me Joel Mentor was wanting to downsize he wanted to spend more time with his family and so I was first couple deals I had I bought them from him and the strategy I had was you know worst house on the block has the most upside and and and it's that birth strategy and and I was able to do that and I probably end up buying maybe about 10 units from him and then I started branching out and and people started knowing that I was in the business and I told I told people tell everybody that you want to get into real estate you don't know who you're going to buy from you know so initially it was my mentor Joel and he got me linked up with bankers and then I told the bankers hey this is what kind of properties I'm looking for then I would call Realtors hey this is what kind of properties I'm looking for but

5:39I don't want to pay retail so don't don't flood my phone with a bunch of stuff that's on MLS or that's that's live that would be retail value because that's not my strategy here and then I would also go on credits list go on Facebook Marketplace tell everybody that you can possibly tell I'm looking at buying real estate because you never know where that deal is going to come from and I've had I've been able to do that over 10 years I get five six calls a week hey do you want to buy this and I'm not actively necessarily telling anybody anymore that like I'm trying to buy more real estate they just they assume and then Word of Mouth gets out there and it's you know if I'm not buying it I'm sending them to somewhere else for that person to buy and it's just that's kind of what networking

6:27Is all about right is is so people can can help you get you to where you want to go yeah and it so it sounds like Joel was like a huge key point or key component of your success early on how how did you find like how did you convince like if someone else wants someone like a Joel to Mentor them you know where do you recommend they start and how do you approach someone to to be that person absolutely you know there's several different ways out there now certainly here my Consulting business or Consulting we're doing some of that mentorship if people are interested in that but you know if you want to go more organic or somebody in your area I think the best places to look for those are people that own

7:16Real estate right so you know they you never know when somebody really wants to downsize you know with everybody that I've met in real estate they love telling stories about real estate and kind of quot unquote mentorships and and some of them are more involved than others and but they love telling stories you know because we got plenty of them and so you know just like what we were talking about you know before going on going on the air here you know different rental stories of different things that might happen and all that's just so valuable information because you can read a book about that but if you hear a real life story that real life story is going to stick with you much more than what a book's going to tell tell you and so that's what I recommend to people like find people that are in

8:04This business that's been in the business for a while that you know who cares if they want to downsize or not just pck their brain more than likely they'll sit down and talk with you and then let them know like hey you know what I I like what you're about or guess what if if it's not a right fit hey you know what like do you know anybody else I can talk to and then find that right fit and then really lean into it and say you know what like I know your time's precious and and I buy you that and maybe you want to sell something one day and and I can buy some stuff from you but I promise you you know real estate's kind of fraternity of men and women that really like people say you know what there's a bunch of competition out there for Real Estate like I don't view it as competition right there's plenty of real estate for everybody not one person can buy it all so you know what if we don't get one deal that's

8:52Okay you know there's going to be another one and it's from my experience everybody wants to help everybody which will certain to Great you know especially with you know stories and the dos and the don'ts and I mean there's just so many different resources out there now yeah yeah that's why we're doing this right now I mean because it it's it feels good to help other people and then them come back and say wow that really made an impact in my life and and people are out there doing that I think to your point one thing you mentioned is look for people who are doing it like we kind of went the opposite route when I was getting started about 14 years ago now and we we we I didn't have somebody like that I knew personally that did it so we started going to these events and seminars and some of them were great some of them were

9:41People that were actually doing it and then others it was like these guys on stage who had like maybe done a couple deals and they're just professional speakers and selling you on some you know some big thing that they're selling in the back of the room and it was terrible so but the the finding point to your point was are they actually doing it so you got to really look past the smoke and mirror sometimes and see okay how many deals have you done how many are you doing right now like what's what's the strategy you're using why are you using that are you actively using it or is it something you did a decade ago and you're just speaking in theories so I think that's such a great Point yeah I still remember Joel told me this very early on he went to a seminar it was actually locally and after the class you know he

10:29He went up to the speaker and and he just said well you know if you don't mind me asking how many rental properties do you own and he said I own two and he said well you made it sound like you owned hundreds and you had this great plan and and all that and so you do have to be careful about that I mean there are people out there that are not very genuine about what they're trying to sell and so you know I always tell people trust your gut TR trust that intuition you know if it just seems off it's probably off like you know lean into that a little bit and and and I always tell people trust but verify you know you can trust somebody all day long but verify what someone's telling you so you know because at the end of the day you're the ones accountable for yourself you're the one that's accountable for the deals that you do whether they're successful or not and so you want to make sure you're doing the right thing there

11:19Yeah absolutely in your book you talk about how to spot a good deal and everyone kind of defines a good deal quote unquote differently you know so to you I'm curious what constitutes a good deal are there like specific metrics or what what are you looking for y so you know the strategy that I use is you want to buy the worst house on the Block and so everybody can interpret that completely different it depends on what the block looks like right but you know my strategy is if you bought the best house on the Block there's not very much upside it's already the best you're not adding anything to that Community you're not going to make the property values go up in that Community because you're already at best but it and you're going to overpay somebody you're going to pay retail value for that property for them doing the work to make it the best house

12:07On the Block where if you take the worst house on the Block you're now creating value for the community you're bringing up the street property values are going up you have so much more upside because you can normally get that work done Pennies on the dollar compared to if you bought a house at retail value they're getting all of that that value out of that house where if you bought the the worst house on the Block you can get stuff fixed so much cheaper so you're going to have better equity in it Sweat Equity in the property which then in return you have less money tied up in this asset you can pull some money out you know refund you know your Sweat Equity and then roll that money to the next property and that's what I've done and you know you can increase rents you have so much less money tied up

12:55In that property and so now what happens your money goes a lot further and so instead of you know for instance buying a $200,000 house you know you might buy $100,000 house that needs $50,000 worth of work okay you got $1 150 in it well that's $50,000 you don't have to pay back and so you know that's been my strategy has worked quite well there's a few things that I always look out for and always tell new investors don't buy a house with structural issues especially as a new investor you know I do it now because I have a team that that knows how to work through some of that stuff so you know you want it make sure it's more cosmetic things there could be a busted window there could be a hole in the wall it might need new floors or carpet or new

13:45Countertops might needs the the yarn might need to be cut or Shrubbery done you know the easy cosmetic stuff that most people can't look past you know so so you have to understand if you can look past those things you're already giving yourself a huge advantage over the next investor because most investors say oh there's a hole in that wall there's a window broken the shrubber grown up oh this place just needs to be bulldozed down that's what the majority of people think so if you can look past that then you already have a huge Advantage and that's been my strategy and then what I do is x i can get this property for you know whatever the discount is for for it being the worst house in the block then I add in okay this

14:33Is how much my fits up cost going to be all right so then this is how much I can refinance the property for so here's my payment and then what can I rent it for and so if I can get my money back out the majority of my money some sometimes you don't necessarily 100% get your money back out you know you might leave a couple thousand in or or whatnot but if I can get the majority of my money out and it's going to be cash positive every month because I don't buy real estate just to say I own real estate right I don't want to make just $100 a month on a rental property like that's a lot of work per unit to not make very much and if the market takes just a little bit of a turn you're going to be upside down in it so I just I want there to be conservative numbers built into a property and

15:21So then you know all right if if it cash positive every month after payment taxes Insurance a percent for maintenance stuff well then you know what it's probably a good deal right you know I'm making money every month I've got all my money back out in it I'm using someone else's money to make money that seems like a great deal because I have this I have this saying that you know what real estate is the only thing that you can use someone else's money to buy something someone else makes the payment for you in rent and they they make your mortgage payment you make a little bit of money every month and it appreciates over time and you don't have a dime of your own money tied up in it if you if you do it certain ways there's nothing else that allows you to do that I mean the stock market works very similar but you have to have money to physically put in the stock

16:09Market to make money right so it and it's not paying you much each month even if you get a dividend so exactly so I actually have a cool story about the stock market this is probably five six years ago I started doing a a duplx come available and so I had a 401k for my retail job and I'm like you know I start running the numbers and and I I didn't tell anybody I was doing this but I cashed out my 401k took 50% hit okay took a 50% taxs on it bought this property in January of that year by December I made all my money back in the rent because by rent I was I was bringing in close to $33,000 a month in rent after I fixed it up I wasn't making a $3,000 a month dividend on that on that

16:58That that or 401K either and I made back the money that I lost in one year and the property went up in value so I actually come out probably hundred $150,000 to the Good by doing that and when I tell people the story they're like well that was crazy for taking the money out and then when I get to the end of the story well you know this is how much money I'm really making like they're like okay well that actually makes kind of a lot of sense there you know so it's just fun things like that that you can do in real estate if you do it the right way I mean this is one of these businesses that's not very forgiven if you don't do it the right way you know you're kind of on the hook for it so you know as long as you're doing things the right way you can certainly make a good living