How to Go from Fear to Freedom One Rental at a Time

0:00The way I operate, I have kind of this personal model is I don't sulk very long. I I think it just it's it's a downward spiral that just perpetuates if you allow your mind to focus on the narrative that it's building out of fear essentially. It's always fear related. — so I I'll kick and scream, fuss, give myself permission to to whine and feel sorry for myself for about this long. — But I hate that feeling, Kirby. I hate the feeling of the anxiety it brings and everything else. That just, you know, you get one thought that builds on the next and they're all fear-based thoughts of the worst case scenario that's going to happen.

0:33You're going to go broke. You'll never make it. You don't know what you're doing. You're not smart enough. You're not wise enough. You know, you have no experience. Whatever it may be, it just whirls. You know what I'm talking about. — Oh, yeah. — And — usually it's like 2 a.m. Too, — right? I know. And you're like, "Is it time to get up yet? Should I just get up or what?" You know? — Exactly. — Yeah. Totally. It is. It's weird how that works. But I I made a decision and you know I always teach people because because you know my my passion now is is helping people learn and helping people make a step step into the bigger things and just just all the same kind of things that we're talking about here that that you seem to enjoy as well.

1:10And you know when you make a decision the difference is you don't give yourself an out. All right. If if if you make a choice then there's always other choices and you're always going to take the least route of resistance. So for me, I decided, look, there's there's no way to go. It's when I decided to play the cards I was dealt like it was a hand I always wanted. That's when life started changing and and you push into it. And there's this amazing way there's this amazing thing. Now I'm a person of faith, but you know, there's there's all different type of people out there, whether it's the universe, whatever else, but movement is movement.

1:42And I believe to my core based on my experience and my path, when you make movement, things happen. Things happen. And but it's that first step. So I never let myself, you know, I I I I swam in fear for a while and it was hard to get over. But it was when I would push in deeper that I'd see a little win. And that little win gives you a little more confidence. And then and then you take another little step. And and as you do that, you just start stacking those little steps. And the next thing you know, if you if you want to push it forward, you know, 10, 20, 30 years, you look back, you're like, "Holy cow, how did this happen?" And it all started with that one little step.

2:22So I think really the premise for me was you can't get stuck in the fear mindset because you know economies or markets like you know you've been in it long enough. If you look at the history of real estate over time over all time it's always on an upward trajectory. Does it eb and flow? Does it dip? Yes it does. It always does. You know people ask me all the time when's the best time to buy? Just buy. Just just go get something bought. Buy now. You may you may overpay but just buy now. — So I never really gave myself choices. I just put myself in the pressure pot where I made a decision and I stuck to it.

2:56You know, burn the boats, so to speak. And it's the way that the pressure you put behind you that always allows you to push forward because you no longer have a choice. — So, play the cards you were dealt like it was the hand you always wanted. That's Yeah, — I love that. If people really thought about that more and what that means. I feel like this this comparison mindset kills so many people today. And I feel like that would help — for sure. — I mean, it just just so much. I love that motto.

3:27I hadn't heard that before. So, in in terms of your your rental properties then, what did that what does your rental property journey look like? So you bought that one in '05, you hit 08 and then how did that how how did you start building from there? — Yeah, great question. So, you know, it's a funny thing. There's just an under where you buy the first one and it's really really hard just to get the first one bought. Then all of a sudden the second one just shows up. It's just there, you know, and then the third and the fourth.

3:59So for me in '05 was my first one. Then 06 and 07 I was stacking them. So I started buying more. I was I was energized. I'm like, "This is awesome." You know, it's like you you feel like you're you're winning and you see a path to freedom. Big freedom compared to, you know, what I expected for this guy who has no education to to fall back on. And so, it felt like something I could do. And I saw a real opportunity that I could build legacy and and wealth for my family and security and all those things that, you know, real estate brings fairly easily if you if you do a few things right.

4:32And so, you know, I had bought more and I was stacking them, but then 08 hit and I'm like, "Oh my gosh." And then everything paused obviously till about 2012 for me. — So, didn't buy another one till then because, you know, in the manufacturing business, I'm a big proponent of, look, you want low risk, but you want to jump into real estate, great, keep your day job. You don't have to burn the boats from the first step, you know, and jump in. That's the big scary stuff. And it doesn't have to be that way. Transition slowly and just start stepping on those.

5:03And if you want to do that someday, great. If you only want one, it can change your future. If you want 10, you'll probably want more after that one because it's kind of an addiction, you know? — Yeah. — And you start thinking, this is really cool. I like this. And you see the opportunity and the numbers and the future that it presents. But even one will will change your future. So for me there was that long pause and then I got back into it because in the manufacturing unlike real estate you know when you don't have any business but you have overhead and I had like 32 to $35,000 a month that had to be paid out just for overhead even when you're not making any money.

5:41— Yeah. — So you're like oh my god no pressure there. Yeah for sure. It's it's tough. So — I was scared man. I operated in fear mode for a long time and trying to protect my family. Just kept managing what I had and then as soon as the business started recovering from like a groundup rebuild I mean it was a massive overhaul in systems and processes to create efficiencies and then chasing customers again like like we were starting from zero. We we've been blessed that the business you know those things start taking root at some point.

6:12You know, your your efforts always have some kind of response, good, bad, or indifferent. And we were putting so much effort in that it started responding and that started bringing in some cash flow again. And so what I did was I just take the cash I earn and go buy more real estate. — I've been doing that for years now. And now I'm blessed, you know, to be retired at at 53. Now I'm working more than I've ever worked before in my life, but but it's all choices and things I choose to work on. So, it's a lot more exciting because I don't have the pressure of have to, it's want to.

6:45So, that's kind of how we got there. — Yeah. Yeah. That's it's funny you bring that up because I think a lot of people picture like financial freedom as like you sail off and never do work again. And it's like as soon as you get to financial freedom, then the question comes up like what's the whole point of life? Is it to get to a place where you just can sit around and do nothing forever? You know so then it's like well what is the the you know a lot of people then work even more hours but it's just on things that have a bigger impact which I think is has been true for me as well — 100% I you know I so I I coach people in all different types in real estate I I kind of specialize with business owners and entrepreneurs to help them break through barriers and reach new levels in all

7:33Everything that encompasses being a business owner and entrepreneur cuz I've had some of those struggles over the last going on 37 years. But you know the the thing is you you just you have to embrace the journey because it's never the end game that you're going to win. And if you sit around and you think you're going to retire to the couch, you start dying. You literally start dying. Your brain, your body, everything. And you know, again, if you're a person of faith, the Bible says, you know, hey, be fruitful and multiply in Genesis. And and that's exactly what we're designed to do.

8:05We weren't made to be this, you know, such amazing species with the brain and the abilities that we have to go sit on the couch and that's what creates boredom. So if if there's boredom then it means you're not doing enough in your life because you know everybody does eight hours you average if you do eight hours it's what you do after that. Are you creating are you stimulating your mind? For me, real estate was that it was nice to do something different outside of my day job, but it stimulated me and gave me a little bit more excitement because it wasn't the grind of every day as well.

8:39And it it turns into something. You wake up one day and you're like, "Wow, that that thing turned into something over time." So, it's pretty cool. — Yeah. Yeah. That's awesome. And so I'm curious then from from 2012 to today, since, you know, after you kind of, took a pause on investing once you got back into it, started stacking your rental properties again, was there any lessons that kind of stand out in your head that kind of have shaped the way you approach investing today?

9:09Like big big things that kind of you were like, "Oh, you know, actually, now that I realize this, I'm gonna do things a little bit different, maybe." — Yeah. How much time do we have here? — Yeah, there's probably a lot of them, but — Yeah. Yeah, there is. I would say probably the biggest one that I try to make sure people understand, especially if you know in the audience is people are people who may, you know, have one, two, five, 10, is you have got to look at this like a business, even if it's one. And you know, there's this term I call, and it's in the book as well.

9:42It's called good cop, bad cop. You you can't be the guy. You can't be the guy to your tenants. You can't be having barbecues with them or being their buddy or their friend. This is a business union if you don't operate it like a business. And it's not that hard to do. That intimidates some people think, well, I don't have any business sense. It's not that hard. It's just some basic structure you put together. But it creates this buffer that allows you to have a voice of authority and to impose whatever is on the lease when necessary.

10:14If you don't have that and you're your buddy, man, tenants will take advantage of you. I mean, they will take advantage. I have friends who it, you know, it drives me nuts because I'm like, gosh, you know, quit quit trying to be their friend. You're not their friend. This is a business. You you provide them safe housing and a good place to live. They pay you rent. That's how this works and that's it. That's why you have a lease, you know, and that's the rule book of what they have to uphold and what your responsibilities and their responsibilities are. And I think if you do that, it it makes a completely different picture because you can you can be the good cop when you need to and the bad cop when you don't.

10:50We structured that through an LLC where the management company, we have in-house management, so the management company owns the properties. So that way, even though, you know, I technically own the management company, I'm not the owner. I'm the landlord. The company owns the property. So I can with honesty say I'm not the owner. You know, I'm not. When they say, "Are you the owner of this property?" No, I'm not. You know, I'm the landlord. I represent the management company. So anything any request or anything you have, you know, needs to transfer through it.

11:22And I'm here to help you and be the liaison for that and and help voice any concerns you have or or you know navigate any repairs that you may have so we can have a great relationship. I think that alone is what's made the biggest difference once I learned that a couple houses in. I was never a barbecues, that kind of thing. But, you know, to keep that professional relationship so things go smooth and they know we got to pay our rent or there's going to be ramifications if we don't. And I can't just buddy up and say, "Hey, Sean, I'm going to be late on rent. Is that cool?" You know, that type of stuff.

11:52And the next thing you know, two months later, they still haven't paid you rent because you're buddies. That's that's a big problematic area that if people learn that one concept, it could really change how they structure their business. — Yeah, that's a great lesson. And and what are some of the best deals that have worked or that have worked out the best for you? What type of deals are those? And then how do you make a decision today if it's worthwhile for you to take on a new deal? — Yeah, that's a good question. So, you know, I have some different models than a lot of people.

12:23A lot of people go into real estate and they start buying the the low-end homes, more of starter homes. The problem I saw with that, and I had a friend who was a huge investor, he was about 15 years older than me when when I first started. And he had gosh, I think 40 to 45 homes in one regional area where I live here in St. Louis. And what I saw with him was now he was very wealthy, was doing great financially. He had multiple jobs. He was also the city manager. So he had kind of an insight of when these homes were coming up, you know, under stress or whatever else.

12:57But what I noticed was he's constantly turning these homes. And you know, the greatest cost, as you know, is turnover. So your greatest expense is always going to be turnover. — So I thought, man, I don't want all those headaches. That seems like a ton of work. And I watched him work his tail off trying to keep these properties, you know, up, you know, painted, refreshed, and all this and new tenants, constantly new tenants. So my thought process, and it wasn't by any intelligence, Kirby, it was just by luck and, you know, raw assessment was, what if I buy a nicer quality home that families want to live in instead of a starter style home?

13:35Because, you know, if they're going to start there, that means it's just a starting point. They're not going to be there long. They're going to want something better. So, I started buying, you know, medium family income homes. They're called premium rentals in our market. And, what that means is it's it's at least a three bed, two bath home, 1,700 ft² plus. I have many four bed, much larger homes, two stories that I house people in. And families move in, they we buy in good school systems, and they stay. Our average Tennessee is is about 7 years. We've had one gal who stayed 14 years, and it was it was on a 15-year mortgage.

14:09She bought the house. It was fantastic. — Wow. — But if you The model was just if you buy nice houses, people stay differently than the the entry levelvel houses because those people are they're just starter homes or they're stepping stones and and they move much quicker and you don't have tens of thousands of dollars over five 10 years, you know, of turnover that that just goes out the window. — That's that's such a great point. And and when you're looking at the metrics, when you're evaluating one of these deals, is there a specific metric that you're trying to identify that that makes it a deal for you?

14:46— You mean like a 1% 2% rule, those types of things? — Yeah. Yeah. Everyone, I think, has different yeah, different metrics that are meaningful to them that that make it a deal to them. And you hear people say, I just am looking for a good deal. And it's like, you know, that that means a lot of different things to a lot of different people. So, I was just curious after all your experience buying all these, is there is there a specific metric that you look at to to identify yes, this makes sense to buy? — Yeah, there's there's a handful of key components that's important to me.

15:18So, first of all, we never buy to a a back road. We never buy a corner lot, you know. So, there's there's little things like that you learn along the way that they're less appealing. So, I learned down the road to look at a property like, hey, would I want to live here? You know, and if I do, that means somebody else will as well. If I'm not that excited about it, that means somebody else is going to be less excited about it for whatever reason as well. So, like for instance, you know, we have many come up where you have this house on a corner lot and the garage is on the side. Well, if it's a a three bed plus, most likely you're going to have a family in there.

15:52Well, mom can't see out the window for the driveway where little Johnny and Susie are playing and want to ride their bikes. It's a blind spot. Well, it would make me very uncomfortable to send my little girls out there, you know, to be playing in the driveway that you couldn't see when it's on the side and the house faces the front. So, little things like that that just add up, you know. So, now our model is we want to be in an established subdivision. We want good neighbors in a good school district. School districts are tops because they keep people there way longer. And with some of those components and then obviously like a 32, we never buy anything past 1978 oldest, but we like to say ' 80s plus.

16:32And with some of those components, we've we've done pretty well to to keep people for a long time and and they're happy in the homes and, you know, they're just living life and they stay.