Housing Expert: THE ULTIMATE GUIDE To Buying Your First Rental Property (Step by Step)

I thought the answer was climb the corporate ladder retire when you're 65 I had no inkling there was another way to exit the rat race other than you know what die or get Social Security so you started out as a W2 employee but over the course of 20 years you've acquired 18 180 units I believe real estate investing is a skill if you practice it enough you will get better how can I save so I can buy another asset that's that's all I thought about for the first 3 or 4 years how easy was it to buy a property in 2005 lending was wild in 05 my mortgage broker gave me a blank mortgage application he says just sign it hey there's a bubble wealth is created by ownership over decades I chose a very very small footprint way back in the day to become a lead at better than anybody else it could be classic cars it could be stocks it could be whatever it is it could be fish tanks and coral right whatever you choose to become a lead at and then you have to you know you have to do that for a [Music] decade all right Michael Zuber thank you so much for coming on the iced coffee hour I appreciate the opportunity it should be a lot of fun so we've watched a lot of your content recently and your story is absolutely incredible so you started out as a W2 employee just a normal everyday average W2 employee but over the course of I don't know the last 20 so years you've acquired 180 units 181 181 sorry yes 181 rental units we're going to go into that story how you guys can do it too thanks so much yeah thank you It's a Wonderful opportunity to share um something that's probably not out there on YouTube a lot and that is W2 employees right what what I really see myself as can build wealth it's not only the entrepreneurs of the world that you know have the opportunity to build wealth but if you're a W2 employee which I consider myself to be and that's all I ever was if you do come some of the right things you you can get there so it's it's it's fun to talk about W2 employees how did you get started really at 30 years old which is kind of funny because at that point I was an accountant I was a pain accountant I had in MBA so I went to Advanced degree and I was raised to go to school get a good job you know climb the corporate ladder retire at 65 uh I'm old enough to have experienced a dotc crash where I successfully turned seven Grand into almost 200 only to lose most of that I walk into a Borders Book Store after losing 80% of what was you know more money than I'd ever seen and found Rich Dad Poor Dad so I didn't even start my journey until I was 30 years old really what was that like during the 2001c bubble well looking back on it you can sort of see the remnants but I actually remember thinking I was smarter than Warren Buffett and I actually think I said that a couple of times because again if you turn Seven Grand into almost 200 in about a 12-month period that's that's a pretty good run and now because I'm more mature I can realize I was simply gambling I went from Reading financial statements to kind of reading financial statements to gambling and then the market just took it all away what were you investing in so mainly Cisco Systems was the stock Cisco is insane that was like the Nvidia back like or the Tesla I guess you could say yeah yeah of 2000 yeah I think there's a lot if you actually look at the charts between Nvidia today and Cisco of my era the the charts look almost the same there some people are talking about the today and if you were in Cisco back in the day you're still not back at the peak and it's been 20 plus years so you know there could be a long downside to this so yeah Cisco of systems is the one that got me but also Enron and Worldcom two frauds got me as well so uh there was there was a lot of pain involved okay so you pick up Rich Dad Poor Dad what did you learn from that and where' that take you so if you've ever read read Rich that Port ad it's not a how-to book it's a book maybe how to think different it opened the window to me again you got to this is so frustrating I paid for an advanced degree I have an econ degree an MBA I was an accountant for a Fortune 500 company and I didn't know anything about real estate I thought the answer was climb the corporate ladder uh you know retire when you're 65 I had no inkling there was another way to exit the rat race other than you know what die or get Social Security and Rich Dad Poor Dad was that and it's not even particularly well written but it was such an eye-opening experience I can't do anything except give it credit to to opening I read that book I think it was e8th grade required reading really wow what yeah eth required yeah CU I took a uh I took a class I think it was like a business class or something like that and it was like Reed richad and we would just go over like that that uh the cash flow quadrant right of like what is an asset what's a liability uh what makes money what loses money it's it's the basics that they would never really go into but like that got the cogs at least turning that there's something more to it so what I have found because again I I can only tell my story and it's Where My Story begins with with that early opening book it turns out about 80% of the people that read that book are like me they want to be Robert and Kim but there are 20% of the people go I don't want to be Robert and Kim I want to be rich dad right and I've reread that book on purpose and I could never I can never see myself becoming rich dad the guy kind of making the moves behind the counter I was always the employee just show me a path and you know I'll pick up you know one rental here or there that's it's just eye opening that some people read the same book and see it differently yeah so how did you come across that book like why that specifically uh honestly I was depressed I walked into Borders bookstore it was a physical location I buy books when I travel my career took me all over the world so I read to past the time and honestly it was purple I mean that's the reason I picked it up in all honesty it was purple it's my favorite color I'm like oh purple book never seen one before uh that was you know that's the legitimate answer is why I picked it up and know why not just keep grinding away at your job as a WT employee well did you realize I thought I would do I my whole vision for this after reading richad ported was you know what if I can get to four just four I will have a retirement at 65 that is better than most a four for rental for rental that's all I ever wanted right have my own home which we had at the time and then have four rentals again I'm 30 so by the time those are paid off I'll be you know 60 62 and my retirement will be better I had no grand plan of some other number than four that's as big as my mind would let me so my vision was always to work was to keep climbing the corporate ladder keep busting my butt keep investing in myself to try to be better at it get AR raise get stock options whatever it is I I just don't think big like that I was like just give me to four and you know I'll at 65 have more options than most that was that was the vision yeah so what were the next steps after reading that book and how much were you making at the time with your W2 job so at that time so I was 30 years old we were probably combined so I was married at the time our combined household income was right around 200 Grand M right now which is a lot well it's a decent amount yeah it's it sounds good but in I lived in the Silicon Valley okay right Mountain View California specifically uh where 200 Grand back then was you were still very much paycheck to paycheck we weren't saving anything right it's just that expensive to live there now as you'll see in our story we eventually really get tight on expenses and we are able to save um but 200 Grand you know 20 years ago in the Silicon Valley was not not a great Livy how did your expenses break down at that point versus like rents taxes like all of that like where does the $200,000 go so $200,000 again we were paying taxes we were in the highest tax bracket which again if you had fed plus California we were roughly 50% right 48 and change so 200 becomes 100 real fast we did have a mortgage at the time which was about $3,000 so there goes 36 we had a daughter which we were putting through school which was 15 or 18 we had daycare cuz both of us were working we we we ate out once a week we we didn't live extravagantly we didn't take vacations we lived in the same condo we didn't trade up our condo had no upgrades it was those same white Subway tiles for 20 years we had one car and I had a company car we were not 200 grand for a lot of folks may seem like a lot but when you're spending you know 180 of that before you have any discretionary and it's not it's not great yeah so when did you realize that rental properties were the option versus just doubling down at your day job and trying to turn 200 into 300 let's just say most people myself included you you don't have that optionality a lot in a day job right even though I had a commission-based job you really it's hard to go from 200 to 300 at least in a very accelerated path right eventually you know you get promoted and over my career I became a first line Second Line third line um sales executive so you do have more optionality then but at 30 I was an individual contributor with very little variable comp um so it was it was like how can I save so I can buy another asset that's that's all I thought about for the first three or four years was how can I save more so we got really really tight on expenses we cut down to 50% uh of our expenses we um we found ways to save we didn't go on vacation you know we how are you cutting out so vacations were gone we used to you again we used to spend every penny it's embarrassing to admit but we would go clothes shopping we would we would do fancy restaurants we would just do the extras because we quote unquote deserved it um but yeah now we were looking at our future going you know plus W2 jobs very risky right that's all the income you have and one of us gots laid off we were done right if my wife Olivia or I were laid off at that time given we were spending 200 and suddenly was cut in half we were in trouble we saw that as a huge risk uh again something that that is sort of highlighted in Rich Dad P we need we need to find a way to get some protection or insurance I guess mhm so you cut out all of your expenses and around what year was this so we start the journey in 2002 we didn't really get really focused on cutting expenses 2003 2004 okay so you start saving and then at what point were you ready to buy your first rental property we got the so we remember in the earlier story We turned I turned 200 into 40 Grand that $40,000 uh became three rentals we bought nor Drive which people can look up 1818 Norris Drive East 93703 I believe we bought that December of 2002 so I was first one then we bought Ferris I believe in July of 03 and Clinton like November of 03 okay when you're saying these things is that the stre street names sorry street names yes the street names that's what I remember them by the Numbers get kind of confusing but those were the first three how did you know how to buy those properties because I remember when I bought my first place I was a nervous wreck like I was thinking everything I had into it the real estate agent Ashley that I was working with at the time quit on me because of how difficult I was because I was a real estate agent too but I chose to have another real to represent me in San Bernardino because I figured she knows the market better than I do but I got so frustrated when I was emailing her at 11:00 p.m. and maybe in hindsight this wasn't warranted but I would email her at 11: and like she wouldn't respond back to me until like noon the next day and I'd be like what's going on between these hours like I'm available and then I'd want to write an offer immediately and she says well you know it's kind of late now so I'm going to send it off you know I'll do it when I get in tomorrow and I'm like no it's like this is going to be going into multiples like let's do this now we gotten so many you know disagreements on that that she quit on me so and then I represented myself it worked out but I was so scared during that deal because it's like you could do it for someone else but when it's your own money it it's different I was not nervous buying North stride but let me set it up so we decide we're going to go invest in real estate like a lot of people I spent a year looking in my backyard because after you read Rich Dad Poor Dad you go on to read a lot of other books because again it's not how to so all the books that I read said invest in your backyard so I didn't know any better I tried again as I mentioned earlier I live in the Silicon Valley I want cash flow Nothing Cash flowed in 01 02 o just doesn't work there right I did not know that at the time so after 52 weeks because again I'm very broken I I get very focused every Sunday for 52 weeks in a row we would drive the Silicon Valley looking for cash flow Olivia the better half in our relationship pulled me down on the after the 52nd week and said we got to try something different so for me because I don't like airplanes we didn't want to go around the country so out of state was not an option so she pulled out a California map and we started drawing 30 minutes 60 Minutes 90 minutes and we found Fresno California two and a half hours away Central Valley and we realized that the numbers work so the first thing I do is live where you want but invest where the numbers make sense so what did that mean we bought norest drive for $1 107 $107,000 and it rented for 1100 right the 1% rule right so I felt very comfortable but how did I find it is your question a I never lived in Fresno I didn't know anybody when we started i' driven through it once as a teenager on the way to yuse but the numbers made sense so what did I do I interviewed 20 or 40 different people and I said where would you buy and I just kept a running list right I talked to agents Brokers you know um mortgage folks where would you buy where would you buy where would you buy and the Mayfair District came up the most Mayfair District in Fresno translates to 93703 it's a zip code so the next thing I did is I said what do I want to buy I'd only ever known a house that's all I ever knew so I was only going to buy a house no duplexes no quads no Apartments nothing and then I was like what kind of house and then I said three or four bedroom and then I said two baths because it would rent for more two car garage between 1,200 and 2,000 square F feet so that criteria I put into like real.com or Redfin locked it in and that is all I looked at for three years so what does that allow you to do it allows you to what an average deal is of that criteria and if you look at that every day for six months you will quickly be able to identify the good or great deals this one is mispriced or this one is has some value add you can create a fourthbedroom given square footage or something like that so the only answer is I created a buy box I was extremely focused I knew my numbers and I was not nervous at all when we wrote noris drive because it was the best deal uh at the time but before we get into that AI might just be the most important new computer technology out there it's storming every industry and literally billions of dollars are being invested plus we also use it on every single episode of the ice coffee hour so you better buckle up the problem however is that AI needs a lot of speed and processing power so how do you compete without your cost spiraling out of control well that's why it's time to upgrade to the next generation of the cloud Oracle Cloud infrastructure or our sponsor oci oci is a single platform for your infrastructure database 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mine in a lower price point and mine was three bedrooms two bathrooms 1,400 ft or more uh I forget what the Lots I think the Lots there was like 15,000 ft or bigger for a LW size built in 1979 or new so you didn't have any lead based paint issues um and yeah I would just put that in and then look at the average rents and then decide from there what made sense to buy and back then my minimum to make on a rental property was a 15% cash on cash return which just doesn't exist anymore but back then like that was the low point and I remember seeing deals where I'm like wow this this could pencil out to like a 22% cash on cash return what you just described I call yield just to to differentiate because I'm just trying to figure out how hard my money is working down payment make make ready closing cost versus the expected cash flow over the year that's a yield cash on cash return on Capital but that that's the magic if you do that in a focused area consistently for 90 days maybe six months you'll learn average and then you only write great deals so for example in my this is 2002 not 2010 uh I was looking at anything that was higher than uh 10% % right so nor strive because I was able to buy it right create a fourth bedroom I was able to get you know a higher return than that so that's exactly what I tell everybody to do what most people get wrong is they go oh I'm gonna do that criteria and then I'm bored I'm gonna look over here and I'm gonna look over here and then they just get all confused because you know you can't compare this Market with that market there's different returns different yields different expectations most new investors fall down because they're not focused how did you then navigate going and buying those properties to then expanding so the journey really has two steps so again our Capital $40,000 is gone after the first three it was $20,000 for Norris strive street name $10,000 for Ferris $10,000 for Clinton we're broke we got nothing we got a little bit of reserves for family expenses and things uh but thankfully at the time the market was going up so uh we did a cash out reive Norris Drive I hate admitting my mistakes but they're there so at the time I'm refi nor Drive the mortgage broker asked how much money do you want I didn't know any difference I said how much can I get so I got the maximum which is like $42,000 so I got all my down payment money back plus another 18 or 20 grand which allowed me to buy two more properties good bad my mortgage payment comes in and suddenly my mortgage payment is $150 more than rent oh by the way I have a property manager they take at the time 10% oh by the way I have reserves so I'm losing money every month because I was too stupid too inexperienced to realize don't take all the money right you got a cash flow still you didn't think about doing those numbers I didn't I was just moveing because again I would work 60 hours I would spend a couple hours a night on this it was a complete error in hindsight it's it was just it was absolutely a mistake again I'm sure in the closing documents it told me that didn't read it didn't think to look at it complete error on my part but yeah I created my first alligator which was negative cash flow not not a good idea so how do you how do you about that well in the beginning you just got to you got to get through it you you have to um you know again you you could sell it um what I chose to do at the time was just keep paying it I kept it for two more years and then I sold it and did a 1031 and there was never a better day than getting rid of that property because of the negative cash flow so I moved that into an apartment that we still own but yeah there's not much you can do right because you've already taken rents are they're locked into a lease you can look at expenses but there wasn't much I could do I was I was in trouble and I did it to myself how easy was it to buy a property in 2005 um so it was extremely easy I think where you're going with this is lending lending got really easy so I would so our first deal North Drive I think was 2002 we did a couple in three a couple in four where it really got funny and I remember this in hindsight 2005 I think we're buying our sixth or seven house my mortgage broker gave me a blank mortgage application blank he says just sign it and I say you know this is very different than before blah blah blah blah blah and he's like no just sign it we'll fill it in for you and I'm like what he's like don't worry we got your file and at that point again I'm moving and grooving so I I signed it moved on but yeah lending was wild in ' 05 I remember you saying in in a prior podcast that even tenants that you turned down that didn't fit your criteria would just say well okay if you don't rent to me I'm just going to go and buy a house because of how easy it is that uh you know people could just do stated income say whatever they want to lenders will give them the money to buy a house give1 102% they'll give them more they walk away with a check it was crazy paid to buy a house yes they would walk away with a check yeah yeah so I you're absolutely right so if you want to ask about the hardest time to be a landlord again it's it's uh it was 2005 because you're right I routinely turned down tenants for credit quality or income and they bought a house that just tells you how bad 05 was the 05 vintage was really bad did you see any of the issues leading up to the 2008 crash or did it seem to come out of left field there were telltale signs so um one of the things I pride myself on is always trying to seek out other experts there was an expert in Southern California he's now in Florida named Bruce Bruce Norris he wrote a report called California crash I believe this was in 2006 somebody's talking about California crash and 100% of my net worth is in California real estate I'm reading that report right the essence of that report was affordability is at record lows and the uh the quality of our mortgages is terrible that was the essence of the report and he was like sell and get out so again I at the time I didn't know who Bruce Norris was but he had all the charts all the data so I went back and did my research I realized that Fresno California had a think it was a 13 affordability which the lower you get the least afford the less affordable it is it and it was at a record low so alarm bowls go off in Olivia and I's head so we spend the next roughly 11 months selling every single house because I believed a crash was coming so we took action and we didn't sell and pay taxes we sold all eight via 1031 exchanges like like kind move a house to five units and we jumped from eight units to 80 units in about 11 months and shortly after our last 1031 completed the all hell broke loose I had no idea Fresno would fall 75% I thought 30 would be reasonable given where we were but once once the momentum broke it just it just kept going it was it was a blood bath in Fresno that would have been terrible had you gone through the 2001 crash lost 70% to put it all in real estate to then lose 75% yeah thank you for PTSD I appreciate that yeah that would have been bad yeah so how did it how did it start because I began in real estate in 2008 so when things were already like had peaked we going down is when I started yeah so I never saw the run up and then that like yeah it was it was overnight so I think the best example people can look this up on Zillow again my first property Norris Drive buy for 107 I think we sold it for 262 or 263 it actually runs to 300 so I sold a little bit early but again I had seven others to sell uh it runs to 300 and then it retrodesign it was pretty B yeah so your multif family property that you bought how did that do in terms of what you paid for it versus what it was worth so so the first one we bought so we trade Norris for a five unit on on vaser the first thing I would tell you is if you're a single family home investor and you're doing an exchange or buying five units and above just know that the management is very different single family home tenants you know they don't turn over very much one family to deal with if you're buying five units that are 600 foot each they're all side by side part of your job is going to becoming a counselor it's just a lot more they're parking in my spot their dogs barking the kids are whatever's going on um so that was a headache I wasn't prepared for I wasn't prepared for the turnover being much much higher also I bought the apartment knowing I would value ad which I think at the time that the rent was like 300 or 325 it should have been 525 even back then it was underpriced and that was because of the condition uh and the landlord just not carrying total slum Lord what I learned in that experience is in order to go from substantially below Market just to market you're going to have two kind of iterations to go through you can't just jump from you know Five Below to to at Market you've got it there's a whole process so a lot of learning experience a lot of heavy lifting that first property was supposed to cash flow over a th000 bucks a month it didn't for like 16 months uh ultimately when we got there rents went from 525 to roughly 600 so it it started to work but I again incorrectly assume that managing five units would be just like owning a single family home and it's not from there how did you navigate the downturn in the real estate oh the downturn was amazing so the first thing I did is once once we saw foreclosures happening notice the default right that's the first step of a foreclosure the first thing we did is pause it was the first pause that we had in our investing career because we didn't know what was happening we knew a crash was coming we didn't know how bad it was but the first thing I remember telling Olivia's let's just stack cash let's not deploy any more Capital let's just let's see where this thing goes cuz this is my first downturn um so we're on the sidelines for 6 n months and then properties that were selling for roughly 300 start trading at 150 and we start buying again that's when we started buying again single family home so so in you're saying in nine months there was a 50% cut yeah it came quick yeah 9 to 12 months Fresno was going on so now again not all properties were that but again you started seeing motivated sellers you started seeing some people uh there reos would come on the market every Monday I I mean it became a a process they they had a tape right the tape came out and they loaded in on Monday and I would just go through the list and I would find the properties you know from the lenders and I learned that you could offer I think it was 88% of list price and they would say yes in 87 they would say no it became a formula once you did all of this so yeah it it came down fast but it came down even again remember North Drive Peak value was 300 we start getting interested at 150 it goes all the way to 75 so we were early but we wanted to you know we didn't know where it would go so how much capital Did you have at that time when you're like saving up we had about $50,000 at our disposal and what we did is we just we started buying one and what I would do at the time is I would write for a website I had called wealth buildpro docomo house and and all these numbers and you know we were doing one every 90 days or so cuz we would just bur it we would go buy it cash we'd fix it up and then we go always cash flow it would I mean yeah we were buying them for you know 75 grand they would rent for 1250 1300 you know after we put 18 Grand in so we would get most if not all our money back while we were buring it but the magic happened just by being open with what you're doing my network right my friends were throwing money at us so we there's the first time we borrowed millions of dollars from friends and family we were paying 10 to 12% interest and they just were the first so what we ultimately end up doing just kept recycling capital is we would buy it fix it up then we would get all our money back and stick a first note in a trust deed and we'd pay 10% and we just kept recycling that same 50 Grand so we were doing you know I don't know one one transaction every three to five weeks for a year and a half or two and how did that evolve then from 2010 through today 2010 was probably the most active year for us when we go back and look at our tax statements 2010 but it was pretty good living through 12 in my market um it they came elsewhere first but in my market hedge funds or Wall Street money showed up in 12 and I I remember the day like it was yesterday because again I told you it became a process every Monday the new tape would load and I would go in Monday and have my offers Tuesday and I'd count her on Wednesday and we'd close something on Friday and nothing showed up I'm like huh that's weird right where where'd they go the next week comes so then I start reaching out to my network of people I knew because again you're right agents agents worked with these people and agents work those and they're like Michael New York's here I'm like what do you mean New York's here he's like these people with these these you know big buckets of money are buying everything in the tape at list price right I figured out you could pay 88% of list price so why pay list price they're like they just bought everything and in 2012 the world changed hedge funds Wall Street showed up in Fresno in 12 so w prices that was the bottom and we started building from there and how many units did you have at that time I don't know exactly but I would suspect we were 135 to maybe 140 a lot of that was residential because you remember us going into the crash we had no residential that's about all we bought from 200 in late 2009 let's call it 10 through late 2012 was all residential all single family homes and back to your earlier Point Jack um what we started buying after that was multif family because when hedge funds came in they only came to residential what also happened after that is we started seeing multif family crack and we started buying multif family direct from Banks like credit unions and whatnot so we bought you know a property on milbrook another couple on Diana directly from from Banks so they do crack at different times and I think that's what's you know when we talk about the market today I think there's very much a difference between commercial and residential but the same thing happened before right residential cracked first commercial cracked second how much were you making at the time so guys this time of year can be very busy the weather's nice everyone's going back to school and finding time to cook a meal at home can be very tough I know for me it's just way too easy to end up at a drive-thru which definitely is not the healthiest or the most budget friendly option and that's where our sponsor Factor comes in with their no 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making 400 maybe 380 400 at the time is that net no those are gross numbers and what do what does the net look like on something like that well again we're paying 51% right State uh federal state because we're in California maybe it's 49 something like that so half that's gone immediately daughter still in school all of those things but we probably had seven $75,000 in disposable income again because we chose to ratchet our expenses we're still not taking vacations at this point you got to remember we're 140 units in we're C we're cash flowing now uh in our units and we're still not flexing we're still just just building and the number that you provided that 400 number was not including or is incling no that's just our W2 sorry okay so what was the real estate doing at that time so the real estate actually turned for us probably in 2010 or 11 because I remember this like it was yesterday I was in Europe for work and I remember calling Olivia saying hey how much money do we have to transfer to the to the real estate account and she goes nothing and I went what because we kept having to transfer stuff over and she goes our rentals are paying for it and I'm like didn't we buy two houses last month it cost 18 Grand to remodel in like 21 or something she's like no the rentals you know covered that so we had positive cash flow that's the first time I really saw it because Olivia and I divided the work my job was to find deals and secure capital and her job was to run the business so I didn't really know what was going on in the business that was the first time it really opened to me that this was working so rentals at that time were probably net net 15 to 20,000 positive on top oh 140 units at the time gross was probably just under 100 Grand a month MH right today it's 180 190 a month MH yeah I'd have to do the math but pretty close I would think 90 grand a month and how are you managing the tenants we have had property manager since day one okay our job was to manage the managers and then again I admitted many mistakes I was horrible at we fired the first five right we fired the first five property managers for lying or not e expectations so what we did is we ultimately got to a point where we were large enough to call the shot so we have one point of contact at the property manager we've been with for 10 years we have a standing uh used to be Friday now Thursday phone call we go over the same numbers I get a daily report of what's going on where I can ask questions daily uh so at this point we're spending probably less than 2 hours a month kind of managing that but it's because we've gone through the fire of you know working with the manager setting expectations and we're not adding units like we used to yeah any tenant horror stories oh I have several um I can tell you the first tenant on noris strive almost killed us first first property we bought we're so excited we took half our stack 20 grand we buy it tenant moves in we do everything right credit check reference check income check all of that what we don't know is the family is going through marital Strife they break up divorce the first month weeks after moving in she takes off he is not happy with this he decides to stop going to work he decides to become near as I can tell a professional alcoholic and spends the next three months destroying our property I'm in California so it takes two to three months to get them out costs a thousand bucks to get them out I'm I went from here being excited to have my first rental to here again to your point after losing 80% of my stack I'm ready to quit I remember walking in and there I still can't get this out of my head the sheetrock he's got wine bottles empty wine bottles stuck in my sheetrock and I ready to quit I'm ready to sell it at a loss move on and feeling like a loser Olivia looks at me and goes did we do anything wrong no let's try one more time and from there Norris stride never disappointed next tenant never missed payment you know on onto that but almost killed us the other Horror Story is we had Oh I thought you meant killed like it actually that's what I thought I was like did he come charging my bad should used a different word well it almost killed us financially that's for sure um the other one I call it the hammer story so this is probably 10 years in a tenant comes in to pay rent cash um we my property manager does their job this person who's paying cash for the rent not on the Le we think it's a roommate situation right okay we allow that just fill out an app We'll add you to it we'll let you pay rent next time thankfully they didn't take the payment so he fills out the app brings it back wants to pay rent again my team does the right thing says no we can't accept that till you're approved you're accepted blah blah blah blah turns out the only thing accurate on the lease was his name everything else was wrong turns out the guy was a a drug dealer of some kind he had scared the existing tenant out by threats yeah this is gets crazy um we tell him he has to get out evict he sends his buddies a text or an email or something says let's have a hammer party we actually got copies of this after a fact so all his boys come over throw a raging party in my apartment complex and decide to take hammers to every surface in my unit break the toilet break the tub break this break that end up we call the cops we end up taking like eight people of jail including him but you know I have a $20,000 you know destroyed unit because of that so yeah you know people can be pretty mean a hammer party we should have one of those here man sounds pretty fun we could do the Cyber Hammer cyber Hammer true wow does insurance cover any of that or no uh so I'm sure I could have filed insurance but at the time we we were under the impression that if we did all of our insurance would go up we had not had a claim yet so maybe this again is inexperienced so we we we paid for it all we did you know we used it in the trial he ended up going for jail for longer so but yeah no we paid for that $20,000 gosh I feel like everyone's scared about making an insurance claim because then their premiums are going to go up what's been your experience with that so I've actually had three disasters so I had two fires in a flood um two total losses and one partial loss and surprisingly U first off the insurance policy is a lot easier than I thought so the first one on College uh I get a phone call from my property manager his name is Brad says hey uh your duplex is on fire on College it's likely a total loss um so what happened there uh a home homeless person was camping under the carport lit a fire to stay warm caught the carport caught the tree caught the house thankfully no loss of life just destroyed called my insurance company you know follow a claim I had a check in three weeks I was shocked I I I didn't know how fast it would be so I had to check we ended up scraping the lot and selling the lot and we came out ahead um we had two more one on Diana uh one on Terrace but my insurance actually did not go up as you know much as I feared it went up a little bit um but now every time I fill out a new form I have to say I've had claims so that may impact stuff but it' be interesting to know like the lifetime return of something like that it would I've actually toyed with the idea of calculating all my insurance premiums vers what I've received in those three claims it's probably pretty close to even at this point but you're getting your money back then rather than you know over time which is more valuable right correct yeah it is so fascinating it kind of is frustrating to know that insurance it's like what am I even paying for at the end of the day you know what I mean I heard a story it was on Twitter uh the term is raw dogging it right now in real estate that people are going without insurance self-insured it's called I I would never do that so really what they're talking about is they still have likely still have liability insurance but they're not taking the structure or total loss on it so they're basically saying if it gets sued for liability they're likely covered I would not raw a dog without that but if you want to be self-insured and you you have a big enough checkbook you can write the check to rebuild go nuts I'll never do that I I I like I like being able to call my insurance company and say hey my unit burned down either build it back or cut me a check yeah for me it's the pece of mind because I looked at the cost of earthquake insurance versus the cost of retrofitting the foundation um and I look at that and I think well the financially smart move would be to probably retrofit the foundation the chance of an 8.0 earthquake in Los Angeles like you do all the math and you're thinking if I'm sending you know $2,000 uh you know a year and extrapolate that over the next 30 Years I don't know uh for me it's the Peace of Mind knowing just if something happens I would rather have it than not like just in case no I I I think that's wise in areas that have earthquake prone like LA or San Francisco I think it makes sense thankfully Fresno again where I'm at where I've only ever been um is some of the most stable Earth in California right it's the it's the Farmland uh so I don't have earthquake insurance knock on wood in in Fresno yeah now this might be another like Noob question but I've always wondered if you end up getting earthquake insurance and there's an 8.0 in Los Angeles let's say a lot of people have you know the same insurance companies how is one of those companies going to be able to pay for the flattening of like thousands of homes I think it's something called reinsurance I think a lot of insurance companies have reinsurance they by Insurance okay from like what funds or something like that well Buffet Buffett's big business is reinsurance interesting yeah yeah that's what I think think he has enough money just in case something happens I mean I would hope so I don't know for sure though I would hope so okay so what's the best and the worst deal you've ever done well I'll give two answers on the best deal I think you always got to start with your first one I think you've got to prove it works you got to prove that you know what you're doing you got to see that cash flow again my cash flow in the first deal wasn't great it was about $150 after we got rid of that first tenant before we did a refi but it was proof of concept that would work right that Rich Dad P was right that yeah we can find Value so I think the first deal is always interesting I think the best deal outside of that was an apartment building uh there was an apartment building it's on milbrook it was listed for a long time at 1.4 million 1.44 million to be exact uh and it was listed for two years why was it listed at 1.44 because that's what the previous owner bought it for he wanted his money out unfortunately this was 2012 when the whole Market was rolling over and the his lender um allowed him to you know extend and pretend unfortunately because he knew he was underwater he did not update the property he was being a total slum Lord and ultimately he was the owner was or the bank was forced to foreclose we buy it directly from the bank for 700 Grand so half off it was destroyed how many units 18 18 units uh we ultimately put about 120 Grand into that uh building uh today it's worth you know 283 million something like that wow so and rents have more than doubled on that since we bought it so um and again that's what's coming there's a lot of busted multif family deals coming and there's a lot of stuff being listed at previous purchase price that'll that'll never sell so extend and pretend we only last so long but that was my best deal that apartment building and then what's the worst I remember buying a property on Princeton uh that had a house in what we would call today an Adu it was essentially a garage conversion unfortunately at the time I didn't know um that the garage conversion wasn't done right they didn't they created a a housing unit but it was still on the same garage foundation which was 1 inch thick or 2 inch thick ver 12 in so it wasn't to code uh we ended having to scrape that unit uh so I bought something that I thought would produce two different parts of income and it only had one which really made that deal skinny so yeah I I I definitely you know there's there's some people that do adus wrong yeah and that was a big mistake on my part do you think anybody could be a real estate investor the the thing that I think is different about me is I believe real estate investing is a skill I don't think anybody is born being a real estate investor I think it's a skill I think it's like singing It's like sports if you practice it enough you will get better now will you ever be samel rest in peace will you ever be Jonathan Gray from Blackstone no but can you be better yes you're not going to be Beyonce but you can be a better singer with practice and I think real estate investing is a skill so it can be practiced and learned you just have to be everybody's everybody's too distracted they're too unfocused if you just slow down got a narrow Focus like you did when you started things would start to you would start to understand the market right you would start to understand what an average deal is versus a great deal that's what I would tell most people so I believe because it's a skill anybody could do it what if they can't afford to take the risk because you hear a lot of people saying well it's easy for you to say because you had this job and you had you were able to scrape together some money but what about me because I don't have anything left over I have nothing to fall back on if I take a risk and fail I'm on the streets so what I would tell somebody in that situation is you should look into what today is called house hacking it wasn't called that when I was you know coming up but basically you can get into an FHA or if you're happen to serve in the military a VA loan for anywhere between zero and three and a half down 3 and half% down up to you know 5% if you wanted and if you could get into something where you take your living expense down to zero or near zero you're ahead of the game there's a lot of people that talk about Starbucks and all of this and saving six bucks a cup of coffee but if you can actually go after your largest expense X taxes that's where the that's where it comes so what I've told most young people is my biggest Financial Miss wasn't that loss in the stock market it was not buying a fourplex at 20 when I could have right I could have lived in one unit you is a single guy could have lived in one unit and that would have set me off on entirely new trajectory so I think more most people you know if they're in that state need to look into house hacking three and a half% down and who shouldn't buy real estate well I think there's a couple of things if you're going to be an investor if your time Horizon is less than five years don't even bother right the the beauty of getting wealthy in real estate is holding for a long term you need inflation to be your friend ideally it's 10 years but anybody who has less than 5year timeline don't even bother go do stocks or crypto or something else not not real estate for sure yeah and what do you finding in today's market oh man today's market is really tough um so I'll answer that question two ways uh I think we're actually rolling into the slowest real estate market of my career 20 plus years what do I mean by that I believe last year the low for existing home sales annualized was 3.88 million sold I believe we're going lower than that some time in the next 3 to four months but then we're going to be through this I think this is the bottom in transactions for real estate agents mortgage brokers inspectors but because the market is getting so slow it actually gets me excited why is that because of all the deals I've ever done I buy from people who don't want it called Don't wants and the best way to do that is a slow Market what was the hardest thing to do the last four years buy a piece of real estate because everybody could do it everything cash flowed right more rates are low um so I think inventory is building I think it's up 40% year on-ear I think it gets worse from here I think buyers pull back I think the election that we have in front of us is going to cause people to pull back they're scared pissed off nervous whatever it is but when they do that they pull back and I think that's going to allow people to write disrespectful offers and get some so I think the real estate Market's slowing now but is also opportunity if you're doing the work so I think there are great deals to be had and then more importantly I think people need to learn about seller financing I think the last couple years have been very much cash heavy right dscr loans in onqm cash cash cash but I think as inventory builds you're going to have some people that want out that can't take a lower price or don't want to but maybe they'll offer you terms so I have done seller financing deals five or six times over the last 20 years I think the opportunity for seller financing goes up from here because people some people have to sell although before we go into that for those that don't know I have a coffee company it's called bankroll coffee and our entire goal is to bring people the best quality coffee at the most affordable price of course there's a lot that goes on behind the scenes that I don't often talk about but part of the process of doing all of this was to find the best eCommerce platform to be able to sell from and that of course is where I found our sponsor Shopify for those unaware Shopify is home to the number one checkout on the planet with less carts going abandoned and more sales going for example Shopify is a service called shop pay that lets customers save their email address credit card shipping and billing information that I kid you not boost conversions up to 50% and if you're into growing your business your Commerce platform better be ready to sell wherever your customers are whether they're on the web in your store in their feed and everywhere in between all in all nobody is selling better than Shopify so if you're ready to upgrade your business and use the same checkout as bankroll coffee get started today with your $1 trial period at shopify.com all lowercase again that's shopify.com all lower case to upgrade your business today shopify.com with the link Down Below in the description thank you so so much Shopify for sponsoring this episode and now let's get back to the podcast so for those people out there that are nervous to buy their first rental property or they want to get into it um I think this comment I mean I would say represents their sentiment pretty well okay uh one of the top comments on the Ryan pan podcast that you did was this adjusted for inflation the first house at $100,000 in 2001 is $172,000 in $223 which now is even more sure um Good Luck finding a good rental property now in California let alone Silicone Valley for under 200,000 even under 400,000 it is not possible I would say and also I know Graham can attest to this but like wage growth has not been the same as the the increase in cost for getting into real estate absolutely correct so first off we've never been able to cash flow in Silicon Valley in 25 years point to that question uh second cash flow is is hard it has been very difficult that's why I talk about live where you want and invest where the numbers make sense they don't make sense in the Bay Area that don't make sense in high expense areas there are areas even in LA right if you're in LA and you draw a map and you go towards the Inland Empire or maybe out to the high desert there are opportunities where you you can create cash flow uh maybe it's not as much as it was in 2001 or two but there is opportunities to do that it's it's always it's always hard it's always hard and let's talk to that 172 number today I think if you looked up norrth drive I think it's at 313 or something um the other thing I would tell people people because I I have this saying inflation's a feature not a bug what does that mean I've gone back to 1970 and if you go back to 1970 and look at in real versus nominal home prices nominal home prices are up ungodly but if you adjust for inflation it's about 1% a year right if you take it over a long enough Horizon so real estate goes up slower than most people expect and what does that mean for going forward I think we've seen for the 2020s I think we've seen all the appreciation I think we're FL rough and tough you know at median home price for the know nearly the rest of the decade I just know when I think about my own circumstance in this situation I closed on my first and only property that I have at the place I'm living right now that I'm house hacking which is nice uh was back in late 2021 I got just under a 3% interest rate and I purchased right around 600,000 bucks my mortgage is like just shy of or my Piti is just shy of like 2,300 but now if I were to buy that exact same property at the same price but with today's interest rates it' be like 80% more could be 100% with the decrease in taxes and whatnot yeah and talking of with that considered prices have gone up as well so like maybe that property is like 700,000 or something like that so it's well over 2X and that's just in a matter of three years not even yeah which I think like a lot of people they see that and they're experiencing that or or they have analys analysis paralysis over the past couple of years and now they're just like oh my God like as time continues going on it's just getting so like unmanageable it's not possible and Graham talks about how renting right now is a lot more affordable than than buying for vast majority of people yeah I mean if you do the rent verse own calculation it I believe I saw this correctly it's it's the worst skew that it's been certainly in the last couple of decades the rent vers owners 40 years I years several decades yeah where do you think prices are going to be headed over the next let's call it five and 10 years so the next five and 10 years so just we're on the same page we're going to talk median home price National we're not going to talk Texas or so median price National S&P K Schiller if you'd like I believe through the rest of the decade home appreciation will be sub inflation so in real terms home appreciation will be negative it likely will still be nominal but we're talking single digits right I think inflation will run most of the decade two two and a half percent so nominally speaking it'll be positive real terms it will be lower why is that because you can go back to the 1970s and see that home prices is generally been 1% above inflation and in the first four years we we are way up so I think there's some give back so I think nationally speaking home prices are going to be basically flat and I think a lot that'll drive a lot of people crazy and what about rents you think rents are going to keep up with inflation plus some um I think again I think single families will likely be slightly above inflation CU there's not a lot of them and I think multif family will be slightly less so be negative in in real real terms and what about the difficulties of today's market just competition is through the roof properties are the most unaffordable they've been in 40 years how do people combat that well I think the answer that you didn't say was Supply a lot of all of that roils around Supply and unfortunately I still think we have a bifurcated housing market I'll give you some stats that one of my fans sent me about L Lynchburg in Lynchburg the median home price is roughly 275 Grand today in today's market as of Tuesday onethird of the active listings are below 275 which means two-thirds of them are above 275 also we're seeing increase price reductions but those price reductions are on properties above the median so what I think is going to transpire over the next year or so is transactions are going to disappoint we're going to have more price reductions but it's going to drive people crazy because the median home price will be yanked higher this is how medians calculated right we're going to have more transactions above the median which is going to pull the price higher so I think the median home price is going be positive I think transactions is the thing most people missed and I don't think I don't think we get back to 5 million transactions until 2026 2027 maybe 2028 it's going to be that the housing market is fundamentally broken the FED broke it they took rates too low for too long they started buying mortgage back Securities for too long uh the move up buyer is dead and um yeah that entry level home is it's just not coming on the market enough so but it's still worth it for people to buy today but if they buy the multif family the fourplex and house hack it yeah so I think the easiest thing to do is to house hack a fourplex you can make those numbers work because again if you're going to house a fourplex you technically don't even need it to be profitable you just need it to be less than your rent would be because what you're trying to do is lower your monthly expenses I would argue a fourplex you really should aim for zero so you're living for free which means you can stack another 2,000 bucks a month to buy assets going forward I would argue I'm seeing people all the time Buy cash flow rentals but it's usually in central or the southeast it's tough in California it's tough uh in Texas uh but it's not impossible uh I think I think a lot of people just believe you can't because that's the kind of era we live in I just think it's hard I you know I've been doing 20 years it's never been easy today's uniquely hard true but it's not impossible I do think it gets easier from here um but we'll see and what do you think about the difference between like a big apartment complex versus just single family homes residential I'm so glad we got here um and let me let me take you guys back to' 06 let's talk 06 residential so 06 if you don't know that was pre- crash because most people talk about 08 so this is what happened in 2006 51% of loans originated were arms adjustable rate mortgages 51% I believe 17 it might have been 19% of those were what's called pick a payment do you guys remember put pick a payment pick a payment was essentially negative amortization you had four payments you could pay the 30-year full Piti 15year Piti interest only or negative am which meant 500 bucks below the payment will add it to the back of the debt pick a payment wow guess which much people picked pick a payment right it's the lowest payment by far because you're just adding the debt those are now illegal but they were very common in '06 so in '06 we had a lot of speculation everybody thought residential would go to the Moon people were saying residential never crashes um we had adjustable rate mortgages on steroids and we know how that ended in residential it blew up I want you to now go to 2023 multif family Grant Cardone all these syndicators are going out doing value ad apartment buildings we saw more transactions in 2023 and multif family than we'd seen in decades we saw assets trade two and three times in 18-month periods because people were just speculating and the cap rates kept going lower lower and people were financing this with shorter and shorter Bridge debt having bad assumptions about rent growth and expenses and all of that is blowing up right now so my prediction for multif family is there's going to be a lot of losses and opportunities in 2025 I believe the greatest opportunity for wealth building is going to be in commercial properties I think residential has already seen the appreciation unfortunately uh I don't see a lot of pain building there um so again prices don't go up or down very much but I personally am excited about once again 1030 wanting a house like I did Norris drive into more multif family building so there's a chance Olivia D Olivia and I double or triple our portfolio because we sell houses and buy multif family in 25 and 26 what areas do you think are going to be going down the most I think it's going to be the ones with the most new development coming so again looking at the map it's the Sun Belt which we're already seeing I do think there are some markets that have the combination of tax hits and insurance hits that make it doubly expensive like Austin resets every year we have a lot of the southeast in Florida and the the Gulf Coast Louisiana in trouble because of insurance so I think there's a lot of you can just look at the map and see the pain in that kind of where the gulf comes into the to the US I think that's where a lot of the pain is but again if you step back from today how do you get wealthy how do you get wealthy I believe getting wealthy is Three Steps step one is you have to create disposable or discretionary income right you have to have something left over at the end of the month that you can save then you have to become Elite at something I chose a very very small footprint way back in the day to become Elite at better than anybody else it could be classic cars it could be stocks it could be whatever it is it could be fish tanks and coral right whatever you choose to become Elite at and then you have to you know you have to do that for a decade right wealth is created by ownership over over decades the other thing you should really be looking at is what is the net worth of renters versus owners it's very clear if you own assets but now part of me would say that the difference between that is because people are forced to save and the type of person to buy a house is probably the type of person to also be probably more prone to budget have a higher income make a little more money just overall and that Force saving I don't know let's play with that let's play with that a little bit so when you at least when I step back and I read stats about the average American yeah what is it like 80% of us live paycheck to paycheck something like that something like that right and if we look at home with uh home ownership uh rates it's like 67% roughly 67 68% so I'm not sure I buy that I'm not sure I buy the fact that homeowners have some natural ability to save more than renters um just looking at the stats but I think also that home ownership rate includes inherit es oh I'm sure it does so I'm sure a lot of people would just get a home okay you know maybe move in or you know have access to it yeah uh I guess where where I will agree with this is it is a force Saving right because one of the things again you read in Rich Dad Poor Dad book is is your home a liability right that's a whole thing people get wrapped around I just step back and and look at you know the time is going to go by I'm over 50 both of you are certainly under 40 if not under 30 and when I step back and realize where was wealth created it was in owning assets I think about my mom and who bought a home in 1977 in the Silicon Valley um the only reason she was able to have any simlets of retirement is she sold that house she we never moved same house I grew up in you know she sold in I don't know what it was 2015 2016 so again it's a force savings account for a lot of folks the other thing we need to realize to your point of buying the 600k house 2 point whatever it is your shelter is fixed you know X insurance and taxes you know tidbits renters can't say that right one of the things in this whole renters cheaper is zoom out look what's happening to rent over the next decade or so you think rent's going to go down right in the next decade especially with less development of homes so it may it's absolutely cheaper today um but it will it be forever and the other thing I would ask you guys to look at is we've kind of seen this movie before we've seen an environment where rates went up 500 basis points 600 basis points think 1981 1982 1983 1981 is still the least affordable housing ever even worse than today we still did 2 million transactions you know a lot of cash purchases like today um you know it has been this bad before but again it's just a transactions will go down that's that's what's happening today so how are you navigating today's markets because I'm looking as well and I check every single day in the Las Vegas Market i' I've yet to see any property that makes sense to buy that is either not a huge fixer so you have to put a ton of money just to make it work and time or just you're going to lose money every month and so from my perspective I'm like why would anyone buy for cash flow in Vegas it just doesn't make a lot of sense I'm looking in Vegas I actually just have a show called buying Vegas Olivia and I just moved here so I'm trying to create a new buy box for Vegas so it is tough it's really hard to cash flow uh I don't think again I'm still learning it so I don't know it as well as you yet I think you I'm going to have to change what I do so I've been a long-term you know year lease month-to-month guy for 25 years I may have to go to finish midterm I may have to buy a house uh that is Nona so I can add a Cita or an Adu in the back to Goose so I think you just have to get more creative and look for opportunities I'm still very much early but I will be buying a rental in probably Henderson I think the only thing that might make sense is building an apartment like that could be the only thing but even then land is so expensive is that going to take you three years to build you know 200 units or something like that how much is that going to cost what's the downtime worth and then by the time you're finished with it would you have been better off just buying a treasury yeah so i' I follow a lot of people in the commercial space because I think that's where the big opportunity is if if you have the capital I think the commercial Market again defined is five units and above is where a lot of pain is coming in 20125 um I think there's a lot of commercial Banks who are extending pretending on bridge debt there's a lot of uh Shadow banking going on with uh non-qm loans that they just have to clean up and I think there's a lot of value ad deals that aren't going to be added so we're going to be able to pick up stuff 70 6070 cents on the dollar so I wouldn't be building right now I think you can buy stuff at a discount shortly I guess what I worry about is in a lot of those cases because I've I've also paid really close attention to the commercial market and you hear all these stories of you know the debts coming due pretty soon and they're locked in at you know 3% and now it's going to re you know adjust five or 6% they're going to be losing money on that I'm afraid that all it takes to keep it going is the Fed coming in and saying all right well we're going to back stop some of these Banks and we're going to subsidize some of these rates so that the market doesn't crash you know there's so many variables that they could throw in there to just keep it going no there's no question the bank could create a short-term Bank funding program for commercial loans it'd be fixed tomorrow yeah it could I don't know that the FED really cares about the shadow banking system I would argue that the FED specifically pow wants to see more regulation and wants to see pain there now it's not going to happen to JP Morgan or city or any of the big Banks um but the non-banks the the you know mutual funds the Wall Street funds the debt funds it wouldn't shock me if pal sort of smiles that those guys are having to take some losses so what's your prediction for the rental market just across the United States just overall so I think there's two rental markets I think there's multif family and I think there's single family homes I think multif family apartment rentals are going to go negative I think they're going to go down I think we have Supply coming online specifically in the Sun Belt it would not Shock me if it goes down 3 4 per. single family homes you know flat to plus 1% again I think a lot of what we've seen in the last four years was too much too fast it's kind of to your points right we've we've had this big run up in rent this big run up in prices and the only way to fix affordab there's three things you could do lower prices lower rates increase income my as I sit here today I think we need 5 years of wages going up we finally have wages higher than inflation I think that continues going forward I think it's just going to be years for wages to come up and to that end transactions are going to stay way way down right we did six million transactions I think in 2023 you know we're going to be low fours it's we have a broken housing market this is the first broken housing market since 1981 the move up buyer is not playing staying in their homes longer turnover used to be 8 years it's probably going to go to 12 years it's just the Market's not you're not going to sell your 600k house it's now 700 because you got this low rate I think that I think a lot of people are making that choices so we're going to need time for wages to catch up but what's your solution to this if you had a magic wand and can fix the housing market how would you do it if I could wave a magic wand I would encourage every public Builder small and Mom Builder to build smaller homes for too long we've been building what was called mcmansions we've seen the average sare foot for the last 20 years increased by something like 30% if I had a magic wand I would go back and build what they were doing in the 50s the 997 foot 31 and a half I would build some two tws I would just build smaller homes and I'm not talking condos with shared walls I'm talking smaller homes yes on smaller Lots but I want single family homes I think lenar is the first public Builder to to try this they built some 661 ft in San Antonio they got some Sub in Sacramento uh but if I could do anything I would encourage smaller we need we need entrylevel homes that's that's the big piece that's missing today entry level so it's funny that was actually in my video yesterday where I covered shrink flation in the housing market so building has gone back to the same score footage that we were in 2010 correct and building since the 1980s has increased by double so what used to be 1,400 ft is now the average home for a new construction like 2,800 ft now it's down to like 26 uh more Builders are building instead of walk-in closets they're building a smaller closet that's not walk-in in exchange for building another bedroom there you go uh so you're finding a lot more of those I just I tend to think that for Builders it's more profitable to pack in the square footage and if you're charging you know 150 a square foot or it's it's costing that much then it makes sense to maximize it because you have the materials anyway like building a little more is not going to be that much more money but you could charge way more for a bigger house so I think that uh my suggestion while ago is to be able to take the interest rate with you that was that was the one thing I never understood why the rate had to stay with the house and if you leave your house you can't take the interest rate to another house like you're already approved for the loan yeah it's already back like as long as it appraises for more you would think that would be a great thing uh I understand why Banks don't want to be holding on to these you know 3% mortgages and they factor in that the average one is going to you know be charged off in 10 years they get their money back uh and it'll people to keep that loan for 30 years so it kind of screw them right but it would open up the housing market to be I think you were the first person I heard to bring that up I think that is a very creative and genius because again think about it 600k house you want to trade up you take whatever that mortgage is 500 Grand you have a second for the Delta which is maybe at a higher rate I think that's a genius and and pretty pretty creative fix I I I would hope somebody looks at that but that that could help that would that would get transaction oh absolutely because we're missing we're missing the entry level home right you got into your first home you thought it was going to be your first home you got a 2.9% mortgage now the price is up 100 Grand you probably can't even qualify for it at 29 certainly not at seven you're stuck M if you can move it I yeah I think that's a genius yeah the other thing was taking the property tax basis with you at least on that on that portion that you sell if you double up let's just say then you know it's a pro-rated basis so half the house could be the old property tax I don't know how on Earth real yeah if you move to a different city or something like that but there should be bounds where maybe if you're over the age of 65 within a certain County you're able to exchange one open up there are some of those at least trade down I know they're in California I don't know if they're in in Nevada but if you're 65 and older there's some County tax assessment you know trade-offs like that but that would be I think if you just did the mortgage that would be enough of an unlock I think that's a creative answer yeah what are some of the biggest challenges that you've had to overcome uh in real estate investing um learning a new market you know that was certainly harder than I thought it would be um that first tenant was a a wakeup call understanding Market Cycles because I just thought I just thought everything was the same um access to Capital right when the market was rolling over right getting getting bigger understanding seller financing you know the tax code right because again you got to remember I'm a W2 employee I make more than you know at this time 250 Grand so I can't take losses so I have this carry forward loss so you know how you can structure those with LLCs and other things maybe to give you some benefit becoming a real estate professional with some with some U help from an accountant um it's just always learning I think my biggest error was the first five years I tried to be a cowboy I tried to do it all by myself and part of that was just laziness and excuses cuz I was all over the earth I was in Europe in Asia and South America but but in today's world you you you got to get in the right rooms one of the things that I pay really close attention to today is who are the five people I spend the most time with because if you want to get a six-pack abs get around people that are fit you want to you know be a millionaire get around millionaires um so that's something I didn't I didn't audit um before I think that's a big unlock I do think it's really hard today I haven't done a deal I mean to your point I haven't done a deal in probably a year 14 months but that doesn't mean I'm not trying I've probably written 25 offers the last 14 months you just got to take your shots it's a numbers game it is hard um 2021 was my worst I I wrote a 100 offers and didn't get anything right because everything was flying off the shelf because I I would only write for cash flow um and I didn't change markets a lot of people have changed markets to you know the central or whatnot um but it's definitely hard to cash flow today uh I do you know most of our deals when we look at it occur between October 1st and January 31st the winter months when a lot of people take their time off so I'm hoping that unlocks some opportunities or some seller financing so you just got to keep learning and I've been 25 years I'm I'm still learning yeah what's your advice for people today buyers looking for a good deal don't rush I guess the first thing I would tell people is it's possible I think a lot of people come into this going it's not possible it's hard it's not easy it's always hard um I would tell them that buying today or or I I not even say buying but learning what a good deal is is the goal and I think that's what frustrates a lot lot of people because again to our earlier Point real estate investing is a skill and if you don't spend the time learning the skill you're gambling you're just flat out gambling and I don't believe in that I believe it takes Focus repetition I think you should learn a very very small buy box everybody that I've seen do that they understand oh that one's priced differently than everything else so I think a lot of people get unfocused a lot of people I talk to today that have a stance that it's not possible today when I talk to them like hey I've looked at Dallas and I've looked at Memphis I've looked at Columbia I've looked at Fort Lauderdale and I'm like you're not learning you're you're just frustrating yourself you're going backwards just slow down get one area figure out what you know you should be able to tell somebody your best friend hey an average deal three or four bedrooms two bass between this and that is a negative 8% which is bad but until you can do that you don't know and I just think a lot of people rush it or they just have opinions that it's it's too hard what do you think about the people buying for appreciation that's a big pet peeve of mine um I'm not a fan of that I I I I had a friend of mine back in the day he's an executive when I was just a low-level guy he pulled me in his office and said hey Michael I'm buying in Louisiana this was right after Katrina when they had some depreciation extras come in he's like hey look I can buy four homes and you know I can afford to write off 250 bucks a month negative and given all these you know tax benefits and this is gonna go to the Moon you know lo and behold it didn't and he lost all four of them um because again betting on appreciation is gambling I think that I think one of the ways to bust out is to I think there's two ways to bust out a real estate betting on appreciation or having short-term debt this is Dave Ramsey's story right Dave Ramsey was became a millionaire flipping properties unfortunately as I understand the story Dave Ramsey was using 90-day debt using 90-day debt probably not a good idea right the market slowed down people called the loans and and he went bust I think people going bust in multifamilies because of you know two-year Bridge debt I think people that blew up in 06 to 10 was arms teaser loans 30-year fixed rate debt cash flow day one or keep your money in a money market account and just keep grinding yeah what are your thoughts on Flipping versus the Buy and Hold method again I only can share my experience so while I was working while I had a W2 I had no time so we just bought and hold uh I did retire in 2018 uh it was a great time the flip we flipped 56 properties basically what I did is I paid people to go find slumlords and we would pay cash for their property because I had the scratch the capital and I would fix them up stick a tenant and I would sell them to landlords I did that but it's I stopped doing that in 2021 when prices went crazy um so you can make money in flipping um you need a team I it's a lot harder um I think you I personally think you have to have full-time focus on it you can't do it parttime there's so many ways to go wrong um but I couldn't have done flipping without having a 15 years experience in multiple teams I could call on are there any Emerging Markets right now that you feel there's a lot of potential in so again I don't I don't generally talk about that stuff because I I think everybody has to do their markets but if I had a to my head I would go south east probably like Huntsville something like that that's I've done some casual I've some people point at that that I've looked at for them but it would be somewhere in the Southeast uh price points below 200 Grand population seems to be increasing there's more pH in and around Hunts fo because of NASA and this they seem to have a lot of good stuff going for them and what are your thoughts on the anti- landlord movement I think it's coming um you had the president at the latest debate talk about rent control I mean that's something I believe I heard him say I was watching uh I think there's a lot of folks that are anti- landlord and I think there are some horrible landlords I just talked earlier about buying 56 properties from slumlords I think slumlords should go to jail I think it's I think it's the most disgusting human trait that you could ask somebody to live in and unsafe disgusting property I think they should go to jail that said most landlords specifically mom and pop landlords do a great job and they care about the properties and they care about their tenants and um I just think negativity sells I just think that's just where we are you know us versus them there's a lot of that what do you think of rent control I think if there's any way you want to blow up uh a city uh establish rent control I mean Minneapolis is the latest example they they adopted rent control I think three or four years ago and you had developers pull out instantaneously they canceled projects that were in the play uh I forget who it was I think it was um some Economist that says the only thing that can destroy a city more than rent control is a bombing I mean rent control is is a horrible idea I mean I understand why it feels good it feels good to the tenants that get it um but trust me if you fast forward 3 four five years you will not have any new development you will have more and more people bleeding properties and and it will not end well yeah uh yeah Jack saw it when I was in the duplex My Block in Los Angeles was rent controlled because there was a mixture of single family homes and duplexes that were kind of like you know intermingled across the street and you see the difference when you go one block south of that they're all single family and no rent control the difference between the rent controlled block and the non-rent controlled block was massive just in terms of landlord upkeep how nice the places were pride of ownership my block unfortunately people would not sink any money into their places at all and a lot of the reason was because they had tenants that had been there for 30 years paying significantly under market value putting any money in the property would just be lighting it on fire so from landlord's perspectives why would I spend money on this thing when it's not going to increase any value it's not going to do anything for me uh by the time they move out I'm going to have to update it again there's no point right uh but you see a substantial difference between the two no and again people can go back and look at history I mean you go back to the 70s and look at New York I mean there's lots of examples where cities or areas have brought on rent control the outcome is predictable the only thing you can ask is how long it takes to get there yeah what I also didn't like about rent control in Los Angeles was that it wasn't based on income and that sometimes you just see people who are making a fortune and just happen to be locked into getting a rental back in the early 1990s where prices were low um even though they don't need it if that makes sense no I mean I think there was a TV show called friends where you had Monica and I forget Rachel living in an apartment you New York because it was her mom's or grandma's or something you have a lot of that and it's not based on income it's just based on it's based on luck it is it's B and that's that's not okay so why did you quit your job I didn't want to um so I quit my job at 45 February 2nd 2018 whatever that Monday was I think it was February 2nd might have been the 3 um I was a sales guy I was a senior leader and um the reason I remember it is because in sales you get a new patch you get a new territory you get a new quota every fiscal year and it the last company I was at Splunk you can look at LinkedIn it was my last company um the fiscal year was January 31st so first couple of days of the new year you get a you get those new team new patch new new quota and um I was brought into this back room which i' never been in and they ended up giving me uh the three things that I didn't want uh they also gave me a boss that frankly didn't like me as much as I didn't like him um why didn't he like you because I was arrogant I was cocky um I was very good at what I did and I didn't I wasn't shy I I wasn't PC I voiced my opinion had you known this guy prior to oh we we we knew of yeah we were the same place and then it just so happened to be that you guys got randomly assigned each other as it wasn't random he was above me in the orc chart I'm sure he asked for it cuz wanted to get me out I'm sure it was purposeful oh really what's the point of getting you out if you were making good sales and hitting your numbers I mean W2 employees especially sales High income high pressure uh there's a lot of ego there's a lot of ego he didn't like he didn't like the shine that I had right I was right out the cro Chief Revenue officers I you know I took her places and stuff so I had I was getting more shine than him and that really annoyed him what was it exactly that you were selling so I was selling um software for Splunk security software it it management software so it's called enterprise software is the space they were million-dollar contracts yeah my quote at the time I think was 100 million 101 million how do you get into that how do you decide that's what I want to do were you good at sales to begin with or no I was an accountant I was an accountant out of school I went I went I was a bean counter so I was a bean counter at 22 23 uh my company Quantum at the time you can go back and look at LinkedIn these are all there I don't remember the years but they'll be close so I was at Quantum as accountant we we adopted an Enterprise software called Oracle um I was on that shout out Oracle they sponsor this podcast love them I I heard that yeah there you go shout out Oracle uh love you Oracle thank you for everything you've done um so Oracle gave me a chance to work on a project as an accountant so I was domain expert but I learned the technology that project went well I was then recruited to Sun Microsystems to lead uh their financial aspect that went well and then I was recruited to a software company that had Oracle tools uh as a technician which is really weird because I'm not an engineer not a computer scientist but I knew the business I knew uh finance and then from there I was the best at it that gave me a sales role sales Ro led to management management led to senior level it's just you know 20 years of grinding and being good at what you do so how much were you making from that job or what were you going to make that year versus what were you going to make I I just penciled I think it was 450 was the year that just ended with 450 is what you were going to make from the corporate job and what were you going to make from the rentals in that here and gross and net oh gross was 1.5 1.6 something like that Net's probably 4ish 38 so about the same about the same and again the the beauty about Olivia and I is we live on about 12 Grand a month that's still I mean that's a pretty luxurious life oh it don't suck but you know 12 time 12 is 144 and if you know the rentals are making three easy math that feel pretty good walking out of there I had a couple of days where I smiled so much my face hurt have you ever smiled so much your face hurt I didn't I didn't even know that could happen it was pretty awesome yeah that's awesome and then I'm guessing you had all of this free time to just syn then into into real estate and oh no you would think that maybe I should have but that what' you do just like take it easy maybe this is just me but so the first two days high as a kite don't even think I touched the ground I was so excited but by Wednesday or Thursday I start getting depressed for the first time in my life like like depressed and by like week three I am having not necessarily Suicidal Thoughts but that's how dark it got like you're a failer Zuber you're an idiot you're not contributing Society you're a more I mean I was having my selft talk was horrible three weeks after leaving I'm 45 I don't have to work more I can do whatever I want and I'm having these thoughts and I remember saying I got to get out of this so the first thing we did is we just picked up and did a family trip to Taiwan that's where my my wife's from we spend three or four weeks there it's actually where I stumble upon upon Graham the first time in the back of this car where everybody's screaming Chinese and I don't speak Chinese so I have headphones in so that that was a little bit of Escape but that was just a an escape so I come back from that it's probably five or six weeks I'm still depressed and mind you I'm getting phone calls probably three times a week saying hey come work for me come work for me come work for me we'll give you 300 we'll give you give you 400 I had one offer at 500 Grand a year to come work for me and I remember sitting down going if I don't get out of this headspace I'm going to take a job on Monday because I don't like the way I feel not because they need the money because I didn't like the way I feel my ego or whatever that was was built up in my job and I just couldn't let it go and so I had that Epiphany Saturday morning and then what I decided on Sunday was I'm going to go back and fix a mistake so one of the things that I never did was I never Revisited my journey from Norris drive to nearly 200 units so what I did is I sketched out a that something that ultimately became the book one rinal at a time so it was that commitment to that book that made me feel better I would write for 90 minutes two hours a day and that would be enough that I would I would feel better I could go to the gym after I could go to lunch with Olivia but dude I I don't know what it was but I got depressed after quitting and it wasn't until I stumbled on this idea of hey take a breath you can always get a job let's let's document your story which has always been a weakness so it's it I'm still shocked that it happened but it did happen why didn't you take one of the jobs like why why didn't that go through your mind like I could just take the 500 Grand and still do the book and still do everything else I'm doing so at that point you're six or seven months out you really do realize you don't need the money I stumbled AC this is what I told myself very early on and why I wrote a book which is horrible I'm a horrible speller just I'm not good at it was I wanted to spend the rest of my time creating something that outlived Me by 50 years something and that's tough to do so that's where my focus went because again I could have got a job but you know being an Enterprise sales leader it's hard it's it's very stressful most of those guys are addicted to drugs or alcohol they cheat on their wives you know all this nasty stuff it's a very unhealthy environment and frankly I was done I a lot of people in my space never stop they just keep wanting to climb the financial mountain right if your monthly if your yearly nuts 100 and you're taking in 300 does 400 really move the needle does 450 really move the needle so what I wanted to get comfortable with was just sitting down I reserved the to change my opinion and go higher if I want to but I'm spending all my time now trying to create something that outes Me by 50 years cuz I think you die twice I think you die once physically and then you die a second time when somebody's the last person to say your name and I don't know when you know I don't know many people that have done that so that's that that excites me today and I've been doing it for five years I get almost daily notes now that it's working so what I stumbled on very early is hey let's go try to create a legacy so that's why I didn't need more money how do people find purpose like that in their lives because I think a career could go one of two ways one's it could give people a lot of purpose but two could also be a distraction from that that's a great question I actually think all of us go through four seasons in life so here are very quick the first season is when your parents take care of you for a lot of us that ends at 18 some of us 22 some of us 30 then there's season two that's where you're taking care of yourself financially usually sometime in season two you have this Epiphany this moment like hey I can either keep working until I'm 65 and hope retirement works or I have to do something different for me that meant buying rentals for some people that's stocks whatever it is but if you're lucky enough you can exit season two and get to what I call season 3 which I'm in today and that is you no longer have to worry about your bills now you choose what you where you want to spend your time that's everything I do now is time based not dollars based where do I want to commit the three or four hours a day that I have that I want that are my choice so that's the big thing a lot of people talk about hey find your purpose you never work a day in your life crap when you're in phase two go find the thing that makes the most money go get really good at that live below your mean stack paper buy assets if you want to go find a purpose whether that's painting or you know like my wife does or teaching you know kids to play baseball do that in phase three when you have options so I think some people get that wired and I I've only stumbled on this by accident I I thought I'd work till I was 50 I loved what I did I would have done it for free um but yeah I can tell you I'm so much happier today no stress I get to choose everything I do uh and it's it's a great feeling season 4 is much like season one where somebody else is taking care of you you know you're 80 years old and you've got to go to convalescent home or something and the beauty of these seasons is there's no age limits you can get in and out of them at any time there's also no guarantee you go past them but uh I think a lot of people should focus on making in season three as long as possible when have you been happiest in your life oh today every day I'm happy every day I get more happy what's contributing towards the happiness I've seen the impact of five years of daily discipline you know I've done 14,000 videos I've done this that the other I get notes every day now I get text messages from people saying thank you um you know I got a note this morning from a guy who just Co closed four duplexes seller financing 30-year fixed 4% 30-year money right so things are possible if you do the work right offers but yeah I get notes every day I send out cards to people that do them and there's there's no better feeling than putting something out there consistently your tribe finding you and then them executing it's pretty wild what are your thoughts on the fire movement that's a very interesting thing so my opinion about the fire movement is definitely biased so I retire at 45 as we've talked about I would argue that's early right Financial Independence retire early I try to reach out to a lot of people in the fire movement and frankly they you know they blank all over me they don't like real estate at least the ones that I bumped into they are anti-al estate yeah and um it kind of works so yeah I'm not a big fire guy because of that because just so anti-al estate they can be I think it they tend to sway in the direction of being like Fang Tech worker stashing money way and index funds and not wanting any of the liability or the work that comes along with real estate and I think for a lot of them they view real estate as like a second part-time job or you know like a side hustle that you still have to work towards and they want something truly just like I could go anywhere in the world and not answer a single email or phone call and I never need to do anything two hours a month 180 units multiple six figures a year I'll take that trade yeah now what about for the people like me because I get very antsy if I'm not doing something like I feel if I'm not productive throughout the day I get a lot of anxiety I too feel depressed if I through enti day don't do um and then sometimes I I worry if I'm not doing the highest level thing I could possibly do then I'm wasting time and so even for me like going and painting the garage was something where like I really enjoyed doing that but it was really tough for me to spend the time even on a this is a weekend by the way painting a garage but looking at that and thinking well I should be doing all these other things and this is not the best use of my time but I really enjoyed it yeah so I only can answer you know I'm 52 years old um when I was in my 30s I was Triple type A I was always Mo just always going that direction so I I likely had the very same thoughts if not worse but now that with a little bit of age you know my daughter's 31 um you get a little bit more perspective what what helped me kind of go from Triple A to maybe B is giving myself permission to sit down like literally telling myself it's okay you have 181 units you don't need 191 I I said that out loud Olivia and I have had that conversation where a lot of people my opinion only they have success they have more success they just like what's the next thing right we got a million sub let's go to 1.2 let's go to and that just keeps you on this wheel and the wheel gets bigger and bigger and you got to push more and do all those things what I did right or wrong is I said out loud we have 181 that's enough now we buy we sell we it's okay but I'm not I'm not pretending to sit here telling you I'm grinding as hard as I did 10 years ago no question I still look at my market every day I still wrote 25 offers or whatever it was in the last six months but I am not nearly working as hard as I was before because today my goal is to contribute to others so I I really pivoted I gave myself permission to slow down how do people realize when there's enough again for me it's math right I think most people should look at what I call their monthly nut right what their bills are if you're what does nut stand for I don't know it's a it's a it's a sorry it's um term it's a term like what's your monthly expenditures rent food entertainment every gas Insurance all of your bills that's that's what I call monthly net sorry for the slang Oh I thought you said nut he did monthly nut nut or nut nut nut nut oh it's just a phrase It's I've never heard of that before have you heard of that yes okay my bad no no no no on me apparently so yeah so what's my monthly expenditure so let's just pick a number let's say it's five grand in my world if you get to a point where your assets are spinning off tox that or more you're good maybe two and a half you're 12 you know 125 you're good as long as you don't get stupid and expand your your monthly expenses um you have the optionality to retire so for Olivia and I we got to like 3x are expenses and I'm like so that was what it was for us H yeah in my mind though I would I I agree with that but then I like to plan for the worst case scenario so I've said this before but I'll imagine the market drops by like 50% there's an earthquake in California have a child with disabilities that needs constant care sure and if we plan for all of that happening at the same time how much do you need for all of that without skipping a beat and so that for me is kind of how I base things is like worst case scenario first and then base it off of that the way I see it not to chime in or anything is that you're more likely knock on wood to just walk out one day and get into a fatal car crash or something like that I'm just saying I'm just saying I'm just saying right but like what do you do to hedge against that right and if that were to happen drive a safe safe car if drive a Tesla cyberu if that were to happen right then you would have wasted all of the time that you spent just like you know preparing for the the the earthquake and this and that and this and that when there is an element of Fate just to you know everyday existence you know so and then that time you could have spent doing other things you enjoy like painting more garages who who was it Jack car Michael sailor really put it in perspective when we had him on the podcast he was talking about I think this was on the podcast too of how much trust you put in other people just throughout the day that would you know off you in seconds and he even gave the example of like your Uber driver you get in the car you have no idea how much sleep they got the last night if they're erratic if they've been drinking if they're on substance yeah anger issues substance issues when you're driving down the freeway or a highway you're putting your trust in the other people not to just swerve the wheel 5° and that's it so it's like there's so many little things throughout the day that you you place your trust in everyone else to keep you safe and that things can't happen so one of the things that I would ask you to look at is the expected outcome so again you could you could wrap yourself around the axle of of all these horrible things occurring at the same time child with disabilities earthquake and La drop in the market 50% those all are possible but now I would argue put on an expected value what's the odd to those things happening do the math because I think you're cuz you said this earlier and I've asked you this private are you concerned about like running out of money and you're like yeah I really am like really right so you know I think there's something in there um you know I don't think you should be concerned I I do agree bad things happen but you know what you made it work before you could you could do it again I've always been like this ever you know since I started making money it was always I'm going to save it and you don't know what can happen yeah maybe this is just AE right I've got a couple of decades on you um the other thing I would tell you that's really interesting is I've had the luxury of taking some pretty ridiculous travel the last three or four years like six-star stuff and when you get on these like we did a river cruise for three weeks in Europe and when you get on these Crews there's like 98 people the average ticket's like 25 Grand a person so 50k a cabin and when you're on these cruises for 3 weeks you get to know everybody it's a really small boat and what you really find out is the average age of people on the boat are 80 plus um they're all multi-millionaires um a lot of them Via Real Estate quinly enough um but they all have the same regret they didn't enjoy life they just kept going and going and now they're 82 they can get off in Germany for like 45 minutes before they're tired or somebody has to wheel them around in a wheelchair that's not living right Olivia and I you know I'm 52 she's just slightly older and we got off and we had a good old time right so again once you get to that number like I'm not trying to build Legacy wealth I'm not talking to generate generational wealth Olivia and I good our daughter good I'm done now I reserve the right to change my opinion but yeah that those are eye opening having a conversation with an 80-year old that's worth 25 million bucks and hear them say they regret it they regret the last 10 years of working that's like wow it's pretty eye open yeah in my case sometimes I don't know if I just really like working like for me oftentimes I'd rather work than go on a vacation like that to me seems more fun but then in my mind I'm thinking do I really enjoy the work itself or is it feeling productive or is it uh making more money that I enjoy I I don't know or is it just the fact I really enjoy the work that I do and I would be doing it regardless and that is just more fun or is it that's what I'm used to doing and I just get in a routine or habit let's let's have Jack Jack Know Jack know you better than most so I think in a vacuum you do not prefer to work more than you enjoy to do other things however with all of the context all the surrounding context for example when you're not working you have this just constant like reminder in the back of your brain I should be doing something I and that makes it so you enjoy exactly it makes it so you can enjoy relaxing and do all all that stuff and when you are working although sure you're maybe not like hanging out with a couple of close friends just talking shop and having a good time or like when we had the Fourth of July pool party and stuff like that um it's it's just different like I think when you are working you're thinking okay I'm I'm doing good stuff like I'm building towards a future and you also have this entire added context of like scarcity of like okay well everything can go wrong everything that can go wrong will go wrong and then this is all extremely productive because it will hedge against that it's just so much stuff but in a vacuum I think you really do enjoy relaxing and hanging out with friends more than working could be like if you had we've talked about this before if you had endless resources what would you do and you're like well I probably keep doing the podcast okay good on top of that you say like oh like I want to go you know snorkeling and SCU going and doing all these cool traveling thing so obviously if you just take it to the nth degree you do want to go take it easy it's just that you still want to build towards something you know and then you got a question why are you building and how much is enough yeah that's true yeah so I'll ask the question this way this is this is I asked myself after retirement having that depression what I wanted to do like when you when you fast forward five years what would have happened both personally and professionally for you to deem those five years successful so right now it's 2029 yeah and we five years have gone by what do you think happened both personally and professionally I'll ask you both this it'd be great to hear uh both personally and professionally we'll do personal first personal I probably five five years I probably want to have a child okay 5 years from now uh so that's probably person and then travel is big thing where I really wanted to travel so we talking once a year what are we talking uh I I think it's just the quality of the trip because we travel a lot for the podcast but it's mostly throughout the United States count um I would say just visiting the rest of the world which is a lot of that I have not seen so I'd love to experience that so that like personally I think seeing the world okay would be really interesting professionally though I don't that that's I don't know I would like to feel like I'm doing something different okay um working towards something I haven't already done where it's YouTube it kind of feels like I've done it I I've said everything I need to say there's not much more to contribute so I feel kind of like you know you're up against the ceiling at that point oh there's that's an interesting the Poke perhaps there's something else that uh you know I could get good at okay how about you I would say personally I would love to be with a woman that I will be with for the rest of my life that is not married in five years because you know maybe a couple years in a relationship I would have liked to have traveled a pretty good amount and I would say feeling comfortable with with the financial cushion I feel comfortable right now but definitely not like you know comfortable got so I'm happy where I'm at but I don't feel like I can like I I definitely know 100,000% I need to keep working like a lot but I want in five years I would like to think I wanted to take it yeah at least like if I continueed doing the podcast in 5 years that I would be able to increase the expenses to not have such a large profit margin so then I can reduce kind of my active you know efforts into the podcast and start focusing on other things uh and would say I would be very happy with myself if I did that there you go cuz I think when you ask yourself that question it's sometimes when you really and and I had to do this quietly right because I that's just how I am I got to go go away get quiet and ask that but it really helps Orient what should be priorities today right when you really step back both both of you have said if that's what you want in five years well are you doing said things to work to those today right and and only you could answer those but that's that's why that question is always fun to ask folks yeah how do you start spending more money when did that start for you was that nering it wasn't nerve-wracking um we didn't actually start enjoying any of the money until after I retired well I guess I'll step back so I retired in 18 Olivia retired in 15 the first thing we did is we redid the house so we had been in this house since 1999 it had zero upgrades still had the white Subway tiles all of that so the first thing we did because Olivia was going to be home is we upgraded every surface of of the house paints flooring kitchen cabinets we put in you know thermod door this that you just you know we dropped I don't know 120 Grand or whatever so that was the first year um then I got my dream car which is you know I had a company car so we only had one family car and then I had a company car for when I did work I got my dream car uh which is an everyday driver I now have 104,000 miles on my dream car it's a Mercedes-Benz SL 550 twoo Twin Turbo hard top you know convertible uh White just it was my dream car so I got that I got it used I didn't I didn't buy it new um then we started taking trips we've done one trip a year sometimes two we did a last year we did a month in Asia and three weeks in Europe um because that's our thing and then the last thing we do is our vice and part of the like I think it's 3,000 bucks it might be 3500 bucks of our 12month budget or 12 Grand budget is food we eat out almost every every day sometimes twice a day like fancy places oh 100 bucks very yeah easy yeah yeah easy stuff so we we enjoy food that's our thing that's that's Olivia is a foodie we love Vegas because we can go to lots of new places uh we don't drink alcohol so it's just it's just the food and water but yeah we we're not we don't we don't look at the prices so that's our vice that's where that's where probably a bigger chunk of money goes than most people expect what purchase gives you the most enjoyment trips I really the when I go on trips I like I like to what I guess I call it people watching so so I traveled a lot for work I've been to over a 100 countries done a million miles almost a million miles in the air but I didn't really get to see them right Airport freeway hotel client you know in Reverse but I love just sitting at a table and just watching for three hours because one of the things you get to realize is we're all basically the same our skin colors are different we speak different languages but we all want better for our kids we all want to be you know we all generally want good things and I just like watching people um that that's really fun for me so you've been to over a 100 countries which country is your favorite so the funnest one to vacation is Greece it's every little island is different mikos Road Santorini um you know all of those that that was our funnest vacation because every day was different this is on a cruise ship um I like Japan uh Japan is a lot of fun my wife's from Taiwan so she'll slap me if I don't say Taiwan um Europe what what do I like in Europe uh I thought Barcelona was a lot of fun in Europe South America Chile Chile was a winner Santiago Chile was awesome um Australia was great um but if I would picked my I think Chile was Santiago Chile was I was shocked at how much fun I had there that was a great place you've traveled to over a hundred countries what's the worst country you've been to uh Russia really uh we went to St Petersburg Russia everybody there was miserable again I like to people watch it was they were miserable uh we went to The Nutcracker ball uh and they fed us and I got deathly sick how could you tell people we're upset they didn't smile but it could just be like you know part of their culture you know what I mean like if you're in the the metro in Japan you're not supposed to like make eye contact you know so there's kind of little nuances no but if if you're like if you're in a foreign country now they may not smile at you because you're a dirty American but they also be smiling to their friends and all of this Russia's communist and um when we were there when we were there 48 hours so maybe it's a small sample size but by far um the people were just unhappy when was this so when did we do that what time of year was this like the winter time been summer it would have been summer Bal it's the Baltic Sea cruise it would have been the summer probably September August or September okay because Tucker Carlson recently went to Russia and he came back with like pretty raving reviews like he was like it's so clean the architecture is amazing amazing the fices grocery prices like everything is reasonable yeah I saw that interview I've been there and uh he talked about grocery stores and all of that what do you think about the grocery stores did I mean you probably didn't see we didn't see one so I can't comment but but and again this is In fairness this is nine years apart so maybe something has transpired over the last nine years that that makes it different again it's almost a decade right but yeah it was um Russia by far was the most I remember leaving that going I'm glad I'm leaving what are things about being financially free that you did not predict you would experience um financially free that I did not expect like I I'll I'll speak on in terms of myself although I'm not not even close to being financially free like I always imagined that when I started earning more money and I had more money that I would start buying luxury luxurious things and that wasn't really the case I did buy like a nice car like I bought a Tesla U but that didn't provide me with like crazy A crazy amount of happiness I was really happy for a short period of time and obviously I love the car and I enjoy the and I'm glad I did it but I wouldn't say that Euphoria lasted forever obviously uh the thing that really provides me with a lot of joy is not worrying about smaller expenses and being able to pay for comfort so for example if I'm going to Chipotle comfortably adding the guacamole comfortably asking for double protein oh I still don't do any of that stuff like that like like not worrying about if I'm at the airport and I don't want to bother one of my housemates for a ride I'll just call an Uber it's fine it's like 20 some bucks that's the type of stuff where I feel like really really good about and I didn't predict that I thought it would be buying fancy things yeah I guess thank you for that it gives me a lot of clarity so lucky enough for me I've been in that space for a long time where we don't look at prices on this or that I guess today it's helping somebody else out there's a lot of people that need help these days and to hide the financial wherewithal where you could write hundreds or you can hand hundreds or thousands or sometimes tens of thousands to someone on your discretion is and do it and do it um voluntarily and and most of the time without our name attached to it is um that's a very good feeling cuz I grew up dirt poor we were going to lose our house we were going to move across the country so I know sometimes people get in bad spaces so we have helped multiple families we've helped multiple people um some of them we don't even know we just got their story and and you know we stepped up and and you know I remember there's a story of a guy in Fresno whose brother passed away and it was going to cost something like 5300 bucks for the for the funeral and they were trying to do a a go fundme and we just we just gave the 5300 and said you know go go you know go take care of him and stop worrying about money you know things like that we've done and um that's a pretty cool feeling what's something you think more people should be doing but they're not living below their means the key to getting wealthy is you have to create discretionary income you have to create these little stacks what I call seeds and over time those seeds get planted and then those plants start to grow and if you could do that for decade the chances of getting wealthy is it's mathematically almost certain but but if you don't do this I can't help you and what about purchases that most people should make that would improve the quality of their life or business purchases that would increase um I think smart switches smart switches such good value yeah I don't even know what that is smart switches YouTube premium oh YouTube premium there you go subscribing to this channel is free there you go subscribe to Oracle yeah go work on Oracle um I think most people need to invest in them themselves you know Boren Buffett I think has a saying that says that's the best return you can have I think we rely on stuff too often it's always the next Gadget the next Widget the next iPhone the next this the next that most of you all just need to do less of that um the other thing I would tell you to do is you can you can go on vacation for free you can go in your backyard you can take trips you can do all these things I think we just naturally want to spend money on stuff and certainly if you're in Grind Mode That season two stop it right do that when you're in season three when you're a little bit old older if you were to go back in time let's just say you are 20 years old except it's the year of 2024 what would you do first thing I would do is house hacka fourplex that's my biggest Financial how would you get the financial cushion to be able to do something like that so when I was doing it 20 years old is I had three jobs I had a fulltime job so you would go and start working three jobs right now probably what presumably 16 hours a day so I would either get three jobs or one of those would be a side hustle because again when I was 20 the first time we didn't have this stuff so I had a job at Sears I had a job here I had a job there uh I would do everything I can to make as much money as I can so I could save and buy a fourplex and I would like Alex rosi go to Good Will don't eat out don't go to parties just grind you know sleep work sleep work save buy a fourplex buy a fourplex and what if you live in a more expensive city buy a fourplex in the expensive city I don't buy a move if you move if you can't right you're you're 20 years old if you have to move get away from family or friends but again I think buying a for Flex three and a half down even in La a million bucks what's three and half% 35 Grand you know hopefully you're making more income but the answer if I was 20 unequivocally one of my biggest Financial regrets I didn't house hack a fourplex it's going to be the it's going to be the thing I always say how do you like Vegas I love Vegas we we came to Vegas for the food and the food has not disappointed although I will tell you the fifth day over 115 kind of sucks it's been really hot the last five days it's funny I don't even notice it I well he doesn't go outside I don't go outside so it's a fifth day we're 115 I have no clue I I had no idea good for you yeah I only go out at night and when I open the door at night it just feels like you know 95 yeah all right that's fine I just I don't I don't even notice well good for you yeah I got so many texts recently like you doing okay with the heat I'm like yeah guess the house is 72 it's all right yeah 72 as far as I'm I have no I have no idea yeah cool thank you thank you so much for coming on Michael thank you guys for listening hopefully after this podcast we have inspired you to get a nice deal in real estate only Great Deals Only great deals I link to your info Down Below in the description including the book if anyone's interested thank you sir with that said you guys thank you so much for watching and until next time