Just Got Margin Called (Not Clickbait)

welcome back to the iced coffee hour i got margin called no you didn't no you did not yeah i did what yeah no i i don't believe you much marginally i don't believe jack i don't believe jack no he i think he's being serious i don't know no i don't think so no i did yeah i don't hold on to robin hood anymore i don't believe you wait okay good job i'm not believe i'm not i think jack is joking believe me man what would people say if just like look you work with with me and they're like oh yeah graham's co-host got margin called i mean how does it i mean you've got to think of this i mean i also have margin you guys do it are you guys you guys are missing okay so i know you know i think you're messing so here's what happened basically i opened up a robin hood account i have an m1 account i have a vanguard account those are what i use predominantly for index fund investing which when i first was getting started was like 85 to 90 of my portfolio i invested i think it was i think it was 20 principal in my robin hood account when i was like you know what i want to try trading out random stocks and like selling options and doing all of that like crazy stuff right not selling options i still stand by it's not crazy but i wanted to do options in like individual stocks and stuff like that and uh i grew that account very fast with like dogecoin selling options and the market was very it wasn't a bull run and i was doing really well off of that and i brought it all the way up to 75 000 the 20 thousand dollars in probably a year or so time now this is where you're a genius jack i know i know right this is where i messed up uh that's seventy thousand dollars seventy five thousand dollars or whatever i had not used margin yet and i was like you know what you know this is a good idea why not use margin if i'm picking out the stocks that have brought me to 75 000 just to put a little bit more in them so i decided to do that one of them was robin hood which famously graham told me not to invest in my gosh and uh then it plummeted so i went in on margin and i bought some robin hood stock and then the market started going down and it continued to go down and uh yeah i got margin called because of robin hood because of robert robin yeah robin has gone oh wait all of it yeah yes yes we got to buy in right now and i say 500 bucks jack i was i was willing to pay for those who don't know here's the bad story i was at the gym how are you happy man because you finally sold because you finally sold robin hood i have been on you for months to sell robinhood stock yeah since it was like 30 dollars i'm like sell 20 sell 17 i offered you 500 bucks to sell robinhood 17 i'd pay you and then last night i said how about this i'll pay you another 500 bucks right now to sell your robin hood stock maybe he didn't take because he knew he couldn't tell no because it was he was already margin no you would have been margin called today because robin hood was down another six percent anyways i got margin called and uh you know it is what it is i'm fine with it because in the beginning it started out as play money it grew to a really sizable amount so yeah i was dumb by not selling like when i was at 30 40 50 60 70 whatever account value but i just kind of held i decided to diamond hands and hodl but if you think you're the exception guess what you're probably not uh just like i thought i was wait why are you saying that just because you can't do it other people can't do it probably no you're saying you're the pinnacle investor or no i'm saying because i couldn't do it i'm just going to probably it's like the scariest part is when i had the monkey pick random stocks and the monkey made 40 in a year that's a sign that like hey guys maybe we should let's go back a monkey picking stocks out of a container i mean that's that's what we're dealing with here and everyone's an expert when you look at the amount of finance channels that popped up in 2020 and everybody was oh i'm playing this and playing everyone's making money every day i'm becoming more and more like dave ramsey when we listened to him speak the other day he came to las vegas and did that and tell people about that yeah so he came to las vegas and i confronted dave ramsey in person yeah i confronted him yeah he's really nice but really nice guy really nice guy but he gave this incredibles like speech or he was talking for basically an hour and when he came on stage i was like mesmerized just like first of all i'm star struck i'm like that that's him like to see him on set like he's right there show the footage right here yeah yeah i was blown away that like that's him but he's better in person on stage than he is in his videos no comparison at all but in the video or or sorry on stage he brought up these props and he talked about like the tulip mania and just like all the bubbles along the way and california goldbridge the gold rush that was really interesting uh real estate tech stocks he covered he covered everything and um people get excited over these fads right and they think that they're the exception nfts you think that you can make a lot of money and some people do and that's the loud minority and then other people they limp in yeah they think that they're good they think they're calling babies too beanie babies yeah that's another one and then you get burned like i did on margin yeah but his thing was that uh you're never the exception this time is never different and it's the same thing repeating itself over and over and over again and it will eventually crash to zero the market will always go back to the mean and will continue on so you have you know the market trending upwards but you have a lot of that in between and i think 2020 was that in between i mean so i think it just goes to show index funds it does it's like the same buy and hold strategy and that's why it bothers me though now i'm i'm finally feeling good about it because for the last throughout 2020 2021 everyone is like graham you say the same things every video the same thing just buy and hold buy and hold index funds and uh because it's become a joke now what do you do and when the greatest wealth transfer is coming buy and hold an index fund i mean that's it even we joke about it right now like let me guess the ending of the video graham buy and hold index yeah you know yeah but it's the truth and it works so what what happened what what so you started with twenty five on margin i bought a bunch of apple stock because i was like it's apple it'll be fine and it was yeah but what wasn't fun was my robin hood stock my palantir stuff which i went so heavy on unfortunately but i was making a lot of money on it that's the thing i was making so much money like you know what i have access to all of this margin may as well just put it back into all this stuff and then everything plummets so what's your portfolio account at now take a guess well okay so i'll give you i'll give you you say one number and i'll tell you over under and i will give you one well you started with get twenty number yep yeah and its peak was 75. 75. okay 45. graham i'm going to say 18. under wow yeah are you it was wow are you joking no pure obliteration in my portfolio fortunately fortunately that was still like i said a minority of my investments vast majority in index funds roth ira just dropping exactly haven't you learned anything i feel like we've spent so much time together that you wouldn't know but all of my losses were basically unrealized gain it's not like it was actual profit i had never sold anything yep but you started your but you started your account at 25. yeah so i had a little bit of obviously like principle that i lost yeah that's the good thing with dave ramsey i will say is everything he says won't get anyone in trouble like no one could ever be like oh i paid off my mortgage early and then i lost it like right yeah so it'll never come back to bite dave ramsey even though he's overly safe he'll never get in trouble by saying that i think it's so funny when when we were watching him and he just takes time to pause and he just chuckles like about something oh yeah yeah like people on this robin hood it was a longer positive the crypto currency [Music] he commanded the room he commanded the reminder the room was silent yeah when he went up there yeah really i i liked it a lot i'd actually go back and and watch him again at first i went into it thinking oh i know all of this this is going to be silly and then listening to him like this is really good you know i feel like i'm learning stuff we so graham got invited he didn't mention this but you got invited by one of the people on dave ramsey's george george yeah so we not for anything like entitlement-wise but like graham kind of assumed maybe there was some special stages backstage thing no it was a meet and greet and we like we went in the same lines everyone else did we showed you we're at the end of the line yeah no we're at the end of the lines we're at the far back end of the of the uh whatever you call it the auditorium was that the first meet and greet you've ever been to or have you been to another i've never been to a meet and greet so your only meet and greet was to meet dave ramsey yeah that's cool but it was funny because we showed up and graham's like i wonder if he'll recognize me like i feel like like graham and i were like yeah he probably will recognize you just because you're you're just you're so successful in this space didn't look like you reckon i don't think so i mean in his defense a lot of people are coming through maybe he could have but didn't want to like you know on stage or sometimes you're like there's so many people coming in that like you just look at them halfway like yeah you're like you're basically like tunnel vision and they're like oh they can't like come this way and then the camera and then you know you that also could be yes uh he also is probably not on youtube so honestly i wouldn't be shocked if he didn't recognize you i have i'm like 80 sure didn't recognize me yeah but but the weird thing is he did comment but then again someone else could have access to his youtube account because he did comment on one of our videos yeah i don't think that's dave ramsey realistically he probably has an entire team not a bad idea um by the way taking care of his youtube account and doing all that stuff and he just shows up and people are like we're gonna have people call in you're gonna talk to him or just discuss this financial event and he does so i like him a lot yeah that was great like dave ramsey but first i want to thank our sponsor grammarly being a creator is exhausting writing scripts emails and text messages it's just really time consuming yes but thankfully we have grammarly grammarly is an all-in-one writing tool that helps you communicate clearly and effectively even when you're short on time ever since we installed 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listener that's 20 off www dot g r a m m a r l y dot com slash iced coffee thank you so much grammarly and back to the until now what are you doing tomorrow graham flying to tampa why are you flying to tampa why am i i got to fight i got that i'm going to be so happy to get it over with dude what are your thoughts right now you're about to fight one of the largest tech creators michael reeves he's your same height same weight no we're not the same weight so uh ian sent me a text this morning said michael weighed in at 120. what are you waiting for 127.4 that's good for you though that's good for you i don't know if because i don't know how it works because i know there are different weight classes from like 120 125 125 you don't know the ranges i told ian i'm i i i'm ranging between 125 and 130 i always have he's like don't worry that'll be fine and so i don't know if i have to get down to 125 to be in his weight range i send it to ian he's like oh no worries we'll tell him to drink some more shakes or something like that so drink some more shakes yeah i wouldn't worry too much about it if yeah if anything since you guys are at the at the light weight it's easier for him to come up probably like a pound or two yeah uh probably that's my guess graham what what do you think are the chances you win versus him you know what sucks man is i had a i actually did like a i don't want to say a deep talk with with macy last night but i feel like i put myself down so often with this that i've mentally just kind of screwed myself in the fight i i got way too in my head once i started watching videos of him boxing i constantly just like put myself down i'm not training enough i'm not good enough and i worry that's going to come through in the fight in just the way because anyone who who succeeds stuff like that they never think of that stuff they're always just like no i'm gonna i'm just gonna do it and you have that confidence that makes you do it i'm worried at this point i i have not but you know what i saw a huge spark once you did sparring with somebody you did not know and even more when you told me you got a bloody nose yeah because here's the thing this is a person that you do not know that you were sparring i saw that you kind of had more of an uplift and i i agree i know what you mean you put yourself down a little bit um but after that i think i saw your confidence go up significantly i'm more confident after that but it's easier for me to fight somebody i didn't know because i don't feel as bad oh his name is brian by the way we fought but i don't feel as bad hurting brian because i just recently met him i like him but if if i hurt him let's just say it's not like i've known him for years or it's in front of all these people who are fans of brian if i do something to michael reeves you know i don't want to i think i don't think it's cool like i just hate hurting anybody you know i honestly i told my mom this because she's like how do you think he's gonna do and i'm like i think i'll do well but the one thing it's hard for me to wrap my head around is picturing this in my mind graham and michael in the ring michael let's say just got hit in the face or something or he kind of slipped dropped his hand for a second and he has his eyes and he's looking at graham and he's kind of like dazed maybe yeah and graham going and just hitting him i could never picture but i have to do that i know you are such a softy and i mean that and the most positive that's true you are a very positive way because i admire that because i'm a softy too yeah so that's that's what i worry about but also it's it's so i have to overcome two things hurting somebody else and believing that i could do it and it's just tough one thing that ian said when we had him on the podcast was that what you could do since it's five rounds is you could struggle through three and then on that fourth round just decide that hey i'm gonna go in i'm gonna attack i'm gonna be offensive and i'm gonna really get in there and do my best and then you could completely change it around in one room right like just because the first three rounds have been bad for you doesn't mean the fourth one has to be and i feel like that that could apply to the first the second the third the fourth or fifth round and just your overall mentality it's like just because you've thought that for a while doesn't mean you could just you know switch around it will be hard maybe i mean we'll see so what do you do if you win what do you do if you lose what does it change anything ah i would probably have some regrets if i lost only because uh i probably could have pushed myself further harder does that mean you would be considering getting in the ring again no this is a one-off one-off thing so either way either way if i win it would be incredible but i but then i feel bad winning at the expense of michael you know but how do you think he feels i honestly i think michael is just having fun i don't i don't think he's thinking this through i think he's just doing it and that's what worries me so why can't you do this yeah why can't you do the same man i don't know power through it i don't know because here's the thing realistically let's say you hit michael a little bit too hard gave him a bloody nose i feel like he i feel like afterwards he'd be like dude you got such a good shot like after i met michael like i feel like that's his personality and he knows it's all and i would i would do that i would say the same thing to him i mean brian hit me right in the face right in the draw he got one like this yeah and after i was like man good good one it's you know but yeah i mean you know it's about respect and as long as you guys both respect each other why not try your hardest yeah okay i know i part of me wants to get um what is it called like uh like hypnosis and like just pay someone to to like put me under and then hypnotize me have you been hypnotized before no i have does that actually work i think i think yeah i've never looked into the to the science behind it but i'll be honest i'm a i've looked into specific types of hypnosis when i used to do magic but that's very different than like hypnotherapy or whatever they call it uh so i don't know i'm pretty skeptical on it but tell me about your experience yeah my experience with hypnosis so i went to the state fair i think i was probably 17 or 18 at the time state fair yeah and they would have they would have these people that would come up and perform on this like that on this platform get an audience and everything and then like every night at 8pm they'd have like the hypnotist and if you go in the audience and you're lucky they pick you out of the audience to participate in her act right so i was one of 40 people or 30 people that she brought up on the stage and we all sat on these chairs she started doing this weird i don't know if she actually did that that i don't remember was like six years ago but she started like talking in a very quiet and monotone tone and she was like oh you're feeling very sleepy she gets her heart rate down a lot and then she walks to everybody that's lined up in these chairs on the on the stage and she grabs your arm and then drops it and that's how she can tell if you are hypnotized or not because like some people leave their arm up there and it's like clear okay you're not hypnotized if you leave your arm up there or if you like bring it down really hard yourself or if she sees movement she wants to see like a very relaxed fall of your arm basically to see if you're hypnotized apparently i was hypnotized because she kept me up on the stage she sent probably the other half down and then she instructed me to dance with someone and i usually would have a little bit of trouble doing that just because it's in front of an audience and maybe i'll get a little nervous or something like that but it was very easy when i was hypnotized hypnotized they basically make you not care what anybody thinks and it's not necessarily control i feel like i could have not obeyed what she had told me to do but i was in such an easy going mental state that it was like why not why not do what she told me to do and that was my experience with it it's like she wasn't directly controlling me but also she wasn't like not controlling me at all because i did what she said i heard yeah i heard with that kind of stuff you would never do something that you wouldn't normally be like if you were against something that you wouldn't do it even if you're hit i probably there were certain things if she had she requested me to do them i could have taken off your shirt yeah i could have rejected that i wouldn't have rejected that but maybe it works yeah maybe yeah but hey oh yeah you're worth looking into maybe i don't know graham are you doing okay man you just seem really stressed yeah man yeah you seem a little out of it no just because we're talking about the boxing that's oh okay i know also this this recent drop in the stock market has been affecting you a little bit in your portfolio because he told us like i may have lost you know 60 grand or whatever but at the same time how much did were you down of realized or unrealized gain uh probably one and a half million oh my gosh from the peak then and you said at that point when you were down one and a half million you were up fifty thousand dollars of unrealized games right from when you started investing yeah because uh i had dollar i basically started upping since about a year ago maybe a little over a year ago so it was hopping yeah yeah so because i was making a little bit more i started investing heavier just on a regular basis but obviously you're buying all the way up and then buying all the way back down so um yeah negative like 300 grand 250. you're negative 300 yeah no so your overall experience with stock market investing is you would have been better off holding it in cash um it's hard to say because they have certain tax lots that oh yeah are that makes sense positive and certain or negative so it's hard to say like if you pointed right now and said that you could always look in hindsight and say i'd be better off doing that or this but um you know i'm not bothered by it i think right now i'm down like two percent three percent four somewhere which in the big picture it's not uh you did the right thing technically i mean you dollar cost averaging broad index funds there's nothing wrong with that yeah oh the other the other negative was that um i sold off a good chunk in december to tax loss harvest so i sold that and then i put that chunk into the s p on january 2nd third like it was after the new year yeah yeah god because i because that was probably in individual stocks which plummeted a lot more than the smp right that's true but yeah yeah and what does this all taught you all of this crazy market turbulence and everything the same it's just the same same thing yeah i think if anything real estate feels better because you don't see the fluctuations so if there is a loss it doesn't really matter as long as it doesn't affect your actions correct it's harder to sell and it prevents that impulsive decision to be like oh i'm going to just click a button and sell it's a lot easier with stocks so with real estate when you're renting them out it doesn't really matter so i wasn't going to sell anyway so as long as it rented that's fine how about ulx how has this changed your perspective what's the entire market yeah uh honestly it hasn't really changed my perspective i i literally just invest into the s p 500 that's it um but i'm i mentioned yesterday on millennial money i'm at a point where i'm considering pulling out some money uh just because we're looking to buy a house within the next year and a half to two years but i'm going to wait until we kind of have a set time and then we'll make the decision then so just because even though i would be pulling out i wouldn't say like a loss but like you know we're down yeah um it's still better for me um to have that money and know that that it's there for the down payment for all the fees um and just be safe rather than to leave it into the market that makes sense yeah so yeah other than that no not not really changing anything i haven't bought any individual stocks and probably um well he i should say huge amounts of big socks since like i bought netflix and i got pummeled with netflix netflix but i'm holding i'm holding yeah what can you do now is the easy part i'm gonna say like this is the not worry part imagine if it's another 50 down from here i can't imagine 40 down i don't have any individual stocks anymore i know but but even what are you kidding but even everything put it in it even index funds jack let's just say it goes down another 40 for right now there's nothing that says we can't hit 2800. i'm building up uh cash position right now and i'm not investing it yet i know i could continue averaging as the stock market's going down but i would way rather just hold it in cash right now that's it i didn't sell stock and hold it in cash i'm leaving all of my invested money invested but my income i'm just building cash i'm considering building up a higher cash position as well um i have right now about uh four months of emergency fun um but i'm considering building that out to six um just because i want to be like i don't know with with the way the last week has been my life has been a little bit crazy i had a pet pass away and and stuff like that and um i don't know like i i like i just i feel like there's a bigger sense of me to just prepare for like the unexpected you know because you don't expect stuff like that and part of me feels like i should build it up to six but realistically between four and six what do you guys think do you think that really makes a difference to build up an emergency fund i was gonna say you should have 10k but before we go to that we gotta thank our sponsor ladder ah what's wrong i want to help protect my wife financially if anything bad were to ever happen jack you don't have a don't push it graham jack you should just get life insurance with ladder plus with term coverage being so affordable it really doesn't make sense not to a healthy 35 year old man could get his family a million dollars in coverage for only 35 dollars a month you can get ladders easy to apply for and affordable life insurance coverage from the comfort of your own home in just a few minutes just sign up from your phone or laptop and ladders smart algorithms will let you know instantly if you're approved and life insurance only gets pricier as you age so now is a better time than ever to cross that off your list there's no hidden fees and you can cancel it anytime you want and if you change your mind in the first 30 days you could get a full refund so go to ladderlife.com iced coffee to get your free quote today ladderlife.com iced coffee thank you so much ladder and back to the podcast you know we do a lot on this podcast what talk about my unfortunate misadventures or whatever oh you're dating life with girls yeah and i think it's time to flip the script and talk about you guys because i know that your current significant others aren't necessarily the first ones that you've had right uh right no comment i don't know i have no comment so you don't want to open up about this stuff however it's expected that i do because you're if you're you're dating that's why but you've had no i'm talking about graham i think it's fair it's fair what do you want to know how many offenses wow this is spicy zero zero to ten zero to ten zero to ten so nine [Laughter] so like zero nine and a half zero to ten okay when do you have your first girlfriend uh 17 and why did you like about her oh god i mean a lot of things she was great really nice uh same interest very smart she's very book smart like a straight a student i was not so what do you think she liked in you oh man i was uh uh i was in the band i was in the band i was in the basement i was in a man or like a rock band a rock band i was in a band the school band oh the band uh i played drums and you thought that was attractive to her yeah so yeah we mentioned shows she did yeah and and how did you ask her out uh oh oh you know what this is this is actually uh how it came to be i actually that's a funny story we all went to a friend's house and i they were trying to set me up with this this other friend her name was olivia and they're trying to set me up with her and i went on one date with olivia so far and i don't think she liked me at all and i took her to the cheesecake factory man uh i brought my own drink to pour in the water and we split something we oh we had this thing we'd go to the cheesecake factory dishes or something and split the nachos so like we'd leave at like twelve dollars or something like it was really cheap uh so we did that i don't think she liked me at all and then this was the second day we were having like a whole bunch of friends over for a movie night and uh olivia came and uh we just we're not hitting it off or you know i was just like kinda into her but i don't think she was into me at all and uh anyway we we're all in a group and uh i had on that like the flip phone back then my screen like the the background of the screen was a lotus it was a yellow lotus and i flipped it up and then uh this other girl over at said wait a second is that a lotus i'm like i'm like yeah it's low she's like oh that's my favorite car and like you know lotus and we started talking and then uh i just basically went from olivia to the who became my girlfriend and and how did you ask her out how long did you know her before asking her out um i don't think we ever i i don't think i ever asked her so it's just kind of a gradual yeah yeah well what happened i left something at the house and then she said oh well we could just meet up tomorrow and you you know i'll give it to you then and then was it yeah no no it was a friend house but she was yeah she was she was spending the night there and she's like oh we could just meet up tomorrow and and how long did you guys date for a year and a half i think so wow so yeah almost two years a year and a half almost what led to the the end of it oh man multiple things first of all i got really into real estate and i just became i was i was just like very narrow-minded very like just shallow when it came to stuff like when i started going to real estate it just created this huge separation between like what i was used to and like heist because she was a year below me and so she was in high school when i started doing real estate and once i got in that whole like working phase i could i just like i couldn't relate to the the high school mentor i totally like i couldn't do it and so she'd want to go and like and nothing bad but like hang out with her friends on a friday night or a saturday and we we were all like in the same friend group but i would go there and i would just be like miserable hanging out with her friends and and they were the same but i like i was the one that that had changed and i just go there and be like this is so stupid uh why are they talking about this none of this stuff matters and i was just like i was so used to everyone else like in real estate you wouldn't tell her that though that you weren't having fun i i think i did i probably made her life hell um nope i i yeah i probably put her in some really bad positions normal stuff that i just i couldn't get into and i couldn't fake it and she could tell that i was not having a good time and i think it put her in a bad position because like her friends could also tell i don't want to be there and then uh you know i think a lot of times i was like i just want to leave let's go and it's like that's terrible say that to her i think so i i told you man i told you but you know i'm pretty sure i did or i would be like okay well what time can we leave how about we leave it this time and it was bad it was bad um all right yeah so anyway but but then when she was going off to college i think there was something that she went to that um oh you know what it was she went off to she invited me to go with her and some friends to like something and i said i didn't want to go that was totally you didn't want to go i would say oh she asked why uh i just say no you're gonna have i think in my mind i'm like she'll have fun with her friends and stuff like that like i don't need to be there but i didn't want to be there i thought you know oh she'll have a good time on her own uh but i think she wanted me there and um yeah then after that uh we had we had the talk after that did you cry oh it's um afterwards i did i think during it i was just kind of like kind of like in disbelief a little bit be like no uh-uh like she'll come back right she'll change her mind she instigated the breakup yeah she did yeah have you ever broken up with any of your girlfriends or have you only been broken up yeah yeah that was my that was my only breakup wow yeah and then you went full real estate grind mode then i went real sick i mean that worked out it worked out so in the end like you know i i i made so many mistakes with that that like i won't repeat the same mistakes i try not to spoke to her anytime in the last like five years uh maybe five years ago four years ago i've probably it would have been at least like probably five four years ago or something like that yeah but not like spoken spoken i think this was just like over facebook yeah yeah i think it was just oh you know what she got married and i think i just i sent her and this was like a genuine like hey uh because because it we had so many mutual friends that it would come up on my facebook feed i just said you know hey hope all's well i just want to say congratulations hope you don't just just an innocent sort of thing and she responded back oh thanks you know blah blah and that was it good oh yeah so yeah i didn't expect that all right either die alex i want to know about your first girlfriend my first girlfriend like like your first more serious one okay so i've only had one serious girlfriend other than my wife and that was in high school okay so i dated this girl for six months and what do you like about her she was into like nerdy stuff like me like we both like harry potter uh we both liked you know like video games so it was similar interests she probably liked the same thing about you yeah exactly we were in high school and i just think we got into like it's so weird to explain but we got into like the same routine like like literally like after high school i would go to her place just hang out till whatever nine go home and that was life that was life and you guys didn't like that you were stuck in a rut that there was no progression of the relationship or maybe it caused you to like live very still lives i don't know it was really weird so she broke up with me and but it was really weird because um there were no i'm a really easygoing person there were no like problems um but it for me it was like all of a sudden like like we came home on the bus because we're in high school and like she just looked off and then we got to her house and then you know we had the talk and um it was just very odd because like the week before everything was normal it was like super odd super odd yeah i i to be honest i don't even know were you heartbroken oh yeah i cried so much yeah my parents picked me i had to call my parents i wish she told me before we took the bus home she was probably just nervous yeah she broke up with me and i was heartbroken and then i met kelsey about uh probably a year and a half later in another high school because i moved and kelsey actually was the one who came on to me which if you guys don't know kelsey is my wife now and um i did not date kelsey because i was a uh i could not relate to anybody in high school like kind of like how graham was saying i was running my wedding business um when i was like 16 and everybody was making plans to go to college and i'm like why am i going to get into a relationship now i'm working on building this business like what if i develop feelings for this girl and then she goes to california like i'm like so i told um kelsey in high school i was like i can't you rejected her yeah basically and she would always ask like i felt so terrible because like she'd always ask like why and i'm just like like i just i'm not into like she thought it was her and i'm like it's not you i'm just like in my head space like i'm not in the right head space to be dating and um i'm so glad i did that because i mean you never know right like what if we dated in high school and then we broke up or whatever and so yeah we i reconnected with her later and she became my wife that's crazy but there was an error in my life where i was like jack single you know going on casual dates and stuff i wouldn't say that what would you call them yeah what did you call them rendezvous rendezvous rendezvous hanging out in the hot tub with your roommates or yeah i hang out in the hot tub with my roommates yeah all right no i don't really go on but i learned matt that's when i learned magic yeah and i'm sure that like attracted like that was like dude i thought it was the nerdiest thing ever yeah it wasn't it was when i learned magic first of all people thought it was stupid and then like once you learn like cool stuff then you immediately like everybody goes up to you like could you do the thing like i'm like like okay and uh yeah i did take i i picked up this girl at the mall i was like hey like you're really cute you picked her up at the mall yeah i was like magic i was like what time yes i was like hey i was like what time is your shift over she said like 8 p.m and i was like okay i'll be back here at 8 p.m and i went and i picked her up and then we went on this date i knew nothing about it was fun and then uh then she even told me uh she had two kids and we were like 19 or something yeah or something or 18 i forgot how old i was yeah and uh i was like oh like that's okay and then i took her on the second date and i took her and her kids out it was like how old were you i was like in like 18 19. and she was there but they loved the magic tricks and then i think she just wanted you to perform i didn't do the magic tricks no but then um you know after like going out you know on a date and she had her kids and stuff like she was nice but like i was just that we were in different completely different phases in my life yeah yeah so this is jay bae he's a part of the private mentorship group that we host and i just developed a relationship with him over the two years he's been in the group and he is very smart in real estate investing stock market investing so much and he was such an outlier in the group that we decided to have him on because he was in vegas and he's going to tell a couple crazy tenant stories because he has some really good ones so let's just hear about this shenanigans that he's had with his tenants and uh yeah well good to meet you all right so uh tell us the story i'm curious i'm really curious i know nothing going into this book knows nothing i know most of it and it's it's wild yeah so there those are documented pretty well on my channel um i've had a few properties completely destroyed which i think that would suggest that my screening process needs some work but i'm learning getting better you think that's the solution i mean kind of i mean i want to own responsibility for selecting the wrong tenant of course but sometimes you really just don't know especially when you're renting to a section 8 tenant and my first inclination when i started investing in real estate was i got to do section 8 and i think one of the things that drew me to section eight is that when you when you're first starting out you don't really know how to do the analysis you don't know if the numbers are gonna work you're thinking i don't know how much rent i can get for this property but i'm gonna sign a mortgage and i know i'm gonna pay x amount of dollars i'm really not sure if i'm going to get that much rent but with section 8 they'll tell you how much you're going to get paid it's right on their website the payment standards so then i was able to say oh i can get this and it's going to cost me this this is great i feel confident and it kind of let me feel good about signing these big stacks of mortgage papers but when you get into section 8 renting to section 8 tenants it's tricky because there there are good tenants and there's bad tenants of course like any market but it's a little bit more difficult to find the good section 8 tenants and i think because the things you would normally look for in a good tenant you're not going to find within the section 8 applicant because if they had like a great job and tons of money and a great credit score they probably wouldn't need assistance in the first place so you're down to like oh well it's pretty good it's not that bad of an application but you have to kind of go with your gut and i've had a couple people like i felt really good about them they were nice people everything seemed well and then nope they destroyed my property like really badly what they do i had one tenant that was living there um prior to the pandemic and then when the pandemic happened i didn't do the inspections so normally i do like several inspections a year to see how things are going and section 8 actually requires an inspection but during the pandemic they just said do a self-inspection which means you you call the tenant essentially and say anything wrong how are the smoke detectors there's a little list and they just answer verbally and then you're like okay all good so i did that nothing was reported and then the following year came i'm like okay time to do an in-person inspection again and i show up um and oh my god so much damage the place was destroyed there was the front door had been kicked in the door jam was broken the bathroom had a flood that was completely destroyed the vanity and flooded the floor there the kitchen was it's just it's hard to explain you would have to see it it was just so much waste committed on the property unbelievable amount of damage and the tricky part about it is with section 8 they'll they'll do some weird things to you like there are certain things that are considered uninhabitable and you have to get them fixed right away so they picked out a bunch of stuff after this inspection and they said you have 24 hours to get this fixed i'm like 24 hours so there was like six plumbing problems like none of the drains worked the front door didn't close and they tell me this and they um oh and the funny part is they mail like snail mail the list of things you need to fix but they told me on the phone i had 24 hours to fix it am i the only one not figuring out the problem here i'm going to find out in three days that i had 24 hours to fix x amount of things so anyway they finally emailed me the list and by this time it's already like seven o'clock at night and i'm looking at this going oh my god i have to i need like so many people over here working so luckily by this time i had already made pretty good connections so i know like a lot of contractors and plumbers and various people and i'm always really good to my people by the way and this is a good reason why like whenever somebody does work for me they're like oh it's 200 i'll give them 300 just more than they ask for all the time and in this particular example making good acquaintances because i treat people well came back to help me because i had to call people after hours and i'm like you're not gonna believe this but i need all these things fixed by tomorrow like really so they come over i had two contractors and two different plumbers so four people working and we were there till like 12 30 or one o'clock in the morning and we finally got all the things fixed on this list and so that was just the urgent stuff but then the inspection team says all right there's a bunch of other stuff you have to fix by you got 30 days or whatever yeah it was 30 days and if you don't fix it the property is going to be abated and they sent me this sheet and abatement is a situation where um you're not going to get paid the section 8 payment anymore and you cannot collect the rent from the tenant for the portion of the missing rent so essentially the tenant gets to live there free if you don't fix these things it's just the most unbelievable situation so i'm thinking the tenant destroyed my property and if i don't fix it within 30 days uh the tenant gets to live there free and here's the here's the thing too it's like of course i want to fix the property i don't want to have a garbage property or be a slumlord but this particular tenant already destroyed it once why would i want to spend thousands and thousands of dollars fixing all this damage when they could potentially destroy it again and some of the requests seemed really unreasonable too like too many weeds in the backyard well they're in the least responsible for the landscaping i didn't cause the weeds to be there why am i why do i have to fix that and that was the situation i was in so i fixed all these things anyway and then this inspector came over and still failed me i was just like i don't know what's going on so the property got abated but luckily i was able to evict the tenant because i was working on a side channel [Music] with a lawyer to get the tenant out and it worked otherwise i would have been screwed yeah yeah now i had a buddy who had a whole building of section eight i think it was nine units in los angeles all of them were section eight and it had been nothing but problems he wouldn't originally think the same thing as you that it was going to be guaranteed they were all there 95 of the rent came from the government and didn't have to worry about it but my gosh the problems that he had with that building i mean yes the rent got paid but he would receive calls every few weeks about incidents at the property um there were like drug deals going on at the property there's a whole bunch of like illegal stuff going on the property um a lot of uh infestations for uh bugs because one tenant there in particular was a hoarder and so section 8 would come remove it he would fix it but then a month later the same issue would come and then there'd be cockroaches everywhere from the one unit um yeah it was no he ended up selling it i had the exact same problem yeah cockroaches everywhere and it's not just a sanitation thing but cockroaches can destroy stuff they get they piled up in the stove for example in such masses that that they they leave droppings in like poop and they filled up this stove and it didn't work anymore and i sent a repair man like because it was a pretty new like range i'm like i don't know why it would be broken so i sent a repairman and he got there and he took a picture he's like i can't fix this this thing's ruined wow cockroach is everywhere and what do you do it's like didn't you have also a tenant that hid a fish oh so i haven't told anyone this story yet i also house hack i mentioned that i started out house hacking i still house hack i have tenants right now living in my house and normally i want to say it's like 99 a great experience most people that want to move into a room are just in some kind of transition they're they're moving soon or they have a temporary job or their whatever but i i have made some bad choices and this one tenant in particular stands out as like the worst tenant i've ever had to live with so this guy shows up and he he speaks well and and it just seemed like he had good rapport with me he says oh yeah i work at pixar i'm moving to the area because i got hired as a digital animator for pixar which is nearby in the bay area and i'm like okay that sounds like a great job and i'm all impressed and um i'm like can i check your references yeah i'll get that to you but i need to move in right away cause my job's starting soon and he had all these like weird excuses and i at first i initially agreed that i'm like i don't like i don't like this i'm going against my my gut i want to check three the the references and he wouldn't let me it feels weird so i called him back and i'm like you know what we're gonna go with somebody else and he handled it like a champ he's like i totally understand no problem he was really mature and responsible about it and i was talking to my wife i'm like maybe i judge this guy wrong he handled that so well so i called him back again and i'm like i know this is really annoying i'm all over the map back and forth but the room is open again if you want it and so he moved in and that's that was the biggest mistake ever you should never go against your if you have a bad gut feeling about somebody i think it's best to stick with that it's like a red flag okay this guy moves in okay one rule i have in my house is i don't care if you want to smoke pot or whatever just don't do it inside it's pretty much legal anyway outside just go somewhere i don't want hot smoke in my house so he starts smoking pot in the house like we wouldn't smell it and he's tacking blankets up over the door to try to cover the gaps oh my god so the smoke won't get out and he's putting thumbtacks in the ceiling to try and cover up the vents he just insists on smoking it in the bedroom and i catch him one time and i'm like you can't be doing this but he keeps on doing it and he starts making so many holes in the wall that he decides he wants to fix the holes and he starts adding layers of paint because i had some matching paint in the garage he would go get it and he started painting over the walls and you start getting like this thick layer of paint over the the texture which is ruining the wall you have to tear all that off and start over and finally i had enough because he was painting the door trim he ended up messing up and painting over the hardware it's just the room's getting destroyed and i'm like you know what i've told you multiple times it's in the lease here's a here's a 30-day notice because you won't stop smoking pot in the house and that's when he lost it he was so mad so he ended up uh i have some cameras around the house he ended up slicing the wire and those are pretty expensive to replace because it was a long one he sliced the wire to the camera i don't know why he did that or what he was thinking but he was kind of mad but i could actually see him slicing the wire with another camera that was cause they're wide angle right yeah so even though it wasn't necessarily pointed at him he was in there and i i found the footage so at first i approached him like why did you cut the wire i didn't do it so i showed him the footage and he's like all right i did it because you you're evicting me and i'm pissed off about it and so i changed his eviction notice from a 30 day to a three day which in california you might know that's legal to do if somebody's damaging your property [Music] and then he was just like so mad he's like i'm gonna do something to make sure that you go to jail and he started like um smashing things and calling the police so he smashed his room door and told the police that i was trying to harm him and the police came over i'm like i told him everything i'm like here's what's going on here's video footage of this guy smashing his own door like i have cameras inside i don't know why he thinks he now you have cameras in his bedroom no absolutely not that would be really weird how do you know in the common area of the common area okay got it but because his bedroom door is off the common area it the door gets smashed from the inside and then he comes walking out he thought it would be fine to do inside the room it was really home when he was smashing the door um i don't think i was home when he was actually doing so you couldn't hear him anyways no but but i came home the door was smashed and he's calling the police trying to tell them like he thought i would just get like arrested or whatever anyway uh he's finally gonna leave because he has no choice and he's his efforts to cause more problems are failing but on his way out he gets some raw salmon out of our freezer we buy these like costco packs of salmon and he hides salmon in multiple places around the house and i'm on a business trip and i'm away for like a week or whatever and my wife is trying to study she's she was working on becoming a nurse she's a nurse now and she's like i'm having the hardest time studying the house really stinks i'm like what do you mean it stinks and she's like it smells like something died like this is just terrible you have to come home i'm like i smell so bad that i have to leave my business trip and come home like yes so i i come home and i'm just like oh my leave your business trip well it was kind of wrapping up anyway so um yeah i came home and oh my god it smelled horrible like probably the worst smell i've ever smelled in my whole life it was rotten fish so here's the funny part he hid it in multiple places but i didn't know that so i was looking around for this fish and i finally find some fish in the laundry room in the back of the cupboard i'm like okay i solved it and we throw the fish out and we're thinking everything's gonna be fine it was just like residual smell but it kept stinking and like the next day i'm like what is happening how bad is that fish and we find another one in the closet i'm like oh god we have no idea how many pieces of fish there are in this house this is like this big treasure hunt like an easter egg hunt for rotten fish i mean it was nasty it had maggots in it wow like trigger warning it was really bad but the last piece was hidden behind the dishwasher that was the hardest one to find he took like a piece of fish and he had a cane and he pushed it back there i only found it because i started reviewing the video to see what he was up to and i saw him push it back there so you have footage of him pushing the salmon behind them yeah wow yeah so he got that out and then the smell went away oh geez if i were him i would have put it in like a vent or like you know of course yeah but but you got to put in an area where you're not going to like you can't access it easy so like vents in the drywall uh you know they're giving so many potential bad tenants ideas right now probably you could tape it underneath the table so you're like looking terrible it would eventually drop because it loses its consistency duct tape there you go how is it to kick people out of your own house if you're living with them is that weird because that was something i've always wanted a house hack and that was something that was concerning to me it's like i move someone in and then maybe they start pulling something like that or they start hiding fish in my house i'm like yo quit hiding fish in my house sorry jack get out and then they say oh yeah i live here like what are you going to do and they live in my house and it's awkward you don't want to see someone you've already sent the eviction notice to after you've sent them the evidence yeah you got to like eat in the common areas together hang out i've done that it's really uncomfortable so that's actually a good point because one thing i never do with my house hacking is create like a long-term lease it's always month to month and the reason why is because if somebody's unhappy there i want them to feel free to leave the worst thing in the world is living with a person who doesn't want to live with you so i i'm not going to try to lock anybody in so i tell them from the start like it's month to month but then if you have to kick someone out i would say at least in california it's pretty much normal rental rules they get treated like a regular tenant so they have all the same rights but most people if they're uncomfortable if you feel uncomfortable with them there they also feel uncomfortable being there and they'll just leave early themselves i've never had anyone stay like i hate you i'm gonna stay the full amount of time like every time this has ever come up which is very rare to be honest they have voluntarily just left that makes sense i mean most reasonable people probably just leave yeah jason thank you so much i really appreciate you making it cancelling your dinner plans to come on with us the iced coffee hour i really appreciate it and i'll link to your information down below in the description fantastic thank you thanks great to be here yeah appreciate it