Speaker 0 00:00:00 Welcome to the Investor Agent Podcast. I'm Steve Seymour, your host, where we help transform the human mindset from scarcity and lack to abundance of wealth. One conversation at a time. Steve Seymour here with The Investor Agent Podcast. Today I have Bryce Stewart on. Bryce, thanks for being on today. Hey,
Speaker 1 00:00:18 It's a pleasure to be on here. I'm looking forward to
Speaker 0 00:00:20 It. So Bryce, uh, has his book here. It's on Amazon. We'll, we'll talk about it a little more later, but, um, thank you for being on. We always like having an author as well as an investor on
Speaker 1 00:00:32 Absolutely. Yeah. It's called House Hackers, A Guide to the Galaxy. It's kind of a blueprint of my investing journey from being a w W2 teacher to eventually retiring from my W2 job and then scaling the business.
Speaker 0 00:00:44 And I know House Hacking's a big topic, so we'll touch on that for sure. Yeah. Um, I really want to go back to the beginning. What, what got Bryce interested in real estate? So how did this all, how did this all come about? Yeah,
Speaker 1 00:00:56 I'll say this. Um, I got a degree in college, in elementary education and, uh, coming out of college I assumed, I think a lot of people get into this rut. I assumed that my 19 year old self choosing that major had basically written my economic future indelibly, you know, engraved it in stone. Um, so, you know, what was I
Speaker 0 00:01:22 Gonna just saw one
Speaker 1 00:01:23 Path Exactly. Was I gonna go back and get a degree in finance? Right. No. Like I, I wasn't gonna go to college a second time, <laugh>, so I
Speaker 0 00:01:29 Assume not going through
Speaker 1 00:01:30 That again. Yeah. That, that was my, that was the route.
Speaker 0 00:01:32 Yeah.
Speaker 1 00:01:34 Um, I, I graduated college, moved back to Westchester, which is where I'm from, and, uh, was living with my parents. Right. That's probably familiar to a lot of people. Mm-hmm. <affirmative> recently outta college. My dad was the kind of guy who, because I had a college degree and I started working a job, he was charging me $300 a month in rent. Smart man. Yeah. To live in my high school bedroom.
Speaker 0 00:01:55 You're probably grateful for that now, right?
Speaker 1 00:01:56 Yeah. Right. He, well, he was like, you eat a ton of food, <laugh>. So that was some of it.
Speaker 0 00:02:00 He he's teaching you principles too, though.
Speaker 1 00:02:02 Yeah, exactly Right. So I started working a job in Westchester and I met a guy who was also 23 years old, so I was 23. Uh, a guy that I worked with was also 23 years old. He asked me, where do you live? And I was like, uh, I live with my parents and Mm, yeah. And I asked him, where do you live? And he said, uh, my college roommate and I bought a four unit apartment building in Norristown. He's like, we live together in one of the units and we rent the other three out. And I did not even understand the words that he was saying. Yeah. It just was not even anything that was in my, my, my mind.
Speaker 0 00:02:36 Don't know what you don't know
Speaker 1 00:02:37 Exactly. I had, I went to a school that was a four year, uh, dormitory housing, so I didn't even like rent an apartment when I was in college. And I grew up mostly in suburbia. My dad was a Presbyterian minister, so, um, I always felt like a poor kid in more wealthy areas cuz uh, the clergy doesn't tend to make a lot of buck. Yeah. At least not, not on this side of the grave.
Speaker 0 00:03:00 I can relate different story, but I can relate. Yeah.
Speaker 1 00:03:02 So, um, so because I had lived in suburbia, I just, I had no conception of even really what apartments were. I knew that, um, Chandler and Joey lived in an apartment on Friends <laugh>, and I knew that Jerry Seinfeld lived in an apartment. And, and I, I literally thought only large companies can own apartments. Mm-hmm. So it didn't make sense to me when this kid said that he and his, yeah,
Speaker 0 00:03:25 He's 23. Yeah.
Speaker 1 00:03:26 Own an apartment building. So I was like, my response was, what do you mean? Like, you guys own an apartment, like you two own it? He's like, yeah, dude. And I'm like, isn't there a really high mortgage for something like that? And he said, well, it's not low, but the mortgage is covered by the rents that we take from the other three units. And I was smart enough to be
Speaker 0 00:03:44 Like light bulb
Speaker 1 00:03:45 <laugh>. Yeah. Right. I was like, well what about the real estate taxes and the insurance? He's like, dude, it's, that's gets covered by the other three rents. And in my mind I'm like, yeah,
Speaker 0 00:03:55 Got the hamster wheel going.
Speaker 1 00:03:56 Cyn. Uh, I'm cynical enough that I'm like, there's something wrong with this plan. I gotta poke a hole
Speaker 0 00:04:00 In this. Oh, the fear black.
Speaker 1 00:04:02 So I'm like, well I bet the water bill or the electric bill's really high, or the cable bill. And he goes, I don't know about the other three units, cuz they all have their own meters with the public utility companies. He's like, but if I'm honest, we pay our utility bills with the rents for rent other three
Speaker 0 00:04:17 Units, so they're living for
Speaker 1 00:04:17 Free. And I was like, wait, wait, hold on a minute. I'm paying $300 a month to live in my freaking high school bedroom and you guys are living there for free. Yeah. And he's like, almost, dude, it also puts $200 a month in our pocket for spending money. <laugh>.
Speaker 0 00:04:31 So as you became more and more skeptical Yeah. It got better and better.
Speaker 1 00:04:35 I was angry. Yeah. I was pissed off because no one had told me that, that you could make money from something besides your Didn't that job didn't in high school? No, not in high school. And look, I had parents who were, they were good people. Right? Right. They were financially responsible people, but they did not have a blueprint for,
Speaker 0 00:04:52 They might not have ever even thought of that. Exactly.
Speaker 1 00:04:54 Right. Yeah. It was not, I mean, when you're a Presbyterian minister, there's a lot of other stuff that's on the front of your brain and that gets the most
Speaker 0 00:05:01 Attention. Rightfully so.
Speaker 1 00:05:02 Yeah. So, um, that was a huge moment for me. And I, I cornered that poor guy in the lunchroom and was like, you need to tell me like, who told you that you could even do this? Like, this was not an option that was presented to me. Yeah. And he, the next day he brought in the book for me, uh, rich Dad, poor Dad,
Speaker 0 00:05:19 Ah, which I
Speaker 1 00:05:20 Devoured in like a day
Speaker 0 00:05:21 And a half. The investor bible <laugh>.
Speaker 1 00:05:23 Right? Yeah. Uh, which it's actually not, look, it's,
Speaker 0 00:05:26 It, it's a good kickoff. It's a good mindset,
Speaker 1 00:05:28 Right? Yes. It's a good 30,000 foot view, um, and mindset shift. It doesn't have terrific granular advice. Yeah. But I'll say that any book with granular advice is gonna age out and be obsolete after a while. So you gotta have the 30,000 foot view. But for me, that was really the first kind of light bulb moment was, oh wait a minute. People can make something, can make money from something besides their job.
Speaker 0 00:05:51 Which that is a big piece of it, right? Yeah. Because you could look at the granular Yeah. But if you don't have the mindset shift Right, then it doesn't feel possible. Exactly. It's like, oh, this is, this is good for someone else, but not me. Or, uh, the water bill's gonna be too high or your cynicism will kick in. Yeah. And then when it clicks in. So what was the biggest takeaway for your mindset shift outta Rich Dad Port ad? Because I'd love to hear it in your own words.
Speaker 1 00:06:15 So the mindset shift was gradual, right. Because you're trying to break down all that you've ever known from a lifetime of living. And when you're 23, you already know everything. So who wants to go back and, and scrape stuff down to the foundation and start over again? Right. You know, I, look, I was smart. I I got good decent grades in high school. I graduated magna cum loud from a pretty good university. Um, so I was smart. And sometimes that's a barrier is that you're unwilling to admit that there's something you did not already know or had not already figured out. And so you just write it off. Uh, you make up excuses and because you're smart, you rationalize away opportunities that, look, if you're listening to this podcast, I guarantee there are dumber people than you who are killing it. Yep. And part of the reason that they're killing it is because they're too dumb to even quantify the risk <laugh> of what they're doing.
Speaker 0 00:07:11 <laugh>. They're just going for it. Yeah.
Speaker 1 00:07:12 Right. Which, um, honestly, so
Speaker 0 00:07:14 A certain level, it sounds like it brought a certain level of self-awareness too. Eventually. Eventually,
Speaker 1 00:07:20 Yes. It pricked the bubble initially. Like anybody, it takes time for that to kind of, um, percolate through the entire being. And for me, it took years because guess what, no one walks up and hands you a four unit apartment building.
Speaker 0 00:07:33 No.
Speaker 1 00:07:34 Even after you understand that, that's a possibility. Possibility. Yeah. So
Speaker 0 00:07:37 Well, let's, let's fast forward into that. Yeah.
Speaker 1 00:07:40 I sat on it for a while. Yeah. Didn't do anything. And then, um, uh, my wife's from Bethlehem, Pennsylvania, which is about an hour north of West Chester, uh, in the Lehigh Valley, which when I lived in West Chester, I was so myopic I didn't understand why anybody would live in the Lehigh Valley. I was like, what do you do up there? Milk, milk cows or something. <laugh>. Um, turns out it's the third largest MSA in the state behind Greater Philly and Greater Pittsburgh. Um, it has its own robust local economy. It's growing, uh, insanely fast. It's proximate to North Jersey, New York, and then Philly. Mm-hmm. <affirmative>. Um, it's at a logistics hub for a lot of, uh, trucking roots and uh, there's a lot going on there Yeah. Just as its own economy. But I didn't know that at the time. I couldn't fathom it, whatever.
Speaker 1 00:08:27 So fast forward, my wife and I get married in 2006, we bought a luxury one bedroom condominium that a developer had retrofitted in an old Bethlehem Steel building. Okay. And, uh, my father-in-law was an insurance agent and he was inuring the builder. And so his proposition to us was that he could get us an early, uh, pre-construction contract. Got it. Yep. On this condo. So I thought that that was immediate equity and, um, it seemed like a good idea to start with. And for a, for a while it was a good idea. So we lived there from 2006 to 2008. And my, my brain going into it was at a point where I was like, well, we'll live here for two years as our primary residence and then we'll be able to sell it in two years and not have any capital gains taxes. Cuz that's the rule. Yeah. If you, if you're reside in two. So by 2008 though, we were pregnant with my first daughter and the market was upside down, especially the condo market was upside down. And so a condo that we had purchased at 1 55 and still owed around one 50 on like comparable units we're selling for 85 or $90,000. So we were completely underwater. Um, and then it wasn't until then that I started doing the math. We're pregnant, it's a one bedroom, we wanna move out somewhere. We have more space. So I'm like, okay, we,
Speaker 0 00:09:49 I like how you took responsible responsibility said we're pregnant. Yeah,
Speaker 1 00:09:53 Right. Exactly. She's pregnant. Yeah.
Speaker 0 00:09:55 Um, nice move in case she listens.
Speaker 1 00:09:57 Exactly. Um, but I honestly going into it, I hadn't done the math on the way in of what we would be able to rent it out for. So when, now when we were looking to move, I'm like, well, okay, we'll rent it out. And I realize our monthly drag was like $1,400. Okay. That's principle interest, taxes, insurance, and then an h HOA fee at this place. And the most I was gonna be able to rent the place out for was like $1,100 mm-hmm. For a one bedroom in
Speaker 0 00:10:23 Bethle negative cash flow. So
Speaker 1 00:10:24 Negative
Speaker 0 00:10:25 300. Right. You're feeling real smart at
Speaker 1 00:10:27 That point. Yeah, I'm right. Yeah. Like, yeah. And, and I was a teacher, so not making a ton of money. My wife was working for a, the, uh, chamber of Commerce with nonprofit, so neither of us killing it in the income game. And we had just treated our housing costs like one more bill. Right. And it was all fun and games while we were working two jobs, two salaries, two mouths to feed. But now we're looking at, you know, having a kid and we need to move and we can't without losing money. So, uh, the short expl explanation to that is we did rent it out. We took a $300 per month loss and we had to go and find an apartment that was renting for much less. We found, thank God we found an $850 per month apartment. Not really nice, but honestly a pretty good deal. Yeah. For where we were at. So that brought our monthly housing costs down and it kind of absorbed, kinda
Speaker 0 00:11:20 Offset a little bit. Exactly.
Speaker 1 00:11:21 Right, right. And absorbed some of the $300 loss. Yeah. Um, it was a third floor walkup in downtown Bethlehem.
Speaker 0 00:11:27 Let me ask you, are you glad you kept the condo?
Speaker 1 00:11:29 Um, I mean, at the time it was that or foreclosed. Right. Um, I saw foreclosure as death and, um, so I, I didn't want to do it. Um, we held that condo of for 13 years and it lost money almost every month of those 13 years. And then finally sold it, uh, two years ago, maybe three years ago. I actually wish I hadn't sold it two or three years ago. <laugh>, I could have done a lot better. Better sold it now, right? Yeah. Or kept it. Yeah. So, um, so we rented a third floor walkup apartment. Uh, my wife's job, thankfully let her keep most of her hours so that she was able to do it with an infant. And the apartment was only a few blocks from where she worked. And then when my daughter was four months old, I came home from school, I walk up the two sets of steps, open my front door, and my wife is in the middle of the living room floor, bawling her eyes out.
Speaker 1 00:12:19 My daughter's in the crib bawling her eyes out. And I'm like, oh my gosh, what's the matter? Are you okay? And my wife says, I'm pregnant again. <laugh>. So I was like, ready to, you know, turn it all in. Cuz now I'm like, well, we can't stay in this two bedroom apartment. Which by the way, that's not true. You totally can. Yeah, you can. Two small kids. But I was like, now we gotta move somewhere else. My wife's gonna have to like get rid of all of her hours because she's gonna have two infants. And I'm still, you know, I'm looking at the teacher's compensation Right. And schedule. And I'm like, this is insane. We just went from two salaries and two miles to feed to four miles to feed on one salary and it's a teacher's salary, so it was dire. Um, so that was the moment when I started thinking back to the book that I'd read, um, rich Dead, poor Ed, that guy.
Speaker 1 00:13:08 And I was like, well, if anybody needs to live for free right now it's me and my pregnant wife and my infant daughter. So, um, this was 2008, uh, late 2008. I didn't even know what I was doing, honestly, I'd never even the purchase of the condo, like I had never really made like our, our, my father-in-law kind of handed us off to the Right. Right, I gotcha. The sales agent. So I had never even really been a buyer. Um, so driving to school, maybe a week or two after that, I pull up to a red light, I look over and I see a for sale sign out in front of a, um, a row home that has two mailboxes on the front porch and three power meters on the side of the building. And I'm like, I bet that means that it's a duplex.
Speaker 1 00:13:54 So on my way home, that's a good indicator. Yeah. Right. Yeah. Uh, on my way home. Still use that today. Exactly. Right. Yeah. If you wanna drive for dollars. Yeah. That's a good way to do it. So I pull up, I write down the phone number, um, and I call the agent and say, Hey, uh, I'm one, is this a, I think it might be called a multi-family property. And she's like, yes it is. So I am like, I wanna do a showing. So I go home and tell my wife. My wife is like, you're insane. We're already underwater on a property. You wanna try to buy another property? We're losing money every month. We're underwater. You're nuts. Um, but I did it anyway, <laugh>. Um, and she, my wife actually came with me when we did the showing and we go into the place and it smells like cats and cigarettes and piss and opportunity. Yeah. Smells like smell of opportunity. Smells like cats that maybe smoke themselves. Mm. Um, and tenants were weird running. There was a kid running around with a a shirt on and nothing else. Like Winnie the poo. Do you remember the numbers on the deal? Can you, can
Speaker 0 00:14:51 You share 'em people like, and yeah, we'll make it up. No one will know. We, we walk averages,
Speaker 1 00:14:55 We walked away from that. But the important thing is it put me on a auto email list for that agent. Mm-hmm. With multi, with a multi-family. Yeah. So like two weeks later we get a nu we get an email of a place that looks better, we go to it, it's gorgeous. The guy who bought it bought it sheriff sale and then renovated it very nicely. It was a three story row home, second and third floor combined as like a three bedroom apartment. And then the first floor, separate entrance, separate meters, separate locks, everything. A one bedroom apartment. So the numbers on that were, uh, it was selling for $175,000. Um, the rates at that time, you know, when we looked at getting into it, it was gonna be about a $1,200 per month, uh, payment. That's great. P i t i. Yep. And the apartment on the first floor was bringing in $600 a month in rent. So the way I looked at it was, okay, we were, when we were renting, we're paying eight 50 per month for our housing part. And then this
Speaker 0 00:15:49 Sounds like a no brainer,
Speaker 1 00:15:50 Right? Yeah. Brought it down to 600. So we used an FHA loan to get into that property because I was, I was rubbing together maybe five or $6,000. I even had to borrow I think three grand from my in-laws just to close to get it close to pay the three and a half percent. Yeah. Um, but once we got in there, our housing costs dropped to $600 per month or our kick end did. That's
Speaker 0 00:16:10 Amazing.
Speaker 1 00:16:11 It was awesome. And then a year later, um, maybe 18 months later, we refinanced out of the FHA loan and into a conventional owner occupant loan. Um, uh, I, not strictly conventional, we found a local bank that actually had a killer, uh, loan program. They did 90% loan to value with no pmi. It was a portfolio lender. So they, it was not fanny or, or Friday conforming or anything like that, but no pmi, 90% loan to value. Extremely competitive rate. The only down quote unquote downside was that it was a 15 year balloon on a 30 year amortization. Okay.
Speaker 0 00:16:49 So, but it lowered your payment, but it
Speaker 1 00:16:50 Lowered our payment and we weren't gonna be there for 15 years. Right. Yeah. So functionally that's the same as getting a 30 year fix. Yeah. Um, and it made for great cash flow and it also meant that we were able to refinance after a year and a half and basically have the 10% as built equity into the property. And cuz it had to been an 80%, we would've had to kick in to try to
Speaker 0 00:17:12 Get the loan to get, to get rid of mortgage insurance.
Speaker 1 00:17:15 The important part for your listeners is this, if they're in a similar stage of life, is the fha, if your long-term goal is to be an investor, FHA is a terrific initial way to, to grab a hold of an asset using a really small amount of money. I still, when I coach people today, I explain this is I think the best investment available to the average person walking around in the United States
Speaker 0 00:17:37 Today. I I would agree with you because it's, you know, when you think about you can leverage 96.5% Yeah. And then you can get up to a 6% seller's assist depending on the deal. Right.
Speaker 1 00:17:47 And that's just so unheard of. I mean, you're using a, a couple thousand dollars to gain control of a multi hundred thousand dollars asset. Right.
Speaker 0 00:17:56 Which
Speaker 1 00:17:56 You are entitled to the full appreciation of that asset. You're entitled to the full cash flows of that asset. There's real, and it's a, it, the government subsidized down down payment assistance basically that is just not available. Yes. And you're grabbing a fun what's functionally long term an investment grade asset. Yeah. And there's no other
Speaker 0 00:18:15 And you could that on there or you could refinance it exactly like you did. I mean, there's a lot of options.
Speaker 1 00:18:19 So, I mean, look, I know a lot of people listening to this. Maybe you're experienced, but don't, don't lose sight of this fact that if you're instructing somebody else or just thinking long term yourself, if you want $175,000 of Apple stock, you need $175,000 of cash to go get that. I mean there's margin stuff you can do. Right. But for the average person, that's what you
Speaker 0 00:18:39 Need. Yeah. You can't leverage exactly anything else. The way you can leverage real estate. And
Speaker 1 00:18:43 So if you put in like we did four or five, six grand as part of the, you know, this down payment, the cash investment is a couple thousand dollars, six, $7,000. And for us within a year, even the appreciation of the asset, you know, maybe let's call it three or 4% appreciation over was already a hundred percent return on investment for the money that we made. Not even including the cash flows that we were getting.
Speaker 0 00:19:09 Yeah. So if you think about your cash on cash return, it's through the roof. Through
Speaker 1 00:19:12 The roof. Exactly. Yeah. And this is something that the government is making available to the average person and saying, go do this. We have a program
Speaker 0 00:19:19 For it. I think this is a big piece cuz a lot of times on podcasts like this, you know, people talk about, oh you know, I have 35 properties or something. And then it's like, oh, well that's unrealistic, but guess what? Start with one. Right. You know, and, and there's financing available and you know, you have to talk with local realtor, figure out, you know, find out who's a good mortgage broker or loan officer in your area, what kind of products are available. Yeah. See what your options are. And
Speaker 1 00:19:46 100%, I mean, that changed my life. Just that deal. I mean, it's not the best deal in the world. I wasn't living for free like my friend when I was 23. But for us at that stage of life
Speaker 0 00:19:56 Is though, cuz it's almost like infinite return. Yeah, absolutely. Yeah. Within a year it's your, you have your money back in equity and cash flow and Yep.
Speaker 1 00:20:03 I still have the place. Yeah. It's still one, it's actually one of my flagship apartments at this point. Nice. It's a gorgeous place. But that was the first step that we took obvi, uh, you know, you know the story now, it was kind of out of, out of desperation. Yeah. But it was desperation informed by just a little aha moment. Um, I didn't understand any of the granular pieces going into it, but, um, lemme
Speaker 0 00:20:25 Ask you, were you nervous going forward?
Speaker 1 00:20:27 Oh, 100%. We,
Speaker 0 00:20:29 That's another thing that, you know, you just have to realize courage isn't not having fear. It's taking action in the face of fear. Yeah. And, and, and you have to believe in it. And what helps is knowledge and experience and if you can bounce ideas off of someone, but yes, you must have had some level of internal faith. Oh my gosh. That it was gonna work.
Speaker 1 00:20:48 I it was de so it was driven by desperation. A lot of investors get to that point where the actual big moment, the threshold moment was when they were terrified. And for us, I mean we like prayed for like three days before we submitted the offer. I talked to everybody that I knew and then not trying to toot my own horn, but like a few years later I was making offers on places like site unseen. Yeah. And you know,
Speaker 0 00:21:09 And you're probably not as nervous.
Speaker 1 00:21:10 Yeah. It went from
Speaker 0 00:21:12 Still maybe a little bit each time, a little.
Speaker 1 00:21:14 But I realized after going through it that there's plenty of outs. Yeah. That you're not a like,
Speaker 0 00:21:18 And you build that muscle when you
Speaker 1 00:21:20 Not. Exactly. Right. Yeah. And you realize too that this is key for, look, if you're, if you're a real estate agent and you're coaching a buyer or you, yourself or an investor trying to get through this, you gotta realize that a lot of the steps up to and including, uh, purchasing a, um, an investment property, they're not, they, they're not the cliff that you're jumping off of. So like, okay, for you and I, you make an offer on a place today, let's say you make a below list offer. Let's say you, I don't know, it's a property for 300 grand and you put in an offer at 2 85. Okay. I don't see that as a risky thing to do. Like you actually putting in that offer, you're not deciding that you want to invest in real estate at that point. You're just making an offer.
Speaker 1 00:22:07 Then you get a counter at 2 92. Okay, now you actually have a decision to make. Right. When that counter offer is sitting on your desk, that's when you decide, am I gonna be a real estate investor? Because until that point, you actually don't have a decision to make. You're just talking yourself into LA the laziness of not making an offer. Cuz you're scared, cuz you cause like a lot of people in life, you want to know what step five is gonna be before you're willing to take step one. And what I've learned in my real estate investing career is that there's probably three different step fives. So don't waste your time trying to quantify it right now. Take step one, especially if it's a zero risk step and wait, see until the, the spotlight like shines on the next step.
Speaker 0 00:22:49 See if you have what it takes for step two. Yeah. But
Speaker 1 00:22:52 You, you probably won't see until you're on
Speaker 0 00:22:55 Step four and an inspection contingency. Right. Maybe you have a financing contingency.
Speaker 1 00:22:58 Exactly. Right. You know, um, that's an analog that actually replays in a lot of areas of life where um, you're not alo. I'll give you a good example and this is gonna fast forward in terms of expertise here. I have a buddy who read my book. He's worked for a nonprofit since he was, uh, out of college. And um, so he's never had a high salary, no bonuses, no merit pay, no commissions, nothing like that. Just nonprofit salary. Um, the one thing that he and his wife did that was good was that they, they improved the houses that they lived in and they bought three houses and, um, because they were on a non-profit salary, they just rolled the equity into each new purchase so that they would've a low mortgage payment that they could cover with their, uh, non-profit salary. Very wise, very smart, and very, um, responsible. So
Speaker 0 00:23:48 He read, so they turned each one of their primaries into a rental? No.
Speaker 1 00:23:51 Oh they just sold.
Speaker 0 00:23:52 Oh, I got you. And,
Speaker 1 00:23:53 And tax free moved the equity tax free. Got it. Yeah. So he reads my book and this was two years ago. He starts asking me questions. They end up with a house that's worth maybe four 50, which is, that's like a standard kind of suburban house where we're at four bedrooms, that kind of stuff. And their loan is like 120. Oh
Speaker 0 00:24:10 Wow. So
Speaker 1 00:24:11 They have a really low mortgage. Yeah. So he starts asking me in my book like, Hey, can I, like how did you do x y? So I'm like, here's what you guys need to do. Go get a home equity line of credit Okay. To make a around $200,000 of equity available. And then let's start looking at rental properties. Now here's the thing, they were initially reluctant because what they told themselves was, we don't know if we wanna be landlords. We don't know if there's anything out there that would be interested in buying. The market looks thin right now cuz it was still fairly competitive. And so what I had to tell them was, okay, look, it's gonna cost you maybe 50 to a hundred dollars through your bank to get the home equity line of credit set up, doesn't it? Yeah. Sometimes it's free. Uh, it's always cheap on your primary. And I'm like, then you have access to $200,000 of liquidity. And I'm like, if you at that point decide you don't wanna be a real estate investors, there's no obligation to take a draw on that home equity line of credit. You could just let it sit for a year and then tank it, kill it. Yeah. You know, retire
Speaker 0 00:25:09 It. So you kind of eliminate the risk on their first step. Yeah. Which is them getting their access to Right. To capital lined up. But if they don't use it, they don't have
Speaker 1 00:25:16 To. They were responsible enough that they weren't gonna use it for a vacation. Right. Or a Harley or a boat or something like that. So I'm like, just do that and then we'll talk. Because I'm like, what you can't do is see a good deal and then have to scramble to get the HELOCs set up. It'll be too late. The deal will disappear on you.
Speaker 0 00:25:33 Yeah. It's very wise advice.
Speaker 1 00:25:35 So they did that. They took that step with a no risk HeLOCK. They had no obligation to draw on it and it did not increase their monthly payments at all. And then like three weeks later, my buddy was cruising Craigslist, which some people still use. It works. He found an old real estate investor who thought Craigslist was the pinnacle of digital, um, you know, latest
Speaker 0 00:25:56 Digital advertising avenue
Speaker 1 00:25:58 And was, he was, uh, advertising a property for sale that was like half a mile from my buddy's house, a late eighties, early nineties, build townhouse. Um, he wanted 180 for it. And so my buddy's like, Hey, I'm, I want to go see this property. I was like, I think it's underpriced. I also said, but I'm not gonna go into it with you because I don't want the moral culpability of like walking you into a deal if it's a noose or a guillotine. I'm like, so you have to decide right now, be a man. You're gonna have to walk through the threshold of that door, both figuratively and actually by yourself cuz you'll be the one who has to live with the consequences. So he did, he's fairly handy cuz he, you know, repaired their houses. He went through it. They ended up putting in, he told the guy he was the only buyer because he was the only one who responded to this Craigslist ad.
Speaker 1 00:26:48 He said, I'll pay full asking price. Um, he told the guy, uh, this is my first deal. I've never been a real estate investor before. I can transact in cash. Said that's exactly what they did. They used the HELOC took $179,000 draw, bought in cash. And then luckily, um, like a month and a half later, it appraised for 2 0 5. So instant equity inequity. Yep. They took a stabilized loan, um, at 80%, which knocked out most of their HELOC balance. Brought it, you know, they paid back down the HeLOCK and now the gun is reloaded. He had a little bit of cash, so he actually brought the HeLOCK back down to zero. So there's a stabilized mortgage on that townhouse. It's cash flowing for
Speaker 0 00:27:30 Maybe 500. You have asset bringing in cash flow. Yep. And you have liquidity again. Yeah. Access to capital. And
Speaker 1 00:27:36 The gun is reloaded to go out and do it all over again. So you get to a certain level where you have equity, equity or access to cash or perhaps partners. And um, it makes it magical because you can transact without needing a bank to drag their feet for whatever. Yeah. Three or four weeks. Some more advice for those of you who are perhaps a little bit farther along and you're not gonna do the whole FHA live-in thing. Yeah. This guy was not gonna do what I did, which is my family and I, that whole the duplex thing, we rinse lathered and repeated that a couple of times. Sure. We were willing to use our owner occupancy to, to buy places for a low down payment, but that's not the only way to invest in real estate. There's plenty of people who have done it the way that my buddy did, um, with a home equity line of credit. Or they grabbed capital partners who, uh, had no interest in in managing the asset itself. Yeah.
Speaker 0 00:28:22 Private lending.
Speaker 1 00:28:23 Exactly. So, um, yeah. So those were some of the lessons that I learned. We u we did the whole, um, actually after we did the FHA once and found this bank that did like essentially a 10% down payment program, we, we used that
Speaker 0 00:28:37 Into our, just find something good. Keep, keep it going because
Speaker 1 00:28:39 It took PMI out of the calculus for
Speaker 0 00:28:42 And cashflow. How long did it take you to build up? So you have, how many properties do you currently have under your
Speaker 1 00:28:48 Belt? So I have about five and a half million in real estate. Um, our debts maybe two and a half million, just over two and a half. Uh, my portfolio at this point, cash flow is about 20 grand a month. Uh, that's where a property manager in place. That was a big,
Speaker 0 00:29:05 Big piece. That was another question I was gonna ask you. Self-managed.
Speaker 1 00:29:08 Yeah. That's a piece I just moved in last year. Okay. Um, because my margins were finally at the point where I was comfortable doing that. Um, and I, I've learned a lot of lessons in
Speaker 0 00:29:17 Building And how many doors did you make that decision?
Speaker 1 00:29:19 That is to to
Speaker 0 00:29:20 To to bring in property manager.
Speaker 1 00:29:22 Property management. It was actually, I've been at 37 doors for the last year. Okay. I was a little higher than that before, but I sold some stuff and restructured. Um, for me growing my portfolio was always about freedom. So I was heavily biased in what I acquired that it needed to be easy for me, me to manage temporarily. And then turns out I have a, I've got 32 of my 37 doors are all on the same block.
Speaker 0 00:29:50 Oh, that makes it very
Speaker 1 00:29:51 Easy. Yes. In downtown basketball
Speaker 0 00:29:52 Economy of scale. Right. Exactly.
Speaker 1 00:29:54 You
Speaker 0 00:29:54 Have your maintenance people in place.
Speaker 1 00:29:56 Yep. So for a while that was, I, I didn't wanna be driving all over the place managing properties, but turns out that's a really good pitch to a potential property manager is that I'm handing him a p portfolio that he doesn't have to drive all over the place to manage. And, uh, that means I was able to negotiate a better management fee with the property manager. And actually I'm renting a commercial commercial space to him in one of my buildings. Oh, there you
Speaker 0 00:30:19 Go. Yeah. Makes it even easier. Almost. That's great. Onsite. Exactly.
Speaker 1 00:30:22 He's, every time he shows up for work, he is boots on the ground for my properties. You know, he can see when there's a, a Mountain Dew bottle on somebody's window sill next to a sidewalk because it's not a thorough, it's on a thoroughfare in downtown Bethlehem.
Speaker 0 00:30:35 So I know we just went from like house hacking, getting started to like to that. Whoa. You know, and so how long did that take you and what are like, what are a few learning lessons along the way? Yeah, we'll, we'll keep it higher level just cuz we went granular on the house hacking side.
Speaker 1 00:30:49 Exactly. So I went, we, that duplex purchase was 2009. Our second purchase was two 2012. It was actually a three unit right next door. Um, and then by 2015, my initial goal was just to make up for my wife having to stay home with our two and then eventually three and then eventually four girls <laugh>. And when that worked,
Speaker 0 00:31:09 Kept going up and up and up.
Speaker 1 00:31:10 Exactly. Yeah. Then I was like, all right, enough, uh, when that worked after our fourth girl, we bought a normal house, like a single detached house, but the cash flows from the, um, up from the, at that point, six units that we owned paid for themselves, uh, and threw off three grand a month in, uh, net cash flow. And then I bought a, an affordable house that was maybe 1500 P I T i. And so we were kind of living for free and getting about $1,500 a month in extra net cash. It's
Speaker 0 00:31:40 A very responsible, realistic way to go about it. Yeah. And when you have kids and, you know, you don't wanna take big risks, but Right. But that was like a really, that's like a very achievable, realistic goal for most people if they get into this.
Speaker 1 00:31:53 I think so. And here's two big lessons no matter where you are in your journey that you can take from that. Uh, one is this, I was a teacher still at that point, living in this house, having it paid for, and I kind of figured like in terms of net cash flow or my job is that I'm a teacher, but like we can kind of live like I'm a attorney. Yeah. Maybe. I mean, not a very good attorney, but like, you know,
Speaker 0 00:32:14 You have some lifestyle. Exactly.
Speaker 1 00:32:16 Yeah. Yeah. And, um, I can have a wife who's, and we had four daughters in five years, so, uh, we needed, you need, we needed a COO of our household at home taking
Speaker 0 00:32:26 Care of stuff value. Very valuable to have that Exactly. Opportunity. Um, and it's an amazing opportunity for her and your kids and 100% family as a whole.
Speaker 1 00:32:34 So just to give as much value as possible to your listeners on this. Um, during that time I was reading a, a blog called Mr. Money Mustache, which is an insanely good blog, um, just about financial freedom and about expenses and about, um, the lies and the trap of modern advertising that fool people into shackling themselves to a highly consumptive lifestyle. Um, in many ways, especially when you're building the choices between freedom or consumption and the, um, the way I teach it to peop to kids or to high schoolers or people who are just starting, is imagine that you are standing in front of a plowed field. You're a farmer, you're standing in front of a plow field and you have a bag of seeds in your hands and you're hungry. Okay. So there's a temptation to reach that hand into the bag and eat the seeds. Right. But what is true of every seed that you eat out of the seed bag,
Speaker 0 00:33:29 One last crop.
Speaker 1 00:33:30 Exactly. It doesn't go into the ground and it can't grow. So rule number one, I think of financial freedom is don't eat out of the seed bag or if you have to, to survive, eat as little as possible out of the seed bag. The rest of it you need to put in the ground Yep. So that you can harvest later on.
Speaker 0 00:33:44 That's a great analogy. Yeah.
Speaker 1 00:33:46 It's easy to think about. But, um, I told that to my roofer. Yeah. And he was like, dude, I think about that every month now and I'm doing my budget and stuff. And for him now he's a, he's a landlord. Yeah. That's
Speaker 0 00:33:56 Property takes discipline. Absolutely. You start, oh, I just created, you know, 50,000 in inequity. Maybe I could go buy a car or a boat or a Harley or whatever. Right. Exactly. And you have to, you have to say, well, I could or I could go buy two more properties. Yes. And what will that give me? Exactly. And you have to make those decisions.
Speaker 1 00:34:12 Here's the next lesson. Um, when American pioneers were heading west, uh, during the developmental stages of our nation, they often went in wagon trains. So they'd load up Conestoga wagons and they'd go in a train maybe 15, 20, 30, uh, wagons long whenever they felt threatened by, uh, let's say native tribes or something like that, they would do something called circle the wagons, which means they would draw all the wagons into a circle so that they had a defensive position to shoot guns from or whatever. So that's now a, it's an idiom. When you say circle the wagons, it means get into a defensive. S that's, yeah. And um, when I was a teacher still and sitting in, in our house and had, you know, property coming in, it was really easy for me to pat myself on the back say that worked to also say, well, that worked.
Speaker 1 00:35:01 It was risky. That risk is done. I'm not sure I want to reextend or get into more risk. I already have a good life. I have a good job. I have health insurance coverage. Um, you know, I should just sit tight. I'm making more money, um, net than most teachers are. But the problem with circling the wagons is as long as they're in a circle, you never make it to California. Mm. And so at some point you have to say, look, there's a risk to reestablishing and, and continuing to go. And I had to get to that point when I was sitting there with that house was, this was not my end goal. My end goal was to work myself out of a W2 job and have complete passive income. Um, and so I, I kept investing, I kept looking at deals for a while. I had a lull where we were resaving up money and where, you know, taking care of a family and that kind of stuff, that was fine. But I still had my ear to the ground. I was still, uh, underwriting deals on the ba basically back of a napkin pretty easy with small multi-family. Yeah. And I still had a couple real estate agents sending me, you know, multi-family listings. And they knew too if they got caught a hold of something before it went to market to send it to me if possible.
Speaker 0 00:36:11 And I think there is a time to, you know, go buy, there's a time to hold and there's time to sell, you know, well really no, never should sell in my opinion, but unless there's a losing property. Right, right. But as long as it's an asset producing cash flow.
Speaker 1 00:36:25 Yeah. Well, and remember, even if you're not adequately recapitalized, and even if you have to kind of coach yourself into the same thing we discussed before, there's no commitment to invest until after you get a counter offer that you've signed. Yeah. So be that jerk who offers below list. If you can find, if you are an agent, you know how to submit an offer. If you can find an agent that doesn't mind sending you a DocuSign, um, you know, do that because
Speaker 0 00:36:49 You Yeah. I'm sure during those times you were just more conservative, right? Yeah. Like when you're like in growth mode versus preservation mode. Yeah. And I
Speaker 1 00:36:55 Lost you still,
Speaker 0 00:36:56 I lost
Speaker 1 00:36:57 Lot deals too. Yeah. I lo I, I had stuff that I offered on that we didn't get that we were so disappointed we didn't get. But you know what, that's a muscle that will atrophy if you're not using it. So stay in the game and realize that a lot of the game is not the transaction, it's the relationships, it's the network. It's even your like, I don't know that you have a pre-approval that's up to date that you'll be able to send to a seller.
Speaker 0 00:37:20 Yeah. What is your purchasing power Exactly. Stand on top of your, your true purchasing power, your liquidity, your access to capital. Yeah. Your tax strategies.
Speaker 1 00:37:28 Shop capital partners. If you're in a spot, you know, the time to go find a capital partner is not when you have a deal in front of you, it's when there's no deals on the horizon, you're bored, you're circling the wagons like you said, or you're recapitalizing because it's gonna take a while for them to trust your expertise, your underwriting. Yep. Um, it may take them a while to have money ready to move around, so, you know, it's easier to stay ready than to get ready.
Speaker 0 00:37:52 And, and then your priorities change too. Like you, you know, you build up your portfolio and I'm, I'm guessing, tell me if I'm wrong, but your priorities change from growth to preserving as well as efficiency. Mm-hmm. <affirmative> and tax strategies. And then, you know, you want to still, I'm sure you still want to grow as most investors do, but there's maybe less of a drive to grow versus, well, less of a drive to grow really fast versus grow strategically smart. Right. You know, without changing your lifestyle, within your management scope, you know, you, you become, it's just like anything. You just refine it over time. Yeah.
Speaker 1 00:38:28 You become less willing to take on pains in the butt, um, even if there's money attached to them. Yep. That's kind of the stage where I'm in, where over this, this past year I was like, all right, I want more income, but no additional chores for me. That's been a big rubric is
Speaker 0 00:38:41 That's a great spot to be. Yeah.
Speaker 1 00:38:43 How do I gain income without gaining chores? So, uh, another thing that I, I've done over the last, gosh, five, six years since I retired was I prioritized maximizing the cash flow for everything that I already owned. So some of you may be in this spot where I had, I'll give you a great example. Uh, last year I had a duplex, um, in downtown Bethlehem that had shared gas, forced air heat. Okay. So the thermostat was in the shared hallway. There's no way to subdivide that cost. Um, there's only, you know, the
Speaker 0 00:39:15 Sounds like the landlord's paying for it.
Speaker 1 00:39:16 Yeah. So I was paying for gas and when I looked back over the, in, in the summer, I looked back over the previous year's gas bills and it was like 1800 bucks, maybe between 1600, 1800 bucks. Um, and even in the off month where I wasn't paying for heat, there's like a $35 fee. Yeah. Just like a customer fee that I'm like, what the heck? I'm, I have to pay this too. So I, I looked at it and it's forced air, um, furnace in the basement. I called my HVAC contract contractor. I'm like, what would it take to seal off all of the duct work to the first floor and put in ductless minis splits, um, that run off of the, uh, first floor tenant's electric bill and then move the second floor tenants, um, the gas line for the furnace over to their gas meter so that they pay for their heat and the first floor tenant pays for their heat and I get to terminate that meter and that account for gas.
Speaker 1 00:40:13 So the guy, I've had 'em service my units for a while, he did a double, uh, double-headed, um, ductless minis split, which are like air conditioners and heaters. Yep. So running off a single compressor, but two units. Um, and then he put in some supplemental baseboard heaters in like the bathroom in the kitchen where we weren't getting the heat blown. So all totaled 4,500 bucks. I got kind of a little bit of a deal because I worked so much with him. But, um, that $4,500 investment shaves off an eight 17 or $1,800 yearly cost, which this year probably would've been more because commodity pricing is higher.
Speaker 0 00:40:50 Sure, yeah. Gas isn't going down. Yeah.
Speaker 1 00:40:52 When you're already a landlord, the options that you have, investment options that you have available to you are, are manifold. And in my case, let's say I just have $4,500 in cash, which I did, and I'm looking, how do I invest this? There's a temptation to start looking outside of the portfolio that you already own and say like, oh, should I throw this into low cost index funds or whatever? Sure. Yeah. Should I throw it into, you know, maybe this is part of a down payment on another property, but in reality that's an investment of, and it is a real estate investment, it's a micro investment. Right. Cause a lot of times we think it has to be a new acquisition.
Speaker 0 00:41:27 Yep. Yeah. No, it's, it's very smart. Yeah. And you're getting probably, you know, 20, 20 some percent return. Well,
Speaker 1 00:41:33 Let's see, 1800 to 45. Yeah, that's close to 40%. It's above 40% roi. Now here's the, here's the, the, the real kicker one that is as compared to another investment. Okay. Any other investment that I've made with that $4,500 is gonna introduce additional risk or it's gonna introduce additional chores. Right. You buy another property, now you have another set of gutters, you have another roof, you have another basement, you have toilets, you have another
Speaker 0 00:41:58 Tenants just maximize what you already have. Exactly.
Speaker 1 00:42:00 Yeah. So it's a superior investment because the month after we were done installing it, I now have no more chores than I had beforehand. Same number of tenants.
Speaker 0 00:42:08 I have a brand new heater too.
Speaker 1 00:42:09 Brand new heater, and I'm making more money off of my existing portfolio. Yep. So I renegotiated the leases with the tenants, told them, Hey, if you wanna stay, I didn't bump their, their base rent very much, but I said, you'll be self-responsible for your heat this upcoming year. So they both stay, they opted to renew. So in actuality, that's a direct, um, that's more income coming to me, um, off of that investment without,
Speaker 0 00:42:32 And that building's worth more
Speaker 1 00:42:34 Now. Yeah. That's the other thing. I spent the, the cash, but as you know, um, now it's a duplex. So valuation is in some ways car. Yeah. But I found most even residential appraisers, they do give some credit for things like that. He that's divided.
Speaker 0 00:42:49 Um, why if an investor was gonna ever buy it, they're, they're
Speaker 1 00:42:52 Gonna look at Exactly. Right. So, so now you, you could argue I didn't even really spend the $4,500. I
Speaker 0 00:42:57 Actually, no, I just
Speaker 1 00:42:58 Moved it around. Exactly. I converted cash into equity in a property. Yep. And actually because of the ROI on it, you know, I killed an $1,800 per annum, uh, cost. So my,
Speaker 0 00:43:08 It's also a tax
Speaker 1 00:43:09 Deferred and Exactly. So my equity bump was probably higher than $4,500. Yeah. Cuz now the cost structure for the building is better. The, the net operating income is higher. Mm-hmm. <affirmative>, and as
Speaker 0 00:43:18 You said it basis, it's a, it was a little bit, little bit of depreciation. Not much, but Well,
Speaker 1 00:43:22 But that was, this is one of those items that you could accelerate the depreciation on. Yeah. So it was a tax write off. Okay. This is an insane return on investment that's available to people who already own real estate things that improve your existing property. And I've, my bias has been toward that always. Instead of going out and finding new headaches to, to freak out on, um, I've always wanted more profit out of the units that I already have because that means less chores. It did mean less chores for me. Means
Speaker 0 00:43:51 Now it's a lot of wisdom and a lot of people are so focused on just what's next. Yeah. What's next? And they're not looking behind them. Right. With the efficiency of whats
Speaker 1 00:43:58 Happening. Well let's, let's go one more
Speaker 0 00:43:59 Direction. I'm guilty of that as well. So
Speaker 1 00:44:00 Yeah, let's go this direction with it. If you have a hundred doors and you're cash flowing a hundred dollars per door per month, that's $10,000 per month. Right. Until rents drop. Now you could go out of business, you could go broke. I would rather have 30 doors making $300 a month and only clear nine grand and actually sleep well at night. Yeah. Because a $300 per door profit can absorb a market correction and not put you out of business. That's why, why per each property that I've owned, I've pursued greater and greater margins because profit margins double as safety margins in a down market.
Speaker 0 00:44:38 Yeah. And that's hence why you weren't buying as much because the valuations are going up with low cost of capital over the past couple years and just staying, staying diligent and conservative like most smart investors have been.
Speaker 1 00:44:50 Exactly. And think about it this way too, if you go to, to property management like I did, that's a hundred in the theoretical scenario, a hundred doors that you're asking somebody to manage is gonna be a, an overall greater absolute expense then the expense of managing 30 doors. Yep. So you're, you've hogged tied yourself. If you've gone for razor slim margins in the name of scaling that now maybe you can't buy anymore. You can't find really good deals, you can't find equity and you're really worried that you're gonna l you know, rents are gonna
Speaker 0 00:45:23 Drop. Kind of like any business, you have to have some margin and if you, if it gets too thin and you're going volume based, it's more risky. Yeah.
Speaker 1 00:45:30 So, um, yeah, I think that leads into, for people who are, um, dunno if this is a direction wanna go. This year I made my first LP investment in a larger syndication deal, um, in the name of gaining more income without gaining more chores. I went as a limited partner to a, this was a $73 million purchase in Texas. All nearly brand new asset, 350 doors. Um, so we bought straight from the developer. Um, and the reason I'm saying this is because if you're, uh, an agent of smaller properties, if, if you've only ever done small multi-family, um, it actually gets simpler, um, as you go into larger multi-family, as long as you're not one of the gps. But the one metric that counts really heavily is the metric you and I were just discussing. So that duplex where we, where I drove up the net operating income Yep. Is a great primer for really the only me, the only numbers that matter when you're dealing in higher, uh, unit counts. How
Speaker 0 00:46:27 Can you, how can you increase the bottom line?
Speaker 1 00:46:29 Exactly. And I've found that, uh, I hope, hope this is valuable to anybody in your audience who ends up being a GP or ends up standing in front of the country club crowd and is trying to get them to invest in a deal. You've got a dentist or a doctor or somebody who wants to give you passive funds. I've found most syndicators go about the education of it the wrong way. I'll tell the, from my, from my perspective, the right way to go about it is this, do not speak the word cap rate to anybody who's newer into the business because they're not gonna understand what you're talking about. It's not gonna make sense to them. And it's irrelevant because cap rate is based on total asset value. And what you're asking for is equity that's going in. So it's not gonna, cap rate is not gonna tailor to their numbers.
Speaker 1 00:47:12 Here's what you explain to them. What you say is, in general, in any given market, commercial real estate, so anything five units and above you, and if they're all residential units, it trades at some multiple of its net operating income. So for instance, in California right now, the average would be about 20 times the net operating income of the asset. So that means if you have an asset in California that's delivering a million dollars, so this is after all the costs are paid, right? Everything except for the debt service. So the real estate taxes, the property management, the, you know, utilities, all this snow, no snow in California, but all that stuff, when you're done to make it nice and clean, let's say it throws off a a million dollars in income. Well, in California, that asset could sell for 20 million. In general, that's what the market demands.
Speaker 1 00:48:01 Um, and it means if something, something cleared 10 million a year, you could sell that for, gosh, uh, 200 million. So, um, what you gotta understand then is if you're a syndicator and you say to people, look, this market will deliver 20 times the net operating income, what you say is, I've learned to be really good at boosting the net operating income of an asset, either by driving the cost down or by driving the revenues up. And what, what your investors need to understand is for every dollar that you drive up the net operating income, they make $20 on
Speaker 0 00:48:37 On the multiple.
Speaker 1 00:48:38 Yeah. On the multiples. Yep. So if you're able to take an asset that was delivering a million dollars per year, net operating income, and either through renovations or through submetering water, or through anything else, you can make that 1.1. Well, that's a $2 million equity bump in the value of the asset. And every investor, every limited partner who's in that is, uh, gets the, the full value of that equity bump or the water waterfall split of that equity bump. So it's a magic number in real estate. To be able to do that is because you have an asset that you can crank that lever. Now around where I'm at, it's not a 20 x, it's probably closer to a 12 x, but look, that means if, if I'm able to do what I did with that property, okay, get a $1,800 per year improvement in net operating income, that basically would get multiplied by 12, uh, in terms of increased equity value.
Speaker 0 00:49:31 And that's, that's really how the syndicators make, make it work with the value add. And you're talking going from a five cap to a six, six caps a big difference in terms of that valuation. Yeah. Like now, now we're in a totally different market where who knows, you know, where cap rates could like it change a little bit because
Speaker 1 00:49:48 Like any lever, it goes both ways and it can hit you in the chin
Speaker 0 00:49:52 Right. Cost the capital. So if you leverage in the wrong direction, but
Speaker 1 00:49:55 Right. As long as you know that going in and you've got your debt structured so that you, you've got an exit cap that's realistic, you still in general gain the, the added efficiencies of the net operating income and, and there's still constricted supply. So you may see people still willing to pay a a cap rate, I'm sorry, a yeah. Cap rate even as interest rates go at a higher margin than what the cap rates
Speaker 0 00:50:19 Were. Yeah. A lot of people are anticipating still rent growth and all that. So
Speaker 1 00:50:22 Yeah, you may have that with, with record employment, et cetera. It may go that direction.
Speaker 0 00:50:26 I do want to just in the nature of time, talk a little bit about your book. Yeah, absolutely. We're not gonna go through the whole thing. No. But couple main points. Why would someone want to read this? Yeah, let's, let's, uh, share a little bit about your book. So it's
Speaker 1 00:50:40 A perfect primer for somebody who's never even thought about real estate investing and what, and is that current 23 year old, you know, me, that didn't have any idea about what was supposed to happen. It's perfect because it's a blueprint for how I went from that first duplex to eventually getting, uh, enough cash flow to retire from my W2 job. And it's perfect if you're an agent and you're looking for a good handout for potential clients who are looking in at small multi-family, because it's gonna give them a happy story, a good ending from beginning to end, which is how we did
Speaker 0 00:51:12 It. So it sounds like there's almost like a case study in the sense where you really, you really share what it took to get started as well as scale up.
Speaker 1 00:51:19 Yep. It's an easy read. It's my story. And then at the end of each chapter is the lessons that we took from that sort of chapter of life of like, oh, okay, we didn't know this before. Now we understand. Turns out p i t I isn't the only expense. There's stuff like, uh, roofs,
Speaker 0 00:51:33 Sewer lines, repairs,
Speaker 1 00:51:34 Can see repairs. I go through all of that and even with that, it was still the best investment of my life. And, uh, I have another book that I'm working on right now, which is gonna be called Landlord's Guide to the Galaxy, which is kind of like act two from when I went from retiring from my job to tripling the value of the portfolio. And then eventually Investors Guide to the
Speaker 0 00:51:54 Galaxy. There
Speaker 1 00:51:54 You go. But one at a time here. House Hackers Guide to the Galaxy
Speaker 0 00:51:57 Is this one. Well, Bryce, we appreciate you being on today. Lots of, um, wise words here. Is there anything, any last tips that tips, tricks, uh, words of wisdom you'd like to leave anyone with?
Speaker 1 00:52:08 Uh, yeah, I put, I have uh, a couple hundred grand in cash that I decided to put in a high yield savings account because, uh, it's F D I C insured, I'm getting about 4% and it's immediately liquid if I see a deal. So that hasn't always been true in the career of investors. Right? Yeah. You know, keeping stuff in cash was bad. I don't think it's a bad choice right now to make 4% on your money and then be ready to jump on whatever deals come up.
Speaker 0 00:52:31 There you go. Be conservative, but the liquidity. That's great. Yeah. Right. Well, thank you again. Appreciate you being on.
Speaker 1 00:52:37 Absolutely.
Speaker 0 00:52:39 Thank
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