Financial Independence in Your 30s Through Just 5 Investment Properties | BP Podcast 305

this is the bigger pockets podcast show number 305 you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the Heights you're in the right place stay tuned and be sure to join the millions of others who have benefited from bigger pockets calm your home for real estate investing online let's go down the road this is Brandon Turner host of the BiggerPockets podcast here with the co-host of the day of the year of the month mr. David green David how you doing man what you been up to I'm doing great closed on a property yesterday I believe yeah you're on fire and Fuego yeah it's going really well so I have phone calls with contractors set up now I get to start the part that we all love which is managing a rehab but once you get that then it becomes a cash cow and you get to enjoy making money that's super super excited well very cool well I don't got much to talk about today and in fact today's show is so good and so powerful I want to get to it as fast as possible so we're gonna jump right into it before we do that eliminates today's tip all right today's quick tip is very very very simple get out there and attend a local BiggerPockets meetup in your area they are happening all over they generally don't cost any money they're probably a bunch of people getting together for drinks at the local bar it doesn't matter or a restaurant or whatever get together with people that are doing this stuff get excited get pumped up the new year is coming I knew you I knew you was coming but only if you take some actions you like that cheesy some like headline last year I think we're actually gonna do a new year new you like book sale this year on January 1st so you know I'm stealing headlines from others with that though I don't know that's it so go to bigger pockets that come such events find a local group go meet with them connect grow you become more like them now today show what good if you live in my area come to my meetups a different topic I teach about it every month we're doing three meetups a month all throughout the Bay Area so depending where you live there's probably gonna be one near you so please check it out let us know you want to we'll get you on the list Wow fancy you look at you yeah if you're in Maui we do one once a month as well you know or if you're in western Washington we do them there too um I don't know that's all I got so today's show we're interviewing Brad Denton dope man I didn't get his last name I always Antonio Dantonio Brad Antonio is like seriously a guy to look up to so uh okay so I do a webinar every week on BiggerPockets and one of the things I talk about a lot is that it doesn't take that many properties to obtain financial freedom I say that a lot on these webinars because I really believe that like people think give to have hundreds right but like it doesn't take that money and today's guest proves it in fact he talked about how he's able to travel he's been to 54 countries in the last three years he has financial freedom financial independence and he does it because of the way he invests in real estate and he as you'll find out he doesn't have that many in fact he has just five properties it's pretty fantastic story you'll hear how that's done and some of the tactics he uses to save money some of the taxes he's used over time to make more money and a lot of good mindset and strategy things so again I man this show is so fantastic you're gonna love it so if you do make sure you jump in the show notes BiggerPockets a concise show 3:05 again bigger pockets that comps i show 3:05 leave a comment leave a question talk to Brad and make sure you liberate and review this show on iTunes and with that let's get to the interview with Brad all right Brad welcome to the BiggerPockets podcast good to have you here hey thanks for having me yeah yeah so I don't know a whole lot about you I know that you are a finance with and I know that according to Mindy you are a genius so I want to pick your brain today and find out how is it that you you try you do a lot of traveling I hear 50 some countries is that right yes 54 countries since April 2015 Wow and you don't look that old of a guy I mean you can't be a year over 75 I'm 38 and I did finish in the top 80% of my high school graduating class so oh there you go okay so you clearly have something going on here that allows you to travel and do cool stuff and I hear some of that involves real estate correct correct oh yes all right so why don't we get into your story how did you get started with real estate okay so when I got out of college I bought I saved $8,000 for a down payment on a house and I I tried to find the cheapest house that I could find in a decent School District and I used a stated income loan which meant they didn't verify my income or my assets and I remember actually the lender asking me how much do you project to make this year and I said fifty thousand and I ended up overshooting the mark by probably about thirty thousand so luckily I had a roommate lined up this was I mean you could it wasn't hard to get a mortgage this was the Wild West of mortgage lending back in like 2003 so if you could fog a mirror and then write your initial in that fog like the signature yeah so I got a seven and a half percent interest rate and got a roommate so I was sort of house hacking before BiggerPockets coined the term and I had that house paid off by my 26th birthday and I remember celebrating by having my first steak dinner and the waiter asked me how I wanted my steak cooked and I said I guess just put it on the grill like what okay I want to dive into this thing first of all how did you pay off a house you're a primary by age twenty twenty six like that's for most people they're looking at 30 years to pay that off how'd that happen well it was only an $80,000 house so like I said I found the cheapest house that I can find my roommate was paying half the mortgage and I really focused on getting my income up while keeping my expenses low and I just allocated as my income went as my income went up about $1,500 a month to paying that thing down and then I didn't buy my next house until I could pay cash for it okay okay so I want to ask the question that a lot of people maybe ever wondering at this point why pay off a house I mean let you're you're a finance guy like you know that if you're getting a seven half percent interest well I guess on that one maybe seven half you couldn't get but the stock market averages more than that why not just throw your money into investments instead of paint off house like why not leverage it's a good question I wanted a simplified process so I was in real estate at that time and I knew the headaches that could come from all the documentation that's required and securing funding I knew that it could get messy and I wanted a deal where I could view it quickly assess it and run the numbers on the back of an envelope there were a lot of guys that were looking to pay cash for houses at that time like when I was starting to acquire more properties it was very competitive because I think a lot of people keep cash on the sidelines in case properties dipped in value and that ended up being what happened so I like to keep my finances simple I know the market well enough to where I know if I have one house it's about a thousand dollars in income once it's paid off if I get two houses it's about two thousand and and go from there and then I just found that if I had less properties it was easier to manage and I could take better care of the tenant and I could take better care of the property so yeah if that gives you an idea yeah just peace of mind I don't think you ever regret paying off a house yeah that's true I mean I have a couple paid off right now and like I know that I'm not getting the best return I know I could get a higher return elsewhere but like I just love the security that I find in my couple paid out houses and I hope to pay off more of them at some point you know I think everyone's ever has their own little path right there is no right or wrong I talked about a book on the show a lot because it's like my favorite book it's called life and air it's like millionaire but the word life and they make this point in this book and they say that essentially like the rules that you play by are determined by the goal of the game right so if you're playing Monopoly and the goal is to wipe out every other player that you play a certain way but if the goal of Monopoly was actually was to have the most diverse colors in your portfolio like then that would be you play a totally different way if the goal of the game was to let the guy across from the table win you'd play a different way right so the way you play your game is determined by the game like the goal of the game so they make this point of should you pay off your properties well if the goal of life is to maximize every return as fast as possible they know you probably shouldn't pass the properties right because you can get a higher return maybe with leverage but the goal of life is not necessarily to get as rich as possible as fast as possible and whatever the goal is to have a free life right or something like you said you want to be able to take better care your properties that are care of your tenants and by doing paint off your properties you can do that you get that security and why am i tracking with you here absolutely yeah and I just read poor Charlie's Almanac and one of the things that Charlie Munger says is if you're comfortably rich and someone else is getting rich faster than you so what somebody's always gonna be getting richer faster than you yeah that's a really good point I think actually I'd go ahead Brendan knows it's easy to do that I think that it it hurts a lot of people from making progress himself when they compare themselves to other people like you you're not the same as the next guy who made you increment and fasting and eat for a three hour period and have nothing but kale and tuna fish it takes you longer to like get your diet under control but when you see that person who's getting results quicker than you get discouraged because his Instagram posts look better than yours and I guy I should just give up right and it's dangerous when you start looking at somebody else's game when they're playing by different rules than when you just look at your own game and the second point I'd make to that is if you're the guy that can learn what somebody else is the game they're playing and learn how to help them win you're the one who's gonna get ahead in life like if you know what your supervisors game is when their goals are and it's different than yours if you can play by their rules and help them they're way more likely to help you get ahead than when we just assume well everybody's playing the same game so he's done why is he playing it like that yeah that's a great point it's the old help enough people get what they want and you'll have everything that you ever want and then to Brandon's point where he talked about having a goal so when I got out of college I kept a note in my desk that defined financial independence and it said the financial independence is the ability to live from the income of your own personal resources and so that message kind of always inspired me and I think that if you're if your income let's say is intertwined with self-development and discipline and all of that I think that financial independence and its pursuit is equally as threaded with wisdom I think there's deep wisdom in it because you're simplifying your need and you're developing emotional control and you have a long-term perspective so all of that I mean I had to figure out how do i how do I live now versus how long I want to work and so I'll give you an example of something that I did there was a lot of pressure in my office in my real estate office to drive a fancy car and the thought was that if you drove a Mercedes or a Cadillac that people are gonna want to work with those people because they are demonstrating success with a flashy car and it's not that I didn't drive a POS car but I did try to reduce my expenses in that regard and then I always thought that I would overcome that disadvantage by improving my communication skills and my presentation skills and my ability to develop develop relationships so there's some offense there and there's some defense there but ya always have the goal in mind because that's where you're going to focus and everything's gonna kind of flow into that goal sure sure makes perfect sense so what came next then I mean like you said you you wanted a way to buy the next property until you could pay cash for it so when did that happen and tell us about that property all of the properties that led to my financial independence were purchased but outside of that first property were purchased between 2007 and 2013 and I had very strict criteria because I was after the highest returned I didn't want anything flashy I knew that there were specific neighborhoods that I was targeting that I could get a cash on cash return of about 12 or 13 percent so every property that I bought was between 70 and 90 thousand dollars they could generate about $1,200 and gross rents you want to go into detail sure please yeah yeah yeah so they were renting for about $1,200 at that time and the way that I would break it down since I was paying cash I would do it monthly so in Texas we don't pay state income tax but we pay about three percent on the value of the home so three percent of eighty thousand is twenty four hundred dollars I would break that down monthly to two hundred dollars so I've got my gross rent of twelve hundred less my two hundred dollars in taxes less my insurance which is about 800 to 900 dollars a year so let's call it seventy dollars a month so then I'm at 9:30 right twelve hundred less 200 less seventy I'm at nine thirty and then I've got my HOA fee which is about thirty dollars a month and so I knew that if I purchase a property for eighty thousand dollars that the nine hundred dollars would get me what I did was take nine hundred and this is something that you can do on the back of an envelope take nine hundred divided by eighty thousand multiplied by twelve and you've got your that is a thirteen and a half percent return so that's how I did it okay and so you just had this very simple formula you said I want to make you know a cash on cash return of twelve to thirty percent for those people don't know can you explain what cash on cash word I mean you kind of just defined it but what does that actually mean like what does cash on cash mean just your return your income on the outlay of cash okay yep so like how much you yeah you put into it how much you're getting back in cash flow every year based on what you put into it now what about things like repairs and maintenance did you have much of those how did that affect your returns that that drop them significantly or were you not worried about that at the time yeah that's a good question because I was very busy and didn't want to do a lot of repair so this wasn't my side hustle my side hustle was actually selling real estate once I transitioned into software full-time but we can get into that yeah so I tried to buy every property pretty much the same way they were all built after 2006 they were all 3-bedroom 2bath single stories not more than about three or four thousand dollars in repairs I knew exactly how many days it would take to rent or lease those properties so I had everything kind of built in and then I would set up myself in the MLS to get notified by email as soon as something matching that criteria Kame available I wouldn't looked at it that day yeah I love that it was go ahead go ahead go ahead finish that I was just gonna say it was very competitive because as I was saying earlier I think that a lot of people when the markets began to tank a lot of older folks had cash on the sidelines cuz it's not like and this is my theory but I don't think that a lot of older people were putting a lot of money in the stock market right you tend to transition out of stocks as you increase in age and so I was competing with sometimes 12 13 14 offers and it took me like ten tries to get one property and at that time I was buying a property about every 14 months maybe 16 months somewhere in there okay it was hard to get yeah yeah well I love that you said that about you know I mean everything you just kind of said right so it takes 10 offers sometimes to get a deal and that's like I was joking around it's like high school prom all over again like I make a bunch of offers right you only get accepted once in a while that's okay right you're never gonna get it if you don't ask I mean how many I'm sure you guys have heard newbies say things like yeah I made a couple offers and nothing really worked out so I'm just you know can't really find any deals and I'm like you got to be persistent and consistent about doing this right so I love that but also just the fact that I guess you you knew what you had that criteria from the beginning like you were just like this is what i'ma do I'm gonna keep the try to keep the emotion out of it I'm looking for this property type I'm gonna set it up with email automatic email alerts so I get notified right away so I can jump in like those are all things that work today for people I mean oh you guys should definitely listen to this and in putting this into practice right I get some emails set up get quick on that if you can go like look at a property the same dates listed or making off or the same dates listed you have a significantly better chance of getting that thing accepted and getting the deal when you work quick so is there anything else you were doing that but anything else we were doing to find deals anything that helps you kind of like you know get the competitive advantage there well the competitive advantage I think only was that I was able to set myself up in the MLS system because I was licensed but if you're not licensed pretty much any person with a real estate license would be happy to help you and set you up I mean it takes five minutes to set up the system for the criteria that you're looking for so there was nothing sexy about what I was doing it was very basic I was buying for cash flow and tax benefits I view depreciation as land Yap it's what we what we call in Louisiana land Yap I'm from Louisiana it's extra bonus so okay I try not to speculate I had strict criteria and what I was looking for and yeah that's it man it was very targeted where does land Yap come from yeah it's French so I'm originally from an hour south of New Orleans if you can believe there's land that goes down that far yeah beautiful people a great part of the country it's like a different culture down there great food when we make bonus episodes should we start calling them land Yap episodes yes yes that's funny all right so yeah so if you don't have people listen to the show right now if you don't have automatic emails set up with a real estate agent like make that your goal okay by the end of today I'm gonna find an agent I'm gonna get automatic email setup for whatever come my criteria is even if you're not ready to buy it get it set up get emails coming in start analyzing those numbers figuring out what works what doesn't like get in the game it doesn't cost any money to do all the stuff that we're talking about right now like get in there start working it very cool all right started by profit so how many did it take I mean how many properties did you maybe we can fast-forward to today I mean how many properties you have I kind of walked through your portfolio and real estate and anything else that you got for income coming in yeah so I have five properties that are in the range that I mentioned I sold a six so I did buy in 2011 one of those three-story McMansions but I look kind of lucked out because it did appreciate really well and so in terms of all of the passive income I that money I took and put into a vanguard high dividend yield account but then I have five properties that I own free and clear that provide about five to six thousand dollars in monthly income that's awesome so with that money five to six thousand dollars a month you're bringing in now and that's basically how you found financial freedom I mean that's enough to when you keep your expenses low you can build with that that right that's it your financial number is it's dependent on your expenses basically right we all know the four percent rule which explained away yeah so we should all be tracking our net worth right which is basically just your assets minus your liabilities and if you can live on let's say you have a net worth of a million dollars if you can live on forty thousand dollars which is thirty three a little over thirty three hundred dollars a month you are effectively financial financially free another way to figure that the same the flip side of that if you want to figure it out another way is just take your annual spending multiply it by twenty five and you have your financial independence number so it's very personal I mean they call it personal finance for a reason because you're financially free number is dependent on how much you spend so you should be tracking your expenses if you have the goal of being financially free someday yeah so now Brad you have a very interesting way you've accomplished this it really comes down to like a three-legged stool one is offensive techniques ways that you built up your income to earn more money the other is defensive techniques ways that you keep your expenses low to be able to do this and then the third would be like the mindset you have and I want to kind of cover all of those can we start off by briefly sharing some of the defensive techniques that you put together that allow you to live at such a low base rate so that you could retire at in your 30s basically and travel to whatever 54 countries it was on income from real estate yeah it started with house hacking so I had roommates until I was 31 years old I mentioned driving used cars earlier I would cook a lot of Hamburger Helper tried to stay out of restaurants I'm not a partier so I never was the thirty thousand dollar millionaire when I was 23 years old because yeah I don't drink much at all so I just kind of played defense that way I mean I I I've kept a journal for fifteen years now and I used to write every expense down and then when the iPhone came out I started keeping my expenses on an app but even if you are tracking your expenses you will reduce your spending just by a function of keeping track of it in fact the book that we just launched that BiggerPockets the how to invest in real estate that Josh and I wrote we talked a lot about in in there about this idea of just by looking at what you're doing am i keeping an eye on it like it basically puts you in the driver's seat of your money versus the other way around where your money is driving you around you just kind of hanging on you know like or you're locked in the trunk or whatever you know like your money's maybe you say hey this is what I want to make this is what I'm spending and by knowing it you automatically are going to generally improve that metric or whatever I mean this is true with all business right like if you start tracking how many deals you're analyzing you'll probably start increasing the number of deals you're analyzing you start tracking how many calories you're you're getting you're gonna naturally start eating less calories like it's just a function of human is tracking what's that famous quotes like what gets measured matters or something like that yeah I've also heard in inspect what you expect yep if you expect the results start inspecting those things and it's true it puts it in your subconscious your reticular activating system starts paying attention to stuff and you'll catch yourself like when I was tracking my calories I think I used my Fitness Pal and you right in there like this is what I'm eating and it tells you it would be like I'd be tempted a snack would be like dude do I really want to pull out my phone and put this information in forget it it's not worth it right and I just I wouldn't do it whereas now if I'm not tracking it of course you're gonna you're gonna snack I'm using this yeah others have using this thing called my body tutor right now it's like the service were like you have a personal trainer basically a fitness slash food coach and every day I put my food in it no matter what I eat right and they just every day he looks at it and gives me advice like hey yeah this worked really well this didn't work really well and I've lost like 25 pounds in like four months now off of doing nothing but like writing down my food and having somebody else say like yeah this you know like I'm not making any change I'm not do anything weird diets it's just like writing it down so you said you're using an app to track this what app are using Tosh 'l t Oh sh l I don't know that Tosh so tell us what dog taco it's not it's not very widely used I've mentioned it to several people and nobody ever says I use that too so I know there's a lot of apps out there it's just I don't know it's basic you you plug in you know if you go to a restaurant you put in food and drinks and then it calculates it for you gives you a pie graph and just enables you to track it yes the easy apps are probably some of the better ones they don't get too complicated I think that's fantastic all right that's defensive right anything else you want to throw in there before we move into offensive I would just say that I was very deliberate about whether my lifestyle would increase so if I was making $4,000 a month and I was living on $2,000 a month if I had a big month because I was in sales let's say I made $8,000 in a month I would be very deliberate about increasing my lifestyle so I might give myself a 10% raise and then I'm living on $2,200 a month and the whole idea because I have this goal of being financially independent the idea is to maximize your savings and investments and you're only going to be able to do that if you know how much you're spending every month and I'll tell you one of the cool things that I do when I track my expenses is if I fall way underneath my tark let's say I want to spend $4,000 a month if I get to the 28th of March and I've got you know two or three days left in the moth and I'm four hundred dollars underneath well then I can treat my friends to dinner and they're none the wiser right but that's the kind of thing that contributes to lifestyle that you can do when you know how much you're spending yeah that's cool all right so what about offensive what do you do to make more income in your life I mean you started out making almost nothing when you were had that first deal so what have you done by the way what was your job through all this and do you still work today and then what do you do for more money so my first four years of my career out of college I was in real estate full-time so it was Commission only you don't eat unless you sell something and I remember thinking when I got out of college that I was going to be so overmatched because if you think about it a 42 year old if they started working when they were 22 has 20 years experience the 24 year old has who has two years experience has the 42 year old has 10 times the experience that the 24 year old does right 20 versus two years of experience so I just remember thinking I'm gonna devour every on sales and negotiating that I can get my hands on because I was so concerned that I was going to be overmatched and then I did what Zig Ziglar recommends and turned my car into a mobile university so I'm just used in traffic is brutal and if you can be trying to get like I mean you basically can get a four-year degree just sitting in Houston traffic for a year so I'm just trying to increase my income as much as possible while keeping my expenses down learning everything that I can so I can compete and by the way I found out like there's nobody out there reading books on sales and negotiating like that 42 year old is going home and watching Netflix like everybody else so it's almost every area life right if you want to be really really good at something like if you're in sales if you're in any job that has any ability to increase or grow like just by reading some books on the topic you'll be one of the best my be little brother is a as a waiter at a place out in near Boston and I always tell him I'm like Chris like just go and he'll probably listen to this podcast I'm like just go read some books on like how to be the world's best waiter I can almost guarantee somebody's written a book I'm being an amazing waiter or go sit down and like ask some of incredible waiters like he actually did this he I she told me this sat down was like the best waiter at his restaurant it was like tell me how did you do this like how did you become like such a good waiter and like people are very open to share that but it's 1% of the world that actually does that kind of thing that invest in themselves it's a great point I see a stat come up every once in a while that says that 70% of college graduates never read a nonfiction book after graduating Wow that is astounding right founded but it makes it it's so easy to separate yourself when you know that kind of thing I remember seeing a quote I believe this was Jim Rohn who I know gets mentioned on your podcast quite a bit I quote him like every day yeah he said that the true rewards in life are on the top shelf and the way that you get to them is by standing on the books you read so I just devoured everything I could man and I'm still a reader I probably read finished probably thirty-five books a year and a few of them I'll read twice other than real estate this is probably the topic I'm more passionate about than anything else because so many people start off with the excuse of how it's hard or they don't know what to do and so few of them understand like once you stand on a couple books and you reach the top shelf you're like I cannot believe how easy that was yeah I mean I have example after example of how I rose to the top of whatever I was doing and that was really before I had any confidence or any focus or I was even trying to write I just tried harder than other people did and boom became the top my I was a police officer I transitioned into full state full time real estate sales two months into the year so I had ten months when everybody else had been doing it the whole year I finished my first year as the top agent in the biggest brokerage in our entire area and I didn't even know what I was doing yet right I did not have sales skills I'm not really the easiest guy to talk to I hear from everybody like five times a day that I'm really intimidating it's all I ever hear nothing you want in a salesperson right but no one else was trying I was I wanted it so bad I was listening to three podcasts a day I was reading every book I was talking to everyone I knew that was really good at it and I'm absorbing stuff with purpose like my insecurities about how I did wasn't a good salesperson drove me to want to excel in that area and Brad's talking about that and once we finished up talking about his offensive techniques we're gonna get into his mindset and how that was developed but what I want to convey is if that is you if you're that person who's like I don't know how to analyze deals I guarantee you that that will become a strength of yours if you pursue the trick to analyzing deals or if you think I don't know how to network like you can become the best networker on this podcast because you will be intentional about learning those networking skills we're like the natural who just who just does it without trying we'll never read a book in their life like what Brad just said will not focus on trying to be better at it and won't grow that skill I just have so many examples I can't take up the whole podcast talking about it but if you want to be the best in this country right now you're surrounded by Millennials that don't want to be the best that they want the world to be given to them you're surrounded by older generation people who don't want to have to learn new stuff right they're kind of stuck in their own ways if you're the person that can improve your skills at anything and make it known to your boss you want to oh my god everybody's gonna want you you're gonna be the top guy Brad can you I know that for 13 years you increase your income year-over-year every single year can you share a little bit about other than books what you did that caused that to happen yeah you made a bunch of good points just now especially I wrote a blog post about networking because I think it's so important that people understand that good networking doesn't look like networking it's becoming a person of value to other people and that is how you build your network so that's number one so you're gonna surround yourself with with a higher caliber of person as you continue to develop yourself and you're going to learn to make the highest and best use of time which might be most important as well as developing your habits I think habits are everything but if you just keep your head down for let's say 10 years and work 10% harder than your peers the compounding effect of that is going to be huge so when you pick your head up in ten years and you look around you're gonna see that you've separated yourself and it's because you've incorporated these habits and disciplines into your life and I'll tell you what if I give a talk or something or I'm given an opportunity to speak to young people these are the three fundamental things that I suggest and that is number one is to keep a journal and a journal is where you put your goals it's where you put who you met so one of my favorite books is how to win and how to win friends and influence people by Dale Carnegie and in that book he said that a person's name is the sweetest sound in the English language at least to them right but it's happened to me several times because I write someone's name down when I meet them it's happened where I'll meet someone for a second time and I'll call them by name and they'll say I think we've only met once how do you remember my name and I don't say it but I'm thinking how could I not I wrote it down the night I met you right so it's those little idiosyncrasies that help you to build everything right I mean that's networking stuff right there that's building relationships but in your journal you put your goals who you met what you learned how it impacted you it helps with clarity it helps if you have any type of anxieties if you want to start your day with like a gratitude practice and find three different things that you're grateful for that's going to improve your mood which is infectious so that's number one is keeping a journal and I think that's that's probably number one in terms of if I had to attribute one thing to whatever successes that I've had it would be keeping a journal number two hey real quick real quick before you amber - I was gonna say bigger pockets actually has a real estate investor Success Journal coming out called 90 days of intention coming out here at the end of the year so if you're listening to this after the end of the year go with the bigger pockets that CompStat store and if you're listening to this right now it might actually be in pre-order right now I'm not sure but check it out bigger pockets dot-com slash store you'll see it there but yeah I also believe strongly in the journal thing it's been a huge impact in my life yeah and you can see how you grow over the years so like I can look back and see what I was thinking when Barack Obama was elected and then I'll be able to hand that to my kid I mean how cool was that kind of thing yeah and then I can also see like when I was 24 and 25 what I thought was important and then I'm like wow my growth is pretty impressive cuz I can't believe I cared about that stuff when I was 24 so yeah that's that's huge number two would be and we talked about it already but just start buying books you can't spend enough money on books view that as an investment it shouldn't even factor into the budget stuff because that's going to improve yourself immensely and really separates you so many people are distracted nowadays so if you can just immerse yourself and absorb some knowledge from books everybody who's had success has written the book you've written a book right Brandon I have those David yeah yeah it radiates massive amount of people in a like an easy easy way so yeah anybody yeah exactly read books read boys I love it and the process probably sucks but once you're done with it it's just wonderful and you can pass that down forever so good for y'all for writing a book I'm not there yet I'm in the blog efface but eventually I will write a book well check out Brett check out go to go to Google later and type in how to write a book in a hundred days Brandon Turner like I wrote a blog post and I did a podcast episode for somebody else's show on how to write a book in a hundred days so anybody listen to this too if you want to know how I wrote my book in 100 any all my books pretty much in a hundred days that will document exactly how I did it it's way easier than most we'll think so check it out awesome and do you guys have a like your own publishing house we do yeah BiggerPockets publishing nice yeah it's pretty fancy so there's also there is a process for getting published at BP too and I don't know it so if anybody's listening this is like hey I'm gonna write a book and I'm I'm ready email support at bigger pockets comment ask to be connected with the book department there yeah nice so where was I you were at number you write number two by book what was number three Thank You number three is set goals and you've got to have different categories whatever is important to you so spiritual financial your family your relationships write those things down for 15 years I have taken time at the end of the year reflected gone over the past year see how I can harness what I learned who I met and see how I can get better for the next year and that is the best way to do it I don't care if an asteroid is coming toward Earth I'm gonna get those 90 minutes done the last day of every year so that's really important to me I love it my wife and I go out to a restaurant every single year on January 1st and we sit down at the same restaurant or the prudes the same meal and we go over our goals for last year and what we're gonna do this year and it's been a mean like just looking at a year after you have two year because we use the same little notebook for each one it's been unbelievable I just see like the growth and how our whatever we're setting we tend to it tends to happen and in fact we tend to exceed our goals for the most part because when they write down and work towards it amazing things happen beautiful yeah you have an amazing way of looking at the world where you just recognize like no one else is negotiating I'm gonna make sure I learn how to negotiate nobody else is trying I'm gonna try harder than they did can you share a little bit with us about how you develop this mentality like what you went through that caused you to end up here yeah I can actually pinpoint a day that changed my relationship to yeah so November 7th 1991 and the day I remember the reason I remember the day is because Magic Johnson retired on that day when he announced that he had HIV and I remember not knowing what HIV was and that was pre-internet days so I would wait until my dad got home and I would ask him what HIV was but when my dad walked in that day he his eyes were bloodshot red and he looked like he had been crying and I had never seen a grown man cry before so I knew it wasn't good but he told my brother and me to sit down and he said that he was leaving and I was 11 years old at the time and when he moved out of state I knew that he wasn't coming back I mean he did he had started a new family and so my mom was psychologically and emotionally let's say unwell and she didn't have a job and I remember thinking like am i against still gonna be able to like I didn't know where money was gonna come from and I remember thinking am I still going to be able to eat this like I had like I have been and so it was a very precarious time in my life and it's tough to talk about but he drove me to do things that I wouldn't have done and I can give you an example so my first experience with business and with money was I was 13 years old and I would go to the trading card store with the money that my grandma and my aunts had given me for Christmas or my birthday I would stockpile that money and then I would go to the trading card store and buy a box of basketball cards and the boxes were $40 and there were 36 packs in a box and I would take them to school the packs and I would sell them out of my backpack for $2 a pack and so I would make $32 on each box which is like an 80% return I haven't been able to replicate returns that I made at 13 but yeah I mean it forced at a young age I learned how to manage money and I learned how to invest and I learned the discipline and delayed gratification of not opening the packs because the packs that I would not sell I would bring home with me and I'm staring at them all night and I wanted the Shaquille O'Neal Shaquille O'Neal card that was in there but I couldn't open them because then I would be sacrificing all of my profits yeah so that was kind of how I got my start and where I learned discipline and delayed gratification and it wouldn't have happened if I hadn't been a tough time like that yeah that's the late gratification thing is huge right I mean like we all knows like like many of us have heard the study right the marshmallow test or like remember what famous Stanford University like gave a bunch of little kids more like it was that one marshmallow but if you wait five minutes you can get two or something like that yeah they put them in a room and they said I'm gonna leave this room and come back and if that marshmallow is still there I'll give you a second one and you can eat them both and then they left and they track those kids over like the next 25 years of their life and they found that the kids that had the ability to delay gratification and not eat that marshmallow were like noticeably more successful than the children who were not able to do that and the implication was if you can delay gratification you're successful compound and that's exactly what Brad learned like he had to fight a battle at eleven twelve thirteen years old that then when he overcame it the ability to not open the baseball cards and delay gratification served him in all these other areas of life and it's funny that you would have never thought at the time that would be a blessing right it just felt like a horrible curse right because when you go through the depths of a dark place and you come out of it as long as you don't self-medicate or drown your sorrows and alcohol or something you come out stronger and wiser and your relationship to fear is forever changed because I mean as I got older I noticed that relative to my peers I had a serious capacity for stress and an aptitude for risk-taking that would probably break most people and for me it was just a Sunday at the park like I didn't understand how people couldn't get over the most trivial of hurts and so I I do I became like this anti fragile like beyond robustness and resilience where it served me in so many different ways I have a have a good buddy that just started investing in real estate and at my wedding in May he stood up and said that half of what he does he's copying my example and so his story is really interesting because his brother died not too long ago his only brother and he was only about 40 41 years old and he told me it was really rough I mean he had to carry the guy upstairs and he lived with him until he died and he told me a few months ago he said you know after what I've been through he said I feel like nobody can talk with me and when he said that man it resonated with me so strongly because it's exactly how I felt most of my life and so you face rejection and you swipe it off and you face you know like losses in your portfolio and you dust it off so yeah you just become you have a strength and resilience where you're bold where other people might be apprehensive and it's it's it's powerful man but you have to struggle through it you have to endure it and your relationship to pain is forever changed tell us about some ways that you changing your relationship to pain assisted you or helped you in your real estate investing probably rejection so I was a sales guy I also played college baseball so I you're successful like 30 percent of the time and that is success in baseball so in sales as long as you continue improving your communication and presentation skills your batting average is gonna go from 20% to 30% to 40% so I would say more than anything probably just the resilience and the ability to back up bounce back from anything life throws at you I love that yeah it's really really good so anything you want to add Brandon before we go to the fire round yeah I'm just curious of like where do you see yourself heading next you know you've got this like what I call a level one financial freedom which is where you can pay all your bills it's not like I'm gonna go buy a jet and go you know buy a bass basketball team right but it's like level one it's like I can pay my bills I'm good I can travel a little bit I can have a good life I'm gonna keep expenses low do you plan to try to like just supercharge that and go become a multi billionaire here or where do you see yourself headed I don't I think that I have more time wealth than a lot of billionaires so on Thursday I'm headed to Munich for three weeks and my mom my wife is gonna meet me there so one of my retirement gigs is touring people around Central and Eastern Europe and it I'm able to do that because when I was in my travels since April 2015 one day I was sitting at a cafe and a guy said man you ought to turn this into a business so I do that like two or three times a year where I'll show people around Munich and Prague and Budapest so that's that's one thing that I'm able to do that if I was climbing the hierarchy I wouldn't have the time to do and financial freedom is not only like those at the top of the hierarchy aren't financially free you have to opt out of the hierarchy altogether if you're going to be financially free so as it stands right now I mean I still help a few friends with real estate deals if I'm in town but I'm enjoying writing and I'm enjoying traveling I'm newly married so the the sky is it's wide open man I've got we don't have gaudy tastes I mean she's not into louis vuitton we've done bought bags and yeah I mean if worse comes to worse I guess we we could move to a low-cost area that I'm familiar with and live off of what is like you know if you live in America you're in the top 1% of income earners everywhere so yeah I love that you said time wealth right like so many people are worried about well like money wealth but there's something more powerful in this time wealth right and and and when people here you know wealth and financial freedom and get in real estate and getting all the stuff we offer them think of the fancy cars in the Louis Vuitton bags and all that it's like though how the world sees what we do but that's not why it most of us do it like right we want time well we want we want to be a little eater like hey I'm gonna go spend three weeks showing people Munich like what a cool thing right like it's not like we're all lazy we don't want to work right none of us will ever stop working entirely and sit and watch TV every day right like this isn't retirement in like our grandparents retirement it's be free like how I define financial freedom as I always say it's the freedom to do what you want where you want how you want when you want with who you want right like like it's nobody's gonna tell me I have to drive an hour to work every day I sit in office trying to climb some hierarchy that's we're talking here and you do not need hundreds of properties to get there I love that you did it with five like this fence yes I think you said it life on your own terms and if you take a macro perspective if you realize that what we're able to do has only been possible within the last like 1% of human existence so take advantage of it if you can yeah fantastic fantastic well well I love that I want to kind of end this segment of the show on that and transition over to the next segment of our show the deal deep alright let's get to the deal deep dive this is the part of the show where we dive deep into one particular part of your investing like one specific deal I'm gonna ask you a bunch of questions about that so let's just go jump right into it first one you have a deal in mind right you got something in your head that yeah they're all very they're all very similar so yeah all right good so let's see the first one like from a high I'm gonna ask you like how you found it all that in a second but like first off what is it like a single-family house I'm assuming yes 3-bedroom 2bath single-story built after 2006 that's my target there you go and where was that located in the Houston area all right perfect so how much how did you find it I set myself up in the Multiple Listing Service with very strict parameters and I was sent a notification by email and I went and looked at it that day ransom numbers on the back of an envelope and made an offer perfect alright um how much was it it was eighty thousand I mean I had some that were seventy to some that were eighty between seventy and ninety were all of my deals yeah well what kind of property was it I guess a single-family dwelling that was about thirteen fourteen hundred square feet okay how did you negotiate it anything fancy in there nothing fancy I was competing with people who had cash so there were some things that I could do like reduce the option period or do you guys have option periods where you live yeah well depends it's explain what you mean yeah so in Texas you have the standard is ten days and you have the unrestricted right to terminate for any reason oh yeah we like that okay so yeah you pay for that right typically $100 or $200 and should you buy the house it's applied towards your prepaids and closing costs but it just gives you an opportunity to inspect the house negotiate repairs but you could actually back out because you decide you don't like the color of the front door okay yeah we have inspection periods where I'm at but we don't have like and you can you can ask for an extension period or you know when you offer it you put the expect inspection period in there but yeah we don't have the option but I have heard that people do that I never knew what states have that one don't but apparently I think in Texas it's like no matter what it's built into like the law that you can back out after 10 days for any reason is that right Brad within 10 days yeah in others in other states you have to ask for the period you'd like and they have to agree to give it to you it's in your offer ok real state it's very local weird all right how did you I guess I'm taking all the questions David you want to do any no I think you're doing great Brad how'd you fund it cash perfect cash all right what did you do with it you held on to it you flip it you know what was the long-term with it yeah I have bought and hold and held every investment that I've ever made except for one which was that three-story house that I mentioned earlier so Warren Buffett he was giving a talk to college grads and he said if I could give you a punch ticket that you could only punch 20 times in your lifetime and that was all the investments that you were going to make I think that you would come out ahead doing that so that was his advice and I've kind of taken that so I don't have more than 20 investments total so I'm curious if you'd held on to all those basketball cards that you sold what would they have this point in your career that year was a really bad draft Chaney and okay well that's what was the outcome I'm going to take two David I'm gonna just take all the questions today of the deep dive what was the outcome in it you still hold it today how do you manage it I mean I'm assuming you still hold it cuz you don't sell them but how do you manage it how do you deal with that property yeah I so I manage it remotely myself and that's another thing that we can really benefit from nowadays with the advent of all the technologies that we have you can manage a property I have Skype interviewed tenants prospective tenants from Bolivia and Budapest and Bangkok like oh if I can't meet them at Starbucks I will Skype interview them and then obviously you don't there's no such thing as mailbox any money anymore because people pay you directly through your account if I have a problem I have a GC or general contractor that I hit up and he goes out to the property and lets me know what it's gonna cost and if I think that's ridiculous I'll get another one out there but yeah you can do that from anywhere in the world super alright last question David you wanna take this one yeah what did you learn what did I learn from from this deal yeah many lessons learned I would say that any lessons that I've learned like mistakes is that what you're after well maybe you did something right and you were like oh wow I didn't want to do more of that or yeah mistakes can be the case - or what did you walk away from the still thinking like okay I just learned something big I would say mistakes only in hindsight because I think that my investing strategy has been sound but I would have taken more calculated risk when I had a large income which I don't have a huge income anymore so I'm playing more defense in terms of my investing strategy sure but yeah I probably would have leveraged a little bit and my wife and I are going to use debt on a house here pretty soon so yeah I'm not opposed to leverage so anyway yeah I don't know if that answers your question but yeah mistakes only in hindsight but of course you would change your investments a little bit you know knowing what you know now yeah that's great that's great it's a good good deep dive I love I love just how like simple and I mean that in a bad way man in a really good way house in your strategy is like you don't complicate things you're not like I do this this I'm gonna do this like like this is what I want this exact style house I'm gonna go out and get it now I got it I got financial freedom done like and I told you where I finished in my high school class fundamentals if I could just kind of do the basics yeah it's fantastic super all right well let's head over to the next segment of the show the fire rap it's time all right today's fire on these questions come direct out of the BiggerPockets forums we're gonna fire them at you right now have the first question has anyone compared the returns of like stock a stock portfolio against investing remotely in real estate more if you've ever looked into that or which you get better returns because I'm assuming you have some other investments you said no more than 20 so you probably have some stock portfolio still right I do yeah stocks go up seven out of ten years so real estate has historically appreciated except for as far as I know except for the Great Recession I mean I haven't looked at stats going back to the Great Depression but as you said earlier Branden real estate is local so if you asked me a question about the returns in your particular market it's gonna be a whole lot different from my market which is different from San Francisco from Miami so it's a it's a sticky quits it's a tough question because it varies so much depending on where you're located that's so true that's a really good answer actually thank you yeah and you also have to factor in like stocks typically in my experience wouldn't return what I do with real estate investing but I also just click a button and I own a stock and I don't do anything whereas real estate investing takes a little bit more work right so it's not an apples to apples comparison in that way yeah that's a good point I think that real estate allows you a little more control which is appealing to me yeah but I'm not opposed to stocks in fact when I sell did I mention this already that I have a Vanguard account and I go for high dividend value type stocks almost as like a holding place for cash that I intend to use for real estate and I know that's a little bit risky and I'm certainly not recommending that strategy but that's how I handle my portfolio okay I like that well Brendon I talked about having more tools in your tool belt and that's another tool if you understand stocks you factor that into what you're doing in the real estate you could amplify your return so that it's less risky for you to do it than me because I don't know stocks right so I'm not gonna do it but you're a little more knowledgeable so that's I like that yeah I wouldn't say that I'm super knowledgeable about stocks I just sort of pay attention to what's going on around me and if everybody's Netflix and chillin and everybody's got Amazon boxes by their front door like those are the things like when I was in software everybody was using salesforce.com and Amazon Web Services so just pay attention to what people are doing and that's the stuff that I try to invest in and it's never more than 10% of my total wealth let's say but I think you should take a little risk with some of your portfolio I personally invested in Brandon Turner when his stock was much lower and it's gone up quite a bit so unlike if you bought in Tesla alright so next question if someone has the money to pay a mortgage in full should they do it or should they invest it in new real estate well I think Dave Ramsey would tell you to pay off your house he believes that's the status symbol of choice instead of what does he say the BMW so yeah you don't ever regret paying cash for a house or paying off a house and I believe Dave Ramsey also says that the grass feels a little differently after you've paid it off and I can kind of relate to that does that does your answer change depending on the age of the person who's asking I'm so glad you asked that question man because I noticed that if people are 33 and under then they have not yet and we're in 2018 if you're 33 you have not yet lived through a you haven't had to show up to work and deal with your boss who has seen his 401k cut in half you haven't seen your coworkers lose about a third of your co-workers lose their jobs so you're gonna have a completely different mentality to somebody who lived through the Great Depression or somebody who lived through the circumstances that I'm just talking about we're in an incredible run with real estate and the stock market right now a nine year bull market that has it's unprecedented so yeah I think that depth that definitely shapes your mentality that's a really good point really good all right next question to MBA or not to MBA so this person was asking they can basically they they can get into a really good MBA program which you know average graduate getting out of it at 100k a year at a business or should they just focus on their real estate what do you think oh it's a tough question because I do value education but with education materials being so ubiquitous now you can log on to YouTube and learn just about anything you want to learn so it's a toss up and technology we were talking earlier about algorithms and how it's changing your health I mean my brother is a pharmacist there's a good chance that his job is automated 15 years from now right because an algorithm might be less likely to make the same mistake that he does as a human being so yeah I think I'd go for the real estate man that's a good aunt I never thought about that with pharmacists but you're right they're gonna be like cars like they said they'll do away with them I worry about this quite a bit actually part of it is my just you know I'm a cop we're always looking for threat so I'm always thinking about what could go wrong right but you there's all this pressure right now to like increase minimum wage pay people at McDonald's 20 dollars an hour because no one can live on less than that right and at what point do they're just like you know we really don't need these people at McDonald's right we all complain about their bad attitudes we just go in there and we we choose right off the screen and then they build machines that can build it without a person putting the ketchup on the button they just put it on a conveyor belt and it makes it for you and now like McDonald's decreases their workers by 80% or whatever and we have a smaller tenant base of people to stick in all of our rentals they can afford it so I think that that's something just to keep in mind like as technology is getting better the need for people to do stuff is going to be changing and the the job you choose is very important and the skills you build become very important because if you're just living that comfortable life where I don't want to build up skills I don't want to be out of my comfort zone you're the first one then that computers gonna replicate right like you're the one Elan musk who's gonna replace before anybody else so you should have a little bit of like you know I want to read these books and educate myself so that I have a position later on in life that's exactly right David that's a good point I think the best defense against that is developing yourself into a lifelong learner so that you can adapt to change circumstances and new environments amen I love that okay last question would you buy a property with pending tenant evictions that's it depends question I guess it depends on the circumstances I have had tenants before that had really poor credit scores but I met them and I liked them and I talked to their employer and their previous employer their previous landlord and the Landlord before them because the previous landlord is likely to lie to you get rid of them so I've taken chances on people because I think that I have become really good at vetting people and I'm a good judge of character I think everybody thinks they're a good judge of character but yeah I'll make exceptions in certain circumstances what I love about what you just said there and I want people I want to point this out some people don't and you didn't say this percent really bad track record and you know they had a pit bull and they had a couple of Ixion's on their record and so but my gut said they were fine so I went with them you said I checked all these other things and I did all of my homework anyway and there was this one thing or this little you know like I can make an exception there like right like you did your homework anyway well the problem people have is like you know there are so many red flags here but I in my gut I'm gonna go with them and that's all that almost always ends bad but you like you came at it from an analytical standpoint of like yeah they were great in every other regard all I'll mend this one a little bit that's a great point I think that people deserve a second chance yeah I have a great relationship with my mom and dad now right oh good so good yeah especially good love and this and and this is like you went through a really hard part when you're you know 11 12 13 like that's hard and it shapes you into who you are today but you know I'm glad you turn that around that's supercool and and you are who you are today because of those things so who knows we would be without it well we're getting deep here let's get to the next segment the last segment of the show famous alright let's get to these same four questions that we ask every week number one Brad you have a favorite real estate specific related book who I know a lot of people would answer that question Rich Dad Poor Dad and it certainly taught me the difference between an asset and a liability but I'm gonna say the richest man in Babylon I really like that it's not necessarily real-estate Pacific but it got me saving and investing a large portion of my income in real estate so that's gonna be my answer okay what about a favorite business book oh so many I like my favorite biography is Titan which is a john d rockefeller book I like all of the Robert Greene books like mastery and the 48 laws of power my favorite memoir is probably shoe dog by Phil Knight better than that and I still not ready yet that's got to go back cellent yeah it's really good okay what are some hobbies that you enjoy I enjoy travel obviously I enjoy staying fit and hanging out with the wife and I like reading a whole lot journaling meditating I'm a bit of a weirdo man I go for Wallis and I spend a lot of time in my own head just thinking and writing and that kind of thing let's go where's your favorite place you've ever visited you know your 54 countries I really like Croatia I think it's underrated probably because it's on the other side of Paris and Italy and all of that but it's beautiful it's got history it's got islands I've heard their beaches are like some of the best in the world are you saying that because they're topless they have a lot of Rock beaches so you have to wear like they call them you know like the kind of shoes that you can wear in water there's not a lot of sand but there's some beautiful rock beaches cool cool all right last question Brad what do you think sets apart successful real-estate investors from those who give up fail or never get started you've got to take action once you've read all the books and analyzed the deals and you're set up in the system you beyond that you go look at the property but you've got to take action and once you do I think that you'll probably get addicted it's like getting a tattoo man once you get one you're gonna want to do the next one the next one so yes do you have any tattoos I do not know I adhere to the Kim Kardashian standard of why would you put a what does she say why do you why would you put a bumper sticker on a Bentley [Laughter] all right well last question for you Brad where can people find out more about you so my blog is man overseas dot-com I write about financial independence and self-development and travel the kind of stuff we've talked about today and I also mentioned that I'm headed to Munich on Thursday because one of my retirement side gigs is touring small groups through Central and Eastern Europe so there's a section on the blog devoted to that and then of course I'm on Twitter Instagram Facebook and I'm at man underscore overseas all right good deal well thank you Brad just has been awesome having you on today's show I love your story thank you for sharing some of the stuff that you did and giving people an actionable road map that they can follow and showing like you don't need 100 houses to hit financial freedom and live the life you want did you have anything you want to add Brandon no that's pretty much it it was an awesome show so Brad thank you very much thank you guys I enjoyed it all right and with that we're gonna just take this show out so if you guys enjoyed today's show make sure you leave us a rating review in iTunes stitcher where you listen to shows that and of course come back next week for another real estate investor interview so I don't know that's all I got David Green you want to take us out officially this is David Greene for Brandon stock is rising Turner's signing up you're listening to BiggerPockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the heights you're in the right place be sure to join the millions of others who have benefited from BiggerPockets calm your home for real estate investing online

Channel: BiggerPockets

Views: 56,432

Keywords: biggerpockets, real estate, real estate investing, investing, rentals, rental property, bigger pockets, financial independence, financial independence in 30's, biggerpockets podcast, financial independence retire early fire, financial independence in your 30s, financial independence retire early, financial freedom 101, financial freedom for real people, financial freedom through real estate, financial freedom through rental properties

Id: Ig9DVcCq9Vg

Length: 67min 14sec (4034 seconds)

Published: Thu Nov 22 2018