How to Make $10k A Month w/ Rental Properties | Chad Carson

it's not completely passive but it's passive enough all I can say is I have tracked I'll work it backwards here I have tracked my time pretty religiously for the last five or six years and I average about two hours per week on my real estate business and that's real that's real numbers but what what I'll say is it didn't start that way more and more people want the flexibility to earn money outside of a traditional office setting if you're interested in part-time money side hustles or full-time work the number of opportunities to work from anywhere is growing on our work from anywhere segment today we're going to interview our friend Chad Carson once again Chad or coach Carson began investing in real estate at 23 years old soon after ending his career as a college football linebacker at Clemson University and after initially flipping houses and surviving the 2009 financial crisis which a lot of us have experienced in the past he transitioned to long-term income properties which made him financially independent in his 30s now at 43 Chad works less than two hours per week on his real estate he uses the time and freedom to live abroad he did that for over a year with his wife and two kids both in Spain and Ecuador and he's now on a mission to help small investors get out of the financial grind like he did so they can do more of what matters he publishes a weekly podcast called real estate investing with Coach Carson and he wrote a new big Bigger Pockets book called the small and mighty real estate investor how to reach Financial Freedom with fewer rental properties today we're going to discuss with Chad how small Real Estate Investors can build their way to $110,000 per month in cash flow welcome back to the show Chad Andy it's great to be here thanks for having me great to have you back you and I uh connected recently at a conference but we haven't done this podcast together on the marriage kids of money in six years isn't that why I can't believe how time is flying as a as a parent as a as a podcaster this is amazing I know man I love it well I I I like this conversation around being a small and mighty real estate investor let's talk about what that means how would you define what that means to be a small and mighty real estate investor yeah so I'm going to give you the higher level definition and I'll give you some specifics so everybody can kind of pinpoint where it is the way I Define a small Mighty investor is it's sort of the opposite of what you normally hear online with real estate because typically you hear to be successful you have to 10x you got to have hundreds of units you got to have a thousand units those the people with the airplanes those are the successful people and all of us little peons on the bottom are just kind of climbing the ladder until we're eventually successful well I try to flip that on the head with the definition of a small Mighty investor a small Mighty investor has the least number of properties needed to financially accomplish your goals so it's the least instead of the most it's kind of like there's a I took I was a biology major in college and there was this definition called the aams razor which was about in science the theory that's the simplest is typically the right one that you want to use and so this is sort of that approach with uh real estate investing and with with Finance is the simplest solution you can have is the best because you get the money you need but then you have the time the mobility the flexibility to do all those things you want to do so that that's like the higher level definition but in Practical terms most people that I see I mean I've had people that I've seen with one or two properties that featured in the book and then I'm on the bigger kind of side of a small Mighty investor I have a business partner and the two of us have 33 properties together so you could say like mine or my half is like 15 or 16 properties and then some of those are multif Family Properties so we also have um we have I have about 50 units on my side my business partner has about 50 so you know somewhere in between there is a happy space we could talk about what the numbers look like depending on if you're like a low cost of living area high cost living area but the point is you don't have to have hundreds of properties one or two properties five properties 10 properties can accomplish a whole lot of financial goals so what you're saying is if I don't have the jet I'm still okay yeah the jet and the the the Lamborghini and the house in you know the second house in Hawaii you know all those none of that is necessary it's pretty pervasive out there in the the social media landscape at least every time I I I go on there so I'm glad to hear your message I I I agree with you you the problem with more and more and more and more is that it never ends and I don't think that's the type of message that we're trying to put out there there is a there is a level to which uh what you need I mean even even a little bit of what you want can can be solved with a lot of these types of things now now you've been involved in real estate for what is it 20 years now 21 years yeah 21 years that's incred now the game has probably changed a lot for you in 20 years uh can you tell us a little bit how it's changed or or would you do things differently than you did when you started at this point yeah the the way my journey as a rental investor started I I've sort of been where I had to survive first so like I graduated from college and I had to just put food on the table as an entrepreneur so it really if you got technical it wasn't I was actually not investing in real estate when I first started I was actually flipping houses and finding deals and that's just like somebody who sells cars or somebody who sells you know any kind of widget or somebody who's a technician you know like I was just trying to put food on the table that's what I did for the first five or six years that I was uh in my early 20s but eventually I started getting into the game of doing like house hacking where you live in one you know you live in one unit and have a a duplex or a Triplex or fourplex or a accessory dwelling unit or something and you rent those out to help pay for your living expenses once I started doing that started dip my toe in the Buy and Hold Rental World I realized like this is it's not going to make me Rich overnight but man if I could really like start planting these seeds of these long-term rental properties eventually those seeds will blossom into these fruit trees that will pay me over and over and over again and so I I kind of started with the the quick flip kind of making active money but then now I spent almost all my time that's really what's changed a lot for me is that I I mainly invest in rental properties and it's the cool thing about that is it's passive enough you know I don't it didn't get 100% passive but I spend very little time now that I have a mature portfolio you can get a full-time income eventually take some time but without having to you know take off the time of a job or flipping houses or doing all that I love that yeah now something that has changed over the 20 years are mortgage interest rates now I was looking back at the history they're kind of similar to probably when you started in the game but should that give people pause right now with how high mortgage interest rates are with investing in real estate I think if you were investing two or three years ago and interest rates were 4% and now you're looking at seven or eight perc it is it's challenging to get your head around but I think like anything in life you have to take some historical context and a lot I always like studying history of whatever you're trying to do and in real estate investing historically six to 7% interest rates have been sort of the norm for most of at least the modern history in the United States at least and so I think to take that into account that that is pretty normal to have this the other thing to take into account is the these things change over time and and in the Kermit climber we're in 2024 if you're listening to this as things change there's a lot of opportunity because everybody else is kind of throwing their hands up saying oh man you can't make deals cash flow but what it actually means is it's a little bit more of a normal Market because a couple years ago when interest rates are really low it was really difficult you have to compete with dozens of people to buy a property and so I think there's the flip side of a changing interest rate Market is that if you can figure out how to do that if you can think outside the box get creative buy properties at a little bit lower prices then you can actually find more opportunities than were available two or three years ago I love that yeah that's that's a very good point the the competition's a little lower uh even though the price might be slightly higher than what it is but historically pretty pretty normal let's talk about this General case study if somebody wants to say hey this would be great I think I could get into this I understand that it's going to take some time but I would love to eventually make $10,000 a month and have this be whether a side hustle in the beginning or eventually my full-time income and and and do what CH Chad's doing where it's just a few hours a week is this feasible for someone to to eventually do in the in the uh Market that we're in right now to make $10,000 per month in real estate yeah it's it's totally doable and I'm gon I'll give you like a I like simple math like I like but I like to give examples because I think it makes it more real is that let's just say like over the very long term let's say over the next 30 Years you want to accomplish the 10,000 a month and I'm going to show you how you could probably do that sooner but let's just let's start with a more conservative approach that if you just bought one property per year and let's say this property in today's terms rents for like $1,800 per month and I picked that number because that's in my area I know if you're in California the Bay Area maybe the rentals are 2500 to 3,000 if you in some areas it might be a th000 bucks but my area you can get a single family house that rents for about 1,800 bucks per month now the important part of those numbers is that one property the you have expenses on that property you have to pay taxes Insurance maintenance you probably want to hire a property manager in some cases so let's just say that out of that 1,800 you collect every month $800 is gone and all those operating expenses and that's everything but your mortgage payment and I want to I'll tell you why in this just a second so you you'll have to get a mortgage payment too but my my game plan would be let's buy one property per year for the next five years or five to 10 years but then over the next 30 Years you pay that property off because your tenants you're collecting rent use that rent to pay your mortgage payment maybe you're able to save up a little bit extra money and you pay off the debt so I know you've been into debt payoff in the past right as well personally but you can also do this with your rental properties you can use it as a retirement plan to use all your extra cash flow to pay off the debt on your properties you could do like a debt snowball or you could sell some properties and pay some off we could talk about some of those details but the point is if you had 10 properties each one rented for ,800 bucks you had $800 in expenses on each property the simple math is each property if you paid all the debt off would produce $1,000 per month and net rent after all those expenses so $1,000 time 10 is $10,000 per month or $120,000 per year and it's very doable that over the next 30 Years you could save up extra cash buy those properties pay them off and that you would still be way ahead of almost everybody else who's trying to retire because you'd have these rental properties that today rent for 1,800 bucks but they're probably going to R rise the rent's going to go up with inflation over time it's not going to be you know consistent it goes flat for a couple years and it goes up but the point is like these simple little single family house that you buy one at a time could turn into 120,000 or the equivalent in the future just being like a small amount investors doing a little bit at a time and I'd love to you I'd love to talk about how you could accelerate that but I just want to let that sink in because just such a such a simple plan it always blows me away 10 properties 10,000 a month $120,000 per year and it doesn't have to be that complicated absolutely yeah I mean you think about traditionally investing in a 401k or things like that it could it just as long take 30 years 40 years for you to build up that amount in order for you to live uh for you to you know live on in retirement actually probably even more difficult would you say yeah I think so I mean I like Stock Investing too I like index funds I do it's not either or but I think for for those of us who like to have a little bit more control or maybe we even because say we're control freaks like we like to know that we have a little bit more influence over our retirement that's what real estate Is For Real Estate is something that people say the negative is that you have to get your hands dirty a little bit and go in and buy the property I say the positive is that you get to go in and get your hands dirty because you get to choose the property you buy you get to choose the financing you get you get to choose your tenants or choose the manager who gets the tenants and so I think that's that it gives me a lot of empowerment and hope that okay I've got some control over this this is not something where the stock market is just going to go up and down and I'm G have to be nervous about that it is something that especially if you want to retire early or two you can you can influence that you could pay it off you could pay the debt off earlier you could buy 15 or 20 properties instead of 10 and then sell some those properties to pay off the other ones so it's a I think all of that is a really empowering reason that people get into real estate and it's worth you know the quote hassle or the extra effort you have to put in uh to get the properties up front I love that let's talk about some First Steps then let's say I like I like this plan of the 10 houses in 30 years and yes I'll figure out ways to accelerate it over time as I grow some skills or you know um you know learn learn to pay it down what's the first step if somebody's walking through that process to get that first house like this is new this is brand new but they're but they're but they're interested yeah I think getting your foot in the door is always the hardest thing when you're starting something new but luckily with real estate it is also one of the more approachable Investments and I I mentioned earlier kind of in passing the way I got started with rental properties is still my favorite today is something called house hacking and so here's the concept in general you have to live somewhere and you have to have a residence so why not combine the idea of living in a residence with your first rental property as well that's what house hacking is and there's there's a lot of cool variations on how you can do this the classic way that I did was I bought a 4unit building so it had one one roof four units I lived in unit number two because that was a least desirable unit and I wanted to rent the other three units out that were more desirable and easier to rent but I fixed this property up as a 24 year old and the cool thing about moving into your rental property is the financing is always the hard part and owner occupant financing for Real Estate they have three and a half% down uh payment program they have 5% down payment programs if you're a veteran thank you for your service you can get a 0% down payment uh VA loan and so all of these owner ENT financing programs are out there with lower down payments with really good interest rates compared to a typical investment loan which would be like 20% down or 25% down so let's just make those numbers real if it's a $300,000 property and you want to buy it you know 5% down is $1 15,000 instead of having to put up 30 40 50,000 bucks so it's that that's kind of the most approachable way to get into investing now not not everybody wants to live in the residence and I I get that so it's not not for everybody but if you're willing to do that I'd say that's plan a plan B might be is just to buy a simple single family house or a small multif family property and just save up some cash you might have to save up the cash to do that first down payment uh maybe partner with somebody else to do it if you don't have all the money but if you get just get your foot in the door that you almost get get a university education just on that one property and then you take a deep breath then you start doing the next one but getting that first one I think is is always the most important one I love that so I like the the a b and the C like let's talk C let's just say I don't have a lot of time but I do have money right now and I want and I'm fine with being a long-term investor I know this might take me a while is there a sea level where I'm connecting with somebody who can manage this property for me while I while I don't have time I do have money pulled up in a you know maybe I had it as an Fu fund or something like that and I'm ready to I'm ready to you know use that to invest in real estate talk talk to us about that sea level yeah you hit the nail on the I mean really I think this game you either have the money or you have the time that's usually like people are on either extreme and when I first started I had no money but I had a ton of time and so what I would have what I did was I found these folks who had a lot of money like they were an attorney or they were just really busy in the corporate world but they liked real estate they knew about real estate is I was a little deal finder who went out and found these houses and then we essentially just partnered together on a rental property and the the basic there's some different ways you can structure it but the basic idea was I found a good solid rental property let's say it's a $300,000 property and I just got a really good deal on it I bought it for $200,000 well below value that doesn't happen every day right but if you look and look and look and you buy one property per year it's possible to find something you buy for 200 250 that's worth 300 it's it's definitely possible and so then I go to my partner and I say all right I have this great deal I found it I'm willing to manage it I'm willing to take care of all the hassles for it I just want somebody to put up the money so I need somebody to put the down payment and get a loan to buy the property to use your credit and then we'll figure out a way to we'll split the cash flow we'll split the expenses and then we'll split the profit once it goes up in value so like the plan might be we're going to hold this property that today is worth 300,000 until it appreciates to 600,000 and then at that point we will reass that's what we want to do but we could sell it we could you refinance it we could pay each other off um but that's that's a really simple approach to owning one rental property and it's it's a win for me as the entrepreneur because I didn't put up any money and yet I get half of the profit which might be several 00,000 one of these days and this person who had no time got to put up their money into a deal and put no no more time into it it's a passive investment and then they if you you check out the return on investment for that passive investor they I did that with several investors and they wanted to do more they're like okay when's the next deal coming Chad when's the next one so it's it's truly a win-win deal that's really a cool way to structure it I love that now now it sounds like a big part of that formula is making connections making Community where do you connect with potential Partners or or even people that are willing to help you to take care of the property where's that connection happen because I know Community can be a big part of this yeah this is really the work of real estate and you think it's about the property but it's more about the people and it's about meeting people so people really unlock this entire business and so if you're if you're sort of a Wallflower or an introvert that's okay right but you you have to get outside your comfort zone and I I think the best places are real estate meetups uh every every single city of any size had if you look on meetup.com if you look on Facebook groups if you look at Bigger Pockets and go to their forums and look for local groups there's tons and tons and tons of networks or networking opport unities and what and so what do you do you go there and don't have any like immediate expectations but if you're the money person you you you have a little pitch you have a little story a little elevator pitch where you talk about what you're doing you're say I've got some money I'm looking to buy some rental properties and you just talk to people to see what they're up to and and then you're look you're kind of looking for that profile of that person who it might be a young or maybe a young at heart entrepreneur who's new to the game who's looking for private money or looking for Capital that happens all the time and you just have to get out there and talk to people and network and if you're the person who has no money sometimes you have to get it in your head it's it's hard to believe that you have something of value to add to those people with the money but I'm I promise you the person with a deal is actually more valuable than the person with the money because there's a ton of money out there but if you're a trustworthy person who's willing to treat people well and share in your profits with somebody else there there's money out there you just you just got to meet them and just don't be in a hurry you don't want to just it's like kind like a marriage you know you don't want to jump into a marriage uh right away you want to you want to date a little bit you want to get to know each other you know take your time understand if you're on align if you have similar values but once you find that person I've worked with the same private lenders and partners for 21 years like it's just a repeat business this is a it's worth it because once you take care of each other i' I've I've kept a small group of people who've helped each other out over a long period of time and it it's it's uh the idea is that trust is really fast like when you trust people the whole business flows and it makes it easier and so you just it's worth the effort up front to build those trusting relationships I love that now you've been at this for 20 years you and I chatted five or six years ago and uh you still had this beautiful time Freedom that we were talking about before talk about what that time Freedom has allowed you to do as a father as a community member um how has it changed your life yeah so my wife and I when we first met like on our first date literally we talked about like hey would it be cool to go travel abroad and live abroad somewhere uh because she was a Spanish teacher and she had done that she went to Guatemala and backpacked and her whole family from St Louis was like you're crazy we don't know where you came from but you like to travel around the world and I thought you're wonderful that's amazing I want to do that too and so we sort of jelled on that idea and once we got married 2009 we went and backpacked around South America and Spain and I learned to speak Spanish so that was sort of my hobby on the side that was actually my pickup blind with my wife was like Hey we're in yoga class you teach Spanish I would have learned Spanish that wouldn't that be cool uh as Cy as that sounds that it worked it worked with her and uh so we've been going on these you know so-called mini retirements uh ever since then and so we started in 2009 before kids we went for four months and we weren't we weren't financially independent at that point we just saved up our cash like you save up money for a car and we went and took our backpacks and traveled around and it was the best experience I've ever had it was just it was like a lock moment for me because I'm I'm sort of a type go-getter goal Setter which maybe a lot of people listening to this if you're a Financial Freedom type person you're probably have some some leanings that way it it took me like six weeks just to relax just to take it easy and I could almost feel like an unlocking in my chest it's like H just and so once I got hooked on that this idea of like it's almost like you're climbing a mountain Financial freedoms at the top but that's a long journey along the way you take these plateaus and you take a break whether it's two weeks four months eventually for us once we had kids we went for 17 months to Ecuador I think that the last time we talked on the on the podcast and we lived there and our kids were three and five and we wanted them to become fluent in Spanish and experience another culture and so they went to Local Schools we got to know the parents of other people at the school we got to know other expats living in the area this was in quena Ecuador and again just an amazing experience with my kids I got to see them go from like scratch not speaking any Spanish to like flying past me and like correcting me at the table saying Pap say you can't speak that way Dad you're you're talking talking with a bad bad accent and I loved it like I loved being corrected by my kids and and so we've done these intermittently we did it in 2009 17 and then we did it again last year 2022 and 23 where we moved to to Spain uh to Granada Spain and our kids were 11 or 10 and 12 at that point so a little bit older and we're kind of on the cusp of a new era now my older daughter's like I'm not sure I want to do these trips anymore dad I want to stay home and but that's you know that's life that things things change a little bit um but it's given us this space and this uh time to not just not just rush through life just to be present to have something new with our kids to give them an experience to get to know them better to get to know each other better so it's it's been the best thing for our marriage first and foremost in our family I think but it's also been really good for me as just a personal growth and and kind of pushing back on those Tendencies which I think are pretty common in our culture to always go go go go rush rush rush and all of a sudden you wake up 30 years later and you've missed some of the experiences that you really wished you would have paid attention to I love that yeah it gives you that time Freedom gives you that margin as you talked about these these these these plateaus where you can just breathe it in a little bit and decide am I headed in the right path am I enjoying the the family path that we're on and uh is it the way that we want to continue listening now now there's somebody who may be found this podcast or they're listening online and they see the headline of making $10,000 per month in passive income and Chad they're they're calling BS man they're saying that the real estate requires a ton of work it should not be considered passive income at all what would you say to that person well I I'll give I'll give them this I'll say it's not completely passive but it's passive enough and I and I all I can say is I have tracked I'll work it backwards here I have tracked my pretty religiously for the last five or six years and I average about two hours per week on my real estate business and that's real it's real numbers but what what I'll say is it didn't start that way and so real estate investing is really interesting it's it's it's something that begins like a startup business like a venture capital startup business where yes you got to put a lot of time in to meet those investors to find that property to you know get the property rehabbed maybe and to manage that and so it's a lot of work on the front end and that's almost like you have to pay your dues it's like your your psychological and time down payment on the front end but that's what everybody talks about everybody talks about that period at the front what they don't talk about is that once that property is stabilized I I've interviewed tons and tons of of my students my readers my podcast listeners on average is two to four hours per month is what a lot of if you have five properties three properties then and what is that three to five hours per month that's doing things like bookkeeping that's managing the manager and every once in a while yes you're going to get a call like I got a couple weeks ago where a water main broke on our 12 unit building and it's rushing everywhere and they're gonna have to dig up a big trench and and cut down a bunch of trees and it's going to cost me thousands of dollars to do all that but you know what how much time did that take me it took me a few texts took me a phone call it took me less than 15 minutes it did cost me like six or 7 thousand bucks to fix all that but the point is if you set up systems if you hire really good property managers then that is it's just writing a check it's paying money to someone who is a good responsible person to help you take care of that now that could that be a little stressful oh my gosh I gotta pay 6,000 bucks yes like that's and I wish that wouldn't happened but my main concern was hey can we get this tackled quickly so that our tenants have water so they're not put out by this and and so real estate is a business that starts off heavy on the involvement but it can be it's unlike a lot of other businesses like if you were to own a plumbing business or you own a any other kind of blue collar business it's a lot less it's a lot more difficult to make passive than rental properties rental properties are something that you can hire people build systems there's technology right now that makes it easier it hasn't kept me from traveling the world living abroad for 17 months hasn't kept me from being a podcaster from being a parent from coaching my kids volleyball teams I it's a really flexible passive enough business if you work at it and you build it with the intention of not growing to a th units but just having a small Mighty portfolio that runs well and then you go and do your thing I love that man I love that great great answer and it's so true I mean it is a business and but the upside of putting in the work and then the long-term value can create it to be passive enough as you said now you you talk about being a small and mighty real estate investor talk to us about your new book and definitely your podcast where should they go to connect with these great resources well thank you for having me on first of all it's been a lot of fun as always uh the book I wrote was I actually this is my second book I wrote the first one was about retiring early with real estate it was sort of like the the map or the guide on how to get to the top of the mountain that I talked about and I always had an itch though because I think to write a book you have to have a really strong itch because it's not very fun to put it together at least wasn't for me but it was it this book is more of the handbook for the Tactical side of things how to be a rental investor and so there's this the strategy of being a small and mighty investor why to keep it small I have a lot of examples a lot of stories I featured you know story throughout the Book of other people not just me who've done it in different ways but then the thick like the hamburger the meat of the book is the tactics like how do you finance it how do you find deals how do you negotiate them I told the stories of how I negotiated my first few purchases and how I bought them with seller financing or negotiated unusual terms so this those questions you always have like okay that's great you could buy 10 properties per year but how do you actually do the tactics of it like the day-to-day step of it how do you manage it how do you do bookkeeping that is what I was really passionate about was was being a coach being a teacher to teach the how to do it how to ride the bike so to speak um and so that's that's what the book is and hopefully it's for people who actually want to take this and have a handbook to kind of help them implement it that was my intention and have gotten a lot of good feedback from people uh who've read the book so I would love love for people to get that uh you can get it on Amazon you can get on Bigger Pockets with my publisher and if you get it through Bigger Pockets I had a lot of bonuses and some cool stuff that kind of add on that make it easier to apply it for example I had a bonus chapter on how to uh do small Mighty investing in the changing economy with higher interest rates specifically uh so that's that's something people could check out and my podcast is kind of taking the ideas from the book and applying those just on a week toe basis I have a new episode that comes out every Monday excellent yeah and if you're watching on YouTube he's got a great YouTube channel as well everybody lot lots of great resources from Chad Chad thank you so much for your time today I appreciate it's been a lot of fun thanks for having me Andy [Music]

Channel: Marriage Kids and Money

Views: 1,300

Keywords: How to Make $10k A Month w/ Rental Properties, Real Estate Investing, Rental Income, Passive Income, Property Management, Financial Freedom, Cash Flow, Investment Strategies, Landlord Tips, Airbnb Investing, Real Estate Portfolio, Wealth Building, Property Financing, Tenant Screening, ROI Real Estate, chad carson, coach chad carson, coach carson, rental properties, rental real estate, single family homes, financial independence, how to invest in real estate, real estate

Id: _L-j8VNK67U

Length: 29min 41sec (1781 seconds)

Published: Wed Jun 19 2024