BiggerPockets Podcast 301: The Incredible Power of Long-Distance BRRRR Investing with Alex Felice
This is the bigger pockets pipe cash show three oh, one the geography doesn't matter. And if you are far away it forces you to learn really important skills and talents that are incredibly valuable like you're listening to figure pockets radio simplifying real estate for investors large and small if you're here. Looking learn about real estate investing without all the hype. You're no, right les. They tuned and be sure to join the millions of others who have benefited from bigger pockets dot com. Your home for real estate investing online. What's going on? This is Brandon host of the bigger pockets podcast here with David green. I was going to go with your middle name. But I couldn't remember it. So I was going to go with Lynn David Lind green because that's like everyone's middle name. But not dudes. No, not very often. Usually use my middle name is the man what happened with that? Well, you know, I don't want to lie to the audience. So okay, I see how this is going to be. All right. So. What's what's going on? What's going on? You know? It's funny. Why are we recording today's podcast which was like super high energy and a lot of good content and kinda creepy in a way because this guy that I've never spoken to and says he never read my book says word for word everything that I preached about estate investing. It's like what are the odds of the two of us who do the same thing and have never been we've come up with the same systems. I just was very like, man. What are the odds that would be the case? But it's also because that's what works right? Like, that's that's exactly what I'm getting. Right. Like, we both come to the same conclusion coming from different places because that's what works. So I I liked it. He's evidently like encourages people in the same way that I do. So you guys are going to get a lot out of the show. He's also a bird investor, which we are huge proponents of the Burma thin. So he talks about that. But as we're recording the podcast, I'm getting messages from a wholesaler who's like, I really need to move this property, I can reduce it up. Another like twenty percent, can you buy? So we're talking about real estate while I'm kind of negotiating a deal while recording. Because there's somebody else who wants to buy the house. But I think by next episode. We'll have another house in contract to talk about. I know it was just cool because this is an out of state property that will be used the Burma that I should be able to finance one hundred percent avai my money out of it. And you have a cash line rental antsy fancy stuff and the speaking of birds. That's exactly what we're talking about. Today. We've got Alex on the show, Alex Felice home saying that last name, right. I forgot to ask the guest how to pronounce last names gotta start doing that. Alex is a really awesome, dude. He's been very involved in bigger pockets very much bigger pocket success story. He was sitting exactly where a lot of you are a few years ago, no properties trying to get into it and really made some big changes in his life. And is now just crushing it with the birth strategy. You're gonna learn all about that today. He's got a really great personality. A lot of fun to talk to. So you guys are in for a before we get there. Let's get today's. I clicked it is very simple today. It's something that we talked about a while ago. But I wanted just re restate its for those who don't know bigger pockets actually has provided landlord forms for all fifty states. If you are a bigger pockets pro members, including your membership or you can buy them. What's the word ad hoc us the wrong word? What's alicarte? You could buy them all occurred. Maybe for your state, anyway, go to bigger pockets dot com slash L l forms that you laughing at my lack of I always do this. But different words house camping house cleaning at hawk. It's like it's like Steve Carell from the office. Always always mixing up what he's trying to say. You're hilarious. That's my goal in life is to be like Michael skin by you could buy them all abode. Anyway, go to figure it because that kind of says L forms to check those out and without here. From today's show sponsor. You know, one of the biggest expenses for most landlords, especially those investing in multifamily properties is the Waterville tendencies eight ton of water when they're not the one pain for it. And here's why that's so bad. As you probably know the value of most multifamily properties goes down the expenses, go up. So your tenants might literally be costing you hundreds of thousands of dollars in equity. Well, not anymore. You need to check out true sub meter today. Even if you've been told sub metering your properties impossible true, some meters, smart, custom low cost flow meters. Install at all points of youth without costly plumbing, modifications, even when the plumbing is split between apartments true sub meters has smart meters. For that true. Some eater looks at the sub metering industry of yesterday and married it with today's technology chew. Some meter offers time logging and one hundred percent automated water billion directly to the tenant all for a small cost. This leads to fast. Our y in an instant increase in your property's value truth. Meter is a real solution to landlord paid water. Check them out at true sub meter dot com slash bigger pockets. That's true sub meter dot com. Such bigger pockets T R U, E sub meter dot com slash bigger pockets. All right. Thanks for sponsors, always. And now, I don't wanna waste more time. You got there a little bit show. This thing is a lot of fun, and very very motivating very very informational. You will not be able to leave this show without knowing exactly what the birth strategy is how it works how he can use it in your own life. So with that, let's get to the show. Our allies. Welcome to the bigger pockets podcast. I are you doing man. Very very excited to be here. Thank you. Yes. So high so people have been telling me forever about you. Let's go into your story and figure out like how did you get into real estate? Like why real estate walk us through that beginning? Yeah. You know, I find that. I was probably like a lot of people who I got into personal finance? I because I was living my life tragically irresponsibly fiscally living week to week making bad decisions. You know, like like a lot of people. I got sick of it. After some really bad decisions and found personal finance will start saving some money. And I said to myself, I need to parlay this capital that I've saved into something that will make money passively, and I didn't want to start a business, and I had no services to sell and I'm really lazy. So it had to be passive, and I needed to be tried and true because I didn't want to go figure something out. That's only gonna work for a few years and then have to start over. So that'd be tried and true, passive, and I had to do it without a lot of capital. And if you. Right. That on paper. There's nothing that would appear to work. And then I found real estate and around children and fourteen. I started listening to your podcast and burned that thing down six episode that week while I was going to college. And I bought a house inside a eight months with three grand. We bought a foreclosure, we moved in. We house acted eighteen months later. It was worth I pulled out sixty grand cash. That's and I was I was. And I was booked. All right. So tell us about that I deal. I mean, you you with a single family house that you bought. Yeah. It was just a foreclosure was like fifty four thousand we we FHA moved in. It was kind of dumpy enough that it was foreclosure distress. But nice enough that FHA would let us move in. Which is kind of kind of hard to find. But three grand later. We got a house for fifty four grand in eighteen months later to praised for one hundred fifteen. That's awesome. Where was that at bay Carolina? That's where I do. All my I do on my all my investing too, small town next to four Bradley biggest military base in country. Cool. I was actually looking at a property out there like a year ago, and I run the numbers, and I negotiating and it didn't go through. But I don't know maybe I should have done. It sounds like a good market. And she called me she called me and got you. I got you baby. All right. So actually, I will story. So I was listening to this podcast in the car on the way to college after all my responsible like ended. I said I got to go back to school. So I went to school for finance, and so people my idea was going to go to school to finance for finance to learn how to make money, and I did it. It's college. And they teach you how money works, but then only teach how to make money, but I was listening to this podcast on the way to college back and forth. And I swear that's where I got my real education, the podcast listening to the vodkas back and forth is what made me money not actually going to the commute was worth way. More to me than the degree. That's awesome. That's awesome. I like that idea. You know, zig Ziglar has I think it says it says it, but it was that said about how like you should turn your vehicle into a mobile university. Like if you're sitting in traffic anyway, when not used that time instead of listening to rock music or country. Why not listen to that's going to help you? So you did that you listen to podcasts and kinda growing. And so that I deal like what made you, I guess, I'm curious. Why did you go? The the live basically, call it a live in flip. Right. The house hacking of living flip why did you go that route instead of maybe just continuing renting and going in you invest in a rental property. Well, I was broke I had five grand. And so if you want to buy a house with five grand, you got to move in it, so you can do SHA or VA, but you have to buy one that's distressed enough in it. That's a that's a really tricky avenue specific unicorn to find, but it's possible. And this isn't doesn't fourteen where it was maybe a little bit easier than it is today. But I didn't plan it as good as it sounds now. It was kind of like, honestly, I was living in in a condo and my girlfriend kept collecting dogs, and they kicked me on my condo. And so I was like I need to go buy my house. So I bought this one. And I said I think it's going to make some money, and it did way better than I had expected. And so that was in fourteen by sixteen I bought my second actual rental because I had been saving cash for so long, and then I bought five cents sixteen. That's awesome. Okay. So let's go. So I want to walk through a lot of people are able to do the first deal. Right. A lot of people can do they can. Buy a house, maybe a house hack or a live in flip or the combination of or whatever, you know, they can they can do the first one where a lot of people get hung up is the second one. They say, well, I got the first. But now, I don't have enough down payment. I don't know how to get that seconds. How did you pull off the second deal? I live broke after I broke. I started living broken purpose. And I saved a bunch of money, and it took me four five years at a couple hundred bucks a month. Plus, I cashed out that second property and after four five years, I had I think I paid sixty eight thousand dollars for my my first rental property all in cash and rehab, sixty grand. And I think I had like seventy thousand dollars to my name. And so there was no room for error. But you know, you do what it takes. So I bought that house. He did a burger. Thank you for that Brennan, we did a Burr on my money back six months later. And then I found out about delayed, finance, and then I did four. I it takes eight weeks to a bird. Oh, okay. We got we got one pack all of that. You just said, okay. Good awesome. All right. So you first of all you said you did you did a birth? Those don't know it's by rehab rent refinance, repeat, right? It's the idea where you buy rental property, maybe for cash, maybe for like some kind of short term financing, you fix it up you rented out. And then you go to a Bank, and you get a new loan that pays off whatever you use to buy it. If that totally confused everyone, just go to bigger pockets dot com says Burr with four hours, and you can read more about it. But so it's a strategy that David green here loves and is actually writing a book on it's a tragedy. I love I've used a lot and astrology Alex you love and you've used now. So you you let me go back to that. So you bought this property. How did you finance the property originally to buy it cash? Okay. So you bought it for essentially cash. Right. So then you own capitol. They affect you saved it up off the property, then went to a Bank and got a refinance. Would you remember what it appraised for after y'all got all all fixed up and ready to go ninety five thousand? That's awesome. So then the Bank you seventy percent or something. The gate. Yeah. We'll give you seventy five percent for single family. Yeah. Seventy percent for two to four. You got all your cashback. Yeah. I think when you say that I wanted to that problem as well. Like people can get their first one because they have a little bit of capital, and they can usually move in or do a fix and flip and flip. But you're right it three's a lot of Kaplan. Then he go slow, and I think that comes back to this. Interesting principle that I talked to with real estate people all the time. And I say, I I'm saying real estate is easy real estate is super easy, and it is real estate transactions are really easy with hard is building a business and building a business around doing this can be difficult because people say why don't have enough money, but part of your business is raising capital and getting other people to invest in your common goals, so people they want to do it themselves. They want to raise their money that want to spend their money, and it goes much lower than that. So when you do it that way, so building a business is hard. And that's and that's really the the part that I wish I had worked on much more from the start. And I could have gone off after crushing it now. But I I loved you. Go ahead, Brennan all. We both love it. We haven't alive anyway. Anyway, I just say that the concept of your building a business, you're not just casually buying property your business how they got solid, but David go ahead. You make a really good point about how. And I say the same thing all the time, and Alex and I have never met before this conversation right now. But it sounds like we're doing very similar stuff or both using the bird strategy. We're both investing long distance. We're trying to maximize the efficiency with which rebuilding our portfolio. So even though I don't know, Alex. I can guarantee you like he's like. Yep. That's exactly what's going on. He makes such a good point that you can get that I deal because you only have to put a little bit of money down. If you do a live in flip and you buy it as a primary red, and then you have to start winning big chunks of money down. And unless you're making a ton of cash you start to run out of money pretty quick. That's where we start to figure out the verse. Reggie because if you have big goals that you want to build a big portfolio you've got to be able to refinance to get your money out. So you can go invest it again. And it sounds like Alex, you kind of figured that same thing out. Can you tell me what was the thought process like for you that you realize I need to learn how to Burr so I don't run out of money. And what it what were the skills that you had to develop a Bill to do this. I think everybody went into this problem where they run out of their capital. And then you exactly what do I do next. Well, you go and figure it out and the way I figured out was I asked. Everybody in the planet or alternative strategies forward to both teach me and to do it with me. And what I mean by that is like I didn't figure out the Burma. I found a lender that knew how to do it. And then he helped provide options are -tunities or avenues for continued success. And so with to give or get stuck in a part of your processor party strategy is likely you it's not it's never money problem. It's a networking problem. Or maybe an education problem, you have to learn more about the process or you have to go find people that can that. No and can help. So when I yeah. When you got stuck. Yeah. When I got stuck I said, well, I have spent all my money. And you know, it's funny. People people who don't do real estate love to say. Oh, wouldn't it be nice to pay my house up in cash? Well, the first time I paid that house off in Castroville awful. 'cause my Bank account was drained. And now all I had was nine hundred bucks a month. That's that was worse. So I was like I gotta get alone immediately. And after you, wait, six months, and it's uncomfortable. So literally the discomfort of going slow. I am not a go-slow guy. I don't like it. That right there. Just annoyed me enough where it's like I have to produce a solution here. Okay. So one of the problems that we hear people ran into that are trying to do what you're doing is. They just cannot get over this hurdle of buying a property. They don't see. And you mentioned that you buy properties that you've never even seen. What's your process like for how you can get over that emotional obstacle of I need to see a property before? I buy it suck it up buttercup. The answer I've ever heard. That's great. Okay. Actually, I have a rant about this. Look in close to your property being physically. Geographically, close to your property is not a benefit it is a hindrance how a crush. Well. Because look if your tenant doesn't pay and they live five miles down the street. I guarantee you're not going to go down there and choke him out to get your money back. So being close provides, you know, actual benefit other than some seemingly important piece of mind that doesn't really exist being far being close. It. You can't do anything squatters. You can't it's not gonna make a difference. The geography doesn't matter. And if you are far away it forces you to learn really important skills and talents that are incredibly valuable like managing a team trusting people a long distance learning. How to incentivize people for mutual gain like Mike team on the ground there. I'm I'm worthless without them. But the value was building. Team and building the common goals in the culture that we have far more than I mean falls close to the house. If you're close to the house, you ended up doing everything yourself, and that's the wrong skill to learn if you want to grow. Yeah. I actually agree. In fact, I oftentimes tell people that my ability to do work. I mean, people have heard my story. I'm sure like I could fix up a house, and I learned how to use a saw and a hammer and all that my ability to do work hindered me in the same way that my insistence on doing only local stuff hindered me, right? Like because I felt like I had to do it because I could do it was there. Right. And so I didn't even think about investing in other areas where I probably am into we honest. I I lived in an area where real estate work, so why not just invest there? But when I think about it now, I lived in a very very small area that like cap me at the number of deals, I could do because there just wasn't that much inventory to every any given time. Right. So I think you have a really really good point. They're like you're not going to drive over and shows the guy off for rent anyway. So why not build systems that allow you to get those things done without you having to be there? Yeah. And that's a harder skill to learn to like, you know, people get stuck I think with I buy three houses at a lot of work. And then you kinda get stuck at three houses or four house. You're just managing those buildings. And it's and there's nothing wrong with that. But for me, if I really want to scale this thing, then you need to learn the skills that scale and fix toilets doesn't scale feels that scale your ability to track. Good talent. Ability to your ability to motivate people towards common goals, your ability to delegate and build infrastructure. Your ability to create a culture around your team. Really? It's the abilities that you need that scale are networking in education. I say these to all the time, I talk about them all the time. Those are two things if you do those on unmasks meet people that can help you get your goals and learn what it takes to get your goals and do it every day obsessively. I mean success is inevitable. That's that's really good. I think every single person is clicked little button on their iphone or whether listen, it's we're we're like, we're winds at like thirty seconds and go back like two of those. And then listen to what Alex just said again, like those working in education. Yeah. Like, that's so key, right? Again, we get so stuck on the principles of real estate sometimes especially in the beginning. And I know you have to learn them you have to get good at them. Right. Hot analysts deal. How do you know? But would it be better to learn how to fix a toilet or learn how to find a great? Plumber that Alaska the next twenty years. Like, what skill would be better spent? Right. And we've we talk about that a lot on the show. But and I'm not saying, I should never change. If that's all you can do is change a toilet. Then fine. Maybe you should change the toilet. But there's a good chance that there's other skills that would serve you much better in the long term. So that that's so good. So that's how you scale a businesses by getting those systems down. So I want to go back in on that note, you mentioned how you can do a bird. I think he's an eight weeks you're down to eight weeks. Can we baby eighty I did do that? Look, I have the luxury of being able to buy a house off the MLS. I also have a sick realtor. So she'll send me up. She'll, you know, we'll find out get the offer accepted closing by days. Rehab takes three weeks or weeks for twenty thousand rehab ten placement. My my property manager is a monster. Again, like everything I do is a product of my fantastic my fantastic team. And so I really. Couldn't do as much as I do without them. So he finds a tenant instant in a blink. And so the whole that whole thing takes six weeks. And then I go to a lender. And I use the delayed finance exception, which says you can finance your property inside of six months with Fannie Mae as long as you finance. This is extremely miss understood topic on the forums. They say you can find out what you buy it for. But that's not the rule. The rule is you can finance up for one hundred percent of HUD, and that's very different. And so when I go to buy the house when I close on the hood, I put my rehab costs on their pay for them in full along with insurance. So once attended place that go to the lender. And I say, hey, I want to underwrite this loan. I paid sixty six thousand dollars all in on. That's what it is on the hood as long as it's seventy five percent or of LTV or one hundred percent of hug, whichever ones less. It's less. I leave no money in the deal. I get out my tire amount, and my underwriting goes fast because I I do commercial underwriting for a Bank. So I got the inside scoop. Yeah. The last eight and a half weeks from the time I closed on a house the time. I had one hundred percent of my funds back minus some hard closing costs four hundred bucks. Okay. I need I need to dive in here. So delayed financing. We've only talked about a once before in the show. I can't remember what episode of what we talked about it before. And I had never even heard of it at that point. So you're saying, basically, it's like the the Berlow from the from Fannie Mae, you can actually so normal. Let me give some background normally when you do a burp property you buy it. And then you go and get a loan the lender. Requires what's called seasoning? You have to wait six months sometimes up to a year to get a new loan again. Once you buy a property, so the birds usually takes six months, maybe even twelve months, the delayed financing is a an exception in that rule that allows you to refinance much much quicker. But I'm not sure what you're talking about. I've never heard this before about one hundred percent of a HUD. What do you mean by your repairs, go on, HUD? How does that work? So I talk about this all the time. I'm certainly nowhere near the only person that's figured it out. But it's a it's a credibly misunderstood. And I deal with. I try to among forms all the time trying to help people out, and they just think I'm crazy, but this really works. So when you go to cold on at your house, the HUD is your purchase price, plus or minus, maybe taxes inner taxes. And so what you pay thirty five thousand for the house. The says thirty five grant, right? We all know, this sure. Yes. Yes. Thirty five thousand dollars Hudson's thirty five grand. So when you go to get the loan, even if you use delayed, finance, they're gonna say you can you can get one hundred percent of HUD or seventy five percent, whichever ones less. So the house appraises for whatever. And I only paid thirty five grand. So you can only get out thirty grand. That's what everybody doesn't like about delay finance. You can only get out of the house. So when I started doing was when I got the, HUD, I went to the title attorney. And I said, hey, I'm gonna add some stuff to that. Do you care? No. We don't care. Why would we hear why would the total turning care? What's on the hood? They don't care. So here's an invoice for twenty thousand dollars for my contractor. Here's an invoice to seven hundred bucks for my insurance. Can you add to it? Sure. Now, the downside is you're gonna pay for it all front, I don't have to. And they're going to ask relate to insurance. They're gonna escrow to the contractor, and you can set it up. So they do disbursements and whatnot. But now, the HUD says sixty six grand and so when I go to the lender they're like oh hundred percent, HUD, we're done. We're sixty six grand fascinating. So if I understand you right, Alex, you're paying your rehab cost into the escrow your closing the cost of the house is going to the seller. Then the the escrow company is keeping your rehab costs in escrow, which they then dispersed to your contractor as they complete the work. Is that correct? You that's what you should do it. I don't do it that way I pay my contractor in full of front. I don't care because him and I are. So that's the pilots having a great. Yes. You can tell them escrow out, you know. Whereas I as you tell them they will disperse it. No problem. Okay. So I'd I'd never heard of that either. That's an awesome strategy. And now, basically you've got. Your head is showing a higher amount. So the Bank will let you refinance more of your money back out, which is the whole point of Burr, right? Yeah. And there's specifics here that work for me. Because generally, my all in costs are seventy five percent or close to HUD. So if you had a place where your you had sixty five grand a house, but it was worth one hundred and fifty like well way, the six months 'cause that's a big chunk of money that you're not gonna be able to get out and vice versa. If you have a house that you have sixty five grand into it. And it's worth a hundred or you got eighty grand into it. And it's worth one hundred you're gonna lose ten thousand dollars because they are it's because it's it's LTV or hod whichever ones lower. So you really wanna make sure that your numbers line out before you purchase the property that you're all in costs will be six seventy five percent of the AARP. I just it's fascinating to me that you, and I have never met at what you're describing is everything I've talked about in the book and our criteria is almost exactly the same. My target. Or seventy percent of a RV. So what you're describing like building a team having other people do the work. That's in the book, I wrote long distance investing. That's what we're talking about is how you build that team. How you develop these relationships what you should be looking for you've done this a couple of times now for people who are just getting started. What some practical advice, you can give them for what they need to know in order to be able to start this. They are to focus on how much money they don't have and not focused enough on how much they don't know. So again, it comes back to education and networking if you're if you're having troubles too getting ahead or getting something put together odds are you haven't met the right people yet. And I've spoken about this significantly on bigger pockets, how to find mentors, and you know, the BP resources fantastic defined people local reas learning getting out in finding a guy like me who already does it. And then we'll give you a lot. A we'll give you a lot of confidence. Dila thing is people don't know their market. That's a real big. You have to know. I bought I analyze my properties from MLS pictures, and I've bought them without anybody walk through that house before and made money because I know the market so well, so when I look at a house, I know exactly what's going to rent for how much it's going to work. It's going to take what they are is. And I could do it in ten seconds. And that's not because I'm smart that's because I've been grinding out Zillow and truly analysis templates our practice for years. So if you're unsure of capital, or you're unsure were the cap is going to go prompt you need to network if you're unsure of what Mark to go in and you need to educate, and if you're unsure of what a good deal looks like you're way behind the curve. If you don't know what a good deal looks like you're not going to know how to spring on. When you see once you have to analyze analyze ten ten today. That's what I tell people just grind him out doom through the through your underwriting. Check them out. And so when the good one comes along, you're gonna go. Oh, yeah. That's the one. I got that when we can make a move because I love that. Yeah. If you don't know what a good deal looks like even if one comes across your desk, you can't close and you can't move forward. So if you know a good deal when you see. One. Then you can start making moves the sunlight tell people all the time when they talking about like, well, you know, I don't quite have the money to invest yet. I'm like, okay. Well, analyzed does. Anyway, get so good at knowing. What a good deal is that everything else becomes easier. Right. Because if you're like, you it doesn't take much money to be able to run a number on. I mean like you might have a pro membership right cost in there. But if you regardless analyze deals analysts, let's get so good at that that everything else becomes easier. Right. Yeah. Yeah. And you have to have the, you know, you you gotta practice you've got to prepare because when it comes time to make decisions in this business. You you're gonna learn real quick that you always make an imperfect decision. And that's something that doesn't people don't like to hear that everybody on is looking for a unicorn deal some two percent dealers perfect deal. And I've never bought a perfect deal. It doesn't I don't think it happens. So you have to be ready to make a deal that you look and go it's going to be good enough. Well, if you're unsure and what a good deal even looks like you're never gonna take a that's how you get analysis paralysis. So you really gotta know, and you're gonna spend a lot of. Time. I call it obsessing. You got to be a lot of time obsessing over this. Like, I said meeting people talking to people all the time. I spend hours on that website on your website talking to people in learning still to this day for education and the networking. I'm always reaching out to people trying to find ways to meet him. I met Scott and Mindy last week at Khan, and I've met a whole bunch of my really close real life friends from from spending time on BP. And when you meet people that are doing well, and they like you they're gonna take you along. Yeah. So yeah, I love that a lot of his relationships. Most of it is relationship. So Alex, you make such a great point. Because I see what I call perfect deal paralysis all the time. You get people that are like into it there on BP. They're listening to the podcast or talk my real estate. They're gonna meet ups. They're doing everything on paper. They should be doing, but they can't quite pull that trigger. And it's so frustrating because you're doing all this work, and you're not getting the payoff, and that's one of the reasons I love Burr because when I really dig into why people get perfect deal prowl asus. It's because they have beer missing out. If I buy this deal, but a better one comes along I'm gonna miss out. Right. And that's why I love Burr because if you're using the traditional method, and you got forty grand to put into a deal if you buy a, but B's better you missed out on B and you'll be kicking yourself. And if you know that before you actually pull the trigger eight keeps you from taking your shot, so people like, I don't know. Should I go that market or this market this house or that house the duplex or a single family when you bir- you can do a then be you do a you get your money back? Then you can do it takes all this pressure off of you too. The perfect deal at instead what you should start thinking is thirty years from now, I'm going to be glad I bought this house or not right? Not. We'll should I buy right now. I just don't know what if a better one comes along. Nobody looks back at a house. They bought thirty years ago that has gone up in price times five and is paid off. And like man I wish I wouldn't have bought it not about the one across the street. You know, like, it just wouldn't even remember the house across the street, and that's the shift in thinking that you need, and that's what I love about both for long distance investing is it opens up doors. So you could always be making move. It doesn't matter where your market is. It doesn't matter where your market in the is in the market cycle. And it doesn't matter if a better deal is gonna come along later. Do you have anything at tattle on those lines? Yeah. I love that that comment because people do get I call it unit. I call a unicorn paralysis where they're they're looking for the perfect deal. And you know, I think people need to settle way more than they really are like if you're new I don't care how good you think that deal is odds are your I is going to be junk it just is. And you're not gonna know it until much later because you're gonna look at the as you get better, you're gonna get they're going to get the. Pass. And be like, oh man that deal. I stressed about that deal. Just like you said, David. And so think long term like it doesn't have to be. I don't need ten home runs. I don't need. I don't need five home runs. I need fifty singles. Yeah. I did a video called the stack. Right. I talk about this all the time is like your first deal is not going to make you rich. Your first deal is not going to give you freedom. Your first deal. Does nothing for you, really. By gives you knowledge and experience and will and credibility, right? Because I deal the whole point the only point is to get the second deal. Because once you got the first then you can get the second. The only point of the second deal really is the third and then they get the fourth. And the thing that makes you wealthy is a like, you said fifty singles that, but it's not going to happen. If you never do the first one, right? So I we're not saying by a bad deal. But it doesn't have to be a home run. Don't buy a bad deal. But but don't wait around. But get a good deal. Like I made on my last deal. I looked at it. I was like man, I could've made five grand more in this deal. If I bought it, right? Who cares? Five grand ten grand like. In twelve years. This is going to be irrelevant. Yeah. Not to say that those aren't those big amounts of money or that there. I it's okay to lose that money or overspend. It's just if you're gonna make twenty grand don't get mad that you didn't make twenty five like just take the profitable deal. Get the experience, especially if you're new because a lot of it is just you know, jumping out airplane is really easy. The second time. All right. It's the first one. Yeah. This is really scary. Oh, no. It's not it's amazing and fun and easy and. Did you plans? I was a paratrooper in the military. Yeah. Caffeine jump couple. Couple of couple of Chinooks. Blackhawks stories I can see in my mind's eye Alex jumping out of a plane with a guitar and amplifier playing stairway to heaven on the way down like right and buying three houses before he hits the ground. Like, he just if you guys can see Alex right now, if you're not actually on YouTube, like, he's a very high energy positive kind of an awesome guy. And he just stabbed. I've never seen a Davos. Got our got our first document. Okay. Alex. I want to ask you, what do you look for in a deal? What catches your eyes? So if somebody else wants to copy your system, which is very close to my system. What should they be looking for? Well, look, it's not gonna work in every market. Every markets can have small differences in my market. I'm gonna give you the real transparent real transparent. What I do. I look for a house that I can be all in or sixty five grand. Whether I pay fifty five hundred ten rehab, or whether I pay thirty and thirty five rehab, I need to be all in at sixty five and needs to rent for eight fifty needs to be worth nine ninety five. Ninety ninety five. That's it. There's other small things like in my market a lot of houses come with carports. And I and I hate carports. But I know if it's a three to I can rent it or say eight fifty if I go to if I make it a four two, and he convert that garage and cost me about four grand to do it. I can rent it the section eight and I get a guaranteed nine fifty because it's a four bedroom. And so there's these really intricate and nuance market conditions that you're gonna have to learn about your own market. But what I basically look forward to be all in at sixty five with a twenty five percent equity, and it rents, and it's gonna give me a I'd call it a one point five price to rent ratio in there. So you clearly know your market, right? Because I don't know anything about Bill, but I can guarantee from what you just said most of the houses are going to be appraising between ninety and ninety five between ninety and one hundred thousand that you would be looking at right. And you're going to be all in for the sixty five number you came up with that. Because you know, when I go to refinance it, I can get all my capital back, maybe a little bit more. And you know that if they rent for. Eight fifty it's putting you right in the cash flow where you wanna be. So it's beautiful about what Alex is doing is. He's not wasting time analyzing every house on Zillow like the newbie is he's filtering down to only two houses. You knows we're going to work, and then he's taking those ones picking his best option right out of everything. I'm seeing that. Here's my best option. If amused by criteria. I buy it. It's very similar what I'm doing that. There's a reason that these patterns keep emerging in long distance investing that I do in Alec Stewart, though, we'd never met. I look for all in for seventy five percent of AR V. I wanted to cash low positively so it needs to be around the one percent rule. And I wanted to be in a good neighbourhood. I don't wanna be in a d class neighborhood a war zone. Anything like that? If it makes sense. I'll buy it Alex is in the same boat. But he knows exactly what those properties look like. So he spots it right away. If you can figure out in what market you want to be in a get a general idea of what the deals look like manage. It's so much easier to make a move without getting stuck in that unicorn or perfect deal. Brow? Asus. Yeah. Unicor like decision making is a talent that is that you really have to work on. And I don't know how to. Unfortunately, I don't have any good advice for that. But decision making it being able to make a decision. Good or bad is incredibly valuable to Bill to make one quick and. Like, I said for for better for worse. But not being able to make a decision not be able to pull the trigger that is a hindrance because as you get better you have to make harder decisions that involve more people. It's gonna Volve their livelihood. Now. You know, my business takes up probably a good portion of my property mentioned contractors, lively their portfolio. And so you got to be able to make good decisions. You gotta make fast, isn't and you're gonna you're gonna have to start doing it with a lot of responsibility in your back. So I don't know how to teach that. But yeah, once you find out some of that's works. You got to go to pull the trigger? And I think a lot of that comes back to we talk about like analyze the properties. Learn the market build a team. And if you you know, you know, what really a position that turned me round was I was just starting to get into this. And I found a deal. It was fifty grand. It had attendant. It was written for eight hundred bucks a month, and a wholesaler came up to me and said look just give me a thousand dollar feed. You can have this house. It's done and at the time. Now, look back and go steal perfect. But now at the time I was really scared. And so this is what helped me get over analysis paralysis forever. I called a BP Brenda. Of mine who invest in my area. And I said, hey, I'm scared to take this house down. What do you think about it and week later he closed on it? And he's making money on it. And so I ended it wasn't a perfect deal. But he took it down like in cocaine heartbeat. I mean took it down. So I looked at said did I just I was like I test them. I missed that deal out of fear. That's all it was. It was a good. I knew it my gut, and I miss it. A your end never again will that happen though. Maybe that'll happen at Yuba. I wrote an article for bigger pockets, but how I analyze about a deal in five minutes. And it's I mean, it's exactly what you just said. I don't it's weird that it's like this union Yang thing going on where we are very different personalities, but we're doing the exact same thing. Yeah. We should. Let's go. All right. So I want I want to ask about something kind of random. But you mentioned you are an underwriter for business. But what does that for commercial loans for SBA, actually? All right. So let's let's talk about that for minute. What is s BA? What what did you come in as long as we have you on the show? I love the know. Like, what is that what kind of loans? Do you under right? Yeah. We'll all ask more questions after that. Yeah. Well, back to when I went to school for finance. I said I went to school in finance because I wanted to learn how to make money, or at least how money works, and I started working at a Bank because those are the small town without any real finance opportunities. And then when I moved to Las Vegas two years ago. I wanted to do more. I was new I could do more gun to this underwriting department, and it's SBA is small business administration. It's loans that they give to it's only for owner occupied businesses. But it's basically for new start ups people that want to start a business that can't go to a traditional Bank and get funding because they're in this risk pool. Where it's like, you know, you wanna start a new subway franchise, but you've never run one. And you don't have that much capital. So the big. Wchs aren't going to deal with you. But the SBA will come in and say we can help you with the franchise. We'll give you a bullet. You do a small down payment, and we they mitigate risk in different ways to get startups going, so I mostly deal with actual owner occupied businesses restaurants. Some franchise stuff Diaz have nothing bundt cake on if you ever heard of that we do we do a whole slew of them tropical smoothies, small stuff. But then we also do big stuff. A lot of local businesses in Las Vegas are done to SBA. And it really underwriting is it's been a fantastic learning experience for me because when you do single family underwriting, it's basically just doing the cash flow analysis, but it doesn't really mitigate isn't really show how to mitigate risk. And so what I do is. I look at these five million dollar loans, and you got to go through all the collateral in all the relationships and make sure that everybody can mitigate we can mitigate risk in a in a bunch of different ways that we can explain how the loan is gonna get done. And then it doesn't work for passive multifamily SBA won't do passive investments. But. Man. What you learn by look, I get the advantage of every day. Somebody sends me in a tax return for their business. I get to look at their business credit report, and then their personal tax returns in their personal credit ports on I put this whole thing together in a story to see how this business is running. Why it's good? Why it's bad where it's an paint a picture of trending, and it doesn't have direct impact on what I specifically do. But the knowledge of how a Bank looks at a deal is incredibly useful. Yeah. I all the time because I used to work at a Bank. I was in the underwriter, but I was at the front guy that took the loan apps and stuff for, you know, people wanted a home equity line of credit wherever and what I realized that underwriters for the most part like you said, you're painting a picture of what does this look like with a lot of it is if you can think like an underwriter things rather than thinking how the front salesperson salesperson is designed to say one thing. Yes. Get the application. Yes. We can do that loan, right? Yes. The key. The power is in the underwriter. Like, you are the one that actually makes the decision not, you know, some front and banker who or whatever who's saying. Yeah. I can do anything. Right. So like learn how an underwriter thinks and with real estate. It's not that complicated. I mean like the rules are fairly standard straightforward. You'll like those debt to income. There's loan to value. You can find those things out and then underwrite your own deals. And so I encourage people like look into that. How does ready to think if you guys want to know more about that go to bigger pockets dot com? Such Bank financing. I put together an e book a couple years ago on how a Bank, thanks how an underwriter processes so getting bigger pockets like his Bank financing. It's free. There's nothing it's like a paid book or anything on that note. I'm wondering can somebody as far as you know, you is an SBA loan to like build a fun for like flipping houses. Or maybe for berry cannot do any of that flipping is well banks banks are banks do not like flipping these days not to say that they won't do it. And I'm sure I'm going to get, you know, Email saying that I'm wrong, but banks general especially in Las Vegas our wacky about flipping because well because banks are really Phil. Really conservative. Sure scared scared people on purpose a purpose because we don't want to we don't want to spend money. So, but the SBA can't be passive. So you can't do it for multifamily apartment, unfortunately, which you can do with SBA is self storage. So if you wanted to do a self storage big loan with value, add you can get construction built in and you can do it low down payments or fifteen percent sometimes. And if you're a veteran, you get some discount benefits here, they're Espy as a fantastic program for people who want to start a business, not passive, but don't either have a lot of capital or have a really good understanding of how to embark on that adventure because SPA will help build a business plan for you. That's cool. So it's a fantastic program. I kind of looked into it. But I love it. Very cool. Yeah. I just want to make sure we cover that. Because I I hear a lot of good things about SPA loans necessarily with real estate, but just friends of mine who are entrepreneurs. And I know there's a lot of entrepreneurs listen to our show who have businesses. Yeah. Definitely checkout SBA. So all right last question before we move onto. Like, the deep dive and stuff. I'm wondering what is your future? Look like where do you see yourself headed with real estate? Yeah. So I had the same plan that I think a lot of people on the site half. Which is I want to buy ten houses. Maybe dude over ten years and the retire, and I bought seven in two years and blue that idea straight out of the water. So what would it taught me was, you know, go as slow as goes fast, you can as slows you need to. But don't set your goals too small that was really a before I ever bought a house. I didn't think I could do it before. I went to college. I never thought I could do it. I've bought three houses real quick. And I was like man, maybe I'm better at this than I had give myself credit for or maybe I'm just setting my self expectations too low. So now that I have about to close on my seventh rental, and I started helping other people buy houses through consulting and whatnot. And so we talked about earlier like building a business is hard real estate transactions are easy, and they've gotten really easy, and I've gotten bored. So. Is we are actually we started looking at a sixty eight unit that I don't think a close. But the the plan is I want to buy a small multi thirty or forty units. So that I can get my feet wet to go by two hundred fifty some some big. I just always, you know, I say this all the time the answer to every business problem is scale bigger. So I'm gonna skills because again. I like that. Well, cool. I wanted I wanted to switch. Yeah. It's solid. Like, I even like writing down notes, and I'm gonna make little Instagram quote cars later, like David is where your as fast as you can slows you need to. But don't you set your goals too small like that's like Instagram glory right there? All right. So how would I shift gears here though, a little bit and head over to the deal? Deep dive. There's rarely a sure bet with investing outcomes are nearly impossible to predict but simply safe is an investment. You can be sure about this is home security that's going to protect your family around the clock and save you money doing it to start simplisafe's prices are fair and honest twenty four seven professional security monitoring is just fourteen ninety nine a month. There's no contracts, no pricey hidden fees. And if you don't love it after sixty days, you can return it for a full refund. Guaranteed investment on top of that. It's fantastic protection wire cutter PC Meg and seen it all named SimpliSafe their top choice for home security. So, you know, your home is secure, protect your home. Like, I do with simply safe and support us by visiting SimpliSafe dot com slash pockets. Let them though, we sent you at SimpliSafe dot com slash pockets. S? I M P L I safe dot com slash pockets. Are let's gets the deep dive these are this is the part of the show. I should say. Where we dive deep into one particular deal that you've recently done to learn the good bad the ugly. What went right whatever wrong, whatever about the property. So we're gonna ask you a number of questions about it for the first one, though, it just what you have you have a deal in mind. Correct. Yes. All right. So first of all what kind of property was it. I mean, what are we talking about here? I found this property online. I had seen it only from the MLS pictures, and they were tragic there was a deck in the back that you couldn't see because it was growth like over the house. It was so it was out of control even at growth coming through out the windows, but the walls, and I looked at this house, and I was like there's not a single redeeming quality about this house. I must have it. But I knew the area I knew the market, and I knew that it was scarier. I knew it was scaring people off for reason they were fearful of it not not that it wouldn't make money. All right. And you said you found it you said MLS, right? Yeah. MLS it was thirty six grand or so and I knew it should have been worth one hundred. And I knew it looked worse than it really was. Does it make sense? Does it makes perfect sense? I love looking for those properties that look worse than they really are. And it was on the market for like seventy days. So I knew everybody was just scared of it, which those are my favorite ones, the ones that every you know, if you're fearful of it, I'm gonna come in and and write a check. All right. There you go. All right, Alex. Now, how did you negotiate the steel? Well, this one I was very fortunate. It was on MLS, and it was on there for I want to say ninety days or something. And I just I low balled him a little bit. I don't I'm not a big low baller kind of guy a more like just paying get it done. So I love all the little bit. I think eight thirty six grand for that house and everybody that I told that to thought I was out of my mind. Do you remember what they what were they asking for you? Remember, probably not much more than that. I I wanna say forty. Okay. Sound like that? Yeah. All right. And now a lot of people are listening to the sewing like that's just crazy. Yeah. That's by car for that. Right. So I mean, every market is a little bit different. And if we always say like either go to a market where you know, if you want to buy cheaper proper. We go to market where you can buy them or figure out what works in your market. But don't use that as a house in your market that go ahead. Yeah. If you have a house in your market that don't work you have you have a you're looking at it as an obstacle when it's an advantage. Because now you get to go pick a market that does work, and you get to pick it out of all the markets to kidding. I also want to add in there. You all you often hear is say, you shouldn't buy thirty thousand dollar houses. Right. Like, you could get in trouble with these. There's a difference between a house with a thirty thousand dollar a RV. These are houses he's buying for forty thousand. But the air is going to be ninety to one hundred thousand completely different concepts of don't hear that low number and just be like, oh, I was told don't go by these picks. It's not it's not the same philosophy point. Yeah. The other thing is with those cheap houses you get in my market. If I buy a house that rents for six fifty a month or less. I can't get a ten of probably manager show up because the quality tenant changes, and that's can be different for every market until I see that all the time people by a duplex for eighty grand or around a quad plex for ninety grand. And I'm like, I don't know what you. I don't know what you're thinking. But I know it's going to be trouble when they rent for five hundred dollars a month, it the the number might work on a cash to price ratio type analysis. But you're not thinking of what it takes to actually put somebody boots on the ground and go deal with the person that only wants to pay five hundred dollars a month. Everybody every landlord probably has dealt with the tenant that doesn't wanna pay the full rent. But the trade you from some food stamps for the remainder, and so you don't want to you don't want nothing. You don't want that tenant? But you have to you have to calculate those those troubles. And when you get that thirty thousand our house, and you just see it on paper. It's not gonna work out the same in real life. Yeah. I totally agree. How'd you find it cash? Oh, this is perfect. Actually. So I was waiting on a waiting on a check back from a refi for previous house. So when I put the bid in I was like, look I can afford to buy this house. But I can't afford pretty much anything else until the money comes in. And then even had just enough. Well. Between the time I closed, and this I had H fat go out, and it costs me like eight grand. So I did not have enough money to rehab to do this project. And then the bid came in and said, I got the offer accepted. So I had an offer for health. I really wanted. But I couldn't pay for it. And nobody had seen the house yet the contract you're hadn't seen the house hadn't been expected. Nobody's seen it until I called just made phone calls till I could find somebody love me twenty five grand. And I found a guy on BP who had helped by house. And I said, hey, man, give me twenty five grand. Oh, payback to you in sixty days because I'm waiting on this refi. I'll pay you a just a obscene amount of interest, annualized, whatever. And he loaned me twenty five grand closing the house, and I made a man I made a bunch of money. It's awesome. So if you get stuck like the money is not the problem. It may be very nervous. I don't mean to sound that I was confident about it or that I had it lined up. It was like you have this house. Now, you have this offer accepted. What are you going to do about it? And you grind you. Go. Beg borrow and steal from your friends. And you make sure that the deal is good. I showed him the. He'll he's like. Yeah. That's gonna make money. No problem. Let's go and I him back. I think in in sixty days, Eric who'll very cool. All right. What did you do with the property then after that? So I bought that house with the growth and everything without getting it with my rehab contractor didn't even look at it. So I had really I was guessing what is going to cost the rehab, and I had to borrow money to pay for it. So I love the story because in my head I felt incredibly I was nervous. But I knew it was gonna work out. Whereas everybody else thought I was a lunatic, which is which is what you want. That's what that's where you where you really wanna be. And so, yeah, we have that we ended up putting in a bunch. We did h vac new roof. We built a whole new deck. We did a new driveway cost me. Yeah. I mean, right around thirty grand thirty one summer that. So I ended up all in at sixty eight and then it appraised for ninety ninety five or one zero five it was in the lady that lives in it as happy as can be what's the rent on that? Nine hundred. Awesome. It's greater than one percent real. You're like what one point three one boy four somewhere in there. You've got five point four is about what I get. Yeah. Yeah. That's why you're why you're confident comfortable to go and buy deal like this without getting all the specifics. You don't need to know the exact ran you don't need to run the numbers precisely you can do it without getting a bid from your contractor because you've done enough of these deals that you have a really good understanding of how it's gonna turn out and you're going to do really good or you're gonna do pretty good. But it was enough to move forward. So why you want to know your stuff that was only my third deal? Actually, this is my first long distance deal. But again, it comes down to I looked at the house, and I said worst-case scenario will make fifteen grand. Well, then do it. I mean, what are you waiting for? It's just do it because you can use the fifteen grand. And then the next one I'll feel more confident than the next one. I might make fifty grand then, you know, like, I'd not worried about one I'm worried about, you know, twelve hundred how do I get to twelve hundred. And so what was the outcome with this one? It took me a little longer to refi that one because the spread ended up being big. What was it the spread of being big? I didn't want to do it in in the delayed financing. So I took the six months and got an extra five or six grand out of it. I think and but I still own that house. And lessons learned kind of overall. Would you learn on this thing? Fearless. You can solve problems in a pinch. If you. Take the problem on you can't solve the problem that you have no skin in the game. With like if you're like, I need to go raise money. Well, then you'll get a deal that you actually have to raise money for because we just go ask somebody. Hey, can I have twenty grand in case, I need it. Can you pledge it to me in case something comes up that I need it? You're going to get yeses. And then when the time comes you're gonna get nose, which you really need is to put yourself in a position to to have to figure out problem now like actual skin in the game. Are you losing sleep? Now, you're now you're ready to go actually solve a problem when there's nothing on the line. You have no real Senate. It sounds like Brandon during his ten thirty one exchange to try to buy his apartment. Yeah. The the last day if you questions for Alex about this deal. What is it cash showing a month right now approximately? Yeah. About three hundred bucks. My expense ratios really low forty two percent. And I control I- tribute one hundred percent of that to my how great my property manager. And contractors, we do a bunch of cap ex front, and so he knows like, you know. Don't don't put chandeliers in the kids bedroom like. Like do bunch of cap ex of fronts is not a lot of maintenance afterwards, and we never have vacancy. And so over time these things they let Bill at your cash flow more than than the paper would say so. Yeah. A lot of times you do you'll do capital analysis, and you come up to one hundred dollars a door. And it's like, yeah. But if you don't have any maintenance or very low maintenance to the year, no vacancy, you you're gonna do better than than you project. If you're projecting conservative, and what did you leave in this deal? How much of your capital? Did you leave in it as little as possible? I think I took out. I you could take out a hundred percent of what you put in minus like hard like the loan costs. So probably nine nine hundred bucks or something. Okay. So I'm just going to give you an example. I don't even know how to calculate ROI on that number like it's going to be almost I call it infinite. Infinite ROI, right? So if people that would criticize, well, you didn't even know what you were doing or you didn't know how this was going to end up that was reckless candidate with an infinite ROI because he left almost nothing in this deal and three hundred dollars of free cash flow, plus all the tax benefits blessed the no-kap Bax, plus the blown pay down everything else that comes with real estate. That's what bird will do for. You is it can you creates this incredible bold attitude of I don't need to know everything because it's so officiant. I'm always gonna come out on top. Yeah. I mean, it's like I say you don't need to get home runs. But if you do burn gigolo you money out, it's a home run. If you make a hundred bucks a month like how much how much free income. Do you need before you start getting excited? How? And so three hundred bucks a month or one hundred dollars a month. People say that's nothing. I'm like. Yeah. Again, but get fifteen of them, and you only need one set of cash, I'm still spending my initial seventy grand, right? I mean, if I can do it. It's your recycling. The cat. Great love it love it. I did. Well, let's move onto the next segment of the show, which we refer to as our firearm. It's time for the fire round. Today show is brought to you by Stefka. This is an essential and really cool tool every growing real estate investor needs like we've been there right overwhelmed with a shoebox of receipts that need to be recorded juggling multiple Bank accounts. And honestly, unsure of how much money were actually making every month on our rentals. Look if you're like me, you probably spent a ton of time manually updating in spreadsheets to keep track of all that income and expenses. You know, I used to know that was the only way to do it unless I wanted to pay for some expensive bookkeeper, but Steph, let's real estate investors automate the busy work. So we can focus on growing. Our portfolios. Insuring tax time is a breeze, and let's investors see all of our current properties. In key performance metrics in one central dashboard. Like, I can't tell you how long I looked for a way to do that and stuff is exactly what I needed. So take a few minutes today at your profiles link accounts and everything updates in real time. Steph brings the institutional tools used by the pros for the everyday investor for free, and it's been featured in Forbes, New York Times and the wall. Journal. It was billed by real estate investors. Four wheels investors so to learn more and get started with a free account. Seriously. Do it go to Steph dot com forward slash BP that Stefka dot com forward slash BP. Today's fire on this is the segment of the show where we go through questions that are users on the bigger pockets. Forums have actually asked. So I know Alex you're in the forms anyway. So maybe you've even seen these or to fire them at you right now. I one I like this one. This is I've done a lot of reading about Burr, and I think I've got some sort of mental block. I just can't get the how it works. Can you? Explain it's me like I'm a second grader. No. It's actually it's easy to do this on paper. It's easy to see it on paper. But it is a little bit hard to explain. Talking to through. But here's basically what it is. And I'll try to use easy numbers as possible. If you buy a house all in sixty five grand that's cash. Okay. Cash gone. And then you, and you it's worth let's he's even easy numbers. You buy your all in it for seventy five you go to get it appraised, and it's worth one hundred. The low the Bank is going to give you seventy five grand cash. And they're going to give you a loan for your for the same amount. And so you started with seventy five grand you ended with seventy five grand and a study five thousand dollar loan. You traded no difference in net worth is just you traded non liquidity for liquidity. And you have the twenty five percent equity. Leftover and the cash flow leftover and the tenant is gonna take thirty years to pay that Bank off plus you a little bit. It's people make it seem. It's new and it sounds so it's not like something you run into in regular lights. What sounds way more complex than it is? But it's so freaking simple. They even let him knucklehead like me do it there. Yeah. It's it's like if I'm going to go second grader, I would say like you have a Snickers bar in front of you. And you want to you by us. I have no idea how to work on that. I have a pretty good one. Okay. Let's April get hung up. I think the problem is you get hung up on this idea that you you get alone. When you buy something like that stuck in their head. Like, I have to loan to buy a house to buy a car to buy a thing. The whole idea of refinance is completely different because you're not getting a loan to buy it. You already have it. Right. But when you get a loan to buy something, the Bank doesn't care that you're buying it all day carries it they're giving you a percentage of what it's worth because they want to be able to take it back from you. If you don't pay they wanna get their money back. So if you had a car that was paid off you could go to a place that gives Car Loans and say, I have a car and I wanted to got alone. And they'll say we'll give you seventy five percent of what the car is worth. Here's the Kelley blue book bap value that would be the equivalent of an appraisal. We'll let you borrow seventy five percent of what the blue book value is. Right. If you can for whatever reason people get it with a car, but they don't understand when you just say how the changes everything, right? So have you bought and fixed up that car or less than seventy five hundred dollars you'd get all that money back when it appraised if the car was worth ten thousand dollars? That's understanding Burr and went, but Alex is saying is that if you don't do that you still have the network, but it stuck in equity in the property where it doesn't help you. If you refinance it you take. That money out of equity and turn it into cash that you put in your pocket, which you then can use to go buy your next car or your next house, or whatever, you're you're investing, the choices. Yeah. The other thing I think people get jammed up with with house loans is they they don't think in terms of value that thing in terms of down payment, man, that's a mistake. So they say well how much down payment do I need? And you don't wanna think this way at all. What you always wanna think of is what's the LTV for the product that I can get can get a seventy five percent LTV product will then I need twenty five percent equity. Whether that comes from your down payment or your purchase your ability to negotiate a a house if you can buy retail house for twenty five percent, you don't need any down payment, and you can move right in. But that doesn't happen that often. But that's how you should think. So when I say, you know, you're going to get five percent loan. It's no different than when you get a ninety seven percent FHA loan. If you could buy a house with three and a half percent equity. You wouldn't need any you wouldn't need to put anything down either. And so I think people get a little jammed up with in that regard with the down payment that psyche of it. All right nine next question. What are some pros and cons with buying investment properties out of state? Well, the pros are if you live in a state or you live in an area that is not working for what you wanna do. Then the pro is you don't have to you. Don't you have unlimited opportunity to find a better area? The con is it seems harder. That's it. All right. Good. I like that next one. What team members are important for investing out of state. Property manager. Most important. I would say, and I'm going to say this in no order because because these people all incredibly important to me probably manager real realtor lender contractor not now not in that order in that order. Isn't that David not your core for you? Always talk about. Exactly, right. Yeah. That's what Alec Alec said. He never had never talked. The same for people that I've said if you have those people you can do it. That's all you need these. Yeah. You have to have those four people, and you here's the thing when you're going to call these people on distance you're going to run into a lot of people who suck backed, and you're gonna have to burn through a lot of them. And when you're new you don't know they start the you think they're good because they tell you they're good, and they don't even know they're bad. So you're going to have to run through a lot of these people, but you really want people that are smarter than you to do this. You don't want people that are. You want to convince people that have better than you to deal with you. That's really the goal. So they can bring you up. You don't wanna go find some? It's like I wanna be a contractor. And you like I wanna be a realtor we should start this at the same time. It's like, no you're doing too much you need to find somebody that can help you not learn with you. So find people that are good spend a lot of time networking reaching out to people bigger pockets of fantastic research for this because you can search by both location and keyword, you know, broker loan broker, Charlotte, North Carolina. I I call those Rockstars you find a rockstar. They'll change your life their top producer. They know what they're doing they're smarter than you. And then you bring them value. They bring you value. That's the best relationship. So and they know they're on stars. That's Rockstars in Rockstars, dude. Are you sure you didn't read my book, Alex? You swear, my diary. Okay. This is little too creepy. I'm just going to keep moving on. I'm looking to purchase some property online sight unseen. Can you give me any tips for purchasing property like this? If you're sure it's a deal. Do it. If you're unsure it's deal, you need to find you need to practice more. So that you can be sure. Like if it's a deal by it. That's if you don't know if it's a deal, then you then you are working on the wrong problem, you need to educate more, you need to you need to know if it's a deal. And if you're if you're close ask somebody that knows right? If you have a deal, and it's in David's area. And you're like, hey, man is this a deal, and he's gonna say, no, that's not a deal. And this is why and then you can correct for the future. But if you have a deal, and you're unsure of it's a deal, you need more information. If you're sure to deal, you're just scared suck it up buttercup. Okay. I got my go ahead. As I say in the car business, I used to ISIS tell cars, and I'd I'd mess with people. They'd be like, you know, the I'm too scared of the payments are too high. And I say, yeah, I know the payments that you high lean hard the forms in triplicate. Do it. Anyway. Yeah. Do it. Anyway, I question for you. That's not in the fire round is curious. What's what the background behind you? For those not on not watching this on YouTube. You got a lot of really bright autumn pictures behind you. What is that? Here's a really good like advice, if you want to be happy in life, you need three hobbies wanted to keep you in shape. One to make you money when to keep creative years ago. I started talker fee. I'm not a creative guy, but it's been fun. So when I started doing the YouTube and stuff like that. I wanted something that was visually appealing. I wanted to build a set. I am a production quality beaned about my my work. And there's there's there's a billion people on YouTube that have their office in the background. So I I I have a nice photo printer. And I printed out pictures that are my life my dog ours, Las Vegas ring, canyon, red rock canyon friends that drive cars. Yes. So I just put them up because it creates some visual appealing the visual, aesthetics and. It's me, and I'm all about and I'm all about me. I love it. All right. Well, more about you. Let's shift gears here one last time and head over to famous fall. Are let's get to the famous for this is the same four questions. We ask every guest every week. And we're gonna see what you gotta stay. And I know you've heard these before because you've listened to the show. I think you said earlier I've listened to every episode three times. So I won. What is your favorite real estate related book? Richdad porta baby. All right. That that book I read ten years before I bought a house that book is not a book that you read to learn real estate that is a book you read to get your mind. Get your mind. Right. I I hate that. It's been said so many times. But it really is. That's the one that change everything for me. Okay. What is your favorite business book? I m a heavy reader of nonfiction, but very rarely do I like business books. Right. Allio has a good one. If I could recommend one book that everybody in the planet should read a new one by Yuval Harari that sapiens. It's not a business book. But it is a book about humanity. And it will it provided me Fred's massive perspective on a read a lot of business books. But I do read a lot. And there have a reading list on my website. If anybody you ever want to see I read hard, nonfiction, science culture industry. Gives them a couple of examples of what do you mean by that nonfiction? That's not business like what are some books that you've been reading. Oh my God. This is my favorite question. I read thinking fastest low by Daniel Kaneman. That's a book that teaches you how your brain works, and it is brilliant. Because because it's not working the way you think I read a lot of Richard Dawkins hard science by evolutionary biology. I just read Stephen Hawking's book. The demon haunted world by Carl Sagan, that's an old one. I'm trying to think of facts on this by Hans Rawling. That's a book about why the world is doing way better than people. Think Trump think some of the ones that's good? Well, we'll Kirsch people to go to your upset. Check it out which I'll ask you about. And just a second. But before we do that, David. You've got the next question though, is gonna take. Yes, you mentioned what you're you mentioned what your three hobbies are can you just reiterate very quickly. What they are. You said one for staying in shape being creative, and what was your other one making money making money? So what are three hobbies that you do for each of those oh, well, photography for creativity? Real estate for making money, and I have been a powerlifting for fifteen years Rio. Awesome. That that that small that small advice really works. I it really if you think about it that way, like just spend your time doing three things you like every day, those three hobbies, and if you can find one that makes us the money, which shouldn't be that hard. If you can do that man life get so easy. I saw that advice recently the same the habit thing. And then I added I added one two and I threw up on Instagram. And I said also if you can find a hobby now, it could be a duplicate of the one of other ones. But Finally, I build you build relationships. Right. I think hobbies are great find one that can build you can either do with somebody else or find a hobby. You can do it someone else family, friends, whatever I think Jesse. Yeah. Hobbies hobbies with people are just so key because we're our happiness is typically based on our community. So yeah, I love that stuff. Agreed. And this is a relationship. Well, you know, my photography. Didn't get good until I started hanging out with other photographers my powerlifting. Didn't get good to go to the powerlifting gym. And so yeah, I mean, I agree with that. Like, I should probably meant that three hobbies and you have to include other. People in them. I love it. I love it. All right last last question. What from me? Anyway, what sets apart successful real estate investors from all those who give up fail or never get started. Obsession obsession obsession obsession obsession I have been thinking about this for five years? Actually, I wrote an article I want to send you Brandon called the the famous for I have been pining over this question for five years, and I wrote a long form article about it, and I send it to to Mindy today actually five years ago. I was listening to podcasts. And I'd heard that question. I said, Ooh, I need to answer that and. Arrogantly? I said oh inevitably I'll be on that podcast, and I need to give my perfect answer. Funny. How things were funny how things work out. Well obsession is the answer. But I wrote this long thing about how you come to that answer. Like at first I thought it was networking in education. That's what the difference being that those who succeed in those don't. And then I spent a lot of time going through all the old podcasts as I mentioned in wrote everyone's answer and put him into graphs to see which ones show up most. And you know, tenacity all these types of answers, take action be fearless all these types of answers. And they all seemed really incomplete Jimmy. So I've been pining over this this exact question for like four or five years. And I wrote a an I've written about it. And I really think the reason I've been successful and many other people can be described by their obsession with with what they want to get done and learning about the this question and trying to answer this question and being obsessed with it really led me to a lot of success being obsessed about real estate it leads to success the gym. You know, I I'm a good powerlifter looked a lot of weight. It doesn't come by just showing it to the gym. You gotta get obsessed. And so I. Whatever you're obsessed over whatever you think. Breathe talk and live about will happen. Ralph WALDO Emerson has this. Great quote. A man is what he thinks about everyday man is what he thinks about all day long, and in the so if you just if you're trying to do real estate or trying to find a way to to get started, and you're doing it casually or part time, it's going to be much harder. Like, turn your life into a obsession machine about whatever you want accomplish. And it is inevitable that you will succeed. Love it. Love it love it. All right last question of the day, David Greene where can people find out more about? You broke is a choice dot com. It's a website. I just my personal website. But put my thoughts all my deals. You can get a contact with me there at put my book lists. I spent a lot of time on bigger pockets so between if you reach out to him bigger pockets or you find me on broke his choice dot com. I reach out and talk to people all the time. It happened. Happy to help very cool. Very cool. I did. Well, that's been a ton of fun. So thank you so much for coming on the show. Like seriously, I think people are gonna love this. My absolute pleasure. You know? I love this community. I have been involved deeply in this community for four five years. I know there's other people that look at this community and wanted to be part of it. And I can just say like just just obsessed. Just stay on that website talk to people reach out, and I'm so thankful to to be here and be able to get back to the community. That's given so much for me. That's awesome. That's awesome. Well, thank you very much. And everyone else, of course, check out the show notes at bigger pockets dot com slash show three zero six you can jump in. They're ask Alex questions. You can comment on his amazing hair. Or you could just, you know, get involved in the conversation. Like again, like Alex is such a bigger pocket. Success stories. I love having these stories because like on the podcast, right? Like, this is somebody who did exactly what we're saying. You should do network educate yourself, get involved talk. Like don't just listen to the words saying on the podcast, but go put it in the act and action, right? Alex heard about house hacking and how like me away. Boom. Did it right? Heard about bird. Did it right took action? So I want to recommend everyone do that as well. And you know, we'll see you back here again next week. If anybody has again, anything jump in the show notes, and I just get involved in bigger pockets, if you don't have a free account, go make for account bigger pockets dot com, and it's all I got so David green. You wanna say anything or take us out? Thank you very much, Alex. This was a great show. This is David Greene for Brandon the real estate, God Turner's signing up. You're listening to bigger pockets radio simplifying real estate, investors, large and small if you're looking to learn about real estate investing with not all the hype you're in a rightly be sure to join the millions of others who have benefited from bigger pockets dot com. Your home for real estate investing online.