The King's Hall - Real Estate： Building Wealth Through Real Property

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00:00:37.240 This episode is brought to you by Joe Garracy with Backwards Planning Financial,

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00:00:56.600 The year was 1803, and the young American republic found itself at a crossroads.

00:01:06.640 Still nascent and vulnerable, the United States was hemmed in by European powers on all sides.

00:01:12.300 To the north, the British held sway over Canada,

00:01:14.780 while the Spanish clung to Florida and the vast territories west of the Mississippi River.

00:01:20.000 Yet it was the French, under the ambitious leadership of Napoleon Bonaparte,

00:01:23.800 who controlled the key to America's future, the vast expanse of land known as Louisiana.

00:01:29.600 This territory was not just any land. It was a realm of almost unfathomable potential,

00:01:35.140 stretching from the Gulf of Mexico to the Canadian border, from the Mississippi River to the Rocky

00:01:39.960 Mountains. It was a prize that could transform the United States from a fledgling nation into

00:01:45.420 a continental powerhouse. But this transformation hinged on one crucial question. How could the USA

00:01:52.160 possibly acquire such a vast and potentially valuable piece of land.

00:01:57.380 Most of us today likely consider the acquisition of a single-family home

00:02:01.200 to raise a family in a great challenge.

00:02:03.860 Can you imagine trying to purchase nearly a million square miles?

00:02:07.560 At the helm of American diplomacy was President Thomas Jefferson,

00:02:12.160 a man who understood the value of land.

00:02:14.920 Jefferson was a visionary, a statesman who saw the future of the United States

00:02:18.700 depended on its expansion westward.

00:02:21.260 But he was also a pragmatist, keenly aware of the fragile nature of the nation's finances

00:02:26.120 and the need for a secure base of wealth to sustain its growth.

00:02:30.460 The opportunity for expansion arose in a most unexpected manner.

00:02:34.580 France, under Napoleon's rule, had grand designs for a North American empire.

00:02:39.820 A visionary leader himself, Napoleon had no lack of ambition.

00:02:43.100 But the realities of war and rebellion in Europe and the Caribbean began to sap France's resources and attention.

00:02:50.640 Particularly, the Haitian Revolution, which had turned the French colony of Saint-Domingue into a costly quagmire, had weakened Napoleon's grip on the New World.

00:03:00.700 For Napoleon, the Louisiana territory had become more of a burden than a boon.

00:03:05.460 His original plan to use Louisiana as a breadbasket for the Caribbean colonies was faltering, and the financial strains of his European campaigns were mounting.

00:03:15.420 Recognizing the strategic disadvantage of holding on to a distant, vulnerable territory,

00:03:20.900 Napoleon made a fateful decision for the history of the United States of America.

00:03:25.080 He would sell Louisiana to the United States.

00:03:28.280 Meanwhile, President Jefferson was growing increasingly concerned about the presence of French forces in North America.

00:03:35.100 The port of New Orleans, which sat at the mouth of the Mississippi River, was the lifeblood of American commerce.

00:03:41.100 It was through this gateway that goods from the interior of the continent flowed to the rest of the world.

00:03:47.600 Control of New Orleans by a hostile power could strangle the American economy and stifle the young nation's growth.

00:03:54.660 And so Jefferson dispatched James Monroe and Robert R. Livingston to Paris with a mandate to secure the purchase of just New Orleans and as much of the surrounding territory as possible.

00:04:04.900 The mission was simple. Ensure American control over the Mississippi River and its critical trade routes.

00:04:11.640 Jefferson authorized them to spend up to $10 million for New Orleans and the Floridas, if necessary.

00:04:17.580 But neither he nor his envoys could have anticipated the offer that was about to be placed before them.

00:04:23.380 In Paris, Monroe and Livingston found themselves faced with an extraordinary proposition.

00:04:28.940 Napoleon's foreign minister, Charles Maurice de Talleyrand,

00:04:32.100 made it clear that France was willing to sell not just New Orleans, but the entire Louisiana territory.

00:04:38.680 But the price was a staggering $15 million, a huge sum for a nation still recovering from the deaths of the Revolutionary War.

00:04:48.020 But the offer was just too good to pass up.

00:04:50.780 828,000 square miles of land at roughly three or four cents an acre.

00:04:56.140 For Monroe and Livingston, the decision was immediate and unanimous.

00:05:00.240 They understood that this was a once-in-a-lifetime opportunity,

00:05:03.720 a chance to secure the future of the United States and create a foundation of wealth that

00:05:09.100 would endure for generations. They quickly agreed to the terms, signing the Louisiana Purchase

00:05:14.240 Treaty on April 30, 1803. Back in Washington, Jefferson received the news with a mixture of

00:05:20.640 elation and trepidation. On the one hand, he had just secured one of the largest real estate deals

00:05:26.860 in history, doubling the size of the United States overnight. But on the other hand, he knew

00:05:32.580 that such a bold move would not go unchallenged. There were even questions of constitutionality,

00:05:37.880 as the power to acquire new territory was not explicitly granted to the federal government

00:05:42.560 in the Constitution. There were also concerns about the nation's ability to govern and integrate

00:05:48.460 such a vast and diverse expanse of land. But Jefferson was a man of vision, and he saw beyond

00:05:54.620 the immediate challenges to the long-term benefits. The acquisition of Louisiana was

00:05:59.660 not just a territorial expansion, it was a bet on the nation's future. The land would prove a

00:06:05.460 tremendous store of wealth, a reservoir of resources that could be tapped to fuel the

00:06:10.020 country's growth and prosperity. It would serve as a buffer against foreign threats and a magnet

00:06:15.020 for settlers seeking new opportunities. The value of the Louisiana Purchase was not just in the land

00:06:21.240 itself, but in what land represented. The potential for growth, the promise of opportunity, and the

00:06:28.160 security of wealth. It was an investment in the American dream, a bet on the nation's ability to

00:06:33.960 transform wilderness into wealth, to turn the unknown into the prosperous. As the years passed,

00:06:40.640 the wisdom of the Louisiana Purchase became increasingly evident. The land provided the

00:06:45.600 resources needed for the nation's industrial revolution, from the fertile soils of the

00:06:50.100 Midwest to the timber and minerals of the Rocky Mountains. The Mississippi River became the

00:06:55.040 backbone of American commerce, a conduit for the flow of goods and capital that would power the

00:07:00.040 nation's economy. The purchase also opened the door to further expansion as settlers pushed

00:07:05.620 westward, driven by the promise of land and opportunity. By the mid-19th century, the United

00:07:11.980 States had become a continental empire, stretching from the Atlantic to the Pacific. The wealth

00:07:17.560 generated by the land acquired in the Louisiana Purchase helped to finance the construction of

00:07:22.560 railroads, factories, and cities, laying the groundwork for America's emergence as a global

00:07:27.640 economic power. Yet the legacy of the Louisiana Purchase extends beyond economics. It was a

00:07:33.560 turning point in the nation's history, a moment when the United States embraced its destiny as a

00:07:38.940 land of opportunity and possibility, a land which believed in itself not just in the present

00:07:44.180 generation, but on down the line through many subsequent generations as well. In the grand

00:07:49.760 scheme of history, the purchase was more than just a real estate transaction. It was a visionary

00:07:54.860 investment in the future. It was a bold assertion of the belief that the United States could and

00:08:00.380 should become a great nation, a beacon of prosperity and freedom. And it was a reminder that the true

00:08:06.220 value of land lies not just in its price, but in the opportunities it creates and the dreams it

00:08:11.620 fulfills. In this episode of the King's Hall podcast, we continue to explore the question

00:08:17.040 that likely keeps many of us awake at night.

00:08:19.820 How can I leave an inheritance to my children's children?

00:08:22.900 Many voices clamor for attention and answer.

00:08:25.960 Invest in this business.

00:08:27.100 Invest in my business.

00:08:28.460 Have you heard about this new crypto token yet?

00:08:30.640 This stock is about to skyrocket.

00:08:32.580 You need to get on board before it's too late.

00:08:34.880 And to be sure, there's not merely one answer to the question.

00:08:38.380 So far, we've talked about Bitcoin and precious metals.

00:08:40.960 But if history is any guide, one answer, one place to build enduring wealth

00:08:45.860 must be in the land itself and what may be built upon it.

00:08:50.280 In this episode, we sat down with successful real estate investor,

00:08:54.300 a 35 pilot, and member of our local Ogden borough, Tim Six,

00:08:58.480 to discuss the challenges and rewards of building a legacy

00:09:01.440 through the acquisition and fruitful management of real property.

00:09:06.160 The Kings Hall Podcast exists to make self-ruled men who rule well and win the world.

00:09:15.860 in 2023 indigo sundries became one of our sponsors at the time their business was little more than a

00:09:25.140 side hobby generating a couple hundred dollars a month but because of their partnership with us

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00:09:32.840 livelihood this is what happens when christians support christians our communities are strengthened

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00:09:40.900 thousands of like-minded people and grow your company, we'd love to partner with you. Email us

00:09:45.660 at advertising at newchristendompress.com. Well, gentlemen, welcome to this episode of

00:09:56.080 the King's Hall podcast. Brian, you said there's not one right answer, but I think we can all

00:09:59.860 conclude from the cold open that we need to reconquer Canada. I heard reconquer Canada.

00:10:06.220 i heard france can be bullied into giving us anything for like four cents an acre like let's

00:10:12.260 get the the let's get paris i mean isn't portions of canada just like a the the walmart brand or

00:10:19.000 like the harbor freight version of france it's harbor freight france yeah i mean so how much

00:10:23.580 easier it's harbor freight totalitarian yeah pretty much hey sorry for our canadian listeners

00:10:29.260 unless you're in quebec and then i don't feel bad no the canadians are all like yeah please retake

00:10:34.620 the country no seriously guy if you're listening to us and you're in canada or france you probably

00:10:38.980 would love it if we would conquer you it would just be better way better yeah gentlemen i do

00:10:44.120 want to introduce you guys to our listeners uh we have brian survey french well more american but

00:10:50.660 i mean thank you yeah uh-huh uh-huh dan burkholder american uh iamerican now the one thing that we

00:10:57.000 share in common today they're not yet a sponsor this show but i feel like tekova boot company

00:11:03.420 should be a sponsor because we are to cova boot max to covas if they don't invest in us

00:11:08.340 then i'm gonna go broke investing in them that's right uh we we are to cova boot maxing uh dan

00:11:14.740 we've got ostrich boots on yep yep i've got the full quill and you've got the uh is it smooth

00:11:20.280 ostrich or ostrich belly yeah smoothbore man it's beautiful smoothbore and then brian's got

00:11:25.560 old school i've just got the casket ropers boys like i'm not i'm not i'm not pretension ropers

00:11:30.180 I'm not pretentious, you know, like these other fellers here that, you know, what look like they just stepped out of one of them shopping malls.

00:11:36.120 They got the fancy show, you know, them fancy boots.

00:11:38.480 I ain't seen nothing but linoleum.

00:11:40.540 My boots, you know, they seen they've seen some things.

00:11:43.900 Let me tell you.

00:11:44.240 Yeah, they have because they're rough already.

00:11:47.300 You know, I got a working man's boot.

00:11:49.860 Working man's boot.

00:11:50.920 OK.

00:11:52.740 Semi true.

00:11:54.680 Gentlemen, as we jump into this episode, Dan, I find it interesting.

00:11:57.960 We're going to be talking about real estate.

00:11:59.320 one of the concepts is that real estate isn't one of those investments or is it a business it's it's

00:12:05.880 not the kind of thing where you just put your money into it generally and do nothing which is

00:12:11.540 something i think tim is going to talk about you guys talk about together but it's it's definitely

00:12:16.200 challenging yeah one of the things he talks about is is unlike bitcoin or precious metals or even

00:12:22.260 the stock market the barrier of entry is very high because you can go out and you can buy a

00:12:28.220 fraction of bitcoin for just a few dollars you can buy a little bit of gold you know like gold

00:12:34.180 backs is what they sell at alpine alpine gold here in in utah and you can spend like i think it's

00:12:40.840 five bucks four bucks something like that for a little bit of gold and then you can buy a cheap

00:12:45.960 stock on the stock market a penny stock heck you can even buy fractional stocks now on a lot of

00:12:50.540 yeah you're right apps and exchanges robin hood yeah robin hood um but with real estate uh the

00:12:57.040 barrier of entry is very high because you need to have a down payment on a home you know if that's

00:13:01.880 if you're doing a rental rental real estate you have to have a down payment on a home and for an

00:13:07.100 investor typically i mean tim would be able to tell you i don't know if i i can but it's like

00:13:11.820 30 or 25 it's it's higher than what a standard you know home loan is mortgage on a on a primary

00:13:19.480 dwelling you're not getting an fha loan with one percent down on an investment property you gotta

00:13:24.420 have 20, 30. No. So the barrier of entry becomes much higher. And then it's the liquidity isn't

00:13:30.140 there. Like with any of the other investments I mentioned, it's really easy to sell, you know?

00:13:35.680 So, and that's not as exactly the case in real estate as people are finding out right now

00:13:40.280 in the market. Yeah. Well, it's interesting too. This was something from BAP years ago.

00:13:44.900 And then Aaron Wren had talked about it as well. But this concept of own space, Brian,

00:13:50.260 We realized this, I think, years ago, that if we were going to build a borough in Ogden,

00:13:55.260 you actually have to have real space, real property.

00:13:58.460 And so I think for a lot of people in our day and age, because people are so transient,

00:14:05.520 the idea, and because of inflation and everything else, the idea of owning a piece of property

00:14:09.540 maybe wouldn't be at the top of the list, but I guess tell me why you think it should be.

00:14:13.960 Yeah. In my view, this question really does have multiple answers.

00:14:19.000 that like, how do I invest in my children's children, leave them an inheritance.

00:14:23.520 But one of the things that really comes to the center for me in terms of my own long-term,

00:14:30.240 what am I planning? Real estate plays a big part of that, partly because I'm not just

00:14:35.500 interested in investing in a pile of money or a pile of something worth money,

00:14:40.480 but I actually want a foothold in a place. So I recognize that for my family's mission

00:14:46.500 as members of Refuge Church and this borough here

00:14:49.940 and where the Lord has planted us,

00:14:52.760 we are long-term aiming to plant our generations here

00:14:57.800 in this community.

00:14:59.480 And that means we're going to need somewhere to actually live.

00:15:01.320 We're going to need places to live.

00:15:02.660 We're going to need owned space in the community,

00:15:05.080 both residentially and commercially.

00:15:07.520 And so one of the things that I'm very confident of,

00:15:10.540 at least in the long time horizon,

00:15:12.620 is that it it will hurt to buy real property here now it will definitely hurt as a church

00:15:19.680 as a community but it won't hurt as much as it will in 50 years or in 100 years or in unless

00:15:26.360 we have a warlord situation and then like we're we're good anyway because we'll own a lot more

00:15:29.780 land i i like that because i'm assuming that we will it seems like a theme of this episode already

00:15:35.940 is hostile takeover i mean there's there's multiple ways to get land dan ogden now one

00:15:41.740 thing to consider. So I've talked before on, I think in this podcast that we're going to listen

00:15:47.980 to in this interview about productive assets. So gold, Bitcoin, and stocks, unless you get

00:15:54.720 dividend bearing stocks or non-productive assets, like the only way to actually profit from them is

00:16:00.160 to no longer own them. And so real estate is a productive asset. Obviously you can rent it out,

00:16:04.880 but even more than that with real estate, I liked in your cold open, Brian, you had talked about how

00:16:09.420 land presents opportunity. Yes. And so what opportunity does real estate give you when

00:16:15.460 you're thinking generationally? Well, it's not just a return on income or an investment,

00:16:20.340 but you're actually, what other asset could you buy and have grandchildren raised or, you know,

00:16:28.040 enable your children to, to, to bring your generations into fruition? You know, you can't

00:16:34.220 do that with gold or with Bitcoin, but you can with, you know, helping your children find a

00:16:39.020 place to live, you know, giving them a house, a place where they can actually raise their kids

00:16:43.020 and your grandchildren. So it is a unique asset. Yeah, it is. It's, it's a job and, and Tim will

00:16:50.000 get, you know, notice in the interview, pay attention to that distinction because as a

00:16:55.680 productive asset, it's also a thing to be managed and stewarded well. You don't just, you know,

00:17:01.660 you can buy an Amazon stock and forget about it. As long as you don't lose your password,

00:17:05.240 I guess to your, to your 401k or your investment platform. Right. And it's just, it's going to be

00:17:10.360 there as long as you, you could screw up by not paying attention. Like Amazon goes bankrupt. And

00:17:15.140 then all of a sudden you have a worthless piece of nothing, but for the most part, a stock,

00:17:20.000 Bitcoin and gold, you know, that's something that you're buying as a long-term play store of wealth

00:17:25.420 and hope, hope for a return on the business. But if you think about a lot of like a stock,

00:17:31.880 You're buying something to profit from somebody else's work.

00:17:35.560 When it comes to land, that can be true, real estate.

00:17:38.960 You can hire companies.

00:17:40.060 You can invest in real estate via lots of different vehicles.

00:17:43.120 But for the most part, a lot of the people that we know that are doing this,

00:17:46.900 they're actually building a business.

00:17:48.500 So they're not just employing money to make money passively.

00:17:52.860 They're actually getting themselves involved in a truly productive process

00:17:57.580 that their hands are going to get dirty in.

00:17:59.560 and they're going to learn things as they go. It's one of the draws to me of real estate is

00:18:03.640 that it is truly something that you can raise your children up to learn how to manage well.

00:18:09.000 I liked, I like listening to like the Victorian era, you know, like Pride and Prejudice

00:18:14.000 reading and listening to one of the things I like about that book is it gives you a window

00:18:19.140 into the culture of these landed families and how their reputations were tied to how they managed

00:18:25.200 their land and manage their wealth. And were they good to their tenants? Were they good to

00:18:29.780 the people that they served? Were they a net benefit to the community? And there's just

00:18:36.220 something about owning pieces of dirt and the buildings on them in a community that gives you

00:18:43.380 a stake in the community in a way that's difficult to replicate through other means.

00:18:49.120 People even recognize like you either have the reputation of being good at that and being good

00:18:53.740 to the people around you or like are you are you the person that owns that terrible whatever down

00:18:58.720 on wall avenue here in ogden this like big brick building that a couple years ago like parts of it

00:19:03.300 were falling off onto the sidewalk and uh there was like news articles who owns this building

00:19:08.620 let's and it's some guy in canada it was someone way out the canadians what in the world so that

00:19:14.240 was like there's a direct reputation against actually for us as a church owning the the

00:19:19.840 church that we do in our community, lots of people know about it. Like I'll talk to someone and say,

00:19:25.160 oh, you pastor that church. Oh, I know where that church is. You're the bell tower. You're

00:19:28.200 the stained glass. If we take good care of this building, it says something to people. Dan's

00:19:33.040 laughing because there are weeds out front of the church right now. But yeah. And in our last

00:19:36.160 members meeting, I said, get used to the words deferred maintenance. You did. It was a joke.

00:19:41.540 It was a joke. It was a joke. It's interesting to me if we go back to Louisiana Purchase and

00:19:45.860 some of the ideals of the founders i think it's interesting that uh a good bulk of the famous men

00:19:51.880 you know like george washington being the example uh were land surveyors and the whole value in

00:19:57.880 coming to america was the opportunity to own land where you couldn't have elsewhere so that was

00:20:03.900 certainly part of the warp and woof the ethos of being an american but even thomas jefferson's

00:20:09.720 idea of an intellectual agrarian the idea that to be a part of the republic and to be a voting

00:20:15.540 member, you had to be a landowner. And there's a reason for that, because if you own the place,

00:20:22.060 just like we say about children, you have a vested interest in the future. Well, if you own

00:20:26.480 real property, you have a vested interest in the real physical future. I think this is also

00:20:32.740 interesting. I was reminded of an Aldo Leopold quote, and it says this. He said, there are two

00:20:37.900 spiritual dangers in not owning a farm. One is the danger of supposing that breakfast comes from the

00:20:43.100 grocery and the other that heat comes from the furnace. Do you desire to be shrewd financially

00:20:49.200 for the sake of your family and future generations? We know that a robust society depends on getting

00:20:54.620 this right. Success in building and passing on personal wealth. Let's be mature, responsible

00:21:00.900 leaders with the resources God expects us to turn a profit on, to love our children and children's

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00:21:12.260 tax strategies, and legacy planning in a holistic approach, coaching his clients to act wisely.

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00:23:00.740 As the saying goes, gold is the money of kings, silver is the money of gentlemen,

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00:24:05.460 you'll be speaking with Jace, Ethan, or Stu, three members of Refuge Church right here in

00:24:10.880 Ogden. Head to ogden.gold and check it out today. So Brian, I want to get really granular here on

00:24:17.820 space. Thinking about your backyard and there's a little creek running through it. And recently we

00:24:24.180 had the elders families over and the kids were playing. And I was reminded of my childhood

00:24:29.460 growing up in rural parts of America in the West. The land shapes a people as much as they shape

00:24:35.440 the land and it's good for boys to have a creek to play in yeah it's good to not just have cubicles

00:24:42.140 and you know linoleum so walk me through why in your thinking like for your boys you you've

00:24:50.020 obviously made a conscientious decision and dan you have a big space too at your house where like

00:24:54.240 your kids can go in the garden and they can roam free and they can explore to some extent but for

00:25:00.180 you guys why is that so just practically important for your family that you said we're going to

00:25:04.580 invest in that yeah i mean one of the and this was a very difficult decision to buy a place in

00:25:10.280 this economy like with seven percent interest rates and inflated market and all these things

00:25:16.040 but we looked ahead and we said well we can and it took years of preparation we looked ahead and

00:25:21.360 we said we can we can wait but there was some there was importance to us of while our children

00:25:27.000 are young securing a place like this where we think we could hand it on to them and and they

00:25:33.500 will look back and say, well, this is the kind of property that you can't get today. It's already

00:25:38.160 hard to get today, but in 10 years or 20 years or 30 years from now, I just think it's going to get

00:25:43.120 harder to get any place like this in a place that's actually close to where all the people are.

00:25:49.440 It's not like an hour out in Morgan or way out in the... I'm sure they'll keep developing further

00:25:54.660 and further out. And we made a conscious decision when we bought that place that even though we had

00:26:00.240 some equity in the home that we built in 2019. We had three kids when we built that home.

00:26:04.940 We were very strapped for budgets. We built what we could, which was like,

00:26:08.700 how, what's the cheapest way to get square footage? Well, go two stories straight up,

00:26:12.760 like a box with a roof on it. And no garage, no basement, none of that. Let's just go for

00:26:19.380 what can we do? But we had outgrown it. But we made the decision, we're going to take the extra

00:26:25.680 time and a lot of extra effort to keep that place and buy our next one. Because the idea would be

00:26:33.320 that when my children, I don't just want to hand my children an inheritance when I'm dead.

00:26:39.120 I want to help them when they get into the key years of 18 to 30 in being able to establish them

00:26:46.320 here. When they have young kids. When they have kids. And it's really hard.

00:26:50.160 And when they can't afford to go buy a house. And so I made the conscious decision,

00:26:55.480 And this is opportunity cost.

00:26:57.640 Any of these investment decisions we're talking about,

00:27:00.760 the opportunity cost is that if I invest $1 here,

00:27:04.740 that is $1 I cannot invest in another place.

00:27:08.140 So for us, we said,

00:27:09.860 and it's not that everybody has to make this decision,

00:27:12.500 but we thought it made sense for us.

00:27:13.760 We're going to invest in keeping that house,

00:27:17.340 getting it in an uncomfortable situation to an extent,

00:27:19.720 like not unwise, but just it's difficult to buy another place

00:27:23.060 and then rent the other one out.

00:27:24.400 It's more work.

00:27:25.480 But for our goals, what are we trying to accomplish?

00:27:28.540 I'm actually trying to build a people in a place here in Ogden and in Weber County and in Utah.

00:27:34.020 So we need a space.

00:27:35.940 And even just practically speaking, it is really wonderful to say,

00:27:39.800 I could wait and let a lot of people, I don't want to dump on baby boomers,

00:27:45.340 but a lot of people make the mistake, I think, of they sort of put all of their eggs in the basket of,

00:27:55.480 well, we'll get that dream house when we're 60 and we have no kids and we're like empty nesters

00:28:01.080 and then we'll go and we'll get our, you know, whatever. We're like, well, we want to actually

00:28:05.860 buy a place when our kids are still going to live in it. Like we need space now. We don't need space

00:28:10.020 when we're 60. Well, I hope we still do because we have a mess of grandkids running around. But

00:28:14.660 that was important to us to be able to say, I want my kids to be able to grow up and say,

00:28:19.460 oh, I have memories of that backyard. And I love that. And then hopefully one day they'll inherit

00:28:22.880 it too. And, you know, they'll live in it and continue to be surveys in that house for a long

00:28:26.180 time. But, um, that was a little bit of a rambly answer, but I guess a lot of, there were a lot of

00:28:31.320 things going through our head related to this exact topic in the years of planning and working

00:28:36.720 towards this. Yeah, that's helpful. Dan, curious, uh, your, your read on like, why, why have you

00:28:42.120 invested in a real space, real property? Yeah. Yeah. So part of the motivations were just purely

00:28:47.540 selfish. I grew up in rural Wisconsin, cornfields, forests, rivers, you know, and that's, that's

00:28:53.500 was a lot of my childhood. And so I wanted space, you know, so, um, back home, my parents had a

00:29:00.900 one and a half acre lot and it was like a small lot, you know, it was just, that was small for

00:29:06.700 the area. And so I got out here and in, in our particular region, because of the mountains and

00:29:12.480 the great salt lake there's just not a lot of land and so you're gonna find like 0.2 acre lots is

00:29:18.640 pretty standard 0.25 you know a quarter acre something like that so um we wanted uh to have

00:29:25.020 a little bit more space uh and so we bought an acre uh now my backyard isn't as picturesque as

00:29:32.000 mr silvey's over here he's got mature trees and uh and a river and or a stream and man i wish it

00:29:38.600 Yeah, it's just, it's a stream. But, uh, so my backyard, if you could picture it is essentially,

00:29:44.640 you know, uh, two thirds of an acre that has chain link fence around it and just grass in it.

00:29:49.780 That's how I got it. And so I, I thought about, you know, with my kids, what do I,

00:29:56.020 what do I want? I've got a blank canvas here. I, I don't have mature trees. What am I,

00:30:00.300 what am I going to do? And so I, I planted a lot of fruit trees. I've got a big garden.

00:30:06.220 we, you know, put chicken coop and some chickens in there and planted shade trees that they'll

00:30:12.480 enjoy when I'm probably dead and gone, you know, things like that. But I'm trying to beautify the

00:30:17.360 space. And part of the reason I did what I did is because when you don't have mature trees for your

00:30:22.740 kids to climb in and put a tree house in and, you know, do all the things that come with having

00:30:27.380 mature trees, what experience could I give my kids? Well, I could give them the experience of

00:30:32.820 enjoying the shade of an apple tree and picking, you know, peaches and cherries and, and raspberries

00:30:39.040 and running through the garden and learning how to be productive, learning how to grow things,

00:30:44.520 appreciating beautiful things. Like it is, it is really pretty when the cherries are in full bloom

00:30:49.880 in the spring and you've got the mountains that are covered in snow in the background. And it's,

00:30:54.420 it's just really, it's, it's a pleasant place at times to be, you know, and it's growing in

00:30:59.900 maturity. So, uh, I wanted them to have plenty of space to be able to run around. Cause my brothers

00:31:05.080 and I growing up, we played football in the backyard. You know, we golfed in the backyard.

00:31:09.140 That's how much space we had. But, um, and so my boys would be able to have plenty of space. We

00:31:14.200 picked a quiet street. So there, when I left for work this morning, they're all out on their bikes

00:31:20.860 and scooters running up and down the road. And the guys that are leaving for work, you know,

00:31:25.620 for their commute, they're like stopping and waiting for them to get out of the way. And

00:31:29.200 anyway because it's just our neighbors that use that road so but i wanted to have that space and

00:31:34.280 i'm i'm going to hold on to that house i'm not going to sell it um because they're not like

00:31:39.520 brian said they're not making more of these places around me you have essentially amelia calls it my

00:31:45.180 wife she calls them blammoville where it's just like oh there's a house blam there's a house blam

00:31:49.760 there's a house blam because i've got patio homes and oh yeah and apartments and and anyway and

00:31:55.340 we've just got this little neighborhood that's one acre lots. And so we'd like to hold onto that

00:32:00.860 for a long time, but it was really important to us to have that space for our kids to be able to,

00:32:05.700 especially our boys, to just be boys, you know? Yeah. And I think we were talking about building

00:32:10.860 the new Christendom. When you have this concept of you want to be oaks, you want to be rooted

00:32:14.760 and planted. Well, you actually have to have a place to put the roots. And so that becomes

00:32:19.920 really pivotal. I think I was reminded of this. I'll share the quote and then we can jump into

00:32:24.300 the episode, but this is a Greek proverb and it says a society grows great when old men plant

00:32:30.200 trees in whose shade they shall never sit. So, you know, thinking about our boys, thinking about

00:32:35.900 the future and our daughters as well, there's going to be this work in the new Christendom

00:32:40.740 of building things that we don't get to see the full fruit of. But again, it goes back to real

00:32:45.700 property, real spaces, uh, and having a foothold in a community. Uh, Brian, if you would, I want

00:32:52.680 to hear just a quick plug for one of the greatest books ever written not yet published but coming

00:32:59.400 wow i don't i'm not even aware of what book you could be talking about no uh so we'll have the

00:33:06.100 haunted cosmos book yeah uh lord willing we'll have pre-sales it's really not that far away no

00:33:10.860 we're very close we got pre-orders coming uh books you know being worked on right now

00:33:15.540 it'll be a little bit more than a month pre-orders will be open that's right yeah from when this

00:33:20.440 episode drops. So yeah, the book is Haunted Cosmos, doing your duty in a world that's not

00:33:24.680 just stuff. And it is obviously an overflow of the project that I do with Ben, Haunted Cosmos.

00:33:30.620 But the book is really an investigation into the nature of the world. It is an exercise in

00:33:37.320 attempting to do something that we often don't do well, which is to see and pay attention to what

00:33:43.960 God has actually done and the wonders of the world. It's not a book that is just like, you

00:33:49.780 know maybe you've listened to honey cosmos it might be your cup of tea it might not um it's not a book

00:33:54.160 just about spooky supernatural stuff it's it's really a book in fact one of the themes of the

00:33:58.820 book is that if you're the if you're constantly running to the supernatural for a dopamine hit

00:34:04.580 and you're not paying attention to the god's glory in something like a tree or a blade of grass or

00:34:11.640 i mean if we'll just stop and think about the nature of the world we'll live in it would teach

00:34:16.900 us to properly glorify God in a way that we're often not. So the book works through various

00:34:22.380 aspects of creation, both the seen and the unseen world. And then simply asks, how can we as image

00:34:29.220 bearers, and there's a section on man, what does it mean to be a human? How can we do our duty?

00:34:33.480 So Ben and I both wrote about half the book each. And looking forward to you guys getting your

00:34:38.840 hands on it. We'll have those pre-orders open soon. And I hope you guys enjoy it because man,

00:34:45.220 writing a book is a lot of work it really is it's been good it's i we got to do early reads so

00:34:50.320 very excited for that project as well uh dan thank you for doing the interview i did want to read we

00:34:56.900 had just as we jump in to toot your horn just a little bit reader feedback okay about the financial

00:35:03.020 series somebody texted me this one of our avid listeners they said please tell dan that these

00:35:08.780 episodes on finance and what to do with our money have been extremely helpful the cold opens the

00:35:13.060 conversation and the actual interviews have been incredible. So make sure you tell Dan. So Dan,

00:35:18.380 thank you. Wow. Thank you to the listener. That was very generous. Absolutely. We'll jump in now

00:35:23.060 to the conversation with Pastor Dan Burkholder and Tim Six. And in this episode, we're talking

00:35:27.600 about real estate. Well, welcome to this episode of the King's Hall.

00:35:43.060 where we're going through a special investment series.

00:35:46.160 The premise is essentially,

00:35:48.060 if you have $100,000 in the bank or under your mattress,

00:35:51.020 what are some of the options out there

00:35:52.400 with the uncertainty of the economy and inflation

00:35:54.720 and a presidential election

00:35:56.600 and lots of different variables?

00:35:58.540 It's actually really difficult to know

00:36:00.360 what to do with cash right now.

00:36:02.760 And so in this series, we've gone through,

00:36:05.560 we'll be going through Bitcoin and gold and real estate

00:36:09.680 and traditional finance through the stock market

00:36:11.940 and 401ks and things like that. And today we're going to be talking about real estate investing

00:36:17.080 and probably a whole host of other things with one of my very good friends, Tim Six. Thanks for

00:36:21.780 joining me, Tim. It's great to be here, Dan. Thank you. Yeah. Yeah. Tim is, like I said,

00:36:26.800 one of my good friends. I've known Tim for some years now. He's a member at the church here in

00:36:31.460 Ogden Refuge Church. He is a F-35 pilot with the Air Force. He is a war hero, according to his

00:36:39.540 mother. And my wife told me to say that on the podcast because it would annoy Tim to death.

00:36:46.820 Tim has been in real estate investing for a number of years and he'll, he'll be getting to his story

00:36:51.460 here shortly, but he has found some success, found a niche that he seems to really be thriving in.

00:36:58.240 And so I wanted to pick his brain on real estate investing. He's also into other investments. So

00:37:03.140 it's, you know, towards the end of this, this interview, I'll be asking him about what other

00:37:08.360 investments do you think are worth pursuing? And so he's got a lot of good information on that. So

00:37:13.400 Tim, let's jump in. How did you begin real estate investing? And what was the timeframe?

00:37:20.960 Great start, Dan. So first off, it's a pleasure to be here. You guys are doing awesome stuff.

00:37:27.720 My story really starts when I was four years old. There I was investing in real estate when I was

00:37:32.180 four. Not really. I've always been an entrepreneurial kind of kid. I started selling rocks out of my

00:37:37.340 wagon to my neighbors i uh moved on to washing cars when i was seven did the beanie baby flipping

00:37:43.860 when i was 10 which was oh that's right you're doing on ebay with your mom that's right mom's

00:37:48.640 account yeah yeah it was actually more lucrative than you think uh it was ridiculous started there

00:37:53.940 i uh i picked up 13 or 14 lawns when i was about 12 years old and then uh by the time i'm 16 i'm

00:38:00.760 start my first legitimate LLC. I was buying and selling specialty defense systems, load-bearing

00:38:07.440 equipment for the military with a private account on eBay, right? Which is using a local manufacturer

00:38:14.240 who had these government contracts, but needed Midwest distributors kind of thing. And so they

00:38:19.160 were, I was happy to partner with them when I was 16. That's when we made my first chunk of

00:38:23.860 change, if you will. Went to college with some good, decent money in the bank and came out of

00:38:28.480 college with no debt, which is incredible. Right. So it starts there. Well, but then in college you

00:38:34.480 did your, your AR 15 business, right? Goodness. That's right. I forgot about that. That's one of

00:38:39.000 my favorites. That's the first time we used debt leveraged well to expand even further. That's

00:38:46.560 right. We can dig into that too, if you want, but no, I'd be curious. Yeah. All right. So,

00:38:52.320 so there you am. I'm at Purdue. My junior year of college was when I finally said, okay,

00:38:56.400 this ROTC thing is pretty cool. I always want to be a missionary pilot.

00:39:00.060 Ever since I was a little kid, even with my entrepreneurial spirit,

00:39:02.280 I always thought I always felt called to be a missionary full time.

00:39:07.360 And I love flying. I didn't fly airplanes because my,

00:39:10.780 my parents were pastor and missionaries and we had no money,

00:39:13.580 but I always dreamed of flying airplanes. And so that was the dream.

00:39:18.940 Fast forward to learning about how so many missionary pilots are actually

00:39:22.900 previously trained military pilots and we had no money.

00:39:25.500 It was one of those, hey, maybe Air Force ROTC isn't a bad gig.

00:39:29.400 Go try to fly for Air Force for a number of years, then hop out, take the family across

00:39:33.500 the ocean somewhere and continue that dream there.

00:39:37.480 So there I was.

00:39:38.560 Yeah, I was junior year.

00:39:39.740 I'm for the first time thinking about committing to ROTC.

00:39:43.340 USA has this, what they call the lieutenant's loan.

00:39:46.440 It's a 0% or 2% interest loan.

00:39:49.360 You can get 25 grand out.

00:39:50.900 And most of my buddies are doing it.

00:39:52.120 They're buying their new trucks.

00:39:53.020 They're buying whatever crap they shouldn't be buying with leverage.

00:39:57.080 And I'm like, hey, man, this is 2007.

00:39:59.680 You know, there's this guy, Obama versus this guy, McCain.

00:40:03.280 Everybody's a little bit scared about, you know, if the Obama guy wins,

00:40:07.000 all my guns are going to go away like the Clinton days.

00:40:09.720 But I saw that as an opportunity.

00:40:12.940 At the time, I enjoyed building AR-15s, but it was not lucrative.

00:40:17.900 I mean, you know, you might make $100 if you build a nice rifle.

00:40:21.720 But it was definitely a slow business.

00:40:25.720 So I decided, hey, I'm going to take that $25,000 out.

00:40:29.980 I'm going to buy $25,000 worth of AR-15 parts.

00:40:33.040 And you could buy upwards without messing with the serial numbers and stuff.

00:40:36.400 I'm going to build those.

00:40:37.460 And then slowly I'll build this out.

00:40:39.260 If McCain becomes president, that's fine.

00:40:40.680 I'll still make him $100 a rifle.

00:40:42.760 I had a gun broker account with a local FFL.

00:40:45.760 But if Obama becomes president, I mean, that $25,000 could turn into $50,000 overnight

00:40:49.900 if i do this right so sure enough you know the rest of the story i mean rifles almost tripled

00:40:54.740 in value so it turned into more than just 50 was that was that obama or was sandy hook around that

00:41:00.060 time too or something like that another catalyst a little later because i was this is 2007 and 2008

00:41:05.500 um i think i mean unfortunately yeah the school shootings are still happening so there's absolutely

00:41:11.160 a catalyst in there and so nikki and i we my wife we got married in college got married young

00:41:16.380 according to a lot of our friends, but it's part of our history. It's awesome. So we have a small

00:41:20.200 little crappy one bedroom apartment on the corner of campus with $25,000 worth of air, 15 parts

00:41:27.120 everywhere, the manufacturing business going on, but turned out to be obviously a huge blessing,

00:41:32.740 right? I mean, that really, all these little tiny businesses grew us into being able to take that

00:41:38.040 money out. Why in a way that I hate to say wisely at that age, but at a point it wasn't, it wasn't

00:41:44.800 the dumbest thing to do with 25 grand, even though it was a loan. Right. So that was the

00:41:49.240 first time I saw the, I saw the power of, uh, of some compound interest or, uh, I should say

00:41:55.580 compound leverage versus compound interest. I, uh, I was also a kid in high school who I wrote

00:42:01.620 my senior thesis paper. We had to do senior projects. I wrote it on how to become a millionaire

00:42:05.540 by the time you're 35 years old by investing in the stock market. And so I, I had a Roth IRA when

00:42:12.380 I was 16. I didn't put much in it, which looking back, I'm actually thankful for, but, um, that

00:42:20.080 being said, I mean, my, my dad, um, he's an accountant financially, very wise man, very

00:42:26.800 conservative man, very meager salary for a lot of years. Uh, but, but still has very Dave Ramsey

00:42:33.320 esque style principles. Right. So not a bad way to have a basis of avoiding debt and growing,

00:42:39.940 through compound interest. I just learned at an early age, I think there's, I think there can be

00:42:45.780 better ways. So that's, that's kind of where we started, Dan. Yeah. Yeah. Well, you haven't even

00:42:50.380 got to real estate yet, but one of the things that might be important to define is what is

00:42:54.600 leverage. When you say leverage, I think the context kind of explains it, but what, what do

00:42:59.840 you mean by that? Yeah. It's a big piece of real estate investing, right? Cause real estate's,

00:43:05.160 it's just a massive market. You know, you can go buy a share of Apple for a couple hundred bucks,

00:43:09.600 but to go buy a house, I mean, yeah, a couple hundred grand, right.

00:43:12.540 And who's got, who's got a couple hundred thousand dollars to start?

00:43:15.180 You know, that's not where we start.

00:43:16.920 It is a unique investment in this series because with gold, Bitcoin or a stock, you know, any,

00:43:25.000 any person, if you've got a few bucks, you can buy a portion of any of those, right?

00:43:29.560 You should start somewhere.

00:43:31.020 But real estate, the barrier of entry is a little higher.

00:43:34.460 And so, you know, paying cash for, for a lot of real estate is out of the reach of most people.

00:43:39.600 Absolutely. And some would even say that you shouldn't do it, but I'm sure, I'm sure we'll

00:43:44.540 get into that. So let's, let's get into how you actually got into real estate.

00:43:48.820 So then, uh, joined the air force, a commission 2009, the next 10 years or so are really a story

00:43:56.500 about becoming a fighter pilot, which is a pretty much an all encompassing part of your life. So

00:44:01.960 there wasn't a ton of time for, for side hustles, if you will. That being said, I was still, I was

00:44:07.280 still buying us own gold and silver. I did a lot of those. I like the principles.

00:44:11.120 You were doing new numismatic kind of stuff, not just bullion.

00:44:13.800 That's right. I started out with bullion. I was doing as high volume bullion as I could at that

00:44:18.120 time, but then it turned into us rare coins. And there's, there's definitely a niche market there

00:44:23.840 that is pretty interesting. I learned that on bullion, you might make two or 3% if you're doing

00:44:28.280 it right, but on a solid numismatic, you might, you might make 10%, you know, so still not,

00:44:34.780 still not awesome return with those margins. I mean, why wouldn't you?

00:44:41.000 Yep. So that, that was a, that was a part of that time. So yeah,

00:44:44.280 so fast forward 10 years,

00:44:45.280 I was actually just got back from a trip with one of my good friends.

00:44:48.820 Actually, he was a member of the church here as well.

00:44:51.300 Fellow F 35 pilot, great family guy, four kids,

00:44:55.280 very similar backgrounds.

00:44:57.300 We were just chatting late one night after flying and he was kind of

00:45:02.340 pontificating with me on,

00:45:03.920 And, hey, man, like, you know, the Air Force has been, it's been a great, it's been a great career already, right?

00:45:09.480 Ten years.

00:45:10.060 As a pilot, we can get out at 12.

00:45:12.420 And so we're both discussing, hey, in two years, we have this big decision to make.

00:45:15.520 Like, what do we do?

00:45:16.600 We love flying jets.

00:45:18.120 I think the calling is, back to that being a missionary pilot, I kind of saw it as, you know, I thought it was going to be a Bush pilot in Africa.

00:45:24.600 But I think you can do some awesome things, even flying for the U.S. government, right?

00:45:28.940 I mean, it's still made up of a lot of people who need to hear the gospel and who have families who are important to our country and everything else.

00:45:38.400 So I think besides just flying fast jets and having a great time, the people is why we were still there.

00:45:43.400 And so that's where he was in the same boat where he's going, hey, this is not a bad gig.

00:45:48.040 We're making a difference here.

00:45:49.920 I think we can keep making a difference.

00:45:51.460 But we're 10 years now.

00:45:53.120 How do we have the next 10 years if we do stay in the Air Force?

00:45:55.720 how we set ourselves up with our kids for the future. Besides, I mean, right now we're, you

00:46:01.360 know, we're making a hundred thousand dollars a year. So as pilots, right. As officers in the

00:46:04.360 air force, great salary. We're happy. We're, we're fine. We're, we're taken care of. I get

00:46:08.860 these little side hustles kind of helping on the side too. That's good. So how do we go to the full

00:46:14.380 20 retire? And, you know, if you have a air force job, you know, you can retire 20 years and what,

00:46:21.080 you know collect half your paycheck the rest of your life or just sucking air so it's not a bad

00:46:26.040 look but his point was okay so that's five grand or so a month in 20 years how do we replace the

00:46:34.840 other five grand that we're going to lose by retiring but still have a time with our families

00:46:40.200 because we're looking at our kids ages and stuff too my four kids are you know you'd be hitting

00:46:44.180 those early teen years and whatnot at that age and so pretty important years they're all important

00:46:48.880 But anyway, so he was the one who brought up real estate.

00:46:52.800 He goes, hey, man, so I've heard about real estate.

00:46:56.460 What if, you know, if you buy a house a year for the next 10 years, long-term hold, cash

00:47:02.560 flowing real estate, rentals, intentional rentals, if you will, if you make 500 bucks

00:47:08.580 a month and buy 10 of these the next 10 years, I think there's the other five grand.

00:47:13.860 And I was like, that principle makes sense to me.

00:47:16.840 I don't understand it all.

00:47:17.860 I grew up in a church parish style home and missionary housing.

00:47:21.780 I mean, it was a, you know, I grew up in a real house myself.

00:47:24.420 And so my parents didn't own real estate or a house for that matter.

00:47:28.520 And so to me, it was, it was very intriguing, but I didn't know much about it.

00:47:33.460 And so I just thought the principle sounded sound.

00:47:36.220 So I started digging into it.

00:47:37.960 I hadn't read a single real estate book yet,

00:47:40.340 but I talked to some of their folks that I knew that were very lightly in there.

00:47:44.540 And then we're talking like air force guys who just turned our, you know,

00:47:47.580 one of their houses into a rental.

00:47:49.040 And then I started listening to podcasts and that was kind of like the fire

00:47:52.640 there. But the more I learned, the more is, why aren't we doing this?

00:47:56.300 And so that's when it started. Uh, this is 2018. Uh,

00:48:01.460 it kicks off there where now neighbor across the streets and finds out

00:48:06.420 they're, they're going through a divorce. We liked our house.

00:48:09.200 We decided to buy their house off market. And so you buy their house for you

00:48:14.620 to live in. That's right. Okay. Which came with a basement dweller, by the way. That's a good

00:48:21.120 story. Yeah. So my first house hacking experience, we bought the house across the street. It's got

00:48:25.940 a walkout basement, Utah standard. The house is bigger than probably should be. Somebody lives

00:48:30.160 in the basement, but Hey, she's, she's paying part of their mortgage. So we said, Hey, you know

00:48:33.520 what? She can stay there. We got plenty of space upstairs for our family. So, so now we've instantly

00:48:39.220 got a basement renter house hacking their first house that I didn't know what house hacking was,

00:48:43.260 but it's a term that real estate people use now.

00:48:45.420 And then we turn our house across street into our first rental.

00:48:49.140 Obviously at that time,

00:48:50.400 you know,

00:48:51.100 a VA loan was a fantastic option for us.

00:48:54.080 So we're on a 15 year fix.

00:48:55.420 I was making double payments,

00:48:56.500 trying to pay it off in five years.

00:48:57.720 I had my plan to be debt free within four years.

00:49:00.500 That was the initial gateway drug,

00:49:02.620 as I call it,

00:49:03.320 which is pretty simple.

00:49:06.360 Turn your old house into a rental by the house.

00:49:08.680 I mean,

00:49:09.300 by the next house with a separate unit with it.

00:49:12.560 If you, if you can kind of duplex style, but this was, this is a walkout basement.

00:49:16.860 And so that's where I started.

00:49:17.900 That was summer of 2018.

00:49:19.140 Well, late summer of 2018.

00:49:20.860 So I kind of caught the bug there.

00:49:22.900 And, uh, my, my F-35 friend, same thing.

00:49:26.680 We discussed ideas the whole time.

00:49:28.640 He followed his principles.

00:49:30.000 He bought about one a year to this day.

00:49:32.620 That was six years ago or so.

00:49:34.740 He's, I think he's at six or seven units now doing great.

00:49:37.860 Uh, and fantastic markets.

00:49:39.480 We got the bug.

00:49:40.540 I say we, it's my wife and I, Nikki's stay-at-home mom.

00:49:43.340 She enables me to work hard outside of just normal work hours.

00:49:46.540 We got the bug and started buying one a month.

00:49:49.480 We bought one a month for 40 months straight.

00:49:51.580 One a month for 40 months straight?

00:49:53.340 Well, I should say we bought or sold.

00:49:54.960 Like on average?

00:49:56.060 On average.

00:49:56.780 We bought or sold one a month for 40 months straight.

00:49:58.400 I did have to flip a few of those first, that first year I had to flip a couple because

00:50:01.520 we didn't have enough cash, but we can dig into some of those numbers and how that was

00:50:04.660 even possible.

00:50:05.240 But to start with 30 grand and go 40 units later.

00:50:09.320 but that's where it started, Dan. Oh my word. Okay. So, uh, when we're talking about real

00:50:14.500 estate investing, you know, I don't know a ton about real estate investing. That's pretty broad

00:50:19.800 category though. It's like saying, Oh, I'm investing in the stock market. It was like,

00:50:23.480 well, what, what exactly do you mean? Yeah. Right. Yeah. You've got penny stocks. Yeah.

00:50:28.160 Yeah. The OTC stuff you've got. Yeah. The NASDAQ, you've got the Russell, you've got all of this

00:50:32.880 different stuff. Same thing in real estate, right? So there's commercial real estate. You can, uh,

00:50:38.420 I'm sure we've all seen the HGTV shows in the, you know,

00:50:42.200 early OOs or whatever.

00:50:43.720 Well, unless you're a zoomer, then you weren't alive yet, but yeah,

00:50:47.420 they flip the house flipping, you know,

00:50:49.160 and that was like big money where the big money is, by the way,

00:50:52.280 really risky and lots of taxes, but so flipping houses.

00:50:58.100 And you can talk more about that if you'd like,

00:51:00.900 but you're primarily talking about single family rentals.

00:51:04.340 Yep. It's absolutely right. I hate when people ask, Hey,

00:51:07.200 how's the real estate market?

00:51:08.420 well i don't know i mean shoot there's there's 40 different types of real estate markets

00:51:12.500 and then amongst that what are the three most important parts of real estate dan

00:51:15.500 location location yeah that's right so even within all these sub parts of commercial multi

00:51:20.520 residential you're still talking all these sub markets and then sub subs to the markets which

00:51:25.660 are obviously localities so yeah we focus primarily on residential long-term uh rentals

00:51:32.960 and so we're talking you know four units or less is how it's defined in today's market if you're

00:51:38.400 buying a four unit three unit or two it's the same as buying a single essentially it's kind of

00:51:43.640 dumped down there but once you go past four units in a building that's commercial and so now you're

00:51:48.260 in a commercial loans commercial package why why did you focus on on that segment that's a good

00:51:53.400 question i think it's just because that's what we knew right we had bought our first house in 2014

00:51:57.680 and late and then we just you know turning that thing into a rental it seems so easy and it's

00:52:03.180 it was something we knew because i didn't know much about real estate at all you know nick and

00:52:07.600 at that time, we'd probably be married seven or eight years, right? And so we probably lived in

00:52:11.360 six or seven houses because we move a lot. And so I know how to live in a house and I know how

00:52:16.840 simple it was to be a tenant. And I thought about the fact that anytime we were a tenant somewhere,

00:52:22.620 we took care of the place. I probably talked to my landlord one time a year. I was like,

00:52:26.180 this is pretty simple. I mean, who wants to talk to your landlord? So I thought of all the real

00:52:30.480 estate, at least I understood that principle. I think we could do that because at the same time,

00:52:34.340 right? I'm still a full-time job. I'm still flying in the Jetson Air Force. I can't go full

00:52:38.420 bore commercial multi syndications. I'd love to do that someday, but it's not now. Right.

00:52:43.940 So where are we at today? It made the most sense. And then besides that point, I was also still

00:52:49.420 somewhat adverse to using leverage, right? I mean, my principles are still trying to become

00:52:54.380 debt-free. And so using leverage to me is like, it's like cooking with fire, right? I mean,

00:53:01.100 you give a, you give a four-year-old a match in a, you know, newspaper and like, you're going to

00:53:06.460 burn your house down. Right. I know. Don't actually don't ask me how I know. No, about

00:53:12.240 leverage, not burning a house down. I've also tried to do that, but it wasn't my boy's fault.

00:53:15.760 That was mine. Well, yeah. Different story. Different day. We got four little kids too,

00:53:19.060 right? Yeah. Burn the house down. And so same thing with debt and leverage. Right. And if,

00:53:22.500 if, you know, you don't have the right, I think investment strategy, but also the right risk

00:53:26.720 tolerance, but then also being wise with that risk, I mean, you can, you're going to go bankrupt,

00:53:31.980 right? And it's, it's, it's been done a million times before too. So, so to me, leverage was,

00:53:36.760 was using fire in a way, but I was also, I can heat my house with fire. I can cook with fire.

00:53:41.000 It can be good too. And so I saw long-term hold residential real estate as a place that

00:53:46.800 principally we all need a house. We all, we all need a roof over our head, right?

00:53:51.360 So there's always going to be a demand for residential real estate. I mean, obviously

00:53:55.660 the commercial real estate kind of has been one of the better investments over time,

00:53:59.720 if you look at the numbers, but there's still the biggest, some of the biggest fluctuations

00:54:03.700 have been of commercial real estate too. Long-term hold residentials, in a lot of ways,

00:54:08.780 it's kind of boring, but it's also, if I'm going to use leverage, it's, I thought it was the safest

00:54:13.640 way to do it. Yeah. You know, what's interesting about real estate in this, it could even be

00:54:18.900 unfair in some ways in this investment series, because, you know, with Bitcoin, with gold,

00:54:24.320 with stocks, essentially what's required of you is to buy it and then to sell it at some point.

00:54:30.800 And that's how you capitalize on it unless you have a dividend bearing stock and then you just

00:54:34.400 collect dividends, whatever. But with real estate, it's different because while it is an investment

00:54:39.840 and it is an asset, you also have to run it like a business. And you mentioned that like talking to

00:54:46.340 a landlord and things like that. So I just want to ask what's required. And then I would like to

00:54:51.780 next talk about like, how do you actually monetize, you know, how, how are you getting

00:54:56.920 your returns on that investment then if it's not, cause it's not as liquid as gold and stuff like

00:55:02.720 that. So what's, I got to eye roll. Uh, no, it's absolutely true. Oh, okay. Absolutely. Um, so

00:55:09.960 yeah, just tell me what, tell me, uh, you've got, uh, quite a few doors. You said you, you bought

00:55:15.220 and sold, you know, one a month for 40 months. And, uh, every time I talked to Tim, he's like,

00:55:20.260 oh yeah i'm closing on a house today whatever and so you've got you've got a large number of

00:55:25.220 doors i know you got a couple of guys working for you but um tell me kind of what's required

00:55:29.720 yeah that's absolutely true i mean you can click click click and you have an investment

00:55:33.700 with any of those other ways you talked about right real estate to me is is absolutely an

00:55:38.700 active business although it's classified as passive investing right which is why it's so

00:55:43.920 great from a tax perspective it's anything but passive in a lot of ways though right

00:55:48.040 You also ask earlier if I was suggesting any other investment strategy style things. And I'll first say that probably one of the better ways to build wealth is starting a business. Right. But over, over time, those businesses, you know, businesses come and go. I don't know what the, what the newest percentage is, but you know, something like half of businesses don't survive their first three to five years. Right.

00:56:10.440 Yeah. I think it's even higher.

00:56:11.400 I know the one stat I remember, it was a while ago, I looked at it, but it kind of inspired me

00:56:16.580 with the business of real estate was, I think it's something like 80% of businesses don't last

00:56:21.260 more than 20 years. And I'm thinking about my kids' futures and generational aspect of passing

00:56:27.040 things down to my kids. And I go, well, I'd love to have time to start a business. I don't, right?

00:56:32.540 I still got this full-time job here for another few years in the Air Force and that's going great.

00:56:36.260 So we're going to keep doing that. But I thought, well, the real estate is kind of a happy medium of

00:56:40.240 some people say it's passive some people say it's active i think there's a happy medium for us in

00:56:45.860 the life in the life stage that we're in we've met that balance where it is a business absolutely

00:56:51.580 and you gotta run it like a business but at the same time is you actively set the property up or

00:56:56.900 whatever however we're doing the acquisition the rehab we're placing the tenant but once you do

00:57:01.320 that for the most part i mean it's it's it runs itself right and i go back to the example of how

00:57:07.340 many times i mean we've all written houses in our past right when we're starting out how many times

00:57:11.100 you talk to your landlord yeah yeah maybe maybe once in two years because my fridge broke yeah

00:57:15.840 you call him like when you have to but right you know call your landlord up and waste his time you

00:57:20.100 don't want to talk to him he doesn't want to talk to you you don't want to talk to him so so to me

00:57:24.880 it was okay even at you know 40 some doors today i mean if if i've got 40 calls a year most of those

00:57:32.700 going to go to my maintenance guys which you already said i've got a got a few guys working

00:57:35.820 for me uh full time and they're they're a huge piece of this right employing um you know good

00:57:41.280 labor and guys who want to be a part of this too they get those calls i don't get the maintenance

00:57:46.120 calls i still place all the tenants i still do i still have the leasing and i collect the the rent

00:57:50.760 but even all that so much there's so much automation these days with all the technology

00:57:55.460 we have at our fingertips yeah because you're not collecting checks and having to go to the bank and

00:57:59.740 making sure the ledgers are updated. All of it's online now.

00:58:02.860 Who's got time for that?

00:58:03.500 Yeah. Yeah. Right.

00:58:04.720 No, it's all online. There's great apps for all that kind of thing.

00:58:08.040 Yeah. So a lot of the time, if, you know, help me with this,

00:58:12.320 a lot of your time is spent in acquisition and then like you said, rehab.

00:58:17.660 And so trying to strategically like, where is this house? Is it, you know,

00:58:22.740 what's the return going to be? You know,

00:58:24.600 you've got calculations that you do and we can talk about that when we get

00:58:27.660 into, like, how do you actually realize, you know, this investment, how does it make money?

00:58:32.580 But so you're trying to figure it out. You go through the closing process and all that.

00:58:36.840 And then you've got to figure out like now what's really wrong with the place, you know,

00:58:42.160 and get it ready for a renter. And then beyond that, I'm sure it depends on the market you're in.

00:58:47.360 And you also have different classes of single family rentals. So you have different issues

00:58:55.520 if you're a slumlord versus if you're ABC. Sure. Yeah. Yeah. So, so you have different,

00:59:00.580 different rental rates as far as defaults and things like that. So, but it sounds like most

00:59:05.780 of the time though is spent on the acquisition side, not necessarily on the maintaining side.

00:59:10.880 That's right. Um, it has been for us just because no one just handed me a 45 unit rental portfolio.

00:59:17.800 I love, I know as nice as that would have been, we've had to acquire around. Right. So, so,

00:59:22.680 So, so much time has gone into what you've already said and setting up that portfolio

00:59:27.220 to hopefully be on autopilot someday.

00:59:29.340 And even to extent today is right, which as, and that's, and a lot of that, that time has

00:59:35.060 surged, it's kind of funny, it's surged with in and out of jobs I've had in the Air Force,

00:59:40.020 right?

00:59:40.540 There's certain times I just haven't had time.

00:59:42.360 So I can't acquire, even if I had, even if I had cash, that's not a time I could do it

00:59:46.660 because of the time I had.

00:59:48.060 It's kind of funny to think about people always talk about time in the market, you know, and

00:59:51.600 even now you know hey rates are so high and how can you afford to buy i agree to an extent but

00:59:57.200 to me it was we surged in purchasing and and placing tenants really when i had time i didn't

01:00:04.700 look at the timing of the market yeah i think it goes back to warren buffett who says it's

01:00:09.200 it's not timing the market it's more important to have time in the market it's not timing the

01:00:13.600 market yeah yeah i'm sorry you got it i think that principle is sound which goes back to that

01:00:18.160 whole, I don't know if I finished a thought on the, you know, 80% of businesses don't last past

01:00:22.660 20 years. If you look at real estate, I don't know many people who have invested in real estate for

01:00:27.820 at least 20 years who haven't been successful, right? And so if you keep a long-term lens on

01:00:31.980 real estate, if you look at any 10-year period of real estate, I don't think using sound principles,

01:00:38.260 not being a slum board, placing good tenants, creating good housing, good affordable housing

01:00:43.180 that's safe and that kind of house you and i you and i wouldn't mind living in right yeah then

01:00:48.700 you're going to place the right kind of tenants you're going to people there who are really

01:00:51.440 essentially partnering with you and that's kind of how i've approached it i know a lot of landlord

01:00:55.560 landlords it works for them to to kind of have the i manage my properties but i'll tell my tenants i

01:01:00.660 own the place i tell them the landlords to have the mean guy kind of thing i've never been that

01:01:04.500 way i've all my tenants i've never heard that before i didn't know that oh yeah it's a total

01:01:08.940 thing they uh it's like this like they don't want me then you don't want to be the bad guy so you

01:01:13.420 blame it on the the landlord even though you are the landlord you know disingenuous so they pretend

01:01:18.720 to be like the property manager and they're like oh man the landlord that guy what a jerk am i right

01:01:24.120 and it's him the whole time sorry that the dog's not approved the landlord wouldn't approve it

01:01:29.020 yeah it's yeah it's gonna be a thousand dollars extra it's ridiculous i've never approached it

01:01:35.460 that way i approach my business perspective has been at least tenants in a way are my business

01:01:40.080 partners right real estate can work for all legitimately where we're all winning you know

01:01:45.600 they want a solid roof over their head with a landlord who cares who's going to fix things

01:01:49.600 when things are broken and not uh not just be a sleazy you know collecting checks kind of guy

01:01:53.880 and so all my my tenants from the start i tell them who we are tell them about the kids tell

01:01:58.700 them about you know hey i'm an active duty air force officer we got a set of stuff going on but

01:02:02.940 you're going to meet my maintenance guys or local.

01:02:05.040 Obviously we're not because we move all over the country.

01:02:07.100 The military shtick goes a long way with people.

01:02:09.720 They really like that.

01:02:10.680 Sometimes you go into McDonald's,

01:02:12.180 they give you free food.

01:02:13.300 You tell your tenants you're in the military in uniform.

01:02:16.260 You got it.

01:02:16.680 No,

01:02:17.300 no,

01:02:17.580 maybe it's just police officers.

01:02:19.940 I don't remember paying your taxes.

01:02:21.240 I appreciate it.

01:02:24.560 No,

01:02:25.020 that's good.

01:02:25.860 And it really does help you then partner with the right renters.

01:02:29.920 It's a different perspective.

01:02:30.540 this. And so like when we went through the 2020 thing, I mean, the whole COVID ridiculousness

01:02:36.080 where, you know, you couldn't foreclose anyone and they didn't have to pay.

01:02:40.460 And I can't evict them. They didn't have to pay if they didn't want to. I mean, you just,

01:02:43.900 you just say something about COVID and all of a sudden it's a get out of jail free card for nine

01:02:47.180 months. A lot of people really struggled through that time. And we had our struggles. I had a

01:02:51.240 couple, you know, oddball tenants who just decided to kind of go off the reservation there. But for

01:02:56.500 the most part people are like no we get it you i still had to pay my mortgage we still had expenses

01:03:01.360 to pay we still had taxes and insurance to cover and we still had a good house to provide them and

01:03:05.780 so i can't do that for free and some people understood that and we i mean it was actually

01:03:10.260 i mean looking back on 2020 2021 obviously that was you know appreciation wise that was some of

01:03:16.380 the best years for real estate ever but it's also a great year of growth for us and that goes back

01:03:20.740 to i think that mentality of like i want to call it partnerships it's a little bit disingenuous but

01:03:26.500 But it's mutually beneficial.

01:03:28.560 Absolutely.

01:03:29.040 Yeah.

01:03:29.180 You have a landlord that cares for you and your house and to make sure that you're living in a nice place.

01:03:34.440 You're getting your money's worth and vice versa, that you're taking your responsibilities.

01:03:38.960 We're not inviting me over for barbecues on the weekend, but it's important to still have that kind of relationship.

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01:06:13.720 hard men. Yeah. So tell me about, uh, how does real estate actually make money? Cause I think

01:06:20.240 people get the idea like, Oh, the way that you're going to make money, you, you buy a house and

01:06:25.280 you, uh, are able to make, you know, 1% a month, whatever, you know, on, on, on the returns from

01:06:32.320 the rent, you're able to cashflow it. And that's going to be the main way you make money on a

01:06:37.820 rental on, on real estate. Is that true? And are there other ways? I've heard there's five.

01:06:45.160 Do we talk about this one? No, I've listened to the podcast.

01:06:47.760 All right, cool. There we go. So when we, when I first got that bug,

01:06:52.020 yeah. One of the podcasts I listened to Keith Weinhold coin, I think he's the guy who coined

01:06:56.620 it. Maybe somebody else did, but Keith, he's done a great job educating me at least five ways that

01:07:01.240 real estate pays you. Right. Whereas most other investment strategies pays you one way, right?

01:07:07.180 Maybe two, uh, but one for the most part, you know, you buy a stock for a hundred bucks,

01:07:11.140 sell for 200.

01:07:11.940 There's your appreciation, right?

01:07:14.040 Yeah.

01:07:14.220 I talked about this actually with Jace in the gold episode about how gold and Bitcoin

01:07:19.560 and most stocks other than dividend bearing stocks are non-productive assets, non-productive

01:07:25.340 assets, meaning the only way you can actually profit from them is to no longer have them,

01:07:30.400 right?

01:07:30.640 You buy gold and you hold it.

01:07:32.480 The price goes up and you sell it.

01:07:34.580 And that's how you realize your profits and you don't have it anymore.

01:07:38.080 All right. So it's been, it's been a minute. So I thought through this,

01:07:40.580 Daniel, let me see if I can name them all. So price appreciation,

01:07:43.000 everyone knows that that's the simplest number one way that the real estate can

01:07:46.540 pay you.

01:07:47.000 Just the value of the house goes out.

01:07:49.520 I think historically, if you look at any of our numbers,

01:07:51.400 it's usually around 6% a year, right? Over the last a hundred or 150 years,

01:07:56.140 American real estate has gone up around 6% appreciation per year.

01:08:00.420 Historically over time.

01:08:01.560 Not great when you look at that compared to like a,

01:08:03.600 I think that's probably like 10% or so. Right. Yeah. So, so in that way you go, well, it's not

01:08:08.980 quite as high. Okay. Well, that's, that's the first way that pays you is price appreciation.

01:08:13.280 Number two, a principal pay down. If you have a mortgage, right. We can talk through the mortgage

01:08:18.100 stuff more in depth if you want, but you're going to have some kind of principal pay down. And this

01:08:21.860 is obviously cash flowing real estate. This is real. This is a rental. This isn't a piece of

01:08:26.540 land that's sitting there. I mean, agriculture pays it to you, but. So you have a hundred

01:08:31.120 thousand dollar loan and the person is paying a thousand dollars a month and eight hundred dollars

01:08:35.540 of that is going to the principal you now i wish not that high but the more just there's taxes okay

01:08:41.340 sure i just for this tim tim i gotcha so now the the loan is 900 or uh 99,200 that you didn't pay

01:08:51.760 for yep so price appreciation principal paid on the mortgage if you got that or um as you're

01:08:58.020 Sam's paying that cashflow, which you already mentioned, right? And so this is cashflow real

01:09:02.380 estate. I don't ever advocate buying negative cashflow real estate, hoping the appreciation

01:09:07.360 makes up for it. I think, uh, at least in our last stage of life, we need to be buying cashflow,

01:09:12.180 positive real estate. And you mentioned the 1% rule. That's a great principle that I live by,

01:09:17.040 by for most of this building, which is the 1% rule is yeah. Go back to that a hundred thousand

01:09:21.900 dollar example. You pay a hundred grand for a house. It should be kicking out. You should be

01:09:25.700 you're renting it for a thousand dollars a month and that's the one percent of your purchase price

01:09:30.060 which over time if you look at your expenses and your mortgage and all that you're probably

01:09:34.140 going to cash flow it's hard not to so so when you say negative cash flow it's like if you had

01:09:39.160 a fifteen hundred dollar mortgage on a home that you were renting out and you're charging fourteen

01:09:44.320 hundred dollars a month in rent great great great point and and that that would be negative cash

01:09:49.000 yeah and not only is it the mortgage insurance and taxes there you also have maintenance expenses

01:09:53.620 and all that so that yeah don't buy that stuff at least i wouldn't for now all right so we got

01:09:58.820 appreciation principal pay down cash flow from the rental you have your inflation as part of that if

01:10:06.280 the inflation piece is you know you go back to that hundred thousand dollar house with the eighty

01:10:10.700 thousand dollar mortgage historically inflation is around three percent right it's the way the

01:10:15.060 system's built whether you like it or not that eighty thousand dollar fixed rate mortgage which

01:10:20.500 is a luxury that we have in America, that that's such a common mortgage. It's not common across

01:10:24.620 the world. That $80,000 fixed rate mortgage, essentially, if you look at it as kind of

01:10:30.260 debased by 3% a year, right? I mean, in nominal dollars, it's still 80 grand or let's say it's

01:10:36.160 77 grand the second year. And as you pay it down, nominal dollars is still the same, but inflation

01:10:40.780 is also pushing you another 3%. Really using leverage, using a loan, what you're doing is

01:10:46.880 you're freezing an economic moment. So you're, you're, when you take out a loan, you took out

01:10:52.260 a loan in 2020 or 2018, what you've done is you've essentially frozen the buying power of the dollar

01:10:59.420 in that year. That's right. Because, you know, you, you have a rising costs of, of both real

01:11:05.900 estate and then inflation. So your purchasing power is decreasing. So essentially what you've

01:11:11.040 done is you've frozen that moment in time by taking out a loan. That's right. And that's why

01:11:15.680 boomers have been, you know, such beneficiaries when they, you know, they bought their home for

01:11:20.700 $35,000 and then they end up selling it for $335,000, you know, because they, they, and they

01:11:27.920 had a 30 year mortgage and they were able to freeze that economic moment by only taking out a $30,000

01:11:33.820 loan or whatever. That's right. I think it'd actually be helpful if I give an example, my

01:11:37.520 first, the first property I bought intentionally for rental, right? Yeah. So there's multiple

01:11:41.900 strategies on how to get into real estate. Right. I do think that you've got to have,

01:11:46.580 you got to have cash to start with. You can't, this isn't something you're going to do out of

01:11:48.980 college, but there's people who do, um, and it's their, their stories are incredible, but by and

01:11:53.260 large, I think Carnegie is a guy who coined the phrase, you know, 90% of millionaires are made

01:11:58.800 as real estate investors. And then if you take that further, uh, that 90% of millionaires who

01:12:04.080 made investing in real estate, it also comes out of, you know, you got the business owners who

01:12:08.940 create awesome businesses, you create wealth where that, that wealth usually ends up in real estate.

01:12:13.320 Pretty interesting principle if you look that up. But anyway, so our first, uh, our first two deals

01:12:18.640 at first month, January, 2019, I got the bug. We've got the gateway drug going, um, with the

01:12:24.380 local stuff. Um, I'm from Indiana. That's where my wife and I went to Purdue and a lot of friends

01:12:30.320 are still family still there, you know, a lot of connections. And I just, I knew the area. So I

01:12:35.040 thought, man, we're moving all over the country of all the places to buy. Indiana makes the most

01:12:39.400 sense. It seems like, cause rents are still strong, but you can, your, your entry level

01:12:44.040 price is a lot lower than the mountain West, right? Where we're at now and where we were at the time

01:12:48.260 when we started this too. So our first deal looked like a really traditional, Hey, hopped on Zillow.

01:12:54.400 Hey, that's a nice little duplex for 110 grand. It was $110,000, a nice town, great area, good

01:13:00.480 schools with two tenants, you know, one's paying 500 bucks a month and there was paying like 650

01:13:06.020 a month. So it got my 1% rule, right? At the time I've got, no kidding, Dan, I've got $30,000 in

01:13:13.060 cash. I took a $50,000 loan against my retirement account, my Air Force retirement account, which

01:13:19.500 was in a decent spot at this point. Cause that's all I've been doing really is, you know, taking

01:13:23.460 this, all these little side hustles and putting in the Roth IRAs and Roth, Roth TSP and traditional

01:13:29.000 TSP at the time. Anyway, so I pulled 50 grand out of that, which is a loan against myself.

01:13:33.960 And I pull a $25,000 Amex personal loan. So I've got 105 grand cash in my pocket of which,

01:13:41.240 you know, part of it's mine, part of it's already leveraged, but that 105,000 cash is what we

01:13:46.220 started with. I took that first duplex is 110,000 to use a standard 30, uh, 30 year fixed rate

01:13:53.340 Fannie Freddie, which is a federally backed non-recourse loan, really advantageous loan

01:13:58.060 of which any person can get up to 10 of them, by the way,

01:14:01.380 which we can go to that later.

01:14:03.080 We could probably do 10 episodes out of this, Dan, but yeah.

01:14:06.080 Or an entire new podcast, but.

01:14:09.300 Talk about that later.

01:14:10.340 So I took that, that one 10, I had to,

01:14:12.620 he had to put 25% down on multifamily.

01:14:14.860 So it was a two unit.

01:14:15.780 So you got to do 25%.

01:14:17.080 Single family has investment conventionally, you can do 20%.

01:14:19.780 So anyway, so, so about 30th, I think it was about 30 grand, right?

01:14:22.920 I had to pull out to put down this duplex, put 30 grand down.

01:14:27.040 Uh, and I have the mortgage. We actually negotiated to one Oh five. Now I get the mortgage for what?

01:14:32.800 75 grand now with a 30 grand out. And the two tenants are paying the mortgage. I'm cash flowing.

01:14:37.940 I've started this journey of the five ways that real estate pays you. Pretty cool. Okay. If you

01:14:42.480 look at all those numbers, it's probably easier if we do an episode, we're actually right down

01:14:45.600 with pencil and paper. And I show you like why, if you're not making at least 25% a year in real

01:14:50.180 estate, you're probably doing something wrong. Or I was, I would not be happy with my returns.

01:14:53.900 they weren't at least 20 to 25 percent right 20 to 25 percent yes i mean you i love this tim okay

01:15:00.360 we didn't finish okay we don't know i know but you tell me all the time like real estate is the

01:15:05.760 most boring investment ever it's very boring but it's it's uh tried and true over many years

01:15:13.540 20 to 25 percent is not boring that's exciting you're right but anyway continue with your story

01:15:19.260 okay we'll come back to that uh because i'm sure you want to know the fifth way that it pays you

01:15:23.900 All right. So, uh, that was a really traditional looking anyway. To me, if you got 30,000 bucks

01:15:30.860 in your pocket today, you can, you can go buy that property. Unfortunately, fast forward a few,

01:15:34.740 obviously a few years, your interest rates, well, it's, it's about 30% higher than what it was for

01:15:40.100 an investor loan back then. Um, those are five and a half percent today. I can still get them

01:15:44.420 at seven and a half. So it's gone up about 2% on the interest rate, but the values have gone up

01:15:49.020 too. Right. And that's what we're all complaining about, but guess what? So have the rents. So if

01:15:53.360 you look at the linear scale it's actually they're not that far off still okay they're very at the

01:15:58.120 end of that same month so this is going into month two for the second purchase i hear about

01:16:02.520 the burr strategy burr you know that one dan so burr you you buy the fixed wrapper you try to find

01:16:08.940 the worst house on the best block standard buy it in cash usually because that's what you have to do

01:16:13.080 because these are usually fixed wrappers that you're not going to get a traditional loan on

01:16:16.060 you rehab it that's the that's the first star you rent it out and then you repeat the you

01:16:21.520 you refinance it and then you repeat the process. That's the four hours. So this isn't, this is

01:16:26.160 where you get, you see the dumb, whatever the, the Tik TOK sensational videos of infinite returns

01:16:31.200 real estate, which is a lot of BS. This is where people get into trouble. This is, yeah, exactly.

01:16:36.120 This is where you can really screw yourself, but it's also a place that if you want to start a

01:16:39.580 business, you can start a business around this. Right. And it's what we did. Cause this is where

01:16:42.380 we, this is how we were able to buy, you know, 40 for 40. Right. So we bought this house. I'm

01:16:47.700 looking great once again great neighborhood in indy close not too far from where i grew up it's

01:16:52.100 a small neighborhood this house is listed for 105 000 it's a little two-bedroom one-bath bungalow

01:16:58.220 if you will indianapolis area was listed for 105 but when i was looking at it it was down to 70

01:17:02.440 grand and i've seen that it was under contract twice and fell out of contract so you know what

01:17:06.160 that means something's wrong with it so a realtor friend of mine who was a roommate in college i

01:17:10.880 have him go check it out sure enough foundation issues they gave us the inspection report so we

01:17:15.480 know the extent of what needs done and so i've got it at this time if you think about it i've used

01:17:20.340 30 of my 105 000 i've got like 85 or 75 grand left in my pocket we offer them uh 60 grand cash

01:17:28.180 for the house they accept i paid about 10 grand to fix the foundation i used the last five grand

01:17:34.080 to you know we did a little fresh paint some some flooring and uh some gutter work that's what it

01:17:39.480 was on that house. So now I've got, um, about 75 grand in that house cash. And you have no money.

01:17:46.160 I got no money left dance. What do I do? I can sit on it and I can rent it out. So, you know,

01:17:50.120 this is where, this is where we talk about differences in opinion on leverage versus

01:17:53.560 none. So at this point I put it on Zillow. I ran it out to a nice lady who's still there to this

01:17:58.700 day. Fantastic tenant. She's running at that time. It ran it for 1100 bucks a month because house

01:18:03.300 worth 105, 1% rule. Yep. Sure enough, $1100 a month is what she's paying to rent. So now

01:18:09.460 Now I can stay there and be happy collecting my $1,100 a month.

01:18:13.580 Or I finish the BRRRR, which is you refinance it, which is really, I put financing on it

01:18:18.200 for the first time.

01:18:19.120 So I go to the bank, bank comes in, appraises it.

01:18:22.240 Sure enough, it appraises for $105,000 because, man, it's basically what it is.

01:18:25.400 And the bank at that time, you could, on your refinancing, you can pull 75% loan to value

01:18:31.500 out.

01:18:32.120 So it appraises for $105,000.

01:18:34.140 My 75% loan to value is around $80,000 loan, right?

01:18:37.680 But that's cash that they give me back now.

01:18:40.040 So on a $75,000-ish investment, I just got $80,000 cash back in my bank account that

01:18:46.600 is tax-free.

01:18:47.500 It's also tax-advantaged.

01:18:49.280 That's your fifth way that real estate pays you is tax-advantaged.

01:18:52.660 I just essentially made, quote-unquote, made five grand that I now have a mortgage on.

01:18:58.280 That mortgage at the time, it's like $470 a month, if I remember right.

01:19:02.320 But my tenant's paying $1,100 a month.

01:19:04.020 So $500 mortgage, $1,100 in income, that $600 Delta, keep a couple hundred bucks for maintenance and unknown expenses.

01:19:12.260 You know, you're cashful on $400 a month, essentially in your bank account with zero money down, right?

01:19:20.000 That's where you get this whole infinite returns on no money down.

01:19:22.720 And it can be true, but you gotta be careful too.

01:19:25.020 You gotta buy the right property, contract, it can't screw you.

01:19:28.240 And you gotta find the right tenant to partner with and then put good long-term debt on it, right?

01:19:32.100 And so my W-2 income from the Air Force helped me qualify for that loan too.

01:19:36.940 So I always tell guys too, I don't think you can just quit your job and go do real estate.

01:19:40.640 You've got to build your wealth to a point, I think, in a lot of ways to have that cushion,

01:19:45.880 that fallback, but also to be able to qualify for these, in my case, loans, which is how we grew.

01:19:50.780 So the BRRRR is how we did that.

01:19:52.460 That rental is still, I mean, so, okay.

01:19:54.500 So back to your example, previously, Dan, where you talked about fixing fixed rate and time, right?

01:19:59.780 So this is 2019.

01:20:02.100 That mortgage is $470 a month.

01:20:04.140 It's gone up a little bit, obviously, because taxes and insurance have gone up, unfortunately,

01:20:07.840 because everything keeps going up.

01:20:09.720 So I think that that payment might be five, it might be 600 bucks a month now, right?

01:20:14.260 With how much taxes and insurance have gone up.

01:20:16.500 But that market rent has adjusted with the market rate.

01:20:20.400 And I write this in my leases too.

01:20:22.040 It's never a surprise to my tenants.

01:20:23.460 I write a three to 4% appreciation rate in the lease per year, just to match what I know

01:20:29.200 my expenses are going to go up with too.

01:20:30.680 And obviously maintenance expenses are going to go up too.

01:20:33.020 So that $1,100 rent is now, I think it's around $1,450 is what they're paying now.

01:20:37.700 So that delta is part of that appreciation of fixing that leverage in time, right?

01:20:43.260 Because the U.S. dollar keeps devaluing, obviously, because that's their strategy.

01:20:47.320 But you have a compensation strategy so that inflation actually doesn't-

01:20:51.600 Actually helps you.

01:20:52.340 It doesn't hurt.

01:20:53.080 Yeah, it helps.

01:20:54.140 Yeah.

01:20:54.660 It's sad, but inflation is a good thing for a leveraged real estate investor.

01:20:58.840 Yeah.

01:20:59.620 So tell me about taxes.

01:21:01.500 You said that was the last thing.

01:21:02.680 It's a tax advantage strategy.

01:21:04.580 How does that actually work?

01:21:07.140 That's right.

01:21:07.540 So a million different ways to crack that nut too, right?

01:21:10.580 But everything from the infinite return style strategy with Burr of kind of doing, it's

01:21:16.480 almost that house as we've done multiples of those now.

01:21:20.060 And some of them are, you know, we might have $200,000 in the property and appraises for

01:21:23.540 $300,000 and the banks will want to give you, you know, $230,000 out then.

01:21:28.000 And so you just, once again, you just made 30 grand on it, but that's tax-free because

01:21:31.780 that's a loan.

01:21:33.100 I still have a mortgage I have to pay back.

01:21:34.620 So that's what it looks like on the surface.

01:21:36.200 But really, if you dig down into it, to me, the U.S. tax code as complicated and as awful

01:21:41.340 it is to get through it.

01:21:43.160 I think Tom Wheelwhite, who coined the phrase that the U.S. tax code is a book of incentives.

01:21:48.840 It's what the U.S. government wants you to invest in, right?

01:21:51.640 And so if you look at it, WT employees to the U.S. government, unfortunately, get spat

01:21:56.740 on, right?

01:21:57.260 I mean, you're paying the highest percentage of taxes, but you're also the lowest value to the U.S. government.

01:22:01.500 You're just a worker.

01:22:02.980 Business owners, tons of tax advantages, right?

01:22:05.360 Because the U.S. government wants you to start businesses.

01:22:07.280 They want you to be successful.

01:22:09.900 I'll stop there.

01:22:11.860 They want you to make money and say they collect their taxes.

01:22:14.700 But there's a lot of business advantages too, right?

01:22:16.520 Real estate strategy is no different where the government, if you look at any HUD or any kind of government housing project, guess what?

01:22:22.540 They're all horrible, right?

01:22:23.420 I mean, show me one good example, and I'll show you 10 bad.

01:22:27.180 So I think the government acknowledges that.

01:22:29.080 So they need small mom and pop style landlords across the country and companies to extend,

01:22:34.820 I guess, to provide affordable, clean housing for people who need it.

01:22:39.240 Whether we like it or not, I mean, sure, the American dream is for everybody to own a home,

01:22:42.560 but it's never going to happen, right?

01:22:43.920 And I don't think people even want that.

01:22:46.760 People in our camp, obviously, I think there's a lot of great principles in owning home and

01:22:50.080 real estate in your own home.

01:22:51.880 But the reality is over the last hundred years, I don't know if the home ownership rate's ever gone above 60, you know, mid to high 60 percentile, right?

01:23:00.320 Yeah, it seems increasingly more so that people do not want to own their own home.

01:23:04.540 Yeah, part of our culture, right?

01:23:06.080 So that all being said, the tax code is a book of incentives and what the government wants you to invest in.

01:23:11.600 And real estate's a huge piece of that.

01:23:13.500 And so when people say that real estate investors don't pay taxes, it's not a disingenuous statement.

01:23:18.660 In a lot of ways, they've incentivized real estate investors to provide good, clean, affordable housing by giving you all these tax benefits.

01:23:30.000 Depreciation is the easiest, biggest one to talk about, right?

01:23:33.060 Depreciation is where that same $100,000 property, if the home is worth $75,000 and the land's $25,000, that $75,000 will be depreciated over a 27 and a half year schedule.

01:23:43.960 We're digging into numbers here, but bottom line, that's going into your, that's going into that.

01:23:48.260 If I'm not making at least 25 ish percent on a real estate investment, I'm not happy with my choices, but that's going into that too, that factor, because that depreciation schedule is, is, is coming across my desk as a, it's not a credit, but it's, it's a, it comes off the taxes, right?

01:24:04.560 So it's, it's this one easy advantage where you don't have to spend money to get the credit on your taxes.

01:24:11.000 There's a lot of things that, Hey, let's fly to a conference, Dan, and go to, I don't know, go to Vegas to do this real estate conference.

01:24:17.120 Sure. I, you know, we spend three grand, we can expense the three grand depreciation. You,

01:24:23.100 you can expense that off your taxes without actually spending the money ever.

01:24:26.900 Right. You still had to spend $3,000 on the conference that you'd no longer have.

01:24:31.280 That's right. Yeah.

01:24:31.980 But with depreciation, you still.

01:24:33.740 It's incredible. Yeah.

01:24:34.720 It's a huge advantage and bonus appreciation. We can go to that, but you know, there's

01:24:38.640 more advantages there. And then even if you look at the deferred, deferred, deferred die strategy,

01:24:44.680 1031 tax exchanges, you know, your, your own home up to half a million dollars from married

01:24:50.160 couples, um, advantages there, there's, there's lots of ways. That's a whole other episode.

01:24:54.500 Right. Yeah. And if you're, if you're not adverse to leverage and into taking out debt,

01:24:58.640 um, one of the things that everybody should know, if you don't know, you should know this,

01:25:03.300 that in an inflationary economy, the best way to maintain wealth is through assets. And the reason

01:25:09.120 is real estate is one of the, the easiest things to do this with is that if you, you know, Tim has

01:25:15.820 say in 10 years, you've got a bunch of properties now that have been, you know, 40, there only have

01:25:22.100 like 40% of the loan value on it or, or less because of inflation and all that. And if Tim

01:25:27.940 says, you know what, I think I really want to buy a vacation home in Alaska and buy, you know,

01:25:33.340 he's out of the air force. Now he wants to buy his own plane to fly there. All he has to do is

01:25:37.700 take a portion of his portfolio he can refinance it cash out refinance and he has all of that money

01:25:44.760 is is debt but he didn't have to pay any taxes and he now has cash in his bank account that he

01:25:51.340 can then go and buy whatever he wants and in the meantime he has tenants that are paying down that

01:25:57.140 debt and so that's one of the ways that you can realize profits is by refinancing but anyway

01:26:04.240 check that's right on that's true okay uh which makes it difficult to do with other assets but

01:26:10.440 even like elon musk has done this with tesla shares and and things like that that's why a lot

01:26:15.960 of uh ceo types they'll actually not take a salary they won't take any w-2 income they won't take

01:26:23.240 1099 income what they want is stock options because then they can leverage those stock options

01:26:30.260 to get paid without paying any taxes. So anyway, those are a couple of ways. Tell me for the

01:26:37.040 average person, not that we're telling you this is the best strategy and we'll actually get into

01:26:41.660 the risks in just a minute that come with real estate. But if somebody did have some cash and

01:26:48.240 they're like, I don't know, I could buy Bitcoin, gold, stock, you know, the stock market. I don't

01:26:53.600 know. Real estate seems really interesting. I can only, nobody's making more land. You know,

01:26:58.500 you can mine more gold. They're mining more Bitcoin and, and you know, companies often issue

01:27:03.660 more shares, you know? So where do you start? Yeah. Well, I just point back to an example of

01:27:09.280 what we did. Right. I don't think it's for everybody. Take out a personal loan with the

01:27:12.660 ABEX. That's your advice. So part of it is we had 30 grand cash in the bank that I hadn't put into

01:27:19.660 our retirement account yet, that was still liquid. Right. I mean, so in my opinion,

01:27:24.280 it's what i did myself right i'm not saying it's for everybody but if you're okay with debt

01:27:30.860 that thirty thousand dollars even today you can still go to the same strategy that we did

01:27:35.500 six years ago right or five five and a half years ago where that's that's a that's a legitimate

01:27:40.940 down payment on a on a nice house in the midwest south you know choose your area of the country

01:27:47.260 that's not the mountain west um that's a legitimately decent down payment on a house

01:27:52.740 that's that's probably going to cash flow those markets still exist yeah we we've we've slowed

01:27:58.040 down right i mean kind of backing that like we're a little bit busier in the job right now so guess

01:28:02.740 what things have had to slow down a little bit i also don't think it's a bad time to not go crazy

01:28:06.760 with where we're going with the economy right now is it a hard landing a soft landing any landing

01:28:11.540 we're just gonna keep inflating our way out of this any landing yeah i mean let's just go to the

01:28:16.020 moon so i don't think it's i still don't think it's a bad strategy to even do what we did you

01:28:21.100 know six years ago now depending on your level of comfort with risk you know so i'm i obviously

01:28:27.540 don't have a dog in this fight i don't own a rental uh at this point but i have heard i've

01:28:32.820 actually read a few books and i've i've you know um listened to some podcasts and things and it

01:28:37.540 seems unanimous amongst different sources people say just buy the first one if you buy the first

01:28:45.380 one, you'll realize how easy it is. And then, you know, there's, there's really nothing stopping

01:28:51.640 you. Well, you might hate it. I don't know. I don't know. Well, actually you could lose quite

01:28:57.140 a bit. All right. All right. So let me give you another example. So those are, I gave you the

01:29:03.780 first two ones, pretty traditional ones, a burr. The next one we boxed it because I got my money

01:29:08.880 back, but I'm also wanting to get the cash ball bigger. Right. So we buy a nice single family,

01:29:14.240 all brick ranch on a corner that's it was sold on auction just trashed and just you know back to

01:29:21.020 that worst house on the best block and i bought it thinking i could rent it or flip it and so

01:29:26.360 this is my first time i'm thinking okay let's fix this one up to maybe try to make that you know

01:29:31.980 50 grand without the mortgage and then now my cash ball is you know 130 000 and what could go

01:29:39.080 wrong went wrong right it was one of those i say that you make your money when you buy the right

01:29:42.620 deal. You maintain the money. That's interesting. Tim told me this a long time ago. This was even

01:29:47.060 before you're in real estate. You told me you were selling a, uh, it was a Lee reloader, you know,

01:29:52.700 for loading your own ammo. And you told me like, Oh, somebody is coming to pick it up. They're

01:29:57.560 paying me like a hundred bucks. I bought it for like $20. And you're like, Dan, you know,

01:30:01.700 you make your money when you buy, not when you sell. That's right. Yep. That's absolutely stuck

01:30:06.280 with me. And I appreciate that. It's no different in real estate. The only thing different in real

01:30:10.580 it is you can, you still make your money when you buy the right deal, right? You can now lose

01:30:15.060 that money if you get the wrong contractor. And that's what, that's what I learned on this next

01:30:18.380 deal. Cause I say now that you make your money, when you buy, you maintain that profit margin.

01:30:24.020 If you find the right contractor, I'm not finding a contractor yet that I'm going to make more money

01:30:27.920 because he was cheaper, faster, awesomer. I mean, there's, there's great, fantastic contractors

01:30:32.720 out there who work with integrity and, and, and, and good work. There's lots of, but there's not

01:30:37.580 yeah so with the when it comes to the contractor to me it was almost i want to stay at least

01:30:43.360 to the numbers i predicted right and then uh and then yeah when you sell you just harvest those

01:30:48.040 gains right that's all it is and so on this deal i mean we i didn't have a team yet i was

01:30:53.460 trying different strategies on obviously bids but then general contract subs and from across

01:31:00.140 the country yeah you're not in indiana at this time it just did not it was not a great strategy

01:31:04.640 everything went wrong and so to the point where it's like i just gotta i mean we finished it i

01:31:09.540 found a good christian contractor who who finished it for what took me well past my budget right and

01:31:17.720 trying to figure things out and it's like we just gotta sell a thing at this point because my

01:31:21.800 reserves are so low and so we're in that time but guess what it goes on the market we get a few

01:31:26.660 offers all in in the end no kidding i break even and i was like there's i mean how the how did i

01:31:33.820 just break even on that deal when everything went wrong like there you know the house do way more

01:31:38.540 work every you know every knob and tube wire was everywhere and plumbing was there's actually

01:31:44.700 foundation issues on that house we didn't know about there's brick more if they need a new room

01:31:49.000 it was like no kidding it was it was a house from hell and it's always tough in those situations

01:31:53.080 because you're like man i am so thankful to god that i broke even on this that i didn't lose money

01:31:57.760 and at the same time you're like that was a lot of work yeah for no return but you know what i

01:32:02.300 learned a lot. Uh, and that's where I learned. I needed to put a free education is a good

01:32:06.020 education. I'll tell you what, Tim, I've done investing for a while. And most of my education

01:32:10.940 has been very expensive. I've had the same thing we can talk about. Even this year we're learning

01:32:17.460 lessons, aren't we? Well, so I think that's when I learned how forgiving real estate can be.

01:32:23.220 If you're, if you're, if you're buying the right deals, right. If you're, if you're still scouring

01:32:27.620 the market, I probably make, I'll bet you I make 10 offers for every two that get accepted.

01:32:31.820 Oh, wow. If you're getting every offer accepted, like you're probably,

01:32:35.500 you're probably doing it wrong. Yeah. Yeah. And I'm sure there's lots of tools online and you,

01:32:42.340 you know, you can get YouTube university podcasts, things like that figured out. And,

01:32:46.580 you know, we don't have time to go into like the, the nitty gritty of how do you identify,

01:32:50.260 what numbers do you run? Things like that. Perhaps if there's enough interest on something like this,

01:32:55.060 we could partner with Tim and maybe release some of the equations he uses or something like that,

01:33:01.060 but we'll see. We'll have to see if people are interested enough in that. And if Tim is willing

01:33:05.440 to share some insider information, you might have to pay for that. So what are the biggest risks to

01:33:10.600 real estate? You just talked about that with your story. You buy something and there's a whole bunch

01:33:14.680 of problems. Contractor screws you. I didn't know it needed a new roof. There's all those sorts of

01:33:21.120 things, but I don't know if that's necessarily the biggest risk. Yeah. I mean, we look back at

01:33:26.800 COVID, right? 2020, when that thing hit and when, when, uh, when all the moratoriums dropped and

01:33:31.560 all of a sudden people don't have to pay their, their rent anymore, they're not going to get

01:33:34.840 evicted. There's nothing a landlord can do. I was a big risk. And that was, I don't know if anyone

01:33:38.960 saw that coming. I mean, for the, the reach of the government to go that far into our businesses in

01:33:46.660 that way, I think that was probably, hopefully that was the black swan event that show what

01:33:52.080 could happen. I mean, essentially what happened is the government said that tenants could steal

01:33:57.720 from landlords. Essentially. I mean, in the same way that you, you, it would be akin to owning a

01:34:02.800 grocery store and allowing people to come in and take groceries for free and you not being allowed

01:34:08.040 to stop them, but you actually have to keep stocking your shelves and let them continue to

01:34:12.860 do that. That's essentially what happened with landlords and tenants. That's right. Yeah. And I

01:34:16.720 know there's programs that say, Oh, well, you know, if you have a mortgage, you don't have to keep

01:34:20.180 paying it, but you still had to pay it at some point. And I didn't want to do that. Obviously

01:34:24.060 it's a bad way to run your business. So, you know, those, those kinds of things can happen

01:34:28.360 though. Right. I mean, I'm, I am partnering with 40 some people across the country to pay their

01:34:32.560 rent. And if they don't pay their rent, I've got mortgages on those, on those properties that need

01:34:36.740 paid. Yeah. The bank's not going to be as forgiving as Tim six. So obviously there's,

01:34:41.720 there's ways to, to mitigate that risk. Um, I think, um, you know, to qualify for these mortgages

01:34:47.140 now, even now you've got to have six month, uh, reserves on hand and that's liquid, usually cash,

01:34:53.020 uh, style reserves. I think that's a good principle. Three to six months is minimum.

01:34:58.520 It's three to six months of mortgage payments. That's right. So, so you mean if you have a

01:35:02.700 thousand dollar mortgage, you have to have three to six grand in the bank. That's right. If you

01:35:07.260 want to, if you want one of these standard, I call them the golden ticket loans, the 30 year

01:35:11.560 fixed rate Fannie Freddie, you know, that doesn't seem like that big ask. Yeah. You have to have

01:35:16.940 six months, six months in cash, you know, sitting in your, in your account, it gets bigger,

01:35:21.660 obviously, as you grow those mortgages too, but at the same time, yeah, it's not a bad

01:35:25.360 principle anyways. I think it's a good principle for all of us to have. Yeah. So that's the way

01:35:29.280 to make it. Emergency fund. But at the same time, I mean, what if, you know, World War III kicks

01:35:33.200 off and all of a sudden, you know, I mean, how do you think real estate did in World War II in

01:35:37.300 Italy? I mean, not real good, you know? And so there's, there's absolutely risks that go beyond

01:35:42.380 six months, barring natural disasters and, you know, wars, which obviously can still happen

01:35:48.300 to me. I think real estate is one of the safer bets out there.

01:35:52.620 Where do you think we are going economically speaking in the future? You know, looking to the,

01:35:57.160 to the Tim six crystal ball, I asked the other guys, like, what do you think about the future?

01:36:02.020 What do you think's in store? You can be as vague as possible, you know, or as specific as you want

01:36:06.980 to be, you know, it's fighter pilots talking about world war three makes me a little nervous.

01:36:11.020 I'll stop. All right. I shouldn't have said that. You got to understand that I'm a, I'm a glass

01:36:15.360 half full kind of guy. Right. So I'm always going to typically I'll see the optimistic side of

01:36:19.940 things. The rate at which we are going into debt across the world. Wait a minute. You just said

01:36:26.960 that you're a glass half full guy. That's right. And you start with this. Okay. All right. The

01:36:32.840 rate of debt. You don't know where I'm going with this. No, I don't. Now, I mean the rate at which

01:36:38.340 every nation across the, I mean, across the globe is going into debt. I don't,

01:36:43.040 how's that sustainable? I don't, I don't know.

01:36:45.760 This is going exactly where I thought it was going.

01:36:48.680 Well, and so, I mean, you, you talked about soft landing, no landing,

01:36:53.680 hard landing or crash landing.

01:36:55.480 Okay. Yeah. If you want the shorter term, sure. Yeah. Okay.

01:36:57.300 So what's going to happen in the next 12 months? I don't know.

01:37:00.580 That being said, I think there were so many people, I mean, who was it?

01:37:04.960 was it Goldman or one of the big banks came out with a hundred percent chance

01:37:09.000 of recession in 2023. Right.

01:37:11.080 And when everyone's calling for the same thing,

01:37:13.020 that's usually when you should probably look the other way. Right.

01:37:15.080 And I think we saw some of that in 2023.

01:37:17.080 Now I feel like 2024 came around and people, Oh, well it's all past this.

01:37:21.320 Cool. Like we made it. And now to me,

01:37:24.700 you almost see too much enthusiastic marketers.

01:37:28.880 Now you have to piece all the time highs and everybody's making money and

01:37:32.240 everything. That's where I'm going. Well,

01:37:34.960 maybe you should look the other way too.

01:37:37.800 I'm not saying we're going to have a hard landing.

01:37:39.200 None of us know that.

01:37:40.240 I mean,

01:37:40.860 to say that with any kind of confidence,

01:37:42.320 I think you can use all the signs you have to make your best educated guess,

01:37:46.560 but there's still a guess.

01:37:47.660 I'm not bearish,

01:37:49.240 but I'm also not,

01:37:50.180 I'm not super bullish over the next,

01:37:51.580 you know,

01:37:52.240 12 to 18 months either.

01:37:53.820 But that means I'm still buying.

01:37:54.700 We're still buying,

01:37:55.320 right?

01:37:55.520 I mean,

01:37:55.720 we just closed it.

01:37:56.240 Yeah,

01:37:56.400 you're right.

01:37:56.700 I closed my house a couple of weeks ago,

01:37:58.300 but you know what?

01:37:59.420 The house was in a standard,

01:38:01.800 great,

01:38:02.140 great,

01:38:02.700 great neighborhood.

01:38:03.580 it hit the buy box that's what tim tim says about his equation is his uh spreadsheet it hit the buy

01:38:09.360 box box it's hard if it's all if it checks all the boxes it's hard to not still buy the right

01:38:15.120 deal right yeah and this there's so much cushion in this deal i'm thinking of it's like even if

01:38:20.000 real estate got cut by 40 percent next couple years i mean it's still we still have we'll be

01:38:24.600 fine we have with the systems in place get the management place with the the team in place

01:38:29.140 the businesses is kind of firing on all those cylinders barring yeah natural disaster world

01:38:35.400 war ii or world war three and and uh no one paying the rent anymore i mean sure that's gonna that's

01:38:40.300 gonna crush more than just me right yeah i think in that point it's it would be foolish to think

01:38:45.480 that you're untouchable right we're all we're all susceptible and no matter what we're doing i mean

01:38:50.200 even working for the federal government that being said i mean i i had a mentor early on

01:38:56.460 when we first started this, who had the advantage of a, of a grandfather who built a portfolio like

01:39:03.140 this in the sixties and seventies who survives, you know, the seventies and the eighties and 20%

01:39:09.580 mortgage rates. Cause he did it with debt, but he passed on to his son who passed on to his son

01:39:14.560 who has all the advantages of that generational wealth being passed down through a strong

01:39:19.260 Christian family. He was really instrumental early on and mentoring me in a way that said,

01:39:24.420 hey look i i don't have to use mortgage debt because my grandfather took that risk so you've

01:39:30.520 got to understand that like you could go bankrupt next year i could go bankrupt next year right and

01:39:34.940 i have i have leverage and i actually have i absolutely have obligations that got to be paid

01:39:39.740 and and sure i mean something could happen and and all of a sudden we're upside down and we're

01:39:45.660 forced to sell for some you know for some unknown reason to me today right because i always say as

01:39:50.640 as long as you're buying cashflow in real estate,

01:39:52.360 I don't care what it's worth.

01:39:53.540 If you look at the net worth column in the Excel spreadsheet,

01:39:56.640 I can't eat that unless I'm putting more debt on it,

01:39:58.740 which I don't want to.

01:40:00.380 So even if the portfolio gets cut in half value wise,

01:40:03.560 as long as the rental rates stay close,

01:40:07.100 I mean, my goodness, even if they take a 30% cut,

01:40:09.160 that's, we're still okay.

01:40:11.020 So that's why it goes back to buy cashflow in real estate,

01:40:15.180 have the reserves on hand,

01:40:17.140 and then don't look at what it's worth.

01:40:18.380 I mean, honestly,

01:40:19.060 unless you want to keep harvesting it and keep going,

01:40:20.900 which that's how you grow or at least I'm sorry.

01:40:23.360 That's how we grew. You can do it different ways, but that'll be instead,

01:40:26.860 you know, worst case happens. You go bankrupt, terrible principle, you know,

01:40:30.600 but you know what? I mean, a lot of things have to happen at the same time.

01:40:34.700 I think, you know, I still have the mentality of glass half full.

01:40:38.400 I bet you we can rebuild somewhere. Yeah. You know, I mean,

01:40:42.180 there's, there's great businesses out there. So.

01:40:44.300 Yeah. And you really do benefit. You said to buy and, and, and hold.

01:40:48.260 and and with increasing uh rents and and all of that and your debt frozen in time that really

01:40:55.700 does insulate you a lot so that your margins probably do grow quite a bit over time so it

01:41:00.400 probably does protect you even if there is a i think one of the bigger risks i'm not in you know

01:41:05.720 an economy economic professional by any stretch of the imagination but unemployment rates rising

01:41:11.880 could be concerns and things like that, but yeah, yeah, that's right. So I want to, I want to ask

01:41:19.140 you one last question other than real estate, what do you think could be some good opportunities

01:41:23.560 right now? Even if there's no opportunities, cause there's a lot of uncertainty, what,

01:41:27.660 what have been for you or, you know, what would you consider? Sure. Yeah. We can, I can only talk

01:41:32.420 from my experience, right. But going back to how we started, I still don't think, I still think

01:41:37.620 the probably the greatest way to build wealth as a business. Right. And I don't, I don't know

01:41:43.560 any better way to, to legitimately grow wealth, create something that creates values for others

01:41:50.680 and can employ hardworking people than a business. Right. But going back to those

01:41:56.680 initial numbers, it takes it a certain style of person, entrepreneurial and certain personality

01:42:03.140 trades probably and risk tolerance as well. And how, you know, work ethic that it's not for

01:42:09.540 everybody either. I I've equated my real estate business to small business mixed with real estate.

01:42:16.860 We're not just buying retail stuff off Zillow, right? We have a business, we have a process that

01:42:21.500 acts a lot like a small business. So I still think if, if anyone has an entrepreneurial spirit,

01:42:26.600 that drive has that risk tolerance and that work ethic, I mean, find that, find the niche that

01:42:31.860 works for you but start that business and give it a shot once again what's the worst case sure i

01:42:37.160 guess you know you could get an expensive education but you'll pick yourself up and keep going so i

01:42:43.380 still really like small business i think there's great principles to owning assets like you talked

01:42:47.340 about those are real assets like real estate or gold silver sure obviously we still do that it's

01:42:52.840 kind of where we got our start a while ago anyways i still think we hold a decent amount of reserves

01:42:57.600 with that. Crypto is a weird one to me, right? We've, uh, we've had a lot of discussions on

01:43:01.440 crypto, Dan, where I like cryptocurrency more than Tim, but you wouldn't know that from,

01:43:06.700 if you compared our portfolios. Well, so I, I mean, I've, I trade, I'll trade crypto. I don't

01:43:12.660 trust it. Right. Um, I think that's the one that we'll come back to in 15 years and let's, you

01:43:17.500 know, there's some, I think there's some great principles there. I do. I really do. And some

01:43:21.860 promising things there, but it's also, you know, it's the way worth it. Something else will pay

01:43:26.240 pay for it, right? That's an unproductive asset, but I'm not a currency investor, right? I try to

01:43:32.380 produce real things that produce a good or service. I just want everybody to know that I'm doing my

01:43:38.420 best right now to not turn this into a cryptocurrency thing because we talked to Jordan

01:43:43.820 Bush about Bitcoin, but we haven't talked about any other cryptocurrencies and I'm just holding

01:43:51.080 back but anyway it's the technology it's the technology uh yeah so anyway uh gold silver

01:43:58.520 metals uh cryptocurrency in a reserve and i'm gonna go back to the gold thing and say i think

01:44:04.140 that's i think it's wise from a reserves perspective you're not gonna make you're not

01:44:08.120 gonna gain wealth in my opinion on on holding gold or silver it's unproductive right it's a

01:44:12.860 great insurance policy but if you're 25 years old getting started out and you got five grand in the

01:44:17.420 bank. No, I, I would not advocate what I did, which is my bunch of gold and silver, but I was

01:44:22.040 buying it to try to sell it for a little more than I paid for it, not to hold it for 50 years.

01:44:25.800 Right. Um, I think we'll get, I mean, you'll get there, build your business, find the right stocks

01:44:31.620 that work for you, you know, do your best to, to work hard to work at a side hustle. And, and, uh,

01:44:37.740 if your family can, you know, can support it too. I mean, 40 hour work weeks, uh, it's a baseline

01:44:43.640 for a young person but i think i hustled my my butt off of my my 20s and early 30s which set us

01:44:50.900 up for right now with where we're when we were at with our kids i think if you're not you know

01:44:54.880 hustling your tail off when you're in your 20s i think you did it wrong and even if that's working

01:45:00.100 for someone else uh it's too late for me tim i'm almost 40 oh come on you're doing fine yeah yeah

01:45:06.520 um what what about the stock market i'm curious do you do you dabble at all with stocks or or

01:45:12.340 you do well that's where i made my first hundred grand i lost my first 120 grand

01:45:17.160 yeah are you trading options at that point i was oh okay hey it's the only way to go and this is

01:45:25.020 not financial advice and when i say the only way to go it i mean don't do it yeah can we start this

01:45:29.660 whole podcast out with this is not financial advice i'm not a professional oh no no you're

01:45:33.540 just sharing your experiences we haven't told anybody to do anything yeah please no oh my

01:45:37.820 goodness yeah no absolutely i think uh but stocks goes back to i mean yeah sure you pick them right

01:45:44.160 you can do great but you can you can also get crushed uh just as quickly and the long-term

01:45:50.780 track record is 10 ish right for an sp500 style you know etfs and whatnot which when you look at

01:45:57.420 inflation and the taxes and then i mean to me so i feel like just inflation and taxes that 10

01:46:03.800 becomes you know about four percent real fast uh which is abysmal to me um and then if you also

01:46:11.820 include what i would call you know lost sleep and heartache when you're watching that thing yes

01:46:16.980 if you're if you're looking at your phone more than once a day at your stock you know stock

01:46:21.760 picks like how is that i mean you you're you're spending more time than i am on real estate and

01:46:26.860 you probably have a higher stress level too. Wow. Wow. That's incredible. Yeah. I definitely

01:46:32.760 check more than once. Well, maybe twice. Okay. That's fair. Every 30 minutes. No, I'm kidding.

01:46:40.820 I'm kidding. Yeah. Please get a higher, your quality of life is to be hard.

01:46:45.360 No, that's, it's really interesting that you mentioned both you and Jace talked about

01:46:48.980 businesses are one of the best ways to create wealth. Investing is seems in a different category

01:46:56.080 in a way because what you're doing is you're in most cases buying and holding assets you're not

01:47:01.660 actually generating wealth it's a good way to you know to to compound the wealth that you have

01:47:08.200 but obviously so you'll see this a lot on on the tiktok and on youtube and twitter and stuff like

01:47:15.460 that it's like you know some guy bought a thousand dollars in some meme coin or some obscure penny

01:47:21.460 stock and, you know, hit it big and now it's worth $30 million or whatever. And so there's

01:47:26.940 a temptation there of taking, well, I only have a small amount, so I'm going to take the most

01:47:31.560 tremendous risk I can in order to generate wealth. And it seems like from your story,

01:47:38.200 your personal experience, same thing with what Jace had talked about, just talking about personal

01:47:42.900 experiences, even the story of New Christendom Press, which might be worth telling someday if

01:47:47.740 we're continuing to produce content and to become more stable in the future as a long-term entity

01:47:54.740 is that these small beginnings actually don't take a tremendous amount of money. And with some hard

01:48:01.960 work, you can actually grow wealth, which is a different thing. The thing that is so off-putting

01:48:09.420 to people is the complexity. Like doing real estate to the outside observer, just speaking

01:48:16.340 from my own personal experience, my word, it just seems impossible. You know, at times, you know,

01:48:22.240 it seems very difficult. You have to front quite a lot of cash and there's regulations and taxes

01:48:28.640 and how do you do this and how do you do that? And really it's the same thing with business in

01:48:33.160 a lot of ways. You know, I had started and closed down an auto business at one point.

01:48:37.600 It just didn't, it took too much time. But the amount of regulations, I guarantee you there's

01:48:43.240 more auto regulations for buying and selling cars than there is in starting a real estate business

01:48:49.280 or even getting your real estate license. It took forever. But, but the thing I want everybody to

01:48:54.420 know is that if you're just resourceful, you can figure it out. Like none of this is impossible.

01:49:00.720 How many real estate investors are there? There's thousands and thousands of, of real estate

01:49:05.860 investors. If those guys, and not all of them are very smart, if they can figure it out,

01:49:10.140 you can figure it out, you know, and same thing with businesses. Every town is loaded with

01:49:15.560 businesses. If they can figure it out, you can figure it out. So I mean, it's funny how in this

01:49:22.220 investment series, it seems like what is being landed on is funny. Jordan Bush even talked about

01:49:27.280 this with thank God for Bitcoin as a conference is actually a business. And so it seems like

01:49:33.440 every single episode is ending up in one of the things you should consider is generating wealth

01:49:39.480 through starting a business. And so I know we had talked about it some years ago. It was like

01:49:44.380 side hustles and starting businesses and things like that. So that's something to consider.

01:49:48.660 That's absolutely true. And back to your point on just long-term hold, stock picks and stock

01:49:56.400 portfolio stuff. If you follow the standard American act, if you work your 45 years, you put

01:50:03.380 it in your long-term, your Roth IRAs and whatever plan your IRA is offered at your work,

01:50:09.480 you'll be fine. You're going to retire at 65 years old. And if things continue in the future

01:50:15.340 as in the past, which is a caveat for everything. So that's not fair. It's a perfect caveat. Um,

01:50:20.740 if things continue like that, you'll, you'll be fine. I would argue that you're not building

01:50:24.620 wealth, but you're building a lifestyle that you see other people have done and seems attractive

01:50:29.460 and seems safe. Okay. So that's fine. Building a business, you know, back to the other point is

01:50:34.960 yeah money that comes easy goes easy too right that money fast it can it can be lost real fast

01:50:40.000 it's really easy to press the buy button on some obscure cryptocurrency or on some crazy stock

01:50:44.720 it's yeah i mean yeah let's go pick let's go pick amazon you know 15 years ago and

01:50:49.760 penny stock to start i'm sure but that's um easy come easy go you know go let's go to let's go to

01:50:56.720 vegas while you're at it and pull the you know pull the handle yeah to me i've pulled the handle

01:51:02.520 many times on different stocks.

01:51:05.040 So sure.

01:51:05.720 Yep.

01:51:06.040 And I've been there too.

01:51:06.860 I don't do it anymore,

01:51:07.620 but I've learned that lesson.

01:51:08.660 Right.

01:51:08.980 And I'm,

01:51:09.320 and I'm also the risk tolerance.

01:51:10.880 I know myself well enough to go,

01:51:12.520 my risk tolerance high enough that man,

01:51:14.360 I mean,

01:51:14.680 we can,

01:51:15.280 we can go big or we can go low real,

01:51:17.260 real fast.

01:51:18.200 So real estate's a good fit for me because it is slow.

01:51:21.600 Right.

01:51:21.940 And it's a business for us.

01:51:23.300 It's not super sexy returns at first and it takes a while to get going.

01:51:27.680 And there's a lot to learn,

01:51:28.620 but most businesses are like that.

01:51:30.380 You know, if you're looking to make money overnight and you don't have at least a five-year outlook on something, I would argue a 10-year outlook, then, I mean, you know, go back to your W-2 and check your stocks every day, you know?

01:51:43.080 So, you know, to Jason's point too, maybe he made this point or not, but there's guys out there who just might not feel like they fit into starting a business.

01:51:53.700 I'm not a creative guy, right?

01:51:55.340 I mean, I can follow a system.

01:51:56.660 I know my way around Excel spreadsheets just fine.

01:52:00.380 But if you asked me to start a business tomorrow, I'd probably pick something in housing, right?

01:52:05.060 I know housing now.

01:52:06.180 None is creative.

01:52:06.940 Let's go start a roofing company, Dan.

01:52:08.260 Let's start a hot water heater replacement company.

01:52:10.560 I mean, none of these are creative.

01:52:11.400 I'm sold.

01:52:13.140 But none of these are creative, but they work.

01:52:15.620 And over time, I mean, you can build that wealth.

01:52:18.540 And what's cool, though, is you can pull guys alongside you as you do that.

01:52:22.240 And if you're a young guy hearing this and going, well, what am I going to do?

01:52:26.220 Find a guy like that, like who wants to do that.

01:52:28.900 the Jason of the world who he's only got so much time though.

01:52:32.440 I've only got so much time in the day.

01:52:34.020 I had a really cool offer from a guy in the church last week, right?

01:52:36.760 We have lunch.

01:52:37.400 We're talking real estate, standard stuff.

01:52:39.240 I like to share the story and I like to try to pull guys alongside if they

01:52:43.060 want, you know, be pulled.

01:52:44.680 And he makes the offer to want to work for me for free.

01:52:47.120 Like that's, that's a really smart offer.

01:52:49.880 I, I've, I've never thought to do that, but if you're a young guy out there

01:52:54.080 going, how do I learn?

01:52:55.080 find somebody who's doing what you want to do and you might you might not have the time you know if

01:53:00.940 you got kids and whatnot but but if you do and you have the scrappiness to work in the you know

01:53:05.300 nighttime kind of thing like find the person you want to be like emulate them but ask them if if

01:53:10.420 there's something that you can do for them and now you're going to learn they're going to pull you

01:53:13.680 into that you know they're going to pull you into that business they're going to give you hopefully

01:53:17.120 you know percentage down the road and there's there's different ways to well in the past you

01:53:22.380 would have to pay a master craftsman to have an apprentice, you know, apprentice with them

01:53:27.860 because that was essentially their, their collegiate, you know, education. That was

01:53:31.240 their secondary education. And so, yeah, you can emulate that. And, you know, even, even a deal

01:53:37.460 like that where it's like, Hey, I'll, you know, I'll work my tail off for free. I just want to

01:53:40.940 learn from you. You know, that, that goes a long ways. That's really good. Yeah. I think the,

01:53:46.700 the, the thing that I might've said this on the last episode, the thing that's really interesting

01:53:51.820 is that you get a lot of younger guys and they ask, I think in some ways they ask the wrong

01:53:57.000 question, but they'll, they'll come to, um, you know, one of the guys in the church, they'll come

01:54:01.400 to you, they'll come to Jace or me or, or, you know, any of the pastors and say like, you know,

01:54:06.540 you've talked about starting business and side hustles. What opportunities are out there? What

01:54:11.240 should I do? I'm like, I don't know what you should do, but I can think of 15 different

01:54:17.340 opportunities in the last two weeks that I've thought of and had to say no to. Once you know

01:54:23.920 to look for opportunities, the opportunities are everywhere. Just like you said, you're not a

01:54:30.260 creative guy. Maybe not like, you know, Jace is a visionary. Like he's got ideas. He's, you know,

01:54:35.520 started a neighborhood, buy city blocks. You know, this is how we're going to take Chris and him

01:54:39.540 into Ogden and whatever. He's got all of these big plans, starting banking system, like the whole

01:54:44.160 deal. The guy's just, he's crazy like that. And it's great. But like you said, when, once you

01:54:49.520 started in real estate, you're like, well, if I was going to start a business, it'd be HVAC,

01:54:53.200 it'd be roofing. We could do landscaping. You could do, you know, foundation repair. I mean,

01:54:57.660 like the opportunities become just so great that you just have to say no. Even, even, uh, I heard

01:55:04.360 someone once say like, uh, just because something is a once in a lifetime opportunity is just a

01:55:09.220 data point. Those, those opportunities actually do come along quite often. They're really not

01:55:14.820 once in a lifetime. You know, it's just a, it's a, it's a good opportunity. So one of the,

01:55:19.960 one of the things that you should do is just be interested and start, start trying to make

01:55:24.700 things happen because you can figure things out. You can really do it. It's not beyond you.

01:55:29.060 So Tim, thanks so much for joining me. This was a lot of fun. I hope people really learned a lot.

01:55:34.480 And I just wanted to say, thanks for, thanks for your time. Appreciate it.

01:55:38.220 Appreciate the opportunity. Thanks.

01:55:51.020 Well, in case you didn't know, we have another King's Hall show called The After Hours,

01:55:54.860 and it's available only to our patrons.

01:55:57.520 We have a great time in The After Hours.

01:55:59.080 I play hype songs, which Brian loves.

01:56:01.100 Sometimes we even talk about Brian's cut.

01:56:02.800 We talk about recent news on X and answer listener questions.

01:56:05.780 Overall, it's a great time, so I'd encourage you to head over to patreon.com slash thekingshall

01:56:12.000 if you'd like to support the show and get some extra content.

The King's Hall - August 23, 2024

Real Estate： Building Wealth Through Real Property

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