Working Capital The Real Estate Podcast

The Bigger Pockets family and scaling your portfolio with Brandon Turner|EP1

Apr 1, 2020

In This Episode

Brandon Turner is an entrepreneur, writer, podcaster and active real estate investor who has been investing in real estate since 2007. He is a nationally recognized leader in the real estate education and has taught millions of people how to find, finance, and manage real estate investments. He has written six real estate books, all of which can be found wherever books are sold and at the top of bestseller charts in the Business section. His recent book, How to Invest in Real Estate, recently won the Independent Press Award. He achieved financial independence at age 27 and currently resides in Maui with his wife and daughter. He continues to write, invest, and host the top rated BiggerPockets Podcast, which has amassed over 65 million downloads to date. 

In this episode, we talked about on how he started as a first editor to become the VP of creative content for BiggerPockets to real estate investor, writer and how he contributes in real investing community. After his loan approved in 2007, he had his first single family house, became a landlord and after making some money from it, he started getting rental properties and start flipping houses. He mentioned his strategies about house hacking, managing properties with partnersrefinance-rehab-repeat tips, how he focuses and owning more than a hundred of mobile home parks. Enjoy the show! 

Quotes: 

  • “I want to become the best mobile home park investor in the country. That’s what my goal is, and I think everyone should aim for not to be the best mobile home park investor, but to be the best at whatever niche in your market.” 
  • So, the idea being let’s get everyone involved because real estate it’s like a hike, like a journey, but we’re all in this bike over the mountain together while having a great time with friends.” 
  • “The knowledge is out there. It’s free. It’s everywhere” 

Resources and Links: 

The Book on Rental Property Investing 

The Book on Investing in Real Estate with No (and Low) Money Down 

Brandon’s Instagram 

 

 

Transcript

Jesse (1s):

Welcome to the working capital real estate podcast. My name is Jesse Fragale and on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund joined me and let’s build that portfolio one square foot at a time. I had the pleasure to have Brandon Turner on the show today Brandon is a real estate entrepreneur and the VP of growth@thebiggerpockets.com. One of the web’s largest real estate investing communities. If you don’t know about it, check him out. He’s also the author of the book on rental property investing and the Book on investing in real estate with no, and Low Money, Down buying his first home at age 21.

Jesse (43s):

Brandon quickly grew his portfolio to well over 40 units using a variety of creative financing and just plain old hard work. Brandon great to have you on, Hey, thank you.

Brandon (53s):

This is gonna be fun. I’m excited.

Jesse (55s):

We were actually just talking just before the show that the last time we spoke, I believe was three years ago almost to the day on, on your Podcast the BiggerPockets Podcast, That’s, it’s been a little while, but that Podcast was awesome that you did with us. And I dunno, I’m looking forward trying to return the favor today. Well, I really appreciate that. And you know, I, there’s been a number of people that have talked to me about having you on having it on the podcast. How are, you know, brand has gotta be one of the first people you have on an, for people that aren’t aware. Maybe you could, you could talk a little bit about, a little bit about what you do at BiggerPockets and maybe how, you know, how you and Josh, you know, came to meet. And were you are today in terms of BiggerPockets and what you do for the real estate investing community?

Jesse (1m 40s):

Yeah,

Brandon (1m 40s):

Sure. So let’s see. So I was actually like a real life real estate investor, and I got started early on a w through BiggerPockets. So I was just, I remember finding the site back when I was like 21. I remember typing into Google what to do when tenants don’t pay rent. And I found this little tiny forum and I was like, wow, there’s actually answer to these questions. That’s what everyone was telling me, you know, what are you going to do if they don’t pay rent? So I decided to jump in, I bought some properties and just kind of hung around VP and ask questions on the forums occasionally. And it just kind of kept a close. And by the time I was 27, I was able to kinda quit my job and start a quote unquote retire. Which of course, when you own a bunch of rental properties, you’re just running around, putting out fires all day.

Brandon (2m 20s):

If you’re managing yourself, which I was. And a anyway at that time, I was like, well, how do I make more money? And I was like, I mean, I can just keep buy rentals, but now I don’t have a job anymore. So I was like, well, maybe it can work on Low or, you know, making money online. So I started a small blog and that led to me writing for Josh. This is a volunteer writer for BiggerPockets. And then that led us to becoming Facebook friends, which led us to him saying, Hey, I’m looking for some help managing blog posts. Anybody want to do that? And I was like, I’ll do it. So I became the editor at BiggerPockets, that’s what I was doing at the beginning. Just kind of a contract basis. He would pay me a little bit now a lot of blog posts and a that, yeah. That turned into the podcast, which turned into everything that we’re at today. So today I’m, I think my official title is like VP of creative content, but title is a small company.

Brandon (3m 4s):

You can toss out and titles, whatever you want. A So I basically in charge of the things like webinars, I do the webinar every week. I do the podcast every week. I make a lot of videos. I write some blog posts. I do a lot of social media stuff and just kind of whatever I’m like, you know, it would be cool. We should do this. Then I’ll try that out. And a, it, it’s a pretty fun position.

Jesse (3m 22s):

Well, it’s interesting you say not so, not such a big company right now, but you know, given where you guys were to where you are today, we were at the, the BiggerPockets conference in Nashville. And I was just kind of just amazed at how many people we’re at the conference. How many people you, the team and Josh has touched in the real estate space. It is pretty incredible. Yeah.

Brandon (3m 43s):

It’s, it’s crazy. How many bought it there?

Jesse (3m 46s):

Dive into what we’d like to do is talk a little bit about kind of your breakthrough or your first deal kind of, of substance a, what does that look like for you? And how’d you get it over to the goal line?

Brandon (3m 57s):

Yeah. So I’ll tell I got two kind of two different stories, but related the first one was actually I just about a house because I was balling with some, a friend of my wife’s. We weren’t married yet, but I was bowling with them and she brought her sisters. So my, my wife and my future wife, my wife’s friend brought her sister and she was real estate agent. And so were bowling. And I just mentioned, I’m going to try and find a place to rent. And he goes, well, why don’t you just buy it’s cheaper? And I was like, that, can’t be true. There’s not really a way you can buy it. We’ll be cheaper. And I liked into it a little bit and sure enough, you can buy a house than it was cheaper than what the rent was. There are about the same and you’d own the house. I said, well, there’s no way I’d get approved. And so I she’s like, well, call this lenders.

Brandon (4m 38s):

I call them, this is a lender and this is 2007. And maybe even like late 16 and their like, well, what do we do for job? And like, well, I have basically a minimum wage job and they’re like, okay. And what’s your credit? Like, I didn’t have any credit. It’s a crap. Okay. Well, how long have you had your job for like three months. Okay, great. You’re approved for $300,000. You’re good. And they’re like, that was a, that was the world in 2007. It was just like, you got nothing going for you whatsoever and no ability to get a mortgage. We’ll give you one.

Jesse (5m 4s):

We’ll just call it No doc loan. The menu. Yeah, exactly. It was amazing back then. Yeah. So they gave me a loan, the idea,

Brandon (5m 11s):

Luckily go and spend the Macs, like 300 Kay that they approved me for which most people do. I was raised by a garage sale mom, which is always like find the cheapest thing that you can buy.

Jesse (5m 19s):

Yeah. So yeah, I, I wasn’t bought it

Brandon (5m 21s):

The cheapest house that was on the market and it’s like $82,000 and it was just a single family house that I lived in It and I rented out on all the bedrooms to some buddies of mine from work. And that was presented as his own challenges. Any time you leave with a bunch of dudes that, you know, it’s weird and a, you know, only one fist fight. So this is

Jesse (5m 39s):

Great. That’s a good way to summarize it. It’s weird. Yeah. It was weird. A, it was good though, because

Brandon (5m 43s):

For free in my own house, which is cool. And then, and my wife and I got married, she ended up moving in at that point, we kicked out the roommates and we sold that I had in the house oil own it for nine months, total a, but I sold it for like one 40 and I fixed up during that time. I mean, everyday I’ll be like laying floor and I did not to do anything. I just got to book from home Depot, like called like one, two, three home improvement. So it’d be like, Oh, all right, lay the floor in this way. Like I knew nothing. Like I think I bought the eggs

Jesse (6m 8s):

Has that same book. Okay. Yeah. That sounds about right.

Brandon (6m 12s):

Yeah. Its like the big orange book from home Depot and like I learned I was doing everything I can place in a water heater. I mean I knew nothing, not even know what a hammer was before that. And I figured it out and sold the house. So we made at the end after all like that. And then we made like 20 grand and I was like, that was like, I made money out of nothing. There is like a magician, right? Like manufactured money. And I was like, I gotta do this for my life. And that’s when I found BiggerPockets is right around then because I was like, I’m going to, I told my dad, I’m going to get on a rental properties and flip houses. And he goes, we want to buy rentals. You are gonna end up a broken, homeless living under a bridge because they won’t pay rent and you can’t get the rent from them. And this is the same excuses everyone has like yeah. You know, you can’t, you shouldn’t own rental is because they’re a terrible anyway. So that’s what I Googled it and found that.

Brandon (6m 52s):

And that was so that was the beginning. That was the first deal.

Jesse (6m 57s):

So that was a, a, just the motivation you needed from your father to take him to go to

Brandon (7m 0s):

Usually they’ll stay exactly. I’m like, nah, I’ll show you the old man. And then a yeah, we ended up find a deal duplex. And how is, how can that thing live in one unit rented at the others. And that’s how I got into this thing.

Jesse (7m 13s):

That’s interesting. So that’s exactly what I was going to say. So the host SAC was your first kind of foray into real estate, which is interesting. Cause I think it’s something, not your last book, but the book prior to that, I think there’s, you know, you talk about a few different strategies. How is hacking being one of them and I’m not sure. Or you in the Denver market still right now. I’m not. Nope. I’m in a while now. I’m in Hawaii in a beautiful Maui, Hawaii, right in Hawaii right now. I live in Hawaii. That’s a title. Okay.

Brandon (7m 40s):

I’ve bought a house on Maui and a move out here about a year and a half ago. You know, it’s rough life. Yeah. That’s tough, man. I can see a whale jumping right out there on the ocean that getting that I can see some snow right now. I bet you can. Nice. So like, yeah. I just want you to know a little rough year with the cold temperatures too. I mean I woke up this morning at nine. I actually like, it was like 69. Like when I woke up I was cold, but it was rough. I had actually put on a shirt, you know, it’s not all over.

Jesse (8m 6s):

I think we’re bordering from freezing right now, but you know what else? As long as the sun’s out we’re okay. Yeah. You’re good. So that, that first investment, where was that? Where was that located?

Brandon (8m 15s):

Yeah, first investment. Those were pretty much everything at the beginning was in grays Harbor, Washington. That’s where my wife lived. That’s where I moved after college to be close to her. So yeah, everything was in grace Harbor, which is two hours South, West of Seattle. Okay. And kind of right on the ocean or a real small blue collar, like, you know, almost Rustbelt city, but not in the rust belt. And so like prices were anywhere from I had during the recession, he was like, you get in the house for 12 grand, but yeah, it was, you know, 50, a hundred, 250 $200,000 for a good house. And so it was definitely cheaper than Seattle Tacoma and yeah, I did everything there. I just worked remote basically for BiggerPockets stuff at Weill. I live there. I go to Denver a lot and I lived, I did live in Denver for a while, North of Denver for a year and at one point early on, but a yeah.

Brandon (9m 1s):

Then decided I needed to get out of the rain.

2 (9m 3s):

Well, yeah. So currently BiggerPockets, is that where the teams or is that where the team is located in that area? Still

Brandon (9m 9s):

So everyone in Denver, like the word of mouth,

2 (9m 11s):

Ah, from that first investment at first a couple investments, you know, I, at least I stay with a lot of investors, you know, where they are when they start, where they are today, they’re there is a big chunk and the middle where, you know, if they are still currently investing today, there’s there was a scale up of some sort. Did you see that in, in your kind of investing career or your journey and what does that look like for you? Did you stay in single family assets or did he move to multifamily

Brandon (9m 36s):

State for a long time until it was probably like 28, 29. I stayed mostly in the small stuff, but about a 24 unit and there somewhere a night kind of became my full time gig. Like I quit my job and just manage the 24 units. And at that point it had 40 ish units or maybe 50 and probably be between 40 and 50. It had some partnerships, some people, and we were basically always the ones responsible for managing the properties. And usually the partner would bring in the money to buy it. And that was a great arrangement, a win, you know, we didn’t have a lot of cash. So we just partnered with people that still works today is still on actually do it almost the same thing today. But today I’m buying significantly larger properties. So really the scale up, it didn’t happen until about two years ago, I bought a 50 unit mobile home park out in Bangor, Maine, like as far as you can possibly get from where I’m at right now, pretty much on the earth and about a, a, a 50 unit with my partner, with a guy named Ryan Murdoch and with Mindy Jensen and your husband, Carl.

Brandon (10m 30s):

Okay. How about this? Yeah, this is a mobile home park. Mindy is the community manager at BiggerPockets. We brought this mobile home park and I just fell in love with mobile home parks. I was like, man, I really liked this asset class because it was incredibly difficult. And so I like hard things. I liked things that scare away, most people. So I did that. And then over the last six months now we’ve added another four or five mobile home parks to our portfolio. So I think today actually we’re at today, we are closing on a one, its 170 sum unit Property out in Minnesota, Minnesota, my actual old stomping grounds. That’s what I was actually born.

2 (11m 4s):

Okay. Right on. So probably a little closer or whether that, that we’re having it here in Toronto probably.

Brandon (11m 10s):

Yeah. Close to there. Yeah. That’s in Northern Minnesota though. Yeah. It it’s a much more like yours.

2 (11m 14s):

Yeah. Okay. So now that you’ve, you’ve kinda, what was that move like? Because you know, if you remember our conversation before this space we play in is typically multifamily apartments, but we hear a lot South of the border on mobile home parks and a lot of people are getting into it. Is that, was that a conscious effort? Was it was serendipitous that you kinda came in to that asset class? What it was that transition like and why mobile home parks? Yeah.

Brandon (11m 40s):

A couple of things. We interviewed a couple people on the Podcast like Jefferson Lilly, probably the one that started it and later Kevin bub. But we interviewed like as a member Jefferson, when he got done recording with him, I was like, man, that just sounds so. And a couple of things stood out to me. One, I hate contractors. I hate dealing with them. They just drive me nuts. I’m not good at that. And I was like, if I own a mobile home park where the tenants on their own home, I don’t have to deal with contractors now that ended up being completely wrong. And because we still do a contractor’s all the time and just a that’s what I thought at the time I thought, well, I don’t have to deal with any contractors. So that appealed to me. I liked the fact that the vacancy not as high a vacancy rate was lower, but the time tenants stayed at their homes was way longer.

Brandon (12m 22s):

Like I think I saw a study they’re like the average mobile or a mobile home tenant stays were like eight years where the average apartment is stays for like nine months or something like that. If you were average in a lot. Yeah. It’s crazy. How much longer they stay. Yeah. Turnover is way less and turnover. It’s like the silent killer. Like nobody thinks about that when they’re analyzing deals 100%, but turnover gills you because every time I turn over a unit like in an apartment or I mean anything is in turn our unit, you are losing potentially thousands of dollars in lost rent and in repairs

2 (12m 47s):

In any. And even if, you know, if I dunno for your market, but at least for us, we have a stronger rent control laws. I know there’s a couple States that are similar to this. When you get a tenant out, even if the tenants a sort of the unit is perfect, your ending up doing something in there

Brandon (13m 2s):

Every time. Yup. Yeah. Mobile home parks were like, well, I don’t have to, you know, they’ll stay a lot longer and that’s proven to be true like that. Like we don’t have a lot of people leaving. There are a lower income bracket, obviously tenant. They don’t have make as much money so that you know that. But I actually, I kinda like that as well. I think that the recession is likely gonna happen at some point in the future. Maybe this whole Corona things is going to trigger it out.

2 (13m 23s):

We are going to sell. We know it today. Just announced a or I guess yesterday just announced the, the, the fed cutting, cutting rates, the overnight rate of 50 bips. Oh wow. Yeah. Crazy.

Brandon (13m 35s):

Yeah. It’s an, it’s a, it’s like they are doing everything they can to prevent this from becoming a freefall on the economy. And maybe they will, maybe they’ll protect maybe a little while we’ll salvage it. Maybe not. I don’t know. But I’ve always said the last couple of years I’ve been seeing the same thing over and over and over his, like, there is nothing in the economy to indicate that we’re gonna hit a recession soon, except that you never see recession coming. This is in 2006 and seven anymore. But at the same time, like a recession is caused by fear and fear alone. That’s all recessions are caused by me. The entire economy of every country is based on fear and trust. That’s it? So people spent, they feel good. They spend money at the economy does better. They feel crappy. They scare them. They hold it in. So I’ve always said like, where people are like, well, I don’t see a session coming. And I’m like, no, you don’t see recession coming.

Brandon (14m 16s):

Like it does because it was a bomb goes off somewhere or because there was an outbreak of something. So anyway, so it’s interesting that now we’ve got an outbreak going on and it’s probably just media field. It’s probably not a big deal, but could it trigger it? So anyway, point being, I think mobile home parks because of their low rent is going to fare better in a recession than a lot of the, the high end rentals. So, you know, I don’t think my $235 a month rent is going to be dropping any time soon. In fact, I think I’ll just infill. I’ll be able to put more tenants into these parks because now people have less money. So they’re going to be looking for a cheaper option and we are the cheapest option outside of homelessness. Yeah. Well, it’s funny,

2 (14m 52s):

It’s like the, a, the nerdy economic turn and you’re at Ellis, the city of demand, right? Like the idea that there are going to go anywhere else at that point, you, you know, you, maybe you won’t have the, the Taj mall type of apartment building, but you will. And that’s why we, like, on the apartment side, we’d like the kind of the blue collar apartment buildings, you know, not, not the high end on the market, not the complete disastrous, the end to the market, but somewhere in the middle. But that, that’s an interesting point because, you know, I tell this to, I was actually talking with another agent yesterday and we’re talking about staying cash, rich, having the opportunity that if, if the economy does change, that you’re prepared for it, but also not going so far to be, you know, we don’t want, don’t pull the trigger on anything. Cause you’re just hoping that this recession happens and you never catch the falling knife.

2 (15m 35s):

Like, like you said, the recession could be a macro economic event could be like this, an actual virus, which, you know, the media spins out and then all of a sudden people are worried and it stopped spending. Yeah. That’s exactly it. So that’s interesting. So fast forwarding to today now that you, you kind of, you have the units that you do have under your belt. Have you kept it within that asset class or have you gone into retail office? Have you done anything differently?

Brandon (16m 0s):

Yeah, no, I pretty much. I’m focusing, I’m going to say 90% on mobile home parks. And I’m such a big believer in a lot of people. Like when I talk about mobile home parks, they think that, and I shouldn’t talk about as much cause I’m just creating a lot of competition. Cause there’s not a big house. It’s a small little ass that class, it was only 50,000 mobile home parks in the country. And there’s like 1% or of being redeveloped every year end to be destroyed. It’s like it has a declining asset class, a witch, you know, actually I, I like, but it, this means the more talked about it, the more people coming through it. So I like to preface it with this. It’s not the best asset class in the world now are the only ones gonna survive a recession. And I’m sure there is a million things that we can do. That’ll be fine. But I’m such a big believer in, in focusing and knowing that it doesn’t matter what you decide, it matters more that you’d decide in what you decide.

Brandon (16m 43s):

Like I could’ve chosen, you know what, I’m going to go into C class apartments or I’m going to go into a cost department. I’m going to go into self storage. There’s a way to make it work in all of those. So I just picked one instead. That’s what I’m going to do. And I’m just going full steam in it, that one. And I’m a big believer in vision and knowing where you’re going. I’m like I have this thing called the vivid vision. It’s a huge, like a newspaper article on my wall that is written about my company three years in the future and start rubbing this thing, like an opener Capital as an investment company on a bike and you have any have ever seen. And it just goes through like all these things, like the fact that we work only a 30 hour work week and that we traveled twice a year to exotic locations as a company, too, like team built. We have all of these things and in there and said, we want a thousand, a unit total, a, between mobile home parks.

Brandon (17m 27s):

And some, I said some multifamily, a So anyway. So mobile home parks is my focus. I wanted to become the best mobile home park investor in the country. That’s what my goal is. And I think that’s a goal everyone should aim for not to be the best mobile home park investor, but to be the best at whatever that specific niche you chose in your market, like, how do you become, if you want to flip houses, great. How do we become the best flipper of a three bedroom, two bath home in that zip code? Like what, what would it take to be the best in, in a competitive market? You gotta learn how to be the best. So speaking of flipping, and I’m also doing a little flipping here on Maui because it’s, it’s, it’s so good. Like the profit margins are just like stupid do it

2 (18m 3s):

If you hit it. Right. So on that flipping point a you’ve talked about the burst strategy. I think you’ve kind of YouTube is now saturated because of you in Berlin. There has been, yeah, there has been a million every time I had signed into YouTube bur on like every video I see now, but I mean maybe actually just for, for those listeners that don’t know what the birth strategy is. Maybe you could kinda give a summary of what it is. Sure. All right.

Brandon (18m 28s):

In, in, in a story format, I’ve bought a fourplex from my daughter, Rosey three years ago, the weak extra days a week, she was born. We closed on It and I found this through like direct mail marketing and I got the, I got the deal locked up and it was nasty. I mean, disgusting. There is a hoarder in one of ’em like a garbage hoarder or there was a, a homeless guy living and the other one That broken. So it was rough. So we bought the property. And when you buy it, you use some kind of short term money, typically a hard money loan, maybe cash. Maybe you have a partner who he just has a bunch of cash, a line of credit, whatever. In this case I used a private lender, basically hard money basically, but we were a private lender because there was a friend

2 (19m 6s):

You sound to minister, when you say private, Hey, it is, yeah, it’s a privately

Brandon (19m 9s):

There, but it’s a guy who ran on. BiggerPockets a good friend of mine that we met through BP. We built a relationship over the years and I asked him if I could borrow the money, I think I paid eight or 9% interest on it. And maybe one point. So anyway, so I bought the property using short term money and wrapped in a bunch of the repair costs. So he didn’t have quite enough to do the entire repair a for the whole entire Property, but he had a good chunk of it though. The rest of it, I just used the line of credit from the bank. So I really did the whole thing with no money down. So I bought it used in short term money, then I rehabbed it. So we fixed up that fourplex really nice. One, one unit, one unit, when you don’t want to do in this beautiful, Property a, now that it’s done than we rented it out one at a time, we’d rent them out. And we got great tenants above market rent, great tenants, no repairs and maintenance, hardly it all because it’s already been fixed up.

Brandon (19m 53s):

So you buy it, you rehab it. We then rented out, but I can’t keep paying my friend 8% or 10% or whatever I’m at, I think am at eight forever. And definitely because yeah, I definitely because that’s expensive and he wants his money back. So then we go to a local bank, we say, Hey, local bank, we’ve got this Real I don’t know if it was a local bank, just a lender. And we went to the, the lender and he said, Hey, we got this really nice four unit Property here and it’s fixed up. It’s worth way more than what we bought. At four, we have tons of equity in it. Can we get a new loan? So we refinanced that we got a brand new loan with the refi and that was awesome. And they gave us a new loan that basically paid back everything that I had paid. The my friend that he brought the money from. And the Monday I got from a line of credit now, in that case, I actually had to, they didn’t give me quite enough.

Brandon (20m 36s):

So I had to come out of pocket a little bit and that’s OK. On a burger. Sometimes you get no, Money Down we had the equity just at those like three days before closing. They’re like, Oh, we decided to change. One of our policy is a little bit, we can give you a hundred percent cash out. It’s gotta be like 95 or something like that. Anyway. Annoying. And you deal with that stuff in bank. Sometimes they loved this change. Things is the last second cause what are you going to do? So, yeah, so that was annoying anyway, but know we, we refinanced that. And what that does is it gives you your money back to my, my, my line of credit from the bank was back my investors money back. Now I can repeat the process. So the beauty is now I bought this property. I think we paid 45,000 for it. We put in about $120,000 worth of work. So we’re at like one 65, roughly the Property now I think my loans were like one 40 something right now, the new loans I had a little bit left into it.

3 (21m 23s):

And then the

Brandon (21m 25s):

Properties worth like two 20 to 30, two 40 now. And so we have all this equity now, and again, I could have had had I fought for another bank. I maybe could’ve got all my Capital back out again and again, but whatever, but I can repeat the process and go do it again and again and again. So the Burchette is a cool way to buy fixed route for rentals, which is a bank would never normally finance. And even if they did finance, it they’re gonna want like 30 or 40% down. And it was just be annoying. You’re a super high rate. So it’s basically a way to buy them, rehab them, rent them out, refinance and

3 (21m 53s):

Repeat. And the bar

Brandon (21m 56s):

Side note on that property that I love to talk about. This is because, so we put that property on an 18 year mortgage when we refinanced it. Actually I think it was 17 because it was a year in some way

3 (22m 5s):

He does in your term are technical.

Brandon (22m 9s):

We amortize a well, here, there we did, we did a 30 year mortgage. Okay. But I went into an online calculator to figure out what would it take to pay this property off in exactly 18 years from the time we bought it. And so it had being an extra, like $180 a month or something like that. So I just set up automatic payment. When I set up the mortgage payment, I just ended up to pay that extra amount. So it didn’t affect the cashflow that much. I still cashflow over a thousand dollars a month on that property, which is great. But now I’m going to be paid off when Rosie turns 18, write about the months he turns 18. All right. So now on that property becomes her college education. Yeah, it would be worth by that point. Let’s assume we average inflation will be worth three, three 25, three 50,

3 (22m 45s):

And

Brandon (22m 47s):

We don’t own anything on it so we can re we can refinance it again at that point and pull out 300 grand tax free in cash to go and use for whatever we want. Like her college education, she can use a four or she can use it for start a business and invest in real estate, which I hope she does. But if not, it’ll cover her college. You guys should go to like eight years of college for that. And the great thing, because I didn’t pay it. My tenants are paying it. We’re just paying off the mortgage over 18 years and my tenants and I get cashflow the meantime. So a is going to come up with a good word for that right now I call it college hacking, look a little, a better term eventually. But the YouTube videos, Brandon call the Jacky is going to be all over the trademark. There you go. Trademark in that thing. Yeah. It’s a, it’s such a cool strategy. So if you’ve got kids under the age of like five buy a property, it doesn’t even need to cashflow buy a property, putting on a 15 year mortgage or whatever it takes for them to get paid off.

Brandon (23m 35s):

And I mean, even if you were to lose a couple hundred dollars a month because of that, you put on a short, a mortgage who cares if 15 years from now, or your kid goes on to college and they’ve got a Property. So every kid I have, I’m going to buy a property. I might even start buying it for my nieces and nephews. And he is likable. Yeah. He was buying the property.

Jesse (23m 47s):

I forget the RDSP is just go right into college house.

Brandon (23m 50s):

Yeah, yeah, yeah, exactly. Yeah. Forget all the government in a weird Davion’s plans for college, just by a rental property, a 15 year mortgage, you are gonna be way better off

Jesse (23m 60s):

To summarize with that. I mean, your going in there, you’re getting short term debt for the, for the actual renovations and rehab at a certain point, you are stabilizing that debt by refinancing the property, pulling that money out. I guess the, just some of the things that keep on the radar when you do this is, you know, you have to, it reminds me of kind of the, I dunno if Gino and Jake and Gino a coin, the, the three legged stool, but the kind of Bi-Rite manager, right. Finance. Right. And I think this is really a good illustration of that, that you need to buy. Right. A you need to identify Property that you’re actually going to be able to take to the next level through rehab.

Brandon (24m 35s):

Yes. Yeah. Cause it all depends. I mean, this is like flipping is the same way. Write it all depends on your ARV, like your after repair value. If you screw that up here, then the birth strategies, I like it doesn’t work as well in bed. You are gonna be living in a lot more cash in. So imagine that same Property I mentioned a minute ago with Rosie’s fourplex, you know, I knew it was gonna be worth over 200 grand when I got done with it. But what if it appraised at one 40 and I had 140 into it? Well, now that’s worthless. Now that I’m only gonna get $100,000 loan, I got to keep $65,000 in the deal all because I didn’t know my after repair value. Good enough. And again, the same thing applies for flipping So. Quotes,

Jesse (25m 8s):

It’s interesting too, at least with the F with the birth strategy you do avoid, I see a lot of flippers out there that that are not a lot of flippers. A lot of would be flippers or people that want to get into flipping thinking that you’re going to have the same tax benefits of capital gains when it comes to flipping. And, you know, I tell them if you’re going to make that your primary business, it’s a business it’s operational, the day you stop flipping is the day the money stops. So I prefer, you know, if you’re going to go into renovating and rehab, and if you have a knack for it doing what you just said, try to stabilize properties and keep them and rinse and repeat. Yeah.

Brandon (25m 42s):

Yes. It’s actually kind of amazing that there’s some like us tax laws that make it better, even more interesting than what I mean by that is like, if I buy a Property I can like do like what’s called a cost segregation study. And with accelerated appreciation there, I can almost make the same profit as flipping by holding onto the property. It’s it’s, it’s crazy. But because of the tax savings, yeah. He could lose 50% on, on a flip. Yeah. Or I could pay zero taxes on a rental and they actually,

Jesse (26m 6s):

That’s a whole, that’s a whole nother area where it’s, it’s really interesting. And just I’m so that cost segregation, for instance, if I understand it correctly, you’re basically taking a full audit of all of the components of a building and Property, and then your trying to get the most favorable depreciation terms for those individual exact kind of components. It’s it’s, it’s definitely interesting. And I think this is, you know, the U S and I’m based in Toronto, in Canada, The, we’re very similar in that oil or at least for us oil and real estate are areas that government does incentivize quite a bit through the tax code. I think more so in the States, because there was never been a, in Canada of home ownership. And I think in kind of the Bush and Clinton years that you guys were at a high watermark for home ownership, I think it might’ve been in the 70% where there’s, there’s a bit of symbolism, you know, the pride of ownership in the U S so

Brandon (26m 58s):

Yeah. Welcome to be in a grownup we’re in a house like that,

Jesse (27m 1s):

For sure. And I, you know, that’s reflected through the tax code, but that’s another thing we were just talking before the Podcast about gear and camera equipment. It’s like, whatever you do, you’re going to have to become an expert in the area that is associated with that. So as much as we might not want to learn tax code or accounting, and we’re not going to be experts in that area, but as investors, you can’t turn a blind eye to such a, a huge component of our business.

Brandon (27m 25s):

Yeah. You really gotta like a, again, yeah. You don’t have to be an expert, but you either gotta hire the expert, know enough to be able to hire them, or, you know, read a bunch of books, a reasonably not super complicated stuff, either like you can learn on a podcast are on a, on a webinar, on a, in a book we haven’t been as familiar with all that stuff is here.

Jesse (27m 40s):

Yeah. So I guess I just wanted to turn a little bit about Tim BiggerPockets and kind of the educational component, because, I mean, I don’t think I can really talk to somebody in real estate and mentioned BiggerPockets and them not know who they are. And even some of the videos I do for BiggerPockets, you know, once they see that, that length, they’re like, wait, you’re on BiggerPockets. So we were like, Oh man. But I was looking up some thing about this, a, a cap rate in this area, and there’s five forums on it. So BiggerPockets, you know, you talked a little bit about what it was in Oh 7:08 AM, where is it today? And you know, what, what type of Resources can individuals get into on, you know, whether it’s the website or on YouTube. So,

Brandon (28m 20s):

So BiggerPockets yeah, when I joined, it was basically just a forum with a little bit of a blog. It wasn’t a being called a blog was in articles at a time of today. It’s yeah. To get it today, is the forum still, and that’s kind of the lifeblood of the site in terms of where the most traffic comes from forums or great for traffic, because obscure questions people ask and then like, you’re, it might be the only one to ever ask a question on Google, but there is an answer for it probably on BiggerPockets what’s the cap rate of Toronto in 1992. And like somebody,

Jesse (28m 46s):

We mentioned that. And so Google

Brandon (28m 48s):

Loves forums. And so that’s why we rank well for a lot of stuff there. A, but we also of the world’s largest real estate investing blog, the largest real estate investing Podcast largest real estate investing. Webinar’s we teach, I teach to like 14,000 people a week, a, on a live webinar, a huge YouTube channel. Of course you’re a part of, and lots of contributors. And BiggerPockets this school because it runs out this idea of like, the community creates the content. It’s not like the guru who it is, it’s top down, but I will teach you everything you need to know. And even though people might see me, oftentimes it’s like that the top level guy are me and David just cause were on the podcast. It’s like we create maybe 5% of the content. I could probably a 5% of content on VP and 95% of his grade about other people.

Brandon (29m 29s):

So the idea being let’s get everyone involved because real estate, like, I like to explain it is like a hike. It’s like a journey, right? We’re all on this hike over the mountain together. Well, having a great time. Sometimes its hard, some of them, but it’s a lot more fun with friends. And so when you go with other people, your like, Hey, watch this. Like there is a cool little like shortcut over here or what’s this, this new tool I got, that’s going to help me hike better. And the more people you get involved on that height, the more people that are sharing their knowledge and their wisdom in there, there are lessons learned mistakes, success was whatever. And it kind of benefits everybody. So, and if people learn in different ways, this was a Josh’s like Josh and I talked a lot about this back like seven, eight years ago was we want to be everywhere. And normally in business, that’s a horrible idea. I just said earlier, we had a focus, right? That’s why I’m focusing on mobile home parks.

Brandon (30m 9s):

But we were like, let’s be everywhere. In other words, like let’s, let’s be the best on YouTube. The best podcast. Let’s be the best blog, the best forum you, that you were to a bookstore like you are going to see are books above everyone. Else’s like, how do we become everywhere? Because people learn different ways. And we want to make sure that we have something for every single person. So if you don’t like to read fine, listen to an audiobook or a podcast, or if you don’t like the listen to audio books and you can read a book, you can everywhere. So that’s kind of the BiggerPockets for sure.

Jesse (30m 36s):

Yeah. There’s really no excuse today in terms of learning. I see, you know, whether it’s Podcast audio books and reading, I think one through line. And tell me if you, that you’ve experienced this kind of in, in a kind of your network as well. I found that real estate investors, like I’m a broker as well. And as an agent, a, you know, I feel that it’s more of a day job. It is a little more entrepreneurial, but I feel like if you’re in kind of a, you guys call it a W2 in the States where we were a tea four, if your a salaried employee, I find that there’s kind of a school of thought or thinking, but when I re meet real estate investors, intellectual curiosity is at the top of most of the people you meet, there is kind of a philosophical component of learning, of wanting to learn personal development.

Jesse (31m 18s):

I mean, if you, I think if you pulled a hundred real estate investors, these people would be people that are actively buying books on personal development, taking yourself to the next level. And that’s why I found you touched on a really interesting point there where the actual content is created by the community. And that’s so true in even in doing these videos for BiggerPockets, I’ve found myself being like, man, like I in this one specific vertical in commercial real estate, I might be an expert in, but there’s, there’s this area that’s slightly different that I know nothing about. And then you, you know, then the community is there. Well actually, you know, Mike does, So listening to his content. It’s actually

Brandon (31m 57s):

Actually that. And because there’s so many ways to invest in real estate, there’s a million nuances and little niches and strategies and everything that you’d want to learn. You can find somebody whose doing it and doing it well, which has such a secret of success in anything in life. Like if you want to be skinny, like a skinny person who is, what does this game need to go on BiggerPockets and ask them, you know, like, you know, using the analogy. It’s like a, yeah. If you just learn what the success people are doing. So like, that’s what BiggerPockets so cool. Cause it’s so open and a free sharing yeah. That you can figure out what’s successful. I mean like, yeah, like you said, most people, I know that it’s successful our listening to personal development, like content. Okay. So if you wanna be successful, guess what? Listen to me

Jesse (32m 35s):

First, the development content like this,

Brandon (32m 37s):

Which of them are listening to podcasts. Okay. Listen to podcasts. They’re taking action. They’re analyzing deals every day. They have a system for getting leads coming in their business. So like people complained to me that can find any deals. I’m always like, Hey, well, what do we like? What are you doing for them? Yeah,

Jesse (32m 51s):

Well like a hundred percent a year. You know what? I, I have this a year, we see a lot of an output in our society. Like, you know, as listening to a podcast, just ironically on this, where there were talking about, you know, there’s no news article that says, man ate a salad this day. It’s man lost 50 pounds. You know, that’s the news article and its, and if you move from looking at the output too, what it takes to get they’re like you were saying than that, I want to lose 20 pounds. Maybe as an, I want to lose 20 pounds is what does that look like? Well, I want to lose 20 pounds. It looks like a guy that doesn’t miss workouts or a gal that doesn’t miss workouts focuses on that component of it. And then the outcome will kind of resolve itself.

Jesse (33m 31s):

And I think it’s the same for, for real estate to your point, when exactly the same thing. When somebody comes up to me and says, how do I buy this in this area? It’s like, well, what are you doing? Are you reaching out to people? Like, I’m sure you’re very similar to myself. Just on a greater scale because of the content you put out. Once I started doing videos on BiggerPockets the DMS, I would get the direct messages on Instagram from people thirsty to be like, Hey, what do you charge for a one on one coaching? Hey, I’m willing to pay you though. And I was looking at this and it was actually kind of terrifying to see like 18, 19 year old kids being like, I’ll pay you this amount. And I would be like, well where’d you come up with this figure? Oh, well there’s a local person in my area that, that said they charge me this.

Jesse (34m 12s):

And I’ll be like, to your point about gurus. I was like, Whoa, Whoa, don’t don’t do it. Listen. I’ll, I’m more than happy to get on a five minute call. Call me tomorrow. Like I’ll chat about kind of pointing you in the right direction. But I feel like there is a lot of that content out there that people need to look out for that you have these gurus. So that have actually never done a deal.

Brandon (34m 32s):

What I find fascinating is that what most people there was this great quote from a guy named Derek Sivers who is on Tim Ferriss’s podcast a couple of times. And he said, if more information was the answer, we would all be billionaires with a six pack abs or at least. So like all of these, all these people trying to get into real estate are going to go pay 30, 40, $50,000 for a guru to give them the information when they don’t need the information. What they need is to figure out why they’re not analyzing a deal. Instead they’re watching TV. It’s like a deeper thing. It’s not that it’s not the knowledge that they’re lacking. The knowledge is out there. It’s free. It’s everywhere. I, it’s almost a deeper thing. Like why aren’t you taking the action that you’re supposed to be taking? Which is why I generally advocate performance coaches more than I do like guru. Like I don’t like guru coaches at all.

Brandon (35m 12s):

Like no real estate coaches necessarily. Although there may be a place for them. Like when I got into mobile home parks, I have a lot of money. I’m rich guy. Right? I can say that I could go spend $30,000 on a coach and he would teach me exactly how to invest in mobile home parks. Maybe that would have saved me some time. One, I don’t know if I would have valued it as much though as learning it myself and making the mistakes and figuring all this stuff out. But even if like whatever it may be, I could have paid that. But again, the bigger issue for most people is that there are mostly broke. Gurus are making them, put it all on credit card

Jesse (35m 39s):

And then they, they don’t take the action. Right.

Brandon (35m 42s):

Anyway, because that’s not the problem. The problem is something deeper. It’s like, why don’t they take consistent action? Why are like, why aren’t they tracking their results with a check in their inputs, their lead measures. So anyway, I’m a big advocate of performance coaching, which is way cheaper. Usually like

Jesse (35m 55s):

When you say performance coaching, because you just hear the term coach thrown up, thrown around quite a bit. What would be, would it be a, do a performance coach in, in this context? Yes.

Brandon (36m 5s):

There’s people whose job it is. It’s almost like a mix of like a therapist combine with it. Like a business therapist have a guy that I got amazing. Jason and I get on a call with him every other week. In fact, we’re talking later today and it’s kind of open ended. Like what are we gonna talk about? Like I don’t have it necessarily planned out, but he has asked me questions. I’m in a good, a good coach. He just asks questions. And it’s really designed to just make me think, come up with my own solutions. So it’s like, I’ll talk to him. I’m like, yeah, things are going really good. I just hired a new assistant. It’s like, okay, well how would he got the assistant doing? Like, I’ve been doing this and this and this. Well, what’s going really good with that. Well, you know, this is going really good. Well, what, what are you struggling with? Oh man, it’s really hard when he does this. Well, why is it, why does he do that? Well, I don’t know. I guess I haven’t actually explain how to do that task. Great. OK. Well, what do we need to do is sit down and go to like step, make it a step by step tutorial on how to do that and then will never have that problem again.

Brandon (36m 50s):

And I’m like, Oh, I just came up with a solution myself. Right. And the performance coach, just get you there. So there was a lot of coaches out there, like in different names for them, but I’ve found that very valuable.

Jesse (37m 1s):

You said therapist. I was at a conference but two weeks ago. And it was a venture capitalist talking about when they are investing in a series a for these different companies. And he says, one thing I do, and I don’t think there are very many VC firms that do it. I put immediately I put the founder with a therapist and I say that these are the things I’m going to do. You’re gonna do this, this to this and get a therapist. And he’s like, they all say no. And that, that doesn’t last because it’s mandatory to get our money. And he’s like, well, we don’t call it. Therapist’s we call that a coach. But the reality is, is in that, in that context as a founder of a company and just real estate is very similar. You’re a founder of a building or multiple buildings. You still have similar stresses.

Jesse (37m 41s):

It can be very lonely when you’re starting out in your investing career as the founder, as a, as an entrepreneur. So having somebody to actually, like you said, with here, it could just hear people that may be don’t maybe your, a suspicious about a therapy or coaching that while you have the answer in yet. And it’s like, well, yeah, maybe you did, but what needed to happen were those steps for you to get it out, to manifest it? Yeah.

Brandon (38m 4s):

In other words, if you don’t want to a high performance coach, but you can hire an attorney or you mean get an accountability buddy, like something of a friend that might be holding you accountable to it, or a small mastermind group. And like, not like a, you know, expense, a paid thing necessarily, but just grab four or five people that are on the same journey as you, and, you know, figure out like meet every other week and just go read to you your problems, but just talking them through who can help a lot. And I like paying for performance coach, cause it means I’m the only one I’m selfish ingredient. I want him to like, I want him to focus only on me, but I was in mastermind groups for years and years. And I still am in one, like when we get together or what we know once a month over, over Skype or zoom or whatever, and just chat about what’s going on. And like everyone of those calls that we walk away with going, man, that was so good. Like I just, I grew so much in that.

Brandon (38m 45s):

And so I think a lot of people would, we do, we do well to get somebody’s in their life that can ask them the right questions, the hard questions it’s like Tim Ferriss talks a lot about asking good questions. It gives you good answers.

Jesse (38m 55s):

I mean, it really does tease out the, you know, some underlining things that maybe you’re just there, not on the surface or not sure if you read Gretchen Rubin books, the four tendencies, but it was interesting because it associated your type with your learning style and your tendencies with the goals that you have. So for instance, like you said, accountability, some people need like need that person. I think it’s called an upholder in her framework where you need that person to do the job with you because you’ll won’t, you won’t do it on your own. But if you have the friend, you will, I’m a little bit different. I think it’s the questioner where I have a lot of internal accountability that if I say I’m going to do something, I’ll typically do it. However, I’m very questioning.

Jesse (39m 36s):

And if, if I feel for whatever reason that what I’m doing, doesn’t make sense. And that’s why I’ve the coaches in my life that the sports coaches I’ve really connected with the most were the ones that I respected the most. I was like, no, this guy’s an authority. And then once, once that happened for my tendency. So it’s just an interesting book because you kind of figure out, do you have to be the person that posts on social media and says, I’m going to achieve this goal to keep you accountable. Cause some people that, some people that is a, you know, they need the, a, the stick there. Just going to rap up a little bit here. I’d like to touch on a little bit about first of all the conference this year, I know BiggerPockets has coming up. And a, maybe a little bit about, we were talking a little bit about the journal before a BiggerPockets and kind of it, maybe you could kind of expand on that.

Brandon (40m 20s):

Yeah. The conference gonna be in new Orleans this year. I think it’s October 6th, seventh, eighth, fifth, something like that. Yeah.

Jesse (40m 26s):

We know early October. I’ve just a contributor. A man.

Brandon (40m 28s):

No that, yeah, come on. I just show up. They tell me where to be. I talk a So it’s early October. It’s going to be in new Orleans, right near bourbon street, which is one of my favorite places.

Jesse (40m 37s):

No, I haven’t not. And that was actually planning on going in October this year. And then I got that email. I was like, ah, come on.

Brandon (40m 43s):

It’s so good. Like, I dunno, it’s, there’s a vibe there that is really fun. So that is going to be there. And it’s like a thousand real estate investors, all your best. Friend’s on a big height together. We were just all getting together for lunch on a hike is what the conference basically is. Its a great time to, to share what’s working. What’s not working. I mean I came out of that last conference with so many better, like a much deeper friendships and relationships and ideas for how to grow my business. So it’s going to be a, it’s going to be a good time. So yeah. Conference 2020 a tickets go on sale at some point soon. I’m not sure where the episode airs, but there might be out already. It might not might be it’s gonna sell out. And we guarantee we had sold it last year in. We did.

Jesse (41m 17s):

And it was a grade. It was a great conference is the last one in Nashville. Just the energy. You know, I learned a ton just seeing what other people are doing in different markets, in different States. I learned that your like 10 feet tall, you know, I am 10 feet tall. We don’t see it sitting down, but I’m like, Oh that’s that day? That was the first time we met in person. There is like tall

Brandon (41m 36s):

And then there was handsome, tall, right? Like, are we all want to be hands at all? And then there’s awkward tall. So I’m in the, I’m like in the awkward tall stage. So, you know, I need to drop like four inches and then I’ll and I’ll be like, wow, he’s a tall instead of, Oh he’s tall. It’s like how they say the inflection. It is. How do you just turn an awkward?

Jesse (41m 52s):

Yeah. And, and I just, I just want to note here too, that the conference from, from the experience of, of, of kind of been something that it’s attended, its not a, its not a super salesy kind of event where you’re not getting the actual value out of it, run to the back of the room. You know, you want to be with these five girls in six for Ari’s like its not, its not that type of conference at all. And I think there was just a, there’s a lot of genuine connections that were, that were made in the brief, you know, brief couple of days that you’re down there. So I assume new Orleans would be just as good as maybe a little bit more off the hook, given that we’re in new Orleans. Yeah, exactly.

Brandon (42m 24s):

It’s going to be a, I’m going to be wild. That will be fun. So yeah. That’s that’s the conference and a day you mentioned the journal, the journal, is it something like I’m a big believer and like tracking your lead measure is like we talked about are your inputs. And so there’s kind of, it just helps to do that on, on a day, two day thing, a person can do that on a notebook if they wanted to. But I always really liked having a year, like a general, like they actually do it like a physical journal in front of me that gives me the prompts and not just write stuff down. So like what is it like what’s your schedule look like today? What are your lead measures? What are your three goals you are working towards? What’s your most important next step? I mean this one thing, like if you just start getting into this practice would change your life. As every time you want to do something in your life, ask your team like every goal you have. I get in the habit of asking yourselves every single day, maybe five times a day, what is my most important next step?

Brandon (43m 9s):

Am I an S? Because at the end of the day, almost every big task we want to accomplish in life is really just made up of a whole lot of little, five minute easy tasks. Like nothing’s hard is just a lot of steps we haven’t defined or we haven’t practiced enough. And so by asking yourself that what is the next step? Usually it’s something really simple. And we might have been weeks that we’ve been delaying doing something because we haven’t defined what the next step is. So ask yourself, what is the most important that step? So the journal helps you with that. And it also probably the most valuable part of the journal honestly, is that if you buy the journal from BiggerPockets anyway, ah, there’s a coat on the front page that gets you into a, a page. It basically hooks you up of the mastermind group. So he talked to a mastermind group earlier. You can actually, well, it should just put you in a group with four to five other people that have bought the journal and are working towards their real estate goals.

Brandon (43m 52s):

And then you can just meet with them whenever you want. It’s kinda like we help facilitate a group for you or, or form a group for you and then it’s yours. And so that can be a lot

Jesse (44m 0s):

Cool. So more push on that community aspect there.

Brandon (44m 3s):

Exactly. Yeah. God to get with other people, got to do this hike together. Don’t do it alone.

Jesse (44m 6s):

What is the best way for people to reach out or, you know, The, if they want to get in contact with you or just see some of your content that’s it

Brandon (44m 14s):

Instagram is like my thing a more like a 13 year old girl when it comes to Instagram so you can find me there are beardy Brandon Beard with a Y beardy Brandon and that’s that’s probably, I think I’m of course BiggerPockets than everywhere else, but I’m very social on the street.

Jesse (44m 30s):

My guest today has been Turner Brandon

2 (44m 32s):

Thanks for joining the Working Capital The Real Estate Podcast and I had thanks man. There’s a, this is fun. Thanks for listening to the work in Capital podcast. My goal is to help individuals break into real estate investing as well as educate experience investors. If you enjoyed the show, please share with a friend subscribe and give us a rating on iTunes. It really helps us. If you have any questions, want to learn more or like me to cover a specific topic on the show, please reach out to me via instagram@jforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode or the working capital real estate podcast.