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- [00:00]
Chad Carson
This is an iHeart podcast.
- [00:04]
Joel
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- [00:24]
Matt
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- [00:32]
Joel
Hey, it's Joel and Matt from how to Money. Matt, you and I, we do a decent amount of traveling. So what's a place that you think lived up to the hype?
- [00:41]
Matt
That one is tough, but immediately what comes to mind is Scotland. The scenery in particular was insane. I'm specifically thinking about when we went and hiked Old Man's Store. Oh yeah. Felt like we were on a completely different planet. It was otherworldly.
- [00:54]
Joel
Sure was. Yeah. Yeah. And our Airbnb on the Isle of Skye, man, it looked straight out this field into the sea. Total tranquility. And the castle gardens that we saw, man, it felt straight out of a fairy tale.
- [01:06]
Matt
It's true. Yeah. That trip showed us how big a difference the right place makes. And if you've got travel plans, don't let your place sit empty. Airbnb's co host feature makes it easy to earn a little cash while someone else manages the day to day.
- [01:19]
Joel
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- [01:38]
Matt
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- [01:51]
Joel
Learn more at aarp.org skills welcome to how to Money. I'm Joel.
- [01:57]
Matt
And I am Matt.
- [01:58]
Joel
And today we're talking about being a small but mighty rich real estate investor with Chad Carson.
- [02:23]
Matt
That's right. We are so pumped to be talking with our friend Chad Carson, aka Coach Carson, which is also his site, coachcarson.com hold over from Chad's Clemson football playing days so one of my earliest memories was hanging out with Chad in the pool at fincon nearly five years ago. We're talking real estate. We were enjoying a craft beer, and here we are at it again. But just because this, this feels like a more casual conversation to us, that does not mean that Chad isn't going to bring the goods. We, Joel, you and I, we tout the merits of small time real estate investing. But Chad has made it his miss and it's the focus of his new book, the Small and Mighty Real Estate Investor. So if you're wondering how owning a few investment properties, how that could get you closer to financial freedom, well, keep listening. If you're wondering if it's even possible to get into real estate, given where mortgage rates are currently, this episode is for you. Chad, thank you so much for talking with us today here on the podcast.
- [03:22]
Chad Carson
Matt, Joel, it is great to be here. Thanks for having me.
- [03:24]
Joel
Hey, Chad, you're welcome anytime. Like next week also. So we'll bring you back home again.
- [03:29]
Chad Carson
Let's do it.
- [03:30]
Joel
I mean, there really is a lot to cover. We probably could have multiple episodes with you just because the book is so thorough. But the first question we ask anybody who comes on the show is, what do you like to splurge on? It lets us know a little bit about you and your priorities. But Matt and I, we of course have the big priority of spending more on craft beer. What's that in your life?
- [03:49]
Chad Carson
That was one of the first things I resonated with you guys on. Both listening to you and also meeting you is. Yeah, food and craft beer are like, my wife and I, we like to combine that with travel. I guess that would be my kind of cheat answer that we like, my wife and I, when we first met on our first date, it was like, where are we going to go? Where are we going to travel? And so from there, though, I think just, you know, on a car, we drive an old Toyota, we drive old, you know, hand me down cars from family members, that's okay with us. But going to really nice locations, having good food like in Spain or Greece or that's, that's just, that's the best. Like, we really, we really enjoy that. And then having a good craft beer is right up there with it as well.
- [04:30]
Joel
Okay, so I was detailing my first date with my wife recently to one of my kids, and I ended up taking my wife. We went to the zoo and to a baseball game, which is like a really, really long date. Right. But you, I feel like you blew me out A lot. You guys were talking about going on trips together on your first date, like.
- [04:46]
Matt
Six months from now.
- [04:47]
Joel
That's hard to travel.
- [04:49]
Chad Carson
Yeah, I mean, we were out hiking and we were like, well, what do you like to do? What are you up to? And it was just like one thing after another. She's like, well, I traveled to Guatemala. I speak Spanish. She's a Spanish teacher, by the way. And for me, I was. I was kind of itch, itching to travel because I played football in college and I did a little bit of study abroad, but I was just like, I never got to do enough of it. So I was just really intrigued by that. It's like, well, that's exactly what I want to do. I would love to go to Latin America. I would love to learn Spanish. She's like, well, I'm a Spanish teacher. I was like, well, perfect. You can give me lessons. That's great.
- [05:18]
Matt
More time together. I guess we'll go ahead and get married.
- [05:21]
Chad Carson
Yeah, let's do it.
- [05:23]
Matt
Well, on that note, so you just got back from another year abroad. What made you go specifically to Spain? Can you share something about that trip? How the heck was it?
- [05:32]
Chad Carson
Yeah, well, I mentioned the Spanish language. That's sort of something that we connect with. We've lived in Ecuador in the past for about a year and a half with our kids. So that was an amazing experience. We love Ecuador. We love South America. We wanted to try something in Europe where we could be a little closer. We kind of had this vision of my kids were 10 and 8 when we left, and actually a little bit 11 and 9. I can't get that right. But I wanted to take them to historical sites. And Europe is just so dense with so many different places. And so, like, we went from Spain was our home base. They went to school there. They were speaking Spanish in school, which was amazing. We were in a small community in Granada in the southern part of Spain. But then we also took side trips. So we went to Greece in February and went to see, like, the Parthenon and all these old sites. And that was like a history lesson in person. Yeah, that diversity of just experience, history stories just was. I think all of that together was an amazing experience.
- [06:26]
Joel
Talk to us about the logistics and the finances of pulling off a big stunt like this. What sticks out in your mind as kind of the. The biggest barriers, the biggest hurdles that you had to overcome to kind of pull off a year in a foreign country.
- [06:38]
Matt
Basically, this is like a mini retirement, right?
- [06:40]
Chad Carson
Like a. Yeah, yeah, yeah. When I first did this back in 2009, my wife and I didn't have kids at that point. We just had to save money. So like that's how we did it. First time we went for four months, we saved the money. It was almost like saving for a car and just paying cash for a car. That's the way we looked at it. And instead of buying a new car, we spent 20,000 bucks on a trip and travel. This time around it was just a much different situation. We have rental income coming in from the United States and so paying for all of our lifestyle expenses in Spain basically came from the distributions from our rental property partnership that I have back in the United States. The money side of things was less challenging. Although I know for a lot of people that's going to be the biggest challenge just getting the money. But the other big challenge, which is part of the story of why I wrote the Small Mighty Investor, was that the time and the flexibility to be able to go for a year is probably the most difficult thing because you, you have obligations, you have to be in a certain location. And so for me and my, I have a rental property business and having property managers on the ground doing most of the day to day work. I have a college student rental, so they were leasing properties for me while I was gone and me paying them to do that and having systems and processes like all of that is something that's really important. But with a typical job you can't do that. It's a lot harder to do that. You might have a, you know, digital nomad kind of is becoming more of a thing, but being able to travel abroad is more, you know, having the time and flexibility in addition to the money. And so those two things combined I think were the, the biggest challenges.
- [08:08]
Matt
Yeah, yeah, that makes, that makes sense. And I kind of hinted at this when I said like the many, many retirements. But you are all about creating these awesome experiences just all along the way, not just saving the, the best trips for retirement.
- [08:21]
Joel
Right.
- [08:22]
Matt
You know, when you're actually less able to actually enjoy it. Why is do more of what matters so core to, to your philosophy and how you view life?
- [08:30]
Chad Carson
Yeah, I feel like we, you know, everybody knows it's easy to quantify how to make money. Like you save money, it's not easy to do, but it's easy to quantify. You got, you save a bank account, it's on your statement, like it's pretty easy to measure. And even with time, like we know we want free time, but to me like the good stuff, like As a parent right now with kids, like the good stuff are those small moments, those in between times, like picking my kids up from school and they tell me something that they might not have told me if I was busy working somewhere or going on a trip and seeing their eyes light up when they're doing. Seeing something for the first time in Greece, some big, huge temple, or just the small moments, like just being present, like doing what matters means totally different to different people. It might be serving in your community, it might mean taking care of a loved one. Like, all these things which we know matter to us, they do require money sometimes because we got to pay the bills, we got to pay our mortgage payments. So usually work and our time gets spent doing that. But it most of all requires time. It requires presence. And so for me, the small, mighty investor idea is like, you can go big and get huge and have all this money, but what if it takes away your time? What if it takes away your presence and doing those things that matter? Like, why would you do that? Like, what's the point? Why not have, like, a more balanced approach where you make enough money? Because money is important, but you have, like the ultimate currency, which is that time to do those things that you know are really the most important thing to you.
- [09:52]
Joel
Yeah, agreed.
- [09:52]
Chad Carson
And.
- [09:53]
Joel
All right, let's talk about real estate. Chad, because that's your book, obviously is influenced about that ultimate desire to have more free time, to do more of what matters. But specifically, tell us why real estate? Right. Why not just continue to stock money into index funds and tax advantaged accounts? That's what a lot of personal finance enthusiasts talk about. Like, that's, that's the easy way. Real estate seems a little more difficult.
- [10:14]
Chad Carson
Yeah, I mean, they're all good. I want to say that up front. Like, I like index funds, I like savings accounts. I like all that stuff, which is. What's so cool about your show, is that you, you combine a lot of different tools and show how they all work. But I'll make the pitch for real estate investing if, if this is something that somebody, if you're interested in it, because I think. I don't like to try to talk people into real estate because it's a kind of like, it's kind of like a startup business where on the front end you've got to learn a lot, you've got to build relationships, you've got to invest some time and knowledge and energy into it, but on the back end, it can become a very passive, kind of like a blue chip stock type of investment. So that front end, that front loaded kind of investment of time and energy though is important to know. So like, I don't, that's why I don't want to talk people into it. But if you're willing to, to put that energy and that effort and that money up front, Real estate has this unique quality. And a friend of mine, Jillian Johnsroot, who you guys probably know as well, she always says that real estate money, it spends differently in early retirement or in financial independence. It spends differently. So like think about if you had a million dollars or half a million dollars in a stock investment account or if you had a 401k, like taking your principal out of there to live off of that principal is just a different psychological decision than getting rental income that you, that comes in every single month and you still have the property. Like you're not selling the property, but you get this rental income coming in. And I've experienced this firsthand because I'm, I'm living in Spain. We spend 100% of the money some, some months because we're traveling and doing all this stuff. And guess what, like next month another set of money comes in and then another set of money. And so that, that recurring income of real estate is a super important thing. And it's more than just math. Like the math is important too. But having recurring income that you can also get to be semi passive. So it's not going to be 100% passive. But I spend a couple hours per week now that my real estate investment portfolio is mature. I'm not buying and selling properties, I'm not remodeling properties, we're just managing the managers basically. And I say if you have a few properties that could be like 30 minutes a week, four hours a month, like that's not, that's not exaggeration. Like I've surveyed a lot of people I know who had those kind of portfolios and, and so it could be very passive while also producing that recurring income which when you want to live off your income, when you want to live off your wealth, real estate investing gives you that ability to do it. In addition to all the other stuff you probably heard about of building wealth and using leverage and having small amount of money down. Like that's all true too. But then also real estate is an amazing financial independence kind of core vehicle to help you get there and live off your income.
- [12:46]
Joel
Well, if we're talking about early financial independence, it's also not age restricted like some of those tax advantaged retirement accounts are Right. Like, correct. You're putting it into a traditional 401k or IRA. You're not allowed to really touch that stuff without penalties until 59 and a half. And so real estate, it's like boom. You get kind of that recurring dividend on an ongoing basis.
- [13:07]
Chad Carson
Yeah. And it also has tax advantages. It's not quite as good as like a Roth IRA or something like that, but you can grow in a tax advantaged way using things like depreciation, which shelters your income. So you don't pay quite as much in taxes as you would if you just got the income without depreciation. You know, this is something that people, even before retirement accounts were around. Like people have been using real estate and rental, rental income is like a core retirement vehicle as a core wealth building vehicle because of all these various benefits that it has.
- [13:35]
Matt
Yeah. In addition to the psychological win that comes with being able to enjoy the, the profit from the properties that that thing is shedding every single month. You know, we've talked about the small and the small and mighty approach with our listeners before. This is something we have adopted ourselves when it comes to how it is that we look at real estate. But for listeners out there who maybe haven't heard your philosophy, can you share specifically why going small, how it is that that can be the right choice for a lot of folks?
- [14:02]
Chad Carson
Yeah, I'll tell it with a story. Like when I first started real estate Investing, I was 23 years old, I just graduated from college and every, every class I went to and I'm kind of dating myself now. So it was 21 years ago. Like I was listening to like CDs back in the car, like riding around, you know, that's how we did it back in the day, back tapes. Before that, I was also listening to tapes. But anyway, I was listening to these and the ethos or the main message you got most of the time was, hey, you should get bigger and bigger and bigger and you should grow faster and faster and faster. In fact, the most successful people are the people who get the biggest and grow the fastest. That's just, it's just sort of an unwritten assumption. And so I sort of bought into that and my business partner and I, during the first three, four or five years we're on that track. We were trying to get bigger, buy a lot of properties. But the end result of that was, number one, we hit the 2007 8, 9 recession. And that was pretty scary, you know, having to try to try to survive that when you've grown fast and you have a lot of leverage. So that was one problem, is that there's a. There's a risk of growing fast. But then the other thing we realized, going back to that conversation about time, is that a smaller, simpler, slower, like a. I call it like a tortoise, like, real estate investing strategy is actually super effective too. And it also gives you more of that time and flexibility that we talked about, where if you're constantly, always growing, always growing, always growing. And I'm not saying you shouldn't push it and work hard and do those kinds of things, but if you don't, if you never take a break, like, I look at it like climbing a mountain. Like, if you're always climbing and you never take, like, some plateaus to take a break and take a breath and relax, then you're gonna not enjoy the process. You're not gonna enjoy the reason you're investing in the first place. You're gonna not miss those opportunities with your family, with your friends. And so we realized in that moment, we started writing down, like, in 2007, when we were in the kind of the eye of the hurricane. We were like, all right, what is it? We got into investing in real estate for, like, why are we doing this? We bought, like, dozens and dozens of properties in the last. In the last year. And we wrote down things like, I wanted to travel, like, I, you know, with my future wife, who I just met. I wanted to be present with friends. I wanted to play basketball in the middle of the day. I wanted to go hiking, because we lived in Clemson. We lived in Clemson, South Carolina, near a bunch of the foothills of the mountains. So the things I wrote down on my list, some of them required money. Like, travel requires some money. But the biggest impediment to me doing the things that I wanted to do in my life was free time and flexibility. And that was such an aha moment. I was like, all right, we need to build a real estate investing philosophy, a business that works it backwards from those lifestyle things that the reason we're doing in the first place, so that we don't miss out on the whole benefit of why we even started this in the first place. And that. I didn't call it that at the time, but the end result was having a le. Leaner, slower business. And the more I got into it, the more I studied people who have done this. I met people who had five properties, who were the most relaxed people enjoying life I've ever seen in my life, or people with 10 properties, and they make enough Money, but they don't have the kind of the weight and all the struggle and the stress of going big. And it just inspired me to try to do that with our own business and help other people do it as well.
- [17:07]
Matt
Yeah, well, there's a focus there where you're optimizing for life as opposed to optimizing your real estate, like optimizing your portfolio. And we're. I mean, I'm gonna side with optimizing for life every single time.
- [17:17]
Chad Carson
Yeah.
- [17:17]
Joel
And you're working back from what matters to you, and then you're saying, cool, how do I fund that life? Achieve that. Yeah. And so many people are doing. Are doing the opposite, or they just haven't thought enough about what they want their life to look like. And so they're like, well, I guess real estate is the ticket to wealth. And so they keep pursuing that, and they go so dang hard that they. They're missing out on the benefits of that real estate could afford you. Actually, in your book, you highlight three different couples, and you're like this. This couple is making just plenty of money from their real estate portfolio, but they've got the flexibility to go along with it, whereas somebody else might have, you know, a thousand units. They've got this job, this. This thing they've got to get back to. You want to kind of like talk about those, those couples and that kind of scenario you set up in your book and how you think about it.
- [18:00]
Chad Carson
Yeah. The story was. I'll simplify it a little bit. There's a story. There's a couple, Liz and Tom. They live in St. Louis, Missouri, but they could be anywhere in the United States. Right. But they had this simple 10 property portfolio. And 15 years after they started, they bought these properties, like in the first five or six years, and then they worked on paying them off. They actually paid off the debt on their properties, and they owned 10 single family houses, free and clear. And just to kind of simplify the numbers, when they paid all of their expenses, like taxes, insurance, maintenance, all that stuff, they had no mortgage payment anymore, and they made $1,000 per property or $10,000 per month. So $10,000 per month. Like, think about what you can do with 10,000amonth. And if that's not your number, maybe you only need 5,000 or 15,000, whatever your number is. But the point was, like, 10 properties produced $10,000 per month. And it was. They were paid off. And they were friends with another couple who had kind of got a different path, which is sort of the traditional Path. These days, if you listen to real estate investor, you know, people talking about it, they went and they got big because they were so good at real estate investing that they said, why should I just stop at my own properties? Like, I could go partner with other people and raise money. And they bought thousands of units with a bunch of other people's money. But the reality of the situation in this story was they were taking a trip together, and the couple who had all the thousands of units, they had to go back to the United States. They couldn't extend their trip because they had remodel projects going on. They had a team, you know, one of their team members, like, quit, and they had to go try to replace that person. And so on paper, it looked like they had systems and team, and supposedly it was passive. But when you have this big operation with lots of people and lots of things going on, it's like a machine. There's always something breaking and there's always something you got to put your attention on. And so what I advocate for, what I think this story shows, is it's kind of like time management. You can try to manage your time by doing, like, hundreds of things and having, like, organizers and to do lists and all that stuff, and you can systematize all that. That's one way to do it. Or you could just do less stuff. You could just not do as many things every day, and your life would be a lot simpler. Real estate investing is the same way. You got to find a happy medium where, yeah, you got to get enough properties to pay your goals, pay for things to build enough wealth. But there's a happy medium in there. And I think the small and mighty model says you could get to five properties, 10 properties, 20 properties. You could get bigger if you want, depending on what your goals are. But instead of using the cash to continue getting more and more and more, eventually you reach this stage, which I call in the book the ender stage, where you've built enough wealth to start actually plowing the money back. And to use a poker metaphor, like, to start taking some chips off the table and actually paying off some debt and simplifying your life. And you don't have to pay off all your properties, but, like, actually paying off debt is kind of sacrilegious in the real estate world. People don't talk about that. Oh, you can't pay debt off. Like, what are you talking about? That's not. You can't. Only Dave Ramsey does that. It's like, no, no, you can, actually. You can. You can do it too, like it's actually a reasonable thing to do.
- [20:54]
Matt
Well, we want to talk more about that, how you sold some properties. We want to talk about some of the other factors you consider when you are looking at properties and how we should be responding to rising interest rates as well. We will get to all of that right after this.
- [21:11]
Joel
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- [23:32]
Matt
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- [24:36]
Joel
All right, we're back from the break. We're still talking wizards, our good friend Chad Carson about real estate investing, but kind of taking a different approach than most people advocate for these days. Chad, can you actually maybe hop in the time machine a little bit? You were talking about when you used to listen to tapes, so maybe your brain is already there, but about how you got into real estate in the first place and you actually made a quick pivot in the beginning. House hacking is part of that story. I would love for you to tell our listeners about that.
- [25:04]
Chad Carson
Yeah, I was listening to tapes, that's true. And it was back when I was 23 years old, but I graduated from college. I was a biology major. I thought I was going to go to med school. And I was like, all right, I'm just going to take a break for a year or two and just do this entrepreneurship thing. And I actually started trying to flip houses. So in real estate you could have the rental property business, which is what I do now, and a lot of people do. And you can do this part time on the side. Whereas what I was doing was going out looking for deals, finding fixer upper properties, foreclosures. I would try to get them at a really low price and then my business partner and I would flip them, either fixing them up and selling them or just reselling them to another investor. So that's how I put food on the table. Like that was my job. And once I started doing that for a year, I kind of forgot about med school and said, eh, I'm just gonna do this, do this thing on my own and I don't want to go the traditional path anymore.
- [25:50]
Joel
I'll make more money than a doctor anyway.
- [25:52]
Chad Carson
Yeah, well, maybe not. I don't think. I think I would have made more money. I didn't do that well. But I've survived and I had a lot of fun and I played pickup basketball in the middle of the day so that I met my goal. But I also, you know, in the early years, like anytime you start something new, like your housing expense is a big deal. And so I quickly learned about the strategy where you can move into a property and rent out part of the property that you live in, called house hacking today. And I lived, I actually bought a fourplex. And I'm in a college town, Clemson. And so you have these little small multifamily properties. And this happened to be pretty close to Clemson's campus. And so, but it was a, a major fixer upper. Like, in fact, I showed up, the property was vacant and it had Merry Christmas spray painted across the front of the whole building like somebody like tagged it in the middle of the night. And I walked into, I walked into unit four and there was an outline of a chalk outline of a body in unit number four. And I'm like, okay, I don't know that I can do this. But I had a mentor luckily, who's like, no, no, that's perfect. That's exactly what you want. You know, you wanted to look, look horrible that nobody else wants this property. And I said, all right, I guess I'll do this. And so I fixed that property up. I had to borrow money to do it. But I moved into unit number two and I rented all the other three units out. And my expenses, principal, interest, taxes, insurance, and a little Bit of my maintenance was covered 100% by the other three units. And so there we go, number one, monthly expense, covered. Covered. Yeah. And I still had my old Toyota that I drove for like many years after that. So like I was living lean, lean, lean, lean, very cheap, which allowed me to stay as an entrepreneur because it got rough, you know, it got rough. I had a roller coaster. I'd do really well for a month and I lose money next month. And that helped me kind of sustain that journey of not having to go back to a regular job. But anyone can use that. Like house hacking is amazing. I feel like it's the, if you're willing to do it, there's so many variations of that, but especially early in your career, you can use that as a kind of jumping off point into rental properties because you can move into the house with a smaller down payment you can use to get a long term loan because it's an owner occupant property. And you can learn how to be a landlord. You can learn how to do it if you make some mistakes. Not a big deal. You're right there. And it was where I sort of learned how to do it and realized I could be a rental landlord. And we still own that property. That property that we bought, it was worth 130 or 150,000 when we bought it. Now it's 250, 300,000 bucks, you know, so it's, it's done well and it's making income and it's still. We started doing a bunch more of those after that.
- [28:21]
Matt
Yeah, that's what I love, love about house hacking is that it addressed like at the core of that is are you willing to do something that most folks aren't willing to do in order to get ahead financially? It's just an alternative way of living. And to a certain extent, that's what it is. That's what it takes to be a small time landlord. It's just approaching the issue of housing from a slightly different angle.
- [28:41]
Joel
And it can be like, you think of it as an investment, but it's also putting a roof over your head, reducing your costs every month. I mean, it's got that killer double whammy going.
- [28:48]
Matt
It's amazing.
- [28:49]
Chad Carson
Yeah.
- [28:49]
Matt
So Chad, like, what is it right now that you're looking, that you're looking for? Like when you're looking for a property, what are the factors that you're considering? Like, is it all about the numbers or other considerations that you're keeping in mind?
- [29:01]
Chad Carson
Yeah, I learned early on I used to Think it was all about the numbers. And the numbers are important. Like, and I'll talk a little bit about just some basic ways to run the numbers. But now that I've matured a little bit, I realized that there's sort of like a two sides of a coin. Like a good deal, it has to have some numbers that make sense. So cash flow is a certain type of analysis you can do. You want a certain amount of cash flow or you want it to cover your mortgage and then have a certain amount of money over that mortgage. But you also want to have a certain type of location, because the money you make in real estate is sort of the consequence, it's the outcome. But the cause of that, like the core principle of real estate investing is providing housing for someone. So someone's going to live there. And so the location they live in, the type of property they live in, like, those are so critical. And I had a mentor early in my career who told me, he said, chad, you always want to buy properties that have some sort of romance to them. And I was like, romance? Like, what do you mean romance? Like, what are you talking about? And his point was like, real estate is an emotional, either a purchase or if you're renting a property, it's still, it's an emotional thing. Like you're living there for an emotional reason. And yes, you have to have a roof over your head, but if you, if you don't have a property that has, has some sort of romance to it, meaning, and it could be something simple, it could be like, you know, you guys, I resonate with you that we like walkable locations. Like we like a place with a sidewalk and, you know, big trees and you can walk to a local coffee shop like that. That's romance. Like that, that idea for someone that they could walk somewhere. For a certain type of person, that's romance. For another type of person, it might mean, hey, I want to live close to where I work, but I want to live out with a two acre parcel in the country. And that's like, that's my idea of romance. But the principle is the same, is that you need to buy your properties with that in mind, like number one. And if you do that, like, if you buy properties that are in demand because there's an emotional attraction to them for some reason, then the money stuff will take care of itself. Just for example, I have a single family house that we used to live in and every time I put it on the market to rent, I put it on Zillow and Within a week I have at least five, sometimes 10 applications from people who want to rent the property. And this is at market rent. I'm not like, I'm not, you know, not putting it way below market rent, like just a little bit below market rent. And I get to choose like the best, most qualified tenant. And they tend to stay, and they tend to stay a long time as well. And why is that? That? That is because that property has romance. That property is in a neighborhood that's attractive. It's close to things that people want to be at. And so like that principle is something I missed early in my career. I bought some properties with good numbers on paper, but they were in the wrong location. They. And so you need to control the things you can control, which is where the property is. You can't move that house at least can't do it easily. So you want to, you want to, you want to pick a good location first and then yes, learn how to run the numbers, make sure the financing works, make sure the, we can talk about that too. But I think if you get that idea of location and then a good property that has a good layout, you'll, you'll, a lot of the other stuff will take care of itself.
- [31:52]
Joel
That can also reduce the hassle. Right, Hassle factor. Which is one of the biggest reasons that people say, yeah, real estate. I don't think that's for me. And I think also location can matter not just in the monthly cash flow, but also when it comes to appreciation of that property. But talk to me about passive income, Chad. I feel like it's sold one way on the Internet. Passive income is like a buzzword that people use to get people to follow them and try to talk to them about, hey, here's how you can generate thousands of dollars a month in passive income. It's so easy. Follow me. But real estate is sure you can get passive income over time. But you're also talking about a part time job, right?
- [32:31]
Chad Carson
Yeah, it is a part time job, especially early on. I mentioned earlier, it starts off like a startup company, like a little venture capital startup company. So it's going to take some time and effort up front. And I call that like your psychological down payment. If you're not willing to put that effort and that time in up front, real estate is not your thing. And that's fine. There's other options. There's index funds. And sometimes it's just the practical reason if you have a job that is taking like 60 hours of your week and any. And having an Hour of mental energy on some other venture would like tip you over the edge. Like you don't need to do real estate like that.
- [33:03]
Matt
You don't have time for it.
- [33:04]
Chad Carson
Yeah, you don't have time, that's cool. Maybe you will next year, maybe you will another time of your life. It requires some effort up front and you either need to spend time on negotiating properties, on running the numbers, on, on finding good locations, on building a team. Like that's where you're going to spend your time up front now. But the thing is, like I mentioned earlier, is that it eventually becomes passive though. And real estate's pretty cool in that way, is that you put that psychological down payment, you put that financial down payment and then you stabilize that property, you get a good tenant. I've had tenants who stay for 10 years or more in some properties and when that happens, it's a dream.
- [33:38]
Matt
It's a dream, It's a dream.
- [33:40]
Chad Carson
It doesn't happen every day, but like it happens and it does. I think about how little work you have to do on a property. If there's no turnover, if they're not moving. Yes, if something breaks, you have to fix it. But when I was in Spain, I would have something break. Even the properties I was self managed and my tenant had a plumber's phone number. They could call the plumber, they could say, hey, here's my plumber, I really like this plumber. Call them, I'll pay for it. But go ahead and call them if it's a problem and if it's, you know, if they get, if that gets out of whack and they're spending money, too much money, I can try to change that policy but, but it doesn't have to be a really huge time suck and you can do it from anywhere in the world as long as you have a cell phone. And so that's where the end game of real estate is that it can be very passive. But it also, that keyword that I mentioned earlier, it's also recurring, this recurring income. It's a lot like your salary. And so like you used to get used to having that monthly salary. And that's a nice thing to have. And real estate can replace that. It can be very much like that.
- [34:36]
Joel
I like that.
- [34:37]
Matt
I've never given my tenants the number of the plumber before, but that's a little trick I might have to, I might have to steal from you until they, until you get a bill and you realize that like they had them install like a bidet or something.
- [34:50]
Joel
I remember being like six hours away one time and there was a water issue at one of my rentals, and I was like, usually I'm used to going. I was used to going over there when there was an issue, just to scope it out, get a lay of land. And that was the first time I realized I just called the plumber. He took care of it because I was still out of town and the light went off in my brain. I don't even know that I ever have to go over there again, which is kind of crazy. I mean, I still like to go check on it, see it once or twice a year kind of thing. But, like, it's one of those things where over time I've been able to become less and less active. And I just remember that being this like, aha. Wow. Oh, my gosh. I didn't realize that I didn't have to be this complete, active participant all the time in the property.
- [35:31]
Chad Carson
Exactly. You know, that's. That's the benefit that some people who invest long distance have over those of us who started local is that you have to treat it as a business from the very beginning. Like, you. If you're in San Francisco and you're buying a property in Georgia, like, you can't go look at it. Sorry. Like, it's not going to happen. And so it forces you to think like a business owner as opposed to. And there's nothing wrong with going to the property and checking it out. Like, I'm all for that. Especially when you're learning, especially when you're growing, especially when you're trying to save money. Like, that's cool. Like, there's nothing wrong with it. But eventually, like, I think this is what I wrote about in the book about. I have a whole chapter on systems like that. There's a. You should think kind of like Henry Ford did when he built the Model T and built the assembly line like that. For him, the process of building a car became the thing that he worked on. It became the thing he tinkered with. And you as a real estate investor should think about your business as. This is like a kind of like a machine, kind of like an engine, and you have to tinker with it. And you are the. You're. You're not just working in your business business, you're actually working on your business, trying to create systems and processes and building a team. And if you do that, that's where the good stuff happens on the other end. That's where you can have the benefit of the income. And yes, you're going to have to pay somebody to manage it. Sometimes you have to pay a plumber who might charge more than you, but if you treat it like a business, you run the numbers so that you can pay people to do those things for you. And your profit as the owner of that business is what's left over after you pay all those other people to do those things.
- [36:53]
Matt
It also just comes down to what it is that you're optimizing for. Like, we kind of touched on that there earlier. But, like, it makes me think about. You said you've had tenants that have been around for 10 years, and I'm guessing you were less likely to raise the rent dramatically on that tenant, because if they were a good tenant, you probably wanted to keep them in there. Now, were you optimizing for the amount of cash flow that you had by doing that? No, probably not. But you were optimizing for what it is that you were seeking. This is like the whole building wealth versus achieving some sense of freedom that you talk about. But is that true?
- [37:27]
Chad Carson
It is true. Yeah. Well, somebody's been there 10 years. I mean, it's automatically below the market. And that's not to say we don't raise the rents. We do raise it some. But I'll give you a practical example. I've got a property where the tenant was willing to renew, or I sent an email or a text saying, hey, we'd like to renew the market. Rent right now is $1,800 per month. Or maybe market rents, $2,000 per month. They were paying like 15 $50 per month like this. The rents had gone really up really fast. And we said, we need to raise the rent some. Our insurance is going up, maintenance expenses are going up, but we don't want to. We're not going to raise it up to the market level. We need to raise it by 50 bucks per month. And so that's the kind of, you know, they're still getting a better deal than they could if they had to move somewhere else. But we're covering. We're covering our costs. But I know landlords who don't ever raise the rent rents at all. And that's your choice. And that's a different choice than if you were an institutional landlord, which, you guys know, I'm kind of like, hot on trying to say how small and mighty investors, I think, are much better for communities than these big institutional Wall street landlords.
- [38:31]
Joel
We're with you on that, too. Yeah.
- [38:32]
Chad Carson
Their job is to maximize their return for their investors and they're going to push the rent to market as much as they can over and over.
- [38:40]
Joel
Often at the expense of the tenant.
- [38:41]
Chad Carson
Exactly. Yes. And so I feel like it's not. Not the landlord tenant relationship is often put as an adversarial relationship, but I very, very rarely felt that from. With my tenants. Like, I felt like I'm providing value to them, giving them a nice home that we care about and we have pride in. We're not going to. We're not. We're not slumming that property out. We want to treat it well. We want to treat the tenant well. And they're. In return, they're paying rent and they're. They're maintaining the house as if it was their own. They're taking care of it. And during COVID was one of the biggest aha moments for me was like, I read in the newspapers on Wall Street Journal and all this about how so many tenants weren't paying and how many. How adversarial the landlord tenant relationship was. 99.9% of our tenants were still paying on time. A couple of them had issues and we worked it out. They took care of the properties like they appreciated having a home to live in, and I appreciated them. And it was. I had never been so grateful in my life for our tenants. And I hope, I hope they were also grateful for the home they had because it's a. It's a mutually beneficial relationship. It doesn't have to be something that we're beating each other up about.
- [39:41]
Joel
Yeah. Matt and I had similar, similar experiences. Let's talk about debt and financing for a second, Chad. I mean, rising interest rates, of course we've been talking about those over the past, you know, 18 months or whatever. But how have those changed your advice to want to be real estate investors have. Have rising rates maybe tamped down your enthusiasm for small, mighty real estate investing.
- [40:01]
Chad Carson
It's just changed the approach, it's changed the technique. And the way I compare it at the last, you know, we're here in 2023 when we did this interview, you know, 2018 through 2022 and even before that. This has been an unusual time historically in terms of interest rates, in terms of real estate investing, where you could actually go out and get a 2 or 3% mortgage, pay retail price almost for a house and have it cash flow like that. I just want to get like, put it in perspective. Like that is unusual. Like, that's not. That's not the normal thing. That's not the. Say that it wasn't Good, like, good for us. Like, great. You got to take advantage. But the way we real estate investors, we always have to pivot. We always have to change. We always have to adapt to the market. And I'm going to break the real estate investing into two like pieces. Like, one piece has not changed at all. I don't care what the interest rates are. The fundamentals of those good locations that we talked about earlier, the fundamentals of finding good tenants, the fundamentals of maintenance, like, those things are the same. The challenge. The other piece that we have to look at now is the cost of buying a property with a traditional financing mortgage has gone from 3 or 4% up to like 7%. And what that does is that makes the cost of using debt much more expensive. At least going to the bank and using debt. So how do we solve that? Like, well, one way is you can put more money down to make because your cash flow is not working as well with a small down payment. You might have to figure out a way to either go in with a partner or save up more money. Maybe you have to slow down a little bit, buy fewer properties. And, you know, I've told people, like, if you've already owned a few properties and you're. And you have enough money to even pay cash for a property, you know, you're essentially getting a 7% return instead of paying the bank 7%. If you were in that kind of later stage of your career where you're like, I don't know that I want to pay the 3% debt off, but I could, like, pay cash for a new property or put 50% down or something. The cash flow can work when you make a bigger down payment. And I'm not saying, like, that's what everybody should do, but, like, that's one. That's option A. Like, you could, you can make it cash flow by putting a larger down payment. Option B is like getting creative with your financing. And the way I explain this is like, you can look at your financing like a toolbox. And if you're building a house, you'd have like five or six or ten tools in your toolbox or more, right? Well, when you're financing houses, you don't want to just have one hammer. Like, that's what traditional financing is. I just got a hammer. I'm just going to use the hammer over and over and over again. Well, no, like, why wouldn't you use like a screwdriver and a saw and these other tools? And what those other tools are, are thinking outside the box. Like Talking to the seller and seeing if the seller will finance the property for you. It's called, it's called seller financing. It's not common, it's not typical when you go through a real estate agent that the seller's just going to say, yes, I'd love to finance the property to you. Like, no, it's a little different approach. You might have to reach out directly to the seller. You might have to look for landlords or people who are more predisposed to finance properties to you. Like the ideal person to finance a property is a landlord who's owned a property for like 15, 20, 30 years and they're kind of 10 tired of the landlord business and they're ready to exit. But they like that recurring income, remember that monthly income. And they've gotten used to that.
- [42:57]
Joel
But they're addicted to it.
- [42:59]
Chad Carson
Hey, I'm addicted as well. Like I get it. But then they don't want to manage the day to day affairs. Maybe they're getting up in years. And so them financing to you might be the perfect solution for them. Like that's the way they can exit the property. And so that's like another, that's one tool in your toolbox. You could also use private money. Like the number one way I financed my deals over the years is going to other investors and they would have a, like a self directed retirement account or they would set up a retirement account that had money that they could actually loan to me as a real estate investor. And that's not something a lot of people know about. But if you have your own IRA that you can choose where it's at, or if you have a 401k, an old employer, for example, there's some flexibility on the custodians you can put that with. And so my, that strategy for me was I had a professor, old professor at Clemson University and he had a lot of money in a retirement account and he has some of it in the stock market. But I taught him how, hey, you could like loan me that 100,000 bucks and I could pay you 7% interest or 10% interest or 6, whatever the interest rate you negotiate. And so you can show other people how they could be your bank, basically be your private bank, or you can meet other investors at local meetups who would like to do that. They like to get interest. And so those are just a couple of examples. But the point is like if you think outside the box, this is what real estate investors have had to do for decades. You're going to have to Hustle a little bit. You're going to have to think outside the box a little bit and learn a few different techniques to make it work. Yeah.
- [44:21]
Matt
Again, it comes back to how willing are you to do the things that other folks aren't necessarily willing to do? You got to be willing to do things slightly unconventionally in order to get the deal.
- [44:32]
Joel
All right, we want to talk about deleveraging as well. That's kind of part of shoring up your real estate portfolio. We'll talk about that and then just kind of like how to, to get started maybe as well. We'll, we'll get to a couple more questions with Chad right after this. Looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US Manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground, and built to help kids learn to ride faster, many in just one day. No training wheels needed.
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Matt
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- [48:50]
Chad Carson
Yeah, I think about your real estate investing as a journey, essentially. So, like, think of, you know, I mentioned the. The mountain metaphor. Like, when you first start as a new investor, you're sort of at the bottom of the mountain, and you're going to use certain techniques and strategies when you're new. Like, you probably don't have a lot of capital, you need more money. And so you just try to. You try to use as much debt as you can early on. Like, if you did a house hack and put 5% down on a property, like, awesome. Like, that's what, that's what you should do early on, because you just got to get your foot in the game. So. But that's, that's the approach of a starter. And then you move out of the starter phase into what I call, like the wealth builder phase. And your whole goal as a wealth builder is turning whatever capital, whatever money, whatever wealth you have, let's say you have a hundred thousand bucks, turn that 100,000 bucks into a million bucks. Like your, your goal is to grow, grow, grow, grow, grow. And you want to do it safely, right? You want to get up that mountain. And using leverage makes a lot of sense in that case as well. So you might reinvest all the cash you make from your rental. Like, don't touch that money. Put it back into buying the next rental property and the next rental property. So that's like, those are the two first two stages. But I feel like most real estate investors get stuck in phase number two. Like, all the techniques are talking about just grow, grow, grow, grow, grow. It's like, well, do you just grow forever? Like, do you get into this perpetual debt religion and like, never pay debt off? Like, you know what, what happens and what most people assume going back to, like, the typical model is you just buy more properties, buy more properties, buy more properties. And what I advocate is, like, when you finally get to this point where you have, you can measure your wealth, let's just say you had a million dollars, then why not start taking some of those chips off the table by plowing back some of the profits? You have either the cash flow from your rentals, or you could even, like, let's say you bought 13 properties and you only needed 10. Like, why not sell a couple of your properties, pay taxes on what you sold the property for, and then plow that money back into paying off the debt on a couple of properties. Now, stick with me if you've never heard somebody say, you should do this, like, my business partner and I sort of stumbled into this. But we. We had. We were lucky enough to have, like, a hundred thousand bucks in our bank account. We're like, I've never had this happen before. This is amazing. Where did this money come from? It was because we had been saving our cash flow. We sold a property, and this money was sitting there, and we looked at one of our debts. It was an older debt that we'd been paying for, like, 10 years. It was $1,000 per month, and the property had appreciated to, like, 250, 300,000 bucks. And so we had a lot of equity in the property. And. But we looked at that payment. We're like, we could spend 100,000 bucks and go buy four more rental properties and keep growing, or we could pay off this debt and free up $1,000 per month. $1,000 per month is $12,000 per year. And what would we do there? We'd have $12,000 per year in cash flow. And that's like a. You could think about that. It's like a 12% cash on cash return. We would not have to grow anymore. So we wouldn't have any more properties with more tenants and more headaches and more, you know, heating and air units. And we would simplify our life. We'd increase our cash flow, and we'd also decrease our risk. Because having debt is great. It's a great tool for growing. But if things go badly, if you get in a big recession, if you have a great depression like we had the 1930s, having debt could really put you upside down. Like, you could owe. You could owe less. You could owe more than what the property's worth. The rents could go down. I mean, that doesn't happen. It's probably not going to happen. Like, I don't think it's going to happen. But just when you start getting towards the top of the mountain, when you're climbing, it makes more sense to, like, thinking about not just growing, also thinking about income, also thinking about simplicity. So I feel like that's the stage where it makes sense to start paying off debt. Now, whether you pay off 100% of your debt or you pay off, like, a few properties, you know, we've kind of gone through that over the year. We still have some debt on our portfolio, but instead of having, like, 60, 70% of our value of our portfolio in debt, we have more like 15% or 20% right now and eventually we'll be at 0%. But like, we're, we're feeling pretty good about where we are right now.
- [52:34]
Joel
Yeah, you're sitting pretty. And even if, let's say that there were some predictions of like another 2008 sort of housing recession, I don't see that on the horizon. But if housing prices dip like, and you're over leveraged and your tenant isn't paying or whatever, like that puts you in a, in a bind and you're not in that bind. Right. Even if your, your tenant or multiple tenants don't pay, you're, you're still fine. And so there's like a mental ease that, that creates, I think. What would you say, Chad, to the folks maybe who've made it this far into the conversation? They may be fascinated by the wealth building possibilities of real estate, but they're also hesitant to get going because it, it seems risky. It sounds risky. Like, I don't know, maybe I should just keep tossing money into my 401k. And again, we talk about that all the time. We're totally down. Get the match. Like, don't forsake that. Real estate investing should, should be after you've done that at least. But what would you say to somebody who's like, I don't think that's for me, but it's not necessarily because I don't have the time or don't have the desire. It's just it, it sounds like it's too much.
- [53:33]
Chad Carson
Yeah, I would say just take it one step at a time. Like, you don't have to be, you don't have to make a forever decision. With real estate investing, you can test it out, you can buy one property and that might be enough. Like you might just buy one property, take a break for a year or two, let it season, take a deep breath, see if that was a good decision or not, and then you can do another one after that. And I actually have a mentor named John Schaub, who's a guy I've followed for a long time. He's been investing in real estate for 50 years. He wrote his book that I always loved was called Building Wealth. One house at a time. Just one house. Like, he just recommends buying one house a year, one property a year. And if you do that, like, if you just continue buying, just like the tortoise, not the hare, just plodding along, plotting along. It seems pretty small in the beginning. It seems like you're not making much progress, but that can build an Enormous momentum and. But it also, if you. If you make. You think it's a mistake, if you get into the game, I bought a property or two. This is not for me. You can sell the properties or you can get out of them. It's not going to happen overnight. Real estate isn't as easy to sell as a piece of stock, but if you buy it correctly and you don't overstretch yourself and you're careful with it, it's not going to be a disastrous decision. Like going slowly, thinking about it, being deliberate allows you to kind of get your feet back under you again. And you can pivot, you can change. But I have a hunch, like, if you thought you had it, if you kind of like real estate and you got into it, you might. You might just get addicted to it, like I have, like Joel and Matt has, because it's got. It's got a lot of good stuff to it as well. And some of the negative stuff you hear up front is it talks people out of real estate. But real estate over the long run can have so many benefits. And I'm experiencing those now. And one of the reasons I get out on podcasts and appreciate you guys having me is because I like to talk about it. I like to talk about the good sides of it and how if you get through the tough stuff up front, the other side of that could be an amazing change in your life. It gives you freedom, it gives you flexibility, and I have experienced that myself.
- [55:27]
Joel
It takes a while. There's, like, a lot of stuff you need to learn when you're thinking about becoming a real estate investor. One thing Matt and I, we've done a whole episode on screening tenants properly, because we think that is, like 90% of the issues that you're going to face are not having screened a tenant thoroughly. And so if you do that, you're way ahead of the ball game. You're going to deal with far fewer of the issues that a whole. A lot of other landlords have to endure. But I love what you said, too. One house at a time. That's a great strategy. Makes me think of like an athlete post game saying, I'm just taking one game at a time. And sometimes that just. And you know, Chad, you know this. You probably gave those interviews. Football game, right? You have to say that. But the truth is, when you take it one house at a time, one game at a time, when your focus is just on the next step, you're much more likely to be successful than thinking about this bigger overarching goal you're looking to achieve over time. It's like you got to take it one play at a time, one game at a time, one house at a time. That's how you're going to be successful.
- [56:20]
Chad Carson
Yeah, you open up the sports metaphor. So I'm going to go there as well. Real quick. Bring it. So, like, one of my favorite coaches in sports is a guy named John Wooden. He was a basketball coach at ucla, and he used to bring his all. Like, he had the best players in the country. He had, like, Bill Walton, who's a Hall of Famer. He had Kareem Abdul Jabbar. And he would bring these players in before the season started, and he would spend a whole day, like, or two hours sitting in a room practicing, putting on their socks and tying their shoes. Literally, like, they would have them tying their shoes. So you just imagine this All American. How frustrating would it be? Like, why am I doing this, Coach? Like, I put my shoes on like 10 times. Like, what is this? And he would get them frustrated, and he would say, you know, why we're doing this is because if this is something we can control, this is a part of the process of being a good basketball player. It's a tiny little piece of piece, tiny little step. But if you, if you don't, if you have a wrinkle in your sock or if you tie your shoe wrong, you're probably going to get a blister. If you get a blister, you're going to miss practice. If you miss practice, we're not going to play well in the game. And if we don't play well in the game, we're not going to win a championship or we're not going to do all those things that you want to do. And real estate investing is the same way. The little, tiny baby steps are what matters. So tenant screening, I'm 100% on board. Like, if you're going to own properties, you got to learn how to screen your tenants. You got to learn how to have an application. You got to learn how to. How to have those conversations. Like, the little, tiny. What seemed like tiny steps, they matter a lot. And in real estate, the part of the upfront cost of real estate is learning what matters and what doesn't and what location matters. I mentioned that earlier. Screening tents matters. And there's a bunch of other stuff in there that matter, too. But, like, if you get the financing matters. And so if you figure out, like, the three, four, five things that really matter the most, and you put Your socks on, you put your. You tie your shoes well and you do it consistently, one deal at a time. It. The end result of that is a equivalent of a championship. Like, you will do better and you'll be kind of surprised by it. Like the big athletes, I've seen athletes who are putting for like the winning the British Open and they're kind of surprised by like, well, wait a minute, like what? I just won the British Open. It's because. Because they were like paying attention to their putt. They're paying attention to the process. That's what an athlete does. That's what a real estate investor does as well.
- [58:24]
Matt
Yeah. It almost surprises you that you've done well, but. But it's no surprise, actually, because you've taken all the right steps all along the way. It's why we love your approach. Chad, where is it that folks out there can find your new book? And how can folks learn more about what it is that you've got going on?
- [58:38]
Chad Carson
Yeah. Well, thank you again for having me, guys. And the book is out on BiggerPockets. That's my publisher. That's a big publishing website and real estate investing website. I know we'll have links in the show notes and different places, but if you go to biggerpockets.com smallandmighty, that is where you can get it. It'll also be available 22 August on Amazon, on Audible, so anywhere else you get your books, BiggerPockets is pretty cool place to get it because I actually wrote some extra bonuses. Like I wrote a bonus chapter about being a small and mighty investor in a changing economy, talking about these rising interest rates and different. The way things are changing. How do you adjust? So some of what we talked about today, wherever you get the book, I would love it. I would love to hear from you. Once you buy the book and read it. I'm all over the place online. If you just search for Coach Carson on Instagram, on other places, on my podcast, like, I'm out there, just search for Coach Carson and let me know that you liked it. Let me know that any feedback you have, because I love that's. I wrote this book as a passion project. Like, this was an itch I had in my head and I want to see tons and tons of people buy that one property, that two properties and have success with it. And my reward for that is like getting to hear your stories.
- [59:45]
Joel
Yeah, that's great. Awesome. Well, I'm imagining a lot of how to money listeners are very interested in that Given kind of the. Well, we've talked about with real estate over the years. And this book really is the one, the one to get for sure in our minds if you're looking to get into real estate or if you're just curious. So, Chad, thanks again so much for joining us today on the show, man. We really appreciate it.
- [60:04]
Chad Carson
My pleasure. It's been a lot of fun. Thank you, guys.
- [60:07]
Matt
All right, man. It's always a good day if we can sit down and talk with our bud Chad Carson.
- [60:11]
Joel
Almost makes it feel not like work because it really doesn't. Yeah, dude.
- [60:15]
Matt
We're so fortunate to be able to do what it is we do, like literally drinking craft beer, talking about money, talking about real estate, talking with friends as well.
- [60:22]
Joel
Yeah, we've got a good made in the shade, baby.
- [60:24]
Matt
I'm incredibly fortunate for what it is that we do here at how to Money, but specifically to real estate. The small and mighty real estate investor. What is it today that stood out to you? What was your big takeaway?
- [60:34]
Joel
Yeah, so I love kind of the beginning of the episode where we're talking about how to work backwards from the life you want. And that's so powerful because if you don't know that you might be tempted to overindulge, to go so hard and then look up after that nose to the grindstone real estate portfolio building escapade you've been on and be like, huh? Why? Why did I do that? Because now I'm so locked in, I'm working way more than I wanted. And yeah, granted, I have this awesome real estate portfolio to show for it, but I've missed out on a lot of the important things along the way. And so I think, Chad, we just jive so much on all those levels when it comes to lifestyle.
- [61:12]
Matt
And what is it that we're pursuing, keeping the end in mind?
- [61:15]
Joel
Overdo it.
- [61:16]
Matt
Yeah, it's possible to overdo it and to be too financially savvy with the different moves that you're making. Starting with the end goal in mind is so important. I completely agree with you. And so my big takeaway is going to be when we kind of touched on interest rates, mortgage interest rates, and how I think the natural tendency might be for individuals to find themselves attracted to more and more properties that may not necessarily fit the bill. They might be looking further out or neighborhoods that aren't quite as promising in order to achieve the numbers that we were able to find five, ten years ago.
- [61:52]
Joel
Right.
- [61:52]
Matt
And Chad, he specifically, at some point, I forget what it is that we Even asked him about, but he was talking about the romance of a location and how you can't discount that. You can't calculate that on paper, but it's something that you feel, it's something that you see and you can kind of write down and be like, oh, well, it's got, it's walkable or oh, it's, it's close to this park or it's close to this brewery. Oh, it's got a front porch. Different things that, you know, to certain individuals might appeal to them, but don't, don't discount those things because again, you might be looking at, if you are a real estate investor, you might be looking at some of these other properties that on paper, okay, this should make sense. But you have to look beyond capitalization rate. You have to look beyond. Can I pull in 1% of the purchase price of this home? It's not just about the numbers. You got to take all those other things into account as well.
- [62:40]
Joel
No, I mean, it makes me think. My question, the question I've always asked when I'm buying a property is, would I live in this place and would I be happy to live here? And so if the answer to that is no, then I'm not interested. Right. If I'm whether it's based on location, based on like the yard, based on the way the home looks, I want it to be like cute. And just if it doesn't have all those factors and if I wouldn't be willing to live in it myself or at least 25, 26 year old Joel wouldn't be willing to live in it, then I'm not interested.
- [63:06]
Matt
Makes it tougher to list that property and really believe in it.
- [63:08]
Joel
Exactly. Yeah. If I love the location, if I love the neighborhood and I, hey, it's the disc golf course is right around the corner. My favorite brewery is right over here. Then when I'm talking to tenants, that, that enthusiasm comes through and I think, especially if they don't know about the neighborhood now they know. Right? I'm almost like a tour guide of my neighborhood.
- [63:25]
Chad Carson
Yeah.
- [63:26]
Matt
Oh, absolutely. When I'm telling people, touting the different benefits of that specific property.
- [63:30]
Joel
But.
- [63:31]
Matt
All right, well, let's shift to the beer. During this episode we enjoyed Zeros to Heaven. This is a West Coast IPA by so apropos casa agria casa. That means house.
- [63:43]
Chad Carson
So.
- [63:43]
Joel
Look at you. Your fancy Spanish Chad would be so proud.
- [63:46]
Matt
He would be.
- [63:47]
Joel
His wife would be too. Who's a Spanish teacher.
- [63:48]
Matt
What? Yeah. Did you like this beer?
- [63:50]
Joel
I did, I did. So I'm not usually a West Coast IPA guy.
- [63:53]
Matt
Like, this wasn't super West Coasty, but it wasn't.
- [63:55]
Joel
Yeah, it was really interesting. It wasn't. I feel like a lot of West Coast IPAs, they're bitter to the max, but this one was clean. Yeah, it had those piney notes, but it wasn't, it wasn't over the top pithy bitterness. And so this one was like a balanced west coast.
- [64:10]
Matt
And I mean, super juicy, not overly sweet, but super juicy. It had some of these other notes going on versus just sort of the harsh bitterness that you can expect oftentimes with West Coast IPAs. But yeah, totally agree. Very drinkable. Glad you and I got to enjoy this one here on the show from.
- [64:26]
Joel
One of the best breweries on the West Coast.
- [64:28]
Matt
It's a good one. We'll make sure to link to where it is that you can find Chad's book up on the website@howtomoney.com but that's going to be it, buddy, for this one. Until next time.
- [64:35]
Joel
Best friends out.
- [64:36]
Matt
Best friends out. Going through a divorce while trying to hold it together at work. We get it.
- [64:57]
Chad Carson
Hello.
- [64:57]
Matt
Divorce offers expert help.
- [64:59]
Joel
Help and real support for a fraction.
- [65:01]
Matt
Of what lawyers usually charge. No court battles, no confusing steps. Just help that fits around your life. Some employers even cover it. Ask yours or visit hellodivorce.com and schedule your free consultation. Did it occur to you that he'd charmed you in any way?
- [65:25]
Joel
Yes, it did.
- [65:28]
Chad Carson
But he was a charming man. It looks like the ingredients of a really grand spy story. Because this ties together the cold war with the new one. I often ask myself now, did I know the true Jan at all?
- [65:44]
Matt
Listen to Hot agent of chaos on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.
- [65:52]
D
What's up, guys? Welcome to the Agusto Papa podcast. The go to spot for everything Musica Mexicana. We're proud Mexican Americans who live and breathe this music. We started this podcast to share and discuss our views of musica mexicana. Whether you like to vibe to Peso Pluma. Los alegres del varanco are el Camacho or Pur Ivan Cornejo. When you get in feels then this podcast is for you. Well, actually Peso was supposed to be on Chinito's album. The song with Drake was supposed to be with Peso. Listen to agaGustopa on the iHeartRadio app, Apple Podcasts or wherever you get your podcast.
- [66:22]
Chad Carson
This is an iHeart podcast.