This One Real Estate Mistake Could Set You Back 10 Years

Summary

Radical Wealth Plan — Episode Summary

Episode Title: This One Real Estate Mistake Could Set You Back 10 Years
Podcast: Radical Wealth Plan, presented by Entrepreneur Media
Host: Paul Morris
Guest: Isaias [Realtor, CPA, Community Advocate]
Date: April 14, 2025

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Episode Overview

This engaging episode is all about demystifying real estate investing and helping listeners take informed, actionable steps toward building personal wealth through property ownership. Host Paul Morris, a seasoned real estate investor, is joined by realtor and CPA Isaias, who shares his unique journey from accounting to acting to real estate, and his passion for guiding first-time homebuyers.

Together, they discuss the most common mistakes people make that can delay — or derail — wealth-building through real estate by years. The conversation moves from personal stories to practical frameworks for making your first (or next) move in real estate, while debunking myths and focusing on actionable advice.

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Key Discussion Points & Insights

Defining Wealth and Why It’s Personal

• Paul opens the show by redefining wealth:
  “And when I talk about wealth, everyone has their own definition of it. I'm going to share mine and that's the power to choose and create...What is personal fulfillment for you and really getting in touch with what your dream is or what's your big why? Because it's your definition of wealth that's going to pull you into action. And action is one of the most important things.” (02:25)

• Wealth without Sacrifice:
  Paul argues against the idea that building wealth means giving up what's vital, like time with family. “What if we could show you how to build wealth without sacrifice?” (04:00)

The Power of Real Estate in American Wealth

• Statistics on Wealth and Real Estate:
  “The overwhelming majority of Americans who build wealth have most of their wealth in real estate. Building wealth in real estate is accessible to everyone.” (05:00)

• Forced Savings Principle:
  “Owning real estate in a lot of ways is essentially a forced saving plan...just by virtue of owning real estate, you're capturing, you know, forces that are outside of your control. Appreciation. All that good stuff.” — Isaias (17:45)

• Transition from Renter to Owner:
  “The first bill you pay is rent...that first bill is converted essentially from rent into for savings for your real estate.” — Paul (18:18)

Getting Off the Sidelines

• Mindset Matters:
  “The ethos behind what we do is helping people believe for more...A lot of times, regardless if you're a first time home buyer or someone who's a little more seasoned, it could be a little discouraging to get your foot in the door and find yourself owning a home...if you have a desire to own property, you can do it.” — Isaias (18:53)

• In or Out of the Game:
  “You can either be in the game or be an observer. And it's okay to be an observer. Just get outside, you know, and watch the interest rates go up or down. Watch real estate values go up or down...but you're an observer, you're not in the market.” — Paul (30:00)

• Timing the Market:
  “What if we knew the market was going to go down a bit?...What if right now I could find a deal that makes sense to buy right now. Do we buy it or do we wait? When I find a great deal, I go for it.” — Paul (15:55)

Personal Journeys: From Law and Accounting to Real Estate

• Paul’s Backstory:
  Raised in a blue-collar Pittsburgh family, Paul’s initial career path as a lawyer left him unfulfilled despite financial success. Witnessing missed partner opportunities made him rethink "wealth" as the power to choose. Real estate offered this autonomy (07:00-13:00).

• Isaias’ Path:
  The son of Ethiopian immigrants, Isaias’s career took him from public accounting and community finance (CDFI) to a Fulbright in drama in London, and back to California where he combined purpose with entrepreneurship as a realtor (20:22-24:15).

  • “I wanted more for myself...I didn't find myself in a position where I was leveraging all my skills. My first exposure to real estate was working for a CDFI...” (21:11)

The Numbers Versus Emotions of Buying

• Finding Balance:
  “There's a business side or a number side and then there's an emotional side. You really have to appeal to both...certain people will lean toward one and some will lean toward the other.” — Paul (25:49)

• Avoiding “House Poor”:
  “One thing that's supposed to be a blessing will end up being a chain around your neck. But once we can kind of marry, does this make sense numbers wise and then...look past some of the immediate concerns and keep your eye focused on what's most important? That's kind of the role that I play with a lot of my clients.” — Isaias (25:06)

The Critical Mistake: Waiting for the "Perfect" Time

• Purgatory of the Waiting Room:
  “There's another metaphor...the waiting room is the worst possible place to be. It's purgatory.” — Paul (34:24)

• Risk of Trying to Time Interest Rates:
  “Trying to, you know, plan a picnic based on a national weather forecast...You’ve got to really zoom into the area where you are, that the particular deal that you're looking at is far more important than any of the national cycles.” — Paul (33:17)

• Advice for Sideline Sitters:
  “If I find the right place for you, I put you in it, and then if interest rates go down quite a bit, you can refi. And if they go up...you've actually locked into something that's really good.” — Paul (35:11)

First Steps for First-Time Buyers

• Work with a Realtor:
  “I think working with a realtor off the bat is usually the best. Even in a world...with Zillow and Redfin...a well-informed agent saves you time and can access deals you can’t see.” — Isaias (36:15)

• Get Pre-Qualified:
  “I usually like to get people pre qualified first...I'll give them one mortgage broker, one direct lender...when we have the pre qual we can see what bucket we're in. It's typically very challenging to have a real conversation about what's available...unless we know what we can get a loan for.” — Isaias (42:07)

• Know Your Numbers:
  “A baseline for starting to build wealth is to treat yourself a little bit like a corporation...If you want to move the needle on something, you've got to measure it.” — Paul (44:26)

• Leverage/Wealth-Building via Appreciation:
  “If you put down 10% on a $300,000 house...if that house goes up 10%...you're getting a 10% appreciation on the $300,000...that levers you up to really 100% return.” — Paul (44:01)

Rules for Investing and Lessons from Experience

• Paul's Three Rules:

  1. Value Add: Only buy a property you can improve.
  2. Buy Where You Know: “If something goes wrong [far away], it's happening to you, not for you.” (49:04)
  3. Cash Flow/Ability to Afford: “Have the cash flow to support that purchase, or if it’s your home, make sure you can ride out any market downturn.” (53:33)

• Location and Value Add Illustrated:

  • “In Southern California, that tends to stand the test of time is buying in good location...Clients in good locations saw rapid appreciation.” — Isaias (50:04)
  • “ADUs [Accessory Dwelling Units]...a really great way for people to offset their mortgage while getting the single family experience and being landlords.” — Isaias (50:05)

• Micro Markets and Timing:
  “There’s a market even inside of a micro market, there’s a market inside of the property that you percent.” — Paul (56:28)
  “When 25% of the homes are renovated, that’s a sweet spot...75%, it’s too late.” — Paul (71:58)

• House Hacking as a Launchpad:
  Paul recounts how, unable to qualify as an investor in D.C., he bought a rowhouse, lived on one floor, and rented out the others to make it affordable — the “old school house hacking” route (77:29-81:41).

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Notable Quotes & Memorable Moments

• “When six old men sitting around a conference table are going to decide thumbs up or thumbs down on your future, that is not wealth, that is not the power to choose, and it's not the power to create.” — Paul (12:34)

• “The greatest mistake is staying in the waiting room, trying to perfectly time the market instead of making a smart, well-informed move when you can.” — Paraphrased, theme throughout

• “You can either be in the game or be an observer. And it's okay to be an observer...but you're not in the market.” — Paul (30:00)

• “If you want to move the needle on something, you've got to measure it.” — Paul (44:26)

• “Location and value add...are really critical.” — Isaias (50:05)

• “All things are possible.” — Isaias, when asked what he’d shout from a hilltop (85:57)

• “I try to live a life that isn’t held down by regret. Because if I feel something’s not right, I really try my best to correct it in real time.” — Isaias (86:08)

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Timestamps for Important Segments

• [02:25] Defining Wealth (Paul’s philosophy)
• [07:00-13:00] Paul’s journey from law to real estate
• [16:17] Introduction of Isaias (Realtor/CPA/Community Advocate)
• [17:45-18:18] Wealth in Real Estate & Forced Savings
• [25:06] Balancing emotion and numbers in buying decision
• [30:00] In the Game or On the Sidelines analogy
• [34:24] The waiting room/purgatory metaphor
• [36:15] Why work with a realtor?
• [42:07] The importance of lender pre-qualification
• [44:26] Treating yourself like a corporation, tracking your balance sheet
• [49:04] Three Rules for Real Estate Investing
• [50:05] Value-add and location; ADUs as modern value add
• [56:28] Micro market concept and investing in “the market inside the property”
• [71:58] Timing: 25%–75% renovated neighborhoods
• [77:29-81:41] Paul’s house hacking story in D.C.
• [83:42] Rapid-fire “Fire Round”: values, fears, regrets

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Takeaways & Action Items

• Biggest Mistake: Waiting for the perfect time or perfect deal — being paralyzed on the sidelines can set you back a decade or more.
• Smart First Steps:
  1. Define your personal version of wealth/fulfillment.
  2. Get clarity on your finances; know your buying power.
  3. Work with a trusted realtor early.
  4. Look for “value add” opportunities and the best location you can access.
  5. Don't fear starting small or “house hacking.”
  6. Be in the game — the market rewards action over perfect timing.
• Build a team: Surround yourself with people who are both knowledgeable and aligned with your values (integrity, service, commitment).

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Episode’s Tone and Style

• Warm, conversational, honest: Both Paul and Isaias share personal stories, lessons learned the hard way, and keep the advice realistic and encouraging.
• Pragmatic yet inspiring: Listeners are left feeling empowered, not overwhelmed; the focus is on actionable, down-to-earth strategies, not get-rich-quick promises.

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Resources

• Follow Paul Morris: @paulmarkmorris
• Contact Isaias: Instagram @TheodrosTeam
• PDF Download: Advice & action steps for first-time buyers (to be linked in show notes)

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Final Word:
"Get out of the waiting room, get into the game, do it in a smart way... If you're not in the real estate game, you're missing out. Don't wait for perfect. Do it smart and get in the game." — Paul

Next Steps: Leave a comment, reach out with questions, and start building your own Radical Wealth Plan!

Transcript

[A]

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[A]

This is Radical Wealth Plan presented by Entrepreneur Media. If you have the drive, we'll give you the plan. I'm Paul Morris, New York Times best selling author, prolific investor and award winning entrepreneur. Join our real estate revolution.

Hello and welcome to Radical Wealth Plan where we focus on building wealth through real estate. And when I talk about wealth, everyone has their own definition of it. I'm going to share mine and that's the power to choose and create and you can certainly take mine, but it is important for you to define it for yourself. What is personal fulfillment for you and really getting in touch with what your dream Is. Or what's your big why? Because it's your definition of wealth that's going to pull you into action. And action is one of the most important things. One of the things that I know is that building wealth can be elusive. And as you work your way through life and you increase your job and what you're doing and things start to get better, you start making more money. Life also happens and expenses creep up and you're building a family. And so what does it take to build wealth? And that's what we're going to talk about in this podcast. Sometimes people believe that they have to sacrifice in order to build wealth. And when I hear it defined that way, I can totally understand why people don't build wealth. Because to me, sacrifice is giving up something vital in order to have something else that you want. And who wants to give up something vital? Taking time with family is vital. Do I have to sacrifice that? I'm not willing to do that. If I have to give up time with my daughter in order to build wealth, I don't want to do that. And this is where phrases like money isn't everything come into play. And yes, it's definitely true. Money isn't everything. But money is energy. And how are you going to use that energy? You could use it for good, you can use it for bad, you can use it for spending on frivolous things, you can use it to build wealth. But money is energy. What if we could show you how to build wealth without sacrifice? What if we could show you how to build your vision of wealth while living your life, while not giving up those things that are vital to you? The overwhelming majority of Americans who build wealth have most of their wealth in real estate. Building wealth in real estate is accessible to everyone. And what that means to me is everyone can build wealth. But I also know that not everyone will. It's our mission to guide you and show you how to build wealth. And it's been done before. So we can show you how to avoid the pitfalls and the mistakes that I've made through a 30 year career of investing. Before I introduce our guest today, I want to tell you a bit about myself and my journey of building wealth through real estate. I grew up in Pittsburgh in a blue collar family. My dad built and owned a parking business, but he also spent for the entirety of his life 12 to 18 hours a day, every single day, six days a week, sometimes seven days a week, working in that parking garage. And as a result from being a young boy all the way through Teen years and through college, I spent a lot of time working in that parking garage. And I could see the amount of effort that he put in every single day in order to make enough money to support our family. My brothers and sisters grew up incredibly poor. I was the last child. By the time I grew up, we had all of the necessities, but there was never money for anything extra. By essentially growing up in that parking garage which serviced the medical center, I watched people come all over to see doctors and that was the high water mark for us. That was the professional career that could get us out of this blue collar rat race. Three of my siblings went into the medical field, two of them becoming medical doctors, one a PhD. That was their road out. I believe I had the brain power, but I lacked the fortitude and the stick to it iveness to sit in a classroom long enough to become a doctor. Eventually I pulled my academic career together and I did well enough in school to go to a great graduate school and then go to a great law school. But it was never a labor of love. I never had what it took to sit still in a classroom and study and live that sort of life. I was never going to be an academic, I was never going to be a doctor. I did go to law school, but then only to find that it required way more book work, way more attention to detail than I had in me, and really did not feed my own creative desires. The only person that I knew that made a lot of money in our family was my dad's first cousin. And he did it all through real estate. And I watched him do that. And I really went to him as a mentor. I drove him around to different properties because he was getting older. And I spent time with him and watched the way he acquired property and negotiated for property and really got an inside track to see how someone would do this. He was doing deals that were so large and he didn't help me get into the game, but it was an inspiration. And I always had the idea that real estate is a great way to build income. The first deal that I did was I bought a dilapidated duplex in a fairly nice area. And I bought it at auction, which means we had to come up with cash. But it was so inexpensive at the time, we had to pay off the property taxes and beyond that we didn't have to pay for much more. What we got was a very troubled asset in a nice neighborhood that was broken into two separate units without a permit and we had tenants that weren't paying any rent. I worked through those issues and eventually fixed up the house, got the tenants out, and created it as a single family home, which we held for quite a while and then eventually sold to one of our friends, and they still live in this house today. And that was my first real estate deal. It's interesting to look back even on that first real estate deal. It really had the elements of how I approach real estate today, and that is, we bought a really troubled asset in a great area. After we bought it, we got to work on fixing it a little bit at a time. This story repeats on and on through my journey of building wealth in real estate. The second deal that I did was really out of my league. There was a family that put all of their property that had been in trust on the market for auction. And this family trust had hundreds and hundreds of units, and most of them were in phenomenal condition. And they were all going to the market at the same time because it was being sold out of a trust at auction. At auction, you run a big risk because you have to buy as is. You do your due diligence upfront out of a whole portfolio of assets. Almost all of them were phenomenal. We knew that spending time and energy doing due diligence on a great asset that people were going to bid up into market price or even higher was going to put us totally out of the game. So we focused on two assets that were really troubled in that portfolio, and we ended up acquiring one of them. The story of how we acquired that particular asset and what we did with it is something I'm going to share in detail in a subsequent podcast because it really shows how. How you can get into the game without having real expertise and without having real money. In order to do this, we used friends and family money. In our case, I went to my brother, my business partner went to his brother to acquire the capital necessary to get into this one particular deal. There were two major problems with the deal, and we figured out how to solve those problems before we bid on the properties. That particular deal was almost 100 units. And so that created this massive jump from being a tiny little investor to really owning a significant piece of real estate in a great area in a fairly large town. However, at that point in time, I was still on the academic track. I still did not see myself as a real estate developer or a multifamily unit owner. I didn't see myself as having a career in real estate. This was something that I was going to do alongside whatever career I got into after I had Pulled my act together academically. I was able to do well enough in school to get a scholarship to go to Oxford University, where I did my master's degree, and from there went to Cornell and did a law degree. After doing my law degree, I clerked for a federal judge in Washington, D.C. and then worked for a major international law firm. And that's really the gold standard for people coming out of law school. It was the highest possible start. Salary was going from this Ivy League law school to a giant firm. So in essence, I had gotten the gold ring. I had come all the way from Pittsburgh working in a parking garage to here I am at a major international law firm. And each and every day I dreaded what I did. I love this part of my journey. And that is, there I was. And I was trying to be the best associate that I knew how to be. Because what you do is you work in the salt mine for eight years as an associate and then they decide yes or no, you're going to be a partner. They give you no indication whether you're going to be a partner. Along the way, you get your final exam. Your yes or no after eight years in the salt mine and now your career future is lying entirely in the hands of the hiring committee. I was at that law firm for two and a half years trying to be the best associate that I could be. And right next to me was a senior associate who absolutely crushed it. He is the guy that I would have been if I could have been, because this guy was the best associate in the law firm. After eight years, it came time for him to go to the partnership committee. This committee is going to decide, are we making this guy a partner or not? He was the guy that I looked up to. He's the guy that I went to for information. He's the guy that I went to when I needed a hand, and he was directly right next door to me. I literally bought a bottle of champagne because I knew he was going to come out of this partner meeting and he was going to be made the next partner in the firm. When he came out of that meeting and told me that they had passed on him as partner, he was devastated, and I was devastated. And then I realized, not only am I devastated for him because I like him and he worked so hard and he deserved it, I was actually devastated for myself. Shortly after they made the decision to not make this A plus senior associate partner in their law firm, as you might imagine, he packed his bags and left. It wasn't very long after he packed his bags and left that, I packed mine. One of the things I like to say, sort of jokingly, but not jokingly, is when they passed on Stephen for partner, I quit my job. And that actually is true because I looked at him and I'm like, if they're going to pass on this guy and I'm two and a half years into the eight year salt mine, they're just going to use me for another six years and likewise say, no, thank you. It was at that moment that I knew I had to get out and do some things on my own. This was the beginning of finding my definition of wealth. Remember the power to choose and create. When six old men sitting around a conference table are going to decide thumbs up or thumbs down on your future, that is not wealth, that is not the power to choose, and it's not the power to create. That's when I knew I needed a different path. One of the things I did, even while I was in school and then while I was a lawyer, eventually being a high paid associate for a short amount of time, was I was always investing in real estate. I was still looking at deals. I now had a small track record of doing this duplex with one business partner and then doing this fairly large project with the same business partner and our brothers and doing great at it. I used that track record to bolster my confidence and keep looking for deals. I came to believe that if I could find a great deal, I could find the resources to make it happen. We all think, hey, I need money first to invest in real estate. That's one of the myths that keep people on the sidelines. What you really need is a phenomenal deal. Here's the thing, if you have great credit and money and you don't have a great deal, where are you? Conversely, if you have a great deal and you have no credit and you have no money, we can make something happen. I've invested in all market conditions, including these massive ramp ups, which we're now seeing sort of the end of. So are we at the end of it? Should we wait? Should we stay on the sidelines? My answer is no. It's certainly an important time to be very cautious with your investing and that's what we're going to help you with. What if we knew the market was going to go down a bit? What if we knew that a better time to buy is six months from now? First of all, we don't know that. But what if we actually knew that? And what if right now I could find a deal that Makes sense to buy right now. Do we buy it or do we wait? When I find a great deal, I go for it.

I'm super excited to introduce to you and have a conversation with Isaias, who's a phenomenal young realtor, who I've gotten to know well and who I've worked with for the last few years. Isaias has such an interesting background. He was an actor, he's a podcast host. He's a father of two young children, and he went to school for accounting. He's a certified CPA and spent time at a big consulting firm. And at the end of the day, he decided that his passion was working with people in the community, helping young entrepreneurs and families find their first home. There are a lot of reasons why buying your own home is the best place to start investing in real estate. And some of those are tax reasons. Some of those are you're replacing your rent for a different payment. That's actually building equity. But I want to dive right in and talk to Isaias about what he does in particular to help people get off the sidelines and into the real estate game. Absolutely delighted to have you on the podcast.

[C]

Thank you very much.

[A]

One of the things I looked up was how much wealth is held in real estate. You take the bottom 20% that probably doesn't have a lot of wealth, and you take the top 20% that has a lot more wealth. But the really, the really majority middle has between 50 and 70% of their wealth in real estate.

[C]

Makes sense.

[A]

Yeah, yeah. I was going to say, does that surprise you at all?

[C]

I don't think it does because we've known for a long time that the people who are wealthiest in this world have owned real estate. That's just kind of a common denominator amongst most people. And the thing, the reason why that is is because owning real estate in a lot of ways is essentially a forced saving plan. I think people don't tend to have the discipline or the know how to invest and save in the way that would really maximize their. Their money. And then just by virtue of owning real estate, you're capturing, you know, forces that are outside of your control. Appreciation. All that good stuff is like, you can't take credit for it, but it's going to happen, you know, So I.

[A]

Love it and I did a whole episode and Q and A based on forced savings. It's, I think, just the idea of it. People don't get the sense of it necessarily. So when you're living your life, you are doing a few things and you're going to work. And guess what? What's the first bill you pay? The first bill you pay is rent.

[C]

Got to keep the lights on, man.

[A]

Right. And so that first bill is converted essentially from rent into for savings for your real estate.

[C]

Right.

[A]

And just that concept alone.

[C]

Right.

[A]

And one of the things too is getting in the game versus being on the sidelines.

[C]

That's one of the things that I'm most passionate about. So my real estate team that my wife and I run, the ethos behind what we do is helping people believe for more. And that's our saying and the reason why we say it. Helping people, helping people believe for more, even in real estate. For more, even in real estate. And the reason why we say that is because, you know, a lot of times, regardless if you're a first time home buyer or someone who's a little more seasoned, it could be a little discouraging to get your foot in the door and find yourself owning a home. Whether it's because of the low inventory or all the competition, we know that part of our responsibility is to help people understand their options and let them know that if you have a desire to own property, you can do it. And we'll help you work through all the things that come up along the way. So we help people understand that they can own property, and we'll kind of push past some of the common myths that people hold on to as to why they can't buy real estate.

[A]

I love it. And I definitely think it makes a lot of sense to work with somebody who has that kind of philosophy. Because when we're working with salespeople, the general idea is, okay, so a salesperson is not going to make any money until they make a sale. So really they want to close that sale. And that doesn't have a lot to do with. It might build their wealth, by the way, generally it doesn't. It increases their income, does not build their wealth.

[C]

100% agree with that.

[A]

And homeownership is a great way to do that.

[C]

Yep.

[A]

Why don't we do this? Let me take a second and pause this great conversation and tell me more about yourself, your journey, and how you got to where you are right now.

[C]

It's a very roundabout story. I'll try to get right to it. I grew up in Orange county to two immigrants who came here from Ethiopia. They both met here. And then fast forwarding to when I came into the picture, I grew up very privileged to see two people kind of make a way for themselves. My father started off as a software engineer and then quickly pivoted to being a business owner. He owned a sandwich restaurant, a couple of them, actually. So, like, from the early stages, I saw the impact and benefit of being an entrepreneur. So for me, I graduated from Claremont McKenna College with a degree in economics and accounting.

[A]

Okay.

[C]

And the whole point was to fulfill all the aspirations of these two immigrant parents who wanted better for their son. So I got my CPA while I was working at a public accounting firm.

[A]

Right.

[C]

And then once I did that, I kind of realized that I wanted more for myself, that I didn't find myself in a position where I was leveraging all my skills. I ended up, my first exposure to real estate was working for a cdfi, a community development financing institution. So I was using my skills in the finance side. But then we were now starting to underwrite, you know, different types of deals all throughout the country using participation loans.

[A]

Wow. And just. Just so you know, like, when you said cdfi, I was like, what's that?

[C]

It's not a common thing.

[A]

So just like, for listeners, like, we're really bridging that gap. And, you know, I've been doing this, you know, more than 25 years, investing in real estate, and still I sit down with Isaiah or somebody else smart. And lo and behold, here you go, cdfi. I'm like, huh, Maybe I'm supposed to know what that means.

[C]

No, no, you're not. You're not.

[A]

Well, that's generous. Thank you.

[C]

Yeah. So from there, the goal was always to go to business school. But of course, I told you I like to meander at times. So I actually won a Fulbright scholarship to study drama in London.

[A]

Wow. So Fulbright is very high level. And yet, you know, you've got this sort of, you know, hardcore math CPA background, and now you're going to go study drama in London.

[C]

Oh, my parents were thrilled. Can you imagine?

[A]

Sure. Yeah. Yes, I have. I had two of those immigrant parents, and if I told them I was going to be an actor, they would have lost their minds.

[C]

Yeah.

[B]

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[C]

So you're about to make a trade.

[B]

Based on a friend's text, but which.

[C]

You do you listen to, is it.

[B]

We could buy a house in Tulum.

[A]

Get optioning those options.

[B]

We could lose everything.

Or let's do a little research, get.

[A]

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[B]

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So did that, came.

[C]

Back to Los Angeles, started auditioning for television and film. And then like most actors, you realize, wow, my career's not gonna blow up overnight. But you know, what it actually did for me was it allowed me to realize, hey, I love acting, I love the arts. I now see it as something that's part of my life as term of like a long term thing. But the only way to really sustain something like that is to also take life into your own hands. So having seen my parents as entrepreneurs, I realized quickly that I wanted to leverage the skills that I had, the background that I had to not only give myself some optionality, but also to fill the part of myself that wanted to help people. I wanted to make an impact. That was something that's always been important to me.

[A]

Right.

[C]

I helped some first time homeowners and I got to be a part of a process with them that really unlocked for me why I love this and why I continue to do what I do today. A huge part of this is really understanding people, understanding their needs and how to solve problems.

[A]

As important of an investment as a home is, and I think your first real estate purchase, whether it's a home or whether it's an investment, some of it, you know, it's going to be moved by numbers. I think a lot of people really end up buying based on what is their monthly cost going to be. So what's the monthly payment? Much like we look at a car, you're like, oh wow, hey, can I afford that car? People are going to go, well that, geez, that's 30,000, that's 60,000. Like what's the payment? Right. Does that fit into my budget? And I think people make big purchases like a home, especially a home, or even first investment property. There's some emotion involved.

[C]

Oh, 100%. I think you can't disassociate those two things from one another. So as you said, the number side of it is extremely important. I would say it's the basis for how people can make the right decision. If the numbers don't make sense, if it's going to push you outside of your level of comfort for your everyday life, one thing that's supposed to be a blessing will end up being a chain around your neck. Correct. But once we can kind of marry, does this make sense? Numbers wise and then we can also look at it from the perspective of, okay, your home is something that's, you know, where you make memories, where you know you're going to be here for a long time in most cases. How can we look past some of the immediate concerns and keep your eye focused on what's most important? That's kind of the role that I play with a lot of my clients.

[A]

Right. That makes a lot of sense because I do a lot of sales training. Right. I've been in the real estate brokerage business for more than 20 years and, and one of the things I talk to people about is sort of judging your audience. And I think that there is a business side or a number side and then there's an emotional side. You really have to appeal to both. I think it's not a bad idea. People generally will lean toward one, you have to address both. But certain people will lean toward one and some will lean toward the other. You know, generally, very. Generally speaking, the artist or the, you know, the part of you that went to London to study drama, that's going to be the, like, hey, what's it going to feel like? What's it going to be like? And then the CPA size, like, hey, what's, what are the numbers look like? And, and I know we have to address both of those, but sometimes I try and figure out in which direction people lean because if I were working with, if I were working with a husband and wife and, and the wife was the cpa, right. And the husband was the artist, I'd be like, okay, that satisfy those numbers for the wife, you know, and then we get into the emotion and then for the artist, it's like, hey, can you picture yourself living here and like what you said, making memories, you know, that's a really forward thinking. Get your brain to go.

[C]

You're looking at the totality of the picture.

[A]

Yep.

[C]

I know you spoke about how you've been in brokerage for almost 20 years. Right. What does that look like for you to balance kind of both sides of that kind of numerical, computational and then also the soft side because you're dealing with people all day at different levels and you might have like a more bigger picture, macro view on it, but what does that, what does that look like for you?

[A]

So the brokerage business is very, it has to do with real estate, but it's very different than, than the investment side of it in the sense that when you're dealing with potential buyers and sellers, you're dealing with that one asset.

[C]

Right.

[A]

And the firm that I run Forward Living has 3,000 realtors, and we did 10,000 transactions last year. So the numerical. You're like, wow, that sounds like very numerical. Because I actually don't get involved. I get involved in as few of those 10,000 deals as I can because otherwise I'd be buried by this.

[C]

I get lost in all the sauce. Right.

[A]

Buried by the deals. But that being said, it's still a very emotional business. And so I work a lot more with realtors and agents than I do with the end users most of the time. But even that's a very emotional thing. So it's creating a home for those business people. And it's interesting because the analysis is quite the same. So if I were talking to you, Isaiah, say, hey, you know, are you interested in coming over to my firm? Which you are, so that's cool. You know, one of the things that I might know in advance that you're. You're a cpa, and I might know in advance that you're also a family man because you've got two kids.

[C]

Yep, that's right.

[A]

Two young kids and an artist. So I would look at both, but I would know that the finances for you to come to my firm would have to make sense and that you are hardcore in terms of number analysis. And then you also have. You sort of called it the soft side. And that is, you know, environment matters. Yep. And so, you know, if you paid a few dollars more, but you were in the environment that got you to do the things that you needed to do to have success, would that make sense to you? That's that sort of analysis.

[C]

I think you put that really well. And I think part of the reason why I've been at our office for as long as I have is because, you know, being Beverly Hills, it's gonna cost a little more than most places.

[A]

That's right.

[C]

The value has been really clear for me from the very beginning. The people that you've put in place at our office and the environment that's been created by those folks, it's made the world of difference in putting myself in a position to succeed. So I can see how that makes sense from the split side of making sure the numbers are there, but then also, like the thing that you can't always quantify just as easily, but when you feel it, you know it in every facet of life, there's a duality to all of it. You have to kind of assess a full picture as opposed to just being kind of one dimensional and thinking of things from only one vantage point.

[A]

Yep. So let me dive into another piece of it. And that is, I think that you're either in the game or you're not in the game. And I talked to this great buyer's agent. I'm always learning because so many smart realtors and so many smart people in this business and guy was telling me that he was having a conversation with a client of his and the client wasn't sure, do I jump in the market right now or not? And you know, somebody told me we're going to get another little additional interest rate hike. I haven't checked the news yet this morning to see whether it's happened or not, but obviously interest rates have shifted. People will ask me with the experience that I have, and I do have a few clients, I don't have time to have a book of clients, but the few clients that I have are really friends, friends and family. And so they'll say to me, and whether they do a deal now or do a deal later, it's not going to move the needle for me. So I have no economic interest in slamming in them a deal. Not that I would do that anyway. And they asked me, you know, hey, should I buy now or really, shouldn't I wait? Because our price is going to come down. And so what, you know, how do you deal with that with people that are on the sidelines? And to say it a different way, this great buyer's agent told me he went through all of the different ideas and then he just said, hey, listen, here's the thing. You can either be in the game or be an observer. And it's okay to be an observer. Just get outside, you know, and watch the interest rates go up or down. Watch real estate values go up or down. Right. And take it from there. Yeah, but you're an observer, you're not in the market. So when you're dealing with a first time home buyer, they sort of, by definition are not in the market right now. We're in some funky times. So how do you deal with that?

[C]

I actually have one answer for everybody that I talk to, which is, it depends.

[A]

I like it.

[C]

Because, you know, the thing is, everyone's scenario is a little bit different. And I think there is a certain degree of nuance that's required in trying to understand people's motivations and what their goals are. But you spoke to a point that I think is really important and is true across the board. It's that either you're in the game or you're not. And if you have a long term perspective that's focused on getting your foot in somewhere and then allowing the real estate market to do what it always does, then you're typically going to be in a good place. So the reason why I say it depends is that if I have a client who says, hey, you know, we definitely want to buy a home, but like, these are some of the other factors that impact our life, we're most likely going to have to move in the next year or two because we know this life change is happening. And if we're already in an environment where people are subject to high interest rates and they're not sure where they're going to go, I might tell them, hey, you know what? Based off of everything you told me, you might want to consider all of your options only because no one knows where the interest rates are going to be in the next year or two. And if you were making a financial decision, a long term financial decision based off of betting on where interest rates are going to be, and then you don't even know if you're going to have enough appreciation to cover the costs of selling your home again in a year, then it might not be best for you. But if you look at the real estate trends and just how the market seems to move over the course of the long term, then even if there's like a bit of a plateau, it's always going in an upward direction. So if you're able to hold your home for at least five years, I tend to tell people, then I think this decision makes sense and it does benefit you to get into the game because, you know, a lot of people are missing out on that for savings that we're talking about and the appreciation that is extremely impactful, especially in good location environments in Los Angeles.

[A]

I love all that info. Super useful. One of the things I like to think about is that certain factors like interest rates, for example, when you look at interest rates, it's trying to, you know, plan a picnic based on a national weather forecast. And you go, well, you know, temperatures across the United States, or, you know, they're up five degrees. You're like, okay, well what, are we going to have the picnic on Saturday or not? All right, so, you know, you've got to really zoom into the area where you are that the particular deal that you're looking at is far more important than any of the national cycles. No matter what the market is. There's a divorce, there was a death in the family. I'm moving across the country for a great New job. It can be good reasons, bad reasons. I have a friend that was looking for a house and she and her husband just had their second kid, much like the ages that yours are, and they're in a two bedroom apartment. They're like, okay, we've had it. Yeah. So we do not want to try to wait out the market. What's your advice for us? What if I were able to show you a deal right now that made sense?

[C]

Yep.

[A]

Does that change your mind? And if that doesn't change your mind, then go ahead and wait out the market.

[C]

Exactly.

[A]

You're not ready.

[C]

Right.

[A]

There's another metaphor that I think about, which is the waiting room. And I believe that the waiting room is the worst possible place to be.

[C]

It's purgatory.

[A]

Yeah, that's right. It's purgatory. One of the things that I like to do is figure out what are your needs, what are the things that will serve you. And if I'm able to find you a piece of property that serves your needs, irrespective of. Because how about this? If I find you a place that serves your needs, we don't really know that's the truth. Whether interest rates go up or down and people think they're going to come down, they're quite higher than they were. They're double what they were not that long ago. So people have this idea they are going to go down. I sort of think they're going to go down too. So if I find the right place for you, I put you in it, and then if interest rates go down quite a bit, you can refi.

[C]

Of course.

[A]

And if interest rates go up quite a bit, you've actually locked into something that's really good.

[C]

Right.

[A]

So I believe it's really about the particular deal.

[C]

100%.

[A]

And I'm not telling you. Hopefully lots of people will find this podcast useful and we'll get a lot of people that tune in. And also I encourage people to, in the notes, ask any questions they want because I'm going to go in there, I'm going to see if Isaiah will come with me and we'll go in there, we'll answer questions. I'm not telling people of a very broad audience, you know, go ahead and jump in. Now, I'm not predicting the market. I am saying this. If it makes sense for you to make the move. I wouldn't worry about what the market's doing right now as much as I would worry about what's the particular deal you're getting into. 100% tell me, what's your approach? What do you think are the most important things for first time home buyers? What should they do right out of the gate? Should they run out and find a realtor? Should they look around? You know, everybody now is carrying, you know, stuff they found online. Hey, do I really need a realtor? Or when they bump into you, they go, hey, we've looked at these six properties already.

[C]

I think working with a realtor off the bat is usually the best. Because in a world where people have access to Zillow and Redfin and everything else, it's nice actually to have clients who, you know, have developed their own taste, who have a good sense of the markets they're trying to be in. But sometimes working with a realtor who's well informed and has a lot of information about the different communities that you're looking to live in could save you a lot of time off the bat. You know, there's also the fact that our office or different agents around the country have access to off market deals or just things that are not known by the general public. I think can put people in a position to find success and kind of avert having just to flounder for a while. So I always recommend that they do that. Also. Our job is to advise and to counsel and to be as objective about the process as possible. And to really, as fiduciaries, our goal is to put them in the best position. I will say in full disclosure, and you alluded to this too. Sometimes there are agents who are motivated just by closing a transaction. And I think it's pretty obvious when people behave that way. But I think as fiduciaries, as soon as we move away from the transactional element and we realize these are people who are trying to make the best move for themselves and if they find someone they trust in that position, then you are 10 times out of 10 better working with someone, an agent, a trusted agent, right out the gate, as opposed to just waiting till you're right at the finish line. Because, you know, sometimes I've had clients who've done it on their own because they're independent, and then they reach out to a listing agent on their own and then they start like negotiating through the process and then they realize, oh, maybe this person doesn't have the best interest for me. And then they reach out to you and they're like, hey, can you help me with this? And then they're catching me up on everything that's happened and I'm like, well, I wish we would have gone about this together from the very beginning.

[A]

For sure. For sure. And a couple of funny things. You know, I used to. Before I went to see my doctor who's at Cedars Sinai and went to Harvard Medical School, I would go on WebMD, you know, and I'd be like, hey, doctor, you know, Here are the five.

[C]

Let me decide about myself, right?

[A]

Here are the five pages I have from WebMD. And, you know, and his answer to me is, hey, you know what? Put the paper down and. And pull down your. Pull down your pants. And I'm like, okay, right. You know, and I do think that everybody is looking for property on their own. I totally get that. And even the. Like I say, the few clients that are friends of mine, they'll come, you know, they'll say, hey, you know what? I have one guy, you know, hey, my assistant found these two or three properties. Sometimes they're really good.

[C]

Yeah.

[A]

I'll give you another example. I myself, obviously very seasoned in acquiring, selling, you know, holding real estate as an investment, also in home ownership. And I got a call from a friend. They say, hey, we have. We have a deal. It's killer deal. It's Marina Del Rey. And, you know, I called. And before I pulled the trigger, even with all the experience that I have, I called a friend of mine who does not work for my firm, but I know that he is. He knows Marina Del Rey like the back of his hand. And when I called him, like, hey, you know, I'm thinking about this place, and da, da, da. He goes, oh, you know, where is it? And I'm like, you know, Marina Towers, which is. It's been a long time. I think that's one of the names of the place there. He's like, hey, you know, I'm like, oh, it's Marina Towers. And he asked me, so what stack is it in? And I did one of these things because it was three or four years ago, which means I only had 25 years experience in real estate. And I have this guy who I know is like, you know, he's. He's the bomb. He's probably been in 10 years, you know, and he's like, what stack is it in? And my mind immediately goes, like, number one, I have no idea what he's talking about. Number two, I know I should know, you know, And I just give this little pause. I don't fake it very well. I was like, hey, Jesse, what, What. What do you mean, like, what stack? He goes, oh, well, you know, what's the thing? It's got a floor number, an apartment number?

[C]

Yeah.

[A]

And I'm like, oh, it's 7F. And as soon as I said that I do have enough experience, I'm like, oh, okay. And he's like, oh, F. Okay. So in Marina Towers, the F stack, which is, you know, 1, 2, 3, 4, 5, 6, 7, you know, all the way through 20 or whatever. He's like, the F stack is a partial ocean view and it's that it I. And what floor did you say it's on? I'm like, seven. He's like, okay, well that's great because the view is obstructed even further if you're five or less. So you're at seven, you're in a good spot. So what's the price you're thinking about? I'm like, well, I think I can get it at this price. He's like, okay, well the last sale in that building with any kind of an ocean view was X. So you're getting a great deal on this. What's the condition? I'm like, you know, it's pretty good. He goes, yeah, totally, buy it.

[C]

Yeah.

[A]

I mean, that was less than a five minute conversation. And I'm a guy that lives, eats and breathes Los Angeles real estate. That's a perfect example of why even I would go to a trusted friend or to a realtor. That's the kind of information you gotta have.

[C]

I think that. I think that's a perfect example. And it speaks to how a layperson who has a lot of information available to them might be able to see things from like a bird's eye view. But until you speak to someone who's in the details on the ground level, who's seen that properties in this area seem to have issues of X, Y and Z nature.

[A]

Correct.

[C]

You'll just never really know the nuances of it unless you talk to someone who's done it.

[A]

So, yeah, it just goes on and on and on. Almost every single piece of real estate that I bought, I've learned something from the experts who really, really know that thing, you know, buying in a hot market. And I was buying a house for myself that was on the alley, which I loved because, you know, you didn't have a neighbor on one side. It felt like same size lot felt a lot bigger. And he's like, yeah, you know, the market's hot, so, you know, being on the alley is fine. As soon as the market changes, being on the alley is. Something changes, it's going to compress the price. I'm like really? I like being on the alley. He's like, you may like being on the alley, I'm just telling you. I'm like, huh? Okay. So it's just these little things that people with really local information have 100%. Let me ask you, at what point do you involve a lender or how do you, what do you recommend for that?

[C]

You know what, that's a great question too. It depends on the client and what I perceive to be their appetite for how quickly they want to move. But I usually like to get people pre qualified first. So I tell my clients off the bat, hey, I'll give you two people to talk to and then just kind of have an initial conversation, see what they can offer you. Oftentimes I'll give them one mortgage broker, one direct lender and I'll say, hey, let's figure out kind of what's available for someone under your profile. And then with the pre qualification they don't have to run their credit. Although to be honest, it's not a huge deal if you have to. But I know people don't really like that. So I'd like to honor that as much as possible. Although when we do run it, we get a more clear depiction of what their financial health is. But when we have the pre qual and we can have that kind of big picture conversation, then we can at least see what bucket that we're in. Because I found that it's typically very challenging to have a real conversation about what's available to us unless we know what our financial health is. Unless we know what we can get a loan for.

[A]

Right? That's right.

[C]

Why talk about, you know, buying a. That's right, $3 million property for only approved for a million dollar property.

[A]

That's right. And in my experience, I wish it wasn't the case, but it's just the way it is. I get a lot of surprises at the lending point. Most people were certainly talking about first time home buyers. Most people are not buying all cash for sure. So there's going to be a mortgage, there are some benefits of mortgage, there's a tax write off, you know, that's how you really sort of leverage into it. So instead of paying 1500 in rent, maybe you're paying 1800 for a mortgage. But part of that is going to now going to be tax deductible, whereas rent is not tax deductible. Another part of it is going to appreciate with the full price of the home. So if you put down 10% on a $300,000 house you have $30,000 in. But if that house goes up, let's use really round numbers. If that house goes up 10%. Okay. You're not getting 10% on the 30 grand.

[C]

Right.

[A]

That would be $3,000 appreciation. You're getting a 10% appreciation on the 300,000. Right. So that levers you up to really 100% return.

[C]

Absolutely.

[A]

So that's one of the ways that wealth gets built inside of real estate.

[C]

I mean, I feel like someone in your position, how long you've been investing in real estate?

[A]

Almost 30 years.

[C]

So I feel like you could probably really speak to it firsthand. Tell me a little bit more about that.

[A]

Yeah. A baseline for starting to build wealth is to treat yourself a little bit like a corporation. So that may sound daunting to people. I have a company, Morris Enterprises, Inc. And it's not coincidence that the letters for that are me, Inc. So I'm really treating myself like a corporation. And that means financial accountability. If you want to move the needle on something, you've got to measure it. I look at a financial statement is broken into two things, and one's a profit and loss and the other is a balance sheet. So for an individual, the balance sheet is every asset you have minus all of the liabilities. And I think it's very important to measure that even if it's negative. Like that's the thing. You're like, oh, wow, I'm really gonna write this down because here's the thing. My assets are $200 worth of furniture and my debts are. Well, you know, I've got $100,000 in student loans. Student. And then, you know, I owe 10 grand on my car. So I'm minus 110 with, you know, let's say $10,000 worth of assets. Therefore I'm in a net negative. 100. People were like, oh, you know, that's. What kind of exercise is that? But it's a great starting point and I highly recommend people 100 people doing that.

[C]

I mean, how are you supposed to take yourself out of a situation or work towards a goal unless you really understand what your current health is, your current financial health. I think most people shy away from it because they don't want to know the real answer, even though they kind of know in the direction it's heading. Yeah, but even when I talk to like first time home buyers, one thing that I always tell them is, let's start saving. There are programs out there that actually allow you to purchase a home without any down payment. There's down payment assistance through calhfa so you can come to the table with. With nothing in your hand. But even then, when I talk to my clients, I'm like, okay, even if we can find a way to get you approved based off your income and your credit score, we need to probably put you in a position where you're saving a little bit so that, you know, when things change or when things go up and down, there's a seasonality to life. You're not putting yourself in a position where the home that you just purchased is more of a burden than a blessing.

[A]

That's right. The idea of house poor.

[C]

Exactly, exactly. That's the soft side of it. Also that I consider that's not just transactional is that I want to make sure people have a holistic understanding and, you know, I'm kind of walking them through all the different facets of what it actually looks like to be in the driver's seat of being a homeowner.

[A]

I sure prefer house poor over, like, consumer goods poor. You know, like going all the way back to starting out or, you know, working with people who are starting out, you know, when they're poor, when they're in the minus range, it's generally, you know, generally there's sort of a student loan aspect to it or if there isn't, you know, there's all this consumer debt. And if you're really going to be some version of poor, which I have been, you know, I have been. I have been all of it over time. And one of the things where I stayed quite a bit is, you know, investment poor, because as soon as I had a bit of money, you know, I would find like a great investment. I'd be putting the money in the investment. And that. That created.

[C]

Yeah.

[A]

A lifetime.

[C]

Yes.

[A]

Of forced savings.

[C]

Yeah, yeah.

[A]

So that then I turn around, I look at it. But the answer is, you know, one of the things that, you know, I'll talk about a subsequent episode is, you know, my three rules for investing. And I've been investing for over 25 years. I have, you know, more than 600 apartment units and some commercial retail. I just recently bought six houses in Joshua Tree, which is a different model in the multi family. So I'm always investing.

[B]

We've got gifting all wrapped up at Sephora. Gift more and spend less with our value sets packed with the best makeup, skincare, fragrances and hair care they'll love. This year's Showstopper gift sets are bursting with beauty products from Rare Beauty, Summer Fridays, Glossier amica and so much more. Shop holiday [e-mail] and give something beautiful. This episode is brought to you by. Oops. I've got a box of Cheez It Crackers staring at me and I just wanted that irresistible Cheesy Crunch. Sorry, that was a total snackcident. Mmm. What was I supposed to be talking about? So salty. So crunchy. So cheesy. Whoops. Lost my train of thought. I've heard of brain freeze, but brain cheese?

[C]

Mmm.

[B]

I'll just have one more cheese at Cracker and then I'll get back to it.

[A]

And I've never lost money in a single deal. And if you follow these three rules, you'll get that.

[C]

I should get some paper on that.

[A]

Yeah. Right. But part of it is, you know, having value add 100%.

[C]

Yes.

[A]

And another part of it is investing where, you know the area.

[C]

Yep.

[A]

I'm a strong believer. You know, people talk to me all the time like, oh, you know, there's a great deal across the country or whatever. It's too far away for a single investor to have any kind of positive impact. The deal happens to them.

[C]

Yep.

[A]

Instead of for them. If something goes wrong, it's happening to you.

[C]

Yes.

[A]

You know, it's not something that you can really deal with. And then the third part of that rule is having the cash flow to support that purchase.

[C]

Yes.

[A]

So for a home, it will be making sure that you have the money. But there are three things, because I'm going to take two of them that you just said, and I'm going to add two things. Yeah, go ahead.

[C]

You actually just have. It made me think of something.

[A]

Have at it.

[C]

Which is, while it's true that there are some people who might be in a little over their heads when they first get started, I think identifying that criteria is so critical because that is a safe way to make sure that you're doing the right thing. Like, that's actually something that's come up multiple times recently. Location and value add, you said? Yes. So one thing, especially in Southern California that I've noticed that tends to stand the test of time is buying in good location.

[A]

Yes, for sure.

[C]

And to me, especially in the last couple of years through Covid, I've seen clients that I've put into property in good location and just how quickly. Quickly their properties appreciated relative to other houses in different areas that maybe aren't as good locations. So location's super important. And then one other thing that you touched on, which I'm so glad you did, which I found is something that clients are finding a lot of opportunity in right now is the value add piece. So adus, for example, right. In single family homes with detached garages have been a really great way for people to offset their mortgage while allowing some. They're getting the single family experience, but then they're also at the same time getting to be landlords and finding a way to safely kind of offset their mortgage. So I think, you know, those two things in particular I think are really.

[A]

Critical and I love it. He used an acronym. I've been in real estate a long time. This one I know. So accessory or ancillary dwelling unit. And basically what happened is it happened all across the country. It started out in certain states, I can't remember which ones. It wasn't California, but California adopted it pretty quickly. And for an ADU or a mother in law suite or whatever it is, what has happened was people used to build them anyway and then they would have to hide it so they'd be like, oh, hey, I'm just building a shed, you know, and then they get the permit for the shed. Then they're putting in, just happens to.

[C]

Have plumbing and everything else.

[A]

Yeah, then they put the plumbing and everything else. So now they're going to rent out this illegal unit. But folks across the country realize that we have a housing stock issue, so there's not enough homes for people. How can we build housing stock? And so they've made the laws a lot easier for you to build this extra unit on your property. And the funny thing about that switch is now you can't get the permit for it unless you have the plumbing and the, you know, you can really show that it. Is that again, very important to get in touch with somebody that knows how to do that because adus can take, you know, either forever to get permitted or not long. I just did one in the Joshua Tree properties. Or no, no, I'm doing some of the Joshua Tree properties, but I did one on a property, three units that I have in Culver City, which is a great area, and I wanted to add two units to it. And it literally took forever. Okay, now I'm okay with that because this was not penciled into the deal to begin with. So I'm like, okay, so you know, it takes longer. It takes longer. It actually took. I mean, I should be embarrassed to say this, especially with people listening. You know, it took two and a half years.

[C]

Why did it take as long as it did?

[A]

It was very specific to the site. So it wasn't cookie cutter. There Were a lot of. We did it all with within the regulations, but there were little things like.

[C]

You know, setback requirements.

[A]

Well, no, no, we did a mezzanine. So it's like really, it's only supposed to be one story and you've got height restriction. And we do the mezzanine. So it took forever for them to go like, okay, mezzanine. That's not really a second floor worker with that. And then I looked at the model. Now you can do like a 3D model.

[C]

Okay.

[A]

I look at the model and I'm like, are those real human beings in there? When you're like, yeah. I'm like, okay, well, you know, because how tall would that person. Because I'd be ducking my head in the upstairs unit. Yes.

[C]

Okay.

[A]

And the ceiling he feet, which I think is pretty unacceptable. And we got a great solution that was. Hey, you know what? That's because we had a height requirement. Let's dig down one foot.

[C]

Oh, wow.

[A]

So we're digging down one foot and that then gives us eight feet in the. You know, there are very creative solutions, but those sorts of creative solutions are what took a lot of time in plan check. And here's the thing. On this property, I'm in it for the long game.

[C]

That's it, man. That's it.

[A]

There's no question. And that's one of the keys to winning in real estate. And so location value add. And then the last piece was, you know, if it's investment property that it's going to cash flow or if it's not at somewhere you're living that you can afford it. And what that means is that you can ride this thing out. So whatever happens with the market, if you can ride it out, you will, in my estimation, have a good outcome.

[C]

I think you touched on something. And man, I feel like this is counter to what an agent or someone selling would want to say. But. But one thing that I found to your last point is in a market like this one with the interest rates where they're at a lot of deals don't pencil right out the gate.

[A]

That's correct.

[C]

But the way in which you can work around that is to really leverage the value add piece. And that's how some of my clients are finding a way finding their foot into the door. Because on paper, if you'll find a property that has potential, like one of my clients, right now we're looking for single family home that is situated perfectly with a detached garage which they have every intention on converting to an adu. Now you know, if they were just to do this as purely an income property out the gate and they rehabbed it and all that, it probably wouldn't pencil with where the rents are.

[A]

Correct.

[C]

They know that if they do the adu, then all of a sudden the deal works.

[A]

Right.

[C]

Another client that I just helped close on property in Silver Lake, you know, it was a three bedroom, one bath, and they're not intending on using it as a rental right now. They're going to live as a single family. But this is an example of a property where we saw something kind of off about it, where it was deterring people. And then we were like, but you know what, the way it's situated, we actually feel like we can add a bathroom here. And then now something that, you know, might have lowered the potential value of the home. Now through adding value, now we've created something that, you know, if they were to resell or try to rent it now, they can get, you know, truly maximize their market rents. So I think the idea of adding value and having an eye where you can see opportunity is something that's critical in an environment like this one where, you know, deals might not pencil just if you look at them through one lens and one lens only.

[A]

Yeah. You've been at this how long?

[C]

My fifth year.

[A]

Fifth year. So you're at this Five years. And I'm over here taking notes furiously because, you know, it's amazing how much, you know, I've been doing this so long, how much I can still learn from this. And you, you hit on some points that I'm so glad you did. You know, would never want to have this podcast without hitting these things. And one of the things I talked about was, okay, interest rate is really the national weather forecast. We're not going to plan our day outing, sailing, picnic, hunting, whatever it is, based on the national weather forecast. What's going to happen tomorrow, you know, where we are. So one of the things that is critical is not just the micro market and this idea that I have that there's a market even inside of a micro market, there's a market inside of the property that you percent.

[C]

I love that. I love how you put that, actually.

[A]

So in other words, and I'll explain what I mean by that. So I bought the three Plex in Culver City, and if it were totally tricked out and fixed up and you couldn't do more units there, it's sort of maxed out. Right? And when it's maxed out, it's okay. I would consider something that's almost maxed out. But I've got to somehow get that at a cost probably, to be honest, where they're not going to want to sell it. And that's why the properties that I buy over the course of time are never, you know, it's never like this stunning house or never this stunning property because there's value inside of a deal.

[C]

I think it's really great, man.

[A]

And what that means is no matter what happens with the national weather forecast. So when I bought, not the house that I'm in now, when I bought the house before, I bought an absolute dump in a great area. And I wish, I wish best case scenario for that. That's best case scenario except that I bought it in 2008. I literally bought it, it seems like 5 seconds before the market crashed. And maybe, you know, maybe I should have known better. And you know, I know numbers are crazy out here. I'll put numbers to it. Anyway, it was $2.2 million purchase with some things get hit harder than others. This was a dump to begin with. And I put down $400,000, maybe a little bit more like $450,000 of money.

[C]

Worth at the time if you bought it for 2.2 or could be worth actually.

[A]

Okay, so, you know, here's what's interesting. The house at the time, when I bought it for 2.2 was worth 2.2 or less because it had been on the market. I didn't get it off market. I mean exact numbers, I think they had it listed at 2:2 and I think I paid 2,150. But it had been sitting there a while, which means by definition it didn't have that 2.2 value.

[C]

Market spoke for a second.

[A]

That's correct. And I'll tell you another interesting thing. Unless you're. I've built that portfolio and very, very few of those units and purchases have been a screaming deal as far as the market is concerned. So I didn't buy the like, oh, you know, hey, I just want to sell my house and I'll just sell it directly to you. Or I want to sell my 10 unit building, I'll sell it directly to you and you'll get this big discount out of the gate. Now when I buy something, I usually have made money already on the purchase. How do I do that when the property's already on the market? And that's because I see value ins of inside of that house and that creates its own market. So I buy right before the market crashes. I pay 2, 1 50. I think I put 450,000 down. That takes me to a $1.7 million loan approximately within five or six months. If I had to sell the house, which is again, that's part of the formula of never losing, is that you can afford it. If I had to sell the house, I would have had to have sold the house at about a million six. And what that would have done is wipe out the entire $450,000 that I had, plus another 100,000 that I didn't have in that. That would have been a catastrophic event. And that's what people are afraid of. And to be honest, that's what I was afraid of. Because I bought it. I'm like, oh, my gosh, the market crashed. Now I had the money, cash set aside to improve the place. I even asked my realtor friends again. I'm only going back 10 years, so I had more than 15 years experience. I'm asking guys like, you have five years experience, but you know, the area. I'm like, isaias, I'm nervous. And they all said the same thing to me, like, well, you're gonna live there, right? I go, yeah, and you're gonna hold it for a while, right? This isn't a flip. I'm like, yeah, that's true. And they're like, okay, well, go ahead and improve it. Watch what happens. And, you know, sure enough, I take that place that, you know is now worth 1.6 million. My balance sheet, as I do that balance sheet, My balance sheet now says minus 100,000 on that, what used to be 450,000 cash. You know, I'm down 550 on my balance sheet. Six months later, I took that money that I had set aside. I improved it the way I wanted to. I enjoyed the house, and I, you know, raised my daughter there, and we had great times there. And then I sold it two years ago for, again, sorry, these are sticker shock numbers.

[C]

No, we like the numbers.

[A]

Yeah, I sold it two years ago for $6.2 million. There you go. And then what did I buy? So I went out and I looked for essentially the same thing, which is a place that I love. Now I'm like, you know, I don't want to live in a construction zone. I don't want to live in a dump. You know, like, I work too hard. This is the things that buyers are saying. But I still went out and bought a property that was sitting on the market, which means potential homeowners and potential investors that looked at that property all said not for Me. And I looked at it, and I was able to see the value in it.

[C]

That's really, really good, man.

[A]

It has a spectacular view. It was already flipped. So somebody had already.

[C]

Interesting.

[A]

Yeah. Most of the time, people think like, oh, I go into a dump, you know, and, you know, I've got to figure out how to fix it up. This was already fixed up, but it was done poorly, which really chased away. That chased away homeowners, and it chased away investors.

[C]

And what kind of opportunity did you see in a house that was, you know, supposedly poorly flipped?

[A]

So sort of cosmetically, it looked okay, but as soon as you scratch the surface a little bit, you're like, oh, you know, the plumbing wasn't done right. This wasn't. You know, I knew that that particular piece of property with that view I can remember. One of the things I do is I hire a very tough home inspector. And he's like, there's this wrong. There's that wrong. You know, he's like, by the way, I'm not telling you not to buy the house because, like, that view is crazy. You know, like, it's amazing.

[C]

Why don't you know what you're getting into?

[A]

Yeah, so that's exactly right. So figuring out what exactly is it going to cost to get it to where I wanted it to go. And once I had that, then I was armed with enough information, and I got to tell you, the next thing I did was. And this area is way more in my sweet zone because it's in the Studio City area. I have a real estate office in the Studio City area. I still called my number one realtor, who did both home sales and investments and flips, and I asked his advice, and I'm like, hey, I'm thinking about this house. This is where it is. He's like, oh, I know the house. And I said, look, you know, it was done wrong. He goes, I already know that. Oh, wow. You know, And I go, okay. And he goes, well, what's it gonna cost to get it up to where it needs to be? And I already had that figure set because I had some people look through it. I'm like, well, you know, 200 grand. It could be, like, you know, done, done, done. He's like, okay, so then you have your purchase price, plus you have 200 grand, and now you're aware, and there's nothing on the market for 20 plus percent more that would have that kind of view and be ready to go out the door. So that particular property was there because it scared away investors Are like, you know, it's already done. What's the upside? And homeowners are going into like, wow, this is a house at this price point. It should have, like, nice countertops. The countertops are new, but they're like, not what we want. So now they're thinking about, I'm going to this house, it's done. And the first thing I have to do is rip out all the countertops. Again, I get great advice from people, and I had all these things I was going to do, including rip out the countertops. And somebody who gave me great advice said, you know what, these plans, the things you're going to do, they're phenomenal. Here's what you need to do. Go in there, live there.

[C]

I love that.

[A]

Yeah, right. Live there for six months, nine months, and then figure out what you really want to do. I mean, I went into this, this brand new house that was redone, and I looked at the closets. They should have been like, top, top end closets. And I looked at it. I really, honestly, I'm like, ikea closets would be much better in here, for real. And so one of the, like, I don't care what anybody says. One of the first things I'm going to do is I'm going to change the closets, Okay? I take my friend's advice, and that's live there a while. As soon as I put all my clothes in the closet, it's like, gone from the first thing I'm going to do to, like, the last thing I'm going to do. Because once I put all my clothes in the closet, I'm like, like, oh, yeah. So the closet's crummy, but it's not crummy. It just doesn't fit the house. I'm like, you know, with all the clothes that it looks fine, I would move on to the next thing I put a hot tub in instead of changing the closet.

[C]

Priorities, priorities.

[A]

This is the fun stuff.

[C]

I mean, I think you spoke to something that's really important, which we've alluded to already earlier in the conversation. Working with the right person, having the right people, agents around you can help you spot an opportunity where other people can't see one. And I think, again, in a market like this one, I think that's one of the greatest ways to find your way into the door where people are shying away from something, where there might be gold right in front of your eyes, where others don't see it. So that's great.

[A]

I love it. So one of the Things that we're going to do is we're going to make sure that we have value add. That's an absolute. Now, now, again, I will say this to you. You mentioned Josh. You know, he's a mutual friend, one of my business partners. And Josh knows my investment philosophies. Like Paul, I want to follow in your footsteps. I want to build more wealth. He's the guy I bought the houses with together in Joshua Tree. He's fully familiar with that. And when he went to look for a house for his family, he bought one that was done, done, done. And there's really no upside, there's no value add in that. And when I talk to him about it, he's like, yeah, I got that. And you know what, I worked too hard and I want, you know, so there's not a you must do this thing. He still bought a great house. It's on a cul de sac. It's going to have value over time. It doesn't have that cushion built into it. And just know what you're getting into when you get into it.

[C]

Well, I'm glad you mentioned that because for someone like Josh and I have clients like this as well, they see something that they know they're going to want to stay with for some time. So, you know, especially when you find a property in good location that is down to the nines, it's okay. Because if your intention is to stay there over the semi long run, then your investment's going to be safe. Again, I don't want to speak in generalities because every market around the country is different, but particularly in markets like this one in Southern California, when you buy in an area with good location, the graphs are always going to do the same thing. They might kind of stabilize for over time.

[A]

Sure.

[C]

Or it could go down and it could go down. It could go down, but over time it will go up. That's just what happens over time with real estate. So I think, you know, that's a great example that you brought up because not everyone really has the appetite for a value add situation. Correct. Everyone's, you know, I had a lawyer and a banker who bought a property in Studio City and they were like, look, we might want to kind of adjust certain things to like fit our preferences, but their goal was not to do a full blown construction project for sure. So it really just depends on who you are and what you want.

[A]

That's correct. And I think some of the things are greatly undervalued. And so you don't necessarily have to do a full blown construction project in order to get the value add. One of the things I love to see when I'm out looking at properties is somebody that has a property for sale on the market that, you know, the landscaping is terrible, or when I do multi units, you know, it's like the door is falling. You know, I would go to a good area, but this is basically the worst. You know, the cliche is you buy the worst house in the best neighborhood. Now the best neighborhood in Los Angeles is Beverly Hills. So go try and find a dump in Beverly Hills. You know, it's not going to pencil out, but you know, I really look at sort of an emerging neighborhood. And one of the things I want to push back on you because you're my, I'm your client. And you know what? I hear you. Okay, fine, you sold me on value add. We're going to get value add. I don't want a full blown construction project in my house. But I'll go with you on value add because I hear you and I trust you. We're looking for that. Now you keep telling me to buy in a good location. I agree with that also. However, there is not a good location in Los Angeles that fits in my price point. So should I wait or how can you help me now?

[C]

I think for those people, even if you're aspiring to be in a more prime location, I think there's still ways to make this idea of good location work at different price points. So then the question I would ask the client is what's the best location we can get at the price point we can afford?

[A]

I love it.

[C]

Because there's still opportunities in every kind of price bracket. And then within that there's also ways to create income generating opportunities. So like one client that I'm working with right now, we're looking at this idea of house hacking. We know it's not going to be a long term thing for them. And by design, house hacking isn't a long term thing.

[A]

Correct.

[C]

But if you're willing to buy a property that has two, three, even four units, which is still kind of under the designation of single family or residential rather.

[A]

So four units or less, you can still qualify for FHA programs.

[C]

FHA programs. Commercial residential loan, non commercial loan.

[A]

Correct.

[C]

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[B]

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[C]

And I'm like, okay, let's find you a property where we can live in one of the units and then in the meantime, you can be generating rents from the others. And then, you know, there's obviously nuances to that too, because, you know, rent control laws and all that stuff. But we'll look at all of that and let's look at ways to offset this so that we can eventually put you in a position where, you know, maybe five years from now, two years from now, you can put another renter inside that property. And then when you're generating all these rents from your current property, from your current four units, then we can put you in the actual location that you really want. So this way we're focused on how to maximize our current situation and how we can put ourselves in a long term position that's for the better. So it's also like part of what I really enjoy about what we do too, is to help people come up with a game plan for how to get you where you want. Not everything happens overnight, you know, you, I mean, you can tell me this yourself. Like when you started 30 years ago, I'm sure you didn't imagine yourself with. How many doors do you have right now?

[A]

600.

[C]

Okay, so he said it so casually. He has 600 doors.

[A]

Yes.

[C]

And that's not something you could have even fathomed when you first started. I want to be like you when I grow up.

[A]

Okay, so we're going to, we're going to use this, we're going to use this podcast to fast forward that for sure.

[C]

Let's go.

[A]

And one of the things it's almost back to, one of the first things you said was, was this forced savings. One of the things that it's just human nature, and that is we overestimate what we can accomplish in a short amount of time and we underestimate what we can accomplish in a long period of time. So get out of the waiting room, get into the game, do it in a smart way. I think that we're in a market where I'm not exactly sure where it's going to go. We don't know. So I would take my own client or purchasing for myself, or purchasing for a family member. That's the way I treat it and I would do it in a careful way. I wouldn't count on the market just.

[C]

Going up, up, up, and be conservative to some extent.

[A]

Correct. And conservative for me would be making sure you really have value. Add the location piece. So we're not going to do this in Beverly Hills, we're not going to do this in Pacific Palisades, we're not going to do this in Santa Monica because we just can't afford to do it. One of the things that I do is I look at these neighborhoods on the fringe of those where I see a velocity of change. And the velocity of change is when you see certain types of businesses and things starting to emerge. So it's a, you know, sort of rough and tumble neighborhood. But, you know, and I have a formula, really. And that is when 25% of the homes are renovated, I think that's a sweet spot in terms of getting in. When 75% of the homes are renovated, I think it's too late. Yep.

[C]

Interesting.

[A]

The thing that's the mind twist on this is once 25% of the homes are renovated, all the people sitting around and they know that neighborhood, here's what they say, like, oh my God, did you, like, people are crazy. Did you see what they paid for that? So I'm not suggesting that somebody get in at the very front end of that and like, hey, you know what? I know that neighborhood's gonna skyrocket. I'm gonna be the first one to buy. Nobody knows it, so I'm gonna really a benefit from that. The problem with that is that the velocity of change, I never know then is it going to change in two years or is it going to change in 20 years? And having grown up in Pittsburgh, sort of Midwest, I've seen areas that are changing and I'm like, I'm going to invest there. And then it just took forever to change. Twenty years later, I'm like, oh, it's still like. And I don't have that kind of time to wait. But you see areas like East Hollywood or whatever, to use local stuff, that it's really starting to change now. The mindset is people are going to be like, I can't believe what that's selling for now. Which means you already missed out on a piece of the appreciation. But there's still a lot to go and the velocity is happening. And then once you're at the 75%, people are already baking into the price, what it's going to be. You're not even buying for what it's worth right now. They're like, huh, we know this thing is going in that direction and we're going to price up for it. So that's somewhere. Somewhere between 25% renovated and less than 75.

[C]

I think that's true in a couple different pockets in Los Angeles. We're seeing that in some pockets of east la. We're seeing that in some pockets of south la. You mentioned East Hollywood.

[A]

Sure.

[C]

And like, I think again, to bring back a point that you made earlier, there's a micro market within each market. So even within one pocket in south la, you know, I might tell my client, hey, let's be on this side of the street versus this side. I'm helping another client buy something in Studio City. And we're like, okay, let's just stay south of the 101. Preferably if we could be south of Ventura, even better. You know, so there's like these little specific things, but then we could still kind of adjust because you can't paint everything with one broad brush. But, you know, we still can try to use that as a general basis for how we want to make our decisions. Then take it from there.

[A]

And I'll tell you, I had it in my mind I was going to look the guy's name up because it slipped my mind. Oh, Sam Zell. Okay, so I got it.

[C]

Should I know Sam?

[A]

You know, he's probably a little out of your age range, but Sam Zell is a billionaire who made a lot of money. And the way he made a lot of money is he was moving all of his investments into the suburbs. He had a huge investment fund that he sold out, cashed out, you know, made a few billion dollars. And instead of staying out of the game, he redid his game. And his game was investing only in 24 hour cities. So I had a chance to have a conversation with him. He had a book coming out. I had just written mine, which hit the bestseller list. He's like, hey, let me get some advice on promoting my book. I'm like, I'd happy to do that. And now I want to test some, some of my real estate ideas with Sam Zell the billionaire. And, you know, I'm like, la? He's like, yeah, 24 hour city. And I'm like, okay, well, I have a bunch of stuff in Pittsburgh. Pittsburgh. He's like, it's not even close. Yeah, at the time, this is a while ago, I said Austin. He's like, oh, it's getting there. Here's what he means by 24 hour city. There's so much activity, there's so much urban energy that young adults that flock to the city center, they don't want to. People don't want to commute anymore. Traffic has gotten terrible. They want to live closer to the city center. Whereas before people were like, get me out into the suburbs. So now they want to live in the city center. They want to live someplace really nice. But they'll pay, you know, price per square foot way more than the market. So he saw ahead of that market.

[C]

How long did he make this thesis?

[A]

Probably 10 years ago. So he was really very forward thinking for sure. And then I got bummed out because I'm like, oh, you know, LA is so expensive, you know, I'm definitely investing there, you know, but I have so much stuff in Pittsburgh. Pittsburgh, 24 hour city. He's like, oh, no way. And then I thought a bit. Almost all of the stuff that I've invested in Pittsburgh is right near the schools and right near the medical center though a smaller city. It's got like a major medical center that's a regional medical center. People come from all over to it. And then obviously has, you know, two big universities, Carnegie Mellon and University of Pittsburgh and then also has a bunch of other stuff and right in that city center. I said, let me ask you, Sam, you know Pittsburgh, he knows everywhere. I'm like, what if I'm buying right around the universities and the hospitals, does that make it like a 24 hour city? And he thought, he goes, yeah, actually, yes. So part of my answer is go where there's an economic engine, you know, where you know that there's going to be jobs and there's going to be all this stuff no matter what. So if you're iffy about a particular neighborhood and you're like, oh yeah, it's going in the right direction, man, if you can get next to. And I took that advice that I got myself, but got the Sam Zell a stamp of a approval on. And in west la, I bought a piece of property that was just in a terrible neighborhood, but it was right across the street from a hospital. You know, I just knew that, you know, you're going to have interns or nurses or doctors that are going to need places to live and they don't want to, you know, if they're working long shifts, they don't want to drive all the way to where they can afford. So, you know, right across the street is a big deal.

[C]

It's really simple in the sense that these things aren't going anywhere. Universities are fixtures in the community.

[A]

That's right.

[C]

These hospitals fixtures in the community.

[A]

That's right.

[C]

So there's a lot of opportunities, opportunity that comes with that. And then kind of similarly we've seen this when stadiums are like for example in south la, we see the, you know, SOFI coming in. What was your first experience with that? Did you go the traditional house hacking route? Did you do a traditional. Like what was your situation?

[A]

So I had already started to invest in real estate and I was investing in Pittsburgh, but I wasn't living there. I lived in Washington D.C. for seven years and it was very expensive. Here I am, I own probably at the time 20 apartment units, but I'm still renting.

[C]

Nice.

[A]

Be it as it may. And I decided, you know what, I want to get in the market. And here's what's interesting as I could not have qualified as an investor for that home. But I.

[C]

What do you mean by that?

[A]

So your qualifications for any particular property when you're the homeowner are going to be much different than when you're an investor. Right, right. So you're going to put a lot more money down. Oftentimes the interest rates are not as good.

[C]

So as an investor.

[A]

As an investor. So if I approach that house as an investor. So I already have some investment property. Now if I want to do in Pittsburgh, if I want to do investment Property in Washington D.C. i'm priced out of the market.

[C]

I see.

[A]

In fact, I was sort of priced out of the market in the center city where I wanted to be even as an owner, as a buyer occupier. Got it right.

[C]

Owner, Occupier.

[A]

Owner. Owner.

[C]

Occupier. Thank you.

[A]

Yeah. So even as an owner, occupier. You know, I was priced out of that market. Now I had the money for the down payment and I also had good enough credit to qualify, but the payments were just not what I could afford on a day to day. And so I did old school house hacking. And that was I bought this place. It was a great house. It was over 100 years old. It was actually on the historical tour, but it was a bit ramshackle so it wasn't popping.

[C]

What pocket of D.C. i lived in D.C. too.

[A]

Oh yeah. Dupont Circle.

[C]

Okay.

[A]

Dupont Circle. 18th Street.

[C]

Okay. Okay. Very cool. I lived in Chinatown and Columbia Heights.

[A]

Okay. Okay. Yeah, I love it.

[C]

Yeah.

[A]

And Columbia Heights is great too. Yeah. So, you know, this is sort of back in the day before Dupont Circle blew up. It was still a little sketchy where I was 14th street was like, you know, bad zone. So I'm 18th, I'm only four blocks away, but found a great old house that needed some work. It sat on the market a little while because people didn't want to buy it. I was able to get a decent deal on it. I was able to qualify for it. I was able. I had the money to put down. And I just knew going in that this was going to make me beyond house poor, which I didn't want to do. Now, it was very vertical, which, you know, in Manhattan we might call it brownstone, but in Pittsburgh, we call it a row house. So Washington, D.C. somewhat their own lingo, right? So like, yeah, row house is not as cool, but that's because we're not in Manhattan. But it was somewhat like that. So it was very, very vertical. And so there was two or three stories. Well, there were three stories. Yeah, there were three stories. Plus it had a basement that was rentable. And basically the first story was, you know, the common area. I rented the basement.

[C]

Okay.

[A]

And then I rented the second story to someone else, and then I kept the third story for me.

[C]

Now, were they already separate units?

[A]

No, no, no. It's all together now. The basement was a separate unit. Okay. And one of the things that I did part of my house hacking formula was not how much can I get for each floor and maximize that because I'm living there. So I picked a person that I knew I would like to live with. She was a trainer at the gym. She was very organized. She had a great job. And she could not afford even to, you know, rent out what it would cost to have one floor in there. And I just said to her, hey, how much are you paying where you are? And she's like, oh, you know, 500 bucks or wherever it was at the time. I'm like, you know what? Let me show you this house. It was even before I bought it. I said, would you be interested in living this house on this whole floor would be yours. It's still little, you know, this whole floor would be yours. And, you know, the bedrooms still close off. So, you know, yes, it's true. I'm going to be you walking, you know, through your floor to get up there, but, you know, still sharing a kitchen maybe, but, oh, definitely sharing a kitchen for sure. And yeah, right. You and I would share a kitchen in the common area. The little one downstairs had its own sort of kitchen and exit and entrance. And so I just said, hey, would you move in here and live here for that same cost? Which was definitely under market. She said yes, that was my first tenant. And then we got another guy who was super cool trainer at the like huge muscle guy and was like, you know, studying neuroscience or something. You know, I'm like, oh, this is our guy, you know. Right. He can protect us.

[C]

Yeah, you got to fill the needs wherever they are.

[A]

Yeah, he can protect us. And you know, he's like this quietest guy ever, you know, you know, on the planet. So, you know, and I charged him again. It was the same thing. That's the tenant I wanted.

[C]

That's good.

[A]

It was not advertising. And another thing, I didn't know how long I was going to be there. I was in D.C. for seven years. I rented for five.

[C]

Nice.

[A]

So. So I'm like, you know, you rented.

[C]

It out for five?

[A]

No, I rented, yeah, I rented myself for five. So then every, you know, every year I think, well, how much longer I'm going to be here? That's why I wasn't buying and that was there. I'm like, you know, I thought I was going to be here a year. Now it's five years, you know, I'm just going to go ahead and buy now. I did buy and I only lived there for two years and seven years I moved to LA and I kept that house. And again, like every real estate story, you know, if I would have kept it even longer, right? But, but it was a $440,000 purchase. I put down 10%, which sometimes you don't even have to do. So basically we have location, we have value add, and then the last piece is just really affordability, making sure that you have staying power. Because when I bought that house in Santa Monica, the market tanked. I was like, oh my God, if I had freaked out and sold, I would not be saying, hey, I've never lost money on a deal. I would say, actually I got crushed on a deal because that was crushing. But instead I took the value add place, I had the staying power, I fixed it up and you know, many years later, of course sold it, but at a huge profit. So that piece works out. One of the things for a first time buyer is we're going to look at, I would say identify the neighborhood, identify the area that you want. Definitely identify what you can afford. And you do that either with a realtor that's going to be your trusted advisor or a lender that's going to be your trusted advisor. And then definitely do a credit pool, a soft credit pool. There are all sorts of ones available online. I myself Pay, you know, like a 15amonth subscription. I'm sure if I looked, I could find it cheaper.

[C]

Sure.

[A]

But it pings me every time there's a credit pool or, you know, hey, something bad happened or there was a credit change. I just click on it. I go and see what happened.

[C]

Yeah. Just to be tapped in with what's actually going on in terms of your financial health and your. Your current situation so you have a real time perspective. So that's great.

[A]

I love it.

So one of the things that I do is a fire round. I want to lead the fire round off with saying that. I can't tell you how much I appreciate you being on the podcast and bringing to so many people the possibilities that are out there, the ability to get off the sideline and get into it. And your mantra, which I wrote down, helping people believe for more.

[C]

That's right.

[A]

Such a great mantra. And I think I'll take that mantra. I'll stick it on my wall, and top of your mind, the answers to some of these crazy questions. So what's your idea of perfect happiness?

[C]

Wow. A sense of being able to look in the mirror and be happy at the person that looks back at you.

[A]

I love it. So integrity can grow.

[C]

Yeah. I think the. So I told you about the mantra for our business, but then the kind of pillars that we stand on are excellence, service, and commitment.

[A]

I love it.

[C]

Those are like things that are not just about the business that we run, but also about the person that I want to be. I want to be someone who does hard things well. I want to be someone who's committed to helping other people. And then I want to be someone who sustains over the long term and commits to whatever they do. So not only is that like a personal. Have follow through, not only is that a personal thing, that I want to look at the mirror and say, hey, that's who I am. But I also want to bring that into the business that I run. So I love it. That's what happiness and success looks to me.

[A]

What's your greatest fear?

[C]

Not fulfilling my potential.

[A]

What is the trait you most deplore in yourself?

[C]

I think I can use some more patience.

[A]

What's the trait you most deplore in others?

[C]

People who don't honor people's boundaries.

[A]

What living person do you most admire?

[C]

That's a really good one.

[A]

Wow.

[C]

That's a really good question. I really admire my dad.

[A]

Love it. What's your greatest extravagance?

[C]

My greatest extravagance. My wife and I like to Vacation.

[A]

Nice. What talent would you most like to have?

[C]

Someone who is really in tune with understanding people's needs.

[A]

Nice. If you do a big hike and you climb to the top of the hilltop in your neighborhood or where your people are and you get to that, you summit that top, you're going to yell out one thing to them. What do you yell?

[C]

All things are possible.

[A]

What do you most value in your friends?

[C]

People looking to make me better.

[A]

What's your greatest regret?

[C]

We're going deep today. I try to live a life that isn't held down by regret. Because if I feel something's not right, I really try my best to correct it in real time. So I don't know if regret is the right word and maybe I need to do some more introspection here. My first job out of college, I was working at Deloitte and I had saved up a nice little nest egg in hindsight. And that was I graduated in 2010 and this was like, you know, around the time the market was real estate market was really soft and I had thought I was like, like, should I buy something right now? Potentially. But then my life took a totally different turn. As we talked about earlier, I worked at the cdfi. I moved, I left out of the country. I studied drama. I kind of wish I would have bought some property then. I love it back then.

[A]

I love it. And it's old school real estate. You ask any real estate investor. I mean, I could go on, hey, I regret I sold the house in Dupont Circle because It was worth $2 million a day. But I really got to let go of that in order to keep moving forward. I gotta tell you, thank you so much for your time today.

[C]

Thank you.

[A]

It's been absolutely phenomenal. Tell us where we can keep in touch with you.

[C]

Yes, you can find me on Instagram. Tedrostem. That's T H E O D R O S Team T A M and.

[A]

We'Ll put in the show notes how to contact you. And I'm going to put together a little PDF of some of the really great stuff that you said today, including advice to first time home buyers and what that path would look like to actually get off the sidelines. We're not saying, hey, jump in because it depends on one of the first things you said was it depends. It depends and I love that. And it really has to be a needs analysis for people and figure out where they are, what their needs are, how can we meet their needs. I will say again back to one of the first things I said which is, I think it's Brooking Institute that put it in quintiles, but it's like 50, 60, 70% in that order are the three middle quintiles of that's where people's wealth are. So if you're not in the real estate game, you know, jumping in, you got, yeah, you're missing out. You got to do. Don't you know, do people lose money at it? Yes, they do. Let's do it smart and let's get in the game.

[C]

Yep. Paul, I want to say thank you to you for taking the time to have this conversation, helping people, you know, with this whole idea of what it looks like to get involved in real estate. And I'm looking forward to other episodes. But for someone like you who has all this experience, is now looking in for ways to give it back, that says something about who you are. So I appreciate that too, man.

[A]

Thank you very much. I learn every time I do this and I've taken lots of notes for good reason.

[C]

Appreciate it.

[A]

Thank you again. All right.

I'm so fired up about what we were able to accomplish today and talking to Isaiah, really helping people learn what they need to learn in order to get into action and get off the sidelines. First time time home buyers and beyond. And I'm so delighted to do this in partnership with Entrepreneur Media. What a phenomenal opportunity. If you like the show hit subscribe. That definitely helps us, but also please leave comments. Tell us what we're doing right. Tell us what we're doing wrong. Because we're building a community with radical wealth plan and that community is where we move together from being on the sidelines to building, building great wealth in real estate. I'd love to connect with all of you in between episodes, so follow me at Paulmark Morris on Instagram.

[B]

Take the next 30 seconds to invest in yourself with Vanguard. Breathe in. Center your mind. Recognize the power you have to direct your financial future. Feel the freedom that comes with reaching your goals and building a life you love. Vanguard brings you this meditation because we invest where it matters most in you. Visit vanguard.com investinginyou to learn more. All investing is subject to risk.