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Real Estate Investing School Podcast
233. Gage Heward: Millionaire at 22 Through Real Estate
00:55:06
In this episode of the Real Estate Investing School Podcast, host Joe Jensen sits down with Gage Heward, a young and ambitious investor who became a millionaire by 22 and now owns 23 rental units. Gage shares his journey of growing up in a household...
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- [00:00]
Gage Heward
And I had just bought the property like a week and a half ago and I'm like, of course this is happening on my first deal. Like what did I just buy?
- [00:12]
Joe Jensen
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen and today we've got our guest, Gage Heward. Now Gage was a millionaire by 22. He owns 23 doors of real estate. He hosts the Proximity is Power podcast. He's invested over a hundred thousand dollars in personal development. He's read over 650 books since high school, which was not very long ago, only 2017. And he's the owner of Mamba Marketing. So Gage, welcome to the show. That's quite the bio, especially for someone so young. That's awesome to hear.
- [00:49]
Gage Heward
Thanks Joe. I'm pumped to be here. Thanks for having me, man.
- [00:52]
Joe Jensen
Yeah. So how old are you right now?
- [00:55]
Gage Heward
I'm 26.
- [00:56]
Joe Jensen
26, awesome. So you've been doing some stuff man, fill us in. Like how does a 26 year old have 23 doors already and spend hundreds of thousands of dollars on, on self development? And why would you spend it on that when you could go blow it on a nice car looking cool. Or more real estate. So kind of, I mean we, there's a lot to cover right there. But maybe just tell us a little bit about you first.
- [01:22]
Gage Heward
Yeah, man, it's, yeah, it's a long story but we'll try and make it quick. So I'm, I'm from Utah, born and raised. And I grew up in a home where my dad had money. But we were given nothing growing up. Like cool. Like we had to earn everything extra we ever got. And so it taught us to like if we wanted something we had to make a plan to, to get it. And my dad actually got us selling discount cards door to door when we were like 8, 10 years old. And basically we'd sell it for $40 and anything we sold it for more than $20 we gotta keep. So every time we sold one we'd get like 20 bucks.
- [02:04]
Joe Jensen
These are like coupon cards for people to get discounts places.
- [02:07]
Gage Heward
Yeah, yeah, exactly. And so we'd go to like out in our ward and try to sell these things door to door. And you know, so I learned work ethic, I learned discipline at a really young age. I had to get my Eagle Scout before I was 14. Yeah, like my parents had very high standards. Like we had to get A's. If we got like below A's, we had to pay my parents like, like they paid us for A's. But if we got anything below an A, like. Yeah. And so I feel like what kind of turned the corner for me is like I had a really good foundation of work ethic, discipline. And I felt like I had this drive because even though my dad had been successful, I didn't get to see any of it. Like we always had to pay for our own clothes and all that stuff. Yeah, I had this friend in high school who was like super wealthy and I got to see his, his family's lifestyle and he was a successful, um, I mean, my friend's dad was a successful businessman and they had the craziest lifestyle. Like courtside tickets to the jazz, Riverside Country Club, like Deer Valley scout cabins trips, another house in Boston with a G wagon, cars, craziest. So I saw this lifestyle and they were like the coolest people and in the world, like the most charitable, the most giving.
- [03:37]
Joe Jensen
Isn't it funny? I don't mean to interrupt you, but it's like in the media, like in the movies and everything, it's like the rich people are always like evil, like douchebag, selfish, just like unrelatable. They're always like the criminal, the bad guy. They're always just like, oh my gosh, the rich. And it's like in, in my experience, it sounds like in yours, it's like some of the biggest, best, most amazing, well rounded, like good humans you've ever met that just really have their priorities straight that you've ever met. And it just doesn't get that. I think that reputation is just a lot of an excuse for people like, oh, well, I don't want to be rich because they're all bad and then they don't actually have to do what it takes to, to get wealthy. But anyway, it just made me think that when you were describing how awesome this family was.
- [04:24]
Gage Heward
No, I agree. I think, yeah, entertainment movies make, make rich people seem like absolute douchebags. But, but I think, I think money is just a maximizer. Like it makes you more of what you are. And I, I, I like to believe that most people in the world are good. So most rich people are probably good too, you know, and so getting that taste and get us getting to see, getting that proximity with the family, I just like, it woke something up inside of me in high school. Like I want to go make a ton of money so I can go give at the level and like make an impact. Like they're making not only in the, in the school, but the community, like all of the businesses, like the charities that they were doing were just really cool. And then like a couple months before I graduated, my dad took me to lunch and he's like, what are your plans after high school? And I didn't know. And he's like, gage, I've been pretty. I've like. All the success I attribute to two things. He's like, number one are the books I've read, and number two are the people I've met. He's like, proximity is power, like, who you spend time with, you become like. And he's like, remember that stack of books I gave you for Christmas last year? And I hadn't touched any of them. And I'm like, yeah. He's like, those books, like, they were all self help, you know, thinking grow rich. 7 habits of highly Effective People. Richest man in Babylon. All the OG books, they're all. A lot of them are right here. But he, he basically said, I'll pay you $10 per book you read. And you should, should try to like, take someone you look up to to lunch as often as you can. So 10 bucks wasn't a lot, but to me, like, in my dad being cheap, that was like a ton to me. And I just see it in his face that he actually believed that, like, what made him successful were these things. And so, yeah, dude, that. That got me on a path of like, starting to read books. And like, the more I read, the more I learned and then the, the, the more I read the. I looked at the world in a different lens and I looked at life in a different lens and it kind of like got me excited of like, hey, I could actually go hit this goal of like, becoming wealthy so I can, you know, go make an impact on the world.
- [06:47]
Joe Jensen
What were some of those things that like, stood out to you that are like, whoa, like, because you've been around success, you knew it was possible, you know, but. But once you start reading the books, it kind of shifted for what was possible for you personally. What were some of the, like, yeah. Moments.
- [07:04]
Gage Heward
One thing my dad always told me to read is like, autobiographies of super successful people. Like, okay, like, like, like Shoe Dog, Made in America, the Walmart story, Like, some of these books. And what I kind of started to notice is that. And Rich Dad, Poor dad, the cash flow quadrants, like all these books kind of have like a theme of like, if you want to own a business, you need to learn how to sell. Like, sells the number one skill that you need in life. And, and so that was like, really interesting to me. So. And what's funny is like, around the same time, my cousin approached me about a door to door sales job to sell pest control for a summer commission only gig. And he had sold the last summer and made $44,000. And he's like, hey, I made a list of guys that I think would do well. I think you'd sell well. Like, you're decent at working hard and being positive. I think you'd crush it. And at first I literally, like, told him no. Like, I don't want to sell door to door. That sounds like the worst thing ever. You know, Like, I'm like, I sold door to door in the war growing up, and I hated it. And so at first I told him no, but then that night, went home and talked to my dad and I'm like, hey, like, my, like, JT hit me up to do sales. What do you think about that? And he's like, well, what'd you say? And I'm like, I told him no. And he's like, well, there's two reasons why you absolutely should go do that job. He's like, and I don't even know this. I don't know if you know this, but me and your mom actually sold for three summers back when we were in college and he had sold pest control for Todd Peterson before Vivint was Vivint.
- [08:51]
Joe Jensen
No way.
- [08:53]
Gage Heward
Yeah. And he's like, my best summer back then, I made 60 grand. We were able to buy a triplex, graduate debt free, and buy our first house from the money we had made. And it was, it was like pivotal. But he's like, there's. And he's like, I went to four years of school at byu. I learned more in those summers than I did an entire business degree at byu. Like, I would not be successful in business as I am today if I hadn't had that background. But he's like, the two reasons you should go is number one is the money. He's like, now that you're graduating high school, the first step you need to take is go from an hourly job to some type of commission or results based job. Because in an hourly job, you're capped on how much you can make by how many hours you work. And there's only a certain amount of hours anyone can work in a week. What's cool about sales is you don't get paid per hour. You get paid what you put in the hour. And so there's no limit to how much you can make. And he's like, my dad's in finance. He's like, if you can make a ton of money while you're in your late teens, early 20s and invest, that you'll be able to retire faster than all your friends. And the second reason was the sales skills. Yeah, like, I don't care if you want to do sales as a profession. I don't care if you want to be a doctor, a lawyer, an accountant, a business owner. Sales will make you better in any field you go into. If you want to be a husband, you'll be a better husband. If you want to be a father someday, you'll be a better father. So my dad sold me on going out and knocking doors. So that's what happened after I graduated high school.
- [10:32]
Joe Jensen
That's cool. And I want to point out something people think like, oh, some people listening. A lot of people in this world, you know, in our realm have done sales and they understand, like, the power of it. But those who have never done it, they might be like, why would his dad say, like, the most important skill is learning to sell? Like, who cares, you know? But it's funny because I feel like there's levels of sales, and it's like if you get in sometimes that like, base level is kind of maybe almost a little ugly. Like, there's the guys who kind of lie and manipulate, and it's like they can kind of like weasel their way into getting some sales. And that's not what he's saying is important to learn. That's the base level, like kind of the ugly side of sales. But once you actually get good and you know what you're doing, you find a problem and you find a solution that is a win win that the customer needs something. You figure out the best way to fix that problem, and you find the best way to deliver that from what you can provide. And that's where value is in all business, right? Is providing, you know, solutions to problems. You know, the bigger the problem, the, the bigger the solution and the bigger the payday. And, and that's, you know, that's really what, like the higher level sales does, is really understanding someone, seeing truly where they're at, meeting them as a person and delivering what they need to make their life better. And when people can hit that higher level, like, that's what your dad's talking about. Whereas, like, you need to go learn sales. No. Plus all the work ethic and just interpersonal skills, being able to communicate, like, all of that plays in. So anyway, I've just seen the ugly side of sales and the awesome side, and it's so cool when people can get those, you know, clear. And I think some of the very, very best guys I know, they're so clear on that. And they're the most honest. Like, to be the top tier, you just gotta be, like, either really sketchy or really, really honest. And those who are honest will probably have a little higher lifespan, but there's still some sketchy ones out there too. So you gotta be smart.
- [12:35]
Gage Heward
Oh, for sure. I. I think like we were saying about how the media portrays the rich, I think, like, society view salespeople is slimy, shady. Like, the salesman will say anything to get the deal. Tony Robbins says, like, sales is service. And, like, I feel like so many people view sales in a bad light because most. Most salespeople just, like, anything, are amateur and, like, very novice. And the thing about sales is you get paid per deal. And so if you're novice and you're not really good and you're not like, committed to putting in the work, to learning and mastering the skill, you're gonna do whatever to get.
- [13:15]
Joe Jensen
You're gonna cut corners, you're gonna. It's the same thing in all of life. Like you said, you're like, most people are good. So most rich people are good. If most people are good, the most salespeople are gonna be good. But there's also trashy people who are poor, trashy people who are rich, trashy people who do sales. Like, there's gonn all of that.
- [13:34]
Gage Heward
And I will. I'll say too. Like, my first summer, dude, I got more doors slammed in my face, more people calling the cops, more people yelling at me than all of the other years combined. And it's because I was a novice. I, like, my cousin would tell me, go knock the door and don't leave the porch until they tell you no three times. And sometimes, like, someone would come out and immediately be like, like, no, I'm not interested. I'm like, okay, that's one. You know, and so I, like, I was terrible at reading people, didn't know how to communicate. And, like, by. By the third time, they're like, are you, like, deaf? Like, I told you? No. I'm like, okay, that's the third one. And I'm like, why am I about to cry? And so, like, as I've gotten better, I've been able to, like, yeah, like, my skills have gotten better. I'm way better at reading people. And it just really helps me only try. Like, I only try to sell people that are interested, that can truly benefit from the product and it's so much more fun and enjoyable to sell when you're actually good at it.
- [14:41]
Joe Jensen
Yeah, I love that, man. No, that's super poignant. Like you said in the beginning, you don't know. And so you have to like, figure out how to read people. And there's so much benefit that comes from that. Anyway, we could talk about sales forever. And it's interesting though, and it's, it's really good foundation because that's kind of what's given you the ability to invest the way you have in, in real estate, you know, because you're at like 23 doors. I'd love to hear about what kind of strategy you've used because you're not a full time real estate investor. You know, you're building your, your sales groups and you're managing teams and guys and selling yourself and, you know, it's, it's a lot of work and effort. So what has been your strategy with real estate? How have you scaled to what you have done? And then I want to get into the story of your very, very first deal.
- [15:32]
Gage Heward
Yeah, no, that's a great question. And I really go back to like the principle proximity is power. Because if I wasn't at the company I was at, like, lucky for me, I was at a company where there was this guy named Chandler Smith and Brody's friends with him, but Chandler Smith was at the same company I was at, and he was making like a million dollars in a summer from, you know, selling training and recruiting teams and then using all of his active earned income and funneling all of it into real estate investing. And he, he started a YouTube channel and then eventually started a course that I ended up purchasing. And so I didn't know much about real estate, but I started like listening to bigger pockets and just like Interview Chandler, watch YouTube videos. I started to like, get in proximity with people that had done it because so many people get caught up in the how to do stuff. And I did too. But I'm like, if I could just go learn from someone that's done it, I could figure out the blueprint of how to go do it. So I learned mostly, I'd say, from Chandler Smith. And his approach was try to find, try to find deals that had good cash on cash return. So he, he runs his numbers very conservatively and he tries to make sure that he finds a 10 cash on cash return, otherwise he doesn't buy the deal. And in today's market, that's, that's really hard to do.
- [17:02]
Joe Jensen
Like a little easier when he was.
- [17:04]
Gage Heward
Scaling, but you know that the 2010s to the 2021ish era was wild. Right.
- [17:12]
Joe Jensen
Good decade there.
- [17:13]
Gage Heward
So yeah, that was like my original thing is like buy and hold, buy and hold long term, maybe add a little bit of value, but mostly just like buy as is. Yeah, that's cool.
- [17:29]
Joe Jensen
So where have you bought most your properties at?
- [17:32]
Gage Heward
Yeah, mostly Utah. I live in Utah, I know the market pretty well. So yeah, mostly Utah. And then I have a couple out of state like Florida, Oklahoma, Tennessee and North Carolina. So I, I try to just buy in markets where people are moving to not out of and preferably like most of them are, you know, red, red states.
- [18:01]
Joe Jensen
So how are you finding these out of state deals? Like are you doing like you have any programs you work with or people like that are managing and running it to make it more passive and turnkey for you?
- [18:12]
Gage Heward
Yeah, so right now, so my men, one of my mentors was told me like I shouldn't hire a property manager until I have 10 doors.
- [18:22]
Joe Jensen
Okay.
- [18:22]
Gage Heward
So up until after 10 doors, like I was managing everything myself. And I'm really glad that I did because I learned all the skills of managing because like you, you don't even if you just buy a property and immediately have a manager, you don't even know if they're doing a good job or not.
- [18:38]
Joe Jensen
Like you don't even know what it.
- [18:40]
Gage Heward
Entails, you know it's happening. Yeah. So yeah, so I, I right now with all my units, like they're all are managed and I'm pretty passive. I mean I'm still managing the manager, but yeah. So I guess how I got into out of state is I had another friend who worked at the same company I was at and he was buying properties in Wilmington, North Carolina. And so his wife was an agent. He had 150 units himself.
- [19:13]
Joe Jensen
Was he living out there or did he just have a connection?
- [19:16]
Gage Heward
Yeah, he was living out there. So that was his home base. And so he just was showing me the rent to value ratios and all of that stuff and it was pretty cool. And he had his management company and everything. So I just started buying a couple out there. So that's how I got into the out of state world. And then once I got comfortable with that, I had some other friends who had some properties in Oklahoma City and then some in Florida. And so I just started buying with the people that I knew.
- [19:48]
Joe Jensen
People had like trusted property managers that you could just kind of tap in and duplicate.
- [19:52]
Gage Heward
Exactly, yeah. Plug into.
- [19:54]
Joe Jensen
I love that. I always tell People, people ask me because I do the same thing virtually a lot of out of state investing and people are like, well, how do you, how do you pick a market? Like, how do I choose what's out there? And it's like I always tell them where you have connection is more important than finding the perfect market with the perfect numbers. Like if you have zero connection, then yeah, like you might as well dial in the perfect market with the best price to rent ratios and the best appreciation and the best whatever, you know, landlord laws and all that. But for most people it's like, well, go, go where you have a connection. Go where you have some sort of on the ground leverage, you know, where there's a proven track record like you did. And it's like that makes it way easier than trying to have zero connection. Zero knowledge of the so called perfect market, which doesn't exist because they all have their pros and cons, you know. No, you just went where people were doing it that you knew.
- [20:47]
Gage Heward
Yeah, no, it's, it's huge because I feel like just trust is really important, especially at the beginning. And if you trust someone like that really helps take the risk off a little bit, you know, not all, not all the way, but a little bit. And so no, I, I'm like, no, proximity is power, right? Like if you have proximity with people that have properties in other states, like it's way easier to pull the trigger and feel confident on the market, on your numbers before you, you send it so well.
- [21:18]
Joe Jensen
And there's such a lot like a feeling of abundance with, with real estate for some reason. Like I feel like everybody's just like wanting to help each other, you know what I mean? And it's like you have an investor in like your buddy in you know, North Carolina or Oklahoma, it's like they're not going to buy all the houses, you know what I mean? So you coming in and buying one or two or three, like they don't care. It's like law of abundance, like the more the merrier. They're not gonna be like, oh well, if you buy one, then I don't get one.
- [21:44]
Gage Heward
You know what I mean?
- [21:44]
Joe Jensen
It's just not like it.
- [21:46]
Gage Heward
Yeah. And, and like the more the demand, the higher the prices go anyway. Right. So supply, demand, you know.
- [21:53]
Joe Jensen
Yeah, exactly. And then if they're doing property management, then they're like stoked that you're buying a couple because now, you know, they make a few bucks off that. So it's just like very mutually beneficial to everyone involved. Um, which is one of the cool things I've found with real estate is if it's done right, just like we were saying with sales, like, if it's done right, it's just a win, win, win. Like, when things are done wrong, that there's, like, a loser. You know what I mean? You mentioned the book the 7 Habits of Highly Effective People by Stephen Covey, and that's one of his main principles, is. Is win, win. Like, think, win, win. And it's like, if someone has to lose, like, that's fun. In sports, like, that's awesome. In a basketball game, like, we like winners, we like losers. It's exciting, you know? But in business and in life, like, there shouldn't be losers. That means you're doing something wrong.
- [22:44]
Gage Heward
For sure. I agree, dude, that's awesome.
- [22:48]
Joe Jensen
So let's go to your very first deal, though. So you get in. Your dad, I love how you mentioned, you know, he was successful. You grew up around successful people. You're exposed to that world, but you never really got to enjoy it. They made you work for everything, which is such a perfect balance. Because the person who's given everything, obviously, they never develop that, like, backbone and skill to be successful. But also the person this goes into. Your whole concept of proximity is power. You know, the person who's never been exposed to it and doesn't know anybody who's ever been successful, that's hard for them to, like, comprehend it. Yeah. When you've seen it, even if you weren't the one doing it, but you've seen it, you know it's there. You know, that's the goal. You know, it's possible. You're around it. The proximity is so much power. And then so you're exposed to it. Your dad teaches you all these skills. You start reading, studying, you go out, you start selling, making money, being successful, learning to work with people. When does real estate come in? You know, obviously you talked about how David Chandler Smith was killing it and studying that, but what was the first deal? Like, when did you actually pull the trigger and what did that look like?
- [24:01]
Gage Heward
Yeah, great question, because, yeah, I mean, once I started making some money in sales, like, there's so many different things you can invest in, right? Like cryptocurrency. There's stocks, there's real estate.
- [24:12]
Joe Jensen
Oh, my gosh. Crypto. Dude, I just got to share this. I, like, I've never been in the crypto thing. I've had buddies throughout the years tell me to get into it. My buddy's like, get back into It, I'm like, okay, I find my coinbase login, I get back in. I had bought $500 worth of Bitcoin in 2016 when it was $300. I'd be worth like multiple six figures right now. But I, I sold it all like right after I bought it. Cause I was like, I don't know what I'm doing. Like, I just found this out yesterday. It's like if I had just not sold that, it'd be worth like over 100k right now.
- [24:47]
Gage Heward
Yeah, bitcoin's gone crazy for sure.
- [24:49]
Joe Jensen
Whoopsie. Anyway, I'm sure we all have stories like that with real estate too. Anybody ever, oh, we should have bought back in the day, you know, but shouldn't have sold. Yeah, yeah, exactly.
- [25:00]
Gage Heward
Yeah. No, there's so many things to invest in. And, and my, my friend Casey Boss says like there's no such thing as a good investment, only good investors. And like if you don't know what to invest in, invest in yourself, invest in your human life value, invest in yourself until you know what to invest in and what not to invest in. And so the more I did research, the more I realized like 99% of millionaires in the United States became millionaires through real estate, whether that was their own personal residence or rental properties or investments in real estate. And so like, the more I studied real estate, the more I liked it. Like with, with the cash flow, the principal pay down, the tax benefits, you know, like all of the things that, and depreciation, like all the things just made so much sense.
- [25:52]
Joe Jensen
Yeah.
- [25:52]
Gage Heward
So yeah, I mean what happened was the thing about being self employed and having 1099 income, you need two years of tax returns to qualify for property. So I actually ended up selling for three summers before I could qualify on a property. But yeah, so my first deal, my first deal.
- [26:17]
Joe Jensen
I just want to interrupt real quick just for the listeners. So to get a traditional, you know, conventional loan, you know, that's true, the whole two year thing. But just for listeners listening, just so people don't feel limited, there's other ways to get loans. There's DSCR loans, you can get commercial loans, investment loans, and you bank statement loans. Like there's a dozen kinds of ways to finance this for any of the first year sales reps or anybody who's not in sales, whatever. Like there's ways to do it right away. You don't have to wait three years till you're in there. Like Gage did obviously work that right for you. But I just want people to not think like, oh, I have to wait. Like, there are so many ways to do it.
- [26:57]
Gage Heward
Yeah.
- [26:57]
Joe Jensen
But most people don't realize that. And they. They are told by a traditional lender, hey, you need two years. And so they just sit back and wait. Which, as you've seen in real estate and any other investment, like, waiting is expensive because things go up in value. So, anyway, but go on, you know, not saying you did anything wrong, just pointing out that's a great point. And honestly, be creative.
- [27:21]
Gage Heward
Yeah, that's awesome that this podcast is out there. So people don't, you know, can learn from my mistakes. Because, yeah, I wish I would have bought in sooner. And, yeah, like, not only are there other traditional financing ways, but there's creative finance. You could do seller finance. Like, there's so many options that I just didn't even know about. Right. And so. But yeah, so my first deal, I literally, I was just scouring the, you know, the Marketplace, UtahRealEstate.com or Zillow or whatever, and this duplex popped up in Provo right next to college. And my professor told me that, like, buying next to college towns was good because you could rent by the room and all that stuff.
- [28:04]
Joe Jensen
Yeah.
- [28:05]
Gage Heward
And so anyway, I. I saw this duplex, and what caught my eye is the price was lower than most of the duplexes I'd seen, and it was already rented, and rents were higher than what my payment would be.
- [28:20]
Joe Jensen
You're like, let's go.
- [28:23]
Gage Heward
Phantom cash flow. Right. And so here's when I. When I was running the numbers, I. I hadn't even, like, taken Chandler's course. I barely just got, like, started and learning about real estate. But when I was doing the numbers, I. I remember the purchase price was like 325k, and I would have to put, like 70 to 80k down. And my payment was going to be $1500 a month, and it was rented for $2300 a month. And I'm like, I have $800 to spare every month, like, for expenses. And I'll make the tenants pay utilities, because they already were. I'm like, I don't. I think this could be a good deal. You know, Like, I really didn't know how to analyze the numbers. And the thing is, with that property, it was literally a couple blocks south of BYU, and it was built in 1911, so it was like an old, old, old eyesore. Right.
- [29:26]
Joe Jensen
Yeah.
- [29:27]
Gage Heward
And funny story, so I'm working with this realtor who. That's a cool thing, too. I was working with A realtor who had investment properties herself, so that was helpful, but she still didn't know exactly, like, how to, like, what to run the numbers for vacancy or for, you know, capex expenditures, maintenance, like, all the things that go into it. But anyway, I ended up pulling the trigger. And the first month of owning the property, I text both tenants. I'm like, hey, I'm a new owner. Like, send me. Send me rent through Venmo. Here's my Venmo. And one. One side pays me, like, the same day that rent's doing, but the other side just ghosts me. And I call them, no answer. And then I end up driving to the property and knock on the door. And what I realized when I am, like, pulling up to this house, there was just so much junk in the driveway. I'm like, this isn't looking good. So I go knock on the door. No one answers. I punch in the keypad code, and literally they had moved in the middle of their lease and left the unit completely in shambles. Like, electricity had been turned off, and there was, like rotting food in the fridge, diapers everywhere, stained carpet. They had cat hair, smelled like urine. Like, it was terrible. And I had just bought the property, like, closed on it a week, week and a half ago. And I'm like, of course this is happening on my first deal. Like, what did I just buy? You know? And I had invested more money than I ever had in my life into this thing. And so I was like, holy crap. And so I called my friend who had some properties, and I'm like, dude, what? I just walked into this, like, what do I do? And so he just basically said, yeah, clean everything out and then hire some people to repaint and redo the floors and re rent it. And so hired some company to come clean out all their crappy furniture, clean the place, hired painters, and got some new flooring in there and then rented it. And it's funny because I didn't know that there was a way to screen tenants back then. Like, my smart move, right? Or like, I didn't verify income. I did no background credit checks and. But anyway, look, I lucked out because they were. They were a good tenant. Sometimes they had their church pay rent because they were behind, but once I got it rented, it started cash flowing pretty consistently. So that was my first deal.
- [32:15]
Joe Jensen
So it sounds like the numbers actually did work, even though you didn't know how to run them. You're going like, there's enough of a spread here. Like, what I don't know is Going to be okay somehow. Yeah. Which is awesome because a lot of times, like you said, the, the phantom cash flow people go, hey, my mortgage is 1500 and it rents for 1600. I'm good to go. Right. And that one or two hundred dollars with that kind of math doesn't work, you know, because you've got expenses and like say capex, the big ticket items. You're just gonna have so many things, you know, for sure.
- [32:49]
Gage Heward
Especially like the older the property is, the more maintenance problems are going to happen. Right. And so that's what I learned the hard way. Because, like, yes, since it was built in 1911, it had electrical stuff that we had to fix that was expensive, plumbing issues. And so like, like Chandler says to try to buy things that are like they were the 1970, just to avoid some of those, like, major things. But yeah, still buy a great property that's older than that. But just know what you're getting into.
- [33:20]
Joe Jensen
You just got to run your numbers tighter. On my asset analyze. When I run my numbers, I used to do like a 10% for maintenance reserves. Right. Just 10% for cash, capex for like the big ticket and then another 10 for just maintenance stuff.
- [33:37]
Gage Heward
Yeah.
- [33:38]
Joe Jensen
But now what? I've shifted that. If it's newer, I'll maybe do a 5%, but then as it gets older, I might do 15 or 20%. Like if it's a night, if it's a hundred years old, like, you need to have a high reserve, like hundreds and hundreds of dollars every month set aside. Because stuff's gonna happen. Like, it just is going to. But if you run the numbers that way and you know there's going to be huge vacancies and you know there's going to be high repairs and you know, that's the thing. And you've ran your numbers that way and it's still cash flows with the return you want. It's like, okay, it'll be a bit of a headache, but it can be worth it. But if you run it on a 5% or no reserves and think it's like a new home, you're. You're going to get destroyed.
- [34:20]
Gage Heward
Yeah, you're in for it for sure. Yeah. Like the property, I tried, like it was carpeted and I tried to put like LVP4ing to make sure there were no stains, you know, and it's just better. But like the freaking cement or whatever, the foundation was cracked and it was like a gap like that much like a couple inches in the middle of the living room.
- [34:42]
Joe Jensen
Oh, God.
- [34:43]
Gage Heward
You can't do that. Like, you have to carpet it. And we'll try and, like, put something down to make it seem more flat and so. And then there was, like, a tree, like, the house was right here. There was, like, a big, thick tree that had been cut down where the roots were, had been growing underneath that.
- [34:59]
Joe Jensen
House, digging into the home.
- [35:00]
Gage Heward
It had so many problems. I ended up selling it actually, like, two years, two or three years after I bought it, and luckily the markets had gone up like crazy and bought it. I mean, sold it for a little bit more than I bought it for. So.
- [35:14]
Joe Jensen
Yeah, that's awesome. And that's something that's nice about real estate, especially, you know, the previous decade or so is pretty forgiving. You know, you can make a lot of mistakes. I don't know if it's as forgiving right now as it would then. Yeah, we'll see what happens over the next three years. But. But back then, it definitely was more forgiving, but. But also, there's a lot more information out there now. I think it's easier to. To be on top of it and to make sure that you. You do cover your bases, make sure that you have the margins you need and everything like that. So that didn't scare you off, though, and it's cool. It looks like it worked out. You ended up buying it. You learned a little bit of some of the headaches that come with, you know, tenants not responding and trash in the place and stuff like that. What do you do to screen tenants now? Or do you even. I mean, I guess you have property management for everything now, but. But what if you give to a newbie who's like, wait, I don't screen my tenants? What should I be doing?
- [36:08]
Gage Heward
Yes, screen your tenants. It's so easy to do, and it will save yourself so much time and headache later in the future.
- [36:16]
Joe Jensen
But how do you do it? What does that mean?
- [36:17]
Gage Heward
Yeah, so what I personally do is I literally have, like, Zillow's rent application. I send them, which just basically basic info, like their job information, like basic assets, liability stuff, if they have pets, why they're moving from the previous place. I think, yeah, it's Zillow, so you can get it for free online. So I do that. And then if that looks good, if, like, everything checks out, like, meaning I try to look for, I make sure that their income's three times more than whatever rent is. I make sure that's, like, the big thing I look for. And then, yeah, probably that. And, like, job history. Like, how Long they've been working with the company. Sometimes I verify like their income if I don't think it's actually accurate or whatever. So I do that and then if that looks good, then I'll have them. Mysmartmove.com is what I've used Graham Stephan Shout out on his channel. He talked about that and I've used it ever since. But basically, my smart move, you can send them a background credit check where they pay for it, and it's like $43. You can say I pay for it or the tenant. And then you get their email and you send it to them, they pay for it, and then it runs an automatic background credit check. And then we'll send you back. And then it even gives you like a tenant score. And the higher the score is, the better the tenant. And they'll even tell you if they recommend approving the tenant or denying the tenant based on that. And they even tell you if their income is actually accurate with the data they have in their system. So pretty cool.
- [38:02]
Joe Jensen
Now it's free. Like, I have like a software called Rent Ready that can do a lot of that stuff and it's pretty cheap. 150 bucks for not even that much for the whole year, but like, for, like, say, for people listening right now. Like, my smart move that I use that forever. Like, it's, it's a free, easy resource. I referenced most of my students to go use that great plug there because yeah, you can do a full background check, income check, credit check, all of that. And it looks really professional too. You know what I mean? Like, they're like, oh, this is like legit. And so like, you're just going to kind of weed out the. A lot of people that might not be a good fit.
- [38:41]
Gage Heward
So yeah, because like the first, the first couple properties that I bought where I wasn't using that and didn't have like a system to screen tenants, there were issues for sure. Like, way more people were late, smoking was a problem where it was clearly in the lease that they wouldn't be smoking. And like, yeah, you just avoid a lot of headache. Like, I had tenants moving out in the middle of their lease. You just get, if you're not screening, like, you just get less responsible people most likely living in the house. And yeah, more issues will come.
- [39:17]
Joe Jensen
Yeah, it's honestly probably one of the biggest mistakes people make. And one of the simplest things they can do to really protect themselves is to just screen. Like, it's better to have it there vacant for a month or Two than to put the wrong tenant in which I didn't believe that. I used to be so, like nervous. Like, oh, I can't like not have rent for a month or two. Like that's going to cost me thousands of dollars. Like I got to get someone in. But. But if it's empty, at least it's not getting destroyed, right? If it's empty, at least you don't have to evict anybody. Like if it's empty, that's a lot better than having the wrong person in there smoking, destroying things, not leaving when they're supposed to like, do anyway. I agree. I've. I've been burned many times. So I like that advice if any listeners is like, screen your tenants. Screen your tenants. It's definitely worth it.
- [40:10]
Gage Heward
Yeah. And I like what you said about, yeah, like just being professional. I feel like having like a professional PDF for people to fill out, a professional background credit check, you know. And I have always like listed my properties too when I was managing them on Facebook Marketplace. That's where I got like the best, quickest people to rent. But then when they do sign the lease and everything. I really like the website Avail Co. Yeah, Avail. It's cool. Yeah, because people, sometimes people want to pay online or set up automatic payments and like it's literally free for people to set that up. So I, I like to have like as many options for tenants to make it the best experience for them living in the property.
- [41:00]
Joe Jensen
Yeah, I've heard Avail is a good one. I've never personally used it, but I've heard that one's good. Some people use Buildium, that's for a little more scaled ones. There's a couple others, like say I, I use Rent Ready now and it has all that as well that people should check out. Dude, that's super cool. So we're about running out of time. I want to get into like some of our final four questions, but before we do that, I did want to ask you speak on the power of personal development a little bit because you, you've invested quite a bit of money on personal development that you could have put into real estate, that you could have put into lifestyle that you could have just kept in savings. You know, regardless of how hard you're working, how much money you're making, that's still a lot of money to put into personal development. Why did you decide to do that? What's been the outcome for you? Like, do you feel like it's been worth it? And then also like, how did you spend it? Like, what type of things were you putting that money into when you say personal development?
- [42:02]
Gage Heward
Great question. And my, I've kind of learned this a lot, like more recently. So I, I heard this quote that said, like, the best investment in the world is real estate, but the best real estate is in between your ears. And so I think like the biggest asset you really have in your life is you, right? And the more you can level up, the more skills you learn, the more value you're going to be able to provide the marketplace and the more dollars that are going to come to you and the more dollars you make. Like Dave Ramsey says this, he says your number one wealth building tool is your income. Like the more money you can make from your job, from your income, from your business, the more money you will have to invest in real estate and other things. And so that's like what really sparked it. And I was talking to my friend, I took my friend Jimmy Rex to lunch and he said, like, because he was like, really good at networking. And I'm like, how do you network with such high caliber people? And he says, gage, at first you have to pay to be in the room. You have to pay to be in the room because you have to show them you're serious one. But also like the most high caliber people on the planet, like, not in a bad way, but they don't need you, right? And so like, if they're, they're trying to like make their message more heard, they're trying to help more people. So yeah, they're selling something to get in the room with them, to teach the people that are most serious of how to do what they're doing better. Right? And so basically he said you have to pay for proximity. Like you have to pay to show people that you're serious, to learn more and to level up faster. Because like when people think of personal development, they think self help books, which I think the best bang for your buck in investing yourself are books. Like I really do.
- [44:06]
Joe Jensen
Yeah, for your buck, right? You spend 5 bucks, 10 bucks, $15 on Audible, and it's like you've got a wealth of knowledge for a couple bucks.
- [44:15]
Gage Heward
And it's crazy. Like, the statistic is one, like most people after they graduate high school read less than a book a year. Like in America, like most people can read, but they don't read. And it's like books are the coolest thing because someone can spend 40 years of their life or 50, or you know, 80, and learn a specialized knowledge in one area, let's say real Estate investing, and then write a book that you can read or listen to in eight hours and learn 80 years of experience.
- [44:49]
Joe Jensen
Yeah. And one thing I love about books, because we live in such a world of content, right? There's so much content. You've got a podcast, I've got a podcast. Like everybody's got a podcast. There's just the influencer post that's scrolling like there's so much information out there. And I like podcasts, I like conversations, I like stuff. But like this con, this conversation you and I are having, I think there's value in it. Hopefully it'll help some people. But we didn't like spend five years preparing this information. We're just sharing our experience for a quick hour. When you read a book, somebody's probably spent years, at least, you know, 10, 12, 18 months thinking about what's the best content I could put in here, what's the best way I could present it. Like, they've really put a lot of pressure into presenting that, at least for most books. Some books are trash, but for most of them, they put a lot into it. Not to mention, like you mentioned, the 40 years of experience leading up to the years of preparation for that specific book. So it's like in a world where your attention is your value, you know, that's the most valuable thing you have, is where you place your attention. You gotta be, you gotta curate where what you listen to and what you spend your time, you know, learning. And books, I think are underrated. I think they're more powerful than just another podcast or another thing. You know, those are good as well, but they're just, they're just different.
- [46:13]
Gage Heward
Yeah.
- [46:14]
Joe Jensen
Anyway, I just a big fan of, of good, curated, well thought out planned books that like you said, people put so much into.
- [46:21]
Gage Heward
Yeah. And I agree with you a hundred percent. Like what you tune into is who you turn into. And like, like the books you read, like pro. The basic premise of proximity is power, is you become the average of the five people you spend your time with, whether that's virtual people or people in person. Like, there's a way to get proximity with Warren Buffett through watching YouTube videos of interviews. Or you can read his book or you can go to a seminar where he's teaching or talking. Right. Or you can join his mastermind if he has one, or his, like by his course. And so like, there's so many different things, but like, I think the best investment you can make is in your yourself and it's to get proximity, whether in person or virtually with people that are doing things at a higher level. People that you, you would want to trade places with. Because like you were saying earlier, like, there's 50 million gurus out there to go learn from, right? But like, who you pick to learn from matters a lot. And I think that, like, so many people take advice from people they wouldn't want to trade places with in that area. Like, you need to only take advice from people who've done it, who you would trade places with in that area. You know what I'm saying? And so for me, like, of the hundred K this last year that I've invested in myself, 85K of it went to Tony Robbins, because why Tony Robbins out of all the people in the world? Because, dude, the guy has results. He's trained Steph Curry, Conor McGregor, presidents of the United States, like for decades, not just like years. And he's gotten real results. Seven of the last eight US Presidents have asked him for advice and mentorship. Like, I don't know. There's nobody else, in my opinion, living on the planet that's more qualified than him. Because here's what I like about Tony. You can have mentors in every area of your life. You can have health mentors, you can have relationship mentors, spiritual mentors, business mentors. But what I love about Tony is I look up to him, like in every area of life. Like his whole life philosophy has been to learn from people doing the best in each field of life. He figures out how they do it at the highest level, copies it, and then teaches you in a five day seminar how to do it, you know?
- [49:02]
Joe Jensen
Yeah.
- [49:03]
Gage Heward
So yeah, dude, that's, that's my, that's my, that's my pitch for Tony right there.
- [49:10]
Joe Jensen
I love it, man. And I think that's super powerful. And like, say each, each, you know, like, way to expose yourself to stuff is valuable in its own way. A book will do one thing, but it won't do the same as a podcast. And podcast, one thing won't do the same as the seminar and the similar do one thing, but it's not the same as the retreat and it's not the same as the mastermind. Like, if you can expose yourself to all of it, like, do what you can where you're at, but try to get in to all of it and get in those rooms. So if people want to follow you, Gage, if they're like, dude, this kid is where I'm at. I bet there's people listening. They're like, you know, I'm not ready to drop 85,000 on Tony Robbins. But, like, and he's kind of too out of my realm or this guy's too old or this, you know, but like, maybe a young kid hearing you, like, wait, you're 26. Like, that feels so much more approachable. I want to follow you. I want to learn what you're doing. You have your podcast. How can people tap into that and follow you and. And, you know, be in your world?
- [50:07]
Gage Heward
Yeah, no, I agree with you too. Like, start where you are with what you like, do the best you can where you are with what you have. Right. And like, yeah, maybe it is just a book or a podcast at first, but, like, slowly grow outside of your comfort zone because, like Tony says, the best way you learn is full immersion. And that's why he does, like the four or five, seven day retreats. But yeah, so awesome.
- [50:33]
Joe Jensen
I love that.
- [50:34]
Gage Heward
My. Yeah, I'm most active probably on Instagram @gageheward.g a g E H E W A R D. So I'm on there mostly, but Tick tock. Same username. And YouTube. Same, same username. And then, yeah, my podcast is called Proximity is Power. I actually just had Brandon Turner shout out. Oh, nice. Which was sick. He's a. He's a dog in the real estate space. So that was fun interviewing him.
- [51:04]
Joe Jensen
That's awesome, man. Well, that's great. I'm going to bust into our final four questions. We appreciate your time, man. You're doing some awesome stuff. It's inspiring to see you doing it so young. It's really, really cool. You got a good head on your shoulders. All right, so question number one. If you could send a text message out to everybody in the world, they're going to get their phone blown up and it's from Gage. What does he have to say to me? What's going to be on that text message?
- [51:31]
Gage Heward
That is a great question, man. I. I would say this is like the first thing that comes to mind. I would say you will be the same person you are today as you are five years from now. Besides the books you read and the people you meet, be intentional with who you spend your time with, because it's either power or poison.
- [51:57]
Joe Jensen
I love that, man. I love that. All right. Book or podcast recommendation, besides anything, you know, we're associated with that you would recommend for the listeners to check out.
- [52:11]
Gage Heward
I really like the book called the One Thing.
- [52:16]
Joe Jensen
That's a good one. Classic. The One Thing. All right. Most expensive or interesting mistake you've made in real estate investing.
- [52:28]
Gage Heward
Hmm. Mistake Yeah, I would say. I bought this single family house that was kind of a monster house. It was a single family house, but it had five units in there and.
- [52:49]
Joe Jensen
Just a Frankenstein house. Yeah.
- [52:51]
Gage Heward
Yeah.
- [52:52]
Joe Jensen
And.
- [52:52]
Gage Heward
And we were renting it as a 5 Plex and the HOA was cool with it, but then the city cracked down and that was. That was expensive mistake. So. Yeah.
- [53:02]
Joe Jensen
How did you unravel that?
- [53:04]
Gage Heward
We're still doing it.
- [53:07]
Joe Jensen
Once we figure it out.
- [53:09]
Gage Heward
I'm in the middle of it right now, so.
- [53:11]
Joe Jensen
Fair enough.
- [53:13]
Gage Heward
Yeah, don't. I mean, like, some cities are way, way chill with that stuff, but, like, just make sure you know what risk you're getting into when. When doing that.
- [53:23]
Joe Jensen
Yeah. It's like, if you're gonna try to, like, do something kind of on the side, whether it's from the HOA or the city, where it's one thing to, like, do it, it's another thing to not know what your game plan is if it doesn't work out, you know, so it's like somebody trying to short term rental, but if the city cracks down on it because they don't have a permit or whatever, it's like, do you have a backup plan if policies change? Maybe you're not even doing anything illegal. But what if policies change and now it is not legal? It's like, you should have a backup plan or else you can kind of be in a tight spot. So I look forward to next time when you come on next year to hear how that one turned out.
- [53:59]
Gage Heward
Yeah, it's been fun.
- [54:01]
Joe Jensen
All right. What's one word or a short phrase to encapsulate why you love real estate so much?
- [54:11]
Gage Heward
You know, you want to be a millionaire, invest in real estate. Like, there's not a better place more proven than real estate to build wealth in America.
- [54:27]
Joe Jensen
I love it, man. That's great. Well, stoked to have you on here, stoked to follow your journey. This is my first exposure. A lot of the people we've had on I've known a little bit, but I'm super impressed with what you're doing and just the. Your approach to things. It's honestly pretty inspiring. So stoked to have you on here, and we look forward to talking to you next time.
- [54:50]
Gage Heward
Joe, thanks so much again. This has been a lot of fun. Appreciate you.
- [54:53]
Joe Jensen
Yep, this is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you you're never too young to get started.