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Real Estate Investing School Podcast
99. The Power Of Intention: Blakes ‘Victimless’ Real Estate Journey
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- [00:00]
A
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Today my guest is Blake Erickson. Now Blake has been doing some really cool stuff. He's got a six figure real estate investment portfolio. He also manages door to door sales organization that produces eight figures in reoccurring revenue each year. He achieved the goal of becoming a millionaire by the age of 24, which is pretty young for that. He is in the process of authoring a self help book called Becoming Victimless, which I love that concept. His greatest period of his life was when he served two years on, on a mission for the Church of Jesus Christ of Latter Day Saints. His greatest accomplishment is getting his wife Bri to marry him. And then they have a six month old boy named Cubby. Is it boy or girl?
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B
Boy.
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A
It is a boy. Awesome. So that's, that's a heck of a bio. That's, that's a good life right there, man. You check some boxes, you must be proud.
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B
I appreciate it.
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A
That's awesome. We're glad to have you on the show, man. I want to dive into some of this stuff. So you have a six figure real estate investing portfolio. So break that down for, for the listeners. Like what does that mean? We're talking about six figures of like red residual income. Do you manage it yourself? What, what does that mean to have a six figure real estate investing portfolio? And then we'll kind of go back and be like, how is that even possible?
- [01:29]
B
Cool, cool. Well, fired up to be here, man. Thanks for having me on.
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A
100.
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B
So six figure investing real estate investing portfolio that's in revenue and that's been created over the last two years or so. And so I was 21 years old. I, I dropped out of school. I had done a year of summer sales and I remember I would go to byu, which is just the campus near me, and I'd go and audit classes. And one day I went and sat in this big auditorium and there was this guy up top and the topic was about creating wealth. And he goes and he's like, he starts talking about how to create wealth through real estate, how to create wealth through house hacking. And it was kind of the first time in my life up to that point that I'd heard about real estate and got a grasp for like what it could do.
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A
Yeah.
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B
And I'm a big believer that it's like set the goals out there that you want to accomplish, figure out the lifestyle you want to create, figure out how you want to live, and then reverse engineer it from there. Yeah. And at this point, I, I, you know, I just came off a summer, but nothing crazy as far as financial income, but I knew I wanted an incredible lifestyle. I had a goal that I wanted to retire by 29 and be a multi millionaire by the age of 26. And so up to this point, I wasn't really sure how I was going to do it. And that day, man, just sparked like the idea. It's the real estate.
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A
So that's really cool. If you don't mind me asking, do you know what class that was that. Because everybody always poo poo on like college. Like, oh, us entrepreneurs and investors, like, you don't need college. I never use anything from college. You don't, you learn anything there. It's like. And I actually really enjoyed college. I learned a ton there. But it's cool to hear you, like, that's where you got your inspiration for real estate investing was a college. College course. But yeah, maybe. What, what class was that?
- [03:16]
B
Super unique. So a class called Entrepreneurship 101. Interesting thing about this teacher. His name's Corbin Church. He's like an icon over here in Provo. He's a volunteer, so he doesn't get paid. He's just a man that went out and was a serial entrepreneur, did a ton of real estate. And it's kind of at the point where he's just like, I want to teach it. So not your standard, like college professor, right? A little bit unique, but man, incredibly impactful.
- [03:42]
A
That's cool that, that the university offered an opportunity for him to reach out to students and connect with so many people to share that message because obviously it was very impactful to you and started that vision at a young age. You said you were 21. You started like, oh, real estate's like more powerful than I realized.
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B
Yeah.
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A
So how long did it take from like kind of catching that, that vision, getting that seed planted to actually executing on like your first deal?
- [04:12]
B
Great question. So it took me a year from that point or probably 10 months or so. And the issue that I was going through, which is now an excuse that I've realized was I needed two years of income to be able to get a loan.
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A
And I was trying to get my thoughts right.
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B
Yeah. The excuse that I had in my head, right. And so was trying to get people to co sign, didn't, et cetera. I just wasn't creative enough and I just let that be my story. So I waited the next year for my tax returns and then when that happened, I went out and, and bought My first deal.
- [04:47]
A
That's cool. And I want to just clarify the listeners. So what we're talking about there is to get a conventional loan, it, it typically does take two years of like 1099 where it's not W2. You know, when you're self employed, they want to see a couple years. Like you ever seen those like memes, like if he says he's self employed, he's unemployed. Like, like steer clear to that guy. Right? So that's kind of how lenders look at it. It's like these dating apps. Like if he's an entrepreneur, that means he doesn't have a job. That's kind of how lenders look at it until you have a couple years of solid income to prove it. But the reason you said oh, it was my excuse is as you've learned now there's other types of loans besides the normal conventional loan. You can just go get an investment loan, like a DSCR portfolio loan from a local, local lender, investment lender and, and they'll look at the deal itself as opposed to your two years of history of it working, which most people don't know, which is a huge thing for summer sales guys or any high commission entrepreneurs. A lot of people think, oh I've got to wait two or three years and then they'll make the mistake of they'll switch jobs and now they'll say now they got to wait two more years of the new job and then they switch jobs every two years. Could go to different companies and they never can make the lender happy. And I'm sorry, I'm like blabbing but I just want to mention for those listening, what you need to do is go open an LLC and work for that same LLC regardless of what entrepreneur job you're doing so that you have three, five, six years of consistent history at the same company, your personal llc, even if you move around to different companies and then you can have that history, it won't restart, but you can also just go get investment loans. So anyway, just want to like throw that in there. But so that's cool though. You, I mean it took you less than a year to go from like real estate's dope to actually pulling the trigger, which is, which is pretty quick. And that, that's super cool to hear. Tell us about your first deal.
- [06:43]
B
Yeah, I appreciate that. So from that point forward I'm sitting in that class and I'm like, I got to learn this read Rich dad, poor Dag, all the stereotypical stuff. Then I start spending like 10, 15 minutes a day on Zillow. So I remember it was like part of my morning routine. I'd wake up, hit 15, 20 minutes of Zillow, get to know the market, understand what purchase prices are going for. Orem Provo, just kind of the county I was in and just got super familiar with it. And then when the time came around, I filed my taxes early, found a deal. It was an Orem I was looking for. It was right around the time that I was getting married. So I was looking for a deal that I could do a separate entrance and so my wife could live in. My wife and I could live in one entrance, rent out the other entrance. So we found a six bedroom, two bath and Orem. Separate entrance, two kitchens, completely separate units. And that's we ended up pulling the trigger on. We did three and a half down. I think we bought it for 590,000. So a little bit more of an expensive first buy. But we house hacked that for.
- [08:00]
A
Eight.
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B
Months and then we then went and found another property in Provo that we went and house hacked as well. And we did a conventional loan on that second one and we just did our third one here in the last week or so. So yeah, I've enjoyed the Utah market, getting to know it well.
- [08:21]
A
Yeah, and it's so cool because you know, you mentioned, you said it was what, 509 or 590? Yeah. So 590,000 people are like, whoa, you know, I mean, more and more. That's actually not sounding that expensive, which is so crazy to me. But you know, you did three and a half percent down, you did an FHA loan, you know, so not counting closing costs, which there's going to be that, you know, that's only like 20 grand down to control and own a half a million dollar asset. You're able to do that with, you know, $30,000 all in, probably, you know, closing costs and all that. $30,000 like you know, for, for those that are in the summer sales world, like that's like an average first year guy who just like actually stays out and does the work. Can make $30,000, you know, and it's like you could go home and buy a 30, a half a million dollar asset that you control and have half of its mortgage, if not even more covered by renting out a portion of it. Yeah, you know, like that's so powerful. And I think it's funny because it's like, that's so simple and I think it kind of gets like, oh, I Want to do something cool? It's like, no, start with that, do that, do that every year. And then you guys did it again. So it's like your next loan was another house hack. What did you do? Did you do 5% down the next time or.
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B
We did 10% down because it wasn't within the 12 months. Oh, okay.
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A
So you did it like a secondary home.
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B
Yeah. This one was incredible though. The we found it in Provo. Usually it's like the upstairs is kind of the luxury and most people stay up top. It has most of the bedrooms and then the downstairs usually has less. This one had three bedrooms up, had four bedrooms down. And then we converted one of the living rooms at two living rooms. We converted a living room to an extra bedroom. Cool. And so, and then we did a buy down on it. So it was a 2:1 buy down. And with what we were getting from the base, my wife and I lived at Pop for 700 bucks, so great deal, man. Got us some extra space for our own personal needs. But Also we have six, six, seven tenants down there and been paying 75% of our expenses, so.
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A
So you set up a student housing.
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B
Yeah, that's right. And that's, that's, that's all we've done as far as what we've house hacked. It's been all students.
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A
That's cool. So you're buying these near universities and you're renting it out to students per room. Do you put more than one person in a room or do you have like, like two to a room, one.
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B
To a room that aren't familiar with Provo or Utah. There's BYU and UU. So there's 75,000 students within like 15 miles.
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A
And so not even that many miles. Like it's so concentrated.
- [11:04]
B
Very, very little vacancy. And there is some specific rules within the county where it's like, hey, in Provo you can't have this many occupants in order to have more than this many occupants. We try to abide by those as much as we can while getting creative. But a lot of These bedrooms will do 600 a bedroom. And then if we need to get creative, we'll just do, we'll split one of those bedrooms and do a shared room for like 425 while trying to make sure we don't have a ton of people in there. So the parking in the street isn't overfilling and neighbors are getting upset. So there's a little bit of.
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A
I love that. That's what I was going to say for Everybody listening that wants to do any sort of pad split or student housing or something. It's the three Ps. I say parking, potties and parties, right? So if you have the correct parking, you'll keep the city happy, you know, as long as there's not like cars all over. And it'll keep the neighbors happy. Same thing with parties, right? If you're not having parties, it'll keep the neighbors happy and keep the city happy. And then the potties and as long as there's enough bathrooms and like people living there are actually comfortable, then it's going to be a good experience for your tenants and for you. And as long as everybody's happy, the neighbors, the city and the tenants. Even if maybe you're not following every city guideline, perfect. No one's going to know and no one's going to care if everybody's happy. It's only when there's a complaint that it's like, oh, you don't have enough parking spots or you have one too many tenants there, or it's only when there's issues that, that any of those rules matter. And so as long as you can keep everybody happy, then it's like you can, you can, you can't do what you want. You know, not trying to say 100. Legally you might have to shift things if things go south. But you know, that's kind of the goal is to keep everybody happy because that's what the point of the rules are anyway, you know. But that's cool. So you've been doing student housing. So let me ask you this then, because I always get asked this, Right. Well, what about the off season? Right. What about summer? How do you deal with vacancies when, when there's no school?
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B
Yeah. So we set up initially a 12 month agreement. So we don't do an 8 month agreement. We don't do a semester agreement. We set up a 12 month agreement. So if they want to get out during the summer or they're not going to be there in the summer, they would either have to sublease or transfer their agreement over to someone else and someone else would come in and then incur that agreement. And so that's how we've set that up to avoid that. Because we know that that's a potential risk and we want to avoid that and mitigate that as much as we can. Because if four months of the year rents go down significantly or vacancy goes up, that, that will almost shoot your entire cash flow with how the current market is.
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A
Yeah. So Explain that though. If, is that, is that kind of working? Are people honoring it or do students come summer they're like, well I got a role and they just stop paying and leave anyway. Or do they actually honor that and that works?
- [14:05]
B
I haven't had an issue with it. And when I was single and I was living in Provo, I actually did the same thing myself. And so it's becoming actually pretty standard because I think majority of people that own these properties and Orem and Provo are investors and they do, they do recognize that. So it's becoming a norm.
- [14:22]
A
No, and I remember that. I mean I've been graduated from college for like 14 years or something and I went to BYU there in Provo and I remember when I was going to school it was the same thing and I remember it drove me nuts. Like wait, why is am I signing a 12 month lease when I don't even have school for half that? You know, but that's how it was and so it's super normalized. So I think like the tenants just expect that and they just know it's just something they have to live with and figure out. And I guess if you vet out your tenants good, then they're going to honor it.
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B
So yeah, we've been fortunate to have a bunch of friends or reps or people I work with and, and that there's some, there's some danger to that. But as of right now, it's gone extremely smooth. And that's, that's been beneficial.
- [15:07]
A
Yeah, it's. Let's actually dig into that a little bit because I was going to ask you what your vetting process is for your tenants, but it sounds like, you know, obviously you run a sales team, so you've got connections with, you know, students and salesmen and you've had connections in the area. Has that been the way you feel that is through these connections or do you have strangers just apply or what's been your vetting process in your finding process?
- [15:32]
B
Yeah, so every time we'll. So for example, we got in a deal, we're going through due diligence with the deal last week, so we have three weeks till it closes. Not sure if this is legal or not, but as soon as we get, as soon as we get the deal under contract, we're throwing it up on ksl, we're throwing it up on Facebook Marketplace, we're throwing it up on kind of all the platforms to get as much time out in the market as possible to get that filled. And in the meantime, I'll leverage my personal, personal connections, whether through work, whether through relationships, family, friends, whatnot. And that will be my first priority. And so we'll take everyone that we can get from that. Oftentimes that's sufficient enough. And if that doesn't work through, then we opt to the Facebook marketplace leads the KSL leads the strangers, I guess you could say. And we just do a small vetting process. It should probably be more thorough. But hey, what are you doing for work? What's like your current income? What's your credit score? You know, do you have specific needs? Dog, cats? No. Okay, great. And then we, we move forward hoping that the information, credit and they don't have any weird needs. We move forward in that direction.
- [16:47]
A
Yeah, no, that's cool. And, and I don't know exactly what your contracts look like, but there are forms. I would encourage everybody to put this in their forms when they do get it under contract. That will give you the right to repost it right away. A lot of like wholesalers will use these forms because it gives them right to even list it and find a buyer, you know, while they're, they're, while it's under contract. But I'm a huge fan of that. I mean, I've even told you people, you know, you could even do a kind of like a ghost listing even before you have it under contract. Yeah, it's a really good way to test the market to see where you're at. And you know, and if you want to do it like super up to par, like say there's forms you can just throw in to the, the purchase contract when they sign it so that you do have the right to, to list it, post it, find people. You know, even then you maybe have a 30 day close now you've got a month of, of vetting it out and if things are just really south and it's like you can even back out because you're like, man, I'm getting like the worst response on this, you know, but if you posted a certain price also, you get overwhelmed and swamped. You're like, okay, I'll for sure be able to rent for that, probably more, or vice versa. It's like, man, we're getting crickets. You lower it, you know, okay, so that's where the price point's really at now. You know, you're about to the end of your due diligence period. You run those tighter numbers based on what you can actually vouch for now. And it's like, you know, you always want to run your Numbers, worst case scenario, and that'll just kind of make it a little more accurate. So I love that you do that. I always tell my students it's never too early to, to post a property. Like, like you want to get that as soon as possible because you can always tell people no and the deal fell through or you're not ready or whatever, that's okay. But if you don't have anybody to tell no to that, that's even worse. So I love that you do that early. So. So you, you've done three properties, is that right?
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B
So I've done three in Utah and then I've done a handful out in the Midwest and then a couple Airbnbs out in Idaho.
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A
Okay, well, let's dig into that a little bit. So these Midwest ones, a lot of people are interested, how do I invest out of state? You know, it's hard to cash flow in, you know, these Utah, Idaho, California states a lot of times. So a lot of people are interested in going, you know, out of state. How did you do that? Did you have a team that finds these and vets these, or did you just do it on your own or what was the process for you to. And emotionally, what was it like to like, go from buying in your backyard to buying sight unseen across the country?
- [19:23]
B
Yeah, yeah. So I was fortunate to find a group a couple years back that are wholesalers and they kind of target Indianapolis, Indiana, Kentucky, a little bit of Ohio. And so they kind of got really good at these three or four markets or so. And they sent me a list one day and this was, I'm still naive at this point. I'm just, I have a little bit of money in my bank. I'm like, where do I put this? Sure. And they send me a deal. And one of my kind of rule of thumbs as far as investing in the Midwest is the 1% rule. If it doesn't, if the purchase price and the revenue per month doesn't, doesn't come out to 1%, I'm not going to look at it. So that was kind of like a little bit of my buy box out there, you could say. And he sends me a $110,000 duplex in Kentucky and it rents out for 1600 bucks a month. So I do the math, run my calculator. I'm like, cool. My mortgage is going to be 590 bucks a month and I'm cash flowing a thousand. After property management fees, I'm like 900 bucks. And I love that. Cash on cash. And that's Great, let's do it. And so I think we had like a three minute discussion. I'm like, cool, let me, you know, send me the wire information, whatever I need to do. Let's go. And it turned out well. It never goes out exactly as you expect. There's been some repairs and stuff and the tenants out in the Midwest have not been as great as my tenants in Utah. I have no problems in Utah. Out in the Midwest I do have problems. Fortunately, property management goes through and works out all the kinks through that. But there is vacancy and there is turnover. And so from there I went and did a fourplex through the same group in Indiana that was $250,000 purchase price, rents out for 3,800amonth. So my mortgage on that is 1200. And the cash flow after expense is like 2,200 bucks a month. So I love the Midwest from a cash flow standpoint. The downside of it is appreciation is not going to be that good compared to Utah. Depreciation is going to be, you know, it's just your purchase price is less. So I don't get as much advantages as far as like my tax liability, which is a big reason of why I love real estate. But the cash flow is what I love and, and I'll continue to invest because of that.
- [21:54]
A
Yeah. And that's awesome. And that's what I tell people, people all the time. I was like, well, what's a good deal? What kind of return are you looking for? And stuff like that. It's like, well, it depends on the asset. Like you nailed it. Like if I'm buying, the lower the appreciation state is, the lower the asset is. If it's kind of a crappier, more like run down area, lowering, whatever. Like the lower the class of asset and area, the much higher demand I'm going to want on my cash on cash return, like I'm going to want a ton of cash flow. I'm going to run a really high return because like I said, it's also going to have a lot of repairs and vacancies. So you got to run those numbers even tighter. And even with those tighter numbers, I'm still going to demand a really, really high return because that's all I'm getting, you know. But you buy this amazing asset that's in a booming area, I'm like, I don't give a crap about the cash flow. If it's going to double in value and be this a beautiful asset that even has intrinsic value personally, where it's Like, I could live in that if I needed to, or put my kids in it someday. Like, you know, when it has like these other factors, which is like, that's a big one of my dad's buy boxes. Like, he's like, could I use it, would I want it? You know, and then it's. It's okay to take a less of a return depending on the quality, asset quality of the area. And that's exactly what, what you described that you did in the way you view it. And it's good to be diversified. You know, when I say diversify, some people think stocks and bonds, and I say a class B, class C class appreciation, cash flow. Like, I'll buy the different assets with their different strengths. And that's how I like to be diversified within real estate.
- [23:30]
B
Love that.
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A
But that's cool. So you, you bought those. So these people, the, the group that found them, are they just wholesaling it and then, or they like doing the whole turnkey process and finding it, managing it, the whole nine yards?
- [23:44]
B
Yeah. So they were kind of everything from A to Z. So from a young investor standpoint, it was perfect. They found the property, they kind of got me set up on insurance, got me set up with the right property manager, went in and checked out the property to make sure everything checked out before pulling the trigger. So it was a pretty. It was basically an A to Z process, which was extremely beneficial and really good. Like I said when I was young and naive.
- [24:08]
A
Yeah. Was there a bit of a margin you gave up there? Like, would you still do it that way, knowing what you know now, not then, but like today? Would you do that? Or do you feel like you could vet things out differently today and not give up a margin? Or was there really not a margin you were giving up anyway?
- [24:24]
B
I think that I have the ability to find those deals on my own now. And so I prefer not to give up margin when I don't need to. And so through different platforms, different websites, different connections, real estate agents, property management, like, if I want to just go blow up in Kentucky, I would call every property manager, every real estate agent and say, hey, here's my buy box. Put me on your list. And those guys aren't wholesaling it. So I get that at the right cost and then work it from there. And so that's probably what I would do and I will continue to do moving forward rather than going through a wholesale and giving up a little bit of margin.
- [24:59]
A
Like, listen to that, guys like that advice right There is money. Like, if Anybody's like, oh, I want to buy out of state. Like, Blake just gave you the secret sauce, right? He's like, literally, reach out to five agents in that area, five property managers in that area, five, maybe five lenders in that area, say, this is what I'm doing. How can you help me? And if you can't, who would you refer me to? Like, if you do that, you're going to find a deal. And if you're in the situation, I always say, if you know exactly how much money you have to spend, okay, I've got 20,000 or 50,000 or 80,000, whatever it is, you know the exact penny, you're ready to pull the trigger tomorrow. And, and then you go ask those people, the right deal will pop up, that has the return you're wanting, and then you'll just pull the trigger. It's literally that easy. If you know exactly how much you have to spend, you know what kind of return you're wanting, and then you just reach out to the right parties. Like, it'll pop up and it might be the 10th deal that comes across your table, it might be the 50th, but when it pops up, like you said, it'll be like a three minute conversation at that point, like, yep, that's the one. Get it under contract, and then we'll do the deeper due diligence. And if everything pans through, we bought a place. Like, it doesn't need to be that complicated. Um, especially when you're buying these, you know, maybe not, you know, these properties that aren't millions of dollars, you know, there's not as much risk on them. They're easier to kind of move if you needed to get out of it. So that was kind of your next step. Then you did the house hacking stuff locally, then you reached out, you're like, cool, I want some cash flow properties out of state. And then what? Then you pivoted to doing some short term rentals as well. Up in Idaho.
- [26:36]
B
Yeah. So this one's with the group. They, they're currently in the process of building. It's up in Island Park. I've always been intrigued by Airbnb, but wasn't super well versed in it. So this group was kind of another group that was doing majority of the work. And I ran the numbers, the math turned out great. The location's great. It's kind of like on a lake. Island park's really good occupancy all throughout the year because snowmobiling in the wintertime, lake in the summertime. And just it's, it's beautiful year round. And so because that pulled the trigger on those, those are currently in the process. So.
- [27:10]
A
Okay, cool.
- [27:11]
B
Math is great. From, from the hypotheticals.
- [27:14]
A
Yeah, it all looks good right now.
- [27:16]
B
You know, once we know a little bit more.
- [27:19]
A
That's cool. That's cool. And I love what Blake's doing, you guys, is if you've noticed, you know, besides the house hack, he's basically been doing these kind of. Well, they're not necessarily partner deals, but they are. It's right. Like he finds someone that knows a little bit more about it. A local wholesaler that'll do turnkey stuff and actually vet it out, you know, not just a blank wholesaler, hey, here's a deal. Good luck. These are ones that are like, they're partnering on and I'm sure there was some sort of margin or whatever they're getting on stuff to kind of vet it out and like, so he found someone that knows a little bit more, whether that's they know more about real estate or they just know more about the market or they know more about managing that type of asset, like the short term rental. And he was like, well, I'll just start with letting them do the work. I'll learn the process. That'll kind of help protect my downside. And then once I know it, I, I can just do it on my own. But that's a lot better than sitting on the sidelines because you don't know everything, you know, and that, that's like, that's. This is like a masterclass on how to just actually pull the trigger and take action safely and wisely, you know, and that's exactly what Blake's done, which is super cool.
- [28:29]
B
There's so much leverage out there. And we were at the, I was at the real estate workshop that we did a couple weeks ago with the real estate investing school. And that was a big moment for me as well where it's like there's even more leverage out there that I'm not utilizing. And there's so many people out there that are. You can. That will work for free for you all day, every day. There's so many different automation systems, technology, processes to leverage. And so since then, even more I'm trying to be like, where else can I apply leverage to have essentially my fishing pole in the water in multiple different ponds without having to be there. And it's been fun connecting and find some really good groups. I've been able to do that 100.
- [29:10]
A
Like, and that's the thing, if you set it up right, like I said, the agents are working for free for you. They only make money if you buy it. Same thing with wholesalers. They don't make money if you buy it. The lenders only make money if you buy it. The property managers only make money if you pay rent it out. Like. Like everybody's working for free. They're all taking a piece of the pie at the end of the day. But you're not having to, like, pay everybody to do everything. So for someone who maybe is a little tight on capital or, like, money to go spend. Right. That capital, they're like, well, you can get all these pieces in line and then people. Only if it works out, are you really out anything.
- [29:45]
B
Yeah.
- [29:45]
A
Which is like, that's rare. What kind of business can you do that with? You know, most business and entrepreneurs, that's not going to be the case. You know, you're gonna have to pour a lot of time and money in before you even have any idea if it's even gonna work. You know, but real estate's unique like that. I love that. And like you said, so there's lots of leverage. Will you expound a little bit upon that? You said you're like, whoa, there's even, like, more leverage and opportunity than I realized before. What were some of your thoughts on that topic?
- [30:15]
B
So I think it goes back to, once again, the excuses and the stories we tell ourselves. So I work with a lot of guys, and some of them are like, hey, I don't have enough money for a down payment yet, or I don't have credit yet, or interest rates are too high or purchase price too high, or the market's too saturated. And the greatest part about real estate, Joe, is that there is a solution, literally, to every single one of those excuses, every single one of those stories, and a lot of it is just leverage. So for me, a lot of it's like, hey, I'm too busy. I've got a lot going on. Of course I'm going to buy real estate. But because I'm so busy, I don't have time to, like, go out and find deals or, like, vet a ton of deals, or it's just not, like, my main focus. And so walking away from that, I was just, hey, I got to get rid of this story that I'm too busy, and I got to put the right processes in place where I necessarily don't need to be trading my time to buy real estate. And so I think, for me, is leveraging the connections I already have in getting my buy box in front of them and saying, hey, if anything comes past you, here's my email. And I created a separate email just for deals and I said, please send it here. And so every morning I wake up and there's 10, 15 deals in there every day. And instead of me spending 30 minutes vetting it out, it takes three minutes to go through my emails. And there, I just saved 27 minutes of my day setting up automations through Zillow, through Redfin, etc.
- [31:45]
A
Automated updates like it'll notify you. Hey, a duplex in Ohio popped up. I don't know if everybody realizes that, guys. So hear what Blake just said. You could set up automated notifications from these tools like Zillow and Redfin realtor.com stuff and they'll tell you that's a tool.
- [32:03]
B
I don't think everybody's using the deal we just bought. I partnered with my brother on it in Utah. That was just an automated Zillow one. We caught it early and got an amazing deal for it. So it works and we didn't have to put any time into finding it. So once again, it's just back to people, processes, technology, systems, automation, everything that has to do with that. And if you recognize the opportunity out there and the leverage you have out there, you literally have no excuse to not buy real estate. If you're a person that doesn't have money, then you need to go create a network of people that have money so when you have the deal, you can go partner with them. If you're someone that doesn't have credit, you need to go find people, wholesalers, real estate people that are doing seller finance deals, that are finding seller finance deals and send those to you. So there's just, man, there's just so many resources and things out there that can just help with whatever you need help with. There's a solution for throughout, whatever.
- [33:05]
A
I agree, man. That's like one of the most exciting things about real estate to me is like say no matter what the situation, like there is a way to get something done. Like say you have no credit, you have, you know, money, you have no time, like whatever it is, like, obviously the more restrictions you have, the more creative and more time consuming and more difficult it's going to be be. But it's possible and every time you break a barrier, you're probably going to start removing some of those restrictions, you know what I mean? Eventually, you know, you'll have more money or more time, whichever, however you design your life and your investing, it'll open those up. And I liked one thing you said, Blake, you're like the leverage. You kept talking about leverage. And a lot of times in real estate investing, we're thinking about leverages and like, oh, I'm going to leverage debt. I put 5% down and the bank pays 95% of my purchase price. You know, but you were actually referring to leveraging time. You're like, I don't have the time. I'm running this huge sales team, this organization, this eight figure program. Like, I don't have time to like do all the legwork. And you're like, well, I'll leverage my property managers, I'll leverage these other people, these boots on the ground, these groups that will run an Airbnb for me. I'll leverage them and their time, since I do have the money, but I don't have the time. And so for anybody listening that doesn't have the money, go become a solution for a Blake, somebody does have the money, but doesn't have the time. You go become that solution because you have the time but not the money. And eventually it might turn around. You know what I mean? But like I said, there's always a solution if you, if you just stick to it. That's super cool, man. So. So I want to know a little bit about this deal you just did with your brother. You guys found it on Zillow. Let's dive into that a little bit. You get a notification? Yeah, let's. Let's hear it.
- [34:56]
B
So he's a stud. It's. It's totally his deal. I'm fortunate to partner on him with it, but he's been looking for a while and he's single, lives in Provo. So just house hack it and then rent the rest out to his student friends that are herebyu. This deal was an aurum. It's location wise. It's three minutes from uvu, it's five minutes from the freeway. So location checks out. We go and look at it and it was interesting. No one was looking at this deal. They had one person visit outside of us. And so during this time we go and we look at this deal and it said it had like six or seven bedrooms. And I, and I like a lot of bedrooms. Sure. Because I think you just have a ton of flexibility on what you can do. There's. They started at 649 and they had just. Price dropped down to 615. So we went and checked it out and had six bedrooms in the house. And it had a second living room. Anytime I see a second living room, I'm like, let's go. Takes a thousand bucks to dry while I create another bedroom. So I just turned that from 6 to 7, and then we go out back. And I don't know if people weren't seeing this or maybe it wasn't in the listing clear enough, but my brother and I see there's this house back there, like complete adu. It has laundry room, kitchen, bathroom, and then like a studio living room room set up. So no way.
- [36:24]
A
And that's not on the listing. That's not counted on the bedroom count?
- [36:27]
B
No, not counted. And so we're like, great. So we got seven, six bedrooms. We're turning to seven to work with here. And we have the 80 out back. Parking checks out because we got across the street, there's no house. So we got parking there. And then the driveway, there's four spots. And then we can actually create another gravel drive on the other side of the house. So parking checks out, and then it was three baths inside. So sufficient enough to go rent it out to boys that they're going to have. They're going to be cool with their bathroom space. So on top of this, we're recognizing that no one's offering them anything. And so we go in and say, hey, this deal is going to cash flow right out the gates. And on top of that, though, interest rates just took a big spike. The more we can maximize our cash flow, the better. My brother, this is first home, so he's doing three and a half down. And so he'll be in it FHA. He'll be in, like, 23,000 bucks. And we said to the person, our first offer was, we said, hey, look, we'll buy this for 625. You're offering 615, but we'll buy it for 625. We just want you to attribute a 3, 2, 1 buy down to closing. And so what that means for anyone listening is that the seller will put $29,000 of cash from the property into, like, an escrow account and then attribute 3% or buy down the interest rate 3% the first year, 2% the second year, and then 1% the third year. And so we went right out the gate from cash flowing, I think 200, and I think like 300 bucks out the gate to year one, cash flowing like 1800 bucks out the gate with. With the added bedroom and then the buy down. And then year two, it goes down to 1200. Year three goes down to 800. And then I think after that's between four to 600. So we got a little bit creative with it. They accepted the deal and we're currently in due diligence and we just been super stoked on it. Not a lot of cash in, not a lot of repairs, and really, really good cash flow opportunity.
- [38:41]
A
That's cool. I want to dive into a couple things. Okay, one, guys, we're recording this in October 2023. Like, that's. It's right now it happened and everybody's like, oh, you know, it's easy. Those deals you got in Kentucky five years ago ago, like, yeah, that was cooler. I loved having 4% interest rates on my investment loans. Like, that was really cool, you know, so everybody's like, but it's not possible now, right? You're like, no, I mean, you probably got before the buy down on the interest rate, which we're going to dive into that. What, what? The interest rate was probably what, seven, six and eight. Six, eight. Something like that.
- [39:15]
B
Quot at 75 originally. But yeah, we got it down to seven. We're working with our brother who's the real estate, Jason. So Jason's been.
- [39:25]
A
Jason Griffin from the school.
- [39:27]
B
Yeah.
- [39:27]
A
Awesome. Yeah. So. So they're starting like a 7% interest rate. Guys like, this isn't like, I mean, now they're 8%, you know, a month later. But, but, but still. But then you did the buy down. So, so then what's interesting about that, like you said, is he, you offered the seller and this is like my hack. I always tell my students do this. I love that you're doing this. You're like validating everything I ever tell people. So you're. I love it. You offer them more than the purchase price. But he said, as long as it appraises for that so that we can get the loan for that much, you're going to give us back and use that excess towards paying the interest rate down. That doesn't cost the seller a penny. It doesn't cost the seller a penny. It doesn't cost more on taxes. It doesn't cost them more on anything. All it does is make the property actually look a little better because it's sold for more. So when you got to sell it next time it's like, oh, it sold for this much. It doesn't cost the sell anything. And you're able to wrap that into the loan. What's another 20 grand in a $600,000 loan? Like, it affects your, your mortgage, like 20 bucks. It's like nothing. Right. But it lowered your interest rate through 3 points or something. I mean, huge, huge swing off of having something that cost the seller nothing. And those are like the sweet spots. Real estate, when it doesn't hurt anybody, but it helps you a ton, it's like, just get smart with it. Like, so that's super cool. And what's really vital though, because I'm not a fan of the 3, 2, 1 buy downs, right? I like, I'd like. I'm like, just lock it for 30 years. Like, I'll have a little higher if it's locked forever. That's my personal stance. But what I like about what you did, Blake, is even when it's all done and it goes all those steps back up and now it is on the normal rate, the numbers still pencil.
- [41:08]
B
Yeah.
- [41:09]
A
And that's what's vital. What's scary is when people do a 2 1, 31 buy down, they get that interest rate down. It's real low the first year, a little less the second. And then that third year, if by that third year and it goes back to normal, if the numbers don't work, but they just plan on refinancing, that's a little scary to me, which for obviously reasons because everybody was doing that a year ago and now the interest rates are even worse than that, you know. And so I like that on yours, even after the numbers run up, you're not cash on as much, but it's still a self sufficient asset that's still cash flowing and you're able to just execute right now. Which is. Which is so cool that you guys are able to do that and that. That's happening right now. You guys have it under due diligence right now then.
- [41:51]
B
Yeah, the finish line.
- [41:54]
A
So that's cool. That's super cool, guys. Deals are out there right now. It's happening anyway. We could talk about this forever. Blake, I like your style. I like how you're dabbling in a lot of different stuff. I encourage people, people to do that and see which ones they love. Maybe they love out of state. Maybe they hate it. Maybe they love in their backyard. Maybe they hate it. Maybe they like short term rentals. Maybe they hate it. Go try a bunch of different stuff. When you're first learning, you'll learn a ton. It'll be a master class in. In real estate, even if you fail. But you might find a niche that really just works for you for some reason, because you get this connection and things start falling in pieces in the in line, you know? Sweet Man. Well, I want to go to our final four questions. I want to kind of dive into that, but is there any, you know, kind of final thoughts you want to mention to the listeners? Just about kind of your. Your theory or your, you know, principles of how you approach real estate or investing or life you want to mention?
- [42:52]
B
I think the best way to learn investing is to do it. And so a lot of people are wanting. I. I coach a class, a matter of fact, last week, and there's 50 people there, and I said, how many people in here want to get into real estate? And every single hand grows, and I think that's super common. I don't know if it's like YouTube, just influencers, but everyone wants to get into real estate. And then I said, raise your hand if you've gotten into real estate. And three people raised their hand up to 50. And that's the world we live in right now. And so everybody has an excuse. Everybody has a story that's holding them back, whether it's fear or whether it's some justification logical or not. And the reality is, the day you realize that no matter what your excuse is or no matter what your logical reason is, there's a solution within real estate, however you create the deal, force the deal, make it creative, negotiate it, you can buy real estate today. We could go get a deal today. And whether you have no money, no credit, no knowledge, you can get a deal. And I recommend you just take action because that's the best way that you'll ever learn.
- [44:04]
A
Speaking my language, Blake. I think that's awesome, you guys. This is a good one. All right, we're going to dive into the final four questions we asked all of our guests here. So number one, Blake, what is a non real estate related bucket list item you've recently checked off or you're stoked to check off next?
- [44:23]
B
What I'm stoked to check off next.
- [44:27]
A
Is.
- [44:30]
B
I. I've had. I do this top 10 goal routine every day, and I've had this on my list for a while, but I want to purchase or be a fractional owner in an Adonia houseboat. So that's one that I'm currently in the process of figuring out. And is it a wise financial move? No, but it's one of those investments in just from an entertainment family lifestyle, kind of like my work relationships that. That I'm excited about. And it's always been a buck listing since I was a young age.
- [45:03]
A
That's cool, man. I love that. Yeah. Is it a hospital on Lake Powell. Is that where you're looking to have it? Yeah. That's awesome. That's. That's. Those are, like, my favorite vacations are.
- [45:12]
B
Lake Powell trips, for sure.
- [45:15]
A
I love those. And, like, say, even if those, the luxury item itself isn't a great investment. If you can get your passive income, your residual income from cash flow to cover it, at least it's. It's covered. You know what I mean? You're not working every day to pay for that thing. It's just being paid for buying real estate. Even if itself isn't that still ways to make it justifiable. I love it, dude. All right, question number two. What book are you currently into?
- [45:44]
B
I have a friend, actually. His name is Ben Hardy. He. He's out of Florida. He is. He works closely with my mission president that I started a mission with. He has become recently a top author, and so he's written books. 10x is greater than 2x. Who not how. The gap in the gain. If you guys have heard of him, currently reading his book who Not How. And once again, it goes back to that principle of leverage. And oftentimes we are thinking, like, how am I going to do this? How? How? How are we going to do that? And a lot of time it's just, you got to change the question. Just think who. And that simple concept. And that book has been a massive blessing. So it's been. It's been fun to be in the middle of reading.
- [46:26]
A
Love that one. Yeah, those are good ones. All right, so Ben Hardy, he's. He's got some good stuff. All right, question number three. This could be a book as well, but not one you're currently in. But what content could be a book, could be a podcast. You list a course you took a YouTube channel, but what's some quality content you've discovered over the past decade or so that you're like, people really should check this out. It's golden.
- [46:52]
B
So four years ago, I read a book called Think and Grow Rich. And I'll always say this, but it was like the beginning of everything for me. And the concept of the book is if you can create it in your mind, you can hold it in your hand, which is if you can think it, you can make it happen. And ever since then, that was like the start of getting clarity on what I wanted for my life. Getting clarity on what my goals were, getting clear on what wealth I wanted to create, how much money I wanted to have, when I wanted to have it. And it teaches you why you need to do it. And how you need to do it. And I would actually attribute a significant amount of my success to the principles in that book, because one day I just realized that I can have whatever I want to have, and I just got to think big enough to do it and execute on it. And ever since then, man, everything that any milestones I've been able to take, I planned out four or five years ago, and just from reading that book. So little plug for you guys. If you haven't read it, read it. It'll change your life.
- [48:05]
A
There you guys go. That's. That's a powerful one. I. I highly recommend. I'm like, this. This whole podcast, I'm, like, excited. I'm like, if anybody just took this and literally just did everything that we said to do on this podcast, like, they're going to be off to an amazing start. All right, last question that we'll get you. Let you go start taking over the world again. What would your text message to the world be? You send out a text, everybody's phone starts buzzing and beeping, and that's a message from Blake Erickson. What's it gonna say?
- [48:38]
B
Life happens for you, not to you. And it dives into the book that I'm. That I'm currently in the middle of writing. And the difference between those that are great and those that are successful and those that live a life of fulfillment and significance is they've stripped themselves of jealousy, envy, blaming, excuses, justifications, entitlement, and just recognizing everything that happens to you is a gift. And truthfully, it's happening for you, whether in the moment it's the worst thing in your life, it'll probably end up being the best thing that ever happened to you.
- [49:17]
A
There you go, you guys, I can't sum it up any better than that. If people want to fly, follow you. Blake, if they want to keep learning about this, be notified of your book. What's the best way to keep in touch with you and follow what you're doing?
- [49:28]
B
Yeah, my Instagram is the Blake Erickson, give me a follow. Would love to connect, message me, DM me, and would love to help in any way that I can.
- [49:37]
A
That's awesome. Thanks so much for sharing your. Your story, your. Your. Your. Your vision, your passion, your excitement with us, man. Thanks for being on the show.
- [49:45]
B
You're stuck. Appreciate you, Joe. Thanks for having me.
- [49:48]
A
Absolutely. This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you to be smart with the stories you tell yourself.