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- [00:00]
A
This is the Better Life podcast here with my co host. Wait. I'm Brandon Turner with my co host, Mr. Cam Cathcart. What's up, man?
- [00:07]
B
What's up? How are you doing?
- [00:08]
A
I'm doing great, man. I got my Element sparkling electrolyte drink here. This is not a sponsored show, but if Element wants to sponsor me, I would love some free drinks.
- [00:16]
B
These are expensive.
- [00:16]
A
They are. They're like four bucks a piece on Amazon. But they're so good. You had a little date with your wife this morning at the beach. That's fun.
- [00:22]
B
It was, man. It was great.
- [00:23]
A
That's great.
- [00:24]
B
I went to Big Beach. Read a book.
- [00:26]
A
You didn't go to Little beach with her?
- [00:27]
B
Got some. No, no.
- [00:29]
A
Have you ever taken Lexi to Little Beach? If you know, you know, we're not going to talk about that.
- [00:36]
B
Way to put it.
- [00:37]
A
That's fun.
- [00:38]
B
We've done the hike there, though, along the.
- [00:41]
A
Yeah, that's nice. Yeah. Stay out of the. Stay out of the beach area. Yeah. Very cool. Well, I've been on meetings with Opendoor Capital for the last six hours. So you're. I'm actually fired up. I'm fired up, actually. We got some good stuff going right now.
- [00:56]
B
Good.
- [00:56]
A
It's been a hard year. Ups and downs. Commercial real estate, for those who don't know, has gone in the toilet, especially in Texas. Especially in Austin. And I bought in Austin and in Texas, and so, you know, when Austin, Texas is down, the rents are down 30% and cap rates are double. That's really hard. That basically means that property values are worth less than half of what they were five years ago. But you know what? You only lose if you sell. So everything's a fight. How do we hang on? How do we hang on longer? And I. I think we're figuring it out.
- [01:22]
B
Good. Can I say something? I saw online the other day or. I. I don't know if it was a blog post or what. I was just talking about, like, the worst markets to buy in and the worst times to buy.
- [01:33]
A
Exhausting.
- [01:34]
B
At the exact.
- [01:36]
A
Yeah. The exact time I bought. Yes. When you look at a graph, it's just like.
- [01:39]
B
It's like you're. You're. You're Right.
- [01:40]
A
Yeah. But you know what? It's. Again, you only lose if you sell.
- [01:43]
B
You only lose if you sell.
- [01:44]
A
We gotta hang on.
- [01:45]
B
You keep. Keep going on. I mean, that's how I feel with our flipping company. It's. It is. It is the worst last five months that we've ever. I mean, we. Oh, my goodness. We've We've wholesaled a decent amount. It's just been tough.
- [01:58]
A
Yeah, tough, Tough market. But you know what? Tough makes you strong.
- [02:01]
B
Makes you strong. You keep going, you live to fight another day.
- [02:05]
A
I had a tweet the other day. I said, and maybe this kind of leads into what we're talking about today. But I. I wrote a tweet that was basically like, I'm gonna probably butcher it. But the idea was, I'm gonna wait to go to the gym until the weights are easier. I'm gonna wait to go running until the hills are flatter. I'm gonna wait to diet until the, you know, calories and the food come down. It's like, we would never say that yet. What do people say with real estate? I'm going to wait until the market's easier. I'm going to wait until prices are down. I'm going to wait until interest rates come down. It's like that famous quote, right? Don't wish it were easier, Wish you were better. So, yeah, this is, like, good. It's hard. The words of Jocko Willink. Good, good, good. Yeah, yeah, it's hard. Everyone else is scared. So we're going to learn and we're going to get stronger and we're getting better and we're going to make make waves.
- [02:49]
B
Yep. Just keep powering through.
- [02:51]
A
There you go.
- [02:52]
B
And I also think, for me, I know you've been through this before because you're way older than me, but, like, this is my first down market, and so it sucks. It does suck. It does suck, dude. Sucks that, like, I've learned so much and put so much time and effort into getting better, into, like, building out our systems and our website and our CRM and hiring and training employees. Like, we. We spent hundreds of thousands of dollars and so much time doing that and getting better, and I am making significant this year than I did my very first year in real estate when I knew nothing. That sucks. Yeah, that really sucks.
- [03:38]
A
Yeah. So. Well, I think you're doing a good job.
- [03:43]
B
Thank you.
- [03:43]
A
Keep it up.
- [03:44]
B
Thank you.
- [03:44]
A
Power through and don't commit any of the seven deadly sins of real estate investing. You like that transition?
- [03:51]
B
Yes.
- [03:51]
A
All right, everybody, we're gonna jump right into the content today. It's gonna be a little shorter show today. We hopefully won't go for an hour, hour and a half like we sometimes do. I want to jump in and just talk about some sins. The seven deadly sins. So, without further ado, let me kick this thing off. If you want to build wealth and you want to make a lot of money in life through real estate investing, then do not make any of these mistakes. We'll call them the seven deadly sins of real estate investing. We're going to go through each. 7, 1, 2, 3, 4, 5, 6, 7. And if you find this helpful, do me a favor. If you're watching this on YouTube, of course, leave a comment down below on which one you are most going to avoid. And of course, if you're just listening to us on a podcast somewhere, whoever you're listening to with give them a kiss. That's what I'm asking for, Right? This could get really weird or this could be very romantic. Depends on what car you're in right now. That said, should we jump in?
- [04:42]
B
Let's jump in.
- [04:42]
A
All right, Number one, the first sin of the seven deadly sins. That is lust seen after shiny strategies. And here's what I mean by that one. When I'm thinking about when you're jumping into real estate, everything looks good. Everything works. In fact, like, when you got into real estate, Cam, like, you chose flippy, were you tempted to do other stuff? Were you also trying to do, you know, what were you doing?
- [05:06]
B
No, I would say for us, we chose single family that we built our rental portfolio, we wholesaled and we flipped. But at that time, everything was cool and everything anybody touched at that time was making money. Where it's like, I'm listening to you. You're building a multi family portfolio. I'm like, that's amazing. I'm listening to podcasts with AJ Osborne. He's building his stor stuff. And I'm like, that's amazing. It wasn't Elephante. I'm blanking on who it was. But, like, on the Airbnb side, people were buying Airbnbs and were making crazy money.
- [05:39]
A
Yeah.
- [05:39]
B
And so, like, there was so much that I could have done and I wanted to do, but. And I've said this a hundred times on this podcast. Like, honestly, it was a pace Morby quote it. I was at a conference there. He just said, like, the hardest thing about real estate. He asked that question. He's like, what's the hardest thing? And people were given all these different answers. And he said, all of that's wrong. The hardest thing about real estate is there's too many ways to make a lot of money. And I remember that stuck with me. And I was like, okay, I'm not like, here's what I'm going to play in and I'm not going to go outside of this. And I'm not going to give up my time trying to learn something else or be great at something else, because I just want to be great here and I want to grow here. And. And that's what we did. And I have friends that did the exact opposite. We're like, oh, I'm going to flip houses. Oh, but this is a really cool opportunity. These storage facilities or RV and boat storage and flex commercials, like, they just jump from one thing to the next thing to the next thing, and they never bought a property.
- [06:39]
A
And the reason why that's so dangerous. I think a couple of things. One is like we talked about earlier, but like, real estate's hard right now. We're just talking about how, like both of us are like, it's just hard right now. And in order to make money in a hard market, you have to be good. But how do you get good at something? By doing a lot of it. And the repetitions and the work and the lessons and the learning. And so if you switch strategies every two weeks or every three months, every podcast you listen to, you never get good enough to be able to beat somebody who's all in on it.
- [07:06]
B
Yes. And I would say even like for us, we're like class A minus, class B houses in these certain zip codes. We don't go outside of that. Like, we're not buying class C houses, we're not buying luxury houses. We're buying houses typically between 200 and $300,000, and then once we rehab them, they're worth typically 300 to $450,000. And that's what we play in because we're not luxury flippers. We're also not buying and I'm not going to say the neighborhoods, but we're not buying $30,000 houses. Like that is what we have played in and that's what we've always played in. We know that really, really well. But I think you have to be really niche on. Like, I'm thinking about a guy in my Market in St. Louis and he crushes it, but he only focused on fire damage houses. And the beauty of that is not many people want those and there's not many people that are proficient in that. And so he knows what it's going to cost, how, how long it's going to take him, the permits that he needs to pull, and that's all he focuses on. He crushes it. And anytime anybody has a fire damaged house, they bring it to him and that's all he does. And so I think like getting niche down, knowing exactly what you want to do. And then what are you going to become the best at? I mean, that's what everybody that's listening to this should do.
- [08:20]
A
Thousand percent. All right, sin number two, gluttony.
- [08:24]
B
Gluttony for education.
- [08:27]
A
What does that mean to be gluttonous over education? Why do newbies, especially fall into that?
- [08:32]
B
Oh, I think what I have seen is there are a lot of people. I don't know. Is it the. What's that saying? I'm blanking on the saying they don't want to commit. And so, like, they feel like they're doing something.
- [08:45]
A
Yeah, they're taking action by learning, but they're not actually taking action.
- [08:48]
B
Yeah, they're not taking action exactly. You know, analysis paralysis, I guess, where it's like, oh, I got to do this and I've got to. I. I mean, I know so many people, even in my old education platform that have done seven different programs, and they still haven't bought a house. You spent $50,000 on, and you haven't bought a house yet.
- [09:07]
A
Yeah, it's like, at some point you realize it's not an education problem. Like, obviously we're not saying, don't get educated. Go read a book or two. Because actually, one thing I took from Tim Ferriss's Four Hour Workweek, he had a chapter in there on becoming an expert. And I remember this is like, later on in the book. But he's like, the truth is, to become an expert, you can get 99% of the way there by reading the top three books on the subject and then taking action. But he's basically a quote, something like that. And I'm like, that's so true. Like, you don't need to read 40 real estate books. You need to read three. Like, in the niche that you've now chosen, because you're not lusting after other strategies and a bunch of stuff. You got your niche, you know what you're doing, and then you go all in on education for a short period of time. And then there's obviously ongoing education. Like, you know, go to meetups, you know, listen to podcasts once a week, week. Like, ongoing education is important, but not taking action because you're educating stupid.
- [09:55]
B
Yeah, I. I see that a lot. Even with, like, podcasts, where they let people listen to every single podcast out there on real estate. And I'm just like, just like, pick one, listen to that one. Whatever is. Is in your niche, and then go and do it. So Hormozi talks about this where he's like, people have that commitment, oh, I want to read a book a year or a book a month. And he's like, I choose one book and I read it 12 times throughout the year, like, and just know the book inside and out. And I think that is important.
- [10:24]
A
Yeah.
- [10:25]
B
Whereas a lot of people are like, oh, I want to. I mean, it kind of falls in with lusting after different strategies because they're like, I'm going to join the creative finance course and the acquisitions course and the long term rental course. And they're on. There's six different programs.
- [10:42]
A
Yeah. And not to be a plug. I don't want to be a quick plug for First Deal. But I got this program First Deal and I'll give you example. Everyone listening is like, first Deal is not an education program. Like, yes, technically there is a course I put in there. It's like four hours long. It's pretty good. I actually might just throw the whole thing on YouTube at some point soon. Because I don't want to have an education program. You don't need, like, you can chatgpt or read in a book every single thing I could possibly teach you. What you need is to take action. So we call it is a mentorship program, not education program. Because every week you're meeting with a mentor on Zoom. Like in real life meeting with a real person asking whatever your questions, like, you're currently facing today, like, oh, I'm just stuck. I went to three different lenders and they all turned me down. It's like the. A mentor is going to be able to be like, yeah, maybe you should try this. Or I got a really great bank you should try. Or I got a buddy that lives in that area. He could probably help you find the best bank. All of a sudden it's not education, it's action. It's saying, what is my bottleneck? What do I need to do to break through it and then get some accountability on breaking through it. If you do those three things, whether or not you're in first deal or not, that idea of continually saying, what is my bottleneck? How do I break through it? And then doing the action needed to break through it, that will fundamentally change your life, your business and everything.
- [11:53]
B
Yeah. Community and accountability, those are the most important parts. Education, you're. You can find online. Yeah. And you can find a book.
- [12:01]
A
Agreed. Let's go say number three. And that is greed for impossible returns. The idea here being some people have this mythical idea that they're going to get this home run deal that they heard On a podcast that somebody got and they made a hundred thousand. Let's go. Flipping. Cam made. What's the best flip you ever did?
- [12:20]
B
Probably 120,000.
- [12:21]
A
Me too. It was about 120k. So I made like. Yeah, Cam and Brandon made 120k on the flip.
- [12:27]
B
Bruce is about to make half a million. Yeah. It's pissed off.
- [12:31]
A
Good for him. Yeah. But now, okay, so let's raise the bar again. So now people listening, going, well, I ain't gonna do a flip if I can't make half a million bucks. Bruce made. Bruce. Bruce made half a million bucks.
- [12:41]
B
Do you remember the dude from. We. We interviewed him on the podcast years ago from Brooklyn. He doesn't do a flip unless he's going to make a million dollars on it.
- [12:49]
A
Yeah.
- [12:51]
B
Brooklyn Bank. I think he, like. Yeah.
- [12:53]
A
Who was that? I remember. Yeah. Anyway, but.
- [12:56]
B
But yeah, yeah.
- [12:57]
A
Million dollars on a flip. Yeah, but he just does like one flip every couple of years.
- [13:00]
B
But that said flip right now is $24,000.
- [13:03]
A
Yeah. And that's actually more realistic. So the idea of being greedy for impossible returns says that I'm not going to do a deal if it's not a grand slam out of the park, especially for newbies. I'm not saying buy a bad deal, misconstrue what I'm saying here, people. But if you're only going to buy a deal that makes you a 24% cash and cash return, you're making $2,000 a month in cash flow or you're going to make 100 grand on a flip. It's like you're going to be waiting years. What you need is reps. Like, yeah, get deals. Like, figure it out. Buy deals even if it doesn't make you a lot of money. Just get the reps in.
- [13:35]
B
Yeah. And I think we can actually. We'll talk about this a little bit later. But I think one thing that people that are listening to this need to know is that when you're listening to a podcast or you're reading a book or you're watching a YouTube video, people usually only talk about their highlighters.
- [13:48]
A
Yeah, exactly.
- [13:49]
B
And so it's like the best deal they ever did, but that's not standard. And then second, people are liars, too. And so. Yeah, so you just can't believe everything you hear where it's like, I mean, I tell people this all the time. Like, we are lucky to cash flow. A hundred bucks a door right now. And honestly, that's leaving money tied up into the deal. Like, it's just tough. And now I believe in the long term strategy, but you can't look at somebody and like, oh, they're cash flowing. A thousand bucks a door. I need to find that. It's like, no, just get in, get in. You'll figure it out over time. Things will get better. You'll get better at what you're doing. The market will turn. But you need to get in the game 100%.
- [14:34]
A
Agreed. Makes me think we should do a podcast. Maybe we'll do it later and release it next week. We should do a podcast where we just tell the stories of our. Some of our worst deals. We're just like, oh, yeah, I bought this one and this is what I learned from it. These are the lessons. We could do a whole show on that.
- [14:45]
B
We got one we're losing 35k on, right?
- [14:47]
A
Are you? Let's do another show after this one. We'll stop recording this one. We'll do the next one. We'll release it next week.
- [14:52]
B
All right.
- [14:52]
A
All right, everyone. So listen to next week's episode. We're gonna talk about some horror stories where we have committed many of these sins and we'll talk about what those are. Let's move on to number four, sloth in Deal Flow, which is like, what, Laziness?
- [15:05]
B
Laziness, maybe not committing to it.
- [15:08]
A
Slo.
- [15:09]
B
I think slothfulness just all around. Like, I, I think there's so many people that they, like, this goes back to. Like, they hear. And I'm, I, I am at fault for this. Where they, they see my ad for my old education company saying I make seven figures a year in real estate, and they're like, oh, I want that. And it's true. Which I, first of all may be completely honest. I will not make seven figures this year flipping houses. I have in the past, but they see that, but they don't realize. Like, I was working 70, 80 hours a week. Like, they don't, they don't realize. Like, they're like, oh, Cam's making this and isn't doing anything and is sitting on a beach in Maui. Which I do get to do that sometimes. But I also am. Like, I've got an immense amount of pressure. I've got employees that I have to pay. I've got a ton of debt racked up. Like, they don't understand all of that.
- [15:58]
A
You know, my favorite quote from Alex Hormozi is he once said, don't be upset by the results you don't have, by the work you didn't do. And I, I love that quote. Because anytime I'm tempted to get jealous of somebody, let's say, I mean, I'll be honest. Like, when I look at Cody Sanchez and how well she's done on social media. Yeah, man, I just get jealous because I'm like, oh, she's so good. I look at her Instagram, like, every pose hits. Or my buddy Brian Lubin. You know, Ryan, I love Brian, but his social media is on fire right now. He's just doing super good and he has an education program is crushing it. And I'm like, dang, he's doing. But then I'm like, when both those cases, I'm like, well, I'm not willing to do what those two are doing. Those two are doing so much more work than I am when it comes to, like, social media and all that. I'm like, well, why am I upset then? I didn't do the work.
- [16:41]
B
Yeah. I mean, for me, Hormozi is kind of the same way. I love Hormozi, but I look at him and it's like, you work 18 hour days. You don't. And you, you're. You admit this. You don't have friends.
- [16:51]
A
Yeah.
- [16:52]
B
You don't have kids. You don't have a social life. Like, that's amazing. But I'm just never going to do what you do. I've got five kids. I've. I love friends, I love hanging out, I love traveling. Like, you and I are different. And so if that means that you're going to be way richer than me, which he is, like, so be it, because I'm not willing to do that. Yeah.
- [17:10]
A
That said, to take it back to the idea of sloth. In other words, like, not taking action, Laziness. If you want to buy real estate, there is work you have to do 100%. And so the people who are like, I mean, again, I have a coaching program. You had a coaching program for a long time. It's like we meet with people every single week. And the number of people who show up on a call, and I'm like, okay. Like, we literally start every first deal call. This way. We start with. All right, wins lessons and life updates. That's what I call it. Wins lessons, life updates. And there'll be 70 people on the call and I'll say, okay, what wins? And I always define this. A win is you did anything, any action whatsoever. I don't care if it took you one minute. I don't care if you open up Zillow. That is a win. Report your wins. 15 people out of 70 will report a win. And I'm like, the problem is it's not education, it's just lack of action. And I think oftentimes people think they have to take big action in order for it to make a difference. And so therefore they take no action.
- [18:08]
B
Well, that's a, that's good. I would agree with that. And I.
- [18:11]
A
That, yeah, that people. Yeah, I do too. I feel like I got to do something really big. But do you really have to or can you work for two? Like, if you can't work for two hours, work for 20 minutes. If you can't work for 20 minutes, work for two minutes a day. It's still better than doing nothing.
- [18:24]
B
Yeah. I mean, even like right now I'm kind of exploring different asset class and it's overwhelming. Like I, I was telling you before we started this, it's fun because I'm like a beginner again and there are things where I'm like, no, I want to, like, I want to scale and grow, but I just don't know how to like. But I, I just hop on a call with a broker and like talk with them and I get to learn a little bit and then hop on the phone call with another one and get to learn a little bit more and take somebody out for lunch. And like those small actions, they stack up. But I think so many people, they don't even do that. I mean, that's with single family. That's how we started. Like, I went to a meet up and literally every single person there probably over the next month I met for coffee. I just took it out to coffee and just started learning and learning and learning and that snowballed.
- [19:09]
A
Yeah, there's massive action and then there's consistent action. And both, if you want to really go fast and far, do massive, consistent action. But if you can't do massive action, just do consistent action and it's totally fine. In fact, I told a guy yesterday, I got an Instagram DM from a guy just explaining he was having kind of a hard time in his life, like just getting through some trauma drama that he's going through. And I said, well. And he asked me for advice. I said, my best advice, man, is like, if you're driving a car and it's foggy and you can't see a mile down the road, you can't even see 50ft down the road. You can at least like, like, don't pull over. You can just keep driving, just slow down. Like, there's nothing wrong with slowing down. When things get hard, slow down. That's still better than stopping. So when it comes to sloth and deal flow, be consistent. And the way that I'm consistent with my actions and I try to do that and be consistent, is I just track my habits. Every single day I sit down and I have habits that I track. Did I analyze a deal? Did I take my wife on a date? Did I wake up by 6am Did I shut my phone off at. By 8pm? I just track these every morning. It takes me less than a minute. And by the time I'm done, like, I just. Good, I know what I did. And when I track things, they automatically improve because at the end of the day, you get the results of what you repeatedly do. I say that all the time. You get the results of what you repeatedly do. And by the way, if you want that exact habit tracker that I use, just go to my Instagram beardy Brandon and just send me a DM that simply says the word tracker, T R A C K E R. And it'll automatically my little beardy bot in there will send you the actual tracker that I use. It's pretty legit. I do it every day. It changed my life. So, yeah, don't be slothful. Is that a word?
- [20:38]
B
Slothful.
- [20:38]
A
Word Slothful. Don't be sloth. Vicious.
- [20:41]
B
Sloth.
- [20:41]
A
Vicious in deal flow. I don't know. Okay, let's go number five. And that is wrath towards the market. And here's what I mean when I said wrath towards the market is people will not invest because I have an excuse on, like, oh, the market's bad, or this thing doesn't work anymore. And they have this like anger and excuse against the market. But the truth is, something works in every market. And I'm talking market from a ma, like an actual location market and a economic market. So something will always work. And the sin that people go is they refuse to invest in real estate because of the quote, unquote market. There is no such thing as a good market or a bad market. I agree. There's no such thing. There's just. Yeah, but you can also argue there's not such thing as a good calorie or bad calorie. It's just how many calories you get in. Maybe it's a similar logic. It's like it's not, is it a good market or bad market? Is what market? Is this what works in today's market? So an example today, buying a single family house on the MLS from a real estate agent putting 20% down with 7% interest rates and the competition where it's at and the prices where it's at, that this is not a market for that. Terrible. Yeah. So people say the market's bad because that specific strategy doesn't work. But you know what works really, really well today? Assisted living. Residential assisted living. Killing it for people right now if they know what they're doing. Rent by the room, people are crushing it. Midterm rentals, doing great. Short term rentals, sometimes sober living, sober living, mobile home parks are crushing it right now. Self storage is doing really well, but again, depends on then the specific location as well.
- [22:22]
B
Yeah, but yeah, I, I see that a lot. Like I'm even looking back when I first started, it was during the COVID bubble and everybody, even seasoned real estate investors were looking at me and I was buying houses like crazy because I didn't know what I didn't know. And I'm thankful I didn't listen to them. They were like, it's the, the bubble's gonna pop like you're gonna. And I just kept buying houses because I'm like, it just makes sense right now. And we were running our numbers right, and we're doing, doing the things that we should have been doing to protect ourselves. But like, like I see that all of the time and honestly, like now I'm looking at it from my own point of view and I'm like, am I that old guy now, right now where the market's hard? And I'm like, don't do it. It just doesn't work anymore. I gotta like. So, but, but I think for us we are pivoting a little bit in our, our flipping company to what's working is honestly, wholesaling is working. Flipping it, it's just tough because you're, you actually, you have to pay a lot of money to get a house right now. Margins aren't there. The risk isn't worth the reward. The opportunity cost isn't there. And so like wholesaling is working. And then kind of, we used to flip 90% of the houses that we put under contract. And now I'm like, I'd rather do 30% of the houses that we put under contract and wholesale. The rest.
- [23:34]
A
Yeah.
- [23:34]
B
So it all, it all works. People have been successful in any market. You can't get angry at the market or blame the market for the reason you're not investing.
- [23:42]
A
Agreed. Couldn't have said it any better. We'll say number six, you know, and we kind of already Covered it, but we'll go there.
- [23:47]
B
No. Yeah, this is. This is. This is good. Envy of other investors.
- [23:52]
A
Why is that such a sin?
- [23:53]
B
I think that's for. For multiple reasons. One is because I just don't believe other investors. Most of the time.
- [23:59]
A
Everyone's a liar.
- [24:00]
B
Yes. I truly do not. And to, like, everybody has different lifestyles, different goals, different needs for their family, and so stay in your lane. Like, I run into that. Fortunately, I don't do it as much anymore. But when I was first starting out, I would see other people that were more successful than me or that were crushing it, and I'd be like, what are they doing? I'm not doing, or what do I need to do to get there? And it just wasn't good. Like, it. I mean, it hurts your. Your confidence. I think confidence is such a huge part of investing in real estate. Just knowing, like, that you're going to succeed and you're going to do it well and. And it would. It would. It would hurt. That versus, like, I'm going to stay in my lane. I'm going to do what I think is best and obviously take outside counsel and stuff, but I'm not going to judge or compare myself to anybody else because it doesn't matter. And so I think that's important. Yeah. I think the other side is, like, again, everybody that you talk to is telling the best parts about their job. They're not getting into the nitty gritty. They're not getting into the things that suck. They're not getting into the sleepless nights or having to pay. I mean, there's been so many times where we're completely out of money because I've used my own capital to buy a bunch of houses to flip, because I don't want to use private money. And then the house doesn't close when I want it to, and we don't have any money. And I'm like, I don't know how to pay, you know, next month's bills. And like, that that's happened to us. And I'm. I got a lot of money, and so it's tough. Like, I just. I think you need. You do need good counsel and also people that are going to be real with you and not just share the best parts of real estate investing.
- [25:41]
A
That's true.
- [25:41]
B
I love it.
- [25:42]
A
I have nothing to add to it because I kind of already said it earlier about people I'm jealous of. Number seven, though. This is huge. Pride in your math.
- [25:52]
B
This is good.
- [25:52]
A
Yeah. So many people do terrible math and they're so convinced that they know what they're doing and so they buy deals that don't make any money. And they don't. When I say they, I'm talking about myself here. Like I would deliberately not talk to my mentors. Like the people I was learning real estate from. I would not show them my numbers because I didn't want them to tell me that I was doing a bad job or that I was off. And so I would just like buy it anyway and screw them. In fact, one time I bought a deal. Worst actually. We'll tell the story next week on the episode. But I bought a duplex, went to the hard money lender, I was like, all right, I got a deal. And he goes, no, I'm not gonna fund this, this is terrible. And I was like, screw you. And I went and did it anyway. And then I lost money on that deal. And I'm like, duh. That was just my pride with my math.
- [26:35]
B
Yeah, dude, I have ruined people's lives before by just talking them honestly. Things that they've already bought. I was having a conversation with somebody that we both know on the beach one day and they just bought a. She was telling me that it's going to cash flow, like 600 bucks a month. Because she was like, yeah, our mortgage is 1400 bucks. And it. I was blown away because she should have known this. And she's like, yeah, and it rents for 2,000 bucks a month. And I was like, okay, so like vacancy, how much are you setting aside for that? Well, it's rented right now, so nothing. What about Capex? Well, it was just renovated, so nothing. What about like maintenance? Well, it was just renovated, so nothing. And I'm like, but you don't think that all of those things are gonna start popping up at some point? Like maybe best case scenario, this year you do cash flow, 600 bucks. Yes, best case scenario. That is your best case scenario. But once those things all start hitting like you have to replace a roof. That's $15,000 right there. You know how long it will take you making 600 bucks a month to make that back? And, and I mean for us, probably 50% of, of rent is spent before mortgage interest.
- [27:54]
A
So.
- [27:55]
B
So I mean, in that scenario, like mortgage is 1400, she's renting for 2000. You're negatively cash flowing. 400 bucks. Just quick numbers on that. Yeah, not cash flowing, 600 bucks. And so, so many people, they just don't know what they're doing and they think that they're right and they don't want to. And I mean, mean, even I did this and I'll still do this. Where it's like we, we manage our own properties and, and my mentor was like, you need to put in a, a management fee. Like when you're analyzing your numbers. And I was like, but we manage it ourselves. So like why like it, why would I put that 6 to 10% management fee in there? Because on a 200, you know, $2,000 a month rental, that, that takes my cash flow down. 200 bucks. I'm like, I, I might make it not a deal anymore. And so like I'm not going to put that in there. And then we got to 75, 80 doors and it's like we still managed ourselves but we have a full time maintenance tech, we have a full time leasing agent, and then we have a full time executive assistant that sets up utilities, does all that stuff. And between those three salaries, it's 60, 40, that's $140,000 a year that we didn't budget for.
- [29:03]
A
Yep. Yeah. If you buy rental properties, assuming you're going to self manage, you are now and the numbers only work, if you self manage, you're now trapped into self managing forever or the deal becomes not as profitable and maybe negative cash flow. Yeah, yeah, I did the same thing. My first 30 units, like I just self managed. Not a big deal. As soon as I moved away and hired somebody to manage them, all of a sudden I made no money anymore.
- [29:25]
B
Exactly.
- [29:26]
A
Like all of the cash flow. So at the end of the day, those weren't even investments. I just had a job. I bought myself properties and bought myself a job. I could have just got a job. Like I could have just got a job. A lot less stress and a lot less money down. So yeah, the idea of pride and bad math, don't be prideful over math. Just accept the fact that you're probably not good enough at math. I'm not good at math, you're not good at math. We can all get better and then lower your pride and then go learn to get better and always ask, how do I do this better next time. And if you are somebody who wants to learn more about deal analysis, I have a completely free three day challenge where just literally every day for three days I send you a video on how to analyze deals more. There's homework and there's all this like interactive stuff. Totally free. Just go to my Instagram again. Beardybrandon comment. Or like DM me the word 3 DC like the number 3 the letter D, the letter C. It'll automatically send it and put you right into the three day challenge.
- [30:16]
B
Well, and there's a reason why every deal analyzer has 10% for maintenance, 10% for capex, 10% for management management, 8% for vacancy. It's because that's usually kind of the going rate and that's what it's going to cost. And, and people are like, but I don't need any of these, like 0% on all. It makes me so mad.
- [30:37]
A
Yeah.
- [30:37]
B
Yeah. Because it just, it hurts people.
- [30:40]
A
Yeah. I always go 5 to 10 depending on the age, condition, size, etc, 5 to 10 on repairs and maintenance. And capex usually do. If I'm self managing, I might do vacancy at 3%. If I'm not, I'll probably go 5%. If the market's harder like Austin, I might go 10%.
- [30:55]
B
Yeah.
- [30:55]
A
And then what I say, repairs, capex, management and vacancy. Yeah. So management 10%, 11%. Here's one thing people get wrong in management expenses is property managers are typically, not always, but typically 10. That's very normal, 10% of rent. But they also typically charge first month, first month's rent or at least half a first month's rent. Well, but tenant leaves every 18 months, let's say. And every time they leave, you have a month of rent that you owe. You're. It's not 10, it's more like 12%. And so like, and you got to
- [31:24]
B
do a rental turn.
- [31:25]
A
So yeah, you got rental turns. Yeah.
- [31:27]
B
Every time maintenance act like you got to paint, usually you got to get smells out. You got to, I mean, yeah, it's, it's, it's three to four grand. It's not every ton, but it's every time a tenant moves out.
- [31:36]
A
Correct.
- [31:36]
B
You got four grand in maintenance, you've got a month of it sitting vacant. And then if you are using a leasing agent or somebody like that, you're paying a month or half a month's rent. Yeah, I mean just the costs stack up. Like we do a little over $200,000 a month in revenue in our rental properties. Guess how much money I make out of that? $200,000? Not a lot, like 11 to $13,000 a month. Yeah. Pisses me off, but I mean, yeah,
- [32:07]
A
I could if I have, I don't even know, 14,000 units. Let's say we're averaging a thousand per unit.
- [32:12]
B
Oh yeah, whatever.
- [32:12]
A
14,000. 14 million. Is that 14 million a month? Yeah, let's call 14 million a month.
- [32:17]
B
How much do I actually look like a Free.
- [32:19]
A
No, no, no. How much? No, it's going to get worse. How much do I actually make off that? Zero. Zero off that. And so I'm far worse than you are. You make more off yours than I do off mine. Now, maybe my equity is term if the market comes back in Austin, but like, it's. It's wild how little you actually make from rentals. Unless. This is why I'm such a big proponent of those fringe strategies. The rent by the room, assisted living, midterm rentals, whatever, like sober living. Those things do provide more cash flow the way that it rentals did back 20 years ago. Yeah. And so this is the. The new. The new game is that. And it can work. That's why I like mobile home parks, like RV parks and campgrounds. And like, they all work because they're not real estate. Their businesses are in real estate.
- [33:07]
B
Businesses that are in real estate, they're way more sophisticated. They take way more work. I think that's one of the things that I'm learning is like just the barrier to entry is so, like the work that it takes to get one is so much harder.
- [33:20]
A
Yep. But that's a great thing. It means that most people will not get into it. I was just talking the lower the bare to entry, the worse investment.
- [33:26]
B
Yeah. With. With kind of my operator and what we're looking at. And it's been hard. It's been hard, like setting up financing and we do have one under contract right now. But it's like there's just so the due diligence process and it's stressful in a. In a fun way. I'm actually.
- [33:42]
A
I love.
- [33:43]
B
I love it, but I'm like, this is all really good stuff because it means that like, not many people are. Not many people are going to put in the work that we're putting in right now to get one deal. Yeah.
- [33:54]
A
Agreed.
- [33:54]
B
And so I like that.
- [33:56]
A
Cool. Well, everybody, hope this was helpful for you today. Don't commit these seven deadly sins which are lusting after shiny strategies. Gluttony for education, greed for impossible returns, sloth in deal flow, wrath towards the market, envy of other investors, and pride in your bad math. If you like this show, be sure to leave us a review. If you listen to the podcast thing, the little, like, button. If you're watching on YouTube and subscribe to all the stuff we do at beardybrandon and cam cathcart. There we go. Appreciate y' all. Have a good one.