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The Side Hustle Show
691: 10 Year Path - 1 House A Year: Your Simple 10-Year Path to Financial Flexibility
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- [00:00]
Nick Loper
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- [01:40]
Dustin Heiner
What's up Nick? Hey man, thank you so much for having me on again. I absolutely love your show and I've done side Hustles my entire life. Thank you so much for having me on.
- [01:48]
Nick Loper
You bet you are a practitioner as well as a preacher so we'll get into that. But paint the picture for us here, this ten year plan, if you do this right, you've got a million dollar portfolio at the end of those 10 years and hopefully have some, some positive cash flow from that too. But lay the groundwork for us here.
- [02:05]
Dustin Heiner
So I started Investing back in 2006, bought my first property. It made me money in Cash flow every single month. I said, great, I got to get 10 of those. So if I make it 300amonth on with one property, then that's $3,000 a month with 10 properties. That's great. Just like if you find a good side hustle, you just replicate that same thing over and over again so fast. Where we're at now, I have over 30 properties that are making me money. I still own the ones that I bought back in 2006. First property is always the hardest because you got to prove it to yourself that it works. You got to get the money, you have to build the business, all that sort of stuff. Coach, I don't know, maybe over a thousand students now how to invest in real estate. And like clockwork, they get their first property and we can go into the entire business building process to where it can scale, where you can get to 10 properties in 10 years. And I think honestly, even faster because you do all the work on the front end. Just like building a side hustle, the second property comes so much faster because all that work is paying off in the future. So my daughter, she's 16 years old, just bought her first property three months ago. It's making $300 a month. And this is the plan that I have for her. Buy one property, get that passive income coming in Every single month, $300. Do not spend it. Like, do not go out and buy this or buy that or, you know, whatever.
- [03:16]
Nick Loper
That's maybe the discipline part of this. Like I've got some of this cash flow and I'm, I'm going to parlay that into the next thing.
- [03:22]
Dustin Heiner
Absolutely. And so every year we focus on buying at least one more property. And then over 10 years, if you do that, 10 years, you have 10 properties and hopefully each one, or make you three, four, 500amonth or more in passive income.
- [03:38]
Nick Loper
Yeah. Let's look at it through the lens of your daughter, maybe her 10 year plan here. So first of all, we see all these charts where housing affordability is at an all time low or it's unaffordable, interest rates are high. Where are you finding cash flow? I mean, in our neighborhood, it would cost you half as much to rent as it would to buy with 20% down right now. And so it just doesn't pencil. So where, where should we even begin shopping?
- [04:05]
Dustin Heiner
If you were to get outside of like the west and east coast, because the coastlines definitely the prices are much, much higher. Where my daughter found her first property was in Ohio. In Ohio. So Mazen Ohio is the city that she bought her first property in. And completely honest, I have my own properties there too. So I obviously coach lots of people and coach my daughter through this entire process. So she went through my entire course just like all the other students, learned everything. And so we went through the process together. It was Mazen Ohio, which is really close to Canton, Ohio, Akron. It's kind of right between there and bought it for $125,000. Now she didn't have $125,000. She didn't have that cash that she could just buy it for cash. But what she did was she had savings that she saved up. I want to say it was like she had $2,000 that she saved of her own money. And then we had been putting aside money for college and so I think it was like 10 grand. So we got 12,000 do dollars total and got a DSCR loan, a debt service coverage ratio loan. When you buy a house to get a mortgage, you normally make sure that the bank says hey, can do you have a job that you could pay off the mortgage?
- [05:12]
Nick Loper
Right? Yeah. You're 16, you're like well even if I do have a job, I'm working at McDonald's or something.
- [05:17]
Dustin Heiner
Exactly. So this type of loan is a commercial loan. So it doesn't depend on your income. It depends on the properties income. How much money will that property make in cash flow from the rents and if it'll cover the mortgage, cover taxes, insurance, all the normal things and then make passive income on top of that. They'll lend you the money. And obviously being 16 years old is going to be harder for her. So I co sign because I'm dad, I'm going to do that plus I'll just take over the property if she stops paying for it. But in the end you don't have to have a lot of money. Now you might be thinking I don't have $12,000. Completely understand 10% of 125,000, that's you know, 12,500. I even have mortgage broker 5% down. I even know of you can get a FHA loan 3.5% down. To buy a property now you got to live in there a year. But that's a great way to do it. We live in Tennessee right now and bought in Ohio and we hire experts to do all the work for us. And here's one quick, quick caveat. We don't just hire them after we're all done buying a house. In fact I have lots of students. What they do say hey, Dustin, I bought a house. I did all the things those TikTok gurus told me to do, found a property, spent thousands of dollars to buy it, thousands of dollars to fix it up, then found a tenant and then tried to find a property manager. Well, then I called property managers and they all told me they wouldn't manage it because they get shot there. I'm like, oh, you have a. You don't have an asset anymore. You have a liability.
- [06:41]
Nick Loper
Okay?
- [06:41]
Dustin Heiner
Instead of doing that, instead of saying, I, you know, property manager, I just bought this. Will you manage it? You called your property manager and you found them. Before we build an entire business that then is a system that we put in place, and we talk to the property manager beforehand, say, hey, property manager. You don't say, I bought this property already. You say, I'm looking to buy this property. If they say they won't manage it, then you don't waste your time, energy and money to buy the property. What you do is you ask them if they, you know, how much will it rent for? What's a vacancy factor? Which means how often will it be vacant type of clientele. Will you manage it? All those good questions, they say, yes. They'll tell you how much it rents for, too. So you calculate all your expenses. You make sure your income is also tacked down as expense. $300 is what I suggest, minimum. And then as long as it rents for that total expense and you still make passive income, then that's a worthwhile property that you put into your business that makes money for you. Does that all make sense?
- [07:35]
Nick Loper
What's the rent in this example on the $125,000 Ohio House, 1350. Okay, there are still. They talk about the magic, you know, 1% rule, where it's like, if I have a $100,000 house, I wanted to rent for $1,000 a month, that's the 1% rule. And it's like kind of a unicorn in some markets. Really hard to find. But you say, okay, these, these opportunities are still out there, if you know where to look.
- [07:55]
Dustin Heiner
The Midwest has been really, really good. I have some students investing in Indiana. I own property in Indiana. Tennessee's not bad. Memphis is a little more aggressive of a place because a little more crime there. But at the same time, a lot of investors going there. Alabama's been really good. As I was building out my business, I invest in Ohio, Texas, Arizona, Tennessee and Indiana, all these different states. You don't have to invest in your backyard. You know, you live in Seattle or you live in, you know, San Francisco or really expensive places.
- [08:23]
Nick Loper
Yeah.
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Dustin Heiner
You do not have to invest in that city as long as you do it right. Which means I suggest building a business, finding the experts before you buy the property, and then tell you if it's a bad property, if it's a good property, how much it would rent for, how much it would cost to fix up all of that, then you buy a good property in the right areas.
- [08:41]
Nick Loper
It sounds like there's a two tiered approach for people just starting out. Number one is the database of Redfin houses for sale across the whole Midwest. That's a huge spectrum to try and search and narrow down. And then the second angle is this. Well, I'm gonna find property managers who are already on the ground, who already know the market, they know the rents, they know the neighborhoods, and trying to pair those two together and find and find this unicorn and find that match. But it still seems really, really daunting without some more, some more constraint. Is there any filters or resources that you like to even narrow down that search a little bit?
- [09:20]
Dustin Heiner
Absolutely, absolutely. And so here's how I would explain it. I tell everybody that can hear me, stop being an investor. Because when you think like an investor, meaning quote unquote investor, you think of appreciation. You think of all these different things that are not what you should be doing. What you need to be is an income builder. You need to build income every single month instead of trying to get for, you know, hey, I'm going to get equity in 10 years or 20 years, it's going to be worth, you know, double. You never know if it will, it might crash. But if you invest for income every single month, then it's going to go well. So here's what you do. You in any city, or let's say you just pick a state. Let's say, you know, I said Ohio, you're going to look at Ohio and Redfin or Truly or Zillow, you're going to see a bunch of red dots everywhere. All the for sale properties. Build your business in a city that has a good amount of inventory that you can buy. Now, when I say inventory, that means every single property that you buy, don't look at it as a home, look at it not even as a house. Look at it as a piece of inventory that you put into your business so that you hire the experts to do all the work for you. So if I'm looking in Ohio and you can even just pick Alabama, you can pick Tennessee, you can pick Indiana, you can pick all these different cities or sorry, states. And then you'll see all those red dots and I'll, I'll give you the criteria that I give all my coaching students. We want the type of property that everybody either wants to rent or buy. Because if you ever want to sell it, you want to have a property that sells pretty quickly. Here's the criteria that we look for. A three bedroom, two bath, 1200 to maybe 1600 square feet. You don't want it too small, that families don't want to live in there. You don't want to be too big, where extra walls to paint and toilets to fix and all that sort of stuff. Okay, so you want a, a cookie cutter type home that other people are going to be looking for to rent or buy. And so when you're doing your Zillow, Redfin, Trulia, put those in three bedroom, two bath, 1200, 1700 square feet. You're going to do great there. Then once you start looking, you'll see the red dots and then we'll look for cities that had good, that have good inventory. You don't want a city that has like three homes. You build a business, you find all the right people, but you only have three homes to buy, then you're done. Then you can't scale. Indianapolis has really, Memphis has a lot of, Birmingham has. You can even just start those cities. But here's what you do. Here's, here's the secret sauce that I at Master Passive Income Coach on my podcast that I constantly teach, teach is we build a business first. Because if you start looking and calling realtors, this is a sad thing. I get students, they'll say, hey Dustin, I found a great city, lots of inventory. I have five realtors already sending me deals. They say, whoa, whoa, whoa, whoa. Well, do you have a property manager? No. Do you have a contractor? No. Do you have an inspector? No. You don't have any of these things and you already have deals. Come here. What happens if you bought a property and it's the wrong area because it's a big city, Indianapolis is a big city. There's bad areas that you might not want to rent, that doesn't get good rents or has crime or whatever. So what we do, here's the key thing, we find a city has good inventory, lots of properties to buy that we want. That'll be great. That could rent for more than our expenses, which would be great. Then we stop looking for properties. This is key. You're not going to hear very many people talk about this. We stop looking at Properties. The next thing we do is we find our property manager. We find our property manager because they're the ones going to be managing it for the longevity of the entire time you own it.
- [12:39]
Nick Loper
Yeah, this is interesting. I've got Redfin open outside of Canton, Ohio, and there are some properties in the, you know, call it 85 to $130,000 range that actually look decent from the outside. And under that, like, you've got some. If you want to take on a big rehab project, there's some even less like sub $50,000, which is really kind of unheard of from west coast real real estate, you know, jaded Nick. But at this point, you say, okay, stop shopping, start looking for a property manager. What's what makes a good property management company in your, in your eyes?
- [13:16]
Dustin Heiner
Here's what we do when we're looking for a property manager. You hire slow, which means you interview many different property managers. You interview them many different times, ask them many different questions. In fact, I have A list of 22 questions and answers that I give my students that this is the question you should ask, and here are the answers that you should be getting or somewhere around there. And you know, if you want to deviate from that, it's your own risk tolerance, if you're okay with deviating from that. But at minimum, we interview six, six different property managers. Google search is probably one of the best ways to find chat. GPT start to come out too, where they're finding property managers for you, which is interesting. AI is doing that work for you. But once you get a list of six, you call each one of them three different times. Let's say on a Monday, you call the first call, second call, you call on Wednesday, and the third call you call on. The reason why is I hate when property managers cannot call you back within 24, at most 48 hours. Because if you're trying to hire a property manager and they don't call you back, and this is before they have your money, imagine when they have your money, are they going to call this guy again? I don't want to talk to him. So you want a good, reputable company because be completely honest, it's very easy for somebody to get a hat, put it on, meaning I'm a property manager, and they'll put that property manager out. It's very simple to do that, but it's very hard to be a good property manager. So we interview them three different times on Monday, Wednesday, Friday. Each time we interview them or call them and just chat with them. It's when I say interview, it's talking to them just as a normal human being. Just see their business. Each one gets very short or shorter and shorter. First one should maybe be about 20, 30 minutes because you're asking good questions. And then after you go through all six, then you take those and you rank them. Hey, this was number one, I really like this company. Number two, this is second best, third best and all the way. So forth Wednesday you call them again. You maybe do 15 minutes, 10 or 15 minutes and then you re rank after you ask those questions on the Friday, the last call, last five minutes, you call the top three and you just verify that they're going to call you back, that they answer. Anybody could have a good call at the beginning. You know, the first call, they sound good.
- [15:19]
Nick Loper
Yeah.
- [15:19]
Dustin Heiner
But this is the longevity. You want to make sure you have somebody that you can trust with your money, with your property and never talk to them because they're sending you money over and over again. So that's what we do is we hire slow and fire fast.
- [15:33]
Nick Loper
More with Dustin in just a moment, including other key members of his on the ground team, his revised take on so called turnkey rental agencies and six ways investors are making money right after this. Summer is the season of backyard barbecues, hanging out at the lake, epic family road trips. But when the temperature rises, you don't want to be sweating over your wireless bill. That's why I made the switch to our partner mint mobile in 2019 and have it look back. Here's what's great about simple, affordable premium wireless service without surprises and unexpected overages. All Mint plans come with high speed data and unlimited talk and text on the nation's largest 5G network. The switch was easy. I was able to bring my own phone and keep my old phone number and all my existing contacts. So join me in ditching overpriced wireless and get three months of unlimited service for just 15 bucks a month this year. Skip breaking a sweat and breaking the bank. Get this new customer offer in your 3 month unlimited wireless plan for just 15 bucks a month at mintmobile.comsidehustle that's mintmobile.comsidehustleen upfront payment of $45 required equivalent to $15 per month limited time new customer offer for first 3 months only. Speeds may slow above 35gb on unlimited plan. Taxes and fees extra. See Mint Mobile for details. Before this commercial is over, another 23 entrepreneurs are going to find their next team member on Indeed. Stop struggling to get your job. Post seen on Other job sites when you need to find amazing candidates fast, you need the powerful matching tech and unmatched reach of our sponsor Indeed. Plus Indeed's sponsor to Jobs help you stand out and hire even faster. It'll make your post jump to the top of the page for your relevant candidates and the proof is in the results. Sponsored jobs posted directly on indeed get 45% more applications. That's why for my next hire, I'm using Indeed and joining the three and a half million other employers already on board. There's no need to wait any longer. Speed up your hiring right now with Indeed side Hustle show listeners get a $75 sponsored job credit to get your jobs more visibility@inn Indeed.com Sidehustleshow just go to indeed.com Sidehustleshow right now and support our show by saying you heard about Indeed on this podcast. Indeed.com Sidehustleshow terms and conditions apply. Hiring Indeed is all you need. Okay, so you find your winner based on who has impressed you in these interviews and then you start floating. Property I'm thinking of, I'm looking at this place at this address. What do you think? What do you think of the neighborhood? What do you think it would rent for? That kind of stuff?
- [18:15]
Dustin Heiner
Absolutely. So another key tip I'll give you so property managers are paid to manage properties, not to go look at properties. Honestly, like this is one on one coach I give you because a lot of students have ran a property manager ragged, hey, go check out this property. Go check out this property. Go check out this property. They don't get paid to that. Realtors get paid to look at properties. So you don't want to get fired by your property manager by having them run around everywhere. Have them look online. Just give them a list of five and say, hey, these are the five properties. Tell me, just look online. How much will I rent for? Will you manage it in just the area and then you have your realtor go over there and take them out.
- [18:49]
Nick Loper
Okay, so there's another piece of the pie is I want to find a local real estate agent who knows the.
- [18:53]
Dustin Heiner
Market absolutely so well. No, no, let me take that back. No, I never use a quote unquote buyer's realtor anymore. I find the properties through Redfin Trulia Zillow and I find the seller's realtor. Here's a big tip. This is what we investors do. I find the seller's realtor, the seller's realtor, because I already found the property, the seller's realtor. I'm going to have them represent me. So they're going to get both sides of the commission. They're really going to want me to buy the property as opposed to anybody else because they're getting full commission and I'll get a little bit more insights and they're going to go to bat for me as well.
- [19:27]
Nick Loper
But that's a conflict of interest. Right. The seller's agent can't have the buyer's best interest in mind when their role is to get the highest price. Like, there is kind of a natural issue with dual agency.
- [19:37]
Dustin Heiner
There's nothing illegal about it.
- [19:39]
Nick Loper
No.
- [19:39]
Dustin Heiner
And there's nothing unethical. They have to tell both, hey, I'm representing the buyer now and I'm representing the seller. So as long as you do that, then you're completely on the up and up.
- [19:48]
Nick Loper
All right, so finding seller. So just basically whoever is the listing agent on the. On the property.
- [19:54]
Dustin Heiner
Correct. So here, here's a big thing too. I don't just try to find my properties. I have other people send me deals. Remember, I want it to be hands off. And just like you, I love having my free time. So I have so many people sending me deals. Wholesalers, those are people that are like realtors, but they, they're not necessarily. They, you know, they send you sell the deals to you. Other investors send me deals. Property managers send me deals. Title companies. Everybody knows that I'm an investor. And I get deals sent to me because I tell them I'm an investor. We find the property manager first, but then we also let other people, like all of our fishing poles, our lines in the water. Everybody is trying to look for properties for us.
- [20:31]
Nick Loper
Okay, that's fair. Okay, so we've got the pieces of the, of the puzzle in place. We found the property manager, we found this property. We've kind of gotten their green light. Yeah, it seems legit. Here's what we think it's going to rent for. It matches our, you know, cash flow criteria based on our. What we project our debt service is going to be. And now we go out and look for. Look for financing. Like, what do you think is the next step here?
- [20:55]
Dustin Heiner
Financing is the easiest. Honestly, it's very easy. I've got, I want to say, 18 different ways to get financing to buy properties. But like, if somebody's. If you're on a call or if you're sure you're listening to this and you're thinking, man, Dustin, I don't have very much money. It's like, honestly, you don't need a Lot of money. But the financing, you need to just quote unquote, know that you can get financing in one or two ways. So here's what I would suggest. When you're starting like you're building your entire business, finding your property managers, finding the inspectors and all that sort of stuff, you find a couple good mortgage brokers in that state. That entire state. Because some brokerage brokers don't go from state to state. They only might be in that state. In fact, my students, I've got a list of like 20 different mortgage brokers that my students have used. Got great interest rates, great everything and fees. And so we call up one or two mortgage brokers and just tell them our situation, here's our credit, here's where we're at. I want a DSCR loan, a debt service coverage ratio loan. And they help you to understand how much money you can afford if you're going to buy a property. Does that all make sense? So we're building that first so that we understand the parameters that we're going after.
- [22:05]
Nick Loper
I imagine they're still going to want to know your own credit worthiness, your credit history, your income, that kind of thing. But they're going to base the loan off of, hey, the Projected rent is $1,200 a month. The projected expenses for this is 800. So we have this, you have this margin to play. And so we can, we can lend against that and the equity in the home or the value of the property versus purely based on your income and your ability to repay.
- [22:30]
Dustin Heiner
They don't always run the credit. I'll give you example. So I bundled, and this is another craze of a creative and crazy way that you can get financing. So I had six properties that were owned free and clear over in the Ohio area and I bundled them together in a DCR loan. The DCR loan, they did not even look at my credit. It wasn't even a credit pool. It was on the business. Because I have a business that owns the properties.
- [22:55]
Nick Loper
Yeah.
- [22:55]
Dustin Heiner
Which I teach all my students how to make sure we have the right llc, the right trusts, all that sort of stuff set up. And they did not pull my credit and it's not even on my credit. So we have, I borrowed, I pulled out 500 grand, now $550,000. And so I put you and have invested in, in my apartment complexes and I took that money out of the equity of the properties and I put that in my new apartment complex that we buy. And so I now have a tax free loan. I Didn't have to sell the property. It still makes me money tax free and I put it inside there. And my tenants, obviously, because the rents are going to pay off the mortgage. But here's the great thing. Their sales pitch for DSCR loans is when you go and buy another, another primary residence, this loan of $550,000 is not going to come up on your credit. It's not even be a credit pull because we're looking at the properties, we'll just take the properties. Does that all make sense?
- [23:46]
Nick Loper
Yeah, I'm starting to see the light here. You know, I've always been a little, and maybe just from like the standpoint of if you already won the game, why take additional risk? Like from my perspective today, 20 years into my working career, right? But if I'm early on in my career, I see this as an accelerated path and it's a, it's a unique one because it's like I see three paths, right? I see the traditional investment path, hey, just go buy the S and P index and be happy with your 8% and lather, rinse, repeat for 20 years assuming a decent personal level of personal profitability and you're going to be good to go. But it's still 20 years, right? Here's an accelerated path. And then path three is the entrepreneurial path. Go invest in yourself, go build a business, go do something where maybe it's higher risk, higher reward, but you can accelerate that maybe even a little bit further. But I did want to touch on the turnkey option. So these are properties that have been theoretically pre vetted, pre rehabbed, you know, pre leased in a lot of cases. Hey, we've already got tenants in place here. We just need an investor, usually an out of state investor to come in and we've got property management in place. Like what, what's your take on these? Are there any that you like or what's, what's going on here?
- [24:55]
Dustin Heiner
So if you remember our, our time that I was on your podcast, we talked about turnkey and there were two major downfalls with turnkey. But we're gonna, I'm gonna help you understand a bigger perspective because before last this last year, I bought two turnkey properties. In fact, my daughter, the property she bought was a turnkey property. So let me get into it. So number one, okay, you listening? Don't know what a turnkey company is. They buy the house, then they fix it up and they make it really, really nice and they hopefully get a tenant in there, get it renting and then they Sell it to you. Now the downside is they capture that equity. So the house that my daughter bought, they bought it for like 60 grand, man. Put 30 grand into it. So it's up, it's $90,000 total. She paid 125,000. So you know, she paid them basically, what, $35,000 on top of that?
- [25:40]
Nick Loper
Yeah, they're making a nice margin on it right away.
- [25:42]
Dustin Heiner
Totally. And then they also manage the property so they're making money on the back end. So that's the whole picture of what turnkey is. Now. Couple downsides are, number one, are you going to be getting a good property management company in the end, are you going to be getting good tenants or are they just trying to sell these, pump these out and make money? So that's number one. So vetting a turnkey company is very hard. There's been a lot of problems and you, I mean, if you go to other websites and you see, you know, forums stuff, you'll see people saying, oh my goodness, like this turnkey company was horrible. I lost as much money. So that's number one vetting. But number two, they capture that equity like you said, you know, if they bought it for 60 grand and then fixed up for 20, $30,000 out, $90,000 and then it's reselled for 130, they captured equity, they forced the appreciation. Those are the other two things. Force depreciation up, put money into it and make it worth double what you put into it. So those are the two major. Three major. So you miss out on equity capture, you miss out on forced appreciation, and you also don't know exactly with a good company. But here's the. Well, before I get to like my ideas of why I've changed a little bit and why I actually bought one, do you have any questions on those?
- [26:48]
Nick Loper
Any specific ones you think listeners should put on their short list?
- [26:53]
Dustin Heiner
Oh, of companies to use. Yeah, got it. I'll give you those in just a minute. Let me flesh out the reasoning why you should at least consider it, especially if you have some, if you have a little bit extra money, especially if you're in a DSCR loan, you know, 10%, if you have $12,000, you can buy one of these homes and it should hopefully be cash flowing. 250, 300, 350, something like that. Good turnkey companies, what they do is they go through the entire house, they gut the entire house, they rip off the roof, they put a new furnace in there. Now this is obviously if it's needed, but these Lower priced homes, they're like 80 years old and yes, they're, they're going to need even electrical. So they rip everything out. And Nick, I know you've looked into this so there's an expense line item that you have to account for and also give you a quick resource. If you go to incomebuilder IO incumbuilder IO you can get a free account and you can analyze properties and it'll do this for you. But you need a capital expense reserve. That means big ticket items, huge large ticket items like a roof that's going to be 5, 10, 20 grand. You never know how much it's going to cost to, to get fixed. A furnace, a furnace is going to be five grand. Probably three to five grand.
- [28:07]
Nick Loper
Yeah.
- [28:08]
Dustin Heiner
This is already all going to be repaired if you have a good company. And Nick, I, I think you know, we've known each other long enough. You should be buying properties. Just, you should have your own properties. You could give them to your kids, all that good stuff. But you don't have to worry about the capital reserve. So for five years, my daughter's property we would normally budget, let's say out of 1300 bucks, we'd probably budget 50 to $100 every single month. Set it aside to take care of, hey, if the roof goes bad or the furnace goes out, well, for at least five years we're not going to need to worry about that because this is brand new stuff. And then also on top of that, here's a amazing thing. You get better clientele because it's top notch for you know, cabinets are ripped out, it's brand new kitchen, everything's fresh. It feels like almost a brand new house. So those are a, are a bunch of amazing reasons why you should get a turnkey company. Now I will say though, even though I'm giving you all these reasons why to do it, I bought a home for $68,000 just like a turnkey company would. I got a, my, my contractors 20 grand to get that place tip top. Shafe got it tip out. What close to $90,000. It's worth 130. I'm renting it for 1250 or 1300. So you can do it yourself as long as you're in the game. So the company that I'm going to give you if you want to use the turnkey and Nick, I definitely think you should give them a call, at least talk to him. Is Akron turnkey just easy enough. Write in Akron turnkey and tell them you came from me, Dustin, at Master passive income and they'll give you a couple thousand. I think maybe I want to say it was even like 1500 or $2000 off of it because they're cutting off the middleman, just going right to them. But this is a good company that my students are buying from and I bought, bought three, three homes from them.
- [29:52]
Nick Loper
Okay, let me try and push back a little bit because I do see the light. I've obviously have known lots of people who have gained financial independence through real estate, through the Fincon community, through BiggerPockets. Like it's, it's definitely a thing. But here, if I'm at $250 a month in positive cash flow, I've got 3,000 a year, call it. And maybe I spent 10 grand down to get this property. Maybe it was more, maybe it was less. Okay, so it pencils out 30% cash on cash. Like that's really strong. But at the same time, you just mentioned roofs, furnaces, like that $3,000, like, doesn't seem like a lot of, a lot of breathing room for some of these capital expenses that are going to come up. Like these properties don't magically maintain themselves over time. There's going to be other stuff that, that comes up here and there's going to be vacancies, there's going to be problems.
- [30:42]
Dustin Heiner
So I'm glad you're pushing back. And it got me thinking. I did a workshop for my students recently where I walk them through the. And we talked about this on your last episode, but I got it even more dialed and I got the numbers, I just pulled them up. So the six ways you make money investing in real estate and all those things that come up.
- [30:57]
Nick Loper
Can I, can we, can we pause? Like, I'm impressed. You remember anything from this episode five years ago? This is like episode 387. It was like 300 episodes ago.
- [31:06]
Dustin Heiner
I don't know why. I just remember talking about it. I remember you having good questions as I was like, oh, let me. So the six ways that you make money when you invest in real estate. And I'll jump right into the first one, the best one is cash flow. Now you said, okay, you know, $250 a month.
- [31:20]
Nick Loper
Yeah.
- [31:21]
Dustin Heiner
I mean, that's a lot of money putting. So if you put 1250 down, 12,500 down to buy this house.
- [31:27]
Nick Loper
Now, I could see since we're talking about the 10 year plan, if I've got 10 of these, and now it's 30 to $50,000 a month because of, you know, rent Appreciation and everything, like all of a sudden, or sorry, 30 to $50,000 a year. And I, and I have some level of diversification where I can, I can weather a vacancy, I can weather some expense over there. So if you have this long term view of it and think of it as a portfolio business, then absolutely. But it's like, it's a little bit harder to stomach when it's just one or two properties.
- [31:57]
Dustin Heiner
I'm 100% with you. And that's why you got to scale and grow. So the six ways you make money investing in real estate, and this is, I'm going to give you easy, simple numbers. If you buy a house that's worth $150,000 and you buy it right now, $150,000 and let's say it's cash flowing, you 3, 4, $500 a month, whatever it might be, you buy it cheaper. Like, like the house that I bought for 68,000, fix it up for 20,000 and then now it's worth 130,000. Well, I'm making $550 a month in passive income. So if you bought one property, the cash flow over 30 year time, a 30 year period. Now I know, remember we talked about 10 years, we can just, you know, figure this out afterwards. But let me walk you through this.
- [32:38]
Nick Loper
Okay?
- [32:38]
Dustin Heiner
Over 30 years, that $150,000 property and that you put $15,000 down, 10% down payment cash flow over 30 years, that's if rent does not go up, which it does, but just over 30 years, that's $180,000. And we're also accounting for the things you all talked about like repairs, furnaces, go on. We, that's already accounted for in our expenses. That's not dipping into our income of $180,000. So that's number one cash flow. Next one, if you buy it yourself and you don't use a turnkey company I, I captured, was it $60,000 in equity when I bought the property? Well, that's $60,000 forced appreciation. I put 20 grand into it. That made it worth, I think another $30,000 more. And then so that makes value up market appreciation. And I kid you not, I had to double check this because it sounds weird, but it's true. Every 15 years your property doubles in value. So in 15 years it's going to be 150,000 to 300,000. And then after that it doubles again, it'll be 600,000 after that, 15 years after. So 30 years, you're going to have a lot More money, the mortgage buy down. Here's the great thing. Your tenants are paying for taxes, insurance, your mortgage, everything. So even your principal and interest, they're paying for that. So the mortgage is going down, they're paying, and the interest is going down on top of that. And then the tax advantages. I pay almost no money in tax advantages. And in the end, $15,000 of your money right now for just one property, without even accounting for renting, rent increases, you're over $650,000 that you're going to pocket in this one transaction. And again, all those expenses are accounted for from repairs and all that sort of stuff. That's just one property. And then we scale it and we do it over and over again. So push back. Where am I missing here?
- [34:30]
Nick Loper
No, this is good. You paint this good picture. But the road to real estate wealth is paved with burnt out landlords. People who have had their tenants changing the oil of their motorcycle on the carpet in the living room. A friend of mine, my former accountant Josh from CPA on fire, he posts these pictures of these trashed houses and he's like, well, this is what I woke up to this morning. Here's a text or the, you know, the SWAT team is outside the apartment today. And so it's like, that kind of stuff happens. And so what separates you and your students from everybody who is like, dude, I tried it. And for whatever reason, the tenants that I attracted, the market, the neighborhood, the hurricane that came through, like, bad stuff happens where it's like, if I could just, you know, buy a portion of the 500 largest companies in America and just let those CEOs go do their thing, then, you know, that's. I sleep a little easier at night. But there's, there's two sides to it because it's like higher risk, higher reward. And I think you mentioned the leverage and the tax advantage and all that stuff that goes into it. But what breaks this plan? What breaks landlords down here? Dustin's response, plus his take on whether or not we're in a real estate bubble, coming up right after this. Hey, you've reached Nick at side Hustle Nation. Sorry I'm unable to take your call right now, but if you leave a message, if that's what your customers are hearing, you're leaving money on the table. You fought hard for those leads. You need a phone system that keeps up and helps you stay connected 24 7. That's why I'm excited to partner with OpenPhone for this episode. OpenPhone is the number one business phone system that streamlines and scales your customer communications. It works through an app on your phone or computer, so no need for a second phone or a landline. And here's what's really cool. With OpenPhone, your team can share one number and collaborate on customer calls and texts, just like a shared inbox. That way, any teammate can pick up right where the last person left off, keeping response times faster than ever. See for yourself why over 60,000 businesses trust OpenPhone. And right now, OpenPhone is offering Side Hustle show listeners 20% off for your first six months at openphone.com Sidehustle that's O P E N P-H-O-N-E.com Sidehustle. And if you have existing numbers with another service, OpenPhone will port them over at no extra charge. OpenPhone. No missed calls, no missed customers. Here's a little bit of side Hustle trivia for you. Did you know that our Partner Shopify powers 10% of all E commerce in the US everything from household names like Mattel and Gymshark to dozens of side Hustle show guests you've heard from right on this show. And there's strength in those numbers. Ever notice that purple shop pay button when you're shopping online? That's a telltale sign that a store is powered by Shopify. And just one of the reasons Shopify has the best converting checkout on the planet. Shopify makes it easy to sell online with hundreds of beautiful ready to go templates, inventory management tools, payment processing, analytics, and powerful marketing and email tools built right in so you can find and keep more customers. If you want to see less carts being abandoned, it's time to head over to Shopify. Sign up for your $1 per month trial and start see selling today@shopify.com Sidehustle go to shopify.com Sidehustle one more time. It's shopify.com side hustle.
- [38:06]
Dustin Heiner
Awesome. No, that, that's an amazing question and I'll even say even like your S P idea. That's, that's great. But you have to have a lot of capital in order to, to live on it. What I'm saying is in, in can with 10 properties, you can live on that income and you get equity growth on top of that. But here's what breaks landlords is they buy their first property and they start pulling their hair out because they're not doing it right. They're not hiring the right people or getting the right people to run the business. They're finding wrong tenants that are not going to take care of their property. They might even bought in a place that nobody's going to manage. So that's number one. Okay, we build the entire business. Get the experts. Like Redfin's not an expert. Trulia Zillow. Those are not experts. Who are experts? It's the people that live there in the, on the ground in that city. They're the experts. Gonna be talking you through which areas are great.
- [38:55]
Nick Loper
And so far, this is all sight unseen. Like your daughter's house. Like, did you guys fly up there to do a final walkthrough or anything? It's all, it's all remote.
- [39:02]
Dustin Heiner
Not at all. Out of the 30 plus properties that I own. Honestly, even the two apartment complexes. So the 30 plus properties, I've seen one of them before I bought it. I've. And I haven't seen the other ones. I just, I see pictures and I have experts. Yeah, the other apartment complexes, I have experts. Now I did walk through one of them because I live in the city, so I walk through. So hey, this is a great property. But for single family homes especially now, in fact, I've coached thousands of students. I want to say I know of maybe a dozen students that have flown to the city in order to look at the properties. Because here's what we do. Just like you build any business, any side hustle, you get the experts doing the work for you. And here's the key thing. Remember, if you're a beginner, you don't build a business if you don't follow what I. Most people just buy a property and they try to hope it works out. But what I teach all my students to do, do we build the entire business first and then we have multiple people check each other's work. We don't just say, you know, oh, we got a contractor. Okay, good, and here's your money. And then they run off. And they didn't do any work. No. We have multiple people analyze everything that's going on, touching that property. Now, they send you pictures, they give you explanations. I double check what they say with other people. Even my property manager. I have, let's say a realtor. Hey, realtor, can you go buy and check this out? I'll pay them, you know, 50 bucks or whatever or, or an inspector. And so we always have everybody check. So the first one, if you're starting the roadblock or the problems will come and you'll pull your hair out and you'll give up if you don't build a business first. Now here's the next step. Here's where the next roadblock comes. It's when somebody goes from a beginner and they get three or four properties and they have not built the business like I've told them to. And they have, let's say four or five, maybe even eight properties and they really don't have time. Maybe they might find the right properties, maybe they might be making some money. They're mom and pop, they're running the business themselves. They're finding the tenants, they're collecting the rents, they're managing the repairs, they're doing all this on top of having a family, on top of having a job, maybe even a great side hustle. And so they're running ragged because they don't have the time. Here's the next, that's the next roadblock. But how do you get past that? We have to learn how to start scale and that is by when you do it right the first time, by building the business, getting the right people, then we implement the right systems, procedures and processes in place that are going to make sure that we can scale because we're not taking our time to run the business.
- [41:27]
Nick Loper
No, this is good. So it sounds like the, maybe the biggest mistake that people make is just not having the right team members or the right experts in place the boots on the ground to help you out when things go wrong or to prevent things from going wrong in the first place.
- [41:41]
Dustin Heiner
100% to make sure that you don't get bad tenants too. Here's just a key piece of the process. Well, I just said that word systems, procedures and processes, we have to have those. Any business, your side hustle business, you have that as well. Same thing with real estate investor. We need to stop being an investor, become an income builder, which means we're making money every single month and have that business run itself and so we find good tenants. I hate it when my rent's late. I hate that. So I don't treat anybody differently. I treat everybody the exact same. This is a process that you put in place in your business. Rents due on the first, late after the third, on the fourth, we put a three day notice on their door. This is legal. You have to do this. And then after the third day, if they have not after three day notice, that's like day six, I think six or seven. If they have not paid the rent, you add on with that three day notice, you add on the late fee. But if they have not paid the rent, we start the eviction process just as cookie cutter, as straightforward as possible. Number one, that gets them to pay the rent. Number two, it helps them to be on time and regular. Number three, if they're not going to pay the rent, you get them out as fast as possible. And number four, you just stop paying your mortgage. Will the bank say, hey, you call up your bank. Hey, this is what. I've got this. Before you call up your bank. Hey, bank, my son got arrested for the second time. I had to use the money for bailout for the mortgage. Would you not start the foreclosure process? Because I don't have the money. No, you wouldn't. The bank would say, no, we have to start it. So what we do is we put in systems, procedures and process, treat it and run it like a business and just start the eviction process. You're still going to get some outliers. We're going to have problems. But usually all my tenants, they just move out when it's time to move out. I don't have to evict them. I don't have holes in the walls, dog poop everywhere, which has happened to a lot of people. So we find the right people and then we treat them well, take care of the property, but we let them know, hey, this is. We're taking everything seriously.
- [43:29]
Nick Loper
Yeah, get out your crystal ball. And I want to ask if we're in a housing bubble right now. Oh, okay.
- [43:37]
Dustin Heiner
So here is what I'm seeing. The commercial real estate, which is apartment complexes, especially office complexes. That's definitely. That's going to come to a head now because a bubble happened. I'll get to residential. Just a second. But the commercial, like a large apartment complexes, syndications, which is basically somebody reselling somebody else's deal, just trying to raise money. So. And they don't even invest their own money. It's not even their own deal. They're just trying to take part in the action. Well, what happens with those apartment complexes? Somebody bought it and then five years later they have to sell it. They have to because of financing. Then five years later, they have to sell it again. Five years later, they have to sell it again. And so they were. This is the bubble. What happened is they were bidding up properties and now they're stuck. So they're not giving money to their investors, and they're not. And they might be taking more money. I don't know. That's why the deals that you and I have been in, in these apartment complexes, we're getting 60% of the market value because these people are getting hurt and they have to sell so, so I think commercial real estate is definitely a bubble because of how it's been bought up. Here's the next bubble when it comes to real estate and residential. So this is my prediction, my crystal ball. Here's where the bubble is. Airbnb short term properties. In Arizona alone, there is 70,000 short term rental properties in Arizona. 70,000. And keep in mind, these are homes that were long term rentals or primary residences for somebody to live in. Those are now off the market. That's why rents skyrocketed, because there were no properties. Now here's the thing, with that many properties there, the amount of money and these people, they were following these TikTok gurus on there, hey, I got three properties, I make 80 grand a month and all these, all these fancy things. Well, what's happening, because there's everywhere, this is happening everywhere Airbnb is having trouble is the prices are coming down on every property that's for rent on Airbnb. They can't get what they hoped they would. So they were, let's say, you know, let's say about a 500000 home and it's normally 500. They may paid 550 because they knew, oh, I could rent it on Airbnb, I'll make all this much money. So they way overpaid. The price went up on the property. Well, as the price went up, they eventually have this huge mortgage that they're going to have to pay. And if they can't rent it, meaning for let's say people, the economy goes down. When we see the economy slowing down, inflation, everything's hurting people. So people travel a lot less. That as well as supply, there's way over supply of properties that makes the amount of money they can make per month in rent from the short term, it's going to be hurting them. So they're going to have to have this mortgage payment. So I think eventually in the next year or two, we're going to see a lot of properties foreclose because these Airbnb properties were way overpaid and they're not making money and it's going to hurt the economy in the long run. So that's my prediction. Commercial real estate definitely bubble.
- [46:30]
Nick Loper
Yeah. Particularly in like tourist areas, like high travel areas.
- [46:33]
Dustin Heiner
Yes. And I would say, I'll give you example, I have a Airbnb in Murfreesboro, Tennessee, which is just south of Nashville.
- [46:41]
Nick Loper
I was going to ask if you had any short term rentals.
- [46:43]
Dustin Heiner
Yeah, I have short term and midterm, but predominantly Long term. I love boring old long term that I just make money without even thinking if that word. I'm worried about turnover and properties.
- [46:54]
Nick Loper
Yeah, yeah.
- [46:54]
Dustin Heiner
So Nashville a glut. There's so many in there and it's just, it's terrible. It's hard to break into that market. And so eventually something's going to happen there. But now Murphy'sboro is like 40 minutes south of it. And so people still like, it's a big city, 130,000 people here. People still have weddings, there are still deaths, there's still graduations, there are still reasons to come into town. And so, you know, if you're getting a short term property in like, you know, a town that has maybe 10,000 people, that's going to be a little harder. But, but these outlying cities that people overlooked, you can buy some good properties.
- [47:26]
Nick Loper
Okay, cool. I appreciate you sharing where the market might be headed and some of these bigger macro forces because of course, at a certain point, as we've seen in a lot of cities, the municipalities come in and say, hey, we're going to put a stop on this short term rental game because you're taking up all our housing supply. That's not great for the people who actually, you know, want to live here long term, but absolutely. Very cool. Dustin, this has been awesome. Really appreciate you kind of sharing this roadmap for year one, year two and beyond, what you can do with some systems and processes and team in place. On the real estate side, on the rental property side, what's next for you? You've got masterpassiveincome.com you got the podcast over there. Want to encourage people to check out Dustin's free real estate investing starter course. We'll link that up in the show notes. And you've got your own conference probably on year 3 or 4 of Rubecon Real Estate Investors Wealth Builders Conference, if I'm getting that correct. What's, what's, what's got you excited for the rest of this year?
- [48:18]
Dustin Heiner
You sure are. You got everything correct, man. Good job. Yeah. So my goal is to help 1 million people to invest in real estate because I quit my job in 2016 and then as I started coaching people because they just asking me so friends and family members, I started coaching people and then realized how much fun it was. Number one, because I enjoyed just talking to people. Hopefully comes across on my, you know, I get excited talking about this stuff but then I had plenty of free time, time, you know, 40 plus hours of my life back and so what's up next for me is getting even bigger into my own personal real estate investing. I, I building master passive income coaching people just took up time. So I, and I had plenty of properties. I didn't really. So I'm gonna be buying more properties.
- [48:56]
Nick Loper
When is enough enough? Like, do you struggle with this too? Like, the goalpost keeps moving. You're like, I got 30 doors, let's get to 50. Like, but why, like, if you don't need it, why, why go through it?
- [49:06]
Dustin Heiner
So great point. So for me, once I got to 30, I think 33 or something like that, I had enough money coming in, and it wasn't a drive, like, it wasn't driving factor. But here's, here's an amazing thing. I started realizing I should buy more properties, but I didn't really need to. But then I realized, oh, my goodness, I got five kids. Why don't I help them to buy or why don't I buy more? So I can either give them, give to them or just help them to buy their properties and, and go that route. So now it's growing because I have five kids to be able to make sure that they have, you know, 10 properties each. That'd be another 50 properties that we're all working together to buy.
- [49:42]
Nick Loper
Yeah. Okay. Yeah. What a legacy to leave behind. Yeah. And we, we kind of just touched on it briefly, but kind of recycling the equity where it's like, you know, at a certain point, plus appreciation now I can get a loan against this existing property and put that into the next thing. And at a certain point, there's a flywheel that starts to spin. And I get the sense that it's kind of. You get a kick out of it. It's a fun game for you and this whole legacy factor too.
- [50:07]
Dustin Heiner
Absolutely. It's so much fun. Yeah. But one other quick thing I want to share with you. I don't think I told you about it so, and I just mentioned it earlier, IncomeBuilder IO Incumbuilder IO is my new software that I'm creating that is right now it's free. So for right now, for a limited time, you can get in there for free. And I'm building this out because I realized, not that there wasn't any good software, because there are plenty of good software.
- [50:31]
Nick Loper
This was like a deal analyzer tool.
- [50:32]
Dustin Heiner
So it's even more than that. Yeah, that's it. So right now it's. We started with analyzing deals because that's the number one thing that is easy to jump into, and it helps people to make sure they're getting wins. And so it's green light. Deal analyzer is basically what it's called where you have. If it fits this criteria, you're gonna have a green light. If it doesn't, you're gonna have a red light. We're going to have AI to kind of walk you through how to actually make sure you're getting all green lights. But that's number one. But here's just analyzing. That's just the tip of the iceberg. All my students, I coach them how to find properties, how to analyze properties, how to finance properties, how to get insurance for properties, how to manage the properties, how to do accounting for your properties. And I thought, I want a software that walks a property, not the person, but the property. So if you have your user, you. You create a property, you find a property through my software, you analyze it, but it's a portfolio. I'm trying to gamify it too, where it's like, you don't need to go for me for coaching, you just follow the steps. Like, what's the next step? Here's the next step. Because again, like I said, I created a system, a business that I created over and over again. So we're going to have it to where you even collecting rents, you're managing your portfolio in this app. And my goal is to help people become an income builder.
- [51:43]
Nick Loper
Yeah, yeah. You get that flywheel spinning for sure.
- [51:45]
Dustin Heiner
Sure.
- [51:46]
Nick Loper
Well, this has been really cool. You definitely got me thinking harder about adding some direct real estate ownership back into the portfolio. It's been a long time, so there's. I'll chalk that up as a win for Dustin. Not that we were trying to have any sort of debate here, but let's wrap this thing up with your number one tip for side Hustle Nation. 2025 edition does not have to be real estate related. You got side hustles on side hustles here.
- [52:10]
Dustin Heiner
The number one tip I would give everybody is to honestly, it's never give up. If you give up, then you fail twice. Like, let's say you buy a house and you do it wrong or you start a side hustle and you do it wrong and you fail once, which means you did it didn't work well. You fail twice, you ultimately fail. If you give up, you didn't learn from it, you didn't get better. My suggestion is definitely figure out, like, use the failure as a way to learn so that you can grow and not fail a second time. But never give up. Up.
- [52:41]
Nick Loper
Very good. Never give up, learn what works. If somebody else is doing it, hey, why them? Why not me? I love that kind of, kind of mentality. Like if they figured it out, I can figure it out. We'll link up all of Dustin's resources in the show notes for this episode. All you gotta do is click the show notes link in the episode description and it'll get you right over there. A couple takeaways from me before we wrap. Obviously this long term mentality, the more properties you can stack, the more systems you have in place, the better off you're going to be. You're going to be able to weather some capital expenses that might come up or some problem tenants that might come up. I was kind of reminded of the Warren Buffett line. When you're talking about captured equity, you kind of like you make your money when you buy, not when you sell. It's like trying to buy, right? Not trying to buy at inflated prices. And then building the team, putting the team and the systems in place so that you can really be the income builder, you can really be the owner investor rather than the person who's getting calls from tenants at three in the morning. Hey, the toilets leak it, stuff like that. But Dustin, big thanks for coming by, sharing your insight. Once again, thanks to our sponsors for helping make this content free for everyone. Side hustlenation.comdeals is where to go to find all the latest offers from our sponsors in one place. Thank you for supporting the advertisers that support the show. That is it for me. Thank you so much for tuning in. If you're finding value in the show, the greatest compliment is to share it with a friend. So fire off that text message and help spread the word that way. Until next time, let's go out there and make something happen and I'll catch you in the next edition of the side Hustle Show. Hustle on.