Inflation is creating a situation where you're actually on an escalator and you are going down. But I have this belief that when you buy your dream home and you retire, you die. They watch me get promoted over all of them and there was some animosity there. What about guns? More guns or less guns like these are disasters.

You don't want to end up in these kind of. Partnerships With real estate all of a sudden, you would absolutely, almost without a doubt see a softening of real estate prices in those cities. Market doesn't care that you waited four more years to buy real estate I Would not be surprised if he just Charmed the whole country and stepped in and became the next president. all I was doing all day long was playing World of Warcraft I was not a very personable guy I was a cop I have extreme amount of Regulation around me.

At any point Finra or the SEC could just walk in my office. That's my whole point of this three pillars approach to wealth building is it doesn't pigeon to hold you into only one way to do it. Welcome back to another episode of the Meet Kevin show. Today we have David Green Here you are authors of the book: Uh, buy Rehab Rent refinance.

Repeat the Burr book The Long Distance Real Estate Investing how to buy Rehab and manage out of state rental property and sold every real estate agent's guide to building a profitable business. And now you have a new book coming out. Tell me about it. And then we got to talk about what is happening in this market.

Are we going to have another 2008 Right On man! So this book is written as the antidote to the get rich quick culture that has made its way into real estate investing. I Finally had it up to here with people coming to me and saying hey, David I have no money, no job, no skills, no credit, nothing to offer and my life is terrible. How do I invest in real estate? So I can fix the whole thing and I just I wanted to help people and I knew that giving you information about how to invest in real estate is the equivalent of giving a three-year-old a license to drive a car. It's you need some skills before we get to that point.

So I wrote this book. pillars of Wealth had a make save and invest your money to Achieve Financial Freedom and the idea is the blueprint that I use in my own life to become a multi-millionaire So I focused on saving money I was very very detailed about where every dollar was going and tracking that and then I learned how to make more money and I did that through working in restaurants and then working in law enforcement and then becoming a real estate. There's actually a skill to making money that anybody can learn and then once you have some money now, you can go invest it safely. It is just a different way to look at the world of real estate investing as opposed to what everybody hears is get rich quick, Take my program, buy my course and I will teach you how to turn a dollar into 15 cents or whatever the case may be I mean you're so right.

It's it's this. get Rich a quick idea is is so Sensational it goes viral. It's so exciting. but then unfortunately I wonder if it's almost like we were talking about earlier when we came in.

It's like there's so much like there's so many dating apps and it's so easy. Everything seems so desirable so then you just pick off what seems most desirable but nothing actually ends up working out and it's very much in real estate where if we're left with oh, the only way to make money is get a 10 cash on cash return. You just never end up investing and you never actually build out as you say, the pillars of creating a strong foundation. So how should people in today's environment? With let's maybe start with the market and then kind of work from there.

How you know how concerned do people need to be about this potential for a real estate crash? You know there's little inventory, but people are saying the amount of buyers who have been buying throughout 2023 uh, might dry up. Kind of like those excess savings have dried up. and when those buyers dry up, even though inventory is low months Supply will Skyrocket and then prices will come down. What's your take? Everyone's always waiting for that crash.

The question I ask is what are you seeing that would lead to one and I always hear crickets. The people that are calling for the crash the most usually have no idea what would cause a crash. They just know that Well, we had one in 2010, so we're due. Yeah, right.

Like we're supposed to have one. They don't understand macroeconomics. They're not following what the government does with quantitative easing. They don't know about companies like BlackRock that are buying up as much real estate as they can and they don't understand.

To be frank, the fundamentals of investing in real estate are about more than just cash flow. Cash flow is sold as the foundation that you should build your entire Investment Portfolio on. In a lot of ways, those of us that own real estate realize that cash flow is fickle. It's a cat.

Sometimes it comes and lays on your lap and it lets you pet it a lot of the time. It just knocks stuff off your counter and makes a mess that you have to go spend money and clean up you did. You never know how that cash flow is going to work, but things like Equity Buying in the right locations, getting a really good tenant base, understanding leverage, Buying the property right in the first place. you have a lot more control over those things.

I Don't know if we're going to have a market crash. What I do know is right now, there are not a lot of cash flowing deals out there. We've seen interest rates double or triple and prices have not gone down. They might have dipped a tiny bit in some markets, but in general they are holding strong.

I Think interest rates will continue to go up and prices will continue to hold where they are because people only drop their prices. Your real estate agent. You know this when you have a seller, you have a listing and you're listed at 6 hundred thousand dollars and Jerome Powell comes out and says hey, we're raising rates Do your clients call you and say Kevin dropped the price to five hundred thousand dollars The Market's collapsing. No, no.

When does the seller say hey, I'll take less for my house Oh time. yeah they have to be on their 90 days, 120 days pain of waiting and they'll finally say what if we drop at 10 grand it's always the same conversation. It's so funny. You say that you go in 2018 Rates were uh, a drone Powell was raising rates.

Uh, you know we went from like one and a half to one, three, seven or one seven, five, two, two and a quarter, two and a half and uh, I Remember that summer so distinctly I had seven listings and we put these seven listings on the market. Then all of a sudden we got another rate bump. Mortgage rates shot up somewhere around on that one I don't know why 75 basis points to a full percent. It kind of came out of nowhere out of nowhere.

Yeah, and it was like May of 2018. and all of a sudden the buyers dropped off a cliff and I'm like sellers rates just went up. We need to drop the price and all of them were like man, you just want to make a quick Buck man we just need to wait and had they dropped it then we would have sold right away. but they wanted to wait.

So we waited and it was a fight. It I mean prices eventually stabilized? Uh Jerome Powell eventually stopped raising rates surprisingly in America things just, they tend to work out in the long term anyway. But I remember that Panic of the moment like this actually affects buyers and sellers like no problem, don't care, You got to sit on the market for three to four months before they're willing to start dropping the price. Yet every buyer out there thinks that when the news comes out and it says rates are going up or whatever the the next economic cycle shows, would they expect prices will immediately collapse? No.

And it's not realistic. It works off of supply and demand, how many houses are for sale, and how much demand, are there for them. And it's the comps that make real estate so sticky. Uh, and so this is where you know you have sellers that are stubborn because they say, well, look, my house might be listed at 5.99 but that one over there sold for 580 and mine is way better than that.

And that that ego yes, makes real estate very sticky. It takes many months for comms to start coming down. That's a good point Some markets and you see this every season, especially back to school right now in some markets. I'm seeing some houses that we're selling for six have some active listings that are starting to stagnate around like 590 and we're like, okay, there's gonna be some fluctuation there, but I mean, is it like they're sitting at 400.

No, of course not. These are just the minor fluctuations that we see. Could we have a little downtrend going into the winter? Hey, look, every winter you do right? That's my take at least. November December is when you go by, don't let the secret out, right? But in order for for the real estate to drop in price to the point that it's going to cash flow really strong like people got used to.

Yeah, very hard to see something like that happening because there's still. Even though real estate is not as appealing as it was when rates were lower, it's still more appealing than everything else. It is still. the cleanest shirt in the dirty laundry.

Where else you're going to put your money that beats inflation? So my take with this book is to say look, if if it's very difficult to get more income out of real estate through cash flow, then make income out of real estate through other factors like equity and tax benefits and paying down your loan and go make your money in the old-fashioned way. doing better at your job, starting a business, Being an entrepreneur actually be intentional about building the skills that people build in order to make more money. Taking advantage of capitalism while we still got it, let's hope it stays around for a while, but we don't know how long we're gonna have it right and then managing that money better people, don't they? Often they'll do anything to make another 300 a month in cash flow, but they won't look at their personal budget at all and look at where they could cut two thousand dollars a month. That's so well said.

I I Have this nightmare that we will run out of opportunities to make money and we'll just have like socialism and everyone will be in like a tube with a Ready Player One goggles and you know this will just be you all day long, right? My nightmare is that because then I can't provide more value than somebody else because we're all just in the same tubes. Yes, uh, that that scares me I Love that we are in an environment now where there's so many endless ways to make money, there is no shortage of ways to make money. Uh I Mean it's It's shocking just from the different businesses that we operate from the vendors that will hire you know they'll say we have this perfect solution for your problem and then we get in. We're like we could build something better and as much as sometimes we get frustrated, we're like, no, we should be saying thank you because if other people aren't able to provide good value, we could provide better value.

That means we can make money. Yes. so if we can provide more value, Yeah, it's empowering if the same is true at our job. If we can provide more value than our co-workers we win.

Yes, it's a great opportunity. So I I think you're you're it. sounds like your books, right? Right on the perfect uh path of what we should be thinking about. Uh, not necessarily the most viral path of put everything into a money market fund and just sit around and do nothing.

That's exactly right. But what do you think though? I mean people want to retire early? Can they retire early with real estate? It's possible. But but the people that I know that have retired early and probably you would say the same. They worked 10 times harder than everybody else to get there, and then oftentimes once they got there they realized you know what? inflation is way worse than when I first started on this journey.

my money's not going nearly as far as it did now. I'm gonna go back to work now. My take on this is that if you get to do things you like for work, instead of things you don't like, you've won. It doesn't need to be.

You don't work. There's this idea in our culture that if you're working, if you're not sitting on the beach with a Mai tai, you've done something wrong. That's what we all should be. Getting to the point: I should never have to work that.

That's what Financial Freedom is I Just don't think it's very realistic from what I've seen in my own portfolio, you look at the second law of I believe it's thermodynamics is that if you leave things alone, they will fall apart and it will get worse. Okay, I like that. I Looked at my own portfolio when I stopped paying attention to it. even though I have an organizational chart and systems in place, the people responsible for those systems.

When they're not being held accountable, they start doing a bad job. The money goes away. You've started a business, You built it up. It's doing great.

You stop paying attention to it. your employees start working less hard. Stop. There's no accountability.

It falls apart. Everything in life works like this. Hey, did you know you could now invest in my real estate startup if you're a non-accredited investor, which means almost anybody can invest at a one-to-one valuation. We talk more about what that means at Houssac.com and you should read the offering circular on the risks associated with that.

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Go To Househack.com Okay, like we've been sold This dream that you're gonna buy a couple houses and then it's done. You get to retire and those of us that have those houses realize there's still problems. There's still things that need to be looked at. It's just you shouldn't have to to do the things you hate.

I Love that analogy. I Mean first of all, this reminds me so much of the thorough Dynamics law you talked about I think Ben Franklin Had this quote a used key doesn't rust. Yeah, and if you think about it, it's like, oh, that makes a lot of sense. Yeah, you stick it in the slide every day and turn it.

It actually functions. You know, whereas if if you don't function then then you rust and you fade away. I Actually I have this belief and I don't know what I'll feel like when I get to like retirement age. but I have this belief that when you buy your dream home and you retire, you die like you just you rust away and you die.

and I I'm so excited about working that it doesn't feel like work anymore. And I know that's frustrating for a lot of folks because look, I I didn't love my job when I worked at Hollister I loved it at first but then I got a bad manager a manager that didn't like me because I was a law enforcement Explorer I was doing ride-alongs I had like 3 000 hours of ride alongs and uh, the manager hated cops. absolutely hate it. so my schedule got caught I got the worst duties right I hated working them.

But now you know if we can transition to finding things that we love doing now it's it's fun because we can take that money we build and invest in real estate. Great analogy. Sipping those monetize I get to still sit monetize I Just do it after work. You don't want to go 40 hours a week? Yeah, exactly.

Food tastes best when you're hungry. Vacations are best when you're working hard. Yeah, you want to help. balance in life, right? So I just had balance of a few my ties last night, right? Okay, What? You hear a lot in our space is this formula that would say make money or get money, Borrow money, partner with someone else, buy houses, get cash flow, replace your active income with passive income, and quit.

And then when you look at all the people in the space I Don't know anyone that's done that. Yeah, even the guys that own a lot of real estate. Things go wrong. There's evictions, there's tenants, things break you.

You're constantly putting money into real estate, just like real estate is providing money for you. and it doesn't always come from cash flow. Sometimes the value that you create in real estate sits in equity, or it comes through tax savings, right? But you have to be making money to take advantage of these tax savings. So my case in the book is that, if you love real estate, yeah, and you want to get out of your job, get a job in real estate.

There's so much need for good real estate agents, good loan officers, good property managers, good contractors, good design people, good bookkeepers good. CPAs We are always looking for someone that has skills in these areas as Real Estate Investors And if you're passionate about it, go be great in that space, Make money. Put that money into real estate. It's still possible to do, but you got to work harder than you used to.

I Have this analogy that most of us think that we're standing on the stairs and we're halfway up and if we're not working hard that we're not getting somewhere in life, but we're at least not losing anything. that we have this ability to just sit where we are and we're okay with how much money the FED has printed. Inflation is creating a situation where you're actually on an escalator and you are going down. Oh interesting not.

Building Wealth Not trying to get ahead your your money is losing value. Everything is probably in my world, at least food Gas Energy Vehicles It's probably twice as expensive as it was three four, five years ago. I Love this escalator analogy. If you sit still, it's I mean it's moving down, you're losing and you don't realize it because everyone else is on the same thing and you're comparing yourself to everyone else and you're all moving down.

If you want to get ahead, you're going to have to run up a down escalator which is going to be harder, but it's still worth doing and you can do it and you don't want to get clawed at the bottom of the escalator. I Have this like like childhood nightmare that I just cannot shake out of my head. it was my mom was watching the show The Young and the Restless or something like that I don't know one of these like TLC shows or whatever and the ladies on the escalator. She drops her her lipstick and it goes down and I don't know why it's so like dramatic in my childhood but I just see it getting crushed by the claws at the end.

Don't get crushed by the coffee, you stay on too long. That's what's gonna happen to everybody, right? And you made a good point. We don't know how long we're gonna have capitalism, and when you move into a socialistic economy, your ability to create wealth is greatly hindered. because like you said, you're not.

You're not rewarded for providing more value. Everybody's in the same place. Yeah, and so if you wait till you get all the way to the bottom and socialism kicks in, you may see a lot of the people that were upset that David Green is saying I gotta work hard I wanted to hear about passive income. We may look back at these days and say oh I wish I was in a point where if I worked hard I could get ahead.

That's where all the haters are too. at the bottom of the escalator like that's that's where like all the critical people, you can't do it. It can't be done. They're all at the bottom.

So I'm like I gotta keep running man I want to be in that mess? Yeah, that's what I take and there's joy in the running, right? A Lot of the time. In order to make more money, you have to become a better version of yourself. Okay, you want to sell more houses? You got to be more friendly, more knowledgeable, more organized. They're all things that require you to step up your game.

It's personal development that you use to succeed in capitalism, and a lot of people get excited about real estate investing, which I love I want them to. It's a great carrot yeah, but it it also exposes all the areas where you're not doing great. If you look at where your money's being spent and you can't control your spending, you've got some issues with discipline. Maybe you're relying on retail therapy to feel better about yourself, right? Maybe you don't really want to have difficult talks with your spouse and so instead of having those talks, you just go out to dinner and spend 500 bucks and you just use that as a Band-Aid right? Yeah, when you start looking at how you're actually spending your money, it reveals elements of ourselves that maybe we've been avoiding.

But it feels so good when you actually rip off that band-aid and get in there and fix that problem. I Think one of the things that you mentioned. Uh, about. um, A I think you said it in the discussion of property management and record keeping bookkeeping.

This is actually I think there's a big opportunity there for folks to learn really good bookkeeping, because not only is that going to lead you to be accountable in your own finances as you're saying, safe, but it's also going to give you a skill that I would venture to say 99 of people are horrible at. Yeah, Like if you can run a perfectly reconciled QuickBooks or whatever program you want to use for your personal life and your businesses, you almost can't lose. But now take that skill. And like you said, become a property Manager.

Like here's here's a way: You want to build a really big business and you want to get successful. Starting with real estate so you can buy your own real estate, Start a property management company, understand everything you can about bookkeeping, so you run the best books possible. You become the best property manager possible in your area. And trust me, there's a lot of opportunity to be a great property manager everywhere around the country Everyone hates Property Management You treat Property Management like your clients are your class clients, but your tenants are your customers.

Now You built that five-star reputation. There's no way you won't become wealthy being a great property manager. Because here's the other way as well. this property manager.

You become a licensed real estate agent. What happens when those landlords are like I Don't know man. I Think the American's gonna crash I Want to sell? They're going to call their property manager. Now You've got built-in clients to sell properties from.

The number one way to get buyers as a realtor is list real estate. Yeah, so you get in on the ground floor. In these painful times as a property manager where all the Realtors are leaving the business, you're a great bookkeeper. You can build that five-star reputation.

You're not going to have a shortage of properties to sell. Then you're not going to have a shortage of buyers convert your tenants to buyers as well. That is a multi-million dollar business idea in any City you're in right now, but it's very hard work. but it's doable and you don't even see those angles.

If you're just thinking buy real estate, get cash No nobody, nobody. Well look. The first thing people say when they want to buy real estate is oh, I'll do the property management myself. Most people don't know the first thing about property management.

It is a job. I Say people should start by hiring a property manager and then learn and breathe and then transition to doing it yourself. Maybe in the future people get it backwards. They're like oh, in the future when I have all this cash flow, hire property manager I Have my my ties should be the opposite.

Like build your own business. First learn what other people do and then improve on it. Yeah, and I Just think of where there's opportunity. you have opportunity to build a business.

Right now, you have opportunity to create equity in real estate. You decide the price you pay for it. You decide what improvements that you make. You decide how to read the comps.

You don't have as much opportunity with cash flow. You're dependent on what the market gives you. and a lot of people have tried to avoid that by getting into the short-term rental space and as everyone has flocked there. What you've seen is that the demand for these is is kind of stagnating or going down a little bit while the supply is increasing which makes it harder and harder and harder to run that business.

What I'm getting is you don't want to run in the same direction of whatever everybody else is doing. Oh, you're guaranteed to fail that. Do you think we're in a bubble for Airbnb I Think that certain markets? Yes, Definitely. And not only that, but you're seeing even if it's not a bubble, you're seeing certain municipalities just coming in and saying nope, can't do it.

Incredibly unfair to the people that just signed up for a 30-year mortgage to buy a property and dumped a bunch of money into getting it ready and energy and effort and have done everything that they were supposed to do to succeed as an entrepreneur. And then the city comes in and says, oh, we're just not going to allow this anymore. Oh yeah, and you're up that Creek I Wouldn't say that you could ever say that real estate as a whole is going to go up or down, but you have to look at the individual markets and in many of these markets, you are going to see that it becomes much tougher to run a short-term rental. and like you and I said before, there's people that are doing it, but it becomes their full-time job.

Yeah, well, well yeah, it really important. Go check out the Bigger Pockets podcast that we did with David Green I I Don't know you guys might post after me but State go subscribe to the BiggerPockets podcast and wait for my episode. We talked a lot about that Airbnb becoming a job so shout out for for them which also I Gotta I Gotta shout out Stream Yard Really quick Stream Yard! We do all of our live streaming with Stream Yard and some of our recording even as well with them they're a great sponsor of the channel. Go to Metcaven.com Stream Yard to learn more about them.

Every single Creator or somebody wants to be a Creator should be using Stream Yard so shout out to Stream Yard. so on. Airbnb Is there a potential that in some of these markets? uh, where people have gone in saying look I had cash flow in 21 and 22. but now they're like oh no I need to go long-term rental and all of a sudden then they go from cash flow or like paying their salaries or something to negative cash flow.

Is there a possibility that we're going to see some short-term rentals start getting liquidated and mass in certain markets and could that drive prices down in certain markets, It would have to be so significant in most markets to drive prices down. I Think it's more like if you get more of these short-term rentals put on the market and sold, it is going to be like pouring a cup of water around sand at the beach. It's just going to absorb it right away. We need inventory in most markets.

I Mean you may live in Wichita Kansas and you have plenty of inventory there. but where you and I live in California something goes on. The market is getting offers in four days, so it depends on the specific Market but I I think it could very easily some of that short-term rental inventory could be sold off. You wouldn't even know that it happened.

Wow, you would just have less competition. or yeah, less competition for short-term rentals if you're someone who keeps it. It's so interesting you say that, especially about California. You know if people hate California and this idea of investing in California real estate.

Here's one of the Beauties About California Real Estate is this democratically controlled legislature that we have. It's like 77 Democrats I Ran for Governor against Doosom I Tried I tried okay, but anyway I came in second place. Recall candidates. The the problem that you have in California is they don't build homes.

That is actually a beauty as a real estate investor because when you own real estate, the California government is basically increasing your property values because people want to live in California because of the weather or whatever it is people do like California despite what we hear on social media and people who leave California are starting to come back to California or left during coven. And so what's fascinating is when you have a government that doesn't want to build, you're really just increasing the value of all the real estate other people already own. It's a great hedge. I Call I call the California government my hedge.

It's a good principle that applies in a lot of markets because the the frequent criticism of real estate is that it's too expensive. Yeah, okay, well what's keeping it expensive? Supply Yes and when there's constricted Supply but increasing demand, the prices are going to keep going up. So the very reason that people argue against buying real estate is that it's too expensive is often the fundamental that keeps it a good investment and makes it a safer bet. I Mean imagine if we actually had a government that said, you know what we're now creating or even in California Let's say we're creating 20 new master plan communities up and down the the entire date and we're going to connect those master plan communities to the big cities with Elon Musk tunnels.

and let's just say we could snap our finger and do that. And these master plan communities were each twenty thousand homes. That's 400 000 homes. We can snap our finger like this and they're connected to the big cities.

All of a sudden, you would absolutely, almost, without a doubt, see a softening of real estate prices in those cities. Absolutely because I can now get to the city quickly without living in the old crap. and I could live in a beautiful new neighborhood with new schools and everything. But guess what? it's never going to happen because of government.

Yeah, and a lot of people want that to happen. Kevin They think if we could just get prices to come down that they could be an investor. Well, here's what would happen. It would be good for the economy as a whole if real estate prices came down.

Sure. I Like the average person able to buy a 100. Okay, well if that happens, more of them will buy homes and they will become Real Estate Investors There will be more Supply on the market for tenants to choose from that will push rents going down. That will make it competitive to get a tenant in the house if you don't have fast.

Wi-Fi If you don't include cable with your listing, if you tell the tenants you can't make noise, they'll just say screw it I'll leave you and I'll go to the competition over there. It would actually create a scenario where real estate investing was less profitable because prices and asset values are go are not going up right and rents are not going up correct. and if we got what we wanted, it would make it less profitable to be in the business and that is a common error that I hear people making when they're wishing it was easier. I wish it was easier because then I would do it.

If it was easier, it would be worse for you. Yeah, there'd be less opportunity 100 and that's why when I wrote pillars or one of the reasons that I wrote it was to get people thinking the way we are talking. you want to run towards hard. You want to look for barriers to entry in whatever you're doing because there's less people doing it.

I Give an example in the book of a mechanic who works on a Honda Accords everybody knows how to work on Honda Accords It's not a valuable skill set to have in the marketplace that you can work on an accord, right? But what if you go, do the more difficult path and you go tell your boss hey, I want to learn how to work on those European cars that make no sense. You made your life harder. All your co-workers mock you. Why would you do that that? you're making it harder.

That's stupid. You could just you know, change. Uh, fuel injectors over here. It's the easiest thing ever.

We're smarter than you because we're doing it easy. Well, then there's layoffs or they open a new opportunity for someone that that because they really need someone to work on European cars. you command a higher wage because you have a rare and valuable skill set. That is how people make money in a capitalistic environment.

And somewhere along the way we got poisoned in our mind to think that easier is better. Oh my gosh, you're so right about that I mean people couldn't get people, couldn't pay enough to get their Teslas repaired in 2018 and 19 and insurance companies were like we can't afford to pay for this because it's way too expensive because nobody was trained to work on these EVS for for collision repair or whatever. So you're so right and it's It's so entertaining because I see it every day. Uh and throughout my career I've done this I became a licensed agent, licensed broker, mlo licensed contractor when the Drone license came out.

I'm like I'm gonna get my drone pilot license which was actually out of all those tests I just listed the hardest test. It was like a mini Pilots test. You would think it'd just be like it's a drone. It's not that it was really hard, it was crazy.

still past it. But anyway, I'm like all of these barriers mean the other agents aren't doing it right. That means I can succeed now right now I'm I'm regulated by by Finra by the SEC because I'm a licensed financial advisor I Just passed my series seven broker. we're creating a broker dealer.

There's so much regulation. at any point Finra or the SEC could just walk in my office. you know, give me your books, Show me everything right I have extreme amount of Regulation around me. But to me I Look at those and go.

those are barriers. That means there's less competition around here and as long as you you run your ship cleanly, what do you have to be afraid of? So there's a beauty in it and there's a joy that is in taking the more difficult Road and finding that less people followed you there. and so the reward is bigger when you get there. It's just a shift in thinking that if people are struggling with real estate investing or they're struggling with wealth building in general, that's what I would tell like my nephew when he gets out of high school right? Like hey man, don't ask the question of what's the easiest way to make money right.

You're thinking the wrong way already. You're going to end up with the herd and there's not going to be opportunity for you. What do you think about this? Getting a job in the real estate industry sometimes? I've I've thought of it as almost like legal insider trading where it's like when you're a broker or an agent or a lender or uh, you know, property manager or you're in construction, you have such a competitive advantage over the other per the the doctor who wants to get into real estate on the side, right? What do you think about that? Yeah, you're exactly right. You're putting yourself in an environment where you're more likely to get what you want.

It's like the analogy that we often use is: look, if you're trying to get married, why are you trying to find a girl at a bar? Could you find a wife at a bar? It is possible mathematically speaking. Are you as likely to find her there versus somewhere else? Okay, if you're trying to find deals and you keep going a roof stock or you keep going up wherever you're complaining like I can't find a deal anywhere The people that are finding those deals are not going through the same channels as everyone else, they're not taking the easier path. Like you said, they're a contractor. They get called because Grandma passed away and the house needs a ton of work and they're like hey, let's look at this thing.

We need a quote to fix it and you're like, well, it's going to be this much to fix it or I'll buy it for you from you for this much money, They're literally doing what we're saying they're taking The Road Less Traveled Yup Yup. Wow, that's so interesting. What do you think about this sentiment that's circulating now though, about this anti-landlord sentiment which is oh my gosh, How could you go in there and buy a fixer-upper You know that's that's that's what we do on a regular basis. How could you go into this neighborhood and buy a fixer-upper that's got.

you know, water damage or fire damage? Or it's a hoarding mess. Or there's malt. whatever, right? How could you? How dare you go in there and buy it and fix it up and take that home away from a homeowner? What's your response to that? What would their? what would the homeowners other options be when if you if they were selling or to buy if they were trying to sell the property. Oh well.

yeah, that's the thing if there was no investor who was willing to do that renovation. I Guess they could just walk away and let the property default lose all their Equity Now it's a foreclosure now. the bank takes it. Okay, and then what does the bank do? They're gonna go put it on the market and the investors are going to go bid on the property and they may end up paying even less for it as a foreclosure than they if they had bought it.

and then the person's credit is destroyed and all of their equities gone and the neighborhood just has a low comp that lowered everybody's property values. Yeah now I would point out that I'm not a fan of the people that go after 90 year old grandma who thinks a hundred thousand dollars is still a lot of money and they're taking advantage of people that don't speak English or they're older, they don't understand. But when there is a person who is, I'm going to lose my house I have mismanaged my own funds I've got three weeks to sell this thing before the bank's gonna take it and then I'm gonna have a foreclosure on my record I won't be able to buy real estate for seven years. You're helping that person in that situation.

So you're really helping the seller by making sure they can maximize what they can get. Yeah, yeah, and that they can buy real estate in the future. So what about once? Uh, once the property's bought this idea that well, if you're a landlord, that means you're renting a property to a tenant who could have been a home buyer. You're not stopping them from that.

Why don't What stops them from going to buying a house? Jerome Powell Yeah, that is true. yeah. I Mean, if you look at the housing market in general, it is very difficult to buy a home. I'm not without empathy for that.

Yeah, okay, but what we need is more. Supply Yeah, it's the only way you fix this problem in order to get more. Supply You need less regulation. Yeah, we've voted the politicians in the place that have put these policies in place and you can comp.

You can keep complaining about politicians, but it's us that picked them right. So that negative energy where people just complain about things all the time doesn't benefit them. It's better to look at it and say, well, what is the market doing? where are their opportunities regardless of if I agree with this party or that party doesn't really matter with the reality that I'm faced with, how do I save my money? How do I make more money and and what type of real estate can I buy in this market? That makes sense? Yeah, give me the rules and they'll find a way to play the game right? That's it. So uh, what do you think? like how should people get started in actually buying real estate is? Is it a good idea to get that like cosmetic fixer like we call it the wedge, right? Our version of The Wedge is hey, look here's a place that's selling for I'll use numbers that are relevant to a deal we just closed.

We go buy a place for, you know, 475 it needs, you know, flooring paint? uh, you know the new faucets and the new countertops and some Landscaping work. But it's in a 620 neighborhood and so we're not going to put in. you know, a hundred and whatever. that difference is 140 000 we're gonna put in like 40.

Uh, so that leaves us with Equity So we call that the wedge. Uh, what's your take is that Is that Do Should people start with small wedges? Should people you know get into something that needs some work? What do you usually like to see? The more somebody say this again, the stronger the financial position of the person buying, the more risk they can take or the harder they can swing without putting themselves in a bad spot. So my thought is, we see the deals that make the most money. They're going to require the most work and the most risk If you're someone who can't be disciplined with your own money, can't put money in reserves, haven't worked hard at your job, or have told yourself you're working hard on what you're really doing is just checking in, clocking in, putting in your time, clocking out.

you're not really giving it your best. Okay, then you haven't earned the right to go after those bigger deals. And and the Temptation is to say, Well, where do I go to find the good deal as opposed to who do I need to become so that I can get the good deal. You guys can take down deals that maybe don't even cash flow because you make enough money from business that you can float that deal as it appreciates to a really big degree.

Like the example I remember I was walking on the beach with Brandon Turner It's not as romantic as a salad or something with my taste. Yes, yes. And we're having like a philosophical conversation about real estate and what had triggered it was this idea that we had been raised to hear. cash flow is the only thing that matters and I said I was looking like a mansion in Maui and I was like you see that house over there what do you think that's worth? He's like that's probably like a eight million dollar home I said okay, in 10 years, what are the odds that it won't have gone up.

He's like zero, right? they don't They don't let you build in Maui it's on the beach. It's one of the best parts that's gonna be a 16 17 million dollar home in 10 years and I said okay, what if it lost a thousand bucks a month in rent? Everyone would say never buy it but you'd be losing 12 Grand a year to make seven million dollars over 10 years? Like why don't we ever talk about the fact that that actually would be a good investment for a person that could afford to lose a thousand dollars a month? Now not everyone can, right? right? That was kind of my light bulb moment where I realized you can make even more money in this economy if you have money, if your financial position is strong and when we don't have a lot of savings and the first thing we do is buy a BMW or we're taking vacations that we can't really afford right? We're not fighting to get the promotion and competing with our co-workers We don't realize that you're robbing yourself of that profit. It's not just the cost of the car, it's the opportunity cost of what that Capital could have done if you were in a stronger position. It changed a lot for me.

I Realize I want to run businesses? Is it more work? Yeah. But does it put me in a position that I can take bigger risks with real estate? Yes. And and like you mentioned, when the economy goes bad which it has for us, it's been real. Interest rates going up has hurt me badly.

Our real estate team is selling a third of the houses they used to. Wow! The mortgage company is struggling like it's much harder to make money in real estate. The properties that I have I've run into some problems with. It's been a very tough time, but because I had so much money saved up I can weather that storm I Just want more people to understand that.

That is how you build the confidence and you get into a stronger financial position. Not looking for an Nft or a crypto pump that's going to make you easy money that didn't require anything of you. Yeah, yeah, and it's interesting too because you you started. Uh I can't remember your first job but I know you were in law enforcement for a while so how can you walk me through that transition like how did you go and and make more money and and then apply it? When did you start applying that to real estate? Yeah, that story is in the book and it's a it's a I Here, it's a good story to me.

it's just my life. Right when I was in college I worked in restaurants. My goal was to save 500 a week. Now to do that I couldn't spend a lot of my money that I made and I had to work uh, more days.

So if I wasn't going to make 500 bucks or save 500 bucks that week, I had to pick up another shift I learned that if I stayed late and picked up the closing tables, I could go from five or six tables in the night to nine to ten. Oh nice. 40 increase in income to stay one extra hour. Oh nice.

So I started asking to close every night and if the other server said no, I'd pay him 20 bucks. so I could close I paid 20 bucks to make 70 or 80 bucks. Oh that's brilliant. You paid off your co-workers They thought I was dumb for doing it because they got paid to leave and I'm like I just made a uh what a 400 return on my money if I collect all the tips.

Yes, that's exactly right. So I'm working at the best restaurant I could get into I'm taking more tables then I realized that oh wait, that's a line right there. You just said you're working at the best restaurants I wasn't at Applebee's good for you because you need experience to get in there. Yeah! I Went in there and I said I want a job they said you don't wait tables I said let me be a busboy, let me be a host.

still work for free they let me work for like three days saw that I was good, said okay we'll give you this many shifts a week and then when I had those jobs when my job was done, I immediately went to the service and said what do you need I was helping make their salads I was helping serve their tables I was helping the bus boys with cleaning I was even helping the cooks bringing them sodas when they were thirsty. What happened Kevin was everyone in that restaurant started telling the owners we love David We love this kid. he's the best guy there. So I'm 18 and I have a job with 35 and 40 year olds that are feeding their families with this server job and it was challenging.

It was stressful you you have to do things quickly I was always learning more about Cuisine I was learning more about wine I Didn't come from a family where we ate nice food and drank wine, but in that world that's what it took to be good. Long story short, I Graduated college with a hundred thousand dollars in the bank. My school was paid off and my car was paid off. That's amazing I Mean honestly, it's chilling what you just said because what you did is you provided all the possible value you could with your time yes, and energy, which is so incredible because you're not just narrowly focused on okay now I got the busboy job All right I'm gonna.

The dishes are clean, you know I clean the table and now I'm gonna sit here and text for the rest of my time. It's like, well, what else can I do maybe I'll go sweep I'll go bring some sodas to the cooks I'll go help the service. that's brilliant I mean that that's clearly why you became successful. It stops you from doing it.

Man, there's not. There's no defense. Nobody's gonna say no, no, no, don't give me the call cool I Don't have to get around the offensive lineman to get to the quarterback to help somebody else. Like the only thing that stops US is us and it's a mindset thing.

It's this belief that well, they don't pay me enough. So when they pay me more, work harder. Oh, you just hit on another one. The entitlement that's the entitlement of the society holds people so much back because the idea is, well, if you pay me more, I'll work harder.

Well, that's the opposite of what you should do it should be. Let me work extremely hard and then there's no way you can work extremely hard and the people around you not going Okay we need to keep this person and then we need to keep this person turns into we need to pay them more so they don't leave right. We need to create opportunity for that one. That's my hope with writing this book was for the people that never had a mentor that showed them these principles that they could get it there because what happened is I became the top server in this restaurant in Manteca California at 20 years old good for you man and I went and had reconstructive surgery on my ankle to to fix some basketball injuries that were pretty gnarly and when I came back instead of going back to that restaurant I went to a nicer Steakhouse in a city called Pleasanton where everybody's rich I drove about an hour from my house to get to that nice restaurant an hour each way but my tips tripled.

Yeah, well, you went in with now experience. Yes, you went in with no experience God experience by providing more value, got way more experience than you thought you probably would have even bargained for and now use that to increase your income. That's it. And then and then I started at the bottom of the totem pole and I had to learn even fancier stuff even more expensive wine Like the pressure was on I would go home and Google stuff about Cuisine How do you pair Lamb with a certain kind of wine? Because when my boss walks by I want to hear him I want him to hear me explaining to the customer things that other people weren't doing well.

What do you think happens when the celebrity walks in? Uh, goes to me John Madden Al Davis if you know E40 he's a big rapper in the berry. he used to come in right? uh the Oakland days would come in all the time I was getting the top people that were going to tip the best that were going to share the best experience because I was the top waiter and even though you're just waiting tables, this isn't like. this isn't the boy in the room where you're making a ton of money. it consistently adds up.

That was the money that I ended up making when I graduated college that bought my first real estate and then I became a cop and it became starting over there. What do the good cops do? How do I become a better cop? What do I have to learn? Who are the people I should emulate What do I need to change about myself to be good in this environment that led to overtime opportunities that led to instructor promotions that led to all of these things that made it easier to make money within that industry which then went into real estate. That's incredible I mean it's it's even just to the extent of you suggesting after work it's okay. what can I do to be better at my job? I'm going to tell these stories or provide more value as as a server.

uh and then the people around you are like, how does he know so much? How did he learn all of that We didn't teach him that and then I think you're like a genius you know and it's it's just this like it makes them then go well. Maybe I need to figure out how to learn this stuff and then everyone around you works better and more efficiently. Say that when I took that first restaurant job and I started as a busboy, there were already guys that had been working there as busboy is before me. They watch me get promoted over all of them and there was some animosity there.

Oh yeah, it wasn't cool that I jumped ahead right? Well what you found was that they all started doing what I was doing and their promotion came much quicker after mine did. It literally did what you said where the bar was raised for the whole restaurant. My boss saw that and put me in a position of authority because she wanted me setting the example. So now when the 20-person banquet comes in, it's going to David He deserves it right? I Ended up house sitting for them like my boss.

loving me created privilege. That's how it would often be spoken about, right? But if you were a boss, you would give the most authority to the one that gave you the biggest return on your money in your business. And then the other principle was when you hit a ceiling, which you usually will at most jobs, you don't feel bad about leaving if you know that they couldn't create enough opportunity for you. Oh, that's interesting.

So when you outgrow the company basically ah yeah, and I went to her and I was like look, I want to make more money? what can I do? Is there another management position? she's like I'm sorry David you're already at what we have. This is the top and see that's where the restaurant's like, hey, you know if you're maybe at a larger chain, it's like, well, there's corporate or it's District management and so larger companies do have more of that upward. Mobility But you're right. Like, at some point, cap out uh, at many jobs and then.

but then you take all that experience and that work ethic and you start over and you. but you make more money better the next time. That's exactly right. There is a rhythm to making money in a capitalistic environment.

an actual blueprint that can be followed. and when you get a taste of it, it is so empowering. it feels so good, right? I wasn't going to work every day mad that I had to work I was going to work focused like it was a sporting event and I'm like, how do I give the best performance that I can when I get there every day before I go into work as a cop I'd be praying all right. help me do the best job I can help me to be as safe as I can help me to learn as much as I can.

and then I start getting chosen for all the instructor positions. you get a little bit more pay. With that, you get a little bit better schedule right? I'd have a point if you're an instructor that day and you're not actually working a beat. Maybe you get all your work done in six or seven hours, but you're on a 10 hour shift.

That's three hours to do real estate. Yeah, there's other opportunities that would come from. So how did you transition then from uh, law enforcement to real estate? I got my real estate agent's license Okay, because I was just referring all my buddies to Realtors and how they would come back to me and say hey, the realtor doesn't know and I realize most Realtors don't know as much as me because I just own some rental properties. Well, and if you're also a cop in the area where you're buying, you know this.

You know, Yes, exactly. You know the areas I could articulate to my cop buddies why they should buy a house instead of rent I could overcome all their objections. Well, it's cheaper to rent. Well what if you put three cops in the bedrooms here? They all need someone to rent.

You're gonna be living for close to freeze. It still sound cheaper I didn't think of that right. Then you sell in the house and then next year you can go tell them hey, do you want to buy this one It's got five bedrooms instead of three. You could do the same thing.

So I started selling so many houses that it didn't make sense to stay in law enforcement and I had developed some injuries over the time. so I just made the jump. and then and then it's the same thing we said: you're at the bottom, you're selling houses. Uh, like I was not a very personable guy I was a cop I Jades you a little bit the business a ton man and like you get things done as a cop by having a rigid personality.

You get things done as an agent by having a very flexible personality. So it was like the most stiff person ever going to yoga and I did not like it like people in my life will tell you I was. It was a hard transition for me, but building those skills to be more personable, to be more articulate to explain things to overcome objections led to me being able to form a real estate team and not just be an agent, right? So as a solo agent, the most houses I ever had in contract at a time was like 12 in escrow and that's a lot of work very hard, right? As a team, we hit 53-54 Wow, right! It opens up doors. Now it comes with new challenges.

Oh yeah, running a team is completely different than selling the houses yourself. Like the skills that it takes to be a good Agent are not the same as the skills that it takes to run a company. So you're going from customer service to business building very much so. and I started at the bottom and I sucked at it right? But you see this pattern of like if you show up every day saying I'm gonna work my hardest I'm gonna see the people that do it better than me and I'm going to copy them.

I'm going to figure out what the client needs and how we're going to meet the demand of the market. Money finds you right versus the people that we've hired that are like I don't want to have to show that person a house it's far away from me or I don't want to hold an open house this weekend I wanted to watch football like those are things that Crush you because at that open house you might have met two or three clients. One of them could have been a neighbor that you took the listing that you then sold their house and got a buyer out of that deal. Like these exponential things that create wealth only come when you're in the game and you're playing it.

and I'm passionate about trying to get people into the game. and when you're hearing the the point of view of real estate investing that hey just buy some properties they take care of themselves. sit on the beach of the my tag, you're not in the game. Oh for sure.

Well what's so interesting you said about the open houses? I had uh this I I realized how beautiful open houses were as an agent when I could go back and calculate that I was making thousand to two thousand dollars an hour from open houses because you're really shooting fish in a barrel. The problem is we don't think about it that way because we think we do the open house. Then we go home and we're tired and we're exhausted. Oh I had to put all those signs out.

Oh it's five hours out of my Sunday I could have been watching the game. What a pain in the butt. but the business cards you handed out the the the connections you made, the sellers who are going to sell in the next six months who came in to survey the market and get to know you and see how you run your business. You didn't even know they're like oh, I'm just a neighbor and you're like oh, it's just the neighbor.

No, that's a future seller, right? Those all of those connections that just makes so much money per hour. But again, the problem with our society is we're jaded to think that well, if I don't get paid more upfront, I'm not going to work as hard. But if you actually work really hard at that open house knowing it's going to come, it's just going to be delayed gratification. Then then you do what nobody else is doing that is in the book.

I Talk about that exact problem is people don't want to hold the open house because it's not Gary guaranteed money. If you paid them 25 an hour they would go. But like you said, you made two thousand dollars an hour. Oh my gosh, yeah.

I Talk about the 1099 mindset versus the W-2 mindset. And most of us have sort of like been born into the Matrix where we were shown W-2 jobs. Yeah right. I show up I'm at a physical location.

They pay me money to be here and while I'm here. if I have to work, that sucks versus a 1099 mindset that gets no security. There's no floor, yeah, but there's no ceiling. There's nothing that stops you from being able to do more.

You have to deal with uncertainty if you want to get the big payoff and you and in the 1099 world I Liken it to a cat that has to hunt its own food, but it gets to pick what it wants. It gets to eat really good. It gets to be like buff and strong and powerful because it's hunting versus a house cat that just wants someone to bring its tuna. When you're the house cat, you don't get to choose what you're given.

Yeah, you have to. and then everyone complains and they Grumble and you hear all this. It's not fair I Don't make it up. There's an opportunity.

the government needs to do something to fix this for me. The house cats never talk like that. They're like I'm just gonna go learn how to hunt and find what I want in life and they're happier people even though they have less security. Yeah, I think that's true.

People always wonder like well, whoa, you know what is the definition of happiness and I think when we're 18 or whatever people think okay, well you know I'm gonna get paid six figures and I clock in at eight I clock out at five. When the reality is it's it's usually not money. there's some degree of money helps because then you don't have Financial stress once you get above Financial stress. that's great I think statistically that's like 70 80 000 a year.

But beyond that, more money usually doesn't change much. What? What changes happiness for people and sort of a base level of Happiness So we're always going up and down on that base level. But what raises that base level is failure and achievement right? Getting through hardship but then coming through that stronger and then succeeding because now all of a sudden you get almost this success. High Yeah, and then it makes you want to.

Okay, let's try something else. Okay, that's not working. Let's try something else. Some people call that flip-flopping I I Call it like necessary.

Yeah, you have to change and just keep looking for that success. Being that house cat hunting Tony Robbins refers to that as progress. He says human beings are happiest in life when they are making progress. I Love that you think about every time in life that you've been at a peak.

It's because you were seeing that you were making progress and in the book I actually in the offense section that pillar I Talk about ways to hack into that part of your mind and measuring things so that you see your progress and you stay motivated to keep going when the money's not flowing in yet. Yeah. I Like that progress. Yeah.

I did not know that about Tony Robbins I've read Tony Robbins books some of them. Uh, but wow I mean that's a perfect way to say it. Yeah, and if you think about the W-2 mindset that says I want to go to work and I have to exist and I have to be here and I'm in a bad mood, you're not making progress. That's why Congress is so unhappy.

There's no progress That's amazing. So what do you recommend to like the 18 year old today? What? What Do they practically do like Step one Right now? you know they're watching them like I want to be the house cat man like I I Get it. Capitalism. Okay I'm in step one.

Can they look themselves in the mirror and say that they're doing the best possible job with the job they have right now? Let's say they hate their job because they're working at Jamba Juice and they're like I don't even like this job. Are they the best Jamba Juice worker in that store? Okay, Are they tracking how fast they can make a smoothie compared to somebody else? Are they literally looking at the steps like what I would do and I'm not exaggerating. When I was in the restaurants, we had t