The Incredible Power of Long-Distance BRRRR Investing with Alex Felice

This is the Bigger Pockets Podcast Show 301.

The Geography doesn’t matter and if you are far away it forces you to learn really important skills and talents are incredibly valuable like…

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Brandon: What’s going on everyone this is Brandon, host of the Bigger Pockets Podcast. We’re here with David Green. I was going to go with your middle name but I couldn’t remember it so I was going with Lin, David Lin Green, it’s like every one’s middle name but

David: No dude, not very often, usually you use my middle name “the man”, what happened with that?

Brandon: Well you know I don’t want to lie to the audience

David: Ok I see how this is going to be. Alright Brandon let’s continue.

Brandon: So what’s up Davidson, man? What’s going on?

David: You know what’s funny while we were recording today’s podcast which was super high energy, a lot of good content and kind of creepy in a way because this guy that I’ve never spoken to and says he’s never read my book says word-for-word everything that I preach about at real estate investing. It’s like what are the odds that the 2 of us are doing the same thing and we’ve never met and we come up with the same systems, it was just very, man, what are the odds that would be the case, but

Brandon: Unless because that’s what works, right? That’s just what works.

David: That’s exactly what I’m getting at. We both came up with the same conclusion coming from different places because that’s what works. I like that he definitely encourages people in the same way that I do so you guys are going to get a whole lot out of the show. He’s also a Ber investor, which we are a huge proponents of, the Ber method, so he talks about that. But as we were recording the podcast I’m getting messages from a wholesaler whose like “I really need to move this property and I can reduce it to another 20%. Can you buy it?” so we we’re talking about real estate while I was negotiating a deal while we were recoding because there was somebody else who wants to buy the house. I think by next episode I’ll have another house in contract to talk about which is cool because it’s a another real estate property where i can use the Ber method, I can finance 100% of my money out of it and you have cash in rental.

Brandon: Fancy stuff! And speaking of Ber which is exactly what we’re talking about today. We’ve got Alex on the show, Alex Felice, I hope I’m saying that one right. I got to start asking guests how to pronounce their names, I got to start doing that. Alex is a really awesome dude, he’s been very involved in Bigger Pockets and part of Bigger Pockets success stories. He was sitting right of where a lot of you are a few years ago, trying to get properties, trying to get into it and really made some big changes in his life and is now just crushing it with the Ber strategy. You are going to learn a lot about that today. He’s got a really good personality and fun to talk to so you guys are in for a treat.

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David: I love that you always do this for different words, housekeeping, house cleaning, ad hoc. It’s like Steve Carrel from the office how he’s mixing up what he’s always trying to say. You’re hilarious.

Brandon: That’s my goal in life, it’s to be like Michael Scott.

David: You can buy them a la mode here at Bigger Pockets.

Brandon: Anyway go to biggerpockets.com/llforms to check those out. And to hear from our show sponsors.

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Alright thanks for our sponsors always. Now I don’t want to waste any more time, you guys are going to love this show! This thing is just a lot of fun and very, very motivating and very, very informational. You will not be able to leave this show without knowing exactly what the Ber strategy is, how it works, how you can use it in your own life. So with that let’s get to the show!

Alright Alex welcome to the Bigger Pockets podcast. How you doing man?

Alex: Very, very excited to be here, thank you!

Brandon: Alright so people have been telling me forever about you. Let’s go to your story and figure out how did you get into real estate, why real estate, walk us through that beginning.

Alex: You know I find that I’m probably like a lot of people who, I got into personal finance first because I was living my life tragically irresponsibly fiscally. Living with making bad decisions, you know, like a lot of people. I got sick of it after really bad decisions and found personal finance.

Well started saving some money and started saying to myself I need to parlay this capital into something that will make money passively. And I didn’t want to start a business and I had no service to sell and I’m really lazy so it had to be passive and I needed to be tried and true because I didn’t want something that will only work a few years and then have to start over. Be tried and true, passive, and I had to do it without a lot of capital. If you write that on paper there’s nothing that would have appeared to work and then I found real estate and around ’13 and ’14 I started listening to your podcast and you know, I burned that thing down, 6 episodes a week while I was going to college and I bought a house inside 8 months with 3 grand. We bought a foreclosure, we moved in, we house hacked it, 18 months later it was worth, I pulled out 60 grand in cash and I was hooked.

Brandon: That’s awesome. Alright tell us about that first deal, is it a single family house that you bought?

Alex: Yeah it was just a foreclosure, it was like 54 thousand, we FHA, moved in, it was kind of dumpy enough that it was foreclosure distress but nice enough that FHA would let us move in which is kind of hard to find but 3 grand later we were able to find a house that was 54 grand and 18 months later appraised for 115.

Brandon: That’s awesome. Where was that at?

Alex: Bayville, North Carolina, that’s where I do all my investing, small town next to Fort Bragg, biggest military base in the county.

Brandon: Yeah cool. I was actually looking at a property out there like a year ago and I run the numbers and I was negotiating and it didn’t push through, I don’t know I think I should have done it, sounds like a good market.

Alex: You should have called me, you should have called me, I got your baby. Actually I will tell you a story. I was listening to this podcast in the car on the way to college. After all my irresponsible life ended I go back to school, I went back to school for finance. My idea was I’m going to school for finance to learn how to make money and I didn’t because it’s college. They teach you how money works but they don’t teach you how to make money. I was listening to this podcast on the way to college, back and forth, and I swear that’s where I got my real education. Listening to the podcast back and forth is what made me money, not actually going to, the commute meant more to me than the degree.

Brandon: That’s awesome. I like that idea you know, Zig Ziglar has that idea, well I think Zig Ziglar said it about how you should turn your vehicle into a mobile university. Like if you’re sitting in traffic anyway why not use that time, instead of listening to rock music, our country, go listen to someone who’s going to help you.

So you did that, you listened in to podcasts and kind of growing and so at your first deal what made you, I’m curious, why did you go and do, basically we call it the live and flip, house hacking of a live and flip. How did you go that route instead of just continuing renting and going investing in rental property?

Alex: Well I was broke. I had 5 grand. And so if you want to buy a house that’s 5 grand you got to move in it and do FHA or VA, but you have to buy one that’s distressed enough, and that’s a really tricky avenue, you know, specific unicorn to find but you know it’s possible. And this was 2014 where it was maybe a little bit easier than it is today but I didn’t plan it as good as it sounds now. Kind of like, honestly I was living in a condo and my girlfriend kept collecting dogs and they kicked me out of my condo. I was like I need to go and buy a house so bought this one and I think it’s going to make some money and did way better than I had expected. So that was in ’14 by ’16 I bought second actual rental because I have been saving cash for so long and I bought 5 since ’16.

Brandon: That’s awesome. Ok let’s go to that. I want to, a lot of people are able to do the first deal, a lot of people can do, they can buy a house, maybe a house hack, or a live and flip or the combination, whatever, they can do the first one. Where a lot of people get hung up is the second one. They say sell well I got the first but now I don’t have enough down payment, I don’t know how to get the second. How did you pull off the second?

Alex: I lived broke. After I figured out that I was broke, I’ve lived broke for a purpose and I’ve saved lots of money and it took me 4-5 years and couple of hundred bucks a month plus I cashed out that second property and after 4-5 years I think I paid 68 thousand dollars for my first rental property, all in, cash and rehab 68 grand. I think I had like 70 thousand dollars to my name and so there was no room for error but, you know, you do what it takes. I bought that house, we did a Brrrr, thank you for that Brandon. I got all my money back by 6 months later and then I found out about delayed finance and then I did 4. It takes me 8 weeks to do a Brrrr now.

Brandon: We got to unpack that, all that you have just said. Ok so first of all you said you did a Brrrr, for those who don’t know its buy, rehab, finance, repeat. You buy a rental property maybe for cash maybe for some short term financial you move in, you fix it up, you rent it out and you go to a bank and you get a new loan to pay off whatever you used to buy it. If that totally confused everyone just go to biggerpockets.com/brrrr with 4 Rs, you can read more about it but so it’s a strategy here that David Green loves and is actually writing a book on it’s a strategy I love i’ve used it a lot and Alex a strategy that you love and you’ve used now.

So let me go back to that, you bought this property, how did you finance the property originally to buy it?

Alex: Cash

Brandon: So you bought it with officially cash, right? So and you fix it up

Alex: My own capital that I saved up.

Brandon: Perfect. Saved it up, bought the property then went to a bank and got refinanced. Would you remember how much it got appraised after you got it all fixed up and ready to go?

Alex: 95 thousand

Brandon: That’s awesome so then the bank gave you like a 70% or something?

Alex: Yeah they gave 75% for single family, 70% for two to four thing

Brandon: You got all your cash back?

Alex: Yeah when you say that I ran into a problem as well, people can get their first one because they have a little bit of capital and they can move in or do a fix and flip. But you’re right you drain all your capital then it goes slow. And I think that goes back to the interesting principle that I talked to with real estate people all the time and I, and I say real estate is easy, super easy, and it is. Real estate transactions are really easy. What’s hard is building a business. And building a business around doing this can be difficult because people say well I don’t have enough money, well part of you’re business is raising capital, getting other people to invest in your common goals. So people they want to do it themselves, they want to raise their money, they want to spend their money, and it goes much slower than that so, when you do it that way. So building a business is hard and that’s really the part I wish I had worked on more from the start and I could have gone a lot faster. I’m crushing it now but

Alex: I love that, oh go ahead Brandon

Brandon: I was just going to say that the concept of, you’re building a business and not just casually buying property you’re building on something that’s solid. David go ahead.

David: You make a really good point about how and I say the same thing all the time and Alex and I have never met before this conversation right now but sounds like we’re doing very similar stuff – we’re both using the brrrr strategy, we’re both investing long distance, and maximizing the efficiency from which we’re building our portfolio. Even if I don’t know Alex I can guarantee you he’s like yup that’s whats exactly is going on, he makes such a good point that you can get the first deal because you only have to put a little bit of money down if you do a live and flip and you buy as a primary resident then you have to start putting big chunks of money down, and unless you’re making a ton of cash you start losing money really quick. That’s where you start to figure out the brrrr strategy, have big goals that you want to build a big portfolio. You got to build a big refinance to get your money out so you can go invest it again. I was like Alex you figured the same thing out. Tell me what was that process like for you that you realized I need to learn how to brrrr so I don’t run out of money and what are the skills you had to develop to be able to do this?

Alex: I think everyone went into that problem wherein they ran out of capital and exactly what you said, what do I do next, well, you go and figure it out and the way I figured it out was I asked everybody in the planet for alternative strategies forward to both teach me and to do it with me. And what I mean by that is, I didn’t figure out the brrrr method, I found the lender that taught me how to do it and then he helped provide options or opportunities or avenues for continued success. And so if you ever get stuck on a part of your strategy its likely you, it’s never a money problem, but a networking problem or maybe educating problem you have to learn more about the process or you have to go find people that know and can help. So when I got stuck, I said well I’ve spent all my money and you know its funny, people who don’t do real estate love to say oh wouldn’t it be nice to pay with my money right up in cash. Well the first time I paid off my house in cash I felt a hole because my bank account was drained and I had 900 bucks a month, that was worse so I needed a loan immediately and you know you wait 6 months and its uncomfortable so literally the discomfort of going slow, I am not a go slow guy, I don’t like it, I don’t like sitting still. That right there annoyed me enough to go I have to produce a solution here.

David: Ok so what are the problems that we hear people run into that are trying to do what you’re doing is they just can’t get over this hurdle of buying a property they don’t see and you mentioned that you buy properties that you’ve never even seen. What’s your process like for how you can get over that emotional obstacle of “I need to see a property before I buy it”?

Alex: Suck it up buttercup!

Brandon: That’s the best answer I’ve ever heard. That’s great.

Alex: It’s not a problem. Look I have a big rant about this. Being close to your property, being geographically close to your property is not a benefit, it is a hindrance. It is a crutch.

Brandon: How so?

Alex: Well because look if your tenant doesn’t pay and he’s 5 miles down the street I guarantee you, you’re not going to go there and choke him out to get your money back. Being close, provides you no actual benefit other than and some seemingly important piece of mind that doesn’t really exist. Being far, being close you can’t do anything, if you have squatters that’s not going to do anything. The geography doesn’t matter and if you are far away it forces you to learn really important skills and talents that are incredibly valuable like managing a team, trusting people long distance, learning how to incentivise people for mutual gain. Like my team on the ground out there, I’m worthless without them, but the value was building the team and building the common goals and the culture that we have, far more than if you’re close to the house. If you’re close to the house you end up doing everything yourself and that’s the wrong skill to learn if you want to grow.

Brandon: Yeah I actually agree. In fact I often times tell people that my ability to do work, well people have heard my story, sure I could fix up a house, I learned how to use a saw and a hammer and all that. My ability to do work hindered me in the same way that my insistence on doing only local stuff hindered me, right, because I felt like I had to do it because I could do it, it was there right so I didn’t even think about properties in other areas where I probably, to be honest I live in an area where real estate works so why not just invest there. But when I think about it now I lived in a very, very small area that would cap me at the number of deals that I can do because there just wasn’t much inventory at any given time. I think you have a really good point there like you’re not going to drive up over and show up for rent anyway why not build systems that allow you to get things done without you having to be there.

Alex: Yeah and that’s a harder skill to learn too. You know people get stuck I think, I buy 3 houses that’s a lot of work and you kind of get stuck in 3 houses or 4 houses and you’re just managing those buildings and there’s nothing wrong with that but if it were me if I really want to scale this thing then you need to learn the skills at scale and fixing toilets doesn’t scale.

Brandon: What are skills that scale?

Alex: Your ability to attract good talent, your ability to motivate people toward common goals, your ability to delegate and build infrastructure, your ability to create a culture around your team. The abilities you need at scale are really networking and education. I say these two all the time, I talk about it all the time. Those are two things, if you do those on mass, meet people that can help you get your goals and learn what it takes to get your goals and do it everyday obsessively, I mean, success is inevitable.

Brandon: That’s really good I think every person needs to click that button on their iphone or wherever they listen this podcast on and go back 30 seconds, listen to what Alex just said again.

Alex: Networking and education

Brandon: Yeah like that’s so key right? We get so stuck on the principles of real estate sometimes especially at the beginning. I know you had to learn them and get into them, how to analyse a deal, but would it be better to learn how to fix a toilet or learn how to find a great plumber that will last you the next 20 years, what skill would be better spent right? And we talk about that a lot on the show and I’m not saying you should never change if that’s all you can do is change the toilet then fine maybe you should change the toilet but there’s a good chance that there’s other skills that can serve you much better in the long term. So that’s so good, that’s how you scale a business by getting those systems down so.

I want to go back on that note, you mentioned how you can do a I think you said 8 weeks, you’re down to 8 weeks, can we talk about that?

Alex: Easy baby, easy!

Brandon: How do you do that?

Alex: Look I have the luxury of buying houses off the MLS. I still have a sick realtor so she’ll find a house get the offer accepted, close in 5 days, rehab takes 3 weeks, 4 weeks for a 20 thousand dollar rehab, tend to placement, again my property manager is a monster, again. Everything I do is a product of my fantastic team and so I really couldn’t do as much as I do without them so you find a tenant in a blink and so that whole thing takes 6 weeks and then I go to a lender and I use the finance delay exception which says you can finance your property inside of 6 months with, as long as you may, as long as you finance, this is it, most misunderstood topic on the forum. They say you could finance what you buy for but that’s not the rule. The rule is you can finance it at 100% a hud and that’s very different and so I go to buy the house, close in the hud, I put my rehab cost on there and pay for it in full and with insurance. Once the tenant gets placed I go to a lender and I say hey I want to go write this loan, I paid 66 thousand all in, that’s what it is on the hud, as long as that’s 75% LTV or 100% hud whichever is less, hopefully its less I leave no money to the deal, I get out my entire amount, and my underwriting goes fast because I do commercial underwriting for a bank so I got the inside scoop. So the last 8 and a half weeks from the time I have closed in on a house, I have 100% of my funds back minus some hard closing costs some 400 bucks.

Brandon: Ok so I need to dive in here. Delayed financing, we’ve only talked about it once before in the show, I can’t remember what episode it was and I haven’t even heard it at that time. So you’re saying basically it’s like the brrrr loan from finance. You can actually, so normally, let me get on some background. Normally when you do a brrrr property, you buy it and then you go and get a loan. The lender requires what they call seasoning, you have to di six months sometimes up to a year to get a new loan again once you buy a property, so the brrrr is 6 months maybe even 12 months. They delayed financing is a exception in that rule, housing refinance is much, much quicker, I’m not what you’re talking about but I’ve never heard this before, a 100% of hud. What do you mean by your repairs go on hud? How does that work?

Alex: So I talk about this all the time. I’m certainly nowhere near the only person that has figured it out, say it’s incredibly misunderstood and I try to deal, I’m on forums all the time trying to help people out and they just think I’m crazy but it really works so you go to close in on your house, the hud is your purchase price plus or minus maybe taxes, and so you pay 35 thousand for the house the hud lends 35 thousand grand right we all know this?

Brandon: Sure

David: Yes

Alex: So you close in the house 35 thousand dollars, the hud says 35 grand so when you go to get a loan even if you use delayed finance they’re going to say you can pay a 100% a hud or 75% whichever ones less. So the house appraises for whatever and I only paid 35 grand so you can only get 35 grand. That’s what everybody doesn’t like about delayed finance. You can only get out what you paid for the house.

So what I started doing was when I got the hud I went to the title attorney and I just said I’m going to add some stuff to that do you care? No we don’t care, why would an attorney care what’s on the hud? They don’t care. So here’s an invoice for 3000 dollars for my contractor, here’s 700 bucks for my insurance, can you add to it? Sure, now the downside is you have to pay for all of it upfront and they’re going to Escrow it to the insurance, they’re going to escrow it to the contractor and you can set it up, they do disbursements or what not but now the hud says 66 grand. And so when I go to the lender they’re like oh 100% a hud, we’re done. Cool 66 grand.

Brandon: That’s fast and interesting.

David: So if I understand you right Alex, you’re paying your rehab cost into the Escrow, you’re closing the cost of the house is going to the seller and the Escrow company is keeping your cost in Escrow which they disperse to your contractor as they complete the work. Is that correct?

Alex: That’s the way you should do it. I don’t do it that way, I pay my contractor full upfront, I don’t care because him and I are, that’s the power of having a great team. You can tell them Escrow it out you know as you tell them they will disperse it no problem.

David: Ok so I’ve never heard of that either that’s an awesome strategy and you basically, your hud is showing a higher amount, the bank will let you refinance you more of your money back out which is the whole point of brrrr right?

Alex: Yeah and there are specifics here that work for me because generally my all-in cost are 75% or close to hud so if you had a place where you had 65 grand in a house but its worth 150 for like weight the 6 months because that’s a big chunk of money that you’re not going to be able to put out and vice versa you have a house you have 65 grand into it or you got 80 grand into it and its worth 100 you’re going to lose 10 thousand dollars because its LTV or hud whichever one’s lower. So you really want to make sure that your numbers line up before you purchase the property that your all-in cost will be 75% of the ARV.

David: It’s fascinating to me that you and I never met but what you’re describing is everything I talk about in the book and our criteria is almost exactly the same. I charge mine all in for 75% of ARV. So you’re describing like having a team, having other people do the work, that’s in the book I wrote Long Distance Investing, that’s what we’re talking about, is how you build that team, how you develop these relationships you should be looking for. You’ve done this a couple times now for people who are just getting started. What practical advice you can give them, what they need to know in order to be able to start this?

Alex: They are too focused on how much money they don’t have and not focused enough on how much they don’t know. Again it goes back to education and networking. If you’re having troubles getting ahead or putting something together, odds are you haven’t met the right people yet. I’ve spoken about this significantly on Bigger Pockets how to find mentors and you know, the beekeep mentors is fantastic, local areas, learning, getting out and finding a guy like me who already knows it and then will give you a lot of confidence.

The other thing is people don’t know their market. That’s a real big problem. You have to know, I bought, I analyse my properties from MLS pictures and I’ve bought them without anyone walking into the house before I made money because I know the market so well. So when I look at a house I know exactly how much it’s going to rent for, work its going to take, what ARP is and I can do it in 10 seconds. Not because I’m smart, that’s because I’ve been grinding out zeelo and truly analyst templates or practise for years so if you’re unsure of capital or you’re unsure where the capital is going to come from you need to network. If you’re unsure of what market to go in you need to educate and if you’re unsure of what a good deal looks like you’re way behind the cure. If you don’t know what a good deal looks like you’re not going to know on how to spring on one when you see one so you have to analyse 10 deals a day. Just grind them out, do your underwriting, check out and so when the good one comes along, you go, “oh yeah that’s the one, I got that one”, you can make a move because if you don’t know what a good deal looks like even if one crosses your desk, you can’t close and you can’t move forward, so know a good deal when you see one and start making moves.

Brandon: You know that’s all I tell people all the time, well I don’t have the money to quite invest yet, analyse this anyway. Get so good knowing what a good deal is then everything else becomes easier right? Because it doesn’t take much money to run a number on, I mean you might have a pro membership right cost in there but regardless, analyse deals, be so good at that and everything else becomes easier right?

Alex: Yeah and you have to have the,  you know you got to practise, you got to prepare because when it comes to making decisions in this business you’re going to learn real quick that you always make an imperfect decision and that’s something that doesn’t, people don’t like to hear that, everybody on BP is looking for unicorn deals, 2% of a perfect deal and I’ve never bought a perfect deal, I don’t think it happens, so you have to be ready to make a deal that you can go it’s going to be good enough. Well if you’re unsure what a good deal even looks like then you’re never going to take a, that’s what you call analysis paralysis so you really got to know and spend a lot of time, I call it obsessing, a lot of time obsessing over this, like I said, meeting people, talking to people all the time, I spend hours on that website, on your website talking to people and learning still to this day. Education and then networking, I’m always shouting out to people finding ways to meet them, I met Scott and Mindy last week. And I met my close real good friends from spending time on BP and when you meet people that are doing well and they like you they’re going to take you along.

Brandon: Yeah I love that

Alex: So a lot of it is relationships, most of it is relationship

David: So Alex that’s a great point because I see what is called perfect deal paralysis all the time. You get people that are like into it they’re on BP, listens to the podcast, they’re talking about real estate when they meet up, they’re doing everything on paper that they should be doing but they can’t quite pull that trigger. It’s so frustrating because you’re doing all this work and not getting the pay off. And that’s one of the reasons I love brrrr because when I dig in to why people get a perfect deal paralysis is because they have fear of missing out, if I buy this deal and a better one comes along, they’re going to miss out, right? And that’s why I love brrrr because if you’re using the traditional method and you got 40 grand to put into a deal, if you buy A is better you missed out on B, you’ll be kicking yourself and if you know that before you actually pull the trigger it keeps you from taking a shot. So people are like, “I don’t know I go that market or this market? The duplex or the single family?”.

When you brrrr you do A then B. Do A you get your money back and you can do B. that takes all this pressure off of you to make the perfect deal and instead what you should start thinking is “30 years from now am I going to be glad I bought this house or not?” right? Not or should I buy this right now and don’t know if a better one comes along? Nobody looks back at a house they bought 30 years ago that has gone up in price times 5 and is paid off and say “I wish I shouldn’t have bought it and bought the one across the street”, you know? You won’t even remember the house across the street and that’s the shit in thinking that you need that’s what I love about brrrr and long distance investing is that it opens up doors that you can always be making a move it doesn’t matter where your market is, it doesn’t matter where your market is in the market cycle and it doesn’t matter if a better deal is going to come along later. Do you have anything to add along those lines?

Alex: Yeah I love that comment because people do get I call it unicorn paralysis where they’re looking for the perfect deal and you know I think people need to settle any more than where they already are. If they knew, I don’t care how you think that deal is odds are, your first deal’s going to be junk and you’re not going to know until so much later because as you get better you’re going to look at pass them, oh man I stresses about that deal like you said David and so think long term, like it doesn’t have to be, I don’t need 10 homeruns, I don’t need 5 homeruns, I need 50 singles.

Brandon: Yeah I did what you call the stack right? We’re talking about this all the time like you’re first deal is not going to make you rich. Your first deal is not going to give you freedom. First deal does nothing for you really but gives you knowledge and experience and credibility right because the first deal the whole point, the only point is to get the second deal. Once you can get the first then you can get the second. The only point of the second deal really is if you get the third, get the fourth and the thing that makes you wealthy is like you said 50 singles but it’s not going to happen if you don’t get the first one. Again we’re not saying buy a bad deal but it doesn’t have to be homerun.

Alex: Don’t buy a bad deal but don’t wait around to get a good deal like on my last deal, I looked at it, I was like man I could have made more on this deal if I bought it right. Who cares? 5 grand like in 12 years this is going to be irrelevant. And not to say that those amounts are not big money but it’s ok to lose that money or overspend, it’s just if you’re going to make 20 grand, don’t get mad that you didn’t make 25. Like just take the profitable deal, get the experience especially if you’re new because a lot of it is like jumping off an airplane it’s easier the second time. The first one is oh this is really scary, oh no, no it’s amazing, fun and its easy.

Brandon: Do you jump out of planes? Is that a thing you do?

Alex: I was a paratrooper in the military, yeah. Couple of shanucks, black hawks, yeah I got a couple of stories.

David: I can see in my mind’s eye I can see Alex jumping out of a plane and with a guitar and amplifier playing stairway to heaven on the way down and buying 3 houses before he hits the ground. If you guys can see Alex right now, if you’re not watching on youtube, he’s a very high energy, positive, awesome guy. And he just dabbed. I’ve never seen anyone dab on BP before. We got our first documented dab.

Ok Alex I want to ask you, what do you look for in a deal, what catches your eyes? So if someone else wants to copy your system which is very close to my system, what should they be looking for?

Alex: Well look it’s not going to work in every market. Every market is going to have small differences. In my market I’m going to give you the real transparent in what I do. I look for a house that I can be all in for 65 grand whether I pay 55 then ten to rehab or whether pay 30 and do 35 in rehab. I need to be all 65, it needs to rent for 850, it need to be worth 95, 90-95. That’s it. There’s other small things in my market a lot of houses come with car ports and I hate car ports but I know if it’s a 3-2, I can rent it, or say 50, if I go to, if I look at a 4-2 and you convert that garage and can cost me around 4 grand to do it I can rent it to section 8 and I get a guaranteed 950 because it’s a 4 bedroom. And so there are these really intricate new wants, market additions that you’re going to have to learn on your own market. But what I’m basically looking for is to be all in at 65 with a 25% equity and it rents and it’s going to give me, I call it a 1.5 price to rent ratio, kind of of narrow.

David: So you clearly know your market right because I don’t know anything about by it though but I can guarantee from what you just said, most of the houses are going to be appraising between 90 and 95, between 90 and a 100 thousand that you will be looking at right, and you’re going to be all in with the 65 number. You came up with that because you know when you go to refinance you get all your capital back maybe a little bit more. You know that if they rent for 850 it’s putting you right in the cash flow where you want to be. So it’s beautiful what Alex is doing is he’s not wasting time analysing everything in zeelo like the newbie is he’s focused everything down to only the houses he knows are going to work and then he’s taking those ones and picking his best option, right, out of everything I’m seeing at here’s my best option, if it meets my criteria, I buy it. It’s very similar to what I’m doing. There’s a reason that these patterns keep emerging in long distance investing that I do and Alex do and we’ve never met. I look for all in at 75% of ARV, I want to cash positively so to be around the 1% rule and I want to be in a good neighbourhood. I don’t want to be in D class neighbourhood or war zone or anything like that. And if it makes sense, Alex is in the same boat but he knows exactly what properties look like so he’s buying it right away. If you can figure out in what market you want to be, general idea of what deals look like. Man it’s so much easier to make a move without getting stuck in that unicorn or perfect deal paralysis. Like decision making is a talent that you really have to work on and I don’t know how to teach that, unfortunately, I don’t have any good advice for that but decision making, being able to make a decision, good or bad is incredibly valuable to make one quick and like I said, for better or for worse, not being able to make a decision, not being able to pull the trigger, that is a hindrance because as you get better you have to make harder decisions that involve more people, it’s going to involve their livelihood. Now you know my business takes up probably a good portion of my property managing contractors lively their portfolio. And so you have to be able to make decisions you have to be able to do fast decisions and you’re going to have to start doing it with a lot of responsibility on your back so I don’t know how to teach that but yeah once you found out what works you got to be able to pull the trigger. And I think a lot of that comes back to analyse the properties, learn the markets, build a team, and if you, you know what position that really turned me around was I was just starting to get into this and I found a deal it was 50 grand it had a tenant, renting for 800 bucks a month, and a wholesaler came up to me and said, “look just give me a thousand dollar fee and you can have this house. Its done” and now I look back and I go “steal, perfect” but at that time I was really scared so this is what helped me get over the analysis process forever. Called a VP friend of mine to invest in my area, said, “hey I’m scared to take this house down, what do you think about it?” and a week later he closed on it and he’s making money on it. It wasn’t a perfect deal. He took it down in a cocaine heartbeat, I mean he took it down. And so I looked and I said, “dude I missed that deal out of fear”, that’s all it was. It was a good deal, I knew in my gut and never again will that happen.

Brandon: I’ve wrote an article for Bigger Pockets on how I analysed and bought a deal in 5 minutes. I mean it’s exactly what you just said. It’s weird it’s like this yin and yang thing going on, we’re very different personalities but we’re doing the exact same thing.

Alex: Yeah we should date. Where do you want to go?

Brandon: Alright I want to ask something kind of random. You mentioned you are an underwriter for business, what is that for commercial loans?

Alex: Yeah for SBA actually

Brandon: Alright let’s talk about that for a minute. What is SBA? If you come to this show I’d love to know more what kind of loans do you underwrite? I’ll ask more questions after that.

Alex: Yeah back to when I went back to school for Finance. As I said I went to school for Finance because I wanted to learn how to make money or at least how they work and I started working at a bank in a small town without any real finance opportunities. And then when I moved to Las Vegas 2 years ago I wanted to do more, I knew I could do more so I’ve gone to this underwriting department and it’s SBA is Small Business Administration. It’s loans that they give to, its only for owner occupied businesses but its basically for new start ups, people that want to start up a business that can’t go through a bank traditional funding because there’s risk pool because I know you want to start a Subway franchise but you never run one and you don’t have much capital so big banks aren’t going to deal with you but the SBA you can come in and they’ll say we can help you with the franchise, we’ll let you do a smaller down payment. They mitigate risk in different ways to get start ups going. So I mostly deal with actual owner occupied businesses- restaurants, some franchise stuff, you guys have a nothing bundt cake, I don’t know if you’ve heard of that, we do a whole slew of them, tropical smoothies, small stuff – but then we also do big stuff, a lot of local businesses in Las Vegas are done through the SBA.

Underwriting has been a fantastic learning experience for me because when you do single family writing it’s basically doing the cash flow analysis but it doesn’t really mitigate, show you how to mitigate risk. What I do is I look at these 5 million dollar loans and you got to go through all the collateral relationships and make sure that everybody can mitigate risk a bunch of different ways and we can explain how the loan is going to be done and then it doesn’t work for passive multi family, SBA won’t do passive investment but man what you learn by, look, I get the advantage of everyday somebody gets me in tax return for their business. I get to look at their business credit report and their personal tax returns and personal credit reports. And I put this whole thing together and you see the story how the business is running. Why its good, why its bad and paint a picture of trending and it doesn’t have direct impact on what I specifically do, knowledge of how a bank looks at a deal is incredibly useful.

Brandon: Yeah I argue all the time because I used to work for the bank, I wasn’t the underwriter but I was the front guy that took the loan apps and stuff when people wanted a home equity line or whatever. And what I realize is that underwriters, for the most part, you’re kind of painting a picture of what this looks like but a lot of it is if you think like an underwriter thinks rather than thinking like the front sales person thinks because a sales person is designed to say one thing “yes get the application, yes we can do that loan, yes” the key power is in the underwriter like you are the one who actually makes the decision not some front end banker who whatever saying I can do anything right. So learn how an underwriter thinks. And with real estate it’s not that complicated I mean the rules are fairly standard and straight forward. There’s income, loan and devalue, you can find those things out and then underwrite your own deals. Again encourage people, look into that, how does an underwriter think. If you guys want to know more about that go to biggerpockets.com/bankfinancing. I put together an ebook a couplr years ago on how a bank thinks, how an underwriter processes at biggerpockets.com/bankfinancing it’s free, it’s not like a paid book or anything.

On that note I’m wondering can somebody as far as you know use an SBA loan to like build a fund for like flipping houses or maybe for brrrr can I do any of that?

Alex: Flipping houses well banks do not like flipping these days. Not to say that they won’t do it, I’m going to get emails saying that I’m wrong but banks in general especially in Las Vegas are wacky about flipping because well because banks are filled with really conservative, you know, scared people on purpose because we don’t want to them to mispend money. So the rule of SBA is that it can’t be passive so you can’t do it for a multi family unfortunately. What you can do with SBA is self storage so if you want to do a self storage, big loan with value add you can get construction built in and you can do it low down payment, 10 or 15% at times, and if you’re a veteran you get some discount benefits here and there. SBA’s a fantastic program for people who want to start a business, not passive, but don’t either have a lot of capital or have a really good understanding on how to embark on that adventure because they healp build a business to plan for you. It’s a fantastic program, I kind of lucked into it but I love it.

Brandon: Yeah pretty cool. I just wanted to make sure we covered that. I really hear a lot of good things about SBA loans, not so much with real estate, but friends of mine who are entrepreneurs and I know there’s a lot of entrepreneurs who listen to our show so definitely check out SBA.

Alright last question before we move on into the deep dive of, I’m wondering what does your future look like? Where do you see yourself headed with real estate?

Alex: Yeah so I had the same plan that I think a lot of people on the site have which is I want to buy 10 houses, do it over 10 years and then retire. And I bought 7 in 2 years and blew that idea straight out of the water so what it taught me was go as slow as, go as fast as you can, as slow as you need to but don’t set your goals too small. Before I bought a house I didn’t think I can do it. Before I went to college I never thought I could do it. I bought 3 houses real quick and I was like man maybe I’m better at this than I’ve given myself credit for or maybe I’m setting my self expectations too low. So now that I’m about to close on my 7^th rental and I’m helping other people buy a house through consulting and what not. And so what we talked about earlier, building a business is hard, real estate transactions are easy and they’ve gotten really easy and I’m bored so we started looking at a 68 unit that I think I’ll close but the plan is I want to buy a small multi unit so I could get my feet wet to guy buy a 250 something big. I just always you know, I say this all the time, the answer to every business problem is scale bigger. So I’m going to scale as big as I can.

Brandon: I like that, I like that. Well cool, alright, I want to switch, yeah solid. I’m even writing down notes, I’m going to make little instagram quote cards later like sorry David, as fast as you can as you need to but don’t set your goals small, that’s like instagram glory right there.

Alright I want to shift gears here though a little bit and head over to the deal deep dive.

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Alright let’s get to the deep dive, these are, this is the part of the show I should say where we dive deep into 1 particular deal you’ve recently done to learn the good, bad the ugly, what went wrong, what went right, or whatever about the property. We’re going to ask you a bunch of questions about it. For the first one though it’s just, you have a deal in mind, correct?

Alex: Yes!

Brandon: Alright first of all what kind of property was it? What are we talking about here?

Alex: I found this property online. I’ve seen it only from the MLS pictures, and they we’re tragic. There was a deck in the back that you couldn’t see, because there was growth, like over the house, it was out of control. It even had growth coming through not the windows but the walls. And I looked at this house and there’s not a single redeeming quality about the house, I must have it. But I knew the area, I knew the market, I knew it was scarier, I knew people were scared, they were fearful of it not that it wouldn’t make money.

Brandon: Alright you said you found it. You said MLS right?

Alex: Yes MLS it was 36 grand so I knew it should have been worth a hundred. It looked worse than it really was. Does it makes sense?

Brandon: It does yeah, yeah. It makes perfect sense, in fact I love looking at properties that look worse than they really are.

Alex: Yeah and it was on the market for like 70 days. I think everybody was just scared of it which those are my favourite ones, you know, if you’re fearful of it I’m going to come in and write a check.

Brandon: Alright there you go.

David: Alright Alex how did you negotiate this deal?

Alex: Well with this one I was very fortunate, I was on MLS and it was on there for I guess 90 days or something and low ball them a little bit, I’m not a low baller kind of guy, more like just pay and get it done. So I lowballed a little bit, I think I paid 36 grand for that house. And everybody that I told that to thought that I was out of my mind.

Brandon: Do you remember what they were asking for, do you remember?

Alex: Probably not much more than, I want to say 40, something like that, yeah.

Brandon: Alright now a lot of people are listening to this and going like that’s just crazy, I can buy a car for that right. So I mean every market is a little bit different and like I always say either go to a market or you know if you want to buy cheaper property go to where you can buy them. Or figure out what works in your market. Don’t use that as excuses.

Alex: Yeah if you have a house in your market that don’t work, you’re looking at it as an obstacle when its an advantage because now you get to go pick a market that does work and you get to pick from out of all the markets.

David: I also want to add in there you also hear us say you shouldn’t buy 30 thousand dollar houses right you can get in trouble with these. There’s a difference between, that’s a house with a 30 thousand dollar ARV, these are houses he’s buying for 40 thousand but ARV is going to 90 to 100 thousand combined. Complete different concepts so don’t hear that low number and just be like “oh I was told to go buy these picks” it’s not the same philosophy

Alex: Yeah the other thing is with those houses you get, my market if you a buy a house I rent it for 650 a month or less. I can’t get a property manager to shell out because the quality tenant changes, it’s going to be different for every market. So I see that all the time people buy now a duplex for 80 grand or a quadplex for 90 grand, I’m like I don’t know what you’re thinking but I know it’s trouble when they rent for 500 dollars a month. The number might work on a cash to price ratio analysis but you’re not thinking of what it takes to actually put somebody, boot on the ground and deal with a person that only wants to pay 500 dollars a month. Every landlord has probably dealt with the tenant that doesn’t want to pay the full rent but they’ll trade you some stamps for the remainder. And so you don’t want to, not that you don’t want that tenant, you have to calculate those troubles. And when you get that 30 thousand dollar house and you just see it on paper, it’s not going to work out the same on real life.

Brandon: Yeah I totally agree. How do you fund it?

Alex: Cash. This is perfect, actually I was waiting on a check back from a refi from a previous house so when I put the bid in I was, look I can afford to buy this house but I can’t afford pretty much anything else until the money comes in. And then even then I had just enough. Well between the time I closed and this I had 8 checks go out and it cost like 8 grand so I did not have enough money to do this project. And then the bid came in and I got the offer and accepted it. So I had an offer for a house that I really wanted but I couldn’t pay for it and I haven’t seen the house yet, the contractor hasn’t seen the house yet, hasn’t been inspected, nobody has seen it. So I called, I just made phone calls and find somebody to loan me 25 grand and I found a guy on BP who I’d buy a house. I said hey man give me 25 grand I’ll pay you in 60 days because I’m waiting on this refi, I’ll pay you just an obscene amount of interest, annualised, right? Whatever and he loaned me 25 grand so I bought the house and I made a bunch of money.

So if you get stuck like the money is not the problem. It made me very nervous, I don’t mean to sound that I was confident or that I had it lined up. It was like you have this house now, you have this offer accepted, what are you going to do about it? And you grind. You go borrow, beg, steal from your friends and you make sure if the deal is good, you show him the deal, yeah that’s going to make money no problem. And I pay him back in 60 days.

Brandon: Very cool, very cool. Alright what did you do with the property then after that?

Alex: So I bought that house with growth and everything without getting it with my rehad contractor didn’t even look at it. So I had to, I was guessing what it cost to rehab and I had to borrow money to pay for it.

I love the story because in my head it felt incredibly, I was nervous but I knew it was going to work out as everybody else thought I was a lunatic.

David: Which is what you want? What you really want to be?

Alex: And so we rehabbed it we ended up putting in a bunch we did H vac, we built a whole new deck, we did a new driveway, cost me, yeah I mean right around 30 grand, 31 somewhere there. All in all it ended up costing up to 68 and then it appraised for 95 or 105, and the lady who lives there is as happy as can be.

Brandon: What’s the rent on that?

Alex: 900

Brandon: That’s awesome.

David: It’s greater than 1%

Brandon: 1.3, 1.4 somewhere there

David: Yeah 1.4 is what I get which is why your confident and comfortable buying a deal like this without all the specifics. You don’t need to know the exact rent, you don’t need to run the numbers precisely, you can do it without getting a bid from your contractor as you’ve done enough of these deals and that you really have a good understanding of how it’s going to turn out and you’re going to do really good or pretty good but its enough to move forward so that’s why you want to know your stuff.

Alex: Yeah. That was only my 3^rd deal actually. It was my first long distance deal but again it comes down to, I looked at the house and I said worse case scenario I’ll make 15 grand. Well just do it, I mean what are you waiting for, just do it. Because I can use the 15 grand and then the next one I’ll feel more confident. Next one I might make 50 grand. You know I’m not worried about one, I’m worried about you know 12 hundred. How do I get to 12 hundred.

David: So what was the outcome with this one?

Alex: It took me a little longer to refi that one because the spread ended up being bigger, well with the spread being bigger I didn’t want to do it in the delayed financing so I took the 6 months and got an extra 5 or 6 grand out of it, I think. And but I still own that house

Brandon: Cool. And lessons learned, kind of overall what did you learn from this thing?

Alex: Be fearless. You can solve problems in a pinch if you take the problem on. You can’t solve a problem that you have no skin in the game with. Like if you feel like I need to go raise money ten go get a deal that you actually have to raise money for because if you just ask somebody you go, “Hey can I have 20 grand in case I need it? Can you pledge it to me in case something comes up that I need it?”. You’re going to get yesses and when the time comes who knows. What you really need is put yourself in a position to have to figure a problem out like actual skin in the game. Are you losing sleep? Now you’re ready to actually solve a problem. When there’s nothing on the line you don’t have real incentive.

David: It sounds like Brandon during his 10, 31 exchange trying to try buy his apartment, he got a deadline, the last day

Brandon: Yes stress

David: A few questions for you Alex about this deal. What is it cashing per month right now approximately?

Alex: About 300 bucks. My expense ratio is really low, 2% and I can attribute 100% of that to how great my property manager and contractor is. We do a bunch of capex upfront and so he knows like don’t put chandeliers in kid’s bedrooms. Like a bunch of capex upfront there’s not a lot or maintenance afterward and we never have vacancy. So overtime these things they let you cash for more than the paper would say so a lot of times you do your cash flow analysis come out to 100 dollars a door and it’s like yeah but if you don’t have any maintenance or very low maintenance for the year, low vacancy, you’re going to do better than you project if you’re projecting conservatively.

David: And what did you leave in this deal? How much of your capital did you leave in it?

Alex: As little as possible, I think I took out, you can take 100% of what you took in like the loan cost so it’s probably nine hundred bucks or something.

David: Ok so I’m just going to give you an example. I don’t even know how to calculate ROI on that number. It’s going to be almost

Alex: I’d call it infinite

Brandon: Yeah

David: Yeah it’s basically infinite ROI. If people that would criticize well you don’t even know what you were doing, you didn’t know how this was going to end up, you were reckless. He ended up with an infinite ROI because he left almost nothing on his deal and 300 hundred dollars on cash flow plus all the tax benefits plus the no capex plus the loan paid out. Everything that comes with real estate, that’s what brrrr will do for you. It creates this bold incredible attitude that I don’t need to know everything because its so efficient I’m always going to come out on top.

Alex: Yeah I mean I say you don’t need to hit all homeruns but if you do brrrr and you check all your money out it’s a homerun.

David: Yeah

Alex: You make a 100 bucks a month. It’s like how much free income do you need before you start getting excited? And so 300 bucks a month or 100 dollars a month people say that’s nothing, yeah get 15 of them. And you only need one set of cash. You’ll spend in like initial 70 grand right? I mean if I can do it

Brandon: It’s recycling the capital

Alex: Yeah

Brandon: Love it, love it. Alright dude let’s move on to the next segment of the show which we refer to as our fire round.

It’s time for the fire round.

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Alright that’s it for today’s fire round. This is the segment of the show where we go through questions that our users of bigger pockets forum actually ask. So I know Alex you’re in the forums. Anyway maybe you’ve even seen this but we’re going to fire them at you right now.

First question, I like this one, this is I’ve done a lot of reading about brrrr and I think I’ve got some sort of mental block, I just can’t get how it works. Can you explain it to me like I’m a second grader?

Alex: No. Look it’s easy to do this on paper. It’s easy to see it on paper but it is a little bit hard to explain, talking it through. Here’s what basically it is, I’ll try to use easy number as possible. If you buy a house all in for 65 grand, that’s cash ok, cash gone and then you, it’s worth, let’s use easy numbers. You buy one for 75, you go to get it appraised and its worth a hundred. The bank is going to give you 75 in cash and they’re going to give you a loan for the same amount. And so you started with 75 grand, you ended with 75 grand and a 75 thousand dollar loan. You traded no difference in net worth, you traded non liquidity for liquidity. And you have the 25% equity left over and the cash flow left over and the tenant is going to take 30 years to pay the bank off plus you a little bit. People make it seem, it’s new and it sounds, it’s not something you get into regularly so it sounds more complex than it is but so freaking simple. They even let a knucklehead like me do it.

Brandon: There you go

David: It’s like I’m going to go second grader and say like you have a snickers bar in front of you and, I have no idea how to but I need to work on that.

I have a pretty good one. People get hung up on this idea that you get a loan when you buy something. That’s stuck in their head like you have to get a loan to buy a house, to buy a car, to buy a thing. The whole idea of a refinance is completely different because you’re not getting a loan to buy it, you already have it. But when you get a loan to buy something the bank doesn’t care that you’re buying it, all they care is they’re getting a percentage of what its worth. Because they want to be able to take it back from you if you don’t pay and they want to get their money back. So if you got a car that was paid off, you can go to a place that gives car loans, I have a car and I want to take out a loan, and they’ll say we’ll give you 75% of what the car is worth, here’s the blue book value, that would be the equivalent of an appraisal. We’ll let you borrow 75% of what the blue book value is right. For whatever people get it with the car but they don’t understand it when you say house. It changes everything right?

Brandon: Yeah I know

David: You bought and fixed up that car less than 7500 dollars you’d get all that money back when appraised if the car was worth 10,000 dollars. That’s understanding brrrr and what Alex is saying is that if you don’t do that you still have the net worth but its stuck in equity in the property where it could help you if you refinance you take that money out of equity and turn it into cash that you could put in your pocket which you can then use to go buy your next car or your next house or whatever your investment choices.

Alex: Yeah the other thing I think people get jammed up with house loans is they don’t think in terms of loan devalue, they think in terms of down payment, and that’s a mistake. You say well how much down payment do I need and you don’t want to think this way at all. What you always want to think of is CLTV product that I can get. Can I get a 75% CLTV product, well then I need 25% equity. Whether that comes from your down payment or your purchase you’re ability to negotiate a house. If you could buy a house for 25% you don’t need a down payment and you can move right in but that doesn’t happen that often. But that’s how you think so when I say you’re going to get a 75% loan, it’s no different than when you get a 97% FHA loan. If you could buy a house at 3 ½% equity you wouldn’t need to put anything down either. And so I think people get jammed up in that regard with the down payment. You know that’s like the idea of it.

David: Alright next question. What are some pros and cons when buying investment properties out of state?

Alex: Well the pros are if you live in a state or you live in an area that’s not working for what you want to do then the pro is you have unlimited opportunity to find the better area. The con is it seems harder. That’s it.

Brandon: Alright good, I like that. Next one, what team members are important in investing out of state?

Alex: Property manager, most important. I would say and I’m going to say this in no order because all these people are incredibly important to me. Property manager, realtor, lender, contractor, not in that order.

Brandon: Isn’t that David, your 4 core?

David: That’s exactly right. Alex said he’s never read my book and we’ve never talked before if you just listened those are the same people I’ve said. If you have those people you can do it that’s all you need.

Alex: Besties! You have to have those 4 people. Here’s the thing when youre going to call long distance you’re going to run into people who suck. Fact! And you’re going to have to burn a lot of them and when you’re new you don’t know they suck, you think they’re good because they tell you their good. And then you won’t even know their bad. You’re going to have to run through a lot of these people but you really want people that are smarter than you to do this. You don’t want people that are, you want people that are better than you to deal with you. Really the goal so they can bring you up. You want to go find somebody, I want to be a contractor and you I want to be a realtor, we should start at the same time, no you’re doing too much, you need to find somebody who can help you not learn with you. So find people that are good spend a lot of time networking, reaching out to people, bigger pockets has research tool for this because you can search by location and keyword: broker, Charlotte Carolina.

David: I call those rock stars. You know rock stars they’ll change your life. They’re top producer they know what they’re doing, smarter than you, then you bring them value, they bring you value, that’s the best relationship.

Alex: And they know the rock stars

David: Dude are you sure you didn’t read my book? Alex do you swear?

Alex: Are you sure you didn’t read my diary?

David: Alright this is all too creepy I’m just going to keep on moving on. I’m looking to purchase a property online, site and seen, can you give any tips for purchasing property like this?

Alex: If you’re sure it’s a deal, do it. If you’re unsure it’s a deal, you need to practise more so you can be sure. Like if it’s a deal buy it. If you don’t know if it’s a deal then you are working on the wrong problem. You need to educate more. You need to know if it’s a deal. If youre close ask somebody that knows. If you have a deal and its in David’s area and youre like “Hey man is this a deal?” and he’s going to say no and this is why and you can predict the future. But if you have a deal, you’re unsure if it’s a deal, you need more information. If you’re sure it’s a deal and you’re just scared, suck it up buttercup.

David: There you go.

Brandon: Ok I got my last.

Alex: In the car business I used to work in cars I used to mess with people. They’d be like “oh you know I’m too scared, payments are too high”, yeah I know payments are high but I lean hard the form are in triplicate. Do it anyway.

Brandon: Alright question for you. That’s not the final round but I’m just curious what’s with the background behind you. For those who are not watching us youtube you got a lot of bright, awesome pictures behind you,what is that?

Alex: Here’s some good advice, if you want to be happy in life you need 3 hobbies: one to keep you in shape, one to give you money, one to be creative. Few years ago I started photography, I’m not a creative guy but it’s been fun so when I started doing the youtube stuff like that I wanted something that would be visually appealing to build the set. I am a production quality themed about my work and there’s a billion people on youtube that have office in the background so I I bought a nice photo printer and I printed out pictures that are my life: bars, Las Vegas, canyon, Red Rock Canyon, friends that drive cars. So yeah I just put them up because its visually appealing aesthetics and its me. And I’m all about me baby.

Brandon: I love it well more about you let’s shift gears one last time and head over to Famous Four. Alright I’ll get to the Famous Four, this is the same 4 questions we ask every guest every week and we’re going to see what you’re going to say. I know you’re heard this before because you’ve listened to the show. I think you said earlier you listened to every episode 3 times. So first one, what is your favourite real estate related book?

Alex: Rich Dad, Poor Dad baby. Look that book I read 10 years before I bought a house. It’s not a book that you read to learn real estate, that book you read to get your mind right. I hate that it’s been said so many times but it really is. That’s the one that changed everything for me.

David: Ok what is your favourite business book?

Alex: I am a heavy reader of nonfiction but very rarely do I like business books. Gallileo has a good one. If I could recommend one book that everyone in the planet should read it’s a new one by Yuval Noah Harrari it’s Sapiens not a business book but a book it’s a book about humanity and it provided me massive perspective. I don’t read a lot of business books but I do read a lot and I have a reading list on my website if anybody want to see I read hard nonfiction, science, culture, and history.

Brandon: Wow give us more examples of what you mean by that? Nonfiction that’s not business like what are these books you’re reading?

Alex: Oh my god that’s my favourite question.  I read Thinking Fast and Slow by Daniel Kahneman that teaches you how your brain works. Brilliant becaue its not working the way you think. I read a lot of Richard Dockins, hard science, evolutionary biology. I just reread Stephen Hawking’s book, The Demon Haunted World by Carl Sagan that’s an old one. Factfulness by Hans Rosling that’s a book about why the world is doing better than people think. Trying to think of some other ones.

Brandon: Well that’s good we’ll encourage them to go to your website and check them out which I’ll ask you about in just a second. Before we do that, David you’ve got the next question.

David: Yes you mentioned about what your 3 hobbies are can you just reiterate very quickly what they are. You said for staying in shape, being creative, and what was your other one?

Alex: Making money.

David: Making money. So what are the 3 hobbies that you do for each of those?

Alex: Well photography for creativity, real estate for making money and I have been power lifting for 15 years.

David: There we go, awesome.

Alex: And that small advice really works. If you think about it that way if you spend your time doing 3 things you like everyday, those 3 hobbies, and if you can find one that makes you some money which shouldn’t be that hard. If you can do that man life gets so easy.

Brandon: You know I saw that advice recently the same habit thing. And then I added one to it, I threw it on instagram and I said also if you can find a hobby, now it could be, find the ones that builds relationships, I think hobbies are great. Find one that you can do with somebody else, family, friends, whatever. Hobbies with people are just so key. Because our happiness is typically based on our community.

David: Yeah I love that

Alex: Agreed and this is a relationship. Well my photography wasn’t like that until I started hanging out with other photographers. My power lifting didn’t get good until I go to the power lifting gym and yeah so I mean I agree with that, I should probably amend that 3 hobbies and you have to include other people in them.

Brandon: I love it. Ok last question, for me anyway. What sets a part real successful real estate investors from all those who give up, fail, or never started?

Alex: Obsession, obsession, obsession. I have been thinking about this for 5 years, actually I wrote an article I want to send you, I didn’t call it the famous 4. I’ve been pining over this question for 5 years and I wrote a long form article about it and I sent it to Mindy today actually. 5 years ago I was listening to this podcast, heard that question, I said I need to answer that and arrogantly I said inevitably I’ll be on that podcast and I need to get my perfect answer. Funny how things work out. Well obsession is the answer, I wrote a thing about how you come to that and at first I thought its networking and education. That’s the first difference to those who succeed and those that don’t. and then I spent a lot of time going through all the old podcasts and I wrote everyones answer and put them into graphs to see which one would show up most. And you know tenacity, all these types of answers take action, be fearless, all these types of answers they all seem incomplete to me. So I’ve been pining over this, this exact question for like 4-5 years and I’ve written about it and I really think the reason I’ve been successful and many other people can be described by their obsession with what they want to get done and learning about this question and trying to answer this question and being obsessed it really led me to a lot of success. Being obsessed about real estate it leads you to success. The gym I’m a good power lifter I lift a lot of weights, you can’t just show up to the gym you have to get obsessed. And so I think whatever you’re obsessed over, whatever you think, breathe, talk, live about, will happen. Ralph Waldo Emerson has this great quote, “A man is what he thinks about every day” or “A man is what he thinks about all day long”. If you’re trying to do real estate or trying to find a way to get started and you’re doing it casually or part time, it’s going to be much harder. Turn your life into a obsession machine whatever it is you want to accomplish and it is inevitable that you’ll succeed.

Brandon: Love it, love it. Alright last question of the day David Green

David: Where can people find out more about you?

Alex: Brokeisachoice.com it’s just my personal website, I put my thoughts on deals. You can get a contact of me there, I put my profile list, I spend a lot of time on Bigger Pockets so if you reach out to me on Bigger Pockets, you can find me on brokeisachoice.com I reach out and talk to people all the time. Hit me up, happy to help.

Brandon: Very cool, very cool. Alright dude this has been a ton of fun so thank you so much for coming on the show. I’m sure people are going to love this.

Alex: My absolute pleasure. You know I love this community. I’ve been deeply involved in this community for 4-5 years. I know there’s other people that not in this community and want to be a part of it. I can say just obsess, stay on the website, talk to people, reach out and I’m so thankful to be here to be ablt to give back to the community that did so much for me.

That’s awesome. Well thank you very much. Everyone else of course check out the show now on biggerpockets.com/0306 you can jump in and ask Alex questions you can comment on his amazing hair or you could just get involved in the conversation. Like Alex is a bigger pockets success story so I love having these stories because that’s why I have a podcast right. If somebody can do it network, get yourself involved, talk, like don’t just listen to the words we’re saying in the podcast but go put it into action. Alex heard about house hacking’s a way to start and did it boom. Right heard about brrrr, did it. I took action so I want to recommend everyone to do that as well and we’ll see you back here again next week. If anyone has questions jump into the show notes and just get involved on bigger pockets. Go make a free account on biggerpockets.com and that’s all I got so David Green you want to say something to take us out?

David: Thank you so much Alex this was a great show. This is David Green for Brandon the real estate god, signing off.

[End of Discussion 1:12:54]