$12,500 per Month in ‘Pure Cash Flow’ With Todd Baldwin

Brandon:
This is the BiggerPockets Podcast. I didn’t look to see what number it was. All right 392. This is the BiggerPockets Podcast show 392.

Todd:
We bought our first house in December of 2015 and a couple of weeks after we closed, we had all the rooms rented out and from that day to this, we have literally never missed a month’s rent across any room in any house. We’ve never even missed a day’s rent. It’s in that high demand in this high-priced area.

Speaker 3:
You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing, online.

Brandon:
What’s going on everyone. It’s Brandon Turner host of the BiggerPockets Podcast for another amazing show today, here with my co-host David Greene. David Greene, welcome to the show, man. How are you doing?

David:
It’s going really good. It’s Monday, I just had a very relaxing weekend, got out and got some running done. I got to go see my mom, bought some new realtor clothes and it’s just a really good time to be in real estate. The market is red hot. If you haven’t refinanced your house, you should absolutely look into doing it. Brandon, I know we talked about you, you refinanced yours.

Brandon:
I did.

David:
But it’s really low. Just a public service announcement for everybody out there on BiggerPockets, if you own a primary residence, look into refinancing while you can and even-

Brandon:
That’s a good quick tip.

David:
Yeah, that is a good quick tip. I should’ve saved it. Maybe we can just use it there. One thing I want to say is that when the market is this hot, a lot of people just get out of real estate investing at all. They say, “I don’t want to do it. It’s too hard to find a deal.” That’s what we hear all the time. Well, today’s guest figured out a way to make a hot market work for him. He created a strategy that capitalizes on hot markets, makes his job easier, just very similar to the market I made in the San Francisco Bay area. I’ve been helping clients do this and then he came in and he talked about it like, “Oh, but there is other people that are doing this,” and he’s doing it good. This is a show where if you live in a hot market, even if you don’t, but especially if you do, you are going to love every word that comes out of Todd’s mouth

Brandon:
Yeah. Today Todd talks about things like how his first deal netted him over a hundred percent return on investment, which is cool, how he hires maids for some of his properties, or all his properties, which is probably a strategy you’ve never even thought of doing before, but it’s fascinating. I think you’re going to love it. Basically, he makes over 12 grand a month in pure cash flow after all expenses have been paid and he’s only 28 years old. He’s going to go through exactly how he does it. He has a really unique strategy, something we haven’t talked a lot on the show about, but before we get to that, I want to go back and talk about something you just mentioned, David, realtor clothes. Do realtors have clothes now or is that like a… I don’t want to let you go on that. You bought new clothes?

David:
Yeah. This is the problem. I’m really like-

Brandon:
Because you are not wearing it right now?

David:
No.

Brandon:
You are in a Hawaii shirt.

David:
I’m like a nine-year-old in a 6’2″ body. That’s my problem. I still would rather wear T-shirts all the time but when I’m being a realtor, I found that, if you don’t dress the part, it’s harder people to take you serious. If I go to sell you a million-dollar house and I don’t look like I really prepared for that event, I could be the smartest person ever but you’re not going to hear me. You can’t get past my clothing. I’ve learned that, although I don’t judge people by the way they dress, I have found that it’s easier to trust certain people based on the way they dress. If I show up in a suit, people would think, “Okay, he’s taking me serious. He takes my house serious. I’ll listen to what he has to say more seriously.” There is another quick tip for you, is, dress for the goals that you have rather than just as an expression of your own individuality.

Brandon:
Look at this, just firing quick tips today left and right. I thought you were going to bring up the story at some point of the first time we hung out in person. The first time I ever met you.

David:
I didn’t want to embarrass you again, plus you always deny that you said it every time. You’re like, “I didn’t. David, I said nothing but good things about you. I didn’t give you a list of things to change, if you want to be my friend.”

Brandon:
The first time I talked to David, I just said he was wearing sweatpants with holes in it, I think, and he’s wearing no shirt and he was at a millionaire meetup. It was all millionaire, business owners, and he took his, I don’t know, his shirt and pants and I said, “You should dress the part.”

David:
That’s so much nicer than how you said it. I love-

Brandon:
That’s so much meaner than I said it. Anyway, moving on. That’s a good quick tip. Let’s get to today’s official quick tip.

David:
Quick tip.

Brandon:
All right, the official quick tip today is look, our guest today, Todd Baldwin, is actually going to be featured in the upcoming edition of the BiggerPockets Wealth Magazine. This magazine is phenomenal. It’s shipped to your house. It’s really cool. It’s got a lot of articles and a lot of information and data that you’re not going to get anywhere else and it’s super cheap, it’s not much at all and we can give you a 15% off if you use the code episode, E-P-I-S-O-D-E when you check out on BiggerPockets Wealth Magazine. To get it, just go to biggerpockets.com/magazine. Again, the code is episode for 15% off. It’s literally a few dollars an issue. It’s not much.

David:
If you don’t read magazines, that code episode will also work for the magazine, depending on what you like.

Brandon:
Shut your mouth. All right. Let’s get to the… today’s guests like we said, is Todd Baldwin, has a great strategy so let’s just jump into it now before David can make fun of me anymore for how I say magazine. All right, Todd. Welcome to the BiggerPockets Podcast, man, good to have you here.

Todd:
Awesome. Thank you guys so much for having me.

Brandon:
Yeah. Tell me about yourself. Where are you from? What do you do? How did you get into real estate?

Todd:
Sure, absolutely. I live in Seattle with my wife, we met going to college, a couple hours up North but basically, I have the oldest story in the book. I grew up, not a whole lot of resources, single mother, we were struggling and I knew from a very early age that I wanted financial independence and real estate was the best way that I could see doing that. I bought my first house when I was 23, I believe and now I’m up to six properties.

Brandon:
Wow. That’s awesome. Okay, so first house at 23. Was that a house you lived in or did you… was that your rental?

Todd:
I did, yeah. I lived in that house. Basically, what we did was we bought a house. It was the first time my girlfriend at the time, we’re married now, but it was the first time we were going to live together and we just saw what rents were in Seattle, they’re astronomical through the roof.

Brandon:
Crazy. Yeah, crazy.

Todd:
Yeah. We decided to buy a place and we were able to go to South Seattle and actually build a brand-new house and it was too much house for just the two of us, we decided to rent out the extra bedrooms to my college friends, which basically meant we were living for free. Our mortgage taxes and insurance was paid for every single month by our roommates. That’s how we started.

Brandon:
That’s awesome. How do you convince somebody to… meaning somebody, meaning a spouse that like, “Okay, well I’ve got this good idea, honey, we’re going to build a nice house, your dream house and then we’re going to fill it with my college buddies?” How does that conversation go? Because there’s people listening right now that like, that idea of a house hack sounds awesome but trying to convince a spouse that, or a significant other that you’re going to live with other people, especially in the rent by the bedroom kind of house hack in which you did, how do you convince them?

Todd:
Yes. Absolutely great question. Here’s what’s hilarious, is, my wife and I actually argue over whose idea it was. I’m pretty sure it was my idea but she sometimes… I think I had to sell her to get on board, but now that it works out great, she thinks that it was her idea. At one point she thought she invented it, I was like, “No, you didn’t invent it.” That’s a great question. I mean, it all goes back to choosing a partner that has similar goals to you. Luckily my wife and I, we’re both very frugal and we have pretty high goals for the life we want to live and living for free while we’re young and in our 20s, before we have kids or anything like that, was just a great way to launch ourselves into this life we want to live now.

Brandon:
Yeah, that’s so good. Yeah, having that shared vision of where you’re headed like knowing together, that’s a big part of it. I like to tell people the way I got my wife, I’ve told this story many times on the show, but for those who haven’t heard it, the way I got my wife on board was I asked her to read Rich Dad Poor Dad for a while and she just didn’t really want to read it. Finally, I traded her, I said, “I’ll read any book you want me to read in exchange for yours. I’ll read any book you want if you read Rich Dad Poor Dad.” I read the Twilight Series in exchange for her reading Rich Dad Poor Dad and it worked. Once she read the book, she’s like, “Oh, I get it. I get the mindset,” and then she was all gung ho from then on so whatever you got to do, get them on board.

Todd:
Yeah. You know it’s funny. I’m really into those books. I love Rich Dad Poor Dad. I love all that stuff. My wife actually, she’s really smart, but she’s not really into any of those books, but I still… I was able to get her on board. I’m pretty much more of the income guy, like got to go out and get the next deal and she’s really frugal, trying to cut back on spending and save money so we make up a pretty good team.

Brandon:
Yeah. That’s awesome. That’s awesome. Yeah, that’s like that… what’s that book? Rocket Fuel. It’s like the [inaudible 00:08:30] of attraction, every good company has got to have two people. There’s a visionary who’s like, “I’m going to go do all this cool stuff,” and then the integrator is like, “Hey, what’s the budget though?’ That also works in a relationship as well. [crosstalk 00:08:41].

David:
Brandon, have you ever been in a relationship with anybody of any type where you were not the idea guy?

Brandon:
I started at BiggerPockets as the integrator when Josh and I started working together.

David:
All right. Touché.

Brandon:
Josh hired me essentially to just write blog posts. It was all I was doing in the beginning. I was not the idea guy then.

David:
Then Todd, in your relationship, did you notice that those roles ended up being what it looked like or was that more of a business thing and that in a personal relationship you didn’t think it was applicable?

Todd:
No, I mean, I… by trade, I’m a salesman. I actually dropped out of college to take a sales job and the commission from that sales job is how we basically bought our first house, but no. I’m the go getter. I’m the idea guy for sure. Actually, my wife and I like to consider ourselves where I’m the kite and she’s the line and without her I would probably just float away but without me she would never even realize that flying is possible. We do balance each other out quite well.

David:
That’s beautiful and that’s actually very similar to what Brandon was saying, I think. You’ve got to have, I always call it the driver and the filter. Brandon’s job is, “Go sit. We can do anything. Let’s just go do all of it,” but he’s useless unless he has a filter who comes and says, “Dude, hang on. This is ridiculous. It’s never going to happen,” but the filter never gets anywhere if they’re just saying no to everything all the time, like telling you what could go wrong. They have to have something to filter, which the person has to bring.
We’re talking about this because I would say, Brandon, you probably agree, a lot of questions come from one partner in a relationship saying, “Can you help me get the other one on board?” That you got to [inaudible 00:10:14] going in the same line and as you guys are going to hear from Todd, he has an incredibly inspirational and powerful story, but I’m recognizing right now, this never would have even happened if you couldn’t have got your spouse onboard.

Todd:
Right. Absolutely. I think it goes back to just honoring. If you have a spouse that’s concerned about a big risk you’re taking, instead of just shutting them down, really hear that. They’re your partner in this. If it’s bad for you, it’s bad for them and if it’s good for you, it’s good for them. I think just coming together, being on the same page and even if you are the driver, really honor your spouse if they’re the one that’s taking the back seat and you got to do your thing and make sure they trust you in it but you got to respect them as well.

Brandon:
Yeah. Smart, wise words man. Let’s move on to your next deal. What happened after that? You lived in that house with the roommates.

Todd:
Yes.

Brandon:
What happened next?

Todd:
We’re living for free. It’s awesome. At the time, I was 22 or 23 and for my sales job I was already making six figures so that was great and my wife is a CPA working for a very large accounting firm so we were pretty much just saving 90% of our income at that point because we were just living for free.

Brandon:
I love it.

Todd:
It was awesome. By the way, I don’t know if this is important to your listeners or not, but we did buy that first deal with our first-time home buyer program so we got to put three and a half percent down, but for our second deal, we decided to build another house actually right across the street for a rental and we decided we were going to rent out that house completely by the bedroom. That house we did, I mean, it was a… I did a deal with a builder. I had to put 20% down and that was I think 120 grand at the time was my down payment and it was a six-bedroom, three bathroom house and we literally had all six bedrooms rented out within a week of posting an ad.
That house was amazing. That was great. Currently the market rent for that is maybe 2,800 bucks a month. We’re getting closer to the 6,000 because we house hack it so it’s incredible and then three months after that, we bought our third house, which we again bought owner occupied and we moved into that one and rented out the master that we were staying at at the first house.

Brandon:
Okay, so you went from the one house, then you built the house across the street and you rented all the bedrooms. You actually didn’t live in the second house, right?

Todd:
Correct.

Brandon:
You just rented that one out?

Todd:
Yeah, we just bought it as a rental house, but specifically for the bedroom.

Brandon:
All right. I mean, this is a whole topic I want to get into is, you built a house to then rent out by the bedroom and it cash flow.

Todd:
Yes.

Brandon:
I mean, that’s a strategy that I don’t think we’ve ever really covered here on the show before, but that’s fascinating, the fact that you could build a house and then you could design it the way you want, knowing what you’re going to be using it for, like a rent by the bedroom kind of scenario and then yeah, you have fewer repairs and maintenance, ideally because it’s a brand new house. You’re not dealing with 1940s plumbing or electrical. I mean, that just sounds awesome.

David:
You get premium on the rent.

Brandon:
Yeah.

David:
That’s another thing. People are going to want to live in a brand-new house.

Todd:
Right. Yeah, exactly. This is probably unique to this podcast because I’ve actually like, I’m not really skilled when it comes to big rehabs or anything like that. I know my way around a few things, but I’m by no means an expert. Every property that I’ve bought, it’s actually all been new construction and my wife and I have picked out the flooring and the carpet and all these things and made sure it’s going to be a good design for bedroom rentals. I will say, I mean, we had the benefit of living in an incredibly expensive area. People, especially young people, are happy to pay 900, 1000, even 1300 bucks for a room because a studio apartment is $2,200, no utilities included.

Brandon:
Yeah. This is a really neat strategy if you live in an expensive market, because if you’re in David’s market or my market or your market, we all live in very expensive markets right now so if you can do the rent by the bedroom idea… so that really fascinates me, the rent by the bedroom because I’ve never actually done a rent by the bedroom. I want to dig into some of the ways you do that. First of all, how do you deal with, I mean, I guess you already said it, tenants are okay living… you had full within a week. Obviously, tenants are okay with just renting a bedroom. How do you advertise that? Do you just to say, “Hey, bedroom for rent?”

Todd:
Yeah. Great question. I advertise on social media, obviously, Craigslist. I was on Roomi and then I had this app called Rent Tube where it’s almost like Tinder but for roommates, you swipe right for a match. It’s hilarious. But, I mean, a lot of my tenants by default are in their early 20s because most of them, they’re saddled with student loan debt. They’re just starting out in their careers and they don’t want to go out and spend a bunch of money on some boujee apartment yet. What I have done, what me and my wife have done, we’ve done a few things to make it go smooth.
We have one all male house. We have one all female house and then we have four mixed houses. If there’s a preference we have it in there and then we also try our best to match by personality. It’s not an exact science by any means, but I interview everyone before they rent a room and basically, if someone applies for a specific house, I say, “I think you’ll be a really good fit for the house down the street. Do you want to check that out too?” They really appreciate that because if there’s not harmony in the house, then your business can crumble and nobody wants that.

Brandon:
Yeah. That’s what I was going to say, how do you handle conflict? Like “So-and-so has stole my shampoo,” or whatever like that?

Todd:
Yeah. We have a very specific strategy and people might think this is so weird but so, one of the tips that I will say is, we have a house cleaner go through every single house on a weekly basis and she cleans each house from top to bottom, even scrubs the bathrooms, the oven, just all those things because one thing that roommates often fight about is mess. Another thing that roommate will fight about is if let’s say you’re buying all the toilet paper or the soap, but your roommate is the one using it all the time and never contributing.
Once per month we stock every house with toilet paper, paper towels, hand soap, dishwasher soap, Clorox wipes, just all the essentials. Pretty much the only thing we don’t do is laundry soap because that’s a personal choice, but we try to solve these problems before they even exist and that has been a great way. We also label everything. Everyone gets a shelf or two in the fridge. Everyone gets their own cabinet in the pantry, stuff like that. Everyone has their own space and it’s pretty respectful that way.

Brandon:
Dude, this is so good. I’ve just literally never dove into this topic. My mind is instantly working like, “How do I make this work in Maui? Can I do this here?” Yeah. It’s fascinating. By separating ahead… the cleaner is genius because I get, yeah. When I think back to my roommate life in college, that was always the worst part, is, so and so was causing a big mess or so and so wasn’t cleaning up after themselves. Having a cleaner, but that obviously takes a bit out of your profits so let’s talk finances. What does a house like this look like in terms of finances? What do you rent about? You said 6,000?

Todd:
Yeah. I mean, it depends on the house and how many bedrooms there are versus how many bathrooms. Before I jump right in, I will say that’s another tip, is get a house with a really good bedroom to bathroom ratio, but no, the numbers are great. Off of just six single family homes in South Seattle, we bring in about 40 grand per month in gross rent and after principal interest, taxes, insurance, after all the utilities we pay and after the house cleaner, we net right around 13 grand per month as pure cashflow.
It’s really lucrative and you’re right, if I didn’t pay a maid 500 bucks every week to go clean the houses, I would pocket that but I also probably couldn’t rent the rooms out for as much if there wasn’t a maid. It’s a huge draw, especially if you’re going to be living in a house with five or six people. I mean, we have a house close to the airport. It’s an eight-bedroom, four-bathroom house and all eight bedrooms are rented out and that brings in, gosh, I think $7,825 per month in gross rent. 4,000 per month on that one house is pure cashflow.

David:
Wow.

Brandon:
That’s amazing. I love the fact that these are new builds because I’ll just go back to like, the thing I hate most about land lording, I mean, I love being a landlord, but the thing I hate most about it is, dealing with maintenance problems and when you have a newer property, you just have fewer, not necessarily none, but a whole lot less than you’re going to have with an old property.

Todd:
Absolutely. There’s a lot of people that were skeptical. They were like, “Hey, you’re paying a premium when you buy a new construction house,” and they’re right, you are. You can oftentimes, if you buy an undervalued property and then you flip it, you can do really well but for me, I knew that the house hacks strategy and just renting it out by the bedroom would be a little bit more hands on and I didn’t want to deal with maintenance problems because it’s already a more involved rental situation than just renting out a normal unit to a family or something.

Brandon:
Yeah. Yeah, that makes a lot of sense.

David:
Can we jump in here and point out why this probably works at his market because I’m just worried that the people listening in an area that’s less densely populated are going to be, “Oh, this is easy. I could go buy a house for 80,000 and make six bedrooms.” This is an amazing strategy for Todd’s market and there’s a few reasons I would guess that make it work and you correct me if I’m wrong. The Seattle area is having wild red growth. If you just want to go rent a property right off the bat, it’s very expensive so there’s going to be a demand for a cheaper option for a lot of people.
There’s also lack of housing itself. If you have the option between rent a room for X and rent an apartment for a little bit more, you’re going to get your own space but because there’s not many options, those apartments cost a lot of money so there’s a high level of demand. Then because of that demand, you’re seeing an increase every year in what you could get for rent, which makes it even more likely that people are going to want an option like this.
You have to have a densely populated area where there’s a lot of people that are fighting over housing, at which case, a lower, more affordable option is in high demand. If there’s not a lot of demand for housing, when you offer a cheaper alternative, nobody really cares because they don’t need it. Is that more or less accurate Todd?

Todd:
Yeah, I think you’re right on the money there. A lot of what you’re saying is true, especially in Seattle, I mean, we have Amazon here. We have Microsoft. There’s so many high paying professions and so right in the cities, all of those apartments are so expensive because they’re tailoring to these tech guys that are basically young people with super high salaries. If you’re anything but that, if you make 60 grand a year like most people do, you definitely don’t want to spend three grand a month on some studio.
We get a lot of… I mean, to put it in perspective, we bought our first house in December of 2015 and a couple of weeks after we closed, we had all the rooms rented out. From that day to this, we have literally never missed a month’s rent across any room in any house. We’ve never even missed a day’s rent. I’ll move out somebody in the morning, I’ll send cleaners and painters through and I’ll move somebody new in the afternoon. It’s in that high a demand in this high-priced area.

Brandon:
Yeah. What I love about that is, David and I talk [inaudible 00:20:48] about this a lot. Every market has a way you can invest in real estate. There’s so many people. I did a poll on my Instagram recently where I asked people, I basically just said, “Do you live in a market that’s too expensive and competitive to get into normal rental properties?” 80% of people said, “Yes, I live in a too expensive of a market.” Which means it’s the Seattle’s, the LA’s, the Chicago, whatever. It’s always expensive areas of cities is where the majority of our listeners are living and so they think that they can’t invest in real estate. They think they have to go buy in Toledo or in Indianapolis.
I’m not saying you shouldn’t do that necessarily, but understand that there are ways to invest in every single market and you just prove like, hey, this model works in this market and you figure it out. You don’t have to go and buy a property in the Midwest, where you don’t live in and don’t understand and don’t have a team if you don’t want to. You could figure out a way to do it locally, if that supports your goals and what you’re doing. Now, a couple of specifics though, I’m wondering like legality wise, have you dealt with this at all? Does the County care? Is there a zoning issues with renting out bedrooms in a house?

Todd:
Yeah, great question. In Seattle proper, you can have eight unrelated persons per house without any problem. As soon as the ninth one comes in, that’s when the legal problems arise. But what I did was, I bought in an undervalued area going through a transition that’s just outside the city limits of Seattle, still a Seattle zip code but in these suburbs, you can have two people per bedroom plus one. For example, if you have a six-bedroom house, you can have two people per bedroom for a total of 13, or excuse me, for a total of 12 plus one for a total of 13. Now, I don’t have 13 people in any one of my houses but there’s really, as far as just renting out by the rooms, there’s no law saying that I can’t do it. I cleared it with the cities. I wanted to make sure I was doing everything above board.

Brandon:
Yeah, this is fascinating. It reminds me of that conversation we had with Joe Asamoah back in the day. Well, he’s doing the section eight thing in a really expensive market, where he remodels houses to the Hill, runs them on section eight. This is another similar strategy. I mean, it’s different, but it’s similar in that it works to solve… one, it’s helping with the low-income housing problem in America. You’re giving people options that they wouldn’t normally have and it’s giving the investor way to make above average returns for dealing with something that maybe requires a little bit more hand holding or a little bit more, whatever. What’s also cool is, people renting these places are… and you correct me if I’m wrong, but it’s not the family of seven people with a bunch of little kids running around destroying the property, these are young urban professionals that probably have decent jobs and [inaudible 00:23:12] people.

Todd:
Yeah. Absolutely. No, I literally have a guy renting from me right now who works for NASA. I have I think four or five tenants that make six figures and they’re renting a room from me for 900 bucks because they want to save for a house of their own. As far as your point as above average returns, it’s unbelievable. I mean, I have people that told me, “You can’t make money in real estate in Seattle, go by in the Midwest. You can get 20% returns.” I kid you not and I can show any sort of spreadsheet to prove this, on my very first deal, I was a rookie, didn’t know anything, my very first deal, I am making a 100% cash on cash return.

Brandon:
I love that.

Todd:
I mean, I put $19,000 down and on that house after the mortgage, taxes, insurance, utilities, after everything, I’m getting $25,000 in profits. It’s actually over 100% return.

Brandon:
Yeah. That’s awesome. Yeah, that’s so good. All right. Let’s summarize up this strategy a little bit. What are the must know tips? If you want to run this kind of a business what are… summarize everything, what do people got to do?

Todd:
Absolutely. Okay. There are some must know tips for you guys that you want to know. The first thing is just like I did in Seattle, make sure it’s legal in your area to have leases by the bedroom because some places, some cities I’ve heard that they don’t want you to lease anything out by the bedroom. They want it all to be by just one unit and so they don’t really like that that much. Make sure it’s true. The next one is probably, in my opinion, if you’re going to buy a house specifically for renting it out by the bedroom, I would avoid houses that have an HOA.
The reason is, many HOAs have rules about how many units can be rented. They often have rules about roommates, but particularly even if they don’t have rules about that, they definitely have rules about how many cars can be parked in the driveway and if you have a house with six people, you want to have a parking spot for everybody, and you want it to be legal for them to park, which actually brings me to tip number three, is buy a house with great parking. At all of my houses, I buy big houses on large lots so that there’s at least one parking spot for every rentable bedroom.
I mentioned earlier, I have a house about four minutes away from the airport, eight people live there and there are nine parking spots at that house and it’s just a single-family home, but I bought it on a huge lot. We put some gravel down and we made parking spots for everyone so that nobody has to street park. Probably just the last couple of tips is, you definitely want to get a housekeeper. Don’t go to a Molly Maids or a Merry Maids or some professional service, just find an individual in your area that you can interview and you can trust and you can hire. If I were to go for through Molly Maids, it would probably cost me $400 to clean one of my houses and I have someone cleaning all six houses for just 500 bucks, literally less than a hundred dollars a house. That is huge.

Brandon:
Yeah. That’s so good, so many good tips in there. What about, do you have any tips for avoiding the whole… if you’re including utility, this is as landlord and in general, anytime a landlord includes utilities, that’s when the tenant starts leaving their faucet running for two hours a day, they leave the window open in the winter with the air conditioning on or the heater on with air conditioner in the summer, anyway, you get what I’m saying, right?

Todd:
Yes.

Brandon:
That whole problem of people just waste utilities when they’re not paying it.

Todd:
Absolutely.

Brandon:
I think you’ve dealt with that.

Todd:
Yes. Oh, I have dealt with that. The problem… here’s the reason why I offer all utilities included, it would be very difficult for six people at the end of the month to split up receipts and be like, “Oh, who took the longer shower? Who left their bedroom light on?” That would create so much hassle that it’s easier if they just pay me one price. But, to your point, I did actually come to a house one day, I was going to go, I don’t know, look at a sink that was clogged or something and I literally come in and I have a guy sitting on the couch and the fireplace is on, the air conditioning is going and the doors are wide open and then I was like, “Dude, what the hell are you doing?” He was like, “Oh, well, I was really hot but I like the ambience,” and I was like, “Bro, no, you can’t do that.”
I have had that a couple times, but again, I mean, I price my rooms at a point that I understand that people won’t… they’re not going to treat the house like it’s theirs because it’s not theirs and they will be a little bit wasteful for not paying it or paying for the utility specifically so, I price through… I probably I’m… I have expensive rooms. I have rooms that go for 1,300 bucks for literally just a bedroom and a bathroom and then I have rooms, I think the lowest one that I have is 850 bucks and it’s basically a den. I priced it high to make sure I adjust for anything that will be wasted.

Brandon:
Wow. Very cool, man. Hey, I want to shift over actually to ask David here the question, because David, I know you as an agent, I mean, besides having been a house hacker yourself, but you’ve also… you’ve helped a lot of clients with house hacking. David, what do you think? What tips do you have for people that maybe we haven’t covered today if somebody wants to do this, they want to either live in a house and rent out the other ones or they want to buy a house or build a house and rent them out, anything you want to add on that?

David:
Oh yeah, this is such a powerful conversation to be having for several reasons. A lot of people come and talk to me about the BRRRR book and the Long-distance Real Estate Investing book because I wrote those and they say, “Should I BRRRR? Should I buy long distance? What should I do?” I tell almost everybody, before you even consider those, you should house hack. There are so many ways that house hacking is just for most people, the best way to get into real estate investing. You get a lower interest rate. You get a lower down payment option. You don’t have to BRRRR if you only put 5% down on your property. You’ve already got… you didn’t put any money in. You don’t really have to worry about getting a whole bunch back out.
There’s also the fact that if you look at the cashflow, like if I have $50,000 and I can go invest that somewhere and get a 12% return, which is really good, that’s $500 a month, but if that $50,000 becomes a down payment on a house and I can get $2,500 a month in rent for that same 50,000 and I’ve reduced my living expenses by $2,500, that’s the same as cash flow. When we get into the cashflow, cashflow, cashflow mindset, you start to miss the obvious ways that you can actually save yourself money and house hacking is a big one. What I tell my clients is, you should house hack one house every year if you’re going to invest in real estate. Anything in addition to that, you go buy in another state if you have to or you look at using the BRRRR method, but if you’re skipping house hacking, you’re just giving up the best strategy that you could possibly get into.
The other fact is that, house hacking is a principle, it is not within this box. That’s what I love about Todd’s strategy is, he’s describing house hacking but it’s not buy a duplex, live in one, rent out the other. We describe it that way because that’s the easiest way to convey a principle, but it’s not just do this, buy a triplex and live in one unit and rent out the other. It can be, buy like Brandon, four houses on one lot. That’s one of his best deals that he has. It can be, buy one house and build another house on it, or it could be rent out by the rooms.
Sometimes you can buy a house that has a basement that can be finished and you can house hack that way. There’s a ton of ways for the creative person to make house hacking work if they understand the principle, is that you are trying to reduce your biggest payment that you have in your personal life, which is your housing expense by incorporating a way to rent out part of your rooms to other people. Then the last point I’ll make is that a lot of people say, “Well, I don’t want to do this because I want to like where I live,” and that’s great, but you’re not committing to this for 30 years. You’re committing to possibly owning the house for 30 years or you could sell it. You don’t have to live there the whole time. If you don’t like it, move out, go house hack somewhere else next year, or go rent the apartment and now you’ve got a place that can be a rental property. There’s nothing wrong with that at all.
The reason a lot of people don’t jump in is they think it’s a huge commitment, “What if I don’t like it? I love my house.” Well, go house hack for a year and if you don’t like it, move back into your house and rent out all the spaces or all the rooms or whatever you’re doing. It’s so low risk because there’s so much flexibility with it and that’s why I think so many people in the Bay Area and Seattle and Austin, Texas, all these expensive markets where a lot of our listeners live, they have good jobs, they’re working in an industry that pays pretty good, they’ve got money to invest and they want to figure out how do I get started? This is how you do it.
Oh, you don’t have a lot of money, you don’t have a great job, you’re not making a ton of cash? Well, you don’t need a ton to go buy a primary residence, you can get in with 5% down. This is the way you do it. There’s very few people that this isn’t the very best strategy to get started with and that’s why I love people like Todd that are sharing this information because who would have thought that a strategy that sounds the simple, buy a house and rent out the rooms, could be this profitable and this, I mean, I don’t want to say easy, but relatively smooth because you’ve anticipated the problems you’re going to have and you’re getting ahead of them.

Brandon:
Yeah. Wow, good stuff.

Todd:
I think you’re absolutely right. I will say too, house hacking solves a problem because most people also, you need a place to live too so you might as well go buy a house that you’re going to live in, whether it’s a duplex, you rent out the other half or a house that I’ve done and rented the bedrooms. Anyone who says they’re above that, I don’t say this to flex or anything like that but when my wife and I… when our net worth crossed a million dollars, it was a couple of years ago and we were living in a house with six other roommates, we were sharing one car, which was a 10-year-old Ford Focus and we were millionaires.
We weren’t trying to go buy Lamborghini’s yet, we’re building and even now, I’m recording this in the bedroom of a duplex that we live in, we rent out the other half. We converted one of the garage spots into a studio that we had on Airbnb and in this duplex, we are living with roommates, two years after crossing a million-dollar net worth. Now, we’re not going to live with roommates forever, but I’m 28, I got time and it’s just a great way to get started.

David:
Absolutely.

Brandon:
Yeah. I love that. I love the… I don’t know if the word, yeah, maybe like humbleness of that, being okay with not flaunting like, “Hey, man, I house hack.” So many people are like, they love to spend money on things to show. What’s that famous quote that you see on the internet? People spend money on things they don’t need to impress people they don’t like.

Todd:
Yeah.

Brandon:
So many people will want to do that because they’re like, “Well, I deserve it. I have a good… I make six figures, I deserve a nice house. I’ve got a wife now. I’ve got a husband now. We deserve to have nice stuff.” No one’s saying you don’t deserve it, but if you just sacrifice for a little bit at the beginning in your young 20s and 30s especially, then when you’re in your 40s, it’s going to make such an impact down the road and people are just so shortsighted. They don’t see that. They just think, “I want something nice right now. I want the nicer car right now. I want the nicer whatever,” and so they go get it right now rather than just wait a little bit longer, sacrifice a little bit.

David:
Let me bring in a different mindset. Every time we looked at getting a fancy Italian sports car and we said, “Well, I did serve it,” if we flip that around and said, “Do you deserve to have to pay $300 for windshield wipers? Do you deserve an oil change that cost $450? Do you insure a car with insurance that’s more than the rent for the people that are renting your room, not to include the payment? You deserve better than that. You don’t deserve to have to pay that much.” The whole decision becomes different and that’s how you justify not buying the car. “I don’t deserve that. I don’t deserve to be a slave to an image that I’m trying to get for everyone else.”
Then all of a sudden you’re like, Todd, it’s not hard to live in a duplex when you have, however many units that you have now Todd that you’re renting out to different people and you’re just literally building an empire from the ground up, learning the principles that you’re then going to scale into something bigger. That’s what I love about the perspective that you take when you’re looking at these things and Todd’s like, “Yeah, I’m a millionaire, but I’m a millionaire because I’ve lived a humble lifestyle and so I’m going to cling to that and become two, three, four, five times that kind of a millionaire using these same principles in a bigger way.”

Todd:
Absolutely. No, I think you guys are right. It’s not about not enjoying things in life, but there is a lot to say about delayed gratification. I mean, I will be completely transparent, the house that I want to raise my kids in, it will be a really awesome house right on the water. But if anyone asks me like, “Oh my gosh, you’re in your early…” I’m 28 now, but I plan to get it next year, it’s like, “You’re 30 years old. How do you have a waterfront mansion?” I’ll be like, “It’s because I lived with roommates for five years while I was making six figures and even after I became a millionaire. That’s how I did it. I wasn’t in a rush to go impress anyone.” This is the only piece of jewelry that I own and I think this watch costs $100. I keep it in a box. I’m not a flashy guy. I’m a T-shirt and jeans kind of guy and it just works for me.

Brandon:
I love it. Let’s move on and talk a little bit about building because I’ve never built a new construction before. Let’s just walk through that process, how do you find a lot? Do you find a lot first or the builder first? Do you have to buy in an area where the builder is already building a subdivision? How does that work and then how do you negotiate a price? Are you using an agent? All those questions. What do you think?

Todd:
Great questions. Let me clarify, so the first house we found, what I found was a vacant lot with a frame that was already on it. It was already framed out but none of the insides were… no floor was put down, nothing like that. Basically, we contacted the builders and we were not risky because I was making a good income but we were young and so basically what I said is, “Hey, I’m going to give you $10,000 and we want to buy this house and this will go towards our down payment or whatever and if I can’t get financing for this house, you keep the 10 grand.” They were like, “Awesome.” I mean, they can’t lose in that situation. They have a buyer lined up and if I can’t do it, they get $10,000.
That was very easy to do. That same builder that I worked with… oh, and by the way, I didn’t use a real estate agent. Part of my sales point is that I’m like, “Hey, you’re going to sell this house to me. You’re not going to have to pay 6% interest to the buying or the selling agent, so your 6% commission I should say.” Then that builder had bought the lot across the street, which we talked about. That was the second house we bought. We work with them, we got to pick out a lot of the finishes and everything and we work with them again and same deal, I gave them earnest money and we ended up buying it without an agent. They came out, I think they came out ahead like 36 grand because I paid them what they would have listed it for, but they didn’t have to list it. They didn’t have to use an agent.

Brandon:
That’s cool. How much choice did you have into the design? Did you get to pick from a couple of designs or how much did you design it?

Todd:
The first two, I didn’t have a ton of choice in design. My fifth one, I had a lot of choice in design and actually the fifth one was our first kind of experience with Airbnb as well. This was a six-bedroom, four-bathroom house that also had a mother-in-law attached to it and that was probably my favorite design that we have as just far as just coolness and the rentability of it. Then the house that I bought in SeaTac, I actually, or excuse me, the house that I bought close to the airport, I didn’t build it. It was somebody else’s flip that I bought and that was the eight-bedroom, four-bathroom house. I had no choice over anything on that house, but as soon as I saw it, I loved it because I knew it would work well for our model.

Brandon:
That’s so cool. All right. Building is one of those things that I would love to do and what I love about the idea of building is that you can really design from the beginning what works well for tenants, what works well for… what’s tenant proof rather than what most builders do or what most homeowners do when they’re building this. What would be cute? What would my kids like? What would my wife or husband like? You’d be like, “Huh, what layout is going to make most sense for tenants? How do I put the bathrooms in the right spot that’s not going to be weird and how do I do enough bathrooms?”

David:
Yeah. Do they let you do things like, “Okay, I don’t want a loft, turn that into two bedrooms. I don’t need a family room and a living room, take the living room, make it into an office and a bedroom and I can rent those out?”

Todd:
Right. Absolutely. I mean, it completely depends on who the builders are. We had an option where in our first house we could put a bathroom in a closet, in a space that was supposed to be a family room or a game room or something like that and I was like, “Yeah, I could put my pool table up there or I could get 1200 bucks a month.” I opted for that. The duplex that I live in right now, it is literally the perfect and well, I’m biased because I love the place, but it’s the perfect house hacking building because on my side of the duplex, it’s three bedrooms, two and a half bath and on the other side of the duplex, it’s two bedroom, two and a half bath.
Then we converted one of the garage spots to a studio so we can lease to a family, we can house hack it and put it on Airbnb. There’s so much versatility with this duplex and it’s just like, if you have a choice in design, absolutely. Also, the bathrooms are good. People think of like, “Oh, it’s weird that your house has four or five bathrooms but if you go to resell that house, personally, I don’t think anyone’s going to be like, “Oh gosh, there’s too many bathrooms. [crosstalk 00:39:48],

David:
It’s another thing when you’re representing clients to house hack or what you’re doing when you’re looking for it yourself, Todd. If there’s four or five bedrooms and one and a half bathrooms, it’s very hard to make that work to four or five different people. The bathroom count ends up… I always look for houses with a lot of square footage because we can add bedrooms in there and a lot of bathrooms. If it only has one bathroom, it’s really hard to make that house hack because people will say on paper, “Oh, I can rent out four rooms,” but they’re not looking at stuff like what you said, where are they all going to park their car? Is it in HOA with narrow streets and you can’t put your cars out there or is there not enough bathrooms?
If there isn’t enough bathrooms you have to look at, “Can I run plumbing from one of these bathrooms into another area easily or would I have to run it across the entire house and build new bathrooms?” These are really good tips for people that are thinking, “I want to go do what Todd does.” You have to have somewhat of an idea for the design, how it needs to look, how many bathrooms and where are they? Even at times, can I put a kitchenette in another part of the house and wall it off so that I can rent it out as two different units?

Todd:
Yeah. I mean, having a good bedroom to bathroom ratio, I mean really any more than three, at a max, you don’t want more than four people sharing one bath. That’s way too much. My biggest producer is a house where there’s no more than two people to a bath and that house, for example, we put… gosh, I think I put 65 grand down. It last year, it produced 96 grand in gross rent and 50 grand after all the utilities and stuff was pure profit.

Brandon:
Wow. Yeah. It’s amazing, man. Amazing. All right, well, let’s move on. I want to dive in a little deeper on the numbers of these deals. Let’s move over to our deal deep dive.

David:
Deal deep dive.

Brandon:
All right. This is the part of the show where we dive deep into the numbers on a property and how you found it, how you did all that work. Do you have a property in mind that we can then dig into?

Todd:
Yeah. I’ll use my one close to the airport because I think it’s just the most impressive numbers.

Brandon:
Okay, cool. Let’s go. We’ll start with number one. What kind of property is this?

Todd:
Single-family home.

David:
How did you find this single-family home?

Todd:
Literally, I was up on Redfin at midnight. I saw it as soon as it came online and I went to go see it the very next morning because I knew it was perfect.

Brandon:
Awesome and how much? This was the one that you said that somebody flipped, right?

Todd:
Correct.

Brandon:
Okay, how much was the property? What were they asking for?

Todd:
634,000. I made a full price offer that morning and it was mine by the afternoon.

Brandon:
Wow.

David:
Todd, you are man after my own heart. Go ahead Brandon.

Brandon:
Well, I was going to say, I teach a lot of negotiation tactics and stuff on webinars and whatever else, but that’s always one of my favorite tactics, it’s just be quick. Just be fast. It’s amazing what you can get accomplished if you just are quick at making offers. Make an offer before anybody else even knows it’s for sale.

Todd:
I literally… I saw it as soon as it came online. it came online on a Thursday. There was an open house set for a Saturday. I saw it Friday before the open house. I knew it was perfect. I made them full price and I was like, “Give me this house.”

Brandon:
Yeah. Yeah. Very cool.

David:
Okay, and as far as you negotiated because you were quick, so let’s go with, how did you fund it?

Todd:
I just had my own cash. I put 10% down owner occupied and it came out to… My cash to close was like 65 or 70,000, something like that.

Brandon:
Okay. You then lived in the property for a little bit?

Todd:
A little bit, yeah.

Brandon:
What did you do with the property then?

Todd:
Rented that out by the bedroom. I moved out of it, not too crazy long after that, but that house now it’s eight bedrooms, four bathrooms and it generates right around $8,000 per month in gross rent.

Brandon:
Wow. That is a chunk of money. What’s your mortgage on that?

Todd:
3,600 and some change.

Brandon:
Wow.

David:
Let me tell you guys something that’s going to make everybody even more sick. In general, I’m not going to hold you to the exact numbers, Todd, but in general, properties like this, how much does each bedroom go up in rent every year?

Todd:
Actually, something that I decided to do a long time ago was, I never raised the rent on existing tenants. If a tenant moves out, then I’ll of course rent it out at market but if… whether I have a tenant stay with six months or six years, I don’t raise the rent. The only time the rent would change is if they upgrade or downgrade units.

David:
Sure. Let’s say that market rent, how much does market rent go up every year?

Todd:
Oh sure. 50 to 100 dollars. Sometimes $200. I literally just had a guy move out of our room and I released it for 250 bucks more per month.

David:
Then that’s what I’m getting at. What was the rent originally for that guy?

Todd:
It was a thousand bucks and I’m getting 1250.

David:
Okay, so that’s probably on the higher end, but it’s not uncommon to see something like that.

Todd:
Correct.

David:
You have four or five, six rooms in a property and they’re all doing that, those numbers of what we’re talking about that didn’t look good, guess how good they’re going to look at five years? Over six bedrooms, over 10 properties, all just from house hacking. This is the… You can do this and you can compete with the people that say, “I don’t buy single family homes. I only buy apartments like the Grant Cardone. Single families are for suckers,” kind of a stance. Look at the numbers of what you’re doing and tell me that you’re not beating a lot of those people and getting a lot of appreciation and getting flexibility. If you ever have to sell one of these properties, it’s pretty easy. Try selling your shares in a syndication, it’s not quite as easy. I think you’ve found a really, really good way to maximize a lot of investing principles.

Todd:
Yeah. As far as profitability, nothing touches it because these houses are built to be rented out to a family or lived in by a family. They’re not built for by the room. As soon as they start prizing houses to be sold to be room rentals, then we could look at that.

David:
[crosstalk 00:45:24].

Todd:
But no, I mean, and to your point about the appreciation, in just four and a half years, I just rerun the numbers, I received over 700 grand, just in appreciation, plus all this crazy cashflow, 13 grand a month in pure net cashflow. That house that we were talking about, the four bedroom or excuse me, the eight bedroom, four bathroom, I had a teeny tiny little bedroom that when I first bought the house, I rented it out for $600 a month. Today, two years later it’s getting 875 per month. It’s crazy.

Brandon:
Yeah, so good, man. I love the… I don’t want to say risk-free, nothing in life is risk-free here, but the reduced risk of you have a multiple exit options. You can turn it back to a single family if you needed to. You could sell the property if you needed to. You have a 30-year… most likely I’m guessing, 30-year fixed mortgage on all of this?

Todd:
All of them, yeah.

Brandon:
Yeah, so you’re not dealing with commercial loans, which are five years from now. That’s what I hate about my commercial mortgages is like, in five years I have to go get a new loan. For those who don’t know, most commercial loans have a three to seven year balloon payment, which means you have to literally just go and get a brand new loan at the end of five years and you have… I mean interest rates could be 20% in five years. We don’t know. It’s just added risk on commercials.
You’ve got a fixed, not going to change for 30 years. The property is getting paid off every single month, getting reduced what you owe on it, it’s appreciating over time, you get the tax benefits of owning rental properties and you get the cashflow. You get all four of the wealth generators compounding with very low down payments, especially when you live in the property for a short time in the beginning so you can get the owner occupied three and a half or 10% down. Just crazy. I mean, there’s just benefit, benefit, benefit, benefit, benefit at this.

Todd:
Yeah, and to your point, so we can legally pay zero tax on our gross rental income because of our depreciation schedule. Between the six houses we have, our depreciation schedule, we can take about, I think 120, maybe 140. My wife’s a CPA, she knows all of that, but around 120,000 in just appreciation plus you write up all the interests. What it maps out to is, the first quarter million dollars that we make on these properties, we legally pay zero tax.

Brandon:
Zero taxes. Yeah.

David:
Let me jump in and explain what he’s referring to there because depreciation is a confusing word if you don’t know what he’s referring to. When we say appreciation, we’re typically referring to properties becoming worth more. They’re appreciating in value. Depreciation is not the opposite of that. It doesn’t mean it becomes worth less. It’s a tax term that is used to describe the fact that your home is more or less a… how would you describe it? Like a business asset. If you owned a restaurant and you bought a dishwasher, that dishwasher would slowly every year, wear down until it was worth nothing. You’d be allowed to write off part of the value of buying it.
Well, the government knows that if you just wrote off the entire value of every house that you bought in year one, you go spend $600,000 and you can write that off of the money you made, they would never ever tax you for anything because everyone would just buy a new house every single year. They let you take a percentage of it. I think it’s divided over what? 27 and a half years?

Todd:
27 and a half years, yeah.

David:
One, 27 and a half of it every year that you get to write off. As long as your income does not exceed that number, you don’t have to pay taxes on it because it’s covered by the depreciation. The trick is, when you’re buying a very cheap house, lower priced house, that 27 and a half number that you’re dividing it by, becomes very small and so your rents will exceed it very easily. But when you buy a really expensive house and interest rates are this low, the house is expensive so you get a lot of depreciation every year but that payment is not because the interest rates are low and the rents are higher because the house is more expensive.
You get in this really smooth spot where you get higher rents, more cashflow and is protected by the depreciation of a more expensive house. This is always that Todd has capitalized on knowing the rules of real estate investing, which are not rocket science at all and then applying them in an efficient and creative way, which goes right to Brandon’s point of, he’s got a lot of tools in his tool belt. He understands how to use these tools and he uses the right tool for the right spot and he’s efficiently investing in a way that isn’t a ton of work and still protects your cash. I mean kudos to you, Todd. That’s awesome.

Todd:
Thank you.

David:
What do you say to people who say, “Well, I don’t want to manage all these tenants myself?” Is there a way that you can use a property manager for this? Do you hire someone to outsource it? How do you handle that?

Todd:
Yeah. Good question. I mean, personally, I do manage it all myself. Part of it is because I’m dealing with personalities and nobody will care as much as I do about harmony in the house. An outside manager won’t care as much. It’s just a little bit more niche. But, I mean, as I mentioned before, we’re bringing in right around $40,000 per month. If we could pay a manager five or 10% of gross rent to go manage it for you, you’re still making so much money because of the insane cashflow. You might not be getting a 100% cash on cash turn on your first deal like I did, but maybe you get 80% and that’s still a hell of a lot better than anything else you’re going to invest in.
Yeah, I mean, here’s what I will say, for anyone listening that’s thinking whether or not they’re going to do this, if you haven’t bought a real estate yet, you’re scared to just take that plunge, buy a house for you to live in and then go rent out the bedrooms to your friends. That’s the easiest way you can possibly start. If you have to live somewhere, you might as well live somewhere for free, or at least for very little and that’ll… not that I recommend doing this other recreation I’m about to allude to, but the house hack that you live in, that you rented the rooms, it’s almost like the gateway drug to more real estate. Not that I meant to-

David:
I agree. I agree.

Todd:
Not that I say anyone should go do a bunch of drugs, but it’s like, you get a little taste and it’s like, “Ooh, I like that.”

Brandon:
Yep. Yeah, I like to compare it to training wheels. My daughter Rosa right now is learning to ride a bike-

Todd:
There you go.

Brandon:
… so she has training wheels on. It’s hard to really fall off the bike if you have those training wheels on and house hacking definitely gives you that. Hey, last question of the deal deep dive. What lessons did you learn from this deal? Anything good or bad that you learned from this?

Todd:
Man, that’s a good question. I think this specific deal that we’ve talked about was, I saw it, I knew it was perfect so without hesitation, I made a full price offer and I got it. I think the lesson from here is, if it’s perfect, you don’t always need to nickel and dime and try to be sneaky and negotiate and blah, blah, blah. Just get the deal. You can make up way more later in the appreciation and the cash flow with the rental income. Just get the deal done. As long as it makes sense, checks all your boxes, get the deal done.

Brandon:
Yeah, so good. So good, man. All right, well, that was the deal deep dive. Now it’s time to head over to the last segment of the show. It’s time for our-

Speaker 5:
Famous four.

Brandon:
All right, time for the world’s famous four, the last four questions we ask every guest, every week and we’re going to throw them at you right now, Todd. Number one, do you have a current favorite real estate related book?

Todd:
Rich Dad Poor Dad.

Brandon:
All right.

David:
All right. What about your favorite business book?

Todd:
I like The Art of War, which isn’t necessarily a business book, but it’s a great one that you can use in business.

David:
I agree.

Brandon:
That’s not the War of Art, right? This is actually the actual Art of War from like Sue…? I don’t know how you say his name.

David:
Sun Tzu.

Brandon:
Sun Tzu. Is that his name?

Todd:
Yes.

Brandon:
Okay, cool.

David:
All right.

Brandon:
Because we talk a lot about the War of Art as well. That’s another great business book.

David:
[crosstalk 00:52:16]. Brandon, you also had a good quote [crosstalk 00:52:18] that I don’t think you stole from anybody that had something to do with that like, business is sports. Was it Mark Cuban? Oh, you did steal it, if it came from Mark Cuban.

Brandon:
That is Mark Cuban. I didn’t-

David:
But you didn’t steal it because you quoted [crosstalk 00:52:31].

Brandon:
I quote Mark Cuban all the time on that one.

David:
What was that quote then?

Brandon:
I don’t remember. It’s just like the sport of business.

David:
Yeah, and you had some really good parallels between how being good at business requires the same things as being good at sports. You can get the same dopamine rush, you learn the same lessons. I would think that that applies to the Art of War. Very similar.

Brandon:
Absolutely.

David:
[crosstalk 00:52:49] in war it’s your enemy, in business it’s not necessarily your enemy, but it might be your competition or your opposition.

Brandon:
Real estate is war.

David:
Okay. What about some of your hobbies?

Todd:
Man, I love MMA, I love boxing, archery. I’m a pretty active guy so just any sort of sports or activity related thing, I am all for.

David:
How much do you listen to the Joe Rogan podcast?

Todd:
Oh man, like every day.

David:
I knew it. Those are all the same things he’s into.

Todd:
Yeah.

Brandon:
That’s funny. That’s funny. [crosstalk 00:53:19]-

David:
If you guys don’t know, Joe Rogan has a podcast. It’s almost as good as ours. He’s probably our closest competition.

Brandon:
Almost.

Todd:
Not quite as good. No, I prefer you guys because you guys, you have value, you’re teaching things and you’re teaching the people what they need to know.

David:
There we go. Thank you, Todd. If you ever get on Joe Rogan’s Podcast, feel free to let him know, we’d appreciate that.

Todd:
Oh, I’ll plug you guys for sure.

Brandon:
Yeah. If anybody knows Joe Rogan and wants to get him on our podcast, that would not be a bad thing. I would not mind [crosstalk 00:53:43] with Joe Rogan.

David:
No, I wouldn’t be mad about that. We could go on his podcast too. Anyone out there who happens to know Joe.

Brandon:
Yeah, hook us up. Hook us up. All right. Number four. Last question from me. What do you think sets apart successful real estate investors from all those who give up, fail or never get started?

Todd:
Oh man. I am very seldom the smartest guy in the room. I have no degree of any kind. The degrees behind me are all my wife’s, she’s the smart one. But I’m just a dreamer who never gave up on the dream and I think that’s every successful person. You start off with this idea, this dream and you just don’t quit. You have to know your market. You have to do your research, but I think just kind of the… I don’t know, just that adrenaline rush of going and get the deal, I think you mentioned it before, it was like a dopamine hit. It can be when you go do a deal and that for sure is true for me. I get so excited and so fired up. Passion for what you do and I don’t give a crap about the fear of failure. If I look stupid, I don’t care. I would rather fail and try than not try at all.

David:
That’s really good. I think every successful person we talked to, they all have that in common and it’s the hardest part because, the last thing you want to do is look stupid especially when you put yourself out there as a person to follow. Now you feel this pressure like, I can’t do bad on a deal because there’s an internet full of haters that are going to jump on any mistake anyone makes and expose this person but in reality, that’s how you learn the fastest. A lot of these child celebrities I noticed that we just jump all over them every time they make a mistake, but we all made those same mistakes. We just didn’t have social media and cameras and videos recording every single thing we did. It’s the people who made the mistakes earliest and most frequently that tend to learn the most. That’s a great point. There’s this catch 22 between the most successful people fail the fastest but failing can get others to want to stop you from keeping moving forward.

Todd:
Absolutely. I mean, I guess some people would probably think it’s a failure that I dropped out of college but literally, I dropped out of college when I was 22, by the time I was 25, I was a millionaire through real estate. If I can do it, anyone can do it.

Brandon:
So good. So good man. All right. Well, with that, David Greene.

David:
Last question of the day. I think Todd, you have an amazing story. You are a very good teacher and speaker. People are going to want to know a lot more about you. Where’s the best place for them to find that information?

Todd:
Sure. I literally just started a YouTube channel a couple of months ago, teaching a little bit about real estate and just personal finance. That’s just my name, Todd Baldwin and they can also find me on Instagram @ToddJBaldwin.

Brandon:
Todd J. Baldwin. I’m going to follow you right now.

David:
Me too.

Todd:
Yes, sir. Thank you.

David:
Yeah, go follow Todd, follow Brandon, he’s BeardyBrandon, follow me. I’m DavidGreene24. Follow everybody. Learn as much as you can about real estate-

Brandon:
Everyone.

David:
… because stuff like this, I think about it all the time, but if you’re not exposed to real estate in the volume that Brandon and I are, thoughts like this might not cross your mind, but you start following other people who are doing a lot of the same stuff that we’re talking about here as well as listening to podcasts, your brain will start to change. It will structure itself differently and you’ll see opportunity in places like where Todd does, that if you didn’t have his perspective, you wouldn’t catch it at all.

Brandon:
Absolutely. Yeah, get into real estate. You’re either going to pay off your own house or you’re going to pay off somebody else’s house.

Todd:
You might as well pay off your own.

David:
What was that Albert Einstein quote about compound interest that applies here?

Brandon:
Oh, it’s like the eighth wonder of the world or something?

David:
Yeah. He said, “Compound interest is the eighth wonder of the world. He who understands it, benefits from it. He who doesn’t, pays it.”

Brandon:
Yes.

David:
Or something along those lines. But that absolutely applies to real estate investing. If you’re going to build a lot of wealth for somebody, paying for somewhere to live for your whole life, you might as well make it you.

Todd:
Yes.

Brandon:
Awesome. Well, very cool, Todd. Thank you for joining us today. Thank you, David, for being another awesome co-host as always and Todd, we’ll see you around, man.

Todd:
Hey. Thanks for having me on.

Brandon:
[crosstalk 00:57:36], see you in future. All right, thanks. David, you want to take us out of here?

Todd:
Yes. This is David Greene for Brandon, now quoting other people and giving them credit for it, Turner signing off.

Speaker 3:
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