Making a 25 Deal/Year Business (and Marriage) Work… Together! with Elliot and Chrissy Smith

Brandon:
This is the BiggerPockets Podcast Show 394.

Elliot:
I don’t tell her what decision to make. She gets to make those on her own. And when she makes a decision, that’s the decision. There are certain things we come together and when I make decisions, she doesn’t question me. So we have those lanes and it really takes a lot of the friction out of the partnership because we just trust each other to know that they’re making the right decision and in the best interest of our family.

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. Of course, here with my cohost, Mr. David Green. David, welcome to the show again. Man, how’ve you been?

David:
I’ve been fantastic. Probably not Mally fantastic, but Northern California fantastic. It’s pretty close.

Brandon:
Northern California fantastic is pretty good. What have you been up to? I mean, I know you’re writing a book, a couple books, right? Three books, I don’t know?

David:
Yeah. Writing a series for BiggerPockets of how to be a top producing agent.

Brandon:
Cool.

David:
I think I have now 29 houses in contract after the weekend, so it’s going really, really good. If someone wants to buy or sell a house, this is a strong market right now in California. And other than that, just like constantly educating people, talking about real estate, hanging out with you and today’s show is I think a very easy listen. As we talked to a couple who’s had to learn how to navigate the waters of real estate investing and building a business, and having completely different skillsets while making it all work. And I was just entertained the entire time.

Brandon:
Yeah. I feel like this is one of those shows that just like a fine wine, like the longer it went, the better it got and the deeper it got. Like we know the whole thing was good, but I mean, towards the end of the show, we talk about a couple of things I want to just point out right now to listen to. Listen to where Elliot talks about, like how he actually does the math at the table with the seller. I thought that was just a phenomenal tip for being able to like negotiate. If you’re somebody who’s nervous about negotiation or making low-ball offers, you’re going to love that.
How he actually cuts in his contractors on the profits from a recent flip and then probably my favorite thing… Wow. There’s a lot of favorites in here, but one of my favorite things about today’s episode was when he goes in… Elliot, like just dives into like, “If you’re a new investor looking for a deal, do this, do this, do this, do that.” He gives you a very simple plan to follow that’s pretty much guaranteed to get you a deal. And like he’s very, very practical with it. So it’s really good.
We talk a lot about… Chrissy talks a lot about like kind of the organization of how she gets the business, like manages the cash flow, manages the budget, making sure they have the money to do it. And just between the two of them, just like how to work together as a relationship, as a married couple. Whether or not you are married or not, but you are either going to be at some point married or have a significant other, or have a business partner, or have employees. So if any of those four things apply to you, this show is going to change your life and I want to get to it right away. So let’s get to today’s quick tip.

David:
Quick tip.

Brandon:
Today’s quick tip. Did you know you can listen to shows on different podcasts apps at double the speed or one and a half speed. So what I like to do when I listen to a podcast, I’ll double the speed and then take it down to like one and a half. So I’ll listen for like a minute at double and then go down to a minute and a half. And then a minute and a half feels normal, it like resets my normal. So just FYI, you can cram in more podcasts in less time by doing that. And we will not totally sound like chipmunks, but we will sound like we talk exceptionally fast. That’s today’s quick tip.

David:
That was a very good quick tip.

Brandon:
I wanted it to be a quick, quick tip.

David:
I think we should quickly get to today’s guests.

Brandon:
We should. And now Mr. David Green, I think we’re ready to get to this show. You agree?

David:
Yep. Buckle your seat belts. Hang on folks. This is going to be a very fun and entertaining show.

Brandon:
All right. Let’s bring in Elliot and Chrissy Smith. All right. Elliot and Chrissy, welcome to the BiggerPockets Podcast. It is awesome to have you guys here today. Elliot, happy to have you back. Chrissy, glad to have you here for the first time.

Chrissy:
Thank you. Happy to be here.

Brandon:
Elliot, you’re not happy to be here?

Elliot:
I’m happy to be here. I just … yeah.

Brandon:
We told Elliot before the show. I said, Elliot’s going to talk, dominate the conversation because me and Elliot have a bromance that rivals David and I. So we’re going to attempt to not overwhelm Chrissy today. Does that sound good?

Elliot:
Exactly. That’s my plan. Let Chrissy talk. She’s an important one in this relationship anyway.

Brandon:
There we go. All right. Elliot, you were on episode… oh, a long time ago. What was it? Episode 255.

Elliot:
Yeah. Sounds right.

Brandon:
It feels like we were just babies then. And that honestly is one of my… like I know I say this a lot, but like looking back in the last 400 shows, I would put that in the top 10 of my all time favorite shows, maybe even top 5. Yeah. Because I really, really liked your story. And so people should go back and listen to it, Episode 255 and we learn all about your story. Basically, in a nutshell, can you give us a synopsis or overall, what did you talk about last time? Kind of like what was your background? And then I’m going to move to Chrissy and have her talk about hers.

Elliot:
Yeah. Last time we talked about just kind of how we got started in the real estate business. We were working and I was working a job at 70 hours a week for a bakery in sales. And then part time on the side, we were doing real estate, but then I talked a lot how we got there, our systems, our processes, but then really how I’ve struggled with some depression and bipolar issues, addiction. I was in rehab at 20 or 21, a week after I turned 21, and I had just started dating Chrissy before I went to rehab.
And funny story, we were talking for about a month and a half, and then I call her and say, “Hey, I’m going to rehab.” And she’s like, “Oh, it all makes sense now, why you were like talking to me and then you would go away for like four days and say you lost your phone.” But we dove into that and yeah, that was a good show.

Brandon:
Yeah, it was awesome. All right. So Chrissy, obviously, people can go back and listen to that, but Chrissy, what about you? Where did you get started from and what was your background? How did you get into this whole world of real estate?

Chrissy:
Yeah. I started out really young. I bought my first house at 20 and I’ve always been a very, very frugal person, and it’s probably growing up poor. I grew up far under the poverty line and it’s one of those things that I’ve always wanted some sort of security. And I gravitated towards real estate because it made sense to me, I understood it. And so it’s one of those things that I happen to be in a very good situation when the first time home buyer credit became available.
I had a down payment ready. I was scared to death. I remember not being able to sleep. Like I would go house shopping. I hadn’t even made an offer yet. And I would stay up all night long thinking about what if this happened, what if that happened? But because I was frugal, I decided that I was going to buy a house and I was going to house hack. And I was looking at the numbers and I was paying rent at the time, I’m like, “I’m literally going to be able to buy a house and pay less every single month with house hacking versus sitting here in this tiny apartment.”
That’s kind of where I got started. And then after Elliot and I started dating, we started talking about real estate and the things that we wanted to do, and we both had the same mindset and goals. I was basically adopted when I was in high school and part of that family invest in real estate. When I bought my first house, somebody just mentioned, “Hey, this might be a great rental someday.” And just that thought in my head, my mind went crazy with the possibilities. And so we ended up moving down to Vancouver because of Elliot’s work.
And at that time, we had to decide are we going to sell this house, are we going to rent it? I was scared to death to take on a rental and buy a new house. I’m like, “What if something were to happen? What if we had a crazy tenant and it’s going to cost $20,000 to clean up the property later?” But having good mentors guide me and guide us, in a way, we decided to take the leap, went ahead and rented out the property. And we did tenant screen and tried to do everything correctly. And I just remember, it’s so funny thinking back on it, we were cash flowing like maybe $250 a month and we were so excited about that $250.

Brandon:
It’s the best, right? It’s the best.

Chrissy:
Oh my gosh. It’s so funny. And then we’re like, “Oh my gosh, how do we do this again? Like, how do we repeat this?” And from there, we just both got on board with just being really frugal. We didn’t even know anything about BAR or like any of these strategies for getting properties at a discounted price yet. And so we were just going to do it like the hard way of just working hard and saving up our money, and saving up down payments. And we were going to move from house to house, to house, to house and just rent out each one.
And then Elliot found BiggerPockets probably a year after we rented our first house. And he’s like, “Hey, I’ve got this crazy idea. I think we should send out letters to people to try to find rentals and try to save some money on, at least, the realtor costs, all that stuff.” And I’m like, “Okay, let’s give it a shot.” And we would come home from work and sit down, and just hand-write out address envelopes. And I feel like we got lucky in the sense that, because we personally wanted to buy duplexes. We chose to mail out to duplexes, which at the time I feel like everybody was really bypassing.
They were looking for just absentee and they weren’t looking at like multi-family kind of stuff. And so we actually got a really good response rate and a lot of tire kickers. And we were just getting used to working with people that they’re ready to list it on the market, and running our numbers and having that uncomfortable conversation of, “This is what we could actually pay for it.” That was a big mindset shift. And then, one day I remember Elliot was answering the phone calls. He’s definitely the salesman, but he was napping. And we got a call from a lady that… she was actually a realtor and she owned a duplex that she was just tired of having. And she said, “Hey,” I can’t remember the… I think it was 170.

Elliot:
No, 120, 120.

Chrissy:
120, 120. Gosh, man, I can’t even imagine [crosstalk 00:10:30] the 120.

Elliot:
Wish we had kept it. Every duplex we ever wholesale I’m like, “No, we should have kept it.”

Chrissy:
I know. I know. And so we were working with another guy that was helping us out in the process because they’re like, “Okay, how do we do this? How do we get it under contract?” And so we show up and walk around, and take a look at the property, and it was already such a good deal. And he’s like, “Well, you got to try to negotiate a little bit. You can’t just say, “Oh, this is great,” and snag it up because she’s going to be freaked out.” Elliott, he’s like, “Hey, we could do 115 for the property.” And she just sat there and thought about it for only a few seconds really. And she’s like, “Okay, I could do that.”
And then our partner that we’re working with, he’s like, “Oh, we could do this. We could…” Just advanced strategies where he’s like, “We could buy it. We can refile. We can take this cash and we could spend it to this other thing.” And it freaked us out and we’re like, “No, we’re not ready for this kind of stuff yet.” And so we ended up basically wholesaling it to him. Getting a small fee and I remember afterwards, we sat down and had like a celebration, a little lunch and we were just high on life. Just, I think it was a $5,000.

Elliot:
Yeah, easiest by five grand we ever made. We’re like, “How do we do this again? This is great.”

David:
That’s where I want to jump in and ask you guys, because there’s a lot of people listening that say, “Eh, $5,000, I wouldn’t say no to it, but I wouldn’t necessarily get addicted to this whole thing about real estate.” But that $5,000 meant so much to you guys that you went and built an entire business and then built your life around that business, and now you’re here in the podcast. Do you have any insight you can share as to why that $5,000 meant so much to you two that you could see the value in redirecting and pivoting like your whole life around getting more of it?

Elliot:
Yeah, I think it meant freedom because I was working… Chrissy, we had moved to Vancouver and as Brandon knows, the West side of Washington States is not fun. It rains all the time.

Brandon:
It sucks.

Elliot:
Yeah. Chrissy was depressed. She wasn’t having fun. She wasn’t liking it there. She had a job that she really loved back in Tri-Cities. And so then all of a sudden, it’s like five grand, it meant almost like freedom. And we’re like, okay and we had spent like $250 on letters and stuff at the time. And so we’re like, “Well, let’s see if we can do this again. Maybe we just got lucky.” And then the next month we made like 8,800 bucks on a wholesale on a duplex. And we’re like, “Shit, this actually works.”
And so in that freedom, so we just kept going and we didn’t take any of the money that we made. We put it all back in the business because I was making at the time, like $85,000 a year. I had Oregon taxes, but we were comfortable. We had a house, we could manage everything. We had paid for cars and all that stuff. We’re like, “Let’s see, let’s just see if we can save up enough money so maybe we can do this full-time at some point,” and it just meant freedom.

David:
How about you Chrissy? What does it mean to you?

Chrissy:
It did mean freedom. I’m an efficiency person, for sure. And I saw how much time it took to make that five grand versus how much we had to work. You had to work a full month, basically, to make the same amount of money. I’m like, okay, even if we just did this on the side and it helped us build up money because we still had the mindset that we were going to build up for down payments. It’s like even if we can use this to build up for down payments so we can buy rentals, that’s going to accelerate our growth so much more than just working our jobs and saving up whatever we can.

David:
I agree that I look at life too like from what’s efficient a lot of the time. And then the other thing that a lot of people on the outside looking in don’t think about, is that the way you make money can either be fun or it can suck. And you actually should factor that into also where you spend your time. Because like Brandon and I talk about, we have fun doing this podcast. We have fun putting deals together where we get to help other people. I’m selling a lot of houses for other clients because helping other people build their wealth feels so good. But I’d rather do that than just get more houses for myself.
If you’ve never experienced that, that making money can be fun and enjoyable or at least suck less than what you’re doing right now, it’s hard to relate. But man, like there’s certain things that you can do for 3 hours that feel like 10 and other things you can do for 10 hours and they feel like 3.

Chrissy:
Absolutely.

Brandon:
Yeah. That makes a lot of sense. I was thinking that you mentioned… I know a little bit of your story, like your background, you had a rough teenage years and obviously, like you emerged from a background that was a little more rough. And you can expand as much or as little as you want of that. And Elliot, I know you already mentioned, like you struggled with a lot of stuff as well, early on. I know David, you went through some stuff when you were younger. I know I went through some stuff when I was younger. Like it’s interesting how like though… I guess where my head goes is like a lot of times with kids, especially like, we have kids, I know you guys have a kid, right?
We want to remove all of these obstacles and bad things away from them, which obviously, it’s our job as parents to do. But it’s funny like how much of our success today is built on, and because of the crap we went through in younger ages. Like how much of my success today is probably made… because I got made fun of for being the fat kid in middle school. Almost everything I have today is probably because of that. It’s just interesting. And in case if you guys noticed that, have you notice any additional drive because of your backgrounds that led you where you are today?

Chrissy:
Yes, absolutely. Just to dive into a little bit, my parents, they struggle with alcoholism. I would call them working alcoholics. It’s almost worse in the sense that they’re able to keep their lives together, but continue to drink. It’s one of those things that they did. I did have a roof over my head. I had it better than some people out there, but at the same sense, it was one of those things that any extra money basically went to liquor. And so it was one of those things growing up…
I’ve heard you, Brandon, talk about how a luxury in life is not really having to look at the thermostat, right? Not having to… yeah. And so it’s one of those things that I grew up with using the one ply toilet paper, and just stuff like that. And my parents not ever having any extra money, and you’re just doing every single thing to scrimp and save, and there was never really any security. And so it was one of those things that I started working really young because I wanted to have my own money. I wanted to be able to do my own thing. I started picking raspberries and selling raspberries, and then I had a couple of paper routes.
And it’s just one of those things that I do feel like growing up a little bit disadvantaged, it did give me that motivation to get out and hustle, and to make something of myself. Because I knew I couldn’t sit back and my parents are going to send me off to some summer camp or something. I think it gave me… I do believe it gave me a work ethic and I think it gave me a mindset where even now I still stop and I look at the budget, and I look at how we’re spending our finances, and I always try to make sure that we’re moving in a good direction.
Yeah, it’s one of those things that having a kid now, it is so hard because I’m like, “Man, how am I going to make sure that he cares about these things and that we don’t spoil the crap out of him where he’s just like out like, “Oh, he doesn’t know the value of a dollar or whatever.” So yeah.

Elliot:
Great story about Chrissy, so when we were-

Brandon:
I especially loved every time you say that. Great story about Chrissy.

Elliot:
Yeah, I know. This embodies Chrissy and her budgeting, and how she is with money. So when we were dating, she was making way less money but owned a house. And I was living in Vancouver and I was renting a room from a lady for like 400 bucks a month. I had a truck payment from when I was before, and I was making like 45, taking home like 4,500 bucks a month. And at the end of the month I had nothing to show for it. It was just gone. She’s like, “Where’s all your money going?” And I’m like, “Ah, I don’t know.” As soon as we got engaged, I called her and said, “Hey, how about you put me on a budget and you take over my money.” She gave me $150 a week for food and fun.

Brandon:
That’s awesome.

Elliot:
And took all my money, gave me my rent money so I could pay that. She had my truck dialed like $12,000 or $13,000 paid off in three and a half months. And I’m like, “Yep, she’s the one.” And so even to this day, I still have a budget. I still get a budget every month on what I can spend on dumb Elliot stuff, because I like to spend money on just stupid stuff. And so like literally, her growing up disadvantaged and being so frugal, and doing that has really helped not only her, but it’s helped me as well and helped our life in so many ways that we would definitely not be here if it wasn’t for her. And I remember my dad saying when we were dating, he says, “You better marry that girl because she’ll make you a millionaire before you’re 30.” And sure enough, she did.

Brandon:
That’s awesome.

Elliot:
She made us [inaudible 00:19:35], so it’s just yeah, she’s fantastic in that.

Brandon:
That’s cool.

David:
There’s so many cool things to your guys’ dynamic that I’m noticing, where I would say both of you individually, if you just looked at your own lives, you’d say this is going to be an uphill battle for me with some of the things that we all as kids from what we went through made it tough. But then when you found the right person, not only did you balance each other out, but you also brought out each other’s strengths. My understanding, Elliott, is that you’re the guy who goes, and you’re like the driver. You make things happen. You push things forward. You get deals in contract. You get letters out there. You create this big like mess, for lack of a better phrase, with opportunity in it.
And then Chrissy comes and organizes that mess. She takes all the little pieces that you put in contract, puts them in the right box and helps keep everything moving. And neither of you, theoretically, would be able to do this nearly as well without the other person. That’s very similar to what I found. I played more of an Elliott role in my business, and I have people that then come along behind me and they smooth out the mess, and they love me because they don’t want to get in the front and go into what looks to them like the scary situation of having to make people mad and confront people, and face rejection, and all the stuff that comes from driving things forward that persons don’t like.
And guys like me and Elliot we’re like, “Oh, I just want to get out there and do it. I don’t want to look behind me and see what I just did.” I never know how much money I’m making. I don’t look at my own books. We wouldn’t even pay our taxes if someone wasn’t telling us we have to go pay these taxes, right? And when you get the right fit with the right person, not only are the things that used to hold you back, not holding you back, but it allows you to go do the things that you’re good at, are a benefit to them that they need somebody like you.
And Brandon and I talk about this all the time, because we’re very interested in how to help people get into real estate investing that have things that stopped them. There’s always a person that says, “I want to do it, but I can’t because of this reason. I can’t do this or I can’t do that.” But you two are a wonderful example of how to be massively successful with flaws and how to actually take those flaws and turn them into something that’s a positive, they’re no longer flaws anymore.
Chrissy, you were mentioning how you didn’t really have much stability and you were drawn to real estate because it could provide stability, right? That rent’s going to be coming in and you don’t have to work 40 hours a week to get it. That made you want to go do this. And Elliot, you’re in a position where, like you mentioned, that you really, like up and down, for lack of a better phrase. You have moments where you want to get in there and get stuff done, and then you have other times you’re like that drives gone, but Chrissy can cover for you when the drive’s gone. And when the drives up, there’s plenty of area for you to go play in. Now that becomes a strength for you. Like this is a beautiful picture of how partnerships should work.

Chrissy:
Yeah. I would say that’s absolutely right. I mean, I think part of it is just knowing your strengths and weaknesses, and being humble enough to say like, “Hey, I’m not good at this. I need somebody else to help me with this and hand it over.” I think back on how much maturity and how much trust Elliot gave me in the sense that he’s like, “Hey, this is where I struggle, I see that you’re good at this,” and just handed it over.

Elliot:
But it didn’t happen overnight. I mean, when we first started this business, at first it was like, “This is awesome, we’re great.” And then all of a sudden, I’m like, “I hate my job. Let’s go faster.” So Chrissy quit her job and then… so she was working on the business at home and I’m working 70 hours a week. So I’m like, “You need to do this, this, this.” And I’m all of a sudden, I’m a manager at work so I’m like trying to manage her. And so at some point-

Brandon:
Well, that always works well.

Elliot:
Yeah, that worked terrible. And so we would butt heads because then we didn’t realize that each other’s strength was the same as our weakness. And so like literally after the first year, like we were doing so well, but like we basically almost got divorced. We were super close to getting divorced, like divorce papers were out. And it’s just because we didn’t realize what we had in each other. We would still be so worried about attacking the other person for what they’re not doing instead of focusing on how we could work better together.
And it took a long time for us to actually get there. After we moved back to Tri-Cities, we said, “Okay, we’re going to try to work this out.” And today, I mean, we are just a true story of victory, I think. And it’s a struggle every day, but it’s in certain ways, I mean, you still got to work at it every day, but yeah. I mean, I couldn’t do life without Chrissy. Like David said, I wouldn’t know how to pay my taxes. Like literally, I have one account that I have to manage, it’s my fun money account.
And I get like so many hundred dollars every month, literally every month that account is overdrawn because he’s like, you have to take that over chump protection off, like literally one account. And there’s like maybe $800 that goes in there a month or something and I literally overdraw it every month.

Brandon:
That’s funny. That’s funny. Well, what I love about that principle, I talk about this in one of the books I wrote. I think it’s How to Invest in Real Estate, where you guys ever see that fantastic beast movie, Fantastic Beasts and Where to Find Them. It’s like one of the Harry Potter knockoff or spin-offs, right?

Chrissy:
Oh yeah.

Brandon:
Okay. So in there, there’s this creature, I can’t remember it’s called the alchemy or cami, or something like that, but let’s call it alchemy because I don’t know how to pronounce Harry Potter words. This creature would expand to whatever size you put it in. If you put it in a tea cup, it shrinks to the side of a tea cup, you put it into a bus, it makes the size of a bus, right? It just like expands whatever. I like to say, like our finances is the same way. I love the fact that you do that. You give yourself a budget of like, “Hey, this whatever, 800 bucks, this is what I have for the month.” Like that’s, even though you might go a little over it, if that had two grand in it, you probably spend two grand. If it had 10 grand in it, you’d spent 10 grand, because I’m the same way.
Rather than relying on willpower to try to live within a budget, you instead just confine that to a certain size container. And then you will only like naturally spend about what’s in the container, maybe a little bit more because of the pain of having to deal with over drafting and all that annoying stuff. I think that’s a fantastic tip just for anybody trying to save more money in life. Is that, use that power of the alchemy.

Elliot:
Yeah, it’s hard though. I mean, even like you said, I still go over and Chrissy luckily, when we first got married, she was like super strict, like, “You’re over by $3,” but she’s loosened up more a lot. And I think we’ve rubbed off on each other quite a bit. I’ve started spending less and she started spending a little bit more, but we’ve balanced each other out really well to just like have a really good balance in life of like… We were going to buy a new car and then we had it on order, and then we’re like, “Eh, maybe we don’t need this right now, especially with corona and everything going on.” And so like we’ve balanced each other out really well in that sense now.

Brandon:
Yeah. That’s neat. Let’s walk through… I want to go, first of all, get an idea of where are you guys at right now in your business, real estate business? How many units do you have? Are you still wholesaling mostly? Are you flipping? What are you doing in your business and what do you have?

Elliot:
Yeah, so right now we haven’t been wholesaling for a couple of years. We have a partner in one of our markets that we find the deals and we work together on them, and then 50/50 on that. And then in our other market that we actually live in, we do the flips there. Right now, we’re adding rentals. We’ve added single family, two duplexes, and we just bought a 24 unit like three weeks ago with some partners.

Brandon:
Wow.

Elliot:
Last year we bought a commercial building. We have like 33 units, roughly if you count. The 24 unit, we’re a quarter owner. But so we have that and then we have a 17,000 square foot commercial building that we are going to be redoing the upstairs and putting apartments in there. It’s in a downtown area where we live. We bought some land to do some development. We’re trying to transition our company into a development company this year, but then corona made everybody scared. Right now we’re just working on what we got.
We got another service business that we started that I’m more working on. Chrissy’s let me have my passion project with that and see if I can make that work. But yeah, just adding, trying to add cash flow. That’s really our goal, is to get out of the rat race by cash flow.

Brandon:
That’s cool. And what about like on the deals that you have, you said you have the partner that you get deals and you flip… the flipping locally and then was that wholesaling with the partner?

Elliot:
Yeah, so we don’t wholesale to our partner, we basically are 50/50 partners.

Brandon:
I see, okay.

Elliot:
We’ll pay for half, he pays for half and then he puts them back. We find them, he puts them back together. And so it’s a good deal and that’s in one of our markets. And then in Tri-Cities, we actually just flip them ourselves.

Brandon:
Okay, and Tri-Cities by the way, for those that don’t know, it’s like, I don’t know, we just call it a smack dab in the middle of Washington State on the Eastern side.

Elliot:
No, Southeast Washington.

Brandon:
Is it Southeast?

Elliot:
Yeah. It’s like 30 minutes from Oregon border.

Brandon:
Okay. Yeah. When we’re thinking Washington, it’s not Seattle, we’re not talking… it’s like desert Washington, which is very different than rainy Washington. And then what kind of volume do you guys do on a typical year now? Like where are you at volume-wise in the last few years?

Elliot:
We’ve been buying roughly 20 to 25 deals a year for like the last three years. This year, our numbers are down. We had seven tied up in quarter one. We ended up closing on six of them, but then corona hit, we stopped marketing. We didn’t want to be seen as opportunistic. The calls were actually a lot more angry in March and April, so we’ve shut that down. And so I think our deal volume is going to be smaller, but we’re also adding some rentals and we’ve done some bigger deals. It’s a decent mixture.

Brandon:
Yeah, that makes sense. Okay, and then let’s go through how… I mean, you’re doing mailers, obviously, you’d mentioned that. Is that the only strategy you’re doing to find deals today, or what else do you guys do to find deals, Chrissy?

Chrissy:
Yeah, we do mailers and then we’re also doing cold-calling and a little bit of text messaging that’s… we were messing around with SEO a little bit, but that’s something that, I don’t know, maybe that’s… we haven’t had really any success for it and with it, and it’s one of those 80/20 rules that it’s like, “Okay, well that’s not really working, but these things are working for us, so let’s focus on those.” Primarily, cold-calling and direct mail.

Brandon:
Okay. That’s cool. All right. And then finally, I do want to go into some more specifics and we’ll get to a Deal Deep Dive in a little bit, but I want to know a little bit more about working with a spouse. And so the first question I have, and I want to start with you, Chrissy. Even though it sounds like Chrissy, you were on the real estate train before Elliot was, because you had a house, right? Who first was like, “I want to make this a living,” and how did they convince the other person like that real estate investing was going to be your future? Which one of you started and had to convince the other person?

Chrissy:
I really don’t think we had to convince each other, which that’s not so helpful because I’ve actually had a ton of guys come up to me during conferences, like how do I get my wife on board?

Brandon:
Yeah, I get that question constantly.

Chrissy:
Yes. Yeah. I would say to answer that question, I would say that showing how stable real estate can be. I feel like a lot of people think having a regular job is very stable, but in my opinion, I don’t think it’s any more stable than building a solid rental portfolio, really. If you’re screening the tenants properly, if you make sure that you’ve got enough in your bank for CapEx, if you’re doing your due diligence, then I find it way more secure than holding down a job at a company where you don’t really get to control your future.
I think that is something that that is just a mindset shift and doing it in a way that it doesn’t feel forceful, and maybe putting on some BiggerPockets Podcasts in the background or something when you’re driving around. A lot of it is just knowing that’s possible, seeing other people doing it and doing it well for a long period of time, I think that can really help people change their mindset. But for Elliot and I, yeah, we were both excited about the opportunity for real estate.

Brandon:
Yeah. That’s really good. Elliot, anything you want to add on that? Like convincing the spouse.

Elliot:
Yeah, I think the biggest difference that we had was, since I’m the spender, I like fast money. I like, “Look at these checks, look how big these checks are, spending.” And Chrissy’s like, “Look at this boring rental that we can do.” And I’m like, “No, we can make like 40 grand.” She’s like, “No, but the cash flows $300 a month.” And I’m like, “What? It makes no sense.” And so like that’s our personality type totally to a T.
I think the biggest part was like, I’m push, push, push. I’m the machine gun out there shooting a million bullets and she’s a sniper. Like, “No, this is the one, I’m taking this guy.” And that’s probably why we actually have been such a good team, is because we both like… I’m, “Go, go, go, go, go.” And she’s like, “Yeah, let’s go, but let’s also protect our backside and buy rentals, and buy long term assets.”

Brandon:
Yeah.

David:
It goes to show that different mindsets and different strategies can all be successful. That it doesn’t have to be a way of doing it. That there’s many ways of looking at this. And honestly, if you just buy real estate in a decent area and hold it for a long time, you all end up looking like a genius. Brandon and I have talked about, you could buy a place that does a cash flow, if you can afford it. And if you hold it for a long enough time, at some point it does cash flow. You look at it from a 30-year perspective, if it doesn’t cash flow in the first 5 years and it does for the next 25, it won’t even matter that it didn’t cash flow right off the bat. Or it didn’t have a ton of equity in it.
Inflation makes real estate… makes everyone look really smart for owning real estate for a long time. I like that whether you’re a machine gunner or a sniper, there’s a way that you can make this work for everybody.

Chrissy:
Right. Absolutely. For me too, it’s about the tax advantages versus like the wholesale fees and the flipping, and stuff. I’m the one paying the taxes and I’m like, “Look at how much we’re giving away when we’re doing this.”

David:
Yeah. You know what? That’s a great point, that whole concept what you focus on expands. And Brandon talks about this to the man or the woman with a hammer, everything is a nail. When all you’re looking at is just like, “Okay, I need to make money.” And you’re only looking at the gross money you’re making because like Elliot said, sometimes we don’t even look at our taxes at all. When I finally do stop and look at the numbers, I’m like, “Why am I even doing this? This is horrible. I’m losing 50% of that to taxes and I’m taking all the risk and all the work.” But when you’re going, going, going, you don’t even stop to think about that.
You’re just thinking in your head, “I just made 20 grand, boom, what’s next? Where’s my next targets to go take down?” But then Chrissy’s left to clean up the mess like, “Well, I hope you’re happy. You just risked all of this and gave up 40 years of $300 a month, and then $350, and then $400, and $450, and $500,” as it goes up. And all we did was make uncle Sam some money.

Brandon:
Yeah. Yeah. The 20 grand is really more like 10 grand plus you probably have to more employees to cover all that. Now you’re down to like five grand and you’re like-

Elliot:
Plus your marketing expenses.

Brandon:
Yeah. And marketing, yeah. You’re like, “Wow.”

Elliot:
Then there is sometimes where I’m like, “Well, we don’t make very much on this dealership,” but then you don’t want to keep… The hardest balance that we’re finding right now is because we like to use a bunch of our own cash to do deals. We have some private lenders, but we’ve never done hard money. And people are always like, “Leverage, leverage, leverage, just put as little in the deal as you can,” but we don’t like that.
Our biggest problem now is we’re putting money into rentals, which then takes out of our flipping bucket. And then so it’s like, so all of a sudden you buy a few too many rentals and then all of a sudden you’ve got to build your flipping bucket back up. And then so it’s like, that’s the hardest… Like I think where most people fail and I hear people failing all the time is their cash flow management is really where they fail. And I think where if you can get a Chrissy on your team, like it would be… that would help you so much to like how to manage your cash flow.

Brandon:
What do you mean by manage your cash flow? Explain that.

Elliot:
Like we have money coming in from our flips all the time and then we have money going out for marketing. Then we built this bucket of capital that then we’re like, “Okay, we have extra capital, so let’s go buy a rental.” We bought one duplex, we just bought it from a guy, but we did a 30-year conventional, 20% down. We had to put 50 grand down on this duplex. And so that takes out of your… it goes into the property, so it’s still there, but it takes out of your flipping bucket because it’s coming out of that bucket. Then we have another duplex that we just bought that we’re going to keep. And then we’re refining, and we had to put money down and then we also had to put rehab money in there. Then there’s some more money out of our flipping bucket.
And then we bought the 24 units, which we had to put money out of our bucket there. It’s a six-figure check for that. And so then all of a sudden, our flipping bucket is a lot smaller. Then, all of a sudden, you’re like, “Oh, shoot, I still need to flip houses to make income.” And so like, David, it’s like, “Great, you can get a commission check right now, but I’m actually working today for my money for six months from now.” And so you have to manage your money to make sure you have enough to actually make that money six months from now if you’re doing flipping and putting money in flips.

Brandon:
Yeah. That’s such a good point. I mean, just that whole idea of flipping houses or wholesaling, but you have to have a way of making money that you can then dump into rental properties. A lot of people want to get their rentals and they want to do it maybe like… maybe they don’t have any cash whatsoever. Now they’re trying to figure out some creative way to do it. But no matter what, you have to have some source of money to be able to buy rentals with, even if you’re bringing in a partner or you need to do the BAR strategy, it helps to have some money.
Flipping houses, you guys are doing to be able to generate profits is a great way to do it, but that only works if you’re managing your cash flow correctly and you’re setting aside money, the right amount, and you’re making sure you have enough to pay for the marketing continually. That whole thing, which is what you’re saying, Chrissy is really good at, is managing that budget and that flow of money. So important, very, very important.
Hey, I want to know about working together then as a married couple, because you went from jumping into this game to wanting to get a divorce, like having the papers there to get a divorce, but now you guys, I mean, I’ve hung out with you. You’ve stayed with me at my house here in Maui. I’ve seen you guys as in love and cute. And so you’re still… how do you do that? What are those guidelines or rules, or principles that you guys have found that have worked so well in your business that have allowed you to be able to work together and still come home and like each other.

Chrissy:
I would say, first off, get your ego in check because once you start having some success in this business, you can just think that you are the hottest thing since sliced bread. I think that’s one thing, it’s like you need to be humble about whatever you’re doing, because like David said, especially like during a hot market, everybody looks like a genius. It’s being humble about things and I think also trust is a big one as well. You’ve got to trust your other partner to do some things that maybe you don’t think are going to be successful, that maybe you think it’s a crazy idea, but you’ve also got to trust that they have your best interest at heart too. That you guys, you’re working towards the same goals and you have the conversation.
And if they still see it as something that is going to be beneficial in the long run, you got to trust then that they are going to make the right choices. Sometimes it doesn’t work out and it’s having that grace as well, and I think that’s where it comes down to almost like marriage counseling, where it’s like when you’re married, you’ve got to have that grace for the other person as well.

Elliot:
Yeah.

David:
You know, on my team, we actually pay a performance psychologist to meet with all of us every week and then individual people as well. And they function like a relationship psychologist for the members on the team. They pull out the things they can see where resentment is starting to build. They facilitate difficult conversations between team members. They can help say, “Hey, you’re not pulling your weight. Why is that?” As opposed to someone just pointing the finger and then people get defensive. When you get to a certain point of success, that is a really, really a crucial, important stage and how you continue to go there.
I’m sure Brandon is going to hit that step if he hasn’t already with Open Door Capital, where it’s very difficult to get in someone else’s head and see what they’re seeing. And then we all have a filter that we look at the world from, that we shape by the experiences we had in life. I’m thinking of a team member I have right now where we’ll get someone that comes to us and wants to buy a million dollar house and they have a $200,000 budget. And I’ll say, “Look, we have to have a difficult conversation,” where I explain that’s not going to happen. Don’t fill him up with hope that they’re never going to get this.
And that team member looks at it and says, “This is their dream. We have to find some way to help them accomplish their dream because they went through something in life where no one cared about their dream. Now they’re projecting that onto the client, and to them, that seems like the right business decision to make.” The other 80% of us were like, “No way, this is a terrible business decision.” But if we just tell them that, we look callous, uncaring, cold, like pure evil capitalistic business people. Whereas from my perspective, I’m like, “No, don’t give me hope if it’s not going to happen. Tell me right off the bat and give me another option.” That’s one example. I’m sure you guys have thousands of them where it really helps to have someone that can facilitate those difficult conversations.

Elliot:
Yeah. I actually, throughout our marriage, Chrissy spoke on the ego and that was probably my downfall, was the ego. I got on these podcasts, I got all this stuff. We’re making all this money. I quit my job. And I’m like, “Look at how great I am and all these things,” and that’s really what was our downfall, was my ego to a certain extent. And then so I read this book, Ego is The Enemy by Ryan Holiday, super great book and that kind of-

David:
So good.

Elliot:
-helped a ton. But throughout our career, I’ve always been searching for like, I would go see a counselor. I had counselors, I had all these people that I would talk to, to try to figure it out. And the funny thing is I’ve been doing so great the last nine months. And I hired Brandon’s business coach, life coach, and it just has changed like my perspective and helped me so much.

Brandon:
Yeah, Jason Jareez, woo.

Elliot:
Yeah, Jason. And I think then, but it’s funny because he helps you in not only on business, but life and marriage, and all these things, and it’s just a good sounding board. But one of the other things that really helps that we’ve really had to focus on is like knowing our lanes. When we would butt heads all the time is because we were trying to make every decision together. Then what we had to figure out was what are our lanes? What are our defined lanes? And so then I make decisions for these lanes, which usually tend to be the sales and people side of things. Chrissy makes decisions for these lanes, which are financial, accounting, design, things like that. And then we come together on what we’re going to keep.
But I don’t tell her what decision to make. She gets to make those on her own. And when she makes a decision, that’s the decision. And there are certain things we come together. And when I make decisions, she doesn’t question me. She doesn’t question me when I say, “Hey, we’re buying this house and we’re flipping it, or we’re buying this house and partnering with this person, or this is where I’m coming with the financing from our private lender or whatever.” We have those lanes, and it really takes a lot of the friction out of the partnership because we just trust each other to know that they’re making the right decision and the best interest of our family.

Brandon:
That’s really good. How do you deal with the fact that like… I mean, Chrissy, what do you do when Elliot’s like, “I want to buy this property,” and you’re like, “That’s a terrible idea.” Or on the other hand like, what if like Chrissy wants to do something like, “I think we should do this,” and Elliot’s like, “No, I just…” How do you deal with when you’re just opposed to what the other person is doing but it’s their in their lane? How do you deal with those conflicts?

Chrissy:
Typically, so we’ve got a lot of great people in our lives that are very wise. And sometimes what I’ll just do is be like, “Hey, what do you think Tonso thinks about this? Have you talked to him about it? What did they say about it?” Just to get some other opinions in his head as well. Yeah.

Brandon:
Yeah. Go to the third party because then it’s not like… I mean, because if it’s a bad idea, then the other party should back you up. And if you’re the one wrong, if it actually is a good idea, then the other party will back them up. And either way, we’re going to a third party. That’s really good.

Elliot:
Yeah, usually mine’s about ADD stuff because I’m all over the board. I’m like, “Let’s go here. Let’s buy developments. Let’s do commercial. Let’s do apartments. Let’s do a call center. Let’s do all these things.” Chrissy’s like, “You should talk to somebody about getting focused.”

Brandon:
Yeah, that’s funny. I get the exact same thing.

David:
Well, I’ve never been married, but I’ve heard many married couples say when they go to therapy, it’s easier to hear from the other person, the therapist, that they’re wrong than when their spouse is telling them that they’re wrong. And that’s kind of what that third person can function as, is they can portray it in a way that’s easier for you yourself when we’re in the wrong to take in as opposed to you just always say, “No, you just want to crush my dreams with everything. It’s always a no.” And then when you hear it from someone else, you go, “Oh, that actually makes a ton of sense. Yeah, thank God I didn’t do it.”
And the other part I mentioned when you’re saying staying in lanes, is there are certain points in business where you have to cross lanes. There’s no way around it. And I was thinking when you said that, just like when you’re driving on the freeway, it’s really important that you signal, “I’m about to change lanes.” That you look around to make sure I’m not running into anybody else who’s already in this lane. That you give everybody else time to make space for you to get in there and then you go. You don’t just change lanes in the middle of everything that’s going on, it causes a crash.
And I was realizing like, okay, I need to start doing that. When I need to go into someone else’s lane on the team, that I don’t just jump in there like I like to do and do it really quickly. I let them know we’re going to have a conversation scheduled. Here’s my blinker, right? Let me know when a good time is to come over. I let them make allowances for me. That was a really insightful piece I thought you shared.

Chrissy:
Yeah.

Elliot:
Yeah. It’s funny, Chrissy always yells at me for not using my blinker when I’m driving. I’m not very good at that process.

Chrissy:
You’re right though, it’s all about communication.

Brandon:
It’s so key. We got check your ego. We’ve got, you said, know your lanes. What other tips do you have for people working with their spouses?

Elliot:
We always tell each other, like if we’re arguing about stuff, even if it’s about the baby or our business, or we’re getting to it, we just look at each other and we say, “We’re on the same team. We’re after the same goals, we’re on the same team.” If you look at pro sports, pro basketball, those guys still have turnovers all the time. They still make mistakes all the time, but they’re still, at the end of the day, they’re still in the same team. And so how do we build each other up and not tear each other’s ideas down, and know that we’re after the same goals. It’s just we just had a little bit different ways of how we think we get there. But if we blend them together and one guy is a seven-footer and one guy is a good shooting guard, you need both of them. You can’t have both seven-footers on the team and still win a basketball game.

Brandon:
That’s a good point.

David:
Really good.

Brandon:
Elliot, you mentioned a minute ago that you were starting like a service based business. What is that, and is that the reason why, is it gives you something to unplug and go and try to build something new, and what is that?

Elliot:
I had this buddy of mine, Cole Johnson out of Seattle.

Brandon:
Yeah, Cole.

Elliot:
Yeah, he’s awesome. He had a small cold-call center just for some buddies of his, and then I started using it and I’m like, “Hey, I think you can do this, this and this.” He was like, “Hey, why don’t you partner with me?” Because he’s like Chrissy, really good at billing systems and backend stuff. And he’s like, “Why don’t you go sell it?” And so then we ended up working on that. And so then we partnered with another buddy, Tucker Meryhew, last week but it’s just going to be a cold-call center. And so we’re going to be providing leads to people, you pay by the month or whatever.
We’re trying to build this service-based business for real estate investors. And so that’s something cool because I think, we were talking earlier in the show about cash flow, and so rentals take a while to get there and you can build your cash flow up, but I think we can build, this is a cash flow business. And for the last year I’ve been talking with Jason about, “I need a cash flow business, something that doesn’t really require a ton of me, but should generate revenue every month.” And so I was looking at doing a painting company, a roofing company. I mean, we had all this going, or a landscaping company and Chrissy is like, “No, those are all going to like take so much of your time.”
And so then, all of a sudden, this materialized because I was looking for something like it, and so we’re starting to do that. If it works, I mean the service is great. It works for my campaign. It worked for everybody that’s using it, but it’s still fun to do something different because I’m the guy that gets bored with flipping houses or doing the same thing. I want something new and exciting, and that challenges me. And Chrissy has kind of said, “That’s a great business. You do it.” And so it’s my deal not Chrissy’s deal, but it’s still for our benefit, right?
And so yeah, we’re pretty excited. I think we’re calling it Call Magic and so it’s going to be callmagicleads.com. I think it’s going to be cool. I think it’s going to be really good. Everybody that’s using it likes it, so I don’t know.

Brandon:
The idea is you just… give me the synopsis. People call, they answer the phone and send it to the investors or what?

Elliot:
Yeah. Basically, if somebody comes to us and says, “Hey, I want to use your service.” They’ll give us list of people they want in their area. We’ll help them build lists in their area. They skip trace those lists and then our outbound callers will actually sit there and make calls all day.

Brandon:
That’s cool.

Elliot:
Cold-calling. And then when they get a lead that somebody says they’re interested, we’ll run them through some quick questions. There’s like five questions. “Is this your house? Is it a rental or owner occupied? Does it need work? And what kind of price do you want?” And then if it’s a lead, they’ll push it over to the people that are paying us and then they would follow up with those leads. The nice thing is like it works really well for people to have a good sales teams in place and newer as well. We’re going to have some options to help newer people, but it really just provides a good constant source of leads.
At a lower cost marketing dollar, but just like anything else, just like direct mail or anything else you do in this business, it takes time to build your pipeline and work those leads, and work that system.

Brandon:
That’s cool, man. Well, one thing that I’m a huge fan of you, Elliot, and probably Chrissy is actually a big backing of this, but you guys are just fantastic at knowing the funnel that comes in, like getting leads. How do you get leads coming in? How do you run the numbers? How do you make the offer and negotiate, and get it to closing, and tracking those numbers and make it all work? I actually, I don’t even remember this, Elliot, but a couple years ago, hey, a year ago, year and a half ago. Anyway, I interviewed you in my C-shed, remember my office earlier?

Elliot:
Yeah.

Brandon:
About this thing. And so we actually put it together as one of the bonuses, when you become a pro member on a webinar that I give that I do every week. You get this How To Find Great Deals Masterclass. Anyway, yours is on there. It’s like an hour of you and I just going through everything you do in your business. Just FYI, if you’re currently a BiggerPockets pro member, or if you become a pro member, that is something that you can get. If you go up to the little perks in the corner of your… I think it’s like member perks. If you’re on BiggerPockets, you can find that there, really good stuff.
If you can’t find it, I’ll put a link more information on the show notes for this show on how to get that biggerpockets.com/show394. Yeah, very cool. I love the idea that you’re thinking like how do I bring a more cash flow, regular cash flow? And this is something that David and I talk a lot about, is that it’s not… Real estate is amazing. We love real estate, but you also have to have a source of making income. You have to have money come in consistently and you said cash flow.
And so whether you become a real estate agent, whether you get a raise at your work, whether you can build a side business that’s in real estate or related, or maybe it’s something totally different, it’s really good to have that a good source of revenue coming in. Just something for us people to consider as well in their life, is how can they build something like that or be a part of something that generates some good income that’s not reliant upon the hours that you put in.

Elliot:
Or like your book, right? Like that’s-

Brandon:
Or like a book, yeah.

Elliot:
You write your books and then it’s paying off down the road. You get your high spikes, but then it slowly produces revenue every month. And so it’s just the little things like that, where now you can go out and do flips and take a little bit of risks because you know you have this income. That’s the same of like having a bunch of rentals. You can take a couple of risks because, man, if for some reason I lose this, then I can come back. I have the capsule that I can build that back up really quickly or whatever. It just adds another level of security to the business, and that’s really what you’re looking for, is just multiple streams to add security, I think.

Brandon:
Yeah. It’s really, really, really important stuff. Now, the downside of that, of course, is that people tend to… we talk a lot about building bridges, right? You live on reality island. You want to get to millionaire island, you’ve got to build a bridge. People start building 10 bridges, right? Like, well, I really want to build this Amazon business and this call center, and this whatever because they want whatever, they want passive income. And they also want to buy real estate, they want to BAR, they want to flip.
And so there’s this fine line, and then we’ll move on to Deal Deep Dive, but I’m curious, where do you guys… and I’ll start with you Chrissy. How do you balance… and I’ll go through all three of you though. How do you balance between generating more revenue with new ideas, but also just being consistent with the thing that actually matters long term?

Chrissy:
I would say that you definitely don’t want to be jumping from thing to thing before you have a solid base. For us, like you were saying, we’ve got our systems basically down for generating leads and then we can decide to do what we want with those leads, for sure. But finish a bridge before you start your next bridge and then can start looking… Find a way that you’re not putting too much time, you’re not spending all of your time on that first bridge. And then you can go onto the next bridge and you can really think about is this bridge… this next bridge, is it going to be time consuming? Is it where you’re just creating a job for yourself or are you actually creating a business? And then finish that.

David:
Yeah. And then is it a bridge that you can link to one you already have? Is it just an off ramp or an on ramp you’re creating onto a bridge you’ve got, or is this a completely new project unrelated to your current bridge?

Chrissy:
Yes, absolutely. And I would say that I think it’s very like… Brandon, you always talk about being very focused on one thing, and so you don’t like to commit. And I think it’s the same that you don’t just say yes to everything. You find something that you truly believe in. And if you truly believe in it, you’re going to see it through.

Brandon:
That’s such a good point. Elliot, do you want to add anything on that?

Elliot:
Yeah. I’m the master at building and starting bridges and not finishing them. I remember we were talking at like eleven o’clock at night on your porch about this stuff. But again, it comes back to I have a Chrissy, so I can talk to her about these things and she can be like, “I don’t think that’s a good idea. I don’t think this is a good idea.” And then I’m like, “Hey, what do you think of a call center?” And she’s like, “That’s a great idea.” She was like super pumped for it because I think we have all the systems in place to do it, and I have the right team to put it together and do it, and it doesn’t require more time from her.
But I am very ADD and I go all over the board. And so I really lean on Chrissy to say, “Elliot, slow down. Think about what you’re doing. Let’s not maybe do that.” Because there’ll be so many times where I’d be like, “Let’s do SEO. Let’s do pay-per-click. Let’s do Facebook ads. Let’s do all these things.” Then she’s like, “Elliot, look at how much money you’re spending. Like we have to come back and go to our focus.”

Brandon:
Yeah, that’s really good. David, what about you?

David:
Man, I think that when it comes to this… part of it is you have to recognize and respect that certain brains are designed like Elliot’s to do a million different things at once. You can’t just shame yourself and say, “Bad, bad, bad, you shouldn’t do this.” Because as Elliot was talking, I was like, thinking, I wonder if you looked at Leonardo da Vinci’s scrapbook. How many amazing ideas he was writing down before he picked the one, he was actually going to try to push all the way to completion?
It’s a part of what makes Elliot successful, is that his mind, and Brandon you’re like this too, they fire off with a ton of different ideas. And then another part is your environment. When you’re in an environment like Brandon are in or I’m in, the amount of opportunity you have increases exponentially, and there’s a lot more to look at, and there’s a lot more that naturally like that shiny object syndrome. There’s a lot of shiny objects. You can go do a lot.
Whereas, when I was just a cop buying real estate, there wasn’t a whole lot to look at. It was just see what’s right in front of me and go get it. You got to respect that too. And I think that it’s a balance between knowing I’m always going to be looking for opportunity and getting that filter in your life to help understand you and know what we’re going to allow to pass through and when we’re going to allow it to pass through.
I know there’s a part of myself that I’ve understood, is I like to teach. That’s why I’m here on the podcast. It’s why I work with real estate clients, is they come to me and I teach them, “This is what we’re doing when we’re buying a house and people like that, that’s who I draw.” I’m always going to learn a new thing and then write a book about how to do it. That’s just a part of my life. It’s always going to be that way. Every time I learn how to build a new bridge, I’m going to write a book that says, “This is how I built it.”
But when I write that book is really important. It’s not just do it or don’t do it. It’s don’t do it when I’m building the bridge, do it after the bridge has been built and I don’t have other opportunities. I think knowing there’s a season for everything, there’s a time for everything, be patient. One of the mistakes I make on my team is that I want to go get 25 buyers to help them buy a house and I’ve got two agents to help me do it. I’ve loaded myself up but I don’t have any way to actually service those kinds of people.
Like understanding, I want to build this bridge. I’ve got the plans. Well, I have to order the concrete. But does it do me any good to get all these people together to start building and we have no concrete to use. And that’s what makes this tough but that’s also why Brandon and I are always talking about real estate investing is business, it’s business skills that you have to develop to do it. Elliot and Chrissy have developed a way of splitting apart the business where they each have a lane to operate in and that’s why they’re successful.

Brandon:
Let’s move this over to the next segment of the show. We’ll take it back to real estate specifically. It’s time for our Deal Deep Dive. All right. The Deal Deep Dive is part of the show where we dive down deep into one particular property or investment you guys have made recently or at any point in your career, and to get some dirty details on it. You guys already have something in mind together. Have you guys pre-talked about this or?

Elliot:
Yeah.

Brandon:
Okay. All right. Good. Question number one. What kind of property are we talking about today?

Elliot:
This was a single family fix and flip, very standard fix and flip.

Brandon:
Okay.

David:
How did you find it?

Elliot:
Yeah, so it’s actually in a town about 40 minutes south of us. Chrissy and I are like, “Let’s expand to this town. I think there’s some opportunity there.” We went and we went Driving For Dollars one day. We got a babysitter and went Driving For Dollars, driving so we can figure out the town, and that’s the one key is to ours is like, “I don’t want to drive for dollars, but it actually helps you learn the town. Like some buy sides were bad, some buy sides were good.” Anyway, so we’re driving in this area and so we go and we get about 900 or so leads. And then we sent out a direct mail campaign to that, and then we filtered through some calls, and then this one came off the direct mail campaign.

Brandon:
All right. Very cool. And number three, how much was it, Elliot?

Elliot:
Yeah. We paid 61,000 for it, which is actually was very pretty cheap. We paid 61,000 for it and it was just like a three, two little ranch that was like 1,100 square feet.

Brandon:
All right.

David:
And how did you negotiate that price?

Elliot:
We met with them. And it’s funny because I was at the gym and they’re like, “Hey, can you meet now?” I had to drive down there and I show up, and the lady’s like, “Man, I was expecting you to be like in a suit or tie or something.” And I’m like in my gym clothes, I’m like, “I’m just a normal guy just like you. I’m just here solving problems.” And so we talked to them. I went down there and talked to them, figured out what they’re looking to get. They were like four years behind on their taxes. He had inherited the property and they just needed to get some money out of there.
And so I do what I normally do. I’m like, “Okay, what do you think this property is worth fixed up?” And so they agree. We all agreed the time that it was like 145 is what it was worth. And that’s what I truly thought it was probably worth. And I’m like, “Okay, well how much work do you guys think it needs?” And so then we subtract the work and I’m like, “Okay, we need to make about 30 grand because that’s for our time, we don’t make… that’s not all our money, that’s the government’s money and all that stuff, and our marketing.” And I’m like, “Do you think that’s fair?” And they’re like, “Yeah, that’s fair.”
And so then we get back down to the number and came to like 57,000. And so I’m like, “Okay, well, I’ll offer 57,000.” I just do the math with them right there at the table. And so they thought about it, thought about it, and we ended up agreeing at like 61 is what we ended up agreeing. And so then gave them time to move out. I had it in escrow, let them move out. And then yeah, and then we got it.

Brandon:
Do you typically do that, is actually just do the math with them, like right at the table. Like is that kind of your-

Elliot:
Yeah. A lot of times if they’re reasonable people, like, I’m just like, “Hey, I’m just going to break the numbers down with you of like what this costs us from the very beginning.” Because if they say their property… they think their property’s like worth 300 fixed up and I’m trying to offer them 180. They’d be like, “There’s 120 grand, you’re going to make 120 grand.” And that’s like all these flipping shows, they always show they made this much money, but then you see the math and it’s like, “No, they didn’t make that much money because they didn’t include this, this and this.”
I just sit there and say, “Okay, it’s going to cost 8% to sell it because we have excise tax in Washington, so we’re down to X numbers. Then it’s going to cost us $50,000 to fix it. Mr. Seller, would you agree that that’s a fair number?” They’d say, “Yeah, I agree. That’s a fair number.” And I’m like, “And then we got to make some money and would you agree that it’s okay for us to make money?” And they’re like, “Yeah, I agree.” And so then you get back to the number, “And here’s your number? Does this work for you, Mr. Seller?” Yeah.

Brandon:
Yeah, that’s phenomenal. I really, really liked it a lot. All right. Next one. How did you fund that deal?

Elliot:
We used all our own cash. That was a super low purchase price for us, so we use all our own cash. We put about 30K rehab into it, and so we’re all in it like 90 and 1,000, somewhere in there.

Brandon:
All right.

David:
All right, and you mentioned this was a flip. What was the outcome on that?

Elliot:
The outcome on the deal was fantastic. I have a good contracting crew. We have seminar both towns, but I said, “Hey, if you…” It was a little bit of a drive every day, so I said, “Hey, I’ll cut you in a little bit of the profit if you guys can stay under budget and on timeline.” And so we came in like perfect on everything. And then I showed the agent down there and she’s like… she went and walked it and she’s like, “Man, the market’s gone up. I think you can get like 180 for this property.” We ended up listing it right during Christmas time and ended up selling it for 185. And so it ended up being a really good deal. If you look at the ROI on that deal, the deal was really good.
And that’s not like always how our deals go, but I think the reason I picked this deal for our Deal Deep Dive, is one, Chrissy didn’t have to do anything because we had systems in place already. We always do the same thing in all our houses. It’s always the same Formica. It’s the same cabinets. It’s the same carpet. It’s the same flooring. It’s the same everything. Our contractors already knew what to put in here, so they just got to go down there. I negotiated off our Driving For Dollars and off our mail. And then our contractor, I only had to go see the property like three times after we bought it. And I probably didn’t even need to do that because our contractors just take care of it because it’s always the same every time.

Brandon:
That is so under talked about in real estate spaces. But I want to just bring that up. When you watch the flipping shows, it would be really boring if they did those shows the way that most flippers actually flip houses, which is the same stuff. We talked about this last week, getting on the show or maybe a couple of weeks ago, but how real estate is actually pretty boring. It’s pretty simple for most people. We tend to complicate it and that’s usually when I get myself into trouble, is when I complicate it.
But when you can systematize, now you know your costs, you know what it takes to put down this type of floor, and you know where you can get it, you get bigger discounts on it because you buy a lot of it. That’s how almost every successful, really successful flipper I know does it. They don’t do what they do on TV, which is walk through every time with a brand new clipboard and be like, “Oh my gosh, this would be so cute with this special tile on the backsplash.”

Elliot:
Oh yeah, like, “Let’s look at this tile and this tile.” No, and we said on entry level houses, it’s the same Formica. I mean, literally, it’s the same. We had to talk to our partner this year, they’d be like, “Hey, we’ve been using this color of the house for like four years. It might be time to change.”

Brandon:
[crosstalk 01:02:03] We update that.

Elliot:
You know what I mean? Maybe we update just a touch, but like, no, it just works. And then your crew’s on board, they know what’s going on. They don’t have to call you. And it takes a lot of like we were talking earlier about, I’ve been making decisions all day. If you have everybody on the same page and it’s always the same, that’s more decisions I don’t have to make every day. Now, all I have to do is make, “Hey, there’s a plumbing issue or there’s an electrical issue, or there’s this issue,” but they don’t have to ask me, “What do we put in here? What kind of lights?” We always do the same Tupac lights. We always do the same flooring. We actually buy flooring in bulk. And so, yeah.

Brandon:
Yeah. It’s one thing that I learned from Tarrel Yarber and Nate Robins, this guy, Nate. They walk me through like they have this design packet, like there’s they actually write the codes from Home Depot and Lowe’s for every product that they buy. And they just know this is the color, this is the what? And they walked me through that one time and I was just blown away because I had never done that. I was like, “Why have I not done that?”

Chrissy:
That’s what we learnt ago.

Brandon:
Every time I go to flip and go… okay. Yeah, exactly.

Elliot:
We’re really good friends with Tarell and Grace, and Nate as well. And so we were just at their house last week doing this ropes course, but yeah.

Brandon:
Yeah, I show you were up on a rope thing with them. Yeah. He’s got that crazy backyard.

Elliot:
He’s an amazing investor. He’s really good at building systems. Serene has done a good job about building those books. Ours are probably even more simplified than that because they were still doing granite and moving some walls here and there, and doing big rehabs. But that’s one of his greatest things that he’s done, is building those systems.

Brandon:
Yeah. Systematizing your business. I guess [crosstalk 01:03:25]

David:
Because with systems requires less decisions that have to be made, and if you get less of the ram and your brain being used for making decisions, you can use it for more dollar productive things.

Chrissy:
Right. Go build other bridges.

David:
Yeah.

Brandon:
Yeah. There you go. All right, last question. What lessons did you learn or can you pull out from this deal that apply to our audience?

Elliot:
I think the lessons in this deal were that if you build the processes, this is probably one of the deals that went the smoothest that we’ve done. And it really showed that the four years that it took building these systems and processes really paid off, and you can do this business really easily if you build those systems. But if you don’t start there and don’t take the time to build those systems and build all the work Chrissy has put in to do those design packets, to do those material lists and all that stuff, then it’s going to be hard every time you flip a house and you feel like you’re fighting an uphill battle. But this one to show that once you build those, it’s just as smooth, it works.
The system, if you trust the process, it works. Even right now, we’re not buying as many deals, but I know that if I trust the process, I go up and we go down on how many deals. I think you remember when we were at your house in Maui, I had Ryan running back and forth because I bought like four houses that week we were at your house, because it’s just once you get the momentum, it starts working. And Ryan probably wanted to shoot me because I said, “Hey, can you print this out? Can you print this out?” But we were just buying. Just trusting the process that you’ve built over time.

Brandon:
Oh my gosh, that is so, so good. We could do a whole show just on that one topic of trusting the process. You have the right process and continue. I mean, a couple of months ago, like three months ago, we had no deals under contract with Open Door Capital in my Mobile Home Park business. We were getting a little stressed out, like is the market just changed completely? Is this going to be impossible? What’s going on? I just kept saying to Ryan, I’d be like, “We just have to trust the process. We are getting leads. We’re making offers. They’re just getting rejected. Let’s just make more offers. Just keep trying.”
And today we have five properties under contract, like over a thousand units, because we just kept with the process. If we would have stopped and been like, “No, let’s go try something else fancy.” We wouldn’t have had that because we’re always learning new things. But we just stick with the process. The same thing works if you’re trying to buy your first property, your tenth property, you’re going to flip houses, whatever. What’s that process look like? How are you getting leads? Are you making offers? What’s that look like, stick with it. I mean, this is true for every business in the world, like everyone.

Elliot:
Totally. And if I’m brand new, what I’m telling people. I always tell brand new people is, “Okay, go print out a Google map of area around you, and then go drive every street in that certain area, try to get 500 or 1,000 houses that look bad. Either they have radio antennas up on their older cars. They have moss on the roof or a tarp on the roof, or overgrown grass, go get 1,000 of those. And then you can either do it yourself and hire a VA or you can use it like Driving For Dollars app and it’ll automatically give you their addresses. Then you can send letters out to those people.
And then just consistently send letters for six months, those people and just answer the phones. And it’s just very simple if you just break it down. You will find a deal out of those 1,000, but you have to stick with it. You have to do the process. You have to trust the process every month.”

Brandon:
Ever since you said that to me, you said this to me one time, I think we were interviewing for that BiggerPockets pro thing. And that’s my go-to advice. And every time they says that said they can’t find a deal or they ask me if I can mentor them, I’m like, “Get out of Google map, go drive every single solitary street, write down a list, come back with 500 names on that list, start mailing them for six months. After that, if you still don’t have a deal, let’s have a conversation.”

Elliot:
Exactly.

Brandon:
Prove that you did that first.

Elliot:
Yeah, exactly.

Brandon:
And of course, nobody does, [crosstalk 01:06:52].

Elliot:
No, yeah. That’s the problem. I talk to people all the time and anybody listening like thinking, “Man, these guys, they’ve made it or they had it so easy.” We’ve had it tough. We’ve had a tough road to get here, but we’ve stuck with each other and stuck with the process. Anybody can do this. When I went to college, a community college, I tested into math 91, all high school classes because I barely graduated high school with a 2.2. I mean, Chrissy’s the smart one, so it’s like, anybody can do this. And so you just have to find the person that you need to help you or you learn the skills you need, but just stick to it. You’re going to find deals. You’re going to be successful. But you just have to get started and go and stick with it.

David:
It’s like chopping down a tree and you start chopping on it. And after four or five swings, you’re like, “This is stupid. It doesn’t work. The tree didn’t go down.” All you did was give yourself blisters and waste your time, and you got half of a tree chopped down, which is worth exactly $0 to do.

Brandon:
And then you go and try to jump down another tree, and another tree, and another tree. You just put your dents on trees.

Elliot:
Unless you’re Brandon and you’re so strong, you just one swing with that [crosstalk 01:07:51].

Brandon:
These masculine arms.

David:
Well, there’s an argument for that, right? When you get good enough at doing something, maybe you can go in there and chop it down with one or two swings.

Elliot:
Or you have a chainsaw, like you start learning and then all of a sudden, you’re trying to chop this tree down with an axe. Then all of a sudden, you get a chainsaw and you-

David:
That’s like a system. Yep. You build a system and then it goes way faster.

Brandon:
Yeah. And then you give somebody else the chainsaw and they cut it down, and you get to sit in Maui and hang out with Elliot.

Elliot:
Yeah.

David:
And so you own a lumber-jet company. That’s exactly what we’re talking about. Buying your first house to building a big business, that’s what it’s like.

Brandon:
Yeah.

Elliot:
Yes.

Brandon:
That’s really good. But I think you have to start chopping down the tree. I mean, too many people try to go try to find that chainsaw. They can’t find it. And they’re like, “Well, how come David Green’s chopping down trees in like three seconds?” How come Elliot’s buying all this stuff? But then it just like-

David:
They want to go raise money from all their venture capitalist friends and just go start a business without understanding anything about-

Brandon:
Without chopping the tree.

David:
-forestry or chopping trees. That’s exactly right.

Elliot:
Totally. Yeah. They don’t want to put the blisters in and they don’t see the blisters and the actual effort, or they want to go pay somebody to go get them to have that… builds the business for them and they don’t actually learn anything. It’s like you don’t need to pay anybody to start this. Just go start it. Go find some properties and start making offers.

Brandon:
Yep, so good. Man, we could write a book just on this analogy, like an entire book just on chopping down trees. All right. But we got to move on and head to the last segment of our show. But before we do, I do have one more question. What do you guys need in your business right now that our audience could help you with? That they could bring value to you. Anything you guys need or looking for in your world.

Elliot:
We’re looking to expand into multifamily and more multifamily stuff. We’ll look at multifamily deals in Washington. Really just maybe supporting us with the call center thing would be a great thing. If you’re out there trying to find deals and trying to support us with that, I think that would be really helpful and giving us feedback on how well that’s working, and just trying to build that. But yeah, just we’re good. I mean, at the end of the day, Chrissy and I got… we’re very blessed, very blessed to have just such an amazing life and such amazing friends and mentors around us. But we’re always looking to meet new people.

Brandon:
It’s cool, man. All right. Well with that, let’s get over to the last segment of the show. It is time for our Famous Four. Time for the Famous Four. The same four questions we ask every guest, every single week. But before we get there, just something you should be listening to right after this show is over.

Philippe:
Hey guys, it’s Philippe from the Real Estate Rookie Show. Last week we had Sarah on the show and she talks about how she’s having to rehab a property, build out the basement, being a single mother and what products she used to get through all of this mayhem that’s going on. Make sure that you go back and listen to Sarah’s story. It’s a great one.

Brandon:
All right, make sure you go listen to the episode. And now it is time for the Famous Four. Chrissy, Elliot, you guys ready? I know, you know what’s coming.

Chrissy:
Yeah.

Brandon:
Number one. Current favorite real estate book. Let’s start with Chrissy. Do you have a favorite real estate book in your life?

Chrissy:
I don’t know if this is really considered a real estate book, but I really, really like it. It does tie into realtor life. The Compound Effect by Darren Hardy, it’s not a new book, but I really liked that one. That one’s that I go back to a lot.

Brandon:
Yeah. I’ve heard that probably 10 times and every time it’s just as good as it was the first, so good. Elliot, what do you think?

Elliot:
I would say similar alliance, Chrissy, Pitch Anything by Oren Klaff. I listened to that book like 10 times. That I’ve talked to him a little bit. Man, that book was frigging good. If you’re looking at how to frame things and get people’s MB and sales, that was probably one of the best. And it actually, if you listen to audio, it’s so fun to listen to him because he tells stories. I love books that tell stories and that are teaching a lesson. I don’t like just facts like, “Do this and do this.” It was really enjoyable to listen to.

Brandon:
Yeah. Phenomenon book.

David:
An amazing book. One of my all time favorites. I never read it because the title rubbed me the wrong way. Pitching something just feels gross, but it’s such good content in that book. I talk about that with my team literally every day. And I was just listening to an interview with Oren Klaff talking about how he uses the strategies in that book to get his ideas from his head into somebody else’s head.

Brandon:
Yeah. So good.

David:
Really good. Okay. I’m probably going to screw you guys up, but I’m going to ask you about your favorite business bots.

Elliot:
I really liked the Good to Great and Built to Last series. I think that is just a very good… that guy tells a really good story as well on Audible and talking about how to build lasting businesses. And I think those are some really good business books.

Chrissy:
And I’m going to go with the E-Myth.

Brandon:
Yeah, perfect, oh, my goodness.

David:
Yeah. We had Michael Gerber on the show before. I should say we, is before I was on.

Brandon:
We did.

David:
BP had him on there and he was a very interesting guy, but that’s a very popular book. A lot of people like the E-Myth, and I’m sure a lot of what we’ve talked about today is covered in that book. Okay.

Brandon:
Yeah, so very much so.

David:
When you guys are not setting the bar for how couples should operate in a real estate business, tell us what are some of your hobbies.

Chrissy:
I love to hike. I love to get out and just go explore. And when we don’t have a pandemic, love to travel.

Elliot:
Yeah. I love golfing. I’m really enjoying Monte right now. He’s 19 months and he’s at that stage where he’s just so much fun. I take him golfing with me in the evenings and he’s says, “Dad, dad, this. Daddy, daddy.” He’s all over. He’s running around. He’s still learning how to run, so he’s running and his arms up and he’s screaming, and yeah, he’s just so… or like, he started to like push back a little bit now too. Like yesterday, we were telling him like, “Hey,” he crawls and crawls out of a hamper. We’re like, “Pick him up, pick him up,” and he’s not listening. We’re like, “Monte.” And then all of a sudden he looks at me and starts dancing like, “Woo-hoo, dancing,” with this huge grin. And just, we can’t help but laugh. Like he’s just so my son.

David:
He’s using frame control techniques for pitching anything on you, to take the power in that relationship away.

Chrissy:
That’s right. I actually told Elliot, I’m like, “You deal with it. This is your side of the personality, take care of it.”

Elliot:
Yeah. Or he goes, everybody’s like, we’ll be in the store and be like, “Hi, hi.” And then they look at him and he’s shy, but as they’re walking away, he’s like, “Bye. Bye.” I’m really enjoying him and then just enjoying Chrissy right now. We’ve been in such a good space and there’s always going to be bumps and ups and downs and we know that, but it’s just life’s been really good to us right now, even through the pandemic.

Brandon:
That’s cool, man. Have you guys read the book How to Talk so Little Kids will Listen? There’s another one called How to Talk So Kids will Listen, but little kids will listen. It is the most phenomenal parenting book I’ve ever read for people with young kids.

Chrissy:
Writing it down right now.

David:
Yeah. They learn math [crosstalk 01:14:24], right.

Brandon:
Yeah, write it down. It’s so good. That book literally, I actually told my wife this, “I’m going to take a note cards, like little three by five note cards, like a stack of like 200. I’m going to go through the whole book and just write.” Because it’s just like tip after tip, after tip, after tip, after tip of how to get your kids to do things. And there’s probably like a thousand tips in that book. I just want to have a note card and then everyday just flip through a few of them.
Like, “Oh yeah, I forgot about this one, I’ll try that today.” I feel like it just changed the game with how we’re raising Rosie. I think you guys like it. All right last-

Chrissy:
[crosstalk 01:14:51] All right, thank you.

Brandon:
Yeah, last question from me. What do you believe sets apart successful real estate investors from all those who give up, fail or just never get started? Either of you can answer or both.

Chrissy:
I want to put it in one thing, but I feel like as a combo of persistence but mindset. I just feel like you’re going to hit so many different roadblocks and being an entrepreneur, being self employed, you’re the one that has to figure them out. You either reach out to somebody and network, or you dive into Google, BiggerPockets, whatever. You have to be the one to figure it out. You can’t just let it go at the wayside. And I think a lot of people, they hit roadblocks and they just stop. And if you never stop, if you keep on continuing to figure it out, that’s how you become successful.

Brandon:
That’s awesome.

Elliot:
I don’t think I can say any better than that. YouTube and podcasts, and BiggerPockets are powerful tools. People always talk about wanting to go to college to learn, you can learn anything you want on the internet. You can learn to be anybody you want, build anything you want on the internet if you just really care and want it that bad. You can find out anything.

David:
Awesome.

Brandon:
It’s true. That’s good.

David:
All right.

Brandon:
You guys, that’s been awesome. Amazing. I’d love hanging out with you guys. We’re actually going to hang out next week in person, which is kind of cool. We have to wear masks and stay six feet apart while have a good time on that boat. But yeah, we’ll have a good time. David, do you want to take us out and ask the last question?

David:
Well yeah, last question. For people who want to know more, where can they find out more about you?

Elliot:
We’re both on Facebook and Instagram. Elliot Smith and Chrissy Smith. I think hers is Chrissy L. Smith on Instagram and that’s about it.

Chrissy:
You can email me@[email protected].

Brandon:
All right.

David:
All right, cool.

Brandon:
All right and you got TikTok.

David:
Brandon, anything you want to say before we get out of here?

Brandon:
Well, I was hoping Elliot was on TikTok. I was looking forward to [crosstalk 01:16:46]

Elliot:
No, I refused to download that and I will tell you why after the show.

Brandon:
Yeah. You should. Okay, yeah, It is a time-wasting just suck of my life that I delete every so often, then I’ll reinstall it. Then I’ll delete it again, like a day later. Like, “Why did I do that?” That’s just like, yeah.

Elliot:
It’s funny, Jason Jareez, our coach. He’s like, “Elliot, do that detox thing where you don’t actually look at anything for a week.” I made it four hours.

Brandon:
Yeah. I’m sure most people can relate to that. All right guys. Thank you so much. David?

David:
Thanks guys. Great job tonight. It was great getting to meet you. This is David Green for Brandon, keeping shopping lumberjack Turner. Signing out.

Speaker 3:
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