From Spending Six-Figures a Year to Saving 80% of His Income

Mindy:
Welcome to the Bigger Pockets Money Podcast, show number 321, where we interview Anthony Michael, and talk about an 80% savings rate, avoiding lifestyle creep, and of course, investing in real estate.

Anthony:
When you do find yourself in this position, not being over-leveraged is so, so key because I have private money investor money about 120,000 words of it. I never fall below in my savings account, less than a year of expenses in all the capital that I borrowed from my private money investors, period. So we stay relatively liquid just on the base of like, I don’t know what’s going to happen. I always think of the worst case scenario, and if you’re prepared for that, everything else is great.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and joining me today is the military millionaire, David Pere.

David:
Howdy, always a pleasure, Mindy.

Mindy:
David and I are here to make financial independence less scary, plus, just for somebody else, to introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

David:
Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or start your own business. We’ll help you reach your financial goals and get money out of the way so that you can launch yourself towards your dreams.

Mindy:
David, it’s so nice to see you again, and I’m super excited to talk to Anthony today. He has a very interesting story of being not so great with his finances and then hearing how you could invest in real estate and the stock market and deciding, you know what, “I want to do that and I want to invest from a position of strength. So I am going to fix my financial situation so that I can start investing in real estate,” which is kind of how this whole podcast got started in the first place. So it’s nice to see somebody who has taken the lessons that he’s learned, apply them to real life and now has a whopping 80% savings rate.

David:
Yeah, Tony’s … Anthony has done really well and he’s just a good dude and he’s been able to do this while serving in the coast guard and while, not even living in the area that he’s doing a lot of these real estate projects. So, he’s gotten to partner with people. He’s got some experience with that. He’s gotten to dabble in a bunch of different side hustles and he’s done the right move, which is to earn and come through a side hustle and then, not spend it on stuff, you shouldn’t spend it on, which unfortunately, a lot of people … I see people get sucked into driving for Uber and then, they spend the money on … from Uber on fun stuff, rather than on increasing your investment portfolio and then, you’re kind of trapped in this perpetual cycle.

Mindy:
Anthony Michael is an active duty coast guardsman, flight mechanic who saves 80% of his income. You heard me right, 80% of his income. He’s created two businesses while serving in the military and is on track to become financially free this year. Anthony, welcome to the Bigger Pockets Money Podcast. I’m so excited to talk to you today.

Anthony:
Thank you so much for having me, I appreciate the opportunity.

Mindy:
So 80% of your income that is … that’s okay. That’s a decent savings rate.

Anthony:
It’s a little bit, not much. It’s good.

Mindy:
Let’s talk about your money story. Were you always an 80% saver?

Anthony:
Absolutely not. I was a paycheck to pay checker. Starting off, my first job was Long John Silver’s which I got fired from. Went across the street to Wendy’s. Quit, then got rehired. Growing up in a small town, I didn’t really have that many expenses until I moved away to the military. I wasn’t really good at managing money from the beginning until I moved to the military into New Jersey where I had met my wife and we got married. From there, I think we were on vacation. We were actually listening to Bigger Pockets Podcast and they were talking about investing in real estate and all this other stuff.

Anthony:
I was like, “Man, this is crazy.” Light bulbs are going off like crazy. I was like, “Man, we got to get into this,” and they were talking about the money that you need and all this other stuff. I’m like, “Oh my God, we’re not even close to being in the realm of real estate investors,” if you will. So education was key at that point. So we started reading books and listening to more podcasts, and then the icing on the cake was Rich Dad, Poor dad for us.

Mindy:
Rich Dad, Poor Dad is the number one most recommended book on the original, Bigger Pockets Real Estate Podcast. I wasn’t a fan. I misunderstood the book. So I’ll just stop there, but it’s interesting that so many people are so inspired by that book. What was it about that book that made you say I just have to invest in real estate?

Anthony:
Boy. So originally I didn’t read the whole thing through. He had so many great lessons to kind of take … stuff to kind of take away from in the first 60 … I think 68 pages where I stopped reading. Basically, what I told my wife was like, “We need to get our finances in check first. We can’t invest if we don’t have any money.” I told my wife, I said, “What are we spending money on? Are we eating out? Are we buying too much stuff? Are we living above our means? Do we have car payments that we don’t need? What are we spending money on?” Because we were making a pretty decent amount of money.

Anthony:
I think my wife was making … it wasn’t the best, but it was like $48,000 a year. Then, I was making 70, which 40 of that wasn’t taxed from the military. So we were making decent money, right at a 100,000 a year and our living expenses weren’t even close to being on par with that. So we were throwing money out the window on just frivolous stuff. So we locked that in, went through … got rid of the subscription based stuff and instead of eating out, two, three times a week, we ate out once or none. We started carpooling to different places or not just not going to different places, like really lockdown mode for the first two years.

Anthony:
We went from saving around two or $300 a month to saving 2,000 a month, and that’s when the light bulb kind of kicked in for me, and I kind of went back to the book and was like, “All right, cool. We got this done now. Now, we’re saving money. What do we do with this money or how can I make more money to save to then invest or do I invest in education?” Whatever. So once we got to that point, I started looking for a little side hustle type stuff, and it kind of just fell into my lap because I had a passion for mountain biking. I was up in New Jersey. There was a bunch of amazing trails and mountain biking up there.

Anthony:
It was a huge mountain bike scene. So I started off buying a mountain bike off of Craigslist while I was in school to become an aviator, and I actually had the bike shipped to the schoolhouse and I built it up in my room with my roommate who is also in my class. I was taking pictures of it, and all of a sudden he’s like, “Dude, what are you doing with this bike?” He’s like, “You just bought a bike, you’re not going to ride?” I was like, “No, dude, I can make 400 bucks selling this.” So I built it up, took pictures, put it online, had it sold like two days later, made 400 bucks. I was like, “Okay, this is pretty cool.”

Anthony:
I told my wife at the time too, the mountain bike was $2,000 and I think we had five or six, maybe eight, I can’t remember, probably $8,000 saved. She’s like, “Babe, you’re going to take a quarter of our life savings and spend it on a freaking mountain bike. Are you kidding me?” And I was like, “Babe, trust me, trust me, please. I know what I’m doing. I got this.” So I sold the bike, put the $400 in the bank account. I said, “Hey, look at the account.” She’s like, “Where can you buy more? Let’s keep doing this.” So we ended up flipping, I think 13 bikes that year. We made like … I think we netted like $5,600, but it was an amazing side hustle for me because I could ride these crazy high end, upper echelon bikes that I never normally would buy, especially in my income bracket.

Anthony:
I can make money doing it. So that was the start of the little side hustle venture that now grew into me owning two real estate companies while active duty.

Mindy:
I love this because you didn’t look for a side hustle, you could do. You looked for things that you already knew how to do, that could generate income and that’s the kind of side hustle that’s A, going to be fun to do and not feel like a slog. You’re not going to have to force yourself to do it and B, you don’t have to learn anything. It sounds to me, you already knew how to put a mountain bike together, right?

Anthony:
Yeah, and the better part of the whole thing was not the money that I was making, but the skills that I was learning, doing it. Supply and demand, have a product that people want, and then, negotiation skills on the front and backside, where I would have to negotiate with the seller of the bike. I would target ads specifically that look like crap, like for lack of a better term, they had one sentence write up. They didn’t have a component spec sheet on the bike. They didn’t tell what kind of wear and tear it had. They had a flip phone photo of a pixelated bike on there. I knew what the bike was worth from extensive research and being on the platform that I was selling on.

Anthony:
They didn’t know what they had because they weren’t getting traffic to their ad because it looked like crap. So I would specifically target those people. They would have the bike listed for the market value of the bike. I would just negotiate my profit margin so whatever I can negotiate them down off of their current asking price is what I knew I could make. So that was another hidden skill that I learned while I was flipping mountain bikes, was negotiation tactics.

David:
I’m going to take that sound bite, and I’m just going to throw out there to the entire audience that you heard that, and you should take that and you should know when you work with a real estate agent, this is exactly why you always get professional photos. You never do cell phone photos. You always have a really detailed listing. You need buzzwords and keywords. I mean, there is a reason that people who are looking for off market deals, hunt down FSBOs and hunt down … or for sale by owners for those who don’t know. FSBOs and hunt down crappy listings where someone took a cell phone and was like click, click, click.

David:
Even a nice camera and did it without lighting, without wide angle and whatever, and one or two sentence, like, “Look at this cute house or this is a fixer upper.” We target the heck out of them because they’re not getting other attention, so they are willing to drop the price. So if you’re going to list a property or anything else you’re selling the money is in the details, you got to make it look good.

Mindy:
Absolutely, and as you’re saying this, I’m thinking the same thing, “Oh this is going to be just like real estate.” You’re making, I’m hoping … I really hope you make more than $400 on a deal in your real estate deal.

Anthony:
Yes.

Mindy:
For flipping a bike that’s … I mean, that’s really good. How long did it take you to build the bike?

Anthony:
It wasn’t even that. I got to a point where I would have them … so the crazy thing was when I asked them about the bike, I said, “Hey, do you have any other pictures that you can send me?” They had the photos. They just didn’t take the time and effort to put them up. So I would literally … here’s the crazy part. I would take their photos. I would make a new ad, as the bike is being shipped to me, I would put up all the components, make a beautiful, write up, post the pictures that they sent me and have it sold before it even got to my house. I would print a new shipping label. I’d slap it on the side of the bike and I’d send it right out.

Anthony:
The UPS driver wouldn’t leave because I would put the new label on it and just put it right back in his truck and he could scan it in from there, and I already made the profit. That was the crazy part. They did the work for me, but they didn’t do the work initially. That was the problem.

Mindy:
There you go. They didn’t do the work initially. You can make a lot of money off of somebody else’s laziness.

Anthony:
Yes. Correct.

Mindy:
Okay. So let’s talk about your … you alluded to and I alluded to, you have started two businesses while active duty. What are these two businesses?

Anthony:
So one is a real estate fix and flip company. Actually, let me pull that back. One is a real estate investing company out of Pinellas County, which includes Tampa, St. Petersburg and Clearwater, Florida. Excuse me. Then, the second one is a hard money/commercial lending company that is based nationwide.

Mindy:
A nationwide.

Anthony:
Yes.

Mindy:
Interesting. Okay, and you said the real estate investing company, is this mainly flips, is this mainly rentals?

Anthony:
So as the wise person, Jay Scott said, “You should change your real estate investing strategy due to what the market is calling for at the time.”

Mindy:
Louder for the people in the back.

Anthony:
“You should change your investing strategy for what the market calls for.” So initially yes, this started off as a fix and flip company. It still is majority fix and flip, primarily just because of the capital. It’s hard to say no on a multi six figure exit on a real estate transaction. It doesn’t really matter what kind of cash flow you have at that point, if you kept it, it would take you infinitely long to get the gains and what I can put into 10 other properties. So the ones that make sense to flip, I’m flipping. The ones that make sense to hold, I’m holding for re for rentals. Then, the one I’m starting to dabble into the Airbnb market as well now.

David:
Which in Florida, Airbnbs are generally … I mean, there’s a lot of market there for it, so that’s awesome.

Anthony:
Absolutely. Yup.

Mindy:
You just said something I thought was very interesting. “The ones that make sense to flip, I flip. The ones that make sense to hold, I hold.” So you’re not targeting … how are you finding your deals? Because it doesn’t sound like you’re targeting deals that are on the MLS and trying to figure out how they fit into your strategy.

Anthony:
No, so we’re still targeting off market and direct seller via a direct mail campaign that we have right now. We pull our data from prop stream. We send the list over to our marketing friends. They print up the mailers, they send them to my house. I send them out. I have a program and a lead capture system or simply, I don’t know if I can plug that, but … and then, there’s a team that takes my calls for me, because remember I’m still active duty, so I can’t be on a helicopter taking a call with the seller that wants to sell me their house. So they take the preliminary call intake specialists. They take all the information down in an icon and close.

Anthony:
The interesting part of that is you don’t know what you’re going to get. You can put buying characteristics in the data source and it’ll pump you out, whatever you want to buy. There’s so many different variables with real estate investing and buying somebody’s house that the price make sense to be a flip. The price may not make sense to make an offer on because they want too much, and then, you go in a reverse negotiation tactics because everyone wants Zillow or Zestimate. So we get into yeah, reversing what they think they should get for their house and telling them why they don’t deserve that.

Anthony:
Then, we allocate whatever projects that we get into the different categories of real estate investing, whether it’d be buy and hold, fix and flip, and Airbnbs.

Mindy:
Okay. You just said, “The ones that make sense to flip, I flip.” What makes sense to flip for you and how do you tell the difference between flipping and holding and all the other things that you’re doing?

Anthony:
It’s all a numbers game for us. If the numbers work, they work. So our flipping criteria is based on us making $60,000 net. That’s enough margin for us to be able to work with the sways in the market or any kind of inspection criteria that might come up, that they want to negotiate off of, but we like to net the $60,000. Anything under that, we look to wholesale or keep as a rental, if the numbers make sense. Obviously, the zip code in the area that the property resides into plays a factor in whether or not we hold or flip as well.

Mindy:
So what kind of work are you doing to make $60,000 net?

Anthony:
Some of them … believe it or not, it just depends on the property obviously, but some of them are lipsticks. So I like calling lipsticks. You go in there, paint carpet, clean up the place, make it nice. You don’t have to bring it all the way up to current market readiness. It’s kind of stuck in between the middle age of like the early 2000s, which people still buy. Because a lot of people want to put their own personal touch if they can get a discount off of the normal market value of something. So if we stand to net what we want in the beginning and we don’t have to put a ton of work into it, then we’ll just do that.

Anthony:
Others are … Mind you, those are very few and far between. The majority of the properties are full guts. So down on the studs, rewiring the house, because the majority of the houses that we target in St. Petersburg and Clearwater were built before 1970, which is when Romex Wiring came out and cloth wiring is something that insurance companies no longer want to insure. So we have to change out the wiring, which means we have to go to the studs for that. Yeah, basic full renos, 60 to $80,000 is what we normally see as a renovation budget.

David:
What’s your average … if you’re netting 60, your average purchase price, is that 60 on $100,000 home or is that 60 on like a three million dollar home? Because that plays a difference in how much money that actually is.

Anthony:
Yeah. Great question, Dave. I don’t go above … I try to stay right at the national average for home pricing. I believe it’s in the 400s now, which is kind of crazy. Maybe I’m wrong. Maybe that’s Florida average, but we like to stay median home value for the market that we’re operating in. So it’s usually 60 on anywhere between an 80K purchase price and a 200K purchase price. We don’t really typically go over those amounts. The majority of the properties that we have in the pipe now are anywhere from an 80K purchase to a $200,000 purchase.

David:
I’m just going to just stop and derail because I Googled and holy crap, you’re right. Yeah, according to the May 10th … this is May 10th, 2022, statista.com, according to St. Louis fed, median prices for US homes rose from approximately 323 at the beginning of the pandemic to around 429,000 in Q1 of 2022.

Anthony:
Yeah, wow, that’s right, which makes our buying pool a lot bigger now, which is great.

Mindy:
So I like that you’re looking for properties that have a bigger spread, minimum of $60,000 net for your profit. The reason I bring this up is because I saw a post, I can’t even remember what group it was in, where somebody posted their numbers and they were projecting to make approximately $30,000 and their friends were telling them, “Oh, I wouldn’t do that. I wouldn’t touch that.” And they’re like, “Who turns down $30,000.” I’m thinking to myself, well on the surface for somebody who is newer to investing $30,000 seems great because you’re doing a month’s worth of work.

Mindy:
Well, that month is going to turn into three, at least if you’re a new flipper or six or 12, because flipping is not like the shows on TV. God, that makes me so angry.

Anthony:
Things do go wrong.

Mindy:
Things will go wrong. Can about it. Things will go wrong because drywall is not see through. As soon as you pull down the drywall, you’re like, “Oh, I didn’t realize it had knob and tube wiring or that’s where the smell is coming from. The sewer pipe is broken in the wall or the pipes are broken and now, I’ve got way more stuff to do.” There’s always something that’s unexpected that pops up during the flip. So you’re $30,000 with one unexpected, $10,000 expense, now you’re making $20,000, and instead of flipping it in a month, you’re flipping it in three months, if you are extremely lucky and your $5,000 a month in holding costs just ate up another $10,000. Now, it’s been sitting on the market because you listed it at 320, but it’s actually more like a 310 property and nobody is buying it.

Mindy:
So you have to reduce your price to 310, you break even before you’ve even done anything. We haven’t had our home inspection yet. Maybe there’s something wrong with the roof that you were really kind of hoping would be okay, and a month ago or three months ago, if you tried to sell it, that would be fine. Now, the market has changed so much, even just in a couple of months that people are now asking for inspection concessions and getting them because they’ll walk, if they don’t. They’re not bidding with 57 other people on your house. So the market can change in a heartbeat and you can have completely different marketing conditions than when you initially bought it and your ARV needs to be super conservative and your rehab cost needs to be super extravagant.

Mindy:
I think it’s going to cost 10,000 wealth, then budget 20. If you can’t make money with a $20,000 flip or rehab budget, then you’re not going to do it in 10 either.

Anthony:
I’m so happy you brought up that 10% contingency because I also have a hard money lending company, and the majority of the errors that we see from our people coming to us is they neglect that cushion in their rehab budget. Then, they have to come out of their personal capital for any expenditures above and beyond what the rehab budget was set to. I had this mistake early on in my career, on my first flip where we budgeted 25, it ended up being 37, and I had to come out of pocket as the business partner on the deal and extra $7,000 to dig up the foundation of the front of the home. This is in New Jersey, by the way. The crawl space was leaking, we had a snow. The snow was melting.

Anthony:
The water went through the foundation into the crawl space and was leaking literal like two inches of water in a place where the gas heater was. So that was a $7,000 expense that we didn’t foresee happening. Had we added that to the budget as an old crap expense, I wouldn’t have had to come out of my pocket, my personal capital, which was scary at the time, because I only had, I think, 15 grand to my name because I gave 15 grand for the gap funding for the loan. If you don’t know what gap funding is, it means you’re basically putting the down payment of the property for the loan 20%, 15%, 10%, depending on how many deals you have done. So I was already out $15,000 and we only had so much to work with and then, we had to come out of pocket another seven.

Anthony:
That’s scary. That’s very scary. So I wouldn’t want to be in that position. You ain’t going to pay an excavator to come dig up the front of your house with a credit card. I’m sorry that doesn’t happen.

Mindy:
If you’ve had a really long relationship with them, you might be able to pay them at closing, but even then, you have to have a really good relationship with them. You can’t just call up somebody, and I was going to say out of the phone book.

Anthony:
No phone books exist anymore.

Mindy:
Showing my age like always, but you can’t just call up somebody and say, “Hey, can you come do this, work on my house and by the way, I’ll pay you when I sell it,” they’re going to be like click. “Hello. Hello. Hello.” Yeah. So, no, I love that because you have to build that in and if you’re new, you should build in a 15 or even 20% cushion because if you don’t use it, you don’t have to pay anybody that money. It’s just there in case you need it, and I think another … Murphy’s law … Mindy’s law of flips and investment properties in general is something will break as soon as you close on the house. And if you’re planning a gut rehab, it’s not such a big deal, but if you are planning a rental property, something is going to break as soon as you close. And the cost of that repair is inversely proportionate to how much money you have in the bank.

Mindy:
That is a true statement, ask anybody who has ever bought a rental property with no money. And they’re like, “Oh, the next day the air conditioner broke or the furnace or whatever.” It was a huge expense because they didn’t have any money to cover it.

Anthony:
Yup.

Mindy:
Sorry I could go on these diatypes forever.

Anthony:
Yeah, no worries. It’s a good point though. It really is.

Mindy:
Okay. So let’s say that you have just bought a house in the last month or so, and you’re in the process of rehabbing it and maybe the market flips because the fed raises the interest rates by a half percent and people freak out. What do you do with your flip if you can’t sell it?

Anthony:
So I’m glad you brought this up because another rookie mistake is just thinking of one exit. The deal has to make sense on a multiple exit base. For me, it has to at least cash flow, $300 net, that’s after capital expenditures, as a rental for my all in costs and then a cash out of 75% LTB. If it doesn’t do that, then it fails that one portion, but it may make up for that portion in another way or the risk in another way for the profit made on the flip side. So if I’m going to make $150,000 net on a flip, it’s really hard for a market to swing that much in a one direction for me to go negative. So if it doesn’t play in the cash flow category, but it plays in the net income category for the flip side, then it’s still a deal for me, but I am still looking at each project as a multiple exit type project.

Anthony:
So for instance, the one that we have now, it’s a BUR-BNB. It was initially going to be a flip, which we were going to make 130,000-ish dollars on. Well, it makes 170,000 gross as an Airbnb, according to AirDNA. So even if it made half of that, half of my net income from the flip is made up in Airbnb cashflow after the first year, I’m going to keep it as an Airbnb and not flip it.

David:
So, all right, you’re doing all this. You’ve said you’ve got like seven projects going on right now and correct me if I’m wrong, but you don’t actually live in Clearwater, right?

Anthony:
I do not.

David:
I mean, you’re too far away, but a few hours.

Anthony:
Yeah.

David:
How in the world are you managing seven projects remotely while active duty, and I ask that with the underlying question, being the excuse that most people make for themselves, which is that they don’t have time to do X, Y, Z. So I’m curious how you’re building a team, how you’re managing those projects and how you’re finding set time.

Anthony:
Yeah. Great question. This originally started back in 2019 when I was … I wanted in, I had just done my first flip in New Jersey. This is going to be a little long winded, but there’s context here. We had just done my first flip in New Jersey and we were trying to find another property, but there wasn’t really anything that fit our criteria up there. So I started looking south because I’m from Florida originally. I got on Facebook one day and I typed in Florida real estate investors group or whatever. Then, I found Pinellas County Real Estate Investors Group. So I got in and one of the first posts that I saw while I was at work was, “Looking for private money investors for my fix and flip company. I’ve done over 400 flips,” and whatever.

Anthony:
This guy was posting this. I’m like, “Oh my God.” So I reached out and I was like, “Hey man, I got 50 grand. This is after we sold our first flip and we had some actual money.” He’s like, “Oh, I can’t take an investor under two 50. You need to have 250 minimum. Text me when you have 250.” And I’m like, “Man, that’s going to freaking me forever.” Especially if I can’t flip now, because I don’t think I was doing hard money at this point. So two weeks went by, I message him back, and I said, “Hey, I don’t have 250,000,” and it’s going to take me a long time to get there, but we could borrow hard money. He’s like, “Okay, I’ve never done that before, but let’s do that.” Because he buys all his stuff cash, he’s old school, right?

Anthony:
He doesn’t like leverage or whatever. So long story short, I ended up partnering with this gentleman who is now my business partner. We’ve done 19 transactions together in the last three years. Basically, our partnership structure is I bring the capital to close the property, i.e. the down payment and the hard money and then, I manage the renovation expenses on my credit cards, throughout the entire process. We both find the property. He manages the flipping portion or renovation portion of the property, and then, we share profits on the exit. That’s the partnership that we have. He already had an established relationship within the county and he already has all his subs and everything figured out ready to go.

Anthony:
We’re ready to pounce. When we find a property we’re in that … day after closing, we’re in, we’re already demoing. So instead of building that entire team out from New Jersey, I basically stepped into it for a partnership. I had something that he wanted, which was more money to expand his flipping company. Then, he had something that I wanted, which was making money off of flipping properties. So that’s my current partnership with my business partner. He handles the renovation aspect. We both find the property and I handle and manage all the expenses.

Mindy:
That’s awesome, and that’s nice that you were able to find somebody who brought what you weren’t bringing to the table, and he was able to find somebody who brought what he wasn’t able to bring to the table. I think that’s where some people kind of get a little hung up. Let’s say David and I both have money. Hey, let’s partner. “Well, great. Now we’ve pooled together two piles of money with nothing to put it towards.” You don’t partner with somebody who does the same thing as you. You partner with somebody who can bring what you can’t. So David has the deals, I have the money. Now, we have a partnership.

Anthony:
Yep, and I’m kind of his go-to guy now because him and I talk on a daily basis and he doesn’t have time, like I do … well, not so much anymore, but I have more time in him. He’s managing, I think he’s flipping 30 properties, seven of mine with him and then, 23 others with other investors. So he’s kind of skimped on time. So he’ll throw me a property and say, “Hey, what do you think about this deal?” I’ll analyze the deal for him, because he doesn’t have time. He trust and understand that I know the market now, and then, I shoot him back an answer, “Hey, that’s a deal or it’s not a deal?” And whether I want in or I don’t. So that’s kind of the relationship that we’ve we developed now.

David:
Yeah. So I remembered what I was going to ask. So you mentioned that you manage renovations on credit card and we had talked prior to the show about some of the stuff you do with credit cards and points and understanding how to use credit cards as a tool and credit cards are admittedly a tool, but they are something that a lot of people do not like using. I know for a fact that my wife does not like when I utilize our credit cards and I know that there are a lot of people who probably cringed when they heard you mention that you are doing renovations with a credit card. So I’m curious both why and how, because I would imagine that if you’ve made a couple six figure exits, you could use cash, so why would you still want to use a credit card?

Anthony:
Great question, and there’s a lot of answers to that. So the major reason why I use credit cards is I don’t like being out of my own pocket, because the majority of the deals that I have … actually, all of the deals that I have right now are funded via hard money. Hard money gives you something called draws. You have a scope of work. You finish a kitchen. It’s $5,000. The inspector comes in. They look at the kitchen, it’s done. They give you the $5,000 in a wire form. Then you wipe off the credit card, which have the $5,000 in material costs on it. I’m using these credit cards to essentially build points and build cash back up for my own personal expenses as far as like vacations are concerned or the majority of that is upgrading my own house.

Anthony:
It’s free money, and the second part of that is why not? Why would you use your … What’s the benefit of you using your personal capital, you’re putting it at risk, when you don’t have to put it at risk. The lender is paying you for the rehab. So that’s basically the major reason. For me, transaction wise, it’s a lot easier to break down at the end of the year when we’re doing taxes and stuff too, is there’s subcategories in all my credit card formats that I can log in and say, “Okay, miscellaneous,” which is basically building materials and then, we have food and labor and everything that I can type in and search certain names of transactions that I know came up and those are expenses as well. In my business partner, I pay him labor for his company off of my credit card.

Anthony:
He uses a … I think it’s called a swipe or something that you put on your cellphone and you can just run the number or whatever. It’s through QuickBooks, and it’s like a percent and a half transaction fee, but that gets paid with the hard money loan or the rehab costs back to us. So it’s not even really a fee for us and it helps us keep everything organized as well.

Mindy:
I want to point out, you said it’s free money. It is free money if you pay off your card every month, and if you use it responsibly, and this is something that you have to look at yourself and look at your past history. If you have a past history of being very irresponsible with credit cards, then find another way to fund your rehabs. If you have a past history of being very responsible with credit cards, then this can be a really viable option. I do this. I’m about to buy a house tomorrow and we are looking for, what’s the best card for us? What has the most points? Because we are going to be buying a lot of things and why pay cash or put them on a regular credit card when you can open up a new card that has … most card credit cards now have a sign up bonus where if you open the card, you spend X number of dollars in X number of months.

Mindy:
It’s really common to have to spend $3,000 in three months. Then, you get bonus points, you get 80,000 points for hotels or airfare or whatever. I’m going to be spending a lot more than $3,000. I can certainly do it in the first three months, as soon as I start buying an entire kitchen. Even if I go to Ikea, that’s a $7,000 kitchen that I’m going to be dropping. So maybe I’ll split it up on two cards and get two sets of bonuses. Why pay $7,000, I’m going to pay $7,000 anyway, why not get benefits out of that? Again, I have a history of using credit cards responsibly.

Anthony:
Yeah, and here’s the other thing too, if you can’t take this lightly, but if you can’t manage credit cards and use those correctly, I wouldn’t ask for other people’s money to then go into your investments and then you mismanage their money and now, you owe a physical person something. For me, taking private capital into my company, which I do … the majority of my deals are private capital based now for the gap funding and then, I get hard money cheap, because I’m a lender. I get it cheap, and then, I fund the rest of the deal with that. I wasn’t comfortable with taking people’s money until I had four or five deals under my belt, and I had the systems worked out and I had the processes in place. I knew that this was going to be a good partnership with good exits.

Anthony:
I found that we could make money. That’s when I started taking private capital in, but I still use credit cards too, because if I can borrow the 10,000 from a credit card, I’d rather borrow it from a credit card than from somebody’s personal capital. So that’s just the way I operate. So if you can’t manage credit cards properly, then don’t ask for other people’s money to spend on your projects either.

Mindy:
That is an excellent point. I’m glad you made that right, I mean, this is still somebody else’s money. It’s just the credit card company’s money and who cares, which is a terrible way to think about it. Okay. So you have seven properties going. You said that five of them are flips. One of them is a rental and one is a BUR-BNB.

Anthony:
BUR-BNB.

Mindy:
I love all the different ways that we collaborate with all of these. So the BUR-BNB is going to give you just … it comes with its own cash printing machine, it sounds like.

Anthony:
It is insane, and I think we found a little … I’ll touch on this just real quick, because I think this is pretty interesting. I get my data from AirDNA and us, adding a fifth bedroom to our Airbnb through our nightly projected rate, double. I made it double because now it’s considered a double family rental because it has the capacity to sleep 14 people and now, it can be … Now, you can monetize the nightly rate at a higher amount, because it’s considered two families paying for the one night together. I didn’t know this, but I’ve heard of this in other real estate investors that I’ve talked to with Airbnbs, they’re doing that.

Mindy:
I think it is very interesting. These larger properties that are on Airbnb. So I have a huge family and we had a family reunion a few years ago that we rented a house that sleeps 60, and I didn’t even know that these houses existed. Why would you have a house that sleeps 60 and you get into this house and there are just bedrooms, everywhere and beds everywhere, and we squeezed in there. We have a big … it’s a big family, but they have a wait list and they are rented every minute that they can be open. When we started looking for our next venue, we found it very hard to find these large properties, and when we did find them, we had … “Wow, there’s two weekends in the whole summer that are available for us.” Everything is all booked up.

Mindy:
On the outset, it seems like … one of the mantras of real estate investing is you don’t buy weird properties because weird is a five letter word. Unique is a … I’m sorry.

Anthony:
We get weird sometimes.

Mindy:
Weird is a five letter word, but in this case, weird is a four letter word. Unique is a four letter word you want normal. You don’t want to like wait for that one special person who could possibly want to live in your adobe mud hut. You want a bunch of people who want your property. So a five bedroom house is starting to get into the weird space and six and above, those are weird houses, especially if they don’t have a lot of bathrooms. This is interesting that having a five bedroom house now allows you to rent for significantly more.

Anthony:
It essentially doubled our gross profit margin.

Mindy:
Doubled,

Mindy:
.By adding a bedroom.

Anthony:
I didn’t believe it, but then I did my market research based off of what Airbnb listings had available and every place that slept 12 or more had a nightly rate and was booked at six to 800 a night, throughout the entire summer. I’m like, I told my business partner, I said, “We need to add a bedroom ASAP. I don’t care …” for the listeners, please don’t do this, but we put a non-coded bedroom, just framed out a part of a huge area and framed a bedroom in, a seven by 10 bedroom and put another bed there because it’s head sleeping. Now, I can list that property for 14 people instead of the 10 or 12 that we could get before in our nightly rate doubled.

David:
Yeah, so my office, where I’m at right now, it’s like a two one, but the upstairs is a four, two and a half that I Airbnb and it’s a four, two and a half that also has two pullout couches, so it’s 12 people. What’s interesting to me is not only did it significantly increase the amount that I could charge, because families are wanting to come in to entertain or gather or whatever, but it also opened up the door to where I’ll get crews of three or four guys who are in town, on a project, and they all want their own room, because they’re all adults, but it’s so much cheaper for the company to put them up in my Airbnb than to put them up in four hotel rooms or even two hotel rooms.

David:
So, I have found that I get … the weekend bookings I’ll get like a … it’s very common that it’s like Friday, Saturday, Sunday. Someone checks out Monday and then, I get Monday through Friday and it’s two completely different subsets of people, but it’s all opened up by having extra bedrooms.

Anthony:
Yeah, absolutely, and then, you add the amenities to it. So we’re five minutes from the ocean, Clearwater beach and then, we have a huge pool in the backyard as well as we’re a corner lot, so you have a bigger lot, so there’s a bunch of amenities that we’re going to offer in the backyard and all this other stuff. So really make it like a family type place, because there is a lot of places there that are only one bedroom, you can’t fit a family in that. So we’re really targeting that family market, which I hope pays off for us.

Mindy:
Well, That’s awesome. Here’s a tip, put in a big coffee pot or multiple coffee pots in that house, that flip 60 and we’re a very coffee drinking family, one coffee pot, one 12 cup coffee pot. We had to go to town and buy two more just to keep up with it.

David:
I now have a Keurig and a pot because I had the epiphany really. So, I had a Keurig and I was like, Keurig is awesome. I’ve got 400K cups. This is great. People will love it, and then somebody was like, “Hey, there’s 12 of us that drink coffee and making 12 cake cups in the morning is kind of a pain in the butt, and I was, “You know, that’s really good feedback.” So I now have a Keurig and a pot that sit right next to each other and I have bulk grinds and bulk cake cups and everybody loves it. So, for 100 bucks it cost to buy a decent pot and some coffee, one night stay, more than pays for that. So I’ll take it.

Anthony:
Yup and pays for itself.

Mindy:
Yup. Go with your family and bring another family and stay there together and see, “Oh, one refrigerator isn’t enough.” Then get two or this ice maker isn’t going to be enough then think about that, but yeah, this house had two ovens, which was nice and two refrigerators, which was not close to enough. They did not have enough dishes for 60 people. Well, then don’t advertise that … they had enough seating for 60 people, but they didn’t have enough dishes for 60 people. Then, it was up in the smokey mountains and it burned down with that big fire. So it doesn’t matter anymore. Yeah, those big properties are really … like I don’t want to go on vacation in a five bedroom house, but that is … I can see how that would be really, really valuable. You just have to think outside of your own personal norms.

Anthony:
When we talk about multiple exits too, so going back into that, the property has 130,000 in equity in it when we’re done. So, it could be a flip, quote unquote. Also, we projected half, when we initially write the numbers on a property to keep it as an Airbnb, we only had it at a four bedroom. It was going to gross like 75,000 a year. We were going to make like 40 grand and some change, after all expenses. That’s an amazing property. I’ll take that any day of the week. So even if we’re on the lower spectrum of what the property could do, it still makes sense for us to keep it. So anything above that is extra.

Mindy:
I love that.

David:
All right, Tony. So here’s the question of the hour, when we first started, we were talking about you, saving 80% of your income. You had this massive savings gap to get started. You’re obviously making a lot more money now. So one would think like, “Oh wow, if he was saving 80% of 100 grand, then surely he’s saving 10 times more money now that he’s making whatever.” The question is. How have you … have you noticed the lifestyle creep? How have you had to deal with that? Do you think it’s still 80% or has that maybe backed off a bit, but you’re still saving more money, how does that kind of waiver as you grow?

Anthony:
Yeah. I mean, great question. So the 80% isn’t a median calculation, I guess you could say, because some months we sell a property, the next month we don’t sell a property, but over the course of a year, it works itself out to about 80%. Some months are 90%, some months are 60%. With the influx of money, my wife and I still act like we’re broke. We still question whether or not we should go out to eat or hey, do we need this? We still buy at Marshals and look for sales. I don’t buy, name brand stuff. I drive my 2014 paid off truck. My wife was going to get a new Mercedes SUV and we have equity … believe it or not, we have equity in her Grand Cherokee that she has.

Anthony:
So she’s keeping that because the market value is insane. I think she owes 27 on it and it’s worth almost 40. So we decided against that, because that would’ve added another $1,100 a month payment to us. It just doesn’t make sense, because I don’t want to say fear is the driver, but really your income sources can go away, depending on what the market does. I mean, it would have to be a rainy day, but I act like my income sources can disappear. We still haven’t increased our living expenses above and beyond, before I got into real estate. I would be living the same lifestyle now, if I was just working for the coast guard and my wife was just working as an administrator at a school minus the real estate income.

Anthony:
Now, the one thing I will splurge on is experiences in creating memories. I know that sounds cliche, but that really is ultimately, what my driver and what a part of my why is, as to why I’m doing this. It’s to create time, to spend time with family, travel and make life experiences happen. I did buy a boat, cash because nobody would finance me, which is pretty dang crazy. So I ended up buying the boat, cash, but the boat provided value to me because, my … getting out of jail free card is basically me taking time for myself because we can all get wrapped up in our side hustles and go, go, go, go, go and burnout is a real thing, especially when you have a W-2 and you’re running all this different stuff, and the majority of what I do is sales base, so it takes a lot out of you to have these phone calls and locking these deals.

Anthony:
Commit that brain power to articulated conversations that have to happen. So the boat for me was my getaway, like, “Hey, we can take out the boat and just have the day to ourselves.” We don’t have to think about anything. We’re out on the water. Nobody is going to bother us, but what I didn’t see and what I didn’t know, when I first bought the boat was the opportunity and value it provided other people that don’t have a boat or have the opportunity to get away. So now, I’ve provided value to other people i.e or friends that can come out with us and making an experience. That’s the only thing I’ve really splurge on.

David:
And the Corvette I told you, I was going to call you out on-

Anthony:
That was a dumb move though.

David:
You sold it, so it worked out in the end.

Anthony:
That $1,200 a monthly car payment was not fun.

Mindy:
You didn’t pay cash for it. Okay. I was about to stick up for you and say, look, you’re generating income over and well over and above what you need. It’s okay to buy something that makes you happy, even if there’s no financial benefit behind it.

Anthony:
Yeah. So I sold the Corvette and bought the boat. That’s what I did.

Mindy:
If you like the Corvette, if it makes you happy to drive, you can keep it, but if you decide that it’s better to have a boat, then go that route.

Anthony:
Yeah.

Mindy:
When you say you save 80%, what does that mean? Where do you put this money? Are you just reinvesting it back into real estate? Are you taking advantage of tax deferred accounts? Are you … after tax, brokerage accounts, do you do anything in the stock market?

Anthony:
What’s crazy to me is the course at what my companies are growing over the last, I would say year and a half, I never really had to think about tax sheltering, because we didn’t make an opulent amount of money to have to worry about doing stuff like that. I think my last year’s tax bill was like 3,400 bucks, that’s what I had to pay out. This year is like multi five figures. So now, I have to figure out where to put money. So yes, those are coming, syndications, our IRAs, wherever I can … I actually have a strategy called my CPA tonight to talk about where we’re allocating funds to this year, to get rid of this stuff.

Mindy:
Do you have full-time employees or part-time employees or any employees?

Anthony:
So I’ve been pretty lucky. My business partner, he knows the full-time subs and stuff that work for the company. So they’re not my personal employees because he has his own fix and flip company that they’re branded under. I guess my company really doesn’t have employees, if you will, because they’re subbed under him. Then, we have all those workers sign hold harmless anyways, before they come work for us on the properties, and I got a liability policy on my LLC and all that is taken care of. I don’t personally have employees but what I do have is strategic partners in the spaces that I need them. So on my hard money side, I don’t do the handling of document collecting. My partner handles that.

Anthony:
So basically I’m the sales guy. I collect the lead, I convert the lead. I get the application submitted and then I swipe right, and it goes to my partner and he takes care of the rest of the stuff and then, I get paid out and that happens the same way on the transactional side for the fix and flip company. I hand the transaction. Once the transaction is closed, he steps in and does the quote unquote, dirty work.

Mindy:
Okay. I asked if you had employees for tax purposes, because-

Anthony:
My wife is an employee of the company.

Mindy:
Okay. She doesn’t count, which is the best part of this. Okay. So I want you … this is a research opportunity. I want you to talk to your CPA tonight about a self-directed solo 401k.

Anthony:
Perfect. That’s actually literally on my sticky note, that’s on my monitor.

Mindy:
Good, yeah.

Anthony:
Yes.

Mindy:
Okay. Not a self-directed IRA, and if your CPA cannot tell the difference or cannot explain to you the difference, then you shouldn’t hire them. The difference short term is that your self-directed solo 401k does not have unrelated business income tax. So when you are investing within your self-directed solo 401k, you don’t have to pay this tax. Anything you invest in is just an investment. So let’s say you bought low and sold high and bought something else, that growth just gains in your account, whereas with the self-directed IRA, you may be required to pay taxes on some of those gains. I don’t have a self-directed IRA on purpose. So I never really dove into what the differences are.

Mindy:
I just know that if you have self-employment income with no other employees, other than your spouse, no full-time employees other than your spouse, the self-directed IRA … I’m sorry, the self-directed solo 401k is a fantastic option because you can put in the … you can make your personal contributions. The limit is 20,500 for 2022 and then, your company can match your salary up to 25% with a cap at I think, $54,000.

Anthony:
Okay.

Mindy:
So you could have $54,000 in your retirement account every single year, and I believe if your wife is an employee of this company, she can do the same thing. So that’s … do the math really quick, $108,000 that you can put in there, and it’s not all tax sheltered, but think of it this way. So you made $20,000 because your company had to pay that to you, so you could contribute it to your 401k. Now, that 20,000 is your salary, 25% of that automatically can go in. So 25,000, I think just automatically based on your initial contributions. Then, you can start thinking of other things. So this is super oversimplified just to introduce it to you, so you can then talk to your CPA and they can be like, “Well, she’s sort of right, but she’s sort of wrong. Here’s the real-”

Anthony:
No, I appreciate that. That’s awesome.

Mindy:
Yes, since you’re already talking to them, talk to them about that. Talk to them about the … are you qualify to contribute to a Roth IRA? There are income limits to contribute to a Roth. IRA, contributing to your 401k, reduces your taxable income, and therefore you can make more and still contribute to your Roth IRA.

Anthony:
Got you.

Mindy:
Roth IRA grows tax free. So when you pull money out afterwards, you’re not paying taxes on it. You already paid taxes when you put it in. So that’s not really a tax savings now, but that’s a growth strategy for the future. So talk to them about that, but again, you have to make … I think it’s under 140 combined annual income, so I’m not sure … you might not be able to qualify.

Anthony:
I don’t think I’m going to qualify for that one.

Mindy:
Well, I mean, in that itself is a good problem to have, right?

Anthony:
Yeah. Yup.

David:
It’s like the conversation I had with someone the other day who I will leave nameless for the recording, but they’re at like the … they’re desperately trying to stay below the five million dollar net worth bubble because of the tax implications of when you pass away, and he’s like, I’m spending money that I’ve never spent before and the market is not helping me. It’s still going up. It’s like, yeah, but realistically, if you’ve got to pay tax because you broached five million dollars, there are worse problems out there. If you’re not able to contribute to this deal because you’re making a quarter million dollars a year, you could be in a worse spot.

Anthony:
Yeah, exactly.

Mindy:
Okay. I think this has been a really fun episode. We’ve kind of focused on real estate, which is still my favorite thing, and it’s hard to get me to stop talking about it. I really appreciate the ideas that you have. They reinforce what I keep preaching. Know your numbers, be conservative. Don’t just jump in on a deal that’s going to give you a really low potential payout because there’s so many ways that that deal can go sideways. You have multiple six figure payouts on these flips, and I think that that’s fantastic. I can’t really tell you the … change what you’re doing, because you’re doing such a great job.

Anthony:
One more thing, real quick I’d like to touch on is when you do find yourself in this position, not being over-leveraged is so, so key because I have private money investor money, about 120,000 worth of it. I never fall below in my savings account, less than a year of expenses in all the capital that I borrowed from my private money investors, period. So we stay relatively liquid just on the base of like, I don’t know what’s going to happen. I always think of the worst case scenario, and if you’re prepared for that, everything else is gravy.

Mindy:
I love that.

David:
Yes.

Mindy:
I love that. That I want to … I just want to say those words to everybody who is like, “Well, if it’s sitting there saving and it’s not working for me that I’m losing money.” No, you’re gaining peace of mind. You’re gaining the ability to pay back your investors even if something catastrophic happens. Now, if something catastrophic happens at one property, it’s probably not going to happen to all the properties. Even if it does, you are covered, and that is what investing is all about, you make smart, safe decisions. You don’t leverage yourself to the hilt and then, just hope that everything works out. I can’t imagine how it must have felt to the people that … right when COVID shut down America in March of 2020, people were on the Bigger Pockets forum saying, “How am I going to pay my April rent?”

Mindy:
You should have already had that in the bank, along with May and June and probably even July. What do you mean? How are you going to pay April rent? It’s March-

Anthony:
Yeah. That’s why establishing those core financial principles in your house first in your personal finances first, then you can start setting. You shouldn’t be investing if you don’t have a net stakes at all.

David:
So I give the opposite side of the coin here because while I agree, wholeheartedly, I didn’t have anything when I was starting. So, while I’m now transitioning more to paying off any debt and planning to pay off the primary residents … not the actual investments, but the primary for peace of mind and being much more conservative and having more in liquid, and I have those emergency funds and everything else. While growing, I didn’t have that option because it was like, “Well, I could either save for the next 10 years and have this money or I could start making things happen and have to find a way to kind of do both.” So what I did was I … the one thing I’d done right, was I’d invested in my TSP, my 401k.

David:
So I’ve just kind of always known like, “Hey, if everything else fails, I can pay a 10% penalty tax and that’ll bail me out,” which is not necessarily the right way to do it, but I’ve also never had to touch it.

Anthony:
I have one of those.

David:
So, the idea that it’s only liquid, if it’s in savings, the savings is a great peace of mind, but there’s nothing stopping you from putting some of that into an index fund and being able to tap into it or putting some of that into CDs and rolling. There are ways to combat inflation and still have money if things go wrong. So, it doesn’t have to be either or, it can be a win-win.

Anthony:
Yeah, no, I love it and my mindset on the whole thing is if I can use other people’s money to make 100% returns for my company, then that seven or 8% inflation loss that I had in my bank account is negligible based on the fact that I had 100% ROI turnout. So that’s how I think of it.

David:
Yeah. Absolutely.

Anthony:
Those are all great points.

Mindy:
Okay. I think we have reached the point in our show where it is time for the famous four. Anthony, are you ready?

Anthony:
I am ready.

Mindy:
Okay. What is your favorite finance book?

Anthony:
I think we got to hit it off with the old Robert Kiyosaki, Rich Dad, Poor Dad. I really do think it is the foundation of what I built upon. That and Bigger Pockets, but Bigger Pockets isn’t a book, I guess. They have books, but the podcast and stuff is what helped me obtain that mindset of like, “Hey, let’s jump in. Let’s get our feet wet. No more …” were you saying the sidelines … Over analyzing or-

Mindy:
Analysis paralysis.

Anthony:
Yeah, that’s what it is. Analysis paralysis. So it helped me combat that pretty good too, but yeah, I’d have to say Rich Dad, Poor Dad.

David:
That’s a good one. All right. What was your biggest money mistake?

Anthony:
Legal protection. So I think this was my second deal. I’ll keep this very brief. I was supposed to be partnering with an individual I met from Craigslist. Don’t go to Craigslist to find your business partners, ladies and gentlemen, please. I went to Craigslist. I contacted this quote unquote, real estate investor. He was selling a duplex on a Delaware River that was supposed to be cash only or whatever. I ran my numbers. It didn’t come out right? So he’s like, “Oh, don’t worry about it. I have another opportunity, you can invest with me.” He had a lease to buy option that we were getting ready to do in North Carolina. Whether or not this property ever existed. I’m not sure, but he drove from Maryland to DC or North Carolina to Washington DC to meet me on deployment.

Anthony:
We talked in a burger cafe for about an hour and a half. I thought I had vetted this guy as much as I knew how. Mind you, it was only my second deal in. So I was still a really new investor, I didn’t know a lot of stuff. This guy was the … he’s probably the best salesman I’ve ever … the way he structured everything in the conversation, I gave him $6,000, as soon as I got back to my room. I wired it to his checking account via picture of a check that he gave me. I didn’t even have a promissory note in place. I told him to send me the promissory note. He sent it to me. I didn’t have it looked at by a lawyer. I lost six grand, and that was a hit. Six grand is still a hit.

Mindy:
Six grand is six grand.

Anthony:
Yeah. So my business partner lost a million dollars in ’08. He told me, “You are the luckiest real estate investor for learning that mistake early in your investing game, because it is just $6,000 and not $600,000.” I went to the school of hard knocks for six grand.

David:
Yeah. That brings up a really interesting point and a conundrum that I see with a lot of flippers. So this is actually an Alex Feliz point. I’ll give them the credit, even though it’s Alex, so I probably shouldn’t give them anything. A lot of flippers, they do their first flip and they lose money and they get super disheartened, myself included. I lost 30 grand on my first flip. That is a loss that pays off so well because unfortunately, what I see a lot of times … and this doesn’t get talked about as much, is the person who wins on their first one, whether it’s because the market bailed them out or whatever. Then, they get cocky and they will lose so much more money in some deal down the road because they overlook whatever than the guy who got burned on the first one and lost some money and is now cautious.

David:
So not that you want to lose money, but your business partner is right. A $6,000 hit on deal number two, where you’re like, “Oh crap, I need to figure that out.” That is so much better than what could happen, if you hadn’t learned that lesson and someone came in and robbed you down the road.

Anthony:
The worst part is it wasn’t the six grand that was lost. It was the time … this had happened over the course of seven months. I didn’t have enough money to make another real estate transaction, and I had found others. I waited seven months to the date … I was already pre-celebrating with my wife in Clearwater. We were on the beach having a freaking glass of wine. We had some bang, bang shrimp or whatever, and I’m like, “All right, the wire is going to hit anytime now.” And I kept texting this guy. He never answered me back, and finally, I called the lawyer and he’s like, “What are you talking about? We don’t have this property to close today.” We didn’t even have this property in our system.

Anthony:
I’m like, “Oh man. Babe, I’m sorry, but we just lost six grand.” And it was hard because I wanted to be … I wanted that to work for me because that was my button that I could press for my wife to trust me, going further into future investments. When you lose six grand and you only have 18 in the bank, it’s a big hit. Yeah. Protect yourself legally. That is the moral of the story and don’t get your business … I can’t even say anything, because I got my business partner off of Facebook, but it worked out for me. It might not work out for you.

Mindy:
I hope he stubs his toe every day for the rest of his life.

Anthony:
It turns out, and here’s another thing real quick to plug, do a background check on your business partner. If I had done a background check on this guy, I would’ve saw the 11 misdemeanors and four felonies that he had and I wouldn’t have done business with him. Do a background check.

Mindy:
Anybody who needs money right now, we got to do this. No, you don’t have time to do your research. Okay? If you need an answer right now, the answer’s no.

David:
Always. Absolutely.

Anthony:
It’s costs $5, public crime search or whatevertheheck.com, five bucks. You pull up a report on them you get to see everything that they’re about.

Mindy:
Okay. Let’s switch gears and say, what is your best piece of advice for people who are just starting out besides to a $5 background search on your partners?

Anthony:
Those are two good nuggets. I would say don’t stop educating yourself. There’s always room to grow, especially in knowledge, building base like the solo 401k that you just dropped on me, I didn’t even know about. So thank you for that. Never stop growing and get out there and start meeting people. Get around the people that you idolize. Replace your group of people you hang out with, with the people that you want to be, and I promise you, things are going to happen.

Mindy:
I love it.

David:
Yeah. I absolutely agree with that. All right. What’s your … you’re the life of the party. What’s your favorite joke to tell at parties?

Anthony:
I think Mindy’s got me on this one.

Mindy:
I’m looking for coast guard jokes, but I don’t understand any of them.

David:
I got it for you then. The reason there’s no coast guard jokes is because the coast guard is the joke.

Mindy:
You stop that.

David:
I told you before we recorded, I love the coast guard, but I got to do it.

Anthony:
That’s great.

David:
I usually use that with army. I’m like, man, there’s no … the Marines don’t really talk smack about the army much because they don’t really need to, but it goes the other way.

Anthony:
The Navy says that we’re puddle jumpers. It’s not really a joke, but there’s just something that they call us because we don’t really go overseas.

David:
Puddle pirates.

Anthony:
Puddle pirates. Puddle jumpers.

David:
I’ve heard that one, but you know though, as much flack as the coast guard gets, you guys have some really cool … So they’re the only ones that roll around in icebreakers in the Arctic-

Anthony:
Yeah, and lane helicopters on ice and stuff.

David:
Yeah. There’s some really cool stuff that the coast guard does and there’s a lot of border places, a lot of lives saved and a lot of drug bust and a lot of good stuff that the coast guard does. In fact, I would imagine that on the day to day they probably engage in more action than the other branches unless we’re actually engaged in a conflict.

Anthony:
Yeah, absolutely.

Mindy:
Okay. Here’s a helicopter joke. In honor of Scott who is not here, a man walks into a bar and asks the bartender, “Do you have any helicopter flavored chips?” The bartender says, “No, we only have plain.” I didn’t think it was a good joke but it was a helicopter joke. I didn’t understand that coast guard jokes. They were either really mean or really foul. So we’re not going to call you that.

Anthony:
Yeah. It’s probably because the other people are from other branches that are running those.

David:
Yeah. That’s that’s typical. That’s how they roll.

Anthony:
We don’t have filters.

Mindy:
That’s what I’ve learned through David.

Anthony:
He’s a Marine. He’s different.

Mindy:
Okay. Anthony, where can people find out more about you?

Anthony:
I am really active on Instagram. Tony Michael, R-E-I M-I-C-H-A-E-L. You can find me, I’m always on there. People jump in my DMs all the time, asking me about different stuff and I’m willing and able to help. Secondly, on Bigger Pockets at Anthony Michael, you can find me on there.

Mindy:
Awesome. We will include these links in our show notes, which could be found at biggerpockets.com/show321. Anthony, thank you so much for your time today. This was a lot of fun. I always enjoyed talking about real estate.

Anthony:
Thank you so much for having me guys.

David:
Thanks for being able to work on a short fuse. So it’s probably worth noting here that this morning I … or maybe it was last night, I texted Mindy. It was like, “Are we recording tomorrow? We didn’t have a guest.” And I was like, “Hang on. Let’s see if we can find someone,” and-

Anthony:
Yeah and I responded and you responded this morning and locked me in.

David:
I was like, “All right, cool. Are you good for like three hours from now?”

Anthony:
Double note, I actually have single lung pneumonia right now. So I’m fighting through that. I’m going to take a nap as soon as we unair.

David:
Well, we appreciate you.

Anthony:
Of course. Thanks for having me again.

Mindy:
Wonderful. We’ll talk to you soon. Bye Anthony.

Anthony:
Bye.

Mindy:
Okay, David, that was Anthony. That was super fun. What did you think of his story?

David:
Yeah, it was a good story. He’s doing some good things. He’s helping a lot of people on both … obviously, providing housing for people when he is flipping houses and Airbnb, but also, he does some hard money stuff for other investors, which helps them make ends meet on their deals. So a lot of good information in the show today.

Mindy:
The biggest money mistake really broke my heart, but I’m glad that it didn’t crush him and destroy him and wipe out his desire to continue investing. That guy is a horrible person. The guy who took his money and I hope that he gets diarrhea every day too. That’s my new curse. I hope you get diarrhea and stub your toe every day for the rest of your life. Really, there are so many ways to make money in real estate, through investing. You don’t have to be a skeezy scammer to steal somebody else’s money. That was awful.

David:
Yeah.

Mindy:
I’m glad he learned from it. This is Anthony’s story. We’re not going to dwell on that other guy anymore. This is Anthony’s story. He learned from it. He moved on and now, like you said, that has made him a better investor because he knows what to look for, and I don’t want to belittle his loss, $6,000 is $6,000, but it was only $6,000. It wasn’t $20,000. It wasn’t $50,000. So my advice to people who are listening, if you want to start investing in real estate and you get an idea to have a partnership, vet that partner. Don’t be afraid to walk away because if somebody needs an answer right away, it’s usually not for good.

David:
Absolutely.

Mindy:
Okay. David, should we get out of here?

David:
Yeah.

Mindy:
From episode 321 of the Bigger Pockets Money Podcast, he is David Pere and I am Mindy Jensen saying, got to chat, hot shot.