How to Retire Early with Fewer Rental Properties Than You Think

Dave:
How many doors do you own? People ask me this question all the time, you can hardly go to an investor meetup and avoid this type of question. It seems that many investors tout the amount of doors they have as the ultimate metric of success. But what if doors are just a Trojan horse? Is that actually a good way to measure your portfolio? Or are there better ways to measure your progress?

Dave:
Hey everyone, it’s Dave. Welcome to the BiggerPockets Real Estate Podcast, where we help you take control of your financial future through real estate. And on this week’s deep dish episode, we’re gonna be bringing on an investor and BiggerPockets author and my friend Chad Carson. Chad has been someone I’ve honestly looked up to for a really long time. You may know him as well from the BiggerPockets forums, his books or his platform, his book’s called The Small and Mighty Investor. And I brought Chad on because he perhaps more than any other investor I know, has a very unique perspective of what success means in real estate. And I think we can all learn a lot from Chad about his philosophy and how he implements it in his portfolio each and every day. In our conversation, we’re going to discuss what your goals should really be and how important it is to work backwards from those goals.

Dave:
We’re gonna talk about if door count really matters and how Chad actually measures his success. And lastly, we’ll also talk about what is enough when it comes to making money and building your portfolio. But make sure to stick around to the end because we’re also gonna do a very fun little segment we have drawn up. It’s called The Dish, and we’re gonna ask Chad some rapid fire questions that reveal a lot about his personality and his plans for the future of his portfolio. With that, let’s bring on Chad Carson. Chad, welcome back to the BiggerPockets Real Estate Podcast. Always good to see you. Thanks for being here.

Chad:
Thanks for having me, Dave. Good to see you. I’d

Dave:
Like to start our conversation sort of at the beginning. For people who aren’t familiar with you, can you tell us a little bit about how you got into investing in the first place?

Chad:
Yeah. I graduated from college and just jumped right into it, which is a little unusual, but I, I always had this kind of itch to be, have flexibility and freedom. And when I was in college, I was sort of going down the traditional, uh, I was a biology major, so I was going out like the medical school route. And I honestly thought I was just gonna take a break for a year or two before I went back in the real world. But once I tasted the idea of like being your own boss, working from home, I was out there, I was actually flipping houses at that point. I just, it was kinda like getting the genie outta the bottle. I was so intrigued by it and I liked the flexibility and the freedom that I was like, no, I’m not going back in that box. I’m just gonna keep doing it. So that’s last 21 years, that’s what I’ve been a, a full-time entrepreneur sometimes have been easy, sometimes have been hard, but that’s been my, my full-time gig.

Dave:
One of the reasons I’m so excited to have you here today, Chad, is because you have, what is, I don’t know if it’s unusual, but I’d say it’s at least a less talked about philosophy about real estate investing. So can you share your philosophy with us?

Chad:
Yeah, there’s actually a book in BiggerPockets <laugh> by that title. The the small, the the Smaller Mighty Investor is sort of the, the core philosophy and approach I had. And, and I have. And the idea is that you, you don’t need a thousand units, you don’t need 500 units. You don’t need to go big and kind of scale up all the way to the up the top of the ladder in order to have a lot of success in life. And which is really what my, my experience has been that that’s what I was all about because I started on that ladder. Like when I first, going back to the beginning, I was flipping houses. I was trying to get 50 houses a year that I flipped. I was trying to own hundreds and hundreds of apartment units, and we were on that route until 2007 when the great recession hit.

Chad:
And, uh, there was a combination of things, but the short version of that story is my business partner and I kinda had a reflection moment, kinda had a, you know, a moment where we’re like, what are we doing here? Like, what, why are we actually investing in real estate? And I, I just, we, we both wrote a list down my, my list included things like playing basketball in the middle of the day, traveling, living abroad. I was just got married that year. I would, if I had kids, I wanted be present with them. And the like, kinda the light bulb moment for me was a lot of the goals I had were not things like thousand units or even a, even a money goal. Like the, the, the goals I had were experiencing things in life, becoming a certain kind of person, having certain kind of relationships. And the money, the real estate was all a really good tool. Like it was a wonderful tool, but it wasn’t the main thing. And so it was the aha moment was like, we should probably re reverse engineer this. And I start with the life you wanna live and then build the simplest, smallest portfolio possible that could actually accomplish those life goals. I’m still an entrepreneur, but it’s, it’s kind of balancing that with some of those other dreams that I wrote on that piece of paper back in 2007.

Dave:
I love this philosophy because I, I totally agree. To me, real estate investing is a means to an end, right? It, it’s not, the point isn’t to be a real estate investor, the point is to invest in real estate so that you can do all the other things other than working that you really wanna do. Like I never woke up one day and I was like, oh, what I really want to do is manage tenants on a day-to-day basis. I was like, no, I wanna go skiing. I want, you know, I want to travel, I want to go to good restaurants. Those are things that I personally enjoy doing. And I think it’s so helpful to identify the reason why you’re doing things. In the beginning, we, we talk about a lot like identifying your why or setting your goals, but it’s, it seems to me that a lot of people skip that step. And I’m curious if you’ve seen the same thing and if you have any advice to people who might be struggling with figuring out what their goals are at the outset of their investing journey, or even if they’re active already.

Chad:
Yeah, I think there’s two problems I’ve seen. I’ve had a lot of conversations with people. I think one of those is we, as we get get to be adults, we get a little bit numbed by the process of being an adult. And I, I mean, if you ask a 16-year-old or a 14-year-old, I have a 13-year-old and 11-year-old right now. If you ask them like what do they’re, they’re, they’re constantly being creative about like, oh, I could do this in my life, I could do this, I could do this. Like, there’s just like hundreds of ideas that would excite them. But then you talk to a 40-year-old or 30 5-year-old, they’re like, uh, you know, like, I don’t even know what I would do if I had a lot of time. I mean, they, they, it’s kind of dormant, it’s down there, but it’s not like a realistic dream.

Chad:
It’s not, it’s not something practical. They’re like, Hey, if I gave you a 40 hours per week, a hundred percent free time, like what would you do? And it’s, it’s, it’s kind of, it’s, it’s kind of a blank stare a little bit, which is, I think that’s part of the problem. I think it’s like a problem of imagination and like rekindling that kind of excitement you had as a kid. I think that’s one problem. I think the other problem is a lack of role models, which I hope we can help solve that is say like, here’s some examples. And I was actually, I just read a biography. I don’t, have you heard about the story of Benjamin Franklin basically being early retired, like 41? You ever heard of that? No.

Dave:
<laugh>, all I hear is that Benjamin Franklin, like there’s a 50 50 chance of something God invented. Benjamin Franklin was the inventor.

Chad:
Exactly. But the, the story behind that is he was an entrepreneur. Like he, his, his family was not, he didn’t come from money. He basically moved from Boston to Philadelphia when he was 19 or something with like a dollar in his pocket, you know, and he, he, he was a, an entrepreneur who got into the printing business. He was very successful. He actually started syndications where he had like his Philadelphia printing business, his Savannah, Georgia printing business, like all over the country. He became the postmaster of the United States, which is equivalent I think today, like being Google, like he controlled all the distribution of, of media, like he was super successful. But then at 41 years old or so, he decided to like sell his business to his person who worked with him. He essentially, he had, he owned real estate as well, by the way, in Philadelphia.

Chad:
And he took this retirement to work on his science to become a public servant, to work in politics, to travel abroad and um, go to science meetings and like, so all those things you hear about Benjamin Franklin being a really well-rounded person being the diplomat who helped, you know, the revolutionary war. He did that because he was financially independent and he, he made this decision when in his early forties to say, I’ve got enough, like I have enough money. I could be the, the biggest mogul in the entire country. But I think he’s a, he’s one of many examples, role models who aren’t often the people like put on the pedestal who said, you know what, I’ve got enough money. I’m now going to use my energy, my effort, my contributions in other parts of my life, which are equally important, but they’re a lot harder to measure than saying I have a thousand units.

Dave:
We do have to take a quick break, but we have more from Chad Carson when we return.

Dave:
Welcome back to the BiggerPockets podcast. Let’s jump back in. I think it’s a, it’s a great point you constantly hear, especially in the age of, of social media, people who are trying to scale up. And don’t get me wrong, like if you’re one of those people who genuinely wants to run a giant business, like that’s totally fine. And I th I think the point here is that identify that as your goal. Like if you know that you’re the kind of person who wants to be a super successful business person and to run a massive enterprise and manage people and scale like good for you, great. You can adopt a very specific type of investing strategy that is aligned with that particular goal. I think what Chad is talking about, and correct me if I’m wrong and I I sort of agree with is I’d say most people who are in the BiggerPockets universe who get into real estate investing, that’s not the goal.

Dave:
The goal is more like, I wanna move up my retirement by 10 years, or I wanna spend more time traveling or becoming the postmaster general of the United States. <laugh>, I dunno what you wanna do, but like, I think most people view real estate as a means to an end. And, and I really commend that philosophy of, of just working backwards from what you want to, uh, accomplish in your life. But I’m curious ’cause I’ve shared a similar philosophy with people and honestly it’s not always received that well. I think a lot of people find it incorrect or that there’s something wrong with it. Have you experienced the same thing?

Chad:
Absolutely. Yeah. I, I think especially with my ambitious friends and I, and I want to like set the record straight. Like I know you and I, I speak for myself like I am very ambitious. Like I, I think it’s wonderful that humans aspire to become better, to be better. And I sort of, I get this like deflated conversation when I talk to people, they’re like, oh, what do, you’re in your forties or your thirties and you’re just gonna like, you know, sit on a beach and drink a ma thai and like do do that. It’s just so like, you’re not using your skills, you’re not using your energy. I love work. Why would I wanna give that up? And my, my response is, if you haven’t experienced it working without needing money, like just doing work for the love of it because you just wanna do it and you can walk away at any moment and the only reason you’re doing is because you enjoy it, because you enjoy the contribution it’s giving and because it is helping people, like it’s a totally, totally different ball game and there’s still ambition there. And go back to Benjamin Franklin, like, I don’t wanna beat that example, you know, are are you saying he was not ambitious? Like here’s the person who helped form the constitution of the United States. Here’s the person who negotiated peace between Britain and France and the United States. Here’s the person who invented that or discovered electricity, like really like <laugh>.

Dave:
He’s got a pretty good track record.

Chad:
Yeah. So I, I think for those of you there, those who are like the type A go-getter kind of people, it’s fine if you wanna build a thousand units, that’s cool. Like that’s, but just understand like is that the, is your motivation is that the, is your, because being an entrepreneur of a big company is a totally different skillset and it’s also a totally different cost to being a small and mighty entrepreneur. Like I love, I love the idea of owning 20 properties, 10 properties, having zero debt on them, or very little debt on them, having a lot of cash flow, a lot of flexibility. I work an average about two hours per week, some weeks more, some weeks less on my real estate investing now that it’s like in a stable place. Like I love the idea of being like a time billionaire and having enough money to do whatever I want.

Chad:
Whereas if I, if I were to be like, you know, a mini Elon Musk or something where you have this big corporation that’s gonna go bigger, bigger, bigger, like you are beholden, like it’s like your company is the Frankenstein, like, it, it runs your life and it might be exciting, it might be fun, you know, that’s, that’s for you. Cool. But just, I just wanna make people aware that that is a choice, that is a fork in the road. You can go, you can grow and be ambitious, get to a certain point in your real estate business. And then what I do, what I call like transitioning to a harvester phase where instead of like return on investment and growth being the number one metrics you measure, the metric is, is this decision I’m making going to increase the amount of free time I have? Is it gonna increase the amount of flexibility I have? Is it gonna increase my cash flow like that? That’s the question a harvester asks. And, but because of that they are, they are like protecting and guarding like crazy their time and their flexibility and then the money, you have a good base of money, but that’s, it’s not just maximizing return on investment and saying that’s the only way to measure success. Like no, that’s just one of several life measurements that we think are important.

Dave:
Absolutely love this. And I totally agree. I get really frustrated honestly when people, when I tell people my philosophy, ’cause I, my policy is I try and spend 20 hours or less a month on my real estate portfolio, not down to two hours a week. I’m, I’m, I’m aspiring to get to you Chad, but it’s still not that much. And I often get, you know, the the reaction that, oh, you’re thinking small or you’re not trying to grow. It’s like I, if, if anyone who knows me I think knows that if anything I work too much, it’s just that I choose not to work on real estate that much because I have other professional ambitions. Like I have written several books, I host this podcast, I work full time, I speak at events, I have a social media account where I teach people. Like those are things that I work and I’m ambitious about every single one of them. It’s just that I choose to do that with my time because I don’t have to spend 160 hours or 200 hours a month on my real estate portfolio. You’ve hit something Chad, that I really want to talk about, which is a metric of success. ’cause you said ROI, easy metric of success. You also alluded to earlier that talking about door counts, number of use, uh, of units is sort of this easy way to, to measure success if those aren’t the right ones. What is the right metric of success?

Chad:
Well, I mean you could start from a fi there. There’s financial measures and there’s life measures. I’ll start with the financial, you know, cashflow is, is a nice one. Um, I I think we work, I I think cashflow gets a lot of com. I know you talked a lot about it on the show, on your shows ultimately, like you wanna have enough cash flow to pay for your lifestyle like that, that is financial freedom still. But I think the big distinction that was helpful in my career was that, that that’s, that’s a measure when you get to a certain wealth point, when you get to a certain amount of equity, when you get to a certain amount of wealth, you then want to have the amount of cash flow to pay for your bills, to pay for your expenses. And so I think that like keeping track of your net worth, keeping track of your cash flow, both super important like you as you grow, that’s important.

Chad:
The thing, the other measures though that I really took seriously starting in 2007 when I realized I didn’t have any free time when I was working like 80 hours per week. And I’m like, what, what’s the path I’m on here is actually like measuring your time. Like how much time do you want in the end? Now I’m saying the end because anytime you start an entrepreneur venture, you have to invest a lot of time. Like there’s, there’s no getting around it. Real estate is a time intensive, uh, event on the front end. But it, I think it’s beautiful because real estate on the backend can be semi-passive. It can be like passive enough. Like you, you can, you can hire property managers, you can buy properties that have really long-term tenants who manage themselves in many cases. And so I think time, if you, if you’re not measuring time and how much time something spends takes then and you’re only measuring money, like what’s the point? Like time is how we measure our life. Like that’s what we spend doing stuff.

Dave:
Totally. I actually, in my more recent book, uh, start with strategy. I talk about this because everyone talks about having a budget, right? You, you know, financially you allocate X amount of dollars to your housing or to your car or to your gym or whatever it else. But when it comes to the very important and, you know, finite resource that we all have, which is time, people have no idea how they spend their time. It’s wild. And I introduced this idea ’cause I started doing it myself not that long ago, probably like five years ago of a time budget, which is just like, I wanna know where I’m spending my time and if it’s worthwhile. And that’s how I sort of came up with this idea of 20 hours a month on real estate because I, I sort of actually backed into it. It wasn’t the first thing I said.

Dave:
I wasn’t like, oh, I can, I wanna spend X amount of time on real estate and I have y amount of time left over for fun. I did it the exact opposite way. I was like, Hey, I work at BiggerPockets, it’s usually 50 or 60 hours a week. Again, I do that because I really like it and I’m willing to put in that amount of work. Then I spend x amount of time playing tennis and doing things with my wife and traveling. And what was left over at the end of the day was 20 hours a month for real estate. And I said, okay, that’s perfect. And so if you’re like, Chad and I focused on time as sort of the goal that you’re trying to accomplish, I would highly recommend figuring out a way to just categorize it, put it in a spreadsheet, write it down on a piece of paper, just track yourself for a week or a month and see how you spend time.

Dave:
And I promise you, one, you’ll be able to find more time for real estate investing if you’re sort of in that scale up phase. Because I often hear the opposite that people don’t have enough time. But if you track yourself and see all the free time you have, you might find more time for real estate. And two, you might also just realize that you’re spending too much time work or too much time on real estate. But one way or another, you should know how you’re allocating time and make decisions from a place of knowledge instead of just feeling overwhelmed and like you don’t have enough time for everything. I,

Chad:
I think that’s an amazing tool and I’ve tried to do that as well. And I would also add, when you start using time as your one, your kind of core measuring tool, you’ll also find that there’s all these decisions you make in your real estate investing business. And I’ll get, I’ll get real practical here. Like what type of property do I wanna buy? Do I wanna buy this property? Let’s say we had property a, which has a lot of cash flow potential, maybe it has a lot of wealth building potential, but it’s like a major fixer upper property and you have to spend a ton of time managing this project. Um, and it is probably gonna be a little more management intensive on the back end. Like maybe you’re buying like a fixer upper mobile home park. It’s gonna take a two or three year like turnaround time and then you have this other property, it’s like a single family house.

Chad:
It’s all, it’s like five or 10 years old. It’s relatively new, very low maintenance, it’s in a good location. Uh, it’s in the median price range. It’s not like a home run on the numbers, but this property is gonna be like, it is gonna attract the tenant who can pay well stay a long time. Like those are not the same assets. Like those are not it, you know, one of them might do better financially, like the first one maybe is a better financial deal deal in the long run. But when you are, if, if you are in a stage of your career where you have built enough wealth, where you start looking at time as a more important than just getting a higher return on investment, you might start choosing to own some of these higher quality, lower hassle properties that give you not only more time, but I I didn’t mention this earlier, peace of mind as well.

Chad:
Like the the hours, you’re not working on real estate if you have, if you only have constantly having problems or somebody, your property manager calling you all the time and always having hassles and like, that’s not what we’re going for here. We’re having, we wanna have a lot of time, we wanna have peace of mind, which means having lower risk, higher quality properties. And I’ve, I’ve done both, like I’ve owned the, like the higher risk, higher time properties and the last 7, 8, 9 years of my career have been kind of pruning those off almost like a gardener kind of prunes off the, the bad branches. Like we’ve been looking at our portfolio like this, this tree, this, this orchard. And then we prune off the, the stuff that’s less optimal from a time standpoint, less optimal financially also less, more risky like the, the riskier properties, the riskier debt, like we’ve reduced our debt and all of that like is in the service of these different measurements that we’re talking about of time, of peace of mind, but also, you know, money as well. But you, you have to find like sometimes there’s trade offs between those things.

Dave:
A hundred percent. Chad, you are speaking my language and I’m sitting over here laughing because the data analyst in me is like, how do I calculate peace of mind? I’m like trying to come up with a number. I think I need for my, my tie budget. I need to like add a line that’s like, I spend 20 hours a month on real estate, but I actually spend another 15 hours just sitting around worrying about real estate <laugh>. And that’s like a whole other thing that I need to, to quantify. But it’s so true. And I I think this is something you recognize sort of as you scale up. Because the truth is like when you’re first getting started, you probably should just be hustling. That’s at least my my opinion. Like you should be managing yourself. You should try and fix things yourself, but as you grow, I think it’s really important to not continuing to do that unless you wanna do that.

Dave:
Like make sure that, that that’s the right strategy for you. And I love what you said about deal selection and sort of, uh, of creating it. And I, you know, everyone talks about quote unquote finding deals. I actually like to talk about the context of what I call, uh, designing deals because I think what this calling it finding deals make sort of makes sense, but I think where it fails is that like you just walk across this property and it is what it is and like that’s you take it or leave it. But I think the reality is that if you have this better context of what you’re trying to accomplish, you can go out and create the exact types of deals that are right for you. I’ll just give you an example of, I, I brought a property recently that had about break even cashflow.

Dave:
It needs a cosmetic rehab, probably 20 grand, it’s probably gonna take three months. I need to get a vacant for a little while, maybe, you know, 30 grand, something like that. And when I bought it, I was like, you know what, I, I shouldn’t buy this deal because I don’t have the bandwidth to do the renovation right now. ’cause when I looked at how much time I was putting into my real estate portfolio, I was already at like 16 or 17 hours, right? And so I don’t have enough time to manage that, but I still bought the deal. And you know what I thought, you know what, I’m just gonna buy it and I’m gonna sit on it until this other rehab I’m doing is done. Is it gonna be the most optimal way to spend my money and time? No, but it’s a really high quality deal and I’ll just sit on it for three months. And it was still generating cash flow, it was just break even. And now this has just happened. I finished one rehab and I’ll go into the other one and I’m just going to keep doing that where I have one active project going on at a time and I’m not gonna scale up till five because I wanna hang out and do the other stuff that I want to do in my life instead of managing two rehabs.

Chad:
Well, Dave, you should be building a system and hiring a property or hiring a manager to manage the managers and building layers into your, because, because you haven’t built a sy enough systems, you know, come on now. <laugh>. Yeah, I

Dave:
<laugh> I mean there’s truth to that, like if you wanna get to that level, but I don’t, to be honest, like I have a good relationship with my property manager. I like having one person to talk to and because I’m good at measuring my progress, I know that I’m at my goal or well ahead of my goal and so I don’t need to do it. Like I don’t need more layers. That’s just like if you’re chasing some goal that you haven’t set, maybe you follow that. But I I I think both of us are of a shared mindset here.

Chad:
Exactly. Yeah. I think it’s, it’s, and knowing enough, and I, I’ll I’ll also add to some more quantitative examples, like to, to be able to know when you’re crossing this finish line we’re talking about, like, I, I a hundred percent agree like early in your career, hustle, hustle, hustle, buy a bunch of properties, it’s messy. You’re not gonna be able to measure your time that well, you just gotta get in the game. But I think, I think who I’m, who we’re, I think we’re talking to a lot are the people who are already in the game or people who are new, but they’re trying to kind of think about where they’re trying to go with their career. There, there comes a point like five or 10 years into your career, maybe a little bit longer when you’re gonna have to start making these decisions about what success looks like.

Chad:
And if you have a number, like for example, I always encourage people to have like a, a certain number of rental properties that is their rough goal. It doesn’t have to be exact, but like maybe you said, I I wanna own 10 rental properties and I wanna own them eventually free and clear of debt. Like that’d be a super, super simple goal. And each one, each one that’s gonna rent for, you know, a thousand, a couple thousand bucks, 1800 bucks, it’s gonna net a thousand bucks per month in rent. After all, all my expenses are paid like taxes, insurance, maintenance management, capital expenses. Like a thousand bucks a month times 10 properties would be $10,000 per month or $120,000 per year. And if you had, if you had a goal like that, if you worked it backwards and say, all right, I’m not there yet, but like if I could get there, then, you know, you wrote a book on this, on the strategy and got a big picture.

Chad:
Like if you work it backwards from that overall strategy, then you’ll have something guiding your day-to-day efforts. All that hustle you’re doing will be kind of moving roughly towards this goal. And so let’s say you, for example, get to, oh, well I’ve got 15 properties now, 16 properties and I just bought this extra deal like Dave did. You know, you now know how that fits into your overall strategy. And it might be that, okay, well I only need 10 properties, that’s kind of where I wanna be. I could start picking my four or five properties that are not optimal and I could sell those, I could kind of prune those off or I could do something different. But the the point is like if you, I think a lot of us just kind of, we’re like a sailboat without a compass. We’re just kind of going here, we’re going there.

Chad:
We have this rough idea of some big goal and the goal’s bigger and bigger and bigger. Instead of having like, here’s a specific place I wanna get to and then let’s get there, let’s get, let’s get a certain amount of income, a certain amount of, number of properties, and then if you wanna grow bigger from there, awesome, but that’s a really good place to be. $10,000 a month, $120,000 per year, peace of mind, lots of time. I imagine a lot of this once you get there are gonna be like, okay, what else do I wanna do? Like I wanna, I wanna figure out some other things to do with my life.

Dave:
I, I think that’s, that’s so wise and it just, it makes so much sense. I like your, your your analogy of, uh, you know, sailing without a compass, right? It’s like, it’s so easy to get overwhelmed or distracted or even put yourself in unnecessarily risky situations if you don’t know where you wanna go because there are a lot of cool ways to invest in real estate. You know, like <laugh>, I get presented with ideas and opportunities to flip a house, to do a syndication, to get into industrial. Like that is all cool. And it can be so overwhelming if you are actually gonna consider each and every opportunity that’s out there. There are 140 million properties in the United States, like you can’t go after all of them. So it, it’s just a process of refinement and focus. We’ve talked about a bunch of different metrics of success, time, peace of mind, you know, a specific financial goal.

Dave:
Why, you know, you, you mentioned sort of like this idea of inertia, but like why is it, do you think that people focus on this idea of door count? Because to me, like I just don’t know if it actually tells you anything or if it’s useful. And actually we were talking about my book earlier, but one of the main reasons I wrote that book is at a conference, someone came up to me and they’re like, I’m just a beginner. I have 37 units. And I was, what, what has gone on in this industry where someone with 37 units thinks they’re a beginner and is apologizing to me to it for it? So tell me, Chad, like do you use door count as a metric of success? Uh, and what value do you think it has?

Chad:
No. Well, I mean, I I think it’s tempting. I mean, it, it is, it’s an easy measurement. It’s like, you know, it’s lot easier to measure that than cashflow. ’cause cashflow, you gotta actually like measure your expenses. It’s just, it’s kind of, I think all of us, myself included are it, it’s sometimes we wanna impress our family, sometimes we wanna impress our friends. Hey, look at us. I’ve grown up, I’ve gotten, I’ve done bigger. And that’s natural. Like there’s nothing I think initially wrong with that. But ultimately, if, if you, in the quiet of your, if sitting at your desk by yourself in the morning, in the evening, like what are the things that really mattered to you? And unit count doesn’t matter. Like I’ve, I had known, I’ve had friends, acquaintances who went outta business who had thousands of units and having more and more and more, it doesn’t necessarily mean you’re gonna go outta business.

Chad:
I know there’s lots of successful people who do that, but there, there’s a correlation, like there’s a connection between the, the, the pace that you grow and the size that you grow and the amount of risk you have to take. Like you have to, you have to usually borrow more money to do that. You usually have to. And if you don’t borrow money, you gotta bring in hundreds and hundreds of partners and talk about lack of peace of mind. Like that to me is like my nightmare of having, having like hundreds and hundreds of people asking me every day, how’s your deal going? How’s this going? How’s my money? Like that’s, that, that’s cool. You can get really rich doing that. But if, if your goal is peace of mind, I know people who have met traveling, I know you probably have two who have like five properties, 10 properties and two properties. And they are like the mo they, they’re not gonna make the front page of the paper. They’re not gonna make the, you know, they’re, they’re, they get a lot of attention, but they’re living their life. They’re doing amazing things.

Dave:
But they’re on vacation <laugh>, right?

Chad:
Yeah, they’re on vacation. They’re, they’re, they’re doing amazing things. And so I, I think, I think that door count is easy to measure, but it’s not the, it’s not the ultimate measure. It goes back to like, which one is the tool that you’re trying to get to, which is the thing that really matters.

Dave:
Yeah, I, I sort of kicked the hornet’s nest in the BiggerPockets forums a couple weeks ago with this, ’cause I was saying that door count is just a vanity metric. It’s just like made to feed people’s egos. And that might have been a little too strong. There is some measure, there is some value to it, but I think that the point I was trying to make was that it’s not a measurement of quality, right? Like you could, I could get up to a hundred units quickly and buy a lot of crap, you know, <laugh>. But like, I don’t know if that’s gonna do me anything. And I also think like in addition to it not being necessarily helpful, I think there is a scenario where it’s actually detrimental and can actually be negative to your progress. Because if you’re focusing on that, uh, that on door count, you might prioritize buying a 10 unit that is risky and sort of a thin deal over a two unit that’s rock solid because there’s a, there’s a saying in business that I love.

Dave:
It’s what gets measured is what gets done, right? You say that you give someone an incentive to sell, uh, a very specific, you know, widget. They’re gonna sell only that widget and not the other ones. What get measures is what gets done. And so if you measure door count, you’re gonna be focused on getting the most number of units instead of getting the most cash though, or being the most efficient with your money. And so there’s nothing wrong, per se, with keeping track of your units. Everyone does that. There’s nothing wrong with talking about it, but I think it’s, it goes back to what Chad and I were talking about earlier. It’s like, make sure you’re also measuring the thing that actually matters to you and not just the one that people at real estate meetups like to talk about.

Chad:
I think you open something up. I’m gonna get to my, my, my high horse briefly about this because ano another thing that’s, uh, this, that this kinda my pet peeve is that success in real estate may means going to bigger properties. And one, one of my mentors is a guy named John Shaw down in Sarasota, Florida. He has tried all sorts of different commercial properties. He’s been investing for five decades, almost six decades now. And he, he comes back to the single family house and he always says, that’s my favorite investment because in terms of like long-term growth, cash flow, once you probably pay the properties off peace of mind, all these things we’re talking about, like kinda this combination of financial and like quality and life goals. Like for him, a single family house is like the perfect investment. It’s just, it’s plentiful. It’s easy to understand.

Chad:
And yet, like, I just think there’s this narrative that says, you know, single family houses, it’s kind of for rookies. Like, you know, once you, once you’re not a rookie, then you can go buy a duplex. And then once you’re not a, you know, you kind of intermediate, then you can buy, start getting into multi-family and then commercial and then it’s just, that’s not true. Like it’s, it is not true at all because they, they’re all, they all have positives and negatives. And for, for those of us who, who do have this goal of, of kind of keeping it small and keeping it all like this is ours. Like we’re, we’re not having to bring partners and doing all this single family houses, duplexes, triplexes, fourplexes, that is your playground. Like that, that is where you wanna be. You can do everything you wanna do.

Chad:
You can accomplish every single one of your financial goals with these little bitty properties if you just do them well. Like, you don’t have to, you don’t have to grow up into these big properties. And so I think that’s, it’s kind of closely connected to the vanity metric of number of units is that you’re successful when you go big and have multi-unit properties multi, i, I own some multifamily. I have a 12 unit. I’ve got a property we bought was 28 units, so I’ve grown up into that. But I love my little single family houses and they are, they’re the reason I spend as little time as I do, like my, I have property managers who manage my student rental, multifamily properties. I self-manage a bunch of single family houses with very little time. It’s, it’s, it’s totally a different game. And so when you grow up as a real, real, real estate investor, or even if you’re a brand new, like you can stick with those little small properties and work it backwards and accomplish all of your goals.

Dave:
Yeah, I, I chit Chad, I I I’m with you on that one. I, i, I totally believe in single family homes. There’s, you know, there’s trade offs, like you said, with everything. Great tenants usually who stay longer, there’s less wear and tear. There’s all sorts of good things. But I guess it just, it goes back to what we were saying, this like philosophy of getting bigger and scaling, um, is what people seem to value. But I per, this is maybe just my personal, uh, you know, philosophy that I’m, I’m getting on my soapbox about is like, I think we need to start celebrating people who know what’s enough and just get there, you know, but like, it’s not sexy or cool to go on social media and be like, you know what? I got to my goal and stopped <laugh>. You know, so like, how do we make it cool? Like, that’s what I, I always struggle with is like, how do you make it a goal for people to just set a realistic but ambitious goal, get there and then be happy, <laugh>. Like, what do you gotta do for that? I

Chad:
Know, I, I’m, I’m looking as well, but so far the, the people who motivate me the most outside of real estate are people who are craftsmen or craftswomen of like all sorts of different types, like artists and people who are really good at making furniture and people who are, you know, a mechanic who are just really good at their job. Like, I find that to be inspiring because it’s, it’s less about like this result. I think, I think it’s easy as an entrepreneur, entrepreneur to be very result oriented as opposed to being like, how do you wanna spend your days and what kind of activities do you do? And so we can celebrate it. Like, hey, this person is, has made, has five properties, has a lot of income coming in, and they’re also a kindergarten teacher who loves helping young kids transition into school.

Chad:
Or this person has six rental properties and they’re a firefighter. You know, they don’t get paid that much, but they do a lot of stuff. Like, I have this belief that if, and one of the reasons I try to teach and go on podcast and help is like, there’s a lot of people who are doing some other job making money on something that’s not, doesn’t really feed their soul when they should be a teacher. They should be a preacher, they should be like a podcaster. They should be writing a book. They should be, you know, helping out kids. They should be starting a nonprofit. And I, I feel like we naturally like see value in that and we celebrate those people. And if we could connect financial freedom to these other things that people aspire to, that, that matter to them, then I, I think then it’s kind of cool is like, we can, we can show the, the quantification of money and financial freedom with a kind of bigger picture. Like, hey, we, we as entrepreneurs can go out and like, make a difference in society. If we had enough time, if we had enough peace of mind, if we had enough flexibility instead of just grinding our entire lives, making more and more and more and more money.

Dave:
Oh man, I, I absolutely love that and could not agree more. And again, I, I’m not knocking on people who want to grow up and, you know, build a bigger and bigger business, but I think spend the thinking about how you wanna spend your days is such good advice. And I hadn’t thought about this, but you know, I think maybe six months ago, my wife and I were just talking about goals and what we wanted to accomplish and I asked her like, what is your dream day? Like, what do you want? Like, what does it look like? And my wife is ambitious too. She doesn’t wanna sit on the beach like maybe, you know, a couple times a year. But, you know, she described what she wanted to do professionally, what would have meaning for her. And a couple of weeks ago she came home like so excited and told me that she had her dream day, like she experienced it.

Dave:
And the excitement she felt from that was way more than any bonus she’s ever received at her job. Or, you know, we had just done a flip and made a, a pretty good amount of money on investing, uh, passively in a flip. You know, like the, the reward and value that she got from having this dream day, which is fueled by the fact that we have financial freedom, you know, was more excitement than she got from pretty much anything else in her other life. And like, it’s just really eye-opening to see that, like, it’s not about getting a check or anything else, it’s just finding the right way to spend your days. And it’s, it’s so much more rewarding than just pursuing a number, like the number of units in your portfolio. We have to take one final break, but stick around when we get back. We’re gonna do some rapid fire questions with Chad in our dish segment. Welcome back to the show. All right, Chad. Well we, we can get off our soap boxes now, but this is a lot of fun.

Chad:
I love, yeah, thank you. Thank you for letting me do that. I had to get that off my chest. Yes,

Dave:
<laugh>, no man, I, I really think it’s important to take a step back. ’cause we do talk a lot in the show about strategy and tactics and everything, but like the why you do it and what you’re trying to do is as important as anything else. Uh, it’s gonna help you make those tactical decisions and strategic decisions as we’ve been talking about. So thanks for, for getting philosophical for here, uh, with me today. Before we get out of here, this, this new format we’re doing for the show called The Deep Dish. We’ve gone deep into the idea of investing philosophy and metrics of success, and now we turn to the dish part where Chad, we’re gonna ask you some rapid fire questions about yourself. It could be about real estate, it could be about life, but we wanna know a little bit more about you. So the first question is, I know you travel a lot. We recently met up in Europe, which was a lot of fun. What’s the coolest place you’ve ever traveled to?

Chad:
Oh man, that’s a tough one, but, uh, Peru kind of comes to mind for me. Like I, I spent some time with my wife before we had kids in Peru in 2009, and I was just enamored with the food, with the people, the culture, the music, just the history of the place. Peru, Peru’s, just one of those really cool places, although I had a hard, you know, lots of places in South America draw me Europe as well. Um, but that’s, and I have Asia on my mind as well. I’d really like to visit some places in like Vietnam and Asia, but Peru for now is top of my list.

Dave:
Awesome. Very cool. Second question, what, how big is too big for a real estate portfolio?

Chad:
I think it’s too big when you’re taking more risk than you need to, to, for the benefit that you’re getting. You’ve passed your goal, your, your net worth or your cash flow goal has been hit and you’re still taking risk that you don’t need to take with, I think that’s the time when you harvest, that’s the time when you reduce your risk. I’m trying to remember who said this quote, but there’s basically an idea that once you’ve won the game, like why don’t keep playing like in football, like I I, I play football in college, like in, in the fourth quarter, if you’ve won the game, the quarterback takes a knee. Like they, they don’t, they don’t keep, or, or at a minimum, even if they’re not taking a knee, they don’t like try to throw Hail Mary. It’s like they don’t try to go for it. They, they make safe passes. They do, they’re a little bit more conservative. And, and so I think if you’re not being a little bit more conservative once you’ve hit your goal, I think you’re, you’re getting too big.

Dave:
I love it. All right. Third question, and this is, this is a good one. I don’t, I’m excited to ask you this. Do you ever get fomo or fear of missing out talking to other investors who have bigger portfolios than you?

Chad:
Yeah, of course. Like I’m a human being and so I, I, especially somebody who’s on social media who has my own platform, I, I definitely, and I’m an author at BiggerPockets, so there, there’s definitely some of that in my worst moments. It, it can get to me in my best moments though, I think I, I go back to what I tried to talk about earlier of being a craftsperson. Like I, I really have leaned into this idea that being excellent at what you do, like you could be an excellent real estate investor, and I aspire to be an excellent real estate investor. I aspire to treat my tenants as well as I can. I aspire to give them the best property possible. I aspire to have the best spreadsheets possible. I aspire to have, you know, the properties that are quality as high quality as possible. Like it’s, it’s hard to measure like quality and craft and compare that to size. And so I, I think if you, if you aspire to be a craftsperson and to do things with excellence and quality, there’s the, there, there’s, you’re never satisfied. Like you can always have that ambition, and yet you can only have five properties and six properties and still aspire to do that. So I think that’s, that’s like my, my better moment, my worst moments. Yeah. I’m like, ah, I could do that. Like

Dave:
<laugh>. Dude, I feel that so strongly <laugh>. I know sometimes, you know, we’re, we’ve platform. I talked to very impressive investors all the time. I’m like, man, that’s super cool, but their goals are just different than mine. They wanna grow a huge thing and they’ve done that and that good for them. They’ve identified a goal and accomplished it. My goal is just different. And now

Chad:
The other thing I, I like having other people. Like, so one thing that inspires me, there might be thousands of people listening to this. Millions of people maybe, and maybe each of them owns five properties. And collectively we could, we could do some really big things as a group and not just like one person with a small group of people making a lot of money, like lots and lots of people making money. So the whole mission of BiggerPockets and my mission as well inspires me beyond just my personal number of units.

Dave:
All right. Last question here, Chad. Is there a type of investment you would never touch?

Chad:
Never say never. Um, I’ve shied away from, I’ve shied away from syndications. I haven’t done those and I, I’m not opposed to ’em, but I’ve decided, I had a fork in the road a few years ago where I, I read a bunch of like, really thick syndication packages and I was pretty sure I was gonna invest in some of them and they were probably good investments. Like I, I don’t know, but I just decided that as a small and mighty investor, I felt more comfortable investing in a different way and directly in properties. So like, I just, I like to own the property directly, or if I’m gonna be the passive investor, I would rather be like a small partner. Like, so, like I, I, we, we, we did a deal with a, with a, a friend in Kalispell, Montana where we bought an eight unit, uh, boutique hotel together.

Chad:
We, he’s the general partner. My business partner and I funded the deal with our money. There’s not any other partners. There’s not a bunch of other people. And so like, I like keeping it small, even as a passive partner, just keep it small and keep it simple. Just to me having like a hundred partners and having to deal with all that. And also just, I didn’t understand the risk of that. Like, I understand simple single family, small multifamily properties, I understand my risk. And with, with some of the syndication deals, I just don’t, uh, even having invested for 21 years, there’s a lot of things I didn’t know, a lot of risks that I didn’t understand. And so for me that was kinda a no-go.

Dave:
All right. Well Chad, thank you so much for, for joining us today. This has been a really fun conversation. I really appreciate the time. If you want to get Chad’s book, you can go to biggerpockets.com/do less. I love that url by the way, <laugh>. But uh, definitely check that out. You can also find Chad on BiggerPockets or we will link to his other contact information in the show notes below. Thank you all so much for listening. We appreciate it. For BiggerPockets, I’m Dave Meyer and we’ll see you for another episode of the BiggerPockets podcast in just two days.