BiggerPockets Podcast 139 with Fat Tony Transcript

Link to show: BP Podcast 139: Getting Started as a Businessman, Not a Handyman with Fat Tony

Josh: This is the BiggerPockets Podcast, Show 139.

Fat Tony: I've figured I'm a businessman, not a handyman and I'm okay with that.

You’re listening to BiggerPockets Radio -- simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place.

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Josh: What's going on everybody? This is Josh Dorkin, host of the BiggerPockets Podcast here with my good friend, Mr. Brandon Turner. Hey, Brandon.

Brandon: How are you doing, Josh?

Josh: I'm great, man. I'm great. Good. How about yourself?

Brandon: I'm doing pretty good. I'm moving in the next couple of weeks, which is exciting which you just found out apparently because I never told you.

Josh: Yes. Yes. Nice house. Moving on up to the East side.

Brandon: Yes. Moving two miles away but now I'll have a view and a hot tub.

Josh: Yes, man.

Brandon: I bought this house. I can kind of explain. A friend of mine...it's kind of sad. He went through a divorce a few years ago back, three years ago, whatever. At the time I talked to him about his house obviously because I'm a real estate guy and he had some questions.

We talked about it. It was way out of my price range. I just didn't even envision that I could ever live there. We're talking $280,000. This is like $1,000,000 land. It was just out of my price range.

Anyway, I took a drive one day with my wife a month ago now. I noticed it was listed with a real estate agent. I hadn't talked to him since that time a few years ago. He's happy to get out of it. I got a great deal on it. I'm going to do a little live and flip -- live there for a couple of years, fix it up, hopefully make myself $100,000 by flipping it. That's the goal.

Josh: There you go. Awesome. Awesome. It's beautiful.

Brandon: Thanks. It's pretty cool. I'm doing an FHA loan from house hack and essentially, the live and flip version. I'm going to be in this entire thing for under $15,000. It doesn't need much repairs. It just needs updating. Yes, it's going to be an awesome live and flip. I'm kind of combining investment with my own advice that I give in the book on “Investing in Real Estate with No (or Low Money) Down.”

Josh: Wow! Look at that. Nice. Nice, man. That's great. Cool. Congratulations on that.

Brandon: Thank you.

Josh: Cool. Yes. I don't really care.

Brandon: Fine. I want to tell you anyway.

Josh: I care. Come on. Come on. All right, man. Let's get in to this thing. Today, we've got a pretty cool interview. It's a pretty interesting newbie show. For those of you who are listening, there's definitely a lot of inspiration for the new guy.

Before we got there, big thanks to all of our listeners. We definitely appreciate you guys. We hope you spread the word and tell everybody about the BiggerPockets Podcast. We also ask if you've got a minute or two to jump on to iTunes or Stitch or SoundCloud and leave us a rating review. iTunes is probably the most important place to go and do it. I'm going to share a little review from one of our users really quickly.

This is from DSARV23 and it's, "I'm so glad I found this podcast. I'm 25 and married, work as a security guard three and a half days a week on night shift Wednesday through Saturday. I'll be honest. I only have a diploma under my belt as far as education but I have a ton of drive to learn and plenty of work ethic to back it.”

“Recently started getting in to the learning curve of REI within the past month. This podcast has put a lot in to perspective especially not only how to build and start, how to maintain things and keep growing. This is definitely going to be my go-to place when I have questions and concerns in this new endeavor. Thank you BiggerPockets. I've listened to the first few episodes and can't wait to listen to the rest and catch up."

Awesome. Awesome. Awesome.

Cool. Let's get to today's sponsor; why don't we?

Brandon: Let's do it. B2R Finance is a new commercial lender offering loans specifically for rental investors. B2R Finance can help you unlock equity from existing properties so you can get cash out now. Cash out financing allows you to leverage your current investments to help you grow your existing portfolio.

B2R is and asset-based lender, which means your loan is based on your property's appraised value and cash flow, not your personal debt to income and that is huge. It opens up a lot of opportunities previously not available to rental investors. If you need a loan, call B2R Finance at 855-910-0227 or visit b2rfinance.com today.

All right. All right. All right. Thank you to our sponsors always. If anybody else has ever listened to this and they're interested in sponsoring an episode of BiggerPockets Podcast, e-mail scott@BiggerPockets.com. Scott is our head of advertising. Talk to scott@BiggerPockets.com and maybe you can be advertising on the show.

Josh: There you go.

Brandon: Let's do our world-famous Quick Tip. All right. Our Quick Tip today is...you may have seen this already. We may even have talked about it but I wanted to bring it up again. We have this new thing called dashboard boxes.

If you go to your BiggerPockets account and go to your dashboard, quick little home icon on the left corner of the navigation bar, you go to your dashboard. Down below is a list of boxes of things that you can do that we recommend you do next.

It might be: check out this cool thing on the site or can you give us some more information about this or what are you interested in, take a quick survey. These things are designed to help you get more out of BP.

Go check out your dashboard boxes. Every couple of weeks there are new boxes appearing that are designed to help you and help us present and bring better things to you.

Josh: It's all about personalizing your own experience and everybody is going to have different boxes based upon the information they tell us. Yes, definitely do that.

Brandon: Cool. All right. Let's get in this thing. Today's guest...

Josh: Today's guest. Yes.

Brandon: Today's guest is Fat Tony. You'll hear why we call him Fat Tony, why he calls himself Fat Tony later on. Fat Tony is a real estate investor, lives in the Los Angeles area, which as most of you guys know, prices can be ridiculous but he's figured out a way to make it work and actually invest in real estate at a distance.

The thing that I love about this show is his adherence to lifestyle. He doesn't want to be a handyman. He doesn't want to do his own work. He doesn't want to be trapped by his rental properties. He's figured out a way to make it work without being trapped. I love that.

Josh: That's great. All right. Let's bring him on. All right. Fat Tony. Welcome to the show, man. Let's just open up with that. Fat Tony, what on earth is that about?

Fat Tony: Yes. Good question. Get asked it a lot, believe it or not. In 9th grade, I was about 15 years old. My friends thought it would be funny to give me a Mafia name. My real name is Adam Christopher Taylor. They said that's just a dorky white kid name, which is exactly what I was.

They're like, "Yes. Let's give you a tough Mafia name. It will be funny." Now, more than half my life later, it stuck around.

Brandon: That's awesome.

Josh: In your professional life, everything across the board you are Fat Tony?

Fat Tony: That's it. Yes. I worked at a big magazine for about five and a half years. In the masthead every month, just that "Fat Tony" and that's my name.

Josh: I love it. I love it.

Brandon: For those people who are not watching this on YouTube, sometimes we put our episodes on YouTube, but if you're watching this on the actual or listening on the podcast, you can't see but Fat Tony is not actually an overweight guy.

You're pretty in shape. I saw a picture of you in Hawaii I think on your Instagram. I think it looks like Hawaii because you're doing the hang loose sign.

Fat Tony: I live in Southern California.

Brandon: Oh, that's what it was. Anyway, you look a little bit more in shape than a guy named Fat Tony I'd probably imagine. You do CrossFit. Is that your thing?

Fat Tony: I do. Yes. I've been riding BMX bikes my whole life. Then, about two and a half years ago, I found this thing called CrossFit that a bunch of the pro riders had started doing. It was improving their riding and everything. It got to the point where I was like, "All right. Cool. Let me try this out. If I can become better on my bike and be able to [Inaudible][08:00] or just last longer endurance-wise then I'm all for it."

I started doing it. Within a couple of months, I got to the point where I just loved it so much I was afraid to ride my bike. If I crash, I wouldn't be able to go and train in the gym. Now, I drank the Kool-Aid as they say and I'm pretty hooked to it.

Josh: Yes. There's definitely an obsession with that CrossFit stuff, huh?

Fat Tony: Yes, there really is. I've heard people talk about it's kind of the quickest way to reach the runner's high, just those endorphins when you're working out and sweating hard and stuff. I think there are other things that are worse in this life to be addicted to if you're going to have a vice like that.

Josh: Oh, yes. Oh, yes. For sure. Cool, man. Let's get in to this real estate thing. You do some real estate investing. How did you get into that? Why did you get into that?

Fat Tony: The very beginning of the story would be that I lived in small town Louisiana my whole life, had a very kind of middle-class upbringing, whatever. Moved to Southern California right after college to get a job working for a magazine as I mentioned.

The mindset shift that had taken place at that point was pretty big. I got to California and I was on a small salary. I remember being at this car wash and I had this little newspaper type booklets of houses nearby, whatever. I went to have my car washed.

I'm looking at this booklet. I'm just thinking, "How in the hell do people afford these houses in Southern California?" Where I'm from, a house doesn’t cost this much. I'm just like, "Man, I make like $33,000 a year. How am I every going to do this?"

A good friend of mine who you actually recently interviewed, his name is Terry Adams. He was on episode 134 of your show. He and another buddy of ours recommended this book called "Secrets of the Millionaire Mind." I was kind of going through a tough breakup at the time where I just needed kind of a big shift in my life.

I read this book. It just really changed my perspective, changed my mindset, and in turn changed my life. I went from "How the hell do you ever afford a house in California?" to "Okay. How am I going to afford a house in California? There's got to be a way. Other people are doing it. I just need to figure out the way."

That's kind of where it started was just shifting my mindset; again, a big, big change for me.

Josh: The distinction there was "How the hell? It’s never going to happen" to "How can I do it, how do I figure it out?"

Fat Tony: Exactly.

Josh: It was this total "It's impossible" to "Now I just have to solve the problem." Is that right?

Fat Tony: That's it. Yes.

Josh: Cool. All right. How did that happen? How did you solve it? What did you do? What were the kind of the steps you took? Tell us how it got going.

Fat Tony: After reading "Secrets of the Millionaire Mind," which if anybody doesn't know, it's a book by T. HarvEker. I recommend it to everybody I ever talk to. Like I said it did change my life. After I read that book, I started to kind of ramp up the amount of freelance work that I was doing while I was working full-time at the magazine. I just got into really hardcore managing my money, saving my money, and just bouncing it all out.

I knew that based off my salary and based off the fact that I've lived as a poor kid the previous years in college, whatever, I didn't have a lot of overhead. All the money that I was making on the side outside my full-time job I would just put it into savings, put it into savings. I saved for probably about two and a half years or so.

Once I felt I got to the point where I could potentially start looking for a place and maybe put a downpayment on using FHA loans or whatever if I needed to...during that time I also read other books like "Rich Dad Poor Dad" and kind of continued my education and stuff.

At that point, I was just like, "Okay. I've saved enough money over the last couple of years. I've learned enough to feel like I'm ready to take this step. Let's go ahead and do this." My original thing was I was going to try to get a duplex here in California so that I can live on one side and rent out the other; obviously, a very common practice.

After many, many months of looking, that just didn't seem realistic anymore. I was looking at places that were a little bit out of my budget. Even those were still just in terrible shape. They needed too much work.

It was a good learning process nonetheless; going to these places, seeing how much work they were going to need, realizing that I wasn't capable of doing that kind of work, and I wasn't willing to invest the time and resources in to learning it.

Then, I started looking for just a house or a condo or something I can live in myself. Ended up finding a great short sale. This was in 2010 so the market was still really kind of rock bottom at this point. The kind I ended up getting was $180,000, three blocks from the beach in Long Beach. It had previously sold in 2006 for $350,000.

The short sale process kind of taught me a lot as well and it sort of continued my real estate education, if you will. It took I think close to 11 months from the time I put in my initial offer until that time I got the keys. I had a roommate living with me. It's a two-bedroom, two-bathroom place and I had a roommate who was paying more than half the mortgage so got out of that bit as well.

Brandon: Let me ask you about the condo a little bit. This is something that a lot of our listeners are...probably the live in expensive areas like LA or San Francisco, whatever. I get that question fairly often: "Should I go buy a condo to go live in something?" You did.

A lot of times investors go "Don't do it because of HOA's or whatever." It sounds like you did it and we can hear the rest of that story. Do you recommend that for people who are in those kinds of markets? Should they look in to a condo?

Fat Tony: Maybe I was a little bit naive at that time since I didn't know a lot about it. I just knew that I have looked at so many places and so many of them were rundown and in questionable areas because this is Long Beach after all. When I walked in to this place, I was like, "Okay. I can see myself living here. It's close to the beach. It's in a decent enough area."

I was pretty uneducated at the time about the HOA stuff. Like I said, I've really been looking for duplexes and I had really been kind of reading up on investment type of stuff. I've had good success with it and I'm very happy with it.

It's a small association, only six units which also means that I have to be involved in the board and everything. I was the treasurer for a couple of years. This year is my turn to be the president, which isn't super fun. It's really not that big a deal. I don't have any issues with it at all.

Josh: Yes, yes. For those people listening, $180,000 in Los Angeles area is a really good deal.

Fat Tony: Yes, really good. When people see this place, they go, "Whoa!" It's been remodeled -- granite countertops, nice cabinets, great floors and everything. A kind of funny, sidestepping story here: I actually have a gated garage, which is amazing in this area. Downtown parking can be a bitch in some cities.

A couple of days after I moved in, because of the short sale the agent didn't know a lot. A couple of days after I moved in, a neighbor of mine was like, "Oh, you're so lucky. You got the stored room down there." I was like, "What stored room?" Sure enough, I had to get a locksmith to come open this room. It's like a 10 by 10 just fully locked stored room with shelves and room for bikes and everything. It was a nice little surprise there.

Brandon: That's cool.

Josh: Yes. Yes, that's great. I want to circle back a little bit. You talked about this mentality of money management, this mentality that you have developed where you were going to be smart with your cash. Can you share a little bit more about that? For those people who are listening who are like, "Hey, I'm broke. I got a crappy job and I can't save anything." What do you do? What do you recommend people to do to start doing that?

Fat Tony: My mother when I went to college set me up with Excel spreadsheet. She told me a lot of people at that time…this was 2001. I was a freshman in college when I left the house. She was telling me about people balancing their checkbooks. They write a check. They spend money. They deduct a line on the checkbook. They re-calculate their balance. I remember seeing her doing this.

She's like, "Now you have a computer in college. You can do this on the computer." From the time I was 18, I started using an Excel spreadsheet. That first year I was so anal about it. I thought that's what you had to do with your money; otherwise, you were going to go broke or something. I kept track of every dime that I spent on this Excel spreadsheet throughout college or my first year at least.

I've adopted that and really built on it. Over the last seven years that I have built on this financial journey of mine, I've really fine-tuned and tweaked a bunch of different Excel spreadsheets.

My first thing is to tell people to kind of calculate their expenses, figure out how much they're making each month, how much their monthly expenses are, figure out what's left over, and figure out a savings plan or an investing plan and if that's 5% at the beginning or 10% at the beginning.

At this point I'm up to pretty much 30% of every paycheck. I put 10% in one vehicle, 10% into another, and then 10% into a different savings thing. Figuring out a way to divide up your money.

All these people -- financial gurus, self-help books, the whole deal, they'll all tell you the same type of thing. Even if it's a couple of dollars at first, once you start managing it, you understand how things can grow and work and stuff.

Kind of at the same token, I met a guy that became a big financial mentor to me. He said the very first thing that I should do is track my net worth. I started a new spreadsheet for that I found online, kind of like a base template to use.

I started tracking my net worth. At that time, it was something like $11,000 or something. I can look at it right now and see over the last eight years that it's growing up to couple hundred percent multiplied by that. Just seeing where your money is, seeing where you spend your money, and tracking your money is kind of the first step.

Brandon: Awesome. Awesome.

Josh: Yes, I agree completely. Until you start seeing what you're doing...you can have a lot of money. Rich people burn through money, too. Poor people, rich people, it doesn't matter. Until you're actually watching your pennies go by, it's hard to really see it.

Brandon and I have talked about this on the show, his Starbucks habit. Setting a budget. There are things that you love and you just can't give up, your vices. We all have them. You don't have to but constrain yourself and say, "I'm going to limit myself to this." Having a monthly budget is really powerful.

Brandon: I'll have you know I have not had Starbucks in about two months now.

Josh: Oh my God.

Brandon: I know. Two whole months of that. My wife still goes.

Josh: That's why you've been such a miserable...

Brandon: That's why I've been...

Fat Tony: I think that's actually a big reason why I was able to keep such low overhead. I never drink coffee. I don't like the taste. I never drank alcohol. I was able to save a lot of money that other people would spend kind of going out on a daily...

Brandon: Here's the trick. The trick is you don't get coffee. Get peppermint hot chocolate, a 170-degree peppermint hot chocolate with whipped cream. It is the best Starbucks drink on planet Earth but there's 1,000 calories in it. That's why I stopped. I hired a personal trainer. He's like, "Are you stupid? What are you doing? Everyday?"

Fat Tony: My thing is water. It's free out of the tap and saves me money and it's healthy.

Josh: You are right about the booze thing. It's amazing how much money you can save by not drinking booze. My wife doesn't drink. I never really drank. Once that happened, she was a cheap date. I became a cheap date. Going out to dinner...a nice dinner is $50, $60. You bring alcohol on board. Now it's $80, $100. Yes, It's a great thing.

All right. You also said something that I made a note about which I thought was awesome. You were like, "I found a bunch or really rundown properties and I didn't want to mess with them because that's not my thing."

I think it's so important for listeners and for people in general, obviously to know what you're good at and know what your skill set is because if you suck at that stuff and you go and you start trying to fix up a property, you're just not good at it or you don't like it, you're going to start hating real estate. You're going to start hating everything in this business.

Fat Tony: Yes. That's actually kind of a point that I wanted to bring up, one of the things that I wanted to kind of get across to listeners and stuff is that I really have set up my whole kind of "investing career" right now based off of keeping a good balance in life and finding what I still want to do with my time because right now I don't want to make real estate my full-time business or gig.

I think at some point in my life, I might want to rent that up. I could sort of see that in the future at some point but I'm not there right now. Right now, my focus is building these businesses I'm doing, working for myself, staying active in the BMX or CrossFit community, these niches that I'm really passionate about. I see real estate as a long-term play so I'm not right now taking that as my main focus. Yes.

When I started out, I knew that I didn't want to put in a bunch of work in to a place. It's funny when I got this condo, there were a handful of things that needed to be done; even the garbage disposal, it burned out. I was like, "Oh, I'll try to do that myself." After a couple of hours, I realized I didn't have the right tools. I tried to go buy the right tool, didn't get the right one again.

I literally put it out on Craigslist. I was like, "Ill pay someone $20 to come over here and just remove this nut for this stupid faucet because I don't have the right tool and I don't want to go back [Inaudible][21:11]" 20 minutes later, two guys showed up and they switched. They were like, "Oh, do you want us to finish putting in the garbage disposal also?" I'm like, "Please go ahead."

At that point, I came up with...maybe somebody...I don't want to quote somebody's quote but I've figured I'm a businessman, not a handyman and I'm okay with that. There are people that get paid and make a living to do these things that I don't want to do so I'm happy to pay them and help them put food on their kids' plates.

When it came time to paint my condo when I moved in, I found somebody; paid them I think $700, paid the whole thing. It took them a day. It would have taken me a couple of weeks. That day I left and went and rode my bike. I came home. My house was painted. I'm like, "This is what I like. This is my style."

Josh: Yes. Nice, man. That's awesome.

Brandon: That's true. I think a lot of people think they have to get in to the handyman to be in real estate. They have to be good at construction or good at changing the...I've said this before on the show before but I'll say it again now. I think being handy hurt me in my investing business.

Yes, it helped me get properties, get these rundown properties but it made it so that I was an integral part of my business and I could not escape that. I budgeted. All my budgets at the beginning were based on me fixing things. Now I don't fix things anymore. I have to pay for that now but I never budgeted that way in the beginning.

All my early properties now, they don't cash flow very well anymore because I'm not doing the work anymore. Yes, it hurt me knowing that I thought I was a handyman and not a businessman.

Josh: There is not a single task that requires one trip to Home Depot. There are loads. You always forget something. You always have to go back six times. It's not fun.

Fat Tony: Right, right.

Josh: Cool, man. What came after the condo?

Fat Tony: Sticking with that theme of kind of wanting to be a hands-off, I started looking out of state because basically at that point, I knew that anything in state was really expensive or anything nearby me was really expensive. What really got me kind of in that out-of-state investment type mode, again, was my buddy Terry who you spoke with on episode 134 of your show.

He was talking to a mutual friend of ours at that time who was into construction and he lived in Saginaw, Michigan. Poor guy, I know. He was buying tons of these rundown places after the market crashed for $5,000, a couple of thousand, even maybe a couple of hundred dollars I think. By the time I called him, he'd already had several places under his belt and was putting in the work himself.

Terry ended up buying a place over there in cash. I just kind of saw through him. I was like, "Damn! You made this look too easy." My next play was to try to see the same real estate agent as my friend did because I felt that was a trusted person and then to buy in the same area where our other friend lived because that was kind of my eyes and ears on the ground.

What ended up happening was me and the other guy in Michigan kind of had a falling out of some sort. We sort of lost touch. Then, the agent I was trying to work with was just really, really bad at communicating through e-mails. I prefer to have everything in e-mails so I could see it in writing and not forget anything.

It just kind of drew up a red flag for me. Every time I asked questions, they didn't get answered. I was like, "Okay. If my eyes and ears on the ground isn't there anymore and my trusted real estate agent doesn't seem trustworthy, now what am I going to do?"

I started calling around in Louisiana because that's were Terry lived. That's where my family lived and where I'm from and things are cheaper there but not as cheap in Michigan. I started calling around and basically just cold called real estate agents in the area until I found someone on the phone that seemed to fit the bill.

I told them I'm an out-of-state investor. I want to buy a property that looks like this. I need somebody that's dealt with out-of-state people before. This lady ended up working out really well. Every time I e-mailed her questions, they came back point-by-point. I was like, "Okay. This is how I need somebody to communicate so that it's effective for me and that's going to work for me."

The first place that I bought as an investment was a three-bedroom, two-bath single family in Louisiana in the same town that Terry lives in which is a couple of towns over from both where my parents live.

Josh: Got it. Awesome. Awesome. I'm sorry about the drama but I love the story. I like that you kind of stuck to your guns on...you didn't feel comfortable in Michigan. The boots on the ground kind of failed you. That was something that I'd experienced, the exact same thing.

That really is one of the big reasons I tell people to beware of investing out of state is once you lose your eyes and ears, you've got nothing and you're blind. Just make sure that you can trust the folks that you're working with anywhere but especially when you're investing at a distance.

Again, I love that you ended up not proceeding, not moving forward in Michigan not because I have this hate towards the trade. I don't know why anyone would think such a thing. It's a smart move.

You pick up this three-two. What did you pay? What is the rent? Tell us a little bit about the numbers.

Fat Tony: That one was $63,000. I've got a sheet right here so I can give you actuals. $63,500 and it rents for between $700 to $800. I think it started out as $700 and maybe went to $725, maybe $750 now so a pretty good rent. My buddy, Terry also was working with a property manager at that time. I was able to hire him on board.

I bought it without ever going down there to see that house or anything. Again, this was kind of in line with me wanting to stick to what I was enjoying doing in my personal life but still being able to invest very much on the side.

Of course, I did dedicate a lot of time and energy and focus in to learning a lot of stuff before I made the plunge. For instance, when I was buying my condo, my real estate agent at that time was kind of a mentor of mine. He was a new agent and he was really trying to help me learn as we started looking for places.

He turned me on to this book, which I'm holding up for anybody looking. It's called "What Every Real Estate Investor Needs to Know About Cash Flow...And 36 Other Key Financial Measures." I read that book and literally studied it like a textbook and took notes on it every morning before I went to work for a long period of time.

Again, I put in work ahead of time. By the time I was ready to actually do the investing, it was very much a hands-off thing. I bought it sight unseen. The property manager took care of everything. They had a checklist from the property inspector that told me what needed to be done and I kind of went over that with the property manager and told him what I felt comfortable doing.

I said, "You're the one renting it out. Get it to where you need to be to get a tenant in there for me." I let him do his thing because that's his business and I've stayed back in California shooting photos or ride my bike and he was taking care of the property.

After that, I actually did go back to Michigan, not physically. Again, I knew this place was still cheap out there. At this point, I again was still on a very small salary. Actually, at this point I lost the salary because I quit my full-time job to be a freelance photographer.

Now, if I try to get a loan, it would look even worse for me on paper. I had the mortgage for the place I lived in. I just got the financing done for the single family in Louisiana. At this point, I was like, "Well, my next step is going to have to be cash," or so I thought. I'm sure there are other options but for me I felt that a cash deal would be the best at that time.

Saved some more money and then I was like, "Okay. Let's look back to Michigan because I can afford a place in Michigan in cash at this point." I didn't go back to the same real estate agent. I didn't contact the old friend of mine or anything. Again, I picked up the phone and started cold calling.

I feel like, maybe this is an exaggeration but it might have been literally the first guy that picked up the phone at any of the offices I tried to call. I was just like, same deal, "I'm an out-of-state investor. This is what I'm looking for. I need somebody that deals with out-of-state investors. I want somebody that also has rental properties of your own so I know you understand where I'm coming from. Blah-blah-blah."

Had my whole spiel down and right away the guy was like, "Yes. I've got ten rentals of my own. I was a full-time investor, whatever before I became an agent. I deal with out-of-state investors. I just sold one last month. Yadi-yadda." I was like, "Okay. Cool. Show me what you got." He sent me an e-mail with three properties listed and I bought one of them. It was that easy.

Again, I never went there to see it. I didn't go crazy unlike the analysis stuff. It was like, "Okay. This is a three-unit. Total rent is $1,300 and costs $19,000. Yes, there are going to be things wrong with it because it's old and it's in Saginaw. Yet, there are going to be other surprises that come up. Hey, for this price let's go ahead and try it out." Yes, we just went ahead and sent off the cashier's check and had it a couple of weeks later.

Brandon: Did it need a lot of work? After you got it, did it need a lot of repairs? $19,000 is pretty cheap for three units.

Fat Tony: It was already rented out. All the units were filled when I got it. I figured if there were people in there and they were paying then it was good enough for them. I can guarantee it's not a place that I would want to live in but somebody wants to live there. One of the ladies has been there for 12 years or something.

The property inspection report was pretty lengthy. The biggest thing at that time was the roof. It was going to need to be replaced or whatever. I knew that was going to be a big expense.

That actually helped me negotiate the price down a little bit because I got a pretty high estimate in quote for the roof. I was able to bring back that to the seller and say, "I need to take some money off because this is a much higher estimate than I originally planned for."

After I got it, I didn't necessarily dump in a bunch of more money. Like I said, it was already rented out. As those tenants moved out, new ones came in. Of course, you had to do some cleanup and light repairs and stuff. That just kind of came as we went along.

Brandon: Okay. Okay. When did you buy that? That was a couple of years ago I'm assuming.

Fat Tony: We pull up my Excel document here.

Brandon: Nice.

Josh: I love it.

Fat Tony: I'll tell you the date was October 9th, 2013.

Brandon: Okay. In the few years since you've bought that, how has it been for you? Has it been good, a lot of repairs?

Fat Tony: It's been a little bit of a pain in the ass. It hasn't been the best thing but at the same time, I look at this as a long-term play. I may have this thing for God knows how many years. Just like you put money in the stock market, you don't watch it everyday and start stressing out about it. You let it sit there and do its thing over time.

It hasn't filled up my bank account exponentially by any stretch of the imagination. It has maybe brought in a little bit of money, maybe broke even. I'm pretty sure it hasn't really lost money at this point.

There have been a few larger things that have come up. One of them actually just again in keeping the theme with kind of sticking to my guns and living my life how I want to and being a very hands-off investor, I needed a new furnace because it's in Michigan. I needed a new furnace. This was last April or something.

I was in Louisiana hanging out with seven-year old niece at that time. We were at the bowling alley. I get a call saying that the furnace needs to be replaced. It's going to be $2,000. I'm at the bowling alley. My niece was throwing the ball. I'm like, "Okay. Cool. Here's the credit card number." I put the phone down and then I went up to my turn to bowl.

I've got money in my investing account for this purpose. I'm not going to stress out about it because I'm not there to take care of it. The property manager is there. He knows what needs to be done. Here's the credit card. Let's pay for it and get back to hanging out with my niece and enjoying life.

Josh: That's great. That's great. I think that itself speaks to the importance of having reserves and having the capacity to invest. A lot of people will get in and they end up being the tired landlords I think. In many, many cases, they get in to the game. They're not prepared. They don't have reserve account to handle things.

When something comes up, they flip out and they start going crazy. They ignore things because they don't want to spend the money on it. You've got to have those reserves. You really have to, as a landlord it is your responsibility to take care of things when they break. It is your responsibility.

That fact that you're, "All right. I trust this person..." I love that you trust that person. I wish every property manager were trustworthy. The fact that you found somebody that's worth for you is great.

I want to talk about the buying sight unseen really quickly. Clearly, you're not a risk averse person. For other folks, do you recommend buying sight unseen? What challenges come with doing that?

Fat Tony: For me, it's actually a little bit easier because for me if I see a place then I try to imagine myself living there. I look at every little thing. I’m like, "Oh, this needs to be fixed. This looks crappy. I wouldn't like this." I would be more emotional about it if I saw it because it's hard for me to look at a place and feel like I wouldn't want to live here.

For me, not seeing it actually help because the property manager says that he can get it rented, I listen to him. I say, "Go for it." For me, it's actually easier. I think there are kind of different levels of that emotional quality to money and finance and stuff. You hear people in the stock market. Like I said, they look at it everyday and they stress out about it or whatever.

If you're the kind of person that is going to be stressed out because you're not seeing it then maybe you need to see it. I think that kind of comes sort of that "Secrets of the Millionaire Mind" or just like sort of working on yourself and conditioning your own mindset to get you in the right place to not be emotional about money, to not be emotional about your investments and stuff. For me, I think it actually works better.

Josh: Do you or have you visited that or your other investments or have you never seen them?

Fat Tony: The one in Louisiana it didn't get rented...the first one in Louisiana. I have another one that I got after the Michigan place. The first one in Louisiana it didn't get rented right away and just by chance I ended up going to see my family before it got rented. I did go in there and see it before it got rented.

I've gone back to Louisiana to see my family. I'll drive by every once in a while partly as part of a tax write-off because I'm going to "check in" on my properties. Yes, the one in Michigan I've never been there and I might never go there.

The third one in Louisiana I actually did see before I bought it, not because I was dying to or wanted to or needed to, just because I happened to be there. The agent who was also the property manager that I'm using now, he was like, "Oh. Let's go drive by and check it out. I know the tenant. She'll let us walk through there and blah-blah-blah." I did go see that one but not because I needed to.

Brandon: Cool. Cool. How do the property values fare? Do you track what they're worth today, for example the triplex in Michigan? Could you sell that one for more than you bought it for today do you think?

Fat Tony: That's a great question. I haven't looked at it too much. I feel like maybe I had asked my property manager about that at one point to update my Excel spreadsheet. Right now, I still say that it's worth the same but I don't have a great answer for that one.

Brandon: Sure. That's fine. That's fine. I just know that a lot of times with those really low-end properties, sometimes they may never go up in value and that's a conversation we have on the site a lot. They may go up just with inflation. It's just something to keep in mind if people are buying.

Those ones might not go up as much but if you buy a $300,000 house in a great neighborhood outside of Detroit, that one might actually go up because it's a nicer neighborhood.

Fat Tony: That's a great point because the condo that I live in now has been pretty much my best performer but I'm living in it because that one has gone up from about $180,000 to now it's probably about $270,000. That one's appreciated amazingly. Again, in two years since I got the one in Michigan and I do look at it as a long-term play and provided we can keep tenants in there and keep the money rolling in then I think it's going to be good. Keep improving it slowly but surely over the years and hopefully the long-term play works out.

Josh: What is the long-term play? What’s the plan? It sounds like you've got a few in Louisiana, some in Michigan. Are you going to stick to the small multi's, one to three, one to four units and just keep building? Do you eventually want to rely fully on this portfolio? Tell us a little bit about your plans.

Fat Tony: That's a really good question. I wish I had a really, really solid answer for you because I am very big on writing down goals and sticking to goals and stuff but I haven't necessarily mapped out the long-term game plan. I know at this point I do want to keep acquiring single family and small multi's.

I think at some point when I'm ready for it, I might try to find a partner to kind of build up the business more and start getting a lot more aggressive with this. Again, that's not going to come until I feel like I’m kind of tired of where my other career paths have brought me.

Eventually, I do want the other paths of income from my real estate to allow me to not have to work. For right now and the next I'd say five years or so, it still looks like the single families and the small multi's and stuff. I'm running to problems now because as I've said I'm self-employed and getting loans and financing and stuff has been a big, big challenge.

At this point, I'm working on different types of line of credit, which even that is challenging with my job or lack of job situation. Time to get creative and figure out the next step, which again, that is relatively difficult because I'm not making this a job right now because I'm kind of doing this on the side and stuff.

Josh: Awesome. Awesome. There's a really good book...

Fat Tony: I'm going to send him my book. I’m going to send you a copy of my book.

Josh: BiggerPockets.com/nomoney. The BiggerPockets book on "Investing with Little or..." I don't know the...why did you make the title so complicated?

Brandon: I like the title. "Low (Or No Money) Down," BiggerPockets.com/nomoney.

Josh: We'll send Fat Tony a copy.

Brandon: What? Yes, I'm going to send Fat Tony a copy. All right.

Josh: Or he'll kill you. He's a Mafioso.

Brandon: He's a Mafia guy. All right. We talked a little bit about that. We talked a little bit about what you're going to do in the future; now you said maybe look for a partner, that kind of thing.

Kind of the last question I want to get before we get to the Fire Round is what mistakes do you feel like you've maybe made that you could help other people not make the same ones? Looking back, just reflecting on the last few years of your investing, what kind of advice would you give others based on that?

Fat Tony: I don't really feel like I've had any big mistakes or anything.

Brandon: That's good.

Fat Tony: Like I said, I don't think the Michigan property had been a grand slam homerun but I don't think it's necessarily bad. It's only been two years in. I guess with that maybe there are some things that I wasn't really aware of.

Maybe I should have asked a few more questions about the expenses because not growing up in a place where it snows and not living in a place where it snows, I didn't realize that during the winter months I would need a budget for snow removal and how high the gas bill would get up during the winter and stuff or even that I'd be paying the gas bill because it's on a single meter for the three units or whatever because of how the house was converted.

There are a few of those types of things where maybe I should have asked a little bit more questions that I just wasn't aware that those questions existed. Yes, I don't really feel like there have been big mistakes.

Just advice for people, for me it's all about working on yourself. If you can condition your mind to be successful then you're good to go. Again, the "Secrets of the Millionaire Mind," I sound like I'm promoting to do that. No affiliation but it just changed my life so much that I feel like if I hadn't read that book, even the other real estate books, the "Rich Dad Poor Dad" book, they wouldn't have sunk in and got down...they wouldn't have had such an impact on me if I hadn't re-formatted my mindset to begin with.

I would have read these books and still left the book thinking, "Yes but I'm not like that" or "Yes. I can't do that because..." I'll be making excuses or whatever. Being able to really start out with a great solid mindset kind of set me up for success with everything else I did.

Josh: Awesome.

Brandon: Yes. Makes sense. I think mindset is so important. It's something I did not focus on enough in the beginning. I just went out there and functionally tried to make things work but I had a lot of limiting beliefs, things that I didn't think I could do. Mindset is so important. That's why I really stress people should read those, the mindset books just as much as the books on how to actually do things.

Josh: The funny thing about that is I personally used to say, "It's such a bunch of hullabaloo. Mindset, what the hell? Who cares?" It really matters. Whether that's in your business life and your personal life, how you look at the world will determine your path and it will determine your level of success in anything and everything that you do.

Without a doubt I was a major, major skeptic in the world of creating mindset. I thought it was some self-help guru BS.

Brandon: Who needs a self-help book?

Josh: Yes. Yes. It's great. It's great.

Fat Tony: The other advice that I have kind of comes in the form of mentors. Maybe this is a good plug for the BiggerPockets website, too because like I said, as I was getting my condo my real estate agent was a new agent. He was kind of learning and he was also interested in investing. He was a mutual friend of mine.

We had actually played that Cash Flow game or whatever, the Cash Flow 101 or something. We had played that together so I knew that he was into the real estate investing type thing.

Him kind of working with me while we were finding a place and sort of helping me learn and recommending books and just having him kind of by my side that whole time made me feel like I wasn't alone which again, people can go to your website and find that same type of thing through the forums there and stuff.

Also, kind of a co-worker acquaintance of mine ended up becoming a very, very close friend, as I was talking to her about sort of my new-found mindset and my new-found desire to start on this financial journey, she was like, "Oh, you should talk to my dad. He's a wealth adviser."

Sure enough, I got on the phone with him and he told me that when he got started in this game, in the financial game, he had a mentor that helped him. He said, "I'll mentor you for free but you just have to promise to pass along this knowledge to other people as you come up."

This guy told me the same thing and he's been a great resource to bounce ideas off of or to more or less just be a sounding board for things and like I said, make me feel like I'm not alone in this and just kind of give me that extra push of confidence of "Yes, you're on the right track. You’re doing the right thing."

Finding people that can share that mindset and share that journey with you a little bit is really helpful I think.

Josh: Awesome.

Brandon: Yes. Yes. I fully, fully agree. I think. Like you said, it's one of the valuable things about BiggerPockets is even if you don't have a...you don't have to go pay for a paid mentor and hire some coach to walk you through it. You can just find people that are doing this in real life. I met people all over BP and then I've hung out with them in the real world and have helped me learn and grow as an investor. Yes, very cool.

All right. Why don't we transition this thing over to the Fire Round?

It's time for the Fire Round.

Brandon: All right. Fire Round, these questions come straight out of the BiggerPockets forums, which we were just talking about. Fancy that? Question number one: "I'm investing far away from the place I live. Would you recommend as a first investment in a new area a single family home in just a normal neighborhood or look for a gated community?"

Fat Tony: All of my investments have been very far from any gated community. I would say do the homework. Run the numbers and go with what makes sense financially. Again, don't get too emotional about it.

Talk to the potential property manager that's going to be running the place. Ask him, "Do you feel comfortable managing this one? It's not in a gated community. Are you going to be able to get tenants in there? Are they going to be good tenants that are going to stay and pay the bills?" If he feels comfortable then it doesn't matter for you if it's gated or not because you are still going to be providing a house to somebody that needs it.

Josh: Yes. Right on. Awesome. "What do you think? Is it smarter to invest in a single or multifamily home for my first investment?"

Fat Tony: Let's see. Again, I think it all depends on the numbers. I don't necessarily think it matters that much aside from that. If you do go for the multifamily, keep in mind those questions like I said that I forgot to ask.

Are you going to have to pay some of the utilities? Do you have to pay for the yard maintenance because it's a multifamily? You can tell them, "Oh, you guys each take every other week to cut the grass or snowplow." That doesn't happen. You're going to have to pay for somebody, the expense and stuff.

I don't think it matters. You just have to know ahead of time what questions to ask and what you're going to be looking for.

Josh: Right on.

Brandon: Okay. "When you're looking at a multi unit, if you're looking to buy a multifamily property, what do you specifically look for?"

Fat Tony: For me, I specifically look for a place that that property manager feels comfortable getting tenants in to. That's pretty much it. Like I said, run the numbers and if that guy says that he can get people to live in there to pay the bills then I'm okay with it.

Josh: Right on. You are about as hands-off as they come. The next two questions that we have I think we kind of have covered. "How do you balance your career with investing?" I think your career is primary and you got the managers. I'll answer that one.

The other question we had was "Where do you primarily look when looking for a new investment property -- online, paper, word of mouth?" I'll let you answer that one.

Fat Tony: I did look online a bit but I feel like every time that I bought one it's been through an agent or the property manager himself which I guess now in Louisiana my property manager is also an agent.

Again, Terry Adams talked about this on again on this plug for you on episode 134 of your show. He talked about how as the property manager he deals with all these properties. He knows when the owners are getting ready to dump off the properties when they're getting tired of them or when they've exhausted their liquid and their reserves and don't have money to fix stuff so they just need to get rid of the place.

Kind of having that inside track is super helpful I think.

Josh: Right on. Cool.

Brandon: Very cool. All right. Moving over to the world-famous...

Famous For

Brandon: All right. These questions we're asking every single guest so we'll throw them at you now. Number one: what is your favorite real estate book?

Fat Tony: "Secrets of a Millionaire Mind." Can I list off a few that I have here though?

Brandon: Sure.

Fat Tony: "Secrets of a Millionaire Mind" and then "Rich Dad Poor Dad" came after that. Also, not a book but just the movie, "The Secret," kind of more about that mindset type thing like setting goals, visualizing stuff. The one that I mentioned "What Every Real Estate Investor Needs to Know about Cash Flow," it's a very, very long title.

That book I honestly couldn't tell you a damn thing about it at this point. It's been some years later. I read it six years ago but like I said, I felt like I studied it like a textbook.Even though I might never remember anything super specific from it, I think just putting that time, energy, and focus in to something, you're going to get something out of it.

Brandon: Yes. Yes. I read that book six, seven years ago. It was hugely influential. Frank Gallinelli, which we had on the show back a couple of years ago. It was just so instrumental. I don't remember every single piece of the book but I just know that it built that foundation that is so important like understanding all those terms, what they mean. Yes, I love that book. Cool.

Josh: Frank is a good guy. He's a good guy. All right. Favorite business book, non-real estate?

Fat Tony: "The 4-Hour Workweek."

Josh: Okay.

Fat Tony: Is that a business book?

Josh: Yes. Mindset and business.

Fat Tony: Yes. Like I said, I worked full-time for a magazine. I did that for five and a half years. Just to fill in the gaps a little bit, I was a photographer and video producer for a BMX bike-riding magazine. My job was to travel all over the world basically documenting these professional riders and professional athletes.

All the guys that I was shooting with didn't have jobs and they just seemed like so carefree. I was jealous of their lifestyle basically. Kind of with the help of that book, it helped me realize how you can run business and do businesswithout living in the corporate world.

Having this influence from this guys that I was hanging out with, that was kind of like, "Okay. I can do this." It took several years for me to work and transition over to that but now I've been on my own for three and a half years or so of freelance work and it's been incredible. I've been able to travel more, build relationships, fine new hobbies, work less, and make more money.

Brandon: Very cool.

Josh: Sounds good. It sounds good. All right. What about hobbies? Sounds like your career is a hobby, which is a beautiful thing. What else to do you do?

Fat Tony: It used to be BMX riding. I don't do that quite as much anymore because I'm so into CrossFit now. CrossFit is a hobby. I just recently, as I said with the new-found freedom, I picked up snorkeling and surfing which there are plenty of out here in Southern California. Yes, surfing, snorkeling, CrossFit.

Brandon: Very cool.

Josh: Awesome, man. Awesome life.

Brandon: Final question: what do you believe sets apart successful investors from those who give up, fail or never get started?

Fat Tony: Probably just to keep in theme, mindset and priorities and maybe goals. Maybe that's kind of in line with priorities but I'm very, very big on making a game plan and setting action and following it to make your goals happen. Definitely those people that have the drive and the determination to set goals and follow them, that's going to set them apart.

Josh: Awesome. Awesome. All right, man. Fat Tony, where can people reach out and find you, man?

Fat Tony: I have social networks all over the web. That's just fattonybmx. Even though I'm not really riding and BMX isn't really my career anymore, the name has been around for a long time so that's sticking. Instagram, Twitter, Facebook, and fattonybmx.com.

Also, if I can give a quick plug, I have my own podcast called "The ExpansionProject," which I talk a lot about mindset and just kind of find interesting and successful people and sort of deconstruct what makes them tick. I actually interviewed you and Joshua on episode 25 on my podcast. That's called "The Expansion Project." You can find that on iTunes or Stitcher or just go to theexpansionprojectpodcast.com.

If I can do one more quick little plug, I recently started a new business kind of in the CrossFit world. It's an aggregate blog, very similar to the website that I ran for the BMX magazine where basically I find the coolest videos and the best photos and report on all the latest news in the industry. That's called breakparallel.com. If there are any investors that are Cross trainers, go check that out.

Brandon: Break Parallel, you said?

Fat Tony: breakparallel.com. You got a personal trainer now. Come on.

Brandon: Yes. Yes. I'm going to go there. I'm going to go there.

Fat Tony: Cool.

Brandon: I actually have some friends that are BP'ers that are also CrossFitters. I’m going to send them that way, too.

Josh: It's a cult.

Brandon: It is a cult, yes.

Josh: It is. It is. Awesome, man. The podcast was great. We had a good time. I had a good time doing Fat Tony show. We chatted about real estate, which is why he's here to talk about it today. All right, man. Listen. Thanks again for being part of the podcast. We definitely appreciate it and lots of luck to you on the ongoing, budding investing career. We look forward to keeping up.

Fat Tony: Thank you very much. I appreciate the opportunity.

Josh: All right, Fat. Take it easy, man.

Fat Tony: Later.

Brandon: Take care.

Josh: All right, everybody. That was Fat Tony. Yes! Fat Tony.

Brandon: Who is actually ripped.I didn't want to embarrass him but man, he is ripped.

Josh: He is ripped.

Brandon: Check out his Instagram and you'll see what I'm talking about.

Josh: If you need a new stereo, he could get you one off the back of a truck.

Brandon: I don't even think he's Italian. Is he Italian?

Josh: Eye-talian? Is that how you say it?

Brandon: What do you say? What do you say?

Josh: Italian.

Brandon: Eye-talian. Is that weird?

Josh: Yes, it's weird.

Brandon: Is that my Northwest accent?

Josh: I don't know but it's weird. Eye-talian.

Brandon: Italian. Is that how you say it? Italian?

Josh: I don't know, man.

Brandon: Weird.

Josh: Anyway, it was a fun show. It was a fun show. What have you been thinking about the stock market, man?

Brandon: The stock market? I"m glad I don't have anything in it. Yes. I don't know. Hopefully, in the time since we recorded this, it's been recovering hopefully because a lot of people lost a lot of money recently.

Josh: Yes. It's been kind of crazy.

Brandon: That's how it goes.

Josh: It's how it goes. It's another reason for those people who aren't in real estate to consider it because the housing market it can go up and down for sure but you have more control I think in how your destiny plays out in real estate. Would you agree?

Brandon: Not at all. I hate real estate investing.

Josh: You're fired.

Brandon: What? I fully agree. Here's my problem with stocks. I've always been...I used to be a stockholder but when the price of a stock drops by 20%, 30%, 50% because some board director did something bad or a legal case or just a market turn...

Josh: Or because China is...

Brandon: Because China devalues their...all you can do is sell or you can buy some more...

Josh: Or you can hold on...

Brandon: You can hold on for ten years, whatever. I like that on my rental properties, if the market drops, I can hustle harder to recover that. When the market did drop, I got properties that the value dropped but my cash flow stayed the same because I just hustled harder. I made sure it wasn't sitting vacant. I made sure that it was still renting good. Yes, I like that assurance I got.

Josh: Yes. I think that's one of the important things about it. Now granted you're not guaranteed to get the same rents, rents have been crazy records lately. You can't count on that continuing but if it does turn, there are ways to improve upon it -- fixing up the property, making yours...Scott and I were talking about this in the office.

He's got a rental property. It's doing well. He was shopping for another property, another property in the area that was getting considerably more rent, considerably more rent. He went and he looked. He's like, "Wow. They really fixed this thing up fantastically. What am I doing? This is crazy. I need to fix my place up and capture that difference and get the rent difference."

Again, you have more control. There are, I'd say far less external factors that can affect your rental property than can affect potentially stocks that you're buying.

Brandon: Agreed. Agreed.

Josh: Yes. Cool, man. Cool. Cool. When do we get out of here?

Brandon: Okay.

Josh: What do you think?

Brandon: I'm going to go get the second half of my breakfast.

Josh: You got Starbucks I think.

Brandon: Yes, rub it in. Do you want to drink your peppermint hot chocolate in front of me.

Josh: I might. 173 degrees.

Brandon: Two months. Two months. This has been tough.

Josh: Wow. You have enough money now to buy another property as a result of not buying Starbucks for two month.

Brandon: The irony is that I'm spending more on my personal trainer than I was on Starbucks but that's okay. I started at 215, weighed at 215 and now I'm at 201 this morning.

Josh: Really?

Brandon: Yes.

Josh: What are you doing?

Brandon: I am eating only whole foods. Not Whole Foods the store but like real food.

Josh: Yes. Whole grains, nothing pre-packaged.

Brandon: Yes. Nothing pre-packaged. Everything's cooked. Other than that it's fruits, vegetables, meat, and a little bit of...

Josh: Yes. You're exercising I'm assuming.

Brandon: I'm exercising three times a week. I’m trying to walk. I'm doing P90X three times a week and I'm walking 10,000 steps at least five times a week.

Josh: Nice. I saw you climbing up on the chart of our...

Brandon: Yes. Yes. My Fitbit here, today I'm only at 2,900 but yesterday I hit 14,000. That's because I stood for the webinar.

Josh: I hit 11,000 today.

Brandon: I'm whooping you. I’m whooping you.

Josh: Yes. All right. Let's get out of here.

Brandon: All right. I'm out of here.

Josh: All right. I'm Josh Dorkin, signing off.

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