Early Retirement ($10k/Month) by Age 35 with Bryce Stewart

 Brandon: This is the BiggerPockets Podcast. Show 276.

Bryce: ‘You know what? I don’t know how to sell a truck that has a loan on it,’ but I know how to vacuum my truck, and that’s free. That’s free. That day I went out with my Shop-Vac and I freaking vacuumed the truck. The next day, okay, I don’t know how to sell a truck that has a loan on it, but my wife know how to take pictures. She’s got a good eye. Still free.

She takes pictures. Alright. I don’t know how to sell a truck that has a loan on it, but I know how to make a Craigslist ad. That’s still free. I make a Craigslist ad. People start calling me. I guess I can let them test drive my truck. Still free. Anything cost any money yet, guys? That’s still free.

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Brandon: What is going on everyone? This is Brandon Turner, today’s host of the BiggerPockets podcast. Here with my wonderful, amazing co-host, Mr. David Green. How’re you doing, Buddy?

David: I am doing pretty good. I just got off the phone with my banker. I’m working myself through two different refinances right now.

Brandon: I hate refinances.

David: You’re not kidding, man. The fun part of real estate is buying it and then the annoying part is having to find the funding for it. We’re kind of going back and forth about what stuff they need. I’m ordering surveys. I’m ordering the flood survey, to know if I need flood insurance there, and getting appraisals, and going through everything.

The good news is, once these things close, I’ll have a whole bunch of money. I’ll be able to go buy a bunch of more houses, but right now I’m just trying to stay the course and remind myself that I need to be disciplined, because the fun part right around the corner.

Brandon: There we go. Yeah. We talk a lot about the BRRRR strategy. Buy. Rehab. Rent. Refinance. Repeat. The refinance is definitely the worst part of that entire process, having to refinance properties. Again, once you find a good banker, a good lender, once you get all your documents organized and everything, it becomes a whole lot easier, but it is annoying.

Do you know on the last refinance I had to do, did I tell you this? This is how ridiculous their underwriting was. I was trying to go conventional. I was able to do it. I went conventional, residential loan. They required that I write them an essay, an actual essay on the benefits of refinancing real estate. I had to write a blog post for Fannie Mae on the benefits.

Unbelievable. Why does this even matter? Why do I have to write you an essay on the benefits? It’s because you can get your cash out, and you can lower your interest. That’s what it was. I had to write them an essay, a five point essay.

David: You got a homework from someone that was going to make a lot of money from you.

Brandon: I did.

David: That’s awesome.

Brandon: That was so unbelievable. Anyway, we got to move on with today’s show. Today’s show is unbelievable. I know I say that a lot because I’m a huge fan of our show, but today’s show really- this could be one of the most life-changing shows for a lot of people. This guy is an average Joe, who retired at age 35. He was a teacher, a middle school teacher. Retired at age 35.

He talks about how he did that through just small multifamily properties, especially, I want to just point out, make sure you guys listen in close when he’s talking about vacuuming the truck. Not going to tell you anything more about that, but when you hear about vacuuming the truck, take some notes. This is unbelievable. Stay tuned for that. You guys are going to love it.

Alright, with that let’s move on to the quick tip.

David: Quick tip. Alright.

Brandon: I jumped that you. You didn’t know that was coming.

David: No, I didn’t. You’re always sneaking a quick tip in there. I only catch the very end of it.

Brandon: Alright.

David: Alright. Today’s quick tip is, track your entire net worth. Okay, this is very important for several reasons. One of the things our guest talks about how he writes down what his goals are. It activates the reticular activating system in your brain, where once you’ve told yourself, ‘Hey, I’m looking for this or I want to do this,’ your subconscious start bringing attention. It’s the part of your brain that when you buy a black Honda, and all of a sudden you see black Hondas driving down the road all the time.

I want you to track your net worth because what you find is, you’ll have opportunities to finance real estate, to pull money out of an asset you have versus borrowing it from someone if you didn’t have to, that you won’t think about if you’re not tracking your net worth. Our guest today talks about how he borrowed money from other people, who took HELOCs on their property.

You might have a ton of equity in your primary residence. You don’t even realize it because you’re not tracking your net worth. You don’t know you have equity there. You might have a car with a high value that you could go take a short-term auto loan on. You might be able to take a business loan because you have a business that’s making a lot of money. If you track your entire net worth, you’ll see where you have assets with equity in them, and you’ll have opportunities to borrow money to buy more real estate.

Brandon and I talk about all the time. You get that first deal under your belt and you do well, and it’s probably going to buy your second deal, and then your third. It’s so important that you know what opportunities you have to make your own job easier at finding real estate. Track your net worth, and you’ll start seeing that stuff pop up.

Brandon: Nice. The not so quick tip.

David: Yeah. That’s a good point.

Brandon: No, it’s okay. I like it. That’s such good idea. I didn’t do that for a long time. I was so unorganized, but now I’m much more organized in how I do that. Anyway with that, let’s get to today’s show sponsor.

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Brandon: Alright. Big thanks to our sponsor as always. Now let’s get into the show. Before we introduce you to Bryce, I’m actually going to read an introduction here in just a minute when we get into the show.

Before we get to it, I just want to ask you guys again, as always, if you love this show, if you want to help us out, the best way you can do so is by sending a check certified for a  $100,000 to David Green or Brandon. No. Leave us a review in iTunes, and rating or review in iTunes. That helps us out a ton. Without the $100,000 cheque, we’ll still continue. Let’s get to the show.

Alright. I’m going to start today’s episode a little bit different. I actually am going to read an introduction that our guest today, Bryce, sent. Then I’m going to welcome you, Bryce, to the show. Bryce is here now. I just want to read this because this is awesome.

Well, we asked him why we should talk to him. Whenever people ask to be on the show, or we ask people to be on the show, we want to figure out what they want to talk about today. Here’s what his response was.

“The reason they need to hear from me is, I’m a complete idiot.” Now this is Bryce. I’m quoting Bryce on here. “I’m a complete idiot. I mean it. I took zero business courses in college. The highest level of math I took was mathematics teaching principles for elementary students. On top of that, proud of my first duplex, I barely know how to hang a picture, never watched HDTV, my natural disposition and demeanor is not Type A. I’m not particularly disciplined or well trained. I had no marketable or useful skills pertaining to investing in real estate or even personal finance when I began my early retirement journey.” In other words, you had no idea what you’re doing.

Bryce, welcome to the BiggerPockets podcast. That’s awesome.

Bryce: Hey, thanks. That’s quite an introduction. I appreciate that.

Brandon: It’s different than a lot of people maybe, feel about real estate investors. They feel like, ‘I was successful, and I’m wicked smart, and I’ve got really fit, rich family and friends. I come from this strong business background and that’s why I’m successful.’

You’re like, ‘Nah, that’s not how it is.’

Bryce: No. Exactly right. When you have compelling reasons to succeed, that’s what drives you forward. It’s not always the skills. Those can come as you go through your journey. It’s the compelling reasons that really drive it. For me, that’s what it was. I should throw on there, the other reason you should listen to me, is that I retired at age 35 and I’m making $10,000 a month passively from real estate income.

Brandon: That’s awesome.

Bryce: I went from being an elementary school teacher to being a retired, real estate investor before I was age 35.

Brandon: That’s awesome. That’s awesome. I want to dive into your story, of course. Starting at the very beginning. Getting all that is awesome. How did you get started with this thing? What was the very first deal look like it? It was a rockstar deal I’m assuming, making thousands a month?

Bryce: Absolutely not. My first deal was my biggest mistake. I’m actually still paying for it today. In 2006, my wife and I were engaged. We decided we would buy a one bedroom condo, a luxury one-bedroom, one-bathroom condominium. We didn’t realize until two years later, after the ’07 crash, that one, we couldn’t sell it for even what we had bought it for, so we were under water on it. Two, we couldn’t even rent it out for what the fixed costs were month to month in the place.

We got pregnant while we were living there and we wanted to move out of the one-bedroom, one-bathroom condo. That’s when I started doing the math, and realized, ‘Oh crap, we’re going to lose at least $300 a month on this place.’ That’s when my real estate education began. $300 a month in the hole. That’s a pretty inauspicious beginning, if there ever was one for a real estate investor.

Brandon: Would you recommend, we’re going to get into more of your story here, but this is something that so many people do. The typical American dream story ever is, guy and girl, or whatever, guy and whatever, meet and they get together. They buy a nice, fancy, whatever house, their dream home. They got two incomes coming in, everything is great. They start having kids. Everything’s fine. That’s what everybody does, but you’re saying that was maybe not a good idea.

Bryce: Right. We looked at it as if we would have two incomes forever, which is so foolish. We got burned with it. We didn’t have the cash to make up the difference in selling it, and we ended up needing to move out. We became tenants, so we rented a two-bedroom apartment. We had our first daughter while we were living there. We were simultaneously landlords losing $300 a month. That was with the place occupied.

Even with a great rental, we’re losing $300 a month. I have a young, infant daughter. I have a wife who is putting in not quite full time hours in her job, because we want her to be able to stay home and take care of the daughter. Then guys, I’m not kidding you, four months after we had our daughter, I come home. I walk up to this third floor walk-up apartment and my wife is laying on the floor, bawling her eyes out, and I’m like, ‘What is the matter?’

That’s when she goes, ‘I’m pregnant again.’ We went from me, looking at her hours reduced to essentially going down to one salary. Now she’s going to need to take care of two infants, and me going from feeding two mouths with two salaries, to feeding four mouths on one salary. That’s when I was like, ‘I got to do something different.’ I was a teacher. I was a school teacher. I could look at what my income was going to be the next year, and it was not enough for where we were.

David: Okay, so you clearly came out of the gates on fire. You just couldn’t miss. You crushed it with your first deal. You found your income was being cut in half. You had a lot of confidence because you’ve done so good on your first deal, that you knew, ‘I should just go invest in real estate. I’m really good at this, and I have a lot of free time, and extra money with these babies.’

Bryce: I was beat up. We were beat up. We had been making spending choices that two people with two salaries and no kids would make. We had to curb that. I had to also look at the income side, and figure out how am I going to make more money.

David: What I’m seeing here is the beginnings of a beautiful story, where you looked at everything you didn’t like about your life, and took responsibility and said, ‘I want this to be different.’ Am I close, Bryce, with how this worked out?

Bryce: Yeah. You are. If I quote the great Jim Rohn, he said, ‘If you picked up a book and the chapter one said, “Everything was perfect,” and then chapter 2 said, “Everything was still perfect,” and then chapter 3 said, “Everything was still perfect,” you’d stop reading that book.’ That’s not a very interesting story. It was terrible to begin with. That really was a kind of the compelling reason for me to move forward. In a way that first deal being such a bust, is what put me on the path to making it right, so silver lining. That’s what motivated me.

David: Okay. Tell us what you learned from those mistakes and how you incorporated that into your real estate investing career. You clearly turned things around since then.

Bryce: Well, the first thing I learned was that Fannie Mae, and the gigantic financial and mortgage system in our country holds a lot of, and controls a lot of the value for condominiums, so we were stuck with something we couldn’t sell. That segment got burned so hard in ’07. Honestly, I got to that point and I had to think backwards.

Let me rewind a little bit for you guys. When I was 23 and fresh out of school, the first job I had, I was living with my parents in my high school bedroom paying my dad $300 a month because my dad’s that kind of guy.

I’m working at this job. I was 23. I worked with another 23 year old. I ask him where he lives, and he says, ‘My college roommate and I bought four unit apartment building. We room together in one of the units, and rent the other three out.’

At age 23, I was like, ‘Wait, I don’t get it. I thought only big companies owned apartment buildings.’ I didn’t understand that people could actually own apartment buildings. That was like new to me. I start asking all these questions like, ‘Isn’t that a high mortgage?’

He’s like, ‘Well, it’s not low, but we pay the mortgage with the rents from the other three units.’

I’m like, ‘What about like taxes and insurance?’

He’s like, ‘Dude, we pay it with the rents from the other three units.’

I’m like, ‘Wasn’t there a high electric bill? High water bill? High electric bill?’

He’s like, ‘Well, it’s metered separately so I really couldn’t tell you what they do. To be honest, we pay our utilities with the rents from the other three units.’

I was like, ‘Dude, you’re freaking living there for free? I’m paying $300 a month to live in my high-school bedroom.’

The guy goes, he’s like, ‘Almost dude. It also puts $100 in each of our pockets every month.’

I was like, ‘What do you do with money from this job?’

He’s like, ‘Stock market, baby.’ I was pissed. Guys, I’ll be honest. I was really pissed. I went to a good college and did a decent degree. I had smart parents and nobody had ever told me before you can make money from something besides your job.

I grabbed that guy in the lunchroom and I was like, ‘You need to tell me how you did what you did.’ That’s when he gave me his copy of the book, Rich Dad Poor Dad, which I’m sure a lot of your listeners of read before.

David: Nice.

Bryce: I read that book in, I don’t know, in maybe a day and a half. I swore to myself, if I ever get this shot at doing this, this kind of thing, what this guy did, I’m going to take it. Fast forward back to me, having a pregnant wife, being a $300 a month in the hole, living in third floor walk-up apartment,

I was like, ‘Okay. It’s time.’ It’s now or never. I got to do this. Maybe some of your listeners are in that spot, maybe they’re not. You get to a point where you’re, ‘Okay. I struck out enough in little league with my bat on my shoulder. I’m not going to strike out in life with my bat on my shoulder. I’m taking a swing at this thing.’

The first step I took was, I called a realtor. I had never done that before. I asked, ‘Can I see some, I don’t know what they’re called, multifamily properties?’ She takes me to one. We do a showing. We go into this duplex. It smells like piss, and cats, and cigarettes. I didn’t like it. I walked away, but it got me on her auto email for multi families locally.

I live in the city of about 75,000 people and a pretty large metro area. I started getting these emails of duplexes, triplexes, quads in my area there. Like two months later, we get an auto email. This place, it’s gorgeous. It’s a duplex. It’s like a New York style apartment. It’s nicer than the place that we’re living in. That was the first thing that caught my eye, was the pictures, but it also has an apartment that’s making money on the first floor.

We go to see this place. I quantify it and realize that the PITI, and this is key for your listeners, this is how you first want to approach a deal. You see something that you like or you think it’s in a good area, okay, your first move is what’s this going to cost me in terms of P&I, principal and interest? What are the taxes? They might be crazy high, you don’t know. Then you can usually ballpark the insurance and figure out what your fixed monthly costs are for the place. Then you look at the rents.

For me, I looked at it and I think the PITI was going to be $1,200 a month, and the rent coming in with $600 a month on the first floor, and I’m like, ‘Well wait, we can live there then, for net $600 out of our pockets.’ We were paying 850 to rent where we were.

I’ve got a pregnant wife. I’ve got a small daughter. I’m like, ‘Man, I can’t afford not to invest in this duplex. It’s going to save us $250 every month.’ That was really the first lesson. I can live more cheaply by buying a multi-family, doing half of what this kid out of college did, and then make that work. That was my first deal. That really cut my teeth.

Brandon: Okay, so you bought this duplex. At that time, were you thinking things like repairs and maintenance, the fact that you have to cover that kind of stuff, or were you not really worried about it? Were you going to do your own work? How did you calculate that in the beginning?

Bryce: I was not of thinking that. Honestly in retrospect, I probably was not giving enough credence to that metric, but that can be all over the place. That kind of stuff happens when you buy a single-family home too. You have repairs and maintenance in the single-family home.

That’s not really a detractor for multifamily as much as it’s a detractor from owning real estate period. We had one waste line. We had one roof. We had one set of gutters. It would just happen to be a duplex. I don’t necessarily buy the whole R&M argument as a detractor for it. You got to move ahead with it anyhow.

Brandon: Yeah.

Bryce: Start with the PITI.

Brandon: Cool

Bryce: You got one lawn to mow. One tax bill. PITI to get started.

Brandon: I love that. I love that. Again, we call this house hacking at BiggerPockets, a lot. You are finding a way to live cheaper or maybe for free. In this duplex, you were now living for 600 bucks a month instead of paying 850 somewhere else. You own the property. You’re building equity. You’re paying the loan down. You’re getting the tax benefits. You’re getting all these great things about owning real estate, and you do it with a very low down payment usually. Is that what you did for this? Did you get a FHA loan for this or something? How did you finance it?

Bryce: Yeah. That’s exactly right. As a teacher with kids, I did not have a huge sum ready to rock and roll. I had to get 3½% down. FHA. Even with that, I think borrowed $4000 from my in laws just to close. It was every last penny that we had to get into the place. I realized even on the front end, this is how we save money every month after this.

That’s what we had to do to get into it. FHA. To be honest with you, take those numbers again,1200 and 600. A year later, we refinanced out of the FHA and into a conventional product, we lowered our monthly payment to 1100 and we bumped the rent up $100 to 700. Now I’m sitting at 1100 PITI and 700 coming in. We’re living there for $400 a month. That’s in the nicest apartment I’ve ever owned.

David: That is one of my favorite parts of owning real estate. It’s good when you buy it, when you buy it correctly. Then it just gets better every single year.

Brandon: Your systems get better too, so it’s less work every single year.

David: Yeah. Exactly right. It’s less work. It’s more profitable. You get better at finding better deals so you start off better, and then those get even better as you go. The whole thing just works exponentially. That’s how a guy who claims that he’s not smart, is able to retire at 35 years old with a $120,000, because you learned how to manipulate this really powerful force in a good way, and you rode that wave all the way in.

Bryce: Absolutely. I’ll share with you real quickly. The third night we were living in that duplex, it was shared ductwork. I had a younger guy downstairs. My infant daughter and pregnant wife were asleep. I start smelling, man, that pungent weed smell. I’m like, ‘This is bad. This is bad.’ I tell the guy, ‘Hey look, do what you want with your life, but you just can’t do it on my property.’

We were month to month. He goes, ‘Then I’m not going to renew the lease.’ I freaked out because there goes my income.

I go to my wife. I’m like, ‘What should I tell him? Should I tell him it’s fine to do it?’

God bless my wife. It’s like, ‘No. Screw him. We’ll find a better tenant for more money.’ Sometimes you need a partner to push you to be a little stronger and better in the midst of it.

Brandon: My wife is the exact same way. She’s always like, ‘Screw up. Let them leave. I don’t care. We’ll find a better one.’ That’s the great thing about being a landlord. Typically when you’re a landlord, you have all the power. You have so much power.

There’s one thing that drives me nuts about Airbnb. I had an Airbnb unit for a while, and then I got rid of it. Part of it was because of the extra work. The other part is because I hated not having the power. The power of Airbnb is the reviews. Reviews control your entire success forever with Airbnb.

I’m not saying I was a bad Airbnb guy, but I was so afraid all the time that if I did anything that wasn’t hugging them, and kissing them, and then they would just leave me a bad review, which would then destroy my income. With rental, that’s like, ‘No. You’re smoking pot. You’re out. Bye.’

Bryce: Right. Right. That said, these are still your clients. One of my mindsets has been, this is my client. I’m serving them. This is a product that they’re buying. If I want them to renew, or I want them not to trash the place, or want them to tell me about repairs that need to be done, you still got to treat them really well. I’m not saying that you wouldn’t or that you haven’t, but I look at it as these people are paying me. I want to give them the best product I’m capable of giving them.

David: Obviously, there was a little shot of fear that went through you at that point. ‘Well maybe, I will let you smoke some hippie lettuce in my next door unit.’ It’s like you’re going too crazy here. You’re able to overcome that because you realized you need to take control of your own thing. Can you tell us a little bit about some things you’ve learned or some techniques you’ve used to overcome that fear that’s apart of real estate investing, being a landlord, agreeing to make this mortgage payment for the next 30 years, all that kind of stuff?

Bryce: Yeah. Well, some of that delves into life philosophy. You got to think about it like this. I was honestly, before that deal, I’m not kidding you, we talked to everybody that we knew who was smarter than us. We prayed for three, fours days days before we put in the offer. We were like, ‘Is this the right decision?’ We were freaking out about this decision because it was so huge to us.

It was a risk. I don’t want to mitigate the risks of real estate. They’re there. You could have a furnace go out. We did. That place lost it’s furnace six months down the road. You could have a lot of stuff happen. All of that is risks. Those are risks that people use to freeze themselves and never get into investing in real estate. That’s where I was. I was looking at all the downside risk, but it’s a balance scale.

On the one side is the risk, that all these bad things are going to happen. They’re real. Give them some weight. What’s on the other side of that balance scale? It’s this. I could be 85 years old, laying in my bed, looking at my ceiling, and kicking myself because I never freaking tried. That’s a risk too.

You’re foolish if you’re not quantifying that risk too. I got to the point where I was like ‘Okay, there’s that risk of having a furnace go out or whatever,’ and then there’s this risk of just being stuck in a job that I didn’t want to have, and wasn’t making enough money for me and my family, for the rest of my life. How about that risk? You’re sitting on that risk too.

That overcame my fear because one of my fears was not having enough money for my family and being stuck in a low paying job forever. That’s a fear too.

Brandon: Yeah. I love that.

David: That’s not talked about enough. Go ahead.

Brandon: It’s not. Yeah. I just love that. The risk of not doing anything in my opinion is far greater than of doing something, especially with real estate. If you were to go risk all your money on bitcoin, that is different. That is a very large risk.  If you’re going to risk it all even on a single stock, whatever.

Real estate, I don’t want to say you cannot lose. People lose all the time. Like you said, there are risks to it, but there’s so many protections of real estate. If I buy a bad deal, if I buy something and for some reason something didn’t work out quite like I wanted, my cashflow wasn’t quite what I wanted, it’s probably going to be okay.

It’s probably still going to overtime go up in value or probably pay the loan off overtime. I’m still going to get some good tax benefits from it. I’m probably okay as long as I’m a halfway decent manager of the property, or of the systems that it’s behind it. Again, the risk of not doing anything I think is just far greater.

Bryce: Absolutely. Absolutely. Yeah. If you’re farmer, you can’t guarantee that planting a crop means you’re going to get a yield at harvest time. There could be locusts. There could be drought. You can guarantee that if you don’t plant, you’re not going to harvest anything. That is a guarantee.

Brandon: I love that. Let’s talk about the landlord thing. A lot of people say, ‘I don’t want to get into real estate because I’m nervous. I’m scared. I don’t want to be a landlord. Uncle Bob, Uncle James, Aunt Sally, they did rental properties and they lost their shirt, or their wallet. They had a horrible experience. They had a guy smoking weed in the basement.’

Everyone’s got these stories of their Uncle whatever who failed at real estate. ‘That’s why I don’t want to be a landlord. I don’t want to fix toilets like Uncle Bob did.’ What do you say to those people?

Bryce: I say you got to vacuum the truck. If you’re listening this podcast right now, get out your pen and paper, you got to vacuum the truck, Here’s what I mean by that.

Brandon: Yeah. What does that mean?

Bryce: On my journey to financial independence, as a landlord, I had bought a Toyota Tundra. Terrific truck. Great, but I had a loan on it, and it was killing me. The gas mileage was killing me. Most of the time, it was a 5000 pound vehicle carrying around a 200 pound man. Not a very efficient equation.

It got to the point where I was like, ‘I got to sell this thing,’ but I owed $10,000 on the loan.I did not have that much savings to pay this truck off. It’s killing me at $300 a month in the payment. I’m like, ‘I don’t know how to sell a truck that I have a loan on.’ The state holds the title to it. They’re not going to release it till it’s paid off. I, for months, I’m like, ‘I don’t know how to do that. I don’t know how to sell a truck that has a loan on it.’ I let that keep me from taking any positive steps.

Finally I get to the point where I’m like, ‘You know what? I don’t know how to sell a truck that has a loan on it,’ but I know how to vacuum my truck, and that’s free. That’s free. That day I went out with my Shop-Vac and I freaking vacuumed the truck. The next day, okay, I don’t know how to sell a truck that has a loan on it, but my wife know how to take pictures. She’s got a good eye. Still free.

She takes pictures. Alright. I don’t know how to sell a truck that has a loan on it, but I know how to make a Craigslist ad. That’s still free. I make a Craigslist ad. People start calling me. I guess I can let them test drive my truck. Still free. Anything cost any money yet, guys? That’s still free.

Then I’m like, ‘Well, okay.’ People test drive. One guy wants to make an offer, and I tell him, ‘Okay, I would need you to give me the money first for me to pay off the title, and then we could go to the notary, once I get the title in hand.’ He’s like, ‘I’m not going to do that,’ which you shouldn’t do that. It’d be stupid.

Brandon: Yeah.

Bryce: What we do is this. He gives me $500 as a deposit. He’s like, ‘Just see if you can free up 10 grand, man. Here’s $500 to hold that truck, and then figure it out.’ I go, and listen to this, I self escrow all of my taxes and insurance for my real estate properties. I’ll be honest. I also dipped into a couple of security deposits. This is mid journey. I pull out 10 grand. It wasn’t savings. It wasn’t even really my money. I pay off the note with a 10 grand.

I get the title. We go to the notary. We do the deal. He gives me 10 grand. Then I put it right back. Now I’m out from under $300 a month in a truck loan, because I vacuumed the truck. Real estate, it’s the same thing. People are, they are looking at step five. They’re like ‘I don’t know how to be a real estate investor. I don’t know how to make these deals happen.’

Okay, great. Don’t let that freeze you up from taking steps one through four. I didn’t know how to be a real estate investor when I called the realtor that first time, and asked her to show me multifamily properties. It was free to go see the cat piss, cigarette place. That was free. It was free to get the auto email with all the multi families. That was free. Guess what? Here’s the other thing. It was also free to make an offer on that place.

Brandon: Yup.

Bryce: Right here, I’m going to tell you this right now.  You make an aggressive offer, that is a free and a low risk proposition. Let’s say, there’s a place that’s listed for $200,000. You offer 180. They come back and they say 192.  What’s the offering to the general public for that place? It’s still $200,000. What’s the offer to you?

David: 192.

Bryce: 192. You’re still risk free because you can turn down their counter offer when that’s sitting on your desk. That’s when you decide whether you want to be a real estate investor. When that counter offer is sitting on your desk, then you start really thinking hard. ‘Am I ready to go through with this?’ Don’t cut yourself off before you get there. Do all the three steps first. Vacuum the freaking truck, and then decide that you’re ready to rock and roll when you got that counter-offer back on your desk.

Brandon: I love that.

David: Yeah, that’s incredible. You’re so right about that. So many people would benefit if they would stop looking at five steps down the road, and start looking at one step in front of them.

Brandon: But David, I don’t have any money. I can’t because I don’t have any money. That’s what people say. I don’t have any money.

David: Yup.

Brandon: I can’t find any deals.

David: Or my wife just got pregnant with our second kid, and we don’t have anybody, and she’s going to quit.

Brandon: Yeah. Yeah.

Bryce: And she’s crying on the floor.

David: Yeah. Yeah. She obviously went from crying on the floor to retiring at age 35.

Bryce: Yeah.

David: It worked out for you. Can you tell us a little bit about where you are now, your overall portfolio?

Bryce: Yeah. Let me give you in brief the next step. I figured out when we were living in that duplex, and we’re getting the margins better, and better, and better, and it was down to like 1100 PITI, and 800, and eventually 900 in rent, I’m like, ‘Well wait, I’m only paying $200 a month to live in this place.’ Then I started doing the math. What can I rent out the part that we’re living in for, because that would be profit over and above whatever our PITI is.

Long story short, I rented out the place we were living in for $1,400. I’m making 900 on the bottom floor. That’s 2300 in, and 1100 out in PITI. That’s when I started doing the R&M math, and realizing I have a common electric meter I got to carry. I have to pay a water bill and that kind of stuff.

That really didn’t make that much of a ding. I was clearing $1,000 a month on that place after we moved out of it. That was the mortgage payment for our next place that we also lived in. It was kind of crazy that first time. The second time was even crazier.

We bought a triplex. We moved into it while it was still being renovated. Get this guys. This is where you got to channel Vito Corleone from Godfather Part Two. You got to do everything it takes. That second place that we bought, we lived in a smaller apartment. We had three daughters in a two-bedroom apartment. Their bedroom look like a Romanian orphanage with cribs all over the place.

I’m teaching. I got my real estate license. I’m a realtor. I’m a teacher. I’m a coach. I’m a landlord. I’m coming home at night, at 4:30 after school. We’re getting the girls to bed at 8 o’clock at night, doing the dinner thing, then to bed. In this triplex, I’m going upstairs and I’m painting. I’m working on the other two units from eight until one in the morning. I’m going to sleep and getting up at six in the morning, and starting the whole thing over again.

You better believe every single brushstroke, every single in a piece of trim that I’m putting in, I am building my financial future.That was not easy. It was not easy at all. I’m not going to lie to you. We had a box of wine in the fridge. It went a lot quicker than it normally should. We made it. I told her, ‘Honey, just give me this one more- do this for a year and then we’ll get whatever house you want.’

That triplex, once we got it outfitted, I cleared $1500 a month after financing from that triplex. Now, we’re going with 1000 from the duplex, 1500 from this triplex, and now I’m shopping for the home.

David: Okay, so Bryce, let me dig in on that. You’re making $500 per door on these deals you’re getting.

Bryce: That’s right.

David: You’re clearly getting deals that someone like me can never find. You got some secret source that’s finding you deals. Maybe it’s the black market. Maybe you’re getting these from Russia. I don’t know. Can you tell us where are you finding these incredible deals that are allowing you to make $500 a door?

Bryce: Yeah. I’ll say this. One, none of them made me $500 a door when I bought them. In some ways, the decision to buy them was only one decision. The decision of what to do after I bought them- there’s a lot of subsequent decisions. That’s the whole thing of being a real estate investor. Part of it’s yeah, buying a property, but then you have a whole lot of other decisions that your success hinges on after that.

For me, this might have been stupid, we spared no expense. We opened them up. We put in granite countertops, ceramic tile floors. We redid the hardwood. We exposed the brick. They’re gorgeous. They’re still nicer than my house. The thing is, we were living in it with a mortgage that was an owner-occupant primary residence mortgage, because we’re in that segment of two to four unit.

All the money that I borrowed, we refi’ed that duplex and took a little bit of money out of it, but I’m getting that money as cheap as you can borrow money, because it came as a primary residence mortgage. After our FHA, we found a local bank that was willing to do 90% loan to value, because of the upgrades and everything, they already assumed more than the 10% that we needed when we were walking out of it.

For free we went from a FHA loan to a 90% loan to value and a little bit of cash, which is part of how I started renovating the next place. While we’re living in that triplex, and I spent every last dime making the place as nice, we refi again, get the higher value.

Again it’s on owner-occupant financing. I still have those same two owner-occupant mortgages on those places, because they were 30 year amortizations. They’re both at 3¼% interest rate, and I’m laughing all the way to the bank because they cash flow like kings.

Brandon: What you’re saying is the same thing me and David say all the time. You don’t find good deals. You make good deals. You didn’t just happen to stumble across like, ‘This is an incredible deal. How did nobody else find this?’ How did you find it then?

Bryce: The triplex that I found, the second one, was right next door to the duplex. Honestly, it directly abutted it. The landlord had Section 8 tenants there, which I guess I can’t knock it. Some people need it. Whatever. They got to take it. These were like Section 8 and County mental health outpatient leases. Literally, we’re living next to like, insane people. Part of it is, I bought out of self-defense. I wanted to defend the investment I’d already made on this duplex. I worked on that landlord for like a year and a half.

I’m like, ‘Sell me your place. Sell me your place. Sell me your place.’ This was my one and only pocket deal. I go to the guy. I’ve been talking. He’d been talking, throwing out crazy numbers. He was coming in high. He’s saying like 230, which for my area I was like, ‘That’s going to be hard to make money on, 230.’

Finally, I learn how to do an agreement of sale.  I’m going to walk an agreement of sale to this guy, and put it in his hands so he’s not just shooting wind.That’s what I did. I wrote it for 195. I take it to his desk. I’m like, ‘I don’t think it’ll appraise for higher than this.’ I was lying. I guess he wanted his 195. He agreed to 195. We did it and we got in for cheap. Again, we bought with owner-occupant financing to get in on that 195.

Brandon: That’s awesome.

Bryce: Two years later, we refinance at a higher value. I’ve got walking money for my next deal that again, is coming as cheap as you can possibly get it.

Brandon: That’s awesome. How many total units do you have now?

Bryce: I’ve got 23 units.

Brandon: Wait, wait, wait. You’ve 23 units and you’re retired at 35. Don’t you have to get hundreds of units and be investing for 20 years to be able to retire? You’ve to get lots of units, right?

Bryce: In fact, I got to be honest. I listen to your podcast. I hear you interviewing landlords. They’re saying stuff like, ‘Yeah, this deal is clearing me $200 a month, $300 a month.’

I’m like, ‘That would not even get me out of bed.’ I’m not going to go see a place unless it can reasonably be over $1,000, this is after financing, for me every month. When that’s your metric of evaluation, and yeah, I’m not buying it like that. Like you said, I’m adding value. I’m figuring out. It might mean dividing the heat when I buy it, to get rid of that cost. It might mean paying. It might mean knocking out a wall doing a big reno. I want the end game to be, this property is going to give me at least $1,000 a month.

I say 23 doors. One of those 23 doors is that condo that was losing me money. Let’s say, it’s 22 doors that’s getting me 10 grand a month passive income. When you get into it, you go for ROI. You as the owner of the property, you know what the potential ROI for the property is better than anybody else.

Brandon: Can you explain ROI for those who don’t know?

Bryce: Yeah, that’s acronym for return on investment. Return on investment. Return on investment. Return on investment. I buy a place. A three-unit. This is one of my deals. This is one of the deals we didn’t move into, but I I buy it and it’s shared oil radiator heat. Every landlord knows this. The middle of December. The tenants have their windows wide open, and you’re paying to heat their stupidity.

The best time to do it is when you buy the place. You come in, you look at it and you tell the tenants, ‘Hey, new ownership. The first thing that’s happening is,’ and this is how you say it, this is exactly how you say it. You say, ‘Everybody’s going to use the amount of heat that makes them comfortable, and pay for what they use.’ That’s fair. No one can argue with that.

Brandon: Yeah.

Bryce: People are going to be, ‘Ah, the landlord is making me pay for my own heat.’ Then don’t use as much heat. Now I’m not a jerk. I also replaced the windows. They got double paned windows. They’re happy with that. They can control it. That’s between them and the power company, not me.

Let me give you an example here. This is better than any real estate deal I’ve ever made. I buy a place. I cut out all the radiators because the cost was $3,000 per year on heat, and then I put in baseboard electric heaters, at a cost of $5,000 total. I spent $5,000 total. It cuts my landlord costs like $3,000 total every year. That’s a return on investment of $3,000 every year for a $5,000 investment. That’s 60% return on investment.

Let me ask you guys. Have you ever found a real estate deal that’s giving you a 60% return on investment? Now, I haven’t. You could grab a bunch of properties really quick, I’m sure you could, but it makes more sense to take the properties that you already have and find those areas of hidden ROI and exploit them. A lot of times, they’ll be a better return on your money than going out and get another property. You still only have to deal with the same number of tenants.

You go out and get another property, you got a whole new set of weed smokers trying to do damage to your property, whereas you could keep three tenants and still get good return on your money. You got to max that out and then move to the next deal.

Brandon: I love that. I don’t think people think enough about that. Hidden ROI. I’ve never even heard that phrase, but I’m going to start using that now. Instead of going out and buying another property, how can you maximize the one you have? You could probably get a even better return.

Bryce: Without increasing your monthly effort at all.

Brandon: Yeah.

Bryce: It’s the same rental.

David: That’s really good. That’s really good. Everybody should be looking at ways that they can do the same thing. Brandon often talks about, when I see a two bedroom house that’s got 1200 square feet, I know there’s a hidden bedroom somewhere in there. He knows that if he can find that extra bedroom and make it into an official bedroom, his rent might go up by 15 to 30%. Boom.

Your ROI just increased incredible for the price of putting up some drywall, and maybe building a closet. That’s a really good tip, Bryce. I really like that. Can you tell us as far as what you’re buying, are you only buying small multifamily properties right now?

Bryce: Yes. At least I have been. I’d be willing to move into the next segment. That’s this next journey. I’ve gotten to the point where I’m financially free and I don’t have to worry about my job everyday. That gives me time to network with the kind of people, the Grant Cardones of the world who can tell me, ‘Hey dude, here’s how you go from a four unit in Bethlehem, Pennsylvania to a 300 unit wherever, in Cleveland.’ Everybody’s in Cleveland.

Brandon: I live in Cincinnati. Same thing.

Bryce: In Cincinnati, yeah. That’s what I’ve bought. One of the reasons I’ve been so successful is I live in an area that is growing. I live in the third largest metro area in the state of Pennsylvania.

Brandon: Where are you?

Bryce: We’re in the Lehigh Valley, which is an hour north of Philly, and an hour and change west of New York City. That’s a key area. That’s where Grant Cardone would, I think, call a tertiary area or like a third area, where you’re part of a larger metropolitan statistical area, but the values aren’t bloated yet for the kind of prices that are going in northern Jersey or New York city. I’ve kept my sights hyper, hyper local. All 23 of my doors are within a two mile radius of my house.

This is also important too. They’re also all within one mile of either Lowe’s or Home Depot. I’m not buying condos in Corpus Christi from Pennsylvania. I’m not because there’s so many different pieces that come in, when you’re not there, when you can’t drive by the place, when you can’t go when there’s a problem, especially when you’re starting out and you’re the property manager. It saves you money. It saves you time to have stuff that’s local.

For me, and this is key too, if you’re in an area like that, that is worth investing in, for me a good deal in Bethlehem is better than a great deal in Pittsburgh, or even a great deal in Philadelphia. A good deal, for me, local is one that I can control and I can start maxing out that ROI. I look hyper local and it makes the management that much easier.

David: Yeah. One thing I noticed is that you know what you want. You know what works for your system. You’re looking for properties that fit a model that you’ve already developed. That probably takes a lot of the anxiety out of, ‘I don’t know. Should I buy it or shouldn’t I?’ It’s a very simple question for you because you’re looking for, ‘I’ve got a round hole, so is this a round peg? Will it fit in my hole?’ You’re not trying to force a square peg into a round hole.

For the people who are listening that are, ‘Hey, I know where I want to invest. I know what I’m comfortable with. I’m ready to do this, but I can’t find a deal.’ Are you finding these deals through Direct Mail? Do you have a super secret wholesaler that’s feeding you? Is this stuff that you’re actually just buying up the MLS because you know your stuff?

Bryce: Yeah, no. I’ve never done any of that late night infomercials stuff. Not to paint it all with the same brush, but I was afraid of that honestly. I didn’t want to put that much more labor on my plate. Sorting deals is labor. I’m just perpetually on the local auto email for multi families within the zip codes that I’ve given to my agent. Even though I’m a real estate agent, I have an agent that works for me too.

I’ve done deals before. I’ve done deals two years ago where I called her up. I was like, ‘Write the offer and send it in. Then let’s go see the property.’ I had already adopted that mentality of, ‘Don’t get frozen. Take step five.’ I knew I can always get out of this deal, even if we get an agreement of sale. They take my offer. Whatever, I don’t like the furnace on the inspection, I walk away. I find termite tubes, I walk away even if they’re dead. I don’t like the radar numbers, I walk away.

You can do all that stuff after you have the agreement of sale. What you can’t do is get an agreement of sale that’s already between them and another buyer. You can’t undo that. Get the AOS. Get the AOS. Get the AOS. It’s free. I guarantee it’s free. That’s a free step. Then decide, ‘Am I going to follow through with this deal?’ That took me a couple of deals to figure out where I was like, ‘Oh yeah, wait. The important thing is to make sure I’m the one who can play this deal.’

Before you have the agreement of sale, the seller has the upper ground because they can go to any buyer. After you have that agreement of sale, you have the upper ground because they’re committed to you as a buyer. Then you can take your sweet time deciding, ‘Do I want to keep this? Do I want to get rid of it? Am I going to lose my earnest money? Am I going to find a easy contingency out of this?’ That’s always there to you.

David: I wrote a blog article for BiggerPockets about how I analyzed and bought a deal in five minutes. We were at a real estate conference. We were learning how you find off-market deals. This couple that was there, went and left, and got on a phone call. The wife came back crying and she said, ‘The funding I had for this deal just fell out. I was just about to close on it. This was such a good deal.’ She’s heartbroken.

I was like, ‘Well, tell me about it.’ She said I think, the ARV was 145. They had it under contract for a 100, and it needed maybe $1100 of work. It was a really, really good deal. Then I said,  ‘Is this a property you would have bought?’

‘Oh yeah. We were going to buy it.’

I said, ‘Okay, I’ll buy it.’

She looked at me like, ‘How do you know?’

I said, ‘Well, when you were talking, I looked up the pictures on Zillow.’ I confirmed that ARV was close to what she said. ‘I looked up the rent on Rentometer. It was past the 1% rule. The pictures of the house looked like they’re in really good shape. Let’s put me in a contract. I’ll give you a $7000 assignment fee just for giving it to me now.’

They were buying it from a wholesaler, so they was already an assignment fee attached to this deal.

Bryce: Oh my gosh.

David: Good, right? I had no worries. Everyone at the conference was like, ‘You’re crazy. You’re an idiot. What are you doing? You haven’t gone to see the house. You haven’t called anyone or talked them.’

I said, ‘I know. All that comes later. I’ve got inspection contingencies. I’ve got a period of time that I can look at all this stuff. If I don’t like it, then I can back out at that point. If any information someone gave me doesn’t check out, I can back out at that point. Why am I going to let some other buyer jump in because I’m frozen and scared, and I can’t move on the deal?’ Put it under contract, and then you start your stuff.

When you’re new at investing at real estate, you tend to think, ‘I got to have every single duck lined up. Everything domino has to be in place. I’ll push the first one, and all just “prrrr” in one big thing go down.’ The end result be a closed sale, but that’s not the case. You don’t need to know it all in the very beginning. You need to know the basics.

That’s how investing works. You start up with this really blurry picture. If you like it, you dig in deeper and you look closer. If you keep liking it, you keep in digging. If you get to the point that it focused enough that you didn’t like something you saw, well then you back out. As long as you do that within the time period you have do it, it’s not a problem. This comes down your vacuum your truck thing.

Bryce: Yes. Vacuum the truck. That’s what you did. You vacuumed the truck. You knew step one, and you didn’t know step five, so you took step one. You got to do that.

David: Step five becomes a lot more clear after you hit step four, and three, and two. You only got to take one step. You don’t have to run to the whole thing. Can you tell us very quickly here, Bryce, how are you funding these deals? You know how to find them. You know how to analyze them. How are you funding it?

Bryce: I told you the first five doors, first six doors that we have we did it through owner-occupant financing. The next deal that we did after that, I convinced my father-in-law and my father to take out Home Equity Lines of Credit on their personal residences. Again, cheapest money you can borrow, and they gave me the money. I had already had proof of concept with my first couple of deals. It wasn’t like they were taking out a loan on their house for me to go bet it all on black, or to go invest in Bitcoin.

Remember I told you I borrowed $4,000 from my father-in-law on that first duplex? We paid him back in four and a half or five months. We ate macaroni and hamburger helper, so that we could save the money to pay him back. You know what? Even with family, that counts. When I went back to him and said, ‘I need 20, $30,000,’ he knows Bryce is good for the money, and he’s going to pay me back. I used family route because that was cheapest and because I was asking people to bet on me.

My very next deal was one that I found and I was like, ‘Holy crap. I can’t believe nobody else has taken this.’ This is a good lesson. This is why you go see stuff. It was a four unit that was owned by a school. A quad owned by a school that they let students stay in gratis. Free. No rent, if they were taking a crash course in this masters level school. The listing agent makes the listing for this place. What do you think she puts down as rents for this place online?

David: Zero?

Bryce: She puts zero. Everybody, including me- you look at it and you’re like, ‘Oh, it’s a dump. It’s a dive.’ Whatever. ‘There’s something wrong with it. It’s a shell.’ I think I was the first person with half a brain to walk through the place, and to be like, ‘Wait, what are they asking for this?’

It was in the middle of a blizzard. I’m there with my agent, in the middle of a blizzard. I call my father-in-law and I’m like, ‘Hey, can you come see this place, and also can you take a take out a Home Equity Lines of Credit?’ He comes. He looks at it. He’s like, ‘You’re right. This is a good deal.’ We line it up. I make an all cash offer because I was getting the money from my- they both had lines of credit. They just maxed them out for me. Gave me the cash.

They agreed, and here’s that agreement of sale thing. I get the agreement of sale. I’m not kidding you, within an hour and a half of getting the agreement of sale, there are two agents with their clients on the front porch trying to see this place, and they all wanted it. I’m like, ‘Hey, I got a signed agreement of sale. Tough luck, guys.’

Brandon: You locked it up.

Bryce: That was a quad. I got it for 165 in cash.

Brandon: Wow.

Bryce: Four months later, we take an appraiser through. 270.

Brandon: That’s awesome.

Bryce: Cash flowing, right? That was the deal that for me, I maxed out my my loan on that 270. That was my first commercial paper deal. Then that was my seed capital for my next purchase. That’s when I have the 20% down, 30% down, was able to start doing that. I had learned how to recognize value. I had learned how to vacuum the freaking truck, and move forward with stuff. Then it snowballed. I knew what I was doing. I knew where I was looking. I knew how much I should be paying. I knew what I could get in rent to get that above $1,000 profit every month on the places.

Brandon: I love that. I love that creativity too. You didn’t sit there and go, ‘Well, I don’t have any money, so I’m going to back to watching my TV. I’m going to watch my stories.’ You just kept asking questions. ‘How do I do this? Well, I got family that might have equity in their house.’

Bryce: Right.

Brandon: I love that. That thinking, ‘How do I afford it,’ not, ‘Can I afford it,’ makes all the difference.

Bryce: Yeah. Let me stop you right there because people are going to say, ‘Well, my parents don’t have that.’

Brandon: Yup, and they will.

Bryce: ‘Good for you. You have a silver spoon in your mouth.’

Brandon: Exactly.

Bryce: Alright, so go find hard money. Get a hard moneylender. The deals that I had would have still made sense even with hard money, especially if I could refinance them out in three months, six months or whatever. You just got to find a deal where a hard money lender is going to be like, ‘Yeah, I’ll give you the down payment, man.’

David: Yeah. Brandon and I, we do webinars for BiggerPockets. They’re usually geared towards people that are getting started. Everybody’s concern is, ‘How do I get this first deal?’ It’s so much work to find that deal. What you just described is you worked hard to get a deal. You had a ton of equity in it. That first deal bought you your second deal. That second deal if you buy it right, it’s probably going to buy you your third deal.

You only have to put that insane effort in in the very beginning, and then it gets easier. As you get better, and your equity grows, and your options grow, and like Brandon was saying, these creative options start to become apparent, and you’re not going to be working that hard all the time.

I tell people if every workout that you did in the gym was like the first one when you haven’t gone in six months, you would never work out. That’s just excruciating. That’s not how it is. They progressively get easier until it doesn’t even really burn anymore. You just get tired and you’re done. If it did burn, you would quit going. You can only do it for so long.

That’s what it’s like when you first start investing. It’s going to be a lot of work. It’s going to be new. It’s going to be scary. There’s going to be negative emotions. You’re going to make a mistake, like you did on your first condo. You’re going to work really hard to get a deal. If you get a good deal, that deal is going to get you your next one, which will get your next one. Then you get to the point of real estate investing is a ton of fun, and deals are finding you. You got a network of people. All the stuff that you’re worried about in the beginning is not there.

Think of it like, something else in life you did that was really hard. That first job you had that just sucked, and you weren’t good at it. You hated going to work everyday. By a couple months into it, it was great. Keep that in mind because the stakes, like you said earlier, Bryce, are so big if you don’t do this.

Bryce: Right. I want to say this too. I know there’s people listening to this, that they’re arguing. They’re in their head. They’re arguing with it. They like, ‘I don’t even have a good deal.’ Okay, great. That’s the same as me saying, ‘I don’t know how to sell a truck with a loan on it.’ Vacuum your truck right now. If you’re listening to this, write it down.

Look online for that local realtor who can take you to a multi-unit. That’s free. Free. Free. Free. Take that step. You got to vacuum the truck. Even you guys at your stage in the game, the two of guys, you’ve got stuff right now that you didn’t move forward on, or you haven’t moved forward on yet, that you just need to do those next couple free steps, and figure it out. I don’t know if it’s calling Grant Cardone back up and being like, ‘Hey, can you tell me how to do that thing you said on the podcast,’ or whatever. That’s free. He already knows you, so he’s going to take the call.

People, they’re going to get out of what you’re saying. They’re going to try to say, ‘Well, I don’t even have a good deal lined up, so nobody’s going to trust me.’ Okay, fine. Start looking at deals. You won’t know a good one until you’ve looked at a critical mass of them.

David: Yeah. I can share from my own life that I’ve always bought every deal I’ve ever bought with my own money. I work really hard to save money. Then I go invest it. I wonder if I’m not going to look back and say, ‘Why didn’t you raise money when interest rates were super low, and there was tons of money to raise? You could have had four or five times as many houses,’ because I didn’t want to step out of that zone of comfortability.

I’m giving up a lot by being stubborn and doing it this way, rather than going and learning something new. Can you tell me, Bryce, now that you’ve got financial freedom, what’s next for you? What’s in your future? What are some ideas you have and where you like to see yourself go?

Bryce: Here’s where I’m going to pull a page out of Mr. Money Mustache. If you haven’t looked at that blog, that guy is a prophet. He’s terrific. One thing that he says, this is gospel truth and that’s this. There’s a diminishing marginal utility to money. After you have a certain amount that you need, getting more only helps you out in a diminishing amount. Once you’re fed, once your kids college is funded and everything like that. You can make yourself really busy chasing deals your whole life, but the key to getting exactly what you need is that you can begin to scale out.

You can scale up with more work, but you can also begin to scale up your passivity. That’s my next goal. For me honestly, I don’t know how I’d spend any more than a buck 20 every year, from what I’m making. What I want to do is, I want to start moving myself out of the day-to-day management, because at this point I have four daughters. We had four kids in five years. They’re young. They love me. They love being on my lap. I love spending time with them. I volunteer 20 hours a week for a non-profit locally here.

I love doing that stuff. There’s some of that stuff too, that you get to age 85 and you’re like, ‘I miss some opportunities there to have really done good.’ For me, that’s the next step. I need to figure out either how to take those 23 doors and get them all under one roof by 1031ing into a larger property, or figure out maybe a little bit more scalable system of management, where every new property doesn’t increase my workload.

Here’s a great example. I have one unit that’s a law firm. It’s in a small office. They use it three hours per month. They don’t even really go there. They just use for appointments. They’re paying me a really small rent. They’re pay me 675 per month for this little office. I can make more on the square footage if it was a one bedroom apartment. At first, I was bummed. I’m like, ‘They’re not paying me very much for that space.’

When I look at it, they’re paying me more than any of my other tenants, on the basis of how many hours of labor they require out of me month to month. In one sense, that little law office that’s only used three hours a month, it’s paying me way more than any of my other places because they never flush the freaking toilet. They’re never there. They’re not using electric. They aren’t complaining. They aren’t doing stuff. They’re still paying me rent every month.

You got to look at your investing career in that way too. Not just return on investment of money, but return on investment of time. How do I maximize my time? Ultimately, nobody got into this to stare at a computer, or fix a toilet all day. The fun part of real estate investing is that you get your life back. You get to do what you want to do. You can go the gym. You can play golf. You can take the girls out. That’s the real aim.

Brandon: That’s so true. A couple things I want to bring up there, then we’ll move on. We got the fire round coming up here. Every investor has these phases. I’ve talked about these before in the show. The initial phase is for most people, maybe not most, but for me and for you, it was, ‘Get out of my day job.’ That was phase number one. I think David you’re the same way.

Whatever you got to do to get out of your job, I’m going to do that. If it means painting until one in the morning, like you did there. I’ve had so many one in the morning, two in the morning days painting, right? If it means managing myself, I will manage myself. If it means hustling, however I have to borrow hard money, friends, family. It doesn’t matter. I had to get out of a job.

Once you achieve financial freedom. It’s like that game. Robert Kiyosaki’s cashflow game. Once you get out of the rat race, now you have the mental freedom, the financial freedom, the physical freedom to explore the next phase. Then that phase comes. Then you can figure out what really matters. What’s the next thing?

Yeah. That first part, kind of sucks. If you have a strong enough vision, it’ll pull you towards that. Yeah, it’s going to be hard. I got to work. I got to struggle through this. I’m going to read a quote. Steve Jobs said, ‘If you’re working on something that you really care about, you don’t have to be pushed. The vision pulls you.’

I had this vision of financial freedom. Anyway. that’s phase one. Phase two, and now you’re entering that one right now, and you’re figuring out, ‘Well, what comes next?’ Anyway, again my point is, the people listening right now, you might be in phase one right now. It might be hard, but it’s not going to be like that forever. That’s just phase one.

Bryce: Right. Right. I’ll say this too. That pull becomes stronger when you write it down. I told you that I was a moron, right? I told you I was an idiot at the beginning. I was that guy who never wanted to take notes in class, never wanted to journal or write anything out. When I started this real estate thing, the first time in my life I committed to writing down my goals. I wrote them down daily. I was pissed off enough with my job, that I wrote down daily, ‘I will not sit for 35 years of this crap. I will work myself out of this job. I’ll figure it out. I don’t care if it kills me, but I’m going to work myself out of this.’

That doesn’t sound like a business tip, but when you’re the person doing the business and your emotions are what is controlling it, that is a business tip. Write down somewhere every day. ‘Here’s what I want.’ Then figure out everyday how to push the football a little farther down the field.

Brandon: I love that. I love it. Yeah. Writing down goals. Reviewing them daily. That’s why I do a journal every single morning. I write down my goals of what I want to do, and how I’m going to get there, and identify the next step. When you keep that top of mind, otherwise you might go to two, three, four, eight, ten weeks, whatever without ever thinking about, ‘Wait, what was my goal again? Oh, that’s right. Oh, I haven’t done anything towards that. I haven’t vacuumed the truck in like forever.’ If you identify, ‘This is what I want. This is the next step. I’m going to go do it right now.’

Bryce: People are going to argue. They’re going to say, ‘I don’t know the next step.’ Alright, fine. Find somebody that knows. Vacuum that truck, man.

Brandon: Yup. There you go. I love it.

Alright. Well, we got to get out of here and move on to the next segment of our show, which we lovingly refer to as our Fire Round.

It’s time for the Fire Round.

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Brandon: Alright. Let’s get to the Fire Round. These questions come direct out of the BiggerPockets forum, where real life BiggerPockets members are asking these questions. We’re going to ask you them, Bryce. You can help them out a little bit.

Number one. Would you decrease your monthly rent in order to keep a good tenant? Somebody wants to move. They’re threatening to move if you don’t lower the rent, but you like them, as a tenant.

Bryce: Not in my market. I have a plethora of good tenants. I’ll find the next one for more rent.

Brandon: Alright. Number two.

David: Very good. Alright.

I am having a hard time finding a qualified tenant. The rental has been on the market for 15 days, and after 48 leads, no one is qualified. The problem is that they don’t have a 600 plus credit score. What should I do?

Bryce: If you’re basing it solely on the credit score, you’re not being smart. You want to look at what’s competing for rent every month. There’s plenty of kids who come out of college with a good degree, and maybe even a good job. They have what you would call shallow credit, meaning they have never borrowed a lot of money so they don’t have a very high score.

To me, that’s actually a smart kid. Someone who hasn’t taken out a lot of credit card debt, or anything like that. They just get a bad score from a calculus on a computer. You got to look at what they’re carrying. Did they just buy a new beamer, and they have bad credit score? Yeah, get rid of them. If they are smart, keep them.

Brandon: I love that tip. It’s fantastic.

This is little bit of a longer question. It’s a situation. A potential partner identified an off-market opportunity he wants to partner on. It’s a duplex and it’s currently owned free and clear. The guy who owns it does not have a mortgage. The owner lives in it currently, he wants to move out. I think it’s worth between 105 and 120.

Did I say duplex or house? Can’t remember. Yeah, it was a duplex. Okay. A duplex, between 105 and 120. Owned free and clear. He wants $75,000 in his pocket. The guy who is selling it wants 75000 in his pocket. He’s planning to list it, but he’s willing to deal with us since the partner is a friend of his. It can rent for, it looks like, right around 1500 a month total. It’s like 1½% rule. It looks like it needs about 10K in rehab. How can I structure this deal? What can I do since I don’t have a lot of money to put this together?

Any suggestions for them?

Bryce: Well, the first thing is you want to get that contract. Maybe you have to tweak the financing or anything like that. One. There’s millions of guys out there who are saying the same things to their buddy about wanting to move. That’s not a deal. That’s not a deal. That’s hearsay. That’s water cooler talk. That’s not a deal.

A deal is when you have an agreement of sale. Then you find out what he’s actually willing to part with it for. Then you can start shopping it around the banks. Maybe you leave the financing contingency wide open or leave a few options for yourself, but then you go to a bank. If the two of you need money from somewhere else, you’ve got something that you that you can go to somebody and say, ‘We have this under contract. We’re looking for the money.’

Otherwise, you’re wasting everybody’s time, including that guy who is saying he wants to sell his house. Make him stop wasting his own time, and tell him this is the quickest route to $75,000, and see if he’s serious.

Brandon: It just stood out to me in this that I think I would do. One of the tricks I like to do a lot when I’m doing real estate, I like give sellers two offers. It makes them debate between the two offers you are giving them, rather than yes or no. They’re like, ‘Oh, which one’s better?’ In this case, the guy said he needs 75 grand in his pocket. That’s what he wanted, but it’s worth a 105.

I’d probably say, ‘Okay. Hey buddy, option number one. Will you carry contract for, I don’t know, 30 grand? I’ll come up with a bank to give me the 75 needed,’ so I’m going to buy it for 105 for example, or, ‘Will you carry the entire contract for a year, and I refinance it out later, and I’ll pay you a 110.’ I might give him a couple of options there, but this is one suggestion that stood out to me. David, anything you to add, or Bryce?

David: I want to say that it sounds like you’ve created a new concept of the Jedi mind trick when it comes to real estate investing, Brandon, the Jedi Turner. That’s really, really smart because what you’re doing is it rather than insulting them with the lower offer, where their only response that they can take with their irritation is to come back at you with like anger and pain.

Now you’re giving them two offers. They get to decide in their mind which one of them make sense for them, when originally, probably neither of those offers would have made sense if you had made one individually. That is really, really smart.

The end result, the seller needs to get rid of that house. That’s why they’re trying to sell it. If it was in really good shape or if it was really good property, someone would have already bought it. We’re looking for homes that have usually been on the market for a while. They need to get rid of it. They just can’t bring themselves to accept the fact that they’re not going to get what they think that they deserve.

You’re presenting this in a way that that doesn’t let them think, ‘Oh, I’m getting ripped off.’ Its, ‘Ooh, I have options. I have some control.’ You’re giving them this illusion of control that they really, really want. Much like Master Yoda would have done with Luke.

Bryce: Let me jump in on that really quick too.

Brandon: Please.

Bryce: This is a key lesson for you investors out there. When you’re thinking of purchase price, let’s say you are at a highest and best point. You’re getting to somewhere where you’ve got a property that you know is a high value, but somebody else knows it is too. You’re looking at a loan that’s amortized, in my case, over 30 years.

That first duplex that we bought, we offered a 102% of list price. We knew there were multiple offers and I was like, ‘There is no way I’m going to lose this best deal for $2,000 amortized over 30 years. Not when I can make that back.’ That’s peanuts every month, that with a coat of paint you can make back up, and rent. Don’t lose a deal for a couple grand, because then you got to start looking again. It might be six months before something else  like that comes up.

Brandon: Yeah.

David: Yeah. I just want to shout from the rooftop sometimes. The list price does not matter. Quit thinking that if you get it below list, you got a deal, and if you paid over list, you paid too much. You run your numbers. You look at your ROI. You look at your options. You look at your equity. You look at your cash flow. You do not look at the list price. That doesn’t matter at all.

If people can get over that hurdle in their head of, ‘Oh, I got ripped off because I paid over list. Oh, there’s so many more deals that would be out there.’ You were smart enough to recognize this is a great deal. Who cares what they’re asking for? I need to be the top offer. I love, love, love you said that.

Can you tell me, Bryce? I know you manage your own properties. Where do you list them for rent?

Bryce: I got to be honest with you. I like in a hot market. It’s terrific. Bethlehem, Pennsylvania is 75,000 people. It is the darling sister city, in the third largest metro area in the state. All the yuppies, all the professionals, everybody who wants to live in a downtown that’s safe, fun, active, where they can walk to the restaurants, and outdoor shopping. They all want to live in Bethlehem. Literally, all I got to do is put my places on Zillow, or Trulia, or HotPads, and maybe Craigslist. I got people jumping down my throat, ready to rent from me.

I know that’s not the same thing for every market, those are free. That’s an easy thing to start with.  I have never had to go outside of those, at least not yet, outside of those channels.

David: Would you say it’s fair to say that, it’s more important the condition and the price of your property, then it is this secret where you can put it out as a rental and get a great rental right away?

Bryce: Well, maybe. The other thing that’s important is good pictures. People don’t go to see something that doesn’t have good pictures. I don’t care what your property looks like. It’s what it looks like on the internet first. Then when they come and see it, there’s that wow factor when they walk in the door.

All my places, honestly, they look like the set of Friends or Seinfeld. I have exposed brick. I’ve got granite countertops. It’s open concept. They walk in and it’s unique. It pops. It’s in a great downtown. They’re like, ‘What do I got to do to rent this from you before the next person walks in?’ That’s when I’m like, ‘Oh, maybe my price should be higher.’

Brandon: I love it. That’s actually one more benefit of making your properties, the main benefit, making them really, really nice. Putting in a little bit more work. Doesn’t usually take that much more money, but a little more thought into how you’re developing your properties, is you can usually get a lot higher rent, and you can be little more pickier with your tenants, and you get higher quality tenants. All good stuff there.

Bryce: Right. You marry a smart woman like my wife, and they can tell you what looks nice, and what a kitchen should look like too.

Brandon: There you do. Alright. Well, we got to get on to the world famous, Famous Four. Before we do, let’s hear from Mindy Jensen on what is going on this week over on the BiggerPockets Money podcast.

Mindy: Hi Brandon. Hi David. On Monday’s episode of the BiggerPockets Money podcast, we talk to the Mad Fientist about three ways to access your retirement funds early. A little preparation can have you paying little to no taxes on your early withdrawals, and there are even penalty-free ways to pull money out before age 59 and a half. The Mad Fientist breaks it all down, so it’s easy to understand. Plus, he sports a way better beard than you, Brandon. Okay, now for the Famous Four.

Brandon: Alright. Definitely check that podcast out. If you guys are enjoying the BiggerPockets Money podcast, do me a favor and let Mindy know. Let’s make Mindy feel awesome. Go over to Twitter. Her Twitter is @MindyAtBP. It’s ‘@’ sign, and then Mindy a, t, b, p. Let her know that you’re loving the show. That’ll make her feel good, her and Scott Trench. Yeah. Definitely check out that podcast. It’s awesome.

Actually, David Green here- David, you were on the BiggerPockets Money podcasts the other day. I’ve had numerous people say, not only is it the best podcast of the BiggerPockets Money podcasts I’ve ever heard, people said it’s the best podcast period, episode, they’ve never heard ever. Listen to the episode, the BP Money podcast that David Green here was on. He was the guest on there a few weeks back.

Good job, David. Apparently, it was really good. I haven’t listened to it. I only listened to the first 10 minutes, because you were so boring. I’m totally kidding. I listened to the first few minutes when we were putting it together, but apparently it’s amazing.

David: Can you guys tell how surprised Brandon is that I did a good podcast? He’s like, ‘Against all common knowledge.’

Brandon: Against all odds.

David: Alright. Awesome. Okay.

Brandon: Alright. Moving on, we got the world famous, Famous Four.

David: Alright, Bryce. What is your favorite real estate book?

Bryce: It’s got to be Rich Dad, Poor Dad. I know it doesn’t give you all the granular answers, but you got to start with a 30,000 foot view of what you can do. For me, like I told you, that was the first seed that was planted, and that made me realize what was possible, so that when things got tough, I started looking for real estate as the answer.

Brandon: Perfect. Love it.

Number two. What about business books, business related books? Any current favorites?

Bryce: Yeah. This is going to sound crazy again. Honestly, Think And Grow Rich, by Napoleon Hill. That’s a mindset book, but listen. Businesses are run by people, and people have mindsets. The first way to tweak a business is to tweak a mindset. That book for me was so pivotal, I can’t even describe it.

One, it erased my cynicism about my own prospects about investing in real estate. It gave me actionable steps. That’s when I started writing stuff down too, because the book’s like, ‘You got to write this down to make it real.’  It showed me how to have that goal.

For me, my goal was 10 grand a month in passive income. When I first made that goal, that seemed insane. That’s laughable. Who has $10,000 a month in passive income? Through this book, I wrote it down. It changed how I looked at my goals. Not just financial, but any goal that you want to get.

Businesses are made of people. People need to have goals. It requires the right mindset. Especially, if you’re a business owner, man. Read that book. Mark the pages. Highlight it. It’s terrific.

Brandon: Love it.

David: Love that book too. That’s very good. Alright.

You’ve got four daughters. You paint houses and put in trim. When you’re not doing that, what are some of your hobbies?

Bryce: I love playing frisbee. I love golf. I’m terrible at golf. Now one of my goals this year is to play a little bit more golf. I play guitar. I’m involved in a local nonprofit called, The Young Life, which is just terrific.

Brandon: I love Young Life.

Bryce: Yeah. Young Life’s awesome. Gosh, what else? I sing. My family, we sing all the time. We make up songs in our house and we sing. It’s weird and it’s crazy. You got to do that when you have four girls.

Brandon: That’s awesome. Alright. My last question of the day. What do you believe sets apart successful real estate investors from all those who give up, fail, or never get started?

Bryce: I’m going to tell you right now. There is one thing. It’s not just real estate investors. There’s one thing that separates successful people from unsuccessful people. It’s this. Clear goals. Clear goals. Clear goals. Clear goals. You got to have that out there. You got to have that goal, so that steps one through five makes sense, even starting to take. For me, I had wishy-washy goals before I got into real estate investing. There was nothing out like, ‘Here’s what I’m aiming at.’

Man, you paint that target, and now all of a sudden, you know why you’re loading your gun. You know how you’re going to hold it. You know what you’re shooting at. You know when you’re missing. You know when you’re hitting.

Unless you’ve got that goal, that every day you can hold up your schedule and be like, ‘Okay, am I moving this football forward,’ you have no way to mark your progress. Clear goals is the way that a guy with no marketable skills, no business training, could barely hang a picture, had two kids- the only way I could have succeeded was to have clear goals of, this is what I want. Until you do that, you’re just meandering.

David: That is really good.

Brandon: So true.

David: Very good. Bryce, where can people find out more about you?

Bryce: There’s a couple places. In fact, to get into the BiggerPockets podcast, this is so crazy, when Mindy contacted me and said, ‘Give me your quick bio,’ I thought, I bet everybody just emails back a couple of paragraphs. I’m not going to do that. I’m going to make a YouTube video of my real estate investing career.

Right now, if you go to YouTube, don’t search from Google, if you go to YouTube and in the YouTube search bar you type in, ‘From broke to retired in 15 years,’ I made like a little Emoji,  financial biography that shows with rounded numbers, and it’s overly simplistic, but how I went from being in school debt and buying a bad condo, to being financially free in 15 years.

Brandon: I watched it. Cool

Bryce: Did you watch it? Yeah.

Brandon: Very cool.

Bryce: A couple other places. You want to check out Proof of Concepts. You can look at BethlehemRentals.com. Honestly, that’s the last place I list my rentals just because everybody around here on Trulia, Zillow and HotPads. I have that site as a backup and a test case. You can look there. You can see there too, that I’m serious when I mean my properties pop. I want them to look really nice. I want people to come and jump at my properties.

My BP, my BiggerPockets profile is BryceS17. I’m a new user so I don’t have a whole up there, but if you want to shout out to me on BiggerPockets, you can do that. Then, the email address that I’m going to give for the purposes of this podcast is Bryce, which is b, r, y, c, e, Stewart, which is s, t, e, w, a, r, t, 7, 9 @ gmail.com.

If you’re interested in doing deals in Bethlehem, sometimes I have more than I can handle. I’m looking to branch out, maybe bring in some other money these days. If that’s something that you’re interested in and you’re actually serious, shout out to me. I know the city really well. I know the difference between a good deal on one block and a bad deal four blocks away, so if that’s something that you want to do. It’s a great area to invest.

Brandon: That’s awesome. Hey, can I just point out something real quick? I don’t know why I never really thought of doing this before. I went to your website. BethlehemRentals.com. You’ve got a testimonial on there. It said, ‘I loved my apartment. It was in a great location and my landlord was always on top of things. If I move back to Bethlehem, I’d rent from him again.” I love that idea. Why have I never thought of putting a tenant, whatever, recommendation right on the homepage? I’m going to totally steal that idea. Nice work.

Bryce: Really the question is, why haven’t you thought of merging together a couple of reviews, and turning them into one quote like that, which is what I did.

Brandon: There you go. There you go. I love that.

David: Did you make like a Voltron ad of the reviews? Did you just take a piece of all of them and put them together, and make this awesome robotic review?

Bryce: Yeah. Yeah. To be honest with you, it keeps me accountable too. That’s what I’m shooting for. That’s what I want. I don’t want tenants who don’t like their experience with me, because they still know where my place is, and they can pick up a rock.

Brandon: There you go. Alright. Man, Bryce, this has been fantastic. So many good nuggets in here. We covered a lot of stuff today. Thank you for joining us. Of course, people can get involved. Read the show notes by going to BiggerPockets.com/show276. They can ask you questions in the comment section. Hopefully, you can jump in an answer those, or they can just say, ‘Hey Bryce. Nice work.’

Thanks dude. This was awesome.

Bryce: Guys, go vacuum your trucks. Vacuum your trucks. Do it.

Brandon: I’m doing it. Alright. Take care.

Bryce: Alright. Later, guys.

Brandon: That was our show with Bryce Stewart. Bam, that was awesome. I love that.

David: How cool was that, that this average Joe was able to retire at 35 years old, with all that money. He’s a self-proclaimed, what was it, an idiot that he said, or not a smart person?

Brandon: Idiot. Moron. Whatever. I didn’t say it. He said it.

David: I’m not sure if I agree with him, but yeah.

Brandon: He seemed like this wicked, smart guy though.

David: I love what you said about the way you make offers when you’re offering two different amounts so that you give the seller something to think about, and you turn the attention away. That was a really, really good point. You had a lot of good points on today. You were on fire.

Brandon: You are on fire, David Green. That’s why they call you David, on fire, Green.

David: That is why they call me that. That’s a good point.

Brandon: Anyway, hope you guys enjoyed the show. Again, if you loved it, go to iTunes. Leave us a rating or review. If you’re watching this on YouTube, make sure you guys click that little thumbs up button. That helps us reach more people as well.

I don’t know. If you’re not on our YouTube, you guys should totally subscribe to our YouTube channel. We put all of these podcasts episodes up there on the YouTube channel. We also put other things there that you would never see otherwise. I make a lot of videos, and going to be making a whole lot more going forward. In fact, I’m researching new mirrorless cameras right now, so I can do some better higher quality video. I’m excited for that.

On that note, if anybody here is listening who’s in Hawaii, who is a videographer, I would love to hang out with you and talk to you, and make some videos. Hit me up if you’re in Hawaii and you’re a videographer, because we could do some damage. I will say this. If you’re videographer in the Bay Area, hit up David Green. You never know what he could use as well. We’ll do some damage together, David.

David: You got to be really good to work with me, though.

Brandon: Really good.

David: I need help to make me look good. Brandon doesn’t really need it. I need a little bit more.

Brandon: There you go. Alright. Let’s get out of here. Thank you guys for joining us. For BiggerPockets.com, this is Brandon Turner here with my co-host, Mr. David, needs a lot of help, Green.

David: Signing off.

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