From Car Valet to $100k/Month… Seriously! with Thach Nguyen

Brandon:
This is the BiggerPockets Podcast Show 395.

Thach:
Oh, man. Are you really actually making that money? And he’s driving a Benz and living at his mom and dad’s house? How is that possible? But they don’t realize, I think, behind the scene I was buying a lot of rental property. And I was actually accumulating them and getting them paid down so I get out of the rat race. So I could actually start to invest more and sell real estate without having a gun at the back of my head.

Speaker 3:
You’re listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on, everyone? It’s Brandon Turner, host of the BiggerPockets Podcast, here with another phenomenal episode with a really, really engaging guest and, of course, a super engaging host named David Greene. What’s up, David Greene?

David:
What’s going on, Brandon? That’s a very nice intro. You’re in a good mood today.

Brandon:
I’m in a good mood today. Today we have a phenomenally awesome show as, of course, we always do, but with a really cool guy. His name’s Thach Nguyen. So Thach I met years ago, and then I followed on social media. He is just a bundle of energy and a bundle of knowledge all wrapped into one bundle of greatness. He goes into a ton of stuff today. I don’t know. We talk about a lot of things, everything from how he went from nothing to making 100 grand a month in passive income. I did not mis-say that, 100 grand a month in passive income. We actually recorded this officially right before the coronavirus lockdown, so we held onto it a little bit longer just so we could do topical shows about coronavirus during the height of that.
We talk about how he got through the 2008 recession, lessons learned there, including some paid off property stuff, whether or not you should pay off properties or not. And the lead acquisition strategy that most of you won’t do and that he’s still doing it today even though he’s making 100 grand a month. It’s crazy. He’s got a perfect BRRRR example during the Deal Deep Dive toward the end. So hang tight for all of that, but before we get to that show, let’s get to today’s quick tip.

David:
Quick tip.

Brandon:
All right, guys. We’re going to put together a special type of podcast, a BiggerPockets Podcast in the near future where we want to hear from some of you. So here’s what I want to do. I want you to go to biggerpockets.com/guest and let us know your story. What I’m looking for is stories of people who have listened to the podcast, started from basically nothing, and now you have a pretty phenomenal portfolio of business. You’ve got a cool story to tell because of what you’ve learned. And if BiggerPockets was a part of that, let us know your story, biggerpockets.com/guest. And we might bring you on the show. We might do a show with multiple different guests coming up here shortly of success stories of the podcast. So if that’s you, biggerpockets.com/guest, let us know. That’s today’s quick tip.

David:
Quick tip.

Brandon:
I think we’re ready to take this show on the road. Are you ready, David?

David:
Yeah. One of my favorite things he talks about, so be sure to listen for it, is what he learned coming out of the last crash. So from 2008 to 2010, Thach lost some money, and he took what he did wrong. He incorporated it into his business now so that while he’s building wealth, he’s protecting himself from the downside. I always love hearing from people that have that seasoned experience that have lived through more than just one, not even a market cycle, just one elevator ride up. So be sure to make sure you listen all the way through so you can hear some of that good advice.

Brandon:
Truth. With that, let’s bring in Thach Nguyen. All right, Thach. Welcome to the BiggerPockets Podcast, man. Good to have you here finally after many years of knowing about you. I’m pumped.

Thach:
Oh, man. I’m honored to be here, man. We’ve been knowing each other for a long time, buddy. I missed you guys in Seattle last year and excited, man, to play with you guys.

Brandon:
Yeah. This is going to be fun. Let’s hear about your story. I mean, I know a lot about what you do because of your social media presence. You’ve got quite the social media game going, which is awesome. I definitely encourage people to follow you because you’ve got videos about everything on how to do this stuff. But before people do that, they got to know a little bit more about you. So how did you get into real estate? What was that like?

Thach:
Well, I came from Vietnam. My family evacuated in ’75. My dad worked for the US government. When the Vietnamese Communists invaded South Vietnam, the government told my dad to leave. So my dad came home, picked all of us up, and we left on the last plane out of Vietnam with one suitcase, a hundred dollars for all eight of us. I was five years old at the time. We landed in Camp Pendleton in San Diego. We lived in a shelter there for a few months, got shipped up to Seattle. Lived in the shelter there for a few months. Finally, we got our own little rental house, two bedroom, one bath, little shack, but it’s obviously a palace compared to living in a homeless shelter.

Brandon:
Yeah.

Thach:
Then I went to school like a normal kid. I graduated in 1988 from high school at Franklin. I wasn’t sure what I wanted to do, but two older brother was in the aviation business fixing airplanes, flying airplanes. So I thought that’s the best thing to do, follow them. But I hated it, and that’s one of the tip I always tell people, “Man, you got to follow your own passion and follow your own inspiration, not what everybody else around you is doing.” So I was parking cars at a Chinese restaurant, and one of my friend, the daughter of the owner, was studying for the real estate license. And she says, “Hey Thach, you should do real estate with me. I think you got good mouthpiece. I think you’ll do well at it.”
So I went and got my real estate license in 1991. I got my license and I got hired. I was 21 years old, youngest guy ever in Washington state. The first three years I was selling maybe two houses a year. I finally got a mentor in 1994 that taught me how to do real estate, residential real estate, and I started doing well. I would knock on a hundred doors a day, five days a week for 10 years straight.

Brandon:
Whoa.

Thach:
Basically, how to find listings. I didn’t realize that was a key thing for me today because back then when I was doing a hundred doors a day, five a days a week for 10 years, I was going out there focused on finding listings, talking to sellers. That’s how I made a lot of my money. Then during that process I met a mentor that said, “You got to own real estate if you want to be wealthy, not selling real estate.” Today one of my messages today is you got to own real estate, not flip real estate if you want to be wealthy, right?

David:
Yeah.

Brandon:
Can you explain that real quick? Because a lot of people are listening to this and they go, “Hey, I just read the book on flipping houses,” which I love that book. I made some good money this year flipping houses. So what do you mean you can’t get wealthy or you’re not going to get wealthy flipping?

Thach:
To me today after doing this now for 30-plus years, flipping houses is like selling real estate. You’re on this treadmill and you are running. The moment you get off the treadmill, you’re not making any more income selling real estate no more. Well, flipping houses is the exact same way. When you’re on the treadmill running, when that treadmill stop, then you got no more money. And let’s be honest, why are we even flipping houses in the first place? Everyone knows when they got into real estate, all got inspired somewhere, somehow because they want to own real estate sometime down the road so they could actually live off the passive income.
But they got caught up, in my opinion, basically comparing themselves to the Jones. Well, Brandon flipped 20 houses. Well, I’m going to do 30. Well, David flipped 30. I’m going to do 50. Then now they’re on this rat race chasing who can flip the most houses. And at the end of the day 20 years down the road, they realize that I got nothing to show for all my work, and I got no passive income. So they got to keep running on the treadmill even at 90 years old.

David:
Yeah. I can’t tell you the number of investors I’ve talked to who are major flippers. They’ve been doing it for decades.

Thach:
Decades.

David:
And then they’re like, “Yeah, I got to get myself some passive income because if I stop, I’m broke.” I’m living great now. I got a great car. I got a great life. I got a great house, but as soon as the market crashes or something slows down, they’re struggling. So you looked at this and you said, “Look, I want to build some wealth.”

Thach:
That’s right.

David:
How did that start for you? I mean you were involved in real estate pre-2008 crash then.

Thach:
That’s right.

David:
And you’re obviously involved today. So walk through that journey.

Thach:
Yep. As I was selling real estate in 1991, in 1995, ’96, I met a real estate mentor named Saul. He said to me, “Look, you’re doing well selling real estate, but if you really want to set yourself up for the future so you can work when you want to work where you want to work, you got to own real estate. So go ahead, make your money selling real estate because everyone got to make money somewhere so they could actually have money to buy. So go ahead and just crank out selling real estate.” At that time I was 27 years old. I was listing about 10 to 15 homes a month.

David:
Wow.

Thach:
So I was making a million dollars at age 27 selling real estate, but what made my whole life jump when Saul says, “Take the money you make and start buying real estate.” Back then you could buy rental property with 5% down, 10% down, not like today. I was buying a bunch of rentals, and I remember when my pivoting point, Brandon and David, was. I was living at home and I was the top agent.
I wanted to buy a really nice house to live in. And my wife, who is a really smart one, says, “Honey, I think we should listen to Saul and figure out how much passive income do we need to have so we can be out of the rat race before we do anything big.” At that time it was $25,000 a month of passive income, so I needed to get 15 rental houses paid off before I go buy something really extravagant like a nice house. So I lived at my mom and dad’s house, man, until I bought 15 rental property.

David:
Wow.

Thach:
I was making a million dollars selling real estate. I remember a lot of people was talking shit about me, “Oh man, are you really actually making that money? He’s driving a Benz and living at his mom and dad’s house. How is that possible?” But they don’t realize behind the scene I was buying a lot of rental property, and I was actually accumulating them and getting them paid down so I get out of the rat race. So I could actually start to invest more and sell real estate without having a gun at the back of my head. That’s how it started for me. In 1997, I bought my first rental house for $105,000. And today I bought that for 105 with $5,000 down, and today that property’s free and clear and is worth 750 grand.

David:
Wow.

Brandon:
Let’s talk a little bit about that. I’m curious. I guess I want to go to you mentioned, “I want to have 15 properties,” and I know I’m going back a little bit, “paid off before I buy something nice.” First of all, I love that you were willing to sacrifice and forget about everyone around you. This is a huge thing today because everyone feels like they have to rise to some social media level, right?

Thach:
Yes, yes. Yes.

Brandon:
I mean even just the idea of owning a house. I’m curious, David, your thoughts on this because you’re an agent. I mean so many people out there pushing, you got to own a house; you got to go buy a house. And investors will ask me all the time, “I don’t even own a house yet. Should I still invest in real estate?” Yes.

Thach:
Yes.

Brandon:
Yeah. Who cares if you’re renting? I mean yeah, I think it’s probably financially smarter if you look at the dollar percentages and all the math. It’s probably smarter to own, but are you just owning something that’s going to actually just hold you down? Because most people when they go out and buy a house, then they’re like, “How much can I qualify for? I’m going to go buy that house, maybe even a little bit higher than that. Fight with my lender over it.”

Thach:
Right.

Brandon:
That idea of I need to own a house is, I think, holds people back more than it helps sometimes. But yeah, I’m curious of David, your thought as well and Thach, your idea on that?

Thach:
Go ahead, David.

David:
I just had this very conversation with a client yesterday who’s saying, “David, I think I want to house hack in the Bay Area, but I also want to go buy properties in the Midwest. There’s some turnkey stuff I’m looking at. How do I know which one I should do?” They both have merits to them, all right. What I would say is that owning a property makes more sense than renting the house you live in probably 10 times out of 10 if you look at it over a long period of time. If you look at it over one, two, three years, that starts to be different.
But the point of owning a house is not just to watch it appreciate. It’s to lock in what your monthly payment’s going to be. If you live in a market like Thach or me, the Bay Area, Seattle, it’s not uncommon for us to find people that are spending $2,500, $3,500, $4,500 a month a rent to live in. Those same people could go buy a house for $5,000 or $6,000 mortgage, and in five years that will be less than the rent that they’re paying, especially if they house hack. So if you can throw on in addition to that, you’re getting rental income for your house and now you’re getting a mortgage interest tax deduction that you weren’t going to be getting before. And you’re paying down principal and you’re getting appreciation. It starts to look really good.
Now here’s another thing to consider. When you were renting, every year your rent went up. When you own a house, your payment stays locked in. Not only that, your tenant’s rent is going up, so you’re winning twice. Your rent isn’t going up. Your tenant’s rent is going up instead, and your expenses are staying locked in. When you factor all that together, to me, I don’t know why anyone wouldn’t house hack. The only time you shouldn’t house hack is if you’re in someone else’s house hack so you can save money to get to your own. Buying a house straight up, just I’m going to go lock myself into a $6,000 a month payment, can totally handicap you so that you can’t go invest in other real estate.

Brandon:
Correct.

David:
But if you do it smart, it’s the opposite. It should accelerate how quickly you can save. Then eventually, your primary has enough equity, you can take a HELOC on it. You can go invest that money. That’s the way that I would look at it. I don’t like when people get into the binary method of, should I buy a house or should I rent? Should I invest out of state or should I invest in my market?
You’ve got to look at your own financial picture and maximize and tweak what makes sense for you. If you live in Mississippi and rent is $450 a month and you could go buy a house and it’s $600 a month, it doesn’t probably make a huge difference what you decide when you’re in that kind of… But if you’re like where Thach and I are in, this is huge, thousands of dollars every month that’s going to change hands depending on how you structure it.

Thach:
Yeah. I agree, man. For my situation, I can’t speak for everybody out there listening. My situation is I didn’t have a problem living in my mom and dad’s house. At that time, Cammy, we wasn’t married yet. She didn’t have a problem living with my mom and dad because Asian folks are all tight. For me, I wasn’t in a hurry getting out there and buying. What I knew from my mentor was, “Man, get yourself set up so that you don’t actually have to work. You can work when you want to work.” That was a tough sacrifice, Brandon, like you said because I was the top agent. I was the number one agent in our office and around Seattle driving a convertible Mercedes Benz. I’m 27 years old and I live at my mom and dad’s house. You can imagine the shit talking that was happening on the street, right?

David:
Yeah.

Thach:
But today, you know what I mean, they know where the respect is because very few people can do what I did. You know what I mean? But I lived at my mom and dad’s house. If you actually can live in your mom and dad’s house and you don’t care about getting out, stack your rental property. But I think the biggest thing for everyone listening is it don’t matter where you are right now. You got to really ask yourself, by what age do you want to have the option to work or not to work? That’s the first question I think everybody should think about when they get into the investment game, into real estate.

David:
That’s good.

Brandon:
Yeah.

David:
What are your thoughts on that, Brandon? Should you start buying rentals right away? Should you flip houses first? Does it matter how you structure it?

Brandon:
Yeah. I think it’s like that quote, “It’s more important that you decide than what you decide.” I go to that all the time on stuff because people just don’t do anything. I think flipping houses and I mean house hacking, flipping, it all has a place. That’s what so beneficial about listening to podcasts, right, is because you listen to a podcast and you hear a bunch of different stories and examples of this worked out really well for this guy. I’m going to go do this strategy. I mean, you got to make money. Like you said, Thach, you were selling real estate. Some people flip houses to make money.

Thach:
That’s right.

Brandon:
And that’s fine. If that’s what you want to do, it’s a great way to make money if you’re good at it, if you have the right skillset for it. Like you just said, David, a minute ago, I’m still not a fan of these, “This is what you should do. This is not what you should do.” The idea that there is a path that has already been written down for you that you just haven’t discovered yet, you know what I mean? Like, that whole idea that I don’t know…

David:
Yeah, totally.

Brandon:
… that it’s black and white. It’s not black and white. Learn as much as you can about everything. What do you think?

Thach:
Yeah. Someone today asked that question. I get that question asked a hundred times a day on Instagram. Hey, if you’re a husband and a wife and you got two kid and you want to settle down and you want to get into a school district, go for it. Go get your house, buy it, get in it, get settled, and then go make some new money and start buying and focusing on building your rental portfolio. But if you’re a single person and you don’t care living at your mom’s house and you don’t care hacking, do that. You know what I mean?
But the key is if you want to get a house, get into it. But the key if you want to start owning real estate, you got to go out there and figure out how to make cash come through the front door so you could actually buy a rental. Because if you only got enough money to do one or the other, you’re sure going to have a problem. Because you got to keep flipping, but you don’t put your money in apartments where it’ll make any cashflow down the road, you’re going to be flipping house for the rest of your life. I think people, if you want to get into a house, if it’s a have-to for your family, get settled, go buy it, and after that focus on building your cashflow.

David:
There you go.

Brandon:
David, what are your thoughts? I was going to ask you that earlier, but what do you think somebody should do? I mean it’s the same kind of, it’s not black and white.

David:
One of my favorite things, Brandon, that you ever said was that all these different strategies we talk about on the podcast are tools in a tool belt. You can do it this way. You can do it that way. The more you have, the more jobs you can take on. I love that. The problem is when people start to say, “Well, do I want to be a hammer guy or a nail guy?” Now you do want to niche down on one element and be good at what you’re doing, okay. But there’s lots of different ways to do the thing you’re good at doing, if that makes any sense. You can be a house flipper that looks at the… You get that deal in your contract, you’re like, “Oh no, I’m keeping this one. I’m going to split it into two units and have a rental,” like what Thach was saying.
I have a very specific formula for how I build wealth, and it’s super simple because I like to take complicated things and make them simple. I earn money. I amplify money. I invest money. Those three things, earn it, amplify it, invest it. When the returns come back, that’s an earning of money. Then I amplify that. Then I invest it. And at every level I’m trying to increase that dollar. If I can earn a dollar, turn it into $1.50, amplifying it, invest that and turn it into $1.75 or $2 by adding equity to my deal, that puts of cashflow, which becomes earning. And I run it through that cycle again. There’s all kinds of different ways. You have to know the type of investing you’re doing and how it fits into that formula.
Thach and I, we both earn money by selling houses. That’s a way that we can build income. Then we take that money and we amplify it by flipping houses. I take my money. If that’s all you’re doing, earning, amplifying, earning, amplifying, like Thach said, you never get out of the rat race or the hamster wheel. But if you then take your earnings that have been amplified and you go invest them, now you’re starting to build long-term wealth, like what Thach was saying. But you can do it way faster than the person who just earned and invested. They didn’t amplify it or they didn’t even earn. They just spent all their time looking for a deal, and they found this great deal. But they could’ve made $200,000 with that same time if they would’ve had a different element.
You take your skills. You learn how to apply them, and then you create this ecosystem that starts to create wealth for you. That’s how you get to the point Thach is at where he’s got this much passive income a month. He didn’t just say, “I’m going to go do this one thing and do it to get to 100 grand a month.” He combined all these different ways in a method that caused his money to make him money, caused this opportunity to develop that opportunity. The end result is what he’s talking about. You’ve got to tweak your thinking if you want to get to that place.

Thach:
Yeah. Well said, brother. Well said, well said. Well said.

Brandon:
All right. So Thach, let’s go back to you.

Thach:
Yes, sir.

Brandon:
Your story, you got in, living with your parents. Started buying these properties. Then you said 15 properties? You pay them free and clear?

Thach:
Yep.

Brandon:
Were you getting mortgages on them? What was the story there?

Thach:
No. I accumulated the number of doors that I needed. So I know that if I have those many door, I’ll be getting 25 grand. Once I accumulated the number of doors and then I call it phase two, which I started to pay them off. Phase one, I accumulate it. Phase two, then I pay it off. Once I got that out of the way, now I am out of the rat race. Now I can go ahead and increase whatever I want, but I’m doing it because I want to do it, not because I have to do it.

Brandon:
Yeah. That’s cool. There’s a lot of debate on whether or not you should pay off properties. Let’s have that debate real quick here or discussion. Let’s say you could pay off a mortgage at 4% interest and then it’s basically like you’re making 4% of your money, which people say is stupid from a financial standpoint. But then the beauty of having them paid off is that nobody can come take it from you. Dave Ramsey all day long would fight for pay them off as quickly as possible or just buy them for cash.

Thach:
That’s right.

Brandon:
How do you look at the debate and where do you find yourself in there?

Thach:
Yes. For me is I’ve gone through this cycle now, this crazy that’s going on right now, this is probably maybe the fourth or fifth time I’ve gone through some crazy stuff.

David:
By craziness, you’re talking about the coronavirus and the threat to the economy?

Thach:
Yeah. The coronavirus. I’ve gone through the 2008 crash, but the bottom line is you got to have peace of mind at some point on this journey. If you always buy to keep buying and leverage to keep leveraging, borrow to keep borrowing, and you don’t ever have it paid off, you don’t really have the true peace of mind. I mean, why we doing all this for, right? Not to create more stress for ourself. As we get older, I’m 50 years old, as you get older, you want peace of mind. So in my opinion, what I learned from my mentor is figure out how much money do you need to live comfortably if everything was free and clear?
At that time, I say, “If I had 25,000, everything’s free and clear, so I’ll be very comfortable.” He said, “Well, let’s make that the first benchmark. Let’s figure out, how many doors do you need to have? And let’s get those paid off, out of the way, so that you can have peace of mind. Then after that if you want, you can grow how much more passive income you want, but your house is free and clear. You know what I mean? You don’t have to worry about selling.” Right now there’s a lot of real estate. In Seattle right now, a lot of scared to shit right now or even just in anywhere through America, but in Seattle, we are the hot city right now. With the virus, can’t nobody sell no real estate. Well, imagine this go for two, three months. They’re all going to go broke, let alone what they going to do?
So I think at some point the peace of mind is worth a lot of money. So what I learned from my mentor is figure out how much money I need to have to be out of the rat race and then get that out of the way. Get my house paid. I live in a big house in Mercer Island. This house is over $3 million. It’s free and clear. I get everything out of the way. After that I go and invest and grow my net worth and grow my passive income because I want to, and it’s fun now. It’s not because I have to.
Now, I got a line of credit on all my property, but I never need to get to them. But the other thing that, David, you said, why I still sell real estate, because that’s new cash coming through the front door every single day. I flip houses not because of the flip. I flip houses to bring the cashflow to come through the front door so I can actually buy good rental property. That’s the reason why I say, “Pay off your property so you get out of that rat race first, and then after that you can have mortgage on the other property if you want to.”

Brandon:
One of my favorite books of all time, I’ve talked about it before on this show. It’s called Lifeonaire. It’s like millionaire with the word life instead of million. That’s the point they make in this book is if the goal of life is to get as rich as possible, to just at any cost get as rich as possible, then we should play by certain rules. Like, you shouldn’t pay off your house. If the goal of life, the number one goal is to get as rich as possible, you probably shouldn’t pay off your house because financially speaking, you can get more… The goal of life is not to get as rich as possible-

Thach:
No.

Brandon:
… at least not for me and not for you guys, I’m sure. But peace of mind is a pretty big goal of life. So I’m actually leaning towards yours. Now in the beginning, I wasn’t going to wait 20 years to get into real estate without using debt because otherwise I’d still be working at a bank right now making $12 an hour. I wouldn’t be where I am today. So I don’t regret using debt to get there.
But yeah, I’m working to pay off properties right now because I want that peace of mind that comes from okay, now once I’m like, “No matter what happens, no matter, I’m good no matter what.” When I have that, then it… Because yeah, all the flips and I write books, book royalties and even BRRRR stuff, all that’s fun and great, but it could stop. The economy could change and I don’t know want anybody having a say in that.

Thach:
Yeah, yeah.

David:
I would bet if we looked at when both of you scaled your business the fastest, it was the point when you hit the peace of mind that comes from financial freedom, my bills are covered. For you, Thach, it was my houses are paid off. Now I can take risk without worrying all the time. And boom, it’s just like any sport you play, when you’re out there being aggressive and offensive without worrying about what could go wrong is when you play your best football.

Thach:
Totally, totally.

David:
Or for a fighter, that’s when they fight the best. That’s one of the reasons you scale so quick to get out of that, what if this goes wrong, what if that goes wrong? Because when you get that monkey off your back, boom, big things start to happen. I get asked all the time, “Why do you still work if you’re financially free? Why are you still an agent?” The short answer is I don’t ever worry about not making my mortgage payment when I’ve got fresh money coming in, like you said, Thach, to put into reserves. I’ve got seven, eight years worth of reserves built up that if the economy went terrible, I’d be fine.
I hear a lot of criticism of people saying like, “Oh, the BRRRR strategy’s bad because you over-leverage.” I think that’s just people that don’t understand it. Leverage isn’t necessarily the scary thing. It’s not having enough money in reserves to make your payments if things go wrong. Once I hit that point where I wasn’t worried about, can I not make the payment, that’s when I scaled the most. That’s when I bought the most properties and I made the most money. There’s a very strong argument to be made for get that monkey of worry off your back, whatever it is for you individually, and then you’ll watch your business take off.

Thach:
Absolutely. My mentor has been drilling in my head that the standard I want you to have at all times in cash reserve is a million dollar. I mean think about that standard. You know what I mean? That’s been instilled in my brain since I was young. But on this whole peace of mind, nobody know peace of mind until they go through some crisis, a crisis in their life, personal, financial. My dad died from cancer. You know what I mean? So I know what it is. Not having to worry about working or making certain bills. My dad when he was dying, I had probably almost $18 million around, and I told the doctor, “Man, I’ll give him anything, all my money to save him and you can’t.”
So at some time, you always want to have peace of mind. I tell you, peace of mind is probably worth more than all the money I have even right now. People take that for granted. You can actually have peace of mind building your business. You just got to know the right type of property. That’s why I’m a big advocate of the BRRRR. David, I know you wrote a whole book about that, and I always promote it for you. But I talk about BRRRR in Seattle. You can build peace of mind going toward building big asset, big passive income if you know how to buy right and have peace of mind on your journey there.
You don’t have to wait, you know what I mean, until you actually buy the number of property, get them paid off, then have peace of mind. This is why I think the BRRRR model is a beautiful model to do it because you can actually do it, have peace of mind on your way to big success.

David:
That brings up a really good point. I know, Thach, that you survived the 2008 crash. You mentioned that a little earlier. Can you tell me what your mindset was like before the crash, what you adapted to get through it, and what it’s like now?

Thach:
Before 2008, I thought that hey, no big deal. I’m making a lot of money through the front door. I’m bulletproof, right? Oh, the market in Seattle is good. I’m bulletproof, right? If you own a lot of rental property, I’m bulletproof. Well, I’m glad I got smacked because during that 2008 market I was making a million dollars a year selling real estate, and I owned a lot of single-family homes and some apartment buildings. And at the same time I was building a 254-unit brand new apartment building in the midst of the whole thing.

David:
Whoa.

Thach:
That market when it crashed, most of my renter that lived in the outskirts where they’re everyday blue collar, they lost their job. So I had probably 10, 20 units going vacant, and all of a sudden I had maybe 20, 30 grand a month in vacancy. I had to step up and start basically paying those rent. Then all of a sudden during my construction of my big building, the market slowed down and all of a sudden I needed to start feeding that machine. That was 100 grand a month in that complex. A lot of my rental property wasn’t all paid down or paid off. Now, my 25 was paid off, but I had a whole bunch of it that’s new that I didn’t pay down or pay off.
So now what I learned from that is as I’m growing my portfolio bigger, at a certain point I stop and I start paying some of them down again. Because if anything happened, I don’t need to be sucking a lot of gas. New construction today, I got to really be careful on what I actually buy. I hate this phrase when people say, “Go big or go home.” I think that’s the stupidest damn comment out there, right, because you’re just laying everything on the line basically just to have no peace of mind.
Today I have a niche. I do single-family niche, what I know. I do townhouse niche, and I do micro-apartments. I do all in field city, so when the markets slow down, the in-city field is the last thing to get affected.

David:
Smart.

Thach:
So I don’t over-leverage myself today. When I do BRRRR, I don’t take out the equity out of my property. I leave all the equity in. I just take my down payment back out, but all the equity stays in all my BRRRR property. So I don’t mess with it at all. Those are the things I learned in 2008 market and what I’m doing different in today’s market.

David:
What you just said reminds me of a big argument we get in real estate. In fact, just these arguments in real estate always irritate me because there’s this presupposition that there’s a right way and a wrong way. So you hear people say, “Why would you ever buy a townhouse or a single-family when you could go buy 400 units instead?” Right?

Thach:
Right.

David:
The answer is very similar-

Thach:
It’s like in Oklahoma or down in Louisiana somewhere.

David:
Yeah, right. Or even another country. There’s a lot of that going on like, “Go invest in this country.” But the answer is there’s pros and cons to each side. We said something earlier in this. Oh, it was should you pay down your house or should you go use debt to make more. There’s pros and cons to each one. When you go use debt, it’s an offensive move. You can scale faster. You can build wealth bigger, but at a certain point when you’ve already jumped ahead in the game and you’ve got a big lead, it doesn’t make sense to keep throwing long passes or throwing haymaker punches. At that point you tighten up and you start to play defense. That’s how you win. You’ve got to look at where you are in this whole journey and what’s going on around you to know how to make the right move.

Thach:
Absolutely.

David:
What you said is you’re playing at a big level, Thach, but you’re still investing in town homes. And for the people that say, “Why would he do that?” It’s because they’re safer. They’re more flexible. They’re easier to pay down. You can sell them off a whole lot easier than you can sell a 400-unit building off. There are benefits to what you’re doing. And in this environment, you feel safer making those singles and doubles, not swinging for a home run every single time.
I would bet you that when the market turns around and we have a recession and all these people are foreclosing on their 400-unit apartment buildings, that’s when Thach is going to jump in to go buy those. You can’t get into that mindset of well, this is the only thing I’m doing and why would anybody do this? And I always pay off or I never pay off. I think you have to look at what’s going on around you and make the call based on what the environment dictates.

Thach:
Absolutely. I mean, I buy single-family home today. I build townhouses. I build small apartment building. I got a 100-unit apartment building we’re building right now in downtown Oakland we’re building right now. So I play all the level, and to me, I don’t have a preference what I buy or keep as long as the number makes sense to me and it’s in big demand. Everything I buy today has a niche to it. My micro-apartment in downtown Oakland, it’s a niche. It’s one of the most affordable price point you can get in downtown Oakland so that’s very highly niche that I know that when the market turns, I’m still pretty safe compared to a luxury apartment in somewhere.

Brandon:
What do you mean by micro-apartment?

Thach:
Micro-apartments are studio units that average about 300 square feet, and we make them efficient. We make them geared toward workforces, and we put them in area where there’s high demand for rentals but high demand for affordable housing.

David:
Yeah, yeah. I’m such a big believer in just affordable housing right now.

Thach:
Me too, man.

David:
Yeah. I think when recessions happen, they compress from the top.

Thach:
That’s right.

David:
I think everyone sees yeah, it’s the workforce housing. These people need a place to live. The downside is of course these people are also the ones that are potentially going to lose their jobs, but there’s just so many people at that level that are just not being served right now. I mean not many people are building micro-apartments right now. Everyone’s building these A-class, beautiful… because that’s where they can project out these amazing returns for their investors if everything just keeps going up and to the right.

Thach:
And it looks good on the ground.

David:
It does.

Thach:
They look good on the ground.

David:
Yeah. You want to take all your people. Yeah, look how beautiful this property… We have a pond. We have a black swan in the front of it that’s swimming around, not symbolic at all of what’s going on.

Thach:
When you really look at your ROI return, I mean it’s ridiculous. You know what I mean, on the micro?

David:
Yeah.

Thach:
Our building is all located in the heart of the center of it. Here’s the thing. Yes, you’re right, it compress on the top. At the bottom, even if it has to go down a little bit, it go down a little bit. It can’t down any further because you’re already so affordable, right?

David:
Yes.

Thach:
Right now a 450-unit square feet in luxury apartment in downtown Oakland, it go for three grand. Our 300-square-foot unit, 325, go for $2,000. And a one bedroom in someone’s house is going for 1,500. At some point you can’t go any lower, so you’re pretty protected when you really know a niche.

Brandon:
And what’s cool too is if you do a good job, and this is a belief I have, if you do a good job of rehabbing or building your building, now you have a new product. Let’s just say that bottom rung does lose their job, a good portion of them, in that rent. Well, that’s fine because the people above them, the guys that are paying 3,000 right now, they’re just going to tighten their belts.

Thach:
That’s right.

Brandon:
Now when they have a choice of where they’re going to go, they can go to an old 1950s building for 1,800 or they can go for 2,000 to brand new construction. That part of the industry I think is going to fare a whole lot better, at least that’s my…

Thach:
I think since we’re on this conversation for the listener, these are conversations for all you out there listening. If you’re ever going to have the mindset of owning investment property, really think about what niche do you want to carve out on a rental. Don’t just go buy a rental to say you own a rental. Don’t just go buy a rental so you can own a rental. Don’t just go out and buy property in Louisiana or Tennessee or wherever just so you’re buying it. Really think about the niche. For me, my niche is around affordable housing. A lot of my property are in area that is in high-end area like Seattle, but it’s geared to affordable. So I am creating a real good niche for myself.

David:
Oakland’s my market. That’s where I am all the time. I’m in the East Bay.

Thach:
Yeah. You know exactly where it is, bro.

David:
And I know how much in demand that is. I see how much prices are growing, and you see the pressure people are having to be able to afford the houses out there.

Thach:
Right.

David:
Affordable housing is where it’s at right now. That’s what everybody is demanding. Really, the reason Oakland’s growing is because San Francisco, there is no affordable housing there.

Thach:
That’s right.

David:
So they’re flooding over into Oakland because there’s no more room. That’s just a good principle to look at when you’re trying to figure out where to invest. Well, where is the place everybody wants to be that’s too expensive? Find the place right next to that and keep going until you actually get to where you can get-

Brandon:
That’s kind of what Tacoma is to Seattle, isn’t it, Thach?

Thach:
Yeah, it is. It is, seriously.

Brandon:
Tacoma’s the overflow from Seattle’s crazy prices.

Thach:
Yep.

David:
So if you were trying to figure out, where should I invest in Washington, I would say okay, well, Tacoma is blowing up, so what’s right next to Tacoma? Is there a suburb right outside of it where I can go and I can find something to house hack? The other point that I would want to make is that for people that are afraid to buy a house right now, there’s going to be a lot of that, okay. The COVID-19 has got everybody asking a million questions. People do not like uncertainty, so people are freaking out. But they’re saying, “Should I buy? Should I wait? What’s going to happen?” Your mind will never, ever be able to answer that many variables. The best computer in the world couldn’t handle all that.
So what I do is I just plan for the worst case scenario and I keep moving forward. If you go buy a four or five-bedroom house in Oakland right now, and God forbid the market tanks, right, that that $800,000 house becomes worth 600 or 650. Well, there’s a lot of people that are going to let their houses go because the market is dumping. We saw that in 2010. Where are they going to go? They need a place to live. They’re probably going to come rent a bedroom from you, and you’re going to be the person renting out that $1,200 bedroom or that $1,000 a month bedroom, okay. Now they’re paying your mortgage for you, so even though the value of your asset dropped, your cashflow actually goes up. You save a bunch of money. You can buy another property because they’re cheap.
Then when it turns around, you’ve got two houses that are going to go up in value much higher than what you paid for. There’s always, always, always a strategy that you can implement whether the market’s up or whether the market’s down when you think that way. When you think in a one-track mind, I buy low and I sell high. I cash flow, and that’s all that I worry about, you get yourself into trouble. When you can flow with what comes your way like what Thach is describing, you won’t lose money in real estate because if all the houses foreclose, people need a place to live.
Right now we have the opposite problem. We can’t get buyers into contract. It is super hard because every house is getting 20 offers. This brings opportunity for people that might’ve been in that position. That’s why, Thach, Brandon, me have confidence to be buying because we’re not just looking at this single-track mind, buy a house just to buy a house. We’re looking at all the variables. Do you mind sharing, Thach, what your portfolio looks like now, what your investing has grown to?

Thach:
Yeah. Today I still sell real estate today. Then I also buy houses, single-family houses. Pretty much most of the houses I buy are beat up houses. I fix up and I keep them as BRRRR properties. I build brand new townhouses in Seattle. I try to find property. When I build townhouses, I try to keep them. If they fit the BRRRR model, I try to keep them. If they don’t come close enough, then I just go ahead build them, sell them, to keep more cash in my pocket. And I build micro-apartments. Those are all my portfolio. So when you add all those up, I have over 107 property, and I have over $107,000 a month in positive cashflow after everybody’s paid out.

David:
Wait, wait. Say that again. How much?

Thach:
Over $107,000 a month.

David:
That’s amazing.

Thach:
Yeah. And what’s crazy, Brandon, started from zero. I have no investor in most of my property. The only investor I have probably in my property in Oakland, but all the other stuff, I don’t have an investor. So I do all this again from new cash coming through the front door, and I get to keep all the cash myself.

Brandon:
Wow.

David:
Yeah. You know why I love this? Because I think one of the big hurdles that Brandon and I have, because we spend so much time putting our heads together trying to figure out, how do we help that newbie that’s afraid to get started? Because as you’ve seen, Thach, once you have this much momentum, it gets so much easier. Deals come to you. You’ve already got contractors in place. This stuff just falls into your lap. Okay, I’ll go to this with this one, this with this one. But that’s because you have momentum. Building that momentum is the really hard part.

Thach:
That’s right.

David:
One of the things that stops a lot of people is the whole reason that they were drawn to real estate investing was not to build wealth. It was to get out of a situation in life they don’t like. They don’t have confidence. They think money’s going to fix their problem. They don’t like their job. They don’t want to change something about them. They think real estate investing is the magic pill that’s going to make them happy. But the people that tend to scale the biggest like you, Thach, kept working. You kept earning money to reinvest. You hedged the risk that you took with investing. In fact, I’m sure you bought a lot of properties in ’03, ’04, ’05, ’06, that you ish you wouldn’t have. And you kept them because you were still working and you were earning money.

Thach:
Right, yes.

David:
There’s something to be said for the person who says, “I’m going to keep working. I’m just going to do a job I like now. I have freedom to go get into a better position, a better job or leverage out the parts I don’t like and focus on what I do to scale.” I really think a lot of people shoot themselves in the foot-

Thach:
I agree.

David:
… when they get a tiny bit of success and then they’re like, “Okay, I’m cashing it in. I’m throwing in the towel.”

Thach:
I totally agree, man. Now for me, I was parking cars at a Chinese restaurant, working at a body shop selling, and bagger at Safeway when I got into real estate. Now it was natural for me to quit those and go into real estate, but today real estate is my vehicle. Flipping houses is my vehicle. Building new construction, a thing that I don’t want to keep, those are my vehicles to bring new cash in the front door so I can actually buy good rental property with my own money and keep 100% of my own property and my own equity and my own passive income.
But yes, I see that all the time. As soon as someone get a little bit of success, they stop bringing new cash in the front door. And what they do is they go find an investor to put the money up. They do all the damn work to get maybe 40% of the profit, but most of the investors don’t want to own long term. They want short term, in and out.

David:
Yep. Got to pay them back.

Thach:
So they got to keep flipping. They got to keep flipping. They got to keep flipping. Then all of a sudden 20 years go by and they go, “Where’d the time go?”

David:
I firmly believe as soon as we hit a recession, which could be right now from the virus. It probably will be. We’ll probably climb out of this and keep going. Nobody knows.

Brandon:
Nobody knows.

David:
But a lot of the people that are posting on social media, let me teach you how to make money in real estate. Do big deals. I’m going to show you how to raise money and syndicate are going to be gone. We’re never going to hear about them again. Their social media’s going to disappear because it’s exactly what you said, they just rode a rising tide up. They made it look easier than what it was. A lot of those people are critical, the people like us that are saying, “No, just keep working hard, keep your foot on the gas while you’re going.” Like, “No, no, no, no. Quit your job. Pay for my program. I’m going to teach you how to do it.” They’re going to be left, when the tide goes out, what’s that Warren Buffett quote? When the tide goes out, you see who’s been swimming naked. I love that quote.

Thach:
What’s your thoughts on that, Brandon, about brand new investor going out there raising investors to do deals?

Brandon:
Yeah. I don’t know. I don’t want to say people shouldn’t do it. It goes back to the black and white. Everyone got their own thing. There is a whole lot of people though today that are really excited about this idea of I got no money. I don’t have any experience. I’m going to go out and do a syndication because right now money is easy. Convincing people is fairly easy because everyone’s nervous with the stock market.

David:
Real estate’s been going up too, yes.

Brandon:
Real estate’s been going up, yeah. So it’s, I don’t want to say easy, but it’s easier to be a syndicator now than it ever has been before. But yeah, again, none of these people know… I think if you’re going to do it, that’s probably okay if you go work with somebody who’s been there, done that before and so you’re part of their team and learning alongside them. But yeah, I-

David:
You know what it reminds me of? Do you guys remember when Texas hold ’em just completely took off and everybody was just wanting to play poker and watch poker?

Brandon:
Yeah.

David:
Texas hold ’em just became huge. It was on ESPN. All of a sudden poker became a sport. I don’t know how that part worked, right? But everybody wanted to play Texas hold ’em. So if you were a poker player, that was the best time ever to be good at it because all these schmucks that know nothing about poker want to come play, and they’re bringing money and you’re just taking it all. That’s like when the real estate market’s doing super good. You don’t have to be that great. You just got to be a little bit better than the next person and you’re going to collect everything, okay.
But if you’re the really good poker player now that we’ve moved on and now Texas hold ’em isn’t the cool thing anymore, there’s different stuff that people are interested in, now it’s really hard to make money playing poker compared to what it was like then because there’s not as much easy money flowing around. That’s something just to be aware of when you hear all these people saying, “I did a ton of money. Look at my check that I just made.” It doesn’t mean real estate is a scam, but it does mean it’s easier than normal. That isn’t natural. It’s not going to stay that way forever.

Thach:
Right, yeah.

Brandon:
Yeah. True. All right. So Thach, before we get onto the Deal Deep Dive and the rest of the show, I’m curious, you talk a lot about BRRRR. I know on your Instagram you talk about BRRRR. Can we talk about, and real quick, in case somebody hasn’t listened to this show before and they don’t know what BRRRR is, can you explain what BRRRR is? How do you know you’re going to go and BRRRR a deal versus you’re going to do something else with it? Any tips you have on people trying to get into that world?

Thach:
Absolutely. David obviously wrote the book about it, so I don’t know, a lot of people ask me, “You got a book?” And I was like, “No, but David Greene got a book. Go get it over there.” But BRRRR stand for buy it as a fixer, rehab it, rent it, refinance it, and then repeat the process. Okay. So after all my experience on real estate and trying to bring as much cash in the front door as possible, how do I get to a point where I can actually buy more property. Of course, BRRRR was the thing I learned from mistakes from just doing a lot of deals.
For me today after owning a lot of property, owning property in certain location, I realized there is three ingredients, or I call it three component in my opinion, to create my opinion of a true BRRRR for me and a property I will keep as a rental. If it doesn’t meet those three criteria, then I don’t keep it. Criteria number one, it has to meet the 70% rule. If a property is appraised for, if the ARV is going to be a million dollar, purchase price or rehab price should be a minimum of 70% all in, right? If I don’t meet the 70% rule, I don’t keep it as a rental. If it’s at a 65, I might flip it, okay.
Number two, it has to be in an area that have good rent so that when I pull my down payment back out and finance 100% of my 700,000, the rent has to cover all that and property tax and insurance and give me at least $500 plus and more. If it’s not in an area that can do that, I don’t actually buy it because of the area and I’ll just sell it. Then number three, it has to be in the area where I work where it appreciate every 10 year. It double every 10 years. So if it doesn’t double every 10 year for me, I don’t actually keep it as a rental. I get rid of it.
So I learned from all those life experience in the past that I have a home that I used to own rentals in the Seattle area where after 20 year it never even double. When it’s time for me to sell it, I bought it for 150 and it was worth 175 after 20 years. Even so, in that market today isn’t that strong in Seattle, so I’m made a conscious choice that from now on I’m going to sell those property, move it close into area where it has a better appreciation. That’s why today when I buy a property, I always look in a certain area in Seattle, and so I get the appreciation. I only buy in certain area where I have good rent. And of course, I only buy property where I can create the value. I can get 30% margin. Otherwise, I don’t keep my rental property. That is my definition of a keeper.

Brandon:
That’s so good.

David:
Thach, when you first started, were your criteria little looser when you were first trying?

Thach:
Way looser, bro. Way looser.

David:
That’s what I wanted to point out. It’s okay to do that, right?

Thach:
Yes.

David:
Because when you’re starting, you’re never going to hit a 70% margin on every single deal that you’re looking at. You’re not going to just get a deal. You’re trying to build wealth. For Thach, you’ve changed your criteria to meet where you are in life and what makes sense to you. For the brand new person starting out, don’t think, “I need to go hit Thach’s criteria.” If you can, awesome. But for some of those people, if they’re at 75% all in instead of 70 or even 80, it still makes sense to buy that deal. You see these things change as you grow.
Because I was thinking as you were talking, I have three criteria. My categories are the exact same as yours, equity, cashflow, neighborhood. Those are the three things I look at. But our actual criteria within those categories are different because you’re further ahead. It makes more sense for you to be there, and this just plays to our point of you can’t just copy someone else’s model and think you’re going to go out there and do what they do. You’ll never get anywhere, but you still can copy the principles of what they’re doing.

Thach:
Yes, yeah. I would say if someone’s new, definitely like Lorenz, my videographer person, I’m teaching him how to go out and prospect and find deals. I teach him, “If you’re going to go prospect three, four hours a day, why go prospect in the area that don’t have much appreciation or low rent? You might as well spend the same amount of hour prospecting in the area that give you better return, better on your money.” It’s a choice. So if you’re newer in the game, just figure out what area has better rent, what area has better appreciation, and spend your prospecting time there because you’re still spending the same amount of hours anyways.
Then the third point is that whatever you believe is possible, you’re going to attract. If you believe that you can get 10% margin, you will always attract 10% margin. If you believe that you can get 20%, you could get 20%. The whole key is in Seattle the average flipper, they make about 10, maybe 15% margin. The problem is that become the reality in this game. So I tell Lorenz when he’s new in the game, “Don’t listen to that reality. Listen to the reality that someone like me is telling you,” because now I’m brainwashing him with a different reality.
It’s all exposure out there too. That’s why I love doing these podcasts with people who are playing big because it’s not that I have more experience, which I have gone through a lot of mistakes. And I tell people, “You don’t have to make the mistake. You can learn from other people’s mistake. If you go find an area that have better rent, better margin area, and better appreciation, start playing in that sandbox and you will find better opportunity. And you work your way up to finding better margin in that sandbox.”

David:
That’s smart.

Brandon:
Hey, for anybody who wants to know more, go deeper on this, I know Thach, you recently did a video with Tarl, who’s a mutual friend of ours.

Thach:
Oh, yes.

Brandon:
Yeah. It’s on the BiggerPockets’ YouTube channel. It’s called How To Start Thinking Like A Big Time Real Estate Investor. It was phenomenal. I want to recommend it to everybody. We’ll actually put a link to it in the show notes as well for this show, but go check it out. Yeah, How To Start Thinking Like A Big Time Real Estate Investor. You can just type that whole phrase into YouTube. Really, really good stuff.

David:
I wanted to ask you, Brandon, you’re in a very similar situation. You’re in an expensive market, Maui, just like what Seattle is. You’ve got your hands in a couple different methods, and you’re creating a synergy between all of them. What have you found since you’ve moved to Hawaii? How has your business changed and how has your mindset changed when it comes to what strategies you’re going to use?

Brandon:
Good question. This goes back to what you were saying earlier, we’ve talked about a number of times, is you can’t just follow a formula or somebody’s rule that says this is how it’s done. I’m a firm believer that every single market you can invest in real estate. Doesn’t matter, every market and all time, doesn’t matter, you can do it. But you can’t always do the same thing that you were trying to five years ago. You can’t do the same thing that they’re doing in the other market. I don’t know if I could do what David’s doing in Jacksonville here, I don’t think I could do. But I could probably build micro-apartments, maybe, but maybe not.
Again, everything’s different. I’ve found some stuff that’s worked really well here. And how did I find that? By talking with people who were actually doing it. Because if other people are doing it, then my assumption always is I can do it and I can do it better. That sounds a little bit arrogant, but all I mean by that is I will work harder and I will learn more. And I will test more and fail more in order to get to the end result more than most people will.
Actually, I got this from The 10X Rule, Grant Cardone’s book. He’s like, whenever he sees somebody doing something inspiring and great, he doesn’t get jealous. He says, “Well, if they can do it, I can do it.” That means the opportunity exists. So you see somebody with a huge social media following, don’t be like, “Oh, they suck because they got a big following,” and get all jealous. It’s like, “Oh, it’s possible in this niche to have that big of an audience? Great. That’s where I’m going to go.” Anyway, I’m not sure if that answered the question, David, but that’s what I did here is I found flipping condos has worked really well for me here.

David:
Wow.

Brandon:
That’s what we’re doing, we’re flipping a number of condos. In the past, I was like, “I would never buy condos.” But in this market it works really well. Then I bought a triplex that is basically doing the Joe Asamoah strategy, who is a guest we had on the podcast and doing that strategy and going Section 8 with that. That’s working really well here as well. I don’t know.

David:
I want to point out, part of the reason that it’s working for you is you’re taking the resources that Brandon Turner has unique to him and he’s utilizing them. So Brandon meets people that want to help him. We met Greg. We just interviewed him. I don’t know if that show has come out yet or not, but he’s helping you build a flipping business. That’s at this point from all the houses that he’s sold, from as long as he’s been in real estate, from the people that follow him, he has resources that other people don’t have that he uses to help build his wealth.
Before everybody says, “Well, that must be nice to be Brandon and Thach. I don’t have that.” You do have resources that we don’t have. You have time to be boots on the ground. You know people that will reach out to you and talk about real estate that won’t reach out to us because it’s too hard to get ahold of us. There’s things everybody has that they can use if they want to do this. When you’re picking your niche, ask that question, where do I have a competitive advantage? Where am I likely to get deals? The flip that I’m doing right now, my partner and I, we each made 100 grand on this flip.

Thach:
Wow, nice.

David:
It came from a friend who was in financial distress, was going to lose the house to foreclosure. That is not a special David Greene gets this deal that nobody else can get. That’s because when it comes to real estate, they think of me and they said, “What do I do? I’m going to lose my house.” We were able to step in and make a win-win for everybody. Everybody out here has that chance. I mean if you don’t have a friend, maybe that’s the case, you should work on making friends. But there’s always resources that you have at your disposal that you can use to help you with your goals.

Thach:
Absolutely. I agree 100%.

Brandon:
Yeah. Hey Thach, where do you see yourself headed in the future? What’s the next few years look like goal wise?

Thach:
For me is I got a 14-year-old boy. I got a 12-year-old boy. For me right now, I’m just having fun right now doing real estate. I’m not doing it because I have to. In the next five years I want to get to $200,000 a month in positive cashflow. My 12-year-old, Hudson, is going to be in college here probably in six and a half years. By then, then I want to do some 1031. I want to buy me a house in Newport Beach and down in Maui next to you.

Brandon:
Nice.

David:
Great.

Brandon:
You can buy next door. It’s a nice house. I just spent some time there last week.

Thach:
Okay, good.

Brandon:
We’ll be neighbors.

Thach:
All right. Then after that I can just work wherever I’m at. Right now I just got to stay in Seattle, be with my kids. But I’m just positioning myself again. This is again, I’m thinking right now 10 year down the road, basically, how do I want to position myself 10 years down the road. I know my kids will be out in college, out of college, so I’m just stacking my money, stacking my rentals.
I want to buy a beautiful home on waterfront and we’re surrounded, but again, a lot of people don’t see this. I want to sacrifice because a waterfront house over here is going to cost me 10 million over here in Mercer Island. I don’t even need it. You know what I mean? I got a nice house now, but I’d rather go and stack more rental, get up to $200,000. So that way my kid get out of school and I’ll have a lot of option. That was no different back then when I was living at my mom and dad’s house for a good 10-plus year, 15 year when I bought my first house. That’s what I’m doing.

Brandon:
You know what’s cool about this episode hearing your story, it’s like on social media I know you drive a cool car, right? What do you have?

Thach:
I got a Rolls Royce convertible. I got a Ferrari 488. I got a G-Wagon Mercedes. I got a new Bentley coming here next month on my birthday.

Brandon:
All right. So you’re a car guy and you’ve got these-

David:
Brandon just opened Pandora’s box of cars by asking that one question.

Brandon:
Well, here’s what’s cool is on social media people might see that, and they’re like, “Oh, wow. So Thach has got all these cool cars. I’m going to get that if I jump into real estate next year.” It’s cool to hear your story. You’ve been in this for decades.

Thach:
35 years.

Brandon:
You lived with your parents for a long time.

Thach:
Long time.

Brandon:
You paid off all these properties. You earned those cars.

Thach:
Yes.

Brandon:
They didn’t come naturally. So I have quick question on that note. When should somebody do you think reward themselves with a new car, with the fancy stuff? And when should they say, “I’m just going to keep plowing it back into the business and wait until I have more”? When’s that point?

Thach:
I think the first thing is I think if anyone get on this journey doing real estate, especially if they want to get into investment real estate, I think the first question we talked about earlier. At what age do you want to have the option to work or not work? How many doors would it take for you to actually have that? If it’s $20,000 a month, on your journey and going making money and start accumulating enough doors and start buying those doors. And then even start to paying some of those down.
On your journey to your 20,000, hey, if you’re driving a Honda and you want to just get something nice but you can’t afford a Ferrari, go buy something nice. Go from a Honda to a Lexus, what I did. Because it’s not going to make that much of a difference. It’s not going to change your life overnight going from a $500 to a $600 car payment, but at least you’re rewarding yourself. You know what I mean?
So you’re going to be inspired to keep going toward your $20,000 a month in passive income, right? I didn’t get my Ferrari, you guys, until 15 years later when I first decided I want to buy a Ferrari. That’s when I got out of the rat race before I bought my Ferrari. That was my big ticket, but I did buy… I went from a used Honda and I bought a brand new Acura Legend. The monthly payment was $300 different. I worked my way up to buying a used Mercedes Benz. That was $300, $400 different. I say reward yourself, but don’t jump from crawling trying to do a marathon overnight.

David:
Yeah.

Brandon:
Yeah. This goes back to what we talked about at the beginning of the show, right, is people compare themselves to other people, what they’re doing and say, “I have to do this too.” It doesn’t work that way.

Thach:
That’s right.

Brandon:
Everyone’s got a unique journey. Let’s say you get into real estate and you’re super excited about it. You jump in and you go buy that Tesla that costs you $1,300 a month, that’s $1,300 a month more now that you have to try to generate.

Thach:
That’s right.

Brandon:
That’s years potentially longer you have to stay at your job because you’re hampering yourself for this thing. So if you want to reward yourself, then make it a reward. Don’t make it a, “I’m going to reward myself first and then try to outearn my reward.” That’s where I think people, yeah, they-

David:
Well, what Thach did that kept him safe was that he let his investments buy his toys. He didn’t use his principal to buy his toys.

Thach:
That’s right.

David:
It’s completely different when your apartment building bought you a Ferrari than when you bought a Ferrari so you couldn’t buy an apartment building.

Thach:
That’s right.

David:
The other thing I really like, Thach, that you said was, “Ask yourself, when do I want to be financially free?” Because a lot of people with an amateur mindset will hear that and they will think, “Well, I want to be there tomorrow.” But you probably don’t. If I said to on overweight person, “How quickly do you want to be at a healthy body weight?” Let’s say they’re 250 pounds overweight. And they said, “In a month.” There might be a possible way you could lose 250 pounds in a month, but I promise you they wouldn’t do it if it involved getting up every single day, eating a grape, and sitting in a sauna for four hours. Let’s say that that was medically possible.
The point is the strain that it would put on you to accomplish a goal in 30 days versus a year is so bad, hardly anyone will actually do it. This financial freedom works the same way. You can get there in a very short period of time if you went and knocked on doors for 10 hours a day and then hired VAs to actually process all the deals that you got your way and just went through mistake after mistake and people hated you when you screwed up a ton. And you had no life, and your social life fell apart. You can get there quickly. Nobody wants to do that.
There’s nothing wrong with saying, “No, I want to do it over a five-year period of time because that is a manageable pace that I can handle and still enjoy my life and work it that way.”

Thach:
Well, here’s the thing. Most people wouldn’t even ask that question anyways. The problem, if they’re always following and listening to people all the time about flip, flip, flip, flip, flip, all they talking about is, “When can I get my next flip?” The good thing is start from the ending in mind is when do I want to have the option to retire. And then figure out if this flip is going to be a flip to generate new cash or if this fixer house is going to be a good property so I can start keeping my rental. After this conversation in this podcast, I think to give people an idea, if you want to start having nice stuff down the road, start thinking like an investor more versus a flipper.

David:
Yeah. Smart, dude.

Brandon:
All right. Well, what do you need in your business right now that our audience could help you with? Anything that you’re looking for that I mean, a quarter million people listening to this right now, anything that they could offer you or bring you?

Thach:
I think for me it’s if anyone have any kind of house, land, a townhouse, you know what I mean? Sites, apartment sites in Seattle, that you guys looking for people to buy, think of me. I’d be happy to look at it. If I don’t like it, I can refer it to other people. If I like it, you guys can sell it to me.

Brandon:
All right.

Thach:
That’s my little niche up here.

Brandon:
All right. Very cool. Well, let’s head over to the next segment of our show to learn more about something you’ve done. It’s time for the Deal Deep Dive. Let’s do it. Let’s do it. All right, Deal Deep Dive, the part of the show where we dive deep into some particular deal that you have done. Thach, you got something in mind that we could dig in on?

Thach:
Yeah. You know what? I’ve been thinking about it here, and after talking to Kevin, he said that probably 40%, 50% of the people are more beginning, right?

Brandon:
Yeah.

Thach:
So I figured I’d keep something that I think anyone can do this. It’s a simple property, but it takes a different thinking to do this deal versus a flipper mindset, okay.

Brandon:
I like it.

Thach:
All right.

Brandon:
What kind of property? We’ll start with first question, what kind of property is this and where is it located?

Thach:
This is a single-family fixer with single-family zoning in an area called Beacon Hill in Seattle. Right.

Brandon:
All right.

Thach:
This is right up just right above the Boeing Field.

David:
How did you find this deal?

Thach:
Cold call.

Brandon:
Cold call.

David:
Oh, wow. How long ago were you cold calling?

Thach:
I still cold call and door knock today three days a week, four hours a day still today.

David:
That’s awesome.

Brandon:
I love that. $100,000 a month in passive income and still cold calling.

Thach:
Yeah. Cold call, door knock, I do it every day still four days a week.

Brandon:
That’s awesome.

David:
They call it cold calling because you got ice in your veins.

Brandon:
All right. How much was the property? First of all, what were they asking for it and then what’d you get it for?

Thach:
Yep. We cold call the guy. It was a two bedroom, one bath, 900 square feet with an unfinished basement, low ceiling. They had to go outside to get to the basement. Okay.

David:
When you say unfinished basement, for me as a real estate agent looking for house hack deals, I get really excited.

Thach:
You know it.

David:
My heart just started pounding.

Thach:
Okay. The owner was just asking 300 grand. We talked about it and then we eventually sealed our price at 285 as a fixer as is. I bought it for that, 285. Two bedroom, one bath, 900 square feet, unfinished basement. Now, the basement was unusual because it was low ceiling, five feet, and you had to go outside to get to the basement. All that was down there was crawlspace and washer and dryer.

Brandon:
Okay.

David:
Okay. How did you negotiate that deal? Any tricks that you used?

Thach:
Nope. When you door knock and cold call and meet the people yourself, I believe it’s much easier to negotiate with the owner than it is to buy it on courthouse or everything else.

David:
Totally.

Thach:
The guy was motivated to move. He wanted to get down to Arizona, and he wanted to sell it as is. The house is just really beat up. It’s a holder house. And he’s just like, “Hey man, 285, I’m good with it. All right, let’s go. Give me cash.” He just needed 30 days after he closed to stay there for 30 days. He want to start 300. I came in like 365, and we landed at 285.

Brandon:
Nice.

Thach:
Easy. One of the easiest deal I can do because again, I door knock. No one else is at the door knocking, cold calling the guy. I mean no one else was there. It was easy to negotiate.

Brandon:
Yeah. That’s awesome.

David:
How did you fund it then? Where’d the money come from to buy it?

Thach:
Yep. Basically, I have hard money lender. What I did was with the basement for people out there listening, if you have house with basement or upstairs or even detached garage, I had to figure out how could I add value to this home. The basement, I dropped the basement floor versus jacking the house up. I dropped the floor, so I created a six and a half, seven feet ceiling. And I put two more bed and one bath downstairs. Now I made it an 1,800 square foot home.

Brandon:
Wow.

Thach:
The total rehab was 140. So 285-

Brandon:
I’ve never heard of somebody dropping a basement floor. That’s clever.

David:
Oh, yeah. We do that all the time.

Thach:
Yeah.

David:
That’s exactly right. He actually gave a really good nugget there where he said, “Instead of jacking it up.” Because if you’re smart when you hear that, you realize oh, there’s two ways to do it. I could jack it up or I could dig out the floor. Let’s ask my contractor which is the cheapest way.

Thach:
That’s right. That’s right. And dropping the floor is much easier, much cheaper. We reconfigured the upstairs. We gutted it all out. We made a staircase that go downstairs. Now this home, I bought it for 285, 140 for rehab, and it’s a total of 425. Now it’s a four bedroom, two bath, 1,800 square feet. Hard money lender at the time asked me to put down 20% of 425, which is 85,000. Then they financed the rest.

Brandon:
But Thach, I don’t have $85,000, so I can’t do this deal. Then people shut off this podcast, right?

Thach:
That’s right. Two ways-

Brandon:
What would you do if you had nothing?

Thach:
If you had nothing, okay, A, you have such a good deal. The most easy thing you can do is you can assign it. This property was appraised after I got done for $700,000.

Brandon:
Oh, nice.

Thach:
So there’s 275,000 equity in this house. If you know how to run the math and run numbers, if you didn’t have no money and you couldn’t get no source to get nobody to put up the money, assign it 400 grand and you can make 100 grand right there on the spot.

Brandon:
Yeah, yeah. That’s awesome.

Thach:
Right. If not, find someone with 85,000 and then split the profit with them.

Brandon:
Oh, wow. Yeah. I love it. That’s great. Finding somebody to bring the down payment and then split the profit I think is one of my favorite strategies of all time for no money down.

Thach:
Absolutely, yeah.

Brandon:
As long as you have the deal.

David:
That’s what Brandon says all the time, “You get the deal, the pieces will work out on their own.” By deal, we mean a lot of equity. That’s what Thach is saying. You go it at a good enough price, you could do anything.

Thach:
Anything.

David:
You have every option at your disposal.

Thach:
This is why I preach this all the time, guys. Flipping houses to flip houses is overrated. In my opinion, finding good deal is really where the money’s at, where the opportunity’s at. If I were to teach people to just go out and find deal like this, they don’t even have to flip houses. They could just assign and make 100 grand and just move on. All right. Then the next time they ever find a deal like this, instead of assigning or flip it, fix it up and then keep it as a BRRRR property.

David:
All right, beautiful. Okay. So what did you actually end up doing with this deal?

Thach:
So what happened was after I got it all done, I put 85,000. After I got all done, the bank, I had to refinance from hard money to permanent financing. The bank sent out an appraiser and the appraisal was 700,000. So they say, “I will loan up to 70% of the appraised value,” which is 700 grand. 70% is 490. I’m all in at 425, so I told the bank, “I just want to finance 425.” So they said, “No problem. You got plenty of equity in it.” So they financed 425. At 425 finance, I got my $85,000 back and the hard money got their money back. When I got that, I got no money in the property.
I left my 275 equity in the property. I didn’t take it out. My mortgage after property tax and insurance, I rented for 3,500, and I make almost 700 bucks a month in positive cashflow with no money in the property. I got 275,000 equity in the property. Anyone can do this deal. You just got to go out there and prospect the owner directly and follow up with it.

David:
Yeah. Because you cold called, right?

Thach:
That’s it.

David:
That’s why you got it. I mean that’s amazing.

Brandon:
Yeah.

Thach:
And finding opportunity where you could add square footage to create the higher ARV.

David:
And that’s exactly what we’re doing with my real estate business is I’ve got four guys combing the MLS to see where did a listing agent screw up and say this house has 1,100 square feet, but it has 600 square feet that wasn’t permanent or wasn’t included or could be added. That’s why when you said “unfinished basement,” my little antennas go… my reticular activating system’s like, “Oh, I’m looking for those words all the time because that equals opportunity.” It’s like we’re saying, this is what we do to find deals for our clients. This is what Thach did to find a deal for himself. You can find deals. It’s not as simple as put a search into Zillow and have a house that’s 50,000 undervalued, right?

Thach:
That’s right.

David:
You got to do a little bit of work, but if you’re willing to do the work, man, there’s so much opportunity. This is awesome.

Thach:
If you guys live in a city where you have basement, I like to go and when I do my criteria search for making my list of homes to go out and door knock and cold call, I like to find home with unfinished basement so I can go cold call them, door knock them. If a house has upstairs that’s unfinished, I like to go after those property. If the house have detached garage, I like to go after those. Those are homes that I can add value without costing me an arm and a leg, and I can make a lot of money return.
Now, the beautiful part about this property is after I got my money out of this property, I get $600 cashflow a month. That’s 7,200 bucks a year, but the house is on a 5,000-square-foot lot. And in Seattle, just like anywhere else in the metropolitan area of any big city, single-family zoning now, if you got a backyard, they let you do a detached dwelling unit. So right now I’m in the process of permitting a thousand-square-foot detached dwelling in the back. And when I’m done with that building, it cost me 225. I think it’s worth 525. I’m going to get probably another $600 a month in cashflow on my deal with no money out of that property also, and the land was free for me.

Brandon:
Yeah. That’s cool.

David:
If you were not already selling houses, I’d be trying to recruit you to come work out for team. Because this is like, we are sharing a brain. This is exactly what we’re looking for for our clients right now. It’s so funny.

Thach:
Now here’s the thing, anybody can do this. This is what I call basic 101, but if you’re a flipper, you see this opportunity, you’ll flip and you get rid of it. You’re never able to keep anything. When you’ve got an investor’s mindset, you think like an investor. You analyze like an investor, and you figure out, how can I keep this property? This is how you create wealth right here.

Brandon:
Hey Thach, did you say you were paying 225 to build the 1,000 square foot?

Thach:
Yes.

Brandon:
Okay. What does that thing rent for if you’re going to rent that out?

Thach:
Yeah. They rent for about 2,200, almost 2,500 a month in Seattle.

Brandon:
All right. So it’s basically better than a 1% deal-

Thach:
Pretty much.

Brandon:
… of a brand new construction. Now my assumption is you’re going to separate the water meter so they pay their own utilities.

Thach:
Yep.

Brandon:
Here’s why I wanted to make this point is that that strategy is something that works especially in California, Seattle area, Hawaii. I think that’s one of the most tremendous opportunities out here in Hawaii is adding those units. Because out here, let’s say I can build a 600-square-foot, two bed and one bath with a huge… because we have outdoor living, so a huge lanai. It’s actually like the living room, basically. So 600 square foot, I can build it for about 150K.

Thach:
Wow.

Brandon:
That’ll rent for $3,000 a month.

Thach:
All day.

Brandon:
It’s 2% deal all day long in Hawaii, but nobody does it. It’s so rare that actually people do that here because it takes work and you got to go through the permit process.

Thach:
Well, the thing why they don’t do it, Brandon and David, because when your identity is a flipper, you have to flip to keep that identity going. If you’re an investor and that’s your identity, you keep that going.

Brandon:
Yeah.

David:
It’s that saying to the man with a hammer, everything is a nail.

Thach:
Yes.

David:
When you look at it from that perspective, that’s how you see it. Your reticular activating system says, “Nope, I can’t flip it. I don’t want to look at it.”

Thach:
Yeah.

Brandon:
All right, last question of the Deal Deep Dive. I mean was there any other lessons that you picked up on this thing that you can share? Anything that people can pull out of it?

Thach:
I think that that’s basic real estate investment. If you think like an investor, you always think like an investor, you analyze as an investor. You look at the project through a different lens. If you think like a flipper, you always look through a lens of a flipper, and that’s probably the biggest lesson I think people can take away from that.

David:
So expand your lens. Love it.

Thach:
Yes.

Brandon:
All right, dude. Yeah. That was one of the best examples of a BRRRR I have ever heard. In the future when people are like, “Well, what’s BRRRR?” I’m going to be like, “Go listen to the Deal Deep Dive on this episode. You will not have any confusion about a BRRRR after you’re done with that explanation.”

Thach:
Well, if they really want to see a real big BRRRR, watch the YouTube one that me and Tarl did, right?

Brandon:
Yeah, yeah. So good. Yeah, you and Tarl, you guys do some good stuff together. So yeah, check it out. Again, BiggerPockets’ YouTube page, you’ll find some awesome stuff there. Now it’s time to head over to the last segment of the show. It’s time for the world famous (singing). All right. Time for the world-famous Famous Four, the part of the show where we ask the same questions to every guest that comes on the podcast.
Question number one, Thach, do you have a current favorite real estate-related book?

Thach:
Yes. I love this basic real estate book for the basic people.

Brandon:
The Science of Getting Rich by Wallace Wattles. I’ve never even heard of that book.

Thach:
Yeah, man. This is one of the most OG. I learned this from when I started real estate.

Brandon:
All right, very cool.

David:
What about a favorite business book?

Thach:
This is one of my favorite business book.

Brandon:
What do you got there?

Thach:
Zappos.

Brandon:
Delivering Happiness from Zappos. Yeah, I’ve not read that one. Tony Hsieh.

Thach:
Yeah. You can make money and have alignment, peace of mind and purpose.

David:
Oh, that sounds like something Brandon would love.

Brandon:
I’ll pick that book up today.

David:
How come you haven’t read that book, Brandon?

Brandon:
I have not read either of those books. This is great.

David:
Thach, did you listen to every single episode of the podcast, find the only books Brandon hasn’t read, and go bring those here?

Thach:
How’d you know that, man? How’d you know that?

David:
I’ve never seen him stumped twice. This is awesome. It’s like someone just knocked out Muhammad Ali twice in a row. All right. So when you’re not finding books that Brandon hasn’t read, which is a goal in and of itself, what kind of hobbies do you have?

Thach:
I coach my kids, two of my kids’ baseball team. They play 14 baseball U and 12 baseball U. I love to be on their practice, their games. Then we love to travel, take the kids around the world and just have real life experience with those guys. That’s one of the things we love to do, sports, developing those guys’ mindset personally and everything, business. My kids, they love going to real estate sites. They love to go. They actually own washer and dryer in the apartment building that we own.

Brandon:
That’s awesome.

Thach:
Every time we build more apartment building, they want to take their money and buy more washer and dryer in all the units. They love to do stuff like that. We love to teach them stuff like that. That’s what we do for hobbies and fun.

Brandon:
What a great idea. I never thought about having your kids run the washer and dryer because then they go over to collect the coins.

Thach:
Right. Yeah, dude. It’s fun, dude. It’s awesome.

Brandon:
Yeah. Teach them this stuff. Yeah. That’s awesome. I actually love laundry machines because it’s such a simple… For a picture of financial independence or financial freedom and passive income, it’s such a picture of that. Because you buy this machine for a thousand dollars. You put it here. You have to rent the space maybe or maybe you have a partnership. You make money. You go and collect the coins. It’s just such a pure picture for a young mind on passive income, so very cool.
All right. Last question from me. Number of the Famous Four, Thach, what do you think sets apart successful real estate investors from all those who give up, fail or just never get started?

Thach:
I think from what I’ve learned from life experience is that they don’t have a very clear endgame on what they’re doing it for, why they’re doing it, and what the purpose they’re doing it for. If you don’t have a real clear endgame, then you’re not going to keep going when the time get tough. Or when you fall down, you won’t get back up. So you got to have a real clear endgame what you’re doing all this for.
For me, my endgame was to be out of the rat race and to work when I want to work, where I want to work, and to travel when I want to travel, take whoever I want to take. To me, that’s freedom, opportunity and choice. For me that was the thing that connected for me that I felt very deeply connected. So when I was door knocking 100 doors a day and people tell me, “Get off my porch. I didn’t ask you to come to my house,” I just basically turn around and go knock on the next door.
Even today, as wealthy as I am today, when I door knock, I still get people say the same thing. And you know what? Instead of being rude, I can easily say, “Lady, I can really easy buy your home no problem.” But you know what it is? I just turn around, just keep going because I’m clear on the endgame. So when you’re clear on the endgame, you just keep on going.

Brandon:
So good.

David:
You know what? If Thach has the humility to go door knocking and cold calling at this stage in a career, I don’t think anybody could say, “I don’t want to go do that. I’m too good for that.”

Thach:
Seriously.

Brandon:
All right, man.

David:
Awesome story.

Thach:
Yeah. That’s why I do it, because I love to do it, but also inspire other people. If you’re brand new, if I can do it, you can do it. If you’re somebody advanced, if you need more cashflow through the front door, hey, if I’m doing it, you can do it too.

Brandon:
So good.

David:
That’s absolutely right.

Brandon:
Yeah, so good.

David:
Okay. I’m sure there’s going to be a lot of people that want to learn more about you, Thach, and learn from you. What’s the best place for people to learn more about you or how to get ahold of you?

Thach:
Yeah. The easy to way to do it, on Instagram. My Instagram name is @thachnguyen and my Facebook name the same thing, Thach Nguyen. That’s the two place that they can find me all the time.

David:
All right. We will of course link to that on the show notes as well, so everyone go check out Thach. He’s awesome. Follow him on Instagram and all the social media channels. It’s actually super entertaining to watch you. I’ve been following you for a while.

Thach:
Thank you, brother.

David:
You keep it fun.

Thach:
Thank you.

Brandon:
All right. Well, with that, time to get out of here. David Greene, you want to close up shop?

David:
Yeah. This was an awesome talk. I really appreciate that. I think a lot of people do too. This is probably one I’d recommend people go listen to twice and share with friends because there’s a lot of value that was packed into this thing. I guarantee that you missed something when your brain was thinking about the thing we just said before. I’m going to go listen to this one myself because I really, really liked it. That being said, this is David Greene for Brandon, the Maui condo flipper Turner, signing off.

Speaker 3:
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