From Engineer to Real Estate Mogul: Chris Larsen's Journey REIA 503

And if you're more efficient with your time when you're young, you can build up a lot of experience and you can actually make more money later on. However, we always have to remember that we don't know how many days we have left on this earth. So you never want to sacrifice all your time. You want to continue to have those experiences and do those things.

Welcome to Streams to Impact and be inspired to engage passionately in the work of your calling while achieving financial prosperity through multiple streams of high yield returns on investment to bring your dream of making a impact to reality. I'm your host, Dr. Allen, and I am delighted that you are joining us today. If you haven't yet, get a complimentary copy of our exclusive guide, High Yield Investment Blueprint: Secure 18%+ Returns in 60 Days. Go to our website, highyieldblueprint.com. That is www.highyieldblueprint.com. Just provide your email address and we'll send you a copy today. Hello, enlightened investors. Welcome back to Streams to Impact. I'm your host, Dr. Allen. As always, it's a delight to have you with us, and we have a really meaningful conversation for you today. Chris Larsen is the founder and principal of Next Level Income. He retired from from an 18-year career in medical devices to fully commit to helping others achieve financial independence through education and strategic investments. Starting at age 21 with his first rental property while studying biochemical engineering and finance at Virginia Tech, Chris has amassed over 20 years of experience across real estate, from development and private lending to syndicating over $1.5 billion in commercial properties since 2016. Chris lives in Asheville, North Carolina with his wife, 2 sons, and their lively Vizsla Lucy. Chris embraces the vibrant outdoors and culture of the region. His journey is a testament to the next level lifestyle where financial freedom fuels A life rich with adventure and purpose. So we are so glad that Chris is with us today, as Dreams to Impact is all about putting our blessings financially and otherwise to work to live not only abundant lives for ourselves, but for those around us and for the development of our communities. So we're glad you're with us, Chris. And so just start off by taking us on a journey as to how did you go from engineering to biotech to investing.

Yeah, Alan, great to see you again as always. And, uh, yeah, as we were chatting before the show, glad, uh, glad you made it safely through the, the recent storm here, um, in the region. But yeah, so I was listening to your intro, which I— your, your intro is better than all the other intros I get, so you must, you must put a little bit better spin on it. So, um, I gotta— I have to, I have to write write some of those tips down. But I was thinking, I'm actually going to cross this month, uh, 25 years. So, I just—

Wow.

Yeah.

So, I'll be 25 years of real estate experience. Um, and, uh, I'll share some of my story and then I'll also share with your listeners how they can get a free copy of my book as well if they want to really, really get into it. But I went to Virginia Tech and my, my goal and my passion at the time was, was cycling, was racing bikes, which As you know, this is a beautiful area that we live in. That's great for that. It's one of the reasons we moved to Western North Carolina. But I wanted to be a pro. So I went to college and I thought, well, I really just want to be a professional, but you don't make a lot of money as a professional cyclist. So I want to have a degree to fall back on and do that. And I really always liked physiology. And I ended up being able to get in-state tuition for biomechanical engineering, even as an out-of-state student. So I settled on that, but I really didn't love it. I didn't have a passion for it. I just wanted to race my bike and I poured my heart and soul into riding my bike and racing. Um, I made it to the highest, highest amateur levels. Um, you ride, you go from Cat 1 up to Cat— I'm sorry, Cat 5 up to Category 1. And effectively, once you're a Category 1 cyclist, you're, you're professional. You, all you have to do to go from 1 to pro is, is get a license.

Yeah.

So the team I raced on was a Cat 1. We did a lot of the pro-am races around the country. And during that first summer in college, June 21st, 1997, we were at a race up in Pennsylvania and my best friend passed away. He had a brain hemorrhage during the race.

Wow.

And he died. Went back to school, spent another year kind of using my bike as therapy. My grades weren't great. I really questioned, you know, do I want to stay here? What do I want to do? I was probably depressed. But I had, uh, I had the sport which kind of carried me through that. But I'll never forget the following summer. So, um, I won my, my friend's memorial race and actually won it the summer of '97 in September. And then I won it the following race, the second time in a row. And I was, I was flying. I was in great shape. I'd won a lot of races. Um, and I, I remember winning that race and I wasn't happy. I wasn't sad. And I went, I just remember going away from that race and thinking, I don't, I don't think I want to do this anymore. And the reason is, I, I thought long and hard about, you know, what would happen if something happened to me? If I died, would I have regrets? Would I have been happy with the way I was living my life? And I said, I am going to honor the life that I have and also honor the life of my friend Chris that passed away. His name was also Chris. And I've always kind of felt like I've had to live 2 lives to really honor that. And I said, you know what, cycling is not really, you know, what I'm meant to do. And I said, as I thought about, um, you know, the process of, of being able to live life on my own terms, one of the things that really dawned on me was that, you know, whether we like it or not, you need money to be free, to be able to pursue your passions in this world. And I said, okay, how can I achieve financial independence? I got interested in the stock market by the same family friend that introduced me to cycling, coincidentally. So, Clint Provenza had a massive impact on my life in a lot of different ways.

Yeah.

But after day trading for a year and making a ton of money and losing money, I said, this is really not investing. This is not what I want to be doing 20 years from now. And I read 250 books on investing, finance, business, stock market, anything I could get my hands on. I was just a voracious reader. Ended up getting an MBA in portfolio management. So, I almost got a PhD in finance. I took extra classes. I enjoyed it so much.

Wow.

But I decided that year when I was 21, as you mentioned, to buy my first property, that real estate was going to be my path towards financial independence. And now, here we are 25 years later, dozens and dozens of properties. You know, hundreds of millions of dollars of acquisitions. And it all started with that, that one single-family property back in Blacksburg, Virginia, that today we would call a house hack because I bought it and I rented out the extra 2 rooms to friends, bought the place next door, and then we were off to the races.

And that— and the rest is history, as they say.

Yeah.

So interesting trajectory there, and thanks for taking us through that interesting aspect of your life. And a lot of Well, a few things are interesting about that, but one is that you were cycling, and for a good portion of your life that brought a whole lot of meaning, and it came to a point where it didn't. And so through introspection, you decided that there was another path for you.

Yeah.

And tell us a little bit more about that, that— journey, uh, because it's, uh, it's, it's, it's the hero journey. It's the, the quest. Uh, it's the spiritual journey. So tell us about that.

Yeah. Yeah. And I, I love the way you, you really described that, Alan, because, um, anybody that— if you're listening, you've ever been passionate about something and then you stopped doing it, and that could be— it could be a relationship, it could be a sport, it could be, um, you know, art, anything, um, you know, career that you pursue, when you've lived your entire life in pursuit of that and you stop doing it, it's really, it's really, you know, kind of earth-shattering. Um, and, you know, I had to really kind of re— you know, reinvent myself in a lot of ways. Um, I still love the sport. I still love everything I got from it. But yeah, it was a really tough time because I'm like, well, shoot, I'm not going to be an engineer. I didn't want to be an engineer. Like, now I'm not going to be a professional Yeah. You know, I lost my best friend, um, who was going to be my roommate that year in college. Um, you know, so my whole network was built around cycling. Um, my grades weren't great. So I really, it was really a very challenging time in my life to, to kind of go through that. Um, but it also gave me the ability to see kind of through that process that, you know, life continues. And, you know, there were other things. So, I developed new relationships. I developed new, you know, passions and loves and different things through that process. And I look back now and I realize that, you know, that was the path that God had laid out for me. And, you know, I went— I have a strong belief now that the challenges we face in life, you know, whether you believe in God or the universe or elsewise, the challenges we face in life truly do give us—

Growth.

the strength and the skills necessary to become more successful or face the other challenges, you know, that we have as we go forward. And, you know, just in conversations and research, Malcolm Gladwell writes about— I think it's in Outliers, or actually maybe David and Goliath— he talks about how there's an outsized number of CEOs, presidents, leaders around the world that have lost parents as young children.

Mm-hmm.

And I remember reading that. I lost my father when I was 5, but I think losing my friend had a bigger impact. And what really ultimately, you know, dawned on me, Allen, is that when you lose somebody at a young age, when you think you're invincible and that life is, you know, limitless, you realize in that moment that life is actually finite. And anybody that's analytical like I am, the equation's very simple. If you think you're going to live forever and time is at the bottom of that equation, that value equation, well, if you're going to live forever and you're going to live— and that, that bottom, that time on the bottom of that equation is infinite, value's zero.

Hmm.

As soon as you put a number on the days you have left, whether it's 10 days or 10 years or 100 years, on this planet, then you realize how much more valuable your time is. And that's what I realized, that I needed to really get busy, you know, being productive and, and making a difference in the world.

And the other thing that was interesting about what you were talking about is that you came to this realization that fulfillment and happiness isn't necessarily separate and apart from money. We, you know, there's, you know, people go into monasteries and different things like that and they spend their life in contemplation and money's not the big deal in their spiritual journeys, but, you know, somebody's footing the bill for those.

Yeah, absolutely.

Somebody's feeding them and providing them shelter and clothing and what have you.

Great point.

You can't really take finances out of the picture. I mean, I've tried to do that. It's just not possible.

Yeah, definitely.

But you came to that realization at an earlier age than I did, that is for sure. And so how is it that you came to that realization and yet you're not like some people who become obsessed with actually accumulating money and they just that becomes their whole life. We just have to get more money, more money, more money, and I'm not going to point out who I'm thinking about at this moment, but outside of that, their life doesn't seem to have a whole lot of meaning.

Yeah.

How did you come to that point of realizing that finances, money, they're important to life, but they're a way to a means?

Yeah.

Not an end in and of themselves.

Yeah. Yeah. That's an excellent question, excellent point that you make, which is a lot of times, a lot of people get sidetracked or they get obsessed, right? Like the saying, the love of money is the root of all evil. And money, I've seen money as a vehicle to an end. And it's hard for me to go back precisely in my mind and think about where that has, that has meant to me because I certainly have, you know, gotten hypnotized by, you know, oh, I want to make 6 figures. I want to be, you know, have, you know, 7 or 8 figures of net worth and, you know, thinking about those things. But ultimately, you know, it's, it's saying, well, hang on. Like what? I realized this a couple of years ago. It's like, okay, I need, you know, I, I need the private jet to, to, to save time, and it's actually worth my time to— or worth my money to, to pay for this private jet. And, you know, you get into this cycle and then you say, well, hang on a second. Um, and this is one— as an engineer, it helps me do this. Um, engineers are taught to analyze but also iterate. So you make a set of assumptions and then you solve a problem, and then you test your solution and see if it's accurate, and then you iterate, you go back and you say, hey, are the assumption— assumptions still the same? And you can get the wrong conclusion. And we see this a lot in today's world. We see it in, in the finance world, we see in the political world, we see it in the, uh, the nutrition world. It's, it's everywhere. It's in the education space. If our assumptions are wrong, we can be amazing at solving a problem, but we're going to come up with the wrong answer. So we always have to be questioning our assumptions. That's the, that's the main point. So, if you say, well, wait a minute. What if I— what if what I'm doing is costing me this time which is enabling me to generate this money that is solving this problem that actually I could eliminate that problem in the first place if I just go back and do this? There's a fable about fishermen on the beach and a successful businessman coming up and talking to him. He's admiring the fisherman's catch and his operation. And he says, let me help you. He goes, I can help you scale. And he asked the fisherman about what his day is like. And he says, oh, I fish for a part of the day and then I prepare the fish. I spend time with my family and friends and then I get up and do it all over again. He goes, let me help you expand your operation. He goes, you're going to have to work hard. You're going to have to put in more hours. He goes, but if you do this for the next 10 to 20 years, he goes, you're going to have this amazing business and then you won't have to do it again. You can spend your time as you wish with your family, with your friends, enjoying the time on the beach. And it's like, well, wait a minute. Maybe the lifestyle and the path that we pursue actually creates these problems that we then have to solve. So, we always have to be saying, hey, Should I work harder or should I work smarter? And sometimes, if you look at money as the vehicle, not the means to an end, if you say, wait a minute, what about my time? What about my life? Because really, money is just a store of the time that we've put into it. And I actually have a philosophy I've built around that, but I'll kind of pause there.

Well, yeah, those assumptions. We can— it's so easy to get those wrong. Well, take us on this journey. You started off with a single-family home and you house hacked that, probably before there was such a term as house hacking, but you did it. And that's the way I started actually as well. But it's kind of hard to scale to the level that you scaled with single-family, so you branched out into other things. So just take us on that journey real quickly here. Yes.

Yeah, absolutely. So, um, real quick, let me— there was something I, I wanted that popped into my head that I wanted to share. So we focus on kind of going back to the prior point, Alan, um, and I won't, I won't, I won't not tell my story, but, um, we, we say, hey, look at the—

Oh, tell your story.

Yeah, look at the compound effect of money, right? But we forget about the compound effect of time. And if you're more efficient with your time when you're young, you can build up a lot of experience and you can actually make more money later on. However, we always have to remember that we don't know how many days we have left on this earth, so you never want to sacrifice all your time. You want to continue to have those experiences and do those things. Um, but yeah, I bought that first property, and my life has been kind of marked by, by, um, losses, unfortunately. And I had— I built a single-family portfolio I was a successful medical device rep as well. So, I was making several hundred thousand dollars a year and I was saving 50% of what we were making and buying property and investing. But what I realized was at the end of 2011, my mother had passed away. And that following year, I did this kind of retrospective analysis of, hey, how are my investments doing? Am I on the right path? Just one of those points where you kind of pause. And what I realized was we had made it successfully through the Great Recession with our properties. Everything had cash flowed. We didn't lose anything. But I was making like 7% on my equity in my properties, and I was paying tax, and I was ending up with like 4%. So, you know, if you have— if you buy a portfolio of properties, you know, and say you put, uh, $200,000 down on a million-dollar portfolio and it doubles in value, Well, now it's worth $1.2 million. So, you know, even if you double the cash flow and double your gross returns on that, you know, you just, you know, 6x your money. So your actual return on equity goes down by a factor of 3. I think I'm doing the math right there, right? So if you're making 12% returns, you know, and, you know, they double to 24, you know, you still have to, you still end up behind where you started. So I was like, well, how, how can I take this equity that I have, get better returns, but also not deal with the phone calls? True story, on my honeymoon from a realtor trying to rent out one of my townhouses that I had. So it's like, okay, I don't want to have those phone calls anymore. And through that process, I learned about real estate syndications, specifically apartment syndications. And again, I mentioned I I talk about this in my book. If you want a free copy, you can go to nextlevelincome.com. We'll even send you a copy if you put your address in there. nextlevelincome.com. And I walk through that whole process that I, I kind of went through in determining that I thought apartments would be a much better investment than single-family homes. It'd also be scalable. And the effect was I more than doubled my returns. I took my tax that I was paying on those returns to zero. And they were fully passive. And that was in 2013. That was, you know, kind of— I spent a year after my mom passed away learning about this space. And then a good friend of mine at the time started doing the same thing. And lo and behold, 3 years later, we ended up buying and syndicating our first apartment in 2016.

And been doing that ever since.

Yes, sir.

Yeah.

8, I guess. What is it, 8 years? Yeah, over 8 years now.

But you have branched out beyond just apartments. I know you've been into some mobile home park deals. Yes. And also car washes.

Yes.

Talk to us about the differences there and the pluses and minuses.

Yes. So at the core of our strategy is, is the value-add strategy. So, you know, we go into apartments— I know your listeners are familiar with this, Alan— we go into apartments, we make improvements, And as we improve the apartments or mobile home parks, we're able to increase rents, we're able to increase revenues, we're able to increase NOI and ultimately returns to investors with that process. And this process can be applied to different asset classes. So yeah, right now I'm a big fan of affordable options. I'm actually— I mentioned to you, I'm hopping on a flight here in about an hour and a half, and I'll be flying down to Houston for a property to tour, a property we're acquiring, and we're doing a partnership with the Houston Housing Authority. Which we're actually lowering rents, but we're also lowering our tax bills significantly through a partnership program with them, which increases NOI. So that's kind of a different variation of value-add.

Right.

And I think at different parts of the real estate cycle, different asset classes perform well. So I think right now, properties are expensive, rents are expensive. If you have something like a mobile home park or apartments that fall into that affordable category that can give people a clean, safe place to live and the rents are reasonable, you can do, you can do very well. Car washes are a little different. So even if we apply the same value-add strategy, you're really investing in a business. So there's more variables in a business. There is a real estate component. There's great depreciation benefits. And I know one of the things that a lot of people are waiting on now with the new administration is, are we going to get some of those enhanced depreciation benefits back into real estate, which kind of helped supercharge the asset class a few years ago with the 2017 Tax Act that went into effect. You know, so that, that's one nice thing about car washes, but really where the rubber meets the road is operations. And if you can operate these car washes well, one of the nice things is that as you stack these, and we have 32 total car washes that we own right now, But as you go from 1, 4, 8, 16, you know, 32 washes, then you actually increase the exit multiple that you can get. And it's the same thing with mobile home parks as well. So in some asset classes, you know, some of the challenges that you have operationally, like mobile homes and car washes, can be offset on the other side with enhanced returns if you can professionalize these, take take these properties over from a mom-and-pop operation where a lot of these car washes and mobile home parks are owned, pull them together, put professional teams in place, and you may take a mobile home park that you buy at an 8 cap and be able to sell it for a 6 cap. And, you know, that's a— that can be a really nice, uh, back-end icing on the returns cake, if you will.

Right.

Yeah.

Yeah. Well, Chris, um, I know you have a plane to catch here, so been delightful having you with us. And viewers and listeners, be sure to go to nextlevelincome.com, right? Did I get that right?

Yes, sir.

nextlevelincome.com and get Chris's free book. So viewers and listeners, thank you so much for being with us today. Always glad that you're with us. Please take a moment, like, share, and subscribe, and also leave us a rating and review. And live abundantly until next time. We meet again. Thank you, Chris. Been wonderful.

Thank you, Alan. Always a pleasure.

Thank you for tuning into Streams to Impact, brought to you by Steed Talker Capital, a company empowering passionate professionals like you to develop multiple streams of passive income built on solid passive real estate investments. As a significant part of our endeavors to make a cosmic and meaningful impact for this world, Steed Talker Capital contributes significant portions of our profits to activities and organizations committed to better understanding the equine. These endeavors attempt to enhance the treatment of horses worldwide. Steed Talker Capital, working for a world where all creatures great and small flourish abundantly. If you are ready to learn how our passive investors have earned an average 33% annual return on their investments, Schedule your complimentary Passive Income to Prideful Impact consultation. Obviously, we cannot continue indefinitely to offer these valuable consultations for free, so grab your Passive Income to Prideful Impact consultation while you still can. Go to steedtalker.com/passive.