SFR vs. Multifamily with Brett Riggins - REIA 498

Welcome to Streams to Impact, the podcast where busy professionals are empowered to develop multiple streams of passive income built on solid, secure, hands-off commercial real estate investments. This show is not just about wealth development. Every episode, we dive deep into inspiring conversations with professionals who are living life to its fullest while making significant and meaningful impacts on a world in great need. Engage with us each week and discover how you can thrive and flourish abundantly in all areas of your life. Now here is your host, Dr. Allen.

Hello, Enlightened Investors, and welcome to Streams to Impact. We are so delighted you have decided to join us again today, and we are going to have a very informative and enlightening conversation with a 20-year veteran of the real estate Brett Riggins is passionate about helping people connect with the life that they want, which is exactly what Streams to Impact is all about. So we are glad he is with us today. He is the founder of Connect Home Buyers and Physician Wealth Systems, and he is the host of Real Estate Mogul MD podcast. He shepherded More than $20 million in transactions in the last decade. So welcome, Brett. Thank you for being with us today. And if you would just take us into the show and tell us a little bit about your start in real estate, and what were some of the high points, and what were some of the more challenging times?

Well, what a, what a question to unpack right out of the gate. First of all, I want to thank you so much. And to the listeners, the viewers out there today, thank you for your time and more importantly, your That's really, really important. Wow. And when you— when we started the introduction too, I heard the crowd. It was just like this bellowing applause. Does that get overdubbed later since it's just the two of us?

I didn't hear it, so I don't know.

Oh, it must have been on my side. It must be a delay.

It's just, maybe it's just an enthusiastic crowd today.

That's right. I hear it in my head all the time. I guess that's the thing about the internet. The fire of passion, right?

Yes.

That drives me and now the people I surround myself with. I love it. And I love— it's almost like a— I get the goosebumps thinking about it— contagious kind of feel. You know, when you have that optimism and integrity and you mix it with genuineness, and it's just a beautiful place to be. So, first of all, thank you so much for the invite here today. Man, when did we get started in real estate? '07 was the perfect time to get started in real estate, right? At the high side of '07. And I bought my first rental. It was— I did everything wrong from the start of this thing. I had nobody around me. And this was pre-YouTube. And the speed of information was just a little bit slower. No excuses. No excuses at all. Just kind of putting everybody, putting that lens of perspective here. So nobody around me, nobody that I knew was investing in real estate. And I had a family, a relative that was a real estate agent. And they were like, hey, Brett, we've got this property, it's foreclosure. So all of a sudden, you know, these things pop up in my head like these, okay, hey, that sounds like a great deal already, right? But, you know, there were things like location that are really important. In, in real estate, didn't know anything about. And then obviously in '07, things changed. '08 came around. Just a little bit. Yeah, I had this property that I was just going to clean out the trash and cut the grass and sell it, right? Did not work out that way. I had 3 other investors in there with me. They— I mean, we're— Allen, we're talking like weeks. These guys just bailed out in weeks. And everything, everything went wrong with this thing. But luckily, I was able to hold on to it, got through the downturn. Even in this town where I had purchased this property, they closed the schools. Like, it got so bad they closed the schools. There's still no school system in this town anymore.

Wow.

So, location, yes, it was— everything was horrendous.

So, this is—

oh, this is so much fun. So, I'm holding on to this property that I wanted to sell. And you know what's happening in 2008? There's a lot of foreclosures going on. So how many people in my ears— I didn't have the right people around me— saying, Brad, just let it go. Foreclose. Everybody else is doing it. Let it go. And there was just no way I was ever going to let that happen. So I was like, hey, let me rent this thing out. So I put my ad up, whether it was on Craigslist or wherever I was doing it, you know, in '08.

Mm-hmm.

And I got the worst tenant. I got the worst tenants that I could find. I had no screening process. I had no systems. And like I said, every single mistake that I could make, I made. And boy, they were learning mistakes. When we look back, we call that tuition, or some people call it the dumbass tax. I don't know if that one may be blurted out or beeped out, but sometimes it's the same thing. We got through that. I had the worst tenants. It was small claims, no screening process. Ultimately, that Property, I ended up getting maybe through two cycles of tenants on that and upgraded, improved the property, over-improved the property. I spent a lot of time at that time, Alan. I was in design build construction, and I was working and living about an hour and fifteen minutes from this property. So on the weekends, I would drive down, work straight Friday night, Saturday night, go back Sunday. So we're talking like eighty plus hours a week here. But we got it fixed up. We sold it. Ultimately, it was in the black on the sale. And that was really kind of like the first turning point in my life with real estate because the funds, although there was so much sweat equity, tears and blood and energy burnt in this thing, that room in the black was something that helped me pay off, pay down my college debt.

Wow.

debt that I had. So ultimately, it was a wonderful experience to top it off. How about that one, huh, Allen?

Well, that sounds like some of my, my experiences, which were the worst days in my life, but I look back on them as the best days. But as you were talking, I mean, well, I just have to laugh because it just mirrors so much of of my experiences of purchasing without really knowing what I was doing, putting in mountains and tons of sweat equity and not paying myself for that. And yeah, I'm afraid there's a lot of us in the real estate industry who've had that experience. Well, you came out in the black. Well, that was good. How did you manage to do that in a town that doesn't have a school system?

Sweat equity. In the renovation company that I was part of, we would— we were high-end renovation. So oftentimes I would go in and pull out 2 or 3-year-old products, you know, 5-year-old products. So I grabbed up— I grabbed up a whole kitchen worth of cabinets, doors, windows. I ended up replacing the windows. That was a big piece. And the knowledge piece too would also hurt me a little bit, Alan, because I over-renovated. Right, and now getting into this where you know I talk a lot about single family. That's my base. That's my foundation, and I think it's a great place to start. But I know now what I need to do because I know my outcome that I'm looking for. I'm looking to have a property that a lender will be happy, will be excited to lend on, and mitigating the risk. You know, having a good LTV, a good DSCR, and I want a property that an insurance. policy provider is going to be happy to write that policy on, right? And I want a property that a tenant's going to be happy compared to the other available properties to rent. Nice, neat, clean, and mechanically sound. When I mix those things together, I've got a great opportunity. As long as I'm in the right location, I've got a great opportunity to make a happy family and make me a happy asset manager as well too. So that knowledge hurt me. In the beginning, because I over-renovated. I was you know looking at things like it was it was a 1940s, 1950s house, and it had the beautiful farm-style trim with the backband and just some really high-quality stuff. And when I made the renovations, I'm like in my mind, I'm like that should go back that way, right? Yeah, so quite the journey, but it was mainly sweat equity and. lightly used construction materials that would go into the property.

Well, that was certainly a smart move. And of course, you had to have the connections in order to have that available to you there. And well, I'm glad for you that it worked out. You know, there is— I see still people still doing that same thing of over-improving, particularly if you're going to hold them for rental properties. And I understand that. I mean, You know, we want properties to be proud of, and we often think that we're going to renovate those to the standards that perhaps we would want to live in, but that often leads to that situation of over-improvement, and I have been there more than once. You talk about location. What makes a good location, and what makes a location you don't want to invest in other than The school system being shut down.

Yeah, school system, you know, that's definitely rough. And I always think about scale when we're talking about this question too, because it's going to be a little bit different for everybody. You know, if we're talking about 100 homes or 100 units, maybe a little different than if we're talking about 1 or 10, even 10 units. I like starting with the idea of investing in your own backyard because you're going to know the areas when it comes to school districts. You know, what school districts are struggling, what school districts are being sought after. And then, you know, there's definitely places where we can find data on this, but also crime areas. If you start in your own backyard, you're going to have an idea of what those 2 things are. And when we start looking at scale, then we're looking a little different, Alan. Then we're talking about population, steady population growth, you know, all of these things when we're underwriting a deal in the multi-world. I can consider those things in the single-family world too. That crime rate, the median household income. I love breaking this down too. So if you think about it, if you look at the average rent for, say, a 3/1, 1,000-square-foot ranch and just keep it, you know, easy, $1,000. Well, I need to, as an investor, especially if I start adding multiple units, I need to know what that means to the person inside of that area who's going to rent that. That means I have requirements to rent that out to a tenant, right? I'm looking for a minimum of 3x income to rent ratio. So that means if that average is $1,000 a month, I need that person to bring home at least $3,000. And that tells me that their median income needs to be around that 36. And it's safer if it's bring home at 36 too. So if you wanted to move the tax bracket on there and get the other, that ramps it up a little bit. So the income, average income, median income makes a difference Based off of the rent that we're looking at. Jobs, how are the people going to get that money, right? What are the— are there job growth? What is, um, what does that look like the last 3, 5 years? So there's ways that we can grab this kind of information and mitigate risk. Again, looking at it from a smaller perspective, if I've become an accidental landlord or I've got 1 unit, 2 unit, sometimes the smaller areas, we're not going to have that data available. And it's Definitely not going to align with that 1 to 3% growth that we're targeting on a scalable scenario.

Well, a lot of things are happening in the world of real estate, but a lot of things are happening in the world of economics and finance. And considering all of the geopolitical things going on and the economy and the Fed and lowering interest rates. Is now a good time to invest in real estate?

It's always a good time. The best time to plant a tree is 20 years ago and today, right? I love that saying. And in real estate, there's always deals. There are always deals if you have the knowledge, the capacity, and the tenacity to find these deals, but also be willing to pivot just a little bit too, Allen, because just because, like you were mentioning, geopolitical, cost of money, all these things may factor. I can't go out there and be fixated on a particular deal unless I have the patience and ability to wait, not buy, wait, not buy. But it's a difference if you're able to make a little pivot. Maybe your acquisition process is a little bit different. Maybe the asset class is a little different. Maybe the market is a little different. So, there's always opportunity out there. You just have to have the systems, the processes, the relationships in order to take advantage of the opportunities that are available.

And yes, it helps to have some understanding and some wisdom before getting into this. We are talking today with Brett Riggins, and he is with Physician Wealth Systems, and he helps people to grow and develop their wealth Particularly through real estate investment opportunities. So Brett, tell us about Physicians Wealth System and how we can take advantage of that.

Yeah, Physician Wealth Systems is an idea that turned a little over 2 years ago, and it stems from the nationwide real estate acquisition company that we had built. And at that time, Alan, we were, you know, fixing and flipping. We were wholesaling, hoteling, all of that stuff. Had the machine going. And in order to do this, you know, we were doing 6 flips at a time. In order to do this, we needed to leverage other sources of money, right? And on the front end, it's a little different when you're acquiring a property that's all beat up, maybe distressed, distressed seller. It's not a Fannie Mae, Freddie Mac box that you're going to fall in for the most part. So we leveraged Private money lenders, and throughout that process, I always heard, "Hey, how can we get deals like this from the lenders? How can we get equity?" Because it was just a debt relationship, and I'm like, "No, that's that's it's our equity. We got it. It's okay." But ultimately, that's where the idea of plugging in the physicians, high-income earners into our acquisition machine, and now paired with those years of energy burnt. Lessons learned of our own long-term hold portfolio as well too. That's where Physician Wealth System came in. So now, all of the equity goes to the client, goes to the community member. So, we're setting up the structures, the acquisition machine. We'll do 12 properties in 12 months. It's a target to do the 12-month period. We're going to make the best decisions for the business and for the portfolio that we're building on timeframe. But that's the target to hit that 12 properties. And it's start to finish, find it, acquire it, renovate it, get it stabilized, locked in with the property manager, and then build the asset management processes and platforms that allows the investor to be the asset manager and not the landlord, right? We want processes in place to make this active real estate investment as passive as can be. In doing that, we're creating a turnkey real estate investment business for the clients.

And you can find Brett at physicianswealthsystems.com, and he has a gift for you there. It is a free download toolkit. So that's physicianswealthsystems.com/free-download-toolkit. Well, Brett, how is it that you avoid poverty?

Avoid poverty. Wow. That is a great question. I think I'm blessed because I've taken so many risks, Alan, when it comes to ideas and shiny object syndrome. Just surrounding myself with the right people is the biggest piece. And that, whether it's a mentor in life, in relationships, in real estate, In technology, having the right people around me to bounce ideas off, never being the smartest person at the table is always a great place to be because we're always learning. Not being a lazy learner, taking this stuff in, this information that we have, applying it and creating wisdom. I think that experience piece is the transition between knowledge into wisdom. And then from there, man, just shortening the feedback loops, the feedback circuits that you have. So, you know, you've heard it said before, fail fast and make sure we're getting feedback so that way we can make those pivots, as I mentioned before too. So surround yourself with the right people, man. Take action, learn from your mistakes. I could just go on for hours on that. And the things that you learn inside of that process, Allen, are the things that somebody can never take away from you. Even if the money piece comes and goes, even if the real estate, the size of the asset comes and goes, the knowledge that you've created, the wisdom that you've created through your action, nobody can ever take that away.

Well, I think you sort of addressed this, but what do you mean when you say change your mind, change your life?

So, it starts with the mindset. And the first conversations that I have, so amazing having the opportunity to talk with people on podcasts. It's one of the funnest things That I get to do. But so many of the conversations that I have come down to the way we think, the way we feel, the way we've been conditioned to feel about certain things. And that self-awareness is that first step into self-development. And that awareness always, always starts with that thought, right? The thought then creates a feeling, creates an action, and then we create habits. Well, it all comes back to that thought.

Yeah.

So oftentimes I've found that a lot of the biggest hurdles that investors have are to just realize the limiting beliefs that they may have. And if it's, I don't have time, I don't have money, and I don't have friends like that, all of those are limiting beliefs. How you feel about money, how you feel money should perform for you. So the self-realization of those thoughts is a big step, but then overcoming them and creating the thoughts that then lead you to the path that you want to go, right? I want, I want to be this. And it's like the idea of manifestation, you know, and it's depending on how spiritual someone is, maybe, maybe somebody believes in it, maybe they don't. But there's something that happens in our brain, but it all starts with a thought. And the more that I can be aware of my thoughts, create those thoughts, I create the path that I want to live, and I create the opportunity to live my life by design, the way that I want to live it. No boxes, no limits. Let's make it, let's make it happy, right? And so then in turn, we can make it happy for others as well too.

Yeah, there's so much wisdom in that, Brett, and I totally agree with you. It all starts with self-awareness, which can be a big hurdle for a lot of us and can be challenging. But once we really, I think, realize that the root Is first of all self-awareness, then we can all change our lives and change the trajectory in which we take our lives. There's a lot of things outside of all of our control, but there are a lot of things that we can take control of, and that's where we take responsibility. Well, Brett, what does wealth mean to you?

Yeah. And that last statement, just rounding back to that, I mean, the idea of it is simple, but the process is not easy. I had a guest on the show the other day and it just— something that stuck in my mind is embracing the suck, embracing that idea of it's not going to come out and be perfect. Okay, I've changed my mind, Brett. Why isn't my life changing? It's not that easy. It's not an easy button, right? The idea is simple, but just like you mentioned, Alan, there are so many things outside of our control. And that's even something that starts in our mind too, understanding that and saying, understand I can't control that, but it's still frustrating. It's still creating these emotions in me. It's how I can train myself to respond instead of react. And then I can continue to improve myself. This is something that I've used on my way to building wealth and understanding wealth because it may not be— I mean, I'm not sitting here in the Taj Mahal. I'm not, you know, I don't have multiple import cars and private jets and all that. Well, I've got a private jet on my screen of my computer, but hey man, I got a computer. It's pretty nice. You know, it's, it's wealth is what we believe it to be. And if we find this with this point of being content, uh, but not complacent, being in this point of what is freedom to me? I'm wealthy every single day because of the gratitude that I am aware of that I have, that I have control of. Happiness is an idea, right? Happiness is something that we create, and all we have to do is decide that we're there. Understanding what wealth is to me is that self-awareness piece of being happy and being grateful for what I have, right? And now, I actually am in a place where I have freedom of time. I have freedom of location. I have freedom of work.

Yeah.

And I have the freedom now to help others find that path. It's going to be a little different for everybody. Oftentimes my goals will relate to numbers and timeframes, but the idea of wealth to me doesn't. I am, I am the most wealthiest person in the world and so happy to be here.

What a great realization. Content, but not complacent. And Happiness is a transient feeling. Subjective well-being is, is really a lifestyle, and it really comes back to that ability for us to, to decide how many positive emotions that we bring into our lives. And like you have alluded to, it really begins with our thought processes, which— We just mentioned that there are a lot of things that are outside of our control, but one of the things under our control is certainly how it is that we think. And how it is that we think is followed by how it is that we feel and our emotions. Well, Brett, thank you so much for being with us today. A very enjoyable conversation.

Thank you.

And Enlightened Investors, I know you have I hope you enjoyed the conversation with Brett. And remember, you can get in touch with Brett through his website, physicianswealthsystem.com. Check him out and get on the mindset to wealth through contentment, but not complacency. Thank you so much for being with us today.

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