David Lindahl: How To Invest In Cash Flow Real Estate w/ David Lindahl

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Hey folks, this is Ryan Daniel Moran and welcome to the Freedom Fast Lane Show. On today's show, I'm very excited to present to you somebody who had a profound effect on me before I was ever in business for myself. Today we're going to be interviewing David Lindahl, who is one of the world's most well renowned real estate investors who specifies in teaching people how to invest in multifamily homes even if they have no money to their name and not a lot of free time because that's how he started. Today, David actually goes into his step by step process for getting deals, for closing on them and using none of his own money. And you'll do well to pull out a pen and paper and take notes on his step by step process for making that happen. Personally, my financial strategy is to make money in my businesses and to take that money and to put it into real estate, much like David suggests in this interview. And then I take the profits that I make from real estate and I put those into dividend paying stock. That is my Freedom Triad, where it continues to feed itself with passive cash flow. I make my money in my business, I invest it in real estate and the money I make from that I put into dividend stock. Now that's how I did it. That's how I spend my money and build my cat, my passive cash flow. You can modify that if you'd like. Either way, you do very well to take notes throughout this call with David Lindahl because he goes through his step by step process. By the way, I think the best way to earn money in order to put into real estate, if you're going to use your own money, David teaches you how to not use your own money. But the best way I think to get cash flow going so you have a place to invest it is on the Internet by having an Internet business. And we teach that all day long@freedomfastlane.com if you head to freedomfastlane.com and put in your best email address, I'll send you free reports and newsletters that will teach you exactly how you can build an online business and passive cash flow streams so that you can invest them into other places and live an extraordinary life. With that, let's dive into the interview with David Lindahl.

Hey everybody, this is Ryan Moran and welcome to Freedom Fast Lane. Today I am very excited and honored to be joined by somebody that I have been studying and reading over the last several years. We've never met in person and this is our first time finally making a one to one connection. Today we're joined by David Lindahl. And David is a world renowned real estate investment expert who authored the best seller Multifamily Millions, which had a huge impact on me, a lot of millionaires that I know. And you can find that, and you should find that on Amazon.com he has personally inspired me and millions of other people around the world to invest in real estate as a vehicle for wealth. He's also the author of a new book called Massive Passive Income Creator which you can download for free@davesfreebook.com he regularly shares the stage with some of my own heroes, including Donald Trump and Tony Robbins. And he's joining us here today on Freedom Fast Lane to share his systems and step by step processes for making it big in real estate and generating a passive income. David, thanks for hanging out with us.

My pleasure. What's going on, Ryan?

David, I am really excited to hang out with you. For those of you who aren't familiar with you, why don't you give us just a brief overview of maybe your story, how you got excited about real estate and how you changed your life, you know, a decade and a half ago.

Okay. Yeah, I did start about 18 years ago after about a 10 year stint in a rock and roll band, which I was the lead vocals. I got in that band when I was 16 years old and finally realized I probably wasn't going to make it in rock and roll when I was 26 and.

I was tired of living the life that I was living in that band. So I wanted a better life. So somebody told me that in order to get money or earn money or make a lot of money, you either have to own something or you have to sell something. So at that time, I come from a family of entrepreneurs. My grandmother owned a fish market. My uncle owned a carpenter business, carpentry business. My other uncle owned a gas station down the street. So I thought, you know, I'm going to own something. And I didn't know what I was going to own, but I did know that I needed some money. So I started knocking on some doors for people that had high grass and asking if I could mow their lawn because I had been mowing lawn since I was like 10 years old. My father owned an apartment building, two family property and I would mow my neighbor's lawns as well. So I figured that I could do that for a while until I figured out what I was going to do. Well, that first year I got 41 accounts and that worked out pretty good. And that was basically from knocking on people's doors. And then the winter came and I struggled, and I wasn't sure what I was going to do. A friend that was working for a local bank knew I was struggling, asked me if I wanted to do the repair work on a property that the bank had foreclosed on so they could put it back on the market. I said, sure. Didn't know how to do the work, didn't even know how to bid the work. But I saw it as an opportunity. So I got my cousin who was in construction to come out and help me do the bid. And then my friend who actually worked for the bank helped me get the job, made sure I was a little bidder. And then I started calling people that knew how to do the work. I started calling contractors and subcontractors, and I started asking friends and families if they would help me out. Friends of my family and my own friends got the first job done. The bank liked to work, asked me to bid a second one, and I did. And then I bid a third one and I won that one. And I started realizing that there were investors looking at these deals, and there were homeowners looking at these deals, and the investors were going to buy and sell, and they're going to make a lot more than I was making in the rehab. So I was watching those late night TV shows, Carlton Sheets and that Asian guy. So I took what little money I had and I bought their stuff. And it got me started. What it did is it pointed me in the direction of.

A real estate investment group. And that was really the big change for me because I started joining my local real estate investment. I started going every month. I started looking around the room, and these people all kind of looked like me. They acted like me. They came from the same area I did. They talked with the same accent I did. And they were making money. Some of them were making money. Some of them were just starting out. They were at different levels. But I thought, you know what? If these people can do it, then I can do it too. And I kept going. I kept asking questions. I kept getting more education. Nine months later, I did my first deal. It was a three family over in Brockton, Massachusetts. Many people say, oh, you can't start with a three family. Why'd you start with multi families? You got to do single families first.

That was after I bought it, because fortunately for me, nobody told me that beforehand. I had seen an interview with this guy by the name of Harry Helmsley, who started with nothing in New York City started buying and selling apartment buildings and ended up owning the Empire State Building. It was something that he said during that interview that really got my attention. He said that the reason he liked to buy multi families is that a group of people will give you money every month to pay for a building for you. They'll give you money every month to pay the maintenance guys to do the maintenance on the building so you don't have to go out there and try to swing a hammer. They'll pay you money every month so you can hire a management company to manage the property so you don't have to deal with any of the tenants in the building. And they give you so much money that at the end of the month you'll have extra money. You'll have passive income money that you can go out and spend on yourself, money that you can go out and reinvest, money that you could just put into a savings account. I thought, wow, if there are people out there willing to give me money to buy deals, then I'm willing to take it. That's how I get started. After going through nine months of fear, being very afraid to do my first deal, I popped my first one and then three months later I had three more. Six months later I had nine. And that first year I had 11 deals.

Yeah, I have a bunch of questions about exactly that. But there's something that you just mentioned that I really want to make clear. Because as we're going through this interview, we're going to be going over step by step stuff.

We're going to.

People are going to be intro to your book and your systems and your strategy. But what you just said is what a lot of people experience is that you had nine months of fear. Some people have had nine years of.

Fear, some had a lifetime.

Yeah, amen to that. So tell us briefly about that nine months of fear and how you got over it. Because at the end of this, a lot of people are going to want to take action. A lot of people are going to want to start looking in their areas for opportunities to buy real estate. They may want to buy your book. So for those who are ready to take action that are facing that window of fear or have been facing that for a long time, how did you overcome that?

Well, my big problem was, is my father. I remember I'd been in rock and roll game for 10 years, so I was kind of the black sheep of the family. And my father, I told him I was going to start investing in real estate. And he told me that if I did then I was probably going to lose everything. And I thought, well, you know, I don't have anything.

But he just, he kept telling me, dave, you invest in real estate and you're going down, you're going down. He said this hand signal of, you know, his hand going down. Sometimes he wouldn't even say it. He would just like make that hand signal when he saw me sometimes when we started talking about real estate.

So when I would look at properties, that's the first thing I would think in my mind when I saw one that I thought was going to be a good deal. I educated myself. I had learned how to analyze deals. I was out there in the marketplace. I was doing all the things that you need to do if you're going to be an investor. And then I was finding deals that worked. But as soon as I found a deal that worked, that's when the real fear came on. Because I knew I was going to put in an offer on this deal.

And I thought, oh my gosh, if I put in an offer on this deal, there's a chance I might even get this deal. More afraid.

What happened was I started bird dogging these deals, started putting the offers in, they would get accepted, then I'd bird dog them to somebody else. So I would get paid like 2,000 or $5,000 to Bird Dog these deals. And that was pretty good because I was making money and I didn't have to own the property. My father told me I was going to get foreclosed on if I ever bought a property. So as I'm building my confidence and building my confidence, it was this property that came on the. And I put it together. I sent out the bird dog package. And one of my investors who had bought a lot from me said that he was interested, but he's really busy right now. He said, but he'll take a look. A couple weeks later I called him back, you're going to do that deal? He said, no, he's too busy right now. Took another bird dog, same thing, third bird dog, same thing. And I thought to myself, oh my gosh, this is it. This is the first deal. I mean, this is like somebody from above planted this property here and said, this is the one. Recognize it? And so I still, I was really afraid. So I have a best friend. We've been best friends since we were 10 years old. He was working in a factory at the time. He's making like nine bucks an hour. And I figured, you know, if I was gonna go down, I better take somebody with Me.

That was my friend Rob.

It's so generous of you, David.

Situation. I said, look, you know, we got nothing to lose if, if we do get foreclosed on like my father predicts. I said, what's gonna happen? They're gonna take the property back. They can't come after us because we don't have anything. You know, he's living in a one bedroom apartment too. So I looked at the pros and cons. If it worked out, it was a much better life for me. If it didn't work out, well, I just chalk it up as experience.

Yeah.

Yeah.

There's something very freeing about realizing that if your worst case scenario were to happen, it's not always that bad. And the fear of something happening is always, always, always worse than, than it actually happening is. That fear stays with you forever. If it actually happens. There's almost a sense of relief, like I don't have to fear this anymore.

You know, it's. And it's called catastrophize. Well, I've got a friend who's a psychologist and we talk a lot about different things. I also have a friend who's a monk that I've known Now for about 10 or 12 years who always gives me really good advice. And they both said, you know, talking about different things is you can't catastrophize. And catastrophizing is thinking about the worst outcomes before they actually happen. Because you're right, most of the times the worst outcome never happens if you just don't think about it or you try not to think about it. I started doing these transcendental meditations as well. It's the same thing. You just got to keep the future out and the past out and think about the now working in the present. Then you get more done.

David, I could talk about this topic specifically all day, but in the interest of keeping it on point. So let's talk a little bit about that first deal and really your system and what it is that is your bread and butter, which is investing in multifamily homes and getting passive cash flow. So could you give just a quick overview of what your system is, of what your step by step process looks like for people who are just beginning in real estate and getting their first, second and third deals in order to generate passive income?

Well, it's a five step system. The first thing to do is you've got to attract the deals and attracting the deals. It's, it's a relationship business. Well, there's a bunch of different ways to do it. But there's two main ways to do it. One is to create relationships with realtors and bankers who will give you pocket listings, deals that other people don't know about. That's how you know you've created a good relationship when you get a pocket listing. The other one is direct mail. Especially in today's market, where there's still a lot of foreclosures out there, direct mail works really, really well. You'll get a seller who's in trouble to raise their hand and say, yeah, you know, I'm interested in selling my property. Are you interested in buying? So you get the deal attracted. And then the next step is you got to analyze that deal. You got to analyze it properly. And I can give you a very quick formula, please. There are, you know, after you go through this formula and it works, then you want to take the next step, which is to put the numbers into some sort of a software. Because I figured, I learned that using software not only helps you analyze deals faster, because you're going to probably analyze anywhere from 10 to 20 deals before you get one. It also helps you kick out the bad deals faster as well. But if you will use this simple formula by taking the yearly income of a property, and that's the yearly income, subtracting the yearly expenses. Okay, yearly expenses. I'm kind of going a little bit slow. So if you're writing this down, those that are listening, you can write it down. So you subtract the yearly income minus the yearly expenses, not including the mortgage. Because we use that in another calculation that's going to give you what's called the net operating income, or noi. That's like the holy grail of multifamily investing. Because we'll take that net operating income, we'll multiply it by 10, and that will give us the value of the property. It's just as simple as that. If they're asking for more than that, then they've overpriced the property. You need to come down to that. And if they're asking for less than that, then you probably have a really good deal there. And so that's the first screening method. And then after that works, then you would put it into some software and then bang out some. The software will allow you to see forecasts. There's this thing called the APOD page. Anytime you're looking at a property, the APOD is an acronym for annual property operating data. And there's certain ratios you want to look at. You want to look at the Cap rate, which is the formula that I just gave you, the equation. You want to look at the cash on cash return. You want to look at the debt coverage ratio. You want to look at the gross rent multiplier. That page will also give you the yearly income, the yearly expenses.

The income before taxes. So there's a lot of good information on that page. And the best part about these softwares is if you just simply put in your income, your expenses, your mortgage amount on page one, all these things are automatically calculated and then you can get a good idea of what your deal is doing. So now you've analyzed it. So let's say that you've got a deal that.

Works.

Okay? So now people ask me all the time, you know, where should I start my negotiation process? Where should I start my offer? Well, typically your offers are started at about 10% below strike price. And your strike price is the maximum amount that you will pay for the property. You always have to set your strike price at the beginning of the negotiations because negotiations get very emotional. And you want to make sure that you don't go over that strike price when you're in the heat of emotion or the heat of a negotiation. So I usually start about 10% below and I'll work my way up from there. If it's a really hot market, then I may go to right to strike price. But I'll ask for some concessions. I'll ask the seller to pay closing costs, or I'll ask the seller to give me a repair allowance, something that I don't really need. But I know if I offer full price and I don't ask for something else, the seller's going to think that he put the property on the market for, for less than what the value is. And he may actually go up on price. That would be his counter. That happened to me twice. Did that ever happen to you?

Well, I have a similar situation happen that I want to cover as soon as you get through this step. But I don't want you to finish because I'm loving what you're talking about. Okay?

So you've analyzed it, and now you start the negotiation process. So you start the offer process. That's the letter of intent. So you get the letter of intent and then they accept it. So now they accept the offer. Then you've got to do due diligence. Due diligence comes in three forms. You do the financial due diligence. They give you the operating numbers from the property, and you just make sure that they are the numbers that you did your analysis on, you do your physical due diligence, and that is you hire an inspector to go to the property and make sure that everything's intact. And if it's not and the seller didn't tell you before.

You went and inspected, then you start deducting from there. And then the third is legal due diligence. And legal due diligence is just making sure that the title is clear. So you do your due diligence or the other thing you do. The two other things I always do is I get my private money investors in line, and that's another step in the process. You don't want to be using your own money. And if you don't have any money, you can't be using your own money. But private money is the way to be investing, getting angel investors, people that want to fund you real estate deals because they want to be in real estate, but they just don't have the time. And these people are business owners. You'll get most of your private money from business owners. So just go to their groups, go to the chamber of commerce, the business networking international meetings, the citrus clubs that are in every state, and hang out and offer opportunities. Don't go in there asking for money. Go in there offering opportunities and knowing that you don't have to accept every investor in your deal. You only accept the ones that you want. When you have that attitude going in, you're going in a position of strength instead of a position of weakness, which is, oh man, I hate asking people for money. Don't offer opportunities. So that's the third step. That's the fourth step is getting your private money in line to close the deal. Private money is the down payment, it's the closing cost, and they actually pay you an acquisition fee for putting the deal together. So don't forget to ask for that. And then the bank will give you the other 80% of the deal. So your private money people will put it up sometimes 100%. And I've raised over $67 million in the last four and a half, five years and bought over $200 million worth of real estate with it. But even I am continuously looking for private money because you will eventually run out. So you want to put down as little in each deal as possible with the use of private money in the combination of lenders or banks. And you might be thinking, oh, you know, I got crappy credit, or I could never get a bank loan. Well, first of all, with multifamily, the banks are qualifying the property first before the qualifying you. And that's a big plus in multifamily investing.

Sounds like you put up none of your own money when you're doing these deals.

I never do. If I've ever put up money in my past, it was because there's different times when I just had a barrage of deals coming in and I couldn't fund them all as fast as they were coming in. Or I confused my time, I confused my investors. I had five different deals going on. So I offered them all to all my investors that have been giving me money. And they're like, well, you know, I'm not sure which one to go into, or maybe I'll do this one, maybe I'll do that one. And I realized I should have just done like gotten a group of investors giving them one of the deals, another group of investors giving those, giving them a deal. So I have, during that situation, I put up some of my money, but I got it right back after the deal closed. It's called backfunding. And as soon as the deal closed, then I went back to my investors and said, hey, come on, who wants to be in this deal? I got my money back.

Well, I've read countless real estate books. I've been really reading real estate books most of my life. And I can say that that five step process was a beautiful, succinct breakdown.

There's another step.

There's one more. Okay.

Yeah, it's getting the management companies to manage the deal. So it's hiring the right management companies. Multifamily's come in all different shapes and sizes. There are different shapes and size management companies that will manage those deals. But you got to make sure that you do not manage these properties. Those tenants will burn you out in a two, two and a half year period if you start to deal with them. Let the management companies deal with the tenants. Let the maintenance guys handle the maintenance of the properties. Your job is to go out there and get more deals, create more cash flow. You're an investor, you're not a manager.

Amen. I wish I could write faster because you're spitting so much gold. I love what you just said in step three about maybe it was step two. Forgive me about making the offer. I just ran into a mistake. I wish I had conducted this interview a few weeks ago. My most recent deal was a single family. It was a very small deal, so it wasn't a huge, you know, a big impact. But it was my most recent deal. I made an offer and I got it accepted right away. And I thought, oh, I wish I could go back and, you know, start at 10% of my strike price, because I went right for my strike price rather than going what you just said of below the strike price and then asking for. For concessions. That's a great rule of thumb that I'm going to start using. Thank you for that tip.

You're welcome.

All right, so I'm curious, just to satisfy my curiosity, after this process is done, how do you have it set up legally? Are you doing each deal as its own legal entity, as its own llc? And how are you structuring your deals to attract investor. Attract investors. Also not creating a big mess of financial jargon that a lot of people get confused by.

Okay, first question. What was the first question?

How do you structure your deals legally? Are you putting them all in your own llc? Do you have a business that holds them all?

Each deal is a different llc. You want to treat them all as a different business.

That way, if one goes down, the rest of them don't go down with them. Okay, that's the first thing. How do. Now, how do we structure the deals for the investors who are attracted to them?

Yes.

All right, so typically, investors are attracted to a real estate deal where they can get an 8% or better cash on cash return. And the cash on cash return is just basically it's kind of like compared to money you're getting a savings account. You know, it's the money that you get during the year or the cash flow you would get every month, and then add that to the disposition amount. Disposition means when you sell the property, what's the percentage that you're going to get from.

You bought the property at a certain price and you sold it for a certain price. What's your profit? So you add those two together and that's what's called the annualized return. Investors like to see an annualized return of 20 to 25% in a deal. So you project the. You take the current revenues, you project the future revenues from historical data from the property and what you can do to improve the property. You always want to buy a property where you can do some sort of value add. And value add just simply means that, hey, let's increase the occupancy of the property. By increasing the occupancy, we increase the cash flow. When we increase the cash flow of a multifamily property, we increase the value. Same thing with occupancy. Let's see if we can increase the occupancy. I already said occupancy. Let's see if we can increase the rents. We increase the rents on the property, we're increasing cash flow. We increase the occupancy on the property, we're increasing cash flow, we're decreasing the expenses in the property, we're increasing cash flow as well. So when we're going in and looking at deals, we're looking at deals that have small problems. Maybe they couldn't get it rented up fully, maybe they couldn't, maybe they haven't raised the rents to where the market's been going, or maybe they're just having a hard time with their expenses. But we'll look at it, we'll make sure that we have a pretty good feeling that we're going to be able to fix this small problem. And then we buy the property based on today's numbers. That's really important. We buy it based on today's numbers and then we go in there and we increase those numbers by using those value adds and we increase the value of the property. So we show that to the investors as well, what we're going to do and what we project as a return for that. And we put together what's called the property package. And then we just lay it all out. And we also lay out all the closing costs, all the expenses. We lay out the acquisition fee. The acquisition fee is anywhere from 3 to 5% of the purchase price on a property.

So if you're doing a million dollar deal and you're getting a 3% acquisition fee, your investors are paying you $30,000 to put that deal together at the closing. That's pretty sweet.

Yeah. And do you put that in your pocket? You put that right in your pocket.

The highest acquisition fee I've ever gotten was a 13 million dollar property where I get a $647,000 acquisition fee.

Not a bad. And none of your own money going into the deal.

No.

You're actually getting paid to set up passive income streams for life.

Yeah.

Not a bad deal. Okay, well, that's wonderful. You have a quote that I really like that I'm reminded of right now. At least I ascribe it to you because I think I heard it from you, which is that it's not money that makes money, it's the movement of money that makes money.

Yeah.

And that's what I'm hearing you say right now is that you didn't have money when you started, and even though you have money now, you don't put your own money into deals, but you get it to move around and that's what creates wealth for yourself.

Absolutely, yeah.

And you, you, you partner with banks as well, who need to move that money and you channel it into places that are going to produce wealth for yourself and a return for the banks and your investors. So it. That, that's a quote that I like to bring up when I think about the nature of creating wealth. Because it doesn't necessarily require you to have anything to start as long as you're putting together value that creates money. Moving that money around so that it creates value and creates more money.

Yeah, absolutely. And that ties right into market cycles as well. Because market cycles is all about market timing and buying a property or identifying markets that are just at the emerging phase, meaning they've just come out of a downturn and then now they're about to start appreciating again, typically through job growth. Job growth moves most markets. So you take money that is maybe at the top of the cycle, that is getting close. Not the top. We actually move out of a market at about three quarters of the way up a market cycle. If you think of a roller coaster, you think of sitting in the seat and going up before you about to go over the other side, Go about three quarters of the way up and then sell off our properties. That's the sell signal. And take that cash and move, move it into another market that's just starting to go back, go up that escalator and that's the movement of money as well. Moving it from one market that maybe has matured into another market that's just starting to emerge. You do that and you become very wealthy very quickly. One market will actually make you very wealthy.

Do you have any markets right now that you're really high on? Areas of the United States that you're investing in heavily because you see them at either an emerging stage or at that initial point where they, they're starting to go up.

Yeah, they're actually. We're in one of the best times in history right now because there are so many different emerging markets going on because of the deep recession that we're in and we're slowly working our way out of. So there are markets like Atlanta is a great market to be in right now, just starting to emerge out of a big shadow inventory market, meaning they had too many foreclosed single family properties where the investors, actually a lot of the investors didn't get foreclosed on and they were just taking any rents to try to survive, which meant the apartment markets were depressed because you could get a single family property for the same amount as a single bedroom apartment. So people weren't renting the apartments. Well, that has changed. So now it's a good time to be in Atlanta. Over there in Provo, Utah, one of the best markets in the United States right now. Because the entrepreneurism that Brigham Young University is creating and the fact that the state of Utah, Utah didn't even participate in the recession, barely. Great government leadership, which is a good hallmark of an emerging market is government leadership.

There is Madison, Wisconsin, which is just starting to emerge out of the downturn in their marketplace. Dallas, Texas, I mean, the state of Texas is a. There's so many good markets in Texas right now, Dallas being one of them. The sub markets around Dallas, Amarillo Temple, go up north to. Well, if you go west to Texarkana, go to Tyler, one of the top 10 markets just recently cited by Milken Institute. They're there. So it's a great time to be investing. I can't think of an area other than Detroit in the US Right now and other than the places where people really don't live, like Montana and Wyoming, there's people there and there's good real estate going on. But if you're an emerging market investor looking for different markets to be moving your money into, you want at least a minimum population size of 100,000 in that market and some sort of transportation system coming through, whether it be a highway, you definitely want a highway going through. You want at least one airport with one major carrier coming through as well.

So those are just some of the things that we look for when we're looking for emerging markets. Transportation hub, a medical hub, shopping hub. Those are other things. We look for state capitals that have high density of universities. Another great market to look into.

That's excellent to know. I heard a quote once that said that the deal of a lifetime comes every six months. And what I'm hearing you say right now is that there's so many deals of a lifetime out there, just all over the country, just about anywhere anybody can find that deal that really changes their life or gets them started.

Here's the whole idea behind that, Ryan, is the fact that the, the deals of the lifetime are out there, but they're not out there if you're not in the game. This is not a game of let's go out and hit a home run and make a bunch of money and be wealthy. This is a game of singles. You go out there and you just get good at doing good deals. And you do good deals here, you do good deals here. You start creating cash flow for yourself, you start creating appreciation, you start creating wealth. And all of a sudden, every six months or so, boom, this great deal comes along and you just make a ton of money off of it because you're in the game. Then you hit some signals. You hit some signals and all of a sudden, boom, another big deal comes along. It's like, holy crap, can't believe I.

Get into this deal.

It's because you're in the game.

Tell us a little bit about that, about being in the game. And you mentioned, I think you call them pocket deals, deals that other people aren't talking about, but that you get because of the relationships that you're getting. Could you talk a little bit about finding those deals and building those relationships and where people need to be planting seeds right now so that in three to six months, months, bam, they're getting all these deals presented to them.

The deals come through the relationship. So what you want to do is you want to create relationships with real estate brokers that are active, that are on the listing side. You don't want to get a buyer side broker because the buyer side goes into a negotiation.

On the side of weakness because they're not the listing broker. And if the listing broker can help it, he doesn't want to share that commission. So you scout out a market and you try to find the listing brokers, the good listing brokers in the market. And you can find that out by talking to the management companies in the market, the attorneys in the market that are going to be on your team anyways, the appraisers in the market that you're going to put on your team and become your team member, they'll steer you to the right agents. And then you want to create a relationship with these people and you want to find this is probably the most important thing or the fastest way to create a relationship with somebody. And I train my students on this all the time, is. And typically it takes four months to create a relationship with the real estate broker. The average investor stops at a month because they're just getting crappy deals and they go, oh, this guy's not sending me anything. I'm just going to move on. Not realizing that it actually takes four months of communication every 10 days to a broker. But if you find something that you sincerely have in common with that person, other than real estate, and that's the key, you can cut that down to at least in half, if not down to one month, very, very quickly. And that's where those pocket listings come from because people want to do business with people that they like and they trust. And when you like somebody, you have sincere interest with them. And then that's how you start your conversations off with people. Hey, maybe it's fishing, maybe it's cooking, maybe, who knows what it is? Maybe it's a sports.

And you send them things on that before you know it, you actually become friends because you have similar interests. And then friends do business with friends. Real simple formula for success.

You talk a lot about formulas and you talk a lot about systems, and you talk a lot about having people on your team. Can you talk about the importance of having your system set up and kind of what are the first systems that you get in place before you start investing in real estate or the first ones that you have in place as you start to work on your first deal in order to attract more of them? It's kind of a switch in the brain for people who are just starting out in real estate. But having six systems and processes and formulas and a team, that sounds all corporate y. And I don't want to be in corporate America. That's why I want to be in real estate. So would you address that for people?

Yeah. Well, the first systems you need are your marketing systems. Because even though you think you're in the real estate business, you're really in the marketing business and real estate is your product. So you've got to get your systems out to build your relationships with your brokers, which is communication systems. You've got to get your direct mail systems out. You've got to get your systems out for going onto the Internet and sourcing these deals on a regular basis. And you can do that through virtual assistants. Now in other countries.

Going into the classifieds, all the different marketing campaigns that you're going to be doing, because you're not going to get all of your deals from a couple of sources. I just gave you the two major sources, which is realtors.

And the direct mail. But you've got to be casting out a big net. So your deals trickle in from many different sources and you always have an abundance of deals. See, most people make a big mistake in negotiations by going over their strike price because they get too emotionally involved. And they're too emotionally involved because they don't have another deal waiting or they're not negotiating with anybody else. Good marketing systems have deals for motivated sellers coming in on a regular basis.

And it's just like dating.

Some will, some won't. So what next? Right.

Exactly. If you don't have the next one waiting. You tend to get hung up on one and ask me how I know that.

All right, so Dave, why don't you.

Tell us a little bit about davesfreebook.com I really know nothing about this. I've read your other stuff and it has had a huge impact on me. It's had a huge impact on countless entrepreneurs that I know, people who are investing in real estate and building wealth for the long term. But I know very little about your latest project. So tell us a little bit about it.

Yeah, I've written three number one bestsellers, Multifamily millions, emerging real estate markets. And then I co authored a book with Donald Trump called Commercial real estate investing 101. And then I thought, you know what, I'm going to write a book and give it away free to people to show them how they can get involved in creating cash flow in their life. Now it's great to be flipping properties and getting a big check, which we cover in the book as well because some people need money right now to get their heads above water. But really real estate investing is about creating a continuous revenue stream that comes in month after month without you having to work in the system. You actually oversee the system and that means you can be doing anything else. Following your passions, living wherever you want to in the world, or waking up on Monday morning and thinking, oh my gosh, it's Monday, I can't wait to get started. Because you're starting on something that you love to do and that's because you have this continuous revenue stream that come from real estate. So what I do is I just take you step by step through the process in the book's title is Massive Passive Income and show you how to actually put the systems in place to create that revenue stream. And the purpose is just to help as many people as I can out there because I've been so blessed.

You just touched on every major hot point that we talk about here on Freedom 3 Fast Lane, which is living where you want, doing what you want, waking up on Monday and following your passion because you've got something in your back pocket that is paying for your life. It just continues to fund everything. Now we talk a lot about starting a small business that pays for your life and then investing those profits into things like real estate and dividend paying stock, especially real estate right now with the market being the way that it is, you just hit on all our major hot points. It's like you listen to the show. Yeah.

You know what's funny is a Lot of people do that. They start a small business and then they start investing in real estate, where real estate investors tend to do the opposite. They start in real estate and then they start investing that money in small businesses. For instance, the information that I give is my publishing company. And I didn't start that publishing company until I was in real estate for a long time making a whole bunch of money. I had some free time and having systems in place. I thought, now what am I going to do? I thought, I'm going to teach other people how to do that. That's called publishing. People don't realize that not only do I publish real estate information, but also holistic health online information. We're doing how to stay fit information. I just completed an Ironman. I sell information on how to train properly for long distance races. Once you get into business, all of a sudden you realize the huge potential of businesses that are available out there.

Yeah. Well, David, you and I are birds of a feather, my friend and I respect the heck out of you. And I want to personally thank you for having an impact on me when I read your book a couple of years ago and inspiring a lot of people around me and, you know, in a more immediate sense. Thanks for hanging out with us today.

Hey, it's my pleasure. Thanks for having me on.

All right. Make sure you go to davesfreebook.com again. David has personally had an impact on me and most of the other millionaires that I know. And he's giving away his, his free book about massive passive income@davesfreebook.com be sure to check that out. Thanks for listening, everybody.

Thank you.

Thanks for listening to today's broadcast of the Freedom Fast Lane show with David Lindahl. My name is Ryan Daniel Moran and you can find out more information about living an extraordinary life, making money, traveling the world and living the life of your dreams. At freedomfastlane.com we give away all kinds of free reports, free newsletters, and free training classes about living the life of your dreams, making more money than you knew possible, investing it into long term wealth producing assets, and living life on your own terms. You can find out more@freedomfastlane.com I suggest you opt in with your best email address to receive one of our free reports and I'll be in touch soon.

Take care, guys.

Sa.