Episode 569: How to Turn $3,000 Into a Seven Figure Return featuring Chris Larsen

Welcome to the Smart Real Estate Coach Podcast, your source for actionable, real-life, practical investing advice. Each week we help you make a quantum leap somewhere in your business, your finances, and/or your life. Subscribe, leave a rating and review, and learn more at smartrealestatecoachpodcast.com. Hey, welcome back to the Smart Real Estate Coach Podcast, where we help everyday people just like you create 3 paydays every deal— cash now, Monthly cash flow and long-term wealth. I'm Chris Prefontaine, and today I'm diving into a really cool chat with Mr. Chris Larsen. You guys know that I'm big on longevity, and as I get to the last few episodes here, we're actually bringing on guests before I transition to mostly my solo cast and you hearing from people in our community. I wanted to bring him on because he's got over 20 years in real estate. And while he was a college student, so I think it's a really cool story, he bought his first rental property age 21. And so there's all kinds of lessons there we'll dive into, but I want you to know that there's obviously no excuses for you when you go through and you hear Chris's story. After that, he expanded into development, private lending, buying distressed debt, as well as commercial offices and ultimately syndicating commercial property. So Chris has a cool history for a couple decades. And he's been involved in about $2 billion. I had to take a peek at my notes, $2 billion in acquisitions. And so I want to bring him on today, buckle in, take some notes and make sure you share this episode with every single person you know that could get a nugget or two from it. All right, Chris, with that as a little backdrop, welcome to the show, buddy. Good to see you again.

Chris, great to see you as well. Thanks for having me on today.

Yeah. And you're sitting in not your normal spot, right? You're on, I don't want to say vacation, but you're away for this whole summer.

Yeah. So we got, my boys play lacrosse and they practice 2 or 3 days a week here in Charlotte, which is why I got my virtual Charlotte office here today.

Nice.

And yeah, it ends up being an 8-hour round trip from Asheville, Chris. You get down here, you practice, turn around, drive home. So we're back and forth a little bit, but it is, yeah, it's, we'll call it instead of a vacation, it's our summer experience.

Yeah, but look, you get, I mean, my, you're working your butt off for the kids, but I'm saying you got, you're my immediate brain goes to, you have the luxury of being able to provide that for the kids and do that and just experience different stuff. And I think it's important for people to hear that.

We do. And actually that's a great, that's a, it's really a great theme for today, Chris, because we're going to talk about, you know, kind of the process, things that you do, things that we help, you know, our investors and our clients do at Next Level Income. And really why I wrote my latest book, which is to help people really engineer that freedom in their life. Because what good is money?

What good is all this stuff?

I mean, we can't support our kids. I mean, I know you're going through something with your daughter right now. And we had Helene hit Asheville a year and a half ago, and I was able to— we started a nonprofit at that time, and it was all possible because of these real estate, these other streams of income that we created. So thanks for being here today.

I love it. And of course, that wasn't in my notes because you just told me that, right? So that's just real for the people to hear. So Chris, do this so they get to know you. You and I met on your show, but I already told them subscribe and that's a writer-downer. Take us behind the green curtain, like a little bit about how you got here and then we'll unpack some of the stuff you're working on right now because that's really cool.

Yeah, it's been a long journey, Chris. It's funny to say it now because it's been about 3 decades. I bought my first piece of real estate at 21. I just had my 48th birthday, so we're talking about 27 years. And I, like you, I got my start in residential real estate. So I think going back, why I bought that property is really important. And I was, my dream at the time, Chris, I was a cyclist. My dream was to become a professional cyclist. I was in college. I was going to school at Virginia Tech for biomechanical engineering. I knew I wanted to get a degree and I figured I'll go race my bike for 5 years. I'll come back. And figure out what I want to do after that. Maybe get a master's degree, but really professional cyclists, unless you're at a really, really high level, you don't make a lot of money. And even I've got a friend who raced at high level, won pro races. He made about half a million a year, which is really good for a professional cyclist. But by the time he's 35, he's done. And he was smart with his money. He saved a few million dollars and was able to do some stuff. But we had a conversation last year. And he's like, Chris, I don't really know what to do right now because I'm in my 30s. I couldn't have a career because I was a cyclist. Do you go to school? So, I knew that I was going to do that as a short-term thing. But in between my freshman and sophomore years, my best friend, Chris, had a massive brain hemorrhage and died at a bike race. And I came back to school, I kept racing. My team actually went pro 2 years later. But after racing that year, Chris, I remember, I distinctively remember I won this race. I was in phenomenal shape. It was actually my friend's memorial race and I just felt empty and it didn't sit well with me. And I just remember that night going out to dinner with one of my teammates and I had this You know, it was, it was actually not, it wasn't really depression. It was like an emptiness, which is maybe the same thing. But I thought, what, like, what am I doing this for? You know, what if I die tomorrow? And I thought, am I really going to be happy riding my bike around in circles? Like, because that's what bike racing is.

Yeah.

Yeah. And it was, you know, you're hitting that point as an athlete where you're trying to determine, do I have what it takes to take that next step? And what does that look like? It didn't look very bright for me at that point. It's hard. I had a specific amount of talent. I wasn't going to be, you know, a super pro, go win the Tour de France. It's a tough lifestyle. You know, you're training 20, 30 hours a week. You're tired. You can't go to parties because you can't drink. You know, you don't— I wouldn't even take Advil.

You're in a zone.

Yeah, it was. And it was great. It taught me a lot. I have lifelong friendships from it. I learned discipline. I learned structure. I learned so many great things that have been able to translate. And I still love to ride. I still race.

I bet. Yeah. Nice.

In some degrees. But ultimately what came of that to kind of tie it together, Chris, is that I said, I want to live life on my own terms. I want to have the opportunities. I want to go do these fun adventures with my friends because racing's an adventure. You get to travel around. So I really developed a passion for travel and adventure. And I said, I need money to be able to do this. I need financial freedom. And I didn't, there was no FIRE movement back then. Robert Kiyosaki hadn't even written Rich Dad Poor Dad yet.

Yeah.

But I went and I spent 5 years reading everything I could get my hands on. So 250 books, ended up getting an MBA in portfolio management. But during that period, Chris, I decided that real estate was going to be my path towards financial freedom, which led me to buy that first property. And then the next one and the next one and the next one. On and on and on that, you know, it took us about 15 years to get to that point with the great financial crisis, which was a little setback. I had a career in medical device sales as well, but throughout that period, real estate was, you know, really the base of what drove our passive income through that time.

Yeah. So I guess I'd say why, a couple things from that. What, why real estate though throughout it? Like you said, you bought the first property, but what was there? A number of things have stacked up to go real estate or what was the tick?

Yeah, so it took me a few years to come up with that. As a junior, that year after I quit racing, I started investing in the stock market and I started investing in the stock market and then I ended up day trading in the stock market, which are 2 totally different things. It's like wholesaling deals versus investing in an apartment building. Very different. One is active, It's very stressful. There's a lot of work that goes into it. And the stock market's very risky. So that what dawned on me at 3:00 AM one morning after not sleeping and worrying about my trades the next day was that this is not investing and I'm not going to live to see 40 if I keep this up. Yeah. I said, this is not the right way. I'm like, what investments are going to give me control, are going to give me the ability to invest with a lower amount of capital? Because I had, At that point I've been trading, I had, I was making about $5,000 a month in the stock market. So I had a nest egg at $30,000 or $40,000 that I had saved. But that's not going to get you very far in the big picture. Yeah. In the big picture. So I, as I've read and learned about real estate, what I really liked, Chris, was that you had leverage, you had income, you had appreciation, And you had depreciation. So I really like that. And as an engineer, as an analytical person, I could put together a plan where I knew after 15 years, if I paid these properties off that I bought, that I would have a pretty certain amount of income at that point. And I said, put together a plan where it's like, if I bought, if I buy this many properties over this period of time and pay 'em off in 15 years, then I'm going to have 10 grand a month coming in. And that was my initial plan. And it was because of that control and the ability to start small with small dollars that really led me to real estate.

You know, it doesn't matter if you're brand new to real estate or if you've been doing this for several years or a whole bunch of years. I learned the hard way back during the crash that doing creative deals is much better. It's a much better path in real estate in general than let's call it the old way, getting paid once, using banks, signing personally. 3 paydays, getting paid 3 times on a deal. It's better 3 ways, not one. Money now, money over time, and money long term. And I don't care if you're in an up, down, sideways market, it doesn't matter. You can and should operate with the utmost confidence. There's literally nothing I love more than helping people create systems and simple systems and processes to become massively successful with our 3 Payday System, and doing so in literally any market. And doing it geographically, literally anywhere. So if you've been learning and learning and listening and studying and not taking action, I'm telling you, after going through it myself, it's costing you tens of thousands, if not hundreds of thousands of dollars by not taking action on the 3 paydays the way you should be getting paid. Many of the people that were brand new, just like you, that joined our community have fast-tracked their startup. Now, I mean, wouldn't that be ideal?

Yeah.

If you said, okay, should I go fast or slow? Should I take action now or later? It's costing you too much money to wait. Each one of you are at a point in your life, I'm sure, where you want things to be easier. You want things to be better for you and your family. You probably realize that you not only want more, but you deserve more in this life. So, to be able to give your family everything they want, build a legacy for you personally too, and to have time freedom to start enjoying life, frankly, whatever else you're seeking. And for some of you, now's the time, for example, to just focus on security. Maybe it's building a big solid bank account for retirement. We take these things super, super seriously, and it's my life's biggest reward to help you achieve them. I want to give you a free discovery session with our team. It's free. It's 15 or 20 minutes. You have zero to lose and everything to gain. And to understand how you might fit into the 3 Payday System that we've done now in over 80 markets as of this filming, go to smartrealestatecoach.com. podcast.com/discovery for a free call with our team. smartrealestatecoachpodcast.com/discovery. Because it's not whether or not you can do it or whether or not you fit. You can do it. It's whether or not you'll take action and do what it takes. And we can guide you through that process. smartrealestatecoachpodcast.com/discovery. We'll see you soon. I love it. So let's, let's take them to where I mentioned in the, in the intro. Then let's kind of bring it to today. What's on your plate? You're helping a whole bunch of people, like talk about what's going on right now.

Yeah. So we just finished our latest book, just finished my latest book. You can get it at nextlevelincome.com/financialfreedombook. It is an ebook and it's built out of all the lessons that I've learned over the last 27 years, mistakes, successes, and really a step-by-step formula to go from active income to passive income. But my story, Chris, we moved from residential to commercial real estate about 15 years ago. And again, that's the beautiful thing about real estate. You can, there's so many different flavors.

Pivot.

Oh yeah. And paths that you can take. So the past 10 years we've been focused on commercial real estate. Multifamily's been at really the cornerstone of our portfolio during that time. We still do a lot of multifamily deals, but we ventured into some other areas of commercial real estate as well. We have a hard money lending fund that we use. So, you know, we have options so that, you know, both us and our investors can either generate income, they can generate appreciation. Some investors really value the depreciation that we talked about, but our investors work with us, Chris, because they want to be passive investors. So, you know, that's the difference between like what we do and what you do, which Yeah. I've had investors and clients that have worked with you and love what you do in that aspect. But it's fantastic that you can do a couple different areas in real estate.

Yeah. I mean, both, right? Parlay some money like the 3 paydays and then talk to the syndic. There's all kinds of stuff we can do within the same umbrella. You know what I'd love you to do is talk a little bit about the W-2 people listening to you right now. Like, I'm screaming lately about how cool this market is for real estate in general and then creative certainly, because we need solutions. You don't need to go hacking prices. So talk to them about anything on the level of why should they make the move now? Because there's a crapload of people on the sidelines going, oh, I'm afraid. And is now the right time? Just address them because we're doing them a huge service by even mentioning it.

Yeah. So I love how you frame that because I think, you know, I love to say real estate is a get rich slow And stock market, SpaceX, you're seeing these crazy valuations. Yeah, you can get rich real quick in the stock market. You can also lose everything real quick in the stock market. But what I like about real estate is if you're consistent and look, what's great is you can flip homes, you can buy homes, you can generate income from your W-2 job, you can invest passively and grow those income streams. But whether you've been investing for 10 years, whether you haven't invested yet, if you look at real estate and say, okay, I'm going to make an investment once a year for the next 10 years or 20 years and slowly build those income streams, do a creative deal even once a year, generate $500, $1,000 a month, whatever that might be. It might not be, I tell my initial investors, it's not going to be super exciting. You know, that first deal, you're getting $500 a month. That's not life-changing money for somebody that's making $500 grand a year. But if you do that for 10 years, it's actually not $500 a month at that point, you know, or I'm sorry, it's not $500 times 10 at that point after 10 years, $5,000. It's probably $7,500 or $10,000 at that point because as real estate goes up, as inflation kicks in, rents go up, your cash flow goes up. We have things like 1031 exchanges, which, you know, you can take a property like we, this is a beautiful story we bought, and this is why you should get into it for the long term. That first property I bought at 21, Chris, $3,000 down. Now, I wasn't super creative, but I didn't have credit. I had my mom co-sign on a loan and I got 2 roommates in my 3-bedroom townhouse and put 'em in there. We call it a house hack now, right?

Yeah. Yeah.

And what I did was I was able to use some of that equity to buy the place next door. And I had, now I had 6 units that I did. And that same property I bought back in 1999, I sold 15 years later, did a 1031 exchange. I bought an office, an 8-unit office building in downtown Asheville out of foreclosure from the bank for $525,000. And after a year of getting it all leased up and getting it all fixed up, I was cash flowing $3,000 a month. So I simply, $3,000 initial investment. Yeah, it took 15 years, but now I'm cash flowing $3,000 a month. We just sold that building for more than twice what we paid for it, Chris. Love it. And again, with 1031 exchanges, you can take a $3,000 initial investment and through a very tax-efficient, tax-free manner, generate a 7-figure return. And now you're talking about real money at that point when you go home.

Yeah. Oh yeah.

So if I think it's a great time right now, we're seeing discounts in the multifamily market of 20, 30% of what prices were a few years ago. We found a great deal right now, which is going to be our first true value-add deal in 3 years. So if you've been sitting on the sidelines, especially if you've been in the stock market and you're seeing super high returns there, I think it can be a great time to start to diversify and get into real estate at this point.

So let's talk about the market. I love it. Like this week I was on all kinds of shows, right? And every single one of them asked me, I go, look, The billionaires don't know. I don't know, but I give my opinion. So what's your opinion of the cycle we're in and where do you see it going?

Yeah, so there's a great book out there called The Secret Life of Real Estate and Banking by Philip Anderson. It talks about how real estate goes in 18.5-year cycles and the exact number isn't the point. And like you, Chris, I don't have a crystal ball. I can't predict things. And usually when I do, I'm wrong. So I always kind of hedge my bets. But the market goes really in 3 cycles, and this does repeat, and we can go all the way back since we started tracking it in the United States in the 1850s. You have a down period. So you have the downturn like we had during the Great Financial Crisis. That's typically about 4 years. Then you have 2 7-year upcycles, typically separated by kind of a mid-year or a mid-cycle downturn, which was COVID. It matched up with COVID in this case before it was 9/11. It's interesting how we have these events.

Things happen. Yeah.

Yeah. If you go back, I learned about this because I watched my parents lose their jobs with a real estate development company during the savings and loan crisis in the early '90s. So I saw the cycle play out during my lifetime. But during the first part of the cycle, that first 7-year upswing, prices are low, land prices are low, value-add deals are great. You can build spec homes, construction costs are low, you have rising rents. You can really generate a lot of wealth during that time. During the second half of the cycle where we are right now, things have stabilized. Rents typically peak out, interest rates begin to rise, prices are high, you have lots of equity. Creative deals can be really good because people have a lot of equity in properties. Maybe they have loans that can be assumed at low rates. So that's why it's really important to understand all the different strategies because at different parts of the cycle, there's different strategies.

Exactly.

What I can say definitively now, I can't tell you exactly when the cycle's going to end, but during the second half of the cycle, it's a great time to be the bank. And what I mean is when rates are high, Like if you can loan money out, you know, you can get double-digit returns right now, which can outstrip returns that equity investors are getting with really good security. You can do preferred equity positions, you can do hard money lending like we're doing. And we allow our investors to come along with us and participate in that. But it is important to understand that when we're at this point in the cycle, There may be a slowdown. We're seeing housing prices starting to peak right now in a lot of markets. We're seeing those discounts start to occur. So I'm also a big fan right now, Chris, of keeping some cash on the sidelines. So, you know, again, going back to the stock market, the stock market's high. Maybe it's, maybe you take a little profit, you start to build your war chest, your dry powder, and start to look for those deals that are starting to happen that we're seeing. And again, you don't have to go all in right now. You can kind of start to participate, build some cash, look for opportunities that are out there. But what I would say is you don't have to time the market, but be very selective right now. It's a, in my opinion, it is a buyer's market right now.

Yeah, I would agree. And I had Lon Welsh, I don't know if you know him or you had him on your show maybe. He's unlike our conversation that just kind of flows.

He's stats, right?

It's just But, but I happen to agree with him and he was pretty much dead on with what you're saying with charts and graphs and everything. So you're well supported, but with your, with your update there, you're, you're spot on. Yeah. Um, Chris, what, what, uh, what else are you doing right now? I know you're helping a bunch of people too, right? Like what, what else are you doing working with people just so these guys get an idea and then tell them how to reach you because I didn't say that yet.

Absolutely. So, uh, you know, we, we used to do paid coaching, Chris. But what we've done over the past 6 years here, I've taken everything that I've done with my coaching clients and with the beauty of AI, we've been able to take everything that I've done and we have 2 tools that can help you if you're listening today. So one, you can get a free copy of our book at nextlevelincome.com/financialfreedombook.

Love it.

It's interactive. A cool part of that book is you get access to our online course material and then You can also take advantage of chrislarsen.ai. chrislarsen.ai is your 24-hour, 27— I'm sorry, 24-hour, 7-day-a-week coaching resource. It's all of my books, all my content, all my podcasts, all rolled into one. And you can chat with chrislarsen.ai. You can even have a phone call with chrislarsen.ai. But if you're listening, if you're that high-income W-2 employee, Chris, like you were talking about, and you say, hey, Chris, like, I love my job. I'm making a lot of money, but I really would like to develop some additional income streams, but I don't want to go and fix a house up myself right now. I don't have time to find that deal. Go to nextlevelincome.com and click on the invest link, and I'm happy to schedule a call with our team and we can share a little bit more about what we do with our investors there.

I love it. And just to give you guys a little bit more of a plug, and I said it in the intro, but look, you've been at this almost 3 decades, similar to me. That's important, right? I had a Very, uh, well-skilled gentleman on my show a few weeks ago, but he was very candid and open. He explained how he started 10 years ago and that was all upswing. And that in the last 2 years, he's had to make some serious adjustments, but he was nice enough to share and go, look, it's reality. So he was sharing his struggles, but that's what happens. But when you've been at this 3 decades, you've already done a bunch of that. And so people need to latch onto that. So great job. Great job. What, anything, Chris?

I've probably seen and made the mistakes along the way, and that's our goal, Chris, is, you know, I tell my boys this, my boys are 16 and 14, and I say, look, like you're not stupid if you make mistakes. You're stupid if you make the same mistake. And the easiest way not to make a mistake is to find somebody that's made that mistake. Hire them as a coach, ask them questions, you know, say, hey, like what, how should I look at this? You know, if you've never looked at a commercial real estate deal, Read our book, get free access to our LP syndication course. At least you'll know the questions to ask so you can look for those things. And I'm not perfect. I'll make more mistakes in my life. But I think the beauty of what you do with your podcast and we do with ours and our material and resources is that we help people shorten that learning curve substantially.

I love it. Give us the link one more time for the actual book itself and Super, super appreciate you being on and sharing with us. I want them to go ahead and go further with that with you.

Absolutely. Thank you very much for that. nextlevelincome.com. You can get all our resources, forward slash Financial Freedom Book, How to Become Financially Free by 40.

Love it. Good way to wrap, my man. It was good to have you on. And we got to do some encore stuff together as we roll this out further, but super appreciate you. Enjoy your fam in North Carolina.

Likewise. Thank you, Chris.

Thanks, buddy. All right, guys, if you got value from today, make sure you subscribe so you don't miss the next episode. If you're ready to start structuring deals with 3 paydays, head over to smartrealestatecoach.com and let's get you moving with the next few steps. You know, guys, for years I've been at the business now, 34, but for years we had some rent collection things in place. We had bookkeepers in place. We had marketing to go to all these different websites. Now, We simply go to prosperity.io. It was built with us and you in mind. You can market your first property if you're brand new. You can scale if you're already in the business, but you can market your properties across 50+ platforms in one click for way less than hiring a pro. You can easily collect rent online, so it's like an escrow service for you. You can track payments. You can get monthly reports so you know how your investments are doing, or if it's your first investment, and no tech headaches, no guesswork, just smart tools To help you grow with confidence, get started now at prosperity.io because every portfolio starts with a powerful first step. All right, thanks for tuning in to the Smart Real Estate Coach Podcast. If you got value from today's episode, guys, be sure to subscribe so you never miss a future episode. It literally takes one nugget to access some of the things we're doing, and when you're talking the amount of the size rather of the paydays, It's an opportunity cost that you can't let go. So don't miss an episode. And for goodness' sake, share it with someone who needs to hear it. If you're ready to find your best path for getting started on your real estate investing journey in general, head over to smartrealestatecoach.com/getstarted. We're going to help you take the guesswork out of your next steps. See you in the next episode.