How Keith Weinhold TRANSFORMED His Life Through Fourplex

It really goes back to the old Jim Rohn quote, which you've almost certainly heard. But it's so prescient here. And that is you are the average of the five people that you spend the most time with. Take your five closest friends, take their morals and values. They're probably pretty close to your morals and values. Take their formal educational attainment level. Take the way that they dress, take the time that they go to bed at night. You know, if you average the five, that's about how you are. If you want to change yourself, change your five. Just a great quote from the legendary business philosopher Jim Rohn. But I had found that two of my five closest friends about 20 years ago, Flip and Danny, what they had done is they made their first ever home, first ever property of any kind, a fourplex building where they lived in one unit and rented out the other three. So because this is two of my five, it sort of took on this context of normalcy. To me. It didn't seem scary. And I learned and I did indeed follow through and make my first ever property of any kind, a fourplex building. Like Flip mentioned in the bio there, where I lived in one unit and rounded out the other three. And this is something very actionable for you, the listener and viewer here. If you want to get started in real estate with a bang, you can do exactly what I did. This program still exists with an FHA loan. You can buy a single family home, duplex, triplex or fourplex. A fourplex is the biggest property that you can do it with. So I really recommend that you do it with a fourplex. For economies of scale. If you live in one unit for at least 12 months, if you can make a 3.5% down payment. I didn't have a lot of money. I was just a workaday job employee at a state dot. But I think a lot of people can come up with a three and a half percent down payment. And part of that or all of it might even be able to be a gift. And then the third thing you need, besides that 12 month owner occupancy period in one of the units in the 3 1/2% down payment is just the minimum credit score of 580. That's all you need. Yes, that's all you need. Now there are some things that you need to avoid and properties that you need to avoid, but that's how you can start with a bang, live in one unit, rent out the other three and get the appreciation and the tax benefits on an entire building. That's exactly how I began. You probably saw a picture of it. It was a 295,000 DOL modest fourplex and the rents in each door were 725. I can still remember that. That is a great actionable way for you to get started. And if you have Veterans Administration benefits, VA benefits, it's 0% down. A 12 month owner occupancy period and your credit score doesn't even have to be that good. So that's how I began and that's how you can still get started with a bang today with an FHA loan on a fourplex building.

I love that you just gave very actionable advice. Yes, right. Because very many times we talk at such a high level that people aren't sure where to get started. So when I'm on the phone with investors, I get where do I start, which path is right for me, who do I trust? And Keith here as a guest on our show just gave you one of the ways to get started and a very actionable way if you want to do that fourplex. So just curious, Keith, when you got this, this fourplex, did you do the rehab or did you hire contractors?

I did it myself. I didn't know how to do it. I'm still not a good handyman by nature at all. People must think I'm a good handyman since I own all this real estate in multiple states, but I'm really not. I just know how to identify a good deal and then put the people in place in order to manage it. But yes, I did some of the rehab myself. Actually one of my two friends that had also made their first ever property, a fourplex building. I still remember he showed me how to remove the vinyl, replace it with hardwood plank flooring, knock out a pony wall and add this plank flooring. But like that's the most sophisticated type of rehab that I've ever done. It is simple to figure out, but I really needed someone to come in the door and show me how to do it. So it actually didn't take too much rehab. It definitely wasn't any sort of BR strategy or fix and flip. It was really a buy and hold property.

I love it. And so last question on this topic because I love this part of getting to know you. Do you still own the fourplex or did you sell it?

No, I sold that 4 Plex after holding it for 11 years because I wanted to take the equity from it. The return from home equity or property equity is always zero. And by 2013 I was aware of that. So what I did is a 1031 tax deferred exchange from that 4 Plex building into. Into an 11 Plex building, adding little or none of my own money. I just extracted the equity from a smaller property because it had grown, and I use that as a 20% down payment on an 11 plex.

Nice. I love it. What a great strategy. Thank you for sharing that story. Okay, so I want to go into what we call Get Real segment. This is really where we tell that about, tell people about the challenges that we have. Whether it's business or real estate. There's always a roller coaster ride of learning, having something happen and failing and then, you know, realizing that that was something that you could learn from and now you can be better. So I know that you have this amazing podcast, and I would call it, call you a very successful businessman as a result of what you've grown, but you're also a real estate investor. So I'm not sure where you want to go with this, but I'd love for you to share some type of Get Real moment, whether it's business or real estate or even your personal life that will just allow others to kind of understand that, hey, it's not always rainbows and sunshine. We all go through challenges and we all eventually get over them.

Yeah. Gosh, things have gone so well with the Get Rich education podcast. I don't even know if there's a Get Real moment there, although I still have my small problems with it from time to time. Shirley. I would say as an investor, I made an early mistake. The first time I ever bought property across state lines and it was in Crowley, Texas, which is just south of Fort Worth. There's nothing wrong with the Crowley market, but I got so enamored of buying this place. My first ever out of state turnkey property. You know why? You know, the mistake I made. It looked pretty. Just because it looked pretty and it was cheap and it looked pretty. It was a brick single family home. I paid 153k for it, despite the fact that before I bought it, the property manager that I was going to use in that market told me, hey, they don't think that's a good property. For whatever reason. And I never found out why, but for whatever reason, we don't think we're going to be able to keep that one occupied. I bought it anyway. I was like 153k, even though there was someone with local market knowledge right there that told me not to buy it because they couldn't keep it rented. I Just thought it's only 153k for a brick property I'll buy that. I could never keep it occupied for whatever reason. It was actually a failure. My first ever out of state turnkey property and I sold it because I couldn't keep it occupied. Now I did sell it for 165k a couple a couple years later. Just a little bit more than what I bought it for. But after aging commissions and anything, I didn't make any gain. But you know, it wasn't a complete tragedy. But really the lesson that I got from this is the market is more important than the property and your team, especially that property manager, that's actually more important than the property itself. So you know, I got a hard lesson. You know, I ended up losing my time on that deal and I didn't make any money so I wouldn't get emotional about this thing is not about emotions. If I and my wife are going to live in the brick home ourselves. Oh, okay. Well, maybe it matters that it looks pretty, but it does not have to look pretty to be profitable. In fact, there's almost a negative correlation there for long term rentals. If a property looks too pretty and it's in too good of a neighborhood, it often doesn't cash flow either. So those are some of the lessons that I learned on that. And really just about every one of my turnkey rentals I bought since then have been winners. Danny and Flip.

Oh, I love that. So I love the lessons learned because that's really what helps people move past the mistake, right? Is when we can share what we, what happened, what we learned so that now they don't have to make the same mistake. So thank you so much.

It should be about facts and numbers, not emotions. I might have emotions in my own home, but yeah, that has no place in my investment. So yeah, that was the lesson learned. Don't fall in love with a pretty property. Pretty does not matter in a long term rental.

That's right.

Pretty does not rent.

Yeah, just because it's pretty doesn't mean it cash flows.