216: Buying 150 Houses and Experiencing a Financial Meltdown with Damion Lupo

This is the BiggerPockets podcast show.

216 houses. I've done tons of those deals, and so I can tell you the great ways to do it and the bad ways, and I think there's a value in people that have done both sides of it so that you're not just getting the bright side or the total fear and panic version of that particular style.

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What's up, everyone? This is Dave Meyer, the guest host of the BiggerPockets podcast, here with my co host, Mr. Brandon Turner. What's going on, man? That was really good.

Yeah, that was a very good. Josh Durgan, actually, I think you said co host, so, like, you said co coast, you know, so I don't know. I'm gonna have to tell Josh that you're screwing up his bit.

I know, I know. I can't do it as well as him. I didn't want to show him up, you know.

Yeah, yeah, I understand that. You know, nobody wants to show up, show up the boss, so.

Yeah. And I was the big guy.

Yeah. Anyway, well, it's good to have you here today. I'm excited about this. I always like when you're guest co hosting today. I don't know what Josh is up to. I don't know.

I saw him walking around. I think he's just slacking off today.

Being a big deal.

Yeah. And his more important stuff to do.

But you're.

You're coming out here, right?

I am. I'm actually gonna be out there in two days. Yeah, there's. There's kind of a Denver meetup, which obviously people are listening to this. That already happened, but.

Yep.

You know, if you were part of.

BiggerPockets.com events, you would know about said meetup if you're in the Denver area. So make sure you check back there frequently. And there you go.

Sweet. Yeah.

Dude, the new office is awesome. And it's like 75 degrees in Denver today, so hopefully the weather will hold for you because the garage door open right now. Everyone's sitting outside. It's pretty sweet.

I have a garage. I'm so. I've never seen the Bigger Pockets headquarters that you've been there for, like, a couple of Months, and I've not been to.

Yeah, two months, but, yeah, it was good. You weren't here the first two months. It was pretty much chaos for a little while. But we've reigned everything in. Everyone's got their desks now. We're all. We're all in the right place. So it's a good time for you to come. It'll be great.

Well, I'm looking forward to it, so. Well, cool. Well, today's show is. Is incredible. I mean, I loved today's conversation with our guest, Damian. Yeah, fantastic guy. Super, super high. I mean, he's done a lot of good stuff. He's done some amazing things. He's experienced a lot of bad things, too, which he's very honest and open about. So that's very cool.

Yeah, I mean, this show features murder and intrigue. There's, like, all sorts of crazy stuff going on.

Yeah.

Stay tuned.

That was. That was crazy. Oh, and. And make sure you guys listen at the very end or towards the end, he talks about how to get a lender, like a private money lender or a hardware lender to say yes. Fantastic. Is two pieces of. So there are gold. I mean, it's worth the price of admission right there. So very cool. All right, well, before we get to that interview, why don't we talk about today's quick tip? All right, today's quick tip. We're going to talk real quick about the path to purchase we've mentioned before. But because Dave Meyer here was kind of the head of that project, I want Dave to talk about it for a minute. What is path to purchase and why does it matter?

So the path to purchase is a new type, of course, that we're trying. It is just the first iteration. We're just trying to test it out a little bit. But it is a video course, and we've got eight different segments, and it is taught by our own Scott Trench, and he's going to talk you through the basics of purchasing your first rental property. There's a lot to learn, but Scott really makes it easily digestible in video format. There's key takeaways, but the main thing here is that we really want to expand this and we want to start making some more courses, not just about rental. We want it to be interactive. We're thinking about building quizzes. So I really wanted to reach out and tell everyone who has used the path to purchase, shoot me an email. Shoot an email to support, you know, just message me on bigger pockets. Tell me what you like about it. Tell me what you want to see in the future because we've got a great reception, a lot of people are using it. People who are completing the whole thing have given us some good feedback. But we want to hear from everyone about what you want to see next.

Very cool. So two quick questions on that. First, where do they go to access the path to purchase?

So if you are a bigger Pockets member, which if you're not, you should be, it's free. And just go to your dashboard and on when you log in it will ask you if you want to get on your path to purchase and you can go right there.

All right. And how do people, I mean do they have to raise their credit card limit to pay for this $9,997 product?

You know, it actually comes to you at the cost of free 99. So just go on there. All you need to do is create that free account and you could be on your path to the first purchase.

Free 99 I've never heard that phrase. That's funny.

It actually doesn't cost 99 cents.

That's great.

I like 3. 99. That's a great phrase. All right. All right. Very cool. So path the purchase. Check it out. I love it.

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We get to the interview? Enough chit chatting here, Dave.

Let's do it.

You want to introduce Damien?

All right. Yeah. So Damien is awesome. He's an entrepreneur since he was 11 years old. Paid for his first house with his Visa card because no one would give him any money. Built that up to over 150 houses in seven states and then totally crashed down in 2008. But he rebounded and has a really amazing story. Like, it's a really motivational story talking about the emotional rollercoaster he went through, and now he's back to killing it again, running a sort of lending side of things out of Austin, Texas. And really just an incredible story for everyone to listen to.

Yeah, yeah, it's fantastic. I love it. So anyway, let's go. Let's do this. All right. Damian, welcome to the show. Good to have you here.

It's good to be here, Brandon. Thanks for having me.

Yeah, this should be a lot of fun today. So, you know, I don't know a lot about your story, but I know from kind of reading a little bit, you are. You're kind of like a rock star in this business. You've done a lot of stuff. And so, I don't know, we're excited to just kind of dig in and see what you've been up to. So why don't you take us from the very beginning? I mean, how did you even. Maybe, maybe even before that, what did you do before? Real estate. And then how did you get into this real estate thing?

Well, the funny thing is I had rockstar hair before I started real estate and now I have no hair. So there's a transition that you go through. If you actually are out there and you survive, you just lose all your hair.

This is true.

Before real estate, I had the traditional path of going down the road to college and thinking I was going to be in the Air Force and this whole thing. And then I got asked to leave college by the, the dean because I was starting a business in my dorm room that was putting the bookstore out of business. So they said, either shut it down or leave. And I said, yeah, but I'm paying for school. And I quickly finished my business, paid for school in like four days and left. And then I did a sort of kind of hybrid. I went into insurance and was selling insurance. But the problem is I didn't really have the ability to go out there and be a financial artist. Like, I didn't have the blanks, the slate or the canvas that I could just create. And at the time I'd been reading a lot of Donald Trump, which was a different thing back then, before he became president. And I was like, oh, I'm going to be the mogul. I'm going to be Donald Trump. I'm going to Trump my life and have huge buildings. And so I thought, I can't do that in insurance. I'm going to be stuck at whatever the level is. And with real estate, there was this unlimited potential that was really only limited by me and my thinking. So I just morphed into that back in 1999.

I really, like you just said that. And where you said what was it, it was only limited by you and your thinking. Right. That's also, I mean, that perfectly sums up one of the things I love about real estate. And I know, Dave, you're the same way. The fact that when you work most business, even most businesses out there or jobs, you can be self employed or employed, but you don't have that ability. There's very few things that you can just like you said, a blank canvas.

Yeah. And the thing that's really cool about real estate is with businesses that maybe you're going to take public, there's this potential to create the unicorn, the billion dollar type of thing. With real estate, it doesn't take. I mean, there is a lot of stuff that has to happen to create a public company. I mean, I've been going through this process in London with my company and it's just a lot more complex. You can create massive financial wealth with real EST, with an 8th grade education, if you decide that you want to go do it, I mean, really, it's. It's up to you. It's up to you. It's. It's not. There's no limiter on it. It's. It's just, how much do you want it?

Yeah, I love that.

That's a really great point. And it does allow a certain amount of creativity. Like, it's doesn't, as you said, like, you don't need a tremendous amount of education, but there are so many different ways to go about it that you can find your own niche and definitely do what works best for you. So I'm curious, in 99, what, where did you start? You obviously didn't start with giant buildings Trump style. But what was deal?

So my first deal was a buddy of mine came to me and I had read Rich dad, poor dad that fall, and I'd watched some infomercials, and he came in and he said, hey, man, I got a deal. You want to be my partner? And I said, all right, what does that mean? And he said, well, you got to put up the money. And I went, okay. So then we do it. We rehab this house together. And so we closed. Basically, I used my Visa card because I didn't have any money and my insurance agency didn't really have any income at that point. It's too early and too young. So I took over a lady's mortgage and brought in the money. And as soon as we closed, it was time to do the actual, actual work, you know, going into the house. And I remember going over there and looking around going, I got to do a lot of stuff here. So I called him and. And his response was, hey, I don't really. I think that my time is. Is best spent doing that stuff, so I'm going to go looking for deals. I went, wow, you're like the best partner ever. You just disappeared as soon as you actually needed to do something.

No money, no time. It's perfect.

Yeah, well, so 10 years later, he's still driving a cab. So it kind of, you know, it goes really. This, this business is set up for people to succeed if they're willing to stick with it. And.

And he just wasn't. So I ended up learning how to fall off roofs, roofing and get high, painting and electrocuting myself, doing electricity and flooding myself and swimming through the kitchen trying to fix pipes. So it was really just. That was the introduction. I mean, I was in it. I mean, if you're in it. That's about as in it as you can get.

That's awesome. I've done that, the paint thing. One time I wanted to paint a hole inside of a house and it had to be oil based, primed, right? With like Kiehl's oil based primer. And I'm like, I'll only be in there for like a half hour. You don't really need a mask like they say, right? No, we're like five minutes in. Like, we're just stumbling around hitting the walls. Like, that stuff will mess you up. And that explains a lot of what's going on today and here. Like, this is permanent.

That actually may be the reason that, you know, a lot of things did happen over the years. I realized, oh, you know, those windows were closed and there was no mask. And three days of painting later, I totally messed up my entire life.

It's a good experience. So I want to know, like, getting into it. So many people out there, I mean, people listen to the show. People listening, you know, like just, you know, not listening to show, whatever. They struggle with getting that first deal, like actually jumping in. So what do you think was the hardest part about getting that first deal? And how did you overcome that?

Well, the good news, at that time, I was, I was 22 or 23. I didn't really have any belief systems around what was what was supposed to happen or the rules. And that's actually a huge benefit. It gets harder and harder as you get older and you have all these experiences and all this brain damage of what's supposed to be right and wrong and people telling you what things are risky and what aren't. At 23, I just went, okay, it's a house. I mean, how complicated could it be? So I just went out and figured it out. And so I wasn't really afraid of anything. And it's funny how we learn fear as we go along. And now I think about what I did back then and I go, whoa. I remember four months later when I bought. I thought I was going to go bankrupt that month. And I bought eight houses that month. As soon as I realized I was going bankrupt because I needed to get off my butt and do something because I was stalled out. I'd owned three houses. I bought three houses those first five months. And then I did a financial statement and I. I went, whoa. I have read all over this thing. All I'm doing is spending money, rehabbing, having a good time in my painting and my electrical stuff. And I wasn't selling anything. I wasn't responding to people actually calling me. And so I went out there and took massive action, bought eight houses and then figured it out, going from three that are not full to 11 pretty much overnight.

If I think about that now, I go, whoa, that's terrifying, the idea of doing that. But it just made sense back then, and that was just being naive. And I think part of the path to success. Success is being a little naive about what you can and can't do and just being willing to step forward and into whatever it is and then figuring it out. Because we're. We're pretty adaptable. I mean, we're not. We're not total animals. We actually have the ability to think with our frontal cortex.

Yeah, I like that a lot. I think.

I don't know.

I don't know, Davis, that happened to you at all. But, like, when I started, when I look back at my story of my first couple deals, I'm like, Like, what was I thinking? Like, yeah, I did the same thing. I put. I put all the rehab costs on a visa and, like. Like, paid myself because I quit my job at the time. Like, all the stuff that I would never advise people today generally is a good idea. Yeah. Yeah. But I did it, and it worked, right? So, like. Because I was too naive, too stupid to know that I probably shouldn't do that, but I am where I am today because of that, so. Something to say for the second?

Absolutely, yeah. At first, your risk tolerance is so high because you're just, like, blind optimism. You're like, oh, I'll figure out how to rebuild an entire shower, or, yeah, I could lay new baseboards, and you just go for it. And then everyone has that point where you're just looking around. You're like, what the hell did I just get myself into? I definitely need to call a professional. But, you know, it's. It's obviously empowering to find. Get those first few small wins. But, Damian, I was curious. What market were you in when you were doing all of this, and what was it like back then, and how has it changed a bit to what you're doing now?

Well, the funny thing is, I was in Phoenix, and so this was in 99. I was starting off in 2000. And right then, that was the blow up before the last blow up. That was when the tech thing melted down. And the funny part was, at the time, not a lot of people were all excited about real estate. They were excited about petfood.com and making their millions of their stock options. And so I was out there doing real estate. And I have people go, real estate, that's for losers. How are you going to make money there? You need options. You need to go do. This is before Facebook. So people seriously thought they were going to become gazillionaires by working@petfood.com and selling dog food on the Internet. I just went, all right, I'm going to go do this thing in this very boring market. And at the time, there wasn't a lot of sizzle. I mean, I was sizzling because I was all excited, but it was very different than it was five years later. And really today, there's a lot more sizzle than there. There was back then. There was value probably in finding something that wasn't super hot. I don't know that there are a lot of markets that aren't necessarily hot right now. There's a lot of enthusiasm for real estate. It was a bit different back then. What I find now is that in any type of market that is cruising up, there's just a lot of irrational exuberance with a lot of stupid money that's chasing things. And you have to be sensitive to that and not be one of the stupid money players that goes, well, I need a deal, so I'm willing to pay more than that other moron. I'll be the bigger moron. I mean, you got to be smarter about these things.

Yeah. Are you finding that a lot in today's market? I mean, trying to buy and deal. Trying to buy deals today, Like, I find that. And there's a lot of stupid money out there chasing these deals. So it's becoming harder and harder and harder to find good deals. I mean, what are you doing about that?

Yeah, there's, I mean, people. So there's two things that are happening. People are chasing things and they're, they're, they're riding on top of the next guy that's saying, I'm going to buy this thing. And with, with the whole idea of flipping in and out. So they're not really honoring the idea that you need to make money when you buy. And they're, they're still playing the speculator game, which you get caught eventually in that one. You've got to be smarter than the other one is. It's really hard when we're chasing yield on cash flow, when we're buying things that are going to give us some type of return if we're not creating value in the deal. And whether that's buying a rental house or an apartment or storage or Whatever you're buying, if we're not creating some type of value, we're competing with people that are willing to put money into something for 2, 3%, 4%, because we're in a 0% interest rate environment. So anything is better than that, which means that work has to be done. You don't just say, okay, I'm going to throw my money at the wall and I'm going to get 10 or 12%. I have no risk and no work. I mean, that is not real. So there's an opportunity, if you're willing to be creative and work it. But I think people are irrational that think they can throw money out there. If there's a pitch for a deal that we can get involved with and somebody says, hey, I've got 12 or 15% and you don't have to do anything and there's no risk, you're about to lose your money. Yep, that's it.

Sounds about right. So for some of our newer people, what would you give advice for what to look for? You made a great point about looking for opportunities to add value, and I think in a hot market like this, that's excellent advice. It's what everyone needs to do. So what are some tips for what a newer investor should look for when looking for a deal?

The one that's hard. Get out from under in front of your computer screen and go drive around. I mean, it's easy. The problem is everybody's on their computer screen and they're looking at at the same resources we're all looking at. What most people aren't willing to do is actually go out there and spend some time in the field. When I was driving around doing my guerrilla marketing, I was putting signs on the corners of streets and asking people to call me to sell me their house. I was doing those things and I was being chased by the cities trying to find me for putting up my signs with my ghost phone numbers. And I mean, I'm going through this whole process. I was out there busting my butt making this happen. And a lot of people were saying, this isn't working. Well, it's not that it wasn't working. They weren't working. They weren't out there there. I think it's important for anybody that's starting out to get out and start looking at things. Just being in neighborhoods, you'll see things that nobody else is going to see. You'll see the person that's selling a house or that has a sign that's fallen over and they're too Cheap to pay an agent. They're trying to sell it themselves. You're the only one that's going to see it because everybody else is looking online and it doesn't exist there. This is sweat, blood and tears. By being out in the field, we've become so digitized in the last 15 years. Everything's digital. So people are looking for the hack and easy, the, the easy path and they miss the opportunity that there's no competition for because nobody else is willing to go out there and do it. So that's, that's the hack. It's getting out of your house.

Yeah. I got a buddy the other day, some guy the other day told me he was bought some list online. He's like, oh yeah. I went to this website and they, they promised me all these, like these are all vacant properties that I can buy and so I'm just gonna send letters to all them. And then he did that, he started sending, he said he got zero phone calls back. I mean nothing back. And I'm like, well that's because a hundred other people bought that exact same or a thousand other people bought that exact same list, of course that, you know, those properties aren't around anymore. Those people are getting 10, 20, 30 pieces of mail. There being people in show up at their door all the time. I mean again, like if you want to get good deals, you have to go to where everyone else isn't. And I think that's good advice.

And you have to, you have to pound it. I mean if you're doing that, okay, that could work. And you and the 20 or 100 people are going to be doing it, it could work. The reality is you've got to pound those people 10 different ways, 10 different times, send them a stuffed animal in the mail or something and so that you stand out. Because yeah, everybody else is buying the exact same list. So those things work. But it doesn't work with a one time effort. And people, people just quit too soon. They don't realize the laws of selling. You don't close things on your first time. I mean that's crazy.

Yeah, yeah, that's so true. And I think people oftentimes, you know, they get excited about something like direct mail marketing or even driving for dollars, whatever. And they focus only on the event, not the system around the event. Right? So like for example, Craigslist, I tell people all the time, hey, just go post an ad on Craigslist. And you know, you might get a call, you might not. But that in itself is pretty relevant. You probably won't get a deal. 99% sure you won't get a deal posting that ad on Craigslist. But if you had a system you built that, posted an ad weekly and renewed it every Friday and you did that every single week for a year, well then now you might have an opportunity to get ticket deals because you're, you have a system behind it, not just a one time event.

Yeah. And now with technology there are those things that will automate a lot of that stuff. I don't know if postlets still does this or those different things with Craigslist, but those things. And if you can't automate it, then there's upwork and there's a person that can become your automation system. And so you can do these things. But really what you just mentioned is critical. It's taking some time to think through the systems that need to be built. And when you're new, you go, I don't have any idea which system I should even start with and how would I look at designing that? And that's where you leverage off other people that have already done it. There's a gazillion people that are offering to sell their systems that here's what I've done already. And just even sitting down and saying what do I do with somebody? I mean there's meetup groups everywhere. And so these are the free resources. And like meetup, I don't even think that was there when I started. I had to fly to freaking Florida and talk to people that were selling me their tapes. And that was my only resource really. So now we've just got the leverage. It's smarter to leverage off of that stuff than it is making all this stuff up on your own. It's too expensive and too exhausting to make everything up on your own.

Yeah, that's so true. So true. Just a big or aside here if people are interested. If you're listening to this, if you go to biggerpockets.com events, you can see actual local events in your area. And meetup.com is a fantastic place as well. But also make sure you check out biggerpockets.com events and maybe if there's no event in your area, you can start one. So it's kind of a cool place to go. So how many total deals have you done total now, Damien? I mean, what's the last? You know, 10 or 20? What are we now, 25 years look like? Or 10, 15? I don't know. What are we at 1999?

Did you just put me in.

Eighteen years. Eighteen years. I can do math. All right, what does that look like for you? What have you done?

So the total. So I've bought 150 plus houses. I've had apartment complex complexes that I've rehabbed. I mean, condo complexes that I've built, towers. And most of the stuff was the houses. I mean, that's where I cut my teeth and where I built systems and the other stuff. I was dancing into it. So one of the most dangerous things is to take advice from somebody that's done one thing one time because they don't really know if it worked. How do you know that it's replicatable? I mean, like, really, you did it one time? And I can tell you how to not do an apartment complex where your security guard gets killed and people steal your copper multiple times in one year. Like, I can tell you the worst way to do it. But I'm not the guy that wants you. You don't want to learn from me on how to do it successfully because I haven't done yet houses. I've done tons of those deals. And so I can tell you the great ways to do it and the bad ways. And I think there's a value and people that have done both sides of it so that you're not just getting the bright side or the total fear and panic version of that particular style.

So I definitely want to dive into 100 houses. But I got to know, like, a guy really died. Like your security?

Yeah.

Was he murdered or something?

No.

Armed guard died at. He was guarding my property. And I had these crazy. And this is next to Graceland in Memphis. I had these people came in and they stole all the copper out of the property while he was on site. And then they came back less than a year later. I'm in the middle of fighting with Lloyd's of London over the claim for a quarter million dollars. They come in and they steal the pipes and they kill them. I mean, it was like maybe the universe is telling me I should not be Gracelander in this thing. It was pretty intense, man. Stuff happens and that was real.

Wow. Wow.

Yeah.

Okay.

Not something you expect to hear in the real estate game.

No, man, like you're thinking about. Worst case is my tenant trashes my house. No. People die sometimes. That was intense. Wow.

It's crazy, man. All right, so let's go to something a little less morbid then the house.

Usually there's not death.

Shifting topics now.

All right, so. So you said, you know, like you're I mean, you're 100% right on that. A lot of people try to learn from people who've done things one time, two times. Especially, like, you know, people who just got into real estate two years ago, they go out and write a, you know, a book or they got this online course about how to do it. And I'm like. Emma was like, you know, like, yeah, maybe you can learn something from it, but chances are, yeah, I don't know. Like, people today that just got in the real estate game, I feel like. Like, it's hard to learn because everybody made money in the last. Like, if you bought in 2010 and you sold in 2015, you made money. Like, it's just what it is.

You're brilliant.

You're brilliant. Yeah. Like, I think Mark Cuban says everybody's. Everybody's a genius in a bull market. Because, like, it's just my little brother's in stocks right now, and he's telling me about how much money he's making, and he's, like, a genius. And I'm like, well, you got in a year ago, and the economy's been doing nothing but amazing things for the stock market. So, you know, keep going. Good job. But, you know, I don't know. I'm not going to learn from my brother. No offense, but. So, okay, let's go. So what we can learn from. Of houses. Your career in buying all these houses. So, I mean, first of all, like, how many deals were you doing a time? Were they flips? Were they rentals? Kind of talk about that a little bit.

Yeah.

When I was. When I started out, my goal was cash flow. I really bought into what Robert Kiyosaki talked about when he. When he would say, cash is trash, cash flow is king. And I was like, okay, okay. And I would hear it over and over, and I would listen to his tapes over and over. So I just. I was swimming in the Kool Aid, and so that's what I was focusing on. I wasn't really going after the flips. The funny part is when I started doing flips, I got a little bit ahead of myself. And because I was just focusing on the cash, even if my deals were successful, I would have been killed by taxes. And when they weren't successful, it was because I was rushing things. And I made the mistake that thinking X number of square feet is this much money, that it's all based on that, and I wasn't creating an actual experience for somebody. And that was a huge lesson when I lost a few million here. And There with some of these bigger flips, I wasn't creating something that somebody would actually want to drop a million and a half to for. I was creating square footage. And so with the rentals, it was a different experience because I was creating a short term solution for people, for the most part, where I gave them value. I gave them a 1200 square foot house that they could put their family in. And it was simple. When you start flipping, you've got to be a lot more on the ball because if you make a mistake, there's nobody there. It's just a vacant house that bleeds you to death. So I just kept doing the same thing with buying houses. I was typically lease optioning them. So in my mind at least, the theory was I'm going to the bank because banks are awesome. You just literally have money coming in all the time and there's no tenants. They don't call you about anything going wrong. That was the theory and that was one of the seminars I went to. And then in reality, people still have a mindset because the psychology of somebody that's renting, even if they're lease optioning typically is, hey, you're still supposed to fix this house for me. And so I learned that I'm not totally out of the landlord game, which was okay.

It was part of it. I mean, if you go in and you say, I'm not willing to do any work, you're probably not going to have a very long career in real estate. You've got to be willing to, to actually engage. The majority of my stuff was lease options, which is great, except when property values go up like crazy and you've got fixed option prices and then people start cashing you out, then you're sort of happy because these huge checks, I mean, hundreds of thousands of dollars were coming in a week at one point in 2005, which was great, except now I didn't have any property. The whole point of real estate was having something that keeps feeding you for the rest of your life. My cash flow game was being dismantled by the market and I was happy and pissed at the same.

Go back and talk real quick. What is a lease for those people who have no idea what a lease option is, maybe explain how does that process work and how did you make money from it and, you know, kind of dive into that a little bit.

Yeah, definitely. So with, with a lease option, the idea is that you're setting somebody up, you're the bank. So they, somebody wants to buy the property and they say, okay, I can't qualify at the bank right now. And they would. They would give me a, say, three or four or 5,000 bucks, and that would be effectively a down payment. We call it an option payment. And it would go towards the purchase price. When they eventually bought me out, when they got conventional financing, they went to bank of America or something, and then they would make a payment to me, and it would generally be fixed. It might go up 3% a year or something, kind of like a traditional lease. And basically there was a monthly cash flow between what my underlying mortgage payment was going to be and what they were paying me. And so I made my money each month. And because they had more skin in the game, they had that option or that down payment, they typically took care of the house better. And they were more likely to stay there longer because it wasn't like they could just leave, leave. And they had a $500 security deposit. If they have 5,000 bucks, they kind of want to stay because they don't get that back. That is not refundable. And I tended to have a better chunk of people that were in those houses. And they had more of an owner mindset. Not completely, but they were a lot closer than somebody that just put up a few bucks as a security deposit and then rented.

Sure, that makes sense. So the lease option thing, I mean, at the end of the day, would you recommend people who are just getting started maybe look into that? Or are you saying, like, would you say that was kind a of a waste? Don't go that route.

I actually really like it. And one of the things that I like about it now is because we're in the opposite space in terms of interest rates. It used to be the interest rates were dropping. They were at 78%. And as they dropped down. The problem with my lease option program was that I had fixed option prices. So if somebody had. They came in and their option price to buy a property for me was 150,000, I would lock that price for the next 30 years. That's fine as long as markets don't move. But when the markets went from evaluation of 150,000 to $300,000, then everybody left. They said, hey, I want to get better financing. I'm going to. I'm going to go to the bank. They're giving me a mortgage at 4%. That's better than your deal. So right now we're in the opposite space. The mortgage rates are going to go up, which means if you're locking people at a certain price, the likelihood that that property is going to go up is very, very low. I mean, it's. It's just pretty unlikely because as rates go up, prices generally go down. If anything, they're not going to go up like they were when their interest rates were going down. So I like the idea. Now, I think it's more likely that the cash flow would maintain itself indefinitely, and you'd have people sitting there, pay for the next decade or two.

Yeah, very cool.

So tell everyone a little bit about the structure you were using. I know you had a really helpful partner who contributed no time and no money in your first deal, but did you have a partnership where you're using an LLC for some of these more complicated deals that you were doing as you sort of grew your business?

Yeah, as I grew the business, I typically would have a limited partnership, and my corporation was the general partner. And then I'd have investors coming in, and they would end up being one of the limited partners. And one of the things that's really important whenever we're talking about partnerships is figuring out who has control and who has the majority interest. It gets really, really hairy when you have equal interest in partners and one partner decides to not paint anything, and you're like, all right, what do I do here? Because they have as much say as you do, except they're not doing anything.

More fumes for you.

More fumes. Yeah, it's great. So there's an important piece to have, and it's kind of like having a prenup. You just really get clear on, hey, if I'm going to do this deal, I like you. Right now. I may not like you in three, and I don't want to be sitting there with all my financial assets tied into somebody that has become a werewolf on me. I like to have people that come in that are in a minority position. It might be 49%. Really, the money is flowing pretty much equally. But I like to either have a limited partnership with an investor that's a minority interest or an LLC. LLCs are getting more and more popular now. That's what we use. The limited partnership generally has more moving pieces that I don't tend to want to use. But one of those two things. I think the craziest thing is doing anything as yourself as an individual, sole proprietor, or just a general partner. Then you're on the. You're liable for everything they do, everything you do, probably everything the neighbor does. I mean, that's crazy to me. So this is where an attorney of any sort, even a really bad attorney, is going to be able to help you at least sort that stuff out. Because when I see people that have real estate in their own name, I just shake my head and I go, are you really? This is like amateur hour at any level.

So let me ask you a question. When do you think I mean something? So I get this question all the time when people are just getting into real estate, they haven't even bought their first deal yet. The number one question people always have is, well, do I need an llc? What do I need? I don't know what to do. I'm so confused, Right? And then they never take action on anything because they're just so confused about the LLC thing. So I usually tell people like, you know, go get the first deal, then worry about the LLC thing. Do you agree, or do you think they should go get the LLC now and then, you know, stop talking about it?

Well, now everything is so damn easy. You go on incorporate.com, you get an LLC, it's set up tomorrow. I mean, it's. And for a few hundred bucks. So there's to. There's no reason to not have that set up. And it's not something that takes a lot of time or there's a lot of brain damage. I mean, there's all this AI that allows us to go through this process, really, in an automated way, in a matter of 15 or 20 minutes. It's set up tomorrow, you have your papers. I mean, this is not complicated anymore. So I don't think I would wait for that. Years ago, I remember people saying the same thing. And I go, yeah, I get it. And you don't want to get stuck figuring out your business cards and your logo and all this stuff and not actually do a deal. Go do a freaking deal and then back into it with all of your branding. But really, they were in such a litigious society where everybody's suing for everything and just having some type of entity. And I love the single member llc. It's super simple. So just setting that up today, you're in business tomorrow. I don't see that as much of a delay. And I think it's incredibly powerful, especially because a lot of people will just forget about it indefinitely until they get sued and then oops.

Yeah, that's true. And that's why, if you want an llc, go get an llc. Stop talking about the LLC forever. And like, yeah, I've been. I've been wanting to get into real estate for like five years. I just. I don't know what to do about the llc. Like pay an attorney a couple hundred bucks if you need to to go ask for half hour of their time and have them tell you what to do and then go do it and stop talking about it. Yeah, I love it. So I want, I want to actually go backwards a bit because you said something earlier that I found kind of fascinating. When you talked about the cash flow and you were drinking the Kool Aid. I remember you saying that phrase, you were drinking the Kool Aid. To go by casual. Do you say that in a negative way? Like maybe your opinions change now or like how do you view cash flow today versus appreciation versus just business and wealth? And I mean, what's your view on all that?

Well, the reason I said I mentioned the Kool Aid because at one point I was drinking the Kool Aid and then I just jumped in the swimming pool of Kool Aid and I was surrounded by Kool Aid. I was all in. And to me the whole point of real estate is creating long term sustainable wealth that keeps paying you. And so back then that was the idea that made sense. I mean, sure, it sounds awesome to make 20 or $30,000 or 50 or whatever. Today you do some flip or something, but the math also makes sense. And if we actually think about what happens when we do a flip, if it's successful and we risk whatever we risk and we do it, we get killed with taxes. Unless it's in some type of really slick vehicle and there's some cool vehicles, but for the most part you're going to be paying the highest income tax bracket rate, you're going to be paying self employment income tax, you're going to be paying all these things. It's not unreasonable to think that you're going to pay 60, 70% in actual taxes for doing a flip and all that risk. And you can do these deals with long term sustainable cash flow where effectively you're paying zero tax. Why would you do that deal and do it over and over where you have to keep working and give away 70% of your money when you can do a deal one time, keep it all and it pays you the rest of your life? That just doesn't even make any sense to me why you would do the flips unless you're just stuck or you have a deal. It's like I can do this thing, I can get in and out, out in a month and I'm going to make 50 grand and the risk is super low. Maybe, but most people aren't doing that. They get all excited about this pie in the sky idea that they're going to make 100 grand and they're not realizing that the government is going to be making majority of that.

Yeah, that's so true. So true.

So you say like in the past that this is what you were doing back then. So what have you been doing since then and what are you up to these days?

Most of the stuff that I'm doing now is the lending side, so I'm doing hard money lending. I like being the bank. I mean really, when you're lending money, you're definitely the bank.

It's a cool space to be in because you're still looking at deals but you've got somebody else that's out there and they're really truly bird dogging and you're not partnering with them in the sense that if the property does well, you do well. You're just acting as a bank. And if you can look at it through those type of eyes and you can really become a bank, then you're learning how do you have money truly just work for you without being in the mess of real life estate? The mess is good if you want to be in the mess. I just happen to like the idea that people are out there scourging through neighborhoods and they're finding deals and then I'm investing with the people. So typically I'm looking at a deal, but I'm primarily looking at the person that's running it. And then if I like the person, then I'll look at the deal. And the other thing out of the. There's three things I'm looking at. I'm looking at the market that they're in. So I'm not going to be in an area where I have to deal with any type of violence. It's not going to be the south side of Chicago where I. I might get killed if I actually had to be there, or my partner, my investor that I'm funding might actually get killed. So I'm sensitive to that kind of stuff. I don't mind rough. I just don't want to get slaughtered in the middle of the investment in a bad way.

Well, you have a history with that, so we understand your sensitivities.

I don't want to do it again. It's no fun.

Do you still own all of your rentals?

No.

So part of the process, part of my wonderful experience of going through this stuff, making a ton of money, especially in 2004 and 2005 and then some in 2006 when I was selling things off to me, when you have a market that's going up 10 or 15% a month.

It's telling you something. This is crazy town. And it was. And so I sold things off. The problem is, because it was my first cycle in real estate, I thought, well, shoot, this is all me. I am the smartest guy in the world. I should go do more of this. So I took all that money and I went and ran it into other deals. And I didn't understand that we were in that bubble environment. I didn't understand how to hedge. I was just levering up. The banks were just giving away money, so I happily took all the money they would give me, and I happily signed on it and guaranteed everything. And so when 2007 and 2008 happened, I had all these projects that stalled, and ultimately I couldn't carry the debt. Since I had signed on it, there was only so much I could do. Taking out cash advances on credit cards, and, I mean, a million dollars on credit cards. And eventually they just buried me. So I did the whole, I'm going to spend a couple years giving you stuff back and unwinding things and doing the reset sw and then now being in the lending space, I'm looking at deals, I'm funding deals, and I'm being really, really careful about going and getting into things. And what's funny to me is several years ago here in Austin, I looked at properties at some of these houses, and I was talking to a buddy of mine, and I said, that's a crazy deal. Why would you do that? And now that property is probably about 60 or 80% more valuable. And so I'm thinking, all right, you can be wrong. I mean, you can be early, and it still looks wrong. And I was early to calling this thing, but it was still irrational. It doesn't mean that people were making money. I'm just not going to chase it. I chased it before. It didn't quite make sense, but I was willing to stay in the game. And I think we just have to be conscious that there's a lot of fluff. And if you're not buying with value or you don't have a way to create it, you're just asking to be caught. And so we've got to be smart about that. Just because you're on the sidelines doesn't mean you're stupid. I would have made about $5 million if I had gone on vacation for a year.

And that's.

So what was that like emotionally, I imagine, after going through such a downturn in 2008. It's pretty hard to go back into real estate afterward. Were there any times you thought about just scrapping real estate and going into something else?

Yeah, I mean, not only did I think about scrapping real estate, I thought about scrapping me. I mean, when I went through that meltdown, it wasn't just losing the money and that the thing that is missing in a lot of people's planning is that they think, oh, if I lose money, I can survive that. It's when you have attached your self worth to your net worth and you lose that and then you don't know who you are and then you have people coming at you. Because at the time I had a lot of investors, a lot of money out there that wasn't necessarily bank money with just nasty letters. It was people calling me saying, I hope you rotten to hell, I hate you. I've known you for 20 years. You're the worst thing that's ever happened. Happened to me. That doesn't give you a whole lot of confidence or inspiration to go do anything. The biggest problem with melting down without a foundation or without rules, without values, without anything really in place, is that when you melt down, you end up putting yourself out of the game for a while. And when you're out of the game, you lose track of what's going on. So it takes time to get back in. I was out of the game for several years, just resetting and just figuring out whether I had any reason to even be here on earth. I mean, that's a. That's a tough thing to go through to even to question that. That's. I mean, that's a dark space. So I don't recommend that. That's a bad process. It's. If you go through it, you get it and hopefully you just don't have to because it's. It's like the worst thing you can ever imagine.

Yeah, yeah, it sounds absolutely awful, but it seems like you reached a point where you wanted to jump back in and regain some of that confidence. So what was that like? You know, coming back from such a difficult, difficult time.

The thing is actually very cool. Once I decided that I was no longer going to try to defend a lie or defend anything from the past, there was no more justifying or blaming or being a victim. And that is a huge part with investing. It's owning everything that you do. And some are good, some are bad. I mean, you can define them as good or bad, they just are. And really, if you can just say this was my choice, I'm responsible for it, then you can move through things. It's when you're pointing fingers and you can't control anything or you can't control your response, you just need jerking it, then you're really stuck. And the pivotal point was when I owned responsibility, not only for the real estate stuff, but it came because I got fired from a volunteer thing I was doing in Connecticut on a campaign in 2010. And at the time, I was pretending I didn't get fired. I was claiming that I'd resigned and people online were just beating me up and they were saying, this guy got fired. And I was like, no, I didn't get fired. I was resigning because they didn't know what they were doing. And the reality is I sucked as a volunteer. I was not very good at it. It wasn't my game. I hated it. And once I said, okay, I can't change a lie, let me just own this, I owned the truth on that. And that sort of spilled into the other stuff because I'm a firm believer that the way you do anything is the way you do everything. And I was acting a certain way and it was spilling into everything with my relationships, my money, my work. And when I started owning everything, it spilled into everything else. I was owning how bad my relationships were. I was owning how bad my health was, how fat I was getting. And I was like, minute, wait a, wait a second. Okay, I need to fix this. I need to acknowledge what this is. This is a disaster. It's very, very bad. Right? It's terrible. So I started fixing it because I decided it was mine to fix.

Yeah, I love that. I just, I got finished reading. I'm going through Jack Canfield's book the success principles. And like, I'm doing like an online, I have like an online, like Facebook group that we're like, every week we're going through one chapter at a time. Just kind of like, how do we put this into our life? And the first, the first chapter was called Take 100% responsibility for your life. And that was the thing that stood out to me so much. Much was like, yeah, when you do take that ownership, like, not only do you, you know, accept responsibility for it, but it also means that you have the ability to fix it now. And so once, like, it's kind of like a two edged sword in a good way, it's like, hey, I'm at fault for everything that's ever happened to me. You know, I'm at least responsible for it. And that also means I'm responsible for everything good thing that could happen going forward. And so like yeah, this week I've been really, really focused on how do I stop blaming, how do I stop complaining? Because every good or bad thing in my life is a response result of what I'm doing or not doing. And I think it's a powerful mindset to try to get yourself into if.

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So what would you say to people today who are, you know, thinking that today we might be back in 2006, 2007, they're getting worried. They're like, well, should I just wait for the next market? Should I wait for the crash? Should I buy these deals hoping that the market goes up like it did in Austin? What do you say to them?

I would say if your strategy is hope, then you're, you're smoking a lot of hopium. Hope is a terrible strategy. What I mean, I'm hopeful for a brighter future. I mean, I really buy into Peter Diamandis in general, his idea around abundance, the book he wrote, Abundance. And I think the future is very bright. I'm also a pragmatist and I understand practical cycles. And so I'm thinking about what matters to people. What are they going to be doing in an up cycle or a down cycle? And one of the things that we know is that the millennial generation is highly likely to rent a lot longer. And, and just that that's what they're going to be doing. And they're a bigger generation than the, than the baby boomers. So you've got tens of millions of people that are wanting to rent. So what are they going to rent? They're likely to rent smaller apartments. I'm thinking about how that's sustainable, that's super sustainable in any economic market because they'll just pack in and what millennials tend to do. And this is funny, one of my team members who's a millennial, got really pissed off when he heard this. Millennials tend to be in packs. They tend to group together. And so when this happens, happens, if there's an apartment, let's say we own apartments, they're going to just pack together. They're going to be there. These things are not going to go vacant. The houses that people are speculating on and flipping, I think a lot of people are going to get caught when the market cycle in those spaces, because, hey, you can't go out and get a four or five hundred thousand dollars loan for your house, your three, four bedroom house. So I'm looking at how things work in these down cycles. I wasn't thinking about that at all, really, in 2007. I was just like, hey, this thing is going to go for forever. This party is on. The party was on and then it was off. And it was off so fast. And there was people that had rentals that.

Had actually leveraged them correctly that weren't super overleveraged. They had the ability to ride right through that Thing, and they didn't have to take time out and go in the timeout box like I did for.

Three or four years.

So there's an opportunity. And that's why cash flow is so much more valuable in my mind than just flipping stuff and speculating. It's also why developing is. When I hear people telling me that their first deal is going to be a developer deal, that they're taking all their money, I just go, what are you talking about? You can't even spell development. And that's their first thing. I got this thing. It's in San Francisco. And I'm like, you're not Facebook, all right? This is not Mark Zuckerberg's neighbor house. Like, come on. But that's the mentality. And the worst teacher is success. So the worst possible thing that could happen to them is that that actually works. Like, when I had all my stuff working, I hadn't been kicked in the teeth yet, and then I thought was brilliant. So I, I just, I would be very sensitive to going all in. Into something that's speculation right now, given where we're at. We've been in a bull market. I mean, this bull is running hot. It's been running a while.

Yeah. There are so many fantastic points in there. But I really like what you said. Like, what was it? The, The. The worst mentor is success. That's so true, right? Like, yeah, it drives me crazy when I see people who are like, they don't know anything about flipping houses at all, right? And they go and they flip a house and they made 100 grand. And I'm like, I've never made 100 grand on a flip in my entire life. And I've been doing this for 11 years or whatever. I'm like, not that I've been in it that long, but like, yeah, I'm like, this is stupid. And like. But I know that some of them are learning. Like, I'm glad that I learned in 2007 and I started flipping. I lost. Not. I had a rough 2007, 2008, probably not as bad as you, but it was. It was. It was rough. But I learned through the down the. Through the failure, which then helps in the good times. And so, yeah, definitely something to be aware of for people that are listening to this is things are good. So one more question before we kind of move on is people that are listening to this maybe want to get into. Into private lending or hard money lending. Do you have any advice or tips or lessons you've learned in that field?

Yeah, I mean, one of the, one of the most important ones is know who the heck you're in business with. I mean, really understand that person. Now when I get, when I get calls from people, I'm, I'll lend today. I mean, somebody says, I got a deal and I want money, I know who I'm lending to, so I, I can do that. The thing is, you don't want to be lending based just house, because even a house is like a little business or an apartment. It's a business and somebody's got to run that business. And so if you're lending, you've got to know who's operating your business. You've got to know that this person is not going to just go, ah, this is getting hard. I want to go do something else, I want to go on vacation. And then all of a sudden, what do you got? You're going to be dealing with their business. So the lending piece, really the way to do it without getting burned out or crushed is to make sure you're lending with people that have a track record. I've watched people do deals with other people that are newer and they get all excited about the upside and they're not paying attention to the downside. The people that they're working with either aren't disclosing it or have not had problems or losses. And so everything is rosy until there's a mistake. I mean, one of my mentees went and bought a house in Florida last year and then the hurricane came through and we were talking and I said, well, you might get a new house. I mean, I've had that happen. I had stuff in Alabama and when hurricanes came through, we ended up with a lot of houses that had no roofs and they basically got rebuilt. And so as long as nobody was hurt, I was happy that there was a new house being built on State Farm or whatever it was. What I found there was that the partner that my client had gone and worked with had just sort of forgot to get insurance on this house. And they had paid cash. It was a $350,000 deal. So I said, wait a second, you've got a hurricane that's going to hit your house tomorrow and you have no insurance. Guess who's the insurance company? That'd be you. And if this house goes away, you just took a hickey that'd be, that's gonna kill a third of your net worth gone overnight. And so it was rookie, it was just a rookie mistake and amateur thing. And so it's again, I'm just Reiterating how important it is that you vet the person you're dealing with. And I'd be really leery about putting a whole lot of money and your financial backing with somebody that is brand new. Test them and see how they show up in the real world, not just what they talk about.

I love that. Before I worked at Biggerpockets, I actually worked in venture capital and it was the same thing. You always look at team and person first because things are inevitably going to go wrong. There are always going to be problems. And I would rather take the smart person who's going to be able to figure something out than the perfect deal that looks perfect because it's still going to go wrong and you're still going to rely on that person to try and navigate a difficult situation.

Yeah, you guys have probably many people have heard of Marcus Lemonis, the one that runs the show, the prophet on cnbc. He goes into turnaround deals and he looks at the people, the process and then the product. And it's funny how often people look at the product, oh, it's a beautiful house or it's a cool business or it's a cool widget or something. It's like, no, no, no. It starts with the people and then the process. So you have a great person that really has integrity and doesn't have a clue, doesn't have the process like going out and whatever it is, you're in trouble from the get go. So really, those two things, if you're talking about lending or being in business with people that are doing deals, it's their integrity and it's also their process. Do they actually have a clue what they're doing? Are they just making it it all up?

Yeah.

That's awesome.

A good point. So let me go back into the same question, but from the other side of the other angle. Somebody who just getting started wants to use hard money, how do they convince you to say yes to them?

They show me that they've done their homework, that they have, that they've gone out there, that they've. Especially when they're brand new, if they can say, here, I found this deal, here's my process. I get people that'll say, here's my deal, it's worth 200, I'm buying it for 150 and there's 10,000 in repairs. Can I have 160? 60,000. And I go, I mean, how do we even know it's worth 200? They're like, oh, well, I guess I could go look at comps I mean, just the kind of the basic stuff. I want to know that you know that this thing is worth whatever it is. And you can prove it to me, you can prove it to yourself. I want to know that you've actually gone out and done the research on what it's going to take to fix things, and it's not going to be you, like I was fixing everything yourself. I want to know that you can actually have somebody go do these things and you can pay for it. So it's really. It's somebody that's done their homework, that spent the time. It's really obvious when somebody has done their homework and investigated a market and a property. Property and the problems, and it's not totally blue sky, the worst thing to do is say, hey, look, it's this amazing profit potential. I want to know all the things that you can think of that could go wrong and how you're going to fix them in advance. At least you've thought through it. So spending time on that makes a lot of sense to a hard money lender. And I remember in Orlando, right the very beginning, the first month of when I was starting and I walked up to these guys at this convention, I just seen Robert Kiyosaki speak. I'm all excited. I have bags of tapes and videos and everything. And I go up to these guys and. And I said, hey, I'm a real estate investor. I don't have a card yet, but I'm a real estate investor. And I was wondering if I could borrow some money. And they said, yeah, come back to us when you have three or four deals. And I went, you guys are just not seeing the light. And I was pretty full of myself already. And I get it. Because they wanted to see if I could go survive three or four deals and whether that would actually work. They wanted to see a balance sheet that had more than my personal checking account on it. And I get that. Going out there and surviving a deal or two is pretty important. And it tells you a lot about yourself and tells a lot to a lender, whether or not you're even worth doing deals with.

I love that. I love it. All right, well, last question before we head to the fire round. Where are you headed next? What's the next 5, 10, 15, 20 years of your life look like?

When I first started out, it was all about these houses. And now when I talk to people, I go, if you could do what I did, you did 150 houses, and you could do those with one transaction. Transaction, would you do 150 different houses or would you buy an apartment complex? Most people go, I think I would do the apartment complex. There's a reason, because there's leverage. What it looks like going forward is I'm thinking about things that can scale, that don't need me being in the middle of every piece of them. That's the most challenging thing I think with houses is that you have individual businesses and individual operations on every single one. So if that's the entire model, it can be pretty, pretty hairy. And then the dangerous part is like what I did, I went into seven different states. So houses around Phoenix wasn't enough. I needed to have them in different time zones. Now going forward, it's really finding things that have the scalability and the ability to have people manage them. And I can have institutional money that's being lent on them. It's not just me or Joe Blow that has a 401k that's going to invest. I'm thinking about things that are bigger. It's funny that it doesn't take all that much more time to do these bigger projects. In terms of doing an apartment apartment complex versus a house, I'm thinking about doing the thing the one time that's paying a lot over the next forever. In terms of real estate, I'm the bank and I'm thinking about those bigger assets just getting better and better at that. Because some of that the houses are easy, I mean fairly easy going and doing 100 unit apartment complex, you're fighting with bigger, more sophisticated players. The reality though is if you commit to that and you spend the next few years in the middle of it, you're going to get good at it and eventually one's going to pop and you're going to go, okay, this is cool. Now you've got an apartment apartment complex. That just makes more sense to me, especially with the demographic trends that are happening with the mass groups of people. So I'll just keep doing that. When I think about real estate, I'm thinking about using it as a base to put my money into that my business generates. So generate money from my business and it's like McDonald's. The whole point was to build a real estate portfolio. I'm not necessarily looking at real estate to generate the cash like with the flips. I'm looking at it as a place to park money and to have long term wealth.

Sure, I like that a lot. I mean, I was just talking with a guy this morning about that same thing. His business is doing really, really well and he's looking like he needs real estate as a place to park that wealth because, you know, he doesn't. I mean, originally he wanted, like, I want to quit my business and go and make all this money in real estate, but what he was good at was generating millions of dollars a year from his business. And I'm like, right. And finally he's like, okay. He's like, okay, I'm going to stick with this for a while and just take my millions and put it all in into real estate or at least majority into there and create passive income five years from now. That'll support me the rest of my life. And I think that's smart. So cool.

I think it's super smart.

Yeah. All right, so let's shift gears here and head over to the next segment of a show which we call our Fire round.

It's time for the Fire round.

All.

Right, the world famous fire round. These questions come direct out of the bigger pockets for forums, which of course, of course, all of the listeners can go to@biggerpockets.com forums. All right, let's do these firearm questions. Number one. I've been investing in real estate for just over 10 years. I started with house hacking where I lived in one half of a duplex, rented out the other half. Now that 13 properties, I feel like I know what I'm doing, but whenever I look at my numbers, I don't feel like I'm making the progress that I would have expected. Did I buy these wrong or what should my next steps be? Should I sell it? Refinance, buy more, pay down aggressively?

The answer to that is if you feel like you did something wrong, stop doing what you did in the past and take a time out and figure out what your game plan is going to be going forward. If you had to blank slate it, figure out what you would do different the next time and really stop digging because you're obviously doing something wrong and maybe you just don't know what it is. Find somebody with gray hair or no hair and ask them the question that's been through this stuff before and get their perspective because you probably don't even see it.

I love that.

Awesome.

All right, question number two. This is perfect. What should I be careful of when scaling my business? My goal is to grow my business fairly quickly over the next couple of years. But I also want to make smart, smart decisions. Any advice on effectively building a business the right way?

Yeah. Make sure that any deal that you're doing, any, anything that you're, you're Buying into. You have the ability to pay somebody outside of your internal work because you are not scalable, but external people are scalable and make sure your deals can support that thing. Otherwise you're just buying into a pipe dream and you're not really, you're not treating it as a business where pros can take care of all the pieces that pros do. You're not the pro, you're the deal maker. Make sure that the pros are operating, operating this thing.

Love it. Number three, should I use a hard money lender for my first deal? I hear they are expensive.

Hard money lenders will make you money. And the other thing that they do is they provide this amazing oversight because hard money lenders don't do things that lose the money. So if a hard money lender is willing to give you money, there's a higher likelihood that your deal is probably sound. And if you feel like the hard money lender's money is too expensive, your deal is probably too, too slim and probably not really worth doing.

That's fantastic advice. There was a deal I did one time where I, I went to my typical hard money lender and I said, this is the deal. Here's the numbers, here's everything. He said no. And I'm like, oh, come on. I mean, look how perfect this is. He said no, it's not good enough. And I said, oh come on. He said no. So I went out and I fought tooth and nail. I got another lender to do it. At the end of the day, I lost 10 grand on that deal. And like I'm like, I done that too. My lender, I mean, he'd been in this game for 30 years. Why didn't I listen to him? Because I was a dumb 23 year old kid.

Gut check.

Yeah, Yeah.

I think it's very, very Last one.

I'm looking to partner on a flip with a friend who has money and I plan to do the manual work on the flip. Is this a good idea for getting my first deal? What should I know before jumping in?

Well, when we have, when you have a money partner and you have the active partner, they usually switch roles at. By the end of the deal, the money partner becomes the guy that learned things and the guy that did the activity actually ends up with the money. So is it a good deal? I don't know. It depends on where you want to be at the end of the day deal. But if you're going to do the, if you're going to be the active part, at least you you can control a lot of things if you're the money part and you have no control. You know, enjoy your money while you have it. It may not be there very long.

All right, all right, awesome. Let's get to the last segment of the show, which we lovingly refer to as our famous four. All right, the Famous Four. These are the same four questions we ask every guest every week, and we're going to throw them at you right now. Number one, what is your favorite real estate related related book?

Favorite real estate related book is probably Cash Flow Quadrant because it really differentiates the, the idea behind what it is to work and what it is to be an investor. And I think just reading that about a hundred times will imprint that so that you understand what cash flow means and why it's important to you.

Yeah, there's that story in that book. I just reread it. But like the, the two tribes that were like building water to their, their place, whatever, and like one guy, you know, is carrying water buckets every day and the other guy basically builds a pipeline and turns on the spigot. And like that story changed my life back when I first 10 years ago. And when I reread it now recently, I'm like, oh, that's so good.

Anyway, changes my life every time I hear that story. I just keep going, yeah, where am I? Where am I hauling buckets? Where am I actually building the pipeline?

Yep, so true.

All right, so what is your favorite business book in general? Not necessarily real estate related.

So my favorite business book is Mastery. And it's funny because it's kind of a martial arts book. But the truth is if we're doing anything in business or in real estate, you want to be the best. And Mastery is all about continuing to evolve and grow and focus on this long term path, this journey, and continuing to move through the different plateaus we run into. So I would recommend that book to everybody. It's by George Leonard.

All right, all right, next one. This is you, David Meyer. All right.

Oh, I'm slacking. All right. What are your hobbies? What do you do for fun?

So for fun I do two things. I ski and I teach and practice martial arts and I founded my own martial arts. So that's kind of. It's got my heart and it really spill and everything else. So I'm happiest when I'm sitting on the mat throwing people around or having my students throw me around.

Ah, sounds.

Where do you ski? I have to ask there.

Tell your ride. It's the Best.

It is the best.

Where's that? What is that?

That you Southwest Colorado. Oh, yeah, exactly. As far as you can get from Denver and Colorado, pretty much. But yeah.

So you run into a state.

Yeah, totally, basically.

All right. Did you say you have your own, like, studio? I mean, like, do you, you teach, teach, like martial arts? Did you say you invented your own martial arts?

Or you.

I mean, what. Tell us about that.

Yeah, all above. Yeah, so I actually, I've been teaching for about, about 12 years and, and I formed my own thing called Yokido, which is a blend of aikido and yoga, blended those together and founded that a few years ago. So I've been teaching that and developing that and, and teasing that out. So it's, it's my own version of my own style of, of blending those two things together.

That's awesome. That's awesome. I'll check that out. All right, my last question. Question of the day. What do you believe sets apart successful real estate investors from all those who give up, they fail, or they just never get started?

Well, one, they just quit. I mean, people, people are looking for the hack and God love him, but Tim Ferriss has created this whole generation of people that want the hack. The instant, the four step, the three step, the no step, the like right now. And the difference between those that are successful is they hold on to it. A vision. And the easiest way to do that, and I hate to say that because nothing is really easy if it's really worthwhile, but the easiest way to do that is absolutely surrounding ourselves with those people that are not going to tear you down. Because most people have crabs in their lives. They're people that are pulling them into the box. And if you will, surround yourself. And for me back, I didn't have any friends. I mean, nobody really wanted to hang out with me. So I just listened to tapes and I pretended that Jim Rohn and Robert Kiyosaki and John Maxwell and whoever else and these, everybody that they were my friends and I just listened to them and so I absorbed them, I became them. And if that's something that any of us can do, we just have to be more conscious about who we're absorbing because most people, they're too stuck and they're not willing to be bold. And so if you're going to be bold, you need to be around people that are bold as well. And they will inspire you and they'll push you forward when you're starting to second guess and when you're getting beat up. So it's the people that are around us super conscious of the that.

I love it. I love it. All right, Dave, last question.

All right. Where can people find more out about you?

There are a couple places they can visit. The work that I'm doing at total control financial is a great place to see the financial bondage unchained. Helping people get off the Wall street roller coaster. It's a great place. You can also find me on Amazon or damianlupo.com and I'm kind of all over the place. So wherever you find me and you reach out, the cool thing is when you reach out and you say, hey, and you want some engagement because I'm one of those gu that's going to reach back out to you and support you if you do it. So do that. I'm out there and I love supporting people, especially when they're on this journey because all of the pain, all of the trauma that I've gone through, it's really cool when somebody goes, hey, I have a question. And I go, you know what? I can help you avoid some of the trauma I went through. And so please, please, please reach out to me and I'd love to help you.

Awesome.

That's great, man.

And I would encourage people in the comments section below this show. This show is number 216. So if you go to biggerpockets.comshow216, there's a comment area at the bottom. You can leave your comments there. And Damian, hopefully you can, you know, jump in, check and answer questions if people have them and just kind of, you know, continue the conversation there.

I'm on it.

Awesome, awesome. Well, good deal.

All right.

Well, Damian, I have to ask you one question. It's totally self serving because I have a problem, but what's your favorite restaurant in Austin?

My favorite restaurant in Austin is Uchiko.

Oh, I've never been there, but I'm going in a few weeks.

Where?

What is it?

It's called Uchiko. It's literally the best sushi fusion, Asian fusion thing you've ever experienced. Everybody I've ever brought there has said the same thing. This is the best I've ever experienced in the world. So done.

I'm calling you when I come. We're going to Uchiko.

Nice, Nice.

Awesome. Well, thanks a lot, man. Really appreciate your time.

Thanks guys. It's been awesome.

Awesome. Well, thank you. See you around. Alrighty. Big, big thanks to Damian. That was an awesome show. I am inspired and I learned a lot.

Yeah, that was amazing. It went a lot of places I wasn't expecting.

I know, right?

Like, it's pretty awesome.

Like, I didn't know a lot about him going into it, but I feel like I know him, like, really well right now. Like, I go hang out with him and just have, like, the best conversation at that. What's that place called? The sushi restaurant?

Uchiko.

Yeah, that place.

I wrote it down.

I'm not a sushi guy, but maybe I'd go with him anyway.

Yeah, definitely. Well, Austin has amazing food, no matter what, if you're going down there. But, yeah, no, it was amazing. He was very honest, which I really appreciate. Like, he was talking about some of the more difficult parts of his career. That's not all roses, you know, but he's obviously killing it and has a great story to tell.

Definitely. Definitely. Well, thank you, Dave, for, you know, jumping in today and being the awesome host that you are.

Of course.

Yeah.

Yeah.

Josh, buy me lunch or something.

You should.

You should.

So with that, I mean. I mean, that's pretty much all we got, so. I don't know. Are you watching any good shows on Netflix these days?

I just started Westworld. I know I'm, like, kind of late to the party on that, but I like it so far. Have you seen it?

Yeah, I watched the whole season. It was. It was intriguing. Probably one of the better made shows I've ever seen in terms of, like, just.

Oh, good.

Yeah, sure. Like, just cinema, cinematography, quality dialogue. All that stuff is fantastic.

It's pretty weird. A lot of action. I mean, there's not much not to like. It's pretty good.

Are you.

Have you seen anything good? What are you up to?

I don't know. I don't.

I.

What have I been watching lately? The new 24. I've been watching the new 24.

Oh, really?

I like it.

Really?

You know, there's no Jack Bauer, but I like it.

Right.

Like, I don't want to watch it because it's just. There's this image of Jack Bauer in my head, and I don't want to. To ruin it, but maybe I'll check it out.

The new guy does do a good job, and when you're watching it, you like. It's just like the old 24. So it's like the same. Heart pounding. Yeah. So it's. It's good. It's fantastic.

It can't be bad then. Yeah, I'll check it out.

Yeah. Yeah. All right, let's get out of here. Remember, everybody, if you've not yet left us a rating review in iTunes, or subscribe to the show, please do so or in Stitcher, SoundCloud, wherever you listen to the show at or on YouTube. If you're watching this on YouTube, thumbs up, please. That helps us a lot. And be sure to follow us on Facebook. We do weekly Facebook live video videos there. Kind of see the inside of both the bigger pockets world and some of our the actual bigger pockets members, Real life investing. So it's kind of cool there. And I don't know, it's about all I got for you. So anything else you want to add?

That's all we got.

All right.

No, I think we're good.

All right. You want to take us out?

All right, let's hear it for bigger pockets. This is Dave Meyer signing off.

You're listening to bigger pockets radio, simplifying real estate for investors large and and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com, your home for real estate investing online.

All right, everybody, this is just a quick little hidden part of the show, which I just contest this out. Let me know if you guys like this. Put a message in the comment section, biggerpockets.com show216. But we've got five random questions we're gonna ask Damian real quick that have nothing to do with real estate. We just wanna know the answers to these. So my first question, Damian, what kind of music gets you pumped up?

Kind of music gets me pumped up. Probably house.

House. Is that a band or house music?

No, house music.

Okay.

Not like our house, but, like, you know, house, it's got feeling, and it's got.

You know, it pumps you up.

All right, all right. I was thinking there's like a band named house. I didn't. And I was like, is that. Am I that, like, out of the loop? Okay, good. All right, good. David, what do you got?

So looking back, what mentors had the biggest impact on your life?

The two mentors that had the biggest. There was one guy that I was paying $10,000 a month to have about a half an hour of his time. I spent $400,000 with him over a period of about two years, and he was the $100 million man. I realized that you can pay people a fortune and still be getting the wrong advice if somebody is there just to tell you what you want to hear. And I should probably have never listened to anything this guy said. On the other hand, I have a mentor who's my partner now with my real estate stuff. And he has always. He's always been there to tell it to me straight. His name is. They're both. Their names are Dan. The guy that's been my mentor, though, has been there. He also has no hair. And he's just been through the real world of real estate investing. And when he shares and I ask him, I actually ask him, what are you thinking? Because he won't just vomit on me. He actually will wait for me to say, hey, I need some help. And that's a huge thing to be able to just say, hey, I need help and have somebody you respect. I respect him. And so I listen to him real close.

Great. All right, number three. How long can you go without checking your email or text messages?

Man, I had a panic attack when I went to yoga the other day and I was like five minutes out of my house because I forgot my phone. So clearly I'm like a squirrel brain when it comes to that. So how long can I go? I don't know. How long can I fall asleep for? Because that's about the only time I'm not checking it.

You know, I actually just.

Very honest answer.

Very honest. I just got this new app called Moment. I just found it in the app store the other day. And what it shows me is how every time I pick my phone up, it's like lit up. It records it. And so, like, I can monitor every day. Here's my, like the last. The last couple days. Like four hours. Yeah, four hours. Yesterday was five hours and 28 minutes. My phone was on in my hand five hours a day. Right. Anyway, Moment. Try downloading it and just like, it'll. It'll.

Have you checked your emails during this interview?

I. I have not. Have you?

No, no, no.

So the key is you can't see it.

Yes, exactly. Yeah. I'll always interview. You'll never have to worry about it. All right, all right, next one.

What would you do to fix and improve the US Economy?

What would you do to fix it and improve the US Economy? I would probably have a fire party with all the regulations and maybe that's happening a little bit right now. Things that hamstring us, I would just have a big bonfire and burn them up and make them die. It's just letting people, letting people loose. You know, there's this huge creative factor that's happening right now. And the more people can get unleashed from that, I think the better because people are cool and they come up with the coolest stuff. So getting out of their way is an amazing opportunity, and hopefully we see a lot of that. I'm optimistic about that.

All right. I like it. Number five. If you were to die, we should call this, like, the random five. We'll need a little sound effect. Random five, the red number five. If you were to die three hours from now, what would you regret the most?

I'd probably regret the. The most that. That I never got to be a father.

Okay. It's a good answer. Very honest. Are you married right now?

I'm not. And I've got to be careful because that. That squirrel brain of mine pops up, I'm like, oh, you know, it'd be good. It'd be cool to be a dad. And then I start looking around, I'm like, oh, you know what? You're single. You want to be a mom.

But I don't run off cliff and end up being a dad with like, what's your name again? Oh, yeah.

That'S a good answer. Good answer.

Well.

Well, yeah, I like. I like this little section. I think this will be. This will be fun. Maybe we'll try to do this in future interviews. So, Damien, thank you for playing along, and we'll see you around.

All right. Thanks, guys. Thank you.

Thanks a lot, Damien.

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