Real Estate Riches: Dani Beit Or's Out-of-State Investing Mastery!

Hello, hello, hello. Welcome back to the podcast, The New and Experienced Investor Podcast, the real estate podcast that brings real estate investors from all walks of life together. I'm Alex Barnett. I'm one of your hosts. I'm the new guy.

And I'm Joe Homs. I'm the experienced guy.

Yeah.

Loving it. Thursday, we have an amazing guest. Sometimes we have people who are new and experienced. This guy is just straight up experienced, and so we're lucky to have him. He's right in our local area, even though he's investing all over the country. So it's gonna be an amazing talk. We'll bring him in in just one second. And, uh, let's just talk about our meetup that we have coming up on Monday.

Hangar 24. Irvine, 6 o'clock this Monday.

Blue skies.

Be some good, good speakers.

76 degrees.

Subject to.

Yep.

Yeah, if you can make this one, this is the one to make.

That's right. Yeah, we have the founders from Creative Investors. They're, they're out of the sub-2 community. They're regional leaders out of the sub-2 community. They created their own, uh, company that strictly focuses on creative deals. So if that's something you guys want to learn about, then definitely come out to this one. Either way, it's just a great event to come to because we usually have between like 70 and 100 people. So if you're into networking and finding new partners, whether that's private money partners, contractors, lenders, whoever you can think of, they're usually there.

They're always there.

Love it.

Yeah.

Awesome.

And we should have a good time. Remember to buy something to eat or drink. Make sure that you get your parking ticket validated and you'll get out of there for free.

There you go.

Perfect. If not, you're locked in for the night. That's right.

Cool.

All right. Well, let's just jump right into it. Today we have Danny Bate Orr, and he's, he's a really prolific investor. I would say he's done over 5,000 real estate transactions for over 20 years. He's helping new and experienced investors you know, I guess invest all over the country. So instead of me telling them about you, why don't you just jump in?

What's up, Danny? Guys, it's a pleasure to be here. Truly a pleasure. Thanks for having me.

Absolutely.

Yeah, absolutely. Go ahead, give us the rundown. I know it's like 20 years of experience you got to put into kind of a small bio. I know you're used to it by now. Maybe paint the picture of what you were doing before real estate and how you got into it.

Yeah, it's kind of funny. I always joke at myself when I say before real estate, I was a high-tech engineer working for corporate Israel. Got bored with my job. I was in my mid-20s. And that's when I actually used that job, used that income to start looking at investing. It wasn't even real estate, you know, back in Israel at the time. I was just looking to educate myself on real life finances. Realizing this job is going to be fine. It's not going to take me to financial freedom. It's not going to take me far. So I started, I put myself on a quest of 2 years saving money a little bit from my job. You know, at first in Israel, you start everything a little bit late because of the 3 years mandatory service. So school starts late, real life adulthood in a way starts late. I saved up a little bit of money, started investing in stocks and options. Was not happy at all on the rewards relatively to the risk I was taking, and I was constantly looking at different options, and I kind of got exposed to U.S. investing. Now, I used to—I went to high school in D.C. for two years. That has been my experience with the U.S. I wasn't complete stranger, but I don't know what about you guys. But when I was in high school in D.C. Real estate was not on my mind. Other things were on my mind, right? So I lived there with my parents. I went to high school two years. I had a great time, but I just got a flavor. I got a taste of the U.S. I fell in love. I knew one day I want to go back, and then when someone kind of presented the idea of investing in U.S. real estate, it fit very well with my personality, with the risk I'm willing to take, with the risk reward that this is providing. It wasn't easy to do everything in 2002 when I purchased my first rental property outside Phoenix, Arizona, all done remotely. So Google was a startup. There was no Zillow, no public records. MLS was maybe quality fax depending on the quality of the fax machine at the time somewhat, or scanned and sent over by email but scanned. Terrible, terrible. So completely sight unseen, different country, different language. You know, I always say you need to know to speak English and you need to speak, you know, to speak American. It's 2 different things, right? So I was, I knew English. I didn't know American English. Laws, regulation, nuances, time zone, everything different, right? But I still felt that I owe it to myself to dive in. I actually asked myself one day, are you going to Talk about it. Are you gonna, you know, walk the walk? And that was really conversation I had with myself. And I said, listen, I'm a walker. I'm gonna jump in. I have a lifetime, you know, you know, many years to recover if I fail, right? I didn't fail, but I just told myself, here's your safety net in my mind. You know, we always have to tell ourselves some story, right, to do things. So that was my story to myself. You have a safety net. Your safety net, you're working, you're employed, you have an income. And you know what? You'll survive even if it'll take years to recover from it. And that gave me the confidence to jump in, buy sight unseen, brand new home from a builder that took a few— I mean, I can't remember, 3, 4, or 5 months to complete, close on it with a mortgage, 25% down. Actually, I didn't have 25% down. So I called my cousin, who's a very good friend of mine, very close, grew up together, same age. I said, listen, here's the deal. I need half. He said, I'm in, right? Because I already told him, he already knew I'm, you know, investigating this. And I told him, you know, why don't you come with me? I also felt that by bringing a partner, I'm cutting my risk by half. So I find myself another safety net, so to speak. And we jumped in. I remember us signing the document, the closing documents in Tel Aviv, in one of Tel Aviv, you know, high-rise office building. Going down in the elevator, looking each other in the eyes like, "What have we just done?" Right? We were like, you know, two young guys buying a house. You know, today is almost normal to say, you know, in Israel today when you meet the certain in the social circles. So where do you own? Oh, I own two in Atlanta. I own two in Phoenix. Right? Right now, this is how the conversations are going in Israel. There was no conversation, no meetup, right? Back then, no groups, no Facebook. All of those support systems. Didn't exist. They do exist in Israel right now. So that was my first experience. Bought, you know, a nice rental property for $128,000 and change in a nice suburb of Phoenix. Held it for many years. It did very well just before the boom of, you know, the boom years and then the crash of 2008. It did very well. I probably refinanced it twice. Pulled that house alone, probably bought You know, within three four years probably bought me four or five more homes just by with the mortgages just kind of circling that you know recycling those funds so that was my start and I fell in love with this that was like much more exciting than my project management job in some high tech company which is was was fine but right not not exciting yeah wow yeah can I pause you real quick for a second you had mentioned a word fax machine do I need to translate tell me what that is fax machine is yeah yeah are you old enough to remember that yeah okay just want to make sure that we're We're on the same page here.

Thank you. Yeah. I didn't know that's how the MLS worked, but—

We could just simplify it for the, for this generation. Yeah. It's a fast mess. Fast mail. Right. Fast regular mail.

Exactly. Yeah. But that's how the MLS started, right? They just put it all— you, you were telling me they put it all in a binder.

In, in a book. And it's like a phone book basically.

But yeah.

Interesting.

Yeah. It's funny.

Wow. Okay. Yeah.

So, I mean, so you were doing, you were doing all this stuff that, you know, people tout On BiggerPockets right now, you know, back in 2002, you know, buying something, refinancing it, taking that money and putting it into the other properties and stuff.

Yeah. Without any terminology. I didn't, I just did it. I didn't call it BRRRR. I didn't call it BRRRR. I didn't call it anything. I just did it.

Yeah. My first property that I bought, I actually bought it subject to. Um, and I still own that today. And, you know, now that's the big thing right now, subject to, you know. So, um, yeah, we're old enough to remember all this stuff.

It's been around for a while.

Well, yeah, and that's the new thing. Somebody takes some, like, an old concept and then you repackage it with a cool new name and then write like 20 books on it. And then there you go.

There you go. I should have wrote some books.

Same here. Yeah, I kick myself a lot.

Yeah, you just gotta like coin it something cool.

Exactly.

I couldn't write though. I'd, I'd have to have ChatGPT GPT helping me out.

Even writing was difficult.

Now it's not. I'm a terrible writer. That's great.

Well, okay, so, well, so take us through the crash. I mean, what was that like for you? Because you were already investing.

Yeah, so in the going into the crash, I had myself, um, I think I wanted to accomplish like 20 properties in 5 years. I was able to accomplish it in 2 and a half years, or give or take. That was before the crash. Uh, everything highly leveraged, negative cash flow was by default, by design. You know, now I know not to do it, but at the time that was kind of the motto, the the advice I was following. So into the crash, all my income is real estate dependent. Going into the crash, oh my God! Right? So rents were still okay. Values were you know crashing down. My income, which is real estate dependent, crashing down. Having a lot of hard, you know, hard time maintaining those properties. How to make a decision? Which one am I letting go? So now I'm now I I in a business mode. I tell myself. So luckily for me, I realize where we are very early in the in the cycle, which made me make decision according to it. Don't ask me why I realized it, but I just realized it. And I saw that the reason I'm saying it because I've so out of I've seen other people around me not realizing it the same way and dragging and continuing to do things they eventually did. You know, maybe a year later or a year and a half later, and losing all that time that they kept trying to hang on to something. So I had to let a few properties go to foreclosure. Not fun, not fun at all. At the time, foreclosure was still a stigma. Like today, I think people are addressing it a little bit differently. Back then, it was, you know, a bit of a stigma. But what happened with the crash— so I went in with my lot of properties into the crash. Seeing values tank, but cash flow is okay because vacancies actually kept steady because a lot of you know a lot of property got yanked out of the market. The you know the the renters were still there, were still paying. So that was not a problem. The cash flow was problematic because it was by design negative. So it was pulling me down financially. Any one of my clients who did not go into a financial by design negative cash flow situation. They were like, just listen, this is not pleasant to see your $200,000 home worth $100,000. Not fun. But the cash flow is still there. I told myself, those properties I can hang on to, keep them. Because I knew, like, part of me knew that I bought well, which is absolutely true, meaning good areas, good locations. Crash happened, the values are down, but they're rented, they're in good locations, they're they, they will come back, right? I just told myself again, I had to tell myself some story.

Mm-hmm.

I told myself, I asked myself, how long, what was your plan? I said my plan was always buy long term and, you know, and hold it for long term, many, many years, preferably no less than 10, right? Usually 5 is fine, but I, I prefer 10 or more. And that's what happened, you know, hang on to those properties. Slowly this value started climbing up. We know Very well what happened since, so I'm not you know I'm not I'm actually the only thing that I kind of regret is maybe letting too many go right I should have tried keeping some of them because they've done very well so going into the the crash I found myself with my own portfolio and a lot of the product my clients in a similar situation. And the first thing I did when I started kind of getting catching my breath a little bit, I said, "All right, you're taking care of your own portfolio." The second thing I made a promise to myself. I said, "Every client of mine who's going to call or email or whatever," and those were not pleasant conversations for anybody who's been around. Not pleasant is even you know said carefully. I will be there. I'll pick up the phone. I'll answer their call. I will at least give them a shoulder to cry on. I will very likely have something to contribute back to them because I'm in the same situation finding solutions. Maybe I can learn something back, but at least I'm going to be there. I'm not going to, you know, I always thought that there's, you need to be a leader in your niche. Leader doesn't disappear when things go bad. I mean, that's not a leader. That's nothing. Right. Right. So it wasn't easy to do it because the calls were very negative and a lot of people, nobody, I don't think anybody Blame me, although people in time of crisis are looking for someone to blame. But I could see that they're wanting to vent and to kind of someone that will understand also what they're going through, so I could sympathize as well. And that's exactly what I did. Say, "Hey, I get it." Now that you vented, let me tell you what you can do. Here's three, four, five things you can do. I'm trying. I don't know the answer, but at least I'm giving you options that you can try and get out of this situation. For those who's been long enough, there were programs coming out, loan modification, the short sale. You know, some things were coming up, so we were not completely, you know, helpless, right? There were things going on, but it was always at the time the regulator was looking at loan modifications and short sale more preferably to homeowners. Investors were kind of secondary. Maybe we'll get around to you. You're not as important. So we were getting less preferable treatment, actually. So it was more challenging as an investor on an investment property to get into those same programs. It's kind of funny. We know what the rates did during COVID Anybody who got loan modification during the crash of 2008 may have gotten a 2.5% interest rate because those were the interest rates they were offering for loan modification temporarily, meaning for 4 years, for 5 years, for 2 years, for 6 years, something like that. And then it gets adjusted. So the government came in and says, we're not going to let you fail, the population. We're going to try and help you find a way how to navigate it. So for me, the crash on an investor level was a time, very difficult times on one hand, but I always look back and say, I'm not a survivor of the crash. I'm a beneficiary. I'm a graduator. For me, it took me from an experience That was my PhD. Let me just be like, that's the way I perceived it. And on a business level, I just completely wiped everything down and said, okay, I'm going to start my business from scratch, fresh. Everything's going to be done much more systematically, much more system, system, you know, systems and processes and checklists very carefully, and how we analyze and evaluate. And that's the methodology, methodology I created just after the crash. I'm using Oh, you know, for what, for 15 years now or so? So since 2010, to completely streamline investing, you know, more on scale, not just for myself, for my— for the clients I work with as well. Yeah. So it wasn't all, all a loss.

Was that your first crash?

My first crash?

Okay. Yeah. Because that was, that was my third. Yeah.

And I, I I lacked the confidence in that crash.

I saw it coming. Yeah. And I was only representing sellers at the time, selling their houses. Didn't want— did not want to represent buyers because I knew that was going to happen. Um, but when it did happen, I was a big beneficiary at the end of the day because I was buying properties locally here in San Juan Capistrano that had been selling for $500,000. I was buying them for $100,000. Yeah.

Yeah, absolutely.

So, but that's because I've got a little bit more experience than you do, and I kind of saw it. And, and I've been in California my entire life, so I've seen these, uh, ups and downs before. So along those lines, where do you see the market today?

So that's a very good question. Um, I'll just tell you a tiny story here. 2013, I'm in Irvine walking, having again another conversation with myself. Real estate is still cheap at the time because we're still after the crash, but we're just coming out of it, right? And I have a conversation with myself yet again, and I tell myself, remind your Danny from 2015, '16, '17, when that Danny from the future asks why didn't you buy more properties in 2014, remind that person you bought as much as you could. You know, at that time. So I had that conversation three, four years later. Why did I buy? Oh yeah, yeah, yeah, yeah. Now I remember. I bought as much as I could during those post-crash years, and that was you know that was so I know exactly what you mean when picking those properties. Yeah. So it's interesting time. So the way I what I think is going to happen, my interpretation. This is how this is how I make. My decisions based on this analysis of what's happening. So we are obviously still seeing in the residential market tremendous demand or a lot of demand and relatively low inventory. And I'm not saying there's always local markets that will have different behavior. Austin, Texas, the superstar of the COVID era is actually behaving a little bit differently. But in most markets around the country, there is relatively high demand and low inventory. Part of that low inventory is obviously because nobody wants to give up on those low interest rates or sell their house knowing they have to buy something and then their affordability is completely off. So that hurts the situation of inventory. So we have that supply and demand challenge on one hand that I think will continue to push the prices up because that's still stronger. Demand is still higher than supply. I do think that people have consumers, right? We have to remember the real estate, the residential rental market is not driven by investors. It's driven by consumer homeowners. We are a big tail behind them. Consumer, from my experience of about 20 years, I have a memory Memory period of about two years. Oh, sorry, about six months. Meaning right now people will slowly start comparing whatever the rate is today to what was in COVID, right? Because that's irrelevant what was there. But then people still go last year or two years ago. That fades out. So I think that the minute we will see that there is no additional interest rate increase, that will give a signal. To people that are already buyers, that are already on the sideline to come back and start looking and buying because they're waiting. They've been renting. They still have the need, the want, whatever to buy. If we see, so I think that just few buyers, it's still a large number coming back that will increase the demand. At the same time, maybe that will also bring some sellers in saying, okay, it is what it is. This is the new norm. This is the new rate. I have to deal with it. Maybe they'll come back, those who's been waiting. If we see what I just explained, if we see it under a decrease in interest rate, everything I just said will be even amplified. So I think at minimum, we're going for, again, in most areas around the country, we're going to a situation where the demand will continue to be strong. Inventory will continue to be low and the demand will probably increase relatively to the supply. And if we see a decrease in the interest rate, that will even be greater. So I tell my clients and I've been telling them since, let's just say the beginning of the winter. So since probably October 2023, buy now, buy as much as you can. Why? Because right now, going back to September, October, there was, for me, there was a sense of uncertainty. Where exactly the economy is going, where things are heading. What I've learned over the years in times of uncertainty, if you're certain, you'll do well, right? So exploit that uncertainty in the marketplace in your favor, meaning go to the property that you've been trying to get to buy for some time, and maybe now the seller is a little bit more responsive to you. Before, you know, multiple offers, we can't do anything about that. So I was advocating to my clients, I think that if you're not going to exploit the next I'd say 4 to 6 months, which are now behind us, and use this opportunity of a little bit uncertainty, not sure what the economy is doing, where are we heading. It will probably change coming the spring of 2024 exactly where we are. And this same house you're looking to buy in suburb of St. Louis for $275,000, it's probably going to be $300,000 or $315,000, not a lot more. But you know what? The rent will not go as much. And it will be more challenging, more challenging to to cash flow with that. So those who listened and you know use that, I think they're doing well with that. Not everybody is on the same page as I am. I'm a little bit optimistic too.

I agree with you. The Fed was supposed to drop interest rates this year four to five times. Do you see any rate drop this year at all?

So I did. I was invited to speak to a European group of real estate investors that are looking to invest in the U.S. So European group, that group that invited me, asked me to do more of an economical overview beyond just the US. So I spend a lot of time reading research papers from central banks, US as well, and big financial organizations to see what they're all projecting across the board. And this is done, this was done about 3 months ago, maybe not even that. Across the board, central banks, In in the U.S., Canada, the bigger European countries, and parts of Asia all predicted that the interest rate will go down throughout 2024, but most likely the second half of 2024. Not necessarily dramatically, but will start going down. And we know there's a lot of correlation between the the countries because it creates an arbitrage between countries. They don't correlate well on you know government interest rate or federal banks interest interest rate. So if the US is doing something, the US maybe doesn't care what the other countries are doing. A lot of other economies are following suit to be in line with the US. Otherwise it creates a greater arbitrage between interest rates between countries. That's not always healthy.

From— but from what you just said before that, and I agree with everything you've been saying so far, and I've been telling my clients the same thing, if interest rate goes down, the demand's going to come up. The property prices are going up. You know, that's just normal. That's— and, and I honestly, if I had to predict, I would predict that we're not going to lower interest rates at all this year. The only reason that we would is political, to make the current president, you know, look more in favor.

Of course.

But There's a double-edged sword there. The minute he does that, the prices go up. That's like the opposite of what he wants to do. He wants to bring the prices down, and that's what the Fed wants to do. So I'm predicting that I don't think we're going to see any rate drop this year at all.

So I, I, I'm exactly like you. I changed my opinion. First of all, I always thought it's going to be maybe quarter percent this year. So yeah, if it will, and it's very like, it's a signal. It's not even very, it's not a dramatic change. Yeah. I do think right now that especially based on the the unemployment report that just came out, I also under the opinion that it will not go up and not go down, just stay the same for now for 2024. That's my which is still I think will maybe indicate to buyers to come back to the market unless someone will throw in the wild card. Yeah, and the wild card in my opinion is. If you let people keep their mortgage that they have from COVID rate and move it over to your next property, that'll be a crazy wild card. There you go.

I wish we've talked about that in the U.S. for yeah ever.

Just let me carry my mortgage to the next. Do yeah even let me I'll pay you right? Yeah yeah just let me carry it over. That will change the the that was one thing that can change the entire entire industry.

Yeah. Yeah.

Open it up.

Honestly, that's a little bit like subject to, you know, except, except as a homeowner, you're not taking the loan over. But as a buyer of that property, you're taking over that loan and the interest rate. So that's kind of a good thing. Yeah. You know, but I agree.

If they change that, it's like a wild—

it's like there's a lot of wildcards out there that people talk about.

But is it an assumption? Is that what you're talking about?

Or no, the current doesn't exist. Yeah, they're basically saying if you've got, you know, $300,000, $400,000 loan on your property, you're just going to take that to the next purchase. Okay.

And keep the same terms. Okay. Nobody's talking about it. It's not like it's something that's been talked about. So I don't want to create impression like, you know, we are exchanging ideas here because, you know, and this is what's coming up, right? Wish— that's my wish. That's my prayer. I wish they would do that. That will open up Yeah, that will open up them, you know, many things if they do that.

Absolutely. Yeah, yeah. Because I mean, we're seeing it too, just looking for deals and stuff. People are just not budging because they're, like you said, they just, they look at, okay, where am I going to move? And then if I got to go get a new loan, I got to just downsize, I guess. And nobody wants to do that.

And guess who would— who should advocate for it? It's the lenders, because they would do more mortgages. They're also not doing as much. They're doing well, but not as, you know, mortgage activity is down because of that, because there's less Yeah.

In the past, the, the signs that were out there that something bad was going to happen was one, interest rates. So interest rates are high. I'm very fearful as they go up. The other thing was employment.

Yeah.

Employment's down to like, if you need a job, you, you've got one. Yeah. You know, it doesn't take you long to get it. It's like really low. So that's like an oxymoron. It's really surprising to me. And then the other problem that we had in the other 2 downturns were the banks. And like you said, the banks are in the business of making loans.

Yeah.

Okay. So how do we get Alex into this property? Let's lower the FICO score. Okay. Let's lower the down payment. Yeah. Okay. Um, how about a warm body loan? He's got a warm body. Yeah, we'll just give him—

There's one more thing that can be relatively easy, and it— we— I've seen it every once in a while. How about 40-year mortgages? Oh yeah, 40-year mortgages will ease that pain.

They've been talking about that. In fact, there were— after COVID, there were some 40-year mortgages.

I think also after the crash or during the crash, there was something that they would, as part of the loan modification, we will spread it over 40 years or something like that. But that was also very Like time specific that they did it. But if they do it today, that will open it up. Yes. And every lender knows very likely you're not going to— like 90% are not going to hold those mortgages. No, no, not at all.

No. Most people sell their home anywhere between 5 and 7 years unless, you know, exactly, they're like me. Yeah. We have lived there forever.

If we could solve the real estate problem from this room, I would be very happy.

Absolutely.

I'll take one option, not two. Two is amazing. Yeah. Yeah, absolutely.

So People, you know, the, the government, banks, uh, they can get creative and, and solve a lot of this stuff.

Oh, easily. Yeah. No, I, I don't think— absolutely—

that that's like gonna happen anytime soon.

And again, it's not thinking about us investors, right? This is— no, no, we're the bad guys. Yeah, yeah, exactly.

We're the bad guys. It's amazing. And then the other thing you said, and I totally agree with you, When when the market 2008 hit the bottom, my rents on my properties were shooting up. Why? Because everybody wanted to rent my place, you know, and so supply and demand simple as that. So my rents are shooting up. I'm good. I have no problems here. You know, let's have another downturn and let's go out and buy ten or fifteen more properties.

I've been waiting. Everybody's waiting. Did you see?

Did you see the rent behavior like the crash of 2008 in the previous cycle?

Yes, same thing.

Same thing.

Same thing. I bought my first house when I was 22, and, uh, the rents, the rents at that time, I think, were $500 for a 2-bedroom in San Juan Capistrano. Um, they're about $3,000 now. But, um, as the downturns came, I never, never had to lower my rent. Nice. Because people were losing their houses and they'd have to go someplace. And that's why supply and demand. So I've never, ever had to lower rents in all the units that I own.

Never. Yeah. You know, it's— that's what gave me the confidence when COVID hit that we're going to be okay. Our, our category of properties. Yeah, I was very confident. I mean, I look at COVID as a stress test to my model and it passed tremendously. Right? But that was really true because I was planning for it. I was preparing for it in my mind. The way I set up my philosophy and teach is the crash is coming, right? It's not about if it's coming. If we know it's coming, how about we plan for it from the get-go? You know, embrace it as much as we can. So if I know it's coming and I'm waiting for it, I plan to— I do decisions assuming it's coming sometime, right? We don't know exactly when. And when COVID hit, I was like, okay, this is— I thought it's going to be a much greater catastrophe from that respect. And month after month before we realize, you know, it's actually not that terrible, the first— I'm talking about, you know, April, May, June— I called— we have about 1,000 properties in our network in different markets. I called, you know, spread probably around, I don't know, 7 property management, 10 property management companies. So I called every one of them mid-month, mid-April. How are we doing? Oh, we're okay, but don't get excited. Uh, we have a few problems. How many? Oh, we got 2 properties with problems. Come on, that's normal.

Yeah.

I called the next guy, similar story. I called the next— I do it in mid-May, similar story. Let's— right, we did have properties with problems, right? We had from, from not 1,000 back then, were maybe about 800-ish. So, but out of 800 properties in the network We probably had 12 to 14 problematic, and two of them were even problems that just got worse because of COVID So they were there. And mid-June, I call again. I always call mid-June because you know it gives them the first 15 days to collect rents and talk to the. Okay, same conversation. I don't. I'm not sure if I even called mid-July again because I realized where things are heading, and then I always kept quiet about it. Because I was talking to peers and colleagues and like who do different, you know, different segments of the markets in rentals, like apartment buildings, the lower-end properties, and say, how you doing? Oh, we're very good. We're at 70% collection. I'm very happy. I'm like, okay, I'll be quiet because we went from 96 to 95, right? We went 1% down in collection on rents. And that, you know, so I was like, okay, I'm not going to say anything because I don't want to bomb that person, my friend. To realize we're actually doing okay, and that was kind of funny to see because I I thought going into COVID will be okay because of the formula, the model, what I've seen in the past. I didn't have the confidence of three crashes; I only had the confidence of one. But I could tell how things are pan out. Then it turned out to be another one that the rents did not go down. On contrary, went up. Yeah, you know, jumped up. Oh no.

Yeah, that's what they do. That's definitely what they do. So, you know, with that said, and I agree, I think it's, if you're sitting on the sidelines, I don't know why you're sitting on the sidelines at this point.

Mm-hmm.

You know, unless, like you said, something dramatic happens and, you know, your mother country is a little problematic right now. I mean, that, that could be earth-shaking, but—

It was.

Even then, um, yeah, no, no, that, that was, but I'm talking about if, if that escalates into a world war.

Right.

Um, you know, we've gone through world wars before.

Yep.

You know, it's like, uh, you just have to position yourself and take advantage of literally what's going on.

Absolutely. 20 years that I've been doing this for like You know, always in a buying mode. Yeah, like whatever the economy is like, there's no like, oh, should I buy now? I've never had that discussion. You know, it's all about what's the— how do I find an opportunity, or I create an opportunity. It's not like, is it a good time to buy? Right. Which I think it's a— yeah, for me it's almost an irrelevant question. It's what to buy, how to buy, how do you put the deal together, where is the opportunity. Those are the questions, you know, one should be asking, right?

Yeah, well, maybe you can go into that a little bit because I know you're, you're, you like, you mentioned you're working with people to get investment properties, um, and then you mentioned you have your own framework and, and philosophy. And I saw that the company's called Simply Do It. Simply Do It. Love that. Yeah, so maybe you could kind of go into that and, you know, um, share some experiences.

Uh, yeah, so what I, uh, gladly, gladly explained that What people— and you guys have even mentioned it in one of your podcasts, you know, like the how do you get started, right? It's— I've been doing it for 20 years. Before people come and meet with us for the first time, we call it a welcome session. We ask them to complete an intake, simple intake, few questions, no personal stuff, just to get kind of ready, better for us to get better prepared for a meeting, you know, conversation. And a few years ago, we did an analysis. I have thousands of lines of meetings with one-on-ones that people completed those intakes. So we analyzed everything. The number one question to ask questions, how do I get started? By far beyond number 2. So the number one question, and I put a lot of YouTube channel and education and the webinars and seminars so that the information is out there, still the number one question. So I realize, you know, there's— I think there's 2 main buckets. One is the knowledge bucket and one is the execution bucket. People need the knowledge to feel, you know, like you guys talked about, to mitigate the fear, to know how to operate. They need the knowledge and the understanding and the why and, and all of that. But a lot of people have the fear to pull the trigger. So we created— I created a system that We put a lot of emphasis on educating, calibrating expectations, you know, explaining, teaching, kind of coaching them in a program. But our program is not like a program that someone goes to a class and then they may do, may not do something. We call it on-the-job training kind of a program. While you are investing, we are alongside with you mentoring you, coaching you, answering questions. I can give you example on the way, on the way here. You know, like a simple one. One of my clients is saying, "Hey, I got those two options about inspection. This company is costing $100 less than this one. Why should I go with the one that you are the new partnership that we created?" And I explained to him, "Those are the reason you'll get much more for $100 more." Yeah, $100 more. It's like, "Oh, got it." Simple, right? Such a simple question. He needed that. You know, he lacks the confidence to make those decisions, even small ones. So we created that system that provides that support, knowledge, education, and I even say we lend you from our, from our, my confidence so you are more comfortable to pull the trigger and actually execute. And then we created a whole different bucket of where to buy, who to work with. We, I'm 100% out of state, right? So I live here in Orange County. I Only invest out of state. So that means we need a strong support system on the ground in every market. So there's a clear, very detailed methodology how we find an agent, how we train, and how do we vet an agent? How do we train them? How? Because most of them are not experienced with real estate investments or just a little bit. We have a very robust Excel to analyze what works, what qualifies, what doesn't qualify, how to evaluate, how to present it to the client. So we go after we find the agent. We put a lot of effort into educating them, training them to bring them to our cultural standard or how to present things, but also how to go about the information, making sure they understand they need to provide information in a realistic way and not optimistic or pessimistic, you know, because people want to work— people, people can call that, you know, when they see it. And then property manager in a very similar way. So they will handle the management post Purchase. So that's how we created those two main buckets, so people can not just think about it, but actually execute. Because it starts with a question. I know like twenty years ago, people were talking about out of state. It wasn't as common practice as we see today. Today, I think like when I tell people that what I do and it's out of state, rarely do I get like out of state. I never thought about it. Yeah, like oh okay. My friend does it. My uncle does it. I am my own. We get that. Nowadays, so that's how we I try to bring all those two worlds together: education and execution, and help people you know actually live here. Ninety-five percent of my clients buy sight unseen, never see their properties. That's amazing.

Yeah. Well, yeah, and it's it's a lot easier to scale that way. You know, I mean, if you're going out and visiting each property, it's like you can't even do it. I mean, we're we're kind of doing that here in California. You get the process down of talking to the seller. Getting the pictures, you know enough to be able to like see, is this a deal? Is this not a deal? True. So that's great. And, and I love the, the execution part. I mean, like you said, there's so many mentorships that are just focused on delivering modules and, and, you know, I guess just all the education. And then you take that all in and then you go like, okay, but where do I start? You know? And you still have that same question.

And I meet them sometimes, they call me, I went through this training or that training. And I paid fifteen, twenty thousand, and I'm like, great! How was it? So what did you buy?

I still don't know where to start.

Yeah. Then they come and they join our program, and they actually start buying. Not all of them, but you know, I'm like, I'm blown away. Right? I'm blown away. I'm I that's why I kick myself. Say maybe I should charge a lot more.

Yeah, for sure. For sure. Well, I think I think there's definitely a need for that. It's like it's it's And you can tell you're passionate about it, you know, and it's, I think people will gravitate to that a lot more. And you mentioned before the podcast, you have a lot of repeat, um, people that come to you. So that's, that's something that these other mentorships I'm sure don't have. Maybe they'll get you in the door, they collect the 15 grand, and then that's it. Like you're never gonna see the people come back and, and work with them again. Yeah. So I think that's something that will cultivate just a future, you know?

Yeah.

That's great. Um, as far as— okay, so let's say somebody comes in, they, they're completely novice, you give them all the tools. How are you— like you said, you physically hold their hand. How are you doing that? Are they going and locating the properties on market? You have— these are the list of properties we have available, pick which one you like. I mean, how does that work?

The teams, the agents, part of training them— and I have a fully dedicated person on my, my staff who's, uh, kind of overseeing the agents and helping them They are usually the one who's looking for properties, relevant qualified properties, putting them together, analyzing them, then making it more accessible so someone can look at an email with the details. Okay, I understand what's going on here. I have a few questions. There's always some questions or verification, which is great. And then if they're comfortable with that property, we'll help them move into an offer. Usually start with if it's a beginner, hey, we want to talk with you. Can we go over some questions, some details? And we do that every day. We go over the details, make them feel a little bit more comfortable. By that time, we usually know them, um, well, and I can tell them— me or Jessica works with me— you know what, we don't think it's a relevant property for you. Maybe for the experienced one, because it has too much work, it is. So maybe pass on this one, let's wait for another one. Or you know what, here's the one that we found that it's really something. So it's very Very personal, very intimate. We know our clients well. We try to to make sure there's a good match. My I believe that if we do, if they are successful, and successful is not just I bought a house for two hundred fifty and a year later it's three hundred. This is great. It's not always the case. Actually, rarely it's the case. Success is then is to have a renter in place rather quickly, and the rent comes in with minimal issues and. They all know when we all teach them there's going to be friction and misunderstanding and vacancy and repairs and all of those things. And property managers, even when we vet them carefully and we spend a lot of time doing that, they're people and they're inefficient and there's a lot of things there. So put them at ease, explain, make them sure, make sure they understand it's not 100% passive. There is hands, some hands or involvement on your end. We even support them after they close. We stay for years. What happens? Question, problem, big, small. We stay. I spoke to one of the property managers that, you know, from Tennessee this morning about a vacancy. I just had a conversation to check in what's going on with that vacancy. So we stay involved to support them and we don't just toss them, you know, like, good luck, see you around, call me when you buy the next one. We know that will help build that relationship and gives them the confidence that when things go challenging and they will, right? It's not if. When challenges will present themselves, because this is real estate, challenges will present themselves. They have someone there. I always like to to to look. I internally, I always joke that I'm like a big brother. They call in and say, "Hey, I need some help." The brother with experience, right? And the brother comes in, and sometimes the brother steps in and helps. Right? Calls the property manager, gets involved, and sometimes it's just a conversation of you know what? Here's three things you can do in order to mitigate the situation. Sometimes like listen, here's what I want. Here's what happened. I'm not sure if it's the right thing to do or to tell the property manager. I just want to run it by you. We have that conversation done, right? So simple for me, so beneficial for them to have that even 5-minute conversation, to know that someone is looking out for their best interest. My interests are always aligned with— I always tell the property manager, I like you, we're good friends, you're number 2, you're not number 1. Number, number, number 1 is my client. And he's—

yeah, no, no, no, I thought you meant out of the property managers, you're like, you're number 2. No, no.

So No, I tell them when there is a when there is a discussion, I tell them listen, I'm always going to favor my client over you. Never have a doubt about that. I like you. We're friends. I like the relationship, but I'm always going to favor them over you. You know, so just keep that. And there's like I get it. They're never like I want them always to know where you know the the relationship stands, right? Yeah. Yeah. So a lot of what we do is kind of on the job training for the clients. I teach them so they are more independent, and that's how I think I'm able to get a lot of repeat clients. Yeah, because they come back and they know. So the second time around, the basic questions— that inspection question of today, it's not, not going to come up again. That's going to be one, one time, right? The insurance question that this guy is going to ask me in, in 2 weeks, we're going to have a discussion, and that'll be the last time we're going to have that discussion, because in the next 4 properties He would already know the answer for the most part, right? For the most part. So that's why I invest back into them. My assumption, every client is coming for more than one, right? Will that happen? I don't know, but that's how I plan it. I love that.

Yeah, that's awesome. Do you happen to know a gentleman, and I'm gonna date myself here, his name is Marshall Reddick? Do you know Marshall? Uh, yeah, of course. Marshall, Marshall Reddick, it sounds very Similar to what your business plan is. But Marshall Reddick started like 40 years ago. No cell phones, no internet, no nothing. And he put groups together and he had meetings all the time.

True.

So fast forward to today, 2024. How do you handle all your clients? I mean, do you guys have like Zoom meetings? You have physical meetings? Do you even do any of that stuff?

So I like it on a business level. I like to scale everything. So that means we have YouTube. So I have a whole set of videos that I just do for my clients that are not open to the public to help them kind of to make sure they're— I don't want any of my clients to let their guard down, right? So one way is YouTube. Second way is You know, just reminder. So twice a year, summer and winter, I send a checklist. I say, dear client, here is 15 things you should do in order to make sure you don't let your guard down. Maybe something about insurance, a home warranty, an inspection, and you know, just to make sure. Now I do put, you know, the responsibility onto them. If someone is not opening the email or going through the list, not doing anything, there's nothing I can do about it. So we put more of a Push to help them do better. I offer all my clients once a year one-on-one at no cost. Just my client. How's your portfolio doing? Every time I do a portfolio, usually when people have three or more, and I do. I did something like this just the other week. Just last week. Every time I do one of those calls, I point out my goal is to point on the gaps and the problems and make holes in their portfolio. And help them improve. There's always things they can do on how they're raising. Let's say just as an example, four properties—they're not conducting their affairs correctly when it comes to raising rents. So I just out of that situation, here is how you know they just made $200. You know, I told them four properties, fifty bucks. Just pointing them how to get to fifty bucks more per property, $200. That's already $2,400 a year just from one call if they follow suit, right? They have to follow suit. Uh, we just did a partnership with an insurance company, right? That insurance company says we, we only work with investors, and just because you have, you know, bulk— my clients— we are already going to give you from the get-go a discount, a bulk discount. I did my own, my own insurance. I'm actually finishing the last one out of maybe a few. Um, just on 2 policies, I saved $2,200 a year on 2 policies. $2,200 a year, right? So multiply by a few years, you get this. It's just one thing, right? I had to spend the time to talk to them, to provide documents and all of that. If you don't, as an owner, do those things, you're not gonna improve. So I do those things as well. I do webinars for my clients, internal webinars. If they join, up to them again. So it's very push. Yeah, there's a lot of information. I'm now starting to push the real estate professional to— a lot of them are real estate professionals. That's tremendous to someone who can qualify, tremendous saving. So I'm kind of doing the cost segregation. I did it, I did it many years ago, totally forgot about this tool, bringing it over to again. I did mine cost segregation for 2023 on 2 properties. Sending one of my clients had a conversation with him. Those you know periodic conversation. He's already real estate professional with his wife, high earner. I'm like, dude, you're already set up what people are trying to accomplish. You already have it—the properties, the the wife, the the income. You got to do real estate professional and cost segregation. He's like, what is all cost segregation? I explained to him. He's completing seven properties cost segregation studies. Probably I sent him the details yesterday on what to do. So as we speak, that is a saving of hundreds of thousands of dollars. Just this conversation, hundreds of thousands, one person. So absolutely. Yeah. Yeah. Never ends, right?

Never ends. Yeah. That's amazing. So let's go top markets. We know you got the in. Where are we going to make The most money out of state.

I don't know if I can share that. That's a very that's a secret behind the paywall. No, no, I'm joking. I'm joking. I'm joking. Listen, today my sweethearts are Kansas City. Kansas City is both Kansas and Missouri. It's a metro, not the city, but the metro. St. Louis, Metro St. Louis. Birmingham, Alabama. Yeah, sweet, sweet, beautiful place. I'm blown away when I was there, you know, how nice of a place it is. Uh, very different than any other markets that I visited in a very good way. Okay. And then people like to call it Nashville. It's the wrong terminology. It's called Middle Tennessee. Nashville is the main known city in the area, but Middle Tennessee is actually— crosses, you know, Tennessee from Chattanooga in the south All the way to Clarksville at the north. That's a strip that's probably 6, 7 million people live in that area, and they're kind of Nashville itself gorgeous, beautiful. I love it. We can't buy anymore. Numbers don't work for us in the typical classical metro for a few years now. So we've been for years we've been going throughout that Middle Tennessee, which is even as far down as. 2, 3 hours from Nashville and up north an hour. That's why it's called Middle Tennessee and not Nashville.

Right. Yeah. You mentioned you, you have your agents looking for properties. Mm-hmm. And from what I gathered, it's all different types of rehabs, or are you looking for ones that are pretty much rent-ready, minor rehabs?

Well, I like to call it what we mostly focus on, the most boring properties you can buy. Okay, for me, boring is sexy because we are— most of my clients are busy, um, you know, like a lot of high-tech, a lot of people who are busy with between work and family. We all are, but you know, they don't want to deal with it, right? So we are mainly looking, not always, for the properties that are almost rent-ready, that almost always they need some work, light cosmetic, light rehab. We don't go— we don't, you know, we don't do any gut jobs. We don't do— I used to. I did about 100 flips in different, different, um, metros. I don't do that anymore. That's a whole different podcast we can, uh, if you want, one time, sometime in the future, why I stopped doing flips. Because I know you guys, there's always some good stories in there. There's a lot of, uh, scars. Um, yeah, it's funny. I did 70 good flips, maybe 20 amazing flips, 50 good flips. And ten catastrophe. Yes, the catastrophe. The ten catastrophe. The last one. Yeah. So, so boring. You know, we like those kind of almost rent ready kind of properties. Mainly single family duplexes, fourplexes. Good schools, good areas. Almost always in the suburb. Those are the type of properties that we. We want the family with the dogs and the cat and the two kids that go to school and can afford those $1,500 to $2,500 rent that that wouldn't burden them, bury them, right? Right. So they have that ability to pay that. They have the stability. The chances of we having an eviction and a problem with that kind of a tenant reduce, you know, goes down tremendously just by going to this category. We do have eviction even with those good people go through tough times. It's just the way it is. So, but we don't have a lot. We don't have a lot of evictions, right? So that creates quiet. I, on the top of everything we talked about, I also measure the ERI. Do you guys measure ERI? You know what that is? Emotional ROI. And the reason is I learned over the years when you have a property manager reporting to you there's a leak in the kitchen faucet out of state, 1,000 miles from here, but you hear here Right? When you are here receiving that message, the house is flooding. Yeah, for sure. Yeah. Now it's funny. I know it's funny.

All right.

But that's, that's exactly what goes through your mind. Yeah. You're staying up that night. For every 100 miles or every 1,000 miles, it amplifies by— I don't know what. So then in the next day, when you call the property manager to follow up and he doesn't answer, oh yeah, there's only 2 options. Either he fled with my money to Mexico, which I don't know what the security deposit— what is he fleeing with? Yes. Yeah. So that's Either that or he drowned. Mm-hmm. Yeah. But in the flood now, is it possible that he's at the doctor? It's a full school function or just in a minute? No, no, no. That's not, that's not responsible. So that is something I call the emotional ROI. That's great. And people don't really value it. And then when you have a property, boring property that you do have those problems, but it's not as dramatic. Mm-hmm. You know, the frequency is not as, as much and the You know that how much the situation is not as much because we also buy new houses, relatively new houses. Okay, then you can be here or traveling or in Europe and the property is there. It's pretty much in the background of your life and it's easy to scale. You see that once you build the confidence that one works not perfectly, right? Just got— I always say there's always noise in the system, but once you have one and you see that it works and you get used to it, that the rent is coming and yeah, the property manager's glitches and inefficiencies What do you do when you're six months later? It's working, and you know it's working. You don't hear it from me; you know it for yourself. Mm-hmm. You just buy another one, right? And it's not gonna cost you hours a month unless you work in it, right? But if you have a job and it's very demanding and a family, and you don't want to spend time on real estate, then you can buy ten properties maybe over time, or five, or four, or twenty, and just let them sit in the background of your life. It will require some time. It will. It's in your best interest to supervise what's going on. But we created this a system that you don't have to micromanage and be involved day to day to day to day, and actually continue with your life. You know, I love people sometimes. You know how people even sure you know that come to you and say, "Oh, I love real estate. I want to quit my job and start doing real estate." I don't like that. I don't like it for you. I would rather you keep your job, you be attractive to the lender, and let's buy houses for you in the background in your life. And you— and that, you know, when you have a job, you're attractive to the lender. It's critical, right? You also have an income. That income puts you at ease, right? Because your basic, let's just say, is covered, right? So you don't have the pressure, how am I going to pay rent and what's going to happen? And, and, you know, and even if you have a couple and what, you know, And one is both is working, even if what happens if one of the spouses stays working, all of a sudden get fired or something like that. All right, keep your job. Let's find a way how you could do it, you know, almost like a side business. That's the way I look at it. It will require time and commitment, right? Like you guys are saying, it's not something that you can go to the program. If you don't buy, nothing's going to happen. But if you find the right suitable program, you don't have to quit your job. You can actually accumulate more houses more productively when you have a job, right? Yeah. Yeah.

I agree. Yeah. I love that. Very good. Let's go ahead and jump over into— I think that'd be a good segue into some of these videos because they kind of touch on that. I kind of want to get your take on the hot take. So take a look over here. Okay.

What do we got first? Challenges to turnkey, and I the first one I see, and this is just for my me personally, is that you're typically buying retail price, and this is so you're somebody else has already done the work of buying a good deal, fixing it up, getting it rented. They've added a lot of the value to it, so you're paying more of a retail price. Now that doesn't have to be a deal killer in and of itself, right? You might just make a little less profit than an investor would who could buy it themselves and do all that work themselves. And for the first couple of deals especially, that's not a deal killer. So I think that's one issue. If you're someone who wants to get a great deal on a property, then it might turn keys probably not for you. But I think the second one is the the bigger challenge is that because it's so easy, because it's marketed as something that oh just turn key come on just jump in it's just press a button you never have to look at it you can buy the property and that's the benefit of it. But I would say the challenge of it is lulling you into some complacency. To not do your homework that you need to do as a real estate investor. A couple of challenges to turn.

What do you think? I agree with what he said. I had never been attracted to the turnkey. I don't think it's a bad model. Let's just start. It's not a bad model for sure. For me, the first thing he said, you're already buying into a turnkey. Someone else is probably eating a lot of the. Little meat on the bone that's there left, right? So right there, there's I have my first challenge. My second challenge is I'm always concerned about who did the work and did they rush through, meaning I will eat the lack of quality or I'm not gonna even know who did the work with you know to go after them, so to speak. So that will that will be on me if they are not doing their job properly, which is. Probably never happened in real estate, right? I'm always sure all the GCs are doing perfect job. I know, I know. I'm just making up stories here. I'm always weary about that. It serves one thing: a psychological, the EROI. It helps people with that ease. So if someone is looking at that is gateway into the real estate, I would say I would rather that person goes into that because then they will. Step in, start doing, and then they will learn and say, okay, now I can do it on my own. So if it ease you into the real estate, I love it. If you can see beyond those little iffiness and willing to go and do it by yourself or use some other system that will help you accomplish the same, you'll probably be better, better. And lastly, what people you know, it took me even years to understand. A lot of people like the idea of buying a house with a renter, right? So that means zero vacancy or producing from day one. I like it too. There is maybe one out of five renters that's the minute you're going to take over, you're going to be praying for the day you you cannot renew, right? So not all it sounds great, and even when you do your due diligence, nowhere in the due diligence they'll tell you this guy is a jerk. This guy is a is. Bugging us. You know, there's nothing. He pays on time, but that's where it ends. So not all renters are like that, but many times you'll get that renter, and that's something— you know what, when I have my property manager going through a very clear process, 95%— 97 times, you know, percent of the times, we're not going to have major issues. We're going to have, you know, regular stuff, so we can avoid it. So I know a proper protocol was put into place in order to put— to place that tenant.

Well, and one thing I love about your philosophy is you have the never let your guard down sort of mentality.

Yeah.

Where some of these turnkey places, I think they fluff it up. They're like completely hands-off, passive income, all that stuff. And you're letting them know, like, it's not going to be passive. You're renting to people. It's a people business.

Correct.

Some people have bad days.

You're not going to know. It's a business.

It's a business.

And just knowing that and having that expectation upfront can, when it happens, you're like, oh, okay, Danny told me about this. So that's all it is. Rather than than being like, they said it was going to be completely perfect. Yeah. And now this guy is calling me about the toilets. I don't know what to do, you know.

So I think it's, you know, a big difference. After the crash, when I started building everything back, um, I missed on something. I, I— there were a lot of complaints from my clients after closing. Why is it taking so long? And why is it vacant so relatively so long? A lot of iffiness. And I'm very— always been very good with Calibrating expectations, and I still couldn't understand where is the gap coming from because it's an understand it's a knowledge gap. It's expectation gap. Took me maybe three years or four years after I created what I call the owner crash course, something that I give only to my clients when they close on the first property, and it's one of those things that I also put in that email. The two that once twice a year email reminder. You can always access this from the get go. They get this owner crash course, a video and a checklist that explains to them in 45 minutes the typical things that can go wrong. The typical things are how it will look like. The minute I started sharing that on closing with every client, and I'm almost kind of joking with them, did you watch? Can I test you? I tease them on purpose, right? Because I really want them to watch. The number of those complaints of calibrating expectation dropped by 80%. So basically almost none, right? There was always something, but almost none. So what happened? I only calibrated their expectations, how things will work out with the problems, with the unpleasant sides of things, and pointed out where are the classical fail points. So if you are ahead of the game, you will avoid the problem to begin with in most cases, right? In most times. And that just drop those complaints almost completely off.

So the other 20% aren't watching the video.

Yeah, they're like, no, I saw—

you know what, I'll bet you're right.

Yeah, I know, I know, right? They're not watching.

Before we go on a call, did you watch the video? No? Go watch the video, call me after. Yeah, I like that.

I like that. Yeah, I watched the video.

Yeah, yeah. No, no, I'm not that stupid. I'm gonna test you. I'm gonna squeeze you.

Ask me a question about it.

That's good. What do we got next?

Uh, looks like a short about financial freedom.

Okay.

Buy 10 rental houses before you're 30 years old. If you can buy 10 rental houses before you're 30 and you own those 10 rental houses at the age of 30 and you don't buy another piece of real estate for the next 25 years, when you're 55, more than likely all of those properties are going to be paid for. And if, let's just say you still have a balance on all 10 because you put them on 30-year notes, you can can sell off more than likely 2 or 3 and pay the rest off. So now you're sitting there with 7 homes paid for that you have tenants in and you have cash flow coming in every month. So think about that. If you literally had 7 rental properties making you $2,000 a month, that's $14,000 a month. That's called financial freedom. So buy 10 rental houses before—

Hmm, makes it sound so easy.

No, wait, hang on a second. The concept Is is absolutely correct. You know, I know it's not easy, but the concept I've been I have my own videos one way or another saying exactly the same—not in the short, but in a in a long video explaining it and how to go about it. So I am the what I am seeing is that usually most of my clients they're not showing up before thirty-five-ish, right? So when I get a twenty-five-year-old, I'm like, dude, you're young. You are amazing that you're here. You do well if you just slowly move with the program—not even fast. So I the one thing that many times maybe you guys heard it too. My goal is ten homes. I'll buy one house per year. You know what I tell those people? Buy ten now if you can. I know it's challenging, and don't do anything else for the the rest of the time. Why? Real estate loves time. The minute you own that property, two things are starting to work in your favor. Two things, primarily two things. Even a little bit of appreciation. I don't talk. Forget about crazy, crazy times. Just a little bit inflation rate appreciation of 4% compounding a year. It's already working in your favor in the background. Number one. Number two, guess what's happening to the mortgage principal, right? It slowly, slowly goes down. So that's why real estate really loves time. Instead of you accumulating them over years, right? How about you buy as many as you can now and rest? Now I know this is very theoretically. You know, of course it's obvious, but we can't do it. So how about if you can't do 10 now, try to do it, you know, one after another as quickly as you can. And what I've seen for, you know, when you do something for many years, there's patterns you see that emerge every 2, 3, 4 years that you can't see it if you're doing something for 2 or 3 years, right? You have to see those. So what I've noticed with a lot of my clients, I call it the golden time of 2 years. 2 years in after their first property, it's almost always like there is this serious aha moment. They look at Zillow and like, oh, it appreciated. In our case, $25,000 in 2 years, right? It's not a lot appreciation of what you see here in the COVID but I have people that, oh my God, I've never been able to save $25,000 without doing much effort. So there is this first aha moment. What has happened here? I bought a house. Yes, there were some noises and some friction and some inefficiencies, but while I was dealing with it and it wasn't taking over my life, it appreciated $25,000, $30,000. Maybe there's some cash flow coming in. I'm able to starting accumulating wealth. And when they realize it, usually it's the couple that are having this conversation. All of a sudden, I've seen it so many times, there is like the entire household The financial dynamic changes without even talking about it, and now they're already thinking, okay, how can I speed up the you know the time it will take me to to save the next down payment? Before, they were just cruising. All of a sudden, what just happened here? Now why two years? It's enough time to something to to pass that there's some something substantial happened with the property. That it shows. If 6 months later, a year later, usually you see maybe a little bit, you know, maybe even it went down a little bit because something happened. So it's not really showing. But 2 years in, you're like, okay, I can, I could, I get the beast. It's working, it's renting. There's some, you know, some friction point. But look what happened in the background of our lives while we were still working and having, you know, our kids and family. And we didn't Flip houses on a daily basis. We went to a job, you know, like job sites, right? We just happened in the background, and that's where they that's where they get it. That's the golden moment of you know internalizing that point, and then you know they're like something changes, and they're like okay, I'm ready for more. Yeah. Now I want to move faster. All my veteran, you know those who've been with me for more than ten years clients, the same sentence: I wish I bought more. I wish I started sooner. I wish I bought more. I wish I started sooner. Those are the two things I hear all the time. So either you learn it the hard way, which is okay, or maybe listen to not elderlies. Those are people who are just maybe your age. They just started, you know, sooner. Yeah. And I wish everybody could buy 10 right off the bat. Maybe it's not so good to buy 10 right off the bat. Maybe buy one, get used to it, make sure you're comfortable with it, and then, you know, accelerate. I have one client Who bought the house in a suburb of Dallas, Froney, Texas, very close to Dallas. He bought it September of 2021. Very quickly, he started getting nervous for no good reason, no good reason. And then he realized that the tenant has two dogs in the house, that the property manager told him the tenant has two dogs. He just didn't know to ask, and the parking manager didn't know to say what type of the breed. One of the breed was considered the problematic breed. There's no problems, right? I'm just saying here's what happened. There are no actual problems. This guy, from the moment he realized what's going on with the breed—by the way, sweetest, nicest guy ever, like amazingly nice guy—he calls me and he's freaking out. So for the next. 3 months. I'm talking about October, November, December. Every 2 weeks I get a call and he starts, Danny, tell me I'm crazy. You have to help me. I'm not sleeping. I'm losing my mind. He gets extra insurance. He makes sure the tenant gets extra insurance. He doesn't have to, the tenant, by that time. We make sure he gets it. He gets extra coverage. The guy is just calling me and saying, I am stressing out. No, I'm straight. I could tell his personality is not a good fit. And I really, before Christmas, I say, hey, Jonathan, listen. And luckily for me, he's a nice guy. I mean, that helps in that situation. He's not— he's freaking out, but he's not all over the place, right? Very intelligent. I say, listen, Jonathan, it's now Christmas. Comes beginning of the new year. We talk, you know, on the 10th, whatever. You tell me what you want to do. If you want to sell, I will help you sell, and I will try to do it in a way that you will not lose any money, or if you will, because you very likely will, very little. And we are able to— and he calls me and he says, done, I can't, I'm out, I can't sleep, I'm losing my mind. He says, I have no— this is not on you, you did everything nice, you— I just can't, I can't handle this. So this is a guy who didn't know himself but didn't realize this is not a good fit for him only after buying the first one. And you know what, we helped him. We had another investor buy it with the tenant. You know, the house even appreciated by that time, so he was able to walk away breaking even exactly. He didn't lose anything, and we just moved it to another, another client who's no complaints. But that's just something that, you know, he didn't get used to it. Yeah. So it's important to maybe start getting used to it and then accelerating to see that it's a good fit for your personality. He thought this is no problem. Yeah, right. Yeah, yeah, yeah. By the way, again, no problem in the house, no problem with the dog, no problem with the tenant. In our mind, we have, we have some stories, of course, for good or bad.

So yeah, was it a killer chihuahua? Is that the breed it was?

I think it's a, you know, back to the video.

20-year-old Joe read a book back then. Uh, it was called Money Dynamics and it was written by Vanita Van Caspel, I believe. Um, in that book she said the same thing. She said, buy one property for the next 10 years and you'll be good at retirement. 20-year-old Joe, for some reason, was thinking about retirement back then.

Smart.

You know? Yeah. It's like not many 20-year-olds are thinking about retirement, but You know, I took the book to heart, and if you know me, I'm pretty black and white. And so that's what I started to do, was to buy properties. The other thing she said, um, amazing, buy term life insurance because everything else is a waste of money.

Okay.

The insurance companies are just, you know, taking your money, uh, which is what I found. It's bizarre. It's like, let's do whole life and, you know, this will build a nest egg for you. And by the way, if you want to borrow from that, we'll lend it back to you, but we're going to charge you 5%. Wait a second, you're charging me my own money back? Yeah, but that's our business model. So that's what it is, you know. And the other thing she said was buy gold and silver. So the wife and I went out and bought some, you know, gold, gold and silver bags. Yeah, she bought gold. No, no, it was silver. It was coins. Unfortunately, we bought at the top of the market and it took— then the market went down. It took us 10 years to recover that. Yeah, yeah, you got to go. But the property stuff, she's been right on ever since, you know. Uh, so I, I agree with this guy 100%.

Me too. Yeah. All right. I know it sounds— it simplifies it, but the idea—

I mean, that's the concept behind this. Yes, absolutely. Exactly. Just don't—

I have clients that are ready to retire at 45 or 50 should they wish. Meaning they only need to change some of their, let's say, accelerate the mortgage payments, the principal payments, and within 2 to 3 years they're done. Wow. So that done, meaning done. They have support just from the rental income and they started buying probably early 30s and 15 years-ish later. And maybe some of them even refinance everything that they invested back out already. There you go. So time does very well for those who buy real estate. And, and the biggest treat or the biggest disadvantage, you got to be patient. Yeah, you have to be patient. Be patient, my friend. But you know what, that's— I didn't say when we started, when I got started before real estate, I realized very quickly I don't know how— I am not aware of any how to get rich Quick kind of schemes, right? Yeah. I just don't know. I know people are some figured out some content creators or whatever. No, right? I didn't know then. I still don't. But back then when I you know told myself you're not gonna you don't know how to do to get rich quick. You don't have that scheme. How about you get go find a get rich slow kind of a scheme? Oh yeah. Yeah.

Do we have another video, or?

Yep, got one more.

Yeah. Five reasons not to buy in California. Oh my God!

Reasons why I would not buy rental properties in California. Okay. People buy rental properties in California simply because they live there or because they love the weather. Number one, California does not recognize real estate professional status. Number 2, they don't allow bonus depreciation. Number 3, California has a clawback rule for 1031 exchanges. If you go from a 1031 exchange property in California to another state and then you ultimately have a taxable sale in the future, they will claw back some of that tax. Number 4, they have an $800 a year minimum LLC fee and it will only go up from there. Number 5, they have the highest Marginal state tax rates. So if you're considering buying or selling rental properties in California, you should first go to therealestatecpa.com/rc and fill out the online web form to see.

Well, I would say that for the most part, I think it's correct. I'm not—I can't say that I agree. I know for a fact all the details about the 1031 exchange and. the real estate professional. I have much simpler reasons why not to buy in California. You don't have to be in that sophisticated level. You know, we talked about it earlier, it's a tenant-friendly state. I think that's enough, right? But it's an expensive state to buy real estate to begin with. The numbers, you know, the houses are expensive. The rent we are getting here in California relatively to the price of the house Is very low. I know rents are high, relatively low. That's not the case in other states. So for me, just those things—you know—that geo that financial arbitrage of of the of the rents we can we can get on those houses and the tenant landlord laws is good enough of a reason not to consider California. The many the reasons I didn't consider. Plus, even if you everything else makes sense. First of all, even if you go and buy a $500,000, $600,000, $700,000 home, $400,000, that means you need more cash for the down payment. Also, you know, something that can prevent you from buying altogether, maybe you don't have the required down payment for that price tag. Or if you do have the price, then the dollar amount for that price tag, Maybe you want to diversify, not buy one house. So there's a lot of restrictions. I mean, that's— I love living— I've, I've been, you know, I moved to California 20 years ago. I've been 10 years in the Bay Area, 10 years down here. I love it. I really love it. The weather is great here. It's amazing, right? We all understand it very well. Just because I love the lifestyle that this weather, this location can provide me, I don't like the numbers around me. Like, my house is— I'm Like I hope my landlord does. I'm a renter, by the way. I'm a renter for that reason. Okay. Right? Why am I a renter? The house that I'm living in, my rent is cheap. Super cheap, right? So hey, landlord, don't— I hope you're not listening here. Listen, it's cheap. Yeah. Yeah. Like she's okay, but it's cheap for that house. Yeah. Cheap. Okay. Yeah. So that's the whole point.

Yeah. I have a different take. Okay. Let me tell you what the 30-year-old is not telling you about California. Okay. Yes, we have a lot of problems, but California is a very, very high appreciation state.

True.

And you can't get this appreciation anywhere else. Maybe in New York, maybe a little bit in Florida, but nothing close to what we have here in California. So let me give you an example. And it was a long time ago. I bought my house 40 years ago. I paid $160,000 for that house. It's worth $1.6 million today.

So still with a mortgage?

No, no.

Got the 60-year mortgage.

That's what I don't agree with, with what he said. It's like, you know what, the $800 he was talking about, the LLC, insignificant. I'm not worried about that. There's ways around all that. Oh, okay. If you're experienced, you can, you can deal with all that stuff. All right. There, there's just so much opportunity for the appreciation. I won't go back as far. So let's go back to the downturn in 2008. Same condos that I was referring to earlier that were $500,000. Now I'm buying them at $100,000. They're worth $500,000 today.

Yep.

Okay. But that's because it's appreciation. And you're not really going to get any of that if you go out of state. Out of state, you're going to get Consistent cash flow.

Yeah, we get appreciation. It's not just us. But listen, I'll tell you this. I don't think if anybody— if someone is listening is kind of saying, I get— I definitely get what you're saying about California. If someone is buying here, I don't think they're going to make a mistake. And if you're stuck on the $800, don't invest. This is a— excuse me, that's an insignificant reason. Yeah, but if you buy here, it's going to be more challenging financially probably, but you will very likely Do well. No guarantees, very likely do well with the property. So there's no if you like. I have a good friend; she invests heavily in Orange County. She is OCD. She cannot not see the property. She tells me, "I love what you're doing. You do better numbers than me." I can't, right? She would never go out of state, right? Right. For her, it works because she needs to touch. She needs to feel. Yeah. Yeah. She knows appreciation-wise. She can. You know, she's not complaining. I know she's not complaining about that. So for sure, yeah, I agree.

Nice. Yeah, cool. Um, how, uh, can people get a hold of you?

Um, my web identity is Simply Do It. If you write Simply Do It or Danny Simply Do It or Real Estate Simply Do It, you'll either land on the YouTube channel, on our website, maybe find my, uh, not so utilized Instagram. Okay, unused Twitter, X, whatever. Right. Yeah. But those are around the Facebook. And so that's the easiest way to go about it. If you want a website, it's simplydoit.net. So just easy kind of across the board, the same Simply Do It kind of a name. Awesome. Yeah. It's a nice name.

Yeah. Yeah. That's great. Do we have any questions?

We got resident Liz in the chat. Hey, you know what she says. Hi.

Hi. Nice.

Um, Stephanie's in the chat and she wants to know how she can get into buy mode and get one of those warm body loans.

You have to go back, uh, get a time machine and go back a few years, but that's the only way right now.

And then I had a question going back to the mortgage rollover idea you guys were discussing earlier. Is that something that's practiced in other countries or in other parts of the world, just not here in the US?

You know, I don't know anything about the other parts of the world, but I can tell you this. Many parts of the world don't have any financing for properties at all.

You pay cash. I could probably give you some perspective as a foreigner. I'm not aware of that available anywhere. Maybe it is, but I'm not aware. But I can tell you that one thing that drew me to invest in the US, it's a sophisticated market. In Israel, for example, and many other states, you don't have— for example, we talked here, just look how many things we're talking about. 1031 exchange. We we take it for granted, right? Loan modification. Forget about that for a moment. Financing twenty percent down for investors not available. If there is many times not twenty percent down. Subject to, right? Or whatever you want to call it. Subject prep. All of those techniques. A lot of those. That's what sophistication, sophisticated market, and it's available. To everybody, right? Seller financing and all those things are available if you know how to navigate those waters. It is not as common practice available, you know, to do in other countries, although the methodology is exactly the same. The same; it just doesn't exist. So for me, coming here, oh, and of course, how can I forget my my love? The love of my real estate life: fixed rate mortgages. Most countries, they're not fixed rate; they're indexed, right? So your mortgage keeps up with the cost of living. So it's up and down, not here. Wow, that's it. I call it mortgage miracle. You know, it's more than just that. So, um, for me, for an investor who understands those things, oh my God, we take it for granted. Those are amazing tools available if you're willing to spend the time to learn. It's not even that complicated. You just need to put the little effort in YouTube or seminars or the meetup and learn and then follow through and execute. Right? I'm not a master in all those techniques. I'm just aware of some of them. I've done this. I've done that. But you know, there's it. I know it exists. If I need to go and start, you know, digging into subject two tomorrow, I yeah, I'll start digging into learning how to do it better. But it's available. It's out there. It's amazing. You know, if you're if you grew up here and you take those things for granted, you should not. Right? We or other foreigners. Just don't have those amazing tools that we are here, you know, taking for granted. Maybe we should; it's good, but we should not as investors.

If if you travel at all, you can go into other countries, and what you'll see is a single family house and then something built like a second story, but not finished. And it's not finished because they just don't have the money to finish it, and there's no loan that somebody can take. Yeah. And so you'll see that, you know, this is my family house. I'm going to own this forever. I'm going to raise my kids here. And then as more kids come, I'm going to need more room, but I don't have all the money to finish that room up there.

Yep. Okay. I've seen it many times. Yes, many, many times. Yes.

If you travel, that's what you'll see. Yeah. Yeah. So like you said, we are very unique, very fortunate in the United States, and You know that and many other things. Yeah, many other things. I don't know what what's going on in the world today, but I cried when I got my citizenship.

I cried. I never knew I'm going to be that emotional. I cried because I was like, oh my God! I am accepted. Yeah. And this country was so good to me. I'm like, I can't believe I'm getting my citizenship. I I just I went to to the ceremony in Obama's time in LA. Just okay, I got I am so busy. I don't have time for this. I'm like, I did. That was a chore. I was there and I was crying at the ceremony. Wow. Like I was so emotional about it because I so appreciate because those things for me are not for granted. Yeah.

Yeah. I love that. What a way to end it, Danny. Thank you so much. Yeah. Maybe we can have you speak at one of the meetups coming up. Yeah.

I would love to, guys. Yeah. Yeah. Thank you. I'm loving. I could stand here and talk so much. I know. Yeah. This is so much fun. We can do a full show on this.

Yeah. Do four hours next time. But thank you guys so much for joining. Please share with any new or experienced investors in your life, and we'll see you here next Thursday.

I have, I have one more big ask. Okay. Okay. Before we go, uh, you're watching this on YouTube. I'm about 950 subscribers. I need 50 more, please. So if you're watching this, please subscribe. Okay. So I want to get to that 1,000 level so that, uh, I can start Monetizing this channel and maybe getting $50 a month or something.

Yeah, just free lunch. You don't need 50 more, 49.

Oh, okay, I've got you.

Yeah, I'll get you a few more. Okay, I have good friends.

Yeah, yeah, send this out. I just need 50 more. Yeah, see you guys next month with 1,000 or more.

Please like, comment, and subscribe.

Like, comment, and subscribe.

All right, see you guys.

If you want some more advice on real estate investing, reach out to us one-on-one.