From 2008 Burned to BRRRR: Rebuilding a Real Estate Empire

Hello and welcome back to the Owner Meeting Podcast. I'm Christian Osgood, your channel host, today joined by Joel Osgood. This is gonna be a fun episode. We talk a lot about passive investing. We've had all sorts of business owners on here with different products and angles. This is one of my favorite things to talk about, the active side of real estate. Joel is an owner. He's been through multiple market cycles. He's done a ton of single-family. He's done building. He's done flipping. His lending company is Burr.com. Premium IP, by the way. Well done. Awesome name for an awesome company. We're going to talk about all of this and how to actively run and scale your businesses, how Joel's built his, and the takeaways we can have from it. Joel, welcome to the channel.

Thanks a lot for having us on, Christian.

Oh yeah. Oh yeah. Oh yeah. Well, let's just dive right into the— we talked a little bit before. Let's dive right into the big thing. So you had some pain.— in 2008. So you've done all sorts of stuff. We're gonna get into your entire background here. You had mentioned you had a lot of 2008 pain and you recovered faster and stronger than you thought was possible. What was your starting position going into the whole 2008 crisis? Where were you positioned as a company before the whole market got pulled out from everyone?

So for me, we weren't really a company. We were like a one-man band. Love it. Myself, 2 or 3 other partners that really just fell to the wayside as things got tough. They really ran ahead. You know, I like to always joke, you know, you don't get this haircut without having a lot of time. But you can imagine we owned 144 properties. We were the person that's on Instagram now talking about 0% credit cards and how you buy things with no money. You know, the rules are very different. It was very easy to buy properties with no money. For those in the audience that are older, they know the bank Wachovia. Wachovia was a big lender, got taken over one night or really incorporated into their portfolio. I don't know if takeover is the right word by Wells Fargo in a save situation. Wachovia used to give us up to 123% of the purchase price at closing.

Wow.

Getting paid to buy real estate, right? Exactly. One year I did 11 transactions and I think I got either $256 or $259 out at closing as the buyer. Wow. Well, you know, I think back and I look at the troubles that I got into and I can only imagine what people who were playing big did. It must have been just catastrophic, right? We've had on some guys that we know from around the road and they've talked about some of their hurts and wounds. And, you know, for me, that wound was about $4.2 million. That hurts. Not a good day. So we had 1,000 tenants, about 500 called me up and said, hey, you know, you're a nice enough guy, but we just can't pay the rent. Took me about 6 weeks to get up off the couch. At the time I was married and my wife came to me one day around 10:30 in the morning after the girls had gone to school. She said, look, you just got to get out of the house because they don't know what's going on. You're never home now. And now you're watching some ridiculous show on TV and cereal in your shorts, and it's 10:00 in the morning and they're going to school and they're panicked, right? Which I could understand that everything had changed. So it took me a few months to get my feet back under me and I didn't really know what to do. So I just went back, kind of did what I knew how to do. And I went from 100 best friends down to 3. You know, the other 97, I couldn't pay for dinner anymore, so I wasn't their best friend anymore. And you learn these things in life, honestly, going through harder times, not necessarily the great times, but people show their true colors. And look, you learn. And I believe one of the most important things in due diligence is the due diligence on vetting the people you're going to go into partnerships with, right? It's not just the sticks and bricks. We can survive. Most of the sticks and bricks. That's generally a math equation. Yep. Maybe not a good one, but it is one and it's solvable. But with humans, as you know, and other guests have been on here and talked about, sometimes you get in this protracted circle to nothing, but that nothing is exceptionally expensive and has huge ramifications.

Well, we talk a lot about limiting variables. So I mean, the things that wipe people out tend to be more than anything else in real estate, it's variable rate debt, That one obviously has been the most recent where you have a lot of people sign up for the wrong debt product. Your expenses change. It's hard to math if you don't have constants. But more importantly, people are variables. The more people you have in the business and you bring partners in, and I have lots of them myself, you are inviting chaos into the universe. And that is going to be difficult in your business because people will be people. And I think you nailed it. You have 100 friends. You might end up with 3 when times get hard. That's, uh, I had a mentor early in my business named Gary, and he had this policy that's really helped me in business, which is he's like, hey, every time I partner, I just assume that all the work's gonna get dumped on me and all the responsibility is mine. And I am just so pleasantly surprised when anyone does anything to help. And I've gone into partnership like that where it's like, we'll do the OAs, we'll do the partnerships, but you know what, more than half the time, there's one person who ends up taking on most of the work. And that's obviously Joel. You're one of those people who, uh, you can get up off the couch and do the hard thing, which is a hard, hard thing to do.

You know, I think your friend, your mentor really prepped you right. We don't want that to happen, but you have to be prepared for it, right? So it doesn't ruin your mindset at that moment. Because you know what's going to happen at the worst moment, right? So if you're not really ready mentally for it, it's very tough to catch up. And that can be very expensive. You can't make good, clear decisions. You end up shredding tons of dollars. You go home every day, you can barely sleep. It's a miserable ride. You know, I went through that. I understand what it feels like. I was a trader on Wall Street for about 22 years. We only traded proprietarily, so we didn't have any customers.

Traders.

Oh, nice. Traded options on stocks, indexes, commodities. The risk that we took on a daily basis, you know, in perspective, just dwarfed anything in the real estate world. So in the real estate world, I was able to come to it and be able to pretty calmly, you know, stay a little less high when we were doing really well and not be as emotionally distraught when we were annihilated. Yep. And that's helped a lot. I mean, being able to stay calm and see what's really happening instead of just getting caught up in the noise of it all is a huge benefit. Yeah. To me, that's one of the hardest things for people to learn. I'm sure you've talked to tons of new investors. We do every day at BRRRR, and they're so excited about the opportunity to be in a deal. They spent so little time actually evaluating the deal. Or, right, their due diligence was like, you know, my friend Christian told me it was a good deal, so I did it. Yeah.

Or they, or they fall in love with the first deal that's close to working and they try to force it to work. It's like, don't, don't fall in love with the building. It's a building, right? It's sticks and bricks.

I tell people all the time when they're asking me, well, what do you do about this? What do you do about that? What do you do about this? How do you make so many offers? Close your eyes for a minute. Every building has a roof. They all have doors. They have windows. They have flooring. Hopefully they have kitchens or you're going to put one in, right? So they're the same. So why would you spend your time running all over America to go look at all these houses just so you can make an offer? Why don't you make 20 offers a week? See if 1 or 2 get serious. You have a small due diligence period, and if an offer gets accepted, then you go and examine up front and close and personal and see if you can move forward or not. But the other way around is a huge waste of resource time. And people are always like, you think? Like, I don't know. I have friends who have made upwards of 70,000 offers in their career. Yes, they own a lot of properties, but think about— you couldn't even physically have done it, right?

Mm-hmm.

Based in a beautiful city, and it would have been fun to fly in and out of all the time. But who can live their life that way? But understanding what you really want and beginning to build your box. Look, we do something, you do something, other people do something. It doesn't always have to be the same. It doesn't mean any of them are better or worse than the other. But understanding and how to become great at that lane is really the key to your success. Right? Putting together the right teams, understanding your buy box, sticking to it, man. Getting out of your lane can kill you, as you know. Yeah. And it's hard. Like you just said, like people want to jump. Like they just watch some webinar and they think, oh, that's really cool. Like we've had people come to us and ask us about trust. And I'm like, one question. Okay. Do you have any assets? No, not yet. What the hell do we need a trust for? Like, what are we spending $3,500 or $5,000 to have this paperwork drawn up if you don't even own any assets?

Oh, that, that frustrates me. So this is actually a great This is a great topic. So I see a lot of educators in our space, and they like to pitch one of two things, either the, the secret of real estate. And so they'll marry some random sub-niche of strategy and brand it as the next way to buy real estate, which I think is the dumbest of all things. Or they'll teach something that's too complicated, that's too far ahead for people to sound like they're smarter than they are. And they're like, If you're starting, so there's a, there's a great conversation point. What does someone really need to know to get started? Because it's definitely not the perfect partnership structures. If they need a trust, I, I don't even think you need to understand too much about accounting if you're not making any money. Like there's a certain, there's a, there's a cart before the horse. You have to buy real estate to have any of these problems.

I totally agree with you.

If I was starting, what things do I need to know?

You need to know this. You need to know the triangle. Somebody should take out a whiteboard and draw a triangle. One, you got to show people you're willing to work hard consistently. Two, begin to learn how to source deals. That could be as simple as telling every single person you meet what you do. Three, either have money, have access to it, or find it with a good deal. Those are the three things you need. So I didn't talk about you having a ton of cash. I didn't ask you what your credit score was. I didn't ask you what college you went to. I didn't even ask you if English was your first language. People have too much noise in their heads. Sometimes they spend the whole week in YouTube land, which I like. But, you know, come on, it can really, really take you and get you all over the place and get you away from the hard fact. People want to make money with their money. So stop worrying about if you can find money. Start worrying about if you can find a deal that money would be attracted to, because money is very finicky. It's going to spend its time quickly evaluating high risk, high return, lower risk, medium returns, right? It's going to make all those evaluations, optimize, and then go to the deal it wants to. So you need to understand that, right? The language of love of the money. Right. Because America is really only the number one thing in anything anymore. Right. We're like, what, 17th, 18th, 19th in English, 8th in math around the world. I don't know if those numbers are correct, but it's something like that, which is sad but true. Yeah, but we are number one in greed and our dead presidents. The money want to make money every single day, no matter what webinar you're on, what seminar, whatever podcast you're listening to, they're talking about building legacy, long-term wealth. The only way to do it, I don't care who you are, is to get your money to work for you, right? You have to have that as a big component of whatever you're doing. I've worked a lot of years, longer than most, and you cannot earn your way from a regular salary except for, what, 1% of the public that gets to that kind of salary level.

Yeah. Yeah. There's a, there's a study done this fairly recently, and I apologize, I should have the quote at top of mind, but it's just not coming to to me. But there was a study, I promise there's a study. And the dollar amount that it takes to legitimately have a chance of saving to financial, like significant financial freedom, you have to make about $480,000 a year. That's, that's not a high proportion of the population. That's a very high salary.

But think about it, you and I have met a lot of people around the world, around the country. They earn $100,000 90 grand, 120. Somehow they have figured out how to live below their means. They have some savings. Yes, they might not be Warren Buffett, but they're working their way there over time. Right. They understand the value of maybe only having Chinese food one time a week instead of every night. And until you really embrace those types of things, you're never going to get anywhere. It's just true. Like we talk to people at Burroughs, they show us liquidity statements. And then you look at their, their personal credit reports and you see they have $80,000 of credit card debt, which they always blame on. I just pulled down materials at Home Depot. But generally the Home Depot card is not the one that's maxed out anyway. You know, they got $18,000 in savings accounts that are earning— I don't know, let's be generous— 3.5%. They're paying 29% to their buddies at Chase, Visa, MasterCard, like it just doesn't make sense. But somehow they're justifying in their own heads and they're losing the battle. Then you have this— I hate to use the term, but normal regular person who has this, what they would consider to be a modest job, drives a modest car, lives a modest lifestyle, but damn it, always seems to be able to have some money when they need it, right? I mean, there's no real secret. The rich people lay out the program. There's plenty of room at the top. They're not competing with me or someone else, right?

Well, and I found that people who can't manage their own personal finances, they don't have a chance of managing their business finances. If you're bad with your— with your bad with your own money, you're going to be terrible with other people's money.

It's just the truth. I know people don't like to hear that because they want a magic pill, but it's really true. You got it spot on there.

Yeah, I'm just— I've seen it. I've seen it too many times. It's actually one thing we'll So I run a coaching program and it has like— I turn down a lot of people. I don't want you to spend your last dollar learning because you can learn for free. I want someone who's like, hey, I— if you want to succeed in real estate, I want to see that you can manage your own budget, that you've actually managed to save some money. Like, I want to work with people who have a personal level of financial literacy so that you can expand it to your business. But if you're sitting here and you're listening to a podcast and you're like, I have $2,000 in my bank account and $50,000 credit card debt. My credit score is recovering. That's what I always hear.

It's getting better. We're working on it.

If you're sitting in that status, the last thing you should do is join anyone's mentorship program, any course, start a new business. Fix those things. Get your personal budget under control. Eat out less, buy less unnecessary things, go out and earn more. But fix your personal finances because the lessons you learn there is going to make you a thousand times better business operator if you understand how your personal finances work.

It's incredible, right? Somebody is— they feel like they're late in life. They're 28 and they're not already rich because they watch Instagram and there's somebody 22 that's flipping houses, made a lot of money. You don't even know if it's real or not, right? You watch HGTV, you have no idea. But the point is exactly where you're saying, look, If you're going to spend money on mentorship at that point, spend it on somebody who's a financial coach, who's serious and will stay on you to be accountable every 2 weeks like a dog and show you that love, that unconditional love by torturing you every 2 weeks to make sure we've gone over the budget. We know where the money was spent. We know what we're saving. We know what we knocked out on the credit card. We didn't wait 30 days to send in the extra $100. We sent it in now. And we start to learn that process. And in learning that process over 6 months, 1 year, 18 months, it starts to become a habit. Now you got something to work with and you can get back to Christian and now learn how to start to buy multifamily for your legacy, your 5-year, you know, passive cash flow. And you have a big future. And oh yeah, you're 33.

The other thing to do if you're looking for like the right coaches and communities, skip anyone whose advertising is the Rolexes, the Lamborghinis, and the superhouses. Not because they haven't made it. There's some people legitimately have actually bought some cool stuff and live a crazy lifestyle. The problem is they are marketing to poor people, which means if you're falling for that, it's a program that's targeted towards people who are poor. Wealthy people aren't interested in what you drive. They're really not interested in what you drive. That is a— the materialism. Most of us are not interested in that because we're too busy making money. We have jobs.

And businesses went through that phase, right? I mean, we all wanted a cool something at some point. That's the truth. But we had it. It didn't make us any happier. And then I went back to kind of like the normal stuff. People make fun of me sometimes with the car that I drive, but like, it doesn't have any bill. And nobody, when I pull up, that I want to negotiate the price on and try to get it down $3,000, looks out the window and they go, oh, you got that Porsche Panamera outside for like $180,000 or whatever the number is. Why do you really need my $3,000 off again? Explain that to me.

Right.

Like you have to match up correctly and live the lifestyle that makes you comfortable. I get that. But it also has to align and marry to your interests, your values, if you really want to be successful.

Yeah, no, I absolutely, absolutely agree. So coming out of— going back to the beginning. So coming out of 2008, you had a spectacular recovery and your business has grown a ton. What does business look like for you specifically today? What sort of velocity are you doing? What are the projects that you're focused on? Where are you at today and how did you get there from 2008 to now?

I really got there from 3 best friends, right? They just would not accept my woe is me. They basically just kept their foot on my neck and they were great accountability coaches. And to this day still are, to be honest. They are still my 3 best friends.

Oh, that's awesome.

I've known them all for a really long time. 2 of them for almost 40 years and one for probably only about 20. But we've all been together for a long time and they put up with my nonsense by feeding it back to me and making it sound like nonsense. So You know, today our business is twofold. In particular, we lend around the country as BRRRR loans, lending to investors only. A lot of 1 to 4 family fix and flip. New construction has been exceptionally popular the last 2 years, I'd say, in particular, and a lot of DSCR loans. On our side personally, I've been flipping houses You know, tonight I'm going to run a REIA group and there'll be a few people in the group that are probably be 22 years old. So, you know, having some of these stories from the early 2000s are cute, but no one really cares, right? It's got to be relevant today. So yeah, I can give somebody here, here's the HUD, here's the entity name. You can look it up in this state or that state. You can see it's us. I mean, obviously don't go torture the contractors on site, but you can see we're really doing it today. My guy goes to Home Depot at 10:00 when he should have been there at 6:30, and I get annoyed just like you. Right. We go through that sometimes as well. Absolutely. We are also starting to accumulate a real estate rental portfolio again. We are mostly focused on small, medium-sized multifamily. I would say 3, 4 units small. On the bigger side, so far, 12-unit buildings. And that's been the crux of what we're really looking at. We have successfully been able to partner with a bunch of our own clients. You know, I see Christian, I meet Christian, we lend to him a couple of times. Seems like a good guy. Voicemail box is always open. Not that anyone listens to voicemail anymore, but you feel like you can communicate with him. He returns calls. He speaks clearly when you ask a question. And usually I'll just say, Christian, it looks like you're only doing 2 or 3 a year. Can you keep finding properties and would you be interested in doing more? We can put up the money. And sometimes the Christians in the world say, hey, you know, I'm good. I'm very comfortable just doing my 2, 3 a year. And others will say, well, what do you mean? So for us, it's been very powerful to be able to build local teams in different markets with our own clientele. So we have some track record with them already. We see that they can go from start to finish, which I really like. You know, we talked about that off camera, different ages in different markets. That's true. But most of them have experience one way or the other. To me, that's really important. I want to be able to feel good about how someone's going to react when things are going wrong. Most people can do well, pretty well, but I'm more interested in people who can stay the course when things aren't going well because I can't fly 800 miles away quickly. I can do it that day, but that's not the same is meeting an inspector, a zoning person, somebody else who wants to find me in the next hour.

Right.

I need boots on the ground. Plus, to run jobs from far, you have to have it. I know the BiggerPockets library— not to pick on BiggerPockets— they have a lot of books on, you know, investing 1,000 miles away and how sweet it is. We're seeing inside of our own lending portfolio operation a lot of investors who went to tertiary cash flow markets the last 2, 3 years, bought into the Section 8 program, how great, simple, and easy it would be to collect those rents. And now they're trading back out of those properties for breakeven, small losses, because it wasn't as simple to actually just do that from 1,000 miles away. They don't like it as much as they thought they would, and they don't like the market as much as they thought they would. And now they're trading out. So we're starting to see that rotation. Which to you, to me, to others that don't have that legacy on their back and are bogged down by it or have suffered losses from it, you can now clearly use the MLS if you're buying 3 and 4 and 2 and 3 and 4 families pretty well as a tool again and not compete against 30 people. Maybe on the really best properties you compete against 2, 3, 4 people, but that's very different. And people losing their mind just bidding through the roof, which, you know, honestly, for a couple of years there, 2020, 2021, maybe almost all of '22, just drove me nuts and kept me on the sidelines. You know, I didn't buy any properties. I bought one from an estate sale, but it was off market. No one knew type of thing. I just— I find it so important to be able to work with people who can stay clear-minded. The worst beats of my career have been through people. Not through the real estate themselves. Yes, I have lost money on real estate deals. That's true. But I've lost a lot more money, my hair, heartache, aggravation working with the wrong people where we ended up in big problems, couldn't seem to get out even if I was willing to pay my way immediately. You know, you just had to keep working at it. You could waste years on this and really ruin any momentum, change your train of thought, ruin your mindset. All the things you really need, you know, to make a positive impact and create what you're trying to for yourself. You know, picking the right people to work with is crucial. It's almost impossible to do everything by yourself. I mean, some people do it. If you want to own 3 properties, 4, you probably can do that. But if you're going to start to get through 8, 10, and more, you're going to need all hands on deck and finding good property managers, finding good partners, accountability partners, physical partners who can help you with work, manage books, move money around successfully, properly, ethically, transparently, morally, all those good moralities, right? All those good— or whatever you call it. But, you know, just getting that right, to your point, really sloppy, they don't usually get really sharp.

Well, and as you scale your business, and you can scale to any size that's appropriate for what you want to do, so it's important to go in to have a specific goal for what you actually want to build. But as you start to scale, your first few deals, they're probably going to be your hardest deals. And as you start to build that track record and you start to build that resiliency, you start to actually overcome things. Groups will start to want to invest with you just like, just like you do in established operators. It's like, hey, once you get some momentum and some track record, all of a sudden it becomes, hey, do you want to keep doing 3 deals? Or what would it look like if you did 20 deals a year? What would it look like if you did 30 deals a year? I just got out of a meeting with one of my lenders who were like, Hey, we've— they've done a few $5 million loans. We're doing a $10 million loan right now with Fannie. And the reps are like, okay, well, we like the way that you guys operate and we love how aggressively you guys are buying. Like, we love your pacing, we love your operations. We like how you guys handle adversity. It's the exact same conversation. And they're like, have you guys given consideration to what it looks like to be a company that can borrow $100 million? I'm like, No, I haven't given that much thought. And they're like, well, this is what some of our clients have scaled to. And so they kind of laid out like, hey, this is, this is what we like to see to go from where you're at today to, you know, you borrow tens of millions. The next step would be, can you take out these other deals that other people can't take out? It doesn't actually take that long to build a track record though. If you're building your business, you're dedicated to that, that is something that you can start laying the groundwork for today. And 5 years in the future, you can find out you're somewhere you never imagined you be.

Yeah, I think a lot of people have a hard time with the starting point, right? Here I have no experience all the time. So I ask them, you know, what do you do in life? What's your career path? Have you ever gotten a promotion? Have you ever been responsible for a budget? Have you ever had to move people around logistically? You know, single moms, divorced single moms, or single moms sometimes are great at making the transition to fix and flip. They have spent years budgeting, right? Years transporting everybody, moving them around, being logistics manager, scheduling.

And they're typically inherently risk-averse, which is great.

And understanding how to do things not necessarily cheaply in the way the word is often used, but efficiently and economically.

Right.

When Home Depot has a sale, Buy the product, right? Store it in your garage or store it in a friend's garage if you rent your apartment. But you can find those situations. We bought some appliances in Milwaukee yesterday. We're not ready for appliances for 4 weeks, 5 weeks, but great pre-holiday sale. We decided to do it and we're storing them in our contractor's house in the basement. Right. Not perfect. I'm sure his wife's not thrilled, but we did save about 40, almost 40 cents on the dollar. So, you know, we'll get them a free—

fantastic.

Yeah, he'll take his wife to dinner and she'll— next time we're in town, she won't be mad at us. But you have to think that way because, to your point, it's not about the first $100,000 deal. It's a business. And the sooner you get on board with that and start to document your path all the time, you're going to be able to present that book of experience that people are looking for. Much faster than you think. Oh yeah. Yeah. You're going to incorporate other things from your life. It's not just real estate. You know, being able to manage money or being in a position in a full-time role where you are managing money is a trait, a characteristic people are looking for in everything that we do, right? So people just haven't been taught to think this way because to your earlier point, you go to a class, you pay $9,000 for this unbelievable you know, super sales system or great coaching program. And it's so esoteric and it's like so trumped up. They're not even getting the basic simple things that they can move forward on, actionable items that they could do right away and are going to use every month for the rest of their career. Like, I'm a guy and people are telling me about different markets and I'll ask them, well, how many McDonald's are around? How many Burger Kings? How many Wendy's? They're like, what are you talking about? You know, you're like a little chunky. You must love fast food. I'm like, well, you're an idiot. Think about how many billions they spend in demographic studies. And if I go into a town and there's one McDonald's, there's not enough density there to support what I'm trying to build. But if there's 10, you know, Wendy's, Burger Kings, and McDonald's in some medium-sized town, there's enough density there to build what I want to build. There's a hospital, there's some schools right there, there's a little bit of infrastructure. There's tons of fast food. Well, there's tons of rentals, and that's what I'm looking for. And it costs zero to figure that out. Mm-hmm. Go to the police station, fly into a town, go to the police station. Where do you guys not invest? People are shocked to see how many civil servants are investors long term looking to augment their future pensions, and they're putting away a couple of properties now. You don't think they know within their own towns what parts of the city they should and shouldn't be in? Mm-hmm.

Right.

The fire department can tell me where the arsons are.

Well, yeah. And there's a huge advantage of being local or having someone on your team local. I own in Washington State and in Texas. And in Texas, where I live now, very, very easy. I'm from Washington State. I know a lot of the markets, but my ability to immediately react to something— there's a lag. So sometimes I don't know something that I really wish I knew a week ago. You just don't have all the pieces. So building the team, if you're going to invest remotely, is everything. And if you're going to buy small, you're never going to have efficiency.

Easiest to do that. Right. But, you know, you want to keep it simple, right? Because you can apply the same principles on the $10 million Fannie loan that you're going to do on the $500,000, you know, 10-unit somewhere or 8-unit somewhere. And that's your point over time. And that time is much shorter than people think. You're going to grow into that. So setting your systems up early to enable you to scale with the same systems adding to it, learning, meeting good people like yourself that also could give you some tidbits. I mean, that's crucial, right? It can't be a one-off. One-off is chaos, and you can't be successful living in chaos. It's just not possible. I'm living proof of it. I went through it. You know, it's mayhem every day. You're going to spend way too much time on the wrong things. And that is not a success blueprint.

When you built your business, every— I ask this question every time, but the dumbest anyone ever is in the beginning of their career. And so the goal of this podcast is to educate people on as many things they can do right and the right mindset and the right tactical skills. One of the best things we can do is help save people money and not make mistakes that we've made. Mine was a— cost me $1.4 million on a $4.5 million resort that I purchased in the wrong partnership And it didn't tie into my business. I made a multiple, multiple mistake. I bought the wrong type of asset with the wrong team. Cost me $1.4 million to get rid of the partners and fix the problem. I had a 7-figure stupid tax. What has been the most costly lesson that you've learned that others can avoid?

I would say grossly overleveraging. Mm. Oh, it's cool to watch. Figure out everything is 0%. You can use everyone else's money, never do anything with your own. I get it. There have been some people who are really successful at it. Mm-hmm. They've been successful at it during periods when the markets have gone up a lot. If you're in a sideways market, doesn't even have to be down, but as things take more time, that 0% timeframe starts to shrink. If you get nervous, you forget to roll it to another 12 months. It could eat you alive at 29%. So for me, being grossly overleveraged, when the markets slow down, I couldn't cash flow. And not being able to cash flow was super destructive. So we want to balance leverage. I think that's crucial. I'm not saying don't use it. We have to use it in our business. It's important, but it's important to understand it as well.

And what's a, what's a healthy LTV to maintain your portfolio? And I do understand sometimes you buy a deal that has a lot of upside, so Sometimes at acquisition it can get a little bit out of whack. But as a stabilized portfolio, where should one hold LTVs?

I mean, I personally believe if you can get to 65%, you're in pretty good shape.

I agree. That's the same number that I maintain for my portfolio, 60 to 65%.

I've been through a supercycle. I've been through a couple other situational markets, I guess you'd call them. The supercycle took you below 65%., but not for a long period of time. So if you are under control with your own personal finances and your business's finances, you could survive out the cash flow and not puke out the properties. So I like that. Now, if you're at 80, you're going to puke, right? I mean, you just can't take the pressure. 2, 3 tenants here, 2, 3 tenants there. You just can't stomach it anymore. You're not built for it. Mm-hmm. Your business up that way. So my own clients, honestly, have taught me that, you know, watching them, working with them, seeing their appetites, how they structure their deals has really helped me a lot, to be honest. That's the truth. Yeah. And, you know, you learn from some really good people who are willing to share. Again, they don't feel like they're in competition. I'm like their buddy, I'm their lender, but I'm learning from them, asking them questions. And even now, after 29 years, I'm still asking questions to lots of people. Who are infinitely younger than me and never worry about things like that. My whole world reopened 100 days ago learning how to use ChatGPT. Oh my God, unbelievable. But you have to always be learning. You cannot think and stop that you think you got it, because man, they will change the damn rules on you quick. And you don't got it, you're going to get it. So for me, I would say over-leveraging in a very short period of time to build a suspect portfolio that felt good on the way in, didn't taste good under operations, and was overleveraged. That was my biggest mistake.

Oh, I love that. I love that. Yeah, it is crazy how AI is changing the game. That's amazing. When I learned that you can custom prompt ChatGPT, I had— what I did is I asked ChatGPT, hey, can you help me build a custom GPT? It's like, yes, I can. I'll ask you all the questions. It literally went through. It's amazing. 8,000 lines of prompt later, I'm like, it does exactly what I want the way I want to do it. It built it for me. It's the most amazing— it is an amazing time to be in the real estate space.

Quick story. So yeah, a local old business friend who used to work at the exchanges with us reached out and was really humble and said, look, I need some help, I need a job. Okay, come on down, we'll help you get reset up and hopefully it could be a home for you for a couple years, right? Comes in first day on the computer, a little slow. By the end of the first week, he's basically one finger at a time on a computer. Now unfortunately, he's basically done nothing over the last 5, 7, 10 years to enhance his own skill sets. And in today's world, even then you couldn't afford to do that. But in today's world, that's a suicide mission. Yeah, right. You have to be— I don't want to use the word aggressively because people take it in the wrong way, but you always have to be moving yourself forward. You have to take that responsibility. I mean, sometimes I go to the diner at 4:00 in the afternoon to have lunch, right? You finally get a break. You're exhausted, blah, blah. The person serving me is 75, 77 years old. They're hunched over. You can see the body doesn't work as well as it was. Look, when I'm that age, I want to go do those types of jobs for 2, 3 hours here and there for socialization, not because I need to split the tip cup. And none of them ever went to sleep dreaming to do that. There's no way. I'm sure your friends, you hang out, you talk, you're bullshitting about whatever. Talking about these cool dreams once in a while, right? You're, you're in Monte Carlo winning in the casino, or you're in Australia, you know, diving with the white sharks. You're doing cool stuff. You're not dreaming of being in a diner serving some guy like me at 4 o'clock in the afternoon. You can barely stand up and you're hoping I leave you $3 extra on the tip. I mean, this is not the dream, but America is faced with this reality. And if people aren't gonna take every step they can to help themselves, I really don't know what's gonna happen. I'm afraid for them, honestly. You know, I spend a lot of time, you spend a lot of time talking to people. And this is one of the things that I really want to resonate with people when we walk away. I'm not trying to scare you, but I want your eyes open to reality and simple little things you can do to start to help yourself. You're not going to go out and run Cisco Systems or take over Google or Apple or any of those companies. I get it. But to your earlier point, you can figure out how to make 10% more income. Oh, easily. You can figure out how to learn one new skill every 3 months. You can do these things to help yourself. And if you're not—

and it doesn't take that much time, you look back 5 years later and you're like, wow, I'm a totally different person than I was. 5 years. I mean, people look at— I feel like people tend to look at this as like, hey, you know, I'm just kind of like doing my thing until I retire at 65 or whatever it is now. It's like that, that does— you could be in an unbelievably different place a few years from now if you just keep stacking skills, focusing on building your top line and managing your bottom line. If you just do those things. You're, you're going to be in a much better place.

100%. We have friends, business friends in their 50s and 60s that started their portfolios, eventually started to make some private loans and made money, more money than ever made in their whole career. They didn't go out and split atoms. They weren't going to the moon and back. They were doing simple, basic things. They learned to structure. They learned some new things. They put it into work and execute it and keep doing it. Nothing crazy. You know, today I think the playing field has been dramatically evened. For $99 a month, you can go to Harvard Business School. All the case studies that they're studying are in your phone. But what are you doing with your phone, right? Are you scrolling and trolling, using it to learn, A little of both. Like, you got to balance that out because it's right there in your hand for $99 a month. You're paying the bill, your parents, someone else, somebody's paying for it. You got one. I mean, basically every place you go in America, people have a phone no matter what race, religion, neighborhood, A, B, C, D, F, G neighborhood. They all got phones. So there's no excuse anymore. You can't say, well, you know, they're more No, no, they have access. You have access to the same info they do. What are you doing with it? You want something different, do something different. But again, you don't have to split atoms. You can do simple, basic things and keep putting those blocks in place. Then, as you just said, learn how to make a little more income, play a little better defense with your money, begin to save, eventually begin to invest and change your life. Love it.

Really that simple. Joel, how do other people get a hold of you if they have follow-up questions from the podcast? They want to learn more about your lending company, BRRRR.com, any of the above. How do they best get in touch with you?

Well, one of the easiest ways is just to go to our website and drop us a note there at BRRRR.com. You can find us on Instagram at BRRRR_loans. That's easy as well. We actually do respond. We don't have the bots there all day. We have people who actually monitor it. So that we know to respond.

Oh, there we go. That's a, that's a breath of fresh air.

Yeah, I don't like the other. Drives me nuts. So we don't do it that way. Good. You know, for us, we've been around a long time. We enjoy the opportunities to come on and be with you and meet people and talk to them, keeping it real, keeping it simple for them. Take away some of that overwhelming feeling. Show them what they've already accomplished in their life can translate into this or other things that they're interested in. And be more successful no matter how they measure it, because it's not always about money, right? Mm-hmm. Ever they find something that really makes them feel something, that's what we want to help them get behind and be excited about. So for me, that's how I've spent the last 20 years of my career. That's really important. I never really was sure. I hoped, but I wasn't sure that I have an opportunity to make a comeback and, you know, restabilize my life, get it moving forward and be in a positive scenario. So I really feel like I have a responsibility to others to help them in that regard. Look, it's tough. It's not easy. I get all that, but it's a decision you make, and that's what I want to try to help people focus on.

No, that's awesome. Well, Joel, thank you so much for joining us today. We appreciate you a ton. Your knowledge in the industry and just your, just your time in the business. It's great when I get a young entrepreneur on who's like, hey, you know, I'm right in the middle of my peak. It's so much deeper to have an owner who's like, hey, I've been through the highs, I've been through the lows, I've seen how the game is played and how other people react. I appreciate your insights on partnerships, on variables, on loan to value, the entire thing. So fantastic episode. I'm excited to get this live. Everyone give Joel a follow here. Reach out if you guys have questions. If you haven't yet, we have a free school community that you can join, SKOL. There's no fee. There's no reason not to do it. If you want to join thousands of other investors around the country just talking about real estate, creative finance, it's called Multifamily Strategy. You guys are welcome to join that at any time. Reach out to Joel with questions on any of his programs or just want to follow up from the episode. We appreciate you all and we'll see you on the next episode.

Have a great afternoon and thanks again. Pleasure to be here today. Thank you.