Real Estate Rule 2: If it's Not Simple Don't Do It

Hey YouTube, it's Cody and I've got Christian here for today's video, which is rule number 2. If it's not simple, don't do it.

So, on this one, pretty self-explanatory, right? If it's not simple, it's not something that we want to do. And one of the main reasons is it's not repeatable. The more complicated it gets when you add a bunch of steps or there's a bunch of creativity, the odds of the same situation happening again narrow. You want to do things that you can scale, and in order to do that, we need to have a relative level of simplicity.

Consistency matters, and as you get more complicated, it's very hard to be consistent. Posting a video that we don't edit, we just record for 8 minutes and post every single week, it's pretty simple. So we're able to go repeat it over and over and over. But if I wanted to go out and buy a 12-plex, seller finance, zero money down, every single week, It's probably going to be a little bit more complicated because every deal is a little bit different. Every property is different. Every individual is different. And so that's going to complicate that purchase. And so it's not as repeatable as doing an 8-minute video on YouTube. And so when we're going out, we're buying real estate, we're building these businesses, we're trying to help other people do something similar to hit their goals. The simpler that we can keep it and streamline it for you, the more your odds of success go up. If you keep it simple for yourself, your odds of actually going out and doing it goes up. And I don't think that I'm very smart in comparison to a lot of people on the planet, but I keep everything so simple that it allows me to go keep getting little actions done every single day. And because of that, I'm able to go faster than a lot of the people that are a lot smarter than I am.

And in practical application, in real estate, if you're buying investment properties, That's why we always say focus on relationships. Relationships are repeatable. Getting someone to buy into who you are, where you're going, and why you're going there, and for you to genuinely care about them, their goals, and the significance behind them, that's something that you can always repeat. And that's something where, when we need to do a transaction, or it's time for us to buy another property, we're able to go out and do this. And sometimes it's, hey, we're gonna buy a few duplexes. Sometimes it's 12-plex. It's fairly simple on those. Where you get more complicated, our 38-plex deal, we had more moving pieces. It's a bigger building, we brought on partners, we had to buy the partners out at some point. You have all these moving parts. I can say 100%, the first 2 12-plexes that you bought, we could do that transaction again today. Duplexes, we could do that. Stuff like the 38 where it got a little complicated, yes, it helped move us forward, I don't know that I could do that same transaction that same way on another deal. And what we always want to do is show you what is absolutely repeatable. So I will show you everything and how we've done everything. You need simple steps and you need them to be repeatable if you want to scale.

And think about what the common denominator is. At the essence of everything we do, we go out, we build relationships with people, and it's built off of story because storytelling is one of the most powerful ways and one of the most effective ways to connect with other people. At the end of the day, the common denominator is your story is going to be the same. Everything in the past isn't going to change. You can't just go and change the past. Your story is going to evolve. It's going to develop as you get older and you go do more stuff. But at the essence of everything you're doing, you're connecting with other people based on your past experiences. It's what gets you to the table. And so that's not going to change. And since you know that, step 1, you just need to figure out how do you present your story? How do you do that? 'Cause once you figure that piece out, it becomes very easy to book these meetings, to connect with people, and then you just have to learn about their story, how they got to where they're at, and go apply what they teach you to go buy real estate.

Mm-hmm. Simple, repeatable steps. That's all it is. You can scale yourself, and the other great thing is that you can show other people how to do what you've done. If you did this big, complicated, ridiculous strategy to get to where you're at today, odds are most people cannot follow in your footsteps. If it's not scalable, it's gonna be hard for you to help others. And that's the point that Cody and I have gotten to over the last year is we've picked up, I'm at 76, 77 units. Cody, I think you have 10, 12 more units than I do. We've picked up enough where it's, we're in a phase where we want to stabilize things. I want to focus on our existing properties more than I want to go out and acquire for the next few months. I'm not trying to acquire a ton of things today. Keeping it simple, it's easy to show other people how to do this now. And you'll get to a point where you hit your goals and your options are, hey, I can buy everything and do every deal, or I can help others move forward. And that's something that Cody and I are heavily focused on. You're going to really struggle with that phase when you hit your goal and you want to transfer your success to others, if you got really complicated getting where you are, you are going to struggle communicating it and helping other people get to where you've been.

Yeah, and at the end of the day, whether you go creative, you go conventional, you can simplify both games. Yes, it seems more complicated to get a seller finance note. I promise you, it's less paperwork. It's simpler. I signed 3, 4 pieces of paper and I owned a building. You can keep it simple or you can make it super complicated. It's complicated because not a lot of people are doing it right now and there's a lot of ambiguity there. However, if you sit down and really look at it, it's just one person lending you the money. There's just a promissory note signed that you're promising to pay them and boom, you can buy a building. When you're looking at deals, 3 simple steps: deal, debt, and equity. You got to find your deal, then you got to find the debt. Well, if it's seller finance, there's your debt. If it's not, go get a bank loan or go get a private loan. But it is really that simple at the end of the day. And because of that, if you use it or you don't, you'll either go quicker or slower than people around you.

Another piece of practical application here. One of the most common questions we get is, hey, how do you determine when you're going to refinance? How do you manage your balloons? In the spirit of keeping it simple, that's something where we look internally and go, okay, how do we apply this to our businesses? Common knowledge is, okay, you have a 5-year balloon, you have to put it into bank debt. In the spirit of keeping it simple, last week we drove out and talked to some of the owners of our seller finance notes. And we know their goal is to do a lot of contracts and seller financing. In lieu of planning a refinance in 5 years, we sat down and we asked, what are your goals? What do you want to do with these contracts? And what they want to do is pass contracts to their kids, because contracts are easier to transfer and manage for them than trying to sign over a bunch of real estate to kids who don't want to manage their portfolio. Turns out they would much rather just reevaluate and extend at year 5 and do a whole new note. That takes out a lot of steps for us. If it took us 3 signatures to buy the property, it's going to take us 1 signature, possibly 2 depending on how we structure it, to refinance it and extend for another 5, 10 years once we've shown, hey, we are easy to work with. We always pay on time. It's a very easy thing to negotiate. When you can remove steps, again, never necessary steps, we don't skip steps, but when you can remove steps and simplify what you're doing, you can add certainty to what you're doing. You can move forward simpler, and again, this is easier to teach someone. Get your first seller finance note instead of just getting a note to buy the property, because a lot of people go after distressed properties and Oh, it could only sell with seller financing, so this is why I got it. Turns out you're going to have to turn that into bank debt if someone wants to get rid of it. But if someone wants a relationship with you, there's trust and there's synergy in your goals and the reason behind them, you can do these indefinitely. It's not that hard and it's very little work on the paperwork side, just to build a relationship and care about someone else. And that is what we wanted to share with you today. When you keep it simple, easier to keep a relationship.

Oh, that's it for rule number 2, but keep on watching these videos. We're gonna keep posting these rules every single Monday. We got Whiteboard Wednesday on Wednesday, sometimes on Thursday if we have bad internet, and then we have that extra video on Friday. But keep watching these. If you have questions, put them in the comment section down below, and we'll see you guys on Wednesday.