How to become a multi millionaire by the age of 35 | The Real Estate Revolution | Episode 3

Coming up on this episode of the Real Estate Revolution.

Something that has prevented me from taking the jump in the past has just been trying to time it out the right way and knowing when the best time to hop in the market would be. And I know right now interest rates are high, but also seem to be slowly coming down.

I'm 24, and I don't know if I should buy a house or if the market is right. Well, guess what? I interviewed Joey o', Malley, and he is going to talk through his process as to where he's at. I'm going to guide him through the investing scenario, the strategy of buying home's owner occupant, and how he's going to be a multimillionaire by the time he's 35. Joey, welcome to this episode. And I'm super excited to actually interview or you interview me and ask some questions.

Right.

You're a young guy. You're the son of one of my great friends, Tracy o', Malley, who's had such an impact on my life. So I'm really excited to be a part of this. And just kind of answer the questions here. You're thinking about doing some real estate. You've saved some money, and now you've got the burning questions of how do we build wealth? And you're what, 23, 24.

24.

24. All right. And want to start. Start thinking about the real estate thing. So tell us a little bit about. I mean, we were off air, right? You're talking about some of the jobs that you're doing. And so tell us a little bit about that and then jump into what you want to learn today.

Yeah. Well, thanks for. Thanks for having me. I really appreciate you taking the time, but, yeah, I've been working in restaurants for nine years. Worked my way up from, you know, counter employee to bartender to general manager of a restaurant, and then realized it wasn't what I wanted to be doing long term. So I decided to pivot into another. To another area. Started working for a company called Common Hype. We sell sneakers and clothes and just really picked up some steam lately. So hopefully the business continues to grow. But, yeah, I've been living at home my whole life, and I'm definitely ready to leave home and start. Start my life somewhere else and buy my own house and create wealth. I've been saving and saving and saving, but I'm at a point now where I want to let my money work for me more as opposed to just stockpiling it into a savings account. Sure. Yeah. And My mom, who you've known, pointed me in your direction, and you were. You were kind enough to open up your home in Munds park and let us stay there for the weekend.

How was that?

Oh, it was amazing. I was. I was amazed at the place and just how. I mean, it was huge. Really spacious and just really homey. And she was telling me kind of about what you do and all the properties that you own. And that just really turned a light bulb on inside of my head, I would say, of where I want to go.

Yeah, it's cool. When you start to build wealth and acquire assets, you know, so many people look at it from the money aspect, and what's really awesome is the amount of people you're able to bless and the amount of problems you're able to solve for people. Right? So, you know, I was able to. And Tracy gave me a hard time, and I'm like. She's like, well, let me pay. I'm like, just don't rob me of my blessing. Right? Let me. Let me have the blessing to bless you and your family to use it. Right. And I love being able to do that. But it's like, yesterday, one of the rental properties that we own, you know, I got a call from another real estate agent. She's like, hey, my son had some issues. He went through a hard time. Divorce, child custody's credit's kind of screwed up. She's like, all these people we've talked to, they think he's a risk on, you know, leasing a property. I'm like, well, I've been there. I've lost everything. I had crappy credit, and somebody did me a favor and gave me a chance. I said, I'm willing to give him a chance.

Right.

He's got three daughters, single, electrician. But people are so black and white rather than listening the story. So as you start to acquire real estate, you start realizing kind of the blessing that you get to be on people's life. It's not just an income becoming a wealth generator, but it's. It's kind of fun to think about it in that capacity.

Yeah, definitely. I mean, that's. I would say, even another reason why this. This interests me is because of the amount of people that you could impact. Just. I mean, having a home is something that everyone strives for someday. I wouldn't say everyone, but, I mean, it can really bless a lot of people if you have the reach to do it.

Absolutely. So what's. So you save some money and, you know, you're living at Home you're working a job. Is that the career you're going to stay in? You know, the career that you're working right now, or is it just kind of up in the air?

It's definitely going to be for a while, at least. Like five, 10 years, I would say is my goal with it.

Cool.

Just hopefully I want to see how far the company can go and if we can continue to grow. And I want to be a big part of that.

Awesome.

So that is my short term slash midterm goal, I would say.

Awesome.

Yeah. When it comes to like a 9 to 5.

So we're talking about buying our first house. So what questions do you have regarding that? Because I'm going to try to help maybe tweak your mindset just a little bit about buying the first house.

Right. I guess some of the questions I would have would be if my goals are realistic for my current income. I mean, I don't make a ton of money. I work hard and work two jobs right now, but would say I probably average around 50,000 a year total. And I want to buy a multifamily home, like a duplex and rent it out so that some of. Sorry, are you hearing that ding?

Nope.

Having notifications go off. You're good. So, yeah, that's my goal. And I want to have people rent from me and then acquire assets and own property.

Okay. So the multifamily is a great option. Unfortunately, where we live in Phoenix and you're out in Gilbert, the likelihood of you finding a property that is a duplex, where you would actually want to live is going to be slim to none or the price point is going to kick you out of it. Phoenix is. Phoenix area is not. It didn't have a lot of diversity into duplexes and four plexes. They kind of stopped building them back in the 70s. And so a lot of the stuff that you see in the multifamily is, you know, in older parts of the. Of Phoenix and older parts of Gilbert Chandler, if there even is any. If there are. They're super expensive. Right. They're wicked expensive when it comes down to it. But I love the goal of eventually getting there because I'll give you some ideas that, you know, with your income and what you've saved, you know, you might be looking at, hey, we have to take baby steps to get there. Right. So whenever you're considering buying the house and you know, if we were a place like Illinois or New York or something where they built a lot of multifamily there it would be, it'd be a great idea. And again, it all depends on the area you want to live in to where. You know, the theory is you buy a duplex, you live in one side, you rent out the other, and it kind of helps, you know, keep that cost. One of the things that can be similar to that is, hey, maybe we're looking at a two or three bedroom condo or townhome or a two or three bedroom house to where you could rent rooms out. Right. It's not duplex, but you're still getting some cost savings and helping towards the mortgage by renting some rooms out and having that space. Does, does that appeal to you at all?

Yeah, it does and probably is a more. Okay, more realistic option to start, especially in Phoenix. Yeah.

And I'd imagine, you know, you're. You're a single guy, you're a young guy, you probably have a handful of people you could think about that would definitely be roommates because we all know how expensive rent is right now. Right. So if you can give a little bit more to that. So here's one of the goals that I would suggest and kind of look at is that we want to look at, hey, what's our budget going to be? So here's how you get to the budget. We're going to have a conversation with a lender. Because you've had these two different jobs and you have this income, they're going to guide you through what you actually qualify for, which is going to give you a budget.

Right.

It's going to be, hey, I can qualify for a $300,000 house. Now the second part of that, which is interesting and it's always a conversation to be had, is like, okay, because of my jobs and I'm responsible, maybe $300,000 doesn't get what we need. Maybe mom will partner with me to potentially go up in price because I have these other roommates that I'm going to do and I'm going to work it like a business and there's other ways to do that, but those are some of the steps that we might be able to employ there. Right. There's also the step of, hey, maybe on this first one, I want to partner with my mom to do this and we're going to run it like a business. I'm going to use my credit, my ability to buy it, she's going to help. And then when I'm ready to go do the first one solely on my own, I'm going to go buy that. But we're going to keep this as a rental. So it's a way to kind of like start the process. Nobody's giving you a gift. Do not co sign for your kids. No offense, Joey, but partner with them. Right? So you guys can kind of run it together and see what it is if that's an option for you. Right. Some people are like, I want to do this on my own, Great. I just like to throw out the different scenarios that, hey, this is A, B and C and how we can get there. So once we determine the budget or how we're going to do it, then we go through and we look at, okay, well what are we buying? Right. Is it going to be a condo? Right. Because what we're buying now, we have to look at it for future. You're not going to live there forever.

Right?

This is how we're going to build wealth, one house at a time. So you're 24 and I want you to see the mindset of, I'm 24 and I'm going to start gaining assets. They're not going to be huge cash flows. Especially with interest rates being a little higher right now, those will change. There's a path that I've designed for buyers like you that is giving the mindset of, hey, I want you to think about at age 35, you own 10 real estate properties or 10 single family homes by doing it in these steps, okay? The steps are you buy one owner occupied, maybe you get a little sweat equity in it, you're going to rent it out some roommates and then guess what, 12 to 18 months later, we're working on the plan for the next one. Okay? You move out of the first one, you keep it as a rental and then you're continuing to do that. Okay? And here's the reason why. Buying a house owner occupant is your lowest down payment and your lowest interest rate possible. Okay. So it keeps a lot of cash in your pocket and it's a great way to start. And even though interest rates are a little bit higher right now, you're going to have the ability to go through and go, well, I've got a couple of roommates, it's definitely going to cover more of my mortgage than I expected. The first house, you might leave two roommates there and get a third roommate for it and go, well, now these guys are renting it, it makes more money and you're kind of running it like a dormitory, right?

Yeah.

So do you see how that works, you know, in that mindset? So that's the goal that I have for the younger generation is kind of looking at it. The other goal or the other possibility is, hey, maybe you have a really good friend in the company you work for that's in the same situation you're not in or that you're in. Right. I only make so much money. This is the budget. Can I go and get a business partner to buy this house with me? And I say business partner because we're not friends. We're not doing this. This is a business partnership. So you got to make sure that you're aligned with that person. And I did this years ago, actually 20 years ago when I first got in the business. I had these two kids, Steve and Chris. They worked for me at the oil change place that I used to run. And, and I got into real estate and then they came to like, dude, we want to buy a house. I'm like, okay, so the two of you knuckleheads are going to buy a house together. I'm like, this should be really interesting. But we walked through it. They bought the house together just like they were married. They ran it like a business. They lived there together. When it was done, they ended up, you know, they had a couple of roommates which mostly covered their mortgage, but they cashed out of like, I don't know, they sold it in the height of the market in 05, I think they cleared $150,000 tax free in their 20s because they went and got. Got a business partner, right. Rather than saying, well, I can't afford it on my own, I'm just going to go rent. They would have foregone all that stuff. Plus they had a lot of help with their mortgage during that time because of roommates. And so it was a really cool process. So I've seen it done a couple of times. So I would encourage that thought process. Right. Do I need a partner? All that's going to be determined based on the budget meeting with the lender and can I buy something for that budget or do I need to think about it differently?

That's good.

You have any questions thus far?

I guess something that has prevented me from taking the jump in the past has just been trying to time it out the right way and knowing when the best time to hop in the market would be. And I know right now interest rates are high, but also seem to be slowly coming down. So is that something that should prevent me from jumping in now or is that. Or is now actually a good time and then you could refinance later? I'M just new to the whole process. So, yeah, I think the, the unknown is what has scared me away from doing this sooner.

Yeah. So here's, here's the unknowns. And people that try to time the market correct always miss the mark. Because if you're looking at it with your mindset of, you know, and I didn't even really ask what your goal was, but I threw out their 10 properties, right. If your goal was to own 10 properties, and if you look at the market from 2012 to 2022 and you bought a house every year, you would have what we call law of average.

Right.

In 2012, I paid $100,000 for a three bedroom, two bath. Right. And it's great. It's been rented. And the rates might have been higher, the properties were lower, all those things. 2022, you paid $400,000 for the same house, the same neighborhood, Right. You now have what we call law of average. Right? Which is law of average means about, you know, 250 grand is the law of average between the highest and the lowest. But what if you had waited time the market in 2012 and you waited till 2022, you missed $300,000 of equity, right. So this is what people miss. Like there's this piece that's holding me up. The prices are too high. So last year, last couple of years, everybody's like, oh, I'm going to time the market perfect. I'm going to wait till the market crashes, which is not going to happen. Nobody planned on the rates doubling. So when buyers typically buy houses, they're buying based on payment, not on sales. Pronoun on purchase price. Right. So we want to find something that's affordable. Well, if you could buy a $300,000 house now with the rates last year, you could have bought a five house. Okay. The only difference that would have been great was that the payments were lower. And if you're truly looking at, you know, the investment opportunity, then that would have been better off for cash flow. Now here's the cool thing. The prices have softened. There's some more motivation out there. So rates are temporary. You might have a little bit higher rate for a year or two, but we can always change the rate. You can't change the sales price.

Right, Right.

So in last year, well, earlier last year, if we're looking at the same $300,000 house, and I said, Joey's got $15,000 to put down, he doesn't have extra money to pay over list price to waive his inspections. And Joey's got to come up with $45,000 to buy this house. He can't do it. And even if you did have the money to do it, now that same house that somebody paid 345 for, you can probably buy it for 300 right now. They only overpaid for it because of competition. Has nothing to do with the value is not there. It was because of competition drove the price up. Now there's not as much competition. There's not as many qualified buyers like you. And now you can put that minimum down payment down, you can negotiate closing costs, you can negotiate repairs, which all add in the factor that if you look at the difference in payment and this is where a lot of people forget to take into this account. Right. Which is, let's say that same $300,000 house last year was 3% interest, $300,000 loan. Oops, let me redo that. Oh my gosh, my fingers are not working. Your payment for principal and interest would be $1,264. Right. You take the same house today, that.

Was 300 at 3%.

Yep. Take the same house today, the payment will be $1700 and $98 a month for principal and interest. Okay, so there's $500 difference a month, right?

Yeah.

So it's a $6000 a year annual difference in payment because of interest rate. But if you're paying $50,000 less this year, and I'm not saying that you're going to pay like $50,000 below what it is, it's an equation of if the seller gives you $10,000 towards closing costs, you're able to negotiate a little bit of price and they're doing repairs. Let's say that equals 50 grand in all said and done and you didn't have to pay over the list price, it's going to take 10 years closer to eight to equal the difference in that $50,000 in less debt versus the monthly payment that you have. Does that make sense?

Yeah, it does.

So it's kind of like understanding the numbers of it is like, okay, yes, I'm paying $500 more a month, but I took on 50,000 or got more negotiation room in what I did that I wouldn't have had a year ago. Because a year ago in the multiple offer Crisis, you paid 340 for that same house. You had to go and do repairs, you had to pay your closing costs. And now all those things are a reality for buyers like you where it's like, well, what do I want? Do I want the scenario from two years ago, or do I want to go out and have a choice and pay a little higher interest rate? So people get scared of the higher interest rate, but they don't realize what the reality was?

Back here you said, I didn't lose you.

Would I? No. Okay.

Sometimes it's hard to take it all in and understand all of the terms.

Yeah.

You said the word concessions. What is that exactly?

Yep. So when you buy a house, there's a couple of things that you have to plan for. So there's the down payment. So if you're using a typical FHA loan, you would have three and a half percent down, or you could go conventional and use 5% down, and then you're going to have closing costs. Well, your closing costs are typically 2 and a half to 3% of the purchase price. So in this scenario we used, it was 300,000, which would be about $9,000 in closing costs above your down payment. So those closing costs include your lender fees, your title, your escrow, your prepaids insurance. So it includes all that stuff. Now, we go in and we write a $300,000 offer, and I ask the seller to contribute 3% of the purchase price towards your closing costs. So what that does is it keeps $9,000 in your pocket, and you put your down payment down, and that's how you're purchasing the house.

Okay. What is in it for the. For the seller? In the.

What do you mean? What's in it for the seller?

Yeah, like, why would they not. Why would they do that?

Well, because you're using negotiation power. So rather than if we're out looking at houses, you're like, I really like that house at 300. And you're like, I want to offer 280 on it. Or we could offer 290 and take away some of that negotiating on price and go. We want to ask the seller to contribute. So rather than negotiating hard on the price, we're asking the seller to contribute.

I see. Okay. That makes.

And what that does for you is for every thousand dollars you borrow, it's $6 a month on a principal interest payment. Okay. So you take the interest rate six times 1,000, and that's like, that's how many dollars it takes. So if you put $10,000 in your pocket, it's only costing you $60 a month difference in your mortgage payment. So if you kind of factor like, well, if I go from 300 to 310, my mortgage payment went from 1800 to 1860. So that's how you kind of gauge in that price point of what it is. And I always like my buyers. Right. If they have $20,000 for down payment and closing costs, I'd rather you have $10,000 in reserves and a $60 a month higher payment than to have a $60 a month less payment.

Yeah, that makes sense.

So I want to try to keep as much, much money in your pocket as we can.

Okay. Trying to think what else? So do you. So you think the best way to start would be to find like a single family home to like rent out rooms as opposed to going multi?

Yeah, I just, I don't think with your budget and your current job and things like that that you can find a multifamily in the Gilbert Chandler wherever you want to be. That is something you're going to want to live in or it's going to be at your price point. Unless again, you started talking about partnerships and bigger deals, which is something we can discuss. Right. You know, it's another avenue. Hey, Mom. And I know, I just keep using your mom. Right. Because I know she's there. Right. Is I found a four plex that I can buy, but I need a co signer. And we can have three units plus the one I live in that we can rent out. Here's the numbers on it. Would you partner with me on this? Different story, different scenario. And we can explore those avenues if Tracy wants to. Right. Or if you want to. And if you don't want to, that's okay. I'm just trying to give you ideas of what that potentially can look at. Because again, if, if Tracy goes out to buy a 4 Plex as an investor, she has to put 20 or 25% down. The interest rate is a point to a point and a half higher on investments to where? Oh, with a partner, with Joey, we're getting lower interest rate, lower down payment. All these things apply. And now this is an asset. Now we can utilize this as a partnership and create that theory. So there's theory there. And until we kind of know and this is where the partnership thing and all the other ideas, the first step is always, okay, let's get qualified. So I connect you with my lending partner. You're going to do the application. They're going to look at your income, your taxes and say, this is what we can do. This is what you can afford. Now we can determine what we're going to look at and the area that you want to look at to see what's there to see if it's possible because some of the other pieces might be. And again, I'd like to give all the options to you, right? So let's say, because I don't know, I know a little bit about income, I don't know, down payment, let's say you qualify for 200,000 bucks. You're like, well, that's not going to get me much. Well, let's think about it for a second. One of the investment strategies is short term rentals, right? So furnished rentals. Now if you go and buy. I'm not a big fan of short term rentals, but I am a big fan of what they call midterm furnace rentals. So a lot of people refer to like a traveling nurse or an executive that comes in for two or three months, they need to rent something, right. One of the things that tends to sit on the market right now is a one bedroom, one bath condo. Okay, well, let's say you can pick up a one bedroom, one bath condo for 200 grand. The payments $1,000 a month and you're going to live there for a year. But the goal is to turn it into one of these furnished rentals that rents for $2,000 a month. Now you that that rental property is a little bit more work because you got furnishings and stuff that you're leaving, but it does potentially keep. Create a cash flowing asset, you know, in a year or two when you decide to move out. So there's all these entry levels of not what it is right now, but what it could be based on the budget and based on how you want to script going forward.

Right, okay, sorry, I'm trying to, trying to think of.

No, you're good.

Some questions and I had some for sure.

One of the questions you had in the calendar was just how do I determine what to charge a tenant? Well, so are you talking about a roommate or a tenant?

Initially I was thinking tenant because my mind was on, you know, multifamily duplex, but. But now I think it would be more roommate.

Okay, well, let's, let's just answer both questions. Okay. I fully believe like somebody in your position, you're learning the business, right? You've come to me for advice and counsel on it and I would turn you over to an expert that's going to give you the same guidance, which would be the property management company. So if you own a duplex, I would say, hey, you know what, you want to be a tenant in your own building, the other tenant doesn't know you're the owner and you want to keep it that way because if not, they're knocking on your door going, dude, this thing's leaking. Right?

Yeah.

But if you hire a property manager, they're going to charge you about anywhere from 7 to 10% of monthly lease to manage the property. So they're going to collect the money, they're going to manage the tenant, they're going to manage the lease, they're going to manage the repairs, and it puts you out of harm's way with the tenant and making sure that you're not violating any of the landlord tenant act stuff. Right. Which is really important. That's why I still use a property management company. They will help you determine market rent. Because what happens when you try to do it yourself? You go to Zillow, you go to some of these other places, you're not seeing what the market is actually doing to where the property manager say, oh yeah, we just rented one around the corner and we're getting X for it. So we should be able to get this price for it. If you just throw it out there, you might be missing profits by doing that. Or in a worst case scenario, you might be throwing it out too high, which is going to cause you to sit and not collect rent. Right. And the goal is to always get something rented within about 14 days of it being vacant. And we have to do that based on the temper of the market. And then if you look at roommates, I would start asking some of your buddies that live in apartments, dude, what are you paying for your apartment? You probably know some of them are probably paying 14, 15, 1600 dollars a month for an apartment.

Yeah, I do.

If you're like, dude, I'll rent you a room for 800 bucks a month and it's got a kitchen and whatever.

Yeah. I don't think it'd be much of an issue to find people, honestly.

No, no, I mean, again, you just, you know, and when you go into roommate situations, you're going to, we're going to go through the process of you're buying a house not for you to live in, but as your first investment property. Now Joey LLC is renting three rooms to three people. You happen to be one of your tenants. Okay, the other two tenants, same thing. So all that money's rolling up, but you want leases with those, those roommates. You don't want to just do the handshake deal because if somebody's a slob, somebody stealing something, you want the ability to. Right. So it's kind of a month to month roommate thing or every Three months so that you don't get into these situations. Because I've seen really bad situations happen when people don't document things. Right. So it's important that you kind of go into it with a. And I know you're a sharp kid, right? Going into it with a business mindset. And I always love this saying is you, the three of you are really good friends right now, but go into the mindset of what if we have to get divorced? How's that going to look? Right? So when you always go in with the worst case scenario, it's easy to handle all the paperwork when you're going into it with worst case scenario because everybody's good. They're like, oh yeah, no problem, I'll sign that. Blah, blah. It's at the end when somebody gets pissed off was where the problems start.

Right. Earlier you said it's cheaper if it's owner occupied. It's like a smaller down payment. I don't know that. What is the, what is the reason for that? Why would it be cheaper for a down payment if you're living in your property as opposed to if you're just buying it to rent it out?

Because there's more risk as a rental when it comes down to it. And so they're giving favor to a homeowner, which, hey, they. Here's the bank's theory. If you're a homeowner, you're probably going to take better care of the property. You're, you know, you're doing all the things for home ownership. And when you look at FHA or conventional. Conventional is governed by Fannie and Freddie, which are the conservators of loans, right? So they're making the guidelines. And so for homeowners, they have that lower down payment because it's also backed by the government, right. So that's one of the reasons that they have the lower down payments and investment properties. You know, you can throw your arm up and walk away from it. As a homeowner, you're probably not going to do that. So that's why you want to stick with that owner occupant kind of house hack. And that's what we call it as a house hack. Because if you're buying things owner occupant, less down payment, less interest rate, are.

There restrictions on that? Like could you just buy properties and live in it for three months and then rent it out and you just benefited from that?

Such a great question. You can't go through, right. You can't go through with ill intent, which Is I'm going to buy this and then turn it into a rental property and buying it owner occupied. Right. Because that's loan free fraud. Now if you're going through and you're buying it, I'm going to live here. And you have unforeseen circumstances that causes you to move out, move out of state and you have to rent the property, you can prove those right. You didn't do it with ill intent. But if you're doing it with the intent to like I'm going to buy this owner occupied and rent it out and then go do another one, you're eventually something's going to catch up with you because somebody's going to look at, well, three months ago you just bought a house owner occupant. You can't go buy another one. Owner occupant. Right. All that stuff will catch up with you. That's why we kind of have that 12 month seasoning type thing is because they want to see like did you do an owner occupant loan within the last 12 months? Now again, if there's extenuating circumstances, like let's say you got relocated to North Carolina and you bought an FHA property here and you kept it as a rental because you couldn't sell it. Well, there's rules that will allow somebody to make an exception to the rule in North Carolina to do another FHA loan because I got relocated, which you would have some sort of letter from your job or whatever the case may be.

Okay, is that really good question. Is that how you started your, is that how you started in your real estate?

Like yes.

Career would be that.

Yes, that was exactly how I started. We kept our first house as a rental for about 40 years. And I just did the dumb thing which is the price went up on it, we cashed out of it, we paid taxes on it and I never knew what happened to the $100,000. And if I rewind 24 years ago, had I kept that house, it's currently today worth four times what I paid for at 99 and it would have been almost paid off and the rent on it right now would have almost been 100% higher than what it was when we had it rented 15 years ago. So I regret selling it and not looking back and saying I'm going to keep every house, I'm going to keep the equity in it, I'm going to let it sit. It's not a credit card, it's not anything if it's got a good interest rate on it. I want it to be there. Now, somebody, some people have theories that once you get so many, maybe you do a cash out refinance and you move money into more investments. Those are things all to be discussed down the road when those things come about, because it's a game of chess, not checkers, you start moving assets once you have them or you leave them alone. You may take some of your portfolio and say, I'm just going to keep this here, but the other half I can sell, I can move. There's a lot of tax advantages to it, so there's a lot of different moving parts and there's a lot of variables. So you really don't, you really can't plan it out until you kind of get there. But every year you're reviewing it, going, well, do I want to buy another house this year and move? Do I want to keep this one? Because again, once you start buying investment properties that you're not living in, you have to have that 20% to put down, Right?

Right. So I think for me, I mean, my goal is to own again, like multiple properties, hopefully up to 10. Like that would. That, that, that is my goal. But again, with my income not being where I want it to be, getting to that point seems like such a, such a far place to go because it's, you know, I mean, okay, even buying one.

Okay, so let's, let's break that down. Okay. So that you understand. Because right now your thought process is, what I'm making now is going to be the same for the next 10 years. Probably not, right? So we want to break the myth of what is truly possible in what you're doing. And knowing that, hey, this is probably going to, my income is going to increase. If I'm saying, if I'm, if I'm willing to sacrifice for the next 10 years to buy lower properties and have roommates. Think about it, the roommates. If your house is $2,000 a month in mortgage payment and you have two roommates paying you $800 a piece, or better yet, let's say we get three roommates, right? There's four of you and each one was paying $800. Guess what? You are cash flowing while living in your home and you're not paying a penny to live there. Okay, now we're going to fast forward, right? I did that once and this is how it's going to work and now I'm going to go do it again. Right? And so you have, you've saved a little bit of money, which is that 3 to 5%. And now you're ready to go do it in the next 12 months to do it again. And we keep capitalizing on things to create that, because here's what it's going to create. This is where, this is where your eye to stay on the ball. Joey's 24 today. He owns 10 homes. By doing this once a year, by the time he's age 35, okay, we're speeding up the process because time is going to be on your side on this. So at 35, keep in mind your first house, the first mortgage is 10 years paid off. It's a third of the way paid off. The second house is not shortly behind it, right? So you start looking at those, those strategies. You have 10 homes that are rented, okay. By that time you're probably married, you got a little kid running around. If you want one of those, I have two of them. Sometimes I recommend them, sometimes I don't. Just kidding. But you have those 10 homes, you've got a great job, a great income, and those things are just sitting, doing their thing. Those 10 homes, let's just say you paid $300 across the board for every one of those homes. They never appreciated and you put 5% down on each. Again, they never appreciated, they didn't change in value. You now have $3 million at the age of 55, $3 million worth of real estate that is creating probably $15,000 a month in passive income. That's free and clear.

Just by, just by doing that once a year and owning those properties.

Yep, yep.

Wow.

It sounds, it sounds simple. It's just not easy, right? Because one of the things that we don't talk about in all this, right, Is that some of your income is going to be utilized, right? You're going to have repairs. I call these bad days in the stock market. Stock's going to go down and AC is going to go out. So there's ways to protect ourselves from that and build reserves and those types of things. But that truly, had I stayed on that path, right, My life would have been drastically different. We had to speed it up. But we still have, you know, $25 million worth of mortgages right now, right? They're getting paid off. And that was, that was our goal, right? My goal is to have 50 single family homes by the age of 50, producing $50,000 a month in income. That was the big goal. So at 35, you have 10 homes now you're making a good living, you've got a good career. Now you're like, okay, we're going to do some more investing. This is what it's going to look like. It's going to be different or it's going to be the same pattern. I don't have to live in them now, I just have to buy them. Right. And you just keep on that investment strategy of I control this, I don't care if the prices go up or down, it doesn't make any difference. All I care is that it's paying down my mortgage and it's contributing to my future passive income. So it's kind of crazy to think about in 30 years from now, from February 16th, I could potentially have $3 million worth of properties. Even if I put a 10% appreciation over that. 10 over that? 20 years. 30 years. 25 years. 20 years. No, 30 years. See, I can do math on houses. I can't do math on age. Right. Even if 10% on that entire portfolio over time, it's $3.3 million. Right. If you want an average of 5% a year, that's a 50% appreciation over 10 years. What do they look like in 30? Could that portfolio be worth 6 million, 9 million? Who knows? But you're never going to know if you don't start.

Right? Right.

But the crazy thing is, is even if they don't, somebody else still paid down the mortgage. And I said this somebody the other day, they're like, that really makes sense. If I told you, Joey, at age 24 to go borrow $3 million, that's going to be your retirement at age 55 and somebody else is going to pay it off for you, would you do it?

Yeah, I would do it.

Right. That's what rental properties are. So you're like, I'm going to own $3 million worth of houses, I borrowed that for my retirement and somebody else is going to pay that down to zero. And Now I have 3 million bucks.

It's a no brainer.

It really is. And it's just, it's hard to get people in the concept because like, oh, you got to deal with tenants and all the other things. Like, well, you can deal with tenants or you have to figure out a way to make over 30 years. You have to figure out how to put $100,000 a year away for retirement. Can you do that? I'll take the tenant job all day long.

Yeah, me too, me too.

Right. So that's why the assets and there's, you know, there's so many other fun things to do with it and break it up and do different things, but those Are those are kind of your goals, right? So I wanted to get you excited is like, here's what happens in 10 years. Guess what? Even if you only hit five houses in 10 years, you're still light years ahead of anybody else. I mean, geez, you're light years ahead of anybody at 24. That's actually having this conversation. And that was. That's why I was excited for you. Allow me to kind of like have the conversation with you that I can use for social. Because these are the things that I want people to understand. And they don't get excited about it. They get nervous about expenses, they get nervous about the what ifs, but they won't ever take the leap of faith and go, well, let's try it, right? What's the worst case scenario? I don't know. You own a house, you have to move back into it. You got to sell it. I don't know. I mean, we can always do something with it, right? It's. You know, one of my favorite books is Keith Cunningham. It's called the Road Less Stupid. And what he puts in there is. It's not what you see, it's what you don't see, right? So when a lot of people look at real estate, they see, oh, I want to buy a home and I want to make it pretty and I want to make it fun. And they don't ever look at the investment vehicle of it. They're looking at the comfort side of it. So I try to get people like, hey, you can still make it nice. Just don't nest in it. You're not staying here forever because I'm going to come back and we're moving like, we're on to the next thing. If you want to retire and have a better life. And it's not just a better life, it's what are you going to change generationally for your kids or your family, whatever it looks like, right? They're like, okay, here we go. So those are. Those are some things that kind of look in that direction, I guess.

One more question I would have that I've been thinking of is with my mindset, going into the homeowning journey for myself, I'm trying to learn how to rephrase this. What would you say are things that are worth investing in in the home if you know it's not going to be like a forever thing, but it is something that you want to own and rent out? Like, how do I know what to put money into with the home that isn't, I guess, stupid? Like, what is a smart thing to invest in?

No, I love that. That's. That's an amazing. That's an amazing question. Here's the cool part. When we, when we're looking at houses, I'm going to actually have you visualize that this is going to be a rental. And if I was going to remodel or do things to it, I would do this. And so what I'm going to help you understand is long term liabilities and long term maintenance. How do we solve for it? So I'll give you a couple of examples. So if you're like, you know what? I really like this place, but the bathroom's kind of crappy, I'm gonna remodel it. I'm gonna say, cool, let's remodel it as if the tenant is going to live here. What are we going to do? We're not putting pretty tile on the backsplash and the walls. We're using cultured marble. Because cultured marble lasts longer. The grout doesn't tear out, it doesn't leak. And the tenants are going to take care of that. So we're going to do it that way. It's going to save some money. It's still going to look nice. Hey, I want to take the carpet out of the living room. Cool. Let's put tile in all the living and traffic areas and just carpet in the bedrooms. Right. If you're going to paint, let's paint a solid color that we are always going to be able to use. Do you see what I'm saying? Right. If you're going to change the countertop, so you start looking at things that are going to make the house tenant proof, less maintenance for you in the future. Right. And I would say this too, which is kind of a weird thing to say if you're like, hey, you know what? I'm gonna live here a year. The AC unit is definitely on its way out. You don't want to replace that AC unit until you move out of the house.

Yeah. Because you want it fresh for them.

Well, no, it's not that you don't want it fresh for them. I mean, I'd want a new AC for me. There's no tax write off for you as a homeowner to make that repair. It's 100% a tax write off once it becomes a rental property.

Okay, that makes sense.

Right?

Okay, I see.

So it's like, okay, when, when do I do this? When do I want to capitalize on these expenses? So during the time you live There, like, you know what? I'm good with the way it is. I'm gonna sacrifice, maybe throw some paint on the walls. There's some things that I do want to do, which we'll see when we go out look at houses. Like, there's some things I want to do. Okay, cool. Let's save the money. Turn it into a rental property. The minute you move out, do those repairs. Because now they're capital expenditures that you didn't get to write off when you own the home, but they are capital expenditures. Once you are, keep it as a rental.

Okay.

There's, there's a lot of strategy and games to play with this. Right. And you're doing the right thing. Right. By having this conversation. It's going to make your mind work. You're going to see everything differently now because now you're like, okay, cool, now I get it. Right? This is exciting. And then you start, like once you get excited about it, you're like, dude, we can do this. Or what about this? Right? You'll probably ask more question like, okay, slow down. We're not buying a 20 unit apartment complex yet. Like, hold on. Right, but those are all the fun parts of once you get to start understanding it. Just the games you get to play with it and how you get to manipulate things.

Yeah, there's a lot of, there's a lot of wiggle room and a lot of things you can do to set yourself up for success.

Yep. And the cool thing is it's something that we need every day is we need shelter. Right. So it's something that everybody needs and it's something that we own and we get to let somebody help us pay it, pay it off.

Yeah, it is exciting. It's very exciting. I appreciate it.

Well, awesome. So. So you ready to start down that path and talk to a lender and kind of get going on this?

Absolutely.

Awesome. Ready, Joey? Dude, such a great call. Thank you for allowing me to record this and share it. You know, if you guys are thinking about buying a house or just starting, here's my advice. Seek somebody out that has some ideas and guidance so that you understand what's possible. Joey really understands what's possible now and I was excited to have this call. So thanks for joining us, Joey. I appreciate you have an amazing day and I will connect you with our lender and we will move this process forward.

Thank you, Steve. We'll talk soon.

If you are looking for a real estate strategy or coaching, mentoring or community to belong to, pop over to Steve D. Valentine and let's connect. This is a place where everything lives. And I am hoping to help you build your real estate, wealth, life and legacy.