How to Discover True Success in Real Estate

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, www.thelandgeek.com. and today's guest I'm really excited about because he's a wholesaler flipper. We're going to learn all about that. But I'd be remiss if I didn't properly introduce my co host, the brain, the professor. You know him, you love him. Scott Todd from Scott Todd. Net landmodo. Com. Learn anything about anything. Investorninjas.com Scott Todd how are you? Mark?

I'm great, how are you?

I'm great, I'm great. You know, be great if we could learn how to create enough passive income to quit our miserable corporate jobs. Oh, that's right. Our guest today knows how to do that. Brian Elwood from brianellwood.net. he got into real estate investing for the same reason as a lot of people. He read Rich Dad, Poor Dad. He wanted to use passive income to pay his bills so he so he could quit his miserable corporate job and have control over his time. Fast forward in four years he built a successful wholesaling flipping business. He's doing a million plus a year and has a team of 10. But he was making good money but no control over his time. Frustrated, he realized he simply created another job for himself. Today he has shifted his entire focus towards creating passive income. He's acquired a portfolio of a few dozen rentals and shut down the, the flipping business for good. Brian Elwood, welcome.

Thank you so much for having me, Mark.

So Brian, let's just rewind the tape. Tell us about this miserable corporate job and when the light bulb went off and how you went from another full time job, which is probably better than your other full time job, into complete freedom with passive income.

Yeah. So I did corporate America like everybody else and just hated it. Very depressed and unhappy. Fulfilled as a lot of people can probably relate to. And I got a job. I quit the corporate job and got a job at a grocery store because I was like, I just need some space to think and plot my next move, even if I'm going to make eight bucks an hour for a little bit. And I met a guy there who rehabbed houses and I bugged him enough, he started teaching me how. And around that time I also read Rich Dad, Poor Dad. So I start bird dogging for him, just finding deals for him and he's paying me like a thousand bucks a deal. So I remember that year like I quit the grocery store and I was like, I'm gonna work for this guy full time. And I found him seven or eight deals in the next 12 months. And so I made like seven or $8,000 that year total. But I learned so much about finding deals, analyzing deals, and, you know, and I'd read rich dad, poor dad, right? So passive income was the dream, but I kind of put it on the back burner like you probably see a lot of people do. And I got seduced by wholesaling and flipping for the quick check. And I just went full into that business. You know, I was in the masterminds, trying to learn from the greatest wholesalers and had coaches, and we just kept scaling. We kind of were lucky time wise. You know, direct mail would just. You could get a 10% response rate with direct mail, you know, back in 2012. So sure. Yeah. And there wasn't as many, you know, other competitors. So, you know, we scaled the whole sailing and flipping thing to doing over 100 deals a year, had eight or nine employees, and like you said, that was better. I was making good money on my tax return every year, but I'd wake up every day and I'd be like, oh, my gosh, I have a call with my office manager. I have a call with my sales team. Then I've got to have a call with my coach, and I've got to hold everyone accountable. And I just was, being the CEO of a company is not a passive endeavor. I don't know why I thought it would be. Everyone thinks you can just totally automate businesses, but it kind of depends on the business model, I think. And I wasn't able at least to automate a big wholesaling flipping machine where I could just piece out. So I got frustrated and just started focusing on buy and hold. And I got enough rentals to pay my bills. I shut all that down. Now all I do is look for more rentals and just teach other people how to do that as well.

Fantastic. Scott. Todd, what are your thoughts?

Marc, it's funny because we read a.

Book, okay, like, we read, called Red Poor Dad.

Like most people, most people that we talk to on our podcast, it's like, I think for everybody, it's like, oh, wow, I get it. It's, you know, I'm gonna go down the real estate path. And like Brian said, you know, you have this information to go create passive income. He talks about how, like, houses are systems, and systems are what supports the passive income. And yet a lot of people don't go follow that advice. They go the route, like Brian said, like, I'm gonna go wholesale because it's good money today. So you know, it's that, that whole self gratification, right? Like if I just delay the gratification a little bit, I can really build something without having to go what Brian, the route that Brian did. And so, you know, I'd be interested in like Brian, as you think about that, like why do you think that we have this information that says go build passive income, but yet then we're going to go and fulfill or create this wholesaling business or in our case, Mark, we see it too like wholesaling of land. People just want to go and they want to wholesale land only without ever taking the time to build a passive income. And it's truly the passive income that sets you free. It's not. I mean you can go like Brian said, you can be the CEO of a big flip wholesaling company or flipping company. Why do people not just follow the recipe that's laid out like Brian, what do you think?

That's a powerful question. Because I think a lot of people are in that boat. I think there's two reasons. One reason, and I remember when I first got into wholesaling is I liked the idea of limited risk. Like I'm just under contract, I have this piece of paper that I'm gonna assign to somebody or I could just totally walk away from it. So I'm either gonna make money on this piece of paper or I'm gonna walk away. So it's like I didn't have skin in the game. Whereas like, and I did like probably a hundred deals before I even kept a rental. And I was still real scared to keep that house. There was something very permanent about it. Like, oh my gosh, now I actually have to learn how to like get a contractor's estimate. I used to just make the buyers do that, you know, as a wholesaler. So I think a lot of people like the idea that they're not going to lose a lot of money, you know, by getting into a rental and then the other piece. What was I going to say? That they don't want to lose a lot of money and oh, it's that they just don't have money. Right. Like when I got into wholesaling, I just didn't have any cash. Right. And so it's like if you don't have oxygen, you know, you can't think about anything else but breathing. And so, you know, I recommend my clients to have it like 3 months of savings and then maybe another 5 or 10k to play with. Before they start buying rentals, I don't want them to fly so close to the water that they're super anxious and freaking out about every deal that they do. Right. So just getting your head above water and having a little bit of breathing room I think can help people open their mind up to the idea of buying a rental too.

Yeah, that is a really smart way to look at it where when people are getting into real estate they, they want initially, I think to solve their money problems and wholesaling flipping you, you solve money problems. But ultimately we can always make more money. We can't get more time and we start to devalue our time. And when you can solve both, that's really where the magic happens in life. Because now you've got time to really explore with your higher purpose in life. Move up Maslow's hierarchy of needs into self actualization. But if you're constantly hustling solving money problems, you don't ever get to the time part. Which is interesting, but it's also a practical reality because if we're wracked by fear of not having enough money, then we're just holding on too tight. We never even do anything because it's just, we're just in this fear mode. So I really like that idea, Brian, of having some savings, having some money saved up. So you're not going into it, you know, just freaking out that I have to do this and has to work and if it doesn't I'm out of the game. So that's, I thought that was, you know, really great way to answer that. So why then? So not why, but so let's go into rentals. Right. Where are you on the monopoly board and where do you recommend people go on the monopoly board to start getting started in rentals?

I'm doing like single family, small multifamily kind of purchases. I buy in like Tennessee, Alabama, Arkansas, but I live in Denver so I do it long distance. C class neighborhoods. You know, a lot of the houses might cost 50, 60k and rent for 8 or 900 bucks a month. I love that they're in you know, working class neighborhood. It's not a high crime area. You know this, it's that sweet spot. That's what I got my freedom through. And so that's what I teach people how to do. Although you know, I was actually checking your guys stuff out prior to this. And land is something that I'm interested in learning at some point too. And so I don't want people to hear my Strategy and think, oh, it's another shiny object, right? Like maybe they work for this guy. People should realize, like every strategy works, or at least most strategies work if you stick with it and you're consistent. But so it's really about picking the best one that resonates the most with you and then sticking with it for like a minimum of five years, not six months, not three months. I know I'm going on a bit of a tangent from what you asked, but it's a little something I'm passionate about.

No, no, I love it, Scott. Todd, what are your thoughts?

No, I think that's the thing is like, you know, it's important to understand that like really anything will work, right? A strategy will work. It's not tied to just certain things. And I think that that's a limitation. Another self limiting belief that people put on themselves is the fact that, oh, well, it only works for this guy in this particular piece, as opposed to really kind of looking at what people are doing and figuring out how to replicate it in some fashion. Right. You know, I think that's a big deal. And just because you're doing it here doesn't mean that it won't work over here. In fact, there's entire people that make lots of money because they take something that's working over here and they put it over here into this business and then it blows up. So don't limit yourself.

Yeah, the Blue Ocean strategy, I love that. So, Brian, what's some of the worst advice you see or hear given in your area of expertise?

Hmm, that's a good question. You know, I'm gonna go with some advice that I was recently giving to people and realized it was bad advice. And I think it's very relevant to where the market is right now. And the advice that I gave was to find markets that are big and growing in population and look to purchase houses in those markets, because that's what I've always done. You know, I started in Nashville and I bought some rentals and I got a lot of appreciation. And then it got too expensive. And then I went to some towns outside of Nashville, got some rentals there. The growth spread. Now those are just fix and flip towns are too expensive. Then I go down to Huntsville, Alabama and buy some rentals. And then all of a sudden it's too expensive and competitive. And now I'm over in Little Rock, Arkansas and it's like, I've always been pushed out of the markets I was in because the growth raised the prices. But I thought it was cool, because you get appreciation when you're in those growth markets. But then there's this point where you're, like, capped out and you got to go somewhere new. And I was advising people to do that. And I'm noticing people looking in these markets that are growing and they're having a really hard time finding deals. And I realized a couple things. Like, one is just because a market has cheap houses doesn't mean it's a good market to invest in, because some huge towns like Indianapolis or something has 900,000 people, and there's $10,000 houses on the MLS for sale. But every house that's cheap in that town is in an area you wouldn't want to own a house. And so there's a couple of. I've shifted my criteria. I actually think now that the key to success today here in 2020 and buying rentals is to look in very linear and boring markets where the prices don't change, where there's just a ton of cheap properties and there's not a lot of people talking about it. Like those top 10 markets to invest in, that they publish on bigger pockets, you know, and it gets. Everybody's going there, and then everyone's complaining how they can't find deals. You know, one of my coaches was like, you know, I'm buying rentals in Tulsa, Oklahoma. Nobody's looking here. There's just rentals everywhere to be had. I'm like, really? Why am I making this so hard on myself? Why am I not just going where the grass is greener for the time being and stop fighting against what everybody else? So this is, like, recent epiphany I've had, and I've gone back and changed my position on this. And I don't know that a lot of people understand this yet. And they're just sitting on the sidelines saying that you can't do deals right now.

Interesting. Scott Todd.

There's always deals, man. There's always a different market, right? Like Jim Cramer says, like, there's always a bull market and you got to go find it. So, you know, there's always activity. And I think that, like, I, like, I just think that when people say, like, there's no deals or they're too expensive or I'm not getting the response rate, well, then what are you doing about it, right? Like, what are you changing? What are you tweaking? What are you measuring? Like, where are you going? Think about all these things, Challenge yourself, because it's. People are doing it. You just gotta. You just Gotta, like, look for the clues and then go do it too.

No, absolutely. It's funny because when you hit that brick wall. Well, you know, if you're hitting a brick wall, everyone else is hitting the brick wall. So who's got the grit to go through the brick wall? Who's got that persistence? Who's got the creativity? Who's going to keep going? And then next thing you know, you get through it. You're like, oh, look at this. I got a nice little market here. So it's just a different mindset as opposed to, oh, this is just too hard, too competitive. Yeah. Scott Tyler, even though it's Jim Cramer, I do like that quote.

I mean, like, Mark, I'll tell you, one of the first real estates that I looked at was mobile home investing. Not the park, the actual mobile home, the trailer. Right. Like the mobile people live in. And, you know, people were doing these mobile home deals and they're offering owner financing for them and all this other stuff. Well, you know, like there was a guy who wrote a book. He was based in Virginia. Okay, so he writes this book in Virginia. Well, then when I started looking at it and I'm living in Florida, and you start to follow the law. Well, the law in Florida says that if you do more than one deal a year, then you're a dealer, and you have to have a dealer license, which means that you have to go and you actually have to have a showroom. So you have to have a minimum of one anchor. It's the same dealership as, like, a car dealer. Same requirements. So you have to have a minimum of one acre for this, you know, dealer license. And it's completely stupid, you know, like, it's a. It's a stupid law. But then all of a sudden you're like, well, I guess I can't. It doesn't work in my neighborhood. Sorry. And so you give up and then you go, but if you're thinking, well, then, like, what does that mean one. Does that mean that, like, I can only sell one a year? How do you identify what a sale is? Is it when it actually transfers the title transfers, or it. When, like, owner financing? You know, like, there's ways that you can start to work around these things. Is it one per llc? Is it one per. What is that? What is it? You know, like, there's different ways to approach it, but if you just throw your hands up in the air and go, oh, it's not meant for me. It's not going to work in my state, or, you know, it doesn't work in my little area. Okay, well, what says that you have to be local? Why can't. Why can't I pack up and go buy properties in Virginia, for example, where it does work? So it's that. It's like, you're not a tree. You're not rooted to the ground. You have feet. Go walk and move them and figure out how you can do it, make it work, if that's what you want to do.

Yeah. Which leads me to the next question to Brian. He's in Denver, which is arguably one of the better places in the world to live, but he invests in traditional Midwestern cities. So, Brian, how are you doing that in Denver? I mean, I assume you're buying these. These things site unseen, or you have a team go out, like, how do you do this?

Yeah. Just real simply to break it down for you. I'll send direct mail to the sellers, and then I have a guy that I'm partnering with who'll take the calls. And then once he gets something under contract, I'll get a home inspection done and a contractor bid, and I'll have either him or someone else act as project manager, maybe a property manager. There's so many people that you can pay 500 or 1000 bucks to total to oversee, like, a minor rehab of a property and to visit the property a couple times a week. So I'll get someone in that position, and then between the home inspection, the contractor estimate, and my project manager, I'll kind of make the final buying decision, and then they will oversee the rehab. I just kind of check in weekly, call and okay to disperse the next payment to the contractor, and then we just hand it off to the property manager. And that's the whole process.

Pretty simple. I like it.

Yeah, there's a lot of little nuances in there about how to protect yourself from, you know, getting screwed on a contractor. But you're right. Like, if you think about if I was there, if I was in town, which is this is everyone's biggest hang up, you know, I'm not there. It's like people act like they are some super superman, you know, if I was in town, do you think I know more than a home inspector who has 25 years of experience, you know, inspecting houses? Like, I don't even know a fraction of what that guy knows. So really, me being there provides no extra value versus me being on a zoom call with the people who are there. So that's a big thing people need to get over to be able to do deals because a lot of people don't live somewhere like me that makes sense to buy rentals.

Wait, say that again. A lot of people don't live somewhere since like the Denver market doesn't make sense.

Correct. Yeah, yeah.

To buy rentals. So how do you go through that analysis of this? Makes sense? This doesn't make sense.

Well, the biggest first thing is rent to price ratio. So you know, what's the rent divided by the all in price. And you guys have heard of the 1% rule before. I like to see stuff around 1.5%. I think that's where you really get the 2 to 300 bucks a month in net cash flow when you all sort everything out. So a market needs to have that. I used to say a growing market. Now I like a flat market where the population has stayed flat because it just keeps the excitement away. Size, I like 50 to 250,000. Population size. Vacancy rates low, you know, 5, 6, 7%. I like to see some real estate investor activity there. If you, you know, there should be some activity anywhere that's worth its salt, I would think. Plus that's the quickest way to get plugged into who are the best property managers, who are the best contractors, is to leverage people who have already been there a while. And then, you know, economic diversity. You wouldn't want to invest in a one horse town that was all dependent on an automobile plant or something. I did that before and the automobile plant left in the town, town crashed, you know, and so, you know, some diversity. And that's pretty much it. You know, as far as criteria, I think if you have those things and you're looking in C class neighborhoods, you're gonna do okay with rentals.

I know what you're thinking, Scott Todd. Success leaves clues. Am I close?

Successful excludes. But I'm also thinking, man, I don't do any of that for my land business. I just buy land.

Yeah, he's got a little bit more involved model. Which leads us to today's sponsor, which is flight school. Learn how the next 16 weeks can literally change your life. Start building passive income without renters, renovations, rehabs or rodents. You don't even have to know what the 1.5% rule is. There is no rule when it comes to buying and selling raw land. Go up that mountain of land, investing with someone who's done it literally thousands of times with Scott Todd. Go from nothing to doing deals in real time. Plus we guarantee that the education investment, you're going to make it back 180 days or less where we're going to refund you. Just show us that you're doing it. Just show us your work. Learn more. Go to thelandgeek.com training thelandgeek.com training so, Brian, we're at that point now in the podcast where I think your mentorship has been great. But we're going to ask you for one more nugget of wisdom. A website, a resource, a book, something actionable for the art of passive income listeners to go improve their businesses, improve their lives. What do you got?

That's a big question. I'm trying to think of the one thing that would just really help people out. You know, I've noticed that the clients that I have that are always successful have a really high degree of necessity to be successful. Like, they have a strong emotional need to succeed. And they can bulldoze through any obstacle like the one Scott was talking about, you know, with the mobile homes, if they have a high degree of necessity. And so there's a book called Psycho Cybernetics by Maxwell Maltz. It's one of the greatest books written on mindset. Just read like the first three chapters of that book and it will just rewire your brain to give you a different level of confidence and clarity and vision for yourself. And it'll help you with the mindset piece because I believe in you guys. You can figure out the strategy if your mindset's in the right place. Place.

I love it. I love it. Scott. Todd, what's your tip of the week? Mark?

Check out this website. It's SimP DF S I M. PDF Sim D PDF Sim PDF PDF.

Is this another PDF filler?

No, this is a PDF editor. So you have document. Well, then you just upload it. You click on what you need to change. You can change bold italics. You can change the font. You can. You can change the words that are in there. Just go change the PDFs all around. Have fun with it.

Wow, this is great. This is great. How'd you find this?

Come on, man.

I got all kinds of tools, man.

See? See why I love having Scott Todd as a co host. Brian.

Yeah. I didn't know you could edit PDFs until now.

There you go. Breaking news.

It's huge. Well, my tip of the week is to learn more about Brian Elwood at all places. Brian elwood.net and start learning about how you start building passive income and becoming totally free with rentals. He'll teach you. Brian elwood.net Brian. Brian, are we good?

Yeah. Another place to reach out is my Facebook group. It's called 12 Houses to Freedom, and I do a free live training in there every Monday. And just thanks for having me on. I appreciate you and you're doing huge things, and if people are into investing in land, I think you're the go to guy and they should listen to you. And I might reach out to learn it myself from you sometimes. So thanks for everything you do as well.

No, you're welcome to. And you would not be the first person that we've had on the podcast go through the training because they love the model so much juxtaposed next to their. Their model. But look, like you said, it needs to resonate with you. So just because we love it doesn't mean you're gonna love it, but certainly, you know, learn more about it. Which leads me to the point I want to thank the listeners and just remind them that the only way. The only way we're gonna get the quality guests like a Brian Elwood from BrianEllwood.net is you can do us three little flavors. You gotta subscribe, you gotta rate, gotta review the podcast. Send us a screenshot of that review to supporthelandgeek.com we're gonna send you for free the $97 wholetailing course, how to double your money 30 days or less. So please do that. Scott, Todd, are we good?

Good, Mark.

All right, let's do this. 1, 2, 3. Let freedom ring ring. Yeah. All right. Thanks, everybody.

Thank you, guys.