The Game-Changing Move You MUST Make In Business || Bullet Wealth

And at first I was very resistant and hesitant to it because I didn't have the mindset around learning something new. It was fearful because I don't have any experience in it. I was not a trades person by any means. I had no real estate background. So I really pushed my biggest supporter, my wife, away and I told her, good luck. Well, fast forward. She got me convinced on board. We did our first deal after going to a bunch of networking events and getting confidence through like minded people. And we had a proof of concept. And from that proof of concept, we just rolled it year after year into amassing a very large portfolio. Within five years, both of us were able to leave our jobs.

Cj, welcome to the Bullet wealth podcast. How you doing today?

I'm doing great, Scott. Thanks for having me on.

Yeah, thank you for taking some time to share with us. And I think just a little bit of your background would be a really useful starting point, just so people can understand where you're coming from.

Yeah, I mean, basically real estate was never really my focus. I had a W2 prior to being a full time investor and I was a UPS driver and I worked long hours and it was a good job, good benefits, good pay, good everything. And there's this time of year where we UPS drivers seem to take on a lot of work. It's called Christmas. I'm sure you've heard of it. We dawn on the brown Santa suit. And this one particular Christmas in my career at ups, it was by far the worst Christmas season I've ever experienced. It was the defining moment that got me to shift my thinking around trading my time for money. I spent a lot of time away from my family during the holidays, which I should be spending with the loved ones. I was frustrated, I was upset, I was angry. And at the end of that Christmas, I proposed to my wife saying, hey, I don't know if I can do this for much longer. Am I able to quit? She surprised me with the answer, yes. Then she asked me this wild card question at that moment, how are you going to replace your income? I had no clue. I had no clue. But the cool thing about her being on my side and encouraging me to leave is she already started diving in to look into what real estate could produce for us. And she focused in on buy and hold for cash flow, thinking that it will replace my income. Right. We build up enough doors and streams of rental income, it'll pay as if it was a paycheck. And at first I was very resistant and hesitant to it because I didn't have the mindset around learning something new. It was fearful because I don't have any experience in it. I was not a trades person by any means. I had no real estate background. So I really pushed my biggest supporter, my wife, away and I told her, good luck. Well, fast forward. She got me convinced on board. We did our first deal after going to a bunch of networking events and gaining confidence through like minded people. And we had a proof of concept. And from that proof of concept, we just rolled it year after year into amassing a very large portfolio. Within five years, both of us were able to leave our jobs.

Wow. And so a little bit more about that first deal that you guys did. So you went to a few networking events.

We.

What type of books and things like that were you reading at the time?

Rich dad, Poor dad was. Was like the. The holy grail at the time. And another book that she was reading was the ABCs of investing, which is a Ken McRoy from Rich Dad Advisors. I believe that was his book. She was reading that. And we were just applying a lot of what we've learned at networking events. People who have gone before and already had proven track record with building portfolios out of state for cash flow. And we just absorbed and took action on little things that they were feeding us.

And how did you go about finding that very first deal? How did you locate it? How did you run the numbers? How'd you get the capital? All those things.

I'd love to say it was all my idea and it wasn't. It was my wife's. She did a lot of the legwork up front of researching. I did a lot of the networking meeting people who were doing what we were looking to do out of state. And I collected areas that made sense for us. So we, we looked at a bunch of Midwest areas and Florida and we decided on three markets and we pulled the trigger in Indianapolis for our first deal and it was through a turnkey provider. We didn't have a team, we didn't have experience, we didn't know what we didn't know. And we felt it was the best decision for us to get our feet wet to just go with something that should be performing.

So you used something where there was already tenants in place for the turnkey provider? Yes, Got it. And then they kind of already showed you. Here's what the money you're gonna put into it. Here's what should cash flow. You kind of. They already provided all that for you?

Absolutely, yes.

And would you recommend for that to be a good spot for people to start just getting their first. Maybe rental property.

Yeah. My answer to that. I get asked that often. It just really depends what's going to get you to take the next step. And for us, we didn't have the confidence in doing some of the more advanced strategies like the brrr, which is what we do more of now, because we didn't know. We didn't know and we didn't have a team in place. So we felt at that time turnkey was good and if that's what's going to get somebody into the field of play, do it. Whatever gets you that next step to get into the game. Because what I've observed over the years, seeing and helping others get into similar situations like me with investing, is that a lot of people will choose to stand the sidelines waiting to find something that's going to be perfect. There's no perfect deal. You know, you get to get going and learn from proof of concept. Action's your best friend.

Got it. And just kind of taking that first step, getting going. And can we talk through a little bit about what the BRRRR is and what that means?

Yeah. BRRRR is an acronym and it's one of the strategies we implement a lot in residential and commercial. It stands for buy, rehab, rent, refinance and repeat.

Got it. So buy, rehab, rent, refinance, repeat.

Yes.

And is that refinance? You would think that that would not make sense in today's interest rate environment. Could you kind of talk through how that still does make sense even in a higher interest rate environment?

Yeah, it's more of understanding expectations around things you just don't control. So we don't control the interest rate, we don't control what the market's going to do. We can project forecasts and make informed, educated decisions on what we think is going to happen. And ultimately we get to own the result. And with the interest rates being the way it is, what we find in our community and the like minded investors we work with is we just alter the way we run our numbers. So maybe we're acquiring it at a lower price so that when we are carrying that higher interest rate, it offsets the difference that it would have been more favorable for a higher price with a lower interest rate two years ago. Right. So we're just playing with and adjusting. And for us, one of the things we like to talk about is pivoting. It's crucial in what we do. You got to pivot. Sometimes something comes up and you got to be able to shift and stay true to the deal because you don't know until you've created a result what you actually have.

Yeah. And then what's kind of your favorite tool for running some of these numbers then to kind of do those projections, forecasting and running those numbers?

Yeah, I use, we have a in house calculator we use that helps to populate out based on what you think the purchase price is, the after repair value. ARV is what you think rehab might look like. And it'll populate three different offers. You know, the best case scenario, mediocre scenario and turnkey scenario. So that way you have an idea of what you can submit based off of what they're listing at. The other thing that we use a lot is there's a tab in the Redfin that shows specific market update analysis in areas that you might be looking into. And it breaks down trends and flows of real estate. So right now in our area we're seeing about 50% less listings, which means it's kind of a dry market right now for acquisitions. A lot more people are looking at the same exact deal, which we get to be more aware of how aggressive we're willing to be in our risk tolerance for a deal to then acquire the same amount of deals we did last year.

Got it. And then we have a lot of people coming to us asking things about sub 2 and seller financing. What are your thoughts on those two things?

They're great. And they're specialty to a strategy, whatever that strategy may be. If you're flipping, if you're wholesaling, if you're buying and holding, you can take those sub 2 and seller financing and now you can go in deeper into each of those strategies. So can we do it in our market? Yes. Can we do it with our investment strategy? Yes. And we like to work with people to get, like I said, on the field. Sometimes going with that advanced strategy keeps you off the field because it's a lot more work and a lot more risk to get a similar result as if you just got a turnkey property to get your foot wet.

Yeah. Finding a seller willing to sell or finance seems like that could hold you off the field for a very long time. Just trying to find that perfect deal and then find. Seeing if they're even open to the idea of seller financing.

Yeah, exactly, man.

And then so just kind of getting going is what you recommend. Any sort of rules of thumbs of what you said tell people to watch out for something where they could really screw up that, that first deal?

Yeah. I mean, trust but verify. So after our first turnkey deal, it was a great opportunity. We chose to believe it was luck because we didn't know any better. We just, hey, somebody said buy from this turnkey company. We did. We never verified it. So we got lucky on our first deal. And then the second, third and fourth turnkey, our, our favor did not turn in, in our, our way. We, we had evictions, we had poorly done rehabs, we had under market rents. Things that we could have verified early on by simply taking the information and going into more detail and due diligence and, and due diligence is that window that incident inspection period, right. You have as a buyer when you're under contract on a property. We chose on the first deal to not do due diligence because we thought, okay, well somebody told us, a good friend told us to buy from them, we don't need that. And we got lucky. Second, third and fourth, we did the same thing. Then we got burned. We learned some very real life school of hard knocks lessons that cost us opportunity and cost us some time and money. And I don't regret it. I've learned so much from it and I've chosen to redefine that as an investment in my education.

And it seems like you do a lot of out of state deals. Why do you focus so much on the out of state?

Oh man. For me, when we were in Hawaii, I'm from Hawaii. And when we were in Hawaii the numbers just didn't support the cash flow goal that we wanted. The numbers made more sense out in the mainland or in the stateside. And another reason why is I have a tendency to want to control and take over things. Being thousands of miles away, I don't have that luxury of just simply driving to the property and going and fixing something. Even though I don't know anything. I don't know how to fix stuff. I'm not a handy guy, just that.

But you would go try, right?

I'd go try. And it's not the best use of my time or my skill set. I am not gifted in there and I can own that. I'm gifted in other arenas that are better utilized for what we do. Which is why thousands of miles away keeps me buffered from wanting to go and address things on my own.

And then were you going out and flying out and seeing the properties though before you would close on them or were you doing it just kind of.

All remote, all sight unseen basically 3,000 plus miles away and just learning the process of doing due diligence? From that far away and building and creating a trusted team. That was our biggest pivotal point is when we started to say, you know what turnkey is in our friend. We can do different things, different strategies. However, I get to get better at networking and creating that team.

Oh, wow. And so now you're kind of staying away from the turnkey and you have your own service providers and managers and all that.

Yes.

And then are you using brokers to find these deals too in the different cities?

Any way I can get a deal, I'll do a deal. So I've done deals off of Facebook. I've done deals off Craigslist when it was a thing. Now it's not so much much. You know, I've. I've done deals with other investors who are flippers that may have too much on their plate or the numbers are a little tighter for them as a buy and hold. My numbers can be a little bit more padded, I guess, on the front end. I've done deals where I straight off mls, you know, a lot of our agents that we work with, I've done so many that some other agents will give us pocket listings before it even goes live to say, hey, just want to see your temperature on your buyer. What would he offer? What would they offer on this property to avoid the having to go back and forth and negotiate? You know, so whatever way I can get a deal, I'll make it work.

Gosh, that's awesome. That's a good mindset to have. And so what are your goals now for the. For the company?

Yeah, the portfolio side, we stepped into a lot more commercial over the last four years. So we've taken that. Well, we like to use the monopoly analogy. You buy your properties, you add those green houses, eventually you get to trade them in for red hotels. That's what we're playing with in this season is continuing to trade in that large residential portfolio we had and piece it off and roll them into larger deals like commercial assets. So we're doing the 10:31 play. 10:31 exchange play on a lot of the properties that we have.

You could just talk through what that is real quick for people.

Yeah. So 1031 is basically a method that you can use to sell off an asset that you've held for over two years and not pay the gains on it, basically kicking down the gains down the road. And you get to buy like, kind at or above what you sold it at. So a simple way I like to explain is if I bought a house for 50,000 and I sold it at 100. My capital gains is now $50,000. Do I want to pay the taxes? No. Great. So what can I do? I can go and roll that into a 1031 exchange and then buy something like kind at 100 if not higher and tap into that equity tap tax free to now compound and scale my portfolio value.

Amazing. And any other final thoughts for someone just getting going, wanting to learn more about this space or and also find you?

Yeah, I mean thoughts would be is go and take action. You know, OG Mondino, the Greatest Salesman in the World is one of my favorite books I read yearly. And one of the key lines that I repeat to myself is I will persist until I succeed. It is a model that I've lived by. I continue to repeat it to myself because that's what gets me going further beyond what I'm comfortable doing. And if you found anything that I talked about of value and you want to follow us, our Instagram handle is nmproperties. Or you can go to a website called why not now in realestate.com and claim a free gift that we would love to give you.

Amazing. Cj thank you so much for taking some time with us here today.