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welcome to personal finance for
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long-term investors where we believe
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Benjamin Franklin's advice that an
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investment in knowledge pays the best
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interest both in finances and in your
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life every episode teaches you personal
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finance and long-term investing in
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simple terms now here's your host Jesse
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Kramer hello and welcome to personal
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finance for long-term investors my name
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is Jesse Kramer and yes if you missed
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episode 100 we recently rebranded from
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the best interest podcast two personal
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finance for long-term investors I
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explained the reasons in episode 100
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though to be fair you might hear me slip
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up from time to time I think three plus
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years of podcasting habits are slow to
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fade away but anyway welcome to personal
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finance for long-term investors and
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today we have Chad Carson joining us in
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the world of blogging podcasting YouTube
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Etc I consider Chad to be one of the
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most straightforward and helpful
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resources on the topic of residential
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real estate investing and being a
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landlord two top ICS that my regular
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readers and listeners will know that I
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don't spend too much time talking about
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Jad has some serious chops on the topic
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and what I really like about his message
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that it's very approachable to people
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who are either one just looking to learn
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more and and potentially get started and
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or two not interested in a real estate
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Empire per se but rather just interested
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in a quote unquote small But Mighty real
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estate portfolio you know a couple
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houses one house three or four something
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like that but before we get to Chad
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today let's do a customary review of of
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the week and then I want to explain a
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little bit of my personal feelings on
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residential real estate so this review
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comes from shenanigan 7 who said
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personal finance content that everyone
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needs five stars Jesse is such a natural
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podcaster who knows how to connect with
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his guests and dive into their stories
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with easy conversation the valuable
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lessons covered here are what you would
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get from Paid coaching or advising start
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downloading episodes now and expand your
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knowledge thank you shenanigan uh if
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you're listening to this drop me an
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email to Jesse bestin interest. blog yes
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my email address is still associated
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with my blog the best interest so the
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email address is jesse. blog and we'll
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get you hooked up with a super soft best
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interest t-shirt and listeners thank you
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as always for the emails for the
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questions the YouTube comments the
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reviews on Apple podcasts the ratings on
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Spotify I really appreciate it if you
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haven't done so yourself please share
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your thoughts with me and share your
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thoughts with prospective future
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listeners let them know why they should
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tune in too okay so let's begin to talk
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about residential real estate investing
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in residential real estate it's an
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interesting topic for anyone looking to
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build wealth especially for those who
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aren't necessarily convinced about the
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idea of stocks or bonds or more
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traditional publicly traded Investments
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or maybe for people who are looking for
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diversification away from stocks and
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bonds I think one of the main reasons
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why is that real estate feels very
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tangible unlike stocks or bonds yes
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you're buying a piece of a business in a
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stock or with a bond you are loaning
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someone money and expecting to be repaid
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it doesn't necessarily feel Tang ible
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always because you're kind of buying a
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contract or buying a piece of paper or
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you're you're buying a line in a in a
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spreadsheet somewhere that says that you
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own a 100 shares of Apple real estate
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instead is something that you can touch
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you can live in you can drive by right
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to show off to your friends and family
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and it's also an investment strategy
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that many people equate with stability
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and long-term growth unlike say the
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stock market where many people see the
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volatility up the stock market and it
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kind of turns them away they don't
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really like it well other than a few
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rare occasions in history volatility
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like that doesn't exist in residential
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real estate it tends to be more stable
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but is it as straightforward as just
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okay buy a house step one rent it out
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step two and then rake in the cash step
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three well not quite so let's dig in
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starting with some of the pros I think
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one of the first and most obvious pros
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of residental real estate is the income
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that you receive if you buy the right
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property in the right location rental
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income can be consistent and and
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reliable stream of cash flow every month
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your tenants will pay you rent and after
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you cover your expenses like mortgage
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payments Insurance maintenance what's
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left over go straight into your pocket
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it can be a terrific regular income
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source and then there's the appreciation
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in the underlying asset now historically
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real estate values tend to go up over
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the long term and there are dips like
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2008 that can be very very painful dips
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but over the long run over decades
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property prices generally rise we've
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seen that in abundance over the last you
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know 5 to seven years and that means
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you're building your wealth without
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doing much Beyond holding the asset and
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then we get into some of the real magic
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of real estate and that's leverage right
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the magic of Leverage in my opinion is
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is one of the primary drivers behind
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real estate being such a powerful
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investment if it's done right now I'm
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sure I've talked about it here on the
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podcast I know I've written about it on
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the blog Leverage is also a financial
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weapon of mass destruction right we have
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to be really careful with leverage but
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if we use it correctly it can be very
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very powerful it's kind of like nuclear
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energy I suppose right it's the kind of
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thing that on the one hand can power
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entire cities and on the other hand it
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can also blow up entire cities right
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it's it's all about how you use it real
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estate is one of the few Investments
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where you can use other people's money
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that's a loan from the bank to make a
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purchase so if you buy a a $300,000
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property with a 20% down payment that's
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$60,000 of your own money but if you do
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it right you will reap the benefit of
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the entire $300,000 in value if the
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property appreciates by 5% well that's a
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$115,000 gain not on 300,000 it's A1
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15,000 gain on your 60 it's a 25% return
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it's hard to do that consistently inside
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of a a brokerage account investing in
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stocks and bonds now if the value of the
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property goes against you well leverage
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really hurts or if simply you don't run
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your real estate like the business that
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it is and and you really need to think
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about it like a business well maybe your
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income maybe your cash flow is negative
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and you're really not getting any sort
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of long-term benefit from owning the
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property the appreciation is nice but by
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the time you pay off your debt with
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interest included maybe you're not
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getting any sort of gain so again
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leverage can be very very powerful
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you'll hear Chad talk about leverage
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today and in the bigger picture it's one
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of the great Parts about real estate
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investing uh yes there are tax benefits
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too you can usually deduct mortgage
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interest property taxes and even some
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depreciation which is essentially Uncle
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Sam letting you claim a loss on an asset
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that actually might be gaining in value
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kind of just like finding random money
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in your pocket every year that's
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something that you'd want to talk about
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with your accountant to make sure that
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you are including the tax benefits
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properly in your annual tax return
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another big Plus in the real estate
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world as far as I see it at least is
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control when you invest in real estate
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you're not just throwing money into the
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stock market and hoping for the best
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you're not trusting your money with some
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other executive board to run a business
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as they see fit whereas you are just
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really a junior partner that doesn't get
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to make any decisions when you invest in
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real estate your own properties you can
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make decisions that directly affect your
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investment performance it is 100% in
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your control you can renovate to
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increase property value you can raise
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rent to match the market rates you can
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choose different types of tenants to
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minimize risk there's a level of agency
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here that you don't necessarily get with
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stocks or with mutual funds and then
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there's the diversification argument
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real estate can balance out your overall
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portfolio especially if most of your
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assets are in stocks and bonds when the
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stock market takes a nose dive well your
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real estate Investments are probably
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going to hold steady providing a hedge
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against that volatility but before you
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go out and buy your first duplex we need
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to pump the brakes a little bit and talk
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about some of the cons so first up the
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costs of real estate are one of the
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major cons real estate is not cheap
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you've got to come up with a down
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payment closing costs an emergency fund
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for repairs then there's the ongoing
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stuff the property taxes the maintenance
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the insurance the lovely calls at 2 a.m.
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when a tendance water heater decides
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that it's retiring early there are a lot
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of costs that can add up and if you are
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unlucky enough to pick the wrong
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property those costs can absolutely
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outweigh the benefits and that brings me
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to another point when it comes to the
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luck or the lack of luck of picking the
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right property we're talking here about
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the example I used before is investing
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$60,000 of your own Capital into a
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single house now for many of you
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listening you might not have $60,000 out
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there invested in a single company but
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having $60,000 in a single house is way
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riskier than having $660,000 in a single
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stock because when you have it in a
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single house you are investing right in
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in one single piece of property
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you're investing in one building that
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you hope was built right you're
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investing in one building that you hope
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all the previous owners took care of it
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you're investing in one neighborhood
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inside of one city right you're
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investing really in one market where
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you're really crossing your fingers that
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the long-term prospects for that market
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are are positive if you're investing
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$60,000 in apple well yes it's
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concentrated it is a concentrated
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investment don't get me wrong but at
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least in my opinion the risks associated
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with apple this massive company with all
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this momentum behind it those risks are
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far smaller than the risks of investing
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in a single property so that's one of
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the cons of investing in residential
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Real Estate another one are the tenants
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themselves being a landlord is not for
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the faint of heart the dream tenant they
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pay rent on time they keep the place
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spotless they never bother you they
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might even mow the lawn for you the
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nightmare tenant though they trash your
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property they ghost you on rent they
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leave you with legal bills to evict them
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and let's be honest tenants are humans
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just like investors are humans and we
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talk here about you know the the fail
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ability of investors and our lizard
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brain and our monkey brain leading us to
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do things that aren't necessarily in our
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own best interest well tenants are
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humans too and they have emergencies
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they lose jobs they just flake out
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sometimes it's part of the deal of being
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a landlord and it's no fun another one
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of the cons is liquidity real estate
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isn't something that you can just go log
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in and sell with a few clicks if you
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need cash quickly it's not going to be
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easy to offload a property especially in
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a down Market real estate transactions
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take time often months and they come
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with costs like agent fees closing costs
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legal fees that will eat into your
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profits we also have to think about
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Market risks right we already talked
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about this a little bit local economies
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matter a city with a booming tech
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industry might see property value sore
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but if that industry crashes so might
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the real estate market and risk isn't
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just National it's it's hyper local risk
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so you need to research neighborhoods
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school districts crime rates future
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development plans it's a lot of homework
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you'll hear Chad dive into a lot of this
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later on it's very interesting to hear
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his process one of the last cons that I
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think about is the time commitment real
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estate can feel like a part-time job if
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you're doing it right it probably will
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feel like a part-time job and if it
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doesn't feel like a part-time job it's
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probably because you are Outsourcing a
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lot of your work which also means you
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are Outsourcing a lot of your profits
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even if you hire a property manager
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you'll still need to manage them that's
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assuming you find a good one the passive
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income people Rave about real estate but
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it's not so passive when you're
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unclogging toilets or negotiating lease
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renewals or keeping up with the latest
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landlord tenant law
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so should you be a landlord if you're
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considering becoming a landlord I think
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you need to think about your own
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personality are you patient are you good
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at managing people are you handy or at
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least willing to pay someone else who is
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Handy being a landlord isn't just about
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collecting rent checks it's about
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solving problems some of those problems
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are as small as a leaky faucet but
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sometimes they're as big as a lawsuit
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you also need to consider your personal
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financial goals something we always talk
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about here are you looking for monthly
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cash flow are you banking on long-term
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appreciation May be both well knowing
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your goals will help you choose the
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right property because not all real
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estate Investments are created equal a
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property in a high growth City might
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appreciate faster but it also might come
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with lower rental yields a property in a
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stable Market might generate consistent
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income but offer little appreciation so
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you need to pick your poison there
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another consideration and a big
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consideration that we're going to talk
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about today with Chad is scalability
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owning one rental property might be
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manageable but what happens when you own
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five or 10 or more the challenges in
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some cases multiply
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but in other cases you get economies of
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scale working in your favor you're
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probably going to need to form an LLC
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for legal protection maybe even one LLC
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per property at some point you're going
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to want to hire a property manager or
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Outsource to a real estate investment
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firm they're great problems to have if
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your portfolio is growing but there's
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still problems that you need to solve
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for some people real estate investing is
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a fantastic way to build wealth and for
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others it's simply a headache waiting to
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happen and I can speak to this firsthand
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I have multiple people I know some of
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them clients so I I can really see under
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the hood and real estate investing
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commercial or residential the idea of
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real estate leverage right boring money
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and investing it wisely and and taking
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care of these properties has led to
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amazing success for them I also know
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some people personally who at at some
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point in their life owned some
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residential real estate you know maybe
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four six 10 doors something like that
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you know a couple houses in in a market
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and after five or seven or 10 years said
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this sucks I cannot wait to sell these
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houses I'm going to take whatever income
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and appreciation I've gotten so far I'm
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going to take all my chips off the table
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I hate being a landlord it it works
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differently for different people and and
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knowing yourself is a big part of that
00:13:08
if you're not ready to buy property
00:13:09
outright there are other ways to get in
00:13:11
the game There's real estate investment
00:13:13
trusts which let you invest in real
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estate without the hassle of owning
00:13:16
property crowdfunding platforms are
00:13:18
another option allowing you to pull
00:13:20
money with other investors to buy larger
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Properties or developments there are
00:13:23
private real estate investing
00:13:24
opportunities that's something where you
00:13:26
know I I work at a firm where 13 or so
00:13:29
years ago we realized that our clients
00:13:32
were coming to us asking us questions
00:13:34
about real estate investment
00:13:35
opportunities and we ended up providing
00:13:37
a service to those clients where we will
00:13:40
go out and find opportunities for them
00:13:41
to invest in really interesting
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lucrative uh vetted investment
00:13:46
opportunities but it takes all the heavy
00:13:48
lifting off of our clients right it puts
00:13:50
the heavy lifting onto our investment
00:13:52
analysts forming the LLC etc etc etc but
00:13:56
then at the end of the day the
00:13:57
individual investors folks like you
00:13:59
they get the the benefits from investing
00:14:01
in this real estate so these kind of
00:14:03
Alternatives whether it's a re a
00:14:04
crowdfunding a private investment they
00:14:06
can offer diversification and
00:14:08
potentially strong returns without the
00:14:10
Daily Grind of being a landlord so
00:14:13
should you invest in residential real
00:14:14
estate maybe maybe not but whatever you
00:14:16
do you got to make sure the numbers make
00:14:18
sense real estate isn't Magic right it's
00:14:20
just math and when you do it right it's
00:14:22
math that can pay off for for decades
00:14:24
and decades and decades but a solid
00:14:26
investment starts with a clear plan with
00:14:28
realistic expect ations and maybe a
00:14:30
really good plumber on speed dial here's
00:14:33
a quick ad and then we'll get back to
00:14:34
the show did you know my written Blog
00:14:37
the best interest was nominated for 2022
00:14:40
personal finance blog of the year and
00:14:42
it's been highlighted in the Wall Street
00:14:43
Journal Yahoo finance and on CNBC I love
00:14:47
writing especially when that writing is
00:14:48
to share financial education and I
00:14:51
usually write one or two articles per
00:14:53
week you can read them all at bestin
00:14:55
interest. blog again the web address is
00:14:59
bestin interest. blog check it out and
00:15:02
now we're going to bring Chad Carson on
00:15:04
to the podcast though most people call
00:15:06
him Coach they call him Coach because he
00:15:07
actually played football at Clemson
00:15:09
University You' never know it he's just
00:15:11
a kind softspoken guy not saying that
00:15:13
football players can't be kind other
00:15:15
than the fact that he's 6'4 and you know
00:15:17
clearly a strong athletic human being
00:15:19
you wouldn't suspect that he's a
00:15:20
football player what he is now is a real
00:15:22
estate investor World traveler uh father
00:15:25
and husband to a great family he shares
00:15:28
a lot of his real estate investing
00:15:29
expertise with the wider world of DIY
00:15:33
investors like you and specifically Chad
00:15:35
makes a strong case for what he calls
00:15:37
the small But Mighty real estate
00:15:39
investor saying you know you don't need
00:15:40
to own triple digit properties you don't
00:15:42
need to have a full-on real estate
00:15:44
management company instead we can start
00:15:46
with the end in mind start with your
00:15:48
goals in life start with your financial
00:15:50
goals and your timeline specifically and
00:15:52
then work backward to an appropriate
00:15:54
amount of real estate exposure for you
00:15:56
and your family and your personal
00:15:58
portfolio
00:15:59
anyway I don't want to bury the lead too
00:16:01
much so without further Ado here is
00:16:03
coach Chad
00:16:05
[Music]
00:16:09
Carson Chad thanks for joining us today
00:16:12
and I think of you as one of the
00:16:14
internet's go-to resources for the
00:16:16
everyday kind of mom and pop style
00:16:18
person who is interested in owning some
00:16:20
rental real estate perhaps they already
00:16:22
own rental real estate or a small duplex
00:16:24
or or something like that you know we're
00:16:26
not really talking the the Thousand door
00:16:29
real estate Emperors here but because of
00:16:32
that I can think of all these questions
00:16:34
that come to mind at least come to my
00:16:36
mind about owning a rental house maybe
00:16:38
it's the location finding good tenants
00:16:40
doing due diligence how to fund it or
00:16:42
Finance it and so I kind of want to
00:16:44
start going down that lane if that's
00:16:46
okay with you how does the average mom
00:16:48
and popop investor someone who might be
00:16:50
listening today go about getting good
00:16:52
answers to all those kind of question
00:16:54
marks before diving into this rental
00:16:56
real estate world yeah well thanks than
00:16:58
you for having me and thank you for the
00:17:00
introduction the thing I love about real
00:17:02
estate for people who are curious about
00:17:04
it is that it's not rocket science it it
00:17:06
can be intimidating but the good news is
00:17:09
that the things that make good real
00:17:10
estate Investments are very intuitive
00:17:13
and if if you've lived in a house as a
00:17:15
rental or lived in an apartment as a
00:17:16
rental or if you've owned your own home
00:17:18
some of the the reasons you chose that
00:17:20
property to live in are the exact same
00:17:22
reasons that you want to choose a good
00:17:24
real estate investment at least the
00:17:26
approach that I take for small I call it
00:17:27
small and mighty investors and so that
00:17:30
intuitive approach means pick locations
00:17:33
where people want to live it's it's as
00:17:35
simple as that like if there's a demand
00:17:37
because you want demand you want people
00:17:38
to live in your rentals you eventually
00:17:39
want to be able to sell your rental one
00:17:41
day so you want people who want to buy
00:17:42
it so like that when I'm coaching people
00:17:44
to pick locations which is probably the
00:17:46
first important most important
00:17:47
fundamental of real estate is you've
00:17:48
heard people say location location
00:17:50
location well it's because that is
00:17:52
you're really not buying a house you're
00:17:54
buying a neighborhood you're buying a
00:17:56
region of the country so I I almost look
00:17:58
at it like imagine your the solar system
00:18:01
you know the sun is the center of the
00:18:02
solar system well when you pick a real
00:18:04
estate investment you want to find a
00:18:06
city or a region that has like an
00:18:07
economic Sun you want a place where
00:18:10
there people have good jobs so I I I
00:18:11
grew up in Atlanta Georgia so Atlanta is
00:18:14
like the economic Sun so at the center
00:18:16
there's lots of jobs there's lots of
00:18:17
people working there and then I like to
00:18:19
but I'm a small investor so then instead
00:18:21
of investing right in the center of the
00:18:22
sun where it's really expensive I like
00:18:24
going to these satellite cities that are
00:18:26
like 15 minutes 20 minutes 30 minutes
00:18:28
outside the city and there's actually a
00:18:30
term that I read one time called serban
00:18:33
locations s Ur rb- an meaning it's
00:18:35
Suburban but it's got a little bit of an
00:18:37
urban feel to it it's got a town center
00:18:39
it's an old town that has a court square
00:18:41
or something where it's walkable and
00:18:43
it's still a good interesting place to
00:18:45
live it has its own gravity but it still
00:18:47
has it's still kind of close enough to
00:18:48
the Sun that you have jobs and and
00:18:50
people can work but then you have this
00:18:52
quality of life and this affordability
00:18:54
that happens more in the suburbs than
00:18:55
the city so that's that's one idea maybe
00:18:57
that's a good place to jump off yeah oh
00:18:59
it definitely is because a couple
00:19:00
questions immediately come to mind I'll
00:19:02
just start with one of them which is
00:19:04
that idea of kind of doing your own
00:19:07
Regional economic research it sounds
00:19:10
like as part of the house buying process
00:19:13
do you have any metrics or tips that
00:19:15
people can look into when it comes to
00:19:17
evaluating it's like naturally I would
00:19:19
just look in my own backyard but how do
00:19:21
I I'm kind of biased towards that so how
00:19:23
do I zoom out and really look at the
00:19:25
bigger picture of if I should even be
00:19:27
investing in my local region to begin
00:19:29
with well the good news is most parts of
00:19:31
the country actually are still are doing
00:19:33
pretty well the we have a kind of a
00:19:35
benefit of abundance in the United
00:19:36
States that and also Canada if people
00:19:38
are listening in Canada I mean just most
00:19:40
parts of the country are doing well but
00:19:41
I would say like that let's start with
00:19:43
the opposite of what you don't want a
00:19:44
place where you would not want to invest
00:19:45
is typically a place where the
00:19:47
population's decreasing population
00:19:49
growth and real estate investing prices
00:19:51
are very closely correlated and one one
00:19:54
of the reason you think about basic
00:19:55
economics is it's a supply and demand
00:19:57
thing it's really difficult although it
00:19:59
happens in Bur where it's really
00:20:01
difficult to build new housing because
00:20:03
of the cost of it because of zoning
00:20:04
there's a lot of reasons why but Supply
00:20:07
can be kind of limited it goes up and
00:20:08
burst but so really what you pay attent
00:20:11
attention to is the demand and so if you
00:20:12
go to like let's say for example you go
00:20:14
to a small town that has one Factory and
00:20:17
that factory goes out of business that
00:20:19
all of a sudden the demand for your
00:20:20
rentals and your sales is gone like
00:20:22
evaporates that's where you could see
00:20:24
houses going down by like 50% and that's
00:20:26
also why I say go to an economic Sun
00:20:28
there's tons of economic suns in the
00:20:30
United States like I mentioned Atlanta
00:20:31
you know the southeas the Southern
00:20:33
United States is doing pretty well right
00:20:35
in the last 101 15 years but the last
00:20:37
two years like as of 2025 what they used
00:20:40
to call the old Rust Belt you know the
00:20:41
Midwest Upstate New York those have been
00:20:44
some of the hottest parts of the country
00:20:45
so it's it's like I would say just pick
00:20:47
a place that and and use you don't have
00:20:49
to do like super analytical like if you
00:20:51
were a hedge fund or something you would
00:20:52
get really analytical quantitative with
00:20:54
this as a small investor I think you
00:20:56
literally can look at things like
00:20:57
there's a U-Haul if you go to U-Haul's
00:20:59
website they have a trend uh they can
00:21:01
they show you where most people are
00:21:02
moving in the United States like people
00:21:04
where the U-Haul trucks going South
00:21:06
Carolina where I live happens to be one
00:21:07
of the number one this year it's kind of
00:21:09
interesting but just like find a little
00:21:10
Trend like that look go to the local
00:21:12
Chamber of Commerce website to find out
00:21:14
what you know where do people work like
00:21:16
when when I'm coaching people I I say
00:21:18
like do a little one-page description
00:21:20
like almost like a promo of your town
00:21:22
why should I live there what what am I
00:21:23
going to do what's what are the
00:21:25
attractions here is it the natural
00:21:26
resources is it a lake is it the fact
00:21:28
that it has three S&P 500 Index you know
00:21:31
companies that are really big is it
00:21:33
because of the hospital this year like
00:21:35
there's something that's drawing people
00:21:36
to your town make sure you know why that
00:21:39
is and make sure it's a little bit more
00:21:40
of a diverse economy instead of the one
00:21:42
factory town yeah well you you you hit
00:21:45
on a lot of uh local pain points there
00:21:48
with the one factory town I'm thinking
00:21:50
to myself you know Rochester was the
00:21:51
home of Kodak back in the day and codex
00:21:53
demise even in a a metropolitan area of
00:21:56
a million people codex demise was really
00:22:00
impacted the region over the last 30
00:22:01
some odd years but to your other point
00:22:03
there Chad which is uh people are moving
00:22:05
back to the Rust Belt which I think a
00:22:07
couple of Rochester suburbs a couple of
00:22:09
our ZIP codes were in like some some
00:22:12
sort of metric whether it's like home
00:22:13
buys or days on Market being super low
00:22:17
the the idea being that demand for some
00:22:19
of our Suburban housing here in
00:22:20
Rochester is is on the rise again I'm
00:22:23
interested though Chad so kind of
00:22:25
personal finance and investing has this
00:22:27
common problem I'd say and whether we're
00:22:29
talking about real estate investing or
00:22:30
some other type of investing and the
00:22:32
problem is well we don't want to go in
00:22:34
blind so we want to do our research and
00:22:36
as we do our research it kind of builds
00:22:38
up confidence and hopefully eventually
00:22:40
we reach a point where we're confident
00:22:41
enough to P to pull the trigger and
00:22:43
actually go off and and do the investing
00:22:45
that we're hoping to do but a lot of
00:22:47
people get stuck and they either get
00:22:48
stuck on the hamster wheel of analysis
00:22:51
paralysis and they they keep on thinking
00:22:52
they need to learn more learn more learn
00:22:54
more and they never actually do the
00:22:55
thing they never actually invest or
00:22:57
maybe they end up on the other side
00:22:59
which is they dive in head first before
00:23:01
they even know how to swim and they end
00:23:03
up way over their heads is there
00:23:05
anything that you can recommend or in
00:23:07
your coaching experience with clients or
00:23:09
just in your own experience I mean how
00:23:10
do I build enough confidence to to dive
00:23:13
into this pool and and and actually
00:23:15
execute on it yeah well the first is
00:23:18
that you're absolutely right there's
00:23:19
there's a ton of things that can
00:23:21
overwhelm you as a new whether you're
00:23:22
doing personal finance investing in the
00:23:24
stock market or investing in real estate
00:23:26
I mean it could be overwhelming when
00:23:27
you're new and so what I think what I
00:23:29
can try to help with is let's narrow
00:23:31
down all of those things you have to
00:23:33
worry about to like the top things that
00:23:35
could really hurt you like one of the
00:23:36
things you really need to worry about
00:23:38
and we've already covered one of those
00:23:39
like location if you the biggest
00:23:42
mistakes I've made in my career have
00:23:43
been on a micro scale investing in the
00:23:45
wrong locations so if if you get the
00:23:48
region right if you just find a region
00:23:49
where it's generally good to invest and
00:23:51
then you you go to a location and I'll
00:23:53
give you a little rule of thumb this is
00:23:54
definitely not scientific but every town
00:23:57
has like a scale of prices like and you
00:23:59
know the highest price properties all
00:24:00
the way to the lowest price and Real
00:24:02
Estate Investors use like a rough rule
00:24:04
of thumb calling them A B C D the way I
00:24:08
look at that if if you go look on Zillow
00:24:09
this is an easy exercise to do the a
00:24:11
Properties or the a neighborhoods are
00:24:14
the most expensive properties in your
00:24:15
town both by price of resale and also by
00:24:18
rent so you can actually go on a Zillow
00:24:19
map for free and look at that today and
00:24:21
just say all right that's the a area
00:24:22
that's where the million dollar
00:24:23
properties are in my town well go down a
00:24:26
level and most by the way the a
00:24:28
locations are mainly owner occupied so
00:24:30
these are almost all people owning their
00:24:32
homes there's very few rental properties
00:24:33
in a location now go one step down we
00:24:36
call it a b location there might be like
00:24:37
80 90% owners but then maybe 10 to 20%
00:24:41
rentals that's one of my favorite places
00:24:43
to own right now it's one of the safest
00:24:45
place you're not going to get as good a
00:24:47
cash flow necessarily as you will going
00:24:49
down the rung of the ladder a little bit
00:24:50
to what like a CA location would be more
00:24:52
like a blue collar location this maybe
00:24:54
50/50 rentals and owners it might be a
00:24:57
neighborhood that's older kind of gone
00:24:58
through some transitions it used to be a
00:25:00
A or B but it's kind of it's gone
00:25:02
through all neighborhoods go through
00:25:03
Transitions and and then you get to D
00:25:05
and D D can be a little controversial
00:25:07
because sometimes historically it was
00:25:09
neighborhoods that were disinvested for
00:25:11
for all sorts of reason there was red
00:25:12
lining going on cities and so no fault
00:25:15
of the people who lived there it was
00:25:16
just a location that was just had crime
00:25:19
had things going on there are investors
00:25:20
who invest there and some of the dations
00:25:22
are coming back and doing well so
00:25:23
there's ways to make money there but
00:25:25
it's for a new investor you don't want
00:25:27
to start there probably want to start in
00:25:29
C if you have the the means to do it I
00:25:31
would say B minus would be a good
00:25:33
location in my town just to give you
00:25:34
real numbers today in Clemson South
00:25:36
Carolina which probably similar to
00:25:37
Rochester prices a single family house
00:25:40
that would be worth like 300,000 maybe
00:25:43
maybe 250 would probably rent for 1,800
00:25:45
bucks 2,000 bucks somewhere in there so
00:25:47
it might be like a $2,000 rental that
00:25:49
you buy for 250 to 300,000 somewhere in
00:25:52
there that's a that's an example for me
00:25:55
of a b bclass property and the reason
00:25:58
that's more attractive so this we're
00:25:59
going to answer your question is like
00:26:00
how do you avoid the biggest mistakes
00:26:02
and actually get off get off the
00:26:03
sidelines and actually do it number one
00:26:05
start with a loc a region and a
00:26:06
neighborhood that is less scary that you
00:26:09
can actually it's just easier to to do
00:26:11
and then the second two mistakes that I
00:26:13
would say you want to avoid are the the
00:26:15
remodeling of the property it's fun to
00:26:17
watch httv and see these Fix and Flip
00:26:19
shows and all that and but they they
00:26:20
leave out a lot of details because a
00:26:23
project management of remodeling
00:26:24
projects is hard it's not easy I've been
00:26:26
doing it for 21 years and it's still
00:26:28
part I still make mistakes so I would
00:26:30
say find properties that have at most
00:26:32
cosmetic remodeling hey change the
00:26:34
carpet out paint some walls but like the
00:26:36
bones are good the kitchen's good you
00:26:38
don't have to rip out bathrooms you
00:26:39
don't have to do electrical stuff avoid
00:26:41
like really old properties that haven't
00:26:42
been remodeled lately if you get the
00:26:44
right location avoid Big Fix uppers and
00:26:47
then number three get your financing
00:26:49
right and what do I mean by that the
00:26:52
biggest deal is make sure the payment
00:26:54
that you make on your mortgage is a lot
00:26:57
less than the rent that you're
00:26:59
collecting on that property so a rule of
00:27:01
thumb might be like 50% or less would be
00:27:04
kind of a good kind of starting plate
00:27:06
that you want to get more detailed in
00:27:07
your analysis than that but if if if
00:27:09
your mortgage payment is a th000 bucks
00:27:11
and your rent's 2,000 bucks it gives you
00:27:13
a lot of you know leeway there to pay
00:27:16
taxes and insurance and maintenance and
00:27:17
management and what that might mean
00:27:19
today because interest rates are a
00:27:20
little bit higher than they've been you
00:27:22
might have to make a bigger down payment
00:27:23
to make that work and that's okay like
00:27:26
you don't need to hit a home run on your
00:27:27
first deal and so to summarize all that
00:27:29
get the right region fix get a property
00:27:31
not a fix upper get a mortgage payment
00:27:34
that's reasonable low and I would I
00:27:36
would even say a 30-year fixed is the
00:27:38
best scenario don't try to get crazy
00:27:40
weird adjustable rates and all that
00:27:41
stuff just get a 30-year fixed if you do
00:27:44
those three things you might not hit a
00:27:46
home run but you're not gonna get killed
00:27:48
you're not going to lose a bunch of
00:27:49
money what's the argument for those who
00:27:51
don't know Chad what's the argument for
00:27:54
getting a mortgage in the first place
00:27:56
understandably for some people it might
00:27:57
be the only way that they can Finance
00:27:59
the house at all is through borrowing
00:28:01
money but if someone is sitting out
00:28:03
there and they're saying you know what
00:28:04
I've got money in my 401k I've got a lot
00:28:06
of stuff set aside we're sitting on too
00:28:08
much cash as is and rather than plowing
00:28:10
money into the stock market right now I
00:28:12
might throw a couple hundred thousand
00:28:13
dollars at a rental house should that
00:28:15
person do that or would you still advise
00:28:17
they go the mortgage route I think it
00:28:19
depends on what stage of your investing
00:28:21
you're in and I use a little rule of
00:28:23
thumb to help people figure out what
00:28:24
stage they're in i' say there's three
00:28:26
rental stages you're a starter stage
00:28:28
stage is when you're just a baby
00:28:29
investor you're just getting started
00:28:30
your goal is just to get a deal or two
00:28:32
and you're early in your your wealth
00:28:33
building journey and then you get into
00:28:35
the wealth building phase where you like
00:28:37
I have a $50,000 Nest EG or 100,000 I'm
00:28:39
trying to grow that to a million bucks
00:28:40
that's like the second stage the third
00:28:42
stage which it sounds more like your
00:28:43
question somebody already has a pretty
00:28:45
big 401K they're getting closer to
00:28:47
retirement I call that the Harvester
00:28:49
phase where you're actually trying to
00:28:51
have more time have more cash flow your
00:28:54
peace of mind and your risk reduction is
00:28:56
really important to you I'm actually in
00:28:57
that stage personally now you I'm 45
00:28:59
years old but I've been investing for 21
00:29:01
years and so I'm in the Harvester phase
00:29:03
I don't like borrowing money like as
00:29:05
much I I like either making a big down
00:29:07
payment or paying cash for something so
00:29:09
I have no problem if somebody wants to
00:29:10
do that and they have $200,000 and they
00:29:13
want to go buy a rental property the
00:29:15
downside of that the reason people use
00:29:16
Leverage is because the your return on
00:29:19
investment is typically going to be
00:29:20
higher by using leverage if if things go
00:29:23
well they're going to go a lot better
00:29:24
when you use debt right but if they go
00:29:26
bad if things go bad you know then debt
00:29:29
actually makes it even worse so that's
00:29:31
where I've only seen one way that
00:29:33
friends of mine or people I knew went
00:29:35
out of business at real estate and it
00:29:36
was because of their bad debt because
00:29:38
they didn't make their mortgage payment
00:29:39
during the Great Recession D they had
00:29:41
balloon all sorts of crazy kind of
00:29:43
commercial notes even today in 2025
00:29:45
they're not in the residential world but
00:29:47
more the commercial World their
00:29:49
investors losing 100% of their money
00:29:51
because of big huge apartment comp
00:29:54
complexes where the the debt reset and
00:29:56
they're having the interest rates are
00:29:58
higher so getting the debt right is
00:29:59
really important so if you just pay cash
00:30:00
for it all good um you're going to
00:30:03
you're going to get a lower return but
00:30:04
when you're in the Harvester phase
00:30:06
that's not it's not as big a deal you're
00:30:07
not trying to grow as much as just
00:30:09
trying to Peace of Mind sleep well at
00:30:11
night so either one can work that makes
00:30:13
sense going back you mentioned some of
00:30:15
the renovations as being a sticking
00:30:17
point that you want to avoid a house
00:30:18
that requires major Renovations
00:30:20
especially if it's your first fora into
00:30:22
real estate investing only out of
00:30:24
curiosity do you pick up a hammer and do
00:30:26
the work yourself Chad was there a time
00:30:28
in your career when you did or or if
00:30:30
there was a time when you did some of
00:30:32
the renovation yourself what was that
00:30:33
transition like from being the laborer
00:30:36
to now just being the project manager I
00:30:38
know my skills and I am not a skilled
00:30:41
fixer uper handyman although there are I
00:30:44
I have people I know other investors who
00:30:45
do a great job and they do choose to get
00:30:47
involved and get their hands dirty so it
00:30:50
just depends on your skills I'm I'm more
00:30:51
of a you know negotiator a spreadsheet
00:30:53
person a you know I just like the money
00:30:55
and the financing you just you just have
00:30:57
to know what your strengths are and what
00:30:58
what you're good at the cool thing about
00:31:00
real estate is there's a bunch of areas
00:31:01
you can add value and you can add value
00:31:04
in the finding the deal which is one of
00:31:05
my favorite parts of it is you know you
00:31:07
can hunt for a deal find a property that
00:31:09
nobody knows about negotiate directly
00:31:11
with the seller even though it's not
00:31:12
even on the market I love doing that I
00:31:14
do a lot of you know just direct
00:31:15
Outreach to Sellers and find properties
00:31:17
like that you can add value there you
00:31:19
can add value by fixing the property up
00:31:21
and instead of hiring a contractor you
00:31:23
can do a lot of the work yourself that's
00:31:25
cool too and for somebody who's just
00:31:26
doing one deal a year that could be an
00:31:28
awesome way to build some wealth and
00:31:30
have some Sweat Equity in a deal so I
00:31:33
think that's viable too is it just you
00:31:35
just have to kind of figure out your
00:31:36
strengths for me it just wasn't my
00:31:38
interest it wasn't my strengths I'm just
00:31:39
not good at it you can ask my wife she's
00:31:41
like how why do I always have to change
00:31:43
all that the light fixtures out Chad why
00:31:44
can't you do this and I'm like well I'm
00:31:46
I'm really in not in the real estate
00:31:47
business I'm in the finance business I'm
00:31:49
you know I just kind of joke about it
00:31:51
well how about the idea where if you are
00:31:54
getting into this process odds are you
00:31:56
have a full-time job maybe you have
00:31:57
family You've Got A busy life I mean
00:31:59
that's really the point is that you have
00:32:00
a busy life and then on top of it the
00:32:03
idea is you have to gain some sort of
00:32:05
expertise in in real estate investing or
00:32:07
at least you have to learn enough to to
00:32:08
really know what you're doing so how do
00:32:11
the people that that you help Chad or
00:32:12
how do you recommend that someone go
00:32:14
about this process while also
00:32:16
maintaining all the other
00:32:18
responsibilities that they already have
00:32:19
in their life I'd say two things take it
00:32:22
slowly I have a mentor named John sha he
00:32:24
wrote a a book called Building Wealth
00:32:26
one house at a time and always talked
00:32:28
about just buy one house take a deep
00:32:30
breath take a break and just absorb it
00:32:33
learn it don't try to like get too fast
00:32:35
like it's like when you run a when you
00:32:36
run a race there's always people like in
00:32:38
a 5k or 10k race who like Sprint out
00:32:40
ahead at the beginning you like run run
00:32:42
run and you always see them like a half
00:32:43
a mile mile down the road and they're
00:32:45
like huffing and puffing on the
00:32:46
sidelines right that that you can do the
00:32:48
equivalent in real estate and business
00:32:50
of starting too fast so pace yourself
00:32:52
don't try to get ahead of yourself
00:32:53
that's one way because you just doing
00:32:55
one property you're not going to
00:32:56
overwhelm yourself yes there might be
00:32:58
some hassles here and there like I the
00:32:59
first property I bought as a rental was
00:33:01
a fourplex that I moved into I moved
00:33:03
into one unit and I rented the other
00:33:05
three units out that's called a house
00:33:06
hack where you basically can rent out
00:33:08
part of your property you live in and
00:33:10
help cover your mortgage payment I think
00:33:11
that's one of the best strategies for
00:33:13
those of you who are anybody who's
00:33:14
interested or willing to live in a
00:33:15
property that they can rent out it's
00:33:17
awesome you could do it by living in a
00:33:18
duplex a Triplex a fourplex or a house
00:33:20
that has a a accessory dwelling unit or
00:33:23
a granny flat something like that that's
00:33:24
a great way to do it but the point was I
00:33:26
I learned by doing it I didn't know how
00:33:28
to manage properties I didn't know what
00:33:29
I was doing so I just had to learn but
00:33:32
you know YouTube's free you can listen
00:33:33
to podcasts like this there's lots of
00:33:35
information there's free software out
00:33:37
there or very lowcost software Zillow
00:33:39
has a rental manager where you can like
00:33:41
collect rent uh for free I use that a
00:33:44
little bit there's also some paid ones
00:33:45
Avil AV a i l and a bunch of other ones
00:33:49
that stessa is another one s SSA so if
00:33:52
you just look up rental software they
00:33:55
they basically have systematized things
00:33:56
that 15 years ago
00:33:58
you would have had to pay like a
00:33:59
thousand bucks a month to a property
00:34:01
management software to do the same kind
00:34:03
of things they do today for free or very
00:34:04
low cost and that's good for us as small
00:34:07
landlords because we can use that
00:34:09
software we can look very professional
00:34:11
with our tenants it can help us stay
00:34:13
organized you G have to learn some
00:34:14
things but it's not going to be rocket
00:34:16
science again it's going to be the main
00:34:18
hardest thing to do is build a team of
00:34:20
people to help you do what you're trying
00:34:22
to do so like if you're not going to be
00:34:23
fixing plumbing and doing all that which
00:34:24
I don't you just got to build a a
00:34:27
network and people
00:34:28
so that takes time if you're
00:34:29
self-managing you have to just meet
00:34:30
other investors and talk to people but
00:34:32
you can also hire a property manager and
00:34:34
then you just have to build one
00:34:35
relationship with the property manager
00:34:37
and then they hire all those other
00:34:39
people to help you out so there's
00:34:40
there's a couple ways you can do it I I
00:34:42
assume there are probably some cost
00:34:43
differences I mean the more the more
00:34:45
that you keep inhouse and not using a
00:34:47
property manager the more that you earn
00:34:49
the better your margins who are some of
00:34:51
those team members or at least the very
00:34:53
biggest most important team members that
00:34:55
you have Chad well I use a property
00:34:57
manager these days I I used to I used to
00:34:59
manage it myself and that's fine but you
00:35:01
know I pay 10% typically of the rent to
00:35:03
a property manager which for me is much
00:35:06
is worth it like they they earn it like
00:35:08
property managers are not getting rich
00:35:10
but I'll just tell you that it's not a
00:35:11
high margin business so I think it's
00:35:13
worth it in the long run to hire a
00:35:14
property manager for me it has been
00:35:16
because I let me let me qualify that I
00:35:18
have student rentals is a big part of my
00:35:20
portfolio those are a little bit more
00:35:22
active they a little bit there's a lot
00:35:23
more leasing they move out every year or
00:35:24
two on the other hand I have some
00:35:26
properties I do still self-managed there
00:35:28
are single family houses where families
00:35:30
live there and they stay for four four
00:35:32
years 5 years 10 years so I think
00:35:34
picking the right property makes a big
00:35:37
difference in how active you're gonna
00:35:38
have to be I have people I know who have
00:35:41
10 properties that they self-manage and
00:35:43
they work two to four hours a month
00:35:45
something like that on their properties
00:35:46
is once they're stabilized you know if
00:35:48
you're you're getting ought and all that
00:35:49
it takes more time but I I lived in
00:35:51
Spain with my family for a year and I
00:35:53
counted I measured it with all my
00:35:55
properties that we have we spent I spent
00:35:57
two or three hours a week managing the
00:35:59
managers so once you get stabilized this
00:36:02
could be a very part-time business you
00:36:04
still have to pay attention to it still
00:36:05
have to do bookkeeping and but I mean
00:36:07
people pay attention to their stocks too
00:36:09
they look at the stock market for two or
00:36:10
three hours a week as well and they
00:36:11
worry about it whereas real estate you
00:36:13
can actually have some control over you
00:36:14
know the biggest problems I've had of
00:36:16
tenants not paying a big maintenance
00:36:18
issue and most problems I have like the
00:36:20
maintenance you can solve that problem
00:36:21
by writing a check you pay some money
00:36:23
and they fix it right I mean it's not
00:36:25
great but it's you can solve it's just
00:36:27
money whereas you know there some tenant
00:36:29
issues there might be some personality
00:36:30
issues but if you have a property
00:36:31
manager they'll solve that too and it's
00:36:33
just money you're going to miss some
00:36:34
rent you're GNA so I try to remind
00:36:36
myself of that because it is stressful
00:36:37
and people how tenants and toilets and
00:36:39
all this stuff you write a check you
00:36:41
solve it and then you either get a
00:36:42
higher return or a lower return but it's
00:36:44
not the end of the world that's
00:36:45
interesting Chad and I should have asked
00:36:47
you this back when we were talking about
00:36:49
loans and leverage because something
00:36:51
that a question that I've heard more
00:36:53
than once is the idea of is when you get
00:36:56
started if you don't have really any
00:36:58
seed Capital to begin with well is the
00:37:01
first thing you have to do to save up
00:37:02
money just to get rolling or is there a
00:37:05
way with basically very little of your
00:37:07
own Capital upfront to somehow secure a
00:37:10
loan and get started in this business so
00:37:12
what are the pros and cons of kind of
00:37:14
the various levels of Leverage that one
00:37:17
can take and what do you tend to
00:37:19
recommend for for people that you work
00:37:20
with yeah like if you just took the
00:37:22
average in real estate most loans
00:37:24
require you to put 20 to 25% down that's
00:37:27
like the traditional typical way you do
00:37:29
it especially as a real estate investor
00:37:31
so if you're going to get a real estate
00:37:32
investing loan expect 20 to 25% down now
00:37:36
that being said a lot of people don't
00:37:38
have you know if you're buying a
00:37:38
$300,000 property you know that's a lot
00:37:40
of money like 60 to 80,000 bucks I mean
00:37:43
that that's when you're first starting
00:37:44
that's really difficult I I get that I
00:37:46
was the same boat so then that's where
00:37:47
you have to get creative and I mentioned
00:37:49
house hacking earlier in addition to the
00:37:52
the benefit of having renters help pay
00:37:53
for your mortgage payment another
00:37:55
benefit is when you move into a propert
00:37:57
and you live in the property there are
00:37:59
actually lower down payment programs
00:38:01
where you can get into a property for
00:38:03
three three and a half% down that's an
00:38:05
FHA program Federal housing
00:38:06
Administration if you're if you happen
00:38:08
to be a veteran there's a 0% down Loan
00:38:11
program which is probably the best the
00:38:13
best out there there's also but even
00:38:15
with conventional mortgages which are
00:38:16
like the typical if you ever hear like
00:38:18
Fanny May and Freddy Mack or some terms
00:38:19
thrown around those are your
00:38:21
conventional mortgages they they have 5%
00:38:23
down payment programs as well if you
00:38:25
live in the property if you choose to
00:38:27
live in a property and you could do what
00:38:29
I talked about earlier living in a
00:38:30
multiunit property but even if you just
00:38:32
live in a house that you know it's not
00:38:33
going to be your forever home but it's
00:38:35
it's a nice simple house it's good for
00:38:36
your family at that time of your life
00:38:38
instead of selling that property keep
00:38:40
the property and then go buy another
00:38:42
house to move into and just that that
00:38:44
you keep that property as a rental I've
00:38:45
seen people build a three four five
00:38:47
house portfolio just by doing that over
00:38:49
a 10 to 15 year period just Mo just
00:38:52
moving a few times so that's that's
00:38:54
where you can you by being a little
00:38:55
creative by being willing to move use
00:38:57
your your your housing as a kind of a
00:38:59
leverage point you can get in with lower
00:39:01
down payments and then you keep that
00:39:04
loan over time and that's the way I got
00:39:06
started that's the way a lot of people
00:39:07
get started I think that's one of the
00:39:09
best approaches I still remember it was
00:39:12
2019 and a guy from Fidelity came in to
00:39:14
speak to my then employer about personal
00:39:17
finance in general and about our 401k
00:39:19
plan in particular there were 60 or so
00:39:21
of us who attended mostly 50 plus years
00:39:23
old clearly with retirement on their
00:39:25
minds and nothing against this
00:39:27
individual from Fidelity but
00:39:29
unfortunately the guy just didn't really
00:39:30
know what he was talking about it ended
00:39:32
up being a major disappointment and a
00:39:34
bunch of my colleagues afterwards said
00:39:36
in short you know man we're really
00:39:37
thirsty for Good Financial retirement
00:39:40
information where do we go find it now
00:39:42
does that sound true listeners for you
00:39:44
and your colleagues last year either in
00:39:47
person or via Zoom I spoke to about 800
00:39:49
employees at 11 different organizations
00:39:52
sometimes about personal finance in
00:39:54
general sometimes about specifics of
00:39:55
their retirement plans sometimes about
00:39:57
that the nitty-gritty details of Social
00:39:59
Security and withdrawal planning and
00:40:01
retirement math the point being if
00:40:03
you're interested in inviting me to come
00:40:05
talk money to you to your colleagues
00:40:07
where you work that is absolutely
00:40:09
something I'm interested in talking to
00:40:10
you about simply drop me an email to
00:40:12
Jesse at bestin interest. blog and let's
00:40:14
start a conversation you've mentioned it
00:40:16
here that the small and mighty real
00:40:18
estate investor that's a term that I
00:40:20
think you coin I think that's that's
00:40:21
your phrase right I might have stolen it
00:40:23
from somebody but I I've run with it
00:40:26
anyway but but I really I really like
00:40:28
the idea because a lot of the real
00:40:30
estate content that you someone might be
00:40:32
exposed to online is you know how to
00:40:34
build this multi hundred unit real
00:40:36
estate Empire when really your focus is
00:40:39
on like no no you can build a wonderful
00:40:41
life you can reach Financial
00:40:42
Independence you can do all these great
00:40:44
things with singled digigit doors or
00:40:46
maybe a dozen rentals or a couple dozen
00:40:49
it's it's just a smaller but certainly
00:40:51
Mighty Empire if you will but the
00:40:53
question then is for me at least scale
00:40:57
and and it's an understanding I have
00:40:59
maybe it's true or not is that the more
00:41:01
you scale in real estate kind of the
00:41:03
better your margins become you have one
00:41:06
plumber that can handle a ton of
00:41:08
different properties instead of one guy
00:41:10
who only has a few different properties
00:41:12
and if you're small and mighty that the
00:41:14
small might hurt you in terms of those
00:41:16
margins or that lack of scale so I guess
00:41:19
I'm just asking myself first off correct
00:41:21
me if I'm wrong because odds are I'm
00:41:23
probably missing something important but
00:41:25
then the second part of the question is
00:41:26
how many proper is enough and and how
00:41:28
does the average Small Time landlord get
00:41:30
there yeah this is definitely a button
00:41:32
for me to thank you for letting me get
00:41:34
on this pedestal I love it I love it
00:41:36
there there there's a lot of there's a
00:41:37
lot of I think it's oversold that you
00:41:39
have to go big there there's people out
00:41:41
there talk about you should 10x you
00:41:42
should go big and that in business
00:41:44
schools for example you'll hear a lot of
00:41:46
times saying they talk about scale and
00:41:48
how if you're a big business in the tech
00:41:50
world there's a lot of benefits to
00:41:52
having an economy of scale of having you
00:41:54
know one product you sell to a million
00:41:55
customers like I get that that that's a
00:41:57
pretty good business principle but it
00:41:59
doesn't apply it doesn't have to apply
00:42:01
there's always pluses and minuses
00:42:02
there's a lot of risk that goes on when
00:42:04
you grow like for every person who makes
00:42:06
it with this big business there's like
00:42:08
thousands of others who Crash and Burn
00:42:10
and and lose all their money and so I
00:42:13
think if if you want to like find a way
00:42:15
that is both safe and resilient and you
00:42:17
can actually have a high probability of
00:42:19
succeeding with a successful business
00:42:22
model the small Mighty approach not only
00:42:24
to real estate but just to business in
00:42:26
general I think makes much more sense
00:42:28
for those of us who are who who don't
00:42:30
have Ambitions to necessarily take over
00:42:31
the world and be like a we just want to
00:42:33
have a A Life That's flexible and
00:42:35
freedom and options for me personally
00:42:37
I'll just explain my strategy my goal
00:42:39
was always to to travel my wife and I
00:42:41
when we first met was we wanted to go
00:42:43
live abroad and have time to when we
00:42:45
have kids now we have two kids who are
00:42:47
13 and 11 but when before we had kids we
00:42:49
wanted to live abroad and have them
00:42:51
speak Spanish my wife's a Spanish
00:42:53
teacher and that was just like that's
00:42:55
our why that's our goal and having a
00:42:57
thousand units would not necessarily
00:42:59
help us accomplish that because it would
00:43:01
take all of our time it would require me
00:43:02
to be on site yes I'm sure the people
00:43:05
who have a thousand units say you could
00:43:06
hire people to do all that stuff but it
00:43:08
is a big there's always on your mind
00:43:11
there's always things going on so like
00:43:12
what I like to find is a sweet spot
00:43:14
where you're big enough to accomplish
00:43:16
all your financial goals but let's flip
00:43:18
it on his head let's say what's the
00:43:20
simplest smallest portfolio that I can
00:43:22
have that still accomplishes my goals
00:43:25
because the simpler it is the less
00:43:27
hassle it's going to be the less moving
00:43:28
Parts it's going to be the more I can
00:43:30
travel the more I can do the things I
00:43:31
want to do and so it's really just
00:43:33
starting with that thing you want to do
00:43:34
in your life and then say how much would
00:43:35
that cost in both terms of time in terms
00:43:39
of money and for me I want to be a time
00:43:41
billionaire like I want to have a ton of
00:43:42
flexibility in time and then I won have
00:43:44
enough money because the money is just
00:43:46
is there to pay the bills is there to
00:43:48
pay for the splits do all that but what
00:43:50
I really need to live is the time and
00:43:52
and so for me so let's give you a
00:43:54
specific example every portfolio is a
00:43:55
little different but I would us this
00:43:57
like 10 property portfolio example so
00:43:59
let's say you had 10 properties that are
00:44:01
kind of similar to the numbers I was
00:44:02
sharing earlier where each property
00:44:04
rents for 2,000 bucks per month and
00:44:07
let's say after all your expenses and
00:44:10
let's say you also paid these properties
00:44:11
off this you you start off with debt but
00:44:13
eventually you pay them off 10 15 years
00:44:14
from now yeah well those properties that
00:44:16
rent for 2,000 bucks a month maybe you
00:44:18
make at least a thousand bucks per month
00:44:20
probably a little bit more after all all
00:44:22
your expenses are paid so a th000 bucks
00:44:25
times 10 properties is $10,000 per month
00:44:29
times 12 months that's 120,000 bucks per
00:44:31
year so I could own 10 properties which
00:44:34
just you have to just if you don't own
00:44:35
rental just trust me that that's a very
00:44:37
part-time job it might sound like a lot
00:44:39
but owning 10 properties if you have a
00:44:41
property manager it's going to be a
00:44:42
couple month hours a month just doing
00:44:44
some bookkeeping if if you self-manage
00:44:45
it maybe it's an hour or two per week
00:44:47
but you have 120,000 bucks per month per
00:44:50
year coming in on a very part-time job
00:44:53
and the question now is that what do you
00:44:54
do with the rest of your time you still
00:44:56
have a lot of flexib ibility a lot of
00:44:57
time and that's the reality of what I've
00:45:00
seen people who get to that Harvester
00:45:01
phase it's not always easy there's a lot
00:45:03
of bumps in the road but that's like the
00:45:05
end goal is having the small portfolio
00:45:08
that is either you know low debt or no
00:45:09
debt paid off so it's a stable kind of
00:45:12
harvester portfolio and then you start
00:45:14
doing what you set out to do in the
00:45:16
first place which for me was travel
00:45:17
living abroad um starting other passion
00:45:20
businesses which for me is writing a
00:45:22
book or teaching or doing podcast
00:45:24
talking to you about it so this is what
00:45:25
I love to do is teach and so but I think
00:45:28
many of us get caught up in careers and
00:45:30
jobs that aren't necessarily what our
00:45:32
calling was it's not what we are
00:45:34
passionate about we just do it for the
00:45:35
paycheck and what I think is cool about
00:45:37
financial Independence in all its forms
00:45:40
is it frees up those options for you to
00:45:42
start saying just like you did when you
00:45:43
were a kid like what do I what do I want
00:45:45
to be when I grow up like what do I want
00:45:46
to do with my time and that's beautiful
00:45:48
like that's that opens up a lot of
00:45:50
possibilities that are much more than
00:45:52
money it's much more than getting a
00:45:54
thousand units is much more important
00:45:56
yeah f abbility optionality and I like
00:45:59
what you're were saying there Chad just
00:46:00
the idea of getting into this whole
00:46:02
process with the end in mind I think a
00:46:05
lot of people whether it's the stock
00:46:07
market whether it's real estate they say
00:46:10
well I'm gonna own it because I've heard
00:46:12
that's a good thing or I'm going to own
00:46:14
it because other people in my life own
00:46:16
this type of asset too or I just want
00:46:18
more money right I'm going to invest
00:46:20
because I want my money to do something
00:46:21
I I want more money and that's okay
00:46:23
that's a start but I do think it's more
00:46:26
important to start with the the end in
00:46:27
mind and say okay so now we've fast
00:46:29
forwarded 20 years and you have more
00:46:31
money now you have enough money to do a
00:46:32
lot of different things what do you want
00:46:34
to do now is the answer still just more
00:46:36
money and eventually I think most people
00:46:38
will realize oh no there's actually some
00:46:39
other life goal in mind and the money is
00:46:42
just a means to an end it's just a tool
00:46:44
to help you get there and now you could
00:46:46
start to think about right sizing your
00:46:48
portfolio whatever that means for you
00:46:50
absolutely yeah I think the problem when
00:46:52
you first start there's nothing wrong
00:46:53
with wanting money like we're both
00:46:54
investors we like money totally totally
00:46:56
totally a good motivation but at some
00:46:58
point you're if you're like me you're
00:46:59
going to find that the bigger challenge
00:47:01
is once you start getting money is how
00:47:03
do you say I have enough like that
00:47:05
that's that's tricky like I yeah what
00:47:07
was that like for you I mean still it's
00:47:09
an ongoing struggle but having a partner
00:47:11
who you can have discussions with I
00:47:12
think helps a lot having somebody who
00:47:14
you can kind of talk about values and
00:47:16
what's important to you for me being a
00:47:18
parent it was like a big deal like just
00:47:19
it kind of forces you into a a less
00:47:21
selfish hey I just got to Ser these kids
00:47:24
need me I got to do what I got to do so
00:47:26
I think it it starts it got me thinking
00:47:28
about other goals other than just
00:47:30
climbing and growing but I think another
00:47:33
thing that was just I think we lose our
00:47:35
imagination or at least I did of like
00:47:36
what are you really passionate about
00:47:37
what are you good at and so it takes
00:47:39
some self-reflection and I think
00:47:42
sometimes it's so easy to quantify
00:47:43
making money that it just becomes the
00:47:45
default way to measure life instead of
00:47:47
saying like well maybe me spending a
00:47:50
certain number of hours serving these
00:47:52
people in this way even if I didn't make
00:47:54
money would really be fulfilling to me I
00:47:57
would really do what I'm I want to do on
00:47:59
on this Earth that's harder to quantify
00:48:00
it's a little bit more fuzzy and yet
00:48:02
when when people are sitting on the
00:48:03
deathbed they typically talk about the
00:48:05
relationships they had the impact they
00:48:07
made the people that they left a legacy
00:48:10
with like those are the things that we
00:48:12
really are deep down really important to
00:48:14
us but it's hard to can we build that
00:48:17
into our business model that's that's
00:48:18
what we've tried to do I have a business
00:48:20
partner when I say we so we we've had
00:48:22
kind of fits and starts where we've
00:48:24
we've gone down the path of even grow
00:48:25
trying to grow big in 7 and we you know
00:48:28
we had some painful moments trying to
00:48:30
just survive through the Great Recession
00:48:32
and it forced us to sort of to you know
00:48:34
that that's typically what I I learn
00:48:35
when I touch the fire you know it forced
00:48:37
me to forced me to learn about you know
00:48:39
wait a minute I really want to get big
00:48:40
do I really want to do that or or would
00:48:42
it be going this other direction where I
00:48:43
keep it smaller that's how I learn but
00:48:45
hopefully people can learn by listening
00:48:47
as well right right yeah no no one's on
00:48:49
their deathbed saying don't you know I
00:48:51
own 760 units exactly exactly well I
00:48:55
suppose Chad there's a good chance we've
00:48:57
already touched on a few of the seven
00:49:00
rules of the small and mighty real
00:49:02
estate investor but for either the rules
00:49:04
that we haven't touched on yet or just
00:49:06
if there are any of those seven rules
00:49:08
that you really think stand out for
00:49:10
someone just getting into this or if
00:49:13
there's just a couple of the seven rules
00:49:14
that you are your personal favorites can
00:49:16
you talk us through those what we just
00:49:18
talked about I another way describing it
00:49:20
is life first business second I think
00:49:23
it's so easy and my I'm speak pointing
00:49:25
to myself here it's so easy to to let
00:49:28
the the money is Fun the quantifying and
00:49:30
the the growing and the building a
00:49:31
business it should be a lot of fun if
00:49:33
you and by the way if you're getting
00:49:34
into real estate and it's not fun or if
00:49:36
you're not kind of curious about it it's
00:49:38
probably the wrong thing to get into
00:49:39
there's other ways to make money if you
00:49:41
just want to be a lot more passive and
00:49:42
just press a button you know own index
00:49:44
funds I own index funds as well like
00:49:46
that's a nice passive way to invest like
00:49:47
real estate's even when it's passive
00:49:49
it's more involved so if you're not
00:49:51
having fun with it you shouldn't be
00:49:53
getting into it that being said though
00:49:55
like it's the biggest deal I think and
00:49:57
one of the rules that I try to emphasize
00:49:58
and try to set apart with my style of
00:50:00
real estate investing is putting your
00:50:02
life first and working it backwards from
00:50:03
those values getting clear on what's
00:50:05
important to you if you have a family if
00:50:07
you have a partner you know what's
00:50:08
important to to you as a family and then
00:50:11
don't be afraid to measure success a
00:50:13
little bit differently and what I'm
00:50:15
going to say is like sometimes if you
00:50:16
have five properties or two properties
00:50:18
or one property that's not going to look
00:50:20
as in sexy on Instagram to say oh I my
00:50:23
two properties look at me you know but
00:50:25
that's okay like I I want to validate
00:50:27
that and say that's that's awesome like
00:50:30
that's that's amazing one property two
00:50:32
properties can set you you know just two
00:50:33
properties could make you more income
00:50:35
and retirement than most people make
00:50:37
from their social security check isn't
00:50:39
that amazing like that's that should be
00:50:41
we should celebrate that instead of just
00:50:43
saying the most successful people are
00:50:45
the people on the pedestal who have all
00:50:47
this money we should s i I think we
00:50:49
should celebrate those people who have
00:50:51
worked their tails off they've got two
00:50:53
properties they paid it off they've
00:50:55
changed the trajectory of their family
00:50:57
they're living a better life that's not
00:50:59
as Instagram worthy maybe but I think
00:51:01
it's really cool I mean there is a
00:51:03
magical dollar amount out there Chad or
00:51:05
maybe not dollar amount but there's a
00:51:07
magical amount of money it's just I I
00:51:09
don't think many of our listeners are
00:51:10
aware of it it's called enough it's
00:51:13
going to look a little different for
00:51:14
everybody but when you've met someone or
00:51:16
if you've reached that own point in your
00:51:18
life when you say oh I have enough
00:51:20
whether it's the money I've socked away
00:51:21
for retirement whether it's the number
00:51:23
of rentals I own that are supplying me
00:51:25
cash flow to sit there and say I have
00:51:27
enough to do anything and everything I
00:51:28
want to do in this world and isn't that
00:51:30
great that is a wonderful thing so Chad
00:51:33
for any listeners right now who are
00:51:34
either saying okay I want to go read
00:51:36
Chad's book check out his podcast check
00:51:38
out his YouTube any other content
00:51:40
channels I'm missing their Chad how can
00:51:42
people find you that's the best place
00:51:43
yeah if you just search for Coach Carson
00:51:45
on YouTube or I publish on YouTube every
00:51:47
Monday I'm I'm gonna start doing an
00:51:49
extra podcast episode on Fridays in
00:51:51
audio only so if you you listen on
00:51:53
Spotify or any of the podcast channels
00:51:55
just search for Coach Carson or real
00:51:57
estate investing with Coach Carson
00:51:58
that's the channel and if you like to
00:52:00
read a book I've written two books one's
00:52:01
called retire early with real estate the
00:52:03
other the more recent one is called the
00:52:05
small and mighty real estate investor
00:52:07
both are published by Bigger Pockets so
00:52:08
you can look on Bigger Pockets website
00:52:10
and search for my name or just Google my
00:52:13
name plus the small and mighty investor
00:52:14
and that'll come up awesome and
00:52:16
listeners we will do the homework for
00:52:17
you and we will throw as many relevant
00:52:19
links as we can in the show notes so
00:52:21
Chad coach Carson thank you so much for
00:52:23
stopping by the best interest podcast
00:52:25
it's been a pleasure thanks for having
00:52:26
me Jesse thanks for tuning in to this
00:52:28
episode of personal finance for
00:52:30
long-term investors if you have a
00:52:32
question for Jesse to answer on a future
00:52:34
episode send him an email over at his
00:52:36
Blog the best interest his email address
00:52:39
is Jesse best bestin interest. blog
00:52:42
again that's Jesse bestter interest.
00:52:45
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00:52:47
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00:52:49
listen this helps others find the show
00:52:52
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00:52:54
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00:52:56
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00:52:58
for long-term investors personal finance
00:53:01
for long-term investors is a personal
00:53:03
podcast meant for education and
00:53:05
entertainment it should not be taken as
00:53:07
Financial advice and it's not
00:53:09
prescriptive of your financial situation