Find and Fund Your Real Estate Assets Like a Pro

Hey, welcome to another episode of Making Billions, I'm your host Ryan Miller and today I have my dear friend Dustin Heiner.

Dustin is a real estate investor and founder of master passive income, his expertise is in helping investors and fund managers in the alternative asset space to make passive income from investing into real estate.

So what this means is that Dustin not only invests in his own deals, but he specializes in helping people to build real estate businesses that make six to seven figures in passive income.

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[THE GUEST]:Dustin is a real estate investor and founder of Master Passive Income, his expertise is in helping investors and fund managers in the alternative asset space to make passive income from investing into real estate.

Transcript

Ryan Miller  

My name is Ryan Miller and for the past 15 years have helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers, so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  

Does it not feel like most gurus are hiding some of their very best strategies, well, my next guest is certainly not. Join us on this week's episode of Making Billions as my next guest walks you through how to find and fund real estate assets like a pro, all this and more coming right now. Here we go. 

Ryan Miller  

Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller and today I have my dear friend Dustin Heiner. Dustin is a real estate investor and founder of Master Passive Income, his expertise is in helping investors and fund managers in the alternative asset space to make passive income from investing into real estate. So what this means is that Dustin not only invests in his own deals, but he specializes in helping people to build real estate businesses that make six to seven figures in passive income. So Dustin, welcome to the show, man.

Dustin Heiner  

Hey, Ryan, thank you so much for having me, I really appreciate it. I really love the fact that: well, number one, I'm successfully unemployed and hopefully everybody listening to this, they're making billions, at least that's the idea is to get to make them billions. Successful unemployed is where you are not working for somebody else, but you found another way to make money and so like you said, 100% and I love being able to come on podcasts, talk to great people like you, but literally just share as much as I can about how people can actually make wealth by investing in real estate. So thank you so much for having me on the show.

Ryan Miller  

Yeah, man, it's so good to have you been very fortunate to be in the top 2% in the podcast world and literally just yesterday, I got notice from my team that we broke into the top 10. So we're number 7 in the US for investing podcasts. So we're very happy about that, our fans are certainly lifting us up and it's certainly an honor to be numbered with that and it's all because of incredible guests like you. 

Dustin Heiner  

Well, congratulations man.

Ryan Miller  

Thank you, yeah, it's been awesome and before we jump into all that stuff, I'm just curious, like, how did you get into investing in real estate and becoming uber successful that you are today? 

Dustin Heiner  

Yeah, yeah. So I definitely started like most people start, we go to school, because we're taught this plan from the very beginning, we go to school, get good grades, and then you get into college with that good grades and probably going to have 1000s and $1,000 into debt. And then you get a piece of paper after you graduate from university or college and then you hopefully go get a job somewhere, "career". Then work 40 plus years of your life, and hopefully retire 65-7 years old, and retire on 40% of what you manage to save that entire time. You're working at J O B, I call it J O B. It's a Just Over Booked job. Well, I'm following the exact same path and I get the most stable, secure job you can ever get, that is working for a local county government in California, doing technology. California is not going away, taxes are not going away and governments are going away, as well as technology. Well, I'm doing that, but at the same time with that full time job, I bought one rental property, that one rental property made me money while I was sleeping, and I thought my goodness, this is the easiest money I've ever made, because I didn't do anything I made that money. 

Dustin Heiner  

Then, I'll quickly jump into how I got shoved or like just shoved right into it real estate investing, well, I knew I needed to be an investor. I knew that's something I needed to do, but life starts get in the way, right, and you know how it is when you start having kids life starts getting in the way. I took my eye off the ball? Well, by the time my wife had our fourth child, I'm still working a sit down desk job. I got a call from my boss's, boss's, boss's secretary like the top dog on a Friday at 3:30 in the afternoon she says Dustin, would you please come to the office? I said sure and I hung up the phone and I paused for a second thought, why in the world would they call me the office like this isn't normal and I've seen plenty of movies. This is not a good sign and I immediately shook it off. So there's no way there's a problem with my job by getting laid off or anything like that, I shook it off, and I got up and I walked down the hallway to my boss's office. Well, Ryan, this hallway isn't very long, in fact, it's kind of short, but every single step I took it felt like the hallway got longer and longer and longer. And it felt like my feet became lead bricks because the concern and the weight of potentially losing my job was starting to crush down on me. 

Dustin Heiner  

Well, I get down the hallway, and I turn the corner, I see my boss's door, his doors closed and I see a secretary, super sweet, nice old lady. She says Dustin, would you please have a seat and I went and I took my seat and I started thinking about my life. All this time that people told me to do this quote unquote, path, that career path. If I get laid off right now, did I just waste my life doing this? And then I thought, if I don't make money for my family, does that make me a failure as a father? Does that make me a failure as a husband, as a man trying to provide for his family? Well as I'm sitting there my hands get all clammy my forehead gets all sweaty because the nerves are just crushing me. Well, the door to my boss's office opens up our walks a co worker of mine with a piece of paper in her hands, she has noticeably distraught, she's not necessarily crying, but you could tell her world has just been devastated and my boss says Dustin, would you please come in the office. So I get up and I go into his office and I get laid off and remember this is the government nobody gets fired or laid off the government, but I did. 

Dustin Heiner  

The reason why I tell the story is because I realized two things right then in there. I take that layoff notice and I sit down at my desk. I realized two things and I want everybody else. If you're listening to this, I want you to realize this too. Well, the first one was definitely personal, I need to get another job, I need to find a way to provide for my family. I was really blessed, praise the Lord. I find another job, in the same county, a different department wasn't having those same issues. So check, got that. But then after getting laid off, looking at my layoff notice sitting in my chair, I realized, no longer will I ever, ever tell anybody, when they asked me the question, Dustin, what do you do, I would reply with my job. Like, my basically my value that I put on myself comes from my job. No, my value doesn't come from my job, my value comes to my god for myself and for my family. Right then and there, the second thing I realized was, I need to make sure that this never ever happens to me again, I didn't make sure that nobody has the ability to take away my ability to feed my family. So right then and there. I said, every time anybody asked me the question, I'm gonna say, I am an investor, because I knew I needed to be an investor, but life can get in the way. Now, it may so happen that 100% of my money is because my job, that's now my part time job, I'm a full time investor. 

Dustin Heiner  

So fast for the story, I started buying property after property after property, each one, making it $250 or more, I have some properties make me $1000-$1,500 a month in passive income. Eventually, I had 30 plus properties, I thought, my goodness, I don't even have to work anymore, so I quit my job. And the last part of the story I want to share, if you remember that hallway, that was short, but got longer, longer, longer, well, I walked to and from my job a mile and a half every single day to and from, did this for 10 years. The last time walking away from my job, I felt like I was walking on clouds, because I knew I would never ever need a job again. So everybody listening, you need to hear this, that you are worth so much more than anybody could ever pay you. And this is how you'll know your boss is paying you just enough to keep you working without quitting, but not so much that it takes money out of their pocket, if they did, they would go broke. So my suggestion, keep listening to the Making Billions show because if you're thinking, how can I make billions eventually you might even make millions and then trying to get to billions, you're gonna get there because you need to see what's possible, and listen to the show is actually gonna help you see what's possible. So I'll pause the story, because you probably got plenty of questions. 

Ryan Miller  

Thank you for that and you're right, having that moment and that's really what this show is about for hundreds, if not 1000s of years, there's always been this either for real or perceived moment where the wealthy have a special language. And right and we had religion times where only the priests could speak a certain language and only they could access certain knowledge and all these things. And now that language has gone from Latin, to accounting, and that knowledge of finance and investing and making millions and making billions and walking away from your job and no longer having somebody tell you whether you can pay for your family's groceries or not. Now this show and the mission on that I've never said this live on the air but I am today is saying, the mission of the show is to give you that language is almost like Prometheus right, bringing the sacred fire to everybody else is to say, look, this doesn't have to be a special language. This doesn't have to be special tactics or special math or special accounting that only billionaires understand. So there's guys like myself and Dustin and all of our guests who have dedicated ourselves to say, hey, we can teach you this stuff. We can teach you this language of business that will help you to get back on your feet to create opportunities for people and to live in a way that you deserve, so that's what the show is all about. We've got fund managers, we've got investment bankers, family offices from over 100 countries in the world and a lot of people starting up. You were a beginner, I was a beginner. So I'm just curious, from your perspective, what are some of the ways that beginners in your industry can get some early points on the board? What would you tell someone? 

Dustin Heiner  

Well, definitely and with my having done it myself, many, many times, in fact, I invest in Ohio, Texas, Arizona, Indiana, Tennessee, I think it might be one of, might be Missouri, I think we have one of those or two, but I invest all over the country. And I've done it so many times, because the biggest thing if you're gonna get started doing this, if you're if, even if you have one or two properties, you might not be doing it right. You might be but you might not be doing it right, here's the right way to do it. If you're gonna get started, what we do is we build a business that runs itself. So a lot of people might mistakenly think that we're investors, which we are, don't get me wrong, we are investors. But what happens is, we kind of get stuck, and we're just going to invest and then let the property run on its own, you can't do that. The reason why you can't do that is because you need to have people that run the business, you don't run the business. So if you're gonna get started, my number one suggestion is to view yourself as a business owner, more than likely you listen to the show, you already have a grasp of what that means. 

Dustin Heiner  

But let me give you a quick example of what that means, if you're gonna get started. Think of a convenience store, you know, candy bars, and soda machines, all good stuff. Well, you would not sign a lease on a location, open the doors and set a box of candy bars in on the ground. You wouldn't do that you got a business in two seconds, but what you would do is you would build the business first. You get the gondolas, little shelving units, all the candy bars, go on to cold storage, countertops, cash, register bank accounts, insurance, employees, everything in the business before you buy any inventory. Same thing with real estate investing, we build the entire business, find the right location, find the right people to run the business and I can give you more in detail how to do this again to give you a big broad overview. But once you find the location, find the right people and you hire the right people in the business. Then you buy your inventory, my inventory is properties and because of that, I also look at my business as a passive income business. 

Dustin Heiner  

So a lot of people, if you have a lot of extra money, you might be able to park your money and hope for appreciation or just say, I'm just gonna let it sit there and not make money. Well, you should not do that, here's the reason, big reason why, if you're going to start that convenience store, and if you can buy a candy bar for 50 cents, you would not sell it for 25 cents. If you buy it for $1, you will not sell it for it, you will not lose money is what I'm trying to say. But what you would do, is you would buy it for 50 cents, sell it for $1, but here's the great thing about real estate investing, and this is something we'll definitely get into how to fund your properties. Even let's say you didn't even have 50 cents to buy a candy bar, sell it for $1. But it took you 25 cents to borrow 50 cents, when you're out of pocket 75 cents, then you sell it for $1. You'd be thinking how in the world can I make more, buy more of these, I'll buy as many as I can because I could make 25 cents. So if you're gonna get started, the biggest thing you need to do is realize you're a business owner, and your inventory is your real estate because you're not going to live there, but many, many like 1000s of other people absolutely would. 

Ryan Miller  

I love that and where do you go to look for good inventory. Let's talk about how to do that and we'll get into the advanced stuff on how to fund the deal and all these principles. So you want to hang in there to the end, we're just and I talked about funding deals and funding real estate and many different methods. But for the beginners who are listening to the show, where do you go to find inventory, what tech do you use?

Dustin Heiner  

I love that you asked this question first, because funding and the finding, here's the funniest thing. This is the same question that I get all the time on social media, my YouTube channel, my podcasts, my even my coaching students, they always say how do I find properties and how do I find properties? If you're listening to this, you need to realize this, those are literally the last steps. Those are the easiest parts, you might be thinking, oh, it's kind of hard to do. No, no, no, no, trust me, I've done it personally over 30 plus times, plus, I've coached hundreds if not 1000s of students to do this. This is the easiest part and this is how I'm gonna show you how it's really, really simple, the harder part is finding the right people to build the business. Let me quickly say, let's say you bought a property, you found a good city, you bought a property and then you go and you've tried, well first you spent 1000s dollars buy the property, then you spent 1000s of dollars to fix up the property and then you find a tenant and then you hopefully try to find a property manager. 

Dustin Heiner  

Well, I've had this countless times where people call me or talk to me and say Dustin, I did everything those quote unquote gurus told me to do, but I called property managers and they said they would not manage the property because they'll get shot there. Well, you no longer have an asset, you have a liability now. How much better instead of calling a property manager and saying, hey property manager, I bought this property, will you manage it? Instead, because you're hiring experts, you call the property manager, you say property manager, I'm looking to buy this property, how much will it rent for? What's the vacancy factor? What's the clientele like? Will you manage it? And if they say no, then you don't waste your time and money, you don't buy the property. If they do tell you, hey, it's a good property, here's the rent, then you know what you can offer. So when I'm talking about finding properties, first have to make sure that you're having the experts tell you what's a good property, that's the biggest thing. 

Dustin Heiner  

Almost any city in America, or like even in Canada, some people invest in Canada as well. I have students, investors in Canada, actually as soon as the best in Switzerland. And anyways, lots of other places. But especially in America, I have so many people that literally have, we have like, I can't even count how many cities because every city is going to have good areas and bad areas. I'll tell you right now, the best places to find and the best software to use right now that I've seen is two things either Zillow. Zillow is really good, because you see a bunch of red dots on there, this big map of America, you see a bunch of red dots. All those dots are pieces of inventory that you could potentially buy, same thing realtor.com. 

Dustin Heiner  

So here's how you do it, you zoom out, let's say you want to a specific state, let's say Tennessee, like in Tennessee, I want to start investing here. Okay, well, let's start with a big broad view and looking at all the entire city, all the different cities in that state and then look for pockets, like Nashville, you know, there can be tons of dots all over there, Knoxville to me tons of dots there. So we start zeroing in to a city that has multiple dots in the criteria that you want to have. Here's my suggestion, a cookie cutter type home, three bedroom, two bath, 1200- 1500 square feet, ones that everybody either wants to rent, or buy. But it's not too big that you got extra walls to pay and extra toilets to fix and it's not too small that families don't want to live there. So if you're wanting to find property, remember, this is the easiest process to do it. We find a good city that has lots of inventory, right price point a little bit lower, so we can rent it for more and make passive income and then we hire the experts who then we say, hey, property manager, a realtor just sent me this property tell me how much will it rent for, tell me will you manage it, all that sort of stuff. So if you think about finding areas, it is very, very simple, you find the inventory, make sure there's a lot of properties and then drill down. Once you find a good city, then you find the property managers and the property managers and realtors and we'll get into everything else about how you can find more properties but there's so many great ways to get properties. I literally don't work anymore finding properties, I have people sending me deals countless every day. I wake in the morning, drink coffee, go to the gym and come home and look at my email and see all the properties being sent to me.

Ryan Miller  

Man, I love that. It's one thing to get all the inventory and get all the right people and absolutely you need to do that and that's a great way to get kind of that fast early quick wins. So the upside now let's talk about the downside, some rookie mistakes. What are some areas that you found that maybe you can advise people who are starting out to just avoid blowing this up?

Dustin Heiner  

So more than likely, you will never hear this from anybody, I've never heard anybody say this. But here's the one big mistake, especially for your audience, Ryan, Making Billions most likely, they're going to have some money that they're going to need to play somewhere that's going to store as a value in that one property. I'll give you a couple more, but here's especially one, if you have more money than, say, $10,000, $20,000. Let's say you have 100, maybe 200 $300,000 to start investing. You'll never hear me say this, but I'm gonna tell you because I'm a coach, and I'm an investor. You need to make sure you do not waste your money. Let me give an example how that's going to be wasted. If you only had $10,000, that's all you had, and you wanted to invest in real estate, you're gonna fight for every single penny that comes out of your pocket. You're gonna fight for the offer, you're gonna make sure you buy it for cheaper, you're gonna negotiate with a mortgage broker, you're gonna negotiate with a title company, you're fighting for every single penny, because that's all you have. When you have more money in your pocket, you might be thinking, ah, well, it's only $1,000 more, let's just go ahead, no, no, no, don't do that. You need to start from the very beginning as an investor moreso, as a business owner. If you're going to buy inventory, you're not going to say, well, okay, let's just overpay for that. No, no, you're not going to do that, what you're going to do is you're going to make sure you get it and fight for every single penny. So that's the first thing that I want to see everybody listening to this, realize that number one.

Dustin Heiner  

Number two, as we're thinking about investing in a specific city, and then drilling down to a specific property, the problems that can come up is if you do not hire slow, and fire fast. Remember, I talked all about building a business, that is the biggest thing, that's a big overarching principle you must do if you don't do that, it's not gonna go well. Trust me, in fact, the first property I bought in 2006, I bought in 2006 before the crash in 2008, and my property manager started stealing from over the six months. Because I had no clue what I was doing, I did not interview. I just said, hey, you got a pulse, come here and manage all my properties and my money and everything. Bad idea. So here is what you need to do, remember, we build a business, find the right people, then we hire slow meaning. We first find property managers don't find realtors, I have students say Dustin, I found a good city, I've got eight Realtors sending me deals. I'm like, whoa, whoa, whoa, you're putting the cart before the horse. Who would you get to manage those properties if you did buy it? I don't know. So those are last, we find properties. The last what we need to do is make sure we can manage the business. 

Dustin Heiner  

So when we say build the business first, I suggest hiring after you've interviewed at least six, maybe a dozen, you keep interviewing and multiple interviews, phone call is only way to interview, texting is not an interview, email is not an interview. Call them on the phone, because you'll absolutely be able to get a sense if they are actually trustworthy. Do you actually like talking to them? Do they seem like they know what they're doing, but you're gonna hire them after you interview them multiple times, and many different property managers. And then what you're gonna do is you're gonna rank them in 1, 2, 3, 4 and all down the list, the number one is the ones you're gonna go with. That you're gonna have multiple backups, the bad, bad thing I've seen, I got stuck with this too, you find one property manager, you think they're good, but then they turn out to be bad and you don't have a backup to actually just say, hey, they're screwing up, come take over my property. 

Dustin Heiner  

So those are the major things that I see, as you're getting started, those are some hurdles that you're gonna have to get over, you hire slow, but here's the other other part of this statement or this quote, you fire fast. As soon as you find somebody's not doing right. In your business, remember, you are the best person to spend your money, not somebody else, so they're not going to care nearly as much as you. So if they start screwing up, we fire them very fast and get the second person or you know, the next one in line that we have this backup right into the business. 

Ryan Miller  

Man I love that.

Ryan Miller  

Thank you for watching. If you've made it this far, we must be friends. So don't forget to like subscribe and click that notification button. Now let's get back to the show. 

Ryan Miller  

You know, one area that a lot of people that I've been fortunate enough to support in, especially in real estate, but any asset is the price, the acquisition. I remember there was, there was a rare moment early in my career where I actually got to spend time with the Oracle of Omaha, Warren Buffett.

Dustin Heiner  

No way, I would pay money to actually go and work for Warren Buffett because of what I've learned, the knowledge as well as the connections. Wow, that's awesome.

Ryan Miller  

Thank you. Yeah, I was fortunate enough to go there through a connection and he gave a lot of pearls of wisdom, but one of the things he said was I make money when I buy not when I sell. So I'm wondering, you know, based on that, that wisdom and I think that would resonate with you. Can you talk about some of the dangers of overpaying and how do you manage that? How do you find the right acquisition price for the assets that you buy?

Dustin Heiner  

Yeah, great question. So I have 100% agree, you make your money when you buy and then you realize it when you sell, when we invest in real estate, so amazing. We actually make money in six different ways and I'll quickly get, once I get past this I'll help under, help you understand how to actually buy that. The purchase price could be the right purchase price. Now you, we make money in six different ways when we buy one rental property and you can rent it out short term and make $2,000 a month. You can rent out short, or long term making 500 bucks a month, however you want to rent it but this is buy and hold. 

Dustin Heiner  

So we do, we make money six different ways. Number one is passive income, we don't buy a property unless we can make money and passive income is where we make money every single month. Another one is equity capture, which goes exactly what you're saying. We buy it for less than it's worth. We do not overpay for a property, we buy it for less than worth so we can capture that equity. Another one is forced appreciation, where you fix it up, put some money into it and make it worth more than you fix it up for as well as then some. Market appreciation, we just know over time markets go up, their economy goes up, as well as our properties go up. Then we have tax benefits, I love the tax benefits like depreciation. If you're making a lot of money right now and more than likely you listen to the Making Billions show, you're making a good amount of money, you need depreciation. If you have not experienced the amazing blessing because of depreciation, you're still missing out, jump on that right away. So tax benefits, and then mortgage buy down, the tenants pay for the mortgage, taxes, the insurance. I don't pay my taxes, my interest on my mortgage, I don't pay my mortgage payments, I don't pay for my repairs, I don't pay that stuff. Like I don't have to get a job to pay for that, I don't have to get a job to pay for my property manager, that's an expense that I occur before I buy the property and I know it's there, and then I rent it for more, so our tenants pay for all that mortgage. 

Dustin Heiner  

Now talking about the equity and how we actually buy the right price. What it comes down to the right price for the home is your expenses subtracted from your rents is passive income. And I suggest if you're doing long term, a minimum of $250 a month, mid term, which is like 60-90 days, short term stays, those are higher. Short term should be at least $1,000 per property that you should be making every single month, but here's what you got to look at. You told your expenses, well, what's one line item in your expense, it's your mortgage payment. If you are calculating all of your expenses, and your expenses are higher than your rent amount. Well, number one, your expenses are too high, we have to figure out how to lower those, well you can't lower taxes, you know you can't do that, maybe insurance maybe by 50 bucks, 100 bucks, maybe at most that's not a lot. There's very few expenses you can cut but what you can do is lower the price of the home, depending on your interest rate, your payment, your monthly payments, gonna be a certain dollar amount. The way to get that lower is either lower your interest rate, or lower your purchase price your offer price, that's how we figure out what is going to make us money. If you've heard of the book, Profit First, love the idea, you basically bake into your expenses, a line item of your profit. So whenever I buy a property, I make sure if I'm gonna buy a short term property, I'm making a minimum, a line item is $1,000 profit that's going into my pocket before I even buy the property. So I know how to make that no matter what it's an expense item, so that's what I suggest you make sure that your mortgage is low enough so that your passive income is high enough. 

Ryan Miller  

Brilliant and so those are the dials that you can operate on. So if based on what you've said, if you're not able to get the right price on the first offer, we're going to start tweaking some dials. So either you collect a higher rent or you drop your mortgages or somehow your expenses, whatever that is until you get to that right cash flow. So if you're looking to say okay, I, for this to make sense, I gotta make at least 500 bucks a month, or 1000 or 5000, whatever I, whatever, we got to say either I charge more or combination of all but we gotta get this right, because like we said, you make money when you buy. 

Dustin Heiner  

You're absolutely right. The one thing people, I've heard even by social media, be careful who you follow on social media, they might lead you astray, but once somebody said, well just start charging more than rent. Well, that is kind of true, but it's not and the reason why, let's say you could only sell a candy bar for $1, but you said I have to charge $5 because I bought it for $4.50 so I have to charge $5, who's gonna buy the candy bar for five bucks, nobody will. Same thing with your property, if you build a business first, you ask your property manager, you say, hey, property manager, how much can I rent this for? And they say, Well, the short term is gonna be $3,000' long term it's gonna be $2,000 and they give you the criteria? Well, that is all that you can do, you can try to get like, in the short term, you could try to eke out to $3200, $3300, $3500, you're probably not going to get it, especially long term properties. Long term, the rate is very similar around the entire area where you're investing in and so those are dictated if you're a property manager member, you build the business. They are the experts that do this for you, if they tell you this is how much you can rent for, do not say, well, I'm going to try to rent my 10, 20% more just so I can, no, no, it's not gonna work. Trust me, you're gonna fall on your face if you do that.

Ryan Miller  

Absolutely and so you turn the dials to get the price right, but make sure the dials you turn are not in the red zone. 

Dustin Heiner  

Oh ya. 

Ryan Miller  

Yes, supply and demand, eventually will come for us all and so there's a market price and the invisible hand will move that but if you're trying to move it too far, it's gonna be a tough sell and so making sure that you turn the dials with the market prices in mind. So obviously, yeah, candy bar, you got to sell for five bucks, that's not the market price, no one's gonna pay that. So obviously understanding that and it goes back to your earlier point, make sure you have the right people around you, the right professionals who could tell you Dustin, Ryan, whatever, that's stupid, there's no way you're going to be able to charge that price, the most you could charge is this much. If you still need to squeeze some profit out of it, it's not coming from higher rents, you need to start working on either your monthly expenses or get a just a better rate or different mortgage or financing package. So, but either way, those are the ways that we can work on and just zero in on making money when we buy. I love that. Love to just transition into where's the smart money going? What's going on in the market right now?

Dustin Heiner  

So there's a bunch of different assets and obviously with the people that are like, if you listen to this more than likely, you know, different types of asset classes that are out there. It could be storage facilities, single family homes, apartment complexes, mobile home parks, things like that. So if we're talking single family homes, and when I say single family, I mean residential for units and below different type of financing much better than commercial loans. I love those, but the Midwest is absolutely fantastic right now. If you look at all the Midwest, getting down to the Carolinas are actually pretty good to some spots and into Florida. I have lots of students, in fact, I just had a group coaching call with my students last, yeah last night. And I had, I was surprised because we're spread all over the Midwest, lots of different areas, but a lot of my students on the call, we're actually investing in Alabama, and specifically Birmingham. So it was Birmingham, it, and they're buying properties right now. In fact, one of my students just literally got, I think it was like, almost $400 a month in passive income from a long term property in Birmingham, Alabama. And so if you're looking all over the Midwest, great properties for rent, lower prices, higher rent, which means you get more money in passive income and so I've seen really good properties for residential. 

Dustin Heiner  

Now, I would actually say now, some people might disagree with me, but multifamily or commercial properties, it's getting a little dicey right now. And so with the, when I say dicey meaning with you, when you buy a multifamily and apartment complex, the goal is to eventually exit in four to five years, because that's when your financing comes due. There's only so long that you can actually keep refinancing or selling to somebody else. Right now, honestly, there's a lot of apartment complexes that people investors that I know are having trouble. They're having capital calls, which you probably know what a capital call is, where they're actually for asking for more money because the properties are losing money. So here's my suggestion. I personally would sit on the sidelines for multifamily because those will start coming down, but single family homes. Residential four years below, you can do a lot better with offering lower because you never know what issue somebody might have. Or they might just be Hey, grandma just died we're selling this house, you have no idea what's going to happen. So storage facilities are doing not as good as they were about three years ago. They were doing really fantastic, they're tapering off a little bit, mobile home parks are doing great, but it's, especially residential four years and below, you buy a 4-plex? Oh my goodness you have, that's just a cash cow because you have four units making you money.

Ryan Miller  

I love that. So where do you see the market going? You hear a lot of things about short term rentals, aka Airbnb and the likes. Where do you see the smart money going? What do you see on the horizon? What's around the corner?

Dustin Heiner  

Well, definitely for short term rentals, I see a rude awakening for the short term rental. So since 2020, you've had a lot of people come on the scene, tick tock gurus and Instagram gurus say, hey, I bought two properties. I'm making 1000s of dollars a month in passive income, I've literally quit my job. But here's the downside of what's actually happening, this is what's going to happen, eventually. We had so many people that overpaid for properties, because they thought all I gotta do is rent it out 20 days out of the month at a certain dollar amount, and then I'm gonna make money in passive income. Well, as the economy starts to get a little shaky, people are going to start traveling less and it seems like the economy's not doing the best, especially with inflation being very, very high. So I see people that have overpaid for properties, short term properties, because they were counting on a lot more income. Well, what's going to happen is, let's say they don't get it filled, maybe they have to lower their price. Here's another thing, too much inventory on short term, on Airbnb, which means there's so many more competition out there, that brings your prices down, there's more supply, less demand, prices come down. So these people who have way overpaid for properties, hoping to short term rent them, they're gonna be stuck with a mortgage. A huge, let's say they bought a million dollar property, which I know some people who have not personally know people who have, but lots of people have done that already. They're gonna have a huge mortgage payment that they're not gonna be able to pay, and then they're going to foreclose. 

Dustin Heiner  

Now, here's another thing we saw in 2020, all the way through 2023, long term properties, the rents were skyrocketing, like going up 20 and 30%. And I made so much more money in the last three years of increases in rents because of how much long term property has gone up, here's the reason why. It's because there are very few, there's much less inventory than in 2019 inventory for long term properties. Guess why? Because everybody bought those homes to do short term, so those properties are off the market as a long term property. Now they're short term, and so that makes rents go up because there's no properties to rent. Now, what I'm seeing is a glut of Airbnb in Arizona, I live in Phoenix, Arizona. In Phoenix alone, there's like 70,000 Airbnbs, that is so much inventory, there's gonna be a rude awakening in my opinion. Especially with interest rates being really really high, people are not gonna be able to buy the property that they overpaid, somebody else overpaid and they were hoping somebody else would come and buy from them. It's gonna be really hard for them, so that's what I'm seeing the short term game. So here's one quick suggestion, if you're gonna be short term, I tell this to all my students and I bought a, just thinking back, I was supposed to close Monday but I'm closing next Monday on a property that's short term. I can long term rent this and still make passive income or I would not have bought the property. I'm not buying it just oh I have to short term rent it or I'm not gonna make money, no, no, let's say everything fell apart. I still can long term rent it, I think I can make 3 or $400 a month in passive income with long term rent. So if you're gonna buy short term, make sure you could long term rent it before even thinking about doing short term if you can, then it's just gravy on top if you do short term.

Ryan Miller  

I love that, it goes right back to unfortunately some people overpaid and all as they could on short term or short term thinking, and says, well, as long as I can get those short term high, juicy rental rates, then I'm good, but what if you can't? And I think that's what you're saying, Dustin is to say, but what if? Have you considered, just like we did in the beginning, upside and the downside? Have you considered the downside? Have you considered, what if it doesn't go according to plan? What are you going to do? And the answer is, I'm screwed, if I overpaid, I'm no longer able to hold on to this property at market rates at long term. Well, now you've got an issue on your hands and now you've turned an asset into a liability, which kind of is the opposite of what we're trying to do here. Nothing wrong with short term rentals but there's definitely something wrong with overpaying and not having a contingency backup plan should risk occur. 

Dustin Heiner  

Oh, absolutely because I started investing in 2006 started buying property after property in 2008, I was worried I was like, oh, what's going to happen? Like this economy's going bad, am I going to start losing money, I thought rents would come down. They actually went up, because sadly, what happened was when people had to foreclose on their homes, sadly, they lost their home. But what does it make them now that makes them a renter, so the demand was skyrocketing, because there were so many more renters now and so, the last three years have been an anomaly almost like prices in Arizona, Phoenix, some homes, like 50, and 75%, maybe even 100% increase in the appraised value. Which is just unheard of, it's just absolutely crazy. And what I'm seeing is that, if we have this price that is just so high, you know, increased, what people have, in the last five years, they've only been investing in an up market. In an appreciating, a booming economy, because honestly, I believe the Fed, Federal Reserve has been just pumping money into the system, which makes everything go up but what's happened is people have only invested in the booming market. Well, I invested back in 2008 and I saw hotels in America, we had so many hotels, almost either going bankrupt, or literally almost about to go bankrupt because nobody is traveling because that was a down economy. The last three or four years, we have so many people buying all this stuff because it's booming, it's always gonna boom. I heard that back in 2008, I learned, I attribute it to Warren Buffett, and I'm not sure if it is, but it's when people are buying you need to be selling and when people are selling you need to be buying. Same thing, I love that, so now, whenever somebody's buying, I'm not looking to buy, I'm looking to sell and vice versa.

Ryan Miller  

I love that. Yeah, it's to be fearful when others are greedy and be greedy when others are fearful, so.

Dustin Heiner  

There you go.

Ryan Miller  

Phenomenal work. So make sure you have a contingency plan and don't overpay just because you think everything's gonna go, so I believe it's called recency bias. We did a show on the 23 cognitive biases that of all failed investment decisions, so that's an oldie but goodie, so no BG. Moving forward, let's get into the good stuff. Folks, if you listen to the show for a long time, or even a short time, one of the things you can learn is that the guests on the show right at the end, always leave behind a competitive advantage for you. So Dustin, I'm just curious if you have two or three competitive advantages you can provide to people who are looking for whether it's basic or advanced, what are some competitive advantages that you can give to people from your knowledge?

Dustin Heiner  

A big one, I have students come to me and ask me well, Dustin, how do I fund, how do I get financing for these properties? I have $10,000, or $20,000, I have 50,  whatever it might be. They say this is how much I have, should I do this or this or this? Meaning, should I use it as down payment, should I use it or, they add these ors, in there like should I or, or, or. This or this or this, I tell them get that word out of your brain. What we need to replace it with is and, and when I say and, the reason why I say and, is because no matter how many deals you're gonna get. Let's say you put in because I suggest to all my students, here's how I'm gonna get into the next one, how we find deals, we put in lots of offers. At one time, I literally got like three properties under contract. One of my coaches at master passive income, he literally had four properties under contract at the same time, had to figure out how to finance them so finding the properties is not hard. Now finding the property, you, as soon as I explain these, all these ways that we've used to get financing for properties, you're like, oh that makes sense. Because it's common sense or it's, it makes sense because it's very, very simple. But when you, what I want you now to do instead of thinking or, should I use this or this, think of and, it's called creative financing. 

Dustin Heiner  

We get creative in all of our financing. We do a couple of different things together and before I get into them, I'm gonna give you just a second. Imagine you're a carpenter, a carpenter, you know, building houses, they have a tool belt with tools inside their tool belt. Well, every type of financing that I'm gonna give you right now is like a no tool that goes into your tool belt, because whatever the job is, or whatever the deal is, you're going to take out a specific tool to fit that deal that problem, or it might take two, it might take three or four or more. Our competitive advantage is that we have so many ways, 15 different ways. The first way is all cash, we all know easily all cash. Well, if you have all cash, well, here's the great thing, it doesn't have to be your cash, which I'll get into in just a minute but it can be all cash. But my very first property might have been 2006. It was a it's called a BURR method, basically you buy a property with cash, then you fix it up, the R is rehabit, then you get it rented, then you refinance it and then you repeat it. So you basically put the money in for cash, pull it out, and then put it back in your pocket or go back to buying another property. 

Dustin Heiner  

I'll give you a quick example of how that looks, I had a student up in Sacramento, his name is Benjamin, he's a pastor. Pastors don't make very much money at all, but he did have a property and he said, I want to invest in real estate. So I coached him, he got a home equity line of credit, which is another way that another tool that we're going to have as a home equity line of credit on their, on his property, we took out, I think it was like 80% total. So he had like $200,000 to play with. He bought a property, it was a single family home, then used his HELOC to buy it. And then he refinanced it six months later, pull the cash out, paid off his home equity line of credit, and then he has it all over to it again. Now he has the second property in Alabama, that literally has no money of his own in the deal, so he locks another one. 

Dustin Heiner  

Home equity refinance, where you just refinance, you pull a cash out refinance, I've literally done that countless times, Ryan. It's so funny how many times I've done it, because I know my business just like that candy bar analogy. I knew I could sell it for $1, I'm like how much, I gotta borrow money for every single way. Which gets into me another one, is I've literally used a credit card. Now this is a bad strategy, definitely the best strategy. But I used a credit card, I did a cash advance to use as a down payment bought the property and remember it's a business, so I counted for that expense of that credit card before I bought the property. And then now that credit cards paid off, I made money every single month, because remember, that's an expense I make sure I account for, I made money, I still own that property that credit cards are gone. Conventional loans are absolutely amazing. You can jump right into commercial loans, but their five year loans, then you have to refinance. So if you can get as many as you can in a conventional loan, that's by far the best 30 year fixed. As soon as it's done and paid off, you have the property free and clear, you still have to owe taxes, the government always owns everything, so that's another one.

Dustin Heiner  

Another one is delayed financing. I love delayed financing. So think of the BURR strategy I just explained, well, let's say you got that money out faster than six months, because usually a seasoning period of six months for a bank to refinance the property. Well, let's say you took out in two weeks, or maybe three weeks or four weeks at most, and here's how you do it. You talk to a mortgage or start a bank, before you buy the property, you say I want to buy with cash and then I want to refinance it before the six months, meaning I want to do delay financing, which is basically getting a loan after you already own the property, after they've already appraised it in the new value after you repaired it. And then they give you your money, just like it's delayed financing is what it really comes down to a lot more entailed, but I can definitely walk you that, that's definitely the best strategy. 

Dustin Heiner  

I've also used FHA loans, an FHA loan is 3 1/2% down, federal housing administration loan. I have coached so many students to buy a duplex with an FHA loan 3 1/2% down, live in one side of the property and rent out the other one is called house hacking. You rent out the other one and more than likely that tenant is going to be paying your entire mortgage, it's so awesome, so FHA loans, low down payment, which helps you to then buy more properties. DSCR loans, this is terrific, this is really, really new. Like for me back in 2006 I wish these were out because I would have bought a lot more properties, but a DSCR loan is a debt service coverage ratio loan. Everybody remembers buying their first house, if you bought your first house, they look at your income. How much money do you make and will you pay off a loan? A DSCR loan is totally different, they look at the property, will that property pay back the loan? Is it a good business sense? Well, if it does, if you buy it right, then you'll be able to use a DSCR loan, it's in your LLC or your company's name, not in your private name, DSCR loans are fantastic. 

Dustin Heiner  

I've used hard money loans, hard money loans, it's not like you know, you go to a mobster and get hard money from them, they'll break your legs if you don't pay it back. It's not like that, it's basically an institution not like a bank, but they want to turn their money very, very fast over. I've used that and my students, we use it all the time to get into a property , because remember, we buy a property with all cash, but it's not our cash. We use that money, hard money to buy the property and then we use delayed financing to refinance it, pull that cash back out, none of her own money in the deal, pay off the hard money lender and then now we have another property. 

Dustin Heiner  

Here's another one, private money loans similar to hard money, but it's not an institution, it's not a company. You go call your grandma, your aunt, your uncle, somebody like a gym owner, you talk to people, you know, and remember, at the very beginning, I said, I started telling everybody that I'm an investor. Well, in doing that people know me as an investor, they want to invest with me, because I'm successfully unemployed, they're like, how did you do that? Well, I invest in real estate? Well, that's interesting, tell me more, then they might say, well, that's a lot of work, I would just love to you know, just invest money like that. Well, that's great help out when I have a deal, I'll bring it to you and, and if you want to invest with me, we can do that, so that's private money, love private money.

Dustin Heiner  

Another great one, I've done this before, portfolio loans. A portfolio loan is basically a smaller bank, let's say a credit union, they would have a loan on a property that they hold, that means there is their own portfolio, they don't sell it off to Fannie Mae, Freddie Mac, that's another way. 

Dustin Heiner  

Another way is a signature loan, you literally walk into the bank and say, I want an unsecured line of credit, just like a credit card, pull cash out, you're gonna pay a little bit of money. But remember, you're not paying the money your tenants are already counting for the expense, so signature loan, just get money, it's an unsecured line of credit. You can even do a bundle loan. I've bundled four properties together and took out one loan over all of them and I could still because it's a bundle loan sell off each one individually. But I got one loan that bundled all of them together because I needed a certain dollar amount in equity to pull out. 

Dustin Heiner  

Another one is partnerships, you partner with other people. 

Dustin Heiner  

Another one is subject to, you find somebody who's selling, they have a good interest rate, you say, hey, how about I take over making those payments. I'll give you a little money on top of that, but then I will buy it from you, that's another great way. So I probably got there 15, at least 16 now, so I can't remember all of them off the top of my head, but there's so many other great ways. 

Dustin Heiner  

Seller financing, oh, that's another one, so seller financing is different than subject to, subject to, you're taking over the mortgage from somebody else. Not that hard, it might sound hard, but it is not that hard. Seller financing, you just say hey, seller, how about you be the bank, you're gonna make so much more money if you be the bank and not the bank and get a mortgage. So just think about these, these are all tools that go on your tool belt, that whatever deal comes your way, you figure out what tool fits in that slot and then you've, let's say it takes four different ways, let's say it takes cash, it takes private money. It also takes a signature loan and a conventional loan, you put them all together and you buy the property. 

Ryan Miller  

Oh, man, I love that. That's great for funding of property, but what about finding a property we alluded to a little bit for beginners, but I wonder if you could talk about some key competitive advantage, you can provide people who are looking to find a property?

Dustin Heiner  

The finding is literally the easiest, it is literally the last step in the entire building the business, because you might be thinking well how do I find one? Well, there's so many different ways like the MLS, the multiple listing service, I mean, it's so simple, you talk to any realtor and that's another way to talk to a realtor. And they will literally just push a button, and they'll start sending you all properties that come on the MLS, they don't do any work, they literally push a button and it gets sent to you. 

Dustin Heiner  

Now here is as an investor, here are some ways that a competitive advantage I teach all my students and I also use, number one is direct mail. So direct mail, like literally sending them a letter, or a postcard, or I've even done this, I've said you know one of those checks that you get from a bank that has like the kind of gray or black and white like speckled on one side and other side it looks just looks like a bank check. I've sent that to people it literally has, I would love to buy your house and here's the dollar amount, obviously, it's not a real check, call me if you're literally has the dollar amount on there, call me if you'd like to talk about selling your property, I've done that. So direct mail is fantastic phone calling, texting, those are two different ways, like they're actually totally different ones. You can text people, you can even do direct phone calls. If you own a house more than likely recently, you've probably got a phone call from somebody saying, hey, are you looking to sell your house? Same thing, you might be text this exact same way, but kid you not the reason why they do it is because it works. We have no clue who's willing to sell their property. 

Dustin Heiner  

Now, I also tell everybody that I'm an investor, I tell other investors so they know I say hey, if you're ever looking to sell if you know anybody who's looking to sell, let me know I love to talk to them about it. You talk, you tell your property managers, ask them do you know anybody selling? Title companies, I even have title companies say hey, this property's falling out of escrow would you wanna take a look at it? Absolutely. I have wholesalers, wholesalers are like realtors, but they work a lot harder, sorry, if you're a realtor, you know, it's true. Wholesalers work so much harder because they find the buyer and the seller and then they put them together, so wholesalers are amazing. Now, here's what I'm gonna give you, I probably shouldn't, just my students, but I'll give this to you. I'll give you a really awesome tip to find wholesalers, I bought countless properties, at least 10-15 different copies from wholesalers. I don't care that I pay them a little extra money, I pay a realtor the same thing, but they did all the hard work. I literally drink my coffee and watch my emails and just get properties. Here's a tip, here's a huge pro tip to find wholesalers, you might be thinking, how do I find wholesalers? If you think of you driving down your neighborhood, do you see on the telephone poles or electrical poles that say we buy houses fast for cash? You've seen those are called bandit signs, you see those? Well, that's a wholesaler, literally call them up and say wholesaler put me on your buyers list. They'll say yes, please, they're excited because they need more buyers, because they're finding the deals, that is a great way to find wholesalers. 

Dustin Heiner  

Now you might not be living in the same area, well look on Craigslist, or Facebook look, go and talk with and there's another way, go on Facebook in the Facebook groups. Look for people who are saying we buy houses fast for cash, those are wholesalers, those are other investors. So honestly, this is just like the tool belt analogy, these are all tools in your tool belt, that property has come directly to me and I don't do any work other than just analyzing the property. And kid you not hiring VAs, you can hire a VA just give them a simple system, like I give all my students the green light deal analyzer. It's called a one minute green light deal analyzer, you basically it takes you one minute, you put in just a little bit criteria and it tells you if it's a good property or not with a green light or red light. I just give it that to my VA, the VA just literally analyzes all the properties and they come back and say hey, these are the, all these ones fit the green light these ones didn't. So finding is the easiest step out of all of them, you might think it's hardest but it's actually the easiest. 

Ryan Miller  

I love that, before we wrap things up. Is there anything that you'd like to tell anybody how to contact you, anything at all, closing remarks?

Dustin Heiner  

Yeah, absolutely. So actually I have a free course. I just love to give it out, it's literally for free. Do you mind if I give it out to everybody?

Ryan Miller  

100%,  Making Billions exclusive. Let's get it.

Dustin Heiner  

Awesome, if you text the word rental r e n t a l, rental  to 33777 (rental the 33777). I'll literally give you my course many people have just invested just from this one course it's you get it. It'll show you how to find anywhere in the country to invest, how to build a business, how to scale the business to be up to get financial independence. You can even go to masterpassiveincome.com/freecourse all one word, masterpassiveincome.com/freecourse. But you could also find me on my podcast, the Master Passive Income Podcast, it's literally 90 percentage is just me teaching how to do this. It's literally the hows and the hows and a hows, so that you can actually do this. In fact, you'll appreciate this, Ryan, so I became financially free when I was 37 years old, and then I needed a new goal. Well, I made a goal of making a million dollars a year in all my businesses, but I kid you not, I got bored of it and I was not motivated by money. I just realized that about a year later, I was like, I'm not even striving for it. I changed my goal and now I have a passion for this. It's to make to help 1 million people to invest in real estate and hopefully become financially independent, that's what gets me out of bed. That's what gets me on these podcasts is because I love seeing people change their lives by investing real estate. When I bought my first property, it was an accomplishment, I didn't feel fulfilled. When I quit my job, it was a great accomplishment, I didn't feel fulfilled. When my first student bought their first property. I felt so fulfilled because I helped another human being get what they want in life and when my students quit their job or get what they want, financially, I feel fulfilled and then now that's what I'm doing. But you also you can find me on Instagram, The Dustin Heiner t h e Dustin Heiner, and no, Ryan, I'm not that arrogant. It's just the only handle I can come up with. But Dustin, the Dustin Heiner, reach out to me. I love answering DMs on there with people and just helping as many people as I can. But I really appreciate this man, this has been a lot of fun.

Ryan Miller  

Yeah, it's been great, you've been spitting some wisdom. So just to summarize everything that we talked about the competitive advantages, if you have to go back and rewind and listen to it? You absolutely should because there was a ton of competitive advantages in there, but just to summarize, get good at funding your properties, get good at finding your properties. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better and make sure to come back for our next episode where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.