Alan Corey: How I Became a Millionaire before 30

How to Retire Early from Real Estate Investing: Alan Corey's Story Unveiled... Today, Alan Corey joins the show and shares how he turned a modest beginning into a thriving real estate portfolio without traditional connections or initial wealth. Learn how Alan leveraged his "House Fire" Method and uses strategic decisions based on hard numbers and spreadsheets to navigate the real estate market. He believes and reiterates that ANYONE can achieve financial success through real estate investing with the right approach and mindset. Welcome Alan, to The Gould Mine...

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Transcript

•  What's up gold miners. Today. We welcome Alan Corey to the show. Sometimes you might hear that real estate is an inflation hedge. It's not that the property is inflation. It's the debt is an inflation head and you want to walk in that debt so just buying real estate no mortgage that that that's not the same benefit as as having a 30-year mortgage that's locked in place. Allan is a multi-decade real estate investor and author of several real estate investing books. Despite growing up in the projects. Allan overcame those circumstances to become a millionaire before the age of 30 and Ed episode we dive into the journey from Allen's humble upbringing all the way through to where he is today. At the beginning of today's episode. We talk about the current real estate market for both home buyers and Real Estate Investors. Allan also shares his opinion on who should be buying right now and who should be waiting to buy later on in the episode. Allan shares his unique perspective on good debt and he shares his views on utilizing real estate as a hedge against inflation and then finally we wrap up the episode by discussing some of the real estate strategies that Allan has used over the years and he also shares his advice to new Real Estate Investors on the kind of strategy that they should be deploying when getting started in their real estate investing Journey. This one was an absolute blast to film everyone. Allen has a ton of on liners my favorite one being find the home that's ugly in the streets but sexy in the spreadsheets. That's the kind of episode that this one is so without further Ado. Let's welcome to the show Alan Cory Alan welcome to the gold mine glad to be here thanks for having me yeah man. No. This is this is great and and I I think you know just kind of looking through all of your history leading up to this point. In time I have a lot of context but for the audience back at home who just tuned in why should they stick around and what do they stand to learn by listen to this episode uh well. It might have a side effect of getting them extremely wealthy. So I don't. It's not for everyone I should say um. But uh if you're into that thing and you're okay with the side effects then yeah stick around. But uh I've been figuring out how to make money. Uh for over 30 years I didn't come for money. I felt like I was at a disadvantage. So I I've tried everything and published multiple books about uh how I found ways to to make money and I I still teach it to this day when you say you felt like you were at a disadvantage. What makes you say that I didn't have uh mentors. I didn't have anyone that I knew who was really rich. I had like two basketball coaches that they they seemed like the richest people in in the world when I was growing up because they could host have a practice at 3 o'clock after school and everyone else's parents were at work and I never saw them in a suit and tie and then I was like okay. So the that's the life of a rich person and so um some digging you know I figured out that they are small business owners. They invest in real estate and so I I without them. Even knowing that they had an influence on me. I'm sure they were trying to teach me basketball but I was trying to learn how to live their life and so I'm just sort of put bit bits and pieces into action and and gone from there. And so you know I I got started when I I bought my first piece of real estate. After learn reading every book I could this was I'm 45 now um and so this is pre YouTube and social media and like you couldn't just call up a rich person or tweet at them or anything. Like that you could no no one was really really sharing their advice. So I I just spent my days at the library every single book in the self-help. The finance section. Uh I just devoured and just couldn't that was just like I these. This is going to be my mentor and um overall like I I tried to do everything and I was like stocks isn't really for me because I I can't control it really. I felt like it's a a 30y old you know 30-year like horse race like like I'm I'm a bit. But I'm I'm just parking my money and hoping that those CEOs do well real estate resonated because I was like I've been charge. I I get to decide what I'm buying how I'm going to renovate it who I'm renting it to uh what am I going to charge when am I going to sell it all these sort of things and so once I bought my first property I just made a goal to rent to buy one property a year for the next five years and just kept it a simple as that and that sort of led to my first book deal a million bucks by 30 because I was living in the projects Spanish Harlem projects on 108 Street and then Manhattan uh in first 108 in first if anyone's familiar there but um it I I was living the projects and I was like let me save up. I saved up $10,000 to buy my first property um. It was right after 911 when everyone was like get the hell out of New York what the hell are you doing and buying real estate and then in New York. Like very fearful which is sort of the times we're in now and that's that's always proven to be a good time to buy and so but I was like this is the first time I've able to afford a place. It was $100,000 in Brooklyn and this was not when you wanted to go to Brooklyn um and but I was like great worst case scenario if it doesn't work out. I'm back in the projects like I might as well bet on myself yeah right like like worst case scenario. I'm back to where I was. It's a boomerang effect fine. But the upside it was such an asymmetrical upside bet on myself. I was like I could be you know Barbara corkran or or one of these other like big New York real estate Titans if I just plugged away and suck to it. You said a lot there that I that I want to dig into the first thing is you know. This is times like this are when it's time to buy. Let's explore that a little bit because I think that right now you know there are a lot of people who are sitting on the sidelines uh waiting for things to improve why is that a losing strategy so in terms of real estate. I'm a realer as well. And I've been in this for 25 years. So I've seen clients fall into this trap time and time again. They'll look for a property. Whether it's a primary for themselves or investment property and they're not completely satisfied like they're not ready to make compromises um and I got to preface this by saying when I help $2 million $3 million clients. They're making compromises on square footage on location like like it doesn't matter what your budget is you know whether you're buying a $50,000 house. There's going to be compromises okay so um the saving for let's say I want to save another $25,000 because I don't see what I like right now. I'm looking at $300,000 homes $400,000 homes uh if I only I saved another $25,000 I can get that $450,000 home. That's going to not have any compromises time and time again. I've seen this happen by the time it takes you to save that extra $25,000 whether it's 12 months or 16 months or whatever. It is that $450,000 house you looking at is now $500,000 and so you're now buying that $400,000 house passed on a year later for $450,000. So you just bought the same house for more expensive because you wanted to sort of save more money and and get get ahead it it. I you can't outsave typically the home appreciation of inflation anything that's sort of affecting home prices and affordability of homes. Just get in the door. Now let all those let inflation benefit you and then let the tax break start working for you and then start saving while you have your own house and then maybe you buy that second home or the next property. A little bit sooner than you would because at least you have a solid base of foundation that you're. Bu you're you're coming from and you're in the real estate game. It's really hard to get that first step on the property ladder you just got to get on it and then take the benefits of that. You can leverage that old property into your second property that has fewer compromises or makes you more money or whatever you want to do yeah. I mean I couldn't agree more and and what's interesting is that you're you're kind of coming at this two different perspectives. The the like emotional uh you know primary residence uh perspective but also the investor perspective because you did both. At the same time you house hacked right uh. You you did. You did a house hack for your first couple so so walk us through the the sacrifices that were made when you're when you're house hacking because obviously like you're not just thinking like uh a primary resident you're thinking like an investor at that point too yeah so um. I I a lot of people say is primary residents real estate investing and I'll say no because you're buying it like you said with emotional decisions like what's my commute to work what you know. What's the school district. Like the these are things that that um or or more of your uh standard of living right and it's okay to pay a premium for it and it's okay that it's not an investment.
•  It's not you're not maximizing every dollar. It's fine to invest in your own lifestyle. It's just you're not going to get the return on investment as you want investment property which is a spreadsheet decision. You're just looking at the numbers on a spreadsheet and you're looking and saying hey you know does. This make sense to buy yes or no. It's a very calculated you know the decision like literally figuratively. Um I always like to say Real Estate Investors if you're a real estate investor. You want your house ugly in the street and sexy in the spreadsheet because that's usually the way it works a primary residence. Buyer usually does the opposite they want the sexy home but it doesn't make sense in a spreadsheet. You know so that that's how you kind of you know tell the difference between what kind of Shopper you are multif family house. Hacking is sort of my preferred way that I teach people of a company where where I teach people real EST estate investing and what I what I tell them is that's marrying those two things. A little bit say you buy a quadruplex or a duplex or a Triplex something that's four units or fewer you get the same mortgage as you would. If you're buying a single family house. You can put down the same down payment that could be three and a half percent down if if it's an FHA loan or 5% down conventional loan and you get the benefits of both because you get to live in one unit and then let's say you have a quadruplex. You have three other units that are help paying for your mortgage if not all your mortgage or more than your mortgage and um. That is that's really accelerated My Lifestyle because I found a property where I lived in the unit and rented out each of the other was a duplex. I bought it with a primary 10% down. Loan. I rented out all the other bedrooms bu the bedroom 600 bucks each at the time. Uh this was Brooklyn New York. No one wanted to live there but um and I was making $2,000 more than my mortgage payment and I was at a job making $45,000 as a tech support operator at the time so that was actually more money than I was making out my tech support uh job and I was like that's when I got the bug I was like oh. I just need to buy one of these a year rent them out as long as I can cash flow it and then meaning all expenses and property management or whatever um fees are paid by the tenants. Plus I get a little bit extra oh. It's a no-brainer I can see my exit out of the corporate 9 to5. It's just I just needed four five properties and I was like oh then then I can live whatever lifestyle I want so I'm curious what were the interest rates like back when uh you were making those uh First Investments same as they are now. They were uh. First Property had 7 and a half% interest rate okay um and so um yeah I definitely benefited from from going down and in the interest rates over the last 25 years um. But um I I say this I don't care about interest rates. It doesn't matter to me because um what I mean by that is if we'll speak about investing if I'm looking at invest an investment and it cash flows you know. I' I've seen great deals that cash flow even with a 20% interest rate. I've seen terrible deals that I would never buy with a 0% interest rate so the interest rate doesn't determine whether a deal is good. It's a variable and then you have plug it into some spreadsheet and then determine whether it makes sense to you. But it it that doesn't matter that doesn't tell you. If it's a good Market or a bad Market um so that's one thing and then if you get a property today and you feel like oh interest rates are too high to buy a property. One of three things is going to happen um. Either interest. Rates are going to stay the same and you're going to be like oh well glad I bought glad I didn't keep waiting on the sidelines because five years later 10 years later the interest rates were the the same and they haven't changed right. The second thing that could happen is interest. Rates go up and you're going to be like oh man I'm a genius. I'm so smart. I I I timed it right I I got got my 8% interest rate before it went up to 10% or whatever it is right y or the third thing could happen is interest. Rates go down and then you refinance and then you you're like at least I got my property and now it's cheaper for me to own so uh to me the everyone's so worry about interest rates. And it's like that that's just I don't even focus on it. It's it's just a variable yeah and and the the other thing there too is. And this is what I tell all my people because I I don't know if you know this. But like in a past life. I was also a realtor and so um. When rates go down yeah you can obviously refinance and that's great you've also locked in a lower price because for sure prices are going to go up and rates go down uh yeah well still typically what I've seen is yeah. Yes when rates go down prices go up uh. But when interest rates go up prices. Plateau so you know just because rates go up. It doesn't I haven't seen the properties go down like over 20 years it. It just stays the same so right yeah just get in yeah and so yeah you you'll double win. You get the lower lower cost monthly P monthly payment cost but then yeah. The home appreciates the value because now interest rates are lower 100% 100%. So it's like either whichever one of the three scenarios you're always better off buying sooner rather than later I would agree. I think there's very few instances uh where it would make to wait. I mean there's there's obviously like exceptions to that rule right.
•  But uh y very few you know very very few. Very very few well sorry jump and say yeah what would be a worry would be Unlimited. Supply right supply and demand econ 101. When will we have too much supply of homes that what is it going to happen. Last time that happened was uh the great financial crash and that was caused by um lenders. Everyone could get a loan so there you know everyone could get a loan and then oh that that experiment didn't work when they were all interest rate only loans or adjustable rate mortgages two years three years in when it came down to refinance and everyone lost their home. So we had this glut of properties hitting the market okay. So that is what makes home values come down. How would we recreate that event in today is always what I'm thinking about it would have to to be possibly another mortgage event. I don't see that forthcoming because uh everyone's locked in 3% interest rates 2% interest rates. It's really hard to be underwater on property. Uh they changed the laws. They changed the laws in 2010 so you can't do these no do loans where you you know. It's stricter. It's harder to get approved for a loan so over the last uh 14 years um. It's been highly qualified buyers more than they used to be so I I don't see a glut of properties coming through foreclosure or anything like that the other thing would be building. Maybe we we have this glut of Builders who've just knocking out a million properties a year more than we expect and we just have too much inventory well that hasn't happened because Builders haven't found a way to make money in the last five years because interest rates are high and the land costs are high and it's just too risky to build a giant neighborhood so so they'll buy maybe they'll build two homes or three homes rather than than the 50 homes in the middle of nowhere that because it's too risky. I don't know what interest rates are going to be when I'm done with that project in a year and a half from now or two years from now and if if the interest rates go up 2%. Then I just did two years wor of work and I'm selling it for what it cost me to build it and you know. That's that's no Builder is going to take that risk unless there's like government incentive programs or which we don't have right now to kind of push this building um of property. So I don't see that Supply coming from from Builders either um and so it's been sort of. Co also WIP wiped out a bunch of the flippers And We Buy Ugly homes because a lot of those Courthouse step purchases are from people who get foreclosed on for whatever reason they've lost their job or um. They can't fix up their home but when there was a mortgage you know eviction moratorium and there was mortgage uh relief um that basically wiped out all the house flippers uh because there wasn't enough there. Hardly any homes at the courthouse steps to to flip you know there. There's a it's a ecosystem right y whether you love them or hate them. They're there that that's it's a larger supply of an ecosystem. I'm helping this guy get out of trouble and I'm making a nice new home for this new first-time home buyer and so all these sort of people who were um during covid or pre-co were house flippers. They've all found other careers and different jobs now uh and then they're they're kind of reluctant to get back in because interest rates are a little high. So these are all like three different ways that the you know foreclosures and um from lending lending bad lending practices and over supply of building from Builders. None of those things are happening anytime. Soon so I don't see home prices going down and so yeah they just the common refrain that you'll hear throughout. This podcast get in today uh you know I I. Don't benefit whether you buy property or not like that people are like well you just saying that because you I'm a real. No I I don't care if you're buying a house in Texas or California. It doesn't affect me. I'm just trying to tell you like what that I've learned over 25 years here. Yeah I couldn't agree more I mean um just knowing what I know and and having you know been in the game for like over a decade. Now. It's it's been pretty obvious to me that even when you study like historically the the the market and and what it does during even bare. Cycles you know bare markets uh we we typic. We typically see housing Thrive even when the economy is going to you know and that and that's a very interesting um factoid that not a lot of people actually realize you know. It's like what is it four out of the last six bare markets. Housing's gone up housing prices have gone up so so I mean if you're an in investor and you rent out properties and there's a any sort of financial crash. People lose their jobs economy suffers right so when people lose their jobs. It's harder or impossible for them to buy a house. So it creates more rental demand. So if you have a property in a down economy. Uh you probably have more renters than you normally would in an up economy when when everyone could could go get a 3% mortgage interest you know loan kind of thing so uh yeah you can weather the storm also with Real Estate Investors. Let's say property values go down 20% 30% if you bought on just basics of real estate investing and the cash flows just because the property value goes from a million to 800,000 that doesn't mean your rent drops from a thousand bucks. A month to 800 bucks a month there's a 12mth lag on your leases and but in that situation again there's more rental demand than typical so it doesn't decrease rents like it may be marginally 5% here or tickle down here there. But I haven't seen ever a situation where whatever is happening in the economy has created a situation where rental income is now below what your mortgage payment is you know kind of thing like you're you're going to be a you're going to be able to weather any storm and that's what's great about real. Estate. Investing is you get to decide when you want to sell and at down Market I just won't sell. I'll just keep collecting cash flow with there's High rental demand and then whenever I do want to you know wait it out until the Market's great. Then I will sell and so that's different back to primary home buying and now that's different than primary home buying and everyone's horror stories and what makes the headlines and what your parent tells you or uncle about the scariness of real estate is all the real estate they've ever bought. It was bought on emotional decision what what what we talked about Earl but also uh life timing meaning. They needed a house that you know summer whether they because their kids had to start school. Because they started a new job they got married. They had a baby. They had a divorce whatever it was. They needed a house in a really narrow time frame which that's not investors don't operate that way but primary home buyers do and then when they need to exit that property. It's the same thing. It's a lifestyle timing event uh that's forcing the sale uh the Market's down. They lost their job marriage divorce whatever you know death in the family something and then they just have to sell it because that's timing just appeared and they have to sell it. So all. Their real estate experience is based on a lifestyle decision to purchase and a timing decision that um investors don't go by and that's also how they sell primary residence properties and that's not what investors do either how did you insulate yourself from the emotional roller coaster that can be real estate because obviously you've you've learned learned all of this over the years and a lot of people especially if they're firsttime. Investors don't know how to separate the two and so how how what strategies did you develop over time to keep you from kind of giving into that fearmongering that herd mentality that so many firsttime you know investors whether it be in the stock market or because you see it too like people selling out their stocks when they shouldn't and uh and kind of feeding into that that herd mentality how did you insulate yourself from that well yeah you you real estate. It's a feature that it's eLiquid like like you know the fastest. Typically it can sell properties in 30 days right with stocks you can sell it in 30 seconds so um. It's a whole process to let me talk to a realtor let me fix. Some things before the photographer comes and like and then eventually you're like oh. It's not so bad right so that that's kind of a feature of real estate is that uh it takes a slow time to sell um. I looked at. It was that um I I always look five years in in advance 10 years in advance it I've never when I'm I think every investor should like it's not day-to-day unless you're a day trader which we know that's very speculative real. States you know it's not a getrich quick. It's not getrich today. It's get rich eventually and so I was just look at it and be like okay. Even if I broke even worst case scenario.
•  The tenants paid for all my expenses my property taxes my mortgage uh insurance. I broke even they still paid down a good chunk of my mortgage balance each month uh on a property. Uh you know kind of thing so I feel like I'm still winning there. I still get tax breaks. Uh you know I can write off some. Some you know improvements and and depreciation of the property um. So there. There's a lot of things that I still would look at the benefits of of of it and when everything's Fallen apart the opport tunist in me's like oh. This is a good time to buy I can take uh someone else's um. You know worries and turn them into my game. And I'm not taking advantage of them that they they were uncomfortable and they want to sell at a lower price to get out that's fine let me buy and I I can weather. The storm I look at real estate that that my approach to real estate is a mutual fund approach to real estate so just like not buying one stock and you know whether that company win or lose you're you're riding that One stock you would buy a mutual fund of properties which you know sure you buy. A thousand of stocks. 200 are going to be bombs. 200 are going to be winners but you're going to get the average returns and so I sort of tried to do the same thing wor in real estate. I was like if I just have one property then yeah. All my eggs are in one basket. I'm riding this one house but if I got five different properties and they're all duplexes so 10 different units. Um two could be vacant at any time and I'm still cash flowing. It's still proper. I'm still making money as a whole across my portfolio of properties and my mutual fund approach uh uh and and you know. And I always say that each property comes with imaginary lottery tickets when you do this because um when you the more properties you buy you do have that ability where one just is a home run and you bought it for $200,000. 10 years later you did nothing uh a new headquarter came in a new park was built. A Transportation Hub or something was built and that $200,000 property is all of a million doll property and so wow I just made $800,000 that would not have happened if I tried to just keep one property and try to pay down that mortgage and just you know let me. TR pay off that $800,000 mortgage. No I I want as little money as many properties as possible and buy as many properties as possible. So I get those imaginary lottery tickets and that mutual fund uh approach uh to weather all the storms. So you brought something up there where you talk about leverage right and that's one of the beautiful things about real estate and a lot of times. Uh we we don't talk about it. I feel like enough you know. It's. It's one of the the the the greatest things about buying real estate. But some of the gurus out there obviously don't feel. That thatt is a good thing and so you've talked about in previous podcasts. I've heard you talk about good debt in real estate. So uh can you can you explain what constitutes as good debt and how uh how you've successfully used it yeah. Anyone who tells you to to pay off a mortgage is not a guru. They don't understand real estate. They don't understand money like you don't have to um love math to for for me for to understand this example about to give you. But you have to trust math you know kind of thing and if you trust math it makes zero sense to pay off your mortgage. So the story story I like to share is imagine that you pull into a gas station. You find a Dollar on the ground and you you pick up that dollar and you have two choices. You can listen to Dave Ramsey and mail that dollar into your bank. Uh you know and and pay off $1 of your mortgage payment. Or you can do what I say and go in and buy a bag of candy. You know maybe one stickers Bar for a dollar in the gas station that that is my financial advice to you and um that may see counterintuitive but here is the other way you could play out. Let's say you left that Dollar on the ground and you just drove away from the tra gas station and you came back 15 years later you come back 15 years later that dollar is still there and you're like fine. I'll finally pick it up. I'll go do something with it okay so you can 15 years later. You can pick up that dollar and you can still go do what Dave Ramsey or Susie Orman or any of those guys say and pay off mail it into your bank and pay off $1 of your mortgage payment. Great that can be done or you can now go into the gas station and you can't buy anything because Snickers Mars are $4 now and you're like oh man. You know why what's going on well well that that's inflation like if you can lock the price of anything around you in place for 30 years. Why would you want to get rid of that that that benefit because everything else is going to go up in price and so you should go buy all the goods you want now all the Snicker bar. All the you know meals out uh everything now rather than paying down your mortgage um. It's the biggest expense in your life ever like monthly expense and you're GNA have it for 30 years and you. It's such a beautiful thing to lock in this expense when everything else is getting more expensive. So it just doesn't make sense uh to ever to ever pay it off and it it does make sense to if you're about to pay it off get a new 30-year mortgage. You know I'll walk into antique stores and I'm in Atlanta where cobca is headquartered and you see like 5%. 5cent. Cokes and 10cent cokes right um and and now it's $3 a Coke but you know if I could go to Coke and say hey can I lock in the price of coke for three bucks. For the next 30 Years um they would be foolish to accept it. But I would be genius because I know in another three years. Coke's going to be 10 bucks and then I can Ser selling you know Cokes like so. That's that's good debt and that's leveraging and you get that benefit only in mortgages to lock in the lowest interest. For the lowest money. You can borrow for 30 years and it's also why everyone's Grandma seems like a real estate genius because she lives in some great property and you're like I can't believe you only pay 700 bucks a month on your mortgage. Oh it must be so nice uh to be you and I promise you. When when your grandma bought that property it felt expensive. She felt like she was pushing her comfort zone. She felt like you know. This was taking all my savings and all all all it took was get rich eventually and 30 years later. She looks like a genius oh you're so smart and and no one thinks that they can do that and I got you can do. It just buy any property and wait 30 years and you're you're gonna come out ahead yeah and and that you know it's. It's an interesting example that you gave there just now right because you're like hey. You're we're locking in the instead of using the cash to pay down. Debt use it to go buy something that is going to increase in price right right because the debt is fixed and what you're saying is that like over time inflation is going to drive the rest of the goods up so why pay down something that's fixed when you can instead buy something that for sure is going to go up right right. It sometimes you might hear that real estate is an inflation hedge. It's not that the property is inflation. It's the debt is inflation head and you want to lock in that debt so just buying real estate uh with no mortgage that that that's not the same benefit as as having a 30-year mortgage that's locked in place yeah that makes a lot of sense and that's a really interesting way to look at it. So is Dave R Ramsey wrong. Yeah I I think um and I think Dave Ramsey knows he's wrong uh. But it's easier to connect with his audience uh to to teach them things that they they think is true and I think his audience is for getting out of debt and my audience is for making creating wealth and so we have different audiences and I think there is some points to say yeah get out of debt first and then take on the right right types of debt and so his advice is probably good for getting out of bad debt uh. But but he he starts putting your house into that category of bad debt and that's fundamentally incorrect. I mean I I couldn't agree more I I I always chuckle when I watch this stuff. I think it's um. It's interesting to say the least what would you say. Allan is the greatest setback that you've encountered in your investing career yeah.
•  So uh believe it or not you can go broke buying good deals uh and uh I I with you know I've built. Maybe about 10 um houses from scratch sort of the 1 million price point buying empty lots or houses that were tear. Downs um and this was um. You know maybe six or seven years ago and I I I just knew the numbers on the back of my hand. Hey you know I can buy a lot or a tear it down for 400,000 um. It would at the time to build a new house probably 450,000. Let's call it 500,000 so 900,000 all in I could sell them for one one to one two all day and so I so I was just um trying to acquire as many $400,000 or less properties. You know um I s unseen because I was like oh I I could make $200,000 each year and what I didn't take into account was that um my Builder uh could not build a Infinity supply of Homes at the same time as I was acquiring the properties I was acquiring them more than than I could sell them so we got a situation where you know. I I had an empty lot empty property that I bought with hard money loan uh and he couldn't work on it for a year. I think it's really expensive and then uh and so um. They only lost money on one property. It was a beautiful property uh and the benefits were that we ended up selling it for I think 135 so $150,000. More than um. We thought it would uh two years later but it cost me. You know $200,000. More than I thought it would and we ended up losing $50,000 on it. So that's sort of like. We didn't work for two years and and lost $50,000 even though the prices went up so that that's that's one of those things where I learned you know when I started relying on others. I don't I'm not a builder right. But I had a builder that I trusted and knew could do the work and knew his numbers and I you know that's when I was like oh I need to have more builders in my Pipeline and Branch out and work with different people so that I don't get you know what is that uh the the bottle um bottleneck and sort of building your real estate. And I've also pivoted since then and prefer now the bu and hold rentals more so than than building new construction just because buy and hold you can get money at at closing day. One you're getting rental cash flow buying a property that already has tenants in it and um you know this windfall investing where with with um Building Homes because you're you get a big windfall every year every two years. But it could also be a big loss and I I see so many deals every day I want to be putting it to work immediately. I don't want to tie it up for a year to uh to build anymore. But I appreciate those Builders out there who do because there's obviously a supply for necessary home. Buyers want new homes yeah. That's really interesting that um you you've kind of pivoted your your strategy and so it sounds like you know you were you were house hacking for a while. You you built up the portfolio. Then you started diving into the new construction realm and then realized e maybe. This isn't really for me then you've also pivoted. I know that you own a retail center now correct yeah. So uh I I have a bit of Jackal trades. I don't know if that's my ADHD but as a realer I'm looking at properties every single day and I just see opportunity when I see I buy it but also I teach real estate. So I like I I bought a couple shortterm rental because people are asking me about it. And I was like I let me do it myself before I try to teach you like I just didn't feel comfortable teaching things I didn't do so. I've bought apartment buildings. I bought a um 50 single family home portfolio. That was a couple hours from me uh side on scene. I've I have a my I'm office hacking right. Now. So this is a 9unit uh retail strip uh. The tenants pay for my office space and so I'm in the one of the offices here and so um I I try to do everything. So I can talk about it but also I was like you know come make more money here. How do I do this I just wanted to learn about real estate. It goes back to my original craving of knowledge in the library. I wanted to learn. I didn't go to school for Real Estate I I you know and what I finally learned is most residential. Real Estate Investors don't come from money. They're they're self-made. Most commercial investors come for money. They they have a mentor. They have um a trust fund. They have rich people Network that pools money together. I didn't have any of that so. I'm learning that now that I'm wealthier. But uh you know and I'm sort of pivoting back to my roots. Which is you know. I understand this game. The the most I'm it's more me in charge. I'm not taking up other people with money like like it takes to buy apartment buildings. You know I've got um 300 doors in apartment buildings ranging from 20 units to 150 units and um. It's a whole different beast and it's you can make money. But it's also riskier. I think it's when you have money. It's riskier and and it goes back to Lindy uh because in commercial deals. Typically you don't get a 30-year fixed mortgage. You get a seven-year arm y or a 10e arm and so you are refining or selling every seven years or 10 years and you're just hoping that interest rates are going to be good in seven or 10 years and that makes me uncomfortable I'm okay with it. It's less because I've I can. I can weather the storm because I've been doing this for 20 years. But I I never had that worry and I don't have that worry on any of my four units or fewer because they're locked in for 30 years and I don't have to refinance. I don't have to sell if I don't want to but you see that all the time commercial gets hurt because the timing is bad and I don't like living my life and my investments based around timing yeah for the first time in a long time too. The commercial sector is uh hurting big time and it's it's exactly what you just said right so obviously when when people are getting into those seven-year uh products 10e products. Fiveyear products. You look back where rates were 5 seven 10 years ago where they're at right. Now it's night and day and that's uh Armageddon for the commercial sector right now yeah because commercial. They it's based on how much income it makes that that's how you get approved for a loan. It's less so what other properties like that have sold for. It's less so what your personal finances are so if um all of a sudden you you're making money at a 3% rate and you have to refinance at a 7 a half percent rate um and now it doesn't cash flow anymore. You either have to foreclose on it or bring table money to the table just to refinance and so sometimes you know that's called a capital call where you got to call the investors and say guys. This is not working out give me more money and everyone's like what you're like yeah. We gotta bring $200,000 to the table to get a higher interest rate and make no cash flow and so I I I that's not I want to live. I'm you know. It's it's gambling to me yeah. No. It makes makes a lot of sense and it's an interesting perspective coming back to the the switch over back to the uh. You know more Buy and Hold traditional residential play. Right now is your main focus buying kind of Turn. Key assets or are you doing a lot of Burr situations right now uh so in between so um I real estate's a totem poll uh there. There's I always say you can make a million dollars. A million different ways in real estate and and it's where do you want to be on that totem pole. Not necessarily. The top is the best but you could be that wholesaler who who finds off Market deals you could be the the person person who at the courthouse you could be the person who renovates the property you could be the person who tears it down. You could be the person that builds it up. You could be the person that buys it and and and you can buy it anywhere up and down that that different levels of condition on that totem pole um the money I like I see right now and it takes a little bit more money because you have to purchase a property and then renovate it yourself um. I I like properties where it's rentable as is ugly in the streets sexy in the spreadsheets that so funny I have opportunity to renovate it. If I want to I I I might not do it day one after I close because it'll make money day one. It's fine and it might have a wonky floor whatever and um. But if the market turns around or I see an opportunity wow I can put $10,000 into this and raise rents 400 bucks a month then. I'll do it yeah and if I don't have $110,000 today to do that. That's fine. I'm still happy making and you know 100 bucks a door on it right now or whatever it is and so and I also like small multif family for that situation because typically let's say you have a quadruplex. Most of them not all of them. Most of them have the same floor plan and so what I would do is just renovate one unit and see can I push the rent let me renovate this one unit has X same four plans as the other three I'll figure out how much it cost me to get there. Uh B renovating that one and then I see what I can rent it for and if it Mak makes sense and the ROI makes sense. Then I'll do it to the other three and then if I do it and it doesn't make sense. Then. I don't renovate the other three because what's the point right yeah and I wait until the time where it does make sense so I kind of like just testing one unit at a time renovation rather than uh a building that's you know a complete Burr where I'm going to add tons of value because to me.
•  That's sort of the same strategy as building where you you have this huge lag and you're hoping interest rates are good in the future and you just have months and months and months of no cash flow and no income. It's all outgoing and uh I I do that when I have like a slush fund of real estate but you know funds that to put to use but um. It also eats up all my time and and it I I I like singles I just like singles and doubles that are every month rather than a home run. Every 12 months kind of thing yeah hey that makes a lot of sense and and and honestly. I mean it. It clearly has worked out very well for you. We're we're coming up close to time but there's a couple other questions that I wanted to ask you Allen specifically around the current real estate like market and the climate and the approach right now um to investing because your investing strategy has evolved. Would you say that it's more evolved with your personal um just kind of like what's the word I'm looking for here. Like your personal appetite for certain deals or would you say that your your investing strategies have shifted as the market has shifted um let me. I think this is what you're asking me and and maybe what's my advice for others on what strategy they should pursue um and and if that's not what you're asking me. Then then we'll go back to the question but my answer to that is um. I think you should invest everyone should invest in an expertise in your wheelhouse and so the a lot of people want to diversify. I want to buy a short-term rental out of state. I want to buy a local single family house in a good school district. I want to buy a a Triplex uh near the university and what that that doesn't build expertise because you're getting reps in three different types of exercises here and they have different property managements. Different tenant requests different um repairs and the quality of repairs that you have to do um and and it's hard to build um sort of the confidence and the knowledge to really juice every property for what it's worth and I I own the most of of small single families and so I know my the contractor to use all these properties. I know what it will rent for um just looking at photos. Online. I know what I would do or not do. I know what streets to avoid and not to avoid and so that makes gives me the the Reps like just the turn around a flywheel so so quickly that I know much more on a faster basis and I do a better job and so because of that it's easier for me to make a yes no decision um and it should be easier for other people to make a yes no decision. So when I'm evaluating a strip mod that was the first time I've ever done that it takes up all my time and I um have to do a lot more research and a lot more due diligence a lot more asking questions to friends who do this thing and then once I'm in. It's like oh now I got to learn how to write commercial Le that you know for businesses. I've never done that before and so I'm always in learning mode rather than executing mode and so um there's time and place for both and it it's but if a new investor is listening to this whatever investment property you have right now you're the most qualified to buy another one of those investment properties and and and another one and another one and then if you want to get out that's fine. But at least you built the expertise you you. Juiced it for everything it's worth and then you have enough money to Pivot into something that you may be more interested or about or want to put your money into yeah. It makes a lot of sense so as opposed to thinking about okay well like the economy and like oh what the timing and you know all those things. It's more of like let's pick a lane stick to it and then at a certain point because and the reason I asked this Alan right because there's there's so many different thoughts right like I I know people who um have have adjusted or pivoted their their strategies and their like their whole investment thesis when the market shifts and then there's some people that that like yourself that are just like more focused on their own game right and not so much about like the noise and so it's just interesting to hear different perspectives. Every strategy is going to have its moment in the sun office. Space had its moment in the sun with Wei work and everything and uh now it's out of favor um. Short-term rentals had its moment in the sun uh and I I I feel like you know cities now are changing the laws on on short-term rentals and but the people was a gold rush. You know people who got in printed a lot of cash some still AR mine's doing pretty well but sure they might change the rules one day. So I I only buy short-term rentals that I can pivot and turn them into long-term rentals and they'll still be profitable um and so um. I I encourage others to do that too um. Whatever the you know strip malls you know th those had are probably still having this moment in the Sun a little bit uh depending what type of businesses you have in those the service based businesses. The the barber shops and the medic pedicures and stuff like that where um people always need these things except during covid. When they're you're denied going to these things. So it it is has a phoenix effect like it had. It was terrible uh during Co but now now it's doing much better and so it it's hard to chase something because I feel like it's. It's temporary um but the boring old apartment building where that a family lives in that's not um a trend that that's not going away like there's always going to be a need for that. There's always going to be people who are are moving up in life and and moving into a duplex is um unlocking a new wealth bracket for their family and there's also going to be people who are moving down from the million-- dollar mansion and moving down in life and they're happy that there's a duplex there. Like you've get people coming up on their journey and people down on their Journey. At different times you know I lived on no judgment other than the projects right and I might end up back there again and and it's okay I've done it before and and it I'm glad. There's different housing options where I am in life and uh to provide that for people.
•  I that's not that's not a a fad and that's not going to go out of style. Alan you've been awesome man. This has been a phenomenal show and in typical gold M fashion would love for you to leave the audience with one final gold nugget wow okay well. Uh I have books of. Gold nuggets I'm trying to pick out a good one. But I told you the side effect uh of listening to this podcast. Is you might get wealthier uh so uh that's uh definitely going on here so let me see um. I think it's find e people get analysis paralysis when it comes to real subus and it's normal. It's am I making the right move should I buy this and so my approach to overcoming analysis. Paralysis is in my book house fire fire stands for financial Independence retire early um and so how to do it with houses and if you're familiar with the fire movement uh. There's a math formula that says basically if you um have four times of your your expenses. I'm sorry 25 times your expenses annual expenses in a stock account and you with withdraw 4% of that. Every year you can retire early that doesn't make sense to me I I that it I was like there's got to be a better way to do this with real estate and so there is so the example I like to use is the fire movement. This is not what I made up. These are these are the um The Frugal. Uh F personal finance guys out there um and I used to be them. I used to be my million bucks by 30 live way. Below your means liveing the project yeah. I've been there. I get it uh. But what I've learned is that there there's things that are wrong about it. Let's say you have a phone bill internet and phone bill combination family plan whatever it's 150 bucks. A month 12 months of that one year is $1,600 I believe $1600 and um the formula to see if you can retire is if you have 25 times that so $45,000 put it in stock market and you'll be protected as long as you withdraw 4% of that that's called the 4% rule 4% of that 20 that 4% of that $45,000 in the stock market every year you'll have your phone internet bill paid off for the entire year and you that math shows that that should at least last 30 years if not longer for you. My approach to real estate was like that's terrible like if I have to do that for every expensive sure I have to be a millionaire and I get it if I have multiple millions of dollars yeah. Of course I can retire I can lead my day job uh but not true with real estate. So if I take half that instead of saving up $45,000 just to pay my phone bill and retirement um half that $22,500 I can go out and buy a piece of real estate put $20,000 down on a $100,000 property. There's $2,500 of closing costs. Expenses repairs whatever and you might say Allan haha you can't find properties. For $100,000 I I buy them every day you know I bought a portfolio of 50 of them uh. They were $35,000 each uh and I recently sold them for uh $65,000 each so someone else just bought them for $100,000 less that they might not be in your town. But they're in pockets of Middle America and Southeast and you can get a property manager. They're going to cash flow and the same sort of good people who need a place to live in these towns. It's not your town but you can still invest in them all right that's inside the point but for $20,000 I can buy a $100,000 property and it'll cash flow me $150 a month. There I I don't have to retire like in 30 years. I don't have to withdraw anything from that. It cash flows $150 which pays for my phone and internet bill. It burns it up. It's the housefire approach and so if you have analysis paralysis rather than saying is this good deal or is this a better deal. I like to say all right if you want to retire through real estate. Let's write down all your expenses internet phone bill 150 bucks how much money do you have $22,500 great. Let's go buy. A property that cash flows 150 bucks boom is does it yes no buy it. Let's move on to the next bill in your life. Your utility bill your gas whatever um water. It's 100 bucks a month okay well. Let's go. How much money do you have Sav $15,000 okay great let's go put that down. Let's go find a property at $75,000 or something or creative seller financing where we don't have to put down 20% that as long as the cash flow is 100 bucks boom that bill is down and it's much easier to save for each time because now you're not paying for your internet bill. You're not paying for your water bill so that cycle to save up for the next property comes around quicker and quicker and quicker because you're eliminating expenses so your savings rate is higher and then once you go through all your bills. Then you're retired and that's house fire that's for me and so now when I've after I've done that now I make up bills. I'm like I want to go live in Hawaii for three months. Well I don't buy uh a a you know trip to Hawaii. I go buy a house that cash flows enough for me to spend three months in Hawaii. I don't go buy a Tesla I got a Tesla Model X I could gave my cash over the richest man in the world and he gives me a model X no I get a lease. That's a seven-year lease or not a lease sorry. A seven-year car note purchase it with a seven-year car note. And I go buy a piece of real estate my $100,000 that would pay for that car note and then what happens is that house buys my Tesla. For me. It burns up my Tesla Bill and then in seven years that Tesla's paid off I didn't pay for it. My house paid for it and now I've got the rental income from that house that I got to allocate somewhere else. What bill is that going to go pay for do. I need another Tesla. No let me go to Europe for six months. Now you know and so that's how I look at real estate and overcome analysis. Paralysis is what's the biggest pain Point. What's the expense I hate. Let me get a property to to you know burn it up the house fire approach and then when I'm done then you know that's when you know when you're retired. You don't really have to do too much math. It's just addition and subtraction. It's really really easy anyone could do it and I really mean that I'm I'm a dumb dude. I just sort of trial and error and I've been at it hacking away take my advice. This is a way to to retire through real estate and it's it's very easy and anyone who's been listening to this episode would uh disagree. Uh very uh that you're a dumb dude uh lots lots of great neets.
•  In this one Allan and by the way for anyone who's still listening to the show uh all of the links to Allan's books will be in the description below go grab yourself a copy of house fire. I'm gonna read. It sounds like a good read so I'm excited to read it man and um and thank you so much for stopping by Allan. This has been great man you've been a wealth of knowledge and and uh hope to have you on again. Sometime anytime Danny thanks for having me and uh hopefully. Uh you can turn this podcast into a gold mine. Amen brother for.