PreReal Podcast Episode 67 Transcript

Episode 67: Becoming Successfully Unemployed: How To Quit Your Job & Be Successful Investing In Real Estate

I had so many properties that I went into my boss's office. I gave my new boss, which is great boss and everything two weeks notice done. He asked me a question, what are you going to do? I said, I don't need to do anything. I literally have real estate that's going to make me money without working. And I'll round up the story by saying, you remember that story with me walking down the hallway where it felt like the hallway got longer and longer and longer. Well, the last day, I was 37 years old, I leave my office and I take the mile and a half walk to my car because working in downtown Fresno, you have to pay for parking. And so I didn't want to pay a really frugal side walk that far. I've taken this walk thousands of times this last time, a mile and a half walk. I felt like I was walking on clouds because I knew that I would never, ever need a job again because I put the value in myself different than my job. So everybody listens to this. Your value is so much more than anybody could ever pay you all right.

Welcome, everyone to the show. We're joined today by Dustin Heiner. He is the founder at Masterpassiveincome.Com. And Dustin is wearing a shirt that I think we have to start with. I absolutely love it. I love the feel of it. Dustin, thank you so much for joining us today. You've got a great story. I'm excited to share it with the audience. I think you're going to bring a lot of value in the passive income space. How are we doing today, man? I'm blessed, James. Thanks for having me on the show. Yeah. I love the fact that my shirt says successfully unemployed. I love the fact that at 37 years old, I became successfully unemployed by investing in real estate rental properties. And so after 30 plus properties are like, man, why am I working anymore? And so I quit now. I could just have fun talking to great people like you on podcasts and teaching people how to invest in real estate. So I'm interested in the story for a number of reasons. Right. We're in a moment of time where folks are really exploring the possibility of being true entrepreneurs now covet. One of the few silver linings coming out of COVID is that people are reevaluating. They're really taking the time to take the time, if you will. Absolutely. We've talked about this before on the show. It typically takes somewhere around 64, 65 days for people to break a habit, any kind of habit. And then it takes another 64 to 65 days for them to replace it with a new habit. And this went on for so long that people really started to take stock and think there may be a different way. So I'm curious, what was the trigger for you? Can you give us a little context, maybe go back, talk about your life before being successfully unemployed. Absolutely. Yeah. So I've always been entrepreneurial in a sense where my dad was an entrepreneur. My mom and he split up, but my mom remarried and my stepdad was also an entrepreneur as well. So I had a little bit of example from them in their businesses. And as I was going to going through school, I would take a little jobs here and there. But then I would also start businesses. I'll give you just to name a few. A graphic website design company, skateboard manufacturing business, convenience store and a pizzeria started from the ground up, and I started investing into real estate. Now all that to say, as I was doing all these businesses, I was realizing that real estate is like the easiest one. I buy one rental property and make sure that I have other people do all the work. And then I don't literally don't need to work after that because they do all the work. Now I want to tell you a quick story, James, that will help everybody understand how I literally just said, I am now going full force into this. So I have four kids. My wife and I have been blessed to have four kids. And at the time, I was working at the county government in California. So we're working for the Fresno County government, one Department there and working a normal job 15 years. And you're already there living. I like to use the word for your job is just over broke because we're living just over broke because we're not making that much money. And so working for the county government, I was realizing that I'm living just over broke. But I wanted to buy one property, and so I tried it out and that was good. But then I said, you know what? I'm building a career here. This is going to be a great career. I'm going to keep going with that. So my wife had our fourth child and brand new baby girl, beautiful and everything. And so I'm working my normal job. But then I go on Paternity leave and that's Paternity leave was where the dad stays home with the wife and bonds with the kids and everything for about a week or so. And after Paternity leave, I come back to my job and I'm back to work for about a week. And on a Friday at 330 in the afternoon, I get a call from my boss'boss'bosses Secretary, like the top dog Secretary gives me a call and says, Dustin, would you please come to the boss'office? And I said, sure. And I hung up the phone. And then I paused for a second. And then I thought to myself, Why would they be calling me right now? This is not normal. And as I'm sitting there, I'm remembering two or three months before I went on to leave that there were some rumors and some rumblings that there could potentially be layoffs because the Department was losing funding. And so I said, no, I have so much seniority. I'm totally fine. I've been working here for 1015 years now, so I get up and I start walking down the hallway to the boss'boss boss office. And this hallway is not very long, but as I'm walking down it, it feels like the hallway is getting longer and longer, and each step it feels like my feet become lead bricks. Just I can't barely move because the weight is starting coming on my shoulders because I'm realizing I just had my fourth kid. And if this is the time that I get laid off, what am I going to do? So I get through the hallway and I turn the corner to my boss's office and his actual office is closed. But the Secretary is sitting right there at her desk and sheepishly. She says, Dustin, would you please have a seat? So I take a seat and she's consoling me with her eyes because she's a super nice lady and she knows everything that's going on. I have no clue about what's going on. And so as I'm sitting there, I'm thinking, oh, my goodness, is this the time that I actually get laid off from my job where I actually don't have a job anymore? So all these years I've been working, climbing the corporate ladder, trying to get more seniority, try to get a good job and keep a good job? Is that all going to be thrown away? And then what does that make me as a father? Am I a failure as a father? Am I a failure as a husband or even a man providing for his family? And so as I'm sitting there, my hands get all clammy, my head gets all sweaty, my forehead gets all sweaty because the way the world just keeps getting down and down on my shoulders. And then my boss's office door opens up. As it opens up. A lady walks out with a piece of paper in her hand, a co worker of mine. She is noticeably distraught, noticeably upset, not necessarily crying. But you can tell her world is completely rocked, and she passes by me. And then my boss brings me into his office. I actually get laid off because the Department didn't have enough money and they say, Dustin, here's your two weeks notice. Hope everything works out well for you. But here you go. And so as I'm walking back to my office, I am thinking, oh, my goodness, what's going on? I work for the government. Nobody gets laid off or fired from the government. How is this possible? So I get back to my desk and I sit down at my desk and I stop and I realize two different things. Number one, the first thing I realized is that I need to get another job. I need to be able to provide for my family. I need to make sure I have enough money to put food on our table, roof over our heads and make sure everything is okay for my family. So I was blessed praise the Lord to be able to get a job in another Department in the same county just transferred over. It was really great. Didn't actually get laid off because there's a transfer that was a huge, huge blessing to actually be able to do that. Then the second thing I realized was that I need to make sure I never, ever let this happen to me again. I need to make sure that nobody has the ability or power over me, that they can take the rug out from under me and make sure that my family can't feed. I can't feed my family. So I realized that my value is no longer in my job because when anybody would ask me a question, Dustin, what is it that you do? I would say I work for the county government. I do it work for the county government. Well, no longer would I ever say that. And I want everybody listening to this to realize that your value just like I realized this, your value is so much more than your boss can or will ever pay you. And I'll give you an example why they're only paying you just enough to keep you working without quitting, but not so much that takes money out of their pocket. And so your value is so much more. Your boss can ever pay you that much that you're actually valued. So from that point forward, I told myself, no longer will I ever tell anybody what my job is because my value comes from my God comes from myself and comes from my family. Now I will always tell everybody. And from that point forward I did. I am an investor. Now, it may still happen that 100% of my money comes from 100% comes from my side job. That's my side job. My full time business is now. I'm an investor. Now. I'll round up the start story to say Everybody needs to realize your value is so much more. And as I went to this new job, worked there for another four, five, six years buying property after property after property, buying for cash flow passive income, $250 a month in passive income. At minimum, some are way higher than that. Bought property after property. After 30 properties, I had so many properties that I went into my boss's office. I gave my new boss, which is great, boss and everything, two weeks notice. Boss, I am done. He asked me a question, well, what are you going to do? I said, I don't need to do anything. I literally have real estate that's going to make me money without working. And I'll round up the story by saying, do you remember that story with me walking down the hallway where it felt like the hallway got longer and longer and longer. Well, the last day I was 37 years old, I leave my office and I take the mile and a half walk to my car because working in downtown Fresno, you have to pay for parking. And so I didn't want to pay a really frugal. So I walked that far, taken this walk thousands of times. This last time, a mile and a half walk. I felt like I was walking on clouds because I knew that I would never, ever need a job again because I put the value in myself different than my job. So everybody listens to this. Your value is so much more than anybody could ever pay you.

Wow. I mean, there's some profound things here, Dustin, and Congratulations on the success. Unfortunately, so many people never get to that point, right? They don't get to that point where they recognize their value. I have a saying here, know your worth. It's something that I preach to my people all the time. You need to know how valuable you are before any of your clients can ever understand how valuable you are. And as simple as that sounds, it is a journey. And it is difficult for people to get to that point. Not all people. But I would say the overwhelming majority of people have a difficult time recognizing their value and recognizing their worth. Was this something that is ingrained in you from the time you were young, was there a growth period? Were there any books that helped you? How did you make that transition? So there's definitely lots of books that I've read as well as growing up, my parents would always encourage me to strive for more. I've played a lot of sports. I even played College football for Fresno State. I always strived as best I could for being the best that I could always be. And I think that helped me in general, to realize that I have a lot more value. But it literally wasn't until I started reading books and start realizing that there's so much more to my own personal value. In fact, like you said, everybody needs to actually know their worth before they can even figure out how much value they have. And so it literally was that shift in my brain? Well, obviously it led up with both my dad and my father in law, them showing me their path that they've taken and they're building their own value. And then realizing in my businesses how I can create more value than anybody could ever pay me. And then reading books. Fantastic books like rich dad, poor dad, richest man in Babylon, how to win friends and influence people to grow rich. All that sort of stuff was like, this is really changing my brain. And then getting laid off and realizing I have four kids, I literally can't afford to feed their family, my family, all that clicked and in me. So here's what's interesting, James. I can absolutely teach anybody how to invest in real estate. I've talked to hundreds and hundreds of students, but I cannot get them over that hurdle. That mindset shift that they can do it, realizing that they have the value in themselves to actually do that. That's only something inside of them, that it needs to be a switch in their brain to realize that they can do it, and that's only upon them to actually make that happen. So we have a book club here and we're currently reading Rich dad, poor dad. What an absolutely amazing book for those of you who have not read it, I could not urge you more to go ahead and pick that book up. It speaks at its core to financial literacy and how in spite of degrees and continuing Ed and courses and life experiences, nobody teaches financial literacy. We're so moved by the book Dustin that we have a real estate Institute that we're building out. We're currently adding a whole section on financial literacy. It is something that so few people ever even recognize that it's not taught, right? Absolutely. So you have this experience. The trigger for you goes off. Sounds like you've had a great support system around you, which is amazing and is so helpful for me. It took a mindset coach. I had been in coaching, and it was more systems based coaching. And what I found was all of the systems in the world are not able to be used to their potential if you're not in the proper mindset. And I know it sounds cliche, but my mindset coach, Austin Lenny, has had such a profound impact on my life. It has helped really reshape my home life with my wife and my beautiful children. It's helped reshape my career completely. We're on a totally different trajectory now. And one of the things that we've adopted as part of our core values is being lifelong learners. Right. So the book club is a result of that core value where we're making sure we're going back to the basics and we're reading a lot of these books. It's funny how to win friends and influence people is the next book that someone had suggested that we have on the list. So you have this moment, you have good support around you. What brought you into real estate specifically? Yeah. So quickly, touching on how to win friends and influence people. And I get to your question. I've literally either listened it or read it at least half a dozen times, maybe every couple of years I go through because it's amazing. It really helps just overall. So I'm glad you guys are going to be doing that. So what really got me started was number one. My father in law was a contractor, and so I was in high school. I'd be in the summer, slaving away being a framer, working on hot slabs, building houses, doing all that sort of stuff around houses. So I really enjoyed houses. And plus, my dad was a contractor, and that got me kind of thinking, I'd like to do something with houses, but then reading Rest dad, poor dad. As well as another book. I can't remember the book because it's been quite a while ago, but it was on real estate investing. So rich dad, poor dad. He was talking about you're right. Financial education, literacy is so amazing. Once you get that, you start realizing all the possibilities. And in that he started talking about buying a rental property. I said, you know what? I could probably do that and obviously start other businesses, so many other routes to go. And so I started literally doing that, starting businesses and then dabbling in real estate. But here's the reason why I jumped into fully into being an investor because all the businesses I was creating, they were good businesses. But I had to actually show up all the time. What I love now is passive income. And once I bought that first property, the first property that made me, I think it was like $378 or something. And then a check, the first property, the first check that my property manager sent me, it's like $378 right around there. And I said, what in the world? I did work. One time I bought one house. One time I hire the right people. They do all the work for me. And I made $387 a month. My goodness. What if I bought five properties, ten properties. So what I do now, when I teach all my students and also for myself, I say we only invest for properties that make us a minimum of $250 or more in passive income because I wanted to quit my job. Well, $250 a month. That's 3000 extra dollars in passive income a year. If you had ten properties, that's $2,500 a month in passive income, that's $30,000 a year, 20 properties, $5,000 a month and $60,000 a year not doing a thing. I realized if I just keep buying more properties, I'm going to do better and better. So I invested back in 2006, read the book, Richard Porter in 2004, eventually bought my first property, then turned it over to where I actually became an investor. And buying property after property, I realized working $75,000 a year job. I was like, I'm losing money here. I can make so much more money on my own. So I quit. And so what happened was because I realized the passive income nature of real estate. I shut all those other businesses down that were not passive income. And so now every business that I create now is literally passive income. But at the same time, every bit of money that I make goes right into real estate, because that's where I keep my wealth and I could literally pass it and will literally pass its generational wealth to my kids. And so that's what got me started was realizing that one house that I bought was so much better than any other business that I created. I said, how do I keep doing this? I just kept buying property after property after property. So did you dabble at all in, like the fix and flips and the Burr method, or are you straight into passive at this point? So fix and flip 100%? No, it's too much work. I tried. I looked into it. It was too much work. If the market crashes, I guess a little bit. I want to know for sure that I'm going to make money whether the market goes up, goes down or sideways. And remember, I started buying rental properties in 2006. That's where the prices were really high everywhere. 2009 that crashed. And so even though through the crash, I owned every single property, even though there was a crash, my value went down. But I literally made passive income in every single month that I still own the properties. And I'll literally give that to my kids. Now flip, fix and flip. That's just too much work. I literally like working 30 minutes, not a day, not a week, 30 minutes a month and make thousands and thousands of dollars because I have other people doing the work. Now, the beautiful thing about rental properties. And I'll get to the question about Burr method, which is I love doing that. My first property was literally a Burr method, which I'll get to in just a second. Now, if you're going to be building the business, you're going to be hiring other people to do the work for you, the property managers, the contractors and Realtors. And I'll say this over and over again. You'll hear me say this every time as we build the business first, because what's great is I don't pay my taxes, I don't pay my insurance. I don't even pay my mortgage, my property manager, my repairs. I don't pay any of that stuff. My tenants pay for every bit. Now. So happens that I either write a check or the property manager comes out of the rent. But physically, I don't have to work to pay that. I make sure I buy the property right, that I hire the experts. Remember, I built the business first, found the right people in the business that they're going to tell me the exact amounts of all my expenses. So it's really simple. Real estate is very simple. You add up all of your expenses, add them up, you get a total. Let's say it's $1,000 a month mortgage, tax, insurance, vacancy factor, repairs, capex, all that sort of stuff. $1,000 a month. And, you know, it's relatively fixed because everything should be fixed. Your mortgage is fixed, your taxes are fixed. It might go up just a little bit. But, you know the numbers because you've hired experts in that city. I was in California. I started investing in Ohio. Now I might invest in Ohio, Texas and Arizona. All my students are literally all over the country. But what we do is we build the business first. And in doing that, we know that we're going to be able to do a bird method on a property. We're going to be able to cash flow on a property. And I'll give you a quick understanding of what building the business looks like. Now, if you're going to start a convenience store, you would not do this. You would not lease the location, open the doors, put a box of candy bars inside that location. You would actually lose business. In fact, you go out of business in 2 seconds. No, you would build the business first. What you would actually do is you would get the gondola. They're like the shelving units. You get counter tops, cold storage, fountain machines, bank accounts, cash registers, employees. You would do all of that before you actually get any inventory. Same thing in real estate. We find all the right people, all the experts in that city, whichever city thousands of miles away are right next to you. Property managers, contractors, Realtors wholesalers investors. Sorry, inspectors, plumbers roofers. We find all these people first. Before we buy any properties, we build the business and then every property we buy a property you buy. That's not your business. Your business has inventory. Your properties are your inventories that you put into the business. That's how we and I a master passive income. That's how we scale our businesses so easily is because we don't look at a property as a business. It's part of our business as inventory put into it. And so as you're scaling, you literally just find another property, buy it, release your basic employees, but your contractors, your property managers and contractors and everybody to actually do the work because you built the business first, and it's just a piece of inventory you put into the business. So if we can, I'd love to jump into the deals. I'm a deal junkie. Right. So currently, how many assets if you're comfortable sharing roughly how many assets do you own? And roughly what type of passive income are you enjoying from it? Yeah. So I will definitely tell you I own over 30 properties, rental properties making me money. Those are fantastic. I will say that my wife doesn't like me sharing actual numbers, so I have to respect that. But what I will tell you is every property that I bought and you'll be able to extrapolate how much it is. $250 a month is the minimum from the very, very first property. That's the minimum. I have some making six, $700, $800 and the properties that I bought back in 2006, some of them are even double the amount of rent now. So I'm making so much more money overall in general. So 30 plus properties, $250 minimum, some are a lot more than that. So that's basically how my business is continuing to grow, because I take all that passive income to buy another property, take all that passive income to buy the next property, and then I do refinancing, pull the cash out. I'm also really blessed when I was quitting my job. Like I said, my wife, well, with her not wanting me to share any firm numbers. She also said, when you quit your job, we have a lot of loans on these properties. We have some cash or get out of cash. Can we pay those off? And I'm like, oh, then that's money. I can't buy more properties. But that was what her comfortable risk tolerance. And so I said, you know what? Okay, so paid off lots and lots of mortgages and blessed to only have one mortgage on one property and a bundle loan, a commercial bundle loan over four different properties. So that's out of all the properties, everything else is literally cash flow. So did you find as you were scaling that you got to a point where you started to meet resistance from lenders, I assume, are you doing fixed rate product or what type of loans were you transitioning into? I would absolutely say yes and no. So yes, I would get pushed back from mortgage brokers saying, hey, you have too many loans. Blah, blah, blah, but no. In a sense, that mortgages are just one way to buy the property. There are so many ways to get funding for the property. In fact, I have a YouTube video where I literally walk through 14 different funding ways that I personally use that my students use to actually get funding. An easy one would be private money, your neighbors or your uncles or whoever private money get hard money getting signature loans. And here's one on one very advanced strategy. I would not necessarily recommend this unless you know what you're doing. I used a credit card to buy houses and then paid it back. I'll quickly say it was the best loan ever. It was a cash out advance for, like, 0.5% interest. I'm like that's a cheap load. Of course. I've taken every Penny of that and put it into the property. And so here's what I'm trying to say. All of these different ways to get funding. Like I said, all the 14 different ways, maybe 15 different ways to get funding to buy a property. It's a tool that we can use for every deal. Every deal is going to be different. You may have extra money to put out as a down payment or even buy it with cash. Depending on the deal. You figure out what tool you use out of your toolbox to fit to buy that deal. Private money, hard money, all that sort of stuff. Burr method. These are all options. And that's something I would love to do with my students is literally show them all the options that are out there and how to get there and what's going to happen after that. So they can make the best decision for themselves and their family with their risk tolerances and their goals. Because that's the thing. People think the only way to buy real estate is get a realtor and get a mortgage broker and you put them together and you buy a house. I'm like that's just one of thousands of ways that we could do this. And so, yes, I use every single way possible. Okay, so you're buying out of state, right? You're in different markets. One of the issues here that we hear quite a bit is that the barrier to entry in New York is very high, right? Things are expensive here, and people are hesitant to buy out of state where they can't see it, touch it and feel it. So if you could speak to the audience a little bit about how are you? I'm going to give you a couple of things here. How are you sourcing the deals? How are you identifying which markets you're comfortable being in? Are you going and actually putting boots on the ground? How decentralized is the operation? I'll start with out of all the 30 plus properties that have owned, I've literally only seen one of them before I bought it, but only seen two total, because after I bought that one of the houses in Texas, I was right next to it. I said, hey, let's go visit our house and actually walk through it with the tenant in there. But out of all 30 plus properties, I've only seen one of them before I bought it. And literally, I don't know 30 other ones I have never actually seen. And the first time I bought a house, I actually flew to the area because I didn't know what I was doing. Now I never fly to a new area of the country because I hire experts. All my students, they don't fly to an area. We don't put any boots on the ground because here's the thing. Even if I went there, I am not the expert. Even if I spent a week there a month there, I am still not the expert. Zillow is not the expert. Who is the expert. It's the people in our business that we build up first. Remember, we build the business first. It's those people that are the experts. Let me give you an example of what that looks like. Mark our quarterback, our number one person in our business. No more company is our property manager. Now, let me give you an example of this. Let's say you follow these other people that teach real estate. They say, oh, just find an area of the country to invest, find a property, run the numbers. If you make passive income of $100 a month, then you buy it. Then you find somebody to fix it up. Then you find a property manager. Then you find a tenant to put inside there. In my opinion, that's almost backwards. What we do is we do everything first. Before we find any property. In fact, a little bit of one on one coaching. I'll give you what I tell my students is all these properties that we find. I love helping my students find new areas of the country to invest, like literally every single state. We could probably find a really good area to invest and they won't even need to fly there. But I'm telling them, as we're looking at this new city that we're going to invest in, I'll tell them, even though you've seen a lot of good properties right now, more than likely these will all be sold by the time you are ready to buy a property, because we need to build the business first, which is going to take about two or three weeks, maybe a month to build the business. And then we hire those experts to make sure we're buying the right property. The reason why I'm saying that is because I don't want to buy a house and then fix it up, put a lot of money into it and then hope to rent it out. But then find no property managers want to manage the property because it's a bad area or whatever the case may be. That's the last thing you want to do. You want to find out if there is a good property manager first, and then the expert, that property manager will tell you this. Okay, let's give you an example. I'm a property. I'm somebody a landlord going to property manager. I say landlord's, property manager. I'm a landlord. I have these four different properties that I'm looking at that I want to buy. Tell me, which one would you say is like the number one, number two, number three area. How much you could rent it for? They will tell me. Okay, this is my favorite. This is 2nd, 3rd, 4th. This is how much you could rent each one for. Because remember, they're the experts. They probably have a house right around the corner. In fact, that's what happens most times they'll say you can rent for this much. This is how long the tenants tend to stay in there. So the vacancy factor and they'll give me all the understanding of each one of those properties. So I know before I even buy the house how much I could rent it for. And I also have somebody that will manage the property that's sure that they'll find somebody to put in there. So if we build the business first, everything takes care of itself because I'll say the last thing on this one on the quick subject. I love not the fact that this happens, but I love buying properties off people who do this the wrong way. They find a property, they have no clue what they're doing. They follow what everyone else tells them. Find a property, run the numbers, buy it, fix it up, find somebody to rent or to manage it and all that sort of stuff. Sadly, after about four or five years, they get so fed up because they did it wrong and they sell it to me for Penny, not Penny's on the dollar, but for a drastically reduced amount because they're just, like, take it. I hate this property. Take it off my hands. I say, thank you, because remember, I built the business first. I then put that property into my business as a piece of inventory and I let my whole entire business run it. Let me rephrase that. How are you sourcing the property manager? Right. And do you have different property managers in each location? 100% always have property managers everywhere I go. That's a blanket statement for me because like I said, I have the tenants pay for those property managers. So some people might not question. People ask, Well, if it's close to me, I can manage it myself. Yeah, you can. I'd just rather be playing with my kids than dealing with tenants. So number one always I always suggest get a property manager how to source a property manager. I'll get to that in just a second. Yes. Every area of the country I invest, I have different property managers. I find them. And here's to the sourcing thing. So I'll give you some more one on one coaching that I do with my students. I tell my students, let's say we find a city or we start with a state, we start finding a good state, and then we drill and we find a good city. We look at the properties and, hey, this fits our criteria, fits our goals, our risk tolerances. Let's go and start building the business in this one particular city. The first thing we do is we start interviewing property managers. A lot of people say, Well, I found the city and I found a realtor and I found, like, two or three Realtors. They're so excited they sell any properties I'm like, stop, stop. Do not talk to any Realtors. All they want to do is sell you a property. They're going to tell you, hey, it rents for 1800 when it rents for like, twelve. They're not going to do you any good. Stop everything with a realtor go directly to the property managers. So how we source them? Go through Google, go through Yelp, even Craigslist, Facebook Marketplace. If you find a quick little tip. If you're going to find a property manager, if you go and you find houses for rent and you see the same phone number on many different properties, that's probably a property manager. Call them up and say, hey, are you a property manager? And I'll give you another quick tip if you are going through Yelp or Google and you're looking at all the different property managers in the area and you're seeing lots of them are like two and a half or three stars. Well, not everybody likes property managers. I like property managers. Tenants don't necessarily. So we got to look at the reviews differently. So pick on this again. This is really pro tip for you. Click on the company itself. Look at the reviews. If there's a one star and there's a tenant, says, Man, I stopped paying my rent six months ago and now they're finally evicting me. They're a bunch of jerks. I'm going to give a one star. Hey, that's for me. I'm like they should have victim a long time ago. And so I'm looking at if it's a tenant review, I take that with a grain of salt. If it's a landlord review five stars. These guys take great care of my properties. That's what I want to hear is that they're going to take care of great care of my properties through Yelp and Google. So I source them. But here's another one on one coaching. You need to interview them multiple times. Don't just interview them one time, two or three times because a lot of people can put on a good show. For one call. Some property managers won't even call you back. And so if you get one call, the second call, they don't call you back. That's going to be bad. So on my perspective is we hire slow and we fire fast. We hire very slow because we want to make sure we find the right person. Remember, this is the quarterback. This is the person that makes you money or saves you money in your business. And if they don't call you back before they have your money trying to earn your business, imagine how bad it's going to be when they actually have your money and they're like, Well, I'm not going to call them back. I already have their money. It's no big deal. We want the best property manager. So sourcing them. Google, Yelp, Facebook Marketplace, look at renters, Craigslist, all that sort of stuff. But then interview as many property managers as you can, so you find the best one out of all of them. So you're identifying candidates in market, you're going through a fairly extensive interviewing process. Property manager is step one. Now, when you're drilling down on locations of where you want to invest, are you looking at market metrics? And are you focusing more on the stability and potential long term appreciation of the asset? Or are you focusing more on buying the payment, if you will. What do you mean by buying the payment? So a lot of folks have a strategy where they're not so concerned about the real estate appreciation long term, they're more concerned with locking in fixed rate mortgages, establishing what the rental kind of metrics look like. Really drilling down on. I know for one bedroom, it's between 900 and 1100. I know two bedrooms are going to take me from twelve to 15 and three bedrooms so on and so forth. And they know if I can buy this asset with X amount of dollars down and I can get a fixed rate note for 30 years and my payment is $822 a month, and I know that I can get 1250 $2 a month in rent net after I back out my expenses. My cash on cash return is this and the net money that I'm putting my pocket is this they're not so concerned about long term appreciation of the asset itself. Where is your focus? My focus is 100% on passive income, like literally only passive income. Now, cash on cash return is absolutely brilliant. You don't want to spend $300,000 on a house, get a huge mortgage on a house and only make $250 a month. I'd rather maybe buy $120,000 house and still make that $250 a month because there's so much less leverage and so much less of a mortgage payment. So cash on cash is actually very crucial. But passive income is literally all I invest for now, here's the great thing that when we invest in real estate, we actually make money in six different ways. We already talked about passive income. That's fantastic. You make money $250 a month or more in every single property market appreciation. We just know it eventually goes up, so we hold on to it. Then there's forced depreciation. You actually fix it up, make it worth more, which is great. As an investor, we also equity capture. We buy it for lower than it's worth. We don't buy market price or higher. We get properties that are lower, 20% off, 30% off, whatever it might be. Then we also have tax advantages, which was central exchange. Depreciation is amazing. If everybody could just get one property and get depreciation, they'll understand it's amazing. You save so much money in taxes. The last one one of my favorites next to passive income mortgage buy down. Remember, I don't pay my mortgage, my tenants pay the mortgage, they pay the taxes, they pay the principal, they pay the interest, they pay all that, and they're paying off the property for me with all that appreciation like icing on the cake. But here's again, remember, I rarely ever sell any houses because I literally can give these to my kids so that they have built in a business for themselves, on top of not teaching or teaching them to not be jerks, being trusted kids as well as helping them to learn how to do it themselves. All that above, where it's really rare for me to sell a property because it makes me so much money. Now a quick thought might be, well, you have a lot of equity in there. If you sold it, you can actually take that money and buy more properties. I agree. But what I do is I then refinance the property. I pull that cash out tax free. If you sell the house, you have to pay taxes. Capital gains. Unless you do tend to exchange, which is kind of hard to do. Finding a property, all that sort of stuff. But I cash out refinance or get a home equity credit if you can on an investment property, I just do a cash out refinance, pull out 50 grand that's tax free money that I put into my next property and buy that next property or multiple properties after that. So I sold the investor passive income and then I utilize everything to buy more and more and more properties. So is your manager a part of sourcing the deals? Where are you finding these deals that are 10% below market. So, yes, property managers. But then also, I love wholesalers. Wholesalers are amazing. I don't care if they make five grand on a property. They make me a lot of money. So I love wholesalers. Wholesalers are basically they find a seller and a buyer and they try to put them together. I love wholesalers more than Realtors. Realtors are a diamond. Does it wholesalers work their tail off. And so Realtors, they might get mad at me for saying that. But I just use every wholesalers. Craigslist, Realtors property managers, investors, even title companies, title companies will even say, hey, this property fell out of escrow. Maybe you could put an offer on it. There are so many options. There are so many ways to find properties that we don't just use. One. We use Zillow, we use Redfin the MLS every way to find a good deal, even letters or the yellow letters. Things like that. We use all these different ways to find properties. And then when we find a good deal, we figure out which type of financing that tool to get that property done. You're buying each asset in a separate LLC. That's a great question. Yes and no, it's not necessary property. It's total dollar amount. Let's say you're going to buy $300,000 houses. That's $300,000 total. For me, my risk tolerance is about $350,000. Once all the properties in an LLC hit the $350,000, I start a new LLC because I'm okay with losing that one house in all the LLC, let's say there are three properties. One house gets sued. Well, they go after all three of those properties, but they don't go after more properties. Now, if there are a million dollar houses, I would absolutely have my LLC LLC LLC. But for me, it's more dollar amount, total dollar amount. And it just goes with my own personal risk tolerance. Got it. Okay. So would you say that Facebook is kind of one of the bigger tools for you and finding all of these different assets on the different Facebook groups and wholesalers. Is that where you're sourcing most of these people? Oh, no, definitely not. Well, Facebook definitely helps with, like, RIAs or the real estate investor. Meetups groups in whatever city let's say you're investing in. I don't know, Austin, Texas, and you just go to Facebook, type in Austin real estate or Austin investors, and you'll find a bunch of people. And then the key in with Facebook is to be helpful. Don't just go in there. Hey, who wants to sell me a property or hey, you want to be helpful? You want to be looked at as a person that is giving. So then you could eventually get in return, receive in return. But Facebook is good. But then there's also, like I said, Craigslist is really good, even just looking up local meetups in the area. And you don't even have to go to the meet up. They probably have Zoom. I mean, everything from Cobid, they might have Zoom meetups. And so what you want to do is you want to find every single Avenue to find great deals. So I'm sure it's not all roses. Right? Have there been any bad experiences? Is there one mistake you can kind of point to the kind of highlight for the audience to keep an eye out for? Absolutely. So the biggest mistake I ever did was not building the business first and not hiring the right property manager. My very first property that I bought. I basically found a property manager and said, okay, you have a pulse. You say you're a property manager. Let me hire you. Well, in six months, they were already stealing from me. It was horrible. Then I had to fire them and find somebody else. So the best thing that you can do is find the right property manager. And really, like I said, this is like big time, one on one coaching. You have to have to interview many property managers before you find the right one that works with you. Like one that works with me might not work well for you. I'm not sure you need to do that where you are finding the right property manager. Look, you've got tremendous passion. I love your energy. What is the best way for folks to reach out? Yeah. Hey, James, do you mind if I give everybody my real estate investing course for free? Absolutely. Love it. Awesome. So I want everybody just to see if this is possible. I'll show you how to find an area of the country to invest, how to find the right properties, how to build the business first, even how to scale your business. To quit your job, you go to Masterpassive Income masterpassiveincome. Comfreecourse. All one wordfreecourse. I'll give you my real estate investing course. Absolutely. For free. And you can even text the word rental. R-E-N-T-A-L 23377, rental 3377. And I'll never give it to you for free. See if it works well for you. And then you have my podcast Master Passive Income podcast, which is literally just me teaching how to do this rental property stuff. I also have my other podcast Successfully Unemployed, where I interview great people who have already been successfully unemployed. That's how you can find me. I just love helping out as many people as I can, and that comes back to you in droves. It really does when you put good out into the universe. And as Dustin had mentioned earlier, don't go in like gangbusters into these groups looking to take. You have to bring value first. Right? Once you bring value, these things have a way of coming back to you. For me, it seemed like it was a long journey of trying to help impart my knowledge to others. And then one day, it felt like the doors just started to fly open all around me. It really was an amazing experience for me. Dustin. Again, I love your energy. I love what you're doing here. Congratulations on all of the success, the beautiful family. God bless. And thank you so much for joining us. It's thanks, James. I appreciate it, man. Thank you. Thanks. Take care. As always, everyone, please stay safe.