Cash Flow Guys Podcast

In this episode, I address another outstanding question from one of our listeners, here is what he said: “I cannot get enough of real estate however, since hearing the podcast on how you turned your fourplex into short term rentals it has me thinking hard. I got into real estate 4, almost 5 years ago. My first property was a single-family 2 bed 1 bath that has done relatively well. I then went and bought a four-plex 2 BR 1 bath that has done even better. I inherited another single family 3 bed 2 bath when my sister passed, it's a future rental as I put my mom in there, for now, rent-free. I then purchased another single family that I flipped and used that money to buy a brand new 2 BR 2 b duplex. I am currently under contract to purchase another 2br 1 b fourplex the beginning of next month. I was wondering if you could share with me how to go about turning some units into str as they become vacant. I am a go-getter, I listen and fail often but I fail forward. Chalk it up to education. Maybe you could do a podcast on how to create the STR from your rentals, I for one would love to hear about it. I potentially have 12 doors to turn into str's if the demand is there. Curious on your thoughts and if you could talk about the pitfalls and advantages of STR's. Anyway thanks for your time, I have listened to all of your podcasts and want to say thanks for all the great information you put out there.” Before we begin, this episode won’t be a complete class on Short Term Rentals, that’s a series of topics that would take dozens of episodes to cover.  Instead, this is a reflection on considerations during the process. Jill and I got started in Short Term Rentals purely to solve a problem.  The problem was that one of our seasonal tenants was having a tough time paying rent on two places (mine and his primary home in New England), I know, 3rd world problems, right? Anyway, we saw an opportunity for a win/win and here is how the mathematics played out.  Remember, his goal was to keep spending a few months in Florida, while saving money at the same time. Originally he was paying $700 per month which equals $8400 annually.  After speaking with him, he told me he could afford around $500 per month, and would only need access to the unit three months out of twelve. By paying me $500 per month for twelve months, I would earn $6000 per year however, I would have the ability to earn an additional $2000 per month for 9 months.  That meant that we would generate $28,500 per year in rental income from one apartment that previously only generated $8400 per year.  Was it worth me discounting $2400 in rent from the tenant and spending $6000 cash in furnishings?  That’s $8,400 investment for a $28,500 first-year income!!  That's a return of over 300% In the episode, I explained my initial (and current) evaluation process in greater detail.  FOr the right property, it the right location, a conversion to short term rental can result in a supercharged rental income, however, this does not apply to all properties. Listen in to get all the details I covered so you too can #LearnToEarn.    

In this episode, I answer a question from “Blake” who is a lister of the podcast.   Blake asked: “I just recently began listening to the podcast and it has changed my mindset about real estate investing. I graduated from college a month ago with zero student debt and a great career with a very high earning potential. My biggest question is how much capital do I need to begin this journey of wealth? “And when that number is attained, what resources can I use to be the most educated possible (books, podcasts, seminars, etc.)?” “Also, I’m a Dave Ramsey follower as well and want to know how I can build this empire without going into debt or ramping up unmanageable debts? Any help would be incredible. Thank you!” The answer to how much capital is needed really depends on how much time and effort do you plan to invest in the adventure of real estate investing.  If you save $150,000, for example, you could buy a duplex or triplex in most markets, it some markets maybe even a four unit.  But then you are done until you save AGAIN. Instead, learn to raise money from others and help them experience good returns which means you can do more good in the community.  You can start with $100 for example, and learn to generate leads for investors and motivated sellers.  Those leads can be converted to cash.  With no leads, you are forced to buy what’s for sale and usually wind up overpaying.  CashFlowGuys.com/OneFunnelAway is the affiliate link to get 30 days of daily coaching by Clickfunnels I prefer someone to start without capital because they are less likely to get themselves into hot water due to the lure of easy credit and “deals” everywhere as being offered by the sharks in each market.  Banks and hard money lenders will lend to just about anyone without regard to the investment quality of their purchase, remember that!  Instead, they often focus on the borrower and not the asset, especially residential type loans.  There is nothing more dangerous than a new investor with some cash and great credit.  With a bunch of leads to work with, the new investor gets to learn by doing and therefore develops a sharp sword in business.  It's easy to pay cash as our friend Larry Harbolt teaches us, and it's that cash that often gets us into deep trouble. Which resource you use to educate yourself really depends on the medium that most resonates with you.  For me, it’s a video when I am searching for a how-to on a specific task.  Along with that, I appreciate the search engine capabilities of YouTube to quickly provide me the content I need based on what I type. When looking for more of a passive or non-task related education I prefer audio books as my first choice and written books as my second depending on what I am doing.  What I dislike about audiobooks is that it is tough to take notes and such when my hands are otherwise occupied by driving or working on something. I don’t believe it is possible to build a real estate portfolio to the point it will support you to any degree without taking on mortgage debt (aka good debt).  Uncle Dave Ramsey over leveraged when he was in real estate and lost sight of the monthly income generation model when he invested in real estate.  He focused solely on appreciation and ignored all of the other benefits which is what got him into hot water.  Instead, focus on monthly net profit after expenses.  The number of units does not matter as much as the quality of each investment that you add to your portfolio.  

In this week’s episode, I answer a great question from Crystal about Long Distance investing.   Crystal asked: I've developed an interest in real estate in the past few months. I haven't made my first investment yet since I'm still educating myself with books/podcasts and developing a strategy that works for me. One thing that has come up a lot particularly as a long distance investor is the idea of turnkey investments. What are your thoughts on turnkey companies?? Any insight would be greatly appreciated. Turn Key opportunities can be a viable solution but vet them heavily up front.  We can’t expect to achieve the highest level of returns from a turnkey because the provider needs to profit also. Out of all the tun ket providers out there, I recommend Terry Kerr and his team at Midsouth Homebuyers.  They have been in business for 17 years in Memphis (a town I now know well).  I have referred tons of people to them and never once heard a bad word.  You can get to them by using the following link: CashFlowGuys.com/TurnKey When looking into any turnkey operator, take the time to visit their operation in person, attend any training and webinars they host to learn how they run their business. Additionally, reach out to Local REIA (investment club members) as found on Meetup.com or Facebook investing groups that cater to a specific market. Title Companies are also a great resource to learn about how smoothly their transactions close. Let’s not forget to do ALL the math, be sure all expenses are accounted for. Be sure that estimated rents are factual estimations, do your own rental analysis.  Review the deal as if it was not turn-key, sometimes we put too much value on the fact that a property is turn key and therefore ignore other issues.  Don’t fall into that trap.  A good turnkey provider should be open and forthcoming with information when you are in the diligence phase.  If it is difficult to learn about them and to obtain answers, that situation will only worsen over time, therefore, consider this clue carefully sooner rather than later. Be sure to thoroughly review all contracts and management agreements, be completely clear on all expectations of both parties.  How are repairs handled?  Are the agreements too general and allow for you to be nickel dimed to death?  What happens when a tenant has a repair request?  How are late rent payments handled?  What happens when the rent is not paid?  How long does it take to evict a tenant on average? Fruitful out of town investing means we must be confident in the abilities of the ready-made team that comes with the investment opportunity.   Go talk to them, ask about “what if” scenarios and be confident in their ability to handle problems that will crop up (not might) crop up.  Remember, turn key does NOT mean trouble free.--Happy Investing      

In this episode, I answer questions sent in from Jake a college student who listens to the podcast. Jake asked: “Hey Tyler, I’ve been listening to you for over two years now and I wanted to say thank you for what you do because it’s obvious you do it just out of the joy of helping people.  That being said, I’m twenty years old and going into my junior year at NC State University and would like to know what your best advice would be for someone who wants to begin purchasing multi-family properties as soon as possible after I graduate. I’m majoring in Agricultural Business Management and will most likely be in some sort of sales role after college. What would be a good mindset or game plan be for someone in my situation who wants to become a full-time landlord as soon as possible? Thanks again for the great content you put out!” Sales jobs (especially commission only sales jobs) are some of the best training available today.  I would start with a commission only sales job tomorrow to begin sharpening my future sword.  The ability to sell effectively is by far one of the most important skills a real estate investor can develop.  Sales skills are mandatory to convert leads to capital and to find sellers in which you can structure deals.  What you will learn by doing in a sales position will serv e you well the rest of your life in every way possible!   In addition to learning to sell, learning to generate leads in order to have someone to sell to is equally important, in fact, they go hand in hand together.  A great way to get started in lead generation is to read the book DotComSecrets by Russell Brunson.  This book lays out a framework and mindset that will lead any entrepreneur that follows the path to wealth.  You can get a copy of the book FREE (plus shipping) at CashFlowGuys.com/DotComSecrets My next piece of advice would be to remain debt free (assuming you are debt free now), if you are not, get debt free before you buy any property.  Being debt free (besides a mortgage on an asset) makes it much simpler to exit the rat race, it’s just that simple.  So as not to ruin the episode by giving away all the goodies in these show notes, go ahead and listen to the episode and write to me to tell me what you think!  Email to info@CashFlowGuys.com or visit CashFlowGuys.com/AskTyler to book a slot on my calendar to help you get unstuck or your questions answered.      

Boy are you going to LOVE this episode.  This week I interviewed Beau Humphreys who is the host of The Personal Finance Show with Beau Humphreys. As well as a financial blogger and coach. Beau knows what it’s like to be broke after almost bankrupting himself due to a previous gambling addiction.  After making arrangements to get himself out of debt, he explains his journey through life without the ability to borrow money of any kind. For Beau, this meant having to find ways to still get things done in everyday life, without having the luxury or being able to swipe a credit card.  With no other options available, he had to save his money before buying anything which helped Beau overcome some major life obstacles while at the same time putting him on a life changing journey to financial freedom. Dive into this episode to learn more about what the challenges were, and more importantly how he was able to overcome them. To contact Beau please visit his website at: https://beauhumphreys.com/ as well as connecting with him on social media.   Facebook: https://www.facebook.com/beauhumphreyspersonalfinancecoach Instagram: https://www.instagram.com/beauhumphreys/ LinkedIn: https://www.linkedin.com/in/beauhumphreys Twitter: https://twitter.com/beauhumphreys Quora: https://www.quora.com/profile/Beau-Humphreys

I talk to a bunch of people each week who share similar roadblocks to raising money because they don’t feel they have enough expertise to speak intelligently about real estate.  Although they might be correct, these same people can learn quickly and achieve unconscious competence.  How you ask? Immersion For immersion to happen, first we must drill down tight on a specific topic and learn every aspect of it until you can teach it to someone else.  Maybe your student is a family member, a stranger, a colleague or a friend.  I know what you are thinking..you don’t want to teach anyone until you are at the point you won’t make a mistake..that’s just silly! You cannot learn and look good at the same time!  A good example of that is found by watching our blooper reel for our new “Cashflow Roadshow” YouTube Channel at: CashFlowGuys.com/Roadshow while you are there, be sure to subscribe to see more of my stupidity. Toastmasters is a great organization, but did you know that it is most likely the BEST environment to practice what you have learned?  At Toastmasters you will get solid feedback on your performance, your subject matter and also be put in a position to listen to others.  By learning to become a great listener, we also become great negotiators as a byproduct. What’s the next step? Share what you learn with others on social media once you are confident you understand the topic. (More on this in the episode itself. To grab a copy of the Self Directed IRA Handbook I mentioned in the episode, go to CashFlowGuys.com/IRABook

Below is the email I received, and below that is my reply.   Hey Tyler,   I just want to say thank you for doing what you do and providing so much value in your podcasts. Unfortunately the times available to schedule don’t work right now for me because of work.   I just recently listened to your latest podcast “How to get unstuck” and made me realize I’m doing it wrong.   I want to wholesale houses but as you stated it’s not the best way to get financially free. I can see that from the standpoint of constantly needing your pipe line filled with leads to ensure cash flow is consistent. Also not to mention the amount of taxes taken out! Ouch   My concern is how do I get into these multi family homes without any cash knowing any money private lenders and having unfortunately a shitty credit score.   Maybe I’m just overthinking it.... Thanks for your time.   My Reply:   First, Thanks for listening to the show, and more importantly, thanks for reaching out. Why do you want to wholesale houses?  Because some wholesaler made you think he got rich doing it?  Reality:  Most wholesalers are poor beyond imagination, the rest may not be poor, but they are all hat and no cattle as they say in Texas...only a fool sits on a pile of cash. Society lied to us by telling us cash is king, as Robert Kiyosaki says in his new book “Fake” CashFLOW is king, cash is nothing but worthless paper that the government can print at will. Yes, you will need consistent streams of leads to wholesale, you also need these leads to retail, to buy and hold, to fix and flip, to “subject to” as some people call it..bottom line is you need leads. The masses need to be educated on what your needs are, whether it be investment capital or opportunity, neither will come to you unless people know you are looking for it.    Poor Man’s Mentality: “I don’t have any money” “I don’t know any private lenders” I call bullshit, you have some money in your pocket, just not enough.  The fact is that those who have money to invest, simply don’t hang out with broke folk, instead they are in places where people with motivation and money hang out (you know where these places are).  These places are where poor folks are uncomfortable the most, and they are doing what poor folks are most uncomfortable doing, which is learning.   Lenders: Let’s talk about “lenders”.  Frankly, I am not a fan of the term because it brings forth the feeling in today’s society that when someone lends you something, they are doing you a favor, when in fact the reverse is true.  Banks and credit card companies are the most common version of lenders, the reality is that if they cannot lend money, they go out of business!   Mindset shift:  When you help someone invest their money into an opportunity that produces a yield far greater than they could gain for themselves, you are the one doing them a favor are you not?  That said, let’s instead attract people with capital that we can HELP by deploying their capital into worthwhile opportunities.  Without us, those that are sitting on capital actually lose that capital over time because inflation causes the cash to lose buying power.  An example of this is that 20 years ago bottled water cost .10 cents, today I have seen it for sale for several dollars a bottle.  That’s called inflation! Instead of trying to “find lenders” refocus your mindset into attracting them instead.  As the age old parable says, be a lighthouse, not a tugboat.  Here is the story: The LIGHTHOUSE v TUG BOAT parable. A LIGHTHOUSE can help save boats. A TUG BOAT can help save boats. But their functionality and ability in doing so is DRAMATICALLY different. The TUG BOAT goes out and back pushing and pulling with great effort to try and help/save an individual boat, and in the process runs itself ragged trying to get itself AND another boat to shore. The LIGHTHOUSE stands fixed and simply shines it's light. No pushing. No pulling. Each boat has the ability to choose if they heed the light, but the LIGHTHOUSE stands firm regardless of the boat both day and night and simply radiates its light. When you invest time educating yourself to a point you begin to discover and take action on opportunity you will have an awakening that will result in finding all the capital you need to do you deals. As for having a shitty credit score, FIX IT.  Here’s the deal, and I say this with love..There is a reason why you have a shitty score, and until you man up and do the work to fix your credit and become financially intelligent and responsible you should not be dealing with other people’s money, period. Have a bad credit score means you are unwilling to do the work / make the sacrifice to do anything about it.  Yes, I understand that bad things happen to good people but if you really want to fix your bad credit you can, without having to use a service.  Yes, you will most likely have to pay your past due bills in full, perhaps you can negotiate a discount and screw the lender out of some of what you promised to pay them originally, but the fact remains there are no shortcuts.  If you don’t have the cash to pay off debt, earn it, it's that simple. Unless you are a quadraplegic, in prison with a disease that requires you to live in a bubble and not speak to any other living soul ever again, you CAN do this.

Bad things happen in our past, that’s just part of life.  I know, it is much more complex than just those words, however this week I want to discuss the importance of overcoming the past, in order to secure your future. Bankruptcy, divorce, bad credit, bounced checks, past due bills happen, sometimes it feels like there’s no getting around it.  For many this is very true, for others, they can use these bad feelings of the past to rise up above the ignorance that they once experienced in order to never repeat history. History is a great teacher, in fact, those that refuse to study and understand history are doomed to repeat it as the saying goes. There is nothing wrong with looking back to the past for subtle reminders of where you were at one point in your life, but don’t dwell in those thoughts.  Instead, look forward, avoid “over-sharing” of your past and instead of talking or thinking about the drama of the past, take in some new information, positive information that will benefit you. Bankruptcy is intended to provide closure, as is divorce, therefore allow these things to become the closure they were intended to be.  If you allow yourself to dwell on everything you have done wrong, there won’t be much time left to plan how to do things right. It’s really easy to let our mistakes hold us back from future accomplishments in fear of repeating history.  Hopefully, you are a person who learns from the past instead of allowing it to hold you back from a positive future.

Feeling stuck? Lots of people stuck these days when getting started (or while staying started) but you don’t have to stay that way.  I know a large number of people stayed on the sidelines after the crash of 2007, nervous about the state of the housing market.  These folks were waiting for some sort of signal that things were ok for them to invest again, then, all of a sudden, the market went from cold to hot again, does this describe you?  Feel like it's too late now? Many people do, so don’t beat yourself up about that.  The reality is that there is never a bad time to buy, nor is there a bad time to sell, provided you are in front of the right audience.  I honestly don’t believe in the myth of a “Real Estate Market”, this is because I buy for cashflow so that I can therefore build wealth and eliminate my tax obligation.  I used to get all caught up in the market hype when I flipped houses.  Don’t get me wrong, I will use urgency, scarcity and other techniques when buying or selling during negotiations.  After all, people will panic anyway so I might as well play stupid and set myself up with great deals while doing so.  Here is the reality, it is never too late because people always have problems, that you can count on.  There will always be motivated sellers, bad managers, lousy tenants, drama, poverty, etc that will drive people to make irrational decisions.  It is my job to provide clean, safe affordable housing for our tenants, therefore, to accomplish my job I cannot pay more for a property than the tenants can afford to pay in order for me to own it.  I must be focused on the realistic income a property generates and will generate in order to make educated purchase decisions.  Unfortunately, you won’t make money trying to find perfect scenarios or by trying to buy perfect properties.  When you invest a bunch of time in pursuit of perfection you simply wind up spending a bunch of money and wasting a bunch of time, that I assure you.  Education can be overdone, although it is important to some degree.  Don’t try to learn it all though, instead remember the acronym F.O.C.U.S which stands for Follow One Course Until Successful.  This means we need to become laser focused on our investor identity, as well as what our needs are in any investment, these are the two keys to success.  Remember ladies and gentlemen, its about assets over liabilities! 

In this episode I discuss tips on how to deal with emotional Realtors and their sellers.  This came from a Facebook post where a listing agent was “triggered” and therefore offended by a low offer made on one of her listings. I must admit that I was a bit surprised that a supposed “professional” would make such a post on Facebook.  She was basically saying don’t make offers on my listing unless they are full price”.  As you can imagine, statements like this can put her on the fast track to “would you like fries with that?” An offer is nothing more than an invitation to negotiate, never should it be considered the final word.  Instead, use this as an opportunity to start a conversation, a low ball offer might be a test of the waters to see if the seller is motivated or to test the quality of the agent representing them. You see, if I know I have an easily triggered listing agent on my hands, it helps me understand how to navigate the situation for the best outcome.  It also tells me that its likely the listing could be withdrawn at some point due to the agent failing at negotiating as a whole.  When I know I am dealing with an amateur I become “cautiously confident” which means that I need to be paying attention to signs of emotional triggers so as not to encourage an outburst. The buyer’s agent is also to blame in this transaction because they should have got on the phone with the listing agent and learned more about the situation.  It’s anyone’s guess if the listing was priced right, maybe the neighborhood was lacking?  Perhaps the listing photos were less than exceptional?  There could be many reasons why the property has yet to sell.  I teach buyer’s and their agents to request an audience with the listing agent and the seller when presenting offers.  Call me old fashioned, but this method works well in part because face to face, folks are less likely to act like a fool.  In person negotiations are terrifying for many, therefore practice this technique and master it so that you can have far more effective negotiations.  Listen to the episode for more tips on how to deal with emotional Realtors.