Small But Mighty Real Estate Investing w/ Chad Carson #710

A new podcast from The Creators of Up and Vanished. Louisville police are searching for a missing 24-year-old woman. When I read about Alana Chen's disappearance, I couldn't look away. A shy girl from Boulder, who wanted to be a nun since she was a teenager. So Alana was like sneaking out to go to church? But she kept a secret, one that was slowly tearing her apart. I didn't know she was attracted to girls, no, she didn't tell me. Yes, some other says her daughter first opened up to a priest at her church when she was just 14 years old. However, the church denies any conversions therapy was done. She didn't tell me, she told me. I have. She confessed to him. From Tenderfoot TV comes a new podcast about the price we pay to belong and the systems that pay no price at all. This is dear Alana. Listen for free on the iHeartRadio app or Apple Podcasts. For an exclusive binge of the whole season, subscribe to TenderfootPlus at TenderfootPlus.com. Yo, it's Baratunde and I'm back with a fourth season of my podcast, How To Citizen. We're focused now on how to create a dope culture of democracy. To help, we got people like coach Steve Kerr. Connection between people is really powerful for sure. And sci-fi writer and activist Adrian Marie Brown. Eventually, you recognize that what we're trying to shift is culture. I promise it's the freshest take on civics you've ever heard. Join us. Listen to How To Citizen with Baratunde on the iHeartRadio app, Apple Podcasts, or wherever you get your podcast. Yo, what's up? You know who it is, DJ Scream, call host of the Big Facts Podcasts right here on the Black Effect Podcast Network, each and every week. Myself, Big Bang, BabyJay, we sit down with some of the biggest artists and influential minds from the culture. It's all the names you know and respect, like 21 Savage, Low Baby, 19 Keys, GZ, Bird Man, Trick Daddy, and so many more. What made that first project so special? For what? The heart and pain in my voice. On that first album. I listened to it about a year or two with a man that won't make me cry. Talk about track, music, I'm claiming it. Like they talk about the king and all this, I'm claiming to be the queen of track. Yes, dad. Always chopping it up with the who's who of the culture. Tap into the hottest podcast in the streets. Listen to Big Facts on the Black Effect Podcast Network, iHeartRadio app, Apple Podcasts, or wherever you get your podcast. For the streets. Exactly. It's Big Facts. No cap. Welcome to Had a Money. I'm Joel. And I am Matt. And today we're talking about being a small but mighty real estate investor with Chad Carson. That's right, we are so pumped to be talking with our friend Chad Carson, aka Coach Carson, which is also his site, coachcarson.com. Hold over from Chad's Clemson football playing days. So one of my earliest memories was hanging out with Chad in the pool at Fincon. Nearly five years ago, we're talking real estate. We were enjoying a craft beer. And here we are at it again. But just because this feels like a more casual conversation to us, that does not mean that Chad isn't going to bring the goods. We, Joel, you know, we tap the merits of small time real estate investing. But Chad has made it his mission and it's the focus of his new book, The Small and Mighty Real Estate Investor. So if you're wondering how owning a few investment properties, how that could get you closer to financial freedom, we'll keep listening. If you're wondering if it's even possible to get into real estate given where mortgage rates are currently, this episode is for you, Chad. Thank you so much for talking with us today here on the podcast. Matt Joel, it is great to be here. Thanks for having me. Hey, Chad, you're welcome anytime, like next week also. So we'll bring you back home again. There's, I mean, there really is a lot to cover. We probably could have multiple episodes with you just because the book is so thorough. But the first question we ask anybody who comes on the show is what do you like to sports on? It lets us know a little bit about you and your priorities. But Matt and I, we of course have the big priority of spending more on craft beer. What is, what's that in your life? That was one of the first things I've resonated with you guys on both listening to you and also meeting you is, yeah, food and craft beer are my wife and I. We like to combine that with travel. I guess that would be my kind of cheat answer that we like my wife and I when we first met on our first date, it was like, where are we going to go? Where are we going to travel? And so from there, though, I think just not, you know, on a car, we drive an old Toyota. We drive old, you know, hand me down cars from family members. That's okay with us, but going to really nice locations, having good food like in Spain or Greece or that's just, that's the best. Like we really enjoy that. And then having a good craft beer is right up there with it as well. Okay, so I was detailing my first date with my wife recently to one of my kids. And I'm taking my wife, we went to the zoo and to a baseball game, which is like a really, really long date, right? But you, I feel like you blew me out of it. You guys were talking about going on trips together on your first date? Well, we were out hiking and we were like, well, what do you like today? What are you up to? And it was just like one thing after another. She said, well, I traveled to Guatemala. I speak Spanish. She's a Spanish teacher, by the way. And for me, I was, I was kind of inching to travel because I played football in college. And I did a little bit of study abroad, but I was just like, I never got to do enough of it. So I was just really intrigued by that. Well, that's exactly what I want to do. I would love to go to Latin America. I would love to learn Spanish. She's like, well, I'm a Spanish teacher. I was like, well, perfect. You can give me lessons. That's great. More time together. I guess we'll go ahead and get married. Yeah, let's do it. Well, on that note, so you just got back from another year abroad. What made you go specifically to Spain? Can you share something about that trip? How the heck was it? Yeah, well, I mentioned the Spanish language. That's sort of something that we connect with. We've lived in Ecuador in the past. We're about a year and a half with our kids. And so that was an amazing experience. We love Ecuador. We love South America. We wanted to try something in Europe where we could be a little closer. We kind of had this vision of my kids were 10 and 8 when we left. And actually, a little bit, 11 and 9. I can't get that right. But I wanted to take them to historical sites. And Europe is just so dense with so many different places. And so we went from Spain, was our home base. They went to school there. They were speaking Spanish in school, which was amazing. We're in a small community in Granada and this southern part of Spain. But then we also took side trips. So they went to Greece in February. And went to see like the Parthenon and all these old sites. And that was like a history lesson in person. Yeah, that diversity of just experience, history, stories. I think all of that together was an amazing experience. Talk to us about the logistics and the finances of pulling off a big stunt like this. What sticks out in your mind as kind of the biggest barriers, the biggest hurdles that you had to overcome to kind of pull off a year in a foreign country. Basically, this is like a mini retirement. Yeah. Yeah. When I first did this back in 2009, my wife and I didn't have kids at that point. We just had to save money. So that's how we did it first time. We went for four months. We saved the money. It was almost like saving for a car and just paying cash for a car. That's the way we looked at it. Instead of buying a new car, we spent 20,000 bucks on a trip and travel. This time around, it was just a much different situation. We have rental income coming in from the United States. And so you're paying for all of our lifestyle expenses in Spain. Basically came from the distributions from our rental property partnership that I have back in the United States. And so the money, the money side of things was less challenging, although I know for a lot of people that's going to be the biggest challenge just getting the money. But the other big challenge, which is part of the story of why I wrote the small mighty investor, was the time and the flexibility to be able to go for a year, is probably the most difficult thing because you have obligations. You have to be in a certain location. And so for me, and you have a rental property business, and having property managers on the ground doing most of the day-to-day work, I have a college student rental, so they were leasing properties for me while I was gone, and me paying them to do that, and having systems and processes. All of that is something that's really important. But with a typical job, you can't do that. It's a lot harder to do that. You might have a digital nomad kind of, it's becoming more of a thing, but being able to travel abroad is more, having the time and flexibility and addition of the money. And so those two things combined, I think, were the biggest challenges. Yeah, that makes sense. And I kind of hinted at this when I said the many retirements, but you are all about creating these awesome experiences just all along the way, not just saving the best trips for retirement, right? When you're actually less able to actually enjoy it. Why is do more of what matters so core to your philosophy and how you view life? Yeah, I feel like everybody knows it's easy to quantify how to make money. You save money, it's not easy to do, but it's easy to quantify. You save a bank account, it's on your statement, it's pretty easy to measure. And even with time, we know we want free time, but to me, the good stuff, as a parent right now with kids, the good stuff are those small moments, those in-between times, picking my kids up from school, and they tell me something that they might not have told me if I was busy working. Or going on a trip and seeing their eyes light up, when they're seeing something for the first time in Greece, some big, huge temple, or just the small moments, like just being present, like doing what matters, means it's totally different to different people. It might be serving in your community, it might mean taking care of a loved one, like all these things, which we know matter to us, they do require money sometimes, because we've got to pay the bills, we've got to pay our mortgage payment, so usually work and our time gets spent doing that. But it most of all requires time, it requires presence. And so for me, the small, mighty investor idea is like, you can go big and get huge and have all this money, but what if it takes away your time, what if it takes away your presence and doing those things that matter? Why would you do that? What's the point? Why not have a more balanced approach where you make enough money, because money's important, but you have the ultimate currency, which is that time to do those things that you know are really the most important thing to you. Yeah, agreed. All right, let's talk about real estate, Chad, because that's your book obviously is influenced about that ultimate desire to have more free time, to do more of what matters, but it specifically tells us why real estate, right? Why not just continue to stock money into index funds, and tax advantage to accounts, that's what a lot of personal finance enthusiasts talk about, like that's the easy way. Real estate seems a little more difficult. Yeah, I mean, they're all good. I want to say that up front, like I like index funds, I like savings accounts, I like all the stuff, which was so cool about your shows that you combine a lot of different tools and show how they all work. But I'll make the pitch for real estate investing. If this is something that somebody, if you're interested in it, because I think, I don't like to try to talk people in a real estate, because it's a kind of like a startup business where on the front end, you've got to learn a lot, you've got to build relationships, you've got to invest some time and knowledge and energy into it. But on the back end, it can become a very passive, kind of like a blue chip stock type of investment. So that front end, that front loaded kind of investment of time and energy that was important to know. So like, that's why I don't want to talk people into it. But if you're willing to put that energy and that effort and that money up front, real estate has this unique quality. And I have a friend of mine, Jillian Johnson, who you guys probably didn't know as well. She always says that real estate money, it spends differently in early retirement, or in financial independence. It spends differently. So like, think about if you had a million dollars, or a half a million dollars in a stock investment account, or if you had a 401k, like taking your principal out of there to live off of that principal is just a different psychological decision than getting rental income that comes in every single month and you still have the property. Like, you're not selling the property, but you get this rental income coming in. And I've experienced this firsthand because I'm living in Spain. We spend 100% of the money some months, because we're traveling and doing all this stuff. And guess what? Like, next month, another set of money comes in. And then another set of money. And so that recurring income of real estate is a super important thing. And it's more than just math, like the math's important too, but having recurring income that you can also get to be semi-passive. So it's not going to be 100% passive, but I spend a couple hours per week now that my real estate investment portfolio is mature. I'm not buying and selling properties. I'm not remodeling properties. We're just managing the managers basically. And I say, if you have a few properties, that could be like 30 minutes a week, four hours a month. That's not exaggeration. I've surveyed a lot of people I know who had those kind of portfolios. And so it could be a very passive while also producing that recurring income, which when you want to live off your income, when you want to live off your wealth, real estate investing gives you that ability to do it. In addition to all the other stuff you probably heard about of building wealth and using leverage and having small amount of money down. That's all true, too. But then also real estate is an amazing financial independence kind of core vehicle to help you get there and live off your income. Well, for talking about early financial independence, it's also not age restricted, like some of those tax advantage retirement accounts are, right? Correct. If you're putting it into a traditional 401k or IRA, you're not allowed to really touch that stuff without penalties until 59 and a half and so real estate. It's like, boom, you get kind of that recurring dividend on an ongoing basis. Yeah, and it also has tax advantages. It's not quite as good as like a Roth IRA or something like that. But you can grow in a tax advantage way using things like depreciation with shelters, your income. So you don't pay quite as much in taxes as you would if you just got the income without depreciation. This is something that people, even before retirement accounts were around, people have been using real estate rental income is like a core retirement vehicle as a core wealth building vehicle because of all these various benefits that it has. Yeah. In addition to the psychological win that comes with being able to enjoy the profit from the properties that that thing is shedding every single month, you know, we've talked about the small and the small and mighty approach with our listeners before. This is something we have adopted ourselves when it comes to how it is that we look at real estate. But for listeners out there who maybe haven't heard your philosophy, can you share specifically why going small, how it is that that can be the right choice for a lot of folks? Yeah. I'll tell it with a story. Like when I first started real estate investing, I was 23 years old. I just graduated from college and every class I went to and I'm kind of dating myself now. So it was 21 years ago. Like I was listening to like CDs back in the car. Like driving around, you know. That's how we did it back in the days, right? Back in the tapes before that. I was also listening to tapes. But anyway, I was listening to these and the ethos or the main message you get most of the time was, hey, you should get bigger and bigger and bigger. And you should grow faster and faster and faster. In fact, the most successful people are the people who get the biggest and grow the fastest. That's just sort of an unwritten assumption. And so I sort of bought into that. And my business partner and I during the first three, four or five years were on that track. We were trying to get bigger by a lot of properties. But the end result of that was, number one, we hit the 2007, eight, nine recession. And that was pretty scary. You know, having to try to survive that when you've grown fast and you have a lot of leverage. So that was one problem is that there's a risk of growing fast. But then the other thing we realized going back to that conversation about time is that a smaller, simpler, slower, like a tortoise-like real estate investing strategy is actually super effective too. And it also gives you more of that time and flexibility that we talked about where if you're constantly always growing, always growing, always growing. And I'm not saying you shouldn't push it and work hard and do those kinds of things. If you don't, if you never take a break, like I look at it like climbing a mountain, like if you're always climbing and you never take like some plateaus to take a break and take a breath and relax, then you're going to not enjoy the process. You're not going to enjoy the reason you're investing in the first place. You're going to not miss those opportunities with your family, with your friends. And so we realized in that moment what we started writing down like in 2007 when we were in the kind of the eye of the hurricane. We were like, all right, what is it we got into the best thing real estate for? Like why are we doing this? We've fought like dozens and dozens of properties in the last year. And we wrote down things like I wanted to travel. Like with my future wife who I've just met, I wanted to be present with friends. I wanted to play basketball in the middle of the day. I wanted to go hiking because we lived in Clemson, South Carolina near a bunch of the hills of the mountains. So the things I wrote down on my list, some of them required money. Like travel requires somebody. But the biggest impediment to me doing the things that I wanted to do in my life was free time. And flexibility. And that was such an aha moment. I was like, all right, we need to build a real estate investing philosophy, a business that works it backwards from those lifestyle things that the reason we're doing in the first place so that we don't miss out on the whole benefit of why we even started this in the first place. And that, I didn't call that at the time. But the end result was having a leaner, slower business. And the more I got into it, the more I studied people who have done this. I met people who had five properties who were the most relaxed people in enjoying life. I've ever seen in my life where people with ten properties and they make enough money. But they don't have the kind of the weight and all the struggle and the stress of going big. And it just inspired me to try to do that with our own business and help other people do it as well. Well, there's a focus there where you're optimizing for life as opposed to optimizing your real estate. Like optimizing your portfolio. I mean, I'm going to side with optimizing for life every single time. Yeah, and you're working back from what matters to you. And then you're saying, cool, how do I fund that lifestyle? How do I achieve that? Yeah, and so many people are doing the opposite. Or they just haven't thought enough about what they want their life to look like. And so they're like, well, I guess real estate is the ticket to wealth. And so they keep pursuing that and they go so dang hard that they're missing out on the benefits of that real estate could afford. You actually, in your book, you highlight three different couples. And you're like, this couple is making just plenty of money from the real estate portfolio. But they've got the flexibility to go along with it, whereas somebody else might have a thousand units. They've got this job, this thing they've got to get back to. If you want to talk about those couples and that kind of scenario you set up in your book and how you think about it. Yeah, the story was, I'll simplify it a little bit. There's a couple, Liz and Tom, they live in St. Louis, Missouri. They could be anywhere in the United States, right? But they had the simple 10 property portfolio in 15 years after they started. They bought these properties like in the first five or six years. And then they worked on paying them off. They actually paid off the debt on their properties. And they owned 10 single family houses free and clear. And just to kind of simplify the numbers when they paid all of their expenses like taxes, insurance, maintenance, all that stuff. They had no mortgage payment anymore. And they made a thousand dollars per property or ten thousand dollars per month. So ten thousand dollars per month. Like think about what you can do with ten thousand a month. That if that's not your number, maybe you only need five thousand or fifteen thousand, whatever your number is. But the point was like ten properties produced ten thousand dollars per month. And they were paid off. And they were friends with another couple who had kind of got a different path. Which is sort of the traditional path these days. If you listen to real estate investor, you know, people talking about it. They went and they got big because they were so good at real estate investing. They said, why should I just stop at my own properties? Like I could go partner with other people and raise money. And they bought thousands of units with a bunch of other people's money. But the reality of the situation in this story was they were taking a trip together. And the couple who had all the thousands of units, they had to go back to the United States. They couldn't extend their trip because they had remodel projects going on. They had a team. You know, one of their team members like Quitt and they had to go try to replace that person. And so on paper, it looked like they had systems in team. And supposedly it was passive. But when you have this big operation with lots of people and lots of things going on. It's like a machine. There's always something breaking. And there's always something you got to put your attention on. And so what I advocate for when I think this story shows is kind of like time management. Like you could try to manage your time by doing like hundreds of things and having like organizers and to-do lists and all that stuff. And you could try to systematize all that. You know, that's one way to do it. Or you could just do less stuff. Like you could just not do as many things every day. And your life would be a lot simpler. And real estate best is the same way. Like you got to find a happy medium where yeah, you got to get enough properties to pay your- to pay your goals. Like pay for things to build enough wealth. But there's a happy medium in there. And I think the small and mighty model says you can get to five properties, ten properties, 20 properties. You can get bigger if you want, depending on how what your goals are. But instead of using the cash to continue getting more and more and more. Eventually you reach this stage, which I call on the book The Ender Stage, where you've built enough wealth to start actually plowing the money back. And to use the poker metaphor, like to start taking some chips off the table. And actually paying off some debt and simplifying your life. And you don't have to pay off all your properties. But like actually paying off debts kind of sacrilegious in the real estate world. Yeah. People don't talk about that. You can't pay debt off. Like what are you talking about? That's not- you can't- the only day Ramsey does that. It's like no, no, you can actually- You can do it too. Like it's actually a reasonable thing to do. Well, we want to talk more about that, how you sold some properties. We want to talk about some of the other factors you consider when you are looking at properties. And how we should be responding to rising interest rates as well. We will get to all of that right after this. A new podcast from the creators of Up and Vanished. Louisville police are searching for a missing 24-year-old woman. When I read about Alana Chen's disappearance, I couldn't look away. A shy girl from Boulder, who wanted to be a nun since she was a teenager. So Alana was like sneaking out to go to church. But she kept a secret, one that was slowly tearing her apart. I didn't know she was attracted to girls. Nope, she didn't tell me. Yes, the mother says her daughter first opened up to a priest at her church when she was just 14 years old. However, the church denies any conversions therapy was done. She didn't tell me. She told him. She confessed to him. From Tenderfoot TV comes a new podcast about the price we paid a belong and the systems that pay no price at all. This is dear Alana. Listen for free on the iHeart radio app or Apple podcasts. For an exclusive binge of the whole season, subscribe to TenderfootPlus at TenderfootPlus.com. I'm weird. You're weird. We're all weird about money. Hi, I'm Paco Delion. I'm a personal finance expert, author, and illustrator. And together, with the incredibly generous corporate overlords at iHeart Media, we'd like to proudly present to you a brand new podcast called Weird Finance. The show to help us all feel a little less weird about money, one conversation at a time. Each week, me and a special guest will do the thing that many consider taboo, gauche, and downright tacky. We're going to talk about money. So if you want to feel a little less weird about money, get a little better at dealing with it. And you also want to hear people have honest and real conversations, then tune in to Weird Finance, available on the iHeart radio app, Apple Podcast, or wherever you get podcasts. This is the unbelievable but true story of George Remus. You might know him as a character from Boardwalk Empire, or as the inspiration for Jay Gatsby. He was an eccentric and genius lawyer who figured out how to game the system during prohibition. Remus is in the whiskey business, and Remus is the biggest man in the business. While living the life of luxury with his glamorous and ambitious wife, Imagine. Daddy, I am so glad you're here. But George Remus' wild existence took a dark and shocking turn, leading to betrayal. She had Remus just exactly where she wanted him. Revenge? Feel this muscle. I got this for Remus. I could crush him like an egg. And one of the most sensational murder trials in American history. We the jury find the defendant. Join me, Abbott Kaler, as we trace George Remus' transformation from bootleg king to alleged madman. Listen to Remus, the mad bootleg king, every Tuesday on the iHeart radio app, Apple Podcast, or wherever you get your podcasts. All right, we're back from the rake. We're still talking with our good friend Chad Carson about real estate investing, but kind of taking a different approach than most people advocate for these days. And Chad, can you actually maybe hop in the time machine a little bit? You were talking about when you still listen to tapes. So maybe your brain is already there. But about how you got into real estate in the first place. And you actually made a quick pivot in the beginning. House hacking is part of that story. I would love for you to tell our listeners about that. Yeah, I was listening to tapes. That's true. And I was back when I was 23 years old. But I graduated from college. I was a biology major. I thought I was going to go to med school. And I was like, all right, I'm just going to take a break for a year or two. And let's do this like entrepreneurship thing. And I actually started trying to flip houses. So in real estate, you could have the rental property business, which is what I do now. And a lot of people do. And you can do this part time on the side, whereas what I was doing was going out looking for deals, finding fixer upper properties for closures. I would try to get them at a really low price. And then my business partner and I would flip them, either fixing them up and selling them, or just reselling them to another investor. So that's how I put food on the table. Like, that was my job. And once I started doing that for a year, I kind of forgot about med school and said, I'm just going to do this thing on my own. And I don't want to go to the traditional path anymore. I'll make more money than a doctor anyway. Yeah, well, maybe not. I don't think I would have made more money. I didn't do that well. But I've survived. And I had a lot of fun. And I played basketball in the middle of the day. So I met my goals. But I also, you know, in the early years, like anytime you start something new, like your housing expense is a big deal. And so I quickly learned about the strategy where you can move into a property and rent out part of the property that you live in, called house hacking today. And I live, I actually bought a fourplex. And I'm at a college town, Clemson. And so we have these little small multi-family properties. And this will happen to be pretty close to Clemson's campus. And so it was a major fixer upper. Like, in fact, I showed up. The property is vacant. And it had Mary Christmas spray painted across the front of the whole building. Like somebody tagged it in the middle of the night. And I walked in the unit four. And there was an outline of a chalk outline of a body. And unit number four. And I'm like, OK, I don't know that I can do this. But I had a mentor, luckily, who's like, no, no, that's perfect. That's exactly what you want. You know, you wanted to look horrible that nobody else wants this property. And I said, all right, I guess I'll do this. And so I fixed that property up. I had a borrow money to do it. But I moved into unit number two. And I rented all the other three units out. And my expenses, principal interest, taxes insurance, and a little bit of my maintenance, was covered 100% by the other three units. And so there we go. Number one, luckily, expense covered. Covered, yeah. And I still had my old Toyota that I drove for like many years after that. So I was living lean, lean, lean, lean, very cheap, which allowed me to stay as an entrepreneur. Because it got rough. You know, it got rough. I had a roller coaster. I'd be really well for a month. And I lose money next month. And that helped me kind of sustain that journey and not having to go back to a regular job. But anyone can use that. Like, house hacking is amazing. I feel like it's the, if you're willing to do it, there's so many variations of that. But especially early in your career, you can use that as a kind of jumping off-point into rental properties. Because you can move into the house with a smaller down payment. You can usually get a long-term loan because it's an owner-occupant property. And you can learn how to be a landlord. You can learn how to do it. If you make some mistakes, not a big deal. You're right there. And it was where I sort of learned how to do it. And realized that could be a rental landlord. And we still own that property. That property that we bought. It was worth 130 or 150,000 when we bought it. Now it's 250, 300,000 bucks. You know, so it's done well. And it's making income. And it's still, we started doing a bunch more of those after that. Yeah, that's what I love about house hacking is that it addresses. Like at the core of that is, are you willing to do something that most folks aren't willing to do in order to get ahead financially? It's just an alternative way of living. And to a certain extent, that's what it takes to be a small time landlord. It's just approaching the issue of housing from a slightly different angle. And it can be like, you think of it as an investment. But it's also putting a roof over your head, reducing your costs every month. I mean, it's got that it's killer. Double whammy going. It's amazing. Yeah, so Chad, what is it right now that you're looking for? Like when you're looking for a property, what are the factors that you're considering? Like is it all about the numbers or other considerations that you're keeping in mind? Yeah, I learned early on. I used to think it was all about the numbers. And the numbers are important. Like, and I'll talk a little bit about some basic ways to run the numbers. But now that I've matured a little bit, I realize that there's sort of like a two sides of a coin. Every good deal has to have some numbers that make sense. So cash flow is a certain type of analysis you can do. You want a certain amount of cash flow or you want it to cover your mortgage and then have a certain amount of money over that mortgage. But you also want to have a certain type of location. Because the money you make in real estate is sort of the consequence. It's the outcome. But the cause of that, like the core principle of real estate investing is providing housing for someone. So someone's going to live there. So the location they live in, the type of property they live in, like those are so critical. And I had a mentor early in my career who told me he said, Chad, you always want to buy properties that have some sort of romance to them. And I was like, romance, like, what do you mean romance? Like, what are you talking about? And his point was like, real estate is an emotional, either a purchase or if you're renting a property is still, it's an emotional thing. Like, you're living there for an emotional reason. And yes, you have to have a roof of your head. But if you don't have a property that has some sort of romance to it, meaning, and it could be something simple, it could be like, you know, you guys, I resonate with you that we like walkable locations. Like we like a place with a sidewalk and, you know, big trees and you can walk to a local coffee shop. Like that, that's romance. Like that, that idea for someone that they can walk somewhere. For a certain type of person, that's romance. For another type of person, it might mean, hey, I want to live close to where I work, but I want to live out with a two-acre parcel in the country. And that's like, that's my idea of romance. The principle is the same as that you need to buy your properties with that in mind, like number one. And if you do that, like if you buy properties that are in demand because there's an emotional attraction to them for some reason, then the money stuff will take care of itself. Just for example, I have a single family house that we used to live in. And every time I put it on the market to rent, I put it on Zillow. And within a week, I have at least five, sometimes ten, applications from people who want to rent the property. And this is that market rent. I'm not putting it way below market rent, just a little bit below market rent. And I get to choose the best, most qualified tenant. And they tend to stay a long time as well. And why is that? That is because that property has a romance. That property is in a neighborhood. This attractive is close to things that people want to be at. And so that principle is something I missed early in my career. I bought some properties with good numbers on paper, but they were in the wrong location. And so you need to control the things you can control, which is where the property is. You can't move that house. At least can't do it easily. So you want to pick a good location first. And then, yes, learn how to run the numbers. Make sure the financing works. Make sure that we can talk about that too. But I think if you get that idea of location and then a good property that has a good layout, a lot of the other stuff will take care of itself. That can also reduce the hassle, right? Hasselfactor, which is one of the biggest reasons that people say, yeah, real estate, I don't think that's for me. And I think also location can matter, not just in the monthly cash flow, but also when it comes to appreciation of that property. Yes. But talk to me about passive income chat. I feel like it's sold one way on the internet. Passive income is like a buzzword that people use to get people to follow them and try to talk to them about, hey, here's how you can generate thousands of dollars a month in passive income. It's so easy follow me. But real estate is sure. You can get passive income over time. But you're also talking about a part time job, right? Yeah, it is a part time job, especially early on. I mentioned earlier, it starts off like a startup company, like a little venture capital startup company. So it's going to take some time and effort upfront. And I call that your psychological down payment. If you're not willing to put that effort in that time and upfront, real estate is not your thing. And that's fine. There's other options. There's index funds. And sometimes it's just a practical reason. And if you have a job that is taking like 60 hours of your week and having an hour of mental energy on some other venture would like tip you over the edge. Like you don't need to do real estate like that. You don't have time. Yeah, you don't have time. That's cool. And maybe you will next year. Maybe you will another time of your life. It requires some effort upfront. And you either need to spend time on negotiating properties, on running the numbers, on finding good locations, on building a team. Like that's where you're going to spend your time upfront. Now, but the thing is, like I mentioned earlier, is that it eventually becomes passive though. And real estate is pretty cool in that way. Is that you put that psychological down payment. You put that financial down payment. And then you stabilize that property. You get a good tenant. I've had tenants who stay for 10 years or more in some properties. And when that happens, like- The dream. Yeah, the dream. It doesn't happen every day, but like it happens. And it does. I think about how little work you have to do on a property if there's no turnover, if they're not moving. Yes, if something breaks, you have to fix it. But when I was in Spain, I would have something break. Even the properties I was self-managed. And my tenant had a plumber's phone number. They could call the plumber. Like they could say, hey, here's my plumber. I really like this plumber. Call them. I'll pay for it. But go ahead and call them if it's a problem. And if it gets out of whack and they're spending money, too much money, I can try to change that policy. But it doesn't have to be a really huge time suck. And you can do it from anywhere in the world. As long as you have a cell phone. And so that's where the end game of real estate is that it could be very passive. But also that the keyword that I mentioned earlier is also recurring. This recurring income. It's a lot like your salary. And so you used to having that monthly salary. And that's a nice thing to have. And real estate can replace that. It could be very much like that. I like that. I've never given my tenants the number of the plumber before. But that's a little trick. I might have to stop from you. Until you get a bill and you realize that like they have them installed like a bidet or something. I remember being like six hours away one time. And there was a water issue at one of my rentals. And usually I'm used to going. I was used to going over there when there was an issue. Just to scope it out, get a little land. And that was the first time I realized what I just called the plumber. He took care of it. Because I was still out of town. And the light went off in my brain. I don't even know that I ever have to go over there. Again, which is kind of crazy. I mean, I still like to go check on it and see it once or twice a year kind of thing. But like, it's one of those things where over time I've been able to become less and less active. And I just remember that being this like, uh-huh. Wow. Oh my gosh. I didn't realize that I didn't have to be this complete active participant all the time in the property. Exactly. That's the benefit that some people who invest long distance have over those of us who started local. Is that you have to treat it as a business from the very beginning. You're San Francisco and you're buying a property in Georgia. You can't go look at it. Sorry. It's not going to happen. And so it forces you to think like a business owner as opposed to, and there's nothing wrong with going to the property and checking it out. I'm all for that. Especially when you're learning. Especially when you're growing. Especially when you're trying to save money. That's cool. There's nothing wrong with it. But eventually. I think this is what I wrote about in the book about having a whole chapter on systems. You should think kind of like Henry Ford did when he built the Model T and built the assembly line. Like for him, the process of building a car became the thing that he worked on. It became the thing he tinkered with. And you as a real estate investor should think about your business as this is like a machine, like an engine. And you have to tinker with it. And you're not just working in your business. You're actually working on your business trying to create systems and processes and building a team. And if you do that, that's where the good stuff happens on the other end. That's where you can have the benefit of the income. And yes, you have to pay somebody to manage it sometimes. You have to pay a plumber who might charge more than you. But if you treat it like a business, you run the numbers so that you can pay people to do those things for you. And your profit as the owner of that business is what's left over after you pay all those other people to do those things. It also just comes down to what it is that you're optimizing for. Like we kind of touched on that there earlier. But like it makes me think about you said you've had tenants that have been around for 10 years. And I'm guessing you were less likely to raise the rent dramatically on that tenant because if they're a good tenant, you probably wanted to keep them in there. And now, were you optimizing for the amount of cash flow that you had by doing that? No, probably not. But you were optimizing for what it is that you were seeking. This is like the whole building wealth versus achieving some sense of freedom that you talk about. But is that true? It is true. Yeah, somebody's been there 10 years. I mean, it's automatically below the market. And that's not to say we don't raise the rents. Like we do raise it some. But I'll give you a practical example. I've got a property where the tenant was willing to renew. Or I sent an email or a text saying, hey, we'd like to renew. The market rent right now is $1,800 per month. Or maybe it's two. Market rents $2,000 per month. They were paying like $1,550 per month. Like there's the rents had gone really up really fast. And we said we need to raise the rent sum. Our insurance is going up. Maintenance expenses are going up. But we're not going to raise it up to the market level. We need to raise it by $50 per month. And so that's the kind of, you know, you're still getting a better deal than they could have had to move somewhere else. But we're covering our calls. But I know landlords who don't ever raise the rents at all. And that's, you know, that's your choice. And that's a different choice than, like if you were an institutional landlord, which you guys know, I'm kind of like hot on trying to say how small and mighty investors, I think are much better for communities than these big institutional Wall Street landlords. They're with you on that too, yeah. Their job is to maximize their return for their investors. And they're going to push the rent to market as much as they can over and over again. Often at the expense of the tenant. Exactly. Yes. And so I feel like it's not the landlord tenant relationship is often put as an adversarial relationship. But I very, very rarely felt that with my tenants. I felt like I'm providing value to them, giving them a nice home that we care about and we have pride in. We're not slumming that property out. We want to treat it well. We want to treat the tenant well. And they're in the return, they're paying rent and they're maintaining the house as if it was their own. They're taking care of it. And during COVID was one of the biggest aha moments for me was like I read in the newspapers on Wall Street Journal and all this about how so many tenants weren't paying and how many, how adversarial the landlord tenant relationship was. 99.9% of our tenants were still paying on time. A couple of them had issues and we worked it out. They took care of the properties. They appreciated having a home to live in. And I appreciated them and it was, I had never been so grateful in my life for our tenants. And I hope they were also grateful for the home they had because it's a mutually beneficial relationship. And it didn't have to be something that we're beating each other up about. Yeah, Matt and I had similar experiences. Let's talk about debt and financing for a second, Chad. I mean, rising interest rates, of course, we've been talking about those over the past 18 months or whatever. But how have those changed your advice to want to be real estate investors? Have rising rates maybe tamp down your enthusiasm for small, mighty real estate investing? It's just changed the approach. It's changed the technique. And the way I compare it, the last, you know, we're here in 2023 when we do this interview. You know, in 2018 through 2022, and even before that, this has been an unusual time historically in terms of interest rates, in terms of real estate investing, where you could actually go out and get a two or three percent mortgage, pay retail price almost for a house, and have it cash flow. Like that, I just want to put it in perspective. Like that is unusual. That's not the normal thing. That's not the said that it wasn't good for us. Like, great, you got to take advantage. But the way we real estate investors, we always have to pivot. We always have to change. We always have to adapt to the market. And I'm going to break the real estate investing into two pieces. Like, one piece is not changed at all. I don't care what the interest rates are. The fundamentals of those good locations that we talked about earlier. The fundamentals of finding good tenants. The fundamentals of maintenance. Like, those things are the same. The challenge. The other piece that we have to look at now is the cost of buying a property with a traditional financing mortgage. Has gone from three or four percent up to like seven percent. And what that does is that makes the cost of using debt much more expensive. At least go into the bank and using debt. So how do we solve that? Like, well, one way is you can put more money down because your cash flow is not working as well with a small down payment. You might have to figure out a way to either go in with a partner, or you save up more money. Maybe you have to slow down a little bit by fewer properties. And I've told people like if you've already owned a few properties and you have enough money to even pay cash for a property, you're essentially getting a seven percent return instead of paying the bank seven percent. If you were in that kind of later stage of your career where you're like, I don't know that I want to pay the three percent debt off, but I could like pay cash for a new property or put 50 percent down or something. The cash flow can work when you make a bigger down payment. And I'm not saying like that's what everybody should do, but like that's option A. Like you can make it cash flow by putting a larger down payment. Option B is like getting creative with your financing. And the way I explain this is like, you can look at your financing like a toolbox. And if you're building a house, you'd have like five or six or ten tools in your toolbox or more, right? Well, when you're financing houses, you don't want to just have one hammer. Like that's what traditional financing is. I just got a hammer. I'm just going to use a hammer over and over and over again. Well, no, like why wouldn't you use like a screwdriver and a saw and these other tools? And what those other tools are, are thinking outside the box like talking to the seller and seeing if the seller will finance the property for you. It's called, it's called seller financing. It's not common. It's not typical when you go through a real estate agent that the seller is just going to say, yes, I'd love to finance the property to you. Like, no, it's a little different approach. You might have to reach out directly to the seller. You might have to look for landlords or people who are more predisposed to finance properties to you. The ideal person to finance a property is a landlord who's owned a property for like 15, 20, 30 years and they're kind of tired of the landlordy business and they're ready to exit. But they like that recurring income. Remember that monthly income and they've gotten used to that. They're addicted to it. They like, hey, I'm addicted as well. Like I get it. But then they don't want to manage the day-to-day affairs. Maybe they're getting up in years. And so them financing to you might be the perfect solution for them. Like that's the way they can exit the property. And so that's like another, that's one tool in your toolbox. You can also use private money. Like the number one way I finance my deals over the years is going to other investors and they would have a self-directed retirement account or they would set up a retirement account that had money that they could actually loan to me as a real estate investor. And that's not something a lot of people know about. But if you have your own IRA that you can choose where it's at or if you have a 401k and an old employer, for example, there's some flexibility on the custodians you can put that with. And so my best strategy for me was I had a professor at Clemson University. And he had a lot of money in a retirement account and he had some of it in the stock market. But I taught him how, hey, you could like loan me that $100,000. And I could pay you 7% interest or 10% interest or whatever the interest rate you negotiate. And so you can show other people how they could be your bank, basically be your private bank or you can meet other investors at local meetups who would like to do that. They'd like to get interest. So those are just a couple of examples. But the point is, like, if you think outside the box, this is what real estate investors have had to do for decades. You're going to have to hustle a little bit. You're going to have to think outside the box a little bit and learn a few different techniques to make it work. Yeah. And again, it comes back to how willing are you to do the things that other folks aren't necessarily willing to do. You got to be willing to do things slightly unconventionally in order to get the deal. All right. We want to talk about deleveraging as well. That's kind of part of shorting up your real estate portfolio. We'll talk about that. And then just kind of like how to get started, maybe as well. We'll get to come more questions with Chad right after this. A new podcast from the creators of Up and Vanished. Louisville police are searching for a missing 24-year-old woman. When I read about Alana Chen's disappearance, I couldn't look away. A shy girl from Boulder, who wanted to be a nun since she was a teenager. So Alana was like sneaking out to go to church. But she kept a secret, one that was slowly tearing her apart. I didn't know she was attracted to girls. No, she didn't tell me. Yes, some other says her daughter first opened up to a priest at her church when she was just 14 years old. However, the church denies any conversions therapy was done. She didn't tell me. She told me, I have. 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We the jury find the defendant. Join me, Abbott Kaler, as we trace George Remus' transformation from bootleg king to alleged madman. Listen to Remus, the mad bootleg king, every Tuesday on the I Heart Radio app, Apple podcasts, or wherever you get your podcasts. All right, we are back from the break talking, still with Chad Carson about how you can be a small and mighty real estate investor. And Chad Joel, he kind of hinted at the alluded to this right before the break, but de-leveraging. When and how should folks out there pay down debt on a rental property? Because like you said earlier, as well, this is, it kind of goes against the traditional advice, the traditional approach of most real estate investor. You want to hang on to that leverage as long as possible. But you've actually, you have done that before. You paid down debt, but you've also sold properties. Can you talk about when and why you would do that? Yeah, I think about your real estate investing as a journey, essentially. So I think I mentioned the mountain metaphor. When you first start as a new investor, you start at the bottom of the mountain, and you're going to use certain techniques and strategies when you're new. Like you probably don't have a lot of capital. You need more money. And so you just try to, you try to use as much debt as you can early on. Like you did a house hack, but 5% down on a property. Like, awesome. Like that's what, that's what you should do early on, because you just got to get your foot in the game. So, but that's, that's the approach of a starter. And then you move out of the starter phase into what I call at the wealth builder phase. And your whole goal is a wealth builder is turning whatever capital, whatever money, whatever wealth you have. Let's say you have a hundred thousand bucks, turn that hundred thousand bucks into a million bucks. Like your goals to grow, grow, grow, grow, grow. And you want to do it safely, right? You want to get up that mountain. And using leverage makes a lot of sense in that case as well. So you might, you might reinvest all the cash you make from your rental. Like don't touch that money. Put it back into buying the next rental property and the next rental property. So that's like, those are the two first two stages. But I feel like most real estate investors get stuck in phase number two. Like all the techniques are talking about just grow, grow, grow, grow, grow. Is like, well, do you just grow forever? Do you get into this perpetual debt religion and like never pay debt off? Like, you know what, what happens? And what most people assume going back to like the typical model is you just buy more properties, buy more properties, buy more properties. And what I advocate is like when you finally get to this point where you have, like you can measure your wealth. And you say, let's just say you had a million dollars, then why not start taking some of those chips off the table by plowing back some of the profits you have, either the cash flow from your rentals? Or you could even like, let's say you bought 13 properties and you only needed 10, like why not sell a couple of your properties? Pay taxes on what you sold the property for and then plow that money back into paying off the debt on a couple of properties. Now stick with me. If you never heard somebody say you should do this, like my business partner and I sort of stumbled into this. But we had, we were lucky enough to have like 100,000 bucks in our bank account. Or like, I've never had this happen before. This is amazing. Where did this money come from? It was because we had been saving our cash flow. We sold a property and this money was sitting there and we looked at one of our debts. It was an older debt that we've been paying for like 10 years. It was a thousand dollars per month. And the property had appreciated like 250, 300,000 bucks. And so we had a lot of equity in the property. But we looked at that payment. We're like, we could spend 100,000 bucks and go buy four more rental properties and keep growing. Or we could pay off this debt and free up a thousand dollars per month. A thousand dollars per month is $12,000 per year. And what would we do there? We'd have $12,000 per year in cash flow. And that's like a, you could think about that. It's like a 12% cash on cash return. We would not have to grow anymore. So we wouldn't have any more properties with more tenants and more headaches and more, you know, heating and air units. And we would simplify our life. We'd increase our cash flow. And we'd also decrease our risk. Because having debt is great. It's a great tool for growing. But if things go badly, if you get in a big recession, if you have a great, you know, depression, like we had in the 1930s, having debt could really put you upside down. Like you could, oh, you could owe less. You could owe more than what the properties worth. The rents could go down. I mean, that doesn't happen. It's probably not going to happen. Like I don't think it's going to happen. But just when you start getting towards the top of the mountain when you're climbing, it makes more sense to like thinking about not just growing, also thinking about income, also thinking about simplicity. So I feel like that's the stage where it makes sense to start paying off debt. Now, whether you pay off 100% of your debt, or you pay off like a few properties, you know, we've kind of gone through that over the, we still have some debt on our portfolio. But instead of having like 60, 70% of our value of our portfolio and debt, we have more like 15% or 20% right now. And eventually we'll be at zero percent. But like we're, we're feeling pretty good about where we are right now. Yeah, you're sitting pretty. And even if let's say that there were some predictions of like another 2008 sort of, we're set housing recession. I don't see that on the horizon. But if housing prices dip like, and you're over leveraged, and your tenant isn't paying or whatever, like that puts you in a bind. And you're not in that bind, right? Even if your tenant, or multiple tenants don't pay, you're still fine. And so there's like a mental ease that that creates, I think. What would you say Chad, to the folks maybe who've made it this far into the conversation, they're maybe fascinated by the wealth building possibilities of real estate. But they're also hesitant to get going because it, it seems risky. It sounds risky. Like I don't know, maybe I should just keep tossing money into my 401k. And again, we talk about that all the time. We're totally down to get the match. Like don't forsake that. Real estate investing should be after you've done that at least. But what would you say to somebody who's like, I don't think that's for me, but it's not necessarily because I don't have the time or don't have the desire. It's just it, it sounds like it's too much. Yeah, I would say just take it one step at a time. Like you don't have to be, you don't have to make a forever decision with real estate investing. You can test it out. You can buy one property. And that might be enough. Like you might just buy one property. Take a break for a year or two. Let it season. Take a deep breath. See if that was a good decision or not. And then you can do another one after that. And I actually have a mentor named John Shobb, who's a guy I've followed for a long time. He's been investing real estate for 50 years. He wrote his book that I always loved. Just called Building Wealth One House at a time. Just one house. Like he just recommends buying one house a year, one property a year. And if you do that, like if you just continue buying just like the tortoise, not the hare, just plotting along, plotting along. It seems pretty small in the beginning. It seems like you're not making much progress. But that can build an enormous momentum. And but it also, if you think of some mistake, if you get into the game, I bought a property or two. This is not for me. You can sell the properties or you can get out of them. It's not going to happen overnight. Real estate isn't as easy to sell as a piece of stock. But if you buy it correctly and you don't overstretch yourself and you're careful with it, it's not going to be a disastrous decision. Like going slowly, thinking about it, being deliberate allows you to kind of get your feet back under you again. And you can pivot, you can change. But I have a hunch. Like if you thought you had it, you kind of liked real estate and you got into it, you might just get addicted to it. Like I have, like Joel and Matt has. Because it's got a lot of good stuff to it as well. And some of the negative stuff you hear up front is it talks people out of real estate. But real estate of the long run can have so many benefits. And I'm experiencing those now. And one of the reasons I get out on podcasts and appreciate you guys having me is because I like to talk about it. I like to talk about the good sides of it and how if you get through the tough stuff up front, the other side of that can be an amazing change in your life. It gives you freedom. It gives you flexibility. And I have experienced that myself. It takes a while. There's a lot of stuff you need to learn when you're thinking about becoming a real estate investor. One thing Matt and I have done a whole episode on screening tenants properly. Because we think that is like 90% of the issues that you're going to face are not having screened to tenant thoroughly. And so if you do that, you're way ahead of the ball game. You're going to deal with far fewer of the issues that a whole lot of other landlords have to endure. But I love what you said to one house at a time. That's a great strategy. It makes me think of like an athlete post-game. And I'm just digging in one game at a time. And sometimes I just said, you know Chad, you know this, you probably gave those interviews. I post a ball game. I know, yes. You have to say that. But the truth is, when you take it one house at a time, one game at a time, when your focus is just on the next step, you're much more likely to be successful than thinking about this bigger overarching goal. You're looking to achieve over time. It's like you got to take it one play at a time, one game at a time, one house at a time. That's how you're going to be successful. Yeah, you open up the sports metaphor. So I'm going to go there as well. We'll call it. Bring it. Come on. So like one of my favorite coaches in sports is a guy named John Wooden. He was a basketball coach at UCLA. And he used to bring his, like he had the best players in the country. He had like Bill Walton, who's a Hall of Famer. He had cream Abdul Jabbar. And he would bring these players in before the season started. And he would spend a whole day, like, or two hours sitting in a room, practicing, putting on their socks, and tying their shoes. Literally. Wow. They would have them tying their shoes. So you just imagine, it's all at All-American, how frustrating would it be? Like, why am I doing this coach? Like, I put my shoes on, like, ten times. Like, what is this? And he would get them frustrated. And he would say, you know why we're doing this? Because if this is something we can control, this is a part of the process of being a good basketball player. So, tiny little piece, tiny little step. But if you, if you don't, if you have a wrinkle in your sock, or if you tie your shoe wrong, you're probably going to get a blister. If you get a blister, you're going to mispractice. If you mispractice, we're not going to play well in the game. And if we don't play well in the game, we're not going to win a championship. We're not going to do all those things that you want to do. And real estate bestings the same way. The little tiny baby steps are what matters. So, tenet screening, I'm 100% on board. Like, if you're going to own properties, you've got to learn how to teach screen your tenants. You've got to learn how to have an application. You've got to learn how to have those conversations. Like, the little tiny, it seemed like tiny steps, they matter a lot. And real estate, the part of the upfront cost of real estate is learning what matters and what doesn't. And what, you know, location matters. I mentioned that earlier. Screening tenants matters. And there's a bunch of other stuff in that matter that matter too. But like, if you get into the financing matters, and so, if you figure out like a three, four, five things that really matter the most, and you put yourself in the game, things that really matter the most, and you put your socks on, you tie your shoes well, and you do it consistently, one deal at a time. The end result of that is a equivalent of a championship. Like, you will do better, and you'll be kind of surprised by it. Like, you know, that's the big athletes. I've seen athletes who are putting for like the winning the British open, and they're kind of surprised by it. Like, whoa, wait a minute. Like, what? I just won the British open. It's because they were paying attention to their putt. They're paying attention to the process. That's what an athlete does. That's what a real estate investor does as well. Yeah, it almost surprises you that you've done well, but it's no surprise, actually, because you've taken all the right steps all along the way. It's why we love your approach, Chad. Where is it that folks out there can find your new book, and how it can folks learn more about what it is that you've got going on? Yeah, well, thank you again for having me, guys, and the book is out on bigger pockets. That's my publisher. It's a big publishing website, and real estate invested website. I know we'll have links in the show notes in different places, but if you go to biggerpockets.com, forward slash small and mighty, that is where you can get it. It'll also be available the 22nd of August on Amazon, on Audible. So anywhere else you get your books, bigger pockets is pretty cool place to get it, because I actually wrote some extra bonuses. I wrote a bonus chapter about being a small and mighty investor in a changing economy, talking about these rising interest rates and different the way things are changing. How do you adjust to something of what we talked about today? Wherever you get the book, I would love it. I'd love to hear from you. Once you buy the book and read it, I'm all over the place online. If you just search for Coach Carson on Instagram on other places on my podcast, I'm out there to search for Coach Carson and let me know that you liked it. Let me know that any feedback you have, because I wrote this book as a passion project. This was an itch I had in my head, and I want to see tons and tons of people buy that one property, that two properties, and have success with it. My reward for that is getting to hear your stories. That's great. Also, I'm imagining a lot of how to money listeners are very interested in that given kind of the... Well, we've talked about with real estate over the years, and this book really is the one to get, for sure, in our minds, if you're looking to get into real estate, or if you're just curious. Chad, thanks again so much for joining us today on the show, man, we really appreciate it. My pleasure. It's been a lot of fun. Thank you, guys. All right, man, it's always a good day if we can sit down and talk with our bud, Chad Carson. Almost makes it feel not like work, because... It really doesn't, dude. We're so fortunate to be able to do what it is. Like drinking craft beer, talking about money, talking about real estate, talking with friends as well. Yeah. We've got a good mind. I'm incredibly fortunate for what it is that we do here at how to money, but specifically to real estate, the small and mighty real estate investor. What is it today that stood out to you? What was your big takeaway? Yeah, so I love kind of the beginning of the episode where we're talking about how to work backwards from the life you want, and that's so powerful, because if you don't know that, you might be tempted to overindulge, to go so hard, and then look up, after that note to the grindstone, real estate portfolio building escapade you've been on, and be like, huh, why did I do that? Because now I'm so locked in, I'm working way more than I want to, and yeah, granted, I have this awesome real estate portfolio to show for it, but I've missed out on a lot of the important things along the way. And so, I think Chad, we just jive so much on all those levels when it comes to a lifestyle. Yeah. What is it that we're pursuing? Keeping the end in mind? It's possible to overdo it. Yeah, it's possible to overdo it, and to be to financially savvy with the different moves that you're making, and starting with the end goal in mind is so important. I completely agree with you. And so, my big takeaway is going to be when we kind of touched on interest rates, mortgage interest rates, and how I think the natural tendency might be for individuals to find themselves attracted to more and more properties that may not necessarily fit the bill. They might be looking further out, or neighborhoods that aren't quite as promising, and it's in order to achieve the numbers that we were able to find five, ten years ago, right? And Chad, he specifically, at some point, I forget what it is we even asked him about, but he was talking about the romance of a location, and how you can't discount that. You can't calculate that on paper, but it's something that you feel, it's something that you see, and you can kind of write down, and be like, oh, well, it's got, it's walkable, or, oh, it's close to this park, or it's close to this brewery. Oh, it's got a front porch, different things that you know to certain individuals might appeal to them, but don't. Yeah. Don't discount those things, because again, you might be looking at, if you are a real estate investor, you might be looking at some of these other properties that, on paper, okay, this should make sense, but you have to look beyond, you know, capitalization, right? You have to look beyond, can I pull in 1% of the purchase price of this home? It's not just about the numbers you got to take out, the numbers you got to take all those other things into account as well. No, I mean, it makes me think, by question, the question I've always asked when I'm buying a property is, what I live in this place, and what I'd be happy to live here. Mm-hmm. And so, if the answer to that is no, then I'm not interested, right? If I'm, whether it's based on location, based on like the yard, based on the way the home looks, I want it to be like cute, and just, if it doesn't have all those factors, and if I wouldn't be willing to live in it myself, or at least 25, 26-year-old Joel wouldn't be willing to live in it, then I'm not interested. It makes it tougher to list that property and really believe in this. Exactly. Yeah. If I love the location, if I love the neighborhood, and I, hey, it's just, of course, it's right around the corner, and my favorite brewery's right over here, then when I'm talking to tenants, that enthusiasm comes through. And I think, especially if they don't know about the neighborhood, now they know, right? I'm almost like a tour guide of my neighborhood sometimes. Yeah, oh, absolutely. When I'm telling people about it. That's a big part of touting the different benefits of that specific property. But, all right. Well, let's shift to the beer. During this episode, we enjoyed a zeroes to heaven. This is a West Coast IPA by... Soapropo. Casa Agria. Casa. That means house, so. Look at you. Your fancy Spanish. Chad will be so proud. He would be. No, I would be too. Who's this fellow teacher? What, yeah. Do you like this beer? I did. I'm not usually a West Coast IPA guy. This wasn't super West Coasty. But it wasn't. Yeah. It was really interesting. I feel like a lot of West Coast IPAs are bitter to the max. But this one was clean. Yeah. I had those tiny notes, but it wasn't over the top pithy bitterness. And so, this one was like a balanced West Coast. I mean, super juicy. Not overly sweet, but super juicy. It had some of these other notes going on versus just sort of the harsh bitterness. Yeah. That you can expect oftentimes with West Coast IPAs. But, yeah. Totally agree. Very drinkable. Glad you and I got to enjoy this one here on the show from one of the best breweries on the West Coast. It's a good one. We'll make sure to link to where it is that you can find Chad's book up on the website at HowToMoney.com. That's going to be it, buddy, for this one. Until next time, best friends out. Best friends out. Best friends out. A new podcast from the creators of Up and Vanished. Louisville Police are searching for a missing 24-year-old woman. When I read about Alana Chen's disappearance, I couldn't look away. 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