BiggerPockets Real Estate Podcast

BiggerPockets Podcast 393: Campus Maintenance Man to $10M in Real Estate Owned with Rick Jarman

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Real estate investing… old school!

Rick Jarman (@realestateoldschool on Instagram) joins us today to share some of his hard-won wisdom from 44+ years as a flipper and landlord in Tuscaloosa, Alabama. And it's quite the journey, from cabinet maker and campus maintenance man to cigar-puffing 64-year-old social media influencer!

In this episode you’ll hear tales of up markets, down markets, losing it all, getting it all back… and a tornado that wiped out 20 of Rick’s 100+ rental houses. He also takes us through his rules for tenant screening, explains why he favors 15-year mortgages, and paints a picture of what it’s like to self-manage such a large portfolio of single family homes (with a team, of course).

Give Rick a follow, and if you know someone who’d make a great guest on the BiggerPockets Real Estate Podcast send them over to biggerpockets.com/guest where they can apply to appear on the show.

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast show 393, kicking it old school.

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Rick:
You can’t just say, “Well, I lost my job. I can’t do this. I ain’t going to rent no more.” Where are you going to live? What are you going to do? Now, you might have families move in together, but they’ve got to live somewhere. They’re going to be paying rent to somebody or owning their own house. Another thing I always like to tell people when you’re looking at property, always remember, lies can number, but numbers don’t lie.

Speaker 3:
You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online.

Brandon:
What’s going on. Everyone. It’s Brandon Turner host of the BiggerPockets Podcast here with my cohost, Mr. David Greene. David, good to see you again.

David:
Good to see you too. This was an absolute blast. This is going to go down as I think one of the most fun podcasts we’ve done in a while.

Brandon:
It was, we just got finished recording with a Mr. Rick Jarman. Rick is old school when it comes to real estate. I don’t mean that in a bad way, that’s actually his Instagram handle Real Estate Old School, but he’s been in this game longer than I’ve been alive, significant longer than I’ve been alive, and he’s just a character. He just knows so much, he’s got so many experience, so much knowledge, wisdom, and just funny stories. You guys are going to love this show with Rick from down in Alabama. We’re going to get to that in just a minute. But before we get to Rick, and being a rental property owner and all the fun things that go with that, let’s get to today’s quick tip. You know what David? I’m going to let you take this quick tip, because I didn’t prepare one.

David:
I was so hoping that you would do that right now.

Brandon:
Okay, good.

David:
I've got a good quick tip for our listeners today. Today's quick tip is, when you listen to Rick's story, he's going to share how he built over a hundred units and over $8 million in net worth doing the same boring thing over and over and over. Rick shared that he did not worry about the fears more than what they were warranted. He would actually go out there and look at, is this worst-case scenario something likely to happen or, are all my houses are going to go vacant at the same time. There's a lot of value to get out of, one, not overthinking things when you're afraid. It's okay to be afraid, but ask, is it warranted? Is it based on actual reasonable things that could happen? Two, don't get bored doing the same thing all the time. Success comes from the same repeated, sometimes boring efforts. That's how you get good at something. Don't be afraid to be boring.

Brandon:
Yeah, that’s so good. Hey, you know what? One point we never made during this show, but I’ll make it now and this will make more sense later when you’re listening. But we talk about how like a lot of real estate success is just doing the right things over and over and over until you’re good at it. If you are somebody who gets prone to getting bored, which I know I am, and David, you are as well, what we found is what works really well is find somebody else. Once you master it, find somebody else to do that job for you because then the same boring tactics over and over and over, they’re not boring because you don’t have to do them anymore.
Get somebody else to do them, and then you just make sure that they’re doing them over and over and over. That’s what a job really is. If you really think about it, all jobs are doing the same boring thing over and over and over because somebody else didn’t want to do that anymore, now that’s what you’re doing. It’s time to step up and be the leader eventually and do that. Anyway, there you go. I just put that together right there.

David:
It’s really good, I like that. That’s a good quote. All jobs are what somebody else didn’t want to do and now you’re doing it.

Brandon:
Yes. I think it’s time to jump into this thing, David, you ready? Anything you want to add before we go in?

David:
Yeah, let’s do it.

Brandon:
Okay.

David:
Not at all. This is a great show. Let’s bring Rick in.

Brandon:
Here we go. All right, Rick. Welcome to the show. Good to have you here. It’s been a long time coming.

Rick:
I’m glad to be here. I’ve really been looking forward to it, I sure I have.

Brandon:
Well, awesome. Because one of the reasons I was excited to get you on is because on Instagram, you’re pretty active on Instagram for a… you’re a 41-year-old guy, I think is what you said, and so you have a fantastic Instagram with tons of good advice. It’s Real Estate Old School, is your handle there. Very entertaining, just good solid advice on rental properties and what it really takes to be a successful owner. That’s what we’re going to dive in today. What does it actually take to be a successful real estate investor with rental properties? Before you had a hundred plus houses and all that crazy world we’re going to get to. How did you get into real estate? How did this thing start?

Rick:
Well, quick story on it. Right when I came out of high school, I was working in a cabinet shop, the summer before I graduated high school, I knew work doing construction, building houses and I found what I loved, what I wanted to do and basically that's all I've done. My entire life is in the construction and maintenance and flipping and remodeling and just everything. But, when I was putting my wife through college, I was keeping up rental property for other people. I worked for 10 years in maintenance at the University of Alabama, from 1974 to '84 and was doing my thing on the side.
I got to noticing, working on these people's apartments and houses that, there's something to this. It piqued my interest. I read an article, inundate myself in Reader's Digest, it was called [inaudible 00:05:00]Inflation with Real Estate, and this is late 1980, early 1981. My mother had asked me, she said, "What would you like for Christmas?" Well, I was married, two kids and you know how it is and working the job and side jobs, I said, "Well, there's three books that were listed in this article I read and I would love to get those three books." That's what I did and that was the first books I ever read on real estate. I actually keep them in my bedroom between a couple of bookends where I just look at them every day.

Brandon:
That’s awesome. What were the books?

Rick:
One of them’s name was, it was by William Nickerson and he’s probably the granddaddy of all the real estate folks. I even got to meet him one time. It was, How I Turned $1,000, $5,000 into a Million. Later on, they renamed it to Five Million. One of them was Albert J. Lowery on, How To Become Financially Independent Through Real Estate. The other one was Robert G. Allen, Nothing Down.

Brandon:
Nice.

Rick:
They all came out around 1980, the issues I bought.

Brandon:
Nice. They are classics. Man, that is old school real estate books.

Rick:
[inaudible 00:06:11].

Brandon:
Yeah, that’s awesome.

Rick:
Later on, I got into Mark Harrison. I don’t know if you’ve ever heard of him. I met him actually on a seminar [inaudible 00:06:19]was in early ’90s in Orlando, Florida, he put on. But he was real big for a while. He’d have people like Brian Tracy, and all these guys come. They were all young men.

Brandon:
Yeah. Brian Tracy is not young anymore.

Rick:
No.

Brandon:
Yeah. What happened next? Where’d you go? You decided, okay, I got these three books. I’m going to take some action. What did you do?

Rick:
Yeah. Well, I ended up buying my first rental house in 1981. I was working with a guy that was going through a divorce and he had a house that he was going to sell it to me for $10,000. It was worth about 20 at the time, a two-bedroom, one bath. I didn't have any money, I'm just… like I said, just paying for my wife's schooling and life things. I went to my credit union. I told them about the house and they told me if I could get the money for the repairs and pay for the closing costs, they'd finance it for me.
At that time, just like I said, this was '81, I had a 1979 Ford Ranger XLT truck that was nice sometime, but a good-looking truck. Well, I sold my truck, got an equity out of it. I went and found an old 1969 Plymouth station wagon. The tailgate would fold down like a truck and I knew I could work out of it and got it for $600. It had a loan value of 1200 so I borrowed an extra 600 and got the money to fix the house up. That was my first rental.

Brandon:
That’s awesome. That’s awesome. Here’s what I love about that, I mean, it just shows if you really… it’s that old quote, if you really want to do something, you’ll find a way, if not, you’ll find an excuse. I think Jim Rohn said that, David Greene, not me. If you really want it, you’ll figure out a way. The same thing applies today, I mean, maybe like is there a car you have to sell or is there some other way, you got to sacrifice overtime, you got to work to be able to get that first deal? But, you can’t get wealthy if you don’t get the first deal, like the real estate.

Rick:
How bad do you want it?

Brandon:
How bad do you want it? All right, so what came next?

Rick:
Well, about my second house. I got a hundred percent owner financing and I got broke in early, in this game. My second house, I had a fire and they wanted to total it. I found it… back then you didn’t have all the things you have now, checking credit and all that. They fill out the application, they look good and they got the first month’s rent and deposit. I was so green. I was green as a cucumber man. I didn’t even know to check the past references or whatever.
I rented this lady, and at the time my wife had had some surgery and I’d been working and seeing her at the hospital and got home, got in bed and I get a call from the neighbor next door and this is before cell phones, of course, and she’s telling me, “Mister, if you want to see your house before it burns down, you better get down here fast.” I mean, I’m trying to get awake. I said, “Do what, do what?” Because I had two houses so I wasn’t sure which one, it’s 50/50, which one it could have been. She told me and I come to find out, this guy’s drunk and he’d like to beat on his wife a little bit, and she tried to burn him up.
That's what I heard, I didn't share that with anybody at the time, I just went on, and they wanted to total it. I said, "Well, I think I can fix it." I had a friend of mine who had a contractor license and he put a bid in for me and I did all the work and got it going. I was coming from that working background.

Brandon:
Wow. Okay. You got started with a little bit of a hot beginning, [crosstalk 00:09:55].

Rick:
Well, it actually started out worse than that. Right before I got out of high school, I was engaged to be married. My wife and I have been married 47 years. I had just turned 18, but I’d paid down on a trailer, bought a piece of land, owner financing, 500 down and they financed it. I’d put a septic tank in and a water meter, I’d been working all my life. Anyway, we’re having graduation practice as I guess they still do that, we practice. They were supposed to deliver my trailer. We’re waiting and waiting, it hadn’t gotten there yet, so me and a buddy of mine rode up to the main highway to see where it was, if we could see it.
We saw it all right, it was scattered all up and down the highway, an 18- wheeler had hit it when it was turning and just totaled it. I’m thinking, man, have I still got to pay for this thing? Because I’m just 18, so they told me, “Don’t worry, we’ll have you another one in two weeks.” It was like two months, so we had to spend the first couple of months of marriage living with my parents. My real estate career started off rough.

Brandon:
Man.

David:
I'm curious when you were getting started, a lot of people today assume this is a scary time to get into real estate, but my assumption would be, everyone's always thought this is a scary time to get into real estate. We don't get to talk about it very often, or have as many units as you do and have done it as long, and you've seen the highs and the lows. Can you tell me what your mindset was like back then when you were getting started, as far as your fears, concerns, emotions?

Rick:
Well, I came up real poor. I’ll give you a little history. My dad was World War II veteran. He had a complete mental breakdown when I was three years old and for about nine months to a year, we were homeless. My brother went and lived with one family. My mother now lived with another family or her sister, and so we grew up working, had to work, so everything was one of those days where I couldn’t… everything just looked up. I always had the attitude, my mother raised us, we we’re good as anybody else, everybody puts their pants on one leg at a time and just to work hard, and so I grew up working. The opportunity to me was always to better myself. I like to tell people, that fear, you can take that fear and you can let it cripple you, or you can turn it into a motivator. For me, my fear was, I didn’t want to be poor. My parents were poor, my grandparents were, I wasn’t going to be poor.

David:
What about the fear of losing money?

Rick:
Well, I just didn’t have that, I guess, because when I was working at university before I left, I’d worked for 10 years when I left. I went in business for myself. I’d just turned 29, built my first house. When I acquired about four or five houses, some of the guys said, “What are you going to do if they all get [inaudible 00:12:49]one time?” I mean, it just wasn’t going to happen. I mean-

David:
People were asking that question back then too?

Rick:
Oh, yeah. I mean yeah, what are you going to do? I’m thinking, “Well.”

David:
How often did you get asked about toilets? Was that around for a long time also?

Rick:
Oh, yeah. Oh, yeah.

David:
Yeah. Brandon and I joke about that. Because everybody wants to know about clog toilets, but that’s not really the problem landlords get the most [inaudible 00:13:12].

Rick:
I was doing a live Wednesday night with a friend of mine that lives in California that I’ve met on here, and we got to where we do a live every Wednesday night and right there in the middle of it, I forgot cut my phone off and the phone rings. The way we work, I’m on call one week, my son’s on call then my office manager. We had a main sewer line stuffed up and I said, “You all hold on, man. I got to handle this because they would need some direction from me.” We do self-manage. We manage our stuff also.

Brandon:
Yeah.

David:
Tell me what’s your portfolio at now?

Rick:
We’re at about 118 houses right now. In 2011, Tuscaloosa where I lived, Tuscaloosa, Alabama, had a bad tornado and I lost 26 houses total and a commercial building.

Brandon:
Wow.

Rick:
It took a little while to regroup.

Brandon:
26 houses in a tornado? That’s-\

Rick:
Total.

Brandon:
Wow.

Rick:
I had damaged probably 70 more.

Brandon:
Insurance takes care of that? Or did you lose a lot of money?

Rick:
Yeah. Yeah. Luckily, but it doesn’t happen overnight. It was a total close to three years getting squared away, completely with them. If you think things aren’t going to happen in this business, you’re wrong.

Brandon:
Yeah.

David:
It’s so funny that you say that, I was reminded of a Tony Robbins quote and I’m going to give Tony credit for it, because only one of us on the show can steal quotes and get away with it. I’ve got quite a few houses in escrow, right now in the real estate team, which means every day somebody is unhappy with something. When you do enough volume, you’re going to end up having problems. Tony Robbins was saying, he had to come to grips with the fact that with as many businesses as he has, several hundred employees all around the world, somebody somewhere is unhappy. There’s some fire that has to be put out.
When you’re living a small life, you can really avoid unhappy people or things going wrong. When you want to live a big life where you set big goals, part of that is just accepting, if I have a hundred houses, five to 10 of them at any given time are going to have something going wrong, maybe more, and you can’t let that negative emotion stop you from pushing forward or discourage you from building up to be bigger, whatever you’re doing. Was there a point, Rick, where you had a similar experience that you just had to say, “Hey, stuff goes wrong. You got to work with it?”

Rick:
Well, I guess as you’re growing, it was an everyday thing for me this work, for years I did my own maintenance when I was younger, but you’re growing and your houses and the numbers are growing and when you reach a point, like I have a full-time maintenance man, my son has worked in the business with me for 20 years now. My maintenance man’s been, would be about 14 years. I have a sales lady, who’s been with me for 16, office manager for 10. It’s just gets to be day to day life for you. That was one thing when I first got on Instagram, it helped me. It made me go back and rethink why I did certain things because you just… it gets to be your job and it’s what you do.
Of course, I love it today as much as the day I started. People, they’ll ask things and you think, “First, that’s silly in a way,” but then you realize they have nothing to compare it to. For me, learning all this YouTube stuff and Instagram, going on YouTube and learn, I can see that as people when they’re learning the real estate to know where. I stayed… I remember the first thumbnail I’d made, I stayed up to one o’clock in the morning doing it and I was so proud of myself and I told them, I said, “Now, you all might think that’s funny in one of my videos,” I said, “But I can build you a house from scratch. I can sell it. I’m a real estate broker and I can do all these things, but I didn’t know how to make a thumbnail.”

David:
There’s such a lesson in that when you do something new, how long it takes you to learn a new thing. It speaks to Brandon’s point he makes frequently, where you don’t want to try to build 20 bridges at one time, from one place to another, because when you’re first learning how to make a bridge is where you spend all your time. Once you know how to do it, man, you can fly through things. There’s a quote that Gary Keller said, I believe, where he said, “People…” It’s something along the lines of, because I don’t want to get this wrong and have Brandon jump on me, because I [crosstalk 00:17:13]-

Brandon:
I will.

David:
… a quote from someone, “People get bored with doing what works so they try to make what doesn’t work, work.” There’s something to be said where, if you want to get to this point where you’re at Rick, you’re doing the same thing over and over and over and getting really good at doing that thing. I think you’re a great example for our listeners of, I’d really love to know, how did you avoid the bright, shiny object syndrome, where you thought, “Oh, you know what? I’m going to go buy a hotel. I’m going to go buy a mobile home park. I’m going to go get into apartment investing,” and instead you said, “Nope, I’m going to stick with single family houses and repeat this process.”

Rick:
Well, I did try apartments over the years and different things. I'm in a university town, so me working in university in maintenance in house and what better training? I worked in house in maintenance. I didn't like the students. I mean they could turn an envelope, but it just wasn't my thing. A few years ago I sold all the student rentals I had, but I just found, I've loved houses, I always liked houses and I just found what I loved and I just… it's tempting sometimes, but just like those three books I told you I read, two of those guys went busted. They got away from what they knew, Albert J. Lowery got into spas and stuff and Robert Allen, I don't know what he got into.
We all, sometimes you live… in this business [inaudible 00:18:30], if you’ll go through your financial hard times, I did myself, but it’s just, you find what works. When I had the student rentals, it was so much different than [inaudible 00:18:40], I do a lot of section eight, we’re geared for it, we know it. In fact, Josiah Smelser called me the other day to ask me some questions and I know he was a big reason for me to get on here and I appreciate him and you all, and I just… we specialize in that and that’s what we do.

Brandon:
Yes. This lesson is so important. I’m glad you brought it up originally, David, like that quote from Gary Keller because I know people do, they get bored of what-

David:
What works.

Brandon:
… what works. Like I said, I did this webinar the other day and I talked about how, real estate at its core is pretty boring. You just do the same thing and there’s like 12 steps, you just got to do it. The first time, obviously it’s hard, and the second time you’re learning things and it’s like trying to make a thumbnail, like for YouTube. But pretty soon, as long as you’re consistent with it, you’re going to become a multimillionaire over time. People screw up because they just jump from different things. It’s like, imagine if… I’m going to use an analogy here because I’m now the analogist of the group, David.
If Scottie Pippen and Michael Jordan, I don’t know, did they play together? I think they did. If they played together back in the day, we’re going old school here, and they were shooting free throws. They’re like, “I don’t really like shooting free throws. I’m going to back up 10 more feet and try that shot because that’s more fun. I’m going to try just like this shot, but I’m going to do a trick shots over my head all day long, that’s more fun.” They don’t, they just do thousands and thousands of the same shot and the same play, and they run it 50 times over and over a day to make sure that they’re masters at that play.

David:
Scottie Pippen knew, I need to let Michael Jordan be Michael Jordan. When you start competing with the person, when you want to do what they’re doing, that whole dynasty wouldn’t have been there. He had to be okay with doing what we would call the boring work, which made somebody else better. I mean, I think that’s a really big factor of success that isn’t talked about. When we talk to successful people, if we ask them, what did you not do that made you successful? I bet you, they have a list of stuff, I didn’t make this mistake, I didn’t go do that, I stayed with what I knew.

Brandon:
Yeah.

Rick:
Well, and during the time too I was building homes, I was a home builder and I quit building homes in 2015 because we didn't build, probably about 10 houses since the recession. We were able to pull back and ride it out good because I learned all my lessons in the late '90s. While I was at home building, we remodeled and for the recession, I had a 16-man crew. I like to tell folks it's like it is now the tail wags the dog. You can't get anybody… you wait in line, you get work done, so I wasn't… I'm a very impatient person so I had my own crews. We had two framing crews, vinyl side, and crew trim crew, painting crew. We did all that.
The rental was just continuously growing, as I tell folks, I lived life and did my job. That’s what… I hear all the time some young, I hate to say young people, new people, because my baby will be 39 next month, but the first thing they’ll ask sometime is, well, how many houses did you have to have before you could quit work? Well that wasn’t the goal, I love work. I don’t ever… In fact, David, I talk about you in one of my videos, I sent it to you, but I can tell the story in a minute. But David, I love to work, I hope the day I die that I made a deal happen, if not, at least collected some rent. You know what? I love this business.

Brandon:
Yeah, and it keeps you young, it keeps you moving, it keeps you excited. So many people get older and then they just like, “Well, retirement. I’m going to go play some golf every day.”

Rick:
That’s it. Well, when I turned 60, I had a friend of mine, I asked him, he was like 80 at the time, I said, “Why do you keep doing it?” He says, “Well,” and I knew the answer because I knew what I’d told myself. He says, “Well, I enjoy buying them. I love fixing them up,” and he says, “I like the money.” Now, you know that’s it. I tell people, your mind doesn’t change when you… You hear people say, “Man, I’m going to work and do hard when I hit 40, I’m quitting.” You’re not going to work that hard and be good on what you got and just be willing to walk away from it if you’re a true entrepreneur.

David:
I want to ask you, Rick, how the heck are you getting financing on a hundred houses? Because we get a lot of questions from people that haven’t even bought a house yet and they’re worried about what they are going to do when they get 10. Let’s just get that out of the way so they can go get their first house and not worry about.

Rick:
Okay, well it starts out… I like local banks. When I first started, I used Credit use. Credit use to do up to four or five, but I have several local banks. I have one loan that started out with 56 houses on it. I’ll give you the numbers. I paid 500,000 down on it, they financed a million 550 is paid down now to less than 700,000. A lot of those houses are worth 150 to 170,000. My portfolio of real estate is over 10 million and I probably owe less than two million. Like I said, it was just my side, as I’m working and doing my stuff. I was trying to tell my wife the other day, I said, “Now, you realize in about five years, you’re going to get a $12,000 a month raise,” and it’s just going over her head.
But what I decided I'd do is like I said, right now on that particular loan, there's 46 houses in that one loan, and it's with one local bank. I'm going to refinance this, less than 700,000 started over, I always do 15-year loans, start it over at 15 years and the payment would go from 12,000 a month down to about 5,000 so I get a $7,000 a month plus raise and that's just how… But yeah, it's just different banks, you go to them and as you… if the numbers, you pay your bills on time and keep your property up and you just keep those in roads with the banks. I don't know if that answered your question or not.

Brandon:
No, I think you definitely did. I mean there-

Rick:
I hear people say all the time, you can only have 10 houses with one… no, that’s not so.

Brandon:
Yeah, that’s not true.

Rick:
I mean, this loan I got started out as 56 houses.

Brandon:
Hey, why 15-year mortgages?

Rick:
When I started out, that was how you did it. The banks, that’s about all they’d [inaudible 00:24:45]them over for commercial loan, the banks. Your credit unions, if it was in house loan, which is what that would have been, was a 15-year loan, so I just started out doing them that way and just stuck with it. I’ve got a video where I show the difference in the payments on the 15 and the 30 year. If you’re getting a deal up front and you’re not counting on all that money, just… what you think about it? I mean, how old are you Brandon?

Brandon:
Just turned 35 yesterday.

Rick:
You’re just a baby.

Brandon:
I’m a baby.

Rick:
Okay. If you did a loan today, you’d be 65 when it’s paid for. If you do it on 15 years, look how many more years you’re enjoying the money and it might make a hundred, $200 a month difference, but look at all the interest you save also.

Brandon:
Yeah. Hey David, what do you think on that? I mean, as an agent and also a lender, 15 versus 30, what do you typically do? Why would somebody maybe want to do 30 over 15 or 15 over 30? What do you think?

David:
God, this is such a good question because they both have their merits. I’m looking at getting another house for myself. I’m going to house hack and I’m going over the same question, do I want the better rate at 15 years? Which you do save a lot in interest over the life of loan a hundred percent, but when interest rates are this low, that isn’t quite as impactful as when they’re much higher. I’m sure Rick could tell us stories of what he’s seen interest rates over the years, sub 3% is not very common. I don’t know if we’ve ever had them low like this. Then there’s a part of me that says, well, if I get a chance to get 30 years at 2.8 or 2.9%, then that’s what I’m going to do. We’ve seen… we’ve got a lot of our clients that we’re doing. We can get them there.
One of the things I think about is, what’s your strategy? Brandon, you and I have talked about this, there’s a strategy where you buy a house, put it on a 15 year note, then next year you buy another house you put in on a 15 year note and you do that every year and 15 years later, your first house is paid off. You refinance it, tax-free because you don’t have to pay any taxes on a refi. You live off of that money for the year and then next year, your second house ends up paying itself off, and then you live on that money and you just keep doing that. By the time the last house has been paid down and refied, you’re back to the first refi that you did. You never worked again. You just live off of that. I really like that strategy when it comes to the 15-year notes. But if it was just as pure as, do I want to go 15 or 30? I like the 30 right now because rates are really low. I like the 15 more when rates are higher.

Brandon:
Yeah. The way that I look at it is, if your ultimate goal is to get out of your job as fast as possible and get financial independence, level one like, I can pay my bills, a 15-year mortgage costs more. Like you just said, Rick, a couple hundred dollars a month more maybe. Okay, so maybe if you're all… if you just need money right now and you got to get out of your job, I'd probably go for a 30. When I got started, I was going for a 30. For that same reason, you wouldn't want to buy a house for cash, you wouldn't want to use as much debt as possible. All those reasons make sense if your goal is to just be aggressive and get out of your job. Later on, though, your goals might change, painting out a bunch of houses, sounds like a really awesome thing to me, because my goals change, I want more security, so a 15-year mortgage now sounds a whole lot better and so I can withstand the weight a little bit. Do you agree with that, Rick?

Rick:
Oh yeah. I mean, like David said, usually the rates aren’t like this and so you’re getting a better rate for a 15-year mortgage, and if you found a deal, it all works out. But yeah, like you were talking about David, I can remember because like I said, I’m a real estate broker also and of course I mainly just would sell my stuff over the years, but I had agents who wanted to sell my stuff. I can remember though, back in the ’90s that 11 three quarter fixed was the best we could get people. It was a bond issue and they camped out all night long to get this federal bond issue.

Brandon:
Ain’t that something?

Rick:
But 12% adjustment was the best they could get at that time, and these people camped out to get 11 three quarter fixed, and people were still selling houses, buying houses and making a living.

David:
It’s really important to remember that, that we oftentimes fall victim to recency bias, where we’re looking at everything around us and seeing this is how things are, this is how they’re supposed to be, but it wasn’t always that way. What I really like about your story is, I’m sure along this entire journey, there was never a really good time to buy. There was always something that could have come up that said, you know what? Now’s not the time I should wait. That voice never goes away. But I would say in my lifetime, the best that I ever saw was 2009, 2010.
Looking back, we would all say, “You should have bought everything you can get.” But Rick, you remember that, it wasn’t a lot of people saying, go buy real estate right now. It was back in the hatches, duck and cover, who knows what’s coming, the apocalypse is on the way, don’t buy anything. There’s always a reason that you’re going to have to not buy real estate but like you said in the beginning, that comment you made about inflation that’s so powerful. That’s why you want to build wealth the boring way, just doing boring stuff with real estate, because inflation takes you so far, both in increased rents and increased values.

Rick:
That’s right. In fact, like I always keep referring to my video, but I’ve got on [inaudible 00:29:41]anything you want to talk about. I’ve got one just about recessions. Since I’ve been out of high school, I’ve been through six recessions, counting this one. Now the first one was the gas embargo, right when I came out of high school, it lasts about a year and a half, the recession. You getting gas lines, hoped you had gas go to work. Then the next one, by the next five, I was in business, not for myself full time, probably four of them since I’ve been in business for myself full time.
There's always… but nothing, nothing was like 2008. Now, if you were a home builder, real estate agent, it was tough. I mean, my agent's been with me, like I said, 16 years, she had to go to work part time as a dental assistant. I mean, it was tough. I was fortunate enough to have my rentals live on because like I said, up to the recession, my whole career, I built approximately 500 houses, but since the recession, I probably only built 10. Of course, we were dealing with the tornado right after the recession ended in 2011. But, a lot of people that were in the business had to sell off their stuff.
Like I said, I learned these hard lessons in the late ’90s, so I was able to pull back, do what I needed to do, just live off my rentals. We actually opened up into an antique shop, so my son and his wife would have something to do because he worked with me, because we weren’t building. Because my rentals could take care of me, but that time it couldn’t take care of everybody. I tell people now, since the great recession and it sounds terrible, but a blind person could do this business. I mean, it’s just been going up, up and up. But what happened? You had people to come in, they were able to buy stuff in 2010, ’11 that the people lost during 2008 and ’09.
They weren't geniuses. They were just able to get good deals. See the people that were losing it couldn't borrow money, they were fighting battles and the banks quit loaning. Now me, I had some private money lenders and I was able to increase my net worth by two million, right after the recession because I bought stuff I knew I wouldn't keep, that didn't fit my criteria, but I knew I could sell it when things picked up, it all worked out, but it was tough. I mean, here in my town, there were probably just a handful of us that didn't go out of business that was builders. In fact, 2009, I was president of our local home builder's association, worst time you could be president.
I mean, when we were having our awards banquet, I told them, “Look around the room, we have about 300 something builders and associates at that time, or 400, there wasn’t a banker one in there, except one and he was the secretary of the association or the bookkeeper, whatever they call. The bankers, they were scared to come. It was terrible. People don’t know how bad it was. What we’re going through now is so different. It’s bad to have stuff, but banking wise, there’s so many things that are… the banks are [inaudible 00:32:42], the government’s happen, you didn’t have none of that in 2008, it was just… they just shut the doors and banks were in damage control.

Brandon:
What do you say to people right now who are listening to this show going, “Oh, you know the recession might be coming again. I’m freaked out. The economy is in limbo right now. I don’t know what’s going to happen. I just want to sit out. Should I sit out?” What do you say to those people right now that are just worried about the economy?

Rick:
I have a philosophy I tell people, I say, “People are going to either rent or buy or live under the bridge. Only so many can live under that bridge.” Just because the market gets bad and people can’t sell or buy, they got to live somewhere. Real estate never goes out of style. That demand for housing has always been there, it’s always going to be, you can’t just say, “Well, I lost my job. I can’t do this. I ain’t going to rent no more.” Where are you going to live? What you going to do? Now, you might have families move in together, but they’ve got to live somewhere. They’re going to be paying rent to somebody or owning their own house. Another thing I always like to tell people when you’re looking at property, always remember lies can number, but numbers don’t lie. Two things right there to get you-

Brandon:
That’s a good thought.

Rick:
You just got to keep going. I mean, you can’t… there’s opportunity in every situation, just like there’s going to be opportunities after this one.

David:
What do you think about advice for helping people find the right tenants?

Rick:
I’m old school, of course, so I don’t pay any attention to the Beacon score or the FICO score that I hear people talk about. I’m hooked up with one of the credit bureaus. We do the credit checks right there in our office, but you can still get what I call old school credit report where all you do, it shows basically the same thing, but it doesn’t even talk about your score, like a Beacon score. You can look and you can see, “Okay. Are they paying the water bill, the power bill, the gas bill?” I don’t care if my tenants have medical bill, a lot of people don’t have insurance. If they have student loans or not paying, that doesn’t bother me.
I check the past two landlords, you always want check two of them because the one there now maybe want to get rid of them and say they are a good tenant. If they do that and they pay the utilities and sometimes I don’t even care if they own a cell phone, because sometimes I hate paying mine. You know what I mean? If they’re doing those things more likely, they going to pay you. I hear people got, “I don’t take anybody with a Beacon score or I mean, whatever, the FICA score under 700,” whatever. I’m thinking, “You’ve cut your own [inaudible 00:35:19].” But there’s good people out there that don’t have high scores but pay the bills.

Brandon:
Yeah.

David:
How about you, Brandon? What have you noticed, as far as just advice you can give to people that are looking to scale and they want to make sure when they’re self-managing?

Brandon:
Like how to find tenants, you mean, or just in general?

David:
How to avoid the wrong tenant.

Brandon:
Here’s what I’d do, and I’m curious Rick, do you agree with this? Basically, I look at real estate like a funnel. Everything’s a funnel in my life. No, but basically if I’m having trouble finding a good tenant, whether I’m just not getting any apply, I look at the problem, did I either not do a good enough job advertising? Did I get it out there? If people don’t know about your listing, they’re not going to call. Then if I’m still having problems, that means, is my unit up to snuff? Is it better than the average? Or is it about like the average? I look at that.
I look at, am I charging the right rent? Am I at or below? Or at least somewhere around where it should be. If not, I’m going to fix one of those things. I have never, ever, ever, ever had a problem finding a tenant ever in my entire career. I’ve never had a problem. I’ve never had a vacancy more than a month or two, and I’ve only been doing this for 14 years versus Rick, you’ve been doing this a lot longer, but I don’t have problems with that because people always need to rent, doesn’t matter the market, they always need to rent. I just need to make sure that I’m better than other people in quality or in price or in advertising and marketing. One of those three things.
Then additionally, I am really big on defining my criteria ahead of time. What makes a good tenant? What doesn’t make a good tenant? I don’t want somebody who’s murdered somebody. I want somebody who has a job. I want that job to be at least for six months, I have these criteria. Then I do the same thing Rick does, we check the last two landlords. We’re going to make sure they’ve paid their rent on time, like they don’t have any horror stories. Then I put my criteria out there, I get a lot of marketing and I’ve never had an issue getting tenants.

Rick:
I’ll tell you something else we do, because we do manage our stuff and everything I have is right here in Tuscaloosa in Northport. I tell people, I like to use contractors that do the work they sell. But when you’re interviewing a contractor, just look over at his truck too. If he takes pride and all those things, he’s going to take pride in his work. They come driving up, no raggedy truck gets out with the… first of all, be sure they have license, insurance and workman’s comp. If he doesn’t have all those things or she, and they give you a bid, it may be cheaper, but what makes you think you are going to get them back? Because that’s something I hear all the time. People say my contractor screwed me. No, you screwed yourself. I’ve been a contractor since the ’70s, it’s hard to compete with the truth against the lockers. A lot of them will lie, but you’ve got to pick them and check them out. I got off the subject there, I apologize.

David:
No. I think that’s a great point though.

Brandon:
The contractor didn’t screw you over, you… every time I’ve been screwed over by contractor, every single solitary time, it was my fault. It’s always my fault with the contractor.

Rick:
I know.

Brandon:
It’s something I did wrong, [crosstalk 00:38:04], I didn’t check something. Yup. Yup, you didn’t check something, you didn’t check their license, bond insurance, you didn’t set up the payment schedule right, you didn’t manage them correctly. Yeah, people need to stop the blame game and just admit that they didn’t do something right.

Rick:
I will say this. If it’s okay for me talking.

Brandon:
Please.

Rick:
People asking, what are you all doing different during the pandemic? I had been looking probably six months ago or longer, about getting where people could go online and fill out and fill everything and do all this stuff, because we don’t have all that. We use the QuickBooks Pro, that’s our property management stuff we do through there. I told them, the only thing we’re doing differently is, we were [inaudible 00:38:43]touch and stuff, didn’t spread it. I said, we was leaving the front door open, all they had to do is walk in and pay the money, and if I had… they didn’t want to come to the office, I’d go collect the money but, I was going to get my money.

Brandon:
Got to get the money.

David:
We just put someone under contract last night in San Jose, and he was asking me like, “Hey, do you think that we’re going to have some trouble renting in the neighborhood?” It’s like, “Well, one thing you could do is, you can put a little ad on Craigslist or Facebook marketplace and see how many people apply for it.” In the 12 hours from the time he put it up until the next time we talked, he said I had to turn it off. I had 52 notifications and people were saying, “Can I please give you a deposit right now?”
It’s just one of those things where the fear in your head was so loud that this person was like, “I don’t know if I want to buy this house.” What if, that what if was very, very loud and so he didn’t want to take action. Then that one little piece of advice went from, “I don’t know if I should do this,” to, “Oh my God, we got to get this deal today. Don’t let me lose it. I’m going to get like a third more rent than I was even budgeting for.” I’ve just seen this happen so many times where we let those fears that are unfounded, be louder than the facts that would say you should go and do it. We can all listen to Rick talk about, he’s been doing this since what? Was it ’81, Rick? Is that when you got the first one?

Rick:
Well, I bought my first house to flip in 1976, my wife and I, I was 21. We sold the mobile home, we bought the house, we fixed it up, lived in while we fixed it up, sold it, turned around, I had a first mortgage and a second mortgage. Second mortgage was almost as high as the first. From a man, I sold it because I didn’t have any money. I mean, it was a hundred percent finance, but it was through mortgages. We did the labor ourselves. We sold it, turn around, I went back to the man. I said, “Would you be willing to do it again?” He said, “You paid me the first time, sure.” I did it.
But all three of these houses… by the third house, we’d went from a little of two-bedroom, one bath that was built right after World War II to a practically brand new three-bedroom, two bath brick house, one acre land. From 700 square feet to about 2000. We did all that in two years, fixed them up, moving in. By the third house, I had paid off the second mortgage of each time, I’d sell it. By the third one, I paid the second mortgage off and had about $8,000 leftover, and I said, “There might be something to this.” But I had assumed a seven and a half percent VA loan on the third one, assumed FHA loans on the first [inaudible 00:41:11].
People don't realize in the old days, back in the day, all it took to qualify to assume an FHA loan or VA loan was two things. You had to have $4 to $5 for a transfer fee. You could have no credit and that is a hundred percent of [inaudible 00:41:27], but you had to have $4 to $5 for a transfer fee or for hail to Mary under your nose, you were breathing. Those were the two qualifications.

Brandon:
Let’s bring those back. We need those days back.

Rick:
Yeah. I’m telling you, man, it was good days. Well, even before the recession, you could still borrow. You could buy a piece of property, you borrow enough money to fix it up, get it at a hundred percent. I mean, of course all that changed after 2008.

David:
Part of that is what led to the recession, because we were just handing out money to anybody that could find a mirror, right?

Rick:
Even earlier. I mean, we used to build houses, you’d go to bank, borrow enough to build a house, buy the land, pay the interest and you can call your bank and say, “Look, I’m fixing to start a house.” “We’ll, just come by and sign the papers when you get time.” It’s not like that no more for sure.

David:
I see that you’ve moved 31 times. Were these properties that you bought with owner financing moved in, improved it and then moved out?

Rick:
It was a little bit of everything. Like I was just telling you, I had the mobile home and three houses. Then when I started building in ’84, what I would do, I’d take trades and I’d move in to trade and sell the new house. See, I’ve been where I’m at now for almost six years, and I lived in the house before that one, 17. Basically, you take all them years out of the picture since 1984, that’s a lot of moving. My kids, my wife was a school teacher, so we could keep them in the same school zone. They’d leave to go into school, they come home at 8:00 and we’d be moved, when she pick them up, man, we got good at it. It’s just, you did what you had to do.
I mean, you start out with no money and you… because you’re trying to buy a rental property, you’re trying to borrow money to build, and you’re trying to borrow money to buy lots, so you got to keep hustling. But it’s worked out pretty good. I don’t mean it as a brag, but I tell folks where I live now, there’s doctors and lawyers and we got a football coach. Coach Saban lives three houses up from me, the coach of University of Alabama. I tell my wife, I said, well, like I said, “There’s doctors and lawyers who are living here and a football coach and now they’ve got a red neck.”

Brandon:
Yeah, because they had to let you in.

Rick:
I said, “We may not be the only one to start out in a mobile home, but I know I’m the only one who ever worked on the garbage truck,” because that’s what I did when I was 16 years old [inaudible 00:43:47]at Northport.

David:
I love these stories. Brandon’s got a similar one. He used to sleep on a couch, all seven foot, six of them hanging over the top.

Brandon:
That’s right.

David:
While he rented out the rooms that actually had beds to other people. Do you see this pattern all the time? The people that are willing to do what others are not end up getting to live that life that other people can’t.

Rick:
I just don’t understand when people aren’t willing to do what it takes. When you come up poor, you’ve got wants and things and you’re just willing to do what you got to do. But I can tell you another little story. We used to move a lot, like I said and I had been in one house for about three years and we had moved and I’m on the phone, back when your cell phones were plugged into your car and on like a phone and I’m on the phone, I pull up in the driveway and I’m talking with somebody and all of a sudden, I said, “I don’t live here no more.” I had rented my old house. I mean, I just had moved and I’d forgotten that we’re just… that wrapped up what was going on, we moved so much.

David:
I can’t say I don’t do that all the time. Just the other day I went on to a listing appointment and completely forgot the two folders I was supposed to bring. I had to go back. Shout out there to all the assistants out there who keep guys like us on the rails.

Brandon:
Hey, Rick, what do you think the biggest mistakes are landlords make or property managers?

Rick:
I think not keeping your property up is a big one, because you won’t stay competitive in the market. You need to keep your property up. Getting… just not appreciating the tenants. Your tenant, you don’t have a business without them. I have tenants that have been with me… I’ve got one tenant, I bought the house 17 years ago and she was in it when I bought it. I asked her that day, I said, “How long you lived here?” She said 21 years.

Brandon:
Wow.

Rick:
But I’ve got tenants have been [inaudible 00:45:34]12, 13, 14. In fact, a man came and paid his rent for his mom the other day. I didn’t know his mama, I said, “Now, who are you?” He’s like, “19,” and he had moved in my house when he was seven and of course I don’t have all the contact every day. I still approve every application but I don’t do the… Now, somebody comes in and there’s nobody at the counter, I definitely take the money but if my office manager leaves, I say, “Put it on [inaudible 00:45:59].”
Now, my number is not out there anywhere, David, I just don’t talk. I just, I’m at that point in life. I get people on Instagram that say, “I can help you grow your business.” I say, “I don’t want to grow it.” I go back and tell them I still buy stuff. Sometimes I’ll tell my son, I say, “We’re not buying any more rentals,” and it won’t be a day I say, “Son, come on, I got a house we’re going to go look at.”

David:
Yeah, that’s exactly right. Even when you don’t need them, when you got the knowledge and you like it and you get that hit and you know you’re good at what you do, you’re going to provide housing, I mean, you’re obviously doing a good job if people are the staying there for 19 years. It’s hard not to keep doing it. I love that point you made, if you’re not going to retire at 40 because what it takes to get to where you can retire at 40, you’ve invested so much. At minimum, you’re just going to go do it in another way, whatever is rewarding to you.

Rick:
Well, the way I look at it, I went in business for myself full-time, 1984, I had just turned 29 years old, one month, I just had turned 29. Basically, as far as I’m concerned, I’ve been doing what I want to do ever since then. Doesn’t mean it’s always been easy and whatever, but I had to punch a clock for somebody else for like 10 years and my son, he’s fortunate he’s never had to do that. He’s been in this business. He was raised in it and he’s been in it full-time since he graduated high school in 2000.

Brandon:
Rick, where do you find deals at today? Where are you finding?

Rick:
I find a lot of deals on MLS Deal because so many times and David, I'm sure you agree with this, so many real estate agents, I tell anybody, "I think it's good to get your real estate license if you want to do this business full-time and buy rental property, but you can never start thinking like a real estate sales person, you've got to always keep thinking like a investor." A lot of times there's deals out there, they don't have a deal across the front of a big sign because you got to know your market and know what you're looking for, but the agents are thinking sale and lot of them they just want to make that sale and you've got to constant always think about it as being an investor. I get a lot of them through there and off market too.

David:
That’s your reticular activating system. To the person with the hammer, everything’s a nail. The agents have trained their brain to see listing or buyer opportunity and even if it is staring them in the face, they miss it and that goes for a lot of things in life. When you get used to looking at just one goal that you have… yeah, that’s a really good point, I like that, that even if you’re an investor, you become an agent, you got to keep reminding yourself you’re still looking for deals for both yourself and clients.

Rick:
When I got licensed, that’s why I did it. I thought it’d help me find more deals. I sold part time for a year. I actually quit two jobs in one day when I went full-time. I’d been at the university 10 years and I had been selling real estate part time a year and doing my side work also. To this day I only sleep six hours a night. I mean, I was like four hours, six hours. You get used to it. You can do it but I come in and tell my wife one day, I’m fixed on doing this business full-time so I’m going to build me a house. I’d never built a house for me and then we had two babies and she’s always been supportive. She’s never been involved in my business, but she’s always been real supportive and that meant a lot.

David:
Yeah. That’s cool, man.

Brandon:
All right. Before we move on to the next segment of the show, I’m curious, what do you need in your business right now? What could help you out? What could our listeners, what kind of value could they bring you? Is there anything specifically you’re looking for?

Rick:
I just want them to go and follow me on Instagram. I retired from building, like I said, 2015 I turned 60 and that has helped me because it’s hard to pull back, you want to keep… David, you asked earlier about the fears and don’t take this wrong, but I came up so poor and things were so hard, I got married at 18, we were married seven years before we had children because I wanted to get a house. We were doing that. Put my wife through college, put my daughter through college. Luckily, my son’s like me, he just wanted to get his carpenter certificate and come… I was always kind of fearless. You know what I mean? I didn’t have that.
My fear was not the fear of the unknown of the business, like I said earlier, my fear was the fear of failure. When I was young, I’m a pretty big guy but when I was young, I come out of high school, I was six feet tall, 249 pounds and construction and all I did. People say, “What are you scared of?” I ain’t scared of nothing but in reality, I was scared of failure. I could talk about that now, but back then I couldn’t. That was my go-to thing, I did not want to be a failure and I became fearless because I didn’t want to be poor. I don’t mean that in any way bad, I’m just sharing.
But the thing with Instagram’s hit me before I got on there, I had nobody to share anything with but my son. When I got to do it on that and people… and it’s an ego thing too, people like you and they like what you’re doing and I just want that to grow. I just enjoy it. I tell them I don’t do a lot of the DM stuff and all that. I’m kind of like David, you can only get back to so many people, but I try to share it through my videos and I tell them it’s not one time and that I’m not trying to sell anything, I just want to help people.
But I will tell you this, David, I bought your book because I’m all the time telling folk because I believe in that BRRR method that even when I didn’t know what it was called. That’s been the hardest thing for me to learn and all these abbreviations. I bought your book the other day because I’ve been recommended and I’m always telling people to go to BiggerPockets, but to give you a good example, I mean, I literally I’ve had to learn this stuff because I say, “What does that mean?”
I had a guy that… usually what I try to do when somebody starts following me, I always try to say, thank you for the follow. Well, a lot of times, I guess they think it’s automated or something. One guy come back and he said… because he asked me something, I answered and he said, “Well, I just didn’t know. I thought you was a bot,” and I’m thinking, “[inaudible 00:52:11], buddy, I don’t know what you’re talking about,” and he said robot. I mean, I’m old school, but all this stuff has actually been the hardest part, like I said.

David:
But it didn’t stop you from taking action. I think that’s what’s so cool about your story, Rick, is you have a mentality like, “What do I have to lose?” Because of that, you’re successful and I really wanted to highlight it for the people that feel like they have something to lose. Sometimes the fear of, “I can’t take action because what if I lose,” stops you from what you could go get and because you said, “I was poor, I had nothing to lose, I just went and did it,” well, now look at where you got? $10 million real estate with $2 million of debt. I don’t think there’s anybody here who would be mad about being in that kind of a position. It’s a really good lesson for everyone.

Rick:
Well, yeah. Thank you. I tell you something that is kind of the answer to what you said. Where we’re talking about what the people say to you like, “What if they all get vacant and all that?” My answer to people, when I was leaving my job, like I said, I’d been there 10 years. I was vested. I took the money out though because I knew I could do more with it in real estate but they would say, “What are you going to do if you fail?” Well, here’s been my philosophy, you get a house, you get a job and you get a car, you get the same thing everybody else has got. I’ve had my failures, but you just got to… you either pull the cover over your head or you get up and lace your boot up and get at it.

Brandon:
Well, that’s [crosstalk 00:53:31]. With that, let’s head over to the next segment of the show, our deal deep dive. All right, Rick, you’ve got a hundred and some properties there of houses now, but we want to dive into one particular deal that you’ve done and ask you a series of questions about them. We’re going to fire a bunch of questions at you. Number one, what… by the way, do you have a property in mind? Something we can dig into?

Rick:
Yeah. It’s a flip. When we quit building, we try to flip about 12 houses a year because I still have the office and if it doesn’t generate enough money through the sale for real estate with my agent and I still have my son’s salary, my office manager, my maintenance man, so if we don’t generate enough money, it comes out of my rental and I don’t like that.

Brandon:
Yeah. I don’t like that either.

Rick:
I got to flip a deal.

Brandon:
I love it. What kind of property is it? What kind of property type is [crosstalk 00:54:30]?

Rick:
It’s a single-family, which is what I do. You want me to tell you how I got it?

Brandon:
Yeah-

David:
We’ll ask it.

Rick:
Okay.

David:
The next question is going to be, how did you find that deal?

Rick:
Okay. Yeah. I’m glad you asked that. This is a good story. I’ve got this private money lender I’ve been doing business with for 20 years. Now, he loves to go to state sales, I love to go to state sales and I’ve got a video about this telling people basically a way to find houses. Something’s going on when there’s a state sale, somebody is dying or going to a nursing home, whatever. He called me and said, “Man, I was at a state sale and they are going to sell the house.” I said, “Well, see what they’d take for [inaudible 00:55:07],” and so he negotiates the sale. He buys it for 90,000.
He’s going to be the private money lender plus basically wholesaled it to me. That’s another word I didn’t know before I got on here, it was the sign of the contract. He closed on and we turned around right after he closed, he sold me for 95, but here’s the thing, he says, “I’ll finance the house. I’ll loan you 30,000 to fix it up with,” and the way he does it, you got two years make it happen. I said, “That’s the deal.” I bought it for 95,000. I put 32,000 in the house. Now you want me to go in and tell everything about it or?

Brandon:
Yeah, so we got… how did you find it? How much was it? Negotiation, we talk a little about that so-

Rick:
Okay, I bought for 95,000, he loaned me extra 30 to fix it up with so I’m in it for no cash. I ended up spending 32,000 with some closing costs from whatever. Quick as I got the house finished, like three days, I mean, really two days, by the time we got the sign up, we had multiple offers of course. I sold it for 189,000. I paid a 5% sales commission, which 2% come back to my company because I owned the house in a separate company. Jarman Realty & Construction made 2% and the other company made three. The commission was $9,500. I paid $4,700 worth of closing. When it’s all said and done, I mean, it took about 60 days. We got to check at the end we’d netted $48,705.

Brandon:
Wow.

Rick:
[crosstalk 00:56:47]house.

David:
That is not a bad flip.

Rick:
That was a good deal. It ain’t always like that but it was a good one.

Brandon:
To wrap up the deep dive, what lessons can you pull out of this deal that’ll help listeners? What can you teach about this that applies?

Rick:
I think it’s good to have a private money lender just lined up, if you’re out doing business in case you don’t have the cash or whatever, because you got to act fast. It’s just like my house here where I live. For 13 years we had a condo at the beach, me and two other guys at Gulf Shores, Alabama on the beach and we did rent it, every third week was your week. Anyway, I never spent a full week down there in 13 years. I tell you, I like to work. Few days, I’m ready to come home. David, I tell you, you got to watch that video where I talk about you Dave. But anyway-

Brandon:
I want to see this video.

Rick:
I said that David Greene reminds me of me, he likes to work. He likes to get it. But anyway, I’m at the beach and this house where I live, they’d been marking it down. The people had already moved and anyway, long story short, I tell my wife, “If I can get X amount of dollars, I’m going to buy it.” We call them and tell them to look, we want it and made dollar for it anyway and I’m out of town and the guy that’s from a private money lender, I called him and said, “Would you ride by and look at this? Would you do this deal?” He calls me back and he says, “Look, if you don’t want it, I’ll give you 50,000 over what you’re looking at right now so you can act on it fast.” But when you’ve got to go in and wait on all the banks and everything, you’re going to miss the deal. Line you up some outside financing.

Brandon:
I love that tip Rick but I want to expand on a little bit here with you and ask you, how does somebody… you have that mentality of just, it’s a good deal, I’m just going to go for it. You don’t seem to be stuck in analysis paralysis very long, but a lot of our listeners are. How do you get over just… does that just come with years and years of doing this or is that another mental thing to get over? Trying to be perfect.

Rick:
I’ve never had it because like I said, I come from the working background. Back when I first started, you didn’t have home inspectors and whatever. I mean, with my very first house that my wife and I bought at 21, we’re not in it two weeks, central heat and air goes out, we’re sleeping in the [inaudible 00:59:06]porch in Alabama and 102 green heat at night but it was a good deal. I knew I could make money on it so I saved up enough money while I’m doing… I put new central heat there and we still made money.
I think you've got to… I tell people in my videos, if you're looking at a foreclosure, you want to make your offer neat and clean, cut out as many… have an inspection, but don't make all these contingencies, this repair, that repair. A lot of times I get a deal because all I tell you is, "Give me a deed and the title insurance," and I'll take care of everything else. I tell them, "I close in seven days." We'll, you know if you're about a foreclosure, you can't hardly even get an answer in seven days but it gives them that… you got to make… is that least path of resistance whatever you're doing.

David:
That’s important because you’re looking at it from the seller’s perspective and you’re saying, “How easy can I make this for them to just say, ‘Okay, fine. You can take it.'” The minute you jump in and start saying, “Well, I want this and I want that and I want this too,” the natural human response is for them to go do the same thing back. “Okay, well, then I want more money and I want this and I want that,” and now you get yourself into a complicated mess. It usually is, it’s coming from the place of fear, what if there’s some rot on the house? What if one of the pieces of wood is bad? When those get out of hand, you can easily create a situation for yourself that’s not in your best interest as opposed to, “I’m getting a great deal. There’s a ton of meat on the bone. Let me make this easy for the seller so that I can close and not make them want to make it more difficult for me too.”

Rick:
Exactly. That’s what I mean. You said it well. Well, if you live in the South, every house [inaudible 01:00:46]had termites so you can’t be scared of that. I mean, they don’t just come and stay there and eat the whole house and fall in, they come and they go. You just got to keep… the more you learn about construction, houses and the big thing is financing, I don’t care what it is, this business is based on financing. The more you learn about financing, whether you’re a real estate agent, a flipper or buying rental property, you’ve got to learn financing.

Brandon:
That’s why I use that analogy all the time of, if you have a tool belt and you have a lot of tools in that tool belt, you can take on a lot of projects but if all you have is one tool, you can’t do a whole lot. Build up that mental toolbox of these are the different financing options I have, here’s how hard money works. Here’s nine hard money lenders in my area that I built relationships with. Having those options gives you so many more options on what you can do with real estate. Yeah, if you’re somebody listening to this right now and you don’t have any money whatsoever, it doesn’t… go and make those… fill your toolbox right now, you don’t need money to fill your toolbox. Start building relationships or getting an idea of who does what, how you can put things together, meeting people. Yeah, that’s how [crosstalk 01:01:51]-

David:
I bet your neighbor, Nick Saban, would agree with that, Rick. He’d tell you, “I got different tools I can use in different situations.” That’s why he’s a good coach.

Rick:
Well, let me tell you this so, and I’ve lived here almost six years, I see him coming and going. His wife has been down here to talk to my wife. I tell folks, “He doesn’t run down here and ask me who to play and I don’t run up there and ask him about real estate.” I will tell you this, when I bought my house, I was remodeling it and everybody, when they found out I lived… he’s two houses up, they said, “Do you ever see him?” I said, “Yeah. He came down here the day. He was talking. I said, ‘Look, I don’t have time to talk. I got to work.'” They said, “Really?” I said, “No, because this isn’t Alabama. This is a football town right here now.”

David:
Yeah, because of people.

Rick:
But I like seeing him win as my property values, keep winning because I’m not [crosstalk 01:02:40]all that.

David:
They’re going to work that into BiggerPockets insights, who’s expected to be the top college football team and how that helps property values. Everyone’s looking at the high school draft class to figure where they should go invest next.

Brandon:
There you go.

Rick:
That’s why I tell them I don’t care if Alabama wins the state championship, Alabama is good for Alabama because I’m into music like you, Brandon. I was a musician all them years. I played six nights a week my senior year in high school, [inaudible 01:03:04]. I was in my wife’s brothers band. That’s how I met her.

Brandon:
That’s awesome. What’d you play?

Rick:
I play guitar, but I went to bluegrass in 1974 and all I did is Cusco. Since then, I play the dobro resophonic guitar.

Brandon:
That’s awesome. We need more videos of that on your Instagram. That’s what I think we need.

Rick:
Okay.

Brandon:
Before we get there, before people go check out your Instagram, I think it’s time to slowly wrap this show up by heading to our-

Speaker 5:
Famous four.

Brandon:
All right, but before we get to the famous four, let’s hear something else you should be listening to as soon as this episode ends.

Philippe:
Hey guys, it’s Philippe from the Real Estate Ricky Show. Last week we had Ruben on the show, who’s got a full-time job, five rental properties and has figured out how to automate all of it. He also talks about how he took over someone’s loan that was in pre foreclosure, got them money, made himself equity and is now living in the property and is using his rental income to buy his forever home. What a great show. Make sure you go back and listen.

Brandon:
All right. Make sure you check out that episode and now it’s time for our famous four.

David:
Famous four.

Brandon:
I did it twice. Did I? Do you like it? Guest, Mr. Rick Jarman, are you ready for the famous four? Can you handle this?

Rick:
I think so. I hope so.

Brandon:
All right. Number one. Current favorite real estate related book.

Rick:
Current favorite real estate related book. It’d probably be the BRRR Method, even though I haven’t read it yet.

Brandon:
You recommended it enough.

David:
The reviews alone where it definitely make you call it your favorite book without reading.

Rick:
Yeah. Well, I hadn’t read a lot. Like I said, last year, something I’ve been working on some YouTube and Instagram, learning all this stuff. In fact, somebody asked me what’s my favorite, I got to look at one of my books was, Robert Kiyosaki and Donald Trump wrote a book together and I got to look at… that was 13 years ago. I read a lot, but I just don’t read a lot of real estate, but it would probably be the BRRR Method. I haven’t read it yet but I know it’s going to be good.

Brandon:
That’s how you know you wrote a good book.

Rick:
That’s right.

David:
Well, that’s because it has a good title. Brandon came up with the title so that is to tell you guys [inaudible 01:05:13]marketing.

Rick:
Brandon, I’m going to buy your books too now, buddy.

Brandon:
Oh, you better. You better.

David:
[crosstalk 01:05:17]. You’ve got to buy one of his coffee mugs, get one of those squawk like a bird.

Brandon:
Squawk like a bird.

David:
There you go. The profits go to the Hawaii [inaudible 01:05:25]Society, is that right Brandon?

Brandon:
That is true. They do a BiggerPockets that comes slush shirt. It should be slush mug, but it’s slush shirt and you can buy yourself a shirt or a mug with Stuart, the bird on it. Anyway-

David:
All right. There’s a very funny video on Brandon’s Instagram of him trying to make a video and Stuart flying in the middle of it, coming home and just like hanging all over his shirt. I was laughing out loud. Doesn’t LOL mean laugh out loud?

Brandon:
It does but you never knew, we never knew.

David:
Now they’ve got to say L-L-O-L, like literally laughing out loud because we just put LOL for nothing.

Rick:
Don’t get me going on in abbreviations.

David:
All right. Do you have a favorite business book, Rick?

Rick:
You know I do. this is when… like I told you, I went through some hard times in the late ’90s. I went from being able to borrow millions of dollars to where I couldn’t get a $1999 pager finance. It was tough. I read a book, it’s by Trammell Crow, Master Builder.

David:
Master Builder.

Rick:
I don’t know if you’re familiar like, with the Lincoln properties and Trammell Crow properties and all these things. In fact, I recommended this book on the first podcast I was ever on. The guy went and said, “Man, that book’s $80,” because it come a lot, but it’s like a textbook almost. But what he does, he had all these different partners that none of them were related. He was like a spider in the center and there’s a spider way up. Like maybe, I’m doing something with Brandon, I’m doing something with David and they have nothing to do with each other.
I started that because I had accountants and lawyers and even private people knew I knew how to make money and what to do, so I do business with them, we set up companies and that’s how I came back. Because I could take my money I was making and buy rentals and half of something is better than nothing. They would put up the money, I’d be the talent. It reached a point a couple of them said, “Man, you don’t need us no more. I guess we’re not going to do business.” “No man, you were there when I needed you. I’ll keep doing.”
In fact, one of my buddies, who's an appraiser, he and I had been doing stuff together since 1987, I built his office, I did a video about it and stuff, but today the only partners I have are my son and my accountant, who's also my nephew. He and I own four houses together. Working with partners, I did a couple videos how I did that and it's good. That book helped me lay out some ground work.

Brandon:
Very cool. I have not heard of that one.

David:
We know you love to work, which is awesome because I do too. When you love working, it doesn’t feel like work, but what about hobbies other than playing bluegrass guitar and hanging out with Nick Saban and teaching him about football?

Rick:
Well, I tell you, I did a video, which I’m always telling… I told folks that says, I don’t… people ask me what I do for fun, well, I do, I play music. I don’t hunt and fish at all, but I do hunt them George Washington, so that’s… that’s like the only hunting I do. I don’t know what to tell you, but I love to do family things. I love to travel. Of course, I told my wife, I said, “Hey, we’re in a position. We’re ready to really start traveling.” Because, that was one reasons we sold our condo is well, we could travel and it was like three years ago. Then you got grandkids always doing stuff. We couldn’t get down there because of grandkids because I’ve got four grandkids, 15, 10, 5 and less than two years old. I wanted to travel and now we’re in a pandemic-

Brandon:
Yeah, you can’t travel.

Rick:
… and all we can do is just, stuck here at the house. But hunting George Washington, that’s a good hobby.

Brandon:
That is a hobby. All right, number four. Rick, what do you think sets apart successful real estate investors from all those who fail or they never get started or they just give up.

Rick:
No quit mentality.

Brandon:
[crosstalk 01:09:14].

Rick:
You just can’t quit. You just don’t give up. It’s like those saying, you might lose the battle, but you got to win the war.

Brandon:
Yeah. [crosstalk 01:09:23].

David:
Yeah, because as long as you’re learning from your losses, then they’re not really losses, you’re getting one step closer to winning.

Rick:
I will tell you this, Kevin, sent that little list of stuff to fill up. Here’s how old school I am, my office manager was going out of town and our scanner was messed up. She’s gone on vacation and he sent me the list. I’m thinking, “I’m just going to have to hand write it, and I had my wife to write,” because I tell folks, “I can’t spell, but I can add like hell.” I had her to write it out for me and I took pictures of it and sent it to Kevin. But one of the examples or something I was afraid you all was going to ask this, where do you see your career in 10 years? I’m thinking, “Well, I’ll be 75 years old. I don’t know where I’ll be. Hope I’m doing what I’m doing now.”

David:
All right. Well, last question of the day. People want to know more. Where’s your preferred place for them to find out more about you?

Rick:
Instagram, Real Estate Old School, just come and follow me. I try to throw out a video, like I said, four or five, five, six a week. I don’t do any mentoring, I just try to share it through my videos.

David:
There you go. [crosstalk 01:10:32]stuff.

Rick:
I don’t want nothing from anybody, just to come follow. I ain’t trying… I tell folks now, when I write my book, I’m going to try to sell it. Now, I’ll be like you, big time [inaudible 01:10:41].

Brandon:
Rick, if you write a book, I will buy your book and I will tell everyone else to buy it.

David:
Absolutely.

Brandon:
It’s actually my favorite real estate book guys, Rick’s new book is actually my favorite book of all time. I haven’t read it yet-

David:
I haven’t read it yet but I can tell you right now, it’s my favorite book.

Brandon:
… I just know, it’s my favorite realtor… Every time from now, if somebody asks me what my favorite book is? I’m going to say Rick’s new book.

David:
Rick, you need to give us the name pretty soon. Is it going to be called Real Estate Old School?

Rick:
Yeah, I think so. I think so.

Brandon:
There we go. Now, you have to buy one.

Rick:
[crosstalk 01:11:10]maybe after you buy your first piece of property or something. I want it to be really… prepare you for it.

Brandon:
I love it.

David:
Right up.

Brandon:
Do it man. Well, with that said, we’re going to get out of here. By the way, Rick, and for anybody else who cares, I once wrote a… or I did a podcast for another, no, for a guest podcast for somebody else on how to write a book in a hundred days, we’ll put a link to it in the show notes at biggerpockets.com/show393. If you want to learn my tips for writing a book, anybody listening who wants to write a book, you can learn how it’s worked well for me.

David:
I came to Brandon, when I was going to write my first book, Long Distance Real Estate Investing and you gave me incredibly good advice. It was very, very helpful.

Brandon:
Well, thank you.

Rick:
Well, that letter I sent, the first one or the second one, it got lost when I was filling out all that, I told him, I said, “Now, Brandon I’ve got an idea for a book, man. I’d like to talk with you.”

Brandon:
There you go. Now, I’m going to send you a podcast and you’re going to go listen to it. Now I know what a podcast is.

David:
Like I can turn anything into an analogy, Brandon can turn anything into a book. Brandon, I mean, I’m still waiting for you to get into the competitive eating space and blow Joey Chestnut away on how fast you can eat and then write a book on how to eat fast, the fastest eater in the world.

Rick:
Well, I want to say this, guys, this for me, it’s been like being on the Jimmy Fallon show or whatever, because there’s… I’m still a goal setter and like I told you all, the reason I’m doing what I’m doing, the BiggerPockets is and thank you for making my goal come true of being able to be on here. I really enjoyed it. I tell you this, I recommend you all to everybody all the time.

Brandon:
That’s awesome, man. Thank you

David:
Well, thank you. It was great [crosstalk 01:12:45].

Rick:
It was great. I’ve enjoyed it.

Brandon:
All right, thanks dude. All right. That was our show with Rick Jarman. I guess David, you want to take us out?

David:
Yeah. This was a great time guys. Make sure you go check out Rick’s Instagram page, Real Estate Old School. Here is BeardyBrandon. You can watch Stuart, the love bird climbing all over him and I am DavidGreene24. Also, if somebody can find that video Rick’s talking about, tag me in it so I can watch it. Apparently, he’s got a video to me, which is very cool. You’re the first person… Rick, you’re the closest thing I got to a groupie out there, man. Don’t ever change. I need guys like you in my life. This is David Greene for Brandon “Best Book I Never Read” Turner, signing off.

Speaker 3:
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In This Episode We Cover:

  • How Rick went from maintenance guy to owning 100+ properties
  • Selling his truck to buy his first rental in 1981
  • Investing lessons learned through 4 recessions
  • Why his rentals saved him when his home building business failed in the late ’90s
  • Losing 20+ houses in a tornado in 2011
  • Rick’s tenant screening process
  • Why tenants’ credit scores don’t tell the whole story
  • Wrapping 40+ houses into one loan
  • Why some investors “get bored with what works
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Connect with Rick:

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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    Oscar Torres
    Replied 8 days ago
    Great video and thank you for the upload wondering where is the link Brandon Turner mentioned about writing books. I was looking for the link and would love to dig into it. Thanks again!
    Gerald Pitts Rental Property Investor from Nashville, TN
    Replied 3 days ago
    Oscar, I was looking for it too. Found it: https://100mba.net/mba562/#:~:text=Brandon%20Turner%20is%20the%20VP,Awesome%20Book%20in%20100%20Days%E2%80%9D.
    Jim K. Handyman from Pittsburgh, PA
    Replied 7 days ago
    This was the most relevant real estate podcast for my own business that Bigger Pockets has put out in a long time. I wish there were more podcasts with investors like this, but there really aren't that many like Rick Jarman, I suppose.
    Bud Ramkissoon Real Estate Agent from New York City, New York
    Replied 7 days ago
    Awesome advise thanks 👍