BiggerPockets Real Estate Podcast

BiggerPockets Podcast 398: 22 BRRRR Properties in Under 10 Hours Per Week with Tarl Yarber

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When Tarl Yarber last appeared on the show (#189), we got a behind-the-scenes look at his monster house flipping business.

He was doing a lot of volume, but here’s the catch: he was stressed out and unhappy. Plus… with zero rentals to his name, he had to keep spinning the hamster wheel – “feeding the machine” – to make any money.

Today’s show is about a big mindset shift, and the systems and teams Tarl put in place to create a business that truly serves him, rather than the way around… and allows he and his wife to travel 200 days a year while working on his business rather than in it.

We cover a lot of topics here, from high-level success principles to the specific real estate investing actions you can take – today – to adopt a more intentional and focused approach to building longterm wealth.

Lastly – Tarl’s an exceptional networker, and the guys discuss the importance of meeting up with other rockstar investors even if the pandemic is preventing you from doing it in person.

So… how do you do that?

Well, Tarl’s hosting a virtual conference September 18-19, and he’s offering a 50% discount to BiggerPockets Pro members (check your email). This isn’t a series of webinars, either… You’ll be able to actually meet up with other attendees through online breakout groups, so it solves for the biggest challenge most investors are facing right now.

Follow this link to http://virtualwealthexpobp.com/ to snag your ticket today!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast, show number 398.

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Tarl:
The key right now is most people build their business and then take their life and try to get their life to fit their business, whatever they have left over. Instead, why don’t the people do it the other way around where they figure out what kind of life do they actually want to live and then design their business to fit that lifestyle?

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Brandon:
What’s going on, everyone? It’s Brandon Turner, host of the BiggerPockets Podcast, here with my co-host, Mr. David Green. David, welcome to the show, man. How are you doing?

David:
Thank you very much, Brandon. I’m actually doing amazing. We finally got a little bit of relief from all the smoke that was in the air. Thank you very much to all the first responders that are out there working very hard to keep these California wildfires under control. I actually got to go for a run today. It’s awesome. Haven’t been able to do that in a long time.

Brandon:
The other day, David texted me and he says, “I really wish I could go for a run today, but the fires and the smoke, it’s really bad out there.” And I said, “Is that what Jocko would say?” I made you feel a little bad. And then didn’t you go running or was that just a lie?

David:
I did go running, I just held my breath the whole time to try to be somewhat safe.

Brandon:
Okay, good. I’m glad I could guilt you into dying a few years earlier. Let’s get into today’s show. Today we’re bringing on one of our besties friends in the entire world and he’s actually here in the introduction with us. Tarl Yarber. Tarl, what’s up, man? How are you doing?

Tarl:
What’s up? How’s it going, Brandon? How’s it going, David? I’m so happy to be your best friend, you said it publicly.

Brandon:
I said bestie, that’s a little different. That’s like a weaker version of best friend. It’s what you say when you’re all at the bar and it’s like, “Hey, we’re besties,” and you’re really not. But no-

Tarl:
I say that to all my best friends.

David:
It’s not an appraisal, it’s a BPO basically.

Brandon:
Tarl, you are our best friend. Tarl has been doing a ton of amazing videos over on the BiggerPockets YouTube channel.

David:
Yes he has.

Brandon:
Yeah, they’re really good, and they’re actually getting a lot more views than mine. So people, I need you to step up on my videos because I just feel a little sad sometimes when Tarl kicks my butt on pretty much everything in life.

David:
You guys notice, if you’re watching this on YouTube, Brandon wore the shirt that has the shortest sleeves possible to show off his biceps, in a clearly scandalous effort to get more views online. And I wanted to point that out.

Brandon:
Clearly, I'm going to do some videos today in this. I might even roll the sleeves up a little bit more like the [inaudible 00:02:33], handsome shirt today. But before we get into today's show with Tarl, talking about all sorts of stuff, everything from BRRRR investing, I think I want to talk about today. I want to talk about how you travel like 200 days a year. I know you and your wife work together all the time. You just have an incredible life, and I want to talk about your crazy ropes course because you haven't invited me over yet to do that, and all that. But before we do that, I want to get to today's quick tip-

David:
Quick tip.

Brandon:
Today’s quick tip is brought to you by Tarl. Tarl, what’s your real estate quick tip today? Go.

Tarl:
Okay. I didn’t know I was doing that, but I guess… All right. In my business, in my personal experience, the number one key to my success has always been networking with others. That’s how we found the best money, that’s how we found the best deals, that’s how we find the best contractors, we learn the most, we meet people like you, Brandon, and other people like you, David. Unfortunately right now with what’s been going on in the world, it’s really, really hard to network because one of the best ways to do it is face to face.
Our business, we also run an events business, and we run a conference every single year, and we asked ourselves, how do we run a conference virtually but yet still solve the networking part for most people because most virtual conferences is like a webinar, right?

Brandon:
Yeah.

Tarl:
And that’s all it is, and nobody wants to sit for three days at a webinar. So we asked ourselves that question and we were able to solve that. With the help of BiggerPockets, because BiggerPockets is working with us on this event, we came up with virtualwealthexpobp.com. So everybody go to virtualwealthexpobp.com. It is not just 40 sessions, because it is, of some of the most amazing speakers ever like Brandon Turner, David Green, all your BP friends out there, but we were able to solve the networking component.
You as an attendee can actually network with other people virtually, not in person, but face to face via cameras. You could set up your own virtual sessions. You can go to your own networking sessions. You can network with whoever you want. You can set up your camera sessions. You can go to Zoom rooms through our community. It’s really intense and really, really awesome with exhibitors and everything as well. And you could check it out. Go to virtualwealthexpobp.com and hopefully that will solve your networking issues and sometimes you can meet the best people in your entire lives at events like these that will help take your business to the next level.

Brandon:
Look at that quick tip. That was awesome. By the way, so this event is because BiggerPockets was going to do BP-Con this year, BP-Con, and now it’s not happening because New Orleans shut down and they won’t let us come in. So this is our replacement for the year, which is cool that you are doing this, because Tarl and I were just talking. We were like, “Well, BP couldn’t do the one in New Orleans and you were already doing the virtual one, why don’t we just do this one with you guys? So anyway, super thankful for you on that.

Tarl:
I forgot to mention too. This is September 18th, 19th coming up really, really, really fast. If you guys want to network and you want to meet and do 40 plus sessions on all of the real estate topics out there, and you are a BiggerPockets Pro member, you’ll get 50% off the ticket price. Now, BiggerPockets, if you are a pro member, is going to email you guys and send you instructions if you’re a pro member, how to get that 50% off. Don’t email my company. BiggerPockets will let you know right away in the next few days, if you didn’t already get the email notification, September 18, 19. Typically, tickets are $149 right now, and the price will go up on the evening of September 10th to 175. So get your tickets before prices go up or get your discount if you’re a pro member.

Brandon:
Awesome, man. Well, thank you very much. That was a good quick tip. Now I think it’s time to get into the show because, Tarl, you were on the show a long time ago and things have changed in your life. I know that because you and I are buddies and you were out here for the Maui Mastermind we did a year and a half ago now. I learned a lot about your business and what you’ve gone through. Today’s story is the hero’s journey with Tarl Yarber. Tarl, who are you? How’d you get into real estate? For those who didn’t listen to your last episode, which was episode what?

Tarl:
189. So it’s probably the number one BiggerPockets Podcast ever. It’s my favorite, personally, so 189. It’s the only one I’ve listened to.

Brandon:
All right. Good. Good.

Tarl:
I heard the other ones are good too, I’m sure. But just so you know, but 189. That was actually back in August 2016. My wife and I actually just got back from our honeymoon. We’d just got married then. We’ll get into that a little bit, but basically, if you want to hear the whole story, go there. But how I got started in real estate is I read Rich Dad, Poor Dad when I was 17.

Brandon:
How cliché.

Tarl:
I know right? Everybody reads Rich Dad, but I read it when I was 17, and I knew I wanted to get rich. I was super broke as a kid, so I mean our family all that kind of stuff. And so, I was always attracted to that. When I was 20, 2005, I’m 35 now, almost 36, when I was 20, I went to, it was called the Real Estate Wealth Expo. It was in 2005 in LA. There was 40,000 people there. Donald Trump was a keynote speaker then. He did real estate back then. Robert Kiyosaki was a keynote, which is why I went because I was obsessed with Robert Kiyosaki. But it was a massive sellathon.
I knew nothing about wholesaling and single-family fix and flip. I didn't know any of that stuff. All I knew was what Rich Dad, Poor Dad said in the book. But I went there just to listen to Robert Kiyosaki. The short of it is that I end up buying the seminar. I bought a seminar not on real estate, I bought a seminar on personal development on an American Express charge card that I had no money on and I could not pay. It was a $2,000 seminar. Sorry, $1,500 seminar. And I had no money.
I was a broke college student. I was going to school full time, all that stuff. I had to figure out 30 days, because it was a charge card, it wasn't a credit card. I had 30 days to get 1,500 bucks, and I didn't have any money. That was more money than I've ever had in my entire life. I saw a different breakout session called How To Turn $10 Into $10,000 in 30 days or less. And I'm like, "Oh, shit, I've got 30 days. I'm going to go see what that is." And it was on wholesaling real estate, assigning contracts. It was how to basically tie up a property with 10 bucks as earnest money. And then within 30 days assign it for 10 grand. I'm in. It was 900 bucks, and I buy that on the same charge card, and I got $2,500, which, today, seminars are 25 grand, right?

Brandon:
Yeah. Yeah. I don’t think after that [inaudible 00:08:26]deal for that.

Tarl:
It didn’t matter. It’s all perspective. It didn’t matter if it was 25 grand or 250,000. $2,500 to me was the same thing, right?

Brandon:
Yeah.

Tarl:
I went crazy. I did everything those things said to do. And the only reason why I got into real estate was to pay for the personal development seminar. It didn’t take 30 days to make 10 grand, took me six months. And at the end of that six months, I did three transactions, the third one was a $100,000 assignment fee. By the way, it was a 60/40 split. I got 60, another guy got 40 on it. I was 21 at this time. How long does it take for a 21 year old to blow through 60 grand when they’ve been broke their entire lives?

Brandon:
Not long.

Tarl:
Three months.

Brandon:
Right. There you go.

Tarl:
I had such inferiority issues, I wanted people to think I was rich. So I bought a BMW, I bought suits. Actually, believe it or not, I had an alligator shoe, I actually had that. It was just on the toe part of it. I looked like I was successful and I wanted people to think that. I paid off all my debt, but that’s the only good thing I did with that money. And then I never did a real estate transaction again until 2011.

Brandon:
Wow. Wow.

Tarl:
Got completely out of it. I hated every minute of it. So yeah. That’s the origin story.

Brandon:
All right. All right. So then, bring us up to when you were on the podcast last time. What had you done up to that point? Where were you at in your life? What was life for Tarl like then?

Tarl:
In 2016, so August, I was in the thick of our real business. If you know me, especially back then, I was known for flipping. That's what I've been known for for a long time. By then, we had done about 500 fix and flips, from between 2012 and 2016. I'd just got married. I was working 60 plus hours a week, probably, at least that if not more sometimes. Any time, my team and I had 20 active real estate construction projects going on at any time for flips, single-family flips, and we had only three team members. It was me and two other people, Nate and Serena who were still with us today. And I had a revolving door on a project manager, so we can never find a good one.
And then, my wife did not work full time with us. She was working her own full-time job. When we met, she had her passion and her career in a tech business and she was very, very good at it. I was like, “So cool.” I already had my real estate business and we just lived our life that way. But we didn’t see each other that much. We were passing ships at night. We loved being with each other as much as possible. It was the only thing we wanted but we weren’t doing that. We’d just got back from our honeymoon, so we just spent two weeks with each other all the time. It was the greatest thing.
Had our cell phones off, everything. Our team couldn't get ahold of us. It was chaos when we came back. Although, no, that's not true. They did an amazing… When we came back. I had no rentals at all. So 500 flips, guys. No rentals.

Brandon:
No rentals.

Tarl:
Zero. That’s an important lesson that we’re going to talk about on this podcast, for sure. And also, I was not happy. I had no idea why I wasn’t happy though. I was not satisfied and I had no direction in our business at all. My entire business plan was, “Go get more houses,” and that was it. I had no reason why we were doing it either. We were just doing it to make money and that was it. That was me in 2016 August when I was on the podcast. I sounded really good on the podcast too, but looking back, I’m like, “Man, I was not a happy person back then.”

Brandon:
This is interesting because a lot of people are listening to the show right now and they’re at the spot before that you… They want to have that level where they’ve done 500 flips. They want to be making a massive income, or they want to quit their job to be able to do it full time. And you’re saying that you were doing that and you weren’t happy. Why do you think that was? What was causing the discontentment?

Tarl:
I don’t like real estate, so I’m just going to throw that out there.

Brandon:
Okay.

Tarl:
I didn't like it then and I don't like it now. But one of the things that… On a side note, which we can get into some of this maybe later, but I had a business coach back then tell me the reason why I'm good at our business, why I was able to do as much as we did with so few people, and why I was able to scale and build systems out and everything was, because I didn't like real estate, I would find out reasons to get other people to do things and reasons for me not to do it and build our systems around it.
That’s a side note. I was not passionate about anything in it, I just wanted the money. But I didn’t know why I was doing it, I just knew I was doing it for money, and I thought I had to keep becoming successful. I never suffered from comparing to other people. That was not something I did. I didn’t care about that. It was, for whatever reason, this belief inside me, in order to be successful and not be broke, I need to make lots of money. Because I had this inner working in my head back then of like, “Don’t be broke. Don’t be like we were when we were kids. You have to make lots of money in order to do that.” It was a driving force with no direction other than that. That was it, just make money. And I felt that if I didn’t stop, then I would be broke.

David:
I love that you share that. I think that’s so awesome that you’re letting other people… Because I know there’s someone listening or several someones, who if they ask themselves, why are you listening to this podcast? It’s not that they love real estate, it’s that they’re unhappy and they believe this is the pill that will get them out of being unhappy. And real estate can build you wealth, it can do a lot of stuff for you, but it can’t make you happy. Nothing can make you happy.
I know those of us that are honest, most of the time, we’ll recognize that human nature tends to work like a pendulum that swings from one direction to the other. You go from a scarcity mindset, we don’t have enough, I’m not enough, to alligator shoes at 21 years old and BMWs. And then, it’s very easy to say, “Oh my God, that was terrible. Now I have to swing all the way back and hate capitalism and make my own soap,” and then go back the other way again. Whereas most of the time-

Tarl:
The life journey that you’re talking about?

David:
No, not me. Not you. But I’ve seen this happen many times before, where you’re going to be happier when the pendulum rests in the middle and you can look at everything reasonably, and logically, objectively, and ask yourself, “Do I even want this? Is this what I want?” It’s very hard to see things that clearly when that pendulum is swinging so far. Can you share a little bit about what happened that got you into that point where you had that clarity that you could recognize, “This isn’t actually working for me”?

Tarl:
Good question. Actually, yeah, I’m so happy about where we are now. But the truth is most people that are at that point where they start building a business and they start going, and the three of us know people like this where they just start digging themselves into a hole and they don’t realize it. So they just keep going, they’re building, they’re growing, they’re getting more overhead, they’re hiring more people, they’re doing more deals, it sounds sexy, it’s awesome, they’ve got a company, they’ve got an office, they get all the stuff in but they can’t stop, and they have to keep going because they’ve got to feed the machine.
When you do that too, it eliminates the chance also sometimes for some of them to have perspective and clarity and do any introspection, because they have to keep moving 100 miles an hour or else the machine catches up to them. I’ve seen a lot of house flippers go through that, a lot of wholesalers that do tons of deals, big marketing companies but they’ve got big overhead and they’ve got to keep going to feed that lifestyle.
Luckily, at the end of 2017, we had a bigger team then, bigger overhead. We were [inaudible 00:15:19]then. We were doing bigger deals, but we had a whole bunch of stuff all at once fall apart. I hired one employee who’s one of our project managers who’d been with me at that time almost a year. And we found out he was stealing from us, so we let him go. Prior to that, we were letting him go for another reason. But that was like a kick in the gut because we felt like he was a family friend.
We had some big projects of ours fail on us all at once. We lost $86,000 on one single family home in Portland. This is the first property I ever lost money on, which some people lose money at five grand. I was like, “Why did I have to lose money, 86, on one? We had a lot of little things that came apart all in this perfect storm. And even though we did more deals, more production in 2017 than we did in 2016, I made the same amount of money on both years, personally, me.
My company made more money, but we had more overhead, more stress, more hours into it, and at the end of the day, I personally had the same reward doing less work in 2016, if that makes sense. So it was a wake up call for me to go like, “Something’s broken here, and I don’t like this, and why do we keep doing this?” Because the thought of repeating another year of this sucks. Luckily, you guys just had Thach Nguyen who is on you guys’ podcast recently. He’s a really good friend of ours.
He had a little thing that he was doing and I went to it, to go hang out with him. It was that perfect crystal moment. I could have probably heard somebody say this 100 other times, read it in a book, and ignored it completely, and I probably did. But he said it at that moment. He said, “The key right now is most people build their business and then take their life and try to get their life to fit their business, whatever they have left over. Instead, why don’t the people do it the other way around, where they figure out, what kind of life do they actually want to live, and then design their business to fit that lifestyle?”
I’m like, “What? You can do that? Why aren’t we doing that?” It was that perfect… It was like, “Aha. My wife and I need to sit down for a second to figure out, what do we want our lives to look like? Because we never took the time to do that. If I didn’t have those failures at the end of 2017 and I actually got what we really wanted on our business plan, I wouldn’t have had time to even think about that stuff. We would have just been growing and going. I would have still hated it more. So that was the aha moment.
At that point, me and my wife sit down for three Saturdays in a row with white butcher paper out and we started mapping out what do we want our actual life to look like just next year. Let’s just start with 2018. What do we want 2018 to look like? Because I’ve had a struggle with thinking long term for a really long time, because I was like, “I can’t even think past six months or a month at times,” and stuff. So we worked on 2018 and we said, “What do we want to do most? What would make us most happy?”
The number one thing was us being together, and that was it. We were one of those weird couples that actually like being together. We wanted to spend every day together if we could, but she worked a W2 job and I worked our business. And like, “Why are we doing that? If that’s the best thing that we want in our lives, why aren’t we spending time together?” So that was one of the things. And we wanted to travel. We wanted to be more mobile in our lives. We wanted to be able to give back to charities and be able to raise money. We wanted to be able to run…
We do a conference every year right now. It’s a virtual one, but we love doing that for networking purposes. We wanted to do a certain amount of production, we wanted to start building wealth because we had no passive income. Actually, by 2017, we had three rentals I think, but that’s it. We were like, “We love passive income. Why aren’t we getting that?” And so, we started mapping out these things, of we wanted our life to be like together and then we go, “Okay, what’s stopping us from doing this?”
I think the biggest thing that stops most of us is those goals, those dreams, what our ideal life was, are a lot smaller than what the average definition of success is. Because it wasn’t making multiple millions a year, and building these big ass companies, and driving Rolls Royces, or any of that kind of stuff. It was make enough money to go travel as much as we want. Right?

Brandon:
Yeah.

Tarl:
So why do you got to wait till you get 10 million in the bank or 100 million in properties or whatever, that kind of stuff? Our friend, Jay Martin, Brandon, look him up, guys. He’s a great guy. That guy travels the world, that’s all he does. He sold everything he has and just travels the world and does real estate. But he doesn’t care, he just travels the world. That’s it. So why not do that?

Brandon:
Yeah, because that’s success to him.

Tarl:
Yeah, that’s his success.

Brandon:
It’s not the world’s idea of success or Hollywood’s idea of success, whatever. I think sometimes we just end up doing this… We get on this train because that’s what we’re supposed to do versus sitting back and asking like, “What do you want?” Because that’s a hard question. Okay. I’m going to go real… What’s the phrase here? I’m going to set my man card on the table for a second, slide it away from me. But do you remember The Notebook, the movie, The Notebook?

Tarl:
No. Never seen it.

Brandon:
Have you seen that? Okay.

Tarl:
I’m joking. I have seen it.

Brandon:
Okay. Okay. If you have a wife, you’ve probably seen it. There’s that scene where… I think the character’s name is Noah. What’s the handsome actor’s name? I can’t remember his name.

David:
Ryan Gosling.

Brandon:
Ryan Gosling. Yeah, of course. Yeah.

Tarl:
It’s the poster behind you [crosstalk 00:20:21].

Brandon:
Anyway, I just remember the scene where he’s screaming at this lady in the rain. I think it’s raining because it’s romantic. He’s like, “What do you want?” And she’s like, “I don’t know.” He’s like, “What do you want?” I feel like there’s this point in our life were somebody needs to shake you to be like, “Well, what do you want?” My performance coach, actually, Jason, asks me that all the time. Like, “What do you want?” And I’m like, “I don’t know.” It sounds stupid because… But when you really start thinking about what do you want, it’s such an important question because then we can discern… You heard the analogy before, to piggyback on what you said about the rocks in the jar. Have you heard that?

Tarl:
Yeah.

Brandon:
Yeah. For those who haven’t heard it, if you had a jar and you put a bunch of large rocks in it, you could fit like two or three of the big rocks in it, and then it feels full. But then you could take a bunch of smaller rocks and dump those and you fill a whole bunch more. Then you could take a bunch of little pebbles and fill those, and it feels full at every point. Then you can put sand in there. The question I have then is like you said with Thach, are the big rocks your life or is it your business?
Because you can put your life in the jar first, like, “This is the non negotiables. This is what I want. I want to travel more. I want to wake up with my kids and make them pancakes every morning. I want to have a bunch of children. I want to do this, whatever the thing is you want to do. And then you can fit in the business around that. But if you fill your jar with business first or the whatever, “I’m going to do a million flips. I’m going to make a million dollars,” then your sacrifice, you have to do a bunch of little rocks to try to fit in around that.

Tarl:
But I want to add on to that though. That’s okay if that’s what you want. So that’s the thing that I think that-

Brandon:
If that’s what you want. Yeah.

Tarl:
If that’s what you want. Forget what everybody else wants, in that sense. What do you want in your life, to live? Your happiness is most important to you, so why not figure that out? Now, the good thing is that typically you’re bringing other people along with you because they also want to be happy with you and it might be in alignment with hopefully your spouse and kids and all that stuff too. But truth is, it’s still your life to live. So what is it that you want?
If you want to build a big ass business and that makes you happy, then go for it. If you want to watch TV all day and do absolutely nothing, and you’re not upsetting the rest of the world, then do that too, if that makes you happy. But that’s my belief though.

David:
You know what? I've thought about what you guys are saying. It's really big when it comes to financial freedom. People will describe the same principle. Don't spend all your money and then ask yourself, "What do I have left to save?" Carve out how much you want to set aside to save to plan for your retirement, or your future, to invest, and then make your budget fit what you have left.
I've thought about how so many people, they get stuck before they get started trying to figure out, what kind of investing should I do? Should I flip? Should I buy a single family? Should I buy multi-families? Should I buy in high appreciation areas or should I buy in high cashflow areas? You can't answer that question until you know what you want because the strategy that you pick should fit the lifestyle that you want.
If you’re someone who just wants to make five grand a month and be done, and just travel, that’s a completely different strategy than if you’re someone who says, “I want to be in Beverly Hills and have this kind of a lifestyle.” And that’s why this is such good advice because it almost doesn’t matter what the thing that you’re trying to figure out is. You’ve got to find out what you want. We know exercise is good, but are you going to lift weights? Are you going to go run? Are you going to go swim? What kind of a body do you want? What kind of fitness do you want? This is a great thing to force everyone to think about, no matter what it is that they care about in the world.

Tarl:
I think one strategy to add to that is sometimes it’s easier to think about what we don’t want first, just to eliminate all that, and then do the opposite. To think about with real estate. Okay. You just said that, David. I love that you said that. If your goal’s $5,000 a month or whatever, then you know what you don’t want to do. There’s a lot of things in real estate you shouldn’t do then. So just get those off the table and just remove them.
If you don’t want to be full time in the business working 40, 60 hours a week, whatever, then there’s a lot of stuff in real estate you don’t have to do. If you just want to make extra income for your retirement, then that also changes what you don’t do and that will maybe help out. What are you not willing to do too in the business as well? That’s what we started doing when we started shifting our ideal business system, because we were able to travel all over the world, do everything remotely from our phone, have our teams do what they needed to do, be able to work through this.
But that all came from mapping out specifically what we won’t do. And so we won’t do these things, which means other people have to do it or we have to eliminate it. Also it’s the same thing with buying strategy. We got really, really good at figuring out what we won’t buy, because we’d spend so much time analyzing deals. Well, if you’re spending so much time analyzing deals because every deal looks like a great opportunity, and you’re looking for reasons to buy it, well, if it’s out of your buy box and your specific buy box, why are you even looking at it? It’s a no, get it off the table. So that eliminated time dramatically because we just didn’t look at certain deals anymore, so we would stop wasting our time.

Brandon:
This is something I think every newbie needs to take… Everybody, but especially if you’re a new investor, this especially I think applies to you. Because in the beginning, it all looks good. There’s just like you’re at a buffet and there’s just good food everywhere and you just want to fill your plate with everything. But one thing we talk a lot about at BP, and I know, Tarl, you talk about this as well and you did this, is really getting your criteria nailed down, like, “What do we do and what don’t we do?”
For example, the multi-family book that I’m writing with Brian Murray right now that’ll be out like a year from now, but I talk about the crystal clear criteria. It’s like, what property types do you want to do? Well, what strategy begins with that, but then what property type? What location? Where are you going to invest? Where aren’t you going to invest? What condition do you want to buy in? What makes it a good deal? What profitability? What are you going to say go or no go on?
This takes away a lot of the emotion and the, “I’m at a buffet looking at everything here.” And you’re like, “No, I only eat things that are green, and I only eat things that are vegetables.” Okay, well, now that’s a whole lot easier to know exactly. And then you could become so good at that thing, which allows you to work less. Agreed?

Tarl:
Agreed. And then when you get good at that, then you can add on, right?

Brandon:
Yes.

Tarl:
Yeah. Master one then add on or something like that. I think that’s the phrase. And then you could start adapting from that and changing from that. Maybe then one day you’ll do multi-family, but you may want to start with single-family, all that stuff. So who knows?

Brandon:
What did you change? What do you do and what don’t you do when you started making those changes in your life?

Tarl:
To make this relatable too, because we were at a different place. We’d already done a lot of business. We’d already experienced a lot of the things. We’d already gone through a lot of pitfalls, a lot of challenges, a lot of negativity, and a lot of rewards too. But ultimately, what it came down to was we had to shift… First thing we had to do is shift our belief. One was that high income is not always good. Trust me, I grew up super broke, so I’m not that guy that’s saying, “I know what it’s like not to make high income.” I really truly do and we don’t need to go into all the stories. But-

Brandon:
Every rich influencers are like, “Everyone thinks too much about money.” I’m like, “Yeah, just because you don’t remember it was like not to have it. But I agree with what you’re saying because I’m the same way. I remember being broke. It sucked.

Tarl:
It’s all I thought about. I didn’t want to go back to that ever again. But I had to build up that mentality of like, “Okay, we need to shift from mentally not being broke, and shift to like, ‘How do we build wealth in our life?'” If we’re going to build wealth, we can’t keep flipping or we can’t keep having it be the only thing we do is flip. We need to start keeping some of these properties. Let’s change that. How do we now develop our strategies to be able to keep some of these houses and start building up a portfolio, but also not make it to where we’re dependent on overhead of having a lot of staff?
Here’s a key. A lot of people want to scale their businesses up, but scalability is both directions, and I think people miss that part. If your business is only scalable up, but it’s also not scalable down, then it’s not a scalable business. It needs to be going both ways. Especially right now, when COVID hit, for people that were locked in with huge overheads and huge issues, and they couldn’t get out of all that, they weren’t scalable to scale back down. So we wanted our business to be scalable.
We figured out ways to be like, "Okay, how can we get more people on 1099? How can we leverage software more to be able to help us out versus physical people more? How can we eliminate the projects that require us to have a lot more hand-holding and a lot less… And then be there?" Also, another thing, we were… Just on as simple fact. We went from always hiring general contractors to the point to where we were subbing every single… As the general contractor, including buying materials.
Well, it’s really hard to systemize that and travel the world when you’re getting phone calls to buy nails from Home Depot. We had to give up some things. We gave up saving money on construction costs on certain things to make our business simpler. I’m like, “Okay, well, we can get this house done for 50 grand if we’ve still got all these things. But if we hired a GC for these other items, then we’ll get it done for 58 grand instead. So is it okay for me to lose eight grand on this deal to literally have no time into it myself when it comes to construction at that point? Yes. It’s worth that sacrifice. So we started having to go through these motions to go, what will we give up in order to have more freedom?
I was willing to give up profit share to some of my team, which meant that when we did more properties, I made less money. But when we did less, I made more money because I didn’t have to pay out salaries, if that make sense. We started going on down that direction so we can be scalable up and down. Also we gave rewards to our team to where they want to have some sort of ownership, so that way they can feel like they’re not collecting a check, where they actually want to see the business grow and they could take more ownership, which means less ownership from us, which means less work for us to do.
Each one of these steps started getting more and more refined. It’s hard to go into it too much on the podcast with saying like, “Let’s start with BRRRRs. How did we get more BRRRRs? And go through a step-by-step process to how we’d accumulate as many doors as we have right now.

Brandon:
That’s what you did though, right? You got having the BRRRR?

Tarl:
Yes. We started focusing more on wealth versus income. Wealth would allow us to have long-term free time. We stopped thinking about the short term, which is like, “How do we get a million a year? How do we make a bunch of money this year? How do we flip a bunch of houses?” And we started thinking long term. How do we get to $10,000 a month in passive income? How do we get to $15,000 a month, passive income? How do we start building up our assets so that we can leverage them for cheaper financing, so we could stop paying 10% or 12% to hard money lenders or private lenders?
We started thinking like grown-up investors for the first time in our lives. We just did a 1031 about a year ago, our first 1031. And it was the first time I felt like a real investor. I’m just throwing that out there as a side note. But how can we start treating this like a business where we’re building up our portfolio so we could have long-term wealth in our lives and sacrifice the short-term income that was coming into it. Then we had to start something, we were like, “Okay, where are we going to travel? What are we going to do? What happens if something goes wrong?” We started finding different software tools to help us leverage our team and leverage our time, so we don’t have to physically be at these projects as we buy them, but still be able to buy them whether we’re there or not, and still have the transaction still happen and still have the projects go on. We had to go through all that kind of stuff, which is a lot of work, right?

Brandon:
It is.

Tarl:
Ultimately, what we figured out is that if we’re going to stay in this business in real estate, we had to actually start building wealth in it. And if I had to keep going down that path of flipping over and over and over again, I was going to get out completely and never do it again. And so, now there was that breaking point. We all have that bottom level. Now, when I was younger, my rock bottom was negative $10,000 in the bank [inaudible 00:31:51]. But you can set that bar where your rock bottom was. My rock bottom was I’m making too much income. Big problem to have, and having no wealth whatsoever. And I’m stressed out all the freaking time and I hate what I do, and I’m ready to give up and quit and shut the whole business down.

Brandon:
Well, reminds me a little bit of Kiyosaki’s cashflow quadrant. There’s the four quadrants. There’s the, “I’m an employee of a company,” which you got out of being an employee, and you got your wife out of being an employee. Then you just became a self-employed person. Now you just run a business and you’re in it, 50, 60, 70 hours a week. Nothing wrong with that if that’s what you want to do, but you’re still working all the time. And then there’s the, what is it, the self-employed, well, now it was employed-

Tarl:
Business owner, investor. Yeah. Employee, self-employed, business owner, investor.

Brandon:
Exactly. Employee, self-employed, business owner. Would you call yourself more the business owner standpoint or now the more investor standpoint?

Tarl:
I would say both, on those aspects, because it depends on which business. We have more than one business now, but the investor side, it depends on what we’re talking about, but absolutely. We still flip houses. We still do. Yeah. So the one thing that if anybody’s looking to get into the BRRRR strategy, I think flipping houses is one of the best ways to get good at it, in my opinion. Then it’s an easy transition going from a flip to a birth. So that was a big wake-up call for us where we didn’t have to change much in our business strategy. We still flipped houses. But the only big difference is that instead of selling them, we kept them. Then we refinanced them and moved on.

Brandon:
And you got a dog.

Tarl:
Yeah, we have a dog. You guys [inaudible 00:33:17].

Brandon:
I love it.

Tarl:
That’s our first one. So yeah.

Brandon:
Nice. Nice.

Tarl:
He still likes the FedEx guy a lot.

Brandon:
That’s good. [inaudible 00:33:24]and freaks out every time. All right. I want to talk real quick about like where you’re at with your BRRRRs right now. Well, let me just say this. What is BRRRR?

Tarl:
You guys should know that, right? You guys talk about it all the time. The guy that wrote the book on BRRRRs is here, David Greene.

Brandon:
He’s here. The man, Greene.

Tarl:
The man. Buy, rehab, rent, refinance, repeat. It’s something that is coined by Brandon Turner, and then Dave stole it and wrote a book about it. And now it’s all over YouTube and videos everywhere. Apparently you invented the real estate strategy. How does that feel, Brandon, that you invented that real estate strategy?

Brandon:
Well, I mean, I invented real estate in general. Yeah. I invented real estate and it feels pretty good to be the father of real estate, actually. That’s why they call me the father real estate Turner. Okay. So it’s like flipping [crosstalk 00:34:10]-

Tarl:
Yeah. Ultimately, ultimately, ultimately.

David:
I have a theory about people that give themselves nicknames. It’s not flattering. I’ve never known a person that gave themselves a nickname that I had much respect for. That’s funny. Of course, that was said in jest.

Brandon:
Yes. Yeah. Yeah. I give myself nicknames all the time. That’s where that whole thing started, with… Yeah, that’s why everyone calls me Brandon the whatever Turner. And then you started making that a thing on the show. Anyway, keep going, Tarl. Sorry.

Tarl:
Ultimately, at the end of the day, a BRRRR is you buy a… There's lots of BRRRs out there. But if you just want to go straight into what's the best BRRRR and the most widely, I guess, accepted is you buy a property that would technically be qualified as a flip and where you can… It's messed up. It's whatever it is. And you can build equity into it. Typically, by building equity into it, it's through putting some sort of repairs to it, construction, whatever it might be, to make it a better property. You finished it, cabinets, countertops, whatever it is.
So you buy it low because it's messed up, like a flip, you build the equity into it to make it worth more, get a higher after repair value, an ARV. If it was a flip, you would then put it on the market and you would sell it. However, if it's a BRRRR, you buy it, you rehab it, which is what you did. And then you instead refinance it or rent it out depending on what you want to do, whatever order it is, rent, refinance, repeat. So you put a tenant in it instead and you become a landlord. It becomes a rental. Then you refinance it to get stabilized financing on it and also get your money back out of it if you did it. And then you just do it over and over again.

Brandon:
This is a question I get a lot of times from people, especially new investors. They say, “Well, yeah. Why would you ever do it? You could flip that thing and make $50,000. Why would you take $500 a month in cashflow when you could have 50 grand in your pocket?”

Tarl:
Love that you said that because that was me for 500 and something houses. I’m not kidding you on that at all. My very first BRRRR, it’s a property We still own to this day, and I’m so happy my wife was smarter than me on this. But my very first BRRRR was a property bought as a flip in Lakewood, Washington. It was easy. We bought it for a hundred grand. We put about 65 into it. We thought we could sell it for like 235 on the market. So we were going to make like 40, 50 grand after holding costs, all that kind of stuff.
I actually used the BiggerPockets calculator at the time. I didn’t know how else to do it. I’m like, “What would it look like if we kept this thing as a rental?” Because we didn’t own any. It said [inaudible 00:36:34]cash to like $300 a month, maybe $400 a month, depending on what it was. So we kept it. And I’m like, “Well, that’s kind of cool.” I’m like, “Okay, let’s go down that path and go do that.” So we got to go refinance it, we get a tenant in it, all that kind of stuff. But when it came to the closing table, they wanted $6,000 for me to refinance this property.
It was like 6,200 or 6,300 dollars in closing costs that I had to pay out of pocket for this thing. And this is the day of closing. I was about to cancel the entire transaction and cancel the whole refinance because this house was costing me money. I've never had a house to do that before. I was telling my wife, I'm like, "We have to put over six grand into this thing. This is a bill." And she's like, "You're an idiot." And so the-

Brandon:
It’s exactly, I’m sure, what Grace said. Just like that.

Tarl:
Yeah, because in reality, what ended up happening, it was actually 580 or 600 dollars a month in cashflow. I think it was $600 a month in cashflow at that time. It’s gone up since then, which is $7,200 a year. It was like $6,200, $6,300 in costs back into it because we were able to refinance everything out, but that money. So we got all our capital out. We had to leave 62, except for 62, 6,300 bucks. We go to rent it out and get $7,200 a year [inaudible 00:37:47]on it. But in my head, I’m like, “We’ll make 50 grand if we sell this bit, if we sell this thing right now. Why do I want to make seven grand on this thing? This is dumb.”
But I’m so happy that we kept it because today… We thought it would sell for 232 something, whatever then. Today that thing would sell for $360,000 right now if we want to put it on the market.

David:
I want to talk about the mindset that you had, because this is something so many people need to hear. It’s very easy to follow your emotions when you’re in a moment like that. You heard you’ve got to pay 6,200 bucks. You were not expecting to pay $6,200. And then you interpreted that information as, “I’m being ripped off. This is a bad deal.” All the future information that came to you came that filter. It was viewed negatively, okay? And this happens to all of us.
It’s very easy when you turn on the news, or you’re looking at a deal or whatever it is, you’re getting information that’s coming your way. Your filter plays a much bigger role in how you understand it than what you’re actually being told. Thank God you have a wise wife that stepped in and told you that you weren’t being very smart, because if someone came to you and said, “Hey, I got a deal. You can buy it for 165. It’s worth 235. Just put six grand down and it’s yours,” who in the world wouldn’t have said, “I’ll take it immediately, and I’ll buy you a Tesla for your troubles,” or something?

Tarl:
And cashflow $7,200 a year, which means you’re getting 120% return of your money.

David:
You’re making your money back in like nine months. Yes, that’s exactly right. It’s really just the lens that you are viewing that information from that makes such a big deal. And then if you also consider, I’m going to make 50 grand on it, but you think about the fact that there’s way more risk, you think about the fact you’re going to pay capital gains, short-term capital gains on that money, and 50 grand turns into like 30 grand really quick.

Tarl:
[crosstalk 00:39:36], actually. [crosstalk 00:39:36]. Income tax. You don’t pay short term, you pay income tax on the flips. But yeah. You’re right on that. You would pay high income tax-

David:
If you're doing really well, that's a really high percentage that you're going to be paying on that. That's worse than capital gains tax, is what you're getting at there.

Tarl:
Absolutely. Way worse.

David:
So it’s not a true $50,000. And then, like you said, you’re missing out on future appreciation. You’re missing out on the cashflow. It’s actually like a million times better to do exactly what you did. But had you listened to your emotions in that moment, you would have said, “Screw it.” I see this happen so often with people, who hear information, they make a knee jerk reaction just like that. And they convince themselves it’s not something they should do. Whereas if somebody was looking at it a little more rationally, they’d be laughing, like, “What is wrong with you? How are you missing the value in this?

Tarl:
You’re right on that, because the mentality I had was something that you said earlier, Brandon. Seven grand a year in cashflow. If I owe that 50 grand today, that takes seven years to make the same amount of money, or seven or eight years, whatever that is that. Somebody is like, “Why do I want to wait seven to eight years to make the same amount of money today?” But then you factor in what you said, David. You’ve got taxes. You also will never make money on that house ever again, ever again.

David:
That’s exactly right. You’re missing out on all the future appreciation. You just mentioned you made a hundred grand or so in appreciation, in addition to the 7,000.

Tarl:
200 grand, actually.

David:
Yeah. There you go.

Brandon:
What’s funny is that it’s not even a question of, do I want the $50,000 in profit that I would make, or the 7,000? What the real question is, do I want the 7,000 a year and the 50,000 later.

Tarl:
Without being taxed.

Brandon:
Without being taxed very high at all, because I’m going to have long-term capital gains, or maybe not if I 1031 it, which we’re getting little deep there. But yes, all it is about delayed gratification. It’s spreading out your payments over years and it’s all the… Yeah.

Tarl:
What you last just said was both, so you get both. That was the click for me, where I go like, “Wait that 50 grand is still there. I could still sell it. I’m just choosing not to do it right now. So it’s like a savings account for me. And that’s how I shifted it in my head. I’m like, “That is a savings account,” as long as the market doesn’t crash and all that crap.

Brandon:
For long term, it should be fine.

Tarl:
Long term is fine. The best thing about real estate is that if the market does crash, just wait. And if you can wait. The problem would be if it’s a negative cashflow and eating you alive, that’s the kind of stuff that you should get rid of right now. But at the same time, it’s a savings account. That’s how I saw it.

Brandon:
How many BRRRRs do you have right now in total, if you started after talking on-

Tarl:
Since we started focusing in the beginning of 2018, we went from… At the end of 2017, we had three, I think. And then we said, “Let’s start keeping more.” We made a good criteria for what that was. We still flip. And I can go into that criteria later if you want me to, but at the end of it… Right now, we have 22 doors, so 22 single-family homes. They’re all full BRRRRs, since we started doing this, and they’re all done to the nines. We don’t do any kind of…
Every one of those has tile, courts, laminate vinyl planking. It’s the best rental in every single area it’s in. And we do that on purpose. We learned a lot for why we like doing that way in our market. It might be different in [crosstalk 00:42:34]-

Brandon:
Why is that? Because I 100% agree. But why is that?

Tarl:
Yeah. There’s a difference. I want to be specifying people. Know your comps in your market, your comparables. That is so important. What you hear somebody on this podcast do or what we do in our particular market might not be what you need to do in yours. So comparables are everything for how far you actually build up your BRRRR, your flip, your rental, whatever it might be. I do not want to keep one of my rentals if we haven’t done everything on it. I want new roofs if it needs a new roof. I want new windows if it needs new windows. I want new electrical, new plumbing. I want new courts. I want luxury vinyl planking. I want all that kind of stuff on it for a lot of reasons.
One is I want the highest appraised valuation for the property, just like I would for a flip. Now, I would only do the LVP luxury vinyl planking, like courts, all that stuff, if the comp said that’s what I needed to do to get the highest appraise value. So I want to be clear on that, and I’m going to do it all. I do that because that way, for lack of a better word, if I screw things up, I could sell it as a flip and make my money back. So that’s one of the reasons why I do it. It’s out of fear and also business sense, so I have a double exit strategy on it. That’s one way to-
I get the highest appraise value, which means I'm more likely to get my money back out when we go to refinance, because depending on the lender you're at, you can get a 70, 75, 80% loan to value depending on your lenders and all that kind of stuff, to get your money back out on the property. So I want that. The other thing that it did is it got me a higher quality tenant, even if it's in not a good neighborhood for that area.
If it’s a C neighborhood, but I put out A property in there, I’m going to get the best tenant in that neighborhood, because they’re going to want to take care of it and we can qualify tenants better and charge more rent. Side effect we didn’t realize is we were getting higher rents too because very few landlords in the neighborhoods we were in were doing any of the finishes we did. We also took professional photos too, so that also added to it.
Then last but not least, we have no capital expenditures on our properties for any kind of maintenance or repairs, and for any of the rentals that we have. The worst we’ve had was there was a sewer issue on one that we never replaced. The second worst was we had a water heater issue, and that’s it. That’s it, and because we didn’t replace the water heater. So now we did. But-

Brandon:
That’s so good. Yeah. Yeah. I like to say like… Because I do the same thing. I found the same thing. If I put above average quality, like the best in the neighborhood, I can go in a slightly worse neighborhood. But what I find is that, you know how we have like A-class neighborhoods and B-class, C-class, D-class neighborhoods, we also have A-class, B-class C-class properties. And then there are A-class, B-class, C-class, D-class tenants. There’s three things here. So your tenant will be likely the average of your neighborhood and your property. That’s what I found.
If you put an A-class in a D neighborhood, you’re not going to get an A-class tenant because an A-class tenant’s not going to go there. But you’re not going to get a D class. You can probably get a B, B minus then. If you’re in a C-class area, but you do an A-class remodel, you’ll get a B-class tenant. You’ll get a slightly wealthier, less financial problem tenant. And so, yeah, 100% on that. I do that on BRRRs and any rehab I do. I just try to do those little things, because you’ve heard me say before in the show, I’m sure everybody, is like even C and D-class tenants. They still watch Chip and Joanna Gaines. They still want the beautiful gray walls, and they still want the fancy floating shelf, the things that don’t actually cost a lot of money. They just take a little bit of thought, like, “How do I make this a little bit better and how to make it nicer to attract those A and B quality tenants.

Tarl:
Most people actually want to live in a nice place, and they want to take care of it. Then when they have a nice place, the right people, the right tenants want to take care of that place because they like how nice it is. We didn’t learn that from a business plan. That was all on accident, because you’re talking, we just took a flip that we just did the exact same stuff we would have done on our flip. We just instead of renting it out. Actually, that’s not entirely true. We did a slightly different flooring than we would normally do on our flips, but that’s it, like that’s it. So everything’s the same.

Brandon:
I think that's a brilliant point that we glossed over, is when you guys sat down and said, "How do we want our life to look?" You recognized, "I don't want to be addicted to flipping." That doesn't mean you scrapped your entire business and you started a brand new thing. You figured out a way that basically 90% of this project would be exactly the same. Find a fixer upper house, get it at a great price, go through a rehab, add value to it. The only difference was at the very end, the last 10% was, instead of going to an agent and putting it on the MLS, which is more work, I go to a lender and I refinance it, which is less work and cheaper. And that was all that it took. A tiny pivot created a huge difference in the life that you guys now live.

Tarl:
That’s part of that definition when we mapped out what we wanted. We also wanted to not have to manage these things. Now we do, my wife manages all of them, but there’s not that much management to do because we repaired everything on them. Because of that as well, we also got a higher quality tenant. So there’s less work, less issues. We don’t want to have to sit there and keep going back to them and fixing them up. That’s why we don’t own any rentals that are rent grade. We own none.
I don't do the 20% down. Even our 1031 exchanges that we're doing now, we're still BRRRRing them up And fixing them up before we put people in it because we want as little effort as possible once we own them. If it came too much, then we would just hire a property manager. But right now it's doable, so it's not a big deal.

Brandon:
To wrap this whole thing in a nice full circle here, is all of this, we’re talking about the BRRRRing and the really high-end rentals like they’re doing a good job of it, is because you have a foundation in what you want and what you don’t want. You had that clear vision on where you’re headed and what you wanted, rather than the world’s idea of what success is. You said, “This is success to me and my family.” And then you figured out a strategy by utilizing your own unique ability.
You have this rare, invaluable skill which we talk about on the show multiple times, is you have something that’s hard to do, which is managing a rehab. You figure that out over years, so like David said, rather than skipping it completely and going to a whole new niche, you just utilize that unique ability, that rare, invaluable skill, to get you a method of getting the lifestyle that you started with defining. And so, I think there’s such power in that cycle.

Tarl:
Exactly. Legitimately what you all, and what David also you hit on too, and Brandon just said, was nothing has really changed in our business. We just got really specific and added one more thing on, which is the back end of the property. It also has allowed us too, that when we need cash, well, we’ll still do the project. At the end of the project, we can look at it one more time and go like, “All right, let’s sell. Let’s flip it,” because maybe they need cashflow. So our strategy now with the flips, and also with the BRRRRs, is we have the exact same buying criteria on the front end for both.
For us, if it’s a flip, we want a minimum of a 15% cash on cash return for a flip. But ideally, we want a 20%. 20% is our target. Our minimum is 15, but 20% of our target. If I find any flip that’s in our buy box, in our geographic area, with the type of rehab we want to do, and it’s a 20 plus percent cash on cash… It doesn’t matter if it’s a BRRRR, it doesn’t matter if it cashflows, it doesn’t matter any of that. I’m buying the property because I’m going to flip it.
But at the end of the project, when we reevaluate, we get to closer towards the end of it, we’re like, “Hey, let’s look at what the cashflow would be.” What would it cashflow? What could we rent it out for? What would we [inaudible 00:49:51]? Did we go over budget too much, so we have to leave too much in it, for when we go to refinance? Because maybe we budget 80 grand, but we’re at a hundred because we had to replace a sewer or something else happened that came out of it. We go like, “Well, now if we refinance it, we’ve got to leave a bunch of money in.” Anyways, so we go through all that and then we see if it cash flows. And if the cashflows, we keep it. And if it doesn’t, we sell it.

David:
That's beautiful. You mentioned that you have over 20 BRRRR properties now. Can you share how you got loans once you got past 10?

Tarl:
Good question. Actually, we started getting different loans before 10, for actually lots of reasons. What David's also hitting up there is the 10. Has to do with the Fannie/Freddie conventional loans, the backs that you can have as a traditional mortgage conventional means, so basically your Fannie/Freddie loans, go to your normal bank, or Chase Mortgage, whatever, that kind of stuff. And you only have 10 on your record, which I'm not a mortgage broker, but they are changing those rules all the time right now.
For cash-out refinances through traditional conventional mortgage through your Fannie/Freddie, Freddie, I think it allows you to do six, Fannie allows you to do four, cash out. But if you have more than four on your credit report right now for Fannie, they won’t let you do any cash-outs with Fannie at all. And if you have more than six on your credit report, Freddie won’t let you do any cash-outs at all. So that’s something that’s changed. It might change later, but that’s what it is right now.
What we did after we started getting these conventional loans… Let me back up one step, David. Sorry. The number one thing I see most house flippers mess up is they have really horrible finances. So I just want to throw that out there. Most house flippers have horrible finances and they can’t get permanent financing on a house because their tax returns are chaos. They don’t have a-

David:
Yeah, and they’re hiding the money they’re making as much as they can. Yeah.

Tarl:
Yeah, or it just doesn't make sense to an underwriter. It's like it's too dirty, like it doesn't make sense. They don't have clean books and they can't prove that their actual business… It looks like somebody that's just flipping houses, but they don't have a business. So they're not incorporated correctly, all this kind of stuff, to make it look like, no, this is legit. That's a real concern for house flippers that they need to overcome. The best advice I can give any house flipper right now is please stop and please get your finances figured. Go talk to the right people so that you can actually thank yourself later in the future. That's one.
For permanent financing though, if you don’t qualify for your traditional mortgages and you don’t have the right… You can do this both ways. You can go find a portfolio lender, which would be your local credit unions. And then you have institutional lenders out there will be some hard money lenders also do institutional loans, and that they will lend on the property and not look at you. A lot of portfolio lenders will still look at you as an overall business and person and make sure that you have good credit ish. Even though they don’t care about your credit, they just want to make sure you pay your bills. They might make sure that you make enough income.
But they don't really care about your income. They just want to make sure that you actually file your taxes correctly and you're okay there. And they're ultimately looking at the property. They'll give you typically different terms, and they rate you typically on what's called debt service ratio more than what actually your income is, personally your debt-to-income ratio is, and we might be going too much in the weeds on this. But basically portfolio lenders, which are your local credit unions and then institutional lenders, which can help you out a lot. But they're typically higher interest rates and they have the least criteria for you like a hard money lender.
Right now I think most investors can get somewhere into 3 or 4% on an investment property if they’re doing normal conventional, and maybe a portfolio lender might be in the high fours, and then an institutional lender might be in the high fives or sixes, so for interest rates. But each one has less underwriting requirements for that loan, and the best thing I could tell anybody is rate equals risk. So the reason why your interest rate might be high is because you’re more risky. You might be more risky with institutional lender, because they did less underwriting on you. So the more underwriting and the more financial colonoscopy that they do on you, the lower your rate could potentially be, if that makes sense.

Brandon:
That’s cool, man. Well, so let’s wrap this up with where you are at right now in your life. I mean, you’re working 60 hours a week. You had this crazy thought like you could design your life a different way. You got real intentional on what that looked like. You figured out a path to do it through BRRRR. You got into collecting these properties. What does it look like right now? Are you traveling more? How many hours a week do you work on your real estate business? What’s that look like in your life now?

Tarl:
In 2018 and 2019, my wife and I traveled 229 days, and we-

Brandon:
Each or total, I mean, 22-

Tarl:
Total. Yeah.

Brandon:
Wow.

Tarl:
That’s each because we both did it together.

Brandon:
Yeah, yeah, yeah. Was that 229 per year, because that would be ridiculous.

Tarl:
No, it wasn’t 229 per year because we actually like being home.

Brandon:
Yeah, because that would be like gone… Yeah, means that you’re never home.

Tarl:
No, we live in a nice place that we like a lot. We built a ropes course during that time period on our property. If you go on my Instagram, @tarlyarber, you’ll see me doing stuff on that. It’s kind of fun. So we did that, and then the-

Brandon:
Hey, can I just say ropes course is not what people are… It’s not like a flat line on the bottom. It’s literally like 50 feet up in the tree or-

Tarl:
It’s 35 feet up in the air and the trees. Yeah. It’s a legit, professionally built thing that I had a lot of fun building, instead of working in real estate. Ultimately, we did that. Me personally, it’s not that I work a lot in real estate every week, somewhere between six to eight hours, maybe a week in real estate for myself personally. But my time in real estate actually comes in when we buy a project. It goes back to what won’t you do in your business? Like what is that? I figured out all the stuff that we won’t do, but we also…
One of the benefit, the biggest benefit my company got, that my wife and I decided to go in this direction is Serena, who works with us a lot, we sat down and we figured out, if we’re going to change our buying criteria, what is the biggest issues on all our projects that make it to where it’s all our time, and how can we avoid that as much as possible? And we found that if we focus on the planning session, the planning part of the project, before we do anything else, before we start demoing, ripping stuff out, going all over the place, we just stop. We need a full plan for this project, full plan. And we spend the most amount of time on that. The rest of the project’s super easy, and it takes no effort for us to manage it because we plan it out.
So we shift our entire business model to say, “Okay, my need in the business is to help with the planning part,” and that’s four to six hours on one project tops. And that’s it. Time out. I don’t really need to do anything anymore for the rest of the project because everything else works. If I don’t do that or if Serena and I don’t focus on that time period, that’s when we start having issues and more time is needed into the project, and we get change orders, and permit issues, and red tags, and all of a sudden kind of crap.
But that’s a huge lesson, guys, if you guys are in that, is that, spend time figuring out the project before you actually go do it. Most [crosstalk 00:56:28]like a-

Brandon:
It’s the “sharpen your ax” analogy, right?

Tarl:
100%.

Brandon:
If you have six hours to chop down a tree, spend your first four sharpening your ax.

Tarl:
Changed our entire business and the stress level went down to almost nothing because we just spent extra time on the front end mapping out the project before we let anybody do anything. Even if it meant that we’ve sat on the project for a month. People might get stressed out about the holding cost on that. But what’s the holding cost? Okay, let’s say the holding cost is four grand a month for that because it’s an expensive property. But what’s $15,000 of change orders going to do for you later when you don’t know what’s happening on the project? Whatever, just plan the project out before you go with it. It’s better.
So we did that, but that’s where my time comes in now. I spend maybe about four to eight hours a week, maybe six to eight hours a week in real estate. And that’s it. But that’s all [inaudible 00:57:14]on how many projects we own and what’s going on with it. And it fluctuates week to week and it’s on the front end.

Brandon:
That's awesome, man. That's really cool stuff. I feel like this whole podcast was a book. We hand this over to a ghost writer, they write a whole book about this. The Tarl Yarber intentional lifestyle design plan. It's really good stuff. All right, man. Well, I want to get out of here because it's been an amazing show and I don't want to like… I guess, I want to leave people with a couple of actionable tips that they can do. So if you could just give one or two pieces of advice for people right now, what should they do. If they are in a spot where they're just getting started in real estate, they're trying to figure out where the next step is, what they should do with their life, what advice do you have for them to go forward? You could summarize everything we talked about today.

Tarl:
Pretty simply, know what you actually… What do you want to do in real estate? That’s a hard question to answer if you don’t think of it in a different way. Why are you doing the real estate business? Is it because you have $5,000 extra a month, like what David said, in retirement? Is it because you want to build a big, huge business? Is it because you want to make seven figures a year? When you have that figured out, that should help you eliminate all the things that you don’t do in the business.
If your goal is to have extra retirement income passively, then maybe you should buy turnkey investments or maybe you should just invest your money in that side. And then you don't need to go, "I need to go learn flips and wholesaling and multi-family and [inaudible 00:58:30]." You don't need to do any of that stuff. So figure out what your niche is and what you want to focus on. That's the first thing that you should do. And so, you could plan your business around that.
Then know what you don’t want to do, everything that you’re not willing to do in real estate. Are you not willing to put 80 hours a week into it? Great. Don’t. All right? So all those other aspects that you need to not know before you go with it. I would also say that if you’re going to build a team, if you’re going to end up building a team in your business and have people come on, you really, really, really need to get good at knowing what your lanes are in the business with your team, and that’s a bigger topic.
But the thing that’s caused the most chaos in our company is when we didn’t have clearly defined roles and clearly defined lanes for what people did. Every single task, there needs to be an owner for that task. Even though three people might be working on that same task, somebody has to own it, because if nobody owns that task, even though there’s three people on it, it’s the point the finger game that happens there, or they think about something else. We are hardcore on lanes on our team.
My wife’s entire charge of property management, 100% of it. Once the property is ready to get rented, I have nothing to do with it at all. She can burn it down. She can put whatever she wants in there. She can leave it on the market for six months. It doesn’t matter. That’s her lane. Period. And same thing with what I do in my business.

Brandon:
That’s smart.

Tarl:
Don’t cross onto that. It’s so important when you build a team.

Brandon:
Awesome. Awesome, man. All right. Well, before we get out of here, let’s go to the last segment of the show. It’s time for our-

Speaker 6:
Famous four.

Brandon:
All right. This is part of the show where we ask the same four questions to guests every week. And, of course, for Tarl, we’ve asked him before. But they might have changed, so we’re going to throw them at you right now. But before we do, let’s hear what’s going on this week around the BiggerPockets Podcast Network.

Phillipe:
Hey guys, Philippe here from the Real Estate Rookie Show. Last week, we had Aaron Chapman who talks about losing his job right before he closes on a deal, having to press through all those nos, and figuring it out as he goes. So make sure that you go back and listen to our show.

Brandon:
All right. And with that, Tarl, famous four. Number one, what’s your current favorite real-estate-related book? Maybe impactful one in the past or something that you’ve recently read.

Tarl:
Okay. The real-estate-related book, I’ll be honest with you, I don’t read real-estate-related books. But the one that’s been the most impactful in my business actually was, believe it or not, J. Scott’s How To Estimate Rehab by [inaudible 01:00:56]. I’m not doing that as a plug. That is legitimately the best real estate book for me that I needed in my business at the time I read it. And so, Jay Scott’s How To Estimate Rehab.

Brandon:
It’s awesome. What about your favorite business book?

Tarl:
All right. I’ve got three, actually, sorry. At a virtual wealth expo with BP, I’ll go into this in more detail how we actually built out our systems. That’s what my main presentation would be. But the three books, if you really want to know how we live our life, the three books is 4-Hour Work Week by Tim Ferriss, The ONE Thing by Gary Keller, and then The Checklist Manifesto by Atul Gawande. Those three books literally is my entire three Bibles for how we run everything we do.

Brandon:
Fantastic books, all three of them. Yeah. All right. Number three.

David:
What are some of your favorite hobbies when you’re not running around on your rope course, of course?

Tarl:
I absolutely love extreme sports. I am a ski patroller, but I don’t ski a snowboard. So I’m a snowboard patroller and we live 30 minutes from the resort we patrol that. I absolutely love rock climbing. I love building the ropes course. It’s one of my favorite things. Skydiver. Scuba diving, I would do scuba diving over any other thing. I see Ryan Murdock there in Maui with you, Brandon. He’s there and I’m like, “I just want to be with Ryan all the time scuba diving.” That’s legitimately one of my big bucket lists, which I think a lot of people would maybe think I’m crazy for, is I want to go scuba diving in Antarctica. That’s like my top of the thing I want to do in my life. So yeah. I like whales too.

Brandon:
But Tarl, how much would it really cost to go scuba diving in Antarctica? 10 grand, 20 grand right now?

Tarl:
20. Like 18, because you’ve got a trip. It’s not like, “Let us go for a week.” It doesn’t work that way. You have to actually take a boat.

Brandon:
All right. Next time we have you on the show, I don’t want to hear of this, “That’s my life goal,” I want to say, “I did it, now I have a new life goal.” I’m holding you to it right here. Holding your feet to the fire.

Tarl:
Fair enough.

Brandon:
Of course, you’ve got a new baby at home. So congratulations on that.

Tarl:
Thank you.

Brandon:
We’re excited. Last question from me.

David:
Last question of the day. Oh wait, you’ve got to say yours, right, Brandon?

Brandon:
As I said, last question from me. Yeah.

David:
Well, you started talking so much, I thought you’d already asked it.

Brandon:
Why are you trying to cut me off here?

David:
All right. Last question from me. What do you believe sets apart successful and happy real-estate investors from those who give up, fail, or never get started?

Tarl:
In my opinion, we beat that one a lot, like throughout this podcast. But it’s not knowing why the hell they’re doing their business. And so, they’re going in the wrong direction the whole time and they don’t know it. So they don’t know where they are on a map. They have no idea the direction they’re going and they don’t know why they’re doing what they’re doing, and the end reason for it. I was that person, like absolutely that person for why I was unhappy.
In my definition, I was unsuccessful because I wasn’t living the life I actually really wanted. So taking the time to introspect, know exactly where you are on the map so that you can figure out where you really want to go and then be okay going there once you make that decision, even if it’s what the society doesn’t think is right, even if it’s what your neighbors think is silly. Well, it doesn’t matter. It’s what you want in your life. That’s what matters.

Brandon:
Wise words.

David:
Very wise. All right, Tarl, where can people find out more about you?

Tarl:
Well, we didn’t talk about this yet. The Virtual Wealth Expo, I keep saying that, but did you guys know that if you’re a BiggerPockets pro member, you’re going to get 50% off? The virtualwealthexpobp.com, go to that. You’re going to get 50% off that. You’re going to see Brandon Turner, you’re going to see David Greene, you see Brian Burke, J. Scott, Carol Scott, Dave Van Horn. I think he wrote a book three, right?

David:
Yeah.

Tarl:
Most of the BiggerPockets authors are going to be there and a bunch of other speakers and sessions are going to be through there plus networking with everybody. So if you’re not a BiggerPockets pro member, go get your ticket anyways, because you’ll get a 20% discount on becoming a pro member once you buy a ticket on the virtualhealthexpobp.com. Check that out and it’s going to be good stuff. But they could find me there because one of the best things about networking at that event is that you actually get to see everybody at the event and request contact information and all that kind of stuff with each other.
If not, you go on Instagram @tarlyarber, the only one. And also, our company Fixated Real Estate, it’s also on Instagram and Facebook. You can message me on Instagram or go to our conference and check me out there.

Brandon:
I’ve heard you said it before, “I’m the only one, the only Tarl Yarber. I’m going to name my kid, my next kid, Tarl Yarber, like legitimate name, just so you can never say that because I want there to be two. It’s unfair that you get a singular name.

Tarl:
That’s fine, if we could swap social security numbers and stuff too, it’s totally great.

Brandon:
All right. We’re good. Yeah, everybody go to the virtual conference.. It’s going to be awesome. I’m looking forward to that one quite a bit. Thank you for doing something so that… BiggerPockets, because of COVID, we didn’t get to do New Orleans. So this is going to be awesome. So I’m-

Tarl:
Side note. I did say pro members get 50% off. Be on the lookout for an email from BiggerPockets. BiggerPockets will send all pro members how they can claim that 50% off. Don’t hit up my company, hit up BiggerPockets. So they’ll let you know.

Brandon:
All right. Cool, man. Well, thank you so much. This has been really, really good stuff. I mean, it was really like high level, how do we build more happiness into our life by also building a business that supports our desires and our goals, and something that everyone needs to definitely think more through. If you enjoyed today’s episode, don’t forget to leave us a rating and review over in iTunes. Let the world know that you liked this show.
We’re currently in the top 10 of all business shows. It’d be cool someday to hit number one. I don’t think we’ve ever hit that on the show. The way we get there is by ratings and reviews. So thank you for doing that. And of course, follow BiggerPockets everywhere @BiggerPockets on Instagram and YouTube and everywhere else social-wise. Join the new Facebook, official Facebook group for BiggerPockets members, which is kind of fun. And yeah, check out Tarl on Instagram, and of course David Greene and myself. With that said, let’s get out of here, guys. David, do you want to take us out?

David:
Yes, sir. Thank you very much for your time, Tarl. It was a pleasure as always. This is David Greene for Brandon, check out my BRRRRceps Turner, signing off.

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In This Episode We Cover:

  • The many advantages of the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) Strategy
  • Creating multiple exit strategies when BRRRR’ing
  • Why sketchy tax deductions can hurt your longterm wealth
  • Designing your real estate investing strategy to fit your desired lifestyle
  • How Tarl and his wife mapped out their vision on butcher paper
  • Making a “To Do” List and a “To Don’t” List
  • Why businesses need to be able to “scale down” in times like these
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Connect with Tarl:

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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    Scott Emsley Real Estate Broker from Grand Junction, CO
    Replied 23 days ago
    I want to attend the virtual conference! What’s the link for the 50% off for pro members?
    Manny Awasom Rental Property Investor from Los Angeles, CA
    Replied 22 days ago
    Interested in the 50% off promo code as well for pro members for the virtual conference