Mindset Shift at 40 to Start Real Estate Investing with Derek Tellier

Ashley:
This is Real Estate Rookie, show number 26.

Derek:
Because I still struggle every single day. Wait, I got 40 something years worth of mindset that I need to get past and you can tell yourself that you’re going to turn that off and you’re going to change. It doesn’t happen overnight. It’s like anything else. You’ve got to keep repeating it and practicing it.

Ashley:
My name is Ashley Kehr and I am here with my beautiful co-host Felipe Mejia. Isn’t that nice? I didn’t have anything critical to say. It’s been…

Felipe:
That was really nice. I was like, Oh my gosh, I wonder what she’s going to tear me up on now. Ashley, I just realized that we haven’t caught up our listeners on a personal lives. So let’s talk about your real estate investing. Where are you at? What are you doing?

Ashley:
Yeah. So who are you dating these days? You can talk about personal… You mean our investing? So I actually am closing on a refinance this week. It is a portfolio, so two properties and I’m pretty excited about that.

Felipe:
Cool.

Ashley:
And I have a single family under contract that has a garage/barn/shop that has a one bedroom apartment that needs to be attached to it. So I’ll close on that, the end of September.

Felipe:
And what did that cost you? $7,000. Like what are you paying for properties nowadays?

Ashley:
122,000, so expensive for me.

Felipe:
That’s terrible.

Ashley:
But I’m really excited for it and then I am trying to buy a camp ground.

Felipe:
Oh, fancy you.

Ashley:
I know it’s like exciting, but also nerve wracking.

Felipe:
Yeah. Absolutely. Well, I said personal life because I feel like do we have personal lives as real estate investors aside from our family? It’s like family and real estate.

Ashley:
Okay, that is such a good point right there.

Felipe:
So, that is not personal anyways. So on my end, I actually have a flip going on with one of our interviewees that we did in the past. Can you guess who it is?

Ashley:
I’ve seen it on Instagram. So I already know it is Arvi and Dave. Do you know off the top of your head what Rookie episode they were on?

Felipe:
Ah, I can’t remember, but I know that we connected after the show, they live in Nashville. I love their model. We went out and looked at a property. We’re doing one together. We’re actually doing staging today, pictures tomorrow and it will be on the market, I believe Wednesday. It’s a beautiful house on three acres, 15 minutes from downtown Nashville. It’s a great area. I’m super excited to see it. And Dave and Arvi are a great team. They work really, really, really hard.

Ashley:
They were on episode 19. That’s how good my Googling fingers are. So if you want to find out some information about them at biggerpockets.com/rookie19. But I loved how you just pitched right there. Your deal is everyone goes and buys it.

Felipe:
Everyone goes and buys it. No, what’s really interesting is the way they’re doing it. We actually had their mentor on our podcast as well, Ryan Dorsey. So Ryan Dorsey actually teaches them what they do.

Ashley:
Oh, cool. I know Ryan.

Felipe:
So it’s all full circle. It’s going to be great, but that’s not what we’re talking about today. Today, we have a great, great show. I’m really excited because we have Derek. Derek is talking about short-term rentals in the Smokies, Airbnb being out there, how he’s finding deals. He has a full-time W2 job, and this is wild, he has no schedule of how he runs his days. He says he runs his days the way he runs his Harley. Like he stole it. I love it.

Ashley:
Yeah. He gave a lot of great tips about private lending, meetups, which everyone knows that I love talking about that and networking. But did you mention yet that he had what he called a midlife crisis in his 40s and completely shifted his mindset to become a real estate investor? He said that it will be right in the beginning here, how his parents actually invested, but he just completely forgot about it until his friend brought him back to that and he started working out, getting healthier and actually went through a divorce too and made all these changes in his life. And now he’s just this very successful real estate investor who’s done a couple deals in the past year.

Felipe:
Yeah, absolutely.

Ashley:
Okay. Derek, thank you so much for coming on today. Can you start off with telling everyone a little bit about yourself, give us a little background?

Derek:
Sure. Let me give you the condensed version as I can. Just real quickly, I’m a W2 guy. I’ve been a W2 guy my whole life and got introduced to real estate a few years ago and just had to have a real complete mindset shift. My story actually begins back in real estate in 1979 when my parents bought a five family apartment house. Now I was just a kid but that was my first introduction to real estate and I like totally forgot about that. Like 37 years later, I have friends telling me about real estate. They’ve got a couple of cabins up in the Smokies and they’re like, “Man, you need to buy one of these.” I was a W2 guy, I had a job. I couldn’t wrap my head around it. I couldn’t comprehend. I’m in my 40s and I just can’t comprehend what they’re talking about with this real estate thing.
So I kind of blew it off. I just kept working my job and they’d come into town and, “Hey, come hang out.” And I’m like, “Man, I got to work.” So they’d be like, “You got to get out of that job.” So finally it started with, pre-real estate, I was at a point in my life where I just wasn’t really happy. I wasn’t happy with myself physically. So I decided, I guess you could call it a midlife crisis. I started eating healthier, lost some weight, started exercising, lost some weight. And this amazing thing happens when you get physically healthier, your mind gets so much clearer and you see things so differently, and that really happened for me.
So I started talking to him more about real estate and then the first big trigger was I went on a weekend riding trip with a buddy of mine and we hit about five states, 750 miles in three days. And I kind of had this epiphany that I want to be able to do this more. I want to be able to just get up one day and go for a ride, do whatever I want to do. How am I going to get there? And my mind went into all kinds of places. I was going to start a business. It’s going to do all this different stuff. So I reached out to this buddy of mine, a loop that started me down this path and I said, “All right, man, I’m ready for a change. What do I need to do?” And he says, “Download Audible.” And I’m not real technical from that sense of it, so I’m like, “What? So how does that work?”
So he had to literally explain to me how to download Audible and he says, “Listen to Rich Dad Poor Dad.” So I’m like, “Okay.” And everybody who’s ever listened to a podcast on real estate knows you listen to that book, and you’re just like, “Oh my God.” You picture that when you’re young and you got to learn it young. When you’re in your 40s and you’re hearing that for the first time, it’s like, “Oh my God, what have I been doing?” So fast forward decided I wanted to make some changes. So started down this path. I just consumed everything. Audio books, a lot of mindset stuff for myself to get my head wrapped around where I was in life at that point. Listened to literally every single BiggerPockets Podcast. I started with number one and literally all I did was listen to podcasts constantly.
I’d be out running, I’d be at the gym, driving, turned off music, I was consuming knowledge and education. So get through that, he got me into running, same guy. I started running half marathons, ran a full marathon in 2018. That’s about the time this mind shift started, and then I decided I really needed to change my life. I really wasn’t happy in my life and my personal life and a different dynamic, but similar story to what you guys had a few weeks ago with Sarah Brandenberger, was I decided I couldn’t stay in the marriage I was in. So my next step was that I literally decided I was going to get a divorce and decided I was changing my entire life, and it was like this huge thing.
I wasn’t as creative as she was with trying to figure out how to get into a deal at that point. I used it as well. Now is my reason I can just consume knowledge. So I started networking. I started going to meetups. I started going to conferences. Just anything I could. Some friends and some guys said, “Get your real estate license.” I got my real estate license, still working full-time doing all this. I went to a couple of meetups. I started on BiggerPockets, and at the third one I went to, I told somebody, “Well, if they don’t keep this thing going, then I guess I’ll start a meetup.” Well, the next month they didn’t do one. So I started a meetup. I think that was October of ’18, I had my first meetup. So I’ve been hosting a meetup for the last year and a half, almost two years.

Ashley:
How long have you been doing this research? When you started that meetup, how long before that were you learning about real estate and consuming all this knowledge?

Derek:
Really, honestly consuming probably about six months.

Ashley:
Yeah, that’s awesome.

Derek:
Not, not a long time, but just dug in.

Felipe:
And Derek, did you say what your W2 job was? You said you had done it for a long time.

Derek:
Yeah, I’m working the Harley-Davidson industry. I actually am the service director over a small group of Harley-Davidson dealerships, local to where I am. I’m in East Tennessee, South of Knoxville near the Smoky Mountains. So I’ve-

Felipe:
Hey, you’re right next door to me. I need to come over. Let’s go.

Derek:
… I am. I’m right down the street. Absolutely man. I lived in Nashville. I lived in Antioch for a couple of years.

Felipe:
Did you?

Derek:
Yeah.

Felipe:
All my rental properties are in Antioch. All of them.

Derek:
Yeah, you might own my old house, I don’t know. But yeah, so I did the meetup thing and then going through that divorce was the reason why I couldn’t purchase real estate. Now that’s been proven otherwise, obviously. I stayed diligent on my education. So fast forward to 2019, literally my legal stuff got finalized on April 26th. On April 28th, a listing hit the market. This was a Sunday night. That just jumped out at me. I look at the listings every single day, just jumped out at me. It was under $100,000, in the city I live in, which is rare in and of itself. Great location, literally two tenths of a mile from my full time job. I went and saw it the next day, I put an offer in that night, my offer got accepted the next morning because it had the fewest contingencies on it.
I made a cash offer. Offered them less than what they were asking. So this is three days out of my divorce. I’ve got my first property under contract and ended up negotiating them down a little bit further during inspections and got through that one, bought another house to move into, turn that house into a rental. Then the beginning of this year, the next big shift was finding a new career path because I really needed to change things up. I’ve been working all this time, making somebody else wealthy. It was time to start doing something for myself. So a good friend of mine is Avery Car, who was on the OG podcast 364. She does short term rentals. Her husband, Luke is the friend of mine that I’ve known for several years, that got me into all this and got me running. So I’ve known them forever.
Well, Avery and I had talked about me going to work for her after I got my license, but it hadn’t really panned out. So finally, the beginning of this year I said, “Okay, this is ridiculous. Avery is literally killing it in the short term rental market business.” So I went and met with her and I basically told her it was time for me to come and work with her and she said, “Okay.” This was March of this year. So first weekend I’m working with her, she gives me seven leads. Now to this point, I’ve had my license for about almost a year and a half. I closed on four transactions, two of them were on my own. So I only actually had two retail transactions as an agent on working my full time job. I go to work with her, she gives me seven leads. Since March, I’ve closed on nine. I have six more under contract and I’m working [crosstalk 00:11:46].

Ashley:
Wow. And all through COVID too.

Derek:
Yeah, exactly.

Ashley:
Wow that’s awesome.

Derek:
I mean, it’s been such a life changing last few months, even that I now have so much income coming in from that, that from a pure income standpoint, I don’t need the W2, but from a lending standpoint, it really helps to have that W2. So I’m working with that, I’m working with the company I work with to try to find a transition.

Felipe:
Hey, Derek, if I can ask a quick question there, how have you seen COVID affect the market up there in the Smokies? I know a lot of people have questions right now about short term rentals and how it’s affecting.

Derek:
When COVID first kind of got kicked out there in March, things really dropped off. We were working with tons of buyers and that’s primarily what we do. Avery’s team is called The Short Term Shop and we primarily help investors purchase our short term rental. I’m mostly in the Smokies, but she works out on the Panama beach area as well. And in March we saw a big drop off. Everybody got cold feet. So I joined her team and I literally had seven leads. Only one person actually wanted to do anything. Everybody got scared. We had definitely a slowdown through March and April. May 1st, everything opened back up and everybody realized that it really wasn’t going to have an impact.
I saw the cabin owners that I knew… Saw a little bit of drop off in April, but really by the end of April, beginning of May, they were booked solid again. And one of the things I was able to do through all this was, I finally got myself a cab and I had been looking for about a year. So I purchased my first Airbnb. I closed on it on May 19th, I had my first guest check in on May 22nd.

Felipe:
Nice.

Derek:
Then I’ve had two nights vacant since that time which is [crosstalk 00:13:24].

Ashley:
That is awesome. That’s really cool.

Derek:
I’ve been booked solid. I’ve already gotten back 50% of the money I put into that purchase in like two and a half months.

Ashley:
Wow that’s great.

Felipe:
What was the purchase price for that cabin?

Derek:
This is not normal for today’s market. I had been looking for a long time, but I found an anomaly. I ended up buying it for 145,000, which you can not find anything that is in that range.

Felipe:
Wow, what’s it going for like that right now there?

Derek:
I could put that house on the market right now for probably 200, 225 and I would have multiple offers in a few hours.

Felipe:
Is it because their short-term rental is so strong or is it…?

Derek:
Yes.

Felipe:
Yeah. Is that what it is?

Derek:
Yeah, it’s all about the… The market has appreciated in some cases, almost 100% out here just in the last three years because people are realizing how easy it is to manage these things. And a lot of the current owners are true vacation home owners, and they don’t understand that you can self manage this thing and make a lot more money. They got these cabin rental companies out here that charge a 40% management fee, and they’re not getting you near the reservations because the only way you book through them is if you Google and find their website. Everybody goes on Airbnb now. Nobody takes a taxi anymore, right? You get on Uber. Well, Airbnb is the same way. So all these cabin owners don’t realize how much money you can make, but the market has pushed it up. People are now paying so much more than they think their cabins are worth because they realize they can make so much more money.

Ashley:
I want to dig into the short-term rental. So you’re managing it yourself, what does it look like? What’s your system set up? Are you using Airbnb? Do you have your own cleaner that you hire or are you using a cleaning company? What do you do for maintenance? Can you kind of break down your systems for us?

Derek:
Yeah, so definitely using Airbnb and Vrbo. I am listed on both sites. There are some people that will argue that it’s better to use one or the other and just really dive into it. But I’m using both. And the real benefit of what’s new out there is there’s a lot of technology out there. There’s a lot of softwares that you can use to integrate everything. So my calendars between Airbnb and Vrbo are synced up together. I use a pricing software. So I go in and put some baselines and the pricing software identifies what the optimal price for my cabin is on any particular night. So one night my cabin might be 109 and the next night it might be 160. It’s not a set rate, optimizing everything. So those two softwares help to integrate everything, to keep it easy.
The cleaner, yes. You go out and you find your own cleaner. I am using, my cabin is small 600 square foot. It’s a honeymoon cabin. So I found a small one woman cleaner, she has about a dozen or so cabins that she takes care of, and my cabin is near the ones that she already does. So I got connected with her. I just sent her my calendar. I tell her when guests are checking in and checking out, she gets in there and knocks it out, keeps it clean. And really, I mean, I live close by. So I’ll occasionally go out there to take care of some little things, but I don’t have to. I mean, most of our clients are from hundreds or thousands of miles away and they’re all self-managing from home.

Felipe:
Derek, let me ask you a quick question about that. So I’m from Tennessee and I know the word on the street about up in the cabins, up in the Smokies. I know that it’s a tight knit market. Like the good deals go to the people that already live there, or that are already investing there. Okay, so I’m going to spill all the secrets, because like I said, I lived down the road and I know it’s not all painted roses. So let’s talk about that a little bit. How can someone get a good deal out there that’s not going to already your friends and family and the locals in the area.
Like you say, you got a really good deal and you yourself said, “Hey this isn’t regular.” And I know that, like I said my buddy Diego invest out there and he’s like, “The first one was really hard to get, but now we have 20, but it’s because now everyone knows us there. So we’re part of this click or whatever it is.” Right? So how can I as a listener say, “Hey, I want to invest in an Airbnb out in the Smokies. How can I get on, let’s say, Derek’s good side>”

Derek:
Well, it’s really easy for us. All you got to do is reach out because we do get some occasional, what they used to call it pocket listings. You really can’t do that anymore. The National Association of Realtors has put some regulation on that to make sure that we’re publicly marketing so that sellers can get the most out of their deal. But I mean, to backtrack on mine, I say, I got a great deal. Mine was on the MLS. Everybody out there had the same access that I had to mine. I jumped in on it and like everything else, it’s relationships. I talked to that list agent. I gave her my story and buying it for myself was helpful in that sense.

Felipe:
You took action. You didn’t sit down and wait for somebody to say, “Hey, here’s the deal.” Because that’s not going to happen. You took action, you made the relationship. You followed up, you even offered less than listing and you still got it. I think that’s great.

Derek:
Yeah. Well, on the cabin, I did not offer less than the listing. In the cabin I paid over list. Well, they had it listed at 139, I went in and offered 145 with no closing costs, but they had other offers. They accepted mine, I think because maybe she liked me and put some influence on the seller to pick mine or it had to do with the fact that I was on Avery’s team. So when any agent from Avery team puts in an offer, we have a reputation that we close. So, that helps. So when you got to list agent and somebody from her team, myself, or one of the other ladies that works on the team, those list agents see our name, they’re going to say, “I know this agent and they’re going to close.”

Felipe:
Derek, let me button right there. Let’s pivot a little and talk about how important that good realtor agent is because of what you just said. You guys have a history of closing. For our listeners that maybe have one property or maybe don’t have any and are looking, how important is it to get a realtor that’s going to close the deal.

Derek:
It’s huge. First of all, it’s the 80/20 rule, right? 20% of the realtors are doing 80% of the business. So if that’s the case, those 20% that are doing all the business, all the other agents out there know that person and they know that person knows what they’re doing. And they know that person is going to help make sure their client knows what they’re doing. They’re going to help navigate, they’re going to find a solution. In my full time job, I was a problem solver. That’s what I do. I started out in the motorcycle business as a mechanic. I was fixing bikes. So I solve problems. So I’ve had a couple of transactions that a lot of other agents would have walked away from. A lot of clients would have walked away from. And I said, “No, we’re going to find a way to get through this.”
And I’ve closed on deals that other people couldn’t close because I wasn’t going to give up. I was going to find a way to make this work for everybody involved, keep everybody calm through the process and let’s figure out what works. So, that is huge. Having an agent that’s got that reputation for making it work, your deals are going to get accepted over somebody else’s.

Ashley:
Derek, I’m a huge believer in networking and going to meetups and Zoom calls and all of that. And it seems like you have done a lot of that and you got onto Avery’s team. You have met all these people. You figured out how to get these deals. Can you talk a little bit about how that has benefited you and what you can recommend to our listeners as to how they can get involved in what’s the best way for them to network with other people?

Derek:
Yeah. Absolutely, it’s a huge part of why I’ve gotten to where I’m at. You have to get out there and network, you have to meet people for a number of reasons. One, relationships because that’s how you find deals. That’s how you find contractors, that’s where you find people who are going to be there to help you, to mentor you. Is going out there and engaging with other people. So, that’s gigantic. You just got to get out there and do it get yourself… I am an introvert. I am much more comfortable sitting at my house, chatting on text or on computer by email. I had to get outside of my comfort zone to start getting up and speaking and talking to people. But it’s made every bit of difference. It’s taken some time, but I mean, I’m two years into this now and I’m starting to really see some huge benefits of people that are coming back to me, offering me deals.
I’ve built some relationships with some wholesalers, so I’m getting some deal flow that way. You’ve got to get out there and interact and talk to people, and it’s just amazing the world that opens up when you start actually engaging everybody else around you.

Felipe:
Derek, what would you tell an introvert that’s listening to the show that maybe is starting to put all the pieces together, but has a little bit of that fear of actually reaching out and creating relationships or is still an introvert but just wants to fake it. I mean, what would you tell that person?

Derek:
Go to a meetup. The meetup that I host is purely networking. It’s purely about people gathering in a room and chitchatting. I also go to the local Ria. I go to a couple other meetups where they have guest speakers. Get out and go to something. My meetups are free. You know, if you’re local in my area, come to my meetup. If wherever you’re at, there’s meetups out there, go to one that’s free and just pick somebody out of the room and go talk to them. That’s it. I mean, you don’t have to start engaging every single person in the room, start with one person. Look one person in the eye, go out and have a conversation, ask them what they’re doing. They may be a newbie too.
The two of you might be completely new to this and just thinking about it, but then you’ll start talking and feeding off each other. Start with one person and then let that expand and just keep talking to everybody you can. Tell everybody that you’re wanting to get into this. You’d be surprised how many people are doing it and don’t talk about it.

Ashley:
I really liked that tip of just starting with one person, because it can be overwhelming going to these meetups and not knowing anyone, especially if they’re at a bar or a restaurant and you walk in and you don’t even know what group of people is the real estate group. So I think that’s a great tip and one thing I’ve done too is I’ve found people online, either the BiggerPockets forums or Instagram that are going to the same meetup. And I connect with them first to get to know them a little bit and I’ve done this for conferences too, so that I at least have one face that I know to look for when I get there and start there. But you’re right, once you get talking about real estate at these meetups, it’s like you spent so much time talking to different people and they’ll come up to you, and once you get going, it’s hard to stop and already three hours have gone by.

Derek:
Oh, yeah. I tell whenever we go to a new location, a new restaurant, I tell the waitstaff, I’m like, “Look, this is not like a formal dinner. People aren’t going to be sitting at tables and ordering. You have to stick your nose in there and ask them what they want to eat, what they want to drink. I said, we are real estate investors. So you put us in a room together, we are all going to talk to each other. We will starve, we will die of thirst because we’re too busy talking about what we’ve going on. The good and the bad. We don’t care. We have…

Felipe:
Just bring the chips, just bring the salsa. Look, just bring it. We’ll pay for it because we’re going to forget to order.

Derek:
[crosstalk 00:24:10] and I say, “Stick your nose in there and make an order because I need the waitstaff to make money because that’s important for the relationship.” But it’s like, if you’re going to be a passive waiter, they’re not going to order. You got to stick yourself in there and go do it.

Ashley:
It might’ve been the first or second real estate meetups I went to. I went with my friend, John, and it was so exciting. I was having so much fun and he came up to me in the middle and handed me a glass of water. And afterwards I was like, “Oh my God, that was the nicest thing you could have done for me.” I was like, “I didn’t even realize how dehydrated I was from talking so much.” I was having so much fun that I didn’t even think about it. So I was like, “Thank you so much.” But you’re right. You just keep going that you’re not going to stop to eat or drink.

Derek:
I tell people when I post from my meetups, I said, “This is networking, you’re going to get out of it what you put into it.

Ashley:
Yeah. Let’s move on to your rookie deal. That was some really great advice. He gave everyone about meetups and I hope everyone is putting themselves out there to do these meetups, whether they’re virtual or in person. I know a couple of groups have started to go back to in-person. The one in Buffalo had a meetup last week where it was at a park setting, but let’s talk about your rookie deal, which one is this?

Derek:
So this is my first investment property. This was the one that I got off the MLS right after everything was finalized with my personal life. So again, it was listed, it was just the perfect thing. I’m a believer and you put yourself in the right position, things fall into place. So everything fell into place on this one. It was literally less than two tenths of a mile from where I work. So going to see it, the next day was easy. So I hit the MLS on Sunday night, I went from my showing, a walkthrough. There was other investors looking at this house was rundown. It was in an estate, it had been vacant for about a year. There had been squatters in it. There was apparently a drug house at some point. I mean, it had been rated.
I mean, it was in rough shape, but it was a 1980 little ranch house with a three car detached garage, which is one of the key things that I thought was huge for the area, right close to the city within city limits, but yet private because of the isolated, weird location. So I went in and I went to the list agent, they had it listed at 95, I think I offered 90, but I basically had no contingencies on it. I asked her, I think, a seven day inspection contingency, no finance contingency, no appraisal contingency, nothing else. And they accepted my offer on Tuesday, and she told me it was because they had the fewest contingencies. So then I brought a couple of investors I knew out there. I brought an inspector I knew out there, we looked through the house and we found some more issues. Water leaks, and some water damage.
So I started debate in myself, I got to get them to come down. I had my other investors saying, “Man, this place needs a lot of work. You need to get them down to at least 85, somewhere in that range.” And then another buddy of mine says, “Heck, you’ve got under contract, just offer them 70 or 75 or whatever.” So I came back and I offered them 70, I’m under contract, I can’t lose it. Worst they can do is say no and I buy it at 90. I offered them 70, they immediately came back at 81, which I was shocked by and I immediately responded with, “I’ll go to 75.” Which hindsight I thought about. I should have just tried to hold my 70 and play [inaudible 00:27:29] again, but I came right up to 75. They tried to get me to come up to 78, I said, “No, I’m holding it 75.” And they went ahead and went forward with it.
So I ended up getting a $15,000 discount after I bought it. I bought this thing with private money. I used a private lender to actually fund the purchase and my rehab budget. Of course, this is my first deal. So we all know that the rehab budget is like half of what you’re actually going to spend because I don’t know exactly how to control myself on this. I had a good friend of mine that was a contractor that stepped in to manage the project for me. It took a lot longer than planned, but we spend about five months working on it. I refinanced it. I bought it at 75, I ended up putting close to, I think I put about 63 into it. So I was up there. I had to pay my private lender back, his interest plus his money. It appraised at 190.
So I got 1425, 75% loan to value out of it, which left me with just the closing costs for the refinance, and I got my private lender, his money back, I got all of my money back, cost me five grand to refinance it. Took me about another month to get a renter in there, and I listed it at $1,800 a month, which was a couple hundred dollars over market rent for the area. Everybody told me I was crazy for listing it that high, and I’m like, “This house was practically brand new.” I said, “I didn’t get to do the garage, but this house was brand new. I’m going to get it.” I had tons of showings, but nobody putting in applications, but it only takes one. So finally the right person came along and here I am getting $1,800 a month for that place and my mortgage payments like 875.

Ashley:
Great job.

Felipe:
Derek, that’s a great story.

Ashley:
That is a great ver right there. Yeah. How long did you wait before that perfect applicant?

Derek:
Really honestly, they were the first person that actually put in an application. I probably had about 50 showings, but I think everybody was reluctant because of the price. So they were actually the first ones to actually put in an application, but they were a good applicant and I didn’t see any reason not to accept them. So I ended up accepting the first applicant that jumped in on it. But I mean, even after accounting for all expenses, I’m cash flowing $350 a month in that thing.

Felipe:
Derek, I think there’s a really important key to this story that you’ve said. I don’t want everyone to think that this is impossible or that it’s hard, but there’s a key concept there that we get a lot of. Or I get a lot of DMS that say, “Oh, I’m ready to quit my job and go full-time real estate.” But the reason you were able to refinance and correct me if I’m wrong, because I might be wrong, was your W2 job held this up. Is that right?

Derek:
Absolutely.

Felipe:
You have a W2 job, so you were able to refinance this and the bank saw that, that you have money coming in. So I get the DM all the time, “Felipe, I’m ready to quit my job. I want to start investing in real estate.” Like, “I’m ready to go all in, and I’m like, “The reason you might hate your job is because you don’t have a why for it.” Right? I cleaned construction sites to get past my first three deals because I showed that I had a job, whether I liked it or not was irrelevant, but I knew that daily I was working because I was going to refinance a property and get my money back out. And I was going to be able to do a lot of things because that’s what the bank likes to see. So can you tell us a little bit about how important it was to keep your job during this process of this clearly amazing cookie cutter deal that you did? This is great.

Derek:
Yeah. It was everything because I ended up refinancing it before I had a renter. I mean, once you get a lease in place, they’ll count 75% of that lease towards your income, which will help to offset any debt to income you have, but I refinanced it before I had a renter in place. So my W2 job was the only reason I could do that. I was living in a huge house at that point. It was me and my dog living in a 2,600 square foot house that I didn’t really need that big. So I had that mortgage payment. I have refinanced that house. That’s actually what gave me the cash to be able to have the reserves to do this one was the refinance of the first house. So at this point I had two houses and the only reason I could get that refinance was because I had that W2 job.

Ashley:
Let’s talk about that real quick is that you have the reserves. So you basically did a no money down deal, you got your money back but you’ve still had those reserves in place.

Derek:
Yep.

Ashley:
How much of reserves did you have? Like three to six months?

Derek:
Well, I was a dollar amount, I really didn’t factor in the months, but what happened was it started with refinancing my primary residence and I pulled about $57,000 in equity by refinancing my primary residence out. So I paid off some bills I had with that, and then the rest, I just let it sit in the bank. I knew going into this rehab that I was borrowing 135, I think it was from my private lender, I knew I was going to go over budget. So that’s what gave me the comfort to go in there and do some things that maybe a lot of other people wouldn’t have done. I knew I had that money. So that refinance started it, and then being able to refinance back out and get all that money back out was huge because then it gave me the ability to go on and do something else. But yeah, the W2 is the only reason I was able to do any of that.

Felipe:
Interesting. So we’re re-engineering this whole process. Okay, so we talked about the W2 job and how that held up the refinance. Now let’s talk about the private money. I think you said you were new during this time, you didn’t have any history. So talk to us about the private money and how that all worked out.

Derek:
That’s a relationship from before real estate. First and foremost, tell everybody what you’re doing when you start getting into this. And the situation with this lender was it was just somebody I had known for several years. And he was a business owner and had extra cash. And I knew he liked real estate, but he didn’t really own any. He just kind of dabbled around a little bit. He had had some bad experiences actually, but I had known him since I lived here. So I had known him for 14 years, 15 years at this point. So when I said, “Yeah, I’m getting into real estate. I’m getting my license. I’m going to start looking for property to invest in.”
He said to me, “Well, if you ever find something, let me know. I’d like to look at maybe doing a deal with you.” And he was looking for a partnership. Well, when I found this deal, after I got it under contract, I went back to him and I said, “So you had mentioned, you might be willing to lend some money or get involved in that. Were you serious?” And he said, “Yeah, why?” I said, “Well, because I just signed a contract on a deal and I want to know if you lend me the money to do it.”

Felipe:
But this is the importance of those relationships and telling people what you’re doing. If you just put it out there. I mean, like you said, this gentleman said, “Hey, I want to do this.” I know a lot of people now that I’m in the industry that have a done of money just sitting and they are itching to get more than five, 6% than they’re getting in the stock market. They’re like, “Felipe, if you can find me 10%, I will fund any deal.”

Ashley:
Derek, what were the terms on that private money?

Derek:
So he wanted three and a half points and 9% interest, but a guaranteed of six months on that interest, meaning that basically I had no payments for the six months. Everything was deferred compounding interest. So at the end of the day, I was going to have to pay him one big lump sum.

Ashley:
A balloon payment.

Derek:
The good thing was… a full balloon payment with all the interest compounding on top of it. So we knew going in, this is what I’m borrowing, this is what I’m going to owe you in six months. And actually, I closed on the refinance like two days beyond the six months. I was about three days outside. But again, he was a friend, so it’s not like he came back and said, “Oh, you owe me three more days interest.” He just said, “That’s fine.” And he took the check and I’ve done a second deal with him since that. So this is building and he gave me a little bit better terms in the second one, not significant, but a little bit better terms on the second one and I’m closing on that and getting him his money back here in the next week or two.

Felipe:
This is the power of buying cash too Derek. You’re getting way better deals by being able to close. Okay, so let me explain that to our listeners a little bit. Sometimes I get the question as well as, “Felipe, how do you buy so low?” Right? Like, “Everyone’s paying market value or above? How are you getting these amazing deals?” And you said two very key things, cash and not as many contingencies. So you’re able to come in and say, “Hey, I’m going to pay cash.” And people know that that means less hoops to jump into with a bank.
If you have a great hard money lender or private money, whatever the case may be, where you can buy properties cash, you are going to get better deals than someone that’s just buying the regular route. And then those connections, like you said, and telling people that this is what you’re doing, that’s all great strategies to buy properties for under market value with instant equity.

Derek:
Yeah, well, and building relationships. Telling everybody about it, because you might have a conversation with somebody who it turns out that their uncle, their brother, their cousin has a house that is empty. You’ve got to tell everybody what you’re doing. You don’t know where the lead or the deal is going to come from. Deals come from everywhere. Not just off the MLS, not just from wholesalers, they come from every conversation that you have ever. So you’ve got to be telling everybody about it. And then yes, absolutely put yourself in a position where you can make it as easy as possible for that seller, because in those situations, if it’s a distress situation, what they want is somebody to make it easy on them. Make it easy, you’ll get the deal.

Ashley:
I’m curious to know for your rehab, did you use a contractor that was recommended to you or was it referral since you seem to do very well at networking?

Derek:
On the first one, again, it was a guy I’ve known for about 10 or 15 years, but this was my naivety. When we went into the deal, I said, “Hey, I’m buying this house, I want you to help me do all this rehab on it. I thought he was a general contractor. I just I’ve known him forever. I really didn’t know much about his business. He wasn’t. He’s a carpenter. He’s a master carpenter, but he’s not a general contractor. So I thought that I was coming into this deal with him, and I was going to be able to say, “Okay, here’s all this stuff I want to do, go.” And like a weekend, he’s sending me phone numbers. “Well, here’s the plumber and call this guy and line this up, and here’s a painter call this guy.” And I’m like, “I thought you were going to do all that for me?”
And he’s like, “No, man, you need to do all that.” So I’m like, “Crap.” I had to go pull my own permits. We put an addition on that house. That’s one of the reasons we got the value up. We actually built a second bathroom. It was a three, one and we made it into a three, two. Put a nice big master bathroom on…

Ashley:
And this is your first deal?

Derek:
My first deal. Absolutely. I didn’t know but…

Felipe:
That’s a big bite there, Derek. That’s a big bite out of it.

Derek:
Well, then I said, the deal went way too good. So I’m expecting somewhere along the lines here really soon to have an absolute disaster because that went too well. But yeah, so I managed through it. I was spending my nights and weekends out there doing a lot of the work myself. I had some bad experiences. The first plumber I hired was an absolute disaster. The second plumber I hired came in and do to get a good job. But when all was said and done, there was a problem with something he did that he refuses to admit it was his. So I had to bring a third plumber in finally fix the problem.
So yeah, there was definitely some challenges, and on the next rehab I did, I went with a different contractor and made a whole series of new mistakes with the second contractor. So I’m still figuring that part out. I’m playing that by ear. Contractors, everybody says is the hardest part of this business and I’m still only a few deals in, I’m still very much trying to work through finding that balance.

Ashley:
You had said you went over budget on that rehab for your first deal. Did you have to use your own money then? So use some of your reserves to cover that deficiency.

Derek:
Yeah. I had a couple of things. I had some reserves leftover. When I did that refinance again, relationships, one of the next things I did, I went to a local bank, a guy who I had known, he was the manager of the bank, small regional bank. And I said, “I want a line of credit. I want some kind of line of credit with you.” And he couldn’t do anything just outright, but I said, “Well, I’ve got some cash, what can I do with this? If I give you like $20,000 to put down into some kind of account, can you get me like a $50,000 line of credit?”
He said, “Well, I can’t go that much.” He said, “But if you put 20,000 into a CD, I’ll give you a $35,000 line of credit.” So I gave him 20 grand to put in a CD and now I had access to 35. So I actually used that line of credit as the extra that I went over budget on.

Ashley:
That’s really interesting. I’ve never heard that before.

Derek:
Yeah, I used that. I did that on the second one too. So as soon as I got [crosstalk 00:40:06].

Ashley:
What were the terms of that line of credit?

Derek:
The CD was a 16 month CD. So he did the line of credit for the same 16 months. It is, I think prime plus a point is what I’m paying on that line of credit. So, I mean, it’s interest only. Like just a typical line of credit. So really super easy to work with. When I wanted advance on it, I just sent him an email and he transfers it from the line of credit into my checking.

Ashley:
And you’re probably making a little bit of money on the CD too?

Derek:
Yeah, the CD itself only earned interest for 12 months, but it has to sit there for 16. I made I think $500 on it, which is not much, but it’s $500. I mean, it covered the interest for the most part.

Felipe:
Talking about the line of credit, I think that’s a great strategy because I use that, but I didn’t put mine in a CD. I just leveraged a paid off property that I had. So my goal was to pay off a property, put a line of credit and they just keep reusing that money over and over and over. That line of credit, I want to pause real quick because I know that our listeners are going to wonder, how can I use this strategy and it’s really important, when you have a line of credit, it’s really cool. What you did was you put your money and said, “Hey, I’m going to leverage 20,000 to have access to, what did you say? 50,000?

Derek:
35 is what he… 35.

Felipe:
35,000. You were able to leverage 20,000 to get 35,000. Use that money for what you had to do, refinance, pay it back, get your money back out and made $500. That’s great. So you’re finding different ways to hack your money to bring you more money, right? Your money. Wasn’t going to give you $500 sitting in the bank. You put it in a CD and it gave you 500 bucks, and then you were able to still use this as part of the rehab. Now, let me ask you a quick question about the contractor that you said you use. You said you haven’t found a good one yet. One of the strategies that I’ve always, and we’ve talked to many of other people we’ve interviewed, Facebook is a great place to find great contractors, because they’re going to give you honest reviews.
We had, Oh my gosh, I can’t remember his name, but someone on the show and I’ll try to remember before the end, was telling us that what they do is they end up calling prior jobs. So if I’m the contractor, you’re like, “Hey, can you bring me three people that you’ve done work for. And that’s been a great strategy to find some great contractors as well.

Derek:
Yeah, definitely and that’s something I’ve been guilty of is, I’m really bad about not reaching out to specific people. I’ve heard on several podcasts, “I picked up the phone and I called 15 contractors.” And I’m not good at doing that. I’m good at, “Hey, who do you use? Okay, let me try him and let’s just go do it.” So I am a ready shoot, aim kind of guy. I’m very guilty of writing everything, see to my pants. And it’s so far it’s worked out okay. But I don’t recommend it. You have to have a pretty high threshold for fear if you’re going to go into it that way.

Felipe:
Do you buy real estate the way you drive your Harley?

Derek:
Yeah, I ride it like I stole it.

Felipe:
I can imagine.

Derek:
Yeah, I do. I’ve always felt like for good or bad, I have a good gut instinct about a lot of stuff. When I got into real estate, one of the things I would say somebody mentioned to me is like, “I might be new to real estate, but I’m not new to life.” So I coming in a little bit later in life, I tried to use my own life experiences to try to help me through that because most of what we run into is the same types of situations, just different specifics in the environment. So I use that to leverage that I know what I need to do on a big picture. I don’t need to know the specifics or the dynamics. I kind of know where I need to go and if I point myself in that direction, then I can get there, and then usually I’m lucky enough that I’ve got other people around me that’ll help keep me down that path.

Ashley:
And I want to talk about that. That kind of leads us right into our next segment is this is where we want to hear about a key player on your team. Someone who has helped you through all of your purchases and getting into real estate. So we call this segment, the…

Felipe:
MVP.

Derek:
MVP.

Felipe:
MVP.

Derek:
MVP.

Felipe:
MVP.

Speaker 4:
MVP.

Ashley:
So who is your MVP, your most valuable player on your team or someone who has supported you through this process?

Derek:
It’s hands down, Luke and Avery Carl. I mean, Luke is the reason I even thought about or got started in real estate. And Avery is a rockstar agent and getting on her team is just launching me forward. So hands down, I wouldn’t be anywhere near any of this without those two

Felipe:
Derek, how important are these connections like this? Like someone who is going to mentor, push you a little bit out of your comfort zone, how important would you say these people are?

Derek:
For me, it’s critical because I still to this day, struggle constantly with trying to figure that out and every once in a while, I just need to get Luke on the phone because he’s brutal. He does not sugarcoat anything and sometimes you really need that. You need someone to just push you. So I needed it tremendously to help get me centered and make sure I was going in the right direction constantly.

Ashley:
What would be your advice for someone who’s looking for a mentor like this? How would you recommend they find someone?

Derek:
Comes back to relationships, again. Going out to the meetups, talking to everybody. And with Luke, I never asked him to be my mentor. I never asked it. It just happened organically and I firmly believe that, that’s the best way. It depends on where you’re at in life and what your situation are. I mean, there’s lots of paid mentors out there and for some people that works. Join a community, there’s some good ones out there. Sometimes that’s what people need. It depends on the individual. If you’re an introvert and you just can’t get out there and do that but you’ve got cash, you’ve got a great job, then go pay for a program. If you don’t have the cash, then just go start talking to everybody. The mentorships will happen organically if you allow them to.

Felipe:
Or listen to every single BiggerPockets episode.

Derek:
That helps. I have thousands of mentors from that standpoint. I mean, every single episode I listened to, I pulled a nugget out of somewhere. And I’ve gotten tons of those websites and I get tons of emails and I mean, I pull something from everybody. I’m a believer and you can learn something from everybody you meet in life. You just got to listen and find what that thing is.

Ashley:
You’re right. There is so much free content out there to grasp from, but I want to ask about so you work for Avery, do you think that has really helped her become a mentor to you? And do you recommend that someone who, a part-time job or even a full-time job goes and works for a real estate investor and kind of helps them or do you think they do it for free? Offer their services to [crosstalk 00:46:57]?

Derek:
Yeah, it depends on the circumstances. It depends on what the person’s looking for. I mean, I’d love somebody that would follow me around and help take care of some of the stuff that I’m not good at doing. Just keeping notes and keeping tabs on things. If you want to get involved, bring value. Find a way to bring value to the person that you want to be around. With Avery, it was joining her team as an agent. She knew I had the background and the experience to do well on it, but it was amazing that even though I didn’t necessarily learn anything by joining her team, I had learned so much from her over the years already.
The knowledge was already there, but even with my own clients and people I knew that I didn’t get through her, my confidence levels skyrocketed to where I felt more comfortable talking to them, and I was able to close more deals just because I was being around her and the other agents on her team. You’re the average of the five people you surround yourself with kind of situation. You surround yourself with those people, it automatically becomes who you are as well.

Felipe:
It’s so important. I Agree. I can’t agree more. It’s so important to do that and it’s like you said, I feel like most of us have, or will have this desire to teach other people what we’re doing because there’s plenty to go around. No one is trying to hoard all the deals. There’s so many deals that I can’t get. And like you said, it’s just putting yourself out there, telling everyone that you’re a real estate investor, and telling people your goals is really important.
So from that, thanks so much, man. Let’s move on to the next section of the show. We like to call this the Rookie request line. You can reach us anytime at 18885 Rookie to leave a voicemail and we might use it on the next show. You can ask anything you’d like, if it’s a real estate related, we might put it on the show. All right, Derek, are you ready?

Derek:
Sure.

Zack:
Hi, my name is Zack, I’m from Cumberland, Maryland and my question is I’m looking to make my first deal, jump into real estate. I want to do multifamily and my fiance was on board at first, but now she’s leaning more towards single family home, making it a home. We have three kids, five and under. I understand her perspective, but I was looking more towards invest, invest, and then create the home and go from there. So my real question is what is the better way that you guys feel that I could either still try to get the multifamily and possibly the single home or is there a different avenue I should take in getting my first steps into real estate? Thank you and I appreciate your time.

Derek:
Well, that’s a deep one because the first step in that comes from happy wife, happy life, right? So keep the family happy. You got to do what makes sense. You got three little kids. Obviously, if you can find a big enough multifamily, a big duplex where you can live in one side, maybe a house with an accessory dwelling unit where you can have your house and maybe the garage has a little apartment over it is a good opportunity. And obviously that all depends on your financial situation. What kind of income you have. You can buy a primary residence with a very low down payment loan and then does your debt to income ratio still qualify you to go out and buy another single family or a duplex that you can buy strictly as an investment? So a lot of individual questions would have to be answered to be able to get specifics. So kind of hard to house hack with the wife and three kids though. That’s a difficult one, I know for a lot of people.

Felipe:
I think I would tell them multifamily as well. I would not tell my wife, “Hey, this is what we’re going to do.” But I would show the numbers, maybe a little bit of education as to why I think I a multifamily would be good, and then maybe offer to buy the homey big house once the kids are a little older. They probably don’t need a huge house right now. I know personally me, my wife and my kid, we’re living in one of my very first rentals that we upgraded. We’re living here so that we can take advantage of the refinance. So we’re going to take out a huge chunk of a refinance and then we’re going to buy our forever home. But we’re holding back a little bit right now for a bigger, better future later. Because my kid’s only three. He doesn’t care.

Derek:
Yeah, he’s not going to remember the house.

Felipe:
He’s not and I want him to remember his forever home when he gets a little older, when he can remember it, when we can afford a little more. So my personal advice would probably be to go the multifamily route for now. I don’t want to say suck it up a little bit, but you know, what’s the saying? Live like no one else so that later you can live like no one else. So, yeah, that might be what I would do. Ashley, what do you think?

Ashley:
Well, you made a great point by saying show them the numbers. So whether it’s your husband, wife, whoever, write it down and show them how much you’d be saving or how much that extra unit would be paying your mortgage down. So how much extra cash you’ll actually be saving for that forever home? My husband and I, we lived in his grandma’s old house for free for many years. I mean, we lived there until my second was born and then we built our house. And if we wouldn’t have had done that and built a house right away or bought a house right away, we wouldn’t have been able to save for the house that we wanted. So I definitely think it’s worth the sacrifice, but it is hard to get to that mindset, because even for me like that second child, I’m like, “Okay, it’s happening.” I had already started real estate investing too. So it wasn’t like I wasn’t even into it.
So I understand as a mom and a wife of wanting that house sooner rather than later. But once you actually sit down and look at the numbers, I think that it’s more of a visual as to like look at what we can have in five years if we wait that long. And the multifamily doesn’t have to be anything bad, you can still live in one unit, beautiful with granite countertops, whatever, and then you rent out the other side. It doesn’t mean you’re living in a very basic small apartment. There are huge multifamilies out there.

Felipe:
And if you have a multifamily that you fix up while you’re living there, a really nice one. You can live really nice in a multifamily and then rent it out for top dollar when you leave, because you’ve literally, like you said, granted tops the good stuff. So you can show the numbers and say, “Hey, this will rent for this amount and we’re going to live really nice while we’re here.” So yeah, I think [crosstalk 00:53:07].

Ashley:
Here’s an idea, find a duplex with a unit that’s somewhat nice. You live there for a couple months while you rehab the other unit to however you want it, however your spouse wants it, then move into that unit and then you can either rehab the other one or just rent it out as is. That’s what I would do.

Felipe:
There you go.

Ashley:
I do regret all the time that we didn’t house hack, I mean, I guess we lived in a paid off house, but the fact that we didn’t live in a multifamily or anything like that or rental rooms.

Derek:
And my story is what not to do. I mean, when we moved out to this side of Tennessee, we bought the biggest house so we could afford this was 2004. I mean, I never should have gotten approved for that mortgage, but that was 2004 when they were just giving things away. I had 100% mortgage on that house that I had bought and we didn’t have money to do much or anything. I mean, before I started real estate and refinance, I had nothing in the bank. We lived month to month. I didn’t have any credit card debt because I was smart enough coming up to know that you don’t do that. I used my credit cards even then to make me money, but we had nothing to show. I had no savings. I mean, if something catastrophic had happened three, four or five years ago, I had nothing to back me up.
That was a scary time to come into as you’re in your 40s. So for anybody younger out there and you’re having trouble getting somebody, show them that what can happen. This is a much smarter situation so that when do get up into your 30s and your 40s, how much more secure you are and you have more freedom to do things when your kids are a little bit older. I missed out on all of that. My daughter is 19 years old now. And when she was growing up, I was hardly ever there because I was working 55, 60 hours a week constantly. If you listen to those stories and don’t do that to yourself, do the smart things now.

Ashley:
Derek, let me ask you, not even just say you have money, it’s nice to have money to do stuff like that. What about the weight off your shoulders? The relief of not having to worry if something did happen and you don’t have the funds for that. To me, that is like the biggest mindset. Is thinking and focusing on that.

Derek:
Yeah. That’s absolutely it. I mean, we’re on that now at this point, I feel so much better because I know if something does happen to my daughter, my parents are getting up there. I mean, if something does happen, I know that I’m in a position now that I can take care of anything that comes up and that’s a really good feeling to have that I did not have for a very long time. And I wish I would’ve figured it out sooner so I could have had it sooner, but you can’t go back in time. The best time to plant a tree is 20 years ago. Second best time is right now. Real estate investing the same thing. I didn’t do it 20 years ago, so I’m just going to do it now and I’m going to do it as quick and as fast and as big as I possibly can right now, because I’ve got a whole lot of time to make up for. So I’m trying to move quickly while still staying within somewhat of a comfort zone.

Felipe:
I try to tell people that ask me about real estate when they’re like, “Hey, are you scared that a toilet is going to break or the two o’clock in the morning call or all this?” And I’m like, “Well, look, if you have your systems in place, you’re going to be fine.” Those calls are going to happen. I promise. But do you want those calls to be going to you or to someone else?” In that, do you want to own the property or do you want someone else to own the property? 20 years are going to pass whether you invested in real estate or not. Whether you bought that house that you’ve been analyzing or you didn’t 20 years are going to pass and either someone’s going to be paying that mortgage down for someone else or a tenant is going to be paying down that mortgage for you.
So I think it’s really important. Like you said, get started immediately. Start growing that equity in those houses. So thanks for that answer, Derek, all the nuggets in this interview so far have been fantastic. Were going to have tons of show notes, but we’re going to be moving on a little bit more to a couple of random questions that we have for you. Just to get to know you a little bit better as an investor, what it is you do, things like that. So we’re going to ask you a series of four questions and we’re going to go from there. Ashley, do you want to go ahead and ask the first one?

Ashley:
Yes, and I’m actually not going to take one off the list. I wrote it down earlier when Derek was talking. I want to know about your time management. How do you manage your time? You have your W2, you self manage your short term rentals, you’re a realtor, you have a daughter. You’re running, you’re working out, you’re eating healthy. Do you have any time management tips that you can give all of us?

Derek:
All right. I have the worst advice ever on this.

Felipe:
Oh God, no.

Derek:
Because I have none. I don’t. I live so seat-of-the-pants. I just go through and do whatever works for me in the moment. I keep appointments in my phone. I run in the mornings. When I’m going to get my run in, it’s always in the morning so I can get it out of the way. I get up early to do that. I mean, I have somewhat of a schedule because I do have a W2 job. So I keep a notebook and I keep appointments in my phone, but that’s my biggest flaw is I really need a productivity coach. Somebody to teach me how to be more efficient with my time because yeah, I’m horrible. I am absolutely horrible there.

Ashley:
Well, are you the type of guy that just does it as it comes up or you procrastinate? Because I think that might make a difference as why you’ve been successful.

Derek:
Well, a little bit of both. It depends on the reward, right? If I think it’s a high reward situation, I tend to do it now, but consuming all this knowledge, one of the books that I consumed, an audio book was Eat that Frog by Brian Tracy, which basically talks about that. Whatever it is, the biggest pain in the butt that you got to deal with, just do it and get it done right out of the gate. So I’ve tried to adopt that mindset. If there’s something I really don’t want to do, I just need to do it and get it done right away. If it’s something…

Ashley:
So it’s not even really the biggest reward or something that you like to do.

Derek:
No. Correct.

Ashley:
Yeah. So I think that is what has made a big difference for you.

Derek:
Just get it done and I do keep a list. I have a notebook and I keep a to do list of all the kinds of things I need to do and then I just keep going back to it. And some things stay on that list for a week because they’re not that important and I know I can get to them. Some things I know I just need to knock out every day and some things yeah, I procrastinate horribly on and realize that I really should have gotten it done sooner. So yeah, I’m not good at that.

Ashley:
I think you just gave advice right there.

Felipe:
Derek, my turn with the next question. All right. I want to know what your top three books are.

Derek:
So again, I think books come down to where you’re at in your journey and in your life. So the top ones that I come up with, and once that hit me the hardest, The Big Leap by Gay Hendricks. That was a huge one for mindset to help me to understand why I was where I was at in my life and what I was maybe doing to hold me back. Another huge was Extreme Ownership by Jocko Willink that really helped me to understand, just take it. Just own it and make it yours. Don’t worry about what anybody else did. Everything is your fault, everything is your responsibility. Just fix it. The last one, I can’t pick one book, but anything by Ryan Holiday.
I am a huge Ryan Holiday fan, and again, all of these come down to mindset for me. The education aspect of it, learning how to do rentals, all that stuff was good, but none of that data would have done me any good if I couldn’t get my head straight to understand how to actually view things in life. So Ego Is the Enemy, Obstacle Is the Way or anything by Ryan Holiday. I listen to his podcast Daily Stoic, daily. I read his book Daily Stoic, daily.

Ashley:
I’m reading that too. I really enjoy it.

Derek:
I love that. He introduced me. I read meditations. That’s helping me because I still struggle every single day. Wait, I got 40 something years worth of mindset that I need to get past and you can tell yourself that you’re going to turn that off and you’re going to change. It doesn’t happen overnight. It’s like anything else. You’ve got to keep repeating it, and practicing it. So I have to remind myself every single day to keep moving in the right direction.

Ashley:
So based on that, my next question will be, what is your morning routine?

Derek:
I get up between 6:30 and 7:00 typically. I run four days a week. So I always try to get some exercise out in the morning. I do not look at my phone until 9:00 AM. I’ve made that my habit over the last six to eight months or so. So I get up, I exercise, eat some breakfast, get ready for work, and then again, I got the W2 job several days a week. So on those days I’m going to work on other days, I’m following up with clients and then the rest of my day is reactionary to what client’s calling me, what’s happening at work and just deal with it. But yeah, exercise is the most important thing for me in the morning.

Felipe:
Derek, where can our listeners find out more about you?

Derek:
You, you can reach out to me email at [email protected] or [email protected]. Either one go to my phone. Social media wise, I have an Instagram account, I have a Twitter account, I have a LinkedIn account, but I do not really pay attention to them very much. I am pretty active on Facebook. I don’t post a lot, but I’m on there a lot. I do post in the Rookie Facebook pages when I can. Every Saturday morning, after my long run, I do a short little mindset video. Immediately after doing an eight mile run, I pull out my phone and do a Facebook live, just trying to share some piece of nugget. Those are the best places…

Ashley:
That’s on your personal page?

Derek:
It’s on my personal Facebook page. I do have a couple of business pages and I always share it to my realtor page and I have a page for my meetup. So I share it to both of those. So it gets out there.

Ashley:
Yeah. I look forward to seeing that and maybe we can post a link to that too in the show notes. You guys will be able to find the show notes at biggerpockets.com/rookie26 today. Can’t believe it’s already been 26 episodes.

Derek:
I listen to every single one.

Ashley:
Yeah, that’s awesome. Thank you. Well, thank you so much for coming on today, Derek. From short term rentals, to doing your first deal, to private money. I mean, there was a lot of valuable information.

Derek:
And there’s so many layers of my story that we didn’t even touch on. I could talk for two hours about some of the stuff I’ve been through. So yeah, anybody’s welcome to reach out to me anytime. I love talking real estate with people.

Ashley:
That’s awesome. Maybe we’ll have to do a Facebook Live in the Rookie group with you sometime.

Derek:
There you go, absolutely.

Ashley:
Yeah, that’d be cool. Okay, well thank you everyone for joining us this week. I am Ashley, @wealthfromrentals and he’s Felipe, @felipemejiarei.