BiggerPockets Podcast 045 with Tom Sylvester Transcript

Link to show: BP Podcast 045: Finding Your Unfair Advantage, Rural Investing, and Getting Started with Tom Sylvester

Josh This is BiggerPockets Podcast, Show 45.

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Josh What's going on everybody? This is Josh Dorkin, founder of BiggerPockets and host of this - the BiggerPockets podcast. Here with my fellow host, Brandon.

Brandon What's up Josh?

Josh What's up Brandon?

Brandon What's up? You're back from your man-cation.

Josh I am back from the man-cation. Absolutely.  Yeah, I went to Vegas for three days of debauchery.

Brandon Hahaha. I'm glad. I'm glad. I'm sure you had a good time while I was attempted to hold down the fort.

Josh Yeah. I still work every day. But it was cool. Vegas... I used to live in L.A. so Vegas was a weekend trip for us and it's always nice to go back to although I got to tell you - they got to make some changes there you know what I mean. They're building that city out and they're doing some amazing things like City Center is absolutely incredible, but the city's getting shadier, like the strip. Shadier and shadier. There's little characters running around trying to like hug kids and get pictures taken. All the people giving you flyers for the nudie bars and every five feet there's somebody hawking a bar. It's kind of annoying. Outside the casinos, it's definitely shady as hell.

Brandon Outside the casino it's shady? Hahaha.

Josh Outside the casino. 

Brandon Not shady at all. I mean the dark, smoky rooms. Freaky, old people.

Josh Although I did learn a new game. Baccarat, which is a fascinating game. The best odds in the house and something I definitely recommend if you're a gambler. Mini-bacc is kind of fun. It's kind of fun so check it out. But yeah it as good. It was good. Thanks for holding up a fort.

Brandon Yeah. Well you know the other big thing about going on right now is the No-Shave November. I don't know if you noticed my scruffy beard is, you know...

Josh You always have a scruffy beard.

Brandon Yeah. This is scruffier though. I mean, this is like [inaudible] [02:32]

Josh You know, it's funny because I always thought it was kind of fringy until the T.V. was on the other day and I saw Matt Lauer was doing Movember. Yeah, if you don't know what No Shave November is, it's an honor of men's health I guess. Not the magazine but actual man health.

Brandon I just want to look more manly, I don't know. I don't know about health but...

Josh Yeah, it's all about growing a beard and representing for dudes and their privates.

Brandon Wow nice.

Josh Yeah, yeah.

Brandon Well, today we get to bring something back.

Josh What're we bringing back? Are we bringing sexy back Brandon?

Brandon We are bringing sexy back and we're also bringing back our...

All: Quick Tip.

Brandon Because we've got a really good one.

Josh All right so for today's quick tip we're going to talk about a new feature that - we ended up talking about this a couple times in the show but I just want to harp on it. If you go to BiggerPockets.com/meet or if you go to our network in the blue navigation bar, you will see that we have redesigned that page. Now you can go on BiggerPockets and find our who on BiggerPockets lives in your area. So you can actually sort users by zip code.

So you can say, "Hey, who's in my zip?" Or you can see who lives within five miles, ten miles. I think 25-50 and 100 miles. It's a great feature. We've wanted to do this for a while and what that'll is it'll allow you to basically better network with more people in your area. You think, "Hey, I have to go a RIA to network locally." Well, now you just go to BiggerPockets. Go to BiggerPockets.com/meet and you can find out who all those local folks are and follow them. Send colleague requests and link up.

Now there is a caveat, of course. In your zip code, anybody and everybody can go and see who's there. However, if you want to see folks in outer ranges - the 5, 10, 25, 50 and 100-mile range, you do have to have a Pro account. So, you can upgrade to Pro at BiggerPockets.com/pro in order to get access to that but otherwise we did want to make available everyone in your zip to all users. And again you can do that at BiggerPockets.com/meet. So that's today's...

All: Quick Tip.

Josh And it's nice to have it back.

Brandon Nice, all right.  Well, let's get on to the show. Today, we are going to talk with an investor, Tom Sylvester. Hahaha. That rhymed.

Josh Investor Sylvester.

Brandon Yeah, I wonder if he's cringing right now. Anyway, we'll talk with Tom Sylvester. He is a buy and hold investor from the Rochester, New York area. And he's really doing some good stuff over there in Rochester. So yeah, I'm excited to talk to him.

Josh Yeah, it's going to be good. He focuses, in particular, on rural properties.

Brandon Rural properties. Yup.

Josh Yeah, yeah. Rrrural properties in Rrrochester. Rrrochester rrrural. Say that ten times fast.

Brandon Hahaha. No.

Josh Hahaha. No, but Tom's got a lot of cool insight. We're going to explore a bunch of cool topics. So why don't we bring him in and get this thing going?

Brandon Let's do it.

Josh Yeah. Tom, welcome to the show, man.

Tom Hey guys, thanks for having me.

Brandon Yeah, thank you for joining us. This is going to be good. You have a lot of good stories to tell. I know, I read your stories on the BiggerPockets blog all the time. So hopefully we can get into those today. Why don't we just start really at the basic like we always do? How did you get started with real estate?

Tom Yeah, so it's a long story but I'll try to keep it relatively short. When I looked back, I was always an entrepreneur. When I was five, I actually created a candy store out of bedroom and everyone that would stop by the house would have to stop in and get some candy. Buy it off from the store in the bulk section, sell it off individually and things just went from there. I never was really a big reader. Never was really too much into the education and all the financial aspects of things. But when I got to college, someone gave me a book called The Automatic Millionaire. And when I read that, it kind of clicked and I said, " You know, I'm almost out of school and I got to figure out what am I going to do financially for the rest of my life?"

And from there I actually started to read a lot of different books. One of the big ones was Rich Dad, Poor Dad, as everyone on the show has said. So that changed my life. It changed the way I looked at assets, liabilities and really just money, in general. So I got out of school and I started investing in the stock market. I read as many books as I could. I thought I knew a lot and then realized I knew nothing at all and I could not control the stock market.

Josh Hahaha. You and countless millions of others, including all these smartest guys at Wall Street.

Tom Yeah. Yep. So from the stock market, I looked around and said, "Well, what else can I do to reach some of my goals?" Which one of the big goals was I wanted to have financial freedom and I wanted the ability to retire from a day job within 15 years. When I was looking to see what I could do to get there, real estate was a big one. And my wife and I had just graduated from college, we actually moved out to Rochester, New York. I got my first job. When we were looking around, we said, "You know, we're living in an apartment right now and we're paying a rent. Why don't we just buy a duplex and buy a mortgage paid for us?"

Josh Nice. Chime in, Brandon.

Brandon Okay, I do like that strategy.

Tom I gave Brandon a lob right there.

Josh Yeah there you go, man. Softball.

Brandon Hahaha. Yes, thank you. Did you buy a duplex then?

Tom We did not. So when we looked for our first house - my plan was the duplex and the wife said, "I don't know about this real estate thing." So we ended up buying a single-family. And there was a little bit of a setback in my investing career because I'm like, "Well, if I don't buy the duplex, now we've got this mortgage payment, what do I do?"

So I started looking around at local RIAs. Started talking to different people and then I was driving home one day and I heard this ad on the radio for a free two-hour seminar or how to make millions in real estate. And I said, "That's it. This is what I got to do." So probably most people on this call, "No, you go to that two-hour seminar and then they have an upsell." And that upsell goes to a three-day seminar and there's an upsell. Long short it, we ended up spending about $15,000 on the guru real estate training.

Josh Wait a second, hold on, Tom. Hold on. Hold your horses buddy. That's not true. I don't believe it. It can't really be that way, can it?

Tom No, no. And the best part was I put it on a credit card.

Josh Oh. Did you make the call and increase the limit on your card?

Tom I did, you know. That was the best part about investing is you got to increase that limit on your credit card. 

Brandon and Josh Hahaha.

Josh All right so you went it. You went to the one, got sucked to the next, to the next. How did that end up going for you? 

Tom So looking back at it now, I had enough knowledge after the three-day training to go ahead and get started. And that was a $500 training. So between the time I did the three-day training and the time that we were supposed to go on and take these additional four trainings, I ended up finding a duplex in the newspaper and I put an offer and got accepted.

Brandon Nice, that's awesome.

Josh Yeah, it's great. So tell us about that first property?

Tom The first property, like I said, was in the newspaper. I think they were asking $32,000 for it. We went back and negotiated it down to $26,000. And we ended up purchasing it for that price and one of the great things about that first deal was I had found BiggerPockets a little bit before that. So we got the offer accepted and I put a forum post on and said, "Hey guys, can you analyze this deal, make sure I ran the numbers right?" I had a whole bunch of people that came on that said, "Yeah, it's a great deal. Go ahead with it."

As we went through the rest of the deal, I ended up posting two more times on BiggerPockets just to say, "Well, there's a potential issue. Now we can't get financing because the bank's saying this is a car loan size. Not a mortgage size."

Josh But it must be rough to be buying properties the size of a car loan. 

Tom Hahaha. Yes, yes. So that was an unexpected issue, you know. If the gurus always said, "Go find the property and the money will be there," and we got to a situation where we had this great deal - people were telling me it was and we couldn't find the financing. So BiggerPockets actually gave some recommendations. We went out and found financing and we ended up closing that deal.

Josh Oh, fabulous. Nice. So 26K duplex, what did it rent for?

Tom $1,150 a month.

Josh That's pretty darn good.

Brandon It is. Did it need a lot of work or anything?

Tom No, so actually there were tenants existing in there. We put about $2000 into it since then, but most of it is just cosmetic. The furnace, roof, everything else was good.

Brandon So what kind of neighborhood are you looking at to get a $26,000 duplex? Is that ghetto or is that all right?

Tom So actually, it's the hometown the I grew up in. Population's about 3,500. So I'm very familiar with the area and small-world town.

Brandon Yeah, that's actually the same size of my town. I think in my little town we have 3,500 people and we don't have $26,000 duplexes.

Josh Downtown.

Brandon Hahaha. Thank you Josh.

Josh Do you guys want to have like your own little proto-town? Like you know, a love fest here or are we going to do another...

Brandon I like small towns. Let's actually talk real quick on that, because you wrote a post on that on the BiggerPockets blog the other day, about investing in a small area. So do you think that's a good idea for other people to get into, investing in a rrrural... Did I say that right?

Tom There we go. Rrrural.

Josh Hahaha. Rrrural.

Brandon They were mocking me before the show that they were going to make me say that and they just did.

Josh Make you say what?

Brandon Hahaha. So Tom, rrrural. What are your thoughts? You're a fan, correct?

Tom Oh yeah, big fan. I think a lot of it is - a lot of people think they have to go and invest long distance, which you definitely can do but there's another train of thought that you can always find something within your local market, you know, within an hour or two drive. So we actually live in Rochester right now which is about an hour away. But there's a lot of opportunity in that small town. And in that blog post I wrote, we talked about how you can build a lot easier. You don't have some of the issues that you have with the bigger cities. There's a lot of benefits to having that small, rural area where you can really build that business and not just be another fish in the sea.

Josh Yeah, that's great. And we'll point to a link to that in the show notes for the podcast which you can find at BiggerPockets.com/show45. Along those lines, are here any negatives really that would come from investing in a rural area? I could see potentially, just being at a distant to big hardware stores, big box stores, so maybe things like that? What other issues might potentially be out there for a rrrural...

Brandon and Tom Hahaha.

Josh Rrrural properties?

Tom After jousting out Josh and then you go and do it. Hahaha. Oh, I'm sorry. Brandon. Yeah so, there's a couple things. One is your pool of renters are a lot smaller. So we typically do buy and holds so you don't have nearly as many people that want to rent those properties. Also the strategy that you choose has a big impact on that so in that small area, there's only a handful of investors. So something like wholesaling, isn't going to work nearly as well as it does in the bigger city. So you really have to look at the strategy, what you're good at, what your niche is and figure out is that area good for you?

Josh Yeah, that's great. Yeah.

Brandon You know what, one thing I find in my area is that because it's really small - and you know there's larger town around where I live but just in general, because I live in a smaller area, I have a really hard time finding good contractors because there aren't a hundred or two hundred to choose from. There's like 15 of them to choose from. On that regard, when you find a good one - everyone knows who the good one is, and so it's easier maybe to find but I don't know. I have a real hard time. Do you find that at all in your area?

Tom Yes, you know you guys have talked a lot about contractors and how to find good ones. And one of the nice things with myself is, I actually partner with my father. My father's worked in construction for about 30 years, so he knows everything from plumbing to electrical. He's built three of his own houses. So he takes care of more of the contracting side of things and when we first started we were doing all the work ourselves, and then - I'm a big fan of E-Myth, Four Hour Work Week - and one of the big things I want to do as we built our business was to do less and less of the hands-on work ourselves, and hire more of it out.

So my father has a lot of local connections. He's a guy that knows who the good contractors are and who are the ones that we'd want to avoid and he does a lot of that - hiring those people in.

Brandon Yeah, that's smart. It's nice when you have a resource like that to use. You know, speaking of that - there's something in business called - what is it called? It's called an unfair advantage, where there are certain things in your business that you just happen to have that worked for you. In your case, kind of your "unfair advantage" is having a father who knew the business. And people will complain, you know, "Well, I don't have a father who knows the business." But everybody has an unfair advantage of some kind. You just got to find what that is and do exploit it.

Tom Yeah, I mean I think that's a very important thing. Everyone's got a thing that they're very good at and things that maybe they're a little weak on. Take those ones that you're very good at or take those opportunities that you have and exploit those. 

Brandon Yeah.

Josh Yeah. That's great advice. That's good advice. Hey, so I want to jump back if you guys are done with your little rural love fest here and maybe we can talk about some real things that people in the cities actually care about, you know?

Brandon Hahaha. Hey Josh, how much is your house payment?

Josh What's that?

Brandon How much is your house payment? Maybe you don't want to publicly say this, but I'll tell to everyone mine is $380 a month.

Josh Yeah, mine is many times the $385 a month and I do not live in a big house. I live in a little, 2,400 square foot house which includes a basement in the city of Denver. So yeah. That would be nice. No, but you know, of course I can go and walk half a mile to the train station to take me downtown in seven minutes and hanging out in the big city. I could go to restaurants. We have -- I'm not going to diss on the rural people - I love my rural people. Listen up, rural folks, Keep listening. We love cow tipping.

Tom I don't think you could go cow tipping though.

Brandon That's true. You can't go cow tipping. You can't get to bar fights quite as easy.

Josh Hahaha. You know, that's something I really miss. I really do. It's an opportunity I just don't get. All right so I wanted to circle back to the training stuff for a second, because I believe beyond just that training that you went to, you had experienced some of the negatives that kind of come with it and maybe you can talk a little bit more about some of those - the negatives that you experienced?

Tom Yeah, I mean one of the big things is - you know we all see a lot of people get started in real estate and a lot of people don't stay in real estate. That's one of the final four questions that you have. And with that guru training, a lot of is hyping people up and not really giving people actual knowledge. So you go to those courses and they give you just little crumbs and you grab that and you say, "Oh, this is great but I don't enough to get started." So one of the big things with the gurus is it doesn't matter how much money you're going to pay them, they're going to still upsell. So the next upsell that we would've had, would've been this personal mentoring and that cost even more than the advanced training - advanced training in quotes - that we received.

So when I look at all the people that took that training with us, I don't know if a single one of them is still in real estate. And thankfully for me, I found BiggerPockets and got the actual knowledge to do these deals. Not just what we got from this advanced training.

Josh I didn't bring it up just so we can bag on those guys up so...

Brandon But that's so much fun Josh, come on.

Tom Hahaha.

Josh No, I mean people listen to this. There are people who are listening to the show right now who are considering going out there and spending - going to a "free introductory seminar". Or they want to go to the $9.97 boot camp or $5000 or the $15,000. And so what can you tell those people about, you know, what to do there? How to walk away without blowing your wallet? Is it worth going at all or can they get anything out of these things that's going to help them? Or is there just a different route to take? I mean, it's different strokes for different folks in my opinion.

Tom Yeah, you know I think that's key. I'm someone who's very self-motivated. I can learn a lot on my own. I read a ton of books and it was good for me to go to the three-day training. It cost about $500 and what that did for was gave me "here's a spectrum on real estate". Here's all the different types of ways that you can invest. And then I got to pick and choose from that and say, well, back to Brandon's point earlier, "What can I be successful at based on the experience I have and the people I have around me?"

So going to that three-day training and spending that $500 was huge. But that's all I personally needed in order to move forward. And with the internet, with BiggerPockets, with all these things out there, with your local real estate investors - there's so much information you can get that you don't have to go and spend all this money with gurus to get there.

Josh Right on. Right on. And you know, that $500 - not to stick a stick in your back or anything here - but that could've been saved by reading The Ultimate Beginner's Guide to Real Investing on BiggerPockets. There's also a post that we've put together. It's A Hundred Ways to Make Money Using Real Estate. And we'll link to both of those in the show notes for anybody listening, because there are a ton of ways to get going and if that alone is what you need to know to kind of figure it out, then we've got it available now for those folks. Frankly, I'm glad you went to those seminars because they did help you out and they got you motivated and you're out and doing it and killing it. So that's awesome.

Brandon And you know, one of the things that people ask all the time on the forums, "How do I get started? What's the best way to get started with my first step?" Generally, the advice I like to give is just to surround yourself with real estate investors. Whether that's on BiggerPockets or it's at a local real estate club or however you can do it. Surround yourself with it. I mean, the podcast I think are a great way to do it. Because you just get to hear different ways of investing. Just like you said, Tom. You got to figure out what works in your area, with your certain skills and the people you have around you. Yeah, flipping might not work, wholesaling might not work, whatever might not work. But by the more you familiar yourself with it, the more you have a chance to find out what will work and then exploit that and make it work and become successful. So there you go.

Tom Yeah, there's a post that I put on my personal BiggerPockets blog - before I started blogging for you guys - about how to get started in real estate with $100. And with that post, it's a couple things you can do that don't cost a lot of money to really get you in and understand what is the spectrum of real estate so you can figure out is there something for you. And if so, where do you want to go from there. And you know, one of the big things with that is reaching out to the local people. Go buy a couple local investors coffee or I think you had said before, buy them steak. But whatever you buy, and whatever money you put out there is going to come back to you way, way more.

Josh Nice. That's awesome. And speaking of that, I got to plug something. As of last week - at the time that this show comes out - you will be able to go on BiggerPockets and find local investors through the site. You can actually find folks who are on the site in your zip code now and you can also find people within 5, 10, 25, 50 and 100 miles of your area. So you can literally just jump on the site at BiggerPockets.com/meet and start finding people in your area to connect with today.

Brandon I did that like an hour ago and I found like a dozen people in my town that I didn't even know invested.

Josh I did it and I was shocked too, yeah. I couldn't believe how many people in my zip code are on the site so it's pretty awesome.

Tom That's awesome. I just want to thank you guys. You know Josh put a lot of work into that site and you guys keep adding the features. They keyword alerts, the podcast. I started using BiggerPockets several years ago and I kind of stepped away. And one of the reasons I came back and started writing for you guys - and I'm very happy to do this - is to give back. Because you guys have given so much to me and there's so much free now, there's so many good people on that site and it's awesome being able to help people back.

Josh Oh thanks, man. Appreciate it. Appreciate it. All right, so I got a question that goes back to something that you were talking about earlier. You said that your wife didn't let you buy the duplex.

Brandon and Tom Hahaha.

Josh And I think that's something a lot of people probably experience. I knew when I was getting into it, my wife was a little skeptical. Hesitant. It wasn't my wife at the time, I don't think. But you know, still was a little nervous about it. How did you go about convincing her that buying - what was that, that $26,000 duplex - how'd you get her to agree? Did you buy her a big, fat stick over there or a diamond right? What did you do?

Tom Yeah, so we've talked about it and we've had a lot of tough conversations. One of the things that kind of kicked it in the gear was, "Well, I spent all this money on the credit card. I better go something to pay it back." But the big thing that really convinced her was - we looked out and we said, "What do we want our lives to be? What do we want our goals to be?" And I think Brandon was talking about this before: pick a goal, I'll say ten years, and work backwards and say, "How do I get that goal and what do I got to do in five years and three years and one year to get there?" And we knew that we wanted to be able to have financial freedom and this was one of the ways we could do it.

Josh Okay and what advice would you have for somebody else who - beyond that - whose wife might be skeptical, may not have thrown $15,000 on a program already? Who's just like, they really want to do it. How do you convince your spouse or partner to let you give it a shot?

Tom You know, any time you go do something, whether it's starting on real estate, people starting a business, there's going to be nay-sayers. And a lot of people with real estate are nay-sayers. But if you look at those same people that never invested in real estate. So go and look at people that are actually doing what you want to do and talk to them. Take them and your wife out to dinner and say, "What are you guys doing? Tell us how things are going?" and really talking to people who are doing it will help build that confidence.

Josh That's great advice.

Brandon Yeah, you know there's a post also just to recommend. Seth Williams wrote it probably a month ago, but it was basically called - I can't remember the exact title, but I'll link to it on the show notes - but yeah, how do you deal with a spouse or a partner who does not want to invest in real estate. It was a really, really, really good I thought. Again, I'll link to that in the show notes at BiggerPockets.com/show44.

Josh That's actually show 45 but nice try, Brandon. Hahaha.

Brandon Flash.

Tom Someday Brandon.

Josh BiggerPockets.com/show45.

Tom  Someday. Ignore mine earlier.

Josh Ignore Brandon. Yeah, there you go. Hey, rural.

Brandon Yeah, right. Thanks. Okay, let's move on. How about that? So since that first duplex, what kind of came next? What's the rest of your story look like?

Tom Yep, so the first duplex I actually bought with my cousin. I ended up partnering with him because I didn't have enough money for the down payment and I wanted to partner with my father but I don't think he really thought I was serious. You know, young kid out of college wants to invest in real estate, what's he going to do? Well, once he found that I knew what I was doing, I got a good deal and I was serious about it, I ended up partnering with him. And we bought quite a few properties together, mostly buy and hold. We've just kind of stepped up to a little bit bigger properties and now we're starting to branch out. Going into next year for that.

Brandon Okay cool. And I read somewhere that you opened up a liquor store or a wine store? Something like that?

Tom Yes, yes.

Brandon How'd that come about?

Tom So actually, when I was in college my father gave me a phone call. Best news you could ever have for a college kid is, "Hey I bought a liquor store." Hahaha.

Josh Hahaha. Nice. Yeah dad.

Tom Yeah. Somewhere between college and our breaks, I started working at the liquor store and being in New York, the Finger Lakes are actually a big area for wine. So I learned quite a bit working at the store, about the local area and then got to see the back-end of the business and how things were going. So from there, I saw that a liquor store was available in the next town for sale. I went and looked at it. They were asking too much money and I said, "Hey, we buy real estate. Let's go buy a building and I'll go get my liquor license and we'll open it up." It took like a year, but we ended up getting it and one of the nice things with that was being to expand out. So now, I'm not just held to real estate. I'm diversifying that portfolio into small businesses.

Brandon Yeah, yeah. You know, that makes sense. I'm a big fan of the diversification thing. I just can't say diversification very well. All right, so I'm wondering you mentioned earlier, you were just out of college and you wanted to buy this, your dad didn't think you were serious. And I was the same way, right out of college I bought my first. So let's talk a little bit about investing in real estate when you're young. A lot of our listeners are probably under 30. What kind of advice can you give for people who might be in that age bracket?

Tom Yeah, I think one of the first things and going out and getting educated. So a lot of people want to get into real estate but don't spend the time to actually learn the business and learn the financials that really go along with that. There's that saying out there, "You got to look a hundred deals, put offers in on ten before you buy one." And although, you don't necessarily need to go out and look at a hundred deals, you got to start and understand what makes a good deal so that when you go and talk to a bank you can put together that information and say, "This is why this investment makes sense."

Josh Okay, but then I'm this fresh, pimpled kid at 22...

Tom Hahaha.

Brandon You are?

Josh Yes, I am. That's right. Who walks into the bank and says, "Hey, I found a deal." And they look at you and they say, "Come on kid. Seriously?" Or do they not say that? What's that all about?

Tom Yeah, so actually we got turned down for our first deal with the bank. We went and showed them the deal. Everything looked good and they called us back a week later and said, "You know. You just don't have the assets. The deal looks good but we're not going to be able to give you that loan." So that's when we freaked out a little bit and said, "Oh great, we're going to lose this deal." Once again, I turned to BiggerPockets and people gave me recommendations on there. We ended up finding another bank that would finance us, but what we've done since then is really go to a lot of private investors.

And what's great about private investors is you don't have to go through the same qualifications that a bank has. So one of my private investors was actually one of my teachers from the past. He knew what I was doing in school. He knew that I was credible. And when I showed him some of the information, he really liked that. There's a lot of different ways to go about this. And it's just figuring out what works for you. You're not always going to be successful the first time, but there's always a different way to get a good deal going through.

Josh That's awesome and I think you're the first person I've heard who's gone to their teacher. I've heard the mailman. I've heard the pool guy. My wife's lover on the side. But never my ex-teacher.

Brandon and Tom Hahaha.

Josh So that's awesome. That's awesome. Are there any other tips that you might have for some of the younger people, for just what they can do to get the ball moving?

Tom Yeah, I mean if you're not having success, you just got to keep being persistent with it and try something different. One thing that's always brought up is finding a mentor. I like the recommendations of going out and finding someone who's doing it and offering your services to them. Even if you're not making money, you're getting so much more in the education. And then you have real, hands-on experience to be able to then go off and do deals on your own.

Brandon Yeah, that's cool.

Josh Yeah, for sure.

Brandon So we talked about earlier about the unfair advantage and I think as a young person that is your unfair advantage, if you think about it that way. And the reason I say that is because when you go to an investment club and there's 50 guys around that are all 40 to 60 years old - you kind of blend in with everyone else. But when you go and you're 23 years old, and you're like on fire – every one of those 50-year-old guys looks at the younger guy and be like, "Oh, that was me. I want to help this kid." I think that's a huge, huge asset there. Young people don't play up enough.

Tom Yeah, you know you hit the nail in the head with that. I have so many people that want me to be successful just because of that. They see this young guy who's out there willing to put work in and they want to give back because they were in my shoes a long time ago. The second thing with that is being the younger person, you've grown up in social media. You know how to use the internet. My background's actually in IT, so there's a lot of benefit I have to working with other investors where I can help them get the Facebook page setup, do some of that initial marketing. Some of the stuff they might not have the familiarity with.

Brandon Yeah, that's very, very, very true. That's very cool. Well, awesome. Why don't we...

Josh What? Continue. You were going to say, "Why don't we--" and then you're going to ask him about his private investor teacher and how he ended up locking him in and how that happened and anything else about private investors?

Brandon That's exactly what I was going to do. Hahaha. So why don't we jump back a little bit to where you talked about that teacher that invested with you? Can you kind of share how did you even approach that with him? Did you just call him up and say, "Hey, remember me? From high school geometry?" I mean how did that work?

Tom Hahaha. Yeah, so I think one of the things that's important is to keep in touch with people. You never know - and not just for a business aspect - but you never know when you're going to be able to help someone else out or they're going to be able to help you out. So I kept in touch with that teacher. We actually met out for lunch one day. He saw online that we were doing this real estate investing and I told him that we were looking at deal in his town. He asked about some of the details and I walked him through it. And he actually offered, I didn't even ask. He said, "Well, I've got some money sitting around if you want me to invest with you." So we talked through it. We played, we had the money.

Brandon That's awesome.

Tom And one of the big things he liked was not only was he making more money than he was saving it in a savings account, he was also investing in a local community. So we took a building that was vacant and renovated it. Got tenants in there and now it's not eyesore to the community anymore.

Brandon Nice, nice. So what kind of terms do you offer to your private investors, whether it's your teacher or somebody else that you work with?

Tom So a lot of it depends on the deal and a lot of depends on what those people want. So there's some that we've structured monthly payments or interest-only payments. And then there's some where the people just said, "Go, I want my money to roll and we'll do a lump sum payment at the end with principal on interest."

Josh So you could pretty much fabricate it however you want, you just kind of come out with your pitch and they either like it or they make modifications and you go from there?

Tom Yep.

Josh What do those rates look like? And what kind of interest rates are we generally talking about?

Tom So we've had some down into the five percents. We have some this point up into 8 1/2 to 9%.

Josh Okay, not bad. Not bad.

Brandon You know, you mentioned something earlier that I want to touch on again. I never really thought about it in this terms, but about keeping in touch with people in your past. And then you mentioned Facebook and I thought, "I don't think enough investors do that." Like, personally I don't talk about my investing on my Facebook ever. I know there's a lot of reasons why maybe you don't want to, but at the same time maybe there is a reason you'd want to because you've got three, four, five hundred friends on your Facebook and each of them have three, four hundred friends. I mean that's a huge network you have of potential people when they can see you succeed that they may want to partner with you. I don't know. I'd be curious to know how many people have found deals and actually work that way.

Tom Yeah, definitely and even just beyond that - once people realized that I was investing in real estate, I've actually helped a lot of other people get started in real estate. I never knew they had the passion for it. They took me out for coffee, like I recommend. And now they're out being successful too. So to me, that's awesome.

Brandon Yeah, that's awesome.

Josh I think there's an advantage. You know, there's thing you want to be cautious about, right? You start publishing things and you may get some people out of the woodwork, right? You make it that old, middle-school buddy who's your chum and who set in and like, "Hey best friend. You got cash?" or your second aunt three times removed tries to hit you up. But I guess that all kind of relates to how you deal with your family. Personally, if somebody hops out of the woodwork and is like, "I need money from you." You know, piss off.

Tom I do get that almost weekly, honestly. Like I have old friends of mine that'll come out of nowhere and just ask me for money. Like all the time because everyone thinks I'm like loaded or something. Because obviously I talk about real estate. It's always like, "I need twenty bucks dude. I just need twenty bucks." No, I need twenty bucks. That sucks.

Josh Yeah, I don't know about that. I don't know. But yeah, I think that's the downside but I think by sharing stuff and blogging and putting things out there, I don't think there's really that much of a detriment other than - the benefit is you're going to have a lot of opportunities potentially come to you.

Brandon Yeah, I agree.

Josh So where are you buying today? Are you still buying in the rural areas? Are you buying in the city in Rochester proper? What's kind of the pathway?

Tom Yeah, so at this point we're still buying mostly buy and holds in the rural areas but one of the things we're looking at in the next few years is to possibly get up closer to Rochester in the city and do more flips. So my father actually is no longer working a day job and because he's got the construction background, he could be the GC on our jobs and sub-out flips that will actually give us more cash for the business.

Josh Are you still working a day job or are you full-time?

Tom Yes, I work a day job.

Josh Okay. So how do you manage all this? I mean, you're a landlord. You're not flipping or anything like that so I guess it just comes down to having good management, is that right?

Tom Yeah. I wrote a blog post about this a couple weeks ago, about the benefits of having a day job. And a lot of times people get into real estate and they say, "Well, I want to get into real estate. Quit my job. Whatever." There's a lot of people that have done that and been successful but there's also a lot of people that have probably quit their job too early. One of the big things with having a day job is you have stability. You can roll that real estate business in your spare time without having to worry about, "How am I going to pay my rent this month? How am I going to put food on the table?"

And the other thing that's forced me to do personally is, create processes and then outsource those to other people. So I think you guys had James Vermillion on, and he talked about when you're working that day job, you got to have the integrity to actually work that day job and not do your real estate stuff. So I take that very seriously as well. And every time I do something new, I create a process for that and I say, "How do I outsource this to someone else?" So when I'm at the day job, I can focus on that. And when I'm home, I can focus on my family.

Josh That's awesome. Write that down, folks. That's really, really good advice. And I think it's better in this case - the better safe than sorry - than better to leave your day job later than to early.

Brandon Yeah, and we talked about that last week with Michael Woodward about how he left his job but then he had to go back to it because the market changed a little bit and he didn't have that foundation. That was show 44 of the podcast. So be sure to go back and listen to that. And you know, one thing - because I work obviously a day job here on BiggerPockets, I spend all my time here - I had to hire a manager - not only just a resident manager - but I hired an office manager to take phone calls and show units and all that. And I pay her $500 a month plus $100 per unit that she rents out. So if there's three or four units in a month, she'd make a little more. It's very part-time but it was enough that it relieved most of my stuff that I had to do. And so between my wife and my office manager, they manage most of things.

And you know, you don't have to have full time employer. I think people think you have to pay $3000 a month in benefits to have a manager to do something for you, but there's a lot of people at home who would love to work five or ten hours a week to help you out and make a little bit of side income. So when do you believe the right time to quit your job is? When should a person actually do it and jump into it full-time?

Tom Yeah, I think it's probably going to be different for each person. One of the things that I like is - I wrote a blog post on Cash Flow 101 - and how I actually use that to help to find my investing strategy. And one of the great things out of that is you want to build your passive income to be greater than your expenses. Once you do that, in theory, you can quit your job and still be able to cover all your bills. So I think that's a good base line.

Josh That's awesome.

Brandon I've played cash flow you know - there's two ways to play it. I've played it. One they say, as soon as your income meets your expenses - your passive income meets your expenses - you can quit. And other people play you have to have double the income, in order to quit. I tend to lean more towards that, because things could definitely go wrong. And Josh just suddenly pulled his dog up into the interview. So we're going to have a four-person interview now.

Josh Yeah, he decided he wanted in on the studio, so yeah. It's all good.

Brandon Nice. All right well. Nice. All right, do you have any other tips you can offer for kind of balancing your time between finding deals and working a job?

Tom Yeah, I think the biggest thing, like you said, hire people. It's a big theme of Four Hour Work Week and E-Myth is really create systems and don't work in your business, work on your business. So everything I do, I say, "How can I create process that I can now hand off to someone else so that I don't have to deal with it?"

Brandon Yep. Smart.

Josh Nice. Nice. How are you finding deals these days? Is it through the MLS, direct mail? I know Rochester's very similar to my favorite town in America.

Brandon Deeetroooit. 

Josh Basketbaaaall. Buffalooo. You know, the whole quarter's pretty similar and so deals are plentiful, I believe. And quote unquote deals, right. Inexpensive properties are plentiful but I think the challenge is knowing the difference between a cheap property and a deal.

Brandon That's a tweetable topic right there, Josh Dorkin. 

Josh There you go, man. There you go.

Brandon Look at you being insightful. Wow.

Josh Apparently, once in a while, I come out of my shell. So let's talk about how you're finding deals and maybe how you're identifying the difference between those cheaper properties and the real deals.

Tom Yeah, so I know a lot of people wanting to talk about direct mailing and all the marketing they do. One of the benefits of investing in the rural town is the fact that I actually do very little marketing. We found deals with just people putting it on the newspaper. We've had people actually come to us because they know we're investing in that town. We bought deals tax foreclosure auctions. So like you said the deals, at least in my area are pretty plentiful that we don't have to search too much for them.

Josh Gotcha. What about the difference between a deal and a deal? A deal in a cheap property.

Tom Yup, so one of the reasons - once again going back to that rural town - why I really like it so much is we're very familiar with the area and we know when a deal is good and when it's just a cheap property. There's a tax foreclosure auction that properties sold for $7,500 which was pretty crazy. We didn't buy it though, because we knew that area - that property - wasn't the area we wanted to invest in. There were actually some issues with the house that didn't make $7,500 a good deal even though it was very cheap.

Josh Yup, so how would an outsider who's saying, "Detroit, man. $500 house. Let's go. Rochester. Buffalo. I don't know. Columbus, Ohio." Let me piss off everybody in the area there. Come on. What else can I throw out there? No, but how do I know that? Is it just having an intimate knowledge of the area? Or is there any other way to figure that out?

Tom Well, first I'm glad that now I'm not the only one that Josh has pissed off. 

Brandon and Josh Hahaha.

Tom I feel I have a group connection with half of BiggerPockets.

Josh The Haters Club.

Tom For me personally, it's just knowing the area. I wouldn't go on and invest in an area that I don't know. I know that people previously in the podcast have been able to do that with success, but for me, personally, I know the area and I know what can make a good deal. So I think that's it.

Brandon Yeah. That makes sense. I think that can be applied to anybody, whether you live in a small, rrrural area or big area. I know my area, my town, all the surrounding towns total make up maybe 50,000 people, altogether in my whole county. So if I can understand my country pretty well at 50,000 people, go find an area 50,000 people and make that your farm area. Just pick a small area of a city of pick one neighborhood, and make that your area. Make that your small town and just master that one part. So that's my quick tip for today.

Josh Well, that's great. Yay. Quick tip!

Brandon All right cool.

Josh I was going to hop to the kinds of properties that you're investing in. So you bought the duplex, you bought the liquor store. What's next, man? You're going to open up a pot shop or something?

Brandon Hahaha.

Josh Come move out to Washington State.

Brandon Yeah, this isn't Colorado or Washington.

Tom I'm not in Denver, so. But actually my sister did just move out to Denver this past week so who knows? Maybe in the future. Hahaha.

Brandon To open a pot shop?

Josh All right. They're opening up everywhere. It's crazy.

Tom I can't imagine.

Brandon Yeah, we got four in my little town. Four of them already. So anyway. So what kind of properties are you buying?

Tom Yeah, so for a while it was duplexes. We actually bought one single-family that we're planning on flipping. We weren't able to flip that so we're renting that out now. But mostly, bigger multi-families, and then like I said, we're doing some business planning and we may look into flipping more in the next year.

Josh What kind of bigger multis?

Tom Four units and up. The building that we bought where we put the liquor store was the first fourplex that we purchased and it was a mix used residential-commercial. Which was a good way to get our foot in the door for some of the commercial space. One of the things that I think people have said in the past is a lot of times, you do just as much work for the bigger deals as you do for the smaller deals. And I definitely think that's important piece of advice, but you have to understand what to do on those smaller deals before you can step up. And I think we're at the point now where we understand enough about the process that we can do those bigger deals?

Josh And what do those look like? The bigger multis that you've acquired?

Tom Yep, so the fourplex is the biggest one so far but from there we'll look into fourplexes and up.

Brandon You mentioned that you tried to flip a house and it didn't really go well. Can we talk about that a little bit? What happened there? Because I've been there a couple of times.

Tom Yeah, so one of the things that I think goes back to is the rural towns and what strategies work. For us, one of the things we realized was your buyer's market is so much - or your pool of potential buyers is so much smaller in a small town.

Brandon Amen.

Tom Yeah. And then really, the biggest mistake that we made was thinking we knew what the ARV was when we did it. So we picked up the property. We actually put the right amount of money into it, but we thought the ARV was $20,000 more than it actually was. So when we had it on the market, it just wasn't selling.

Josh Gotcha.

Brandon And again going back - that's another problem with investing in small towns - is that it's a little bit harder, I feel like, to find an ARV. I mean, I got a house in my town that sold for $110,000. Another one sold for $170,000. And I have no idea. Like they're the same house.

Josh Aren't you like your own comps half the time, Brandon?

Brandon Well, multi-family, I have my own comps, yes. But single-family, I don't know. I worry about that because if I'm going to go flip a house, I don't know if I'm going to be able to sell it for $110,000... $120,000… $150,000... $170,000. Because there's been five sales of those style houses in the past six months so how do you justify it? I don't know. It's tough.

Tom Yeah, and that's where, like you said, we're looking at it right now. If we get into flipping in the next year, we're probably be up in some of the suburbs of Rochester, where a lot of easier to find comps, a lot more potential buyers.

Brandon Yeah, I think I'd like to keep my buy and hold where I'm at but I wouldn't mind moving up to like, Tacoma or Seattle for my flipping. It just makes more sense. They have more buyers. Well, cool. Are you going back to the buy and hold then? Are you managing your own properties yourself? Like your dad taking phone calls or do you have a property manager?

Tom So we manage them ourselves and it's actually split between my wife and my father. So my wife handles the calls, schedules the appointments and then my father actually does the day-to-day maintenance as well as some of the showings.

Brandon Okay, cool. 

Josh Gotcha. And how's that going? Going well, I hope?

Tom Yup, going well. One of the key pieces was, you didn't hear me involved in that at all. That was a great thing where I've been able to pull myself out so that things aren't hinging on me.

Brandon Very smart.

Josh Nice, so you go to work and they handle the drama and all the maintenance and the screening and everything else.

Tom Hahaha. It's a good way to be, huh?

Josh Fabulous. Yeah. I love it. And what about tenant screening? Do you guys have a particular screening process? What kind of criteria do you guys have set?

Tom Yes, so it's actually funny when you guys wrote Ultimate Guide to Tenant Screening, which is phenomenal by the way.

Josh Great plug, by the way.

Tom Hahaha.

Brandon Which I will link to in the show notes, if people want to check it out.

Josh Wait, what show is this, Brandon?

Brandon Haha. This is show 45 of the BiggerPockets podcast. Anyway, sorry. Continue. You were giving me praise.

Tom When you guys wrote that, it was actually the exact same screening process we used and you know, income three times rent, check your background, checking credit and one of the things that's big for me is really - I think you guys call it the "stress quotient"- but I call it the "headache factor." So after I get through all the screening process, I just look in are there any signs that this tenant's going to be trouble and really giving a headache? Because I don't headaches. But you know, that plug, that screening ad is amazing. So I would highly recommend any landlords, you don't necessarily have to follow each piece of it, but it's a great foundation.

Josh Well, thank you. I think it's great to tell our own content. I mean, listen. The goal is to take what was out there and improve it and come up with the absolute greatest piece of content about screening tenants that's out there. And I think we did that so check it out on the show notes at BiggerPockets.com/show45. Cool, so what about red flags? What would be the headache factor? Is it a guy who drives up, everything looks good but his car has got a bunch of crap in it? Is it the tattoos in the knuckles? Facial piercings? What are we talking about here?

Brandon Mike Tyson tattoos.

Tom Hahaha. Yeah, Mike Tyson.

Josh I actually saw Mike Tyson when I was in Vegas a couple days ago and was riding the escalator - the opposite direction of him. And that guy, man. Everybody goes crazy when they see Mike Tyson. He's just a monster celebrity.

Brandon Is that how it is when you go to conferences, Josh? Everyone's like, "It's Josh Dorkin!"

Josh Yeah, that's because they think I'm Adam Levine.

Brandon Hahaha. That is true. That is true. Anyway. Red flags. What do you look for?

Tom Yeah, a lot of the times is just the small things. So I had a blog post recently about walking through actually a tenant that we weren't going to rent to and there were just so many red flags that we ended renting to another applicant. But one of them was, we told her we would follow-up with her in three days and she kept calling us back in the meantime. Another one was she had to move very quickly. So in her situation - I actually believe her - and it was her landlord who lives upstairs. He had a medical issue and he had to move downstairs. But anytime that someone's got urgency or anything like that, it's a red flag that, "Why do they have to move so quick?"

Josh That's a great one. That's a great one. Yeah, there's usually a story behind it, right?

Tom Yep, yep.

Josh And stories behind it usually equals negative connotations in a lot of cases. So yeah, that's great. So where are you at today? Sounds like you've got a bunch of buy and hold properties. You got this mix use. You've tried the flip thing. Sounds like you didn't get back into it. Is your goal to just keep building the portfolio - the rental portfolio and eventually start to get into the flips and at that point or somewhere around then, thank for your bosses very much and move on, on your own or what are we thinking?

Tom Yeah, so I said in the beginning of the cast that my goal was fifteen years and one of the options is to retire. So I'm about halfway there. I said "the option" because I'm actually very good at my job so it's not that I'm necessarily going to leave but I want the option to do it, which is great.

Josh It sounds like you love your job, which is awesome.

Tom Yeah and you know that's actually a good point. You don't have to get into real estate and think that you just have to leave your job. If you enjoy what you're doing, real estate can just be a supplement and it can give you options and opportunity for the future.

Brandon Yeah, that's good.

Tom But for the next phase, I'm actually reading Jay Scott's two books right which are phenomenal. The book on flipping and the book on estimating.

Josh I think it's titled BiggerPockets Presents: The Book on Flipping Houses and BiggerPockets Presents...

Tom Yeah, those BiggerPockets guys, they just got some good stuff out there. Hahaha.

Josh They do, man. They do. Yeah.

Brandon Like a half-hour commercial here. This is crazy. Hahaha.

Josh Yeah, those books are really good, man. They're real-- Jay is a process guy. He's like super anal retentive about really doing that and the book is fantastic.

Tom Yeah, and you know we talked about the money you spend investing in yourself. Those two books, I think, were combined $50?

Brandon Yup.

Tom I mean Jay's got a lot of experience and the amount of real-life information that he puts in there and the step-by-step process - one of the best $50 I've spent.

Josh BiggerPockets.com/flippingbook. Check it out. Let's move away from the commercial here. This is completely unintentional and sometimes it happens as there's a lot of cool stuff on the site but I think we might want to start easing into the next segment here of the...

It's time for the Fire Round. Fire Round. Fire! Fire! (siren wailing)

Brandon Good job.

Josh What is the fire round, Brandon?

Brandon The Fire Round is the part of the show where we throw some fire-y darts at you while you get pinned to a wall.

Josh Hahaha. What?

Brandon Hahaha. Sorry. Sorry, I was thinking of a circus I was at last week.

Josh Omigoodness. What show is this on? Is this like your fantasy? Dreams? You weirdo.

Brandon All right. These are all quick questions, quick answers that we get from the BiggerPockets forums. So number one, this is an interesting question. It said: will tenants pay more if you roll the cost of different expenses into the rent? In other words, if you've got a property - let's say that your fourplex - could you charge your tenant for the water sewer garbage and just divide it between the tenants and just add it to their monthly rent? Why or why not?

Tom Yeah. A lot of it is the convenience factor. So if you roll some of those things in and the tenant knows they just have to pay their rent and they don't have to worry about some of the other stuff, they'll definitely pay more. Now with that said, we in general like to put most of those charges on to the tenant because tenants like to keep thermostats at 80 degrees and I don't want a high utility bill. So they will pay more but we try to push them back onto the tenants.

Josh And I think that's the safe bet, especially for new landlords to not do that because I, personally, have experienced the negatives of the 80-degree thermostat and sink's running all day. Hoses running, you know. And those bills can get really crazy if you let that happen.

Brandon I put a lock box over my spicket at my apartment complex. I put a lock box because they were washing their car like, three, four, five times a day. People were washing their cars, I mean, every day.

Josh Nice. At the car wash. Down at Brandon's place everybody, come down. Let's wash yo car.

Brandon I think that one lock box - that $20 lock box saved me like $400 a month. It was insane.

Josh Wow. Wow.

Tom Oh yeah. So quick tip, we have to pay water in our town if we own the property. And we got a $800 water bill because of the tenant's toilet was running and they didn't let us know. So at Home Depot, they actually have some of the parts you can put in there that'll make sure that it doesn't keep running. I think it's a $13 part and would've saved us an $800 bill?

Josh Do you know what that's called? Can you...

Tom Yeah, I'll give you a link.

Josh Next question is, what app on your phone can you not live without? What app n your phone can't you live without?

Tom For me, I'd say Dropbox. So for anyone that hasn't used Dropbox, it's a cloud storage platform so I can put documents that are on my PC, get them on my tablet, get them on my phone and one of the things that I do is, my father gets paperwork sometimes, so he'll actually scan it in, I have it scanned to Dropbox so that I can see it in my office without having to actually get the paperwork.

Brandon Nice, cool. All right third question then. What do you believe is your biggest mistake you've made in your investing career?

Tom Biggest mistake would be not understanding ARVs enough. So in our first couple duplexes - once again, same thing with the flip - we renovated a little bit too much upfront. We bought for cash, we renovated and then we went to refile with the bank. And on those first couple properties, we ended up not being able to refile and pull all of our cash out. So since then, we have a much understanding of the ARVs and we can actually pull cash out when we do a refile.

Josh Do you have any quick tips on how to better understand ARV?

Tom So one of the big ones would be talking to local realtors, but we're at the point now - just like Brandon - we're our own house. So we pick up a duplex, it's comped against our other duplex.

Josh Gotcha. Right on. Okay. Next question. Let's say, I own four homes and can't get any more loans. How do I proceed?

Tom So I mentioned it earlier, private investors. And I think anyone that's been in real estate knows - you start out with financial financing or whatever but to really grow it's the private investors.

Josh I think that's good advice and another tip that somebody had given us on that question was to get the loans in your name, then your wife's name, then your business' name and on and on. Kid's name. Uncle's name.

Brandon Good job.

Tom Yeah, that works too.

Brandon All right. So next question. I'm going to a new location that I'm not real familiar with, to look at properties to buy. What should I do first? Like how do I get from there?

Tom Yeah, one of the biggest things and it doesn't cost a lot of money is just driving for dollars. So go up and down each of the streets, either driving or walking, talk to the neighbors. They're going to be give you more information than you can get anywhere else. 

Brandon Yeah, that's good.

Josh Good, good, good feedback. All right, last question in the fire round. Tenant drama. Man, oh man, do I love tenant drama. Woo. All right. How would you deal with two tenants who absolutely hate each other and complain to you incessantly?

Tom Hahaha. That's a good one. A lot of time if tenants have issues - typically what happens is it's not necessarily that tenants that complain to us, but their neighbors will. And we'll just let them know to call the police. So they handle it in a lot of cases

Josh Well, it doesn't bother you. You don't need to answer the phone. You give it to your wife and let her deal with the drama.

Tom Exactly.

Josh You're a real, nice guy Tom.

Tom Yeah.

Josh Hahaha.

Brandon That's great. That's great.

Josh Pawn it off to the cops and to your wife. That's what you do.

Tom Outsourcing, right?

Josh Hahaha.

Brandon Hahaha. There you go. All right, well why don't we move in to the final section of our interview. Something we like to call the...

Brandon and Josh Famous Four.

Josh Four. Get with it, Tom! Come on, man.

Tom I'm surprised you guys haven't outsourced that one yet.

Brandon I was going to. I just haven't got on Fiverr to do it yet.

Josh We like it. Don't you like our operatic duo?

Tom I do. You guys actually get on the same key sometimes, which is phenomenal.

Brandon Sometimes. Sometimes, we do. Miracles happen.

Josh All right, Famous Four. Let's start with your favorite real estate book. What is it?

Tom Rich Dad, Poor Dad. Haha. I know that's the clichéd answer so I'll give a second one. You guys actually had him on. Frank Gallinelli. Cash Flow and 36 Other Formulas that Real Estate Investors Need - or whatever that title is. I think the process of real estate is pretty straight-forward. It doesn't take much to learn how to do land lording or whatever. But really understanding the numbers and what makes a good deal, that book gives you step by step, what the key calculations are and then examples for it.

Josh That's awesome. Yeah, I love Frank. He's awesome. He is probably one of my favorite people in the business. He's a Columbia professor who's teaching people real estate. I mean, would you rather go to the guru who's done whatever they've done or Columbia professor who's a mad scientist with the numbers and can teach you how to do it? I'd pick Frank. Great book. Good guy. Check it out.

Brandon And also you mentioned that the very, very start of the show - I just want to reiterate it here. You mentioned a book called The Automatic Millionaire by David Bach. I want to just recommend that people read that book. Has nothing to do with real estate specifically. They have another real estate version of it but the actual book itself was incredible, I thought. Really, really book. I don't think anybody's ever mentioned it on the podcast, yet. We will link to that in the show notes. But favorite business book, non-real estate.

Tom So once again, the clichéd answer: E-Myth and Four Hour Work Week. Both of those are about how do you outsource, how do you work on your business not in your business. I'm going to go and add some of my own. Think and Grow Rich, that's a timeless classic. Gets you in the right mindset. And then How to Win Friends and Influence People. I'm somewhat introverted but reading that book and really understanding how to communicate with people - I mean, real estate's a communication business - so that book changed how I look at relationships and how I communicate with people.

Josh Nice, nice. Good choices, good choices. What about hobbies? You live up in Rochester so you must like, I don't know, scouring abandoned buildings? What do you do for fun?

Tom Yeah, I was going to say I get sand every Sunday when the Bills play.

Josh Oh there you go.

Tom So I have my wife and two-year old daughter. So they're my world. Spend a lot of time with them. We actually have a home theater we built in our basement so my wife and I do a lot of movies. I like to play video games and then I like to golf too when we get a couple months here that it's not snowing.

Josh Nice, nice.

Brandon That's cool.

Josh Yeah, right on. 

Brandon We should have a BiggerPockets golf like...

Josh We should, a BiggerPockets online video game tournament for those people who play.

Tom Oh yes. We definitely should.

Josh What's it like-- XBOX 27 now or something?

Tom Yeah. Call of Duty just came up last week so hit me up.

Josh Yeah, Tom is organizing the Call of Duty tournament. Make it happen.

Brandon That's awesome. That's awesome. All right, final question. What do you believe, Tom, sets apart the successful investors from those who just come and go and give up?

Tom So I'll first give the clichéd one that's been repeated and then I'll give my own again. Persistence and consistency. You're going to be successful, you just got to keep with it and stay on. But the biggest thing, I think is understanding what your why is and I tell people this all the time. You look at people that are successful at losing weight. And typically they're successful because they have a strong enough why so that when things get difficult, they go back to that why and that overcomes any of the difficulty. It's the same thing with real estate. Why are you in this business and what does it mean to you? And when you have that eviction, or when you have that crazy tenant, your why has to be big enough to get past that and as long as it is, you'll definitely be successful in this business.

Brandon That is terrific advice. Terrific. Well, cool. Well, why don't we wrap things up here. Tom, where can people kind of connect with you and find more? Obviously, BiggerPockets but...

Tom Yup, so I'm all over. LinkedIn, Twitter, G Plus. But BiggerPockets is the good one.

Brandon Cool, and you have a blog as well at Tom Sylvester?

Tom tom-sylvester.com

Brandon Perfect.

Josh Right on. Check it out. And definitely be sure to check out Tom's articles on his BiggerPockets blog, on his blog, on the official BiggerPockets blog and everything else.

Brandon He's all over.

Josh Yeah, he's global. He's worldwide. We definitely appreciate having you on the show. Lots of great feedback. And a reminder to those folks listening that if they've got any questions for Tom, definitely post your questions in the show notes. He'll be there to answer them, otherwise, definitely check us out on Facebook, on Twitter, on G Plus. You can definitely network, link up with us on those places. And finally if you haven't yet created an account on BiggerPockets, jump in. Set one up. You can network with guys like Tom all day long. He's there to help out and come spend some time with us. We've got a lot of cool notes, cool links in the show notes this week.

So make sure to check those out and when you have a second, absolutely make sure to check out the new BiggerPockets networking page at BiggerPockets.com/meet where you can find investors in your zip code, within various mile ranges of where you live and so on. So definitely you want to check that out to improve your networking. Thanks again for listening. I'm Josh Dorkin. Signing off.

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