BiggerPockets Podcast 084 with Chad Carson Transcript

Link to show: BP Podcast 084: Getting Started with Creative Finance and Designing Your Ideal Lifestyle With Chad Carson

Josh: This is the BiggerPockets Podcast Show 84.

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

Josh: What’s going on everybody this is Josh Dorkin host of the BiggerPockets podcast here with Brandon Turner. What’s up Brandon?

Brandon: Hey Josh how are you this fine afternoon?

Josh: I’m doing good, I’m doing good man we just wrapped up recording the show that were about to introduce. And it was one of our first absolutely perfect shows.

Brandon: Amazing.

Josh: We didn’t mess up which was great.

Brandon: If people know how much we mess up except for Dave who’s our editor, he’s the only one that really knows how much we screw up.

Josh: Kudos to Dave for helping us look better than we are.

Brandon: There you go.

Josh: Yes things are good and just excited about how things are going, BiggerPockets is rocking, life is good man.

Brandon: Life is good, I’m getting my refinances all finished up wrapped up and life is much more simple now.

Josh: Awesome, I like to hear it man and the summer’s starting to wrap up so we’re all about to get back in the grind again aren’t we?

Brandon: Yes, I never left the grind.

Josh: Yes I didn’t either, vacation, I need a vacation day Brandon can I take one? Because I’ve had one…

Brandon: No.

Josh: No? Please?

Brandon: No check the employee handbook you don’t get any sorry.

Josh: It’s funny, the job of the boss is not any fun. We’re dealing with this stuff and we’ve got these guys working for us like Brandon they’re talking about vacation. Hey I need Christmas off, I need Thanksgiving off, I need New Year’s. And I’m like, oh okay, yeah of course that’s reasonable. Well I’ll be working on Christmas because somebody’s got to do it.

Brandon: Somebody’s got to do it.

Josh: That’s the life of the boss I guess.

Brandon: Quick tip?

Josh: Yes please.

Brandon: Shall we?

Josh: Let’s please, let’s move on. Quick tip, today’s quick tip is Member Blogs, BiggerPockets/blogs is where you, our membership can go and write blogs. And these blogs, it’s not where you’re going to go and write and ask questions. It’s where you’re going to tell your story, share information things you know and things you’ve learned and articles that you’ve written. And these blogs are really, really good way to build your name to build your brand to show that you are an expert that you know what you’re doing.

It helps people out it helps you out, it’s great for pretty much everybody. You go to BiggerPockets.com/blog, you create a blog and if your content is good your writing is good we might even pick you up to become a contributor on the BiggerPockets blog. We also look to find guests for the podcast there so there’s certainly a lot of value that comes with it and with the visibility with in the community come good things like deals, people wanting to give you money, all sorts of fun stuff. So check out the member blogs at BiggerPockets.com/blogs.

Brandon: There you go alright and today’s pro benefit of the week if you want to upgrade the pro at BiggerPockets.com/getpro and you can watch me and Josh’s cool video there. But today’s pro benefit is you can actually check out who’s looking at your profile, we’ve probably mentioned this before but I just wanted to reiterate. If you are a member you can see who is looking at your profile which is really great because you can connect to the people who are already trying to learn more about you.

Josh calls it prospecting warm leads if you are really good way to put it and looking for people who are already interested in you. So reach out to them, send a message, send them a call or request, build a relationship and they’ve already done work for you. So go check out today and BiggerPockets.com/profile/steps.

Josh: There you have it, there you have it, good stuff, good stuff. Alright let’s get to the show today, show 84 of the BiggerPockets podcast and you can find the show notes at BiggerPockets.com/show84. Our guest in Chad Carson, Chad is a full-time real estate investor from Clemson, South Carolina college town. And he’s got experience in fix-and-flips and lease options and buy-and-hold and all sorts of stuff, primarily really focuses on buy-and-hold and flips. He’s done I believe close to 100 deals now and he’s got a really cool perspective on how to invest and I definitely encourage you to stick around. It’s not all about getting rich, not even getting any reach quick or slowly. After all building well through real estate and also maintaining some semblance of lifestyle and I personally think it’s pretty awesome how his business has shifted.

Brandon: He definitely is kind of a lifestyle real estate investor and I think it’s awesome so people are going to love this very, very motivating and great I love it. Let’s do it let’s bring him in.

Josh: Awesome and by the way for those of you interested who are listening we also get into some really, really cool stuff about using private lenders. There a lot of really great stuff to the attention. Here we go, Chad welcome to the show man it’s great to have you here.

Chad: Great thanks for having me guys I’m really excited about it.

Brandon: Awesome us too. Alright let’s jump into this. How did you get started in the world of real estate investing?

Chad: I learned about it at College because I went to the University, Clemson University and I was sort of, like most postgraduate people here. Saying, what am I going to do? What kind of career am I going to go into? And I was the pre-med route, biology route and I started applying to medical schools. And it was just something in the back of my mind said, I’m just not sure I want to go all these years with school. And then my family members who are in medicine were like, don’t do it, don’t do it. And so I just decided to, I started reading some-, my dad had some rental properties.

So I grew up at least having it in my consciousness that you can be an entrepreneur and buy real estate. And so I read a couple of books he had and decided that I owned my car free and clear and I got $1,000 bucks in the bank, I have nothing to lose really so I’m just going to try to get started and buy some real estate and just sort of went from there. I just kind of jumped to it.

Josh: So you had a $1,000 bucks in the bank and you said I’m going to become a real estate investor, he how did that go?

Chad: Very slowly at first but I think my start was sort of, I would recommend it to other people because I was out of college. I didn’t really have one block to offer to the world, I just read a book, I didn’t know that much about it. But I sought out somebody who knew a lot more about it than I did and my value proposition was, hey I’m studying one little tiny niche I think I’ve learned a couple formula about how to buy properties, the 70% formula and do something like that.

So I talked to my dad first of all and said if I went out and found a use for you could be work something out where I could learn and earn a little bit of money and live at home cheap. And he was looking to acquire more rental properties and a few flips and so he took me under his wing and taught me what he was looking for. And so for me that was a really awesome way to start because I could start with low overhead I learned a ton and also made a little bit of money while I was doing that. So that’s what I did for the first year, which was buying deals for him and picking them out and learning how to go out and find properties.

Josh: That’s really cool and obviously you were lucky that your dad was the guy so you had some built-in advantages with that. But let’s look at this from somebody else’s perspective who is starting. Say I want to, I want to start being an investor and maybe I’ve got a little bit of cash and maybe like you I don’t really know much except maybe how to find or evaluate and find some decent deals. Do you think that’s a good path to go and link up with somebody like your dad who is an active successful investor and offer, hey I would like to find these deals for you? And I guess what I’m really trying to get is what kind of deal did you strike with your dad?

Chad: Sure.

Josh: What did you end up getting? What did you end up getting? What did he pay you?

Chad: Yes, sure I can start with that. I made $2000 per deal.

Josh: Okay.

Chad: His objective with me is that here is my formula this is not going to change and this is what any experienced investor will tell you. And I think there would have been other people who would have done this if I would have to talk to them other than my dad. But he said I will pay you $2000 per deal. So what you’ll need to do is when you go make offers people make sure you use my formula and you subtract $2000 bucks so we can build enough money for you to make a little bit of money. And so that would be the same thing I would do and I did that.

So I moved up, I was in Atlanta, Georgia and Newnan, Georgia where he lived and then I moved back up to South Carolina where I went to school and I did the same thing when I started, moved up there. I found a couple of other investors locally who I knew had cash, who I knew would go buy properties. And I like that strategy of finding one or two experienced investors to buy for better than I have some friends who tried to do wholesaling and they would do the whole buyers list thing

Where you try to get 500 people on your buyers list and I just think it’s you’re kind of working it backwards because you don’t have any clue what a good deal is when you first start. You need the mentorship more than you need the buyers list. I found that to be really effective for me at least.

Josh: And that sounds like a decent deal while you are learning. I mean, make a couple thousand bucks and any opportunity that you bring. Yeah, that’s great.

Brandon: I was just thinking like, I wish people, I just kind of want to pray and read what you just want to kind of reiterate what you said there because it was so good. So many people come to BiggerPockets and they want to be a wholesaler and the first thing they say is, how do I build my cash buyers list? How to find cash buyers, how do I find cash buyers? It’s ridiculous right?

Chad: Right.

Brandon: If you find the cash buyers you’re just going to look like an idiot in front of them because you don’t know how to bring them a good deal. So obviously yes that’s part of the puzzle you need but it is worthless without the other pieces. So I think that’s right.

Chad: One more comment, so just about when you are new and as I said I didn’t have anything to bring to the table, what I think I did have because with my dad and then I had a couple other people who mentored me after that, what I did have was sincerity and energy and enthusiasm and willingness to learn. And I found that for all the new people whatever age you are, if you go in there with that attitude to your experienced investors and find a way to really show them that you are sincere and show them that you are professional about this and you are taking this seriously, I think people are very receptive to that.

And once you get your foot in the door, one of the guys who I did that with he always called me the young pup, and he was the old lion. He said the old lions need young pups to come there and ask them questions and build their ego and make them feel like they know a lot. So if you are you are new people don’t mind sharing. And if you can really build a formula that makes them some money and have a good value proposition, I don’t think it’s hard to find those people at all.

Josh: That’s great advice.

Brandon: I’ve said that before on the podcast too and I’ll say it again now. If you are a young person investing in real estate or trying to get into the game, by young I mean anything under 40. If you are a young person that is, people think that it’s a liability for them they think it’s something bad but it’s really not. That is your strongest asset you have is your youth and enthusiasm because the older and wiser investors just love that. I found it over and over in my life they love that enthusiasm that I have and they want to share with me everything they know.

I see myself in you when I was that age or if only I had started then I’d been so much further today. If you’re young, if you’re trying to get into investing play that up, it’s okay be the young pup.

Josh: I agree, I agree, awesome.

Brandon: You started out, I guess maybe you can call that bird-dogging is that what you would call that?

Chad: Yes I was a bird-dog.

Brandon: So you started doing that. How does that differ from wholesaling or does it differ from wholesaling at all?

Chad: I think the distinction we talked about, I don’t really like the traditional wholesaling model and it sounds like you didn’t either. Where you are basic-, for a beginner, there are some whole-, I know some successful wholesalers but they are very, very few. I don’t know many who do it well so I would say a bird-dog is somebody who is an apprentice to an experienced investor. And a wholesaler is a person who has a legitimate, they are experienced, they are a marketer, they can generate a ton of leads, they really can’t, they understand the whole business model from the beginning to the end.

So I was a bird-dog and I think any beginner was a bird-dog. Essentially you might get lucky in wholesale every once in a while but it’s not a good business plan I don’t think to go out trying to be a wholesaler from the beginning. Be a bird-dog, be an apprentice, be a realtor, be a contractor, do something that is along the whole chain of real estate. And then find a way to learn that little niche. My niche was learning how to find deals and market, that was it.

Josh: Chad, so on the topic of bird-dogging I know you’re not a lawyer but there’s certain debate on the legality of bird-dogging. And I don’t know if you’ve got any perspective on that but I’m just curious what your take is. And by the way again Chad is this…

Chad: I’m not a lawyer.

Josh: He’s not a lawyer and I’m not a lawyer and Brandon’s not a lawyer so.

Brandon: I was going to be a lawyer.

Chad: I was never going to be a lawyer.

Josh: And you wanted to be a lawyer Brandon, it wasn’t happening.

Brandon: My dad wanted me to be a lawyer.

Josh: My mom wanted me to be an astronaut and that wasn’t happening.

Brandon: You got time, you’re young.

Chad: If I had to start over and this is the same situation I was in, I have my real estate license now and I would say the easy way, the easy way, in any State I believe, and you can check with your lawyer too. If you have your license you can get a referral fee instead of, I learnt a ton with my realtor class and I would say that I was very surprised how much of the business I learned when I took the class and learned about local tidal law and things like that. It is very helpful anyway for a beginner and you can get referral fees without basing a lot of issues. I think that’s the way I would go.

Josh: That’s a good idea and I think there’s a lot that comes with getting your real estate license. I remember when I got licensed in California and we had to go through this real estate principles class. It really covered a lot of the basics and you probably want to know as an investor anyway. And I know we’ve kind of talked with a few people on this but it sounds like you’d think it would be a good idea for any new investor to even possibly start that way is to get licensed.

Chad: I like it and I didn’t start that way myself and think you avoid a lot of issues. You’d have to get an assignment about contract. There’s this, if you’re a beginner I don’t think you need to know all the details but you need to know it’s more straightforward to get paid when you have a license. There are definitely some hurdles, some disclosures you got to make but I think those are far less important and difficult to overcome than the fact that when you don’t have a license you got to go through a, jump through a bunch of paperwork hoops. And maybe the legality hoops, I don’t know that’s debatable. But for me it makes a lot of sense.

Josh: So why did you get your license? I’m guessing when you got it you were well passed bird-dogging and doing other things. But what inspired you to get it ultimately?

Chad: I was getting requests for consulting basically, people were putting a deal together and saying could you look at this deal with me or help me analyze it. Or will you, and I didn’t to me, I read the State law on having your license. Basically if you’re a real estate consultant you had to have your license. Again for me if I’m going to have a side income source for people paying me to help them put a deal together as a consultant it makes sense to have that license, get paid that’s why I did it.

Josh: And now that you have it what other advantages do you see coming from it as an investor? And maybe you can talk about again some of the advantages for somebody new and the advantages for somebody who may be in the business for years but hasn’t quite gotten over to do it.

Chad: For me I’ll speak this more experienced, being about 12 years into it now. I think it gives me an added security blanket sort of. I’m a full time investor so I make my money from buying and fixing and flipping houses this is sort of our core strategy. I also make money managing our properties so I have those two incomes sources. But it goes up and down, all entrepreneurs know that and I don’t know what’s going to work next year. And so it’s nice to know that I can then go and change my business model, do a couple listings next year, be a buyers’ agent and a commercial, I mean I can do something else.

And it’s just another thing I’ve got to make some more money because that’s been the most difficult part of the journey for me. You start off with $1000 bucks in the bank and every year you don’t know if you’re going to make enough money this year, you’re going to flip enough deals or what’s going to happen. So I think everybody needs to be thinking about Plan B, C and D and that’s what it is for me. It’s just a Plan, I don’t use it very much right now I still higher realtors to list my properties because I think they do it better than I could.

I don’t show people around the properties and take them around the weekends that just not what I do. I’m a deal finder and putting deals together and talking to private money lenders and I do that really well whereas the realtor thing I don’t.

Josh: And that’s interesting I think most people would say are you out of your mind Chad. Like you got a license, why aren’t you listing your own properties? Why aren’t you dealing with that stuff? I mean you’re spending all this money that you can save and you got your license but clearly for you your time is better spent doing something else. It’s probably the math that you’ve done right?

Chad: Yes and I just did a strengths assessment for myself and I look at my time management and the best time I can spend in what I would say is one of my strengths is when I’m sitting face to face with a seller, talking to them about their problem, having a conversation, listening, talking to one of their, like you said Brandon somebody who’s 70 years old and owns a house. And here I am 33, 34 I’m 34 now, talking to them and the fact that I’m going to listen for 2 hours and just discuss it with them and they can see that I’m sincere that is really good use of my time.

Because when I do that and I do that enough I’m going to get a few deals out of that time and I’ve made a lot of money on flips and I’ve made a lot of money on rentals with that kind of time spent every day.

Josh: I think that’s great, I think one of the things that Brandon has done most for me personally is encourage me of the same thing. I think it’s hard to look at ourselves from within ourselves and I think it’s a lot easier to have somebody come and help you out with that. I’ve found that over the years I’ve been so needy within it that I’ve been too busy to realize that I’m really good at certain things and I should be spending my time and energy on those things. And pay other people to do the things I’m not as good at or that I shouldn’t be wasting my time doing.

It can be hard to come to that decision and I’m personally extremely grateful to Brandon for that. But…

Brandon: Thanks.

Chad: Nice Brandon.

Brandon: Look at me, Brownie pass.

Chad: I can’t figure that one out on my own, I’m kind of blinders on as well doing all the work and mentors other people in your business say hey, what are you doing that for? Why are you spending your time trying to put signs out on your property or do some of that? I got no problem, I think that the other side of that is that I have no problem doing any stage of the work.

Josh: Sure.

Chad: I think people working for you probably respect that if you can do anything in the business. But at some point I think you got to step above the business, look at it and see which thing you’re best at and then focus on that. That’s what we try to do.

Josh: Yes that’s great, that’s great. Instead of putting up your own fence Brandon you have to, for example.

Brandon: I like doing some things and they’re not the most cost effective. But there’s somethings I enjoy doing in life and some things I just, I do because I can’t find anybody else to do them. But I mean that’s a downside of me, I could spend the time looking for somebody who could do them but I don’t a lot of the times. I don’t know I don’t do my own work that much anymore.

Josh: Don’t feel so guilty man I’m getting good at this guilt thing.

Brandon: You are good at the guilt thing that’s funny. So let’s go back to your story a little bit and talk about you. You started bird-dogging, you got, you do it from that one, you got the mentor’s help. What came next? How did you actually get into doing your own deals? What did that look like?

Chad: About the end of the year, as what happens with fathers and sons I started saying dad you ought to be doing this, you ought to be doing this, what about this marketing? He said, son let me tell you something, why don’t you head up 85 and go to another town? I got this thing figured out. I said, you’re right.

Josh: Kicked you out of town man, that’s not a joke Chad.

Chad: It was positive, I think, outgrowing the nest.

Josh: And take your crap with you.

Chad: Get out of my house too. I’d saved that money by then and I had, so I packed up the car and headed up the road. And so my idea…

Josh: Hold on, hold on. He legitimately threw you out of town he’s like this is one investor down.

Chad: No, no. It was mutual, it was a mutual business plan because he was doing me a favor I think by letting me work with him. But at some point I knew that I like to do my own thing. But what I decided to do, I had a friend from college whose father had also been in the real estate business, had mobile homes and some different things. So we had just chatted all the time about real estate and kept in touch after college. And so we had always in the back of our mind that we might want to do something together.

And so we, he was up in Clemson where I live now, in the college town of Clemson. So I moved back up there and we started a business together. And the idea that it was that before I moved from Atlanta we had our first deal on contract up in Clemson. So I’ve been making offers in Atlanta and in Clemson and we bought a REO property that we were going to, it was just a fixer upper.

So my thought was I know how to find the deals now, I’ve got that formula down, I’ve got some marketing tools, all I need to do is figure out how to get the money and I can do what my dad has just done. And so that was the next progression was to start fixing and flipping a few properties in addition to being a little bit of a bird-dog or a wholesaler which I’d already been doing.

Brandon: So on that first deal where did you get the money?

Chad: That was again another mentor, another relationship. So I had a professor at Clemson, when I finished up I went back and I took a few business classes. And I had one on my business professors during classes would tell stories about real estate and what he bought. So my ears perked up because I was interested in that and I talked to him after class and said do you mind if I ride around with you? I think that’s what I said, do you mind if I see some of your properties, talk to you?

And again enthusiasm they see that you’re sincere and he let me start riding around with him while I was taking those classes before I even started the real estate business. So I just stayed in touch with him and when I was getting ready to move back up and do out first deal I told him, I think I have a very good formula let me show you these deals I done I found for my dad. I think I can find some of these deals in the Clemson area. If I found a deal how am I going to come up with the money? That was my question to him. Is there any way I can partner with you or do something with you.

And he essentially said yes, let’s figure out a way that you find the deal, you manage the contractors, you do the work, you go get it sold and I’ll figure out how to come up with the money. And then we’re going to split the profit. So essentially that’s what we did, he went to a local bank we had a relationship with and the baker said I’ll loan you the money, to my friend who’s the professor. I’ll loan you the money, we’ll put Chad and Tommy on the loan too not that it helps anything because you have no job and not much credit.

But that helped us just to get on the loan with him and then he put up the down payment, he put up the money for the fix up. And then we turned around and whatever the net net was we split it three ways between all three of us.

Josh: Nice.

Brandon: That’s cool.

Josh: Nice.

Brandon: That’s cool. I’ve always been a big fan of that strategy of using partners to, and even if they can’t fund the entire thing, a lot of the things a partner can fund part of it. So I am a huge fan of that I’ve done that a number of times. How are you actually finding, you mentioned earlier, you kind of had a formula or a plan or a strategy for finding these deals for them, what was that like back then and does that still work today.

Chad: Yes I started with a lot of direct mail and again I’m not, I don’t see myself as an experimenter in direct mail marketer. I’m not a, what worked 5 years ago doesn’t work now you just kind of keep adapting. But I started doing your typical investor direct mail list like I would do an out of town owner list. And I would find a list of owners who lived out of town or owned a property in town and they lived somewhere else. And I would send them letters just saying essentially I’m interested in buying your house.

And I would do the same thing with an eviction landlord list. We were working pre foreclosures on at that point so I decided 3 or 4 lists that I would send out letters to. And they would call me and out of a certain numbers of them would work. A certain number of those would be a pretty good prospects a lot of them would not. And then I would go through those and screen those and the ones that were good I would go sit face to face, talk to them, see if I could solve their problem.

So that was my little, there’s nothing fancy about that but that was my little formula to find deals. In addition I had one more list in LS. Our first deal that I bought up in Clemson was an REO property listed with a realtor.

Josh: Okay, nice, nice. So you’ve talked about primarily doing fix-and-flip then you had talked about managing as kind of one of your means of driving income. Are you managing somebody else’s properties or are you also building a portfolio with buy-and-hold?

Chad: We have our own buy-and-hold portfolio…

Josh: Okay.

Chad: And we just manage our own properties.

Josh: Gotcha.

Chad: I think our business is, we started trying to grow and do more, we thought about getting beyond this business model. But our business model is really being like a big fish in a small pond as a real estate just focusing solely on real estate investing. I have my license I could go list properties I could do that I could manage properties for others. But fortunately we’ve been able to do, make enough money, keeping it nice and simple, working out of our house, just doing it for ourselves.

It keeps it simpler for me just knowing I’m an investor, I manage my own stuff, I know how to get good at managing my own stuff but I’m not having to go out and find business for other people, manage a bunch of properties. I can keep a manageable number, keep it small and that’s been a really important for us kind of lifestyle wise. Because I want to grow, I want to make more money but I don’t want to be, I’m not interested in the take over the whole territory kind of business and having to be, having the most sales in the whole area, the biggest flips or mange the most properties.

I just want to do enough that I meet my goals and it is moving me forward towards where I’m trying to get to personally. And as long as I’m doing that I’m avoiding getting so big they’re just taking all my energy and time. But I’m able to travel a little bit more, I’m able tom at this point I have young kids so be with your kids a little bit more. And that’s what’s important to me kind of taking and doing a ton of business.

Josh: That’s awesome.

Brandon: I think that happens in every niche just business in general. We get into it because we have a why, we want to spend time with our family, we want to travel more. But then the business takes over and the business becomes the why. So you want to get bigger and bigger because that’s what you want to do and then you don’t have time for things you originally got into the game for.

Chad: That’s definitely what happened to us so our deal that deal, the first year we flipped a couple properties, we’re doing okay. We were definitely scraping by but then we saw some other, you go to the seminars and you start, that was probably the, you hear people who are doing so much volume and you get excited about that. I saw somebody who was doing 50 deals a year and you run the numbers and it’s like they’re making $20,000 per flip. And that’s where what we’re doing on some of our deals so why not do a lot more business.

And I didn’t have any other reason than okay we can do 50 deals that would be great. And I was kind of naive of us to think that. And so we started doing turn up the marketing, do more business, buy more houses, but then you also have to add on more help to manage all these leads. You also have to get more contractors and the more you have the less you’re managing each one well. At least I wasn’t managing them well. And so you start getting sloppy with your money, you start not being sufficient as you were early on.

And it came to the point where in 2007 we had gone from, 2003 was when we started so that was about 4 years later we ended having about 47 closings on properties when we acquired 47 properties in one year. And some of those were buy and flips a good number of those some were wholesale deals, some were buy-and-hold deals, we started buying holding by that point. But by the end of that year my business partner kind of said, hey we need to stop and think about this.

Because we made good money on a lot of these deals but we had some that were not as ideal. Some were in less than ideal locations, some I kind of got enamored by the numbers, oh they’re going to give me great creative financing. So you forget some of the other fundamentals of the deal and so we had sort of an ‘aha’ moment. That alright, put the brakes on, let’s start thinking about what we done here, let’s start seeing what kind of a business model we really want to be. And to your point Brandon we wanted to start thinking about what is the objective here. What are we measuring our success by?

And we started going in this lifestyle conversation started saying we really like playing basketball in the middle of the day for 2 hours. We live in a college town we can go over to the stadium where they, college Clemson basketball team players and play pickup basketball for 2 hours. That’s about as good as it gets for us but that doesn’t cost any money. My wife and I wanted to go on a big long trip for a few months to Latin America and travel around and that certainly cost money.

But it’s a quantifiable amount, you could figure out how much it’s going to be. But what we couldn’t do is when you’re buying 50 houses a year you couldn’t get away from it, it’s a big monster. And so we thought it and said you know what? For what our specific goals are in the short-run and long-run we can probably do this without being huge and doing all that. And that was, fortunately we realized at that point so that we could try and slow things down, be more deliberate and we been adjusting our strategy since then.

Josh: Really quick, is we you and your professor still or is it?

Chad: No it’s the guy, my friend who his father had the rental properties as well, college friend.

Josh: Gotcha, okay.

Chad: We had a partnership on an LLC and owned the business together and we’ve done that from the beginning.

Josh: What are your thoughts on that? I mean investing with your friends like a good friend.

Chad: Yes it’s worked out really, really well for us but I wouldn’t, I think it’s difficult to make that work. I had a good example, my mother’s a dentist and she had a partnership with her brother so family member. You’re not supposed to do business with family members, you’re not supposed to do business with friends I have seen it work for 30 years for them and how if you really had some keen things aligned, you have your integrity in line first of all you working with somebody who’s not going to rip you off, that’s kind of a given.

But then also are your goals aligned? Are your spending habits aligned? It takes a lot of things to make a 50/50 partnership work. So I think most of them don’t work that well. With my business partner it has and early on particularly when you’re growing and you need to have low overhead, I would focus on finding deals, I would focus on getting the money, he would focus on managing the contractors and the fix up. And then he would focus on getting rid of the properties, selling or renting or whatever we’re doing. So it’s sort of divide and conquer early on and that was helpful us.

Josh: Nice, nice. I just want to go back really quickly to what you were talking about with you did these 47 deals within the year. First off, how many deals have you done now total?

Chad: It’s over 100, I think it’s probably less than 200 as the total. So that was a big chunk. Since then we probably, we focus on 3 or 4 flips a year, we probably buy 3 or 4 new rentals a year. Some of those are multi so we’re doing a much slower pace than that.

Josh: Yes it’s interesting. You see and you hear a lot of people who are excited about real estate and they did the taste of victory so to speak. And they get their first couple deals and they’re like, I want to grow, I want to grow and I want to be huge, I want to be huge. And I think a lot of people don’t realize that there is a cost associated with becoming huge. And I think it’s important to stop and reevaluate what your initial goals are. And it’s cool to hear that you guys did that and you guys were killing it with 47 deals in a year, that’s fantastic, holy cow.

And you said wait, let’s put on the brakes, we don’t need all that money, we don’t need all that, we don’t want to live that kind of life. And so part of what this show is about is I think exploring different methodologies and mindsets and ways to go I always think it’s cool to point out little things like this. We don’t have to be the biggest and the best to be winners in the game of real estate. And I think sometimes it’s easy to get caught up in it and forget about that and so I’m really glad to hear you reiterate that.

Let’s build what we need, let’s get this lifestyle that we’re hunting for that we’re looking for. And shoot 3, 4 deals a year is a pretty decent lifestyle you’re not busting your backside working too hard and you’re making good money. So what more could you want?

Chad: Exactly, I’m with you Josh because and it takes a different evaluation though because I think it’s so built in I know it was in my head. I played sports, competition, you’re competing with yourself but more than that with what you hear around. Like you said, you hear around that you need to do more, you need to do more, you need to do more, you need to have more. I think you need to have enough to make that meets your goals and that you’re happy with and that’s really difficult to figure out.

But one little trick we’ve been trying and this is from your fav-, I think it’s your favorite book Josh, [inaudible][34:22].

Josh: Did somebody on Twitter by the way yesterday send me a tweet, it was like Josh when are you going to finish the book? That was literally a tweet I got yesterday, oh my God, guys.

Chad: There’s good and bad in there but one of the things I really thought was helpful in that book was you have to build in measurement tools for more than just money. Money is certainly a factor you have to have money to do what you’re trying to do in life. But you also more importantly like with my trip and playing basketball in the middle of the day you got to equally treat quantify time and mobility.

How much time does it take to meet my goals? How much mobility do I need if I want to travel around the world for 4 months or 6 months? Can I do that with my current job or current structure of my business? And so I start thinking about that so every time you make a business decision, every time you buy a property, every time you hire somebody to do something else you start asking yourself that. How does this affect my bank account for time? How does this affect my bank account for money? How does this affect my bank account for mobility? And you try to do your best on measuring all 3 of those and finding a balance point and that’s been, that was a big ‘aha’ for us to try to use that filter. You’re not going to be perfect with it but at least it brings those other factors to bear because most of the time it‘s just money, that’s all we’re measuring.

You’re a good person or you’re a successful business person by how much money you make per year. When in reality that’s not, that’s important but it’s definitely not the only thing that’s going to get you to where you’re trying to go.

Brandon: Yes.

Josh: Agreed.

Brandon: I think that’s awesome. My wife who’s obviously smarter than I am has to remind me of that all the time. But she’s always telling me like when I’m like, hey, look at, we went and looked on a triplex yesterday, $60,000 this triplex came on the market and it was a great deal I thought. The first thing I said to her is I know we’re not, we’re trying to take this year, we’re trying to take this year off to not buy, to just stabilize and to refinance everything.

I said I know we’re not really buying right now but this deal is so good. She looked at me and said we don’t need it. We don’t, need it, why put ourselves through that extra hassle and extra work? Let’s just relax a little bit. Then I’m like oh yeah that’s right we’re going to relax.

Chad: It’s hard, we need like a 12 Step Club for [inaudible][36:36]. I can’t turn down a deal.

Brandon: I know.

Josh: It’s a great deal, slow down for, anytime you feel like you’re going too fast jump on and we’ll have everybody tell you to slow down. So today you said you’re doing flipping you’re also doing rental properties. I’m assuming, are you managing them yourself?

Chad: Yes, I do part, I have a management business that manage it for our holding company. Basically I used to do all the management, my business partner did too. And we had hired a Bookkeeper that was our main big help was to hire a Bookkeeper who start off doing part-time. Just going and checking the mail. Sending out and doing paperwork filing stuff like that, we’d just start off at a certain number of hours per week and then we started adding responsibilities from there.

If somebody wasn’t paying on time, the 5th of the month comes around, who’s sending the letter to the, send it saying, hey have you paid? And so we both assist and we started handing off more and more and more to her. And she’s been awesome and that has really helped us a lot to the point where now I’m not putting the signs out for rentals, I’m not putting the Craigslist ad up, I’m not sending out the collection letters, I’m not following. So there’s a lot of details I’d say 89% of the details that I’m not doing but I’m still underwriting the leases.

Somebody sends an application she prepares everything and then I say yes that’s going to work, no that’s not and which I give a plugged ear. Your prescreen article I don’t remember the exact name of the brand but that’s, I go by that almost all the time.

Brandon: Was it The Ultimate Guide to Tenant Screening.

Chad: Yes.

Josh: That’s really, really, really good. It has the pictorial diagram of how you figure it out and…

Brandon: Actually…

Chad: We had a little system but I had to adapt it after, I sent it to my business partner and my Bookkeeper, I said we need to do this this is really, really good.

Josh: Well thank you. I will link to that if people want to know what that is in the show notes at BiggerPockets.com/show84. So there will be a link there to The Ultimate Guide to Tenant Screening. You can check out my homemade infographic that I’m kind of embarrassed by it’s kind of ugly but apparently it works.

Chad: It works, it’s good.

Brandon: Cool, I definitely love the idea I mean we kind of do the same thing. We have kind of a Bookkeeper she answers our phones and stuff like that. So I like that idea too when things get too complicated ad too much for one person to handle. It’s a good way to get started with property management without actually paying a full property manager to do stuff. So let’s transition a little bit to financing, I want to talk about how are you getting 3 or 4 deals a year buy-and-hold especially how are you financing these, just going to the bank to get a loan or what?

Chad: No it was sort of an interesting story that goes back from the beginning when the first started is that I just gotten out of college. I did not have a W2 income neither did my business partner. He had an internet business so I guess Josh you could probably, bankers probably look at internet business.

Josh: They don’t.

Chad: Internet, what?

Josh: You have a toy?

Brandon: You want to borrow money? Go borrow from some of your internet friends.

Chad: Neither one of us were bankable basically so we went to our professor friend, he went to the bank so we certainly we got local bank who would give loans and that’s how we did our first couple deals. We would go to the bank, they would loan 80% of the purchase price but back to my professor friend that’s been the key all along. Is that I sort of stumbled upon if you get mentors, the old lion again is willing to help you out.

It’s one step away from wholesaling deal with them to have them loan you money. And so what we started doing was that my professor friend would loan his IRA money as a second mortgage behind the local bank. So the local bank knows about this this is a portfolio loan so they’re not selling us off to Fannie Mae, Freddie Mac that kind of thing. We still didn’t have a lot of cash in the bank so he would loan the money for down payment and the fix up. The bank would loan 80% and so we started transitioning to more private funding, IRA funding.

And to this point, I looked at it about a year ago I think it was 90% of the payments we made both on our holds and definitely on out flip deals are all, are private monies. So it’s either, somebody has an IRA who self-directs their IRA and they say yes I would love to loan some money on real estate I want to get a chunk of my portfolio out of the stock market. They would then loan it to me and they would be my bank instead of me having to go to the local bank.

Brandon: We probably never covered this in depth and we probably should do a whole show on it at some point and that’s the idea of self-directed IRAs. Maybe you could just give us a quick, what does that even mean? What is a self-directed IRA? How does that even work and how can people use that or use other people who have one to invest in real estate?

Chad: Think about a person who has $100,000 at a regular traditional IRA company. So let’s just say Fidelity I guess, you had a $100,000 bucks and you had in the stock market. Well Fidelity will definitely not go buy real estate. You can buy S&P 500 Index Funds, you can buy Mutual Funds that sort of thing. But people that I’ve worked with they then have to transfer that money from Fidelity to either a custodian who lets you self-direct the money. So what that means is you can self-direct the money into any kind of asset. It’s not that it’s illegal to do that it’s that most custodians don’t let you invest in something like real estate.

They’re very niche kind of companies you can put your IRA money with and then they do the paperwork basically for you. So the example would be I want to buy a house, my professor friend had $100,000 I would set up a closing and the closing attorney would contact his custodian and say, hey we need you to wire the money here’s the information. And the custodian will then send the money. My professor friend never touches the money, it’s still his retirement account that’s out there and he’s just choosing to put it into a different investment.

In my case it was a note, he was basically loaning money and I would give him a promissory note and I would give him security by giving him a mortgage to the property that I’m buying.

Josh: What kind of rates do you get from private lenders? Are they similar to a traditional 30 year note or is it a lot higher? How does that work?

Chad: It was always at a premium it was always going to be higher but when I first started I paid 10% interest. That was my sort of my standard number. You guys know you know cash flow and deal analysis that kind of number typically does not work for a buy-and-hold rental. So that worked okay for buying and fixing and flipping houses. Because I was making enough of a profit on the backend that I could afford to take a chunk of that and pay it to my private investor.

So I started off that way but as I started transitioning more of my business to buy-and-hold and I started getting more private lenders that were interested in working with me I started, my numbers, my interest rates started going down on what I was willing to pay. At this point my standard in 6% is what I typically with the private lenders I’m working with now. And so I’ll pay in, either I’ll pay then in interest only in some cases or maybe a 30 year amortization or maybe a 10 year, 15 year call or balloon at the end. So I would have to pay them whatever I owe in 15 years.

Brandon: I think that’s kind of the holy grail of buy-and-hold investors because you can’t get loans form the banks forever, you eventually stop. So getting private money long-term is really amazing thing. So you have any advice? I know you talked about getting the old lions to help that but do you have any other advice for how do I attract that my real estate business and the people listening? How do we get people to lend us money at 6%? That’s what I’m paying my portfolio lenders like 5 ¾% so I mean that’s great. So how do we get that?

Josh: Where do you find 6% lions?

Brandon: Give me his name and number and…

Josh: I’ll do 6 1/4% so if you’re lending to Chad just call me and I’ll pay you a little bit higher.

Chad: Nice I like it.

Brandon: You like that? I just undercut you buddy.

Chad: We got a competition going her heading to war, this is cool. Some people have asked me too locally and what I’ve told them is it’s not easy. That’s probably not what you want to hear but it’s not easy because it’s sort of a slow dance an analogy I give. It’s something where remember I knew my professor friend for a year before we even talked about doing business. And so I would say if you want to just know how you even get started with that my strategy has been talking to as many people as I can as often as I can about what I’m doing.

So I invest in real estate but be deliberate about telling them what you do. So what you might want to do is, everybody is interested in real estate they watch all the flip shows on TV, everybody I know when they hear that I do real estate especially now as the market’s starting to heat up a little bit, people are oh that’s great what do you do? And so you can take that energy and that interest from people and you can turn it around and say, well here’s what I do, I go out and find those properties in the neighborhood that need a lot of work and it’s kind of the worst house in the neighborhood.

We’ll go buy one of those but what I do though is instead of going into the bank and getting the money I have some other local people private individuals who have their money sitting in a retirement account. And it’s getting ½% in the CD and they like to work with me and help me fund these deals and then we figure out a way for both of us to make money on the deals that I buy.

Brandon: I think that’s a terrific elevator pitch by the way. I hope when people heard that and if they haven’t they should rewind it and listen to it.

Josh: Learn it, record it and practice it in front of the mirror a 100 times.

Brandon: Because what you did is you emphasize this is what our company does and you emphasize this is what’s in it for you. You didn’t say it this way but you’re making ½% on your money and I can get you a lot more. That’s like the subtle what you said but you didn’t say that. Let them come to their own conclusions I think that was awesome.

Chad: Thank you. To have that conversation with somebody I might start off that way they’re not going to give me the money the next day. Even so I have a guy who’s a partner with me on a deal now on his loans and money, it took 3 0r 4 years before we finally did a deal together. So the negative of private is it takes patience, you can’t walk in a bank throw your application down and get it. The positive though is once you get that boulder rolling I’ve got stake in one little small circle of people who are good friends and we talk to them and we do business over and over and over again.

I was really lucky again that I was a young guy who listened to my elders giving me wisdom. My first private lender my professor he gave me this advice he said. I think it was a Zig Ziglar quote or something. He said you make sure that me, not only me but anybody else you do business with anybody else who loans you money you make sure we make money and become wealthy, you can’t help but become wealthy.

Josh: Yes.

Brandon: Yes.

Chad: You kind of attach your destiny to your private lenders. What that specifically meant for me was that there were some trying times as some of my private lenders were some deals that I had to eat and lose some money to make sure there is no way my investor’s going to lose money. There’s no way he’s going to be inconvenienced, there’s no way he’s going to have a problem because he’s #1 and I’m going to be okay and I’m going to make money long-run.

But I don’t want him to have to ever worry about it and if they sense that from you, they sense that that person is #1 and you’re kind of subverting your interest and your profit to them that’s sort of a rare thing too. And you have to earn respect from that person by proving that to them overtime. And they’ll bend over backwards and we’re still doing deals and people talk to them, what do you do with your money? I’m putting it with Chad. Oh do you think he will let me loan some money too? Maybe I don’t know, he didn’t have that many deals you have to talk to him. So it kind of builds upon us so overtime.

Josh: So let’s get into this a little bit more because I love your approach. First, so how many private lenders are you currently working with?

Chad: I’m just thinking in the last 3 months I’ve had 2 closings and both of those, I have 2 main private lenders I’ll say that.

Josh: So there’s 2 main guys.

Chad: Two main but I’ve had overtime I’ve probably had 9 or 10.

Josh: And presumably you can probably go back to any of those 9 or 10 and you have your preferred too for whatever reason history. But I want to hear about subverting your own interest for the interest of your lender. Because I think that first of all I’ve never heard anybody say that before and I love it and I think it makes a lot of sense. So I don’t know could you possibly give us an example of a situation where you actually did that and what did it look like? It sounds like you probably ate some real cheese there to keep the relationship and make sure they didn’t get hurt.

Brandon: yes I could think of one. So we had one where the lender loaned me money on a property that about a year later I realized that I should not have bought this property It was in a bad location, the numbers were okay. But it was one of those where you go for the 2% rule or something then you learn that the location stinks. And so you’re going to have to, the 2% rule turns, maybe you guys are familiar with this, a good cash flow. But anyway the location was not good, I wasn’t going to be able to liquidate it fast enough.

And so I basically, we were going to sell that property or get rid of that property but I’m going to take a loss on it. So I’m going to write up a check at closing. I’m going to have to save up the money or if I couldn’t write the check maybe I would figure out a way to add $5,000 difference. I’m going to see if he’ll loan me thee $5,000 against another property that we had. But whatever the case is he’s going to get all his principle, he’s going to get all his interest and he’s not going to be penalized by my bad deal.

I’m the one that made a bad decision, he trusted me to loan the money on a deal he deferred to me I’m supposed to be the expert. And so a very specific example I’m supposed to write a check to make sure my lender does okay.

Josh: I think that’s, I’m going to generalize here, I think that probably is a rare thing. I’m guessing in situations like that most investors might just say well you know I got screwed, you got screwed, we all get screwed and good luck to you and I’ll go find another guy to lend me more money.

Chad: I can think of another example where I did the same thing. It was a lease option deal which is a little bit different where a seller was basically my bank. They were willing to let me make payments to them over time and the same kind of thing happened where I had tenants in there the deal was not good. What I did though is I went back to him I said, I need to sit down and have a conference, we need to sit down and talk. And I was honest with him and I said I don’t think the deal is as good as we thought it was, I don’t think this is going to work but I willing, I’m not going to make any money on this deal, I’ve already had a negative cash flow for the last 3 years. I’ve already lost money on it.

But I want to make sure that you’re made as whole as possible. I don’t know that you going to be a 100% whole but I’m willing to donate my time, my effort and my energy to come out and sell this property as quickly as we can for the top dollar. And I met contractors out there, I made sure he got the cheapest paint prices to get the thing fixed up. I found a realtor who listed at a discounted rate who staged it. So I did all the things that could have intimidated, I could have just given the property back to that person.

But I felt like if whether implicitly or explicitly they trusted me to take on that deal and that’s typically why people work with me is because he seems like a solid guy I trust him. I don’t understand all the details of this creative stuff he’s talking about but I trust him. So the minute you break that trust which is what my mentor told me, the minute you break that you just emptied your bank account. Because that’s not, you’ve kind of messed up the good thing you got going.

I know this happened a lot in the down cycle because I know a lot of private investors who got a bunch of properties back and a lot of hard money lenders. And the entrepreneurs who gave those properties back and just jumped ship and walked off they lost a prime opportunity to build a lifelong lending relationship with that person. Because if they would have stuck with them and said look I owe you the money I could have helped you and helped them out so that the lenders they could have had much money as they needed for the rest of their lives probably at a better interest rate.

I guess you’re right Josh, I think it is rare, I’m not sure why I don’t understand, just kind of shortsighted to see it that way. Because business is about relationships, it’s about having a few relationships who you really have a good, trusting, working relationship. And that has been awesome for me whether it’s the business partner that I have, private lenders, it pays dividends over and over again.

Josh: And it’s a small world too, I mean you by eating it, got so many Brownie points that that guy is going to then go and say, holy smokes this guy Chad just lost a couple of grand and he could have walked away. But instead he lost an extra amount on top just to make me whole. Man if you guys are sitting on your cash you got to give him more money. You got to convince him to do more business, convince him to do more deals because he’s the real deal.

Chad: Right exactly, word of mouth. Word of mouth, you can’t get word of mouth if you don’t wow them with something and that’s with money. We all think about with our own money it took us a lot of time to earn that money and it took this guy a lot of time to earn that money and he really needs that interest. And so if you treat it as carefully as they want it treated then it they’re very good about telling other people about it.

Josh: That’s great. So what’s your favorite type of deal? You’ve done down a whole slew of different types, what do you like best?

Chad: I like the creative stuff so we’ve talked about IRAs but I really enjoy working with seller financing too. And this goes back to the holy grail of long-term investing that Brandon was talking about. Is that how do you buy a property is just an awesome income property in a good location? How can you get that property and get some terms on your financing that allows you to hold it for a long period of time? And the way I seen it is even an IRA investor, a private lender or even better is finding a motivated seller who’s got equity in the property.

Like an old landlord who’s owned this property for 30 years and just tired of it, they’re just sick of this property. I really enjoy that negotiation with them because I feel that it is a big benefit to the seller. If they like you and realize that I’m going to transition from being a landlord to now being the bank for this young pup again and you can get really good low interest rates over 25, 30 years. I had a guy who sold me a house and it was a bad condition house. He had rented it for years and years and years and he was 82 or 83 at the time we did the deal and he financed me a property over 27 years I think.

Josh: Wow.

Brandon: Wow

Chad: He’s 82 years old why in the world would he finance? We had a joke, 27 years from now we need to have a mortgage burning party right, laughing about it. He did that because his part was estate planning and he said I’m going to have people inheriting this and for them to get a big chunk of money is not necessarily the best thing to do when somebody inherits a bunch of money. And this is my argument, discussion with him after we had a conversation was, if you get a steady pay check from me over the next 27 years and whoever inherits this from you will also get that steady pay check.

And that $400 a month can pay their grocery bill for the next 25 years if you give it to a grandchild or somebody else. Instead of giving them a lump sum of $100 bucks they’re going to get this income and that, I like that. Because that’s not easy to do you have to, it’s a slow dance it’s a long conversation. But when the end result of that is for me I buy a property in a good location with incredible financing he’s getting an income stream and not have to mess with tenants anymore. It’s a really win-win kind of relationship and we both do well on that.

Josh: Nice that’s awesome. This is great I mean really, really, really good stuff. I really had one quick question left and I guess it’s what do you looking into going forward. It’s to stay 3 deals, 4 deals a year build up that buy-and-hold portfolio and sit and watch it and eventually stop doing the flips or what’s the strategy.

Chad: I have a lot of fun kind of thinking about what I call like a free and clear plan. So a big part of, we went through the downturn and we had to really button up out hatches and cash flow is going out left and right we had sort of a delay and moving forward on this plan over a few years there. The plan for us is a death snowball some people call lie a domino strategy where you buy and flip some properties use some of that money to pay the bills. But you’re trying to still live simply and keep your overhead really low so you can save as much of every house you sell, save as much of that money as you can and plough it back in to paying off some of the debt in your portfolio.

And so that the end goal and we’re getting closer and closer and closer that is how a certain part of the portfolio be free and clear and there’s a number there that you try to get to so that you progressively are increasing your cash flow and you’re progressively decreasing the amount of stress and moving parts and overhead that you have so that you kind of get, it gets a little bit easier, a little bit easier, a little bit easier. And that sort of where I see the flips and so a few of my rental properties is the engine to get those savings to then plough back and pay off some debt.

Brandon: That’s kind of the same strategy my wife and I are looking at doing especially just in the past few weeks we’ve been thinking a lot about that of just simplifying and figuring out what properties do we want to keep, what do we want to hold on to, get rid of. Anyway I love that. Let’s go on I know how we can talk forever on this stuff but let’s go on to the world famous,

It’s time for the Fire Round.

Josh: The Fire Round these questions come straight from the BiggerPockets forums we’re going to throw them at you and see what you say off the cuff. So #1, what hobbies are good for real estate investors to get involved in that might help the real estate goals while still being fun? What hobbies should people get into?

Chad: This is a good one for me. I love walking neighborhoods, I used to be, I used to do more intense athletics and played football and kind of training. But my exercise now is pushing a stroller around to a 1 year-old and a 3 year-old kid. I think there’s nothing better though, investors do this enough is getting out in the neighborhood that you are farming and just walk, Not in your car, not looking on Google maps like everybody wants to do. Get out and you get exercise, you can take your kids with you, your spouse with you or your significant other and you’re looking at real estate.

And you talk along the way and you stop and you see it for sale by owner, you see a vacant house, you talk to neighbors. You can, if I just did that marketing strategy alone I think I could buy a couple deals a year just walking neighborhoods in my town. So I’ll think that’s a cool outside hobby to have.

Brandon: I love that.

Josh: That’s great. I used to do that when I was an agent. I was I think I was one of the last agents walking the neighborhoods in Los Angeles and people thought I was crazy. Just knocking on doors and putting door hangers on. You get to see what’s around you get to know the neighbors and people think you’re personable and local and that’s great. So yes that’s awesome.

So here’s a good one. When do you think it’s appropriate to call yourself a real estate investor?

Chad: This is a good one, I think now I would say that you do the distinguish between being a real estate entrepreneur and a real estate investor. And this comes down to the definition the best think is having capital to put into an asset. And so for me I was not a real estate investor when I first started I was a real estate entrepreneur. I could have been a real estate agent, I could have been a contractor, I could have been an inspector. What I was was a bird-dog, I happen to be training to eventually become an investor when I started saving up enough money to actually have some money to buy something.

So I would say that’s the true definition of a real estate investor is having enough capital in the bank to put as a down payment on the property. And own a buy-and-hold rental or note or something like this kind of an investment.

Brandon: I agree, I agree, I think that’s well played Sir.

Chad: Good.

Josh: Alright #3, what is your best secret to winning negotiations? Do you have any good negotiation tips?

Chad: Yes I think this is sort of counter intuitive but don’t, I’m don’t think that I’m a good negotiator in the traditional sense of negotiation. If we were to go to like in South Carolina they call them Jockey lots like Flea Markets or whatever and you go out, I’m not any good at that. When we travel to Latin America, you have to bargain, they start the prices like 10 times that are really good, 10 times, I’m just not a haggler. I call that haggling when you have to go back and forth back and forth.

For me there’s a book that maybe you can reference is called Getting to Yes, it was a Harvard negotiation project. And the idea that really stuck in mind is that negotiations are where you sit down at a table with somebody and you listen to one another. And you figure out if you can find a way that my needs can be met and your needs can be met in a way that is mutually beneficial. If not, you get up and walk away. So that’s been my approach, I think being a good negotiator is more about listening than talking. I think it’s more about giving and figuring out a way how can I make this deal work in a way that gets them what they’re looking for.

That doesn’t mean you’re a pushover, you got to make a profit but I’m really kind of turned off by a lot of the traditional negotiation type of talk because I just don’t think it’s the true term of what it’s all about.

Brandon: Fair enough, fair enough.

Josh: Last question in the Fire Round is how do you find a good lawyer that understands the investor mindset?

Chad: I’m still trying to figure that out myself. Actually I mean, my latest answer, I have a local attorney who has been in the business for a long time. I finally defined what I really wanted from a real estate attorney. And doing a closing, doing a traditional closing that’s not doing a tidal surge that’s not the big deal. I think the, I think you need somebody who can be an advisor to you, seeing a whole lot of things go wrong in the real estate world and who can help you build contracts to protect yourself from those crazy things that go wrong that you have no idea that can happen.

And so I guess that the only barometer that measure whether that person has that is talking, ask them stories about what situations are you seeing investors screw up and see if they know some. Because most attorneys are running to don’t know about real estate investors. They do transactions with just typical closings, they’re not used to any of the weird stuff that we do with and don’t even want to do that. So I’ve found a couple that have been in the business a long time and I just by default seen some of those even though they do regular closings they’ve seen the weird stuff too.

Brandon: That’s great, really, really, really good.

Josh: Cool, alright let’s move on to the end of this show my favorite segment we call the

Famous Four.

Brandon: The Famous Four, these questions we ask everyone let’s see what you got to say. #1, what is your favorite real estate book?

Chad: I should take some notes because I listen to some podcasts that I better remember what this is. What’s my favorite book, I don’t know if you have done this one on a show but there is a guy named John Schaub down in Florida called Building Wealth One House at a Time.

Josh: Yes I think somebody mentioned that once but yes it’s a good one.

Chad: I like that book, it’s a good introductory book but it’s also kind of plays with what you’ve been talking about. You don’t need to do 50 deals a year, you need to do one solid good deal a year and that can make you super wealthy. So it’s more of a deliberate strategy and it’s a very good philosophy. I like to look at the authors and people I’m learning from to see how they, what does their lifestyle look like right now and is that something I want. And John Schaub is a guy who has been in business for 35 years in real estate investing.

And very laid back, travels a lot, manages his own rental properties still and so you want to learn from people who sort of gotten to the point that you want to get to. And I like that book for that reason.

Josh: Right on.

Brandon: That’s a good tip.

Josh: What about business book, you already mentioned Getting to Yes and others that come to mind.

Chad: I’ve actually got 2 if I can.

Josh: Sure.

Chad: One of them, I really like studying Warren Buffet just because I think it’s very applicable to what we do in real estate investing. And there’s a book that I have dog-eared and tagged, it’s The Warren Buffet Way.

Brandon: Yes good book.

Chad: Good classic book and so warren Buffet, he actually in his latest annual letter to his shareholders talked a lot about real estate. And so it was very cool, he talked about 2 real estate deals he had done, one buying a farm in Nebraska and one buying a property in New York City. And the fundamentals really it’s real interesting to see how his investing fundamentals applied to real estate. And it will be real helpful for anybody who’s interested in that and that’s one, The Warren Buffet Way.

And the other that I think having to do with just mindset and some of these negotiation things we’ve talked about is The 7 Habits of Highly Effective People by Stephen Covey. That was one, that was the first book I read when I got out of college that was kind of a personal development genre and that was. I’ve gone back and read that book over and over again and I’ve found a lot of good stuff there.

Josh: Great, I’m actually surprised I think that might be the first time Buffet’s been mentioned and Covey, it might be the first time somebody mentioned Covey too which is fairly surprising.

Chad: It’s kind of surprising.

Josh: What about hobbies besides you got these 2 little kiddos pushing them around? You play basketball, what else do you do for fun?

Chad: My wife and I, we like outdoors, we haven’t been camping as much as we’d like to lately. But as soon as the 1 year-old gets a little bit older where she’s not screaming and waking up the bears in the woods we’ll probably do a little bit more camping and hiking. And we like traveling abroad too, my wife teaches Spanish and I’ve learned foreign languages so we like to go abroad and kind of travel slowly and see, meet people and learn languages, eat the food and do all that. So that’s’ another hobby we have.

Brandon: Fantastic.

Brandon: My final question then is what do you believe sets apart successful real estate investors from those who either give up, fail or never get started in the first place?

Chad: For me it’s been relationships, I’ve mentioned that kind of beat it to death today talking about it but and not necessarily relationships as in go in and network and get as many cards as you can at a networking event although that could be okay. What I mean is actually have some really strong relationships with people who you add value to over a long period of time. And I’ve screwed up a bunch of stuff and I’ve done some good stuff too but the thing that I, the best thing I did was aligning myself with people who we could help one another over a long period of time.

Like the private investors, like contractors who ended up helping you out, like your business partner, if you get a good core team and you treat each other right and build a team that works together well that’s pretty strong. It’s hard to screw up even when you do screw up stuff that kind of picks up the slack for yourself as you grow.

Josh: Nice, nice, great stuff. Chad listen, it’s really been a pleasure I’ve…

Chad: Same here.

Josh: Really enjoyed learning from you. I know you’re active on the site, you’re active on BiggerPockets, you’ve been blogging on our members’ blogs and starting to really get out there. And I think you contribute a lot. Where can people find more about you besides there or beside kind of a good place?

Chad: That’s a good place I’m trying to post articles on there. I enjoy writing and teaching and what I decided to say what you guys are doing there on BiggerPockets is just awesome. So I’d refer it to everybody I can and say if you want content and I’m just trying to contribute a few things there and write some articles and hopefully those were helpful for people who are kind of browsing. So you can just go to my profile on BiggerPockets.

Josh: Nice I’m going to link to that in the show notes at BiggerPockets.com/show84. Chad thanks again and we look forward to seeing you around the site. We really do appreciate it and good luck with those 2 kiddos. I got 2 who’s similar in age and I know, I know the challenges.

Chad: You see the rings under my eyes don’t you?

Josh: I’m yawning this whole show and it’s not because you’re boring me man. It’s those other reasons.

Chad: Young dadas, I understand no problem at all. Thank you all for having me it’s really been a pleasure.

Josh: Take it easy.

Brandon: Take it easy, bye.

Josh: Alright guys that was Chad Carson on show 84 the BiggerPockets podcast. And thanks again to Chad for sharing so much of his insights. I know I learned a lot and I really, really love his philosophy.

Brandon: Yes I did too very much so and me and him are, I, we see eye to eye on so much stuff here and it just really became apparent. So yes, definitely connect with Chad with a ton of BiggerPockets profile. Come leave him a message on the show notes page at BiggerPockets.com/show84 and just jump into the community. If you’re not art of BiggerPockets jump in, start connecting, start learning, growing. Take your business to the next level so you can be like Chad.

Josh: Awesome, awesome and of course of you found this or any of our other shows to be of value please help us out, help spread the word. Leave us a review on iTunes, the marketplace where I think we get most of our ear balls, I don’t know if that’s an actual word but listeners, but leave us a review and let people know what you think. Be honest and that certainly is appreciated.

But that’s it, follow us around the various networks, Facebook, LinkedIn, GPlus, Twitter and so on and so forth. And get activate, get out there, participate and do business, do deals, network and good luck to you. I’m Josh Dorkin signing off.

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