BiggerPockets Podcast 095 with Curt Bidwell Transcript

Link to show: BP Podcast 095: Multifamily Investments, Partnerships, and Raising Your Kids to Be Entrepreneurs With Curt Bidwell

Josh: This is the BiggerPockets podcast, Show 95.

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Josh: What’s going on everybody? This is Josh Dorkin, host of the BiggerPockets broadcast. Here is my co-host, the man, the myth—he’s pretty much a myth—it’s Brandon Turner. In fact, there’s actually a thread about Brandon Turner, which is really funny, asking how does this guy do all this stuff? Is he real? Is this a real person?

Brandon: Not fake. This is actually Josh talking to himself.

Josh: Yes.

Brandon: You just have that really, really quick voice change.

Josh: Yep.

Brandon: Hey, guess what? You’re going to be really proud of me.

Josh: I’m looking forward to hearing this. What’s up, dude?

Brandon: Here’s what happened. So yesterday, I officially handed over my first two properties ever to property management.

Josh: All right. I know I’m not the only one listening that doesn’t believe a word out of his mouth.

Brandon: I’ve been talking about this for about seven months now. I feel like I finally took two of my properties—the 80/20 Rule—the two that give me the most trouble, and I handed them over and the lady was like, sure, I can take them. No problem.

Josh: Aw, man.

Brandon: Amazing.

Josh: That’s awesome, dude. Do you feel like the weight of the world off your shoulder?

Brandon: I feel a lot better, yeah.

Josh: It’s getting better already. That’s awesome.

Brandon: These are the two problem properties, so.

Josh: That’s awesome, man. Well, congratulations.

Brandon: Thank you.

Josh: That’s great news. Anybody else listening, if you have problem properties and you’re tired and you’re driving yourself crazy, you might want to consider the same thing.

Brandon: There you go.

Josh: Yeah.

Brandon: Wait, that’s our Quick Tip for the day.

Josh: That is a semi-Quick Tip, yes. No, today’s Quick Tip is—Success Stories. Quick Tip!

Brandon: I had to say it.

Josh: There you go. Today’s Quick Tip—if you’re out there doing deals and doing business, share your success stories. Not enough people are doing this. I really don’t think you guys understand the value of this. The people that I talk to who do this, they send me these private messages and they’re like, Josh, I’ve got to tell you, sharing success stories was a really good idea because now I have like five more people who want to do business with me. Success breeds success. When people see that you’re out there doing business, that you’re being successful, they want to be with you. They want to be successful alongside of you.

Brandon: They want to be with you?

Josh: Whatever, man. They want to do something. Yeah, they want to be successful as well—

Brandon: Sorry, go.

Josh: Keep it clean, this is a family show. We have a minister on this show—a pastor.

Brandon: We do have a minister.

Josh: You just crossed the line, sir. I’m offended. I’m deeply offended.

Brandon: I believe you are.

Josh: All right, guys.

Brandon: Go ahead. Move on.

Josh: Share your successful stories. We have a forum. It’s the BiggerPockets Success Stories Forum and there’s a shortcut to it. It’s BiggerPockets.com/Success . Go on there. Share your success stories, and just let people know—hey, I just closed this deal. Hey, I just found a partnership. Hey, I just did this.

Brandon: I tell you what, in time, that will prove to help you in your business. So hopefully you’ll do it. Yeah, that’s today’s Quick Tip.

Josh: Brandon, I know you’ve got a very, very fast Pro Trip.

Brandon: Yeah, my Pro Tip of the week, which is, if you have not yet uploaded a video introduction into your profile, and if you don’t even know what that means, it means on your profile, you can put a video introduction of yourself talking and saying hey, this is who I am. This is what I do. I’m the real deal. And it builds your credibility and builds trust in a way that a one-inch by one-inch photo on this site can never do. So seriously, one of the best ways to build credibility is just make a quick one-minute video of yourself. So post it. If you have any questions on how to do that, go to BiggerPockets.com/ProfileVideo and we’re going to do a redirect to the correct page that’ll teach you how to do that.

Josh: Fabulous, right on. All right, guys, so today—Show 95, we’ve got a really great guest. We’ve got a man named Kurt Bidwell. Kurt lives up in next to Podunk. He lives right near Olympia, Washington, I believe. Near Brandon. And Curt has been around since 1990, investing in real estate. He’s got a really, really cool story for us. He’s a buy-and-hold investor. He’s done a lot of great deals and to me, the thing that was the most exciting is how he got his family involved in the business, how he got his kids into real estate. It’s fascinating and interesting and something I want to emulate and so definitely some cool stuff. We’ll also get into some high-level stuff. We talked about mix-use properties and some commercial real estate. There’s certainly a lot of great stuff for the newbies but there’s also a ton of great stuff in here for folks who have been around. So pay attention. Get out your notebook and let’s bring him on.

All right, Curt, welcome to the show, man. It’s great to have you here.

Curt: Thanks so much. It was a real privilege to get asked.

Brandon: Awesome, awesome. Curt and I met, it was at the Washington Landlord Association Meetup, right? And you heard me talk for a little while and you came up and I realized you knew a thousand times more than I knew and I was the one talking, so you should have been the one up there speaking, but you get your turn today.

Curt: Nice.

Brandon: Yeah, cool. Why don’t we start at the very beginning? How did you get into real estate investing?

Curt: Getting involved in real estate was really unintentional, and it has been real interesting listening to a lot of the podcasts, realizing a lot of guys got in accidentally and just through a bunch of circumstances and that was me. I was in my mid-20s. I was a youth pastor, and two of my good friends—we had lunch every week and one of them was a realtor and the other guy was an Army recruiter and they sat down one day and said hey, “We’re buying a four-plex. You want to join in with us?” I was like, well, I don’t have any money. I’m a youth pastor. And they said, that’s no problem. We’ve already put the money down and so when it makes money, your portion will go back to pay your share of the down payment. I was like, well, how do you say no?

Josh: Interesting, interesting.

Curt: So we bought the place and a year later, we refinanced it and took cash out, so I was able to pay them all back their share and at that point on, we’ve been equal.

Josh: Wow. I’m fascinated by this. I have yet to hear somebody use this model so I’ve got to find out more. Why did they need you? Why are they asking you? What do you bring to the table? You knew nothing. You’re a youth pastor. Maybe, they bring the Big Guy down to make sure things don’t go wrong, but beyond that, what did you bring to the picture and what was their incentive to have you on board?

Curt: That’s a great question. I think you’ve got to ask them.

Josh: I’m sure you’ve asked them before once or twice.

Curt: In reality, I had some business sense. I was pretty frugal. Some people call me cheap but it’s frugal and I knew how to take care of my own finances and some of the guys on the team weren’t so good as others. So one guy was a realtor. He brought the deals. The other guy brought some maintenance and stuff and I handled the finances, the money, pretty much. And as we grew together and in the business, I realized I had some other abilities and aptitudes, working with the tenants and the people and that kind of thing so it was a good relationship.

Josh: Nice. And in terms of working off your share, that’s a really great idea. You come in with nothing but your efforts and I like that. What would you think about that, Brandon? You do a lot of partnership deals. I mean, how would you feel if one of your partners said, hey, you’re in 50/50. I’m putting down $85K. You’ll have your 50% share when you work the $85K off.

Brandon: It’s interesting. In a roundabout way, that’s how I’ve structured a lot of my partnerships, in that I don’t put in anything than they put in but I don’t typically hear from a newbie standpoint, getting started without a lot of experience and stuff. So I think that’s cool. Whatever you can negotiate to get together working. And it worked obviously. You guys refinanced it.

Curt: The irony is the first guy went broke and we bought his shares out. And so, the two of us have been partners for the last ten or 12 years without him. And now my other partner’s getting ready to retire so we’re working out a buyout plan right now that will probably culminate at the end of this year, so here I am, the least experienced and yet I’m the one carrying on and moving forward so that’s kind of fun.

Josh: Nice. That’s great.

Brandon: My question is about partnerships. We talk a lot about that. They’re a very popular topic. So maybe I can just ask you some general questions about your partnership. First of all, what makes a good partner in your mind?

Curt: I think guys that have a common value system. If you’re not headed the same direction, you’re going to struggle. And I think the three of us that started together had a lot of that and with one partner, we’d been together for 24 years, and we’re still friends. But there have been some ups and downs. We’ve had moments of disagreements. But we each play our role and defer to one another and that’s been pretty helpful.

Josh: The rocky times, what usually leads to that? At least in your experience.

Curt: Expectations.

Josh: Okay.

Curt: One guy comes with a certain set of expectations and they’re not lining up with somebody else’s. So, be that financial, be that workload—whatever it is, when those things don’t congeal together then there’s going to be some issues between you that’s got to be talked out.

Josh: Is there a way to avoid that upfront?

Curt: Well, some of it, I suppose. I mean, a good partnership agreement helps to define what those responsibilities are, but as you move forward, you find at least in our case, because we started out together as really rank amateurs. And not really knowing—like I said, we didn’t know what we didn’t know. So we grew together with some of those things and as that developed, I don’t know that a partnership agreement would have resolved everything but it certainly does define what your specific roles are and that’s important.

Josh: Gotcha. Now, so do you do all your deals with this partner or do you do anything on your own?

Curt: The greatest majority of my properties are in this partnership. I have two other partnerships and then I do have some of my own property. The other partnerships are pretty minor.

Josh: So can we go back a little bit? I think we definitely want to get back to partnerships again. What kind of properties have you invested in?

Curt: Just about everything. We started with a four-plex. We sold that. Moved up to a six-plex, which was three duplexes on one parcel. We added two more duplexes and then we sold those out and bought new construction down in our own area. So we have single-family homes. We have duplexes. We have some townhomes. Basically, duplexes but they’re separate parcels on each side. We bought several of those when the market was really skyrocketing, 2003, 2004, and after accumulating some of those, we sold off a portion of some of those to buy mixed-use properties out in Sheldon, which is 38 apartments then it has some retail office on the first floor and restaurant space. We kept that for a year, two years, refinanced it, took cash out of that and bought 24 units, all two-bedroom, one-bath units. So a little bit of everything. A little bit of commercial. Not so much that. Mostly residential, single-family as well as apartments.

Brandon: Was there a plan? Was there a, hey, we’re going to catapult one to the next to the next? Or was it, hey, let’s just find the next deal, figure out if it looks good regardless of what it is. And kind of go from there. You didn’t have a hey, we want to step up, step up, step up plan, or did you?

Curt: Originally, no. I mean, when I say we started as rank amateurs, we really did. The realtor we were working with, a great guy. I love him still to this day. They moved off to some warm place down in Florida. The opposite side of the world from us. But it didn’t get a lot of education from him or from a real estate—I learned about landlording, didn’t learn about real estate. So I got to a point where I was looking at my own self, saying, okay, if I was to retire today, on today’s dollars, what would I need? Hey, I have half of ten units. I had five units. What else did I need? And I decided, well, if I had two more duplexes, we’d be all right. And so, I went looking for them. And I found a gal who had some incredible expertise in real estate, in marketing. She had experience as a landlord. Her husband was a builder. So she had all these dynamics coming together and when we sat down and talked with her, we began to realize, there’s a bigger picture here. And we’re really missing out.

Josh: So your initial goal, it seems then, was to aim for retirement. You were getting into real estate with the purpose of going for retirement.

Curt: Exactly. As a pastor, I had opted out of Social Security and so I didn’t have that to fall back on other than my non-ministerial activities. And so that’s pretty minimal. So I’m looking for other ways to say, okay, how can I care for my family down the road?

Josh: Gotcha.

Brandon: I think that’s important, too, because nobody knows what it’s going to be like but there’s a good possibility we won’t have Social Security when I’m that age either, like a lot of people our age might not have it either. I think that’s a good way for everyone to look at it today. If it’s there, it’ll be icing on the cake. Some day. But I kind of take the assumption that I will never get Social Security. Because it’ll be bankrupt before then. Maybe they’ll fix it, but I don’t know. So anyways, I think that’s a cool way of looking at it. So, I want to ask, just so people have an idea—Shelton. You mentioned Shelton. That’s where you live. I know where that is, obviously, because I’m from out here. But for the people who don’t—

Josh: That’s in the middle of nowhere, I’m guessing.

Curt: Here’s the deal. Shelton—

Josh: Podunk, Washington? Is that what that is?

Curt: No, that’s where Brandon’s from.

Josh: Oh, okay.

Curt: But it’s right next door. I live in Olympia. That’s the state capital. Shelton’s 20 minutes away from me, right off of I-5. I-5 hits from Vancouver, Canada to Mexico. And when we were trying to refinance this thing last year, I had banks literally tell me it’s too far off of I-5. And I said, well, it’s 20 minutes. And they would say, yeah, but it’s a long 20 minutes.

Josh: Nice.

Brandon: That’s exactly how I think of Shelton. Look, it’s only a half an hour drive from my house but it’s a long half hour.

Josh: Interesting.

Brandon: The reason I bring that up is like, I guess I want to know like pricing in that area because again, Olympia is very, very expensive. Compared at least to Grace Harbor. Maybe not compared to a lot of places, but, how does Shelton compare to Olympia, more of a busy, more expensive area?

Curt: Definitely, it’s a smaller market. The town of Shelton is probably 8,000 or 9,000 people proper or 100,000 in Olympia, [inaudible][15:10]. It’s a bedroom community, it’s a retirement community, a lot of low-income. It was hit big with the timber industry years ago when the major decline—so it doesn’t have the draw, the attraction out there but this being a commercial property still has some value and we’d been able to increase value in it.

Josh: Nice. So you started with multis and then you just hopped right in, obviously. There’s a whole story behind it, as we’ve discussed, and really kind of went from there. It sounds like you didn’t really ever go back to single-family. It sounds like you pretty much stayed with the multis unless I’m getting it wrong.

Curt: When we made the transition from our original properties up in the Tacoma area—Brandon would be familiar with—when we bought our new construction, we had a mix of single-family and duplexes. And then, see that’s 2003-2004, literally, within nine months of buying some of those, we were refinancing because the market was growing so fast and so we took money out, bought more duplexes and single-families. By 2006, we sold about half a dozen or more of those and then bought the multi-family.

Josh: But your purpose has always been cash flow. You’re buying this for cash flow. You’re not flipping houses. You’re not wholesaling. You’re doing buy-and-hold, correct?

Curt: By and large, yes. I’ve always had the mentality I wanted to do some flipping, but I buy something and then I fix it and I keep it and I rent it also.

Josh: So of the different asset classes, the multis, the new construction, the townhomes, the mixed-use, which has been your favorite and why?

Curt: For different reasons—I’ve got a little house that’s just been a real fun house. I’d love to tell you about that in a minute. My preference is to have the multi-families, larger multi-families—and if I can trade all my smallers into larger ones, I would probably do that. The reason being is it’s consolidated. I have more control over the value. As I control the rents and expenses, and for management purposes and so forth, I think—I would like to see, and this has been changing, even in the last few months, it’s been doing some reading and even on the forums, getting some input. I had this mentality I need 150-200 unit complex and as I’ve done a little reading, I’m thinking maybe more 50-75 units, two or three or four of those instead of one single. I’m still developing and growing and thinking about where I want to be.

Josh: Gotcha. I’m curious, I want to hear about that single-family but I’m going to ask you a couple more houses, so somebody hold onto that thought. First, do you do house management? I’m assuming the big multis?

Curt: Only on the Shelton unit because it’s out there and the design of that property is kind of like a dorm, interior studio and one-bedroom units and so we do have a live-in manager there who takes care of just everything. She does a fantastic job out there. I did have management on the 24-unit when I was working full-time. And the problem was, I had five empty units. I wasn’t getting them filled and so when I left my position, we let her go and now I usually have one or two empty and things are running a lot smoother.

Josh: Gotcha.

Brandon: How many do you have right now of total units, then?

Curt: About 85.

Brandon: Okay. At some point in this show, I want to talk about how you do that because I have half that and I go crazy. My wife works full-time and I go crazy. I want to know how you do that and we’ll talk about that maybe in a little bit, but Josh, do you have something?

Josh: You know, he had mentioned going with the three smaller, 60-80 whatever units versus a 300-unit. Why would that be an approach that would be preferable? I’m just curious. What were people on the forums saying and you know—I guess for the listeners, what does that make sense for you?

Curt: Later on, you’re going to ask about books and one of those is Marketopoly, and he had some interesting ideas about some of that and some of the other readings, just liquidity of a smaller complex versus a really big one is one big issue, and then just diversification.

Josh: Okay, so primarily those two things. Okay. Fair enough. Brandon, I know you had a question.

Brandon: I was just curious, do you have any—how do you do it? What do you do? Do you still show units yourself or are you doing repairs yourself? What all do you do and what don’t you do?

Curt: I do everything I like to do.

Brandon: That’s a good answer.

Josh: What does that mean?

Curt: I do most everything. You’ve got to understand that with our houses and townhomes, those are mostly new and like-new, so I have very little maintenance. I have a higher quality tenant. I’ve got professional people, state office workers, and so forth, so I don’t have to babysit those. I get a call occasionally when somebody moves, obviously you’re going to do some turnover and so that’s not a big deal. The apartments, I’ve got a little lower class clientele. I do have Section 8. We clear about 30% Section 8 in those. I have a couple of other situations, community use services, we’ve given a couple of units to and some of that kind of subsidy, but you know, some of it is mentality, it’s tolerance, it’s ability and interest and how I interact with people and by and large, I don’t find it a big burden.

Josh: That’s nice.

Brandon: I think a lot of it is I feel like most of mine are like your Shelton property, probably. They’re all one-bedroom studios. I’ve got some two-bedrooms but they’re very management intensive. So—yeah, Josh, play the violin. So I like what you did. As you grew, it sounds like you got a higher quality—I don’t know what your original four-plex was like, but it sounds like you diversified and did some nice properties.

Curt: We were having drug busts and all that out there.

Josh: That’s always fun.

Curt: I tell people—I think I’ve seen almost everything and the next week, something else happens. I’ve got the hoarders that should be on TV. We’ve had the drug addicts. We’ve had prostitutes. We’ve had gun-running, meth labs, suicide attempts. I’ve had people—

Josh: Way to go, pastor.

Curt: We try to work with them, you know.

Josh: You have the best and brightest tenants, don’t you?

Curt: We work with them all, you know? Sometimes we have bad days, too. And so—

Josh: If it’s a prostitute, you’ve had a bad day.

Brandon: Okay, so you are getting at least higher quality, just to bring us back in. As you grow throughout your investing kind of career—and I like the fact that you’ve said you’re still developing. You’re still growing. Right? I love that. I don’t know, I feel like I don’t hear that. We hear that on BiggerPockets, but so many people in the world, they have this, “I’ve reached it. I’m there” mentality, especially with guys who are teaching and talking. I’ve made it.

Curt: I was surprised when you called me. I mean, I’m not a professional. I guess I am technically but I’m not a realtor, never have been, never thought I wanted to be, still not sure I would want to be. But I’ve just done it. It’s been a part of my life and developed a love.

Josh: Well, according to the IRS, you probably are a professional, right?

Curt: I put more in the whatever it is, 700 hours, so yeah, I can probably claim it.

Josh: So you definitely are a professional. You are indeed. And you know, one of the things for us is this. For those of you who are listening, I don’t think we’ve ever actually talked about our philosophy and I know it’s kind of cut out a little bit of your time but I’ll do it really quickly, on who we want to bring onto the show. We don’t want to bring on some guy that everybody looks up and he’s like, okay, I can’t even imagine getting to that point. We want to talk to somebody who just did their first deal to somebody like you who’s got 80 units to somebody who’s got hundreds and thousands and our goal is to really help people understand how they’ve built their business, how they grew and I don’t think there’s been a show—you can tell me if there has been—where I haven’t learned something. There’s always a takeaway, no matter how experienced you are. And that’s what we try to do. We think everybody and anybody we want to talk to can share something that anybody and everybody can learn from, and frankly, if you were the guy who said I know everything, there’s not a chance in hell I’m going to bring you on my show. We don’t want to interview you if that’s your mindset. Because we want people who don’t think they know it all, because I don’t think anybody does.

Anyways, let’s hop back to partners. We talked about what makes a good partner. Why partner? At this point, it seems that you’re probably fairly successful. You’ve probably done pretty well for yourself in the real estate world. Why do you continue to bring on partners versus going at it alone?

Curt: That’s a great question because I was asked that this morning. I actually had coffee with a BP guy from up in Seattle who came down—

Josh: He told me to ask you that question.

Curt: He asked me if I would partner with him and I smiled at him, and I said no. I’m at a stage where I’m moving out of partnerships because I’m at a point where I don’t need them. Maybe it’s because I’m too controlling and what not, and part of the reason a partnership works is because one guy can say, this is the way it’s going to be and everybody else says, yeah, okay. And I was kind of that guy. So yeah, I’m phasing out of partnerships at this point. I have a partnership with my son. I have another partnership with another really good friend. And that’s it, other than this major one that we’re going to be buying out of, probably this year.

Josh: So I’m going to interrupt the whole flow that we had here because you mentioned your son and I have been told that you’ve got a 15-year-old and I’ve also been told that not only do you have a 15-year-old, but you have a 15-year-old who’s actually done a real estate deal.

Curt: Yeah.

Josh: Okay, so we’ve got to hear about that.

Curt: Well, he’s not 15 anymore, but that just means the story has developed and gotten better. I told both of my boys when they were young, I said, they had watched us grow up with these properties and they had seen some of the benefit, and so they want to buy property, and kids want to imitate the parents, and so I said, when you get the money for closing costs, we’ll go look for a deal. And so, both my boys ran businesses. One had a bounce house that he rented to parties and events.

Josh: How old was he when he had a bounce house business?

Curt: I think he was probably 12 when he started.

Josh: Wow.

Curt: He did that until he went away to college and we sold it and he went onto other things. He’s now studying to be a doctor, but my younger boy, he started mowing lawns when he was about 9. He had a lady in the church that would give him seven bucks and a candy bar and that was his start. And we went down to the Big Box store and he bought a lawnmower, 90 days same as cash, and had it paid off in two months, and mowed for the neighbors wherever he could. He got a contract with one of the developments that we had to do the Homeowner’s Association. They found out he was only, I think maybe 11 at the time, and they fired him.

Josh: That’s age discrimination.

Curt: Absolutely. But we learned some stuff about contracting. We learned that a kid under 18 can’t sign a contract unless he owns a partnership or a business or a corporation. And so as they got a little older, he saved up his money and he had all his closing costs down. The guy that used to do my computer work, they were selling their house. His wife had gotten an inheritance. They paid off that house and put money down on another one, but the house needed some work and they weren’t suited to do the work, trust me. And he was good with computers, not other things in life. So I said, have you thought about carrying a contract? And they just kind of stared at me and said, what does that mean? And I said, well, you become the bank. They said, well, we don’t have any money. And I said, no, your house is the money. So I just took out the yellow pad and started writing away. I said, here’s the possibility. Here’s your value. Here’s the interest rate. And here’s what we’d pay you and in three years, we refinance it or sell it and you get all your money. And we came back again a couple of days later and spelled it out more specifically and they said, yeah, we’d like to do that. So we had this two-bedroom, one-bath bungalow, 720 square feet, and we agreed on $150,000 for it and we moved in the week before closing and started renovating, tearing out the ugly carpets and painting the pink walls and everything and we stuck it on Craigslist and I got slammed with calls. We had the thing rented in a day. And so, this was a 1925 home that had been put on this lot in the 1950s. And they put it on a full basement that had its own entrance from the back.

Josh: Are you saying they actually physically moved this 1920s home on the lot where there was a basement already existing?

Curt: Exactly. Yeah.

Josh: Interesting, okay.

Curt: So, as we’re walking away from the home for the first time, my son looks at me and he says, Dad, look over there. I said, what about it? He said, see that door? That’s another unit.

Josh: Wow. This was at 15?

Curt: Exactly.

Josh: Sharp kid.

Curt: So we spent the next year working on the basement together. We had a framer come in and framed it out for us and then we strung wires and plumbing and all the different things in there. We got it ready and got the basement rented out in addition to the two upstairs in addition to the upstairs as two separate units. Kind of unofficial. Now we’ve got two people that are related to each other in there. It’s working out great. So over the years, three years went by, we got into the downturn of the economy. We were supposed to pay them off. I sat down with them and said, well you see what the market’s doing. It’s not worth what we even paid for it. You can take it back or you can extend the note. Well, they didn’t want to take it back. They said, we’ll extend the note. I said, I really want to go out five years this time. But instead of paying you interest only, we’ll pay you full ambertized payment, so we went from $500 to $750. They were excited about that. Well, unfortunately for them, a year later, they split. So now they want their money so they can go their separate ways. And so, I said, we still don’t have the value in it. And I’m talking to mortgage brokers and so forth. We can get about $120K for it. So if you want to apply all the payments that we’ve made to you towards principle, basically, do a discounted payment, we can get you $120K. And they jumped all over it. They were excited. It worked great for them. So this time, Riley got it financed in his own name, because he was old enough at this point, and he got 30 years at 3.75, his full interest tax payment was less than what we had been paying before with just the mortgage payment. So with the income that’s come off of that, we put a new roof on it, just this week, we finished residing it. Next summer, we plan to put a garage on it and it’s gone up to about $185-$195K value today, so it’s been a fun house.

Josh: So how do you do that? Not the house part, but how do you get your kids to be financially wise? I’ve got a couple of little girls and I definitely want to train them to be entrepreneurs as well. I’m sure there’s lots of people listening who are in the same place, and so what did you do? How did you get your kid mowing lawns? How did you get your kid doing all this bounce house business and everything else?

Curt: Our home has been a home of entrepreneurs. My wife is in direct sales and does very well with that and so they’ve grown up seeing us with the properties. They’ve seen her busy with her stuff and my activities in the church and so forth so they’ve grown up watching these things take place. We talk about money in our home. I never hid things from them. They knew how much our mortgage payment was. They knew how much I brought home. It was never a secret. As they got older and Rich Dad came out with his stuff, I got them Rich Dad for Teens and made them endure that. And you know, they learned from that. They developed a desire and mentality that said they can do stuff. We never told our kids no unless we really meant it. So if they said, hey, can I go do this? Well, yeah, you can. But there might be some costs and consequences so consider this and so when they’re paving the street out front, they ran out there with the lemonade stand with hot dogs and chips. And so it just kind of grew for them. And being open about what they could do and giving them permission to do things that weren’t necessarily standard. But didn’t have a reason to say no. When I’m driving around mowing lawns or taking them to do a bounce house rental, I made them do the interaction with the client and that helped them grow and mature and get experience in those areas in a controlled environment, so they grow up with some confidence that way.

Josh: That’s awesome. That really is amazing. I know I came from a family of entrepreneurs and my family came from a family of entrepreneurs. It’s kind of brought itself down. I wonder how much of a challenge it is for somebody who was not raised in such an environment and so I think a lot of the feedback that you gave just now was really, really priceless in terms of what you can do, I guess for anyone listening who may not have the entrepreneurial background. Do you think there’s any tips that might be helpful?

Curt: Oh, I think developing relationships with your kids outside of even the home, even that business environment really helped a lot. When I drive my kids to their activities, we’re talking about how it’s going to work and we’re talking about other things about life and so my kids, I can brag about them. They never really rebelled in the classical sense and I think it was because of those interactions and giving them a purpose. I would say graciously that I thought one of my boys was either going to be a great success or in jail. Because he was so aggressive. We had to stay ahead of that and we had to give him purpose and direction. And creating a positive direction for him where he benefited from it as well as benefiting other people in the process, I think really helped him.

Josh: Nice. Fantastic. That’s really, really great.

Brandon: What age do you think is appropriate to start that—is it from the time they’re a baby? I mean, would you wait until they’re 10? Where do you begin that process?

Curt: Well, my youngest son—both my boys played tee ball. And you know they had to sell candy bars. And everybody hates selling candy bars. But there was a bike to be earned. And so, my younger boy, he walks up to the lady and he says, now that bike that we’re going to win, if we sell ten boxes, is that a new bike?

Josh: It was innate.

Curt: I was a youth pastor. I didn’t have income. We shopped at the garage sales and whatever, you know. And so he saw that new bike and he had a goal. And my boys never saw obstacles. They just saw the goals. And the obstacles, you just worked your way through them and you get to the goal. And so, he stood out in front of Safeway for eight hours at a stretch and when my wife would say, are you tired, he would say, how many boxes are left? And so, giving them goals. Given them purpose and something they’re going to win with.

Josh: You know what, I think that applies to adults as well. A lot of people find that they have a hard time motivating themselves. They have a hard time getting themselves to work. People look at me and in the past ten years, I’ve worked more than most people would bear to say they’ve worked, probably more.

Brandon: How many days have you had off now, Josh?

Josh: In the last eight years, I’ve taken a single day off. One day off. I’ve worked every other day, with the birth of my kids, you name it. Well, I have a goal, though. And for me, I need a little bit of time off.

Curt: You’ll find out how much more efficient you are when you come back refreshed.

Josh: I don’t disagree with you. But I mean, for me, I love what I’m doing and I have a goal and my goal is getting closer and closer and closer and for me, it’s like I’m that personality type. I can’t stop until I get there and my brain is always going. I’m always thinking. And so, I’ve been thinking about it. Hey, I might take a week off and go somewhere and then I was talking to somebody last night and I was like, wait a second. I’m going to “thaw”—the entire time I’m “thawing”, my brain is just going to be going—the clearer I get from this “thaw”, the more I’m going to be thinking about the goal. So even when I’m off, I’m never off. I can’t shut it off. And I think most entrepreneurs, and I think the same applies to real estate investors—you go take a day off—it’s not a day off. You’re still thinking about your portfolio or you’re on vacation and you look at a condo. Oh, that might be a good rental. Let’s go Airbnb that sucker. Come on.

Curt: Oh yeah, we look at properties all over the world, wherever we go. We always dream and imagine, what if we owned this? What if we owned that? How much would it take to do that? It’s a fun pastime.

Josh: Anyways, bottom line is, the motivations—it’s either in you or it’s not. And if it’s not, then you’ve got to find a way to build it and by creating a goal, saying you’ve got the job and saying, hey, I want to be able to get out of my job—that’s your goal—or I want to make x amounts of dollars next month—whatever it is. If you’re listening to the show and you don’t have the motivation, create that goal. Figure out what it is. Maybe make it easy or attainable at first so that you’re not disappointed. And then once you see that you can do that, you kind of extend it and extend it. We do this all the time at BiggerPockets, Brandon and I. It’s funny, the goals we have are ridiculous. Sometimes, we set our goals so high that when we actually achieve those goals, we look at it and we’re like, oh man, that was kind of disappointing. Why don’t we triple that? Why don’t we set a higher goal?

Curt: But creating those wins for you and the staff and whoever, that motivates you forward.

Josh: Absolutely.

Curt: And you’ve got to get a few wins under your belt and experience that to excel.

Josh: For sure. For sure. So that’s great about your son and it’s fascinating and hopefully, everybody listening also thinks it is and I think getting your kids and really training them to become financially smart beyond just real estate, too, is really important. I was a teacher for four years and one of the things that I did outside my curriculum was financial education for the kids. I thought it was extremely important. I realize that when I had gotten to college and into the real world, I didn’t have any. And I had to teach it to myself and so we really do need to work harder to do that stuff for our children, I think. I’d like you to jump back and we talked about this fun story on the single-family house. Can you dig in on that a little bit?

Curt: What more do you want to know?

Brandon: You said it was fun. Was that the same story with your son?

Curt: Yeah.

Brandon: Ohh. We covered it and didn’t even know it.

Curt: The beauty of that is it’s growing and appreciating so now he’s looking at getting a HELOC so he can go get another one.

Josh: That’s cool. That’s very cool. For those people who don’t know what that is, because I’m a big fan of those, what are the HELOC?

Curt: It’s a Home Equality Line Of Credit. And some places will do them on non-owner.

Josh: What does that mean, for somebody who wants to use one? Why is that helpful? Why would we want to do that?

Curt: It’s cash in your pocket, ready for another down payment.

Josh: How does it work exactly? So you’ve got a property—

Curt: So you go to the bank—it’s basically a second, but it’s a line of credit. So it’s money that you can take as you need it. You can pay it back. Take it again, pay it back. And you might have a ten-year drop period where you can use that money back and forth and then usually maybe a ten-year payback period after that. And during that drop period, you’re only required to make interest-only payments. In our case, we try to pay it back as quick as we can so we’ve got that money available to go put into something else, but it gives you flexibility as opposed to a straight second where you’re amortized over a set number of years.

Josh: Do those interest rates look similar to conforming rates on a mortgage?

Curt: Pretty close. They’re going to be typically a little bit higher. I’ve had my line of credit for about six or seven years. I’m running about 5%. And I’ve seen some a little lower, currently 4.25ish.

Brandon: A friend of mine has a line of credit that—instead of a home equity loan on one property, what he did was he went to the bank and said, I’ve got these eight properties, each one with a pretty significant chunk of equity—can we just do one big one? He got, I think it was a $550,000 line of credit from the bank. They were just like doing a ton of stuff, new construction. They can find us anything they wanted to. Out in Grace Harbor, that goes a long way. Currently, you can buy half the town. So, they were doing a lot of stuff. I think they still have it. I don’t know if the banks are still as generous, but he had the equity and a lot of different properties, so he just combined them together and got a blanket line of credit.

Curt: I’m trying to temper my son right now because they do typically tend to value the homes a little more conservatively on those. So you say, it’s worth $180,000, they’re going to say yes, but we think you’re worth $170,000. So they’re not necessarily going to give you everything that’s there.

Brandon: In its very basic sense, it’s almost like a gigantic credit card that if you don’t pay it, you lose a property. So they are very dangerous things. I think the key is, like what you guys are doing, is you’re buying further assets with that liability, essentially. So it kind of cancels out the evil of it, and makes it better, hopefully.

Curt: And you’ve got to calculate the total cost of capital in that so that those costs are included in whatever you’re going to receive from your new property.

Brandon: My in-laws, a couple of years ago, there was a duplex they wanted to buy and they own their house, free and clear. A duplex came up in the market and they wanted it. The way that they worked it and ended up doing it is they went to the bank and got a home equity line of credit on their home, not on the rental house, and then went out and bought the duplex with just that money. So they did the entire deal with no money down. Because if they could have gone and got a mortgage on that property, they would have been required to put down 20-25%, but when they use their own property, the equity, to cover it, they did the entire deal, nothing out of pocket whatsoever. Now, they can go and refinance that property if they want to, pull out the cash and do it again and again and again. It’s a very cool strategy of getting in there creatively. Very cool.

How about—let’s talk about creative investing. We’ve been talking a lot about that lately—with my new book that came out, we’ve been talking, it’s been very interesting.

Josh: Oh, man. That was so shameless.

Brandon: Do you see how I slide that in there?

Josh: Go to BiggerPockets.com/NoMoney . Check it out. Shameless. By the way, this is Show 95 of the BiggerPockets podcast. Check out the Show Notes at BiggerPockets.com/Show95 . Thank you.

Brandon: Nice. So I want to know—creative finance. Is there anything in your career—we talked about the very first deal that you didn’t have any money. Have you ever done anything like that since or do you have any other creative techniques that you’ve used to buy real estate?

Curt: Well, most of them have been standard bank financing but what you just talked about, when the market was moving up, we were refinancing homes, taking seconds, taking cash out, lines of credit out of existing properties in order to buy additional properties so we’ve done a number of those. We’ve done a couple of the owner-finance ones. We’ve done where we get the owner to carry back a portion when we bought the 24-unit. The owner carried back $100,000, so standard bank commercial financing but with an owner carry-back on that so that minimized how much we had to come out of pocket.

Josh: How much did you have to come out of pocket and how much was the property?

Curt: The 24-unit was just over $2 million and so it seems like we were bringing around $400something thousand plus the carry-back and that was pulled out of the other commercial when we refinanced that.

Josh: They carried $100K so it was $400K plus the $100K for $500,000. You still had to put money down. They weren’t financing the property for you. Gotcha. And that’s a pretty common strategy, isn’t it, on commercial properties, getting some kind of cash back at least from the seller?

Curt: I think so. It’s pretty typical and you’re dealing with a lot of money and either you don't have it or you’ve got it tied up. So if a commercial guy is not willing to pitch in and help out, it’s going to make the deal a little tougher.

Josh: That makes sense. So you went from one property to the next and you kind of were—I forget what it’s called but my brain is a little fried here. But getting one property and picking up another one, sizing up—I know there’s a word but it’s escaping me and that’s okay. Were you doing a 1031 on these properties? Were you exchanging them?

Curt: Most of the time. Not always. We kind of balanced out what the advantage was to have a higher basis or if it was better to just transfer the property on up. And if it didn’t affect us tax-wise, we would take the hit right then but you need an accountant at that point to decide how much of this should be pushed forward because you’re building massive equity when you do that and your basis goes all the way back to those first properties and so we tried to balance whether or not there was a tax advantage and how heavy the hit was in a given year.

Brandon: Yeah, talk to a CPA if you’re going to do that kind of thing.

Josh: Nice. Can you explain really quickly what is a 1031 for those people who may not know?

Curt: A 1031 is a tax-deferred exchange where you’re taking income property and exchanging it for income properties like kind exchange. There’s a lot of rules that regulate that. I think you have to have more debt when you finish than you had in the beginning and so forth. There’s some rules about all of that kind of thing but you can carry your basis and your property forward so that basically, you’re never paying capital gains until the day you die and pass it onto your heirs and keep rolling.

Josh: Nice, nice. There you go, kids. Here’s the big, fat tax bill.

Brandon: I know there are ways, even at that point—I don’t know what they are but I know there’s ways to move that money. The rules that the rich people know that we’re still learning. I know Amanda Hahn mentioned that back forever ago when she was on the podcast and she’s a CPA so—cool.

Well, I want to talk about the mixed-use property because I don’t think we’ve had anybody on the show that we’ve talked about the mixed-use.

Josh: I think it’s been talked about in passing but not—

Brandon: So let’s dive into that. First of all, what does that mean? Mixed-use?

Curt: Basically, it means that the property has multiple primary uses. So in our case, we have residential use and we have commercial use. We have retail, office, and restaurant together with the residential upstairs, so we’ve got a mix of purposes.

Josh: And what’s attractive about that?

Curt: That’s a good question.

Josh: I think they’re cool. I would love to have some mixed-use property. I think they’re cool. Outside of that—

Curt: When the market tanks and businesses hurt, then the mixed-use can hurt. Now, we’ve got some smaller offices, 500 square feet, we’ve got nail salon and hair salon and those are like 700-800 square feet. And I can get those rented almost anytime as needed. But when you get bigger—the restaurants are over 3500 square feet, probably the biggest restaurant space in Shelton, and we’ve been empty for a while, a long while. People are intimidated by it. We’ll make them a great deal, but we’ve looked at a lot of options. The city limits of what we can do and so larger commercial requires somebody who can come in and support it with their business. So that’s a liability in some cases.

Josh: So that’s definitely a challenge. Are there any other challenges that come along with mixed-use?

Curt: Making sure that your uses complement one another. The restaurant that we had initially, they wanted to build out a lounge and we had to put some limits on them timewise and they wanted to have some live music, but we’ve got residents right above them so we said, it’s got to be acoustic. It can’t be after whatever time of the evening so some different things, so that the one use doesn’t detract from the other.

Josh: So you don’t want like a machine shop underneath your apartment.

Brandon: How do you advertise a rental in a commercial space like that? Like how are you looking for tenants to take those, whether it’s the small ones or the big ones?

Curt: For the commercial side?

Brandon: Yeah.

Curt: Craigslist, like everybody else. Put a sign in the front window. For the restaurant, I have a realtor working with us as well, and so every way we can.

Brandon: That’s standard.

Josh: Do you find in terms of renting out the apartments that there’s anything different about renting out a mixed-use apartment in a mixed-use complex versus a house or just a regular apartment building?

Curt: Not really. It’s subject to that property and the needs and interests of people. We’re downtown. We’re in the core of the town. We’re on the corner of Highway 3 and Railroad which is the two main roads in town. We are studios and one-bedrooms so we have a little bit more of transient population. They’ll come in for a year or six months and then move on. But we’ve got a pretty good arrangement in there with our management so people have a sense that they’re at home there. We’ve developed a living room space, a common area, and so they can come down, watch ball games together or they can have a pizza feed. They get together and do holiday dinners, that kind of thing. We’ve got a little park area in the back so they do barbeques in the summer.

Brandon: That’s cool to kind of develop that community. Do you feel like you did that on purpose or did that just kind of happen because of the manager you have in there?

Curt: I think it happened because of the manager but if I was to do it again, I would be looking for that kind of manager.

Brandon: I was thinking, I’ve got my 24-unit. I’m like, I never see the tenants do things together but if I could like cultivate that sort of—and I remember when I bought the place, I used to think, oh yeah, we should have Fourth of July parties outside and then I realized I don’t want to be in that area on the Fourth of July. I want to go hang out with my family now.

Curt: We’re always being invited out there now and sometimes we’ll show up. It’s good to do.

Josh: Do you think that sense of community attracts a better type of tenant? Does it make any kind of difference or is it just kind of a feel-good thing that doesn’t really add any value to your bottom line? Meaning, are you going to rent it faster because you’ve got that community or anything else?

Curt: I’m not sure if we rent it faster but I think people stay longer and so we have less turnover. So I’ve been really pleasantly surprised. We have below a 3% vacancy in the apartments so for that kind of a complex to have that low of a vacancy factor, I think is attributed to that relationship that people have with one another.

Josh: That’s great.

Brandon: Do you have any good tips for finding that kind of a manager that can handle that? And by anybody, I’m saying do you have any tips for me on how I can find that manager?

Josh: Always what’s in it for Brandon?

Brandon: And if you can give me their phone number, I’ll give them a call.

Josh: Oh, that’s right. You live nearby. Yeah, don’t do that. That would be a bad idea.

Curt: The irony was my realtor told us to get rid of her when we bought the property.

Josh: Really? Interesting.

Curt: And yet we communicated to her, talked with her, worked with her and found that we were able to mold her and shape her in kind of the direction new wanted to go. And she was very well suited to the community. She was very well suited to that building and the structure. She had some leadership abilities that I don’t think had been developed before but she’s risen in that. She’s not the same person she was eight years ago to the better. And so our relationship with her has grown. We’ve done some things together. We sent her and her husband down to Disneyland after they’ve been down there for five years as a big thank you. So we’re really kind of doing some special things and some mile markers for her to acknowledge that and to build some loyalty. It has really paid off for us.

Josh: Do you pay her in just free rent or do you give her money as well or how does that work?

Curt: In that case, yeah, she gets a room plus a little cash bonus on top of that. It’s not a bonus, it’s a stipend. She knows what that is every month but we’ll do bonus things from time to time.

Brandon: I love the concept in theory of a resident manager but I’ve gone through three or four of them now and they’re okay—and really what I think, especially after hearing you talk—the words you use are like we molded her, we shaped her, we lead her, we guided her—it’s the same words that Josh uses as the CEO of like in developing a team. And I think that’s where I’ve fallen short. I’ve said that before. I’m just not very good at managing people and as a result, I don’t mold them. I’m just, they’re not good enough, get a new one. Let them go. So actually, this afternoon, I’m having dinner with my resident manager to go over some training.

Josh: Are you going to mold her?

Brandon: It’s a him, but yes. I will work on molding him a little bit.

Josh: There you go. Now, that’s awesome. Hey, Curt, I know I have mentioned the negatives—I asked you what the downsides were. What are the upsides? What are the positives and then we’re going to really quickly wrap this segment up and move onto our next section here.

Curt: A positive to the mixed-uses?

Josh: Mixed-use property, yeah.

Curt: Diversity of income sources, I think would be the most obvious. And when one thing isn’t performing, the other is, and so I think there’s some flexibility with that and it attracts people to that property. Hopefully, they complement one another so I’ve got people upstairs in the residence that come down to get their hair done or they come down to get their nails done at the nail shop and I’ve got an attorney in there. So it’s a one-stop shop. You go get your nails done, get your hair done, get your will updated.

Josh: As a newbie, say somebody decides, this sounds interesting. I want to go buy my first mixed-use and I found one and it’s got a restaurant downstairs and apartments upstairs—do I have to know about the restaurant business to get into that or do I have to generically kind of understand how to rent out a commercial property? What do I need to know to kind of get into this? Because I think there is somewhat of a transition from going from a residential property to some of that commercial and retail?

Curt: Yeah, I think there definitely is. I don’t think you need to know about every business but you need to have some people on your team that do and so be that your realtor, your attorney, whoever that can look over that contract and say that’s appropriate for this type of business, and there’s some things with the restaurant particularly, as opposed to the attorney in an office where he doesn’t use anything but a little bit of heat and the front door. So yeah, there’s definitely some things with your liability, your insurance, utilities, all those kinds of things. Common use maintenance area, some of that kind of thing.

The other thing you’ve got to know is your percentage of commercial versus residential and lenders are going to look at that and say, oh, you’ve got too much commercial exposure. We don’t want to lend to you. And so they’re going to look at a percentage and you’ll want to talk to your lenders and say, how much—what’s your typical percentages? Probably 80-20 or something to that nature. They want mostly residential as opposed to commercial.

Josh: Gotcha. That makes a lot of sense. Would you recommend that newer investors invest in mixed-use or you would say wait until you’ve got a little more experience?

Curt: If you’ve got a good team behind you, go for it. My personal preference is residential and as I move forward, I’m not so sure I’m going to be looking for more mixed-use or commercial. I know there are some other guys on the forums that are all hyped up about and they love it and that’s their wheelhouse. They understand it and they’re going with it but that’s not mine.

Josh: Hey, really quickly, you had mentioned realtor, lawyer, other folks and this is a broad generalization that’s going to piss off a lot of realtors but that’s okay. Generally, I’ve found that residential real estate agents don’t know anything about investment property. On the other hand, commercial agents tend to be far, far, far more sophisticated and so if you need somebody to lean on, I think turning to a local commercial agent is probably going to be a really good bet and I think there’s probably a lot less training that would need to be done than would need to be done on a residential agent.

Curt: I concur fully. Yeah.

Josh: So you know, folks, lean on those local commercial guys because they can certainly help you out.

Brandon: You mentioned your strategy as not necessarily to go to more commercial—what is your strategy? What does your future look like?

Curt: Like I told you, I’m still growing. Still learning. Yeah, my future, I anticipate this transition that should take place by the end of this year. It’s its own acquisition in itself. Right now, I’m in a 50/50 partnership. I’m going to take over both of these properties. I’m going to take over an additional 33 units that will be mine, zero down. And then a graduated payment structure, so a partnership buyout is another way to buy property, zero down.

Brandon: I didn’t put that in my book. Which you can get at BiggerPockets.com/NoMoney .

Josh: I’ve got to tell you—I’m sitting here and I’m looking at these two guys and I’m thinking, what did I do wrong? I’m sitting here and I’ve got two pastors eyeballing me the whole time here on Skype.

Brandon: I’m just a leader. Not a pastor. I don’t get the ‘p’ word.

Josh: All right. Let’s move on, Curt. We’ve got the next section of our show, which is—It’s Time for the Fire Round.

Brandon: All right, the Fire Round—these questions come straight from the BiggerPockets forums. So let me throw them at you. #1—if a landlord doesn’t want to manage their own property, should they get a property management company or should they raise up a resident manager? I’ll kind of tweak the question to be more fitting for this—should they hire just a typical property management company or raise up their own?

Curt: I’m assuming you’ve got enough property to do that with and not a single-family residence or duplex.

Josh: Good assumption.

Curt: Again, you’ve got to depend on your interest, abilities, and tolerances as to whether you’re able to work with the individual who is doing it and oversee your onsite manager or if you are wanting to travel the rest of your life, then leave it in the background and just collect a paycheck. It depends on where you’re headed, so I think there’s some advantages to both of those and there’s some downsides to both of them, too.

Josh: Great. Next question—when a renter pays a security deposit to a landlord, where does it go? Does it all go into a single bank account or are there separate bank accounts for the rent checks and the security deposits? How is that kind of handled?

Brandon: Pizza fund.

Curt: Washington State law requires us to put that into an account separate of our operating fund.

Brandon: And I think most states are probably like that.

Josh: And by the way, if they’re not doing it—it happened to me. Bad things can happen.

Curt: You don’t want to spend that money and not have it available in the end.

Josh: I had a property manager who was commingling—not only were they doing that, they were commingling funds of all their people. That was fun. That was awesome.

Brandon: All right. #3, how do you screen for good tenants?

Curt: Well, I meet my tenants. I talk to them on the phone. I meet them at the site.

Josh: Are you sure you’re asking the right guy that question? He did say he’s got prostitutes and drug lords were living in his apartment units, so I don’t know. Maybe we should find a different question.

Curt: They’re not living there now. Sometimes, they find friends that give them influences and redirect their lives.

Josh: I’m just kidding, Curt.

Curt: Sometimes I do wonder if I’m screening, but I use a professional agency to do that. Currently, I’m using the Washington Landlord Association to process my residents.

Josh: What do you look for? I’m just curious. What are their red flags that you would say, no, I will not rent to this person?

Curt: First of all, I want to know that you can pay your rent on time every time and I want to know secondly that you’re going to take care of my property. So all the questions are going to revolve around that. They’re going to come back down to those issues. How long have you been in your job? Is it a brand new job? Did you just move to town? I just talked to a guy who just moved here from as far away as I can imagine and he’s ready to jump in tomorrow. If they’re looking at something right now, right today, as quick as I can get there—that’s a red flag. And so I tend to put the brakes on them and say hey, it’s going to take us a couple of days to process this. I let them know, we’re looking at your criminal history. We’re looking at your rent history. We’re looking at your income history and sometimes when I tell them that, they just decide not to call back.

Josh: What are the criminal things that would give you red flags? Do you let any kind of criminals in or just prostitutes?

Curt: Don’t tell my wife. I tend to be a second chance kind of guy, but I’m not a third chance guy. I’ve taken some people that others I’m sure wouldn’t, but it depends on the property that I’m putting them in as well. And if you’ve got some assaults or you’ve got some domestic issues, you’re not going to fit into my complex. If you’ve got some theft issues, that’s not going to fit real well. Some of the other issues—I talk to people. I talk to them pretty straight. I had a guy that showed up and I knew that he had some issues and that’s why he was talking with me. And then he shows up at 10 o’clock to see the place and I smell alcohol on his breath. So I look him straight in the eye and say, is this going to be a problem with us? And what are you doing to work with this, to deal with this? Are you going to meetings or not? It’s an $1100 a month unit so I want to know that you’re not going to trash my unit. You’re not going to have big parties there. I want to know your income source and how long you’ve been there and some of those kinds of things.

Josh: Right on. Final question here for the Fire Round is do you use the same rental agreement for all of your properties?

Curt: Yes.

Josh: Okay. Fair enough.

Brandon: Even the commercial ones? I assume that would be different.

Curt: Well, that’s different. But all the residential's are the same.

Josh: Perfect. Cool.

Curt: In fairness, some of the rules sheets are a little different out in Shelton at the mixed-use dorm style housing, it’s a little bit different than it is in the other complex.

Josh: Gotcha. Fair enough. No fraternizing in the common area.

Curt: There you go. No smoking in the building. Of course, we have no smoking anywhere in our buildings, but it’s a bigger issue there.

Josh: Gotcha. Right on.

Brandon: Moving onto the end of our show, the segment that we are going to call our Famous Four.

All right, the Famous Four. We ask everyone these questions and I’ll see what you’ve got to say. #1—what is your favorite real estate book?

Curt: Favorite’s a tough word. It’s usually the one I’m reading. But I’ve benefited from a lot of them that I’ve read and I would say the Rich Dad series, particularly McElroy’s Advanced Guide to Real Estate, Millionaire Real Estate Investor with Keller, and the one I mentioned earlier-Mark McKinsey’s Marketopoly was written right after—it was 207 and it really dealt with some of the downturn and how to make money in that and how to evaluate properties. He did a good job of that.

But let me throw one out just for landlords, especially. And if you just want a couple of hours of some humor and practical insight, a little bit of a cynical edge—The Care and Feeding of Tenants by Andy Kane.

Brandon: Never heard of it.

Curt: Oh, it’s a bit of kick. Seasoned landlords are really going to enjoy it. They’re going to identify it. New guys are certainly going to learn from it as well.

Josh: That’s great. All right. What’s your favorite business book?

Curt: I like Peter Drucker, The Effective Executive—you get things done, the right things at the right time but more recently, Rabbi Daniel Lapin, Thou Shalt Prosper: Ten Commandments for Making Money and I’ll tell you why. We’re in a strange anti-capitalist climate, it seems. And he really gives us permission to be successful, shows us the moral imperative of being ethically successful and how that translates to business, not just you but society and the community in general.

Josh: That sounds really good. That’s a pet peeve of mine, this anti-capitalistic thing that’s happening in our society these days. I don’t know. It’s always the guys who are sitting on wads of cash that are bitching and moaning about how bad it is. So what are you going to say about it?

All right, hobbies. What do you do for fun?

Curt: We have a lot of interests around my house. We love to travel. My home is fairly simple because we like to go to other places and spend our money doing things and making memories, so that’s a big thing. My boys and I took up scuba diving—we do have done Puget Sound but we really enjoy going to the warmer climates. We like that. So dining out, traveling both stateside and internationally. Good passion.

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

Curt: I think people who bring value to the market succeed and so I think it’s kind of key to find ways to serve other people. And no, here comes my minister. You’ll have a paraphrased discussion of Jesus and his disciples and they are all wanting to know who is going to be the top dog and Jesus basically said, if you want to be great, be the servant of all. So I say, whatever you’re doing, find a way to meet with others, find ways to benefit others and make a win-win situation out of it and that brings a lot more benefit than a one-time shake down.

Josh: Right on. I think that’s great, even for those of us who do not ascribe to the J-man, I think we all could agree to that. Just be good to other folks and I think it kind of pays itself back. So that’s awesome.

Curt, this has been fun. Except for the part where you eyeball me and make me feel guilty but there’s been a lot of fun and we definitely appreciate having you on board and sharing your wisdom and we love that you’re a part of the BiggerPockets community

Where can people find out more information about you? I’m assuming the site—

Curt: Yeah, I’m on the site and you can message me there and connect. I connected with a fellow this morning and had a great time together so we appreciate the opportunity to be there and what you’ve got going on it.

Josh: That was the fellow who you had breakfast with who you decided you weren’t going to partner with, so maybe you shouldn’t mention that.

Curt: Hey, we’re going to be in touch and we’re going to bounce ideas back and forth and some deals and hopefully we’ll both glean from that.

Josh: Sounds good. Well listen, thanks again. We really, really do appreciate it.

Curt: Thanks so much.

Josh: All right, guys, this is Show 95 of the BiggerPockets podcast with Curt Bidwell. We really do appreciate his time and energy. You can find the Show Notes at BiggerPockets.com/Show95. If you are not already an active member of BiggerPockets, we definitely encourage you to jump on the site at www.BiggerPockets.com , create a profile, engage, connect with your peers and get involved.

Follow us on our other social media: Facebook, Twitter, G+, LinkedIn, YouTube, and get out there. Do things. Do it the right way. Be moral. Be ethical. Teach your kids how to do this stuff. Get them excited about business and about entrepreneurship. I think that’s just really, really important and that’s it. Make things happen, guys. Have a great week. We’ll see you next time on the BiggerPockets podcast. I’m Josh Dorkin, signing off.

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