Transcribe your podcast
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This is the Bigger Pockets podcast show for forty one constant across all the different banks and financial institutions, is that you or the customer? And no matter where you go, they're always trying to get your business and sell you alone. And once I realized this, it was like I found the missing piece of the puzzle that I was looking for when I wanted to invest in real estate wasn't money, but it was more so knowledge.

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You're listening to a bigger pocket's 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 bigger pockets. Dotcom, your home for real estate, investing online.

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What's going on? I want to bring in Turner, host of the Bigger Pockets podcast here with another phenomenal show with my buddy, my partner in crime, my soon to be hanging out in person in Hawaii, David Greene. What's up, man?

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Hey, I'm excited to be going to Hawaii. I'm going to look at buying a couple of condos out there as investment property and everything, ramping up. What I've been looking at, I'm looking at condos with you. I'm looking at a new house for myself and I'm looking at a couple of apartment complexes in the three million or so range in Georgia. So anybody who's looking at properties out there has an in with brokers. I'd love to hear from them, but it's the season of buying again, so you have to be really good.

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This is like when I'm at my happiest, I.

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Do you have do you have a good team in place to help you buy stuff or do you still looking for like kind of thelo of your life to help you build your portfolio.

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A thousand percent looking for a new portfolio manager to help us ramp up. That's definitely something that's there. And then I also want them to help with acquisitions. So if somebody has any experience with managing rental property, I probably don't want someone who has none at all. But if they understand what to do and they want to grow, I'm definitely looking to hire. So, yeah, thanks for mentioning that house. Open door capital going. Are you guys doing pretty well with both your acquisitions and your management?

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Yeah, yeah, actually we are. And this actually speaks to what today's show. We talk a lot, a lot about. We went we had like a ton of properties on a contract. We've spent the last four months closing on them. In fact, we're closing on a big one in Alaska right now. And speaking of Alaska, our guest today is from Alaska.

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But and now we're back in the acquisition mode. It's kind of like this like flow thing, right? You go really hot and heavy to one thing and then really hot and having the other thing and then back to the one thing. And so we are shifting in acquisition mode right now, which is. Yeah, like like you. It's it's fun. This is where we go on the hunt. It's it's a good time. So, yeah.

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Make sure that you listen to the show listeners here, because we do hit a really important topic on today's show that has to do with you can't just get on one side of real estate and just stick to that unless you're on a team. So if you're on a team and you just like to manage it, you just like systems, you can get away because someone else is filling your pipeline up of properties to buy. And if you love the thrill of the chase, you love acquiring stuff.

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Unless you're on a team with someone else to manage it, you have to do that part to you. So until you either build a team or join the team, it definitely feels like you're running really fast to this side. And then the boat starts to tip over there and you run really fast to the other side of the boat and it starts to tip over there. And I would say that's where most people get started. So you got to have your running shoes on when you're building up your real estate investing business.

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There you go.

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Well, before we get to that show, if you're going to hear more about it, let's get today's show sponsors.

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All right, everybody. So we recently did a whole show about this, the big three roadblocks for new investors.

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What are they. That's right. Not enough time, not enough deals and not enough money.

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So, look, there's no excuse not to get started when you have the right team and the right systems in place. So with that rent to retirement, dotcom, that's rent tío retirement dotcom or call this number. Ready, ready. Write this down. One eight hundred three one one six seven eight one again, that's one hundred three one one six seven eight one. And you can find that number and more information about rental retirement on the show.

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It's a bigger pocket's dotcom site show for twelve there. You know, we've got to do the quick tip today. So let's get to today's quick check. Quick tip. Go to bigger pockets, dot com store. Go find a book there. Read it. You're going to hear why in this show. Why so important to read like that? A lot of good QuickTrip.

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That's really good. And if you'd be so kind to comment on branded Instagram, if the book that he wrote or the book I wrote was better.

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Well, all right. All right. Please do. All right. Well, with that said, I think we're ready to jump into today's show. Anything else we need to cover? I don't think so. So today's guest is Daniel Illes. Daniel is a real estate investor from the far north and he is really good at. Laning like what it really takes to get started building the portfolio quickly, I think he built a million dollar portfolio in the first year.

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You're going to hear about both the upsides and downsides of doing that today on today's show. Plus, he covers a lot of other stuff, everything from credit cards to how to get his no money down deals to other cool things like that. So you can hear a lot about creative finance. And you know what you're going to hear a lot about with some of his favorite books in the entire world, including the books that are very well written. David Greene, thank you very much.

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With that said, let's get to today's show.

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Daniel, welcome to the Bigger Pockets podcast. This may be the first podcast we've ever done with somebody who got on the show because of a tick tock campaign, which is also the welcome. Thanks, Fred. Thank you. Yeah, this will be fun.

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So, yeah, you got it. You got a big tick tock following and you said you put nothing out there like, hey, help me out on the Bigger Pockets podcast. And I got all of a sudden blown up from people being like, you should get this guy on the podcast and I watch your stuff. And I was like, this guy knows what he's talking about. So that's how we're here to give you fun.

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That's awesome. I'm so grateful for Tick-Tock. It's been really crazy ride these last couple of months. And actually, I wanted to to test something out with you guys. Talk is by far one of the most underrated platforms out there right now. And just as a test to prove it, I had a video that did kind of well yesterday, last night when I posted it. And this morning it has two hundred and thirteen thousand views as of right now.

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It's crazy. And I have six hundred and ten thousand and one hundred followers. But I expect by the end of the show, by the time that we're done recording this, I'll have even more. So I'm going to screenshot it right now and then I'll remind myself before the end of the show and we'll see how many followers I have by the end. It just to prove to anyone still doubting tick tock, it is definitely a platform to be to be reckoned with.

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All right.

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So I asked Ryan Panetta this a few months ago when he was on the show. I said, what value does ticktock bring? We before we get into your real estate while we're on the topic, what what it maybe none yet, but what value does Tick-Tock bring or what do you think it's going to bring you by having a big following there?

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So monetization wise, it's already brought me a lot of value between being able to collaborate with the brands that I really love, that I use myself for, that I hope other people can benefit from. But on top of that, also just being able to make incredible connections with other people who I get to learn from and benefit from in the space. And it's really like been a shortcut to being able to talk to these incredibly knowledgeable people in all fields of expertise, whether that's finance, personal finance, real estate, talking to you, Brandon and David, or really anything else related to anything that people do on Tock, because it is so much more than just some teenagers dancing around.

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If you spend more than an hour on the app, I promise you you will find something other than teenagers dancing on the app.

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This is true. This is true. Everyone on the podcast knows this. But I've been talking about for months now. I've been thinking about getting a tech talk and then I'm like, it's just waste a ton of time.

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And the where I'm where I've settled on it at this point is I'm going I'm going to do it and shortly.

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And I'm working on it right now, sort of. But I don't want to be a consumer of tick tock as much as I want to be a provider of content for tick tock. Right. Like the danger of social media is getting sucked into like just like the constant scrolling. And I just lost my whole life to like watching eighteen year old kids show off their abs. Like it's like that's the part that kills me. And I'm like, I don't want to get sucked into that.

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But you're right, it's such a great way to either reach hundreds of thousands, if not millions of people. It's a way to build connections, to build relationships with people that are influencers that you want to get connected with or brands.

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Yeah, I see that. I see that. Definitely, yeah. You do have to limit yourself to make sure that you're not sitting down and then scrolling for like two hours. I've done that like once or twice and I promised myself not to do it anymore.

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So definitely got a limit. You ever got the little video? It's like I got sucked into it. Now I don't even have an iPhone right now. Uninstalled it, but that little guy will pop up and be like, hey, you was grow in for quite a while.

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Why you take a break and tell him very soon that I see them once or twice before. Yeah, exactly. It's always like, oh yeah, I have been here a while. I'm going to go try to do something with my life. So anyway, let's, let's do something with our life today and hear your story. Let's go pre real estate. Would you do actually let's start with this. Where the heck do you live? Because I asked you when you got on this call, those people are watching the YouTube right now.

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Don't know this, but I asked you, is that a fake Zoome background? Because it looks like a fake zoom back because you have like this majestic mountain out back and it's like dark and there's snow and trees and it looks like you're on some fake zoom background, but it's not right.

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So tell us about we were at this is a real zoom background. And I can I can move my computer for Brandon to see it. But everyone else, you just have to trust me. I like walking around later. Real bad now. Yeah, it's a real background and it is in Alaska. So I've been living in Alaska for the last almost twenty years and I really, really love it. It's an incredible place. And I just actually moved recently from Fairbanks, Alaska to Palmer, Alaska.

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So it is actually a lot warmer here. I moved down to the warmer part. But it's still way colder than something like Washington most times of the year, and actually Alaska fact for you, last year was the coldest winter in 40 years in Fairbanks, where I was living my life. So the average temperature between December and February was 10 below.

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And there were 40 days, 40 days. This is like a month and a half. Forty days below. Twenty five below. So it's got cold. Wow.

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I'm reading this fiction book right now called Like Polar Vortex is something that was offered on Kindle Unlimited. Anyway, as I'm reading this book, it's actually really good, but it's about these people who plane crash up of the North Pole. The whole thing is about them, like going through the North Pole area and like in frigid temperature. And I'm reading I'm like, why would anybody ever live in this? And then today we wake up and I'm talking to you and I'm like, why the heck would you live with that?

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But it's beautiful here.

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Yeah, it's really beautiful. And I will admit, it's tough to live in the in the 30 below area. So that's that's why I moved. But it is definitely still worth it. Plenty of incredible things here to do in Alaska and in the summer is actually really warm. So you can leave the house and enjoy it in the outside as well.

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He moved to the tropical tedlow area of Alaska.

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That's correct. Yes, Gon's sort of tropical. So let's talk about how hot the real estate market is up there in Alaska. That connection, David, that was pretty good. I've learned from Brandon, the transition king. We don't get a lot of Alaska investors on here. And I would guess the majority of our audience is really sort of unfamiliar with how Alaska real estate works at all. Can we maybe start off getting a broad understanding of if Alaskan real estate is different than other types of real estate, what the unique challenges are then maybe here about your portfolio?

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Certainly, Alaska is actually very similar to real estate down in the lower 48. That's what we call the other states and it's not too much difference. We don't have igloos. We don't have a lot of polar bears, definitely no penguins. But we do have to have a few small changes to our properties to make them better insulated for the very cold winters, fuel delivery to make sure that the house can stay warm in the middle of winter is also really important.

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Pipes freeze up all the time. If you're not careful, if you don't have the proper insulation and usually houses up here don't last quite as long without additional weatherization or something done to it in every 20 or so years just to make sure that nothing really freezes over.

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So what about, like the roofs when they're got snow sitting on them all the time? Oh, they're insulated.

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The snow insulates it. And we've got plenty of blown insulation in the roofs. That's not actually that big of a deal. It's more so of the structure itself being well built and making sure that you don't have any air gaps to let cold air in right now.

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Another thing I'd wonder about as tenant demand, do you still see a large demand for rental property where you are? Oh, yeah, it's huge.

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We have we have plenty of people up here in Alaska. It's not like just the 13 of us hanging out here. So we do have a lot of people. We do have great investment opportunities. I'm often able to find properties that meet the one percent rule. I have two properties that meet the two percent rule, and there's definitely even more opportunity if you're able to look for it. And there are many properties which aren't well advertised, unlike Washington, where things are instantly scooped up because everyone has their eyes on the market and everyone's driving by the same streets.

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There are a few properties here in Alaska that are very remote, so maybe a few miles away from other properties and you would never know about them because they are very isolated. You only see them when they come up on Craigslist or Facebook marketplace or through a connection of another friend. And that's how you find some incredible deals on here. That makes sense.

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Well, let's talk about then. How'd you get into that then? Why why real estate? What got you interested in it and what was your first deal?

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So I was one of those crazy New Year's resolution lists who set some, like, really wild expectations for himself, knowing that even if I get like half of them, I'll still get, like, half of them, you know what I mean? So one of those resolutions was that I would read 50 books in six months, and many of those actually ended up being bigger pocket books, because I was interested in real estate at the time and I wanted to be able to get into it.

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I didn't know much about it, but I knew that a lot of wealthy people made their money through real estate, so I should probably give it a try. And I remember one morning I was reading a book called The Book on Investing in Real Estate with No and Low Money Down, written by braincells.

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Ziemba amazing book. World class right there, won three Grammys. Actually, I love that book.

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So you know exactly what is going on. Brandon, I remember I came home early that day so I could finish that book later that night. And it was an incredibly powerful book because it resonated with my struggles, the primary one being that I didn't have much money. But it also caught my attention because it like really pulled back the curtain on real estate financing for me prior to the book. I thought that, like, you have to get a loan, you have to have 20 percent down.

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And if you go to the bank, you're kind of helpless. You show them your credit score, they pull your credit and you either get lucky and you get approved or the big bad bank says no and you don't get any property. But in fact, it's really the opposite. There are many kinds of banks and you can always do things a little bit differently. But one constant across all the different banks and financial institutions is that you were the customer.

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And no matter where you go, they're always trying to get your business and sell you a loan. And once I realized this, it was like I found this power and everything just clicked. I found the missing piece of the puzzle that I was looking for when I wanted to invest in real estate wasn't money, but it was more so knowledge. And once I knew what I could do to get started scaling my portfolio without a bunch of money really seemed like something that I'd be able to pull off.

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That's cool.

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So what then? You had to take action on that information.

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So once I figured this out, I started scaling and buying properties as quickly as I could, not with a bunch of money, but by leveraging what I knew about banks and credit already. And in a year I ended up with a million dollars in residential real estate owned, all with less than twenty three thousand dollars down now.

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OK, so we got to unpack this. We got what was that? What was the very first deal then? What was the first thing?

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The very first one was an FHA loan and an FHA loan is one of the most powerful ways to build wealth in real estate that is available to the public just because it's going to put you on a fast track to a life of financial independence quicker than almost any other legal opportunity in the United States of America. It is. Crazy, powerful, and not to be underestimated. And so that's what I went with first. That's cool. I'm assuming you lived in what was the property and I'm assuming you lived in it.

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It was a duplex. They needed some cosmetic updates, which is very easy. I was able to bang them out in a couple of weeks. Not a big deal. And that's how I started with just a little bit of money that I had. I was able to control a large amount of assets and basically scale my investments with the principle of leverage.

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Now, let me ask you a question, because I really like to understand the mindset of the people of the guests when they got their first home, because a lot of our listeners are in that space. They're trying to bridge that gap. Did you come up with this FHA idea from Brandon's book?

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I came up with the idea from many of Brandon's book and some of the bigger pockets books, and we talk about it quite a bit. Yeah, yeah, you guys do. And it's great that you cover it because it is really one of the best ways to get started. But I created this blueprint's knowing what I knew about the FHA loan and the other loan programs possible and how I could continue to scale in the future. And what really made sense to me was that the FHA loan was kind of a first time loan only for people who don't know.

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It is really generally a loan for first time home buyers. They have a lot of restrictions to prevent investors from being able to use an FHA loan to scale a real estate portfolio. It's not the intended use of the loan. So it really only works as your first loan, with a few exceptions.

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Now you can get a second FHA loan if well, you can only have one at a time, I should say. So if you have an FHA loan, if you refinance it in a conventional or sell that property, you can use the FHA loan for another house, but you can only have one at a time. And you're bringing up a really good point, which is understanding the loan products that are out there before you decide on if you could buy or if you can't.

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I have people all the time that will say things like, oh, I don't have 20 percent to put down those of us that are in the business. No, that's ridiculous. Of course, you don't need that. But a lot of people listening, maybe don't. And that's why I wanted to highlight how smart it was for you to read books, because you don't know what preconceived notions you have that are restricting you from getting into real estate until you put yourself out there in the situation and you learn a little bit.

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And now we see that you've scaled pretty significantly in a market where people don't think of a lot of real estate success being possible. So you have an awesome story. Don't want to dig into it. You mentioned that you created a blueprint. Can you share with us what that blueprint is?

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Yes. And that was really just understanding all the loan products available and how banks work and how I would be able to continue to scale my portfolio after that first purchase. So, David, you're right. I did get I ended up getting a second FHA loan, so it is possible to get a second one after you've had a first. There are some restrictions. You have to be very careful with that. And I always recommend talking to a mortgage specialist before you try to pull a fast one.

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But once you understand that that has to be your first one and the restrictions related to it, you can go and plan your steps for your second or third property based off of that. So, for example, I knew that for my second and third property, I wouldn't be able to get an FHA loan. And I had to look at other opportunities that I could invest with low or hopefully no money down to be able to scale my portfolio while not restricting my cash because I didn't have that much right.

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And so what were some of those strategies you came up with that I assume they're part of the blueprint that you mentioned?

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Yes. So one of them was being able to purchase a property based on its appraised value rather than its purchase price. And for that, you need to find a credit union or a bank who is flexible enough to lend to you based on that. And of course, for me, this had to be a different credit union, a different bank from the one that I used with my FHA loan, which was just a big standard, large bank that you see, like the Bank of America, Wells Fargo's type of things.

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Yes. You were able to go you were able to find a bank that would say, hey, this thing's worth two hundred grand. And even though you're buying it for one hundred and fifty, we're going to give you the loan based on the two hundred that we were saying.

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Yes. And I created a strategy relying on the small banks to fund my investments so I would go to them and present them a property which had a very high valuation. But I was able to purchase at a discount and treat that spread as my equity as opposed to a down payment. That's cool.

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So how do you how did you find like how did you find that? Let's go to a particular deal, something that you bought. If you got this, how did you find your early properties or even on your properties?

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What do you do to find them, finding them? Well, the most of them I just found on Facebook Marketplace or Zillow. So the MLS portals, Zillow, real True.com, whatever you have in your area, but specifically in my markets, Facebook marketplace and Craigslist really work. Well, often what you see is a very poorly taken picture of the front of the house with a bunch of junk out in front of it. And it looks like they spent maybe a minute and a half, maybe 60 seconds on the posting.

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And, you know, it's going to be a good deal. And we just went through a lot of those. Affecting a lot of the sellers asking about more information, whereas you might not be lucky enough to find those deals in the lower forty eight in the other states because they're picked up so quickly, they are still out there and they are incredible deals because usually the homeowner is more concerned about selling the property rather than getting the best deal. And that's how the advertisements reflects.

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That's cool. Yeah, it's a cool strategy. I never really thought we only talk about it much here. But, you know, as Facebook marketplace continues to expand and grow and more and more people are using it, there's going to be more and more people who are like, I'm going to pay David Green over here 20 grand to sell my house. I felt myself. What's it like? What's it take? Just put up a picture. Boom.

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So they're going to be putting their stuff on there more and more. So if that's if this is a really good tool to add to your tool belt for everyone, listen to this. Set up like a regular reminder every day or every other day or every once a week. Right. Go check your Facebook marketplace and see what properties are for sale on there.

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Exactly. Stop scrolling through tick tock for like an hour and spend five minutes on Facebook marketplaces.

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You've been scrolling through the Facebook marketplace too long. Once you take a break, go and tick tock. That's that's the next video there. Hey, let's take a quick break from this episode.

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We'll continue in just a moment. But first, let's hear a word from our sponsors. Have you ever dreamed of investing in cash flow in real estate? But it doesn't make sense where you live. Or maybe you don't have the time or experience to put a team together. While the team at Memphis Investment Properties provides a fully renovated turnkey properties in Memphis, Tennessee, with in-house property management there, turnkey model allows you to passively grow your rental portfolio with properties in one of the best cash flea markets in the country.

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So tell us about the where was your portfolio at right now? What do you have right now?

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So right now we have nine units were a little bit closer to the one point five million dollar mark. And we actually took this last year to kind of slow down a little bit, be able to rearrange some of our properties. We sold one as a flip, which I'd love to talk about later. But mostly we've just been kind of organizing everything that we bought in that first year because it was a huge, huge push to buy a lot of properties to accomplish this crazy goal.

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But of course, there's a lot of management behind that. And you have to be able to organize your systems and processes and get everything in place so it runs smoothly and you're not always in a disaster mode. I love that you said that.

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And we should talk about this for a second, because it's something that David has dealt with. I've dealt with is we are and obviously you dealt with is we are ambitious people and we are very big thinkers. We're going to buy a bunch of properties. And then you have to like you realize like there are a lot of systems that go with scaling and that when you just acquire, acquire, acquire, you don't always have the time.

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You haven't taken the time or the patience needed to stabilize, stabilize, stabilized, which is super, super important. So I like. David, do you mind if I ask you because I know you've dealt with that as well. You get really, really quickly as well. Like, how is that that principle of the idea of like taking time back to stabilize? Have you have you encountered that. Yeah.

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What it feels like I was thinking about this yesterday. It's funny that you bring that up whenever you're trying to grow quickly. You have a very unstable enterprise. So it's unbalanced, right? You get into acquisition and imagine like, you know, like a floating piece of wood in the ocean you're trying to stand on. You go acquire six properties and then it's super unbalanced, like you're, oh, I'm going to fall and then you've got to run and put all your attention on.

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So I got to stabilize it. I got to manage them. I have to create spreadsheets and software and people and tools and change the way I think so that I can actually prevent mistakes from happening. And then it gets a little bit balanced. And you're like, man, I just hired all these people to help me do this. I can't pay them all. We don't have enough. Money coming into your own back to go. I need to acquire, you know, I have to use the phrase fish catching fish cleaning, fish catching is going and getting business, whether it's an agent or a loan officer getting deals if it's an investor.

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And then Fiscalini would be servicing that business you've got or managing your property. And you do have to be good at both or you have to find someone that can be good at both. But they're both a big part of real estate investing and we don't talk about it a ton. The systems that go into keeping it so you're not balanced because if you have too many properties and you're not keeping up with them all, the real estate doesn't always make money if you actually have to manage that asset or those groups of assets.

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So what I found is that you can't get it perfect on either side. You have to run on one side and get good at it, then run to the other side and work on that. And it sort of works like your left hand pulls you up on the mounts and then your right hand grabs and then it pulls you up and you go back and forth between the two. So the best advice that I would have for people that are in this position is don't think that you're just going to do one thing you got you're going to be doing both or you're going to have a partner that's going to be doing the other side.

[00:27:39]

That similar to your experience, Brandon?

[00:27:41]

Yeah, that's exactly like for me, like for the years I like the work, the book. The one thing he talks about, not like work life balance, but work life balance thing with real estate. It's like a rental property and then rental property balancing, like you're always kind of doing this balancing act a little bit until, like you said, you bring a partner. So today, like I buy mobile home park and fireweed or buy one in Alaska right now.

[00:28:00]

And so, like, we are compartmentalized so that like when we buy a property now, Brian Murray takes over from that point, boom, he's on it. I don't have to worry about at that point. They would like other areas like due diligence, boom. Ryan's got that. He takes that thing. And although we're involved where we're a little more separated because like on purpose, because we'd rather have everybody going at one thing. But in the beginning, when we're all starting and we've all been there, like, you've got to do everything, which means you're balancing.

[00:28:24]

Daniel, we found the same thing.

[00:28:26]

Absolutely. And that's actually what I wanted to mention is that first year for me, he was very much focused on buying and buying and buying, scaling as quickly as possible. And I didn't have much time or really resources to be able to devote to management and organizing the systems. That's something that my wife actually did an incredible job at, very thankful for her to be able to take care of like that whole separate business by itself. But it was very much focused on just acquiring as many properties as quickly as possible.

[00:28:54]

And that was very difficult because I didn't have the 20 percent down required to purchase every single property. And so one of the things that I actually did first was acquire as much available credits as possible. Your credit report shows your available revolving credits and how much you have available to you on your credit cards. And so I rushed, creating a separate system, a separate blueprints for applying for all the right credit cards in all the right order so I could maximize my credit limits and I could get a lot of available credits.

[00:29:24]

And I actually ended up getting a little over one hundred thousand just on my credit cards available to me, like just out of college. You know, I don't I'm not making a crazy amount of money either. And it's not something that really works for big banks. But when a small credit union or portfolio lender or even a family member pulls your credits or you can pull your credit report for them and they see that you have one hundred thousand dollars available to you unsecured across credit cards, it really sets the tone for the conversation.

[00:29:51]

And then I took that and I took it even further to search for the best banks I could find. So I've added dozens of banks learning about what they lend on the terms of the loan, that they're comfortable with the costs and fees, just trying to find the best deal possible for financing. And since I am the customer, of course, I had every right to shop around. And so I really took that to an extreme. And I found a small credit union in a states that I've never been to.

[00:30:17]

I, I honestly don't even know the state. I think it was Ohio or Idaho, one of one of those to like far away from where I'm living. I just found it through a very good real estate realtor referral. And they had great terms. And I knew that they would be able to fund the type of deals that I was looking to do and they would still be able to accommodate for all the flexibility I needed. And actually on the first phone call with this bank, I spent like forty minutes talking to the person and telling them about my story and my investments and everything that I wanted to be able to do in the near future with them.

[00:30:53]

And only after keeping the person on the phone for almost an hour did I realize this was the CEO of the credit union. Oh, really? And like once I hung up, he told me once I hung up that phone, I knew instantly that I had hit the jackpot with this credit union because they were small enough to let me get away with things and they were still big enough to let me fund everything that I need to in the next year with with the purchases that I was planning.

[00:31:19]

That's cool. OK, so with with the properties that you've scaled up to, I believe you're at nine right now, is that right, units? Yep, nine units. OK, so with nine units, that's basically as far as managing it, it's the same as having nine properties. That's nine different locations and tenants that you have to manage. Can you share something about what you learned creating systems and how you ended? Up now, managing them for the people that may take a similar path so that they know what to expect and what they can do to maybe shorten that learning curve of how you've now structured your management.

[00:31:50]

Right. I actually started managing with my wife for her parents property and we didn't officially manage. It was just kind of helping out a little bit. They're sending a couple of lease agreements to the right emails showing the properties so very by very passive, not even management. But we did have experience in that. And we molded a lot of systems on how we managed that six plex for them. So we created a lot of very strict rules that we would follow and we had them written out for us, so much so that we even knew what to respond when a tenant requested one thing or another thing.

[00:32:27]

It wasn't that we were making a decision. Every time that we had a problem come to us, it was that we had our decisions written out and sometimes we just had to reference that manual to see what that decision would be. It's very similar actually to Brannon's other book, which I which I of course, read and then used a lot of your systems from there. Thank you, Brandon.

[00:32:44]

You're welcome. You're welcome. I like you said that, though, is like when you make your decision. I don't know exactly how you phrased it, but I'll butcher it here. I'm trying to quote you with you.

[00:32:53]

Make your decision ahead of time. You're you don't have to make the decision in the moment. You just have to refer back to the things you've already made. So you made it with a clear head. And that's like System and Management 101, like the best summary I've heard of that. I think it's like, yeah, you made your decision. All right. I thought I was going to refer back to it.

[00:33:11]

I spent it takes the emotion out of it and it helps you treat all of the tenants fairly is even though there might be some extenuating circumstance that wants you to not charge a late fee for someone because you do really feel bad. And I have done that. I know that I probably shouldn't have because they ended up bending the rules more in the future. But once you have these processes in place, it allows all the tenants to be treated fairly, and especially if they start talking to one another and asking why someone got a discount on rent or someone got their late fee waived and the other person didn't.

[00:33:41]

It just makes you seem like a jerk if you don't follow your own rules in the end.

[00:33:45]

Makes sense. Makes sense. All right. So what came through? I guess you took the kind of year to stabilize. You've got your systems going. You've got tenants going in there. What are you doing right now? What do you want to find deals right now? What are you doing to grow your portfolio?

[00:33:59]

So right now it is winter and we are not doing that much. We are still scrolling through Zillow Facebook marketplace looking for what we can find. But since we recently moved down to another part of Alaska, we are very excited to be able to start investing down here. It is a little bit different of the market, but there still plenty of opportunities, definitely more opportunities for a flip or two just to keep us kind of busy and entertained and then also acquiring more long term investment rentals.

[00:34:26]

That's what we try to specialize in, is just buying and holding for the long term, collecting the cash flows, benefiting from the appreciation and with no money down. As long as we can continue to scale that it shouldn't be too much of a problem. We just have to find the right deals where we have enough equity.

[00:34:43]

When you are looking for which area you want to be investing in, whether it's the neighborhood, the city, regardless, what are some things that you're weighing? But you wind direction or the other when looking?

[00:34:53]

I really do try to take into consideration the potential cash flow from the unit. That's very important for me. But also, since I do like to invest with as little money down as possible, I'm going to continue using that bank and using the equity that I have on the purchase to be able to act as a down payment. I don't actually have to put my own money down. So the spread between the purchase price and the appraised value also has to be really high.

[00:35:18]

For me. It's almost like I'm looking for a wholesale deal that I can wholesale to someone that has a spread in the numbers for me to be able to profit off of. But then rather than wholesaling to someone, I just keep it for myself.

[00:35:31]

So it sounds like you're looking more at the property itself than you are location or things like that.

[00:35:36]

Absolutely. It definitely is on a property by property basis. There is a wide range of properties in my market. They're all really, really spread out. But I can't say absolutely that I'm looking for properties under two hundred thousand or above two hundred thousand because if it has a spread and if it has cash flow on the deal, I'm probably going to take it. It what's been your biggest challenge so far in building your portfolio? Definitely being able to scale and setting up the processes that come into place.

[00:36:05]

It's easy to do when you have a single duplex and you manage that duplex for a year or two and then you get two more units and then manage those two for a year or two. But going from nothing to a lot of units, I think we were up at 15 at one point. The management aspect definitely takes a lot more time and planning than we initially expected. So having the systems in place, using a software to manage rent collection, we stopped accepting cash almost instantly because it was a headache.

[00:36:33]

And then having things like fees automated, having vendors set up also has taken a long time to be able to organize a list of people we call if the plumbing needs repair, if the electrician needs to come out, if it's just a maintenance, if it's a cleaning service, whatever it is, we have people on our list, on our roster and systems in place to be able to contact them quickly to get the service out as quickly as possible.

[00:36:57]

And that's taken a lot of time to organize.

[00:37:00]

Is there any specific software platforms that you're using to manage that component of it personally?

[00:37:06]

Right now we're using Tenent Cloud because it allows for rent collection and then also management of repairs. And it's just very easy to be able to communicate with the tenants on that app. But we've tried a few others. I can't say exclusively that I'm going to use tenant cloud forever. It's just something that's worked really well for us now and it allows us to automate as much as possible.

[00:37:27]

I've heard some good things about that. And the whole conversation is what we're talking about is like what we were talking about earlier with stabilizing like this. All the stuff you got to figure out, like who are you going to call? Who, the contractor. What's your policies? What software you're going to use hired to collect rent? What aren't you going to do when you collect rent like cash? So it's figuring out all those things. And then once you have like, you kind of go in that you build your portfolio off a little bit, then you got to get systems and you build your systems.

[00:37:50]

Then you go find more properties and then you buy those more properties and you got to get more systems for those as well, because you're usually taking it to a new level. And that's just that's the the life balance thing or the work balancing real estate investor journey, which is kind of cool to see that in your story. All right. So you mentioned earlier a flip did a flip. You said, oh, I could talk about that. I'd like to know about that.

[00:38:10]

So are you flipping houses or was that an accident?

[00:38:12]

It was an accident and it didn't I didn't really intend for it to be a flip until the very last moment. But this is actually one of the ones that I was hoping to save for the deep dive just because there was so much that happened with that property. Well, good transition to there it is the deal. Deal die.

[00:38:38]

The deep dive is the part of the show, or we dive deep into a property that you've bought recently and kind of get all the details about it, though, since you have a property in mind, why don't we start with number one?

[00:38:51]

What kind of property is that and where the located?

[00:38:53]

It's really two questions, but so it is a duplex in Fairbanks, Alaska, and it was just in need of a cosmetic refresh. So we thought we could pick it up and quickly back a deal.

[00:39:05]

OK. Did you find this property?

[00:39:08]

This property is on the MLS and my wife actually found it scrolling through Zillow. She'd found it multiple times over and each time it seemed like a better deal. So price was dropping, but it had been sitting there for eight months.

[00:39:20]

Oh, that's that's the key. Look for houses have been on the market longer than what is typical for your area. Increase your chances a lot. OK, Brandon, how much wasn't there originally asking one seventy five.

[00:39:34]

They kept dropping the price every couple of weeks by a thousand dollars and I ended up getting it on a contract for one hundred and forty thousand dollars. And then after some more negotiation, we ended up for one hundred and thirty thousand with no money down.

[00:39:48]

OK, beautiful. OK. How do you negotiate that price.

[00:39:52]

We had an incredible inspector. Just tear it up and write a New York Times best selling novel telling the seller everything wrong with the property. And it just ended up being this incredible negotiation between my realtor and the inspector. And it was just clear that the property which was on the market for almost a year now, was not moving unless we had a really good deal to take it. Yeah, definitely.

[00:40:15]

Motivation increases. The negotiation becomes easier the longer those property fit for with it vacant for the seller when they were selling or they rented for them.

[00:40:23]

There was one unit rented and one unit vacant. And we expected to be inheriting that tenants, but it didn't quite work out.

[00:40:30]

OK, so you mentioned no money down. So how did you fund this then?

[00:40:34]

That's what made the deal so special. This is my first no money down deal. And I worked with that flexible credit union I talked about and I got them to agree to give me a loan based on the appraised value. And this is very critical because usually for people who don't invest in real estate, banks lend on the lesser of the purchase price or the appraised value. This keeps them safe and just ensures that they have enough equity in the deal in purchasing that you have enough skin in the game.

[00:41:02]

But this credit union was let me flip it and letting us finance the greater of the purchase price for appraised value, which made it very special. So they still required 15 percent as a down payment. And it was based off of the if it was based off of one hundred thirty thousand purchase price, we could only get a loan for one ten, meaning with a one hundred thirty thousand purchase price, we'd need a 20 percent or a 20 thousand dollar down payment to purchase it.

[00:41:29]

But since we were able to base the loan off of the appraised value when the appraisal came in, the property was valued at one hundred and fifty thousand dollars. And that 15 percent down payment requirements meant that the biggest loan we can get was one hundred and twenty seven thousand five hundred dollars, making almost a twenty thousand dollar difference in the loan limit. And then I remember after I looked at the appraisal, I was like, oh, we're just a little bit short.

[00:41:54]

I still wanted that no money down deal because I knew it was possible I knew was out there. And after a quick call to the credit union, they were able to relax that 15 percent down alignment and just rounded up to a total loan amount of one hundred and thirty thousand dollars, meaning I purchased the house for one thirty and I was getting a loan for one thirty and I had no money in it.

[00:42:13]

I thought, that's very cool. OK, so now you mentioned it was a flip, so we don't have to ask you what the dispute was, but why did you decide to flip it instead of hold it as a rental?

[00:42:23]

Well, this property was actually a really big disaster. And this is kind of where I wanted to warn all of the the hotheads getting into real estate, scaling to a million dollars in their first year, thinking they're the king of the world, things can go wrong. And you definitely have to have equity in the deal. You have to have some kind of barrier between you and losing a lot of money to keep you safe. Even though I had no money in the deal, I definitely did have equity.

[00:42:49]

Right. When I purchased the property, I had that twenty thousand dollars. And if I didn't have that, it could have easily ended my real estate investing career. So I was managing the risk. And of course I did have some cash sitting on the side to keep me safe. But and of course, I had several zero credit cards that I wouldn't have to pay back for fifteen months. But I definitely needed that little bit of equity to keep me safe through this, because after all the remodeling, all the repairs, the vacancies and everything that we just put up with, it was like a nightmare for six or eight months.

[00:43:23]

And my wife and I just had too much of it. It was an emotional drain and we ended up calling it quits on the property. We wanted to keep it as a long term rental, but it was just too much. And by that time, I think about eight or ten months in, we already had a. Solid portfolio that was giving us enough cash flow from the other units to where we could easily sell this one off again because of the equity that we had when purchasing the property.

[00:43:47]

And that's the point to put out there is there's a lot of what ifs that you should be thinking about when you invest in real estate. It's often the other way. Like like what you mentioned. I wanted to rent it, but the cash flows aren't what I thought. If you bought it right, you can get out of that thing without that much damage. And it could go the other way, too. I wanted to flip it. I wasn't going to sell it for as much as I needed to.

[00:44:08]

So I'm going to hold it as a rental. It'll pay for itself and then I can sell later. So that's a great lesson to take out of the deal. Deep dive is you should have more than one exit strategy, especially when you're new. And this is exactly why that cushion saved your bacon.

[00:44:23]

Yeah. Through what was the outcome then on it? Would you end up actually making on the flip? So we purchased it in August for one hundred thirty thousand and we sold it to the very next August for one hundred and ninety five thousand. And out of that sixty five thousand it sounds like a sweet deal. It's like well we made sixty five thousand but we actually only made ten thousand dollars of that in profits. The rest of it went to remodeling repairs, dealing with a frozen pipe, dealing with ground water that resulted from a really quick spring.

[00:44:53]

All of the snow, the like two feet that we had in the spring melted in the course of about ten days and everything around there was flooded. So it ended up being a really close call. And definitely we didn't have that twenty thousand in the deal to begin with. We would have not made it out and it could have been way, way worse.

[00:45:12]

The first time I ever heard someone mention that the snow melt rate is something to take into consideration, whether flipping your house. But it's definitely a unique metric there. That's good. OK, so last question. What lessons did you learn from the deal?

[00:45:28]

Just because I had no money into this deal didn't mean that I didn't have the equity with the loan for one thirty and the appraised value for one fifty. I had that twenty thousand to keep me safe. It's just that I didn't have to pay for it. If I went into this with a hundred percent finance deal with no equity, I definitely would have been sunk. And so that equity keeping yourself safe risk management is definitely something to consider, even when you know how to get loans without your money involved.

[00:45:54]

Yeah, good stuff, man. Good. And I like I love deep, deep ties were the things that that I thought it was a disaster because you still made money. Still good.

[00:46:02]

But there was a lot of lessons learned in the deep, deep dive. I think that really benefits our audience.

[00:46:06]

So thank you for sharing that really good stuff. Before we kind of start to move towards the outro of Today show, a couple of quick questions. First of all, where do you see yourself headed from here forward?

[00:46:16]

I definitely want to expand what I'm doing on Tick Tock and on YouTube. I love to be able to help people on there. And it's really incredible to make money through real estate. But I think it is so much cooler to wake up to like a DM from someone saying, hey, I did this thing with my credit card in my score improved. Now I'm able to get the house that I wanted for like one percent less in interest, saving me hundreds of I mean, that's that's crazy and it seems unreal.

[00:46:44]

And I definitely want to be able to continue doing that as much as possible.

[00:46:47]

That makes them both cool. Man What about the portfolio? I don't get a multifamily ever. Are you going to stick with what you have? Like what do you see yourself in five weeks?

[00:46:55]

Definitely more cash flowing rentals. I think it's fun to flip even more fun when it doesn't end up being a disaster because of the snow. So I will try it again, hopefully all in the summer. So I don't have to deal with that. But definitely, definitely more opportunities for that. My wife and I just find it way too much fun. And we're always going on our walks with our Huskies up here in Alaska and looking at different properties, thinking, oh, that'd be cool.

[00:47:16]

They're like, look at the peeling paint on that one would be a they'd be a quick flip. That's awesome. And and then my last question before we head to the famous fourth, like, what can our audience do to bring you value right now? Like, what are you looking for in your business? Like real estate wise? What can we what can people bring for you looking for type of deal with the mouth? I'm looking for something else, I'm just looking to help you guys understand, so if you wanted to follow me on Tick Tock or on YouTube, I definitely break down all my deals on there.

[00:47:40]

You can look at every single one of the deals that I've done, how much money I made, whether I lost money when it cost me that kind of stuff. And I think that it will be exceptionally helpful for people who are just starting out in real estate because they can see it's not quite that hard to get started. And once you get started, it only gets easier and makes sense.

[00:47:57]

Cool, man. Well, that said, let's get over to our last segment of the show. It's time for our famous for this is the famous for the same four questions we ask every guest every week.

[00:48:08]

I'm going to tell you right now, Daniel. All right. Question number one, what is your current favorite, our all time favorite real estate related book?

[00:48:16]

Definitely the book on investing in real estate with no money down. Thank you very much for getting me started, Brandon.

[00:48:21]

I think I've always wanted to know what's that book about Son of David? Yeah, we hear a lot of good things about that book, so thanks for mentioning it there. I brought it up earlier when you were talking, because for people who are looking to kind of bridge that gap between I haven't bought a house, I want to get my first house, that's a really good book, just to put ideas in your head that you kind of get some momentum going.

[00:48:46]

I'm sure it's terribly written, but the ideas themselves are very concerned, like well written books.

[00:48:54]

What's your favorite business book? So it sounds a bit corny. I know a lot of people say it, but it still is the four hour work week. I read it every year in December and I always find myself coming out with something new and some new highlights or something that I got from the book that I didn't hear before.

[00:49:09]

I also read that about once a year I try to I listen to it about once every year inaudible and it always, like, always fires me up with Tim Ferriss is definitely definitely a writer.

[00:49:18]

A good one.

[00:49:19]

Yeah, I give it a shot at branded and is right. You know that. I just heard Truesdale. He's actually a good writer. Unlike some people who write about the first book I mentioned, we should have to first rewrite the book on investing in real estate with no money down so much better.

[00:49:35]

Oh, like anybody knows, too horrible. Yeah, you got there.

[00:49:40]

All right.

[00:49:41]

When we're not ragging on Brandon, what are some of your hobbies? Wow, I love just being out in Alaska. We are very lucky to be living on a private airstrip and my father in law flies, so that's an awesome opportunity to do anything fun. Either it's fishing, walking our dogs, being able to ski all kinds of fun Alaskan things.

[00:50:03]

All right. I'm going to fly in and come hang out with you next week. We'll be there. I mean, David, coming up.

[00:50:08]

Seriously. Let's do it. Get on a plane. Let's just make it take a quick trip on the mountains. I don't know about the insurance on that, but who knows?

[00:50:15]

Whatever, whatever. We got to risk it. We got life insurance. We're fine. Yeah, we're good.

[00:50:21]

My last question, what do you think separates successful real estate investors from those who give up, fail or just never get started? I think successful real estate investors are definitely persistent, if you want to be successful, you have to keep trying to make it work, especially in the world of real estate, where there's always a way to make it work. Even if you have no money, you just need to be persistent.

[00:50:44]

Very good. All right. Tell us where people can find out more about you.

[00:50:48]

So I share everything on YouTube and tick tock. I have a community of over six hundred thousand followers now, actually, let's let's check on that.

[00:50:56]

Yeah, I forgot the number that I said at first. I don't like right now.

[00:51:01]

Thirteen thousand one hundred or something like that. So it is six hundred ten and eight hundred six hundred, ten thousand and eight hundred followers which I think is more than the first time. I think that's one hundred. Yep. That's crazy. Wow. What an opportunity. But I also wanted to leave the bigger pockets listeners and some incredibly valuable resources. I've just put together a list of tools that I use to kind of manage and master my credits and credit cards.

[00:51:27]

These are things that I use every week, if not every day, sort of like a goody bag for the people who made it to the end of the show. I thank you very much. Bigger pockets. Listeners can get it completely for free, of course, at Daniel Illes Dotcom. That's D and I. L i l e. S Dotcom and I think you'll find them incredibly useful as I have.

[00:51:48]

All right. Good deal, man. Well, thank you. This has been phenomenal. I appreciate you sharing your advice, your wisdom, and yeah. Keep crushing it over there on YouTube and tick tock your reach and a lot of people helping them. You're spreading the good word about real estate and financial freedom.

[00:52:00]

So give it up, man. Thank you so much, Brian. Thanks, Daniel. This is David Greene for Brandon. Good books, bad writing. Turner Sign.

[00:52:10]

You're listening to a bigger pocket's 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. Be sure to join the millions of others who have benefited from bigger pockets. Dotcom, your home for real estate, investing online.