February 25, 2025 • 47 mins
Zach "Big Money" Morgan reveals the art of transforming a modest start into a thriving real estate empire. Inspired by industry stalwarts like Grant Cardone and Bigger Pockets, Zach shares his impressive journey from a traditional job to owning 52 long-term rental properties. We dive into the nuances of sustaining active income through strategic property flips and wholesales, all while navigating the challenges of rental income. Zach’s background in sales, coupled with a serendipitous meeting at a Wisco REI event, paved the way for his success, highlighting the importance of seizing opportunities and leveraging connections.
In our conversation, we unlock the secrets to working effectively with lenders to fuel real estate growth. Discover the initial advantages of engaging with hard money lenders, and how savvy investors transition to more flexible options like community banks or commercial lenders. Our discussion offers practical insights into selecting the right lender, focusing on their adaptability, communication style, and risk appetite. Through personal stories, we underscore the critical need for clear communication and a well-defined business model, ensuring that lender partnerships are aligned with your unique investment strategies.
Networking emerges as a powerful tool in the real estate world, and Zach and I explore how it can propel your business to new heights. From the strategic use of the BRRRR strategy to the pivotal role of real estate gatherings like Real Estate Investor Association meetings, we highlight the importance of community and collaboration. We also share a remarkable first property purchase story that underscores the importance of patience and resilience. As we conclude with a nod to the hidden gem of Sheboygan, Wisconsin, we invite you to join us on this journey of insights and inspiration, ready to fuel your real estate aspirations.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Got deals today.
Welcome back, guys, to anotherepisode of the Wisconsin
Investor.
I'm your host, corey Raymond,and before we get into today's
episode this episode issponsored by Wisconsin Discount
Properties I want to tell youguys about a hot deal we just
had out a week or two ago.
This one was on Bay SettlementRoad in Green Bay, if you're
anybody familiar with that.
Beautiful road, views of theBay of Green Bay, very desirable
(00:23):
area.
This was a three bed, one bath,one stall garage.
We had it out to our buyerslist for only $129,900.
Arv on this sucker was $325,000.
So we had a huge spread on it.
As you can imagine, it was notturnkey.
There was quite a bit of workthat had to be done to this one.
So this was not for the faintof heart project, but typically
(00:45):
when you have huge spreads it'snot going to be.
But the folks that are pickingthis one up are going to make a
nice massive paycheck when theyexit this thing, or if they hold
it and eventually exit.
It's going to be tons of equitythat they have out of this
thing right out the gates oncethey fix it all up.
And some of those projects arethe best you get.
You put one of everything intoit and you don't have to touch
it again, and we'll maybe diveinto that a little bit today.
Let's get into today's episode.
(01:06):
I got my good buddy, zach BigMoney Morgan, on today.
Zach, what's up?
Buddy Boom, new nickname.
I like it.
Oh yeah, how's it going?
Thanks for having me on.
You say that's new man.
I've been calling you Big.
(01:26):
Three former employees on herealready, so excited for
everything that you've gone onand done and in your solo
journey here in theentrepreneurial world after
exiting the nine to five W2.
So today we don't want to focustoo much on leaving our company
, but maybe for other people whoare working for someone else we
can talk about, you know, justin case our employees won't.
Speaker 2 (01:47):
Won't coach your employees on.
Speaker 1 (01:49):
Yeah, yeah, yeah, please don't, please don't.
Speaker 2 (01:50):
It's kind of impossible not to.
I mean you're, you're set up to.
Speaker 1 (01:53):
I say about you what I tell a lot of people who hang
out with me is like you can't beout this too long.
You catch it and then you'rescrewed, you're sick for life
with it.
Yeah, well, tell us a littlebit, man.
So, uh, give everybody a littlebit of your background on you,
your younger guy doing realestate out on your own, like
(02:15):
give us just a little background.
How did you get into this thing?
What?
What prompted you to want to doreal estate?
Speaker 2 (02:20):
let's start there yeah, um, so yeah, I'm, I guess
big picture right now.
I'm 28, uh, we currently hold52 long-term all long-term
rentals come on baby.
Speaker 1 (02:30):
If I had the bell over here like tom crawl, I'd be
ringing that.
Speaker 2 (02:33):
Yeah, I didn't think I got a bell too.
It's somewhere in a box.
It hasn't made it to the wall,but um, yeah, so we do that's
the.
That's the main thing.
Um, we also do um flips,wholesales, um, on the side as
well, not Not a ton of that, buta couple of months here and
there as sort of keeping theactive income going.
I mean, passive income is cooland all, but it's not really
passive and it's not usuallyconsistent, if anybody owns
(02:56):
rentals knows.
So having some other sources isnice as well.
But yeah, starting out, I mean Ihad wanted to invest in real
estate for a long time.
I didn't really know what thatmeant.
But I, starting out, I mean Ihad wanted to invest in real
estate for a long time.
I didn't really know what thatmeant, but I mean I found a
whatever journal little goalsthing written out from like 2015
.
Okay, I was like by my firstduplex and I think I was living
(03:21):
my parents still, I don't thinkI was renting yet at the time.
Yeah, so it's watching GrantCardone and Bigger Pockets, I
think.
If they were started aroundthat time, I think they probably
were.
Yeah, I think.
So.
The social media stuff I mean Igrew up with social media stuff
.
So whether that's good or badwe'll find out down the road,
but those influences have beenthere so you get to see,
(03:52):
obviously, the highlight reel ofwhat everybody's doing.
And, um, real estate alwayssort of stuck out to me.
It's like seemed like anobvious path, like a
quote-unquote easier way tobuild a lot of assets quickly,
yeah, without a ton of capitalyeah because I didn't I don't
know that everybody else Ididn't have millions of dollars
sitting around.
I didn't get a trust fund.
Um, I didn't have millions ofdollars sitting around, I didn't
get a trust fund.
I wasn't making millions ofdollars or anything like that to
go buy a bunch of Bitcoin orwhatever other assets or
(04:16):
businesses and stuff like that.
So it made the most sense asfar as oops nope, I didn't exit.
I thought I exited.
Nope, you're good, you're stillon Career-wise.
I always loved sales, so thisstuff always kind of lined up.
But everything I did was alwayssales.
I mean, I was a personaltrainer for years but that was
really, if you break it down,just sales.
You're selling not just thetraining program but selling
(04:39):
somebody, the future them andthe them that they can be if
they follow your plan.
Hypothetically, I soldinsurance and then I made all
kinds of insurance and then Imet this crazy guy at a Wisco
re-event who also loved coldcalling as much as I did.
Speaker 1 (04:57):
Yeah.
Speaker 2 (04:59):
And you were like we're both crazy, why don't you
work for me?
So that was January 2019.
I think I left UnitedHealthcareand then I guess the rest was
history.
I mean banging out deals,wholesaling and trying to buy as
many of those as I possiblycould.
Yeah, for sure, Until was thatMarch of 2023?
(05:23):
I think so.
Speaker 1 (05:24):
I think it was the time I went solo About two years
now.
Speaker 2 (05:27):
Yeah, a couple of weeks.
Speaker 1 (05:28):
Yeah, yeah, for sure.
Speaker 2 (05:29):
And yeah, so I don't that.
That was at that point.
I think I had 13 units at thetime, something like that.
So that was with keepingpersonal expenses pretty low.
That was like enough to keepgoing with having a handful of
flips and and buying more andstuff like that.
So and it's just been rinse andrepeat, doing the same thing
(05:51):
over and over again, trying toget better at the stuff.
That takes time because timecosts money and continuing to to
grow and scale.
Speaker 1 (06:00):
Wow.
So you went forward.
You grew basically I don't knowrough math 40 units in two
years or whatever.
That's been basically yeah.
Speaker 2 (06:07):
Yeah, just about yeah .
Speaker 1 (06:08):
Now, I imagine, are you using BRRRR on all these,
are you doing the BRRRR strategyon pretty much all?
Speaker 2 (06:12):
of your line holds.
I was looking througheverything to see where we've
got money tied and yeah, it'spretty much everything's been
BRRRR, wow, I think we've got um, every once in a while you get
an appraisal that comes in lowand stuff like that.
Sometimes you can't fight themfar enough, they'll just be firm
at it.
So you've got to leave somemoney in the deal.
(06:33):
But I think I've only got maybetwo or three properties with
some money stuck in them.
Wow, that's awesome, eitherfrom the either you know
traditional burr or buying ithard money and renovating it
either with that money or someof our own money, renting it and
actually refinancing it to pullthe cash out.
Most of them have been withcommercial banks where we're
getting an arv loan right upfront so we get the purchase
(06:55):
price funded and then the restof it on draw.
So that's my favorite.
If anybody's any lenderslistening that wants to give out
some more loans, I'm happy totake 80% ARV, 30-year
amortization.
Ideally somewhere sub 7% wouldbe sweet.
Speaker 1 (07:11):
I'm right there, dude , you're just singing.
Looking for unicorns.
I know, yeah, you're singing mypraise.
Do you have some lenders youcan share with the audience that
you've been having success with?
Speaker 2 (07:19):
Yeah, I mean my best one right now has been the one
for a long time, bristol Morgan.
Okay, they've been awesome.
So they swooped in and saved me.
Last year I had a portfolio, 22units under contract.
I gave another bank maybeshould remain nameless the
opportunity that they made a lotof big promises and ultimately
(07:40):
gave me the run around.
For what was it?
93 days or something like that.
Like I got a long.
I was grateful to get a longclosing timeline.
First because I involved thelender early, figured out what
timeline they would've needed.
It was odd it's eight plex, two, four plexes and three
triplexes, no three duplexes inthat portfolio.
(08:01):
So you know it's a coupledifferent moving parts.
Gave them a long time to getthrough it.
I mean that's a really longtime in our world 90 days for
closing, especially for, like anas-is off-market type thing.
Speaker 1 (08:13):
Were you already set up with this lender like
pre-approved.
You gave them all yourfinancials, prior Bunch of deals
.
You've already done deals withthese guys, so you already had
an established relationship,million in deals or something.
Speaker 2 (08:21):
Yeah, okay, I've done plenty of deals, okay.
So, yeah it just.
For whatever reason, didn't Inever got denied, it just never.
Never got a yes either.
Okay, so, anyways, we've done alot with Bristol in the past as
well.
So we connected with them, gotthings going and they they came
(08:42):
in.
Them got things going and theythey came in, used the prior
appraisals that the other bankhad done, gave me a little bit
extended amortization, like justmade all the pieces work and
got it closed.
I want to say it was like 27days.
Wow, it was amazing.
Many moving parts.
That's crazy.
That's awesome, yeah, so I don't.
I don't want to put that outthere as an example of like, hey
, this is what to expect.
Call you know, call chad ifyou're a month out and something
(09:04):
happens, like, especially ifyou don't have experience first.
Good experience first and thena longer relationship.
I mean, that's some of theperks you can get over the long
term, yes, but um, that, yeah itwas.
It was great how it worked out.
Speaker 1 (09:18):
Yeah, that you and I love I mean you probably picked
this up from being around me fora while that little virus is
community banks.
I preach, preach it all thetime, Like, yes, hard money
lenders are awesome for thefirst certain situations.
They're great when you'restarting out, they're awesome to
get you rolling.
But as soon as you can graduateto a commercial lender or
community bank is the other.
You know, we say commerciallender a lot of times but what
we really mean is like acommunity bank.
(09:39):
So it's not your Wells Fargo's,it's not your, you know, your
big boys, BMO Harris's, it's thelocal guys, right, that can be
a little bit more flexible.
And what I do when I'm lookingand I want to hear your thoughts
on this Z, now that you're onyour own doing some of this
stuff Like some of the things Ilook for when I'm interviewing
lenders is you know, do you have, how creative can you get with
me if I have a constructionproject?
(10:00):
Do you even have an appetite forthat?
I found a lot of credit unions.
They don't want anything to dowith construction.
They want it turnkey.
They want your rehab done, theywant that baby stabilized.
You get some good rates andstuff.
But typically they're not goingto have an appetite for anything
that needs to be fixed up.
So I kind of disclude themright away from a lot of my
purchases.
But on the purchase side I'mlooking for that.
(10:23):
And then communication for meis huge.
Like I just tell the lendersright up front like you, I need
good communication or we're notgoing to be a good fit together.
So like if we're two weeks outfrom closing and I haven't heard
from you and all this, like I'mmay not do that loan with you,
Like I need to be like where arewe at in the process, and then
if you tell me something youbetter stick to it.
So if you tell me you can closeit by a certain day, you better
(10:44):
stick to it or it'll be thelast time we ever do business
together, you know.
So we have those conversations.
What are the things that youlook for?
I mean, I'm sure some of thoseoverlap, but is there anything
else when you're talking to?
Speaker 2 (10:52):
Berlinders that you're talking about, the
communication's huge, I mean,and I learned many them before
that they've.
Speaker 1 (11:08):
You know I was taking hey, we should be good to go as
we are good to go.
I remember that one.
That was one when you workedfor us and you bought that.
Speaker 2 (11:13):
Yeah, we should be good to go and I was like I'm
going to be hyper optimistic, nomatter what.
I've got a disposition, butlike I'm like we're good to go,
like that's a guarantee in mymind we should be good and then
it turns out we weren't good andwe had to swoop in, get hard
money last minute and stuff likethat on that one that cost me
(11:33):
eight to 10 grand, I think, justby 17.
Speaker 1 (11:36):
17.
Okay, I was a little short.
I remember $17,000.
Okay, yeah, yeah.
Speaker 2 (11:45):
That.
Yeah, that's a one that stillsticks because it was a big.
I mean it was 290, somethousand, I want to say, for a
purchase price.
So yeah, you know the pointsstart to multiply after a little
while.
But closed is better than I'llpay that 17 grand every single
day if I'm closing that dealagain yeah, so you guys still
did good on that one.
I haven't done another one likethat since I mean that's kind of
a niche topic.
But yeah, the, the duplexconversions, those are special.
But yeah, for other stuff Ilook for I mean communication is
(12:08):
big.
I ask them up front too, likewhat their appetite is for this
type of stuff.
I just try to explain to themas clearly as possible my
business model, cause it isweird, like this is the only
world I've been in as far asreal estate.
I was never a realtor.
I've bought one propertythrough a realtor.
Everything else has been offmarket, direct to seller that
type of stuff.
So it's a different world thanit.
(12:31):
Like we're in the in the smallpercentage as far as this goes.
So a lot of lenders, just a lotof people, just don't understand
that, how that all works andand why we're getting a 60% to
value deal and stuff like that.
You know, like that doesn'tmake sense if you're a normal
person.
Speaker 1 (12:49):
Logically, it usually doesn't yeah.
Speaker 2 (12:51):
Yeah, and on the financing end, most of them in
general think, well, if you'rebuying it for $60,000, it must
be worth $60,000, because that'show the market works.
But they don't understand thewhole negotiating and getting
discounts and and forcing valueand stuff like that.
So explaining that helps a lotof like hey, look, I typically
am buying deals that are, uh,you know, I aim for 50 to 70% of
(13:15):
value.
I'm going to do someimprovements on them and they're
going to appraise out X, y andZ higher, you know.
And then I want all my moneyback and I don't want any
dollars stuck.
Like, yeah, it is a tall ask,but it is.
But the Y and Z higher, youknow.
And then I want all my moneyback and I don't want any dollar
stuck, like, it is a tall ask,but it is.
But the, the, if you're doing itright, the value is there for
them to.
You know they get good loansthrough.
You know an experiencedinvestor, they got their rental
(13:37):
properties.
There's not a whole lot thatcan go wrong in the, you know,
real basic level.
Yep, um, there's income comingin.
So, yeah, I'll go through that,because I've made that mistake
before too.
Of just sort of like, hey, doyou work with investors?
And they're like, oh yeah, yeah, we work with investors.
Yeah, we like rental property,we like landlords, that type of
stuff.
And then just how they dothings is a little different.
(14:02):
Like they're ultra, ultraconservative.
So the appraisals are justgoing to not that they're
telling the appraisers toappraise them low, but the
appraisals are going to come inlow.
Yeah, they're not going to besuper aggressive, they're not
going to be willing to get realcreative.
So those conversations up fronthelp a ton.
Speaker 1 (14:18):
Yep, I just had a conversation with a lender this
week a new, a new lender thatjust kind of popped in my radar
small community bank and Ireached out to him about this
exact conversation Z and he'slike, well, he's like we want
20% down and we're going to dothe.
We'll appraise it based on thepurchase price or the appraised
value, whichever is lower.
And I'm like, well, what makeswhy?
Why wouldn't I just go toFannie Mae or Freddie Mac then
(14:39):
and just do a mortgage brokerLike, why would I go?
Don't punish me for negotiating.
Yeah, it's like like why do youcare?
Like I this is the part that Istruggle with some of the banks
that don't get created.
I guess I this is just myfrustration as a real estate
investor.
But it's like why do you care?
As long as you have the equityyou need, why do you care?
Right, this is another thingthat some banks I struggle with
(15:02):
is I say I've reached out.
we've had a couple of dealsthrough Wisconsin discount
properties we put out wherewe've negotiated seller
financing terms and the seller'swilling to be in second
positions, which is for thosethat don't know second position
is a riskier position If it getsforeclosed on.
They have a lot less leverageor there's a good chance they
may not get any money back ifthat first position lien holder
can only recoup their, theirprincipal and nothing above that
(15:26):
or whatever Right.
And so so I'm like, hey, I gotthe seller in second position.
Are you guys cool, taking afirst on it?
They're like, well, how muchmoney would you put in?
I'm like, well, ideally none.
I've negotiated the 20% spreadI need.
And the seller is going to putthat in.
And and they're like, oh, no,no, you got to have some skin in
the game.
I'm like why, why do you care?
You've got your spread, why doyou give a rip?
(15:46):
The seller's just coming in.
So I'm like what if I create anLLC with the seller and then we
become partners on it?
Oh, that's different.
How is that different?
It's not different, it's thesame amount of money.
Speaker 2 (15:57):
I don't know.
Just in the paperwork it'sdifferent.
Yeah, that's silly, drives menuts.
Yeah, I haven't had onepersonally.
That's like that with a sellerin.
Second, I've done a handful ofthe seller finance stuff but
like on the portfolio, themultiple properties, I wanted
20% of that one seller financeand we ended up just allocating
it to one property.
That equaled exactly 20%.
(16:18):
So he gets to be first positionon that property and then the
bank gets to be first positionon all the other ones and they
considered that in the whole ofit the value of that one still,
because it was still whatever62% of its future value.
So they still considered it inthe total appraised value and
stuff like that.
Speaker 1 (16:39):
That's awesome.
And just for the audience, ifyou're not familiar with, zach
and I are talking a little bitover your heads the ARV loans
that Zach was describing.
There are some banks and again,it may take you a while to get
to this level with some banks.
It's a relationship game, it'sa credibility thing.
So if you're just starting out,don't get frustrated if you
can't get a community bank tooffer some of these.
But they're unicorns.
There's a handful, very smallhandful handful that will lend
(17:01):
off of the future value of thehouse.
So what happens is you get theproperty under contract.
You give them your scope ofwork Like I'm going to do
flooring I think it's going tocost me 6,000 bucks.
I'm going to do windows, likewhatever.
You just spell it all out forthem.
They hand that to the appraiser.
The appraiser comes, looks atthe property, says oh yeah, if
you do this scope of work, thisis what it's going to be worth.
(17:21):
They give that to the bank.
The bank lends you somepercentage off of the future
value, which is insane.
And it's an insane way to growwealth really, really quickly,
because if you do it right, youdon't have any money into the
deal other than maybe in betweendraws, maybe you got to cover
the pay of the contractordirectly before title company or
the bank cuts you the check.
But ideally you got no moneyinto this thing and you now
(17:45):
you've got a fixed up property.
You didn't have to go through ahard money lender to do that.
Or you're paying points andfees and I mean it's just an
awesome way to go.
And again it might just take youa couple of deals or a longer
established relationship withsome lenders before some of them
will be able to do some ofthose things for you.
Some other lenders that I'vehad before Z I don't know if
you've used any of these, butthey've lend.
They've lend off of the likethey'll do like 85% of the
(18:09):
purchase price and then like 85%of the construction costs.
So you're still getting a goodchunk of your cash during during
the rehab and then they'llrefinance on the future value at
the end.
So hopefully you've had youforce enough appreciation you
can pull all your capital thatyou've had out.
So you may have to just have alittle bit of capital for a
little bit of time in there.
Speaker 2 (18:27):
But I love it and get creative that way.
Which are, which are nice too.
I haven't personally done onelike that, but yeah, I've seen
them.
Yeah, they're like that goodoption if you can't get a
unicorn loan.
Speaker 1 (18:39):
They're more unicorn these days I think, than they
used to be.
But yeah, 2019, 2020, they werehanding them out like candy at
a parade.
Man it was yep, it's like soeasy to get them.
Now it's like, yeah, you gottaknow somebody who knows somebody
sometimes yep, and I think youhave some.
Speaker 2 (18:53):
There's some qualifying criteria, I mean,
obviously, on your personalpersonal income, personal
personal credit profile andstuff like that.
I think most of them want youto own a personal residence as
well, and I think it's got to bein an LLC, obviously.
If it's a commercial,commercial loan on residential
property, they want to in an LLC.
So not a ton of criteria in thegrand scheme of things.
(19:16):
And then I think experience isthe biggest.
Yeah, so in a relationship,trust, using whatever you can.
In the grand scheme of things.
Speaker 1 (19:19):
And then I think, experience is the biggest.
Speaker 2 (19:20):
Yeah, so like and relationship trust, using
whatever you can hard money andstuff to get started on those
first few, just to cut yourteeth a little bit, yep for sure
, and then getting into that andyou mentioned something before
you've got a couple of dealswhere you got some cash stuck
into them.
Speaker 1 (19:35):
What I think is important for people to realize
like I just did a solo episodeon the BRRRR strategy and I
don't even know what I said.
I rambled for 40 minutes aboutit but I don't even know if any
of it made sense, cause you knowyou're just talking, you don't
know if it made sense.
But the thing that struck thatconversation is there's some
investors I talked to at some ofthese networking events which I
want to get to next with youand they're like got these big
(19:56):
goals right, like I want to have, you know, 50 properties like
Zach Morgan.
I want to be like Zach somedaywhen I grow up, right.
And then I'm like, well, whendo you want to get there?
And it's like, oh, next threeto five years, okay, cool,
totally achievable, right.
Then it's like, well, what'sgoing to be the next property?
How are you getting in?
(20:16):
I'm like, oh, snails on achalkboard, it's going to take
you forever to get to 50 units.
But what you were describing Ithink the contrast that people
don't understand is youmentioned you didn't have money
for Bitcoin to go buy a bunch ofstocks or these types of things
to get wealthy.
What's really powerful is whenyou look at even those deals
that you have when you utilizethe burst strategy, and even if
you still have a certain amountof money in there, your cash on
(20:38):
cash return, which is ultimatelythe return on the money you
have invested in the property,is still astronomical because
it's so much smaller thanputting 20% down plus rehab
money.
Then, looking at your returns,you're putting a much smaller
amount into the property andanything you get out of it is
just juiced because of theleverage that you have.
Speaker 2 (20:59):
Yeah, if you look at it that way, like how productive
is the money?
It's still more productive thanit is sitting in a bank account
or whatever, so it's stillworking for you.
But yeah, same idea Ifsomeone's saving up for 20% down
, it's going to take a while,it's a fine, I mean, if you're
okay doing it over the course ofdepending on how high your
(21:19):
income is.
You know, 10 or 20 years.
Speaker 1 (21:23):
Yeah, everybody's goals are different.
I've talked to some people.
They just want to buy like anice turnkey side-by-side duplex
every year, one year, and thenthat's good for them.
That's great, awesome.
But you know, for people whohave some bigger aspirations in
a shorter timeframe, you gottautilize the BRRRR strategy, in
my opinion, to get there.
Speaker 2 (21:41):
But yup, that's what I always ask people too is like,
what's the like, what the endgoal is?
Cause, like not everybody wantsto be self-employed necessarily
and do this all Like and Idefinitely would say it's not
for everybody.
Like it is pretty lonely doingit on your own right, like it's
me myself and I in the officeevery day and we argue with each
(22:01):
other a lot.
So if you've got a job that youcan keep, high income job is
usually what I recommend forpeople and sales is usually what
I recommend.
But that's just from experiencewhat I can recommend, like your
number one way to be a greatreal estate investor is to make
a bunch of money.
I know that doesn't sound likethat's not the answer anybody
(22:23):
wants to hear.
They wanna hear like, oh, justdo these five things and you can
have a million dollars in realestate.
But if you make a bunch ofmoney first, it's gonna be a
whole lot easier to get loans To.
I mean I had to pad theportfolio for a while, like in,
while, like the in those firstreally four years buying stuff
like there'd be stuff.
Gotta wait 10 months beforethis guy gets a furnace again,
(22:49):
or I dip into my personal fundsand and pay for it and we're up
and running again and maybe I'mnegative on that property for
the year, but I could eat allthat for the first four years
until there's enough of themthere that they you can eat it
with the other ones too.
So yeah, but I mean, if someoneloves working and has a great
job and makes a lot of money andmaybe they don't wanna have 100
(23:11):
units, maybe they wanna have,maybe they wanna retire with a
couple extra million dollars inincome producing assets like how
awesome is that, you know?
And then they just that's sortof like gravy on top.
You save someone taxes fordepreciation and maintenance and
repairs and stuff like that.
You got a little tax shelter, alittle extra income and a
little nest egg sort of thingyou know to ask to the kids or
(23:34):
pass the equity or whatever.
Yep, yep.
Speaker 1 (23:36):
And I think, like we talk about risk now when you
brought it up, like my parentsare I've mentioned this to them
a few times they have one duplexright now.
They've had like a coupleduplexes at any one time and
then they usually their MO hasbeen like have it for a couple
of years, sell it, make a nicelittle spread Right and and have
long-term capital gains orshort-term.
But they've had this one andI'm like gosh, that's actually
(23:57):
riskier than if you have 10,because now you have one vacancy
, you have 50% vacancy, versushaving 10 doors and now you have
a vacancy, that's 10% vacancy,right.
So it's much.
You spread out your risk a lotmore and, like you said, now
you're getting a lot of cashflowfrom a lot of them that don't
have maintenance issues to payfor the one that does right.
Or if you have one and it hasmaintenance issues, it eats up
(24:19):
all of your income for the year.
So, anyway, but you're right,you do have to have some capital
to be able to cover that buildphase right, to be able to get
that snowball rolling downhill alittle bit.
I think it's important.
Don't quit your job.
Yes, there you go, all myemployees listening.
Speaker 2 (24:34):
Don't do it, don't quit your job.
And when you have enough toquit your job, wait like a year.
I would say, yeah, you know,let it stabilize, let it iron
out, for sure, unless you're inthe active income.
I mean, if you just want to bea flipper, yep and and
wholesaler and you know whereyour your next month's check
depends on, on the deals thatyou're doing, that that is still
(24:54):
risky in a way, but it's alittle different because you
know you don't have, because youdon't have residual benefits,
but you don't have the residualrisk either For sure.
Speaker 1 (25:03):
Yep, let's transition into networking stuff, zach.
So you brought up, initiallyyou and I met at a REIA event or
, for those of you that know,real Estate Investor Association
event, and that's how you and Imade the connection.
So that's how we met and that'show you and I made the
connection.
So that's how we met.
And then we run a group nowcalled the REI Success Club, and
(25:24):
here actually, the gentleman Iinterviewed who's going to be
the week prior to you, zach,that's how he and I met.
I actually called him on my wayto the REI Success Club and he
had like a two-hour window todrive from Shawano to Green Bay,
which, for those of you thatdon't know, it's about a 45
minute drive, maybe an hour, andhe's like, yep, I'll be there,
showed up in his business windowlike this and then, you've gone
(25:44):
out and done something reallycool, kind of tapping into a
market of networking that Idon't think anybody ever had
prior for real estate investorsspecifically, you run something
called Caffeine and Cashflow.
So a different time, a littledifferent format than the RIA
groups.
Talk a little bit aboutcaffeine and cashflow.
Where you guys have these.
What are the benefits you'vebeen either gaining yourself or
(26:04):
that you heard from folks thatare attending these?
How does it work?
Just tell us a little bit aboutnetworking in general too.
Speaker 2 (26:10):
Yeah, networking has always been huge for me.
I mean, obviously that's wherewe met and has been a huge part
in me being able to grow andscale.
I mean, first of all, you getaround other crazy people who
are doing the same thing, so itseems a little less crazy like
taking out all this debt andfixing up all these properties
and dealing with the stuff thatwe deal with.
But I mean just like it's likethe power of the mastermind.
(26:33):
I mean it's like mastermindlight, because you're not going
hyper specific on specifictopics or people's businesses,
but just on the networking endof it, getting to share ideas,
resources like you're havingtrouble with plumbing all the
time, for example.
Then someone goes well, I justswitched to these faucets where
(26:53):
I use this person and they takecare of that stuff.
Like that transfer ofinformation happens so fast.
The transfer of knowledge youcan solve so many problems in
one hour, just like what seemslike just chit-chatting with
people.
But so much gets done if you doit right.
If you're focused onintentionally meeting new people
and sharing ideas and figuringout what they do, you can learn
(27:14):
so much in between the linesjust hearing what people do.
So yeah, for caffeine and cashflow.
So I started that.
So much in between the lines,just hearing what people do.
So yeah, for caffeine andcashflow.
So I started that.
I think it's over two years nowyeah, just over two years now.
I think I got that started.
So that is.
It's all in the morning.
So I wanted something.
I'm way better in the morningsthan I am in the evenings.
(27:36):
I got young kids.
You know I get tired Not tomake myself sound too old but
and I wanted something right inthe morning.
I'm way more of a coffee guythan anything else.
So started just with Green Bay.
We did hour and a half 100%networking.
We do just introductions.
(27:57):
Everybody goes around, says whothey are, what they do, if they
have anything specific, like ifthey got a deal right now that
they wanna sell something youknow money that they wanna spend
or money that they wanna lend,something like that and it ended
up being a mix of real estateinvestors you know real estate
focused agents, lenders,insurance agents, attorneys,
that type of mix Because of thetime that it is so it's nine to
(28:19):
1030 in the morning verydifficult to get there if you
have a regular job.
So not that I don't want tonetwork with people who are
still in the nine to five,because I think that's great
still especially I was in thatfor a long time in the build
phase but it creates a littlebit more of a focused group of
people who are hypotheticallydoing this full time.
(28:41):
You either got a lot going onthat you're working for yourself
, or you got nothing going onand that's why it's most of the
extremes.
Speaker 1 (28:48):
You got the far.
The far right showed up, right.
Speaker 2 (28:51):
Seriously so.
So it's been cool.
I mean a lot of connections, alot of of deals being done and
stuff like that and it's grownnow to five locations.
So we got Green Bay was thefirst one.
So we got Green Bay, appleton,sheboygan, milwaukee and
Watertown.
Those are the five we've gotrotating right now Every month.
It's just one meetup perlocation per month.
(29:11):
That makes it so every weekthere's one of them that you
could go to.
I'm pretty area specific.
I'm focused in Appleton, greenBay, manitowoc, sheboygan,
pretty much.
Um, I don't, I don't go, Idon't really dip into Milwaukee.
I don't go further South thanAppleton really.
So those are the main ones forme.
(29:32):
But there's a lot of people Isee at all of them and and they
buy everywhere.
So you get to meet like thelocal experts there.
You, you know you're, I need aguy to close stuff, I need a
lender, I need a.
There's contractors that cometo.
A bunch of them.
Um, you can get like, dependingon the day in the room, you can
get like a whole real estatebusiness in one with that.
(29:53):
So so it's been really cool.
Um, and I've had a handful ofpeople um, not graduate, cause
it's different things, things,but who have been coming to all
the nighttime ones?
They go to the whiskeria is therei success stuff too.
And then they come to liketheir first caffeine and cash
flow because they left their joband now they're free in the
morning oh, that's awesome, it'skind of fun, but that's great
but yeah, so it's.
It's a good um good free network.
(30:14):
We do um caffeine andflow onFacebook on the Facebook group.
I would say the other groups doa better job of, as far as the
Facebook group goes, being moreactive.
Not a ton of people are activeIn Caffeine and Cashflow.
Honestly, it's usually just meposting stuff in there, updates
when the events are.
But good place to join ifsomeone wants to see when the
(30:37):
events are and stuff like that.
Speaker 1 (30:38):
Yeah, it's just a good way to stay up to date with
when they are, when they'rehappening.
Get it on your calendar.
That kind of thing.
Yeah sweet, yeah.
The networking piece is so huge, right.
What I love about what you saidis intentionality is one thing
you mentioned.
You have to be intentional.
What do you need to get out ofit, or who do you need to meet,
or what's a connection?
And the cool part is, even atCaffeine and Cashflow or the
ARIA Success Club or any of theREIA groups around, if that
(31:02):
person's not in the room but youask for that person, chances
are somebody in their network,somebody's network there, will
have a connection for you.
So even if you're not there, soyou're going to, you know you
get out of your comfort zone.
If that's scary to you to go ina room of a bunch of people,
you don't know it.
If you're really serious aboutexpanding your business and
exploding it, you got to begoing to networking events,
especially early on.
You know I know some guys nowthat are pretty well established
(31:23):
.
They're they'll tell you it wasa huge part of their success.
Speaker 2 (31:34):
And I bug those guys too, because I'm like you're the
people who should be here.
Yeah, you know, like I knowyou're dialed into exactly what
you're doing and that's whatother people need to hear too,
for sure.
Oh yeah, I always hound thoseguys who are like ah, you know,
I've got a decent amount ofexperience.
(31:54):
I learned something everysingle time.
And the rei success, caffeine,cash flow, whiskery any of those
I go to, there's always a newconnection, somebody doing
something differently than we'redoing it.
Um, I mean, there's so manymicroprocessors involved in all
this stuff that, like, ifsomeone tweaks, like like we
were talking about AI, ifsomeone has some tool, like, oh
(32:15):
yeah, why don't you just'm anexpert at AI by any means.
Speaker 1 (32:19):
I'm just kind of fascinated by it all right now.
Speaker 2 (32:22):
And I think you kind of mentioned the same thing.
Speaker 1 (32:36):
What are you currently doing?
How is AI helping you in realestate investing currently?
Is there anything specificyou're doing that's speeding a
process up or helping youanalyze, or what are you using
it for and what tools?
Speaker 2 (32:47):
are you using?
So I'm pretty green still.
As far as the AI goes, I'veprobably started adopting it
realistically in the last monthor two really using it, maybe
three.
One specific process that'shelped me cut a ton of time down
on is getting my reports doneof how much I've spent per
property, per unit renovation.
(33:09):
It's like compiling all thereceipts together.
So if you have the paid versionof ChatGPT, for example, I
think it's like 20 bucks a month.
Speaker 1 (33:16):
It's not expensive at all, it's nothing.
Speaker 2 (33:18):
They don't limit how many uploads you do.
I think they let you do likethree in the free version.
It's like I have 50 receiptsper unit or what you know it
adds up.
Yeah, so For a ARV loan, ifyou've got funds on draw even
with hard money lenders, most ofthe time they don't cash you
out upfront, they want the fundsheld on draw you got to send
them a report of how much youspent, the before and after
(33:40):
photos you know proof that stuffis done.
That's why I usually do itbefore and after photos All the
receipts, exactly what thereceipts you know were spent on,
what the totals are, and thenit linked to everything exactly
what the receipts were spent on,what the totals are, and then
it linked to everything.
So that process usually took meprobably about an hour to go
through and compile all thephotos, get all the receipts,
(34:00):
build a spreadsheet that doesthe math and link every single
receipt and all that stuff.
So now I take, I copy and pastemy before and after photos in
the ChatGPT and I upload all thereceipts and I tell what to do.
So I say, hey, I need aspreadsheet that shows how much
was spent, what it was spent, onwhat store it was bought from.
(34:21):
And then the here's the link topaste on there for the receipts
, and it takes a few minutes andit builds a spreadsheet.
You got to check the math.
Sometimes, yeah, like sometimesit doesn't read it correctly,
but it's pretty dang accurate.
That's awesome.
And then I can download it asan Excel spreadsheet, send it to
my lender so I can get thedrawback.
(34:42):
So it's saved a ton of time.
Speaker 1 (34:44):
That's awesome.
I love that.
That is so cool.
Every time I hear something,it's like I was talking to my
team yesterday.
We were doing some one-on-oneswith everybody just going
through their annual goals andstuff.
So people got some fitnessgoals and I'm like, have you
ever thought about asking chatGPT to write you a fitness
program based on your goals?
And you're like, no, but I'mgoing to.
And I'm like, yeah, you likeyou can just use it for anything
Like it's amazing, 20 bucks amonth.
(35:04):
It much time I've been using alot to analyze deals or just to
run scenarios on deals.
Yeah, and it's made me want tobuy so much more real estate.
Like when I look at like theequity I'll have after 5 and 10
and 15 years, I'm like whywouldn't I just buy everything?
It's just like there's so muchlike in five years my future
(35:25):
self will thank me because I'mlooking at.
Before I hated, like I hatedhaving to go into like a
spreadsheet, like plug it in andtry to do a pivot table or
whatever the hell, some graph orsomething, and try to get to
come up Like I'm out of patiencefor that.
But I can just go, plug in thescenario and a chat GPT, and it
spits it out.
Now as I go like if I startasking it to tweak it, I've had
(35:46):
it, I've noticed it makes someerrors if I keep saying, oh, go
back and do this differently.
So sometimes I have to juststart fresh again with a new
prompt of like oh, I wanted to,I messed that prompt up, I need
to do a new one.
But it's like it saves me somuch time I can analyze a deal
and in the future value of itand if, equity and all that
other stuff.
And 30 seconds now.
Speaker 2 (36:05):
Yeah, yeah, I haven't used it a ton for deal analysis
, but that's something I've Ithought about.
I'm sure it's great for that.
I mean because if you use a,I'm pretty simple like it's a
google spreadsheet with a realbasic calculator built in and
then I figure out the rest.
So you can even, um, and youcould take, like, for example,
the thing I just said, I uploadall these receipts, how much it
(36:27):
costs to renovate a unit.
You can even upload that as anexample if it's kind of close,
and say, hey, this is a littlebit bigger, a little more square
feet, has a few more lightsthan that one does.
Use this as an example.
Give me an idea of roughly howmuch this will cost.
That's taking from your realexperience and real expenses and
helping you run numbers,because I know that's something
(36:47):
people struggle with early on.
It's like, well, how do I knowthat's something people struggle
with early on?
It's like, well, how do I knowI didn't know what a water
heater or furnace was.
I didn't know the differencebetween the two when I first
started.
So how, how am I supposed toknow how much it costs to
replace?
And then, how am I supposed toknow how much it should cost to
replace Cause what.
What quote you get and what itshould cost can be two different
things for sure.
On either.
Speaker 1 (37:06):
That's great and I didn't know that you could
create your own.
It's called create your own GPT, and so for those of you
listening out here, I haven'tused this yet.
This was life-changing for us.
You go up in the upperright-hand corner.
If you're on the desktop, youhit your settings.
It drops down and I think itsays, like my GPTs right.
And so what Zach's describingis like you could createaking
(37:36):
that GPT.
So you want to come back in andrun another analysis.
Like what Zach is describing,say, hey, go back to the last
property that we had to analyze,and this one's now 400 square
feet bigger.
It also needs windows.
We think the windows are goingto cost 500 bucks a piece.
There's 30 of them.
Give me the breakdown of whatit's going to cost.
And now, like it'll just, andit'll just keep learning as you
train it to keep knowing.
(37:57):
It's so cool.
I love this stuff.
Speaker 2 (38:00):
I got to build one of those today.
Yeah, I don't have one of thosebuilt yet.
I'm just going to start fresh.
I'll help you if you need itlearning from you.
Speaker 1 (38:07):
All right, zach, let's start wrapping this baby
up, cause you got to getbuilding your GPT here.
Okay, you got to get that outthere.
Uh, give me just a deal Likelet's just talk about one
specific deal, best or worst?
I'm going to let you pick bestor worst deal that you've ever
done and let's do a little bit.
I know you don't have to havethe exact numbers or any of that
kind of stuff, but give me thescenario.
How did you get it?
What happened that made iteither the best or worst?
(38:31):
What are some of the numbers?
Tell me a little bit more aboutit.
Speaker 2 (38:34):
Yeah, Putting you on the spot.
I know I was thinking aboutthis earlier too, because we
were texting about it.
I'm like I don't think I have aworse deal, because one of my
main beliefs in real estate is,if you wait long enough, every
deal is a good deal.
So sometimes you might have towait 10 years and then all of a
sudden you look like a genius.
But I haven't had that muchtrack record even, and I've had
(38:56):
deals that I've bought and thenbeen like it doesn't appraise
out, and I got some money stuckin there and then it doesn't
cash flow that much.
Let's talk about your first dealwhere I had to kick not in the
best neighborhood, admittedly,um, and it's not.
(39:19):
It's a little better, not muchbetter today, but it's it's
still still cooking.
But, um, yeah, a little upperlower.
It had um, two I think.
They were both hoarders notpaying rent at the time that we
bought it and the city also hadits teeth in it.
So it was like awesome learningscenarios right off the bat.
(39:42):
You know, yeah, like the stuffthat people are worried about,
you know, tenants not payingrent, tenants being hoarders,
the city getting in on yourproperty.
I got to tackle those right offthe bat.
That's right, great experience.
So, yeah, I was I mean, I wasrenting at the time too and
you're like you're like, dude,you gotta buy it, you need to,
you gotta do it.
I'm like I don't have any money.
You're like I'll be your lender, we'll take care of it.
(40:05):
So, so, yeah, I worked out, umbought it.
I mean we were able to.
We worked with a managementcompany right off the bat.
I mean that was one of thethings that you told me early on
is like, look, I know it's notthat big of a deal to manage a
handful of properties, but, like, scale wise, you gotta have
somebody doing this.
I'm so glad I did that rightoff the bat because I've never,
never I mean besides turningapartments where I need to sort
(40:27):
of be the middleman in theprocess Never done it since, and
I see how much time themanagement companies spend on my
stuff and that's that'svaluable time away from deals
and stuff like that.
So, so anyways they help her.
Speaker 1 (40:40):
What'd you buy for like 55,000 or something like
that?
Speaker 2 (40:43):
Um, something like I think it was 50 flat, I think it
was 50.
Speaker 1 (40:46):
Yeah.
Speaker 2 (40:47):
Something like that.
Um, and yeah, so 50 grand foran upper duplex, right, and who
wouldn't sign on that today?
Um, we didn't have a ton ofpeople who wanted it.
Then that was a wholesale dealthat went out, um, I don't think
a ton of people were interestedand that's probably been one of
my best ones.
So we got, got the peopleremoved, um, got the places
(41:09):
renovated and that was my firsttime doing any of that stuff too
.
So, like I was over there doingsome stuff and then the
management company had somepeople in there doing some stuff
, um, got them re-rented andthen the city just stuck on us,
um, for a couple years actuallythey were, um, first it was the
sheds you know needed to bepainted, and so we went over
(41:29):
there and painted the sheds, um,and then there was, you know,
they don't like the chimney.
So we had the chimney removed.
And then the hardest one, theone that hurt the most, was they
didn't like there was anaddition off of the back that
was maybe only like 10 by 12,but it was like an extra storage
room.
It wasn't really a bedroom, butstorage room kind of went off
of the laundry room, but, butit's like a nice.
(41:51):
I mean, that's a good amount ofsquare footage for a small
two-bedroom For sure.
And they just decided this isnot structurally sound anymore,
you can't have it.
So we tried to have afoundation guy go and run a
report or whatever try to showthem that it's good.
They just decided that it can'tbe there anymore so we had to
(42:14):
have that removed.
Once that was removed, they sawthe other foundation and decided
that one wasn't structurallysound, that we were able to
rebuild because otherwise we'dlose the only bathroom for the
unit, so that we were able torebuild.
So I was like a lot of costs.
Um, I think we were negative 15grand or something, year one on
that one.
If you look at like thecashflow, not too bad in the
grand scheme of things, good foryour, for your tax return, yeah
(42:34):
yeah, that was great.
Yeah, but just for theexperience, like I'm glad we ran
into that stuff.
We also had a managementcompany that was not doing well
on that.
So I think they cost us a lotmore than we should have for the
renovations that were done thatwere done and we changed that
January.
I think we bought it in June,changed management companies the
next January and I've been withthat same one, main Street
(42:56):
Management in Green Bay eversince, for all my North stuff
anyways.
So, but that one okay.
So I'm getting a little intothe weeds, but numbers wise.
So 50,000 purchase andappraised at 72,.
We bought it.
So just enough to refi you backout, yeah, and get a, get a
30-year loan on it.
Didn't have an lc at the time,so it was under our personal
names.
(43:16):
Um so october, I think it wasof 2023.
You know I had, whatever it wasinto the um 40 somethings that
we owed on it and, like thisplace has to have appreciated
quite a bit.
We've got more projects.
Let's pull some cash on thisthing Appraised for $177 or
(43:36):
something like that.
Come on, that's what Four yearslater.
That's not a whole lot of timein the grand scheme of things
for real estate.
That was a DSCR loan.
That's a debt service coverageratio loan.
That's just another DSCR loan.
Okay, so it's a debt servicecoverage ratio loan.
That's just another type ofloan.
We don't have to get into toomuch.
But people can chat you BT.
(43:57):
That that's right, learn moreabout it.
Yeah, um and yeah.
So we pulled like 65 grand orsomething like that out of it.
Speaker 1 (44:06):
That's amazing, so I didn't want to leverage it.
Yeah, tax-free, tax deferred.
I guess you'd say, yeah, Ididn't want to leverage it
Tax-deferred.
Speaker 2 (44:11):
I guess you'd say I didn't want to go up.
I think I only went into the60s for LTV, For the
loan-to-value, but still60-something grand tax-free.
Speaker 1 (44:24):
Divide that by 4.
What's 60 divided by 4?
20-something.
Speaker 2 (44:30):
That works Almost 20.
Whatever, 20 something rightYep.
Speaker 1 (44:32):
Yeah, that works Almost 20.
Speaker 2 (44:34):
18,.
Whatever we're going to get,good thing, not many people
listen to this podcast.
Speaker 1 (44:38):
Zach, so we don't have to worry about anybody
blowing us up too much on ourmap.
Speaker 2 (44:40):
Cut that out in post.
Speaker 1 (44:41):
Yeah, either way that's your think about your
cashflow.
Now that's over a thousandbucks a month that you made on
that property and cash, if youlook at it that way, on the refi
and you still have a bunch ofequity because you only want 67%
of loan to value.
So I mean, that's where I thinkpeople often miss the power of
just buying and letting thingsjust appreciate and let your
tenants pay that debt down andyou just create your own
(45:02):
cashflow that way, even if youguys didn't bring in a dollar
for four years, right, Net cashIt'll be worth.
Speaker 2 (45:08):
It Can scheme things yeah and Right.
Net cash flow it's still worthit and I still own it.
It's like I didn't have to exitthe asset to finally collect on
it.
I was able to pull a little bitmore debt on it and it's still
cash flow positive.
I love it, buddy.
Speaker 1 (45:19):
I love it.
Well, dude, this has beenawesome.
Speaker 2 (45:24):
We got to get you out of here to get you making that
GPT as quickly as possibleBefore we go, though we always
ask that's right Favorite placein Wisconsin to visit or
favorite Wisconsin tradition.
Speaker 1 (45:31):
For those folks who aren't real familiar with
Wisconsin, yet.
Speaker 2 (45:34):
Well, I could probably do both in one.
I'm biased, but Sheboygan,wisconsin, man, is an awesome
place to be.
I know people up here,especially Green Bay, really
talk about Door County.
Door County is awesome too, butI think Sheboygan is sort of a
hidden gem in that.
Amazing beaches, amazing food.
It's a cool place to be awesome.
So that would say I don't knowwhat tradition that fulfills.
(45:56):
Uh, I mean, if it's the, it'sthe freshwater surfing capital
of the world so if you want to,you can go take surf lessons.
Heck, yeah, it's crazy to do inwisconsin but in lake michigan,
yeah I wouldn't recommend doingit until maybe august, when the
water's yeah, no, they usuallydo it um through, like late into
fall, like they do wetsuits, ofcourse, because you know it's
(46:18):
real cold, but that's when theconditions pick up for it to be
good enough waves and stuff likethat.
Okay, so yeah right on.
Speaker 1 (46:25):
Awesome man well z appreciate you being on buddy
and always great to catch upwith you and hear what you got
going on.
For those of you guys listeningto the podcast, we appreciate.
Got deals today.
Welcome back, guys, to anotherepisode of the Wisconsin
Investor.
I'm your host, corey Raymond,and before we get into today's
episode this episode issponsored by Wisconsin Discount
Properties I want to tell youguys about a hot deal we just
had out a week or two ago.
This one was on Bay SettlementRoad in Green Bay, if you're
anybody familiar with that.
Beautiful road, views of theBay of Green Bay, very desirable
(00:23):
area.
This was a three bed, one bath,one stall garage.
We had it out to our buyerslist for only $129,900.
Arv on this sucker was $325,000.
So we had a huge spread on it.
As you can imagine, it was notturnkey.
There was quite a bit of workthat had to be done to this one.
So this was not for the faintof heart project, but typically
(00:45):
when you have huge spreads it'snot going to be.
But the folks that are pickingthis one up are going to make a
nice massive paycheck when theyexit this thing, or if they hold
it and eventually exit.
It's going to be tons of equitythat they have out of this
thing right out the gates oncethey fix it all up.
And some of those projects arethe best you get.
You put one of everything intoit and you don't have to touch
it again, and we'll maybe diveinto that a little bit today.
Let's get into today's episode.
(01:06):
I got my good buddy, zach BigMoney Morgan, on today.
Zach, what's up?
Buddy Boom, new nickname.
I like it.
Oh yeah, how's it going?
Thanks for having me on.
You say that's new man.
I've been calling you Big.
(01:26):
Three former employees on herealready, so excited for
everything that you've gone onand done and in your solo
journey here in theentrepreneurial world after
exiting the nine to five W2.
So today we don't want to focustoo much on leaving our company
, but maybe for other people whoare working for someone else we
can talk about, you know, justin case our employees won't.
Speaker 2 (01:47):
Won't coach your employees on.
Speaker 1 (01:49):
Yeah, yeah, yeah, please don't, please don't.
Speaker 2 (01:50):
It's kind of impossible not to.
I mean you're, you're set up to.
Speaker 1 (01:53):
I say about you what I tell a lot of people who hang
out with me is like you can't beout this too long.
You catch it and then you'rescrewed, you're sick for life
with it.
Yeah, well, tell us a littlebit, man.
So, uh, give everybody a littlebit of your background on you,
your younger guy doing realestate out on your own, like
(02:15):
give us just a little background.
How did you get into this thing?
What?
What prompted you to want to doreal estate?
Speaker 2 (02:20):
let's start there yeah, um, so yeah, I'm, I guess
big picture right now.
I'm 28, uh, we currently hold52 long-term all long-term
rentals come on baby.
Speaker 1 (02:30):
If I had the bell over here like tom crawl, I'd be
ringing that.
Speaker 2 (02:33):
Yeah, I didn't think I got a bell too.
It's somewhere in a box.
It hasn't made it to the wall,but um, yeah, so we do that's
the.
That's the main thing.
Um, we also do um flips,wholesales, um, on the side as
well, not Not a ton of that, buta couple of months here and
there as sort of keeping theactive income going.
I mean, passive income is cooland all, but it's not really
passive and it's not usuallyconsistent, if anybody owns
(02:56):
rentals knows.
So having some other sources isnice as well.
But yeah, starting out, I mean Ihad wanted to invest in real
estate for a long time.
I didn't really know what thatmeant.
But I, starting out, I mean Ihad wanted to invest in real
estate for a long time.
I didn't really know what thatmeant, but I mean I found a
whatever journal little goalsthing written out from like 2015
.
Okay, I was like by my firstduplex and I think I was living
(03:21):
my parents still, I don't thinkI was renting yet at the time.
Yeah, so it's watching GrantCardone and Bigger Pockets, I
think.
If they were started aroundthat time, I think they probably
were.
Yeah, I think.
So.
The social media stuff I mean Igrew up with social media stuff
.
So whether that's good or badwe'll find out down the road,
but those influences have beenthere so you get to see,
(03:52):
obviously, the highlight reel ofwhat everybody's doing.
And, um, real estate alwayssort of stuck out to me.
It's like seemed like anobvious path, like a
quote-unquote easier way tobuild a lot of assets quickly,
yeah, without a ton of capitalyeah because I didn't I don't
know that everybody else Ididn't have millions of dollars
sitting around.
I didn't get a trust fund.
Um, I didn't have millions ofdollars sitting around, I didn't
get a trust fund.
I wasn't making millions ofdollars or anything like that to
go buy a bunch of Bitcoin orwhatever other assets or
(04:16):
businesses and stuff like that.
So it made the most sense asfar as oops nope, I didn't exit.
I thought I exited.
Nope, you're good, you're stillon Career-wise.
I always loved sales, so thisstuff always kind of lined up.
But everything I did was alwayssales.
I mean, I was a personaltrainer for years but that was
really, if you break it down,just sales.
You're selling not just thetraining program but selling
(04:39):
somebody, the future them andthe them that they can be if
they follow your plan.
Hypothetically, I soldinsurance and then I made all
kinds of insurance and then Imet this crazy guy at a Wisco
re-event who also loved coldcalling as much as I did.
Speaker 1 (04:57):
Yeah.
Speaker 2 (04:59):
And you were like we're both crazy, why don't you
work for me?
So that was January 2019.
I think I left UnitedHealthcareand then I guess the rest was
history.
I mean banging out deals,wholesaling and trying to buy as
many of those as I possiblycould.
Yeah, for sure, Until was thatMarch of 2023?
(05:23):
I think so.
Speaker 1 (05:24):
I think it was the time I went solo About two years
now.
Speaker 2 (05:27):
Yeah, a couple of weeks.
Speaker 1 (05:28):
Yeah, yeah, for sure.
Speaker 2 (05:29):
And yeah, so I don't that.
That was at that point.
I think I had 13 units at thetime, something like that.
So that was with keepingpersonal expenses pretty low.
That was like enough to keepgoing with having a handful of
flips and and buying more andstuff like that.
So and it's just been rinse andrepeat, doing the same thing
(05:51):
over and over again, trying toget better at the stuff.
That takes time because timecosts money and continuing to to
grow and scale.
Speaker 1 (06:00):
Wow.
So you went forward.
You grew basically I don't knowrough math 40 units in two
years or whatever.
That's been basically yeah.
Speaker 2 (06:07):
Yeah, just about yeah .
Speaker 1 (06:08):
Now, I imagine, are you using BRRRR on all these,
are you doing the BRRRR strategyon pretty much all?
Speaker 2 (06:12):
of your line holds.
I was looking througheverything to see where we've
got money tied and yeah, it'spretty much everything's been
BRRRR, wow, I think we've got um, every once in a while you get
an appraisal that comes in lowand stuff like that.
Sometimes you can't fight themfar enough, they'll just be firm
at it.
So you've got to leave somemoney in the deal.
(06:33):
But I think I've only got maybetwo or three properties with
some money stuck in them.
Wow, that's awesome, eitherfrom the either you know
traditional burr or buying ithard money and renovating it
either with that money or someof our own money, renting it and
actually refinancing it to pullthe cash out.
Most of them have been withcommercial banks where we're
getting an arv loan right upfront so we get the purchase
(06:55):
price funded and then the restof it on draw.
So that's my favorite.
If anybody's any lenderslistening that wants to give out
some more loans, I'm happy totake 80% ARV, 30-year
amortization.
Ideally somewhere sub 7% wouldbe sweet.
Speaker 1 (07:11):
I'm right there, dude , you're just singing.
Looking for unicorns.
I know, yeah, you're singing mypraise.
Do you have some lenders youcan share with the audience that
you've been having success with?
Speaker 2 (07:19):
Yeah, I mean my best one right now has been the one
for a long time, bristol Morgan.
Okay, they've been awesome.
So they swooped in and saved me.
Last year I had a portfolio, 22units under contract.
I gave another bank maybeshould remain nameless the
opportunity that they made a lotof big promises and ultimately
(07:40):
gave me the run around.
For what was it?
93 days or something like that.
Like I got a long.
I was grateful to get a longclosing timeline.
First because I involved thelender early, figured out what
timeline they would've needed.
It was odd it's eight plex, two, four plexes and three
triplexes, no three duplexes inthat portfolio.
(08:01):
So you know it's a coupledifferent moving parts.
Gave them a long time to getthrough it.
I mean that's a really longtime in our world 90 days for
closing, especially for, like anas-is off-market type thing.
Speaker 1 (08:13):
Were you already set up with this lender like
pre-approved.
You gave them all yourfinancials, prior Bunch of deals
.
You've already done deals withthese guys, so you already had
an established relationship,million in deals or something.
Speaker 2 (08:21):
Yeah, okay, I've done plenty of deals, okay.
So, yeah it just.
For whatever reason, didn't Inever got denied, it just never.
Never got a yes either.
Okay, so, anyways, we've done alot with Bristol in the past as
well.
So we connected with them, gotthings going and they they came
(08:42):
in.
Them got things going and theythey came in, used the prior
appraisals that the other bankhad done, gave me a little bit
extended amortization, like justmade all the pieces work and
got it closed.
I want to say it was like 27days.
Wow, it was amazing.
Many moving parts.
That's crazy.
That's awesome, yeah, so I don't.
I don't want to put that outthere as an example of like, hey
, this is what to expect.
Call you know, call chad ifyou're a month out and something
(09:04):
happens, like, especially ifyou don't have experience first.
Good experience first and thena longer relationship.
I mean, that's some of theperks you can get over the long
term, yes, but um, that, yeah itwas.
It was great how it worked out.
Speaker 1 (09:18):
Yeah, that you and I love I mean you probably picked
this up from being around me fora while that little virus is
community banks.
I preach, preach it all thetime, Like, yes, hard money
lenders are awesome for thefirst certain situations.
They're great when you'restarting out, they're awesome to
get you rolling.
But as soon as you can graduateto a commercial lender or
community bank is the other.
You know, we say commerciallender a lot of times but what
we really mean is like acommunity bank.
(09:39):
So it's not your Wells Fargo's,it's not your, you know, your
big boys, BMO Harris's, it's thelocal guys, right, that can be
a little bit more flexible.
And what I do when I'm lookingand I want to hear your thoughts
on this Z, now that you're onyour own doing some of this
stuff Like some of the things Ilook for when I'm interviewing
lenders is you know, do you have, how creative can you get with
me if I have a constructionproject?
(10:00):
Do you even have an appetite forthat?
I found a lot of credit unions.
They don't want anything to dowith construction.
They want it turnkey.
They want your rehab done, theywant that baby stabilized.
You get some good rates andstuff.
But typically they're not goingto have an appetite for anything
that needs to be fixed up.
So I kind of disclude themright away from a lot of my
purchases.
But on the purchase side I'mlooking for that.
(10:23):
And then communication for meis huge.
Like I just tell the lendersright up front like you, I need
good communication or we're notgoing to be a good fit together.
So like if we're two weeks outfrom closing and I haven't heard
from you and all this, like I'mmay not do that loan with you,
Like I need to be like where arewe at in the process, and then
if you tell me something youbetter stick to it.
So if you tell me you can closeit by a certain day, you better
(10:44):
stick to it or it'll be thelast time we ever do business
together, you know.
So we have those conversations.
What are the things that youlook for?
I mean, I'm sure some of thoseoverlap, but is there anything
else when you're talking to?
Speaker 2 (10:52):
Berlinders that you're talking about, the
communication's huge, I mean,and I learned many them before
that they've.
Speaker 1 (11:08):
You know I was taking hey, we should be good to go as
we are good to go.
I remember that one.
That was one when you workedfor us and you bought that.
Speaker 2 (11:13):
Yeah, we should be good to go and I was like I'm
going to be hyper optimistic, nomatter what.
I've got a disposition, butlike I'm like we're good to go,
like that's a guarantee in mymind we should be good and then
it turns out we weren't good andwe had to swoop in, get hard
money last minute and stuff likethat on that one that cost me
(11:33):
eight to 10 grand, I think, justby 17.
Speaker 1 (11:36):
17.
Okay, I was a little short.
I remember $17,000.
Okay, yeah, yeah.
Speaker 2 (11:45):
That.
Yeah, that's a one that stillsticks because it was a big.
I mean it was 290, somethousand, I want to say, for a
purchase price.
So yeah, you know the pointsstart to multiply after a little
while.
But closed is better than I'llpay that 17 grand every single
day if I'm closing that dealagain yeah, so you guys still
did good on that one.
I haven't done another one likethat since I mean that's kind of
a niche topic.
But yeah, the, the duplexconversions, those are special.
But yeah, for other stuff Ilook for I mean communication is
(12:08):
big.
I ask them up front too, likewhat their appetite is for this
type of stuff.
I just try to explain to themas clearly as possible my
business model, cause it isweird, like this is the only
world I've been in as far asreal estate.
I was never a realtor.
I've bought one propertythrough a realtor.
Everything else has been offmarket, direct to seller that
type of stuff.
So it's a different world thanit.
(12:31):
Like we're in the in the smallpercentage as far as this goes.
So a lot of lenders, just a lotof people, just don't understand
that, how that all works andand why we're getting a 60% to
value deal and stuff like that.
You know, like that doesn'tmake sense if you're a normal
person.
Speaker 1 (12:49):
Logically, it usually doesn't yeah.
Speaker 2 (12:51):
Yeah, and on the financing end, most of them in
general think, well, if you'rebuying it for $60,000, it must
be worth $60,000, because that'show the market works.
But they don't understand thewhole negotiating and getting
discounts and and forcing valueand stuff like that.
So explaining that helps a lotof like hey, look, I typically
am buying deals that are, uh,you know, I aim for 50 to 70% of
(13:15):
value.
I'm going to do someimprovements on them and they're
going to appraise out X, y andZ higher, you know.
And then I want all my moneyback and I don't want any
dollars stuck.
Like, yeah, it is a tall ask,but it is.
But the Y and Z higher, youknow.
And then I want all my moneyback and I don't want any dollar
stuck, like, it is a tall ask,but it is.
But the, the, if you're doing itright, the value is there for
them to.
You know they get good loansthrough.
You know an experiencedinvestor, they got their rental
(13:37):
properties.
There's not a whole lot thatcan go wrong in the, you know,
real basic level.
Yep, um, there's income comingin.
So, yeah, I'll go through that,because I've made that mistake
before too.
Of just sort of like, hey, doyou work with investors?
And they're like, oh yeah, yeah, we work with investors.
Yeah, we like rental property,we like landlords, that type of
stuff.
And then just how they dothings is a little different.
(14:02):
Like they're ultra, ultraconservative.
So the appraisals are justgoing to not that they're
telling the appraisers toappraise them low, but the
appraisals are going to come inlow.
Yeah, they're not going to besuper aggressive, they're not
going to be willing to get realcreative.
So those conversations up fronthelp a ton.
Speaker 1 (14:18):
Yep, I just had a conversation with a lender this
week a new, a new lender thatjust kind of popped in my radar
small community bank and Ireached out to him about this
exact conversation Z and he'slike, well, he's like we want
20% down and we're going to dothe.
We'll appraise it based on thepurchase price or the appraised
value, whichever is lower.
And I'm like, well, what makeswhy?
Why wouldn't I just go toFannie Mae or Freddie Mac then
(14:39):
and just do a mortgage brokerLike, why would I go?
Don't punish me for negotiating.
Yeah, it's like like why do youcare?
Like I this is the part that Istruggle with some of the banks
that don't get created.
I guess I this is just myfrustration as a real estate
investor.
But it's like why do you care?
As long as you have the equityyou need, why do you care?
Right, this is another thingthat some banks I struggle with
(15:02):
is I say I've reached out.
we've had a couple of dealsthrough Wisconsin discount
properties we put out wherewe've negotiated seller
financing terms and the seller'swilling to be in second
positions, which is for thosethat don't know second position
is a riskier position If it getsforeclosed on.
They have a lot less leverageor there's a good chance they
may not get any money back ifthat first position lien holder
can only recoup their, theirprincipal and nothing above that
(15:26):
or whatever Right.
And so so I'm like, hey, I gotthe seller in second position.
Are you guys cool, taking afirst on it?
They're like, well, how muchmoney would you put in?
I'm like, well, ideally none.
I've negotiated the 20% spreadI need.
And the seller is going to putthat in.
And and they're like, oh, no,no, you got to have some skin in
the game.
I'm like why, why do you care?
You've got your spread, why doyou give a rip?
(15:46):
The seller's just coming in.
So I'm like what if I create anLLC with the seller and then we
become partners on it?
Oh, that's different.
How is that different?
It's not different, it's thesame amount of money.
Speaker 2 (15:57):
I don't know.
Just in the paperwork it'sdifferent.
Yeah, that's silly, drives menuts.
Yeah, I haven't had onepersonally.
That's like that with a sellerin.
Second, I've done a handful ofthe seller finance stuff but
like on the portfolio, themultiple properties, I wanted
20% of that one seller financeand we ended up just allocating
it to one property.
That equaled exactly 20%.
(16:18):
So he gets to be first positionon that property and then the
bank gets to be first positionon all the other ones and they
considered that in the whole ofit the value of that one still,
because it was still whatever62% of its future value.
So they still considered it inthe total appraised value and
stuff like that.
Speaker 1 (16:39):
That's awesome.
And just for the audience, ifyou're not familiar with, zach
and I are talking a little bitover your heads the ARV loans
that Zach was describing.
There are some banks and again,it may take you a while to get
to this level with some banks.
It's a relationship game, it'sa credibility thing.
So if you're just starting out,don't get frustrated if you
can't get a community bank tooffer some of these.
But they're unicorns.
There's a handful, very smallhandful handful that will lend
(17:01):
off of the future value of thehouse.
So what happens is you get theproperty under contract.
You give them your scope ofwork Like I'm going to do
flooring I think it's going tocost me 6,000 bucks.
I'm going to do windows, likewhatever.
You just spell it all out forthem.
They hand that to the appraiser.
The appraiser comes, looks atthe property, says oh yeah, if
you do this scope of work, thisis what it's going to be worth.
(17:21):
They give that to the bank.
The bank lends you somepercentage off of the future
value, which is insane.
And it's an insane way to growwealth really, really quickly,
because if you do it right, youdon't have any money into the
deal other than maybe in betweendraws, maybe you got to cover
the pay of the contractordirectly before title company or
the bank cuts you the check.
But ideally you got no moneyinto this thing and you now
(17:45):
you've got a fixed up property.
You didn't have to go through ahard money lender to do that.
Or you're paying points andfees and I mean it's just an
awesome way to go.
And again it might just take youa couple of deals or a longer
established relationship withsome lenders before some of them
will be able to do some ofthose things for you.
Some other lenders that I'vehad before Z I don't know if
you've used any of these, butthey've lend.
They've lend off of the likethey'll do like 85% of the
(18:09):
purchase price and then like 85%of the construction costs.
So you're still getting a goodchunk of your cash during during
the rehab and then they'llrefinance on the future value at
the end.
So hopefully you've had youforce enough appreciation you
can pull all your capital thatyou've had out.
So you may have to just have alittle bit of capital for a
little bit of time in there.
Speaker 2 (18:27):
But I love it and get creative that way.
Which are, which are nice too.
I haven't personally done onelike that, but yeah, I've seen
them.
Yeah, they're like that goodoption if you can't get a
unicorn loan.
Speaker 1 (18:39):
They're more unicorn these days I think, than they
used to be.
But yeah, 2019, 2020, they werehanding them out like candy at
a parade.
Man it was yep, it's like soeasy to get them.
Now it's like, yeah, you gottaknow somebody who knows somebody
sometimes yep, and I think youhave some.
Speaker 2 (18:53):
There's some qualifying criteria, I mean,
obviously, on your personalpersonal income, personal
personal credit profile andstuff like that.
I think most of them want youto own a personal residence as
well, and I think it's got to bein an LLC, obviously.
If it's a commercial,commercial loan on residential
property, they want to in an LLC.
So not a ton of criteria in thegrand scheme of things.
(19:16):
And then I think experience isthe biggest.
Yeah, so in a relationship,trust, using whatever you can.
In the grand scheme of things.
Speaker 1 (19:19):
And then I think, experience is the biggest.
Speaker 2 (19:20):
Yeah, so like and relationship trust, using
whatever you can hard money andstuff to get started on those
first few, just to cut yourteeth a little bit, yep for sure
, and then getting into that andyou mentioned something before
you've got a couple of dealswhere you got some cash stuck
into them.
Speaker 1 (19:35):
What I think is important for people to realize
like I just did a solo episodeon the BRRRR strategy and I
don't even know what I said.
I rambled for 40 minutes aboutit but I don't even know if any
of it made sense, cause you knowyou're just talking, you don't
know if it made sense.
But the thing that struck thatconversation is there's some
investors I talked to at some ofthese networking events which I
want to get to next with youand they're like got these big
(19:56):
goals right, like I want to have, you know, 50 properties like
Zach Morgan.
I want to be like Zach somedaywhen I grow up, right.
And then I'm like, well, whendo you want to get there?
And it's like, oh, next threeto five years, okay, cool,
totally achievable, right.
Then it's like, well, what'sgoing to be the next property?
How are you getting in?
(20:16):
I'm like, oh, snails on achalkboard, it's going to take
you forever to get to 50 units.
But what you were describing Ithink the contrast that people
don't understand is youmentioned you didn't have money
for Bitcoin to go buy a bunch ofstocks or these types of things
to get wealthy.
What's really powerful is whenyou look at even those deals
that you have when you utilizethe burst strategy, and even if
you still have a certain amountof money in there, your cash on
(20:38):
cash return, which is ultimatelythe return on the money you
have invested in the property,is still astronomical because
it's so much smaller thanputting 20% down plus rehab
money.
Then, looking at your returns,you're putting a much smaller
amount into the property andanything you get out of it is
just juiced because of theleverage that you have.
Speaker 2 (20:59):
Yeah, if you look at it that way, like how productive
is the money?
It's still more productive thanit is sitting in a bank account
or whatever, so it's stillworking for you.
But yeah, same idea Ifsomeone's saving up for 20% down
, it's going to take a while,it's a fine, I mean, if you're
okay doing it over the course ofdepending on how high your
(21:19):
income is.
You know, 10 or 20 years.
Speaker 1 (21:23):
Yeah, everybody's goals are different.
I've talked to some people.
They just want to buy like anice turnkey side-by-side duplex
every year, one year, and thenthat's good for them.
That's great, awesome.
But you know, for people whohave some bigger aspirations in
a shorter timeframe, you gottautilize the BRRRR strategy, in
my opinion, to get there.
Speaker 2 (21:41):
But yup, that's what I always ask people too is like,
what's the like, what the endgoal is?
Cause, like not everybody wantsto be self-employed necessarily
and do this all Like and Idefinitely would say it's not
for everybody.
Like it is pretty lonely doingit on your own right, like it's
me myself and I in the officeevery day and we argue with each
(22:01):
other a lot.
So if you've got a job that youcan keep, high income job is
usually what I recommend forpeople and sales is usually what
I recommend.
But that's just from experiencewhat I can recommend, like your
number one way to be a greatreal estate investor is to make
a bunch of money.
I know that doesn't sound likethat's not the answer anybody
(22:23):
wants to hear.
They wanna hear like, oh, justdo these five things and you can
have a million dollars in realestate.
But if you make a bunch ofmoney first, it's gonna be a
whole lot easier to get loans To.
I mean I had to pad theportfolio for a while, like in,
while, like the in those firstreally four years buying stuff
like there'd be stuff.
Gotta wait 10 months beforethis guy gets a furnace again,
(22:49):
or I dip into my personal fundsand and pay for it and we're up
and running again and maybe I'mnegative on that property for
the year, but I could eat allthat for the first four years
until there's enough of themthere that they you can eat it
with the other ones too.
So yeah, but I mean, if someoneloves working and has a great
job and makes a lot of money andmaybe they don't wanna have 100
(23:11):
units, maybe they wanna have,maybe they wanna retire with a
couple extra million dollars inincome producing assets like how
awesome is that, you know?
And then they just that's sortof like gravy on top.
You save someone taxes fordepreciation and maintenance and
repairs and stuff like that.
You got a little tax shelter, alittle extra income and a
little nest egg sort of thingyou know to ask to the kids or
(23:34):
pass the equity or whatever.
Yep, yep.
Speaker 1 (23:36):
And I think, like we talk about risk now when you
brought it up, like my parentsare I've mentioned this to them
a few times they have one duplexright now.
They've had like a coupleduplexes at any one time and
then they usually their MO hasbeen like have it for a couple
of years, sell it, make a nicelittle spread Right and and have
long-term capital gains orshort-term.
But they've had this one andI'm like gosh, that's actually
(23:57):
riskier than if you have 10,because now you have one vacancy
, you have 50% vacancy, versushaving 10 doors and now you have
a vacancy, that's 10% vacancy,right.
So it's much.
You spread out your risk a lotmore and, like you said, now
you're getting a lot of cashflowfrom a lot of them that don't
have maintenance issues to payfor the one that does right.
Or if you have one and it hasmaintenance issues, it eats up
(24:19):
all of your income for the year.
So, anyway, but you're right,you do have to have some capital
to be able to cover that buildphase right, to be able to get
that snowball rolling downhill alittle bit.
I think it's important.
Don't quit your job.
Yes, there you go, all myemployees listening.
Speaker 2 (24:34):
Don't do it, don't quit your job.
And when you have enough toquit your job, wait like a year.
I would say, yeah, you know,let it stabilize, let it iron
out, for sure, unless you're inthe active income.
I mean, if you just want to bea flipper, yep and and
wholesaler and you know whereyour your next month's check
depends on, on the deals thatyou're doing, that that is still
(24:54):
risky in a way, but it's alittle different because you
know you don't have, because youdon't have residual benefits,
but you don't have the residualrisk either For sure.
Speaker 1 (25:03):
Yep, let's transition into networking stuff, zach.
So you brought up, initiallyyou and I met at a REIA event or
, for those of you that know,real Estate Investor Association
event, and that's how you and Imade the connection.
So that's how we met and that'show you and I made the
connection.
So that's how we met.
And then we run a group nowcalled the REI Success Club, and
(25:24):
here actually, the gentleman Iinterviewed who's going to be
the week prior to you, zach,that's how he and I met.
I actually called him on my wayto the REI Success Club and he
had like a two-hour window todrive from Shawano to Green Bay,
which, for those of you thatdon't know, it's about a 45
minute drive, maybe an hour, andhe's like, yep, I'll be there,
showed up in his business windowlike this and then, you've gone
(25:44):
out and done something reallycool, kind of tapping into a
market of networking that Idon't think anybody ever had
prior for real estate investorsspecifically, you run something
called Caffeine and Cashflow.
So a different time, a littledifferent format than the RIA
groups.
Talk a little bit aboutcaffeine and cashflow.
Where you guys have these.
What are the benefits you'vebeen either gaining yourself or
(26:04):
that you heard from folks thatare attending these?
How does it work?
Just tell us a little bit aboutnetworking in general too.
Speaker 2 (26:10):
Yeah, networking has always been huge for me.
I mean, obviously that's wherewe met and has been a huge part
in me being able to grow andscale.
I mean, first of all, you getaround other crazy people who
are doing the same thing, so itseems a little less crazy like
taking out all this debt andfixing up all these properties
and dealing with the stuff thatwe deal with.
But I mean just like it's likethe power of the mastermind.
(26:33):
I mean it's like mastermindlight, because you're not going
hyper specific on specifictopics or people's businesses,
but just on the networking endof it, getting to share ideas,
resources like you're havingtrouble with plumbing all the
time, for example.
Then someone goes well, I justswitched to these faucets where
(26:53):
I use this person and they takecare of that stuff.
Like that transfer ofinformation happens so fast.
The transfer of knowledge youcan solve so many problems in
one hour, just like what seemslike just chit-chatting with
people.
But so much gets done if you doit right.
If you're focused onintentionally meeting new people
and sharing ideas and figuringout what they do, you can learn
(27:14):
so much in between the linesjust hearing what people do.
So yeah, for caffeine and cashflow.
So I started that.
So much in between the lines,just hearing what people do.
So yeah, for caffeine andcashflow.
So I started that.
I think it's over two years nowyeah, just over two years now.
I think I got that started.
So that is.
It's all in the morning.
So I wanted something.
I'm way better in the morningsthan I am in the evenings.
(27:36):
I got young kids.
You know I get tired Not tomake myself sound too old but
and I wanted something right inthe morning.
I'm way more of a coffee guythan anything else.
So started just with Green Bay.
We did hour and a half 100%networking.
We do just introductions.
(27:57):
Everybody goes around, says whothey are, what they do, if they
have anything specific, like ifthey got a deal right now that
they wanna sell something youknow money that they wanna spend
or money that they wanna lend,something like that and it ended
up being a mix of real estateinvestors you know real estate
focused agents, lenders,insurance agents, attorneys,
that type of mix Because of thetime that it is so it's nine to
(28:19):
1030 in the morning verydifficult to get there if you
have a regular job.
So not that I don't want tonetwork with people who are
still in the nine to five,because I think that's great
still especially I was in thatfor a long time in the build
phase but it creates a littlebit more of a focused group of
people who are hypotheticallydoing this full time.
(28:41):
You either got a lot going onthat you're working for yourself
, or you got nothing going onand that's why it's most of the
extremes.
Speaker 1 (28:48):
You got the far.
The far right showed up, right.
Speaker 2 (28:51):
Seriously so.
So it's been cool.
I mean a lot of connections, alot of of deals being done and
stuff like that and it's grownnow to five locations.
So we got Green Bay was thefirst one.
So we got Green Bay, appleton,sheboygan, milwaukee and
Watertown.
Those are the five we've gotrotating right now Every month.
It's just one meetup perlocation per month.
(29:11):
That makes it so every weekthere's one of them that you
could go to.
I'm pretty area specific.
I'm focused in Appleton, greenBay, manitowoc, sheboygan,
pretty much.
Um, I don't, I don't go, Idon't really dip into Milwaukee.
I don't go further South thanAppleton really.
So those are the main ones forme.
(29:32):
But there's a lot of people Isee at all of them and and they
buy everywhere.
So you get to meet like thelocal experts there.
You, you know you're, I need aguy to close stuff, I need a
lender, I need a.
There's contractors that cometo.
A bunch of them.
Um, you can get like, dependingon the day in the room, you can
get like a whole real estatebusiness in one with that.
(29:53):
So so it's been really cool.
Um, and I've had a handful ofpeople um, not graduate, cause
it's different things, things,but who have been coming to all
the nighttime ones?
They go to the whiskeria is therei success stuff too.
And then they come to liketheir first caffeine and cash
flow because they left their joband now they're free in the
morning oh, that's awesome, it'skind of fun, but that's great
but yeah, so it's.
It's a good um good free network.
(30:14):
We do um caffeine andflow onFacebook on the Facebook group.
I would say the other groups doa better job of, as far as the
Facebook group goes, being moreactive.
Not a ton of people are activeIn Caffeine and Cashflow.
Honestly, it's usually just meposting stuff in there, updates
when the events are.
But good place to join ifsomeone wants to see when the
(30:37):
events are and stuff like that.
Speaker 1 (30:38):
Yeah, it's just a good way to stay up to date with
when they are, when they'rehappening.
Get it on your calendar.
That kind of thing.
Yeah sweet, yeah.
The networking piece is so huge, right.
What I love about what you saidis intentionality is one thing
you mentioned.
You have to be intentional.
What do you need to get out ofit, or who do you need to meet,
or what's a connection?
And the cool part is, even atCaffeine and Cashflow or the
ARIA Success Club or any of theREIA groups around, if that
(31:02):
person's not in the room but youask for that person, chances
are somebody in their network,somebody's network there, will
have a connection for you.
So even if you're not there, soyou're going to, you know you
get out of your comfort zone.
If that's scary to you to go ina room of a bunch of people,
you don't know it.
If you're really serious aboutexpanding your business and
exploding it, you got to begoing to networking events,
especially early on.
You know I know some guys nowthat are pretty well established
(31:23):
.
They're they'll tell you it wasa huge part of their success.
Speaker 2 (31:34):
And I bug those guys too, because I'm like you're the
people who should be here.
Yeah, you know, like I knowyou're dialed into exactly what
you're doing and that's whatother people need to hear too,
for sure.
Oh yeah, I always hound thoseguys who are like ah, you know,
I've got a decent amount ofexperience.
(31:54):
I learned something everysingle time.
And the rei success, caffeine,cash flow, whiskery any of those
I go to, there's always a newconnection, somebody doing
something differently than we'redoing it.
Um, I mean, there's so manymicroprocessors involved in all
this stuff that, like, ifsomeone tweaks, like like we
were talking about AI, ifsomeone has some tool, like, oh
(32:15):
yeah, why don't you just'm anexpert at AI by any means.
Speaker 1 (32:19):
I'm just kind of fascinated by it all right now.
Speaker 2 (32:22):
And I think you kind of mentioned the same thing.
Speaker 1 (32:36):
What are you currently doing?
How is AI helping you in realestate investing currently?
Is there anything specificyou're doing that's speeding a
process up or helping youanalyze, or what are you using
it for and what tools?
Speaker 2 (32:47):
are you using?
So I'm pretty green still.
As far as the AI goes, I'veprobably started adopting it
realistically in the last monthor two really using it, maybe
three.
One specific process that'shelped me cut a ton of time down
on is getting my reports doneof how much I've spent per
property, per unit renovation.
(33:09):
It's like compiling all thereceipts together.
So if you have the paid versionof ChatGPT, for example, I
think it's like 20 bucks a month.
Speaker 1 (33:16):
It's not expensive at all, it's nothing.
Speaker 2 (33:18):
They don't limit how many uploads you do.
I think they let you do likethree in the free version.
It's like I have 50 receiptsper unit or what you know it
adds up.
Yeah, so For a ARV loan, ifyou've got funds on draw even
with hard money lenders, most ofthe time they don't cash you
out upfront, they want the fundsheld on draw you got to send
them a report of how much youspent, the before and after
(33:40):
photos you know proof that stuffis done.
That's why I usually do itbefore and after photos All the
receipts, exactly what thereceipts you know were spent on,
what the totals are, and thenit linked to everything exactly
what the receipts were spent on,what the totals are, and then
it linked to everything.
So that process usually took meprobably about an hour to go
through and compile all thephotos, get all the receipts,
(34:00):
build a spreadsheet that doesthe math and link every single
receipt and all that stuff.
So now I take, I copy and pastemy before and after photos in
the ChatGPT and I upload all thereceipts and I tell what to do.
So I say, hey, I need aspreadsheet that shows how much
was spent, what it was spent, onwhat store it was bought from.
(34:21):
And then the here's the link topaste on there for the receipts
, and it takes a few minutes andit builds a spreadsheet.
You got to check the math.
Sometimes, yeah, like sometimesit doesn't read it correctly,
but it's pretty dang accurate.
That's awesome.
And then I can download it asan Excel spreadsheet, send it to
my lender so I can get thedrawback.
(34:42):
So it's saved a ton of time.
Speaker 1 (34:44):
That's awesome.
I love that.
That is so cool.
Every time I hear something,it's like I was talking to my
team yesterday.
We were doing some one-on-oneswith everybody just going
through their annual goals andstuff.
So people got some fitnessgoals and I'm like, have you
ever thought about asking chatGPT to write you a fitness
program based on your goals?
And you're like, no, but I'mgoing to.
And I'm like, yeah, you likeyou can just use it for anything
Like it's amazing, 20 bucks amonth.
(35:04):
It much time I've been using alot to analyze deals or just to
run scenarios on deals.
Yeah, and it's made me want tobuy so much more real estate.
Like when I look at like theequity I'll have after 5 and 10
and 15 years, I'm like whywouldn't I just buy everything?
It's just like there's so muchlike in five years my future
(35:25):
self will thank me because I'mlooking at.
Before I hated, like I hatedhaving to go into like a
spreadsheet, like plug it in andtry to do a pivot table or
whatever the hell, some graph orsomething, and try to get to
come up Like I'm out of patiencefor that.
But I can just go, plug in thescenario and a chat GPT, and it
spits it out.
Now as I go like if I startasking it to tweak it, I've had
(35:46):
it, I've noticed it makes someerrors if I keep saying, oh, go
back and do this differently.
So sometimes I have to juststart fresh again with a new
prompt of like oh, I wanted to,I messed that prompt up, I need
to do a new one.
But it's like it saves me somuch time I can analyze a deal
and in the future value of itand if, equity and all that
other stuff.
And 30 seconds now.
Speaker 2 (36:05):
Yeah, yeah, I haven't used it a ton for deal analysis
, but that's something I've Ithought about.
I'm sure it's great for that.
I mean because if you use a,I'm pretty simple like it's a
google spreadsheet with a realbasic calculator built in and
then I figure out the rest.
So you can even, um, and youcould take, like, for example,
the thing I just said, I uploadall these receipts, how much it
(36:27):
costs to renovate a unit.
You can even upload that as anexample if it's kind of close,
and say, hey, this is a littlebit bigger, a little more square
feet, has a few more lightsthan that one does.
Use this as an example.
Give me an idea of roughly howmuch this will cost.
That's taking from your realexperience and real expenses and
helping you run numbers,because I know that's something
(36:47):
people struggle with early on.
It's like, well, how do I knowthat's something people struggle
with early on?
It's like, well, how do I knowI didn't know what a water
heater or furnace was.
I didn't know the differencebetween the two when I first
started.
So how, how am I supposed toknow how much it costs to
replace?
And then, how am I supposed toknow how much it should cost to
replace Cause what.
What quote you get and what itshould cost can be two different
things for sure.
On either.
Speaker 1 (37:06):
That's great and I didn't know that you could
create your own.
It's called create your own GPT, and so for those of you
listening out here, I haven'tused this yet.
This was life-changing for us.
You go up in the upperright-hand corner.
If you're on the desktop, youhit your settings.
It drops down and I think itsays, like my GPTs right.
And so what Zach's describingis like you could createaking
(37:36):
that GPT.
So you want to come back in andrun another analysis.
Like what Zach is describing,say, hey, go back to the last
property that we had to analyze,and this one's now 400 square
feet bigger.
It also needs windows.
We think the windows are goingto cost 500 bucks a piece.
There's 30 of them.
Give me the breakdown of whatit's going to cost.
And now, like it'll just, andit'll just keep learning as you
train it to keep knowing.
(37:57):
It's so cool.
I love this stuff.
Speaker 2 (38:00):
I got to build one of those today.
Yeah, I don't have one of thosebuilt yet.
I'm just going to start fresh.
I'll help you if you need itlearning from you.
Speaker 1 (38:07):
All right, zach, let's start wrapping this baby
up, cause you got to getbuilding your GPT here.
Okay, you got to get that outthere.
Uh, give me just a deal Likelet's just talk about one
specific deal, best or worst?
I'm going to let you pick bestor worst deal that you've ever
done and let's do a little bit.
I know you don't have to havethe exact numbers or any of that
kind of stuff, but give me thescenario.
How did you get it?
What happened that made iteither the best or worst?
(38:31):
What are some of the numbers?
Tell me a little bit more aboutit.
Speaker 2 (38:34):
Yeah, Putting you on the spot.
I know I was thinking aboutthis earlier too, because we
were texting about it.
I'm like I don't think I have aworse deal, because one of my
main beliefs in real estate is,if you wait long enough, every
deal is a good deal.
So sometimes you might have towait 10 years and then all of a
sudden you look like a genius.
But I haven't had that muchtrack record even, and I've had
(38:56):
deals that I've bought and thenbeen like it doesn't appraise
out, and I got some money stuckin there and then it doesn't
cash flow that much.
Let's talk about your first dealwhere I had to kick not in the
best neighborhood, admittedly,um, and it's not.
(39:19):
It's a little better, not muchbetter today, but it's it's
still still cooking.
But, um, yeah, a little upperlower.
It had um, two I think.
They were both hoarders notpaying rent at the time that we
bought it and the city also hadits teeth in it.
So it was like awesome learningscenarios right off the bat.
(39:42):
You know, yeah, like the stuffthat people are worried about,
you know, tenants not payingrent, tenants being hoarders,
the city getting in on yourproperty.
I got to tackle those right offthe bat.
That's right, great experience.
So, yeah, I was I mean, I wasrenting at the time too and
you're like you're like, dude,you gotta buy it, you need to,
you gotta do it.
I'm like I don't have any money.
You're like I'll be your lender, we'll take care of it.
(40:05):
So, so, yeah, I worked out, umbought it.
I mean we were able to.
We worked with a managementcompany right off the bat.
I mean that was one of thethings that you told me early on
is like, look, I know it's notthat big of a deal to manage a
handful of properties, but, like, scale wise, you gotta have
somebody doing this.
I'm so glad I did that rightoff the bat because I've never,
never I mean besides turningapartments where I need to sort
(40:27):
of be the middleman in theprocess Never done it since, and
I see how much time themanagement companies spend on my
stuff and that's that'svaluable time away from deals
and stuff like that.
So, so anyways they help her.
Speaker 1 (40:40):
What'd you buy for like 55,000 or something like
that?
Speaker 2 (40:43):
Um, something like I think it was 50 flat, I think it
was 50.
Speaker 1 (40:46):
Yeah.
Speaker 2 (40:47):
Something like that.
Um, and yeah, so 50 grand foran upper duplex, right, and who
wouldn't sign on that today?
Um, we didn't have a ton ofpeople who wanted it.
Then that was a wholesale dealthat went out, um, I don't think
a ton of people were interestedand that's probably been one of
my best ones.
So we got, got the peopleremoved, um, got the places
(41:09):
renovated and that was my firsttime doing any of that stuff too
.
So, like I was over there doingsome stuff and then the
management company had somepeople in there doing some stuff
, um, got them re-rented andthen the city just stuck on us,
um, for a couple years actuallythey were, um, first it was the
sheds you know needed to bepainted, and so we went over
(41:29):
there and painted the sheds, um,and then there was, you know,
they don't like the chimney.
So we had the chimney removed.
And then the hardest one, theone that hurt the most, was they
didn't like there was anaddition off of the back that
was maybe only like 10 by 12,but it was like an extra storage
room.
It wasn't really a bedroom, butstorage room kind of went off
of the laundry room, but, butit's like a nice.
(41:51):
I mean, that's a good amount ofsquare footage for a small
two-bedroom For sure.
And they just decided this isnot structurally sound anymore,
you can't have it.
So we tried to have afoundation guy go and run a
report or whatever try to showthem that it's good.
They just decided that it can'tbe there anymore so we had to
(42:14):
have that removed.
Once that was removed, they sawthe other foundation and decided
that one wasn't structurallysound, that we were able to
rebuild because otherwise we'dlose the only bathroom for the
unit, so that we were able torebuild.
So I was like a lot of costs.
Um, I think we were negative 15grand or something, year one on
that one.
If you look at like thecashflow, not too bad in the
grand scheme of things, good foryour, for your tax return, yeah
(42:34):
yeah, that was great.
Yeah, but just for theexperience, like I'm glad we ran
into that stuff.
We also had a managementcompany that was not doing well
on that.
So I think they cost us a lotmore than we should have for the
renovations that were done thatwere done and we changed that
January.
I think we bought it in June,changed management companies the
next January and I've been withthat same one, main Street
(42:56):
Management in Green Bay eversince, for all my North stuff
anyways.
So, but that one okay.
So I'm getting a little intothe weeds, but numbers wise.
So 50,000 purchase andappraised at 72,.
We bought it.
So just enough to refi you backout, yeah, and get a, get a
30-year loan on it.
Didn't have an lc at the time,so it was under our personal
names.
(43:16):
Um so october, I think it wasof 2023.
You know I had, whatever it wasinto the um 40 somethings that
we owed on it and, like thisplace has to have appreciated
quite a bit.
We've got more projects.
Let's pull some cash on thisthing Appraised for $177 or
(43:36):
something like that.
Come on, that's what Four yearslater.
That's not a whole lot of timein the grand scheme of things
for real estate.
That was a DSCR loan.
That's a debt service coverageratio loan.
That's just another DSCR loan.
Okay, so it's a debt servicecoverage ratio loan.
That's just another type ofloan.
We don't have to get into toomuch.
But people can chat you BT.
(43:57):
That that's right, learn moreabout it.
Yeah, um and yeah.
So we pulled like 65 grand orsomething like that out of it.
Speaker 1 (44:06):
That's amazing, so I didn't want to leverage it.
Yeah, tax-free, tax deferred.
I guess you'd say, yeah, Ididn't want to leverage it
Tax-deferred.
Speaker 2 (44:11):
I guess you'd say I didn't want to go up.
I think I only went into the60s for LTV, For the
loan-to-value, but still60-something grand tax-free.
Speaker 1 (44:24):
Divide that by 4.
What's 60 divided by 4?
20-something.
Speaker 2 (44:30):
That works Almost 20.
Whatever, 20 something rightYep.
Speaker 1 (44:32):
Yeah, that works Almost 20.
Speaker 2 (44:34):
18,.
Whatever we're going to get,good thing, not many people
listen to this podcast.
Speaker 1 (44:38):
Zach, so we don't have to worry about anybody
blowing us up too much on ourmap.
Speaker 2 (44:40):
Cut that out in post.
Speaker 1 (44:41):
Yeah, either way that's your think about your
cashflow.
Now that's over a thousandbucks a month that you made on
that property and cash, if youlook at it that way, on the refi
and you still have a bunch ofequity because you only want 67%
of loan to value.
So I mean, that's where I thinkpeople often miss the power of
just buying and letting thingsjust appreciate and let your
tenants pay that debt down andyou just create your own
(45:02):
cashflow that way, even if youguys didn't bring in a dollar
for four years, right, Net cashIt'll be worth.
Speaker 2 (45:08):
It Can scheme things yeah and Right.
Net cash flow it's still worthit and I still own it.
It's like I didn't have to exitthe asset to finally collect on
it.
I was able to pull a little bitmore debt on it and it's still
cash flow positive.
I love it, buddy.
Speaker 1 (45:19):
I love it.
Well, dude, this has beenawesome.
Speaker 2 (45:24):
We got to get you out of here to get you making that
GPT as quickly as possibleBefore we go, though we always
ask that's right Favorite placein Wisconsin to visit or
favorite Wisconsin tradition.
Speaker 1 (45:31):
For those folks who aren't real familiar with
Wisconsin, yet.
Speaker 2 (45:34):
Well, I could probably do both in one.
I'm biased, but Sheboygan,wisconsin, man, is an awesome
place to be.
I know people up here,especially Green Bay, really
talk about Door County.
Door County is awesome too, butI think Sheboygan is sort of a
hidden gem in that.
Amazing beaches, amazing food.
It's a cool place to be awesome.
So that would say I don't knowwhat tradition that fulfills.
(45:56):
Uh, I mean, if it's the, it'sthe freshwater surfing capital
of the world so if you want to,you can go take surf lessons.
Heck, yeah, it's crazy to do inwisconsin but in lake michigan,
yeah I wouldn't recommend doingit until maybe august, when the
water's yeah, no, they usuallydo it um through, like late into
fall, like they do wetsuits, ofcourse, because you know it's
(46:18):
real cold, but that's when theconditions pick up for it to be
good enough waves and stuff likethat.
Okay, so yeah right on.
Speaker 1 (46:25):
Awesome man well z appreciate you being on buddy
and always great to catch upwith you and hear what you got
going on.
For those of you guys listeningto the podcast, we appreciate.
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.