Chasing and Achieving Big Dreams While Building Potent Ongoing Wealth with Austin Hair

[0:00] Welcome to the REI Agent, a holistic approach to life through real estate. I’m Matias, an agent and investor. And I’m Erica, a licensed therapist. Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing. Tune in every week for interviews with real estate agents and investors. Ready to level up? Let’s do it.

[0:24] Welcome back to the REI Agent. I wanted to talk a little bit about strengths and investing, particularly. I think that the more, I mean, this is true in general, not just in investing. I think no matter where you’re at, no matter what you’re doing, understanding who you are and your strengths and getting a really good grasp of those personality things, work traits, I mean, take them all, take all the different assessments, because I think each one gives you kind of a different insight into the way you function. Because I think it’s true for realtors where you get into the business and you feel like you have to do everything. You have to wear all the hats. You have to be a marketer, an accountant, all these different things.

[1:10] And it’s hard. And it’s a lot more than maybe you thought you were getting into. You just wanted to do what HGTV shows and show the butterfly collector that can afford 1.2 million.

[1:27] Yeah. But when you actually get into the business, I mean, there’s a lot of different aspects. And it’s pretty rare that you’re going to be good at all the different aspects of the job. And I think it’s just important to know where your strengths lie. And if you’re an investor, I think it’s important as well to really analyze yourself and figure out where are you best suited in the investing space. And I think in any career, again, how are you going to be the happiest? How are you going to make this long term a good thing for you? And an example for me would be I’m a big picture thinker. I’m a big idea person. I get bogged down and I hate the routine, the mundane, the maintenance. And so very early on from investing in long term rentals and stuff, I’ve just kind of drawn a line in the sand and been like, you know what?

[2:30] I don’t need to be the one unclogging the toilets doing these things because that is going to make me not love this business. It’s going to make me want to get out of this business. I can delegate. I can delegate those tasks. Yes, it’s going to make the numbers a little bit different. But I am not focused on what exactly I’m getting right now cash flow wise or whatever. I’m looking at the bigger picture of every year if I now own because I’m able to do this delegation, I can go from having one or two properties to having 20 properties and be okay with it. And if all those properties go up by $50 in rent the next year, that is obviously a much bigger increase than if I just had one or two. On top of that, they’re all paying their mortgages down and hopefully they’re appreciating as well.

[3:23] And so those kind of things are just important to understand about yourself. What is it that you bring to the table and how are you going to be the most successful in your field? And I think that when you’re looking at getting into more complicated types of investing, there can be a lot of creativity. There can be a lot of strategy as to how to put a deal together, what makes the most sense for everybody. And that’s not everybody’s strength. And if it’s not, then don’t spend tons of time trying to figure out, trying to learn all these different strategies so you can apply them when maybe that’s just not where your strengths are. And it could be that you are more of a repetitive task doer and maybe you’re going to be great at cold calling or doing something that kind of generates deals together.

[4:21] And maybe you partner with somebody who’s better at the strategy, for example. And then together, you guys are unstoppable because you’re able to find the deal, another person’s able to put a good deal together. And yeah, so I think it’s just really important to think through and to understand yourself and to know how you are best suited to do this business. And some people listening here may not want to have any of the headaches that come along with owning property. And they might be best suited just to be a limited partner in a syndication deal. And that’s a really amazing thing. And I’ve talked to some people who are dedicated real estate investors who want to build up their portfolio and let it appreciate and all that kind of stuff until the point where they are able to sell all their property and lose all the headaches and just invest those into syndications and be much more passive in their investing style.

[5:22] So there’s a lot of different ways to do this. But I think understanding yourself and understanding what is going to keep you going long term and what’s going to make you the most successful over your life and happy. Why grind away at something that you hate just so that one day you can enjoy life? Let’s enjoy life as we go. Nothing’s guaranteed. Yeah, if unclogging toilets, cutting grass is going to make you depressed,

[5:55] do it until you have to. Like if it doesn’t pencil out quite right away, but you know it’s a great long term deal, do those things if you need to. But as soon as you can, get out of there because nothing’s guaranteed. You got to enjoy your life.

[6:11] Some of these topics where I was reminded of and thought of because of our guests today, we have Austin Hare on the show. He has a very interesting story. He’s done some really cool things. So I’ll let him talk about it, but he’s done some creative. He was a go-getter in the real estate space from day one and thinking through how to make situations work for him and be able to provide win-wins for friends to house hack that kind of stuff and really turn that all into a portfolio. It’s a great story. He’s got some really cool experience. Definitely check it out while you’re at it. If you enjoy this content, please give us that like or review us if you can. That means a lot. And definitely subscribe to us so you get some other cool content like this one.

[7:08] So without further ado, here we have Austin Hare.

[7:14] Welcome back to the REI agent. We’re here with Austin Hare. Austin, thanks so much for joining us today. Hey guys, thanks for having us on the show. Yeah, you have an interesting background. You’ve done some cool things. Why don’t we just start there and then dive into how you got into real estate? Yeah, you know, it starts, I guess, really with when I was 12, I started wakeboarding and like trying to pursue that professionally. And I did that for like, I don’t know, 10 to 12 years or something like that, retired in 2017. But that was kind of what got me onto real estate. And so, you know, I just feel like everybody’s got their own, you know, different story of how they got to their specific career.

[7:59] But, you know, it was a lot of fun. And the way that it kind of like unfolded for me was we were doing, you know, I was reading, I was in college, I just started competing on the pro tour. I was 18 years old. I was reading Rich Dad Poor Dad. And it was talking about like house hacking, which it wasn’t called house hacking at the time. But it’s like, you know, buy your first deal. So essentially, like that’s what I did by the time I saved up some money. So I was about 23. And then I got a house that was like four bedrooms and a guest house. This was in 2011. So it’s like right at the bottom of the market.

[8:32] And I got some roommates that were the wakeboarders, you know, it was a lakefront house on the pool with a pool and a hot tub and overlooking the lake. And I mean, and it was like $185,000, you know, in the heart of Orlando, which is, you know, it’s just really, really fortuitous timing on that side of things. Yeah, so I mean, definitely got very lucky with the timing. And so that was like how I, you know, started wakeboarding and how that led into real estate. And so then later on, I lived there for about four years and I was getting paid to live there. Like, you know, my mortgage was paid for and I was getting extra cash flow. I had the master bedroom with a view of the pool and a private deck and all this kind of stuff.

[9:14] And so saved up some money and bought another property, kept that one as a long-term rental. And that one was a duplex. So I had long-term tenants downstairs and I lived upstairs. And when I was going out of town, it’s like, look, I might as well throw this thing up on Airbnb, like this new kind of platform. People are talking about it. I don’t know what it is. And it just looked at like every single weekend. And I was like, okay, that’s pretty cool. So eventually ended up kicking out the roommates downstairs, got married. My wife and I were living upstairs and we converted downstairs into like a nicer Airbnb and it did really, really well. And so that kind of like segwayed into doing more real estate.

[9:54] And then eventually I opened up some fitness centers and that’s kind of how I segwayed into commercial real estate is that the guy that I helped me do my site selection invited me to come work with him on the site selection side and the development side for getting healthcare clients. So that’s kind of the, you know, a thousand foot overview and happy to double click on any one of those issues. That’s an amazing story. First of all, that’s so cool. The wakeboarding, man, that like living on a lake with other wakeboarders, being a professional wakeboarder with a pool and a guest, that sounds amazing. Yeah, it was cool. I mean, you know, wakeboarding is a lot of people ask me, oh, is that a sport?

[10:36] It’s not like the NBA or the NFL or anything like that, you know, like a couple of guys make a really good living for their age. And then like, you know, I had to really hustle. So like, yeah, I had sponsors and I made some money from contests and all that kind of stuff. But it’s like the combination of like house hacking and then I would make some videos and, you know, I was able to have a decent lifestyle because of all like the ancillary things that I did and the extra work that I put in. So, I mean, really the only reason I was able to afford the down payment for the house wasn’t because of wakeboarding necessarily as much as it was like I was house hacking rental property. So I’d sign the master lease and rent out each bedroom individually.

[11:10] So I get free rent. So I was just a combination of like all those things. But yeah, like at the end of the day, wakeboarding was very much like a lifestyle choice, you know, like choosing lifestyle over money. It was fun. We got to travel all over the world. I think like 32 countries or something like that. And I did it until I was 29. Most people stop at like 22 or 23. So yeah, it was cool. It was a platform for other things and it was a great learning experience. Yeah. Yeah, that’s awesome. So yeah, you really got into the all sorts of different things. I mean, like, so you had the master lease thing. That’s pretty smart as well. And was that also kind of like your friends like, you know, getting other way?

[11:49] Yeah, I’d source the house. Like I kind of take on the risk. I would sign the year-long lease and then it was up to me to fill the rooms, right? So like I would individually do the rooms at enough of an increase that I, you know, was essentially living for free or close to it. So, I mean, that, you know, that rubbed some people the wrong way. Like how did you pitch that? And I’m curious. Yeah, I mean, like, if I could go back, I would be more upfront and honest about it. That was a mistake that I had made in the past, for sure. But like, to be honest, like most people just didn’t care, right? For example, I mean, for a lot of the houses, I was the one with the boat, right? Like I had the boat sponsorship and I was providing a lot more, you know what I’m saying?

[12:32] Like they could come, they could ride with me, that sort of like, you know, they just rented a room. They wanted to rent it for three months. Like really, it was a really fair deal for them, but I could have articulated better what I was doing, right? Because there was, I would say I had like 30 roommates and there was a, you know, I got in like a little tiff with like two or three of them. So for the most part, it worked out fine. But I don’t know if that answers your question. No, that’s interesting. It does. And I think, to your point, like, I think that is definitely, you could sell that. Like, I got a boat. Yeah, exactly. And then a short term or midterm lease like that would definitely also be more expensive and then you wouldn’t be able to really find that as easily.

[13:16] And then from the lease structure, did you have to talk to the landlords and stuff about what you’re planning on doing? You know, yeah, everybody, it was always people I met through personal relationships. So it was no big deal. Like we were able to, they didn’t really care what I did, right? Like they wanted, like I was signing a lease. They just want to make sure they got paid and that’s what I did. I paid them. Yeah, yeah. Yeah. I mean, people are doing that kind of method as well, like Airbnb arbitrage for sure. And so, I mean, that’s, you’ve definitely been creative and have been hustling to make that lifestyle less expensive and that’s awesome. So you still own that one property? Yeah.

[13:58] I have a hoarding problem. I don’t like to sell things. I like to keep them. You know, I’ve always kind of been in it like for the long term. I like historical, like, okay, I’m much, I’m glad I held on to it when I bought my other property back in 2015, but I was so gung-ho and even in one of the commercial, a couple of the commercial real estate developments I’ve done with my partner, like we’re so gung-ho about being buy-in holders. I mean, there was a good opportunity to sell in 2023, you know, 2022, 2023. That was kind of like the peak of the market. You know, in hindsight, I wish I’d been more flexible and like adaptive. Of course, like you never know what’s going to happen. I think ultimately the rate, as soon as rates drop, I think the prices are going to start climbing again.

[14:40] Obviously, the past two years rates, like real estate is pretty much plateaued, maybe even dropped a little bit in some markets. But I think it’s directly related to interest rates. So yeah, I held it. I like holding it. I like figuring out ways to hold it, like whether that’s conserving your own capital or raising other capital or taking on more debt or, you know, anything like whatever it is in general, it’s a lot better tax wise when you can hold on to a property for a long time because now you’re not paying these capital gains taxes, right? Like your equity is not really taxed. Yeah, no, totally. You can refinance for free. The other day I was tax free. I mean, I should say the other day I was calculating kind of what on an annual basis I would estimate, you know, both my debt payoff and my appreciation are for my properties.

[15:29] And, you know, like it’s a lot better when you have more.

[15:34] You know, if you just have one, it’s okay. But like, yeah, you get, you know, 10, 20 mortgages you’re paying off every month. And they’re all appreciating or, you know, half historically and will continue to appreciate over time. Maybe not last year, but, you know, I think long term, of course, they’re going to appreciate more at some point. Yeah. Yeah. Florida is definitely the people I’ve talked to in Florida have it’s definitely they have a different vibe talking about the market than a lot of other places. And we’re still seeing some appreciation, but it has cooled off. I mean, yeah, it’s like, I think the Zillow report came out. No, I follow a publication called Rezzy Club. And I think Orlando is down like 3.7% year over year.

[16:15] So, I mean, like, it’s not as good as 2020 and 2021 where it was up 10%. But like 3% is not that big of a deal. Like imagine if your portfolio, your stock portfolio dropped 3% over the course of a year, like you wouldn’t care. You know what I’m saying? Like, or, you know, over the course of a day or a week, like so volatile. So it’s like, it’s not really that big of a deal in my opinion. But certain areas like Punta Gorda I read about is like down 10% or 15%. I mean, you know, there’s it’s definitely segmented. The Northeast is keeps climbing up because there’s just so little inventory up there. So, yeah, it’s very situational. But like, you know, there’s what I tell people is there’s always a deal, right?

[16:56] Like you shouldn’t let the direction of the market make you just go totally sit on the sidelines because if a deal pencils, it pencils. Now I think you have to change your calculations, you know, like we’re acquiring some short-term rental portfolio with a 31% gross yield on cost. So every year the top line revenue is 31% of our purchase price. It’s like, it doesn’t, what is it? You know, if, if we’re not getting that at like, it’s already such a great deal, right? Like we don’t have to worry about the fact that the market is going to drop another 5 or 10% before it eventually kicks back up because it’s going to pay for itself by then, right? Like that 5 or 10% that you lose in equity you would make in your cash flow that year.

[17:36] Yeah. And then you’ve also got an asset that’s going to, that you can continue to optimize. So yeah, I think that there’s always opportunities. Like we got to be cognizant of what’s going on, but like so many people are just scared and they sit on the sidelines and they never do anything because there’s always bad news in the press, like always, always, always. But if you can find a good deal, like I think another thing too is, you know, there was, we definitely had to change the way that we were underwriting deals in general. Like we, the way that we thought about them with 3% interest rates was different than how we thought about them with 7% interest rates. We have to essentially charge a lot more rent to the tenants that we’re working with.

[18:10] And that sucks. I mean, that’s a cost that gets passed on to them. And a lot of companies either couldn’t afford it or chose not to afford it. But we were never underwriting deals that banked on having rates drop and being able to refinance because if we had done that in 2020, like if in 20, mid 22 is when I think rates like kind of peaks, like the end of 2022. And everybody was saying, oh, they’ll be back down in six months. Don’t worry. Like if we would have underwrote our deals for like a rate drop in six months, we would have been screwed. Yeah, that’s yeah. And, and I mean, it’s kind of like, you’re not supposed to not, you’re also not supposed to count on an appreciation. So like that’s definitely another factor too there, like when you’re underwriting to think, think through and, and you know, it’s interesting.

[18:54] I think that there’s maybe more of an opportunity in Florida for something like subject to a wraparound mortgages because people are going to be a little bit tighter if they bought recently. Or, you know, if you’re really lucky, they’re still tight and they have one of those 3% interest rates. Yeah. And, and you know, what sucks right now so bad is insurance. I mean, it’s like, I’m just, I’m just going to vent for a second because it’s so stupid. Our property insurance at one of our property or Airbnb properties was three, $2,800 without wind and hurricane. You add wind and hurricane and it goes up to $15,000 with a 22, $24,000 deductible in the case of a hurricane. So $13,000 a year plus a 22 or like call $25,000, you know, $24,000 deductible.

[19:44] That means if you’re one, if you don’t have $37,000 with the damage from wind or hurricane or from a hurricane, then you’re already net negative. And every year, the amount of damage has to go up by $13,000 for it to make sense financially for you. So after like three or four years, if you haven’t got $50,000 with the damage, you’d have paid out and your insurance way more than you can expect to get. And what’s so ridiculous is Orlando is not a prime danger zone for hurricanes. It’s simply the fact that it’s in Florida. People vacate. Our properties get booked when we, when hurricanes come through, because they’re fleeing the coast to come to Orlando. So anyways, like that’s a tangent, but I know for a fact that is definitely compounding the affordability issue right now.

[20:26] Like carrier, I mean, like I think it’s on the lenders. I think the lenders are forcing by forcing wind and insurance, they are going to force people to foreclose, you know, or sell their properties at a loss, which like that doesn’t really affect the lender, but that that sucks for the people. So it’s just, it’s absolutely ridiculous. And yeah, that part is a huge problem that I, you know, I don’t know how we’re going to face that without legislation. Yeah, no, it really is. It’s crazy. And you’ve had a rough go of it. I mean, Florida in general here recently, but yeah, it shouldn’t be blanketed to all of Florida for sure. If that’s not really an issue for you, it’s crazy. Yeah. So, I mean, look, yeah, you’ve got to, I mean, it’s taken me a lot of work to just get so many quotes and like increase my deductibles and do all these things just to make it work out.

[21:15] But, you know, that’s just another reason that you can start to see some compression in the market before, in the pricing, you know, before you start to see an expansion. I mean, we’re going to have to, they’re going to have to figure out how to make insurance affordable and lower rates at the same time. Now, I think those things are going to happen eventually, but there’s going to be some, you know, it’s going to be pretty choppy until then. Yeah. Yeah, I think you’re right. And I think back to your point about like, you know, if the deal pencil’s not to be fearful to continue, you know, I make this point a lot, but, you know, I had a colleague, a friend, somebody that I’ve partnered with on investments that, you know, through the pandemic had, you know, a bunch of doors and he was able to refinance those all.

[21:59] And he was able to like, OK, I’m going to set my, you know, target retirement date is how he approached it. And so he put them all like, whatever, 15 years, whatever it was. But he was able to get, you know, all those mortgages at these cheap rates. And, you know, had he waited for that year when all the rate, when the rates were super low, there’s no way he would have been able to buy that many properties. Right. Like, so it’s, it’s, it’s makes sense. And it’s a long term play if it pencils out now. And sometimes you get a little more creative now. Right. Like you said, like, I mean, you’ve got to do some things a little bit differently. Like Airbnb is one way you could do it or midterm rentals or, you know, go through that co-housing kind of idea.

[22:38] Are you doing long term rentals? Do you do all long term? Mostly we have a midterm. OK. How long have you owned your properties for? The first one was in 2014. That was a primary residency that we kept as a, yeah. So, I mean, we’ve almost all of them were pre like 2021. OK, I’m going to say, like, I don’t know how you’re making, I don’t know how you’d make a long term rental pencil if you bought it after 2022. Yeah. Honestly, I don’t know how people make short term rentals pencil if they bought it after 2022 and they hire outside management at 20%. Like it doesn’t, I don’t, you can’t be making money. So the past, so we bought a fourplex with creative finance, well, with seller financing. So we have a unique deal there.

[23:22] You had a good deal on it. Yeah, that makes sense. Yeah. I mean, the terms and it just, I won’t get into the details of that one, but the way we worked it out made sense and it was a win for everybody. But then on top of that, everything else has been almost all burrs. So like we’ve been able to do a little bit better, like, you know, with our all in costs, our mortgage is a little bit lower than, so that’s helped. Right now, the most recent one we did that way, we really loved it and didn’t want to sell it. We could make a good profit on it if we sold it, but we love it and want to keep it. So we would turn it into a midterm rental. We would be like, I mean, we would be pretty much breakeven if you really factor in all the different like, you know, capex costs and all that kind of stuff if we did long term.

[24:06] So yeah, it wouldn’t actually cash flow technically. So is it midterm? So you’re doing 30 days? Yeah. Yeah. So our time is in a while. Or like, how do you market it? All of them. Yeah. Yeah. So that’s still a bit to be determined. We did get a tenant in there. So like I would say, you know, on the high end, we could probably get about two grand a month for it on a long term kind of situation. And so we were hoping to get about $3,500 a month for the midterm. We weren’t sure what to do. It wasn’t booking right away. We weren’t sure the climate. How long does it take to actually book this place, et cetera? So we reduced it on a few different on the platforms and ended up leasing it for three grand a month.

[24:50] And they’ve they’ll be there for two and a half months, I believe, almost three. Okay. What platform was the Furnish Finder? That one came through Furnish Finder, but we put them on Verbo and Airbnb as well. Okay. Yeah. Yeah. You can sync the calendars and all that stuff. You’re talking about subject too. I’ve been hearing like negative things about the legality of that recently. Like, I don’t know how this is true, but what I heard a couple weeks ago was the mortgage companies are using AI to scrape more data and find out where the payments are coming from. And it’s triggering the due on sale clauses more frequently than it was in the past. Have you heard anything about that? I haven’t. No.

[25:33] And I mean, I know from interviewing people, I’ve interviewed an attorney that does a ton of subject too. And they were saying, I mean, there’s definitely a right and a wrong way of doing it. And I think there’s a couple things I’ve learned. And again, I’m not a lawyer, so I’ve never done one. I’ve passed on a deal that made a lot of sense in the subject too realm because they were so close to what they owed and they had a good interest rate and they had to move and they didn’t have money to move and all that. It made sense for them. I passed that on to somebody else and they did it. But I haven’t done one myself because it is a little bit gray in my mind and I’m a realtor, so I’m not trying to get a bad reputation or anything like that either.

[26:19] But the way I’ve done subject too, because you felt like it’s a gray area. Yeah, I’ve never felt confident enough and now that I’ve talked to this attorney, they would be able to advise, even they’re not in my state, they’d be able to advise an attorney here locally and help orchestrate it the right way. I might feel more comfortable with it. But yeah, so basically my understanding is that you need to put the property into a trust where the seller and the purchaser would be in that trust. And that is allowed in the Saint Germain’s whatever act that you can pass your property into a trust. Yeah, they don’t, the case doesn’t talk about that. There’s a lot of wrong information of how to do it, is my understanding.

[27:01] And if you don’t do that- In that group specifically, or you don’t want to say names? I’ve just, I’ve heard a lot of people talk about it and not everybody mentions that. And I think if you don’t do that step, it seems like that there is a big hole, that it’s obviously- I tried subject too. We’re kind of looking at it for like our personal residence because we bought a house last year. We bought a house last year and we’re looking for more rental properties. But like our niche is like luxury,

[27:30] four to 12,000 square foot houses on acreage that we can host weddings and events and theme. And you know what I’m saying? And so like it just wasn’t likely we’re going to get a subject to deal from that. So my kind of takeaway was like subject two only really works with a distressed seller. Which maybe you can find in the luxury market, but it seemed less likely. And so what it came down to was your pipeline. And so it’s like, okay, do I want to become a- it wasn’t like it was just passive income. Do I want to become a subject to buyer? Do I want to build out like a lead magnet process, like a lead generation process and a sales pipeline and like focus on this full time? Is that kind of how you understand it?

[28:08] Yeah, I mean, I think it can be hard to find. And then obviously you have to get good at explaining it and making it not sound like it’s a scam. Because that was also something that happened, I think in the last, you know, before the bubble where people were basically doing this type of thing and then not like not paying the mortgage, just stop paying it. Right. Yeah. So that was the other thing too is like you have to trust that person to pay the mortgage and it’s going to show up on your debt. Like if I’m like, if I was going to do a subject too to somebody, I mean, I would have to get a lot more money than I would get regular to account for the risk of like them defaulting on the mortgage and it being in my name.

[28:52] That’s the second part that I think is important is you want to make it a wraparound mortgage. And so what that means is that then you have a second deed of trust, like you’d have a deed of trust written between you and the seller that explains what happens if you default. I think in that circumstance, they just get the property back. And it’s two months in, now you missed the mortgage for two months, that’s going to show up on your credit for. Yeah, it also proves that you’re not responsible for the mortgage payment. And I mean, that’s the piece that I thought was missing before that somebody explained to me that I was like, okay, that starts to make more sense. But still I’d want to see it written out and I’d have a lot of questions for an attorney if we were considering to do it.

[29:36] And I think you’re right, I think like there’s no, I wouldn’t do this if it weren’t like the only option for me. Like if I had to sell, I had to move and I was underwater or whatever and this is the only way to get the property moved and maybe, but like it is a unique seller scenario. And just the fact that, you know, Florida might have more sellers closer to that in that scenario or whatever. Maybe now, yeah, maybe after like, that was the other thing too in 2024, 2023. I mean, if you had a good interest rate, that means that you would have had your house before 2022. Like it could be anywhere between, you know, anywhere onward. And then that means you’re also going to have a ton of equity because we had a huge appreciation.

[30:19] So it was like, it was really hard to find somebody who would, essentially you’d have had to have just bought your house in a market where the equity didn’t continue to appreciate really fast so that you owed pretty close to what you were trying to sell it for, you know? Like pretty close to what it was worth. It was just like a long, anyways, I’m not trying to like just sit here and bash on. No, it’s a long shot. And then I think that the other point I’ve heard somebody make that is negative towards the subject to you is that like most people are successful in real estate because they buy right. And if you’re doing a subject to, you’re not buying right. Like that’s like kind of, you can’t like get a, probably a cheap discounted deal and a subject to, right?

[31:02] So like, if you’re like in my case, like underwater, yeah, underwater, then you’re not getting, you know, the low market price. Right. You’re paying with it. Or in my case, like if I’m going to subject to you the property, like I need to get extra, like I need to sell it for more than. Now I will say like it is so stupid that like with the banking system, we have to sell a mortgage for 3% and the new person is bound for 7%. There should be a way to transfer that debt. Because the bank is okay, obviously, with that loan. You’re holding it for, they’ve agreed to do it for 30 years. So look, again, that’s a, that’s a tangent. It’s unrelated, but like that’s frustrating, you know, that you can’t transfer that over.

[31:43] And then also the whole, the whole insurance thing going on is super frustrating too. Yeah. You’d think that maybe if there’s a, like a law and the, and the, and the caveat would be obviously the purchaser would have to be able to, you know, qualify for it, obviously. But I feel like, yeah, I felt that that, that could actually help a lot. I know the market if that was a law. Interesting. We’re in the wrong space. We need to go into legislation. I don’t want to go into legislation.

[32:16] Well, okay. So we’ve gone down a bit of a rabbit hole and I want to go down another one because you also are a American ninja warrior and I want to hear about this. Yeah. So in 2019, my wife, she has a condition called ankylosing spondylitis. And it like is an autoimmune disease that makes her not be able to, like when it flares up, she can’t walk and she can get stuck. And I mean, it really sucks. It’s really, really painful. She had kind of like a miraculous healing in 2019 and wanting to go on the show and like do a ninja because she’s really athletic. And I had just retired from weight boarding in 2017. And I was like, no, I don’t want to do this. So around like early 2020, maybe it was like December of 19, but I was like, okay, I’ll try this.

[32:57] And I just fell in love with it. She, you know, she fell in love with it. And so for the last five years, we go to gym like three times a week. And I think it’s important for people to just play. I mean, I know this podcast is called a holistic approach to life through real estate. And so kids is a great way to play. Like having kids that forces you to play and be in the moment. And this is one of the ways that we force ourselves to just play and have fun. Like when I could go work out of my garage or the YMCA or whatever, and I feel great afterwards, but it’s not, I’m not playing, you know, rather if I, if I stagger that with going to the gym where I’m swinging from monkey bars and trapeze and like, you know, pushing myself and trying new challenges and new obstacles.

[33:35] Now I’m having fun. Yeah. And, and the time flies by faster. So we just kind of figured, look, if I could work out really hard for 30 minutes and not have fun, or I could work out for like an hour at the ninja gym, hour and a half, you know, a couple of times a week and, um, and have a lot more fun. Right. And that’s kind of where we landed on it. And then, yeah, going on the show takes a lot of time. It takes a lot of training, but it’s like really fun. And it’s gratifying. And it’s cool to have all the people reach out with their support when they see you on there. So we just applied, um, a couple of weeks ago for this new season, Lisa was on, she was just on, um, the, her, her show, her episode aired probably like the beginning of July.

[34:09] And, um, I wasn’t on this last one. And, um, you know, hopefully they’ll, they’ll call us. You just never know. They say they get like 60,000 applicants and at least 600 get phone calls and only 200 get aired. Right. So the fact that we were aired at all is like, is like a really cool thing. Um, but fingers crossed, you know, fingers crossed, they call us again this year. You just, you never know, but we’re going to keep training either way. That’s awesome. So do you have to, uh, train differently as well to be able to do? I mean, I know it’s good. It’s got to take a ton of, uh, endurance, stamina, um, Yeah. I mean, there’s a whole, there’s multiple organizations now that spawn because of the show.

[34:43] Um, I mean, I, I’m reluctant to call them amateur because like the guys who do it are so good, like in the elite level. I mean, it’s like the competition is way more fierce than I ever had in wakeboarding, but they, a lot of them don’t get called because they don’t have a good story. So, you know, you, when you train, you’re really, you can train for those events and you can train for the show. And it’s like a similar type training. It’s a combination of like learning new, uh, moves like to stay up to date with it because you don’t know what’s going to, you gotta be prepared for anything on the show. You don’t know what the obstacles are going to be ahead of time, but also having the endurance to get through it.

[35:13] A big part of the show is like endurance. And so yeah, just like running courses and making sure that you’ve got the good stamina and the grip strength and the cardio and all that kind of stuff. But like being strong and muscular doesn’t really help you as much as like having good cardio and having good grip strength. So the lighter you are, yep, just like rock climber, the lighter you are, the better, because you’re holding on by your fingertips for a lot of that stuff. And it doesn’t matter how big your pecs and quads are. Yeah. Yeah, I was going to say and segue that a comment into, yeah, we’re, we’re big crossfitters and, um, it’s, I think it’s similar in the sense that like it’s motivating and fun to kind of constantly have to learn new skills.

[35:48] And, and like, there’s a lot of different thing areas where you’re, you have to get better at and like, you know, Olympic lifting, uh, gymnastics, all that stuff is, uh, it’s hard. And there’s, you know, people dedicate their lives to like, you know, doing Olympic lifting and that’s just one of the elements. And so like, it’s, it’s definitely rewarding. Um, it, it takes, you know, I’ve done group classes for other types of physical fitness stuff and I, and I enjoy them. They’re fun. But I think that skill thing is one of the reasons I got a lot more addicted to crossfit than I have in anything else. So I can see that being a lot of fun with the, that element of, but I’m a heavy dude, so I don’t think I’m good for it.

[36:27] Yeah, you, you, I mean, you can be like the biggest, you know, bodybuilder with super, super strong lifts and then just totally be humbled when you, when you go to the gym, like the 17 year old kids who weigh 130 pounds are the best. Yeah, totally. Totally. Um, that’s funny. Um, we can get back to real estate. Tell me more about, uh, like what you’re doing now and the development stuff that you, you, you started talking about at the beginning. Yeah. Yeah. So, um, we started focusing on, um, development for specifically for healthcare practices. And so like we would look for multi, multi-site dental, derm, behavioral health, vet, uh, et cetera, urgent care type things. Um, and also I’ve been doing the Airbnb in the background too.

[37:14] So like, I would say I was like 90, 10 focused on development, 10% on Airbnb, and now it’s kind of flip flop. Now I’m like 90% focused on the Airbnb. And so they’re just different, right? Like for me, um, when you do a development and you’re holding it, you’re, I don’t know if your audience, are they familiar with cap rates? Yeah. I mean, somewhat. So like, let’s just say, you know, it’s worth an eight cap when you’re done, you know, you’re going to want to develop at a 10 cap. So there’s like a 2% spread there, but with the cost of everything right now, um, the, it’s really hard to get that development constant. So there goes your margin because labor’s up, capitalism, um, uh, interest rates are up, you know what I mean?

[37:56] All the, all that kind of stuff. And so like there’s the, you’re building long-term wealth when you’re, when you’re holding these things for a long time, but, um, the cashflow like is very nominal as the general, as the GP day one. So, um, you know, like you’re building a lot of equity and that’s great. And I think that’s important to do that. But, um, with the Airbnb, it’s kind of the opposite. Like there’s not really a ton of equity buildup because it really only can sell for what your neighbors go for. And that’s not going to be cap rate is, it means like however much money you make, like you can sell the building for a factor of that Airbnb. It doesn’t matter right now, um, because you can only get lending on, on what the banks think it’ll sell for.

[38:38] Like if you, if your business stops working, like they’re not really banking on Airbnb. Now there is something that just changed in February, which is really interesting, which is the fact that the SBA is now willing to lend. Like we almost had an SBA deal on our, on this portfolio. They’ll lend 90% of the value and they’ll give you, they’ll value it based on the cash flow, based on the revenue with residential. So historically it was only commercial and they just had to do assisted living. And now the assisted living was residential that helped them to segue into short terminals. So with the SBA, you know, they want to support people who are giving jobs. And so it’s like, they’re not going to give you money to go do like a long terminal portfolio because you’re not creating any jobs.

[39:14] Right. But I think they’re realizing that Airbnb is a very hospitality intensive business that does create jobs. So that could actually be a game changer and unlocking the equity that you have that like, you know, from the, from the revenue that you’re, that you’re generating. So yeah, our focus has been doing these like destination kind of property, like the properties we’re acquiring, they are, they’re all on like five to 10 acres and they have custom built pools that have like lazy rivers and commercial water slides that are shaped like ice cream cones and billiards tables and stuff like that. And then there’s 15 bedrooms and 650 people and, and each room is themed after like, you know, Monopoly or Scrabble or like a Jumanji theater.

[39:59] And like, just you can, it’s 40 minutes from Disney, but you never have to, you’ll never have to go to the parks. Right. And like we were, we have one in Cleveland, Ohio, but the idea is to just make this like destination type of thing that draws there for the house. You go there for the house. Yeah. Yeah. Of course, like there are other people are coming for like to be there anyways for sometimes, but sometimes people will just go and book the property just to go have a vacation. Like that is the destination. So I would say it’s a little bit of both, but that’s kind of like the niche and that’s been, I think that’s where the future is going. And it’s been exciting. That was really cool. I was going to ask if you’re, if you’re doing primarily around Orlando or if you’re going just to, to anywhere where the property and the demand is there, that’s cool.

[40:46] It’s interesting. Like Orlando has obviously a lot of demand, but it’s got a lot of supply. It’s there’s a lot of momentum in Orlando. So Cleveland, the property is performing really well over the summer. Like much better this year than last year. I mean, because we’ve done a lot of improvements to it, but it kind of has me wondering, I mean, like, look, there’s, there’s pros and cons of both aspects being in a market with, which has a lot of competition means you have more data, you know, you have more data points. You can accurately adjust your revenue, figure out what amenities are working and, you know, and that sort of thing. But of course, if you’re in a blue ocean, then it’s like, you’re taking a gamble because you can’t have data to back up your decision, your, your thinking or decision making, but there’s nobody really offering what we’re offering in that area.

[41:33] So I kind of like, I’m thinking that having these tertiary, you know, secondary tertiary markets where you kind of create the same product, like this product was driven out of competition because of a need for innovation, right? Orlando, Claremont are very saturated areas. You really have to have a top-notch world-class product to stand out and get booked. And so that is not necessarily the case in these secondary markets, right? So if we take that same innovation and drive an ethic, work ethic, then I think you could do really well. Yeah. Well, you know, I think I’m curious what’s going to happen in the Airbnb market as well, from more people coming in to buy them, since we have that 100% appreciation back.

[42:14] You know, I had a buyer looking primarily for an Airbnb just because of that reason. You know, I wonder if they, how much they actually cared about, I mean, I know they want to cover the mortgage. I know they want to make a little bit of money and make it worthwhile cashflow wise, but I wonder if the depreciation is a big enough push for them since, you know, it can, there’s that whole loophole with the, with the Airbnbs or short-term rentals that allows, you know, non-real estate professionals to take advantage of that full depreciation. Whereas if they bought the, you know, just any other kind of product, they wouldn’t be able to take out, they would only be able to write off their, their passive income instead of their earned income, I think is different.

[42:55] What do you mean any other products like a, like a long-term rental or what exactly? Yeah. Yeah. I think it’s basically if you put in enough hours and I don’t, I’m not, again, not an accountant or an attorney, so to do your own research, but it’s something about if you put enough hours in the Airbnb, in the short-term rental space and something that you owned, you kind of get that rep status, that real estate professional status, and then that allows you to, to take deductions off of your earned income, not just your passive income. So if somebody else was, you know, just doing a long-term rental, they weren’t a real estate professional, they could depreciate, you know, either way they could do the, you know, like the accelerated appreciate, appreciation, or they could just do the normal 27 years one, but that would only, I think, take off their passive income. It’s the rent they earned on that property or any other property and not affect their taxable income is, is the way, or sorry, their earned income, their active income is the way I understand it. So like, I think there was a big push for

[43:54] doctors to, to buy into Airbnbs. And similarly, I think, you know, doctors often had like real, you know, real estate professional spouses, like, so like the doctor’s wife being a realtor was kind of always like, like, kind of like joke or people, you know, a thing that happened, but, and part of the reason was for those tax benefits. And so Airbnbs is a way to get through that without having to, you know, be an active landlord or primarily just a landlord or realtor. Okay. Yeah. Yeah. I mean, like, it’d be, I guess the way the benefit is like, you’re getting an interest free loan from the government really, because you’re not to pay taxes, but at some point, you know, you’re going to, if you take the full depreciation and you sell the property, like you’re going to have to pay the taxes or figure that out at that point. So yeah, it’s kind of like, it’s surprising to me that that in and of it’s like, to me, that’s just an added benefit that could maybe make a deal pencil that you’re on the fence about, but to go into it, I mean, look, I guess that’d be good for, you know, prices, like helping prices stabilize again.

[45:01] It might. Yeah. It’s hard to know because it’s interesting in my area, there was like a huge influx of people buying Airbnbs to the pandemic. And I think like there was a risk of that being a bit of a bubble in our market that if a lot of people failed, they’re using past numbers, you know, before, like, you know, before it blew up, they were using the numbers that people were booking with. And then everybody’s going to have less demand. And now people are not traveling to this destination quite as much because they’re also flying to Spain or to Italy or whatever. Right. And so maybe, you know, that, that increase of demand for this reason might help offset if, if there are some people that are struggling and needing to sell, I don’t know. But, but yeah, I’ll have to say it’s like, I, you know, it can be pretty significant if you accelerate the depreciation. I mean, it can be like, you know, you can get like $100,000 off your taxable income, for example. And, you know, what can you do with that $100,000 in the meantime

[46:03] to, to help make it worthwhile when you do have to pay the taxes if you don’t just keep rolling them into other property? Yeah. Yeah. No, look, I think it’s, I think it’s great to, you know, take advantage of it. And like, yeah, anytime that you can defer your taxes is great because like you said, you’re just, you’re getting an interest-free loan from the government, right? Like if I got to pay the government a million dollars or whatever, like real estate, a lot of people listening, I don’t know what your taxes are every year, but say it’s $50,000. Like if I’m going to owe that money either now or I can defer it for 10 years, well, obviously I want to defer it 10 years because if I’m paying the exact same amount, like I might as well hold on to it and make that money work for me, you know, a conservative 7% a year, it’ll double by the time you sell it. And everybody’s making more than 7% these days, you know? Yeah. Yeah. So that’s the idea. And, and, but it’s just an interesting, interesting thing that I kind of want to watch as this, this new kind of market. But that’s, that’s really cool. Are you, are you looking to

[47:04] acquire more, like, do you have like certain set goals now of acquiring new properties or are you, just kind of, if they come up and they make sense, then you’ll go after them? Yeah. You know, I’m trying to, to live in the, the gain and not the gap. Like, you know, like appreciate what you have and instead of like always searching for more, there’s going to be a really big acquisition for us. It’s going to like triple our revenue pretty much. And so, you know, I’m trying not to like get too pie in the sky, head in the clouds. I really want to hammer this out, you know, hire the right people in the right seats, learn the processes, I’ll make sure that it’s successful. But like, I can’t imagine a scenario where other opportunities don’t come up or follow my lap or whatever, right? Like it’s going to, it’s well known brand and I think it’s going to help put us on the map a little bit. So, yeah, yeah, I think, you know, it comes down to like operational efficiencies and like, just like being an entrepreneur, being in any, running with any company, like you have to be willing to put in the effort to figure out what it’s going to make to

[48:07] work. I mean, this idea that you can buy an Airbnb as passive income is like so far gone. I don’t think anybody really thinks that anymore, but like a lot of people got into it in 2020 through 2022 with that mindset and like, oh man, all of my, wait a minute, I got to hire somebody to clean up the scuffed baseboards and like, oh, our AC went out and oh, we got to buy a new laundry machine and like everybody’s adding decor and murals and like, now I got to buy a pool heater, you know what I’m saying? Like there’s just a bunch of things that people didn’t anticipate and I think they’re getting out of the game, which has been helpful. Like, you know, we’ve kind of, we saw, we saw demand kind of dropping for a while and then it’s like kind of plateaued.

[48:44] So I think we’re kind of at the bottom, but hopefully as people have gotten out, those of us who stuck to it and like continue to sharpen our acts and make a better and better product, you know, my, my goal, my hope is that we’ll be rewarded on the other side as everything starts to come back up. Yeah. And I think, I think to your point, I think it’s, it’s, it’s definitely an art form. It’s definitely something that you have to do well. And it’s not just easy, easy money, which I think is what was sold. It’s the hospitality business, you know, it’s like you think running the Marriott is easy. Right. Yeah. No, a hundred percent. I love it. I’m curious if you have any golden nuggets you’d want to share to listeners that, you know, maybe wanting to get into some of the spaces you’ve been involved in or just kind of general mindset stuff. You know, I think that you’ve got to kind of do baby steps, I guess is the best way to put it. Like I’ve been involved both in being the GP and the LP of other deals, meaning I’m the guy running the show and also the guy investing, one of the investors. So like my path,

[49:49] this is just what worked for me, but like I bought a residential property first, right? It was single family. It was, you know, smaller purchase price and did a lot of the work myself. Then I kind of learned the real estate a little bit. And then I had, well, I, you know, I bought two, I ended up buying two residential before going commercial. I went commercial for the first time. I was an LP. So I got invested in a deal, kind of like to see a little bit how it works on the, you know, on the bat, on the outside. And then eventually I started working with other people to become a GP in deals and making them happen on the inside. And so, you know, you got to pick your poison really, like, do you want to be a full-time real estate investor or do you want to continue with your day job? Like if this audience is mostly sounds like real estate agents, they’re probably going to come across deals, you know? And so I think like the, it’s best to just get started in them. And we know when you find a good deal and you’re going to have to either learn, like invest your own money, learn how to raise money, or you can invest in somebody

[50:50] else’s deal. And a lot of times it’s good just to start out investing in other people’s deals too, while you’ve learned the ropes a little bit. So that’s what I got. Yeah, a hundred percent. I mean, it’s, it’s, it’s an awesome 401k replacement for realtors because they, you know, we don’t really have those kinds of things. And it’s, it’s, it’s easier to understand too. Typically, I mean, if you’re buying, you know, real estate in your market, you know, you’re going to understand, you’re going to have a better pulse of it. You’re going to understand that better than, you know, the 500 best performing stocks, if you invest in S&P 500, right? I mean, you’re going to have a way better pulse on, on that one asset. So yeah, so I think it’s a definitely great advice for sure. And it, and you get to take advantage of that depreciation as well in those deals.

[51:36] What about a favorite book, fundamental book that you think everybody should read or one that you currently really, really are enjoying? Yeah, I mean, I dropped Richard Portat earlier. That was a pivotal book for me. Recently, I’ve been enjoying Benjamin Hardy’s books. He has 10 X easier than two X and who not how. So I think who not how is a good one to start with. It’s about like how to delegate and look delegation is like a very, very, very underrated skill. I mean, I have poorly delegated so many things so many times, like I’m still learning how to do that, but you got to start somewhere, especially any sort of like entrepreneurial role where you’re kind of in charge of eat what you kill, like the more tasks that you can take off your plate to focus on the things that are really important, the better. So who not how is a great one. And then 10 X is easier than two X. It was just like a mindset shift, you know, focusing, you don’t have to take it literally, if you don’t want to, some people do, some people don’t. But like the idea being, you know, you can’t do everything yourself. And by having large lofty goals, it actually simplifies your, your processes, because

[52:38] you can have 1000 or 100 different ways to two X your business, right? During the 10 X that eliminates 98% of those, you might be left with one or two ways, you know, one or two paths forward. So the idea is about simplifying. And yeah, it was just like a really good, you know, thought provoking read that, you know, I’m not sure that I’m ready to 10 X personally, maybe that’s a, maybe that’s a letting believe I should examine, but I’m definitely, you know, we’re growing, right? We’re growing a lot. So, well, I mean, I have 10 X from when, when he started. Yeah, that’s actually, that’s a, that’s a good point. We just did, I do, because of that book, I joined Dan Sullivan’s strategic coach program. And the last exercise we did at our meetup was, hey, when, what, what date were you wanting the revenue of VR now? I was like, okay, interesting, I have 10 X already. And everybody could do that exercise. So it’s like, if I have 10 X before, I could definitely do it again. So I don’t know, I’m kind of feeling a little bit conflicted about, about what to do about what to do with that situation. Well, we’re gonna have to follow

[53:36] up and have another podcast, you on the another podcast in a year or so and see what see where you’re at. So if you find that at least. Yeah, that’d be awesome. But anyway, awesome. This is a lot of fun to have you on. What a what a variety of things we talked about, but it was enjoyable the whole time. So thank you so much. Thanks. My pleasure. Thanks for listening to the REI agent. If you enjoyed this episode, hit subscribe to catch new shows every week, visit REI agent.com for more content. Until next time, keep building the life you want. All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.