This is Real Estate Rookie. My name is Ashley Kehr, and I am here with my co-host, Tony J. Robinson.
And welcome to the Real Estate Rookie Podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today, we’ve got Brian Lubin. Brian’s also a podcaster, but a real estate investor, entrepreneur who really documents his journey of being able to leave his six-figure salary with only two deals. He only had two deals. And he talks about this strategy of using both passive income and what he calls passionate income, and how you can combine those two things together to really accelerate the time that you can leave your job or, I guess, so you can leave your job faster.
Yeah. The foundation is really important to having that stability to be able to do that. But it’s not just all roses and happiness. He had a panic attack, and that wasn’t really because of real estate, which most of us do have panic attacks over or worry about. It was actually just the fact of leaving his job.
And he actually talks about how detrimental and serious a panic attack can feel. So he’s going to go through as to when this happened to him, what were the steps that he took in that moment to reassure himself that he was making that right decision to actually move forward with leaving his job.
At the end, you’ll want to keep listening because we go into more detail on co-living and how he was using this real estate strategy, but also even some tax strategies that he implemented during this process too, especially if you are house hacking or you’ve lived in your primary residence, he lets you know something that is a really, really good piece of advice that you may not realize as far as paying taxes on your primary residence.
All right. So before we kick it over, I want to give a shout-out to someone by the name of Jet 91 Jackson. Jet, love to see a five-star view on Apple Podcast. And Jet says, “I’ve been listening to the original BP podcast for years, and I also love on the market, but I find myself gravitating more towards the Rookie Podcast every single day. They cover all the details and strategies a rookie would need to know, and I love hearing the challenges people have run into and how they overcome that in their journey. Not to mention Ashley and Tony complement each other very well. Keep it up, guys. You’re helping more people than you know.”
Jet, really appreciate those kind words. That truly is why Ashley and I love doing this podcast is to hear stories just like that. And you kind of hit randomly on a lot of what we’re going to be talking about in today’s episode, right? You get to hear a lot of challenges. You get to hear about how they overcame them, and it’s just cool that we get to present so many stories like that to folks just like this. So if you’re a part of the Rookie audience, if you’re enjoying this content, please take just a few minutes out of your day. Leave us an honest rating and review on whatever podcast platform it is you’re listening to.
Brian, welcome to the show. Thank you so much for joining us today. Please let us know a little bit about you and how you were able to get started in real estate.
Oh, man. So I had a very traditional upbringing. I went to high school, did the four-year college thing, thought that I was going to be a suit and tie wearing guy for the rest of my life, and that was going to be the pinnacle of existence, right? I was like, “Man, I can’t wait to make it to the top of this corporate mountaintop, and I’m just going to make it to manager, VP. I’m going to drive the fancy cars, have the nice watches, have the beautiful house, be at the coolest country club.”
And so, that was my intention after I left college. I didn’t have this backstory of wanting to be an entrepreneur, wanting to be an investor, any of this stuff. Very traditional, just I wanted to make money. I wanted to just do the thing, and I wanted to get better. So when I was looking at that, I originally got my degree in marketing, and I realized, “Wait a second, this whole salary thing, if I’m really good, I’m making the same amount of money as somebody does not really good. It’s the same amount of money.”
I was like, “Wait, hold on a second. Can I go do something where if I get better, I get paid more?” So I was introduced to sales. So I joined this Fortune 500 sales organization. It was a wonderful experience, which is ironic because I actively preached about how to get out of corporate America, but it was as good as it could have been and, sometimes, the most difficult situations to leave. It’s very easy to leave when things are awful. It’s harder to leave when things are good enough. And that applies to relationships, your life, your business, anything.
So I made it to the top of that company over four and a half years. I made it up and just worked my tail off, blood, sweat and tears, 80-hour weeks really learning, being coachable, just taking feedback, going to the top reps in the company and asking them for help. And that was my first run in with mentorship, made it to the top, got everything I ever wanted, won number eight out of 5,079 for the position rep of the year, rookie of the year, and then decided it was time to leave.
Brian, first, something you said that I think I want to circle back to you, it’s an important point, but you talked about how when you first got that W2 job and you were looking around like, “Man, I’m making the same as everyone else, even though I feel that I’m a better employee than these people,” and you said, “I want to go into a field that kind of compensates me based on the value that I can provide.” I think that in itself is a major lesson for a lot of rookies who are listening today because say that your goal is to accelerate your ability to save cash, to put money towards your real estate business, sometimes, the simplest solution is getting a new job, right?
And if you can leave this job where you’re tied to a 2% annual raise based on how the company performs or whatever it is, and instead move yourself into a position where based on your skills, based on your merits, based on the value that you provide, you can exponentially increase your income, that’s one of the fastest ways to kind of kickstart your real estate journey.
So I want to talk about this because there’s, I think, a certain sentiment, Brian, towards the sales profession. There’s a lot of people who feel that I can’t be a good salesman, or being a salesperson just kind of gives me the ick or I don’t know if I like the idea of doing that. So what’s your rebuttal to people that have hesitancy about sales as a career?
So you guys have complete control over what you sell, who you sell for, and how long you do it. So what my advice is, especially to those people that are listening that are maybe in college, that are looking to make that first jump, go into an organization that’s tried, tested, and proven to where you can actually get behind the product that you’re selling because, then, selling isn’t a game of closing people. It’s the game of helping people make a decision. That’s it.
And sometimes, the decision is that it’s not the best fit, and that’s okay. And I’ll tell you right now, Tony and Ashley, the best salespeople in the world are the ones that will actively lead with that and say, “Hey, I’m here to help you make a decision. This may not be the best thing for you, but it may be the greatest thing for you,” and I only want you to do it if it is the greatest thing for you.
And so, that’s what led to everything. And I even sold myself into that position because I had zero experience, and they said, “Well, why should we do this for you?” And I said, “Well, if you hire someone with a bunch of experience, they may do things the way you don’t want them to do it.” I’m a blank slate. I’m a clean canvas. You can mold me into whatever you want me to become. And that’s what happened.
And so, I made it to the top of that company. And then, a piece of advice that I give to everyone that I think is really, really important, look at your boss’s boss. So that’s what I did because I made it to the top. I won the awards. There was nowhere else to go besides promotions, right? And so, in corporate, you start shadowing your manager. And then, you see their boss too, and you start following the position, and they’re like, “This is what the day-to-day looks like.”
And I followed them, and I was like, “Oh my God, you have less freedom than I do. Oh-oh.” I was like, “Bro, you have Zoom calls in 15-minute increments throughout your entire day, and your diet is donuts and caffeine.” I was like, “Oh-oh, I don’t want to do this.”And then, that’s when I started being like, “There’s got to be another way. There’s got to be another option. I can’t be 30, 40, 50, 60 years old living that kind of existence. I want to have my freedom to do what I want, when I want, with who I want.” So then, that’s when I was introduced to real estate. I’ll pause there.
Yeah. And I want to go into the real estate piece, Brian. But one last thing that I want to circle back to is, I can’t remember how you phrased it, but it was really well said, but you said that it’s easy to leave when you hate your job, but it’s harder to leave when things are just okay. And it’s true, right, because when things are just okay, it’s this idea of you start to get complacent, you find yourself in your comfort zone. And it reminds me of the story.
Have you guys heard the story about the dog that’s sitting on the nail? Have you guys heard this? So there’s a story, these two neighbors. One neighbor walks over to their neighbor’s house, and the neighbor’s got a dog sitting on the front porch. And neighbor’s in his rocking chair, a dog sitting next to him, and the dog’s just howling.
And the other neighbor is like, “What’s wrong with your dog?” And the neighbor who has a dog, he’s like, “Oh, he’s sitting on a nail.” And the other neighbor says, “Well, why doesn’t the dog move?” And the neighbor says, “Because it doesn’t hurt bad enough.”
And it’s this analogy for how a lot of people live life where we’re all sitting on some sort of nails in different parts of our life, but we don’t take action because the pain isn’t great enough. So the question to you then, Brian, is what was the straw that broke the camel’s back, or at what point did that pain get big enough for you to have that moment where you woke up and said, “This is what I want to do full time”?
Oh, it was absolutely when I got everything I ever wanted. So I call these the mountaintop moments of life, and it represents the 2% of life where you get everything. You hit that goal. You run the marathon. You accomplish that thing that you’ve been working towards, and you get up to it, and you raise your hands in victory, and you’re like, “Yes, I did it.” And you’re like, “Oh, wait, now what?” And then, back to the 98% of life, which is accomplishing the next goal. S.
So once I looked at my boss and I looked at my boss’s boss and I realized the goals that I want in life do not correlate with the trajectory that’s before me. So that ceiling kind of started coming down on me. And then, when I was able… Like you said, it was a good job. I was making great money for my 20s. And I had to create the pain from the future and bring it to the present in order for me to do that, because I was like, “I want to be a present father in the future. I want to have my freedom. I want to have control of my time.”
And if I continue down this path, I will not have those things. So therefore, this is the moment I need to draw a line in the sand and make a change in my life. And then, I feel like people that are listening to that, you guys have all had these moments already, which is why you’re listening to BiggerPockets and you’re listening to Real Estate Rookie. You’ve already had those moments, and you’re trying to find that other path, that other alternative. And it’s here.
I think there’s three different ways that actually could have gone. So you needed that next goal, that next achievement. You were at the mountaintop, and you needed another mountain to actually climb. But what about the people whose mindset is, “I’m comfortable, I’m complacent, I’m just going to stay here”? And then what about the people that get too comfortable where they actually start sliding down that other side as to maybe that they get comfortable. They’re like, “We love this lifestyle creep, but it starts creeping too much.”
And then, they start partying too much, and they start going on too many vacations. And their work starts to slide. How did you achieve that mindset of, “I need another mountain,” instead of staying complacent or actually falling back down that path?
Oh, that’s a great question. So Tony Robbins has this quote that says, “If you’re not growing, you’re dying.”
Oh, [inaudible 00:11:43]
Yeah. No. Tony Robinson has got this great quote about this dog on a nail. Tony Robbins has this great quote about if you’re not growing, you’re dying. And that applies throughout all of life. So I’ll answer that with there’s actually this wonderful book called The Top Five Regrets of the Dying, and it was by this hospice nurse named Bronnie Ware.
And in this book, she interviewed hundreds and hundreds and hundreds of her patients on their death beds. And the vast majority of them on their death beds, when they were asked, “Your regrets of life, what do you look back on and regret,” most of them are regrets of omission of things that they didn’t do as opposed to things that they did do that they wish they hadn’t. So it was, “I wish I would’ve went and talked to that person I saw at the bar. I wish I would’ve spoke my mind. I wish I would’ve been true to myself. I wish I would’ve left that job, and done something else.”
And so, they’re all thinking about the things that could have been. And so a piece of advice that I give to people is zoom out to 80-year-old you, and it’s like, “Is 80-year-old you happy with what you’re doing looking back on your life right now?”
If not, take the advice of that person. So it’s like I talked to the 80-year-old version of myself a lot, and I’m saying, “Okay, cool.” Looking back on all of this, what does this look like? And so, that really helped reinforce it. And there’s this thing called sunk-cost fallacy, which is you spent so many years climbing this mountain that you make it 75% of the way to the top, and then you realize that the only way to make it to the top is to go all the way back down and climb another path, which all of us have been, especially in real estate investing, because it’s seasonal sometimes too.
And you’re like, “Oh man, I can’t go all the way back down. I’ve made it so far.” And that’s a lot of relationships too. You’re like, “We’ve been married 10 years. I don’t want to start all over again.” But, sometimes, it’s like you have to go back down to the base of the mountain to make it to the actual mountaintop that you’re looking to summit. A lot of the people, the top regrets of the dying were, “Man, I wish I would’ve gone back down to the base and tried to climb again a different way,” because that’s where the fun of life is. It’s in the climb. Hopefully, that answered the question.
Do you think there is in that story or that situation, there’s some part of some people where they may be thinking that I actually wish I could start over?
I wish that it was wiped away and I would start over, knowing what I know now, it would be so much easier to build and to create that path, and I could get up there faster because of what I know now.
Oh, and the coolest part is you already know what you know now today.
So tomorrow is literally that instance for you to start all over again for fresh, because I tell people the reason that people don’t take action is because they’re terrified to start. They don’t have the confidence to take the action, but taking the action is what builds the confidence, ironically.
And so, the advice I give to people, especially people listening, that on your first property, your first three properties, your first 10, if you do leave that job to go do this thing full-time, when the cashflow supports it, what’s the worst case scenario that’s going to happen, the worst possible thing? You fail, right? Oh man, repairs, CapEx, a roof goes out, the tenant, there’s a messy eviction, like “Oh, crap. What now?” You go get another job. It’s like your worst case scenario is your present day reality.
And then, people are like, “Oh, okay, that makes sense.” And so, that alleviates the fear a lot to just get started because analysis paralysis, I know which we’ll get into here in this episode, that’s the big boogeyman that everyone’s got to beat. That’s the dragon that needs to be slayed for people to do anything because let’s face the reality of the situation. We all know how to do this stuff. BiggerPockets does exist. There’s a lot of episodes. There’s a lot of YouTube videos. There’s a lot of books. So it’s just a matter of people being like, “There’s other roadblocks that are keeping them from that now.”
Brian, I’m curious. When you approach someone that is stuck in that analysis paralysis, what are some questions you ask them to try to help them get out of it?
What do you want? What do you want? So it’s like that scene in the notebook where he is banging on the window, and it’s just like, “What do you want,” because 99% of people can’t answer that at all. And because in our society you’re not trained, it’s not encouraged for you to actually ask what you want. You’re encouraged to be practical and reasonable. So like, “Hey, whoa, too much dip on your chip there. Calm down. Come back. Let’s not do this whole real estate thing,” which my entire family told me how stupid of an idea it was, which I’m sure you guys can relate to, all my friends, all my coworkers, at the time, because that was my network. That was it. They all told me it was the worst idea ever. And so through doing all of that, I asked people, what the heck do you want?
If you won the lottery tomorrow, if you had $100 million just pop into your bank account and you don’t never have to work a day in your life again, what are you doing? What does your day look like? What does your routine look like? Where are you living? Who are you with? How do you feel?
And so, the biggest thing that I’ve done throughout all of investing in all of anything is literally just wrote down what the heck I wanted. And I’ve done that for a long time now for the last three years. This is an excellent book called Vivid Vision by Cameron Herold. And it talks about writing out a three. And he’s been a guest on BiggerPockets on the main podcast too. And so, he talks about writing out in present tense three years in the future, “What does your life and business look like if you’re experiencing it today, if anything was possible?”
And when you write that out, then all of a sudden, you have a goalpost to aim for. When you have a goalpost to aim for, now, you actually have an understanding of what to say yes to and what to say no to. So the reason that most people are not starting is because they have too many options, and they’re driving in this car, and it’s dark, and it’s foggy and cloudy, and they have zero visibility. Of course, you’re going to go slow.
It would be fullest for you to mash the gas in that situation. But if it’s crystal clear, you got the Google Maps set. You got a freaking playlist, bump it on Spotify, you’re listening to BiggerPockets, you can just mash the gas. You can go clear. So clarity is the answer. And that also solves anxiety because people are just anxious because they have too many options. So if you remove all these different options and you’re only focused on one, game over.
Yeah. One thing I want to add to that, Brian, you made a couple of really good points. But the last piece you said about just making the decision, I think that’s where a lot of people get stuck, is that they have this overwhelm because they’re like, “I need to make a decision that I can live with for the rest of my life.” That is not the case.
You make a decision today based on the information that you currently have available. And then, you start progressing down that path. And then, every opportunity that you get, you’re kind of reassessing, does this still make sense for me? And then, sometimes, you might need to pivot, and you pivot this way, and you pivot that way because the path to success is never a straight line. It’s really messy. And there’s ups, and there’s downs. And there’s 180s where you’re not even making any progress at some points.
But the point that I’m trying to make for all of our rookies that are listening, and this was advice that a mentor gave to me, was that it’s not super important in terms of what you decide. What’s more important is that you make a decision. And once you do that, then, you can start making and feeling that progress and feeling that momentum.
And then, the other thing you said was that your family wasn’t incredibly supportive. And I think that is a big challenge for a lot of our rookies listening as well, is that they’ve got their Uncle Jims who watch CNBC and think they have all the information about real estate investing, but they’ve done exactly zero deals themselves. But yet, somehow, Uncle Jim is this authority on what it takes to be a successful real estate investor. And because most of us who have never invested in real estate before, we don’t have that network of people who are also doing it. We feel influenced by Uncle Jim because, hey, he’s our uncle, he’s our family member. I love Uncle Jim. He’s given me good advice before. So he must be right about investing in real estate. But the thing that I always say is that you should only take advice from someone that’s actually done the thing that you’re wanting to do.
And if they haven’t done that, then, why take advice from them? I feel like I’m a pretty good dad, but I wouldn’t feel qualified to give my son advice on how to do an open heart surgery. I’ve never done it before, but if he wants to learn from me about real estate investing, I can teach him that. So I think that’s a super important point, Brian, I’m glad you brought it up, was that community can either support you or they can pull you back.
And everyone’s so stuck at capital H, how. Right? Everyone listening to this podcast in some way, shape or form, it’s like, “How? How do I do this? How do I get mentors? How do I find peers, partners? How do I raise capital?” What are all these crazy things that you guys are talking about all the time?
And when you change the question, exactly what you said, Tony, it was a great point because this is an awesome segue, when you change the questions from how to where and then to who, the game changes. Life unlocks. Everything becomes easier because you don’t have to do this by yourself. And anxiety and indecision, analysis paralysis because you’re doing it by yourself and you’re trying to, and you have to start that way in the beginning. I did it by myself for the first three years, and I felt like I was on an island.
And a lot of people listen to this feel like they’re on an island. So when you know where you’re going, there’s this crazy thing in your brain called reticular activating system, RAS for short. When you go buy a new car to car dealership, you drive out on the road, you start seeing that car freaking everywhere. So it’s just your brain just being trained to see what you’re paying attention to.
So when you know where you’re going, and you’re saying, “Man, I want to travel around the world,” which is what I did. I quit that job and I traveled full-time around the world for eight months. I was like, That’s what I want to do.” So I’m like, “Who has done that? Who has built a business? Who has invested in real estate and built a framework around that, that allows them to have the remote management style and the ability to travel while they do it?”
So that allowed me to say no to other opportunities that presented themselves because every single yes needs to be justified by a hundred nos. So strategy isn’t really a game of what to say yes to. Strategy is a game of what to say no to.
And for me, I was like, “I can’t do multifamily.” It’s too hands-on right now. I can’t do Airbnb for me, at the time, two hands on because I didn’t know what I didn’t know. But I was like, man, “I could do this house hack thing. I got this down, and I could be able to go travel around the world, and you’re telling me I don’t have to pay for rent. What?” I was like, all of a sudden, this just unlocked for me. So you need to know what attributes that you’re looking for in your mentor as well. Then, that’s when you start recognizing those people.
Brian, when you started the second mountain, can you kind of go back and tell us as to how you actually quit your first job and made that decision and what your next step was? Was it to get into real estate, or what was the process there?
Yeah. So a bunch of people listening to this want to quit their jobs, right? That’s basically what I’ve built my entire personality around. So I’ve got this covered, guys. So the advice that I always give around leaving your job is, man, do things in tandem with your job.
Guys, think back to what Tony said at the beginning of the episode about your income. Your income is your biggest asset when you’re first purchasing real estate because you’re bankable, you’re loanable, and you’re able to save that money and have that cash cushion. So we start with our W2 income. And then, eventually, once you have a couple of doors under your belt, then, you can start leveraging all the creative strategies. I know we all want to do sub -2 seller finance, all these wraps and all this stuff to get the first couple of doors, and that’s all fine and good.
But the easiest and best way that’s most predictable and you can spread it out across everyone, it’s just being really good at your job and being where your feet are and making sure that that’s optimized so that you can start buying the property.
So what I did was I had my doors already purchased. I just bought one a year. It was very boring, very unsexy. Anybody can do it. They’d be terrified to learn that anyone can do it. And so, I just did that. So by the time that it came, now, I was making a six-figure income, which some people may think is an advantage and a privilege. And other people that are making a six-figure income also view it a different way, which is oof, this is way more difficult to replace.
40, 50,000 is easier to replace than over 150,000 plus. So it’s like it’s a different game to play. And so, I always say there’s three different levels of passive cashflow that you need. And if you chunk it down, it makes it more attainable. So you have survive, arrive and thrive. So if somebody’s making $100,00, even $70,000 plus, that may be really intimidating for them to figure out how to build that passive cashflow.
And they’re like, “There’s no way I can get out of my job.” But I’m like, “Okay. Well, let’s chunk it down.” So survive, first step. So for survive, we’re just figuring out what are our fixed expenses, roof over our head, food on the table, bills paid. I can survive here. And then, that’s going to be way lower than what your total income is take home.
Arrive is now you’ve got some discretionary room, you can wiggle around a little bit. And then, thrive is, “Oh man, I got this whole thing replaced.” So for me, once I hit that survive and kind of moved to arrive, that was about $4,000 a freaking month for me. Wasn’t that much cashflow? I had two properties co-living that I lived in one part, rented the other rooms out, bought one a year, and I had $4,000 coming in. I was like, “I live for free. I’m debt free, because I always made sure to pay off the credit cards and everything.” I was like, “This is enough to swing for the plate and try to venture out and start up side hustles, take big bets on myself, do my own thing.”
And so January, February, March of 2022, the income was coming in. I started up my own podcast and that started producing revenue as well. It’s like a side hustle. And I was like, “I got this. This is consistent.”
March of 2022, I left that job. And as we were talking about this before the podcast, I journaled every single day, day one, post W2, day two, day 14. I was having panic attacks after I left my job. And so, that’s the irony, is nobody talks about what happens after you do the thing, after you have done, you’ve left your job, you hit quote-unquote “financial freedom,” whatever you want to call it.
There’s a whole lot of life to live afterwards. And none of us, none of us, are just wanting to sit on a freaking beach and do nothing. I did it. I lived in Greece for a month, and I traveled full-time for eight months. I literally lived on the beach. And after three weeks, you’re hung over and sun burnt.
So it’s like what is next afterwards? So a coach asked me something that really changed my life. And I always love sharing it on podcasts because it really impacts people. And my coach said… And you guys will really resonate with this. He said, “Okay. So you want to build $20,000 of passive income.” And everyone says “10,000 is kind of the default,” that you guys probably hear a month. And he goes, “Okay. So you want to build this passive income.” He goes, “Why does all of it need to be passive? Why?”
He’s like, “Can’t you make some of it passive and then just go try to figure out how to generate active income in ways that are super fun to you?” I was like, “Oh my god. Yeah. That sounds awesome.” And so, that’s what I did.
So I used the real estate to build the foundation to exit, and then ask the question, “What really fires me up that I can do, that I would do for free but I can make money from?” And that’s where I came up with passionate income.
So for some people that is building a big old real estate company, that is building an Airbnb empire, that is doing wholesaling, flipping, self-storage, whatever have you, for me, it was podcasting, and I’m still going to buy a bunch of real estate in my life, and we’ll go into my real estate journey here in a second.
But it’s just I want to get everyone to that point where they have enough passive income coming in to where they can focus on passionate income and to really drive the point home and to land the plane. Think about Steve Irwin. He’s a perfect example of this. Steve Irwin was a dude that was the crocodile hunter for people that are maybe don’t recognize the name. He was the guy that lived every single day. He was on freaking fire. Dude’s soul just radiated through the television, and every single person around the world resonated with this guy.
And so, when he died, I remember there was a quote that he had that really stuck out with me. He said, “Give me all the money. Give me the millions of dollars. I’m going to pour it all back into wildlife and conservation, and my family.” And now, his kids are old enough to be doing the same thing that he did. So I want everyone to have that passion. It may not be quitting your job and traveling around the world full time like I did. But if it’s making freaking candles in a cabin in Colorado or teaching surf classes in Hawaii, I want you to do that. A lot of information. I’ll pause there.
You know what? But that is such a great point, and that is very true. When a lot of people do hit that financial freedom, they still end up going out and working somehow, whether it’s a passion project or it’s a job to help somebody else. Whatever that is, it is very true that most people just don’t stop everything and sit on the beach especially, there’s a lot of people too that do education. So whatever they’ve built passively, then, they are so passionate about it, and they help other people to get to that point too. But let’s talk about some of that real estate. So do you have a deal that you want to walk us through?
Yeah. Let’s walk through two of them because I don’t have much real estate, guys. So maybe, I don’t know what I’m talking about. No. The first couple of deals, man, the first deal, I’ll tell you guys, every single person that I knew in my world at the time told me how dumb it was. And the second deal, there were less people.
And now to give you, guys, a full circle snapshot, I just exited both of these deals. I actually sold them, which we can get into that as well about why I made that decision to sell. And now, I have enough cash to be able to float three years of living expenses by doing whatever I want of that thrive level based off the equity created from these two terrible decisions that everyone told me about. So, guys, real estate pays off in the future through appreciation.
It may not be this rapid COVID appreciation that we had, but if you hold on 10, 20 years, it starts to get fun. So the first property I bought was about $300,000 in North Atlanta. I put 3% down. I did a conventional house hack. So that’s what I did, is I put that downpayment down. I lived in one room, and I went and rented the other rooms out.
So when I was looking for a property, I did what David Greene calls the luxury house hack. So I bought a five bed, four bath houses, 1970s built plus or newer with two kitchens, in-law suite, two separate entrances because in Atlanta, duplexes are either way off in kind of the rural markets, and they’re very dilapidated and need a lot of CapEx, or they’re like $4 million in the middle of the city. And a lot of people are relating to this because I talked to people 24/7, and they’re saying, “I’m sitting on $80,000 of cash that I’ve saved, and I’m trying to buy this condo or this place, the house hack, and I’m not able to buy it.
I keep getting outbid. The interest rates are going crazy. And then, I’m just like, “Okay, well, let’s zoom out, and go back to what we’re actually aiming for here.” So back then, I was able to do that and just break even in the beginning, right? And then, when I moved out, I was able to rent it out by the room instead of by sections.
So in the beginning, I rented it out in the top half as a full unit, bottom half as one person living in a bedroom. Afterwards, I transitioned to the co-living approach by rent, by the room. And then, that was able to produce about 1600 to 1800 of pure net cashflow on top of CapEx and everything afterwards. So I just rinsed and repeated that same strategy and got the same house again the next year.
How did you not get shiny object syndrome and stay focused on doing that same thing on repeat?
At the time, I didn’t know anything else because I was just-
That’s a good answer.
And that was such a blessing. I didn’t even know about anything else. I didn’t have mentors or people in my life that were coaching me. I was just like, I read the books, the BiggerPockets books, and I was like, “Man, I’m going to buy this house, and this sounds cool. I ain’t going to have to pay money for rent or mortgage. It’s covered. Awesome.”
And so in the beginning, that’s what I did. But for people that have a couple of properties under their belt like I had at the time, and they come to that realization where they’re saying, “Okay, I’ve done the thing. I’ve got a couple of rentals, now I need to scale,” that’s a whole different ball game to play because now, you’re going from a focus on passive income to a focus on people, which both of you know more than anyone. At that point, it’s all about people.
You’re like, “Okay. Who has scaled where I want to scale? Who in my local market can I trust for acquisition and lead flow? Who are the top wholesalers? Who are the top realtors? Who are the top agents that I can get connected with?”
And then, it becomes a who conversation because going back to what we said, when you know you’re aware and you know exactly what you need, how much you need to come in per month and you know your who’s, that’s when you become dangerous. And so at that point, I was like, “Okay, cool.” Now, we can start to scale.
And for me, it just happened to be, “Oh, this podcasting thing ended up being more lucrative than I anticipated because I created a show myself.” And I was like, “Okay. For me, that was that.” But I know hundreds of other people that have done that through multifamily self-storage, commercial, mobile home parks because what Tony said is, doesn’t matter what you pick, matters that you pick,
And what’s your advice to somebody that is trying to pick their strategy that they don’t get distracted with that shiny object syndrome and just, “You know what, I’m going to research short-term rentals, but also I’m going to be at the same time analyzing campgrounds. And then, I’m going to be analyzing duplexes for long-term rentals.” So what’s your advice on that?
Well, that’s my favorite one. It’s my favorite one because I think I came up with something original. I haven’t heard it. So I think I came up with something original, guys. Oh-oh. Five-star rating review for real estate rookie.
So what we created was if you are in a mall and you’re walking around a food court, are you just going to walk around the food court and just look at the different places and not eat anything? No. You go try the free samples. So you’re going to walk around, you’re going to try the chicken, you’re going to try the beef, you’re going to try the barbecue over here. Maybe, they got some Japanese over here. You’re going to try all the free samples. And then at the end, you’re going to circle around and you say, “I really like the barbecue. I’m going to go back and sit down for that meal. I like that meal.” That’s it.
It’s literally like a food court. So people in the beginning, I think people mislabel shiny object syndrome because I don’t think that shiny object syndrome is a problem until you have something that’s working, and then, you leave that thing to do something else.
Then, it becomes an issue. But in the beginning, it’s about trying out all the different stuff. So maybe, you do a flip. You’re like, “Okay, that was cool.”All right. Maybe, you invest in a duplex. Maybe, you start up a short-term rental.
Maybe, you try the midterm rental strategy afterwards, and you’re like, “Oh, that was a little bit more fun.” Maybe, you try sell storage. And then, you just start trying different things. And then, you can look around your food court, your real estate food court and say, “Okay. Man, self-storage was really interesting to me as opposed to all the rest of this stuff. I want to use that as my path.”
And so, I use this another analogy to land the plane here. If you’re going to a car dealership, and we all are going into this entrepreneurship car dealership and you’re walking around the lot and all the different asset classes are the different cars to pick. So then, say, that you pick a car and it doesn’t matter which one, and you start just driving down this endless highway. So that’s what most people are doing.
So they are like, “Okay, a defeated analysis paralysis, a defeated shiny object syndrome. I’m going to do Airbnb. I’ve got this.” And they post on Instagram. They’re like, “Look at my new car.” And they start driving. But back to what we talked about in the beginning, if you don’t know where you’re going, you’re just going to keep driving, man. You’re just going to keep going.
And then, eventually, what happens when you just keep going and you don’t stop, the car breaks down. And then, that is where everyone’s having all this anxiety, this depression, this fatigue, their relationships are falling apart. They’re getting sick because they’ve been driving this car for 20 years. They don’t know where they’re going. So it’s like once you have that, so land the plane, like I said. Once you have your destination picked out, go around the dealership, test drive a couple of the cars. And then, you can pick out which one you like the best.
One thing I think I’d add to that, Brian, is for all of our rookies that are still trying to decide what strategy they want to go after, I think… Well, first, let me take a step back. There’s a few decisions you need to make. You need to make a decision on your actual strategy. And then, you need to make a decision on your niche because I could say that I want to become a syndicator. But I can syndicate apartment complexes, I can syndicate mobile home parks. I can syndicate hotels, or I can say I want to become a flipper. Same thing. I could flip single family homes. I could flip small multifamily. I could flip large multifamily. I could say I want to become a wholesaler. So you have your strategy first. And then, you have the niche that you want to apply that strategy in.
And I think the best way to find that perfect intersection of strategy and niche is doing a bit of a self-assessment because just because you know someone that makes a ton of money at wholesaling, that doesn’t necessarily mean that that’s the right strategy for you because wholesaling, in a sense, is a sales position. And you have to be really good at having conversations, handling objections, managing leads, and dealing with a lot of rejection.
And if you’re not the type of person that no matter how much income potential there is, no matter even how good you might be at it, if you don’t like the idea of doing that, you’re going to struggle with that strategy. Same thing with house flipping. If you don’t like dealing with contractors and kind of not handholding, but holding people accountable in that sense, then flipping may not be the right strategy for you.
If you want to get into the Airbnb space and you don’t like the idea of being at the beck and call of your guest and providing a exceptional customer service, my property’s turned 12 to 15 times per month, that’s 12 to 15 different groups of people at every single property. If that overwhelms you, then, maybe that’s not the strategy for you.
So the point here is that you’ve got to find the strategy and the niche that aligns with your personality, with your skillset, with your desires and ultimately what your goals are because if your goal is long-term equity gain and your goal is tax benefits, then, you shouldn’t be flipping because that strategy doesn’t align with that goal. If your goal is I want big chunks of cash right now today, then don’t go buy a single family as a long-term rental because that doesn’t align with your goal. So I think it’s taking a step back, assessing yourself and then trying to figure out how do I fit within these different strategies and these different niches.
At the car dealership when you’re at, also, those are the different cars you’re looking at. The equity, I say if you’re looking for the equity, maybe that’s a multifamily play and you’re doing a longer term time horizon, maybe, that’s like searching for the minivans for a family. Tony’s about to have this big old family that he’s growing right now with Sarah.
So it’s just like maybe you’re not looking for that fast cash, you’re not in the market for a Porsche. You’re in the market for that minivan, right. So that’s what you’re going for. And I love everything that you said. Have you guys ever heard of the DISC assessment?
Yeah. By the way, I’m never buying a minivan.
Never buying a minivan. All right. You guys heard it here first. So Sarah, when y’all buy a minivan, you come back to this, and you show it to him.
Actually, I will say we’ve rented a car in Tennessee. And usually when we go out there, I’ll get a truck. But all the trucks were sold out. They’re like, “All we got left is a minivan.” And it was a Dodge Caravan, and it was actually a really, really nice car. It had screens everywhere, and everything was automated. So who knows? Maybe, I want to buy the minivan.
I could honestly see Sarah getting sponsored by a minivan company-
By a minivan.
… and her moving reels and the dancing and the minivan doors opening up and her showcasing it 100%.
I can’t wait. [inaudible 00:40:03]
That’s a good idea. This is going to be awesome. But the DISC assessment for people listening, this is an awesome, awesome thing that you guys can take because in the beginning, it’s like, “You don’t know what you don’t know.”
And a lot of us are probably asking the question, “All right. What Tony just said is awesome, but what are my strengths? What are my weaknesses? Where are my blind spots?” When you’re looking for partners, which we can get into a whole tangent on this as peers, partners, mentors and coaches, but when you’re looking for partners, you’re looking for someone with a complementary skillset to you because if there are two of the same of you, one of you isn’t needed. All right.
So if you’re a people person, you’re super extroverted and bubbly and outgoing like me, believe it or not, guys, Labrador Retriever energy, Golden Retriever energy over here, it’s like I’m terrible at details.
So it’s like I’m not going to partner with somebody that’s a super extroverted people person. I need to partner with someone that’s hyper-analytical, that loves pouring into Excel sheets, and that’s called your operator.
So not go too deep into the operations weeds, a DISC profile is D-I-S-C. And if you go take this free test online, there’s a bunch of free resources, a bunch of websites, it will tell you what your personality style is. D is dominance, I is interpersonal or whatever. The moral of the story is that D and I, if you’re a high ID like I am, then that means that you’re super into people. It may be capital raising and running a team. That’s where you thrive.
If you’re an SC, then that means that you are really into systems, structure, compliance, building out the deal analysis spreadsheet. And if you’re an SC for a person like me that loves making content and loves being the voice and making the vision and all this stuff, I am hungry for SCs in my life. I’m starving for those people that love the spreadsheet. So you may be loving doing that. You love deal analysis, but you’re like, “I can’t stand making content. How am I ever going to be successful in real estate?” Go to that person making content. [inaudible 00:41:54]
Or like Tony, you just marry that person.
Just marry them.
You like the spreadsheet. She likes the content.
You heard it here first, guys. Go find a person that marry them. That is the secret to your financial freedom, but that also be the biggest roadblock if you marry the wrong person.
That’s also true.
So before you get married, take the DISC profile.
DISC profile, baby.
Okay. So Brian, I want to circle back to your properties. And before we move into our segments here, I want to hear the bad. So you left your job. you have these rental properties as your foundation, did everything go as smooth as you thought it would owning these properties because you didn’t mention the panic attacks. Was any of that because of things that happened with the properties? Explain more.
All right. So there’s two different points to that. But first, of course, nothing went wrong. Everything was perfect. It’s real estate. What are you talking about? Everything is okay. No.
A belief that I had in the beginning was that you can out-earn problems. This is false. For people that are listening that think that real estate’s going to magically solve every single problem that you’re ever going to have, this is incorrect. You are always going to have problems. They’re just going to look different through different stages.
They call it different levels, different devils. And I remind myself with that phrase every single day. So it’s like you’re never going to avoid them. You just get better at managing them emotionally. So the first time one of my basement units flooded, it was a lot of emotions. The water heater started leaking.
Wait, first time?
The first time. Oh, are you guys sitting down?
Just wait. Just wait, there’s more. So first time my unit flooded, it was the water heater had bust, and it completely destroyed the entire basement unit, had to get everything fixed. Tenant texted me, and he’s like “Hey, I’m in water.” What? I had never dealt with anything like this before. So, okay, cool.
First time, hyper-emotional, fixing that. Cool. Second time a unit flooded, different house. This time, it was the washing machine return hose came loose, and just launched water all in my personal unit that I was living in. And it was Valentine’s Day. So we had just come back, my girlfriend at the time had just come back and we were like, “Who spilled something on the floor, on the carpet?” And then, all of a sudden, it was everywhere. And then, it started coming under the door. And so, that was fun.
So it was a washing machine hose. So I fixed it, turned the water off, come back later. Then, we leave to go get fans to fix it, come back, have the fans going. And then, the tenant upstairs, their teenage kids came back to do a load of laundry. They realized, “Oh, the washing machine’s not working.” So they plugged it back in, turned it back on again, pretty flooded everything.
So the fourth time was heavy rains, floodplain, poor drainage, one of the gutters and everything wasn’t working, it just backed up. There was a creek. And so, then, it flooded the fourth time. So guys, by the fourth flood, I was just like, “Of course, it’s going to flood. It’s an annual tradition.” And I was traveling at that point. So I just was like, “Okay, cool. Let me call Eric. Eric will take care of it,” property manager at the time.
So he took care of that. So, yeah. And then, you also asked if any of the panic attacks that happened after I left my job were real estate related. No. The answer is because by that point, I’d had the four floods. Well, the three floods, the fourth flood happened. I’d had everything under the sun go wrong, like plumbing, electrical, roof, everything at that point.
So I tell people, “You’re not a real estate investor until you have one flood or a roof.” Now, you’re a real estate investor. Welcome. It’s not even something to be upset about. Welcome to the tribe. You’re embraced now. So I left my job. And this is a really, really important point for people that are still listening to the sound of my voice right now, which means, hopefully, you’re getting some value here.
Cashflow gets you out of your job. Cashflow will get you your initial freedom. Community keeps your freedom. So cashflow gets you out of your job. Community keeps you out of your job because I did everything right. I had the cashflow. I had six months of emergency fund cash sitting in my account. I had great community, I had a thriving podcast. Everything was right on paper.
And I left that job, and I did it. And I was more excited than I was nervous. I submitted that two weeks’ notice on a Wednesday. And I left. And I remember driving to my car thinking there was going to be a mariachi band or something. Just like when you hit millionaire status, you’re like, “Okay. Where are the fireworks? Who do I call?”
It never happens. And so, I remember I didn’t feel anything then, but it was the day, two weeks after, and it’d been two weeks of me not working. And I was texting my friends. And if anybody’s planning to go travel full-time around the world after leaving your job, book the trip close.
I had it two months out. So I had this two-month buffer of second guessing every single thing and every single decision that I’ve ever made. And I’m texting friends to say like, “Hey, can we hang out?” No, they’re working.
So thank God I had my own community that I’d invested in. And that’s ironically where I met Brandon Turner and David Greene, all the BiggerPockets guys, was through that community. And I had mentors in that group that were able to be on the phone with me and talk me off the ledge metaphorically whenever I was freaking out because I was journaling one day, and I was writing out everything that I was about to do. And I was going to go do this trip, and I was going to live in Greece for a month. And I had Mykonos booked and Santorini booked, and all these places booked.
And I was like, wait, “Greece is expensive.” It’s like, “Whoa. What am I doing?” And it just washed over me. And anyone’s had a panic attack before. It’s like a heart attack. You’re like, “I am going to the hospital right now. Call the ambulance. I’m going to die. And that’s what you’re thinking at the time.
And I remember at the time I started just walking and doing my deep breaths and I called a mentor of mine and he said, “This is going to be the scariest time of your life is after you leave that job. But I’m telling you right now that you have made the right decision. You have done the right things. I’m here to support you in any way that I can. And a year from now, you’re going to be going on podcasts. You’re going to be telling people that it’s worth it and that it’s the greatest thing you’ve ever done.”
And now here we are, a year and a half later, I’m still not bankrupt. I did something okay. So it works. And now, I’m literally living every single day feeling like Steve Irwin did, where I’m just on fire and on this like I’m in my path, in my purpose, in my passion for people that are watching Deion Sanders of what he’s doing at Colorado right now as a football coach. That’s what I feel like every single day.
So Ashley, you made this point before about education and about helping other people. I remember I was in Brazil at the time, and this thought came to me, and this is something people can take away and implement in your life today. You don’t need to be in freaking Brazil. You could be at Dunkin Donuts. And this thought is going from me to we.
So at a certain point, if you do this real estate thing the right way, you will have financial freedom, and there will come a point for all of you when you’re like, “I have more income coming in than my expenses. I don’t have to work anymore. Now, what?” And that goes back into passionate income. And what I think my hypothesis is for a lot of people, it’s going to be involved with giving back to other people and helping other people.
So I was walking on the beach, and I was feeling so lost. I was feeling so aimless because when a winner stops winning, you are no longer a winner. And the irony is when you become the type of person that can’t become financially free, you become the type of person that’s emotionally unable to because now, you’re really good at systems, processes, business, and investing.
So I was like, “I got to work on something. What is my path? What am I meant to do in life?” And the thought came to me. I was like, “Me to we.” And it was something a mentor had said to me. So I was like, “How do I help a million other people do the same thing that I did? How do I help a million other people do this for free?”
And so, that’s what started me going crazy with the podcast, going crazy with content. The account started blowing up. Now, we’re knocking on a million followers now. It’s insane, just posting videos and sharing the story, sharing the journey, letting people know that they’re not alone. And now, this is the most fulfilling thing that I’ve ever done in my life. And I know that both of you can directly relate with what I’m saying because you both do it. And watching other people win after you coach them and give them something and they execute almost feels better than when you did it. It’s insane.
That is so true. Having somebody come up to you and tell you they listen to the podcast and their story of what they’ve achieved since they’ve been listening for a year from… I mean the guests that we bring in, they just give so much valuable information. And Tony and I just sit here and get to ask questions based off our own curiosity. But it’s still, yes, it is a great feeling.
Yeah. And here’s the kicker, and I want you guys to do something. Here’s my homework for everyone listening. DM Tony and DM Ashley, and let them know how they’re impacting you. You could DM me too at Brian Lubin. Let them know because a lot of the time, we’re talking into the void. And it’s just like you spend an entire year. And everyone assumes that we’re flooded with, “Oh my God, you’re changing my life. You helped me with this episode.”
No, no one’s doing it because you all think that somebody else is doing it. And so, I had this one woman named Jamara, shout out, Jamara. She called me about some education that I was doing and she said, “Oh my God, you did a podcast episode a year and a half ago about Airbnb, and I’ve bought three Airbnbs since then. And I’m financially free. ” I was like, “Why am I hearing about this a year and a half later?” I was like, “Couldn’t have shot me an email? What the heck?” So there’s so much more impact than you know that’s going on in the background.
Brian, I appreciate you being so transparent about that journey post leaving your job because for a lot of people listening to this Rookie podcast, it is the goal that they want to be able to be in a position where they can walk away from their jobs. But there’s something that I want to point out to everyone. When you do leave your job, it is scary because it’s a different lifestyle where you’re not getting direct deposit every two weeks.
Your ability to generate income is based on the value that you’re providing to not just your employer, but to the marketplace. And the thing that I always tell myself that helps me sleep better at night is that say that my businesses, all of them just came to a screeching halt today. I know without a shadow of a doubt that I can go back out into the workplace, brush up my resume, start applying to places, and in a reasonable amount of time, have another six figure paying job just like I did before.
It’s not like I’m in a position where just because I took a break from the workforce that I’m never going to be able to go back. It’s not like I’m blackballed from every single company that’s out there. Even if everything that I’ve done as an entrepreneur failed in this exact moment, I know I could still go out and get a six-figure income just by being an employee somewhere else. And that’s what always gives me the confidence to keep moving forward because I know that that option is there, and that’s something I want people to understand.
That’s so huge. And I’ll also add to that, my buddy, Aaron Amuchastegui, he runs an awesome real estate podcast as well, and I think he’s been a guest on BiggerPockets a bunch. And so, he did a keynote at this event that we just threw, and he was saying all about his journey and how in the 2000s he was killing it, and he was making millions of dollars through. He had left his job as a home builder, and he was doing his own thing on his own.
And then, BlackRock came to him at the time and said, “Hey, we want to hire you to come on with us. We want to buy your company, basically.” And he’s like, “You can’t put me…” or they said, “We’re going to put you out of business.” He goes, “You can’t put me out of business. I’m the best.”
But it was BlackRock, and no one knew who BlackRock was at the time. So BlackRock put him out of business. And so, that directly afterwards. They bought up every single house at the foreclosure auctions. He couldn’t make a dime, and his income just disappeared. And he went through a two and a half year period of just floundering, of just turmoil with his family and everything.
And now, I met him through a mutual mastermind that we’re in as well in a community, and he’s like, “Man, if I would’ve had people around me at that time,” he goes, “I wouldn’t have floundered for two and a half years.” And Tony, I would actually challenge you on that. I don’t even think you would ever in your life ever again have to go back to that six-figure income because of how strong your community and your network is today, just from even posting free content or sharing what you’re doing, sharing your story with you and Sarah, you would never have to. It’s an option.
But because you have people in your corner, the people are always the answer. They’ve always been the answer. And the more you make, the more they’re going to be the answer. So your rental property, your house hack is not going to emotionally support you. Technology is not advanced to this level. It’s not going to call you when you’re crying when you’re down, you’re depressed. Your people will. So I just wanted to add that.
I don’t think Tony and I physically could actually go back to a nine to five job. [inaudible 00:55:24]
I’m the least hireable person. If anyone Googles me, it’s like how to quit your job, how to leave your nine to five. I’m the least hireable person in America. So those ships have been burned a year ago.
Brian, before we let you go here, brother, I do want to just drill down a little bit on the strategy that you chose because we don’t talk a lot about the co-living strategy. But I guess, first, just for folks that maybe weren’t paying attention at that point, just define what co-living is and how it’s kind of an extension of typical house hacking. And I would love to hear how you sourced your tenants and how you kind of managed multiple people living in the same space together.
Yeah. So it was just rent by the room essentially is how we started it. So in the beginning, it kind of just became this Frankenstein’s monster. There are people that are much better at this than me. My buddy Sam, Sam Wegert, plug for him, I think he’s been on BiggerPockets as well. So he’s a great co-living expert where he actually has SOPs and everything around it.
So for me, I was just doing the house hack thing. And then, I had a tenant move out upstairs. And then, I just had people that I knew already and I was just able to give them a lower than market rent. Say, “Hey, you got a bedroom over here. We do a year lease, like a traditional lease. You’re just basically leasing a bedroom.” So we didn’t have anything fancy about it, and that’s kind of how I’ve operated my entire life, is to just figure things out.
And here’s the cool thing for people that are still listening, once again, you guys are rock stars. You guys are troopers. So I’ll say this, you are guaranteed to fail. It’s guaranteed. At some way, shape, or form. At some point in your journey, you will fail, and that’s okay. I need you to know that.
So we are like, “We’re so afraid of failure that we don’t get started.” But what if you knew that failure was part of the journey, and it was actually an acceptable part of your progression and your investing journey? People aren’t afraid of failure. They’re afraid of the appearance of failure, and they’re afraid of uncertainty. So they’re like, “How long will this failure last before I find success?” So it’s like if you knew that you were four leaky roofs away from the property and the SOPs in the systems that will change your life, you’d be like, “Give me the leaky roofs.”
If you knew you were seven dates away from finding your wife or your husband, you’d go on seven bad dates. If you knew you were four crappy businesses or 40 crappy properties away from changing your life and hitting financial freedom, you’d be excited for that 41st. So that’s how I view this and view everything that I do. I was just like, “Okay. I’m going to try this out. And then, I’m going to pivot and tweak and tweak and tweak.”
And then, eventually, it came to the point to highlight this and to really drive this home, there came a point when I was traveling. And all of a sudden, “Oops, didn’t work out anymore.” Tenant became a problem. Oh, oh, it was a mother with two kids that I had taken out. She was paying enough rent to where I could take out the individual and just give her the full top unit again.
And she didn’t have the best credit score. So when it came to my tenant screening, I let her through. Tenant screening is the most important thing. The most important thing, especially for your first property. You need that good tenant for your first property. Otherwise, you’re going to be discouraged to stay in the game.
And man, she trashed it. She stopped paying rent while I’m traveling. She just said, “No, I’m just not going to reply to you anymore.” And so, it went two or three months with her paying no rent, me filing for eviction, went through that entire process. By the time I came back, the unit was trashed, and it was $17,000 to fix it. So everything was trashed. And this was in a nice neighborhood too. So I was like, “Okay, cool.” So emotional hat was off because I’m a real estate investor now. So I say, “Okay. This is what it is. How do we fix this? And where do we go from here?”
So we talk about the importance of CapEx when you’re doing your underwriting for especially single family and anything… I would be more generous with your CapEx with a co-living situation with more people because more wear and tear, more points of failure. So what I did was I was just like, “Okay. I had CapEx in my bank account, but that was getting eaten away while I was going through the eviction process,” which is the worst thing to go through in any state.
Thankfully, it was Georgia, which was a landlord-friendly state. And so, I finished that up. I go back, I’m looking at it. And my realtor at the time, who also is an investor in the local Atlanta market, he was just like, “Oh yeah, it’s going to be 17,000 to fix.”
I do this all day in my sleep. And I looked at him, and I was like, “I hate this. This is awful. I don’t want to ever do this again in my life. This is the worst thing ever.” I said, “I am done with house hacking now.” And I was like, “I’m going to do something different moving forward.” I was like, “Actually, let’s run the numbers and see what repairs would be and getting this rented back out. What’s the turn? What am I going to have to eat?”
So we talk, I don’t want to go too high level. We can bring it down a little bit, but we talk about return on equity a lot, ROE, which is what is your equity in that property the best thing to use in that property or can you leverage that through a home equity line of credit, through a cash-out refinance and do another property?
I talk about return on ROE, return on energy, return on effort. And right now, I had a thriving business outside of this. And I was just like, “Every single minute that I’m spending focusing on this is a blip on the radar,” and this is just a distraction from what else I’m trying to do in my side business, quote-unquote “my passionate income.”
So we did the analysis on return on equity and the return on energy and effort. And I was just, “Man, this is going to eat our cashflow for a full calendar year afterwards.” Now remember, this worked for four years. And, finally, there was a pop when I did something that was against my systems and my standards. So set strong standards do not waiver from them, and I wavered from them. And that was my mistake. And so, the aftermath was, I was like, “Dude, I’ve got a low interest rate on this property.”
Every single bit of conventional wisdom is telling me not to sell this property. And I hear that you buy real estate, you hold it forever. But I was like, “This is draining me emotionally to deal with. And then, I have to get another tenant.” And now, nobody wants to take the property to manage.
So I was like, “What I’m going to do is I’m going to put it on the market. I’m going to sell it.” So I sold it. And now, I’ve got enough cash to do a bigger deal now that we’re four or five years down the road. And now, I didn’t even do a 1031, which for people listening, you can do a 1031 exchange. You sell a property. Then, you have a time window in which you have to pick a new asset to invest in. And I was just like, “Man, I want to keep my one thing, my one thing.” And that’s what I’m doing.
I say, “I just want to podcast right now.” And I can financially support it. So what I did was I sold that property and now is there going to be a tax implication on one? Yes, about 10 to 15% long-term capital gains, which we’re going to offset with business expenses. And this may be a little insider baseball for people.
You guys let me know. The other property, we’re going to do what’s called the homestead exemption. So I lived in that property for I think it was like two out of the last five years as a primary residence. So we’re able to tax defer that. Now, an important note on the homestead exemption is because me and my CPA are actively going through this right now, you have to have a portion of it sanctioned for business use and personal use. So because a house hacked, if you house hack, you’re going to have a portion of it sanctioned for business use, which will probably be 50% plus.
So when you file your homestead exemption, you can do the exemption on the part that’s your personal use. So that’s another thing that’s important for people. And I didn’t know that until recently. So that’s a lesson that I just learned. So I’ll probably have to pay five or $6,000 tax on that, which is a drop in the bucket. So now, the position I’m at today, I can freaking swing for whatever fence I want to swing for. And I can take whatever risk I want to take because I have the financial foundation and the backing to be able to really launch into the stratosphere now. So it’s about emotional wellbeing over anything. And I feel like the more experience of an investor you become, the more that this will resonate with you.
If you hold the property forever and you transitioned into actually selling the properties and it’s beneficial to you, and I think that’s such a lesson right there, is you don’t have to stay stuck in the same thing. You can change and pivot and still have that strong foundation. It’s just the fact of getting started.
I will say that that isn’t to say just sell your property when things go wrong. Things will go wrong always. You’re always going to have something go left, right sideways. But if you do choose to sell the property, you need to have a strong enough business case why. So for me, it was the return on energy and effort for my other business that was already established and running, or if you are looking to do a 1031 or you are looking to have a strategy in place, don’t just say, “Oh, this property is annoying me now. I’m just going to sell it.” I would not do that. I do want to add that disclaimer.
Well, Brian, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out some more information about you?
Absolutely. I’m all over social media at Brian Lubin, just my name. Action Academy podcast it’s my show which I want both of you guys on. It’s my literal life’s passion. I have not missed a day of podcasting in 479 days. I podcast every day. I do a daily show. So I’m either making a podcast or I’m a guest on a podcast. And I’ve done it all around the world, literally everywhere.
I’ve recorded in Greece, Turkey, Istanbul, Brazil, Austin, Texas right now. So it’s my life’s passion, is that podcast. And then, if you guys want a bunch of free stuff, I’ve basically consolidated every free guide resource, and training that I’ve got at quityourjob.co because that is a dope domain that I was able to buy. And it’s dot C-O, not com. It’s quityourjob.co. So that’s where you guys can find me, and I just talk into a microphone.
I’m Ashley at Wealth From Rentals, and he’s Tony at Tony J. Robinson. We hope you enjoyed this episode of Real Estate Rookie, and we will be back with a Rookie reply.
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