Discover the underestimated power of communication and personal connections in the business world with Aaron Chapman, a finance industry expert with over two decades of experience. Aaron's journey from ranch hand to mortgage lending maverick underscores a crucial narrative: formal education doesn't always prepare you for real-world success. Throughout our conversation, we'll shed light on why some products dominate the market, not solely because of their quality, but due to their visibility and the stories they tell. We'll also share personal anecdotes that illustrate the unexpected paths life can take us on and the importance of resilience and branding in navigating the corporate climb.
Venture into the niche world of real estate investing as Aaron Chapman dissects the transformation of the investment landscape following the 2008 financial crash. Learn the ins and outs of leveraging fixed mortgages against inflation and why specialization can catapult you to the top of the market. We also tackle the intricacies of interest rates and their real-time impact on real estate investment decisions. Aaron's candid discussion on the CEO responsibilities within property investment, focusing on the selection and effective management of properties, provides actionable insights for both seasoned and aspiring investors.
Cap off your listening experience with a deep dive into the pursuit of financial freedom through real estate investing. Aaron and I unravel the reasons behind choosing real estate over traditional investment vehicles, advocating for a contrarian approach that often leads to substantial rewards. We'll also explore the vital importance of hard work, personal initiative, and the continuous quest for growth, echoing Aaron's mantra that staying static is not an option. This episode promises a trove of entrepreneurial spirit and real-world wisdom, sure to inspire your next big move in the world of business and investment.
Join the What if it Did Work movement on Facebook
Get the Book!
www.omarmedrano.com
www.calendly.com/omarmedrano/15min
Discover the underestimated power of communication and personal connections in the business world with Aaron Chapman, a finance industry expert with over two decades of experience. Aaron's journey from ranch hand to mortgage lending maverick underscores a crucial narrative: formal education doesn't always prepare you for real-world success. Throughout our conversation, we'll shed light on why some products dominate the market, not solely because of their quality, but due to their visibility and the stories they tell. We'll also share personal anecdotes that illustrate the unexpected paths life can take us on and the importance of resilience and branding in navigating the corporate climb.
Venture into the niche world of real estate investing as Aaron Chapman dissects the transformation of the investment landscape following the 2008 financial crash. Learn the ins and outs of leveraging fixed mortgages against inflation and why specialization can catapult you to the top of the market. We also tackle the intricacies of interest rates and their real-time impact on real estate investment decisions. Aaron's candid discussion on the CEO responsibilities within property investment, focusing on the selection and effective management of properties, provides actionable insights for both seasoned and aspiring investors.
Cap off your listening experience with a deep dive into the pursuit of financial freedom through real estate investing. Aaron and I unravel the reasons behind choosing real estate over traditional investment vehicles, advocating for a contrarian approach that often leads to substantial rewards. We'll also explore the vital importance of hard work, personal initiative, and the continuous quest for growth, echoing Aaron's mantra that staying static is not an option. This episode promises a trove of entrepreneurial spirit and real-world wisdom, sure to inspire your next big move in the world of business and investment.
Join the What if it Did Work movement on Facebook
Get the Book!
www.omarmedrano.com
www.calendly.com/omarmedrano/15min
I never told no one that my whole life I've been holding back. Every time I load my gun up so I can shoot for the star, I hear a voice like who do you think you are negative?
Speaker 2:all right, another day, another dollar, another episode. If you're an overachiever and you listen to this like right, when they come out, it's a Wednesday, if not hey man, it's the only day in your life that matters.
Speaker 2:What if it did work. Honored to have a very special guest, aaron aaron chapman, here. Let me do the intro for you in my radio voice. Aaron is a veteran in the finance industry with 25 years experience helping clients better understand, source and finance cash flow positive investment properties. He advises over 100 clients a month in the acquisition and financing of their investment properties and primary residences and he ranks in the top 1% of all mortgage lenders in the entire country. Welcome, brother, thank you for being on the show.
Speaker 3:Thanks, Omar. I appreciate the radio voice intro. Make it sound sexier than I really am.
Speaker 2:You are sexy dude and the radio intro mom had to pay out-of-state tuition like a million years ago for college and I maybe was a journalist for like six months or a year. So it is what it is.
Speaker 3:It's interesting how that school thing works out right. So people get an idea of what they might want to do. They go into that and you find you decide that that was a really expensive way to find yourself. And you went. You weren't over there. You know my oldest daughter. When she got accepted into ASU in business communications like hell yeah, I stroked that check, a big big ass check for the first semester and she's into it about three quarters of the way. You know, I don't know that I want to do this. Mike, are you freaking, kidding me? And she became a paramedic, which was way cheaper to have her do you know what the thing is?
Speaker 2:you're going to laugh. In academia, man, it's fantasy land. But it's so much cool to be a journalist in your college newspaper, college radio station and theories at professors and people that have never made it in the real world. Man, it's fine and dandy, but once you get in the real world, what a major kick in the ass. That's what. After a while, dude, I was working like you're going to laugh. I graduated 1996. To laugh, I graduated 1996. I was getting paid $15,000 a year salary and I wasn't working no 20, 30. I was working like 60. Oh, the guy saying, would you like a medium or a large? And can I supersize that, was making more money than me. And that's what I'm like. Screw this man.
Speaker 3:Yeah, the thing about the guys who are asking that question do you want a medium or large or supersized? When they go home, they forget about what's going on, right? They don't care about work. They don't think about work. Those of us trying to build that out, like you were saying, not only are you putting the 60, 70 hours a week in, then you're stressing the time that you're off. How am I going to get what I'm supposed to get, even though I'm putting all these hours in? So it's a.
Speaker 3:It's an interesting dynamic, and when you start talking about the education system, you start talking about the how that's all working out. Man, it's what I'm finding is people are really heavily educated on a theory that somebody else put out there, that somebody else learned so well that they have a degree in the theory but not the practical application. So, as I explained to her, get your business communications degree and come to me and I'll tell you how to communicate to people in business. Ignore that shit. You get the piece of paper and we'll pay for an exorbitant amount for that. You said it best.
Speaker 2:The one key in business, the one key in life, the one thing in sales is you have to communicate, you have to connect. Man, I don't care how many classes, I don't care how many paper degrees and diplomas you can have a PhD, but if you can't communicate, you can't connect, you can't tell that person the compelling reason why to buy from you, why to use your services, why you're way better than a competitor. You know what? It's all fantasy land and that's what academia never teaches you. They never really tell you how to communicate. Man, you can have an MBA, but you know what In the real world, being a businessman one year, two years, three years, whatever, that's a PhD in results, man, that's what pays the bills, not what some guy who's never worked outside of a college can teach you 100%.
Speaker 3:In fact, one of the things we all know is what sells the best is not necessarily the best right. The best product in the world that's being bought the most is one that's communicated greatest to the public, not the one that has the best features, benefits and really the best product, exactly.
Speaker 2:Preach, brother, because people don't understand that. You're like one of the first almost 50 people that I've had. Say that one more time. So what it?
Speaker 3:really boils down to is you don't have to have the best product, the best anything. You have to communicate it better to the marketplace. So there's so many awesome products out there that never see the light of day because they don't know how to market. They don't know how to get that information out there, and what sucks is the ones who market the best are the ones that have spent all their money on the marketing, not on the product itself, and we get a shitty product because that's what we see out there. It's all held dry by Walmart, right, you will see that it's full of stuff that's being bought constantly, over and over and over again, because they are great at marketing. People know where to get that. So, if you want to understand, I think if we can find a way to marry the two, get the absolute best product, the best information, but also be the best at communicating it and the best at marketing it out there that's when the marketplace wins and that's when we, as entrepreneurs, win.
Speaker 2:The thing with entrepreneurs is they always go the opposite way. Instead of wanting to market themselves and be known, they always want to be the best, have the best. You and I can agree McDonald's is shit, but it's the most popular. Coca-cola is shit. These are two of your best marketers out there. People all over the world want this product. Is it because it's amazing? Is it because it's great? No, marketing 101. So I tell people all the time man, get off your ass, promote yourself, throw videos, throw reasons why we need to know you, why we need to use your product, why we need to use your services. Don't. Well, I'm planning, I'm planning. I need to have the best. The best, what the best never wins, man. The best restaurants in town? No, the best marketing, one-on-one marketing and sales is what makes the world go around. The best product, fine and dandy, but it ain't happening.
Speaker 3:You brought up the best restaurants and everybody knows the best restaurants are the holes in the walls that nobody knows about. Right, exactly, those people are honing their craft. They're doing really, really awesome. I was just in Memphis the other day and I like to travel around, meet up with the people I do business with. I'm sitting over drinks and dinner with a few of the guys and one of them mentions the best barbecue and mustard slaw in Memphis at this place. I think it's Payne's Barbecue. He said. I'm like cool and I take this guy's recommendation, so I put that in my phone and find Payne's Barbecue.
Speaker 3:The next morning I'm heading to breakfast and I drove by Payne's Barbecue and I looked at it. I'm like it was. The building looked abandoned. It is a really rough part of Memphis. I'm like, okay, I'm guessing that's the old building, but I'll find it for lunch later.
Speaker 3:I kept driving when I'm later on for lunch after another appointment, I plugged in Payne's barbecue and the street that he said, and it took me right back to that same damn place. I'm like son of a bitch man. These guys have not put it out there into the world that they exist. I pulled up and there were cars everywhere. Now, looking at the place I was at, I'll just be honest, man, I racked around in my Glock and I put that sucker back in my pants before I walked in there. It was that rough looking but it was. It was some of the most amazing mustard salon barbecue I've had. I'm like damn man. I've been coming to this place for seven years and it's the first time I've heard about this place.
Speaker 3:The best places out there are under-marketed, underutilized, under, said. Now, yeah, you just said the entrepreneurs are really really poor at marketing themselves because we're not so self-aggrandizing type people that we do that kind of stuff when we're coming out to the marketplace to use us. We want to be so perfect at the time. So what I've done to try and get over that and be one that's willing to go out there and show my face and raise hell and let the world know that I'm here is because I'm supporting a team of people. I got 31 or 30 staff members that got to feed their family and if I'm not out here shaking my ass like I'm late on rent that they don't eat. So I'm willing to say find Aaron Chapman, talk that, son of a bitch, get your financing done through us. Let us help you build your business with the real estate, investing better than any son of a bitch can in the lending industry because I'm responsible for them. Get some sort of reason to get out there and do what you got to do?
Speaker 2:You're reading my mind because I was going to ask you. I'm pretty certain that the way you got to be top 1% of your field in mortgage lending was you had to put your name out there. You had to tell people a compelling reason why go with Aaron Chapman. We can go with a million people. We could go for some people, especially those in scarce. I'm trying to save an extra dollar even though they're wasting their time. Time is money. A lot of people don't get that. Was that the way you just put yourself out there and you wanted to be right off the bat, well-known in the industry?
Speaker 3:Well, I didn't know how to get well-known in the industry as far as right off the bat, right off the bat, I came into it. I'll just kind of share the reason how I got here. I come from a background in cattle ranching when I was in high school. From there I went to the oil fields of Wyoming working for a welding company, building gas plants and running pipelines. From there I went to driving truck, running heavy equipment, to actually work on a top field drag racing team. For a little while I drove their transport and I rebuilt the clutch for them. And then I worked in the mines in northern New Mexico and when they shut down that project I got laid off. So I came back to Arizona. My wife and my son would live here. I would live in a cabin on mine property and drive back and forth 10 hours at a swing. And when I lost that job I thought I can get a job anywhere. Every job I applied for I keep getting hit with I was overqualified, overqualified, overqualified. And then I ended up deciding to try and get a 10 an hour truck driving job to halt landscape rock and I went over this place applied, got the same bullshit answer of overqualified. So as I'm walking out of that that little construction trailer on their, their yard, I'm wiping tears from my face. I'm 23 years old. I'm broke as shit. I'm getting in my truck, I have a coupon for free diapers because I was too damn broke to even get diapers for my kid. As I'm driving away, the gas light comes on in my truck. So another insult to what's going on in my life Went over to the grocery store with a gas station outside on the corner, pulled up to a pump, ran my debit card.
Speaker 3:I got a decline because my account was overdrawn. I rifled through my truck hoping for a lost dollar and I found a few coins, locked the truck, I started walking the parking lot for what seemed like a couple of hours and I found enough coins to get two gallons of gas. Then I went into the grocery store. I exchanged my coupon Head down. I mean, do you know how that feels to walk up to a cashier with one item and you have a freaking coupon for that one damn item and you're already a busted person? You would turn down like crazy. And then you're walking out with your head down and then hoping nobody sees you and there's a person that recognized me as he's walking to the grocery store.
Speaker 3:He corners me, asked me how things were going. I started explaining to him. He goes, let's go to dinner. I'm like, dude, I can't afford dinner. He goes I've got a gift certificate for Red Lobster, let me take you and your wife out. He took us to dinner and he explained to me the mortgage industry and gave me a business card for a mortgage broker. Dude, I have never had a background in this kind of stuff. Right, this is a lot of math. This is a lot of information I'd never understood and I cheated my ass off to make it.
Speaker 3:Through high school. I learned how to pick a lot. That's how I got out of that damn place. So I had to go into this place, cut a foot off of my hair shave. My mom bought me some clothes that made me look somewhat professional. They started me off a telemarketer in 1997. That's where it started.
Speaker 3:It was pure hell for years, but there came a point where I started talking with real estate investors in 2003. And I decided that's my target market. I need to figure out how do I get in touch with every real estate investor I can find in at least in Arizona at the time. That's where I live, that that's buying a single family duplex, triplex or fourplex, and that's where I focused. Well, the crash happened Right, and that's a whole other story. Me going through the crash, I got put in a wheelchair and big old messed up situation. I came back from that whole mess to people coming into Arizona buying and when they got done buying up here, then they went to Indiana, then Texas, then Missouri, then Arkansas, then Tennessee and they kept calling me because of how we took care of them.
Speaker 3:I just wanted to be sure that, no matter what happened, that one person I talked to had 100% of my attention and my staff's attention, and we kept building from there and slowly, after figuring out the best way to take care of one person, domino to the next person, the next person, and that's when I decided to become the most well-known person in my space. And the best way for me to do that I decided in 2014 was to ditch all the corporate bullshit, get rid of the slacks, get rid of the buttoned up shirts and just be me. If they can stand who I am, then we have a shot at building a relationship. If they can't, then screw them. We weren't going to be friends anyway and there's no reason to work with people I can't stand to be with.
Speaker 3:And that's where it started to domino and that's where I started getting on stages and getting in front of people, because I got a kick out of being able to step into an environment where people say we've got a real estate investment finance expert coming in. They're looking for this guy in a suit and a tie with his hair part on the left, and what they got was a bald bearded sumbitch with a pair of boots and a steel chainsaw hat right. It completely changed the dynamic and I had fun with it. And then I really started to enjoy the people to the extent now, when you say ranked in the top 1%, I'm not just in the 1%, I'm ranked number 20. In the United States there's 312,000 plus people that do this job. I'm ranked number 20. And we look at how many people do real estate investing exclusively, I'm number one. And it's all because I'm dealing with people I love dealing with. I enjoy the group that I talk to, I enjoy the clients that I have and if I didn't shit, I'd go do something else.
Speaker 2:You know, you said something amazing. A lot of times people want to go and be vanilla. They want to be safe, they want to be loved. They want everybody to buy from them. You're like, screw that, not everybody's going to like me, but those that do are going to do business with me. And that's how you found your niche, that's how you found your raving fans, because you were unique. So many people are fearful man. They're fearful of being who they are, they're fearful of speaking their mind, they're fearful of letting their hair out, fearful of wearing whatever. They all want to play the part. They all want to be the safe, they say. And to me, being comfortable, being safe man, that's the worst thing. You were years ahead of your time and that's why you were thriving. I'm sure everybody's like looking at you going oh my God, are you serious? This guy ain't no real estate. This guy ain't no loan mortgage expert.
Speaker 3:It's true.
Speaker 3:And that's what I wanted to think Because think about this when there's all the answers to every question exists out there, but until you ask the question, you can never recognize the answer. So what I force is the question. Initially, because a lot of people didn't know what I look like when I would be talked into or asked to come speak and, like I said, they would say that I got a real estate investment finance expert here and people are thinking, okay, that's who's stepping on stage and I get an idea in their mind what they're seeing. And then when I step up there, they have to ask themselves what the hell is that and what's he going to say? The second they ask the question now they have to pay attention to the answer.
Speaker 3:Now there's a big risk in this. A lot of people don't realize this. You're going to take the direction I took, which is to be so damn unique and so different. You can stand me on a stage with mortgage bankers and I'll be the only one that looks like me. That's how some bitches are either wearing polos or suits or sport coats or something right. They all blend in. I'm the sole person that stands out most of the time.
Speaker 3:Well, when they ask that question, you better bring it. You better bring it hard. You better have information that nobody else has. You better slap people upside the head so damn hard they can't see straight. Because if they look at you and say there's no way that guy can do that is really what he says he is and you prove them right. You just lost complete any sort of trust in your, in your between you and them. But if you go up there and like there's no way this guy is and you deliver such information that puts them upside down, you've, you've gained that person's trust right out of the gate without even talking to them. Now you got to keep maintaining that trust, of course, but like you said, man standing out, being different is a huge, huge thing. But you better be really good at what you do, really really damn good at what you do.
Speaker 2:Well, you said it best. You over-promised and you over-delivered. You showed that and you gave everybody. You went up on stage and you're like hey, take a look at me, I have what it takes. I look different because I am different, because I am the best. It was all the mindset. You knew it. You came in there with 100% confidence, 100% certainty. You brought it on stage and you showed them. You gave them facts. You left everybody wanting more and you left everybody knowing your name because, one, you look different. Two, you came and you changed their life. Just one nugget can change somebody's life, and you did that. And three, they left saying, hey, you know what, if I want to buy more property and I need to get a loan, I'm going to Aaron Chapman, because that MFR knows what he's talking about.
Speaker 3:Well, the other thing also that people need to really wrap their head around is I focused on such a very small sliver of the industry. We think about that, right? You think about lending in general. There's first-time homebuyers, there's people buying luxury homes, there's cash-out refinancers, there's HELOCs. There's hundreds of different types of things that you can do for people. No-transcript. So what I decided to do was compete in a market that nobody's competing in. Go for the smallest sliver of it. When you look at, statistically speaking, the average person in my space, a licensed loan originator is closing one to two transactions a month. Right now, maybe two to three. Last year, I closed 1,378, which is equal to almost six every working day because I chose the smallest market to play in. They're all playing in this big market. When I found, when you try to be everything to everyone, you become nothing to no one. When you become everything to a small group of people, you literally have a lion's share of business to work with.
Speaker 2:Exactly. That's why I mean think about it. Most people are in such scarcity that they feel like, hey, man, I'm just trying to grab my piece. You're like, let those people I know I can be different, I can be unique and I can be in that sort of that niche. You know, you didn't want to be like McDonald's, you didn't want to feed the masses, you wanted to feed the people, you wanted to help the real estate investor and at the time yeah, compared to now, I mean I'm sure when you started I mean people it wasn't until what people read rich dad, poor dad that real estate investing became a, you know, hey, a new way of creating wealth.
Speaker 3:Well, where it really started to kind of blow up 2004 and five people started seeing the property values just compounding and jumping in the state of Arizona. So they're coming over from California so they could pull equity out of their house and buy two or three houses in here and it started pushing up really high. Then the crash happened and now they're saying wait a minute, those houses that we were paying $200,000 and $300,000 for before the crash, now we can pay $50,000, $60,000, $70,000 for. So we had that massive wave come and there's people groups out there that were getting groups of clients together. And just by the grace of God that I happened to stumble into a couple people that were buying from one of those groups and we hit it off with the people that were selling the houses and they said, hey, let's, I want in for me to make that introduction possible. But I had to step up and be there. I could have easily laid back and thought, well, I'm lucky, I got these two loans, but I can't really expect them to get more. And I had to force that and stay in front of that and, as a result of it, you see where we sit today. Now we're doing business in 28 states and things are growing.
Speaker 3:But what makes us unique over anybody else is helping the real estate investor understand the value of leverage better than anybody else ever has. You know, and you probably heard people talk about you know, leveraging or getting a 30-year fix on a house is a hedge against inflation, but nobody's ever quantified that with numbers. I would say that I'm the first person to actually quantify it with a real number. You know, I was on a podcast theorizing about it and the professor of accounting at Kennesaw State University heard that podcast. He reached out to me and said hey, why don't you come speak to my students? So me, you know, I'm a guy who cheated his ass off in high school to get that C just so I can get out finds myself standing in front of the accounting students at a university speaking on leverage and the economy and inflation. And then he took that conversation. He created a tool for me and in that tool I can show that because of inflation, the dollar is losing a significant amount of value every single year.
Speaker 3:But when you lock in your costs as an investor on your money to borrow to buy assets, you're paying it back with a diminishing instrument like the US dollar. So if you borrowed, you know. So you bought a house for 100,000, you borrowed 80,000. Because you put 20% down, you will pay in today's environment $191,000 in principal and interest. But when you recalculate every dollar that leaves your hands to make the payment, even at a minuscule value of 8% inflation, you only pay back $72,000 in actual dollar value. So you get to raise rents, you get to increase your income, but you're giving back the lender less. So I tell everybody, don't listen to the smoke and the mirrors and the bullshit and the shiny object crap about getting an arm or a interest-only loan. Focus on the one thing you can control a 30-year fixed loan, and you're giving back the lender hardly anything that you borrowed.
Speaker 2:Now arms and interest-only loans. Man, that was such a 2008 thing, 2007. Remember when people that didn't know a thing about investing real estate all of a sudden we're getting arms, interest-only loans and they got hammered. You know their six, seven, eight properties. They got crashed, completely crashed. You said it best right there it's a hedge of inflation. People don't understand inflation. You're going to laugh. When I was a financial advisor and I was trying to, it just means sales.
Speaker 3:Exactly, it's a really, really nice way of saying I'm a salesman.
Speaker 2:Yeah, okay, exactly. I was no closer to Wall Street. My firm told me what to sell with the pitch and so many people didn't understand what inflation was. One guy who was a car guy bought all different types of years Mustangs and whatnot. And I was talking to him. I'm like do you think 20 years from now the price of this Mustang is going to be the same, more or less? And I'm like inflation just at a historical 4% rate? He's like, well, there's no such thing as that. And I ended the conversation once he told me there was a possibility, 15, 20 years later, that that Ford Mustang was going to cost less.
Speaker 3:Wow, yeah, it's amazing how how many people have been. I don't know how it's been done, but they've gotten the consuming public to just accept certain things and just roll with it. We've been conditioned to do certain things, but yet other things they've been conditioned to do otherwise. So what I find is that people are very, very conditioned to shop interest rates. Right. You just spend hours calling lenders what's your rate? What's your rate? What's your rate? And wasting all that time rather than understanding what things they're being conditioned to do and why they're being conditioned to do it. Right. They'll accept that a title company raises their costs all the time and not care. They'll accept that when you're buying real estate that the realtor says, well, to get into this market, you should probably be ready to bid $30,000 over list just to get in the game. They're willing to accept that. They're willing to accept that when you buy a car, you drive it for two years, you trade it in, you're going to get half of what you paid for it. They just accept that.
Speaker 3:It's really crazy how we have been conditioned to accept things as consumers. Well, the goal I have is to turn all those conceptions on its ear. Why is that? Why is it? The banking industry is continuing to get you to think you've got to shop interest rate and that is the most effective use of your time, right? So let me ask you if you understand, omar, why is it interest rate that we have been conditioned to shop interest rate? Who benefits from that?
Speaker 2:Who benefits from that is the banks, the loan originator, because you can throw down any junk fees upon junk fees and literally the only thing people look at is the actual interest rate. Even with an interest only loan or the arms of, back in the day it was what's my interest rate? To me that's like going to a car dealership and we're like, hey, so how much can you afford?
Speaker 3:Yeah, and that is all true. Let me get to where it's even more nefarious than that. Have you ever looked at a 30-year amortization schedule and see what the first five years looks like?
Speaker 2:Yeah.
Speaker 3:I have, but before divorce, so it's almost it's virtually all interest right.
Speaker 2:Yeah, oh, it's more than the first five years, but yes, the first five years. You're just stroking a check to JP Morgan Chase, exactly, you're just giving them money to borrow that money.
Speaker 3:So I can tell you we're going to let you have this big 30-year fixed blanket that's going to keep you safe for 30 years. You know what your costs are going to be for the next 30 years. But within about four years, man, they're tickling that refinance, that little refinance thing, in your head. Man, you got to get moving on this, this refinance Rates just got better. You should refinance, it seems. Every four to five years people are refinancing their houses. So what you'll find, even have an example here.
Speaker 3:I have a client who came to me had 120, he purchased his home, had $120,000 loan on it. He starts this he comes to me to do a refinance because the rates are better. So we look at his balance. His balance is just under $114,000 at that time. So he had paid over that period of time $34,000, plus about $35,000 in payments over four years. But he only dropped his balance from 120,000, 114,000, about 6,000 bucks. You pay 35, but you only drop your balance by six. But now he wants to refinance, right, and I'm telling him and this is the worst time in my business when the refinancers are happening I'm like don't do that just for rate.
Speaker 3:It's stupid, it's a waste of your time and money. But some people you can't convince. Well, he went ahead and went forward to refinance. He convinced me we need to do this. So he ended up refinancing, bringing his balance it was at 114 and change to $119,833 when he closed on that loan. He started at 120 four years before. Four years later he refinances it at 119,833 because he added the cost back onto his loan. How far? Did he go.
Speaker 3:$167 is all he dropped his balance by. After four years he paid almost $35,000. When you run the numbers, if a person keeps doing that every four years for 20 years they paid $180,000 in principal and interest. What is their balance 20 years later? It's within $1,000 of where they started. That's why interest rate is being made to be the most important thing, because if a bank can trap you in this shit. He paid 180 grand on $120,000 mortgage but he still owes $119,800.
Speaker 2:That's called marketing.
Speaker 3:Yeah, and it also ends up being called slavery to the person who's being marketed to.
Speaker 2:Well, did you know that Latin mortgage literally meant death? Really yeah.
Speaker 3:I learned something out of this man.
Speaker 2:Literally, because back in the day nobody was going to live. That's why it was death. You bought a property, somebody's going to you, will it to whatever, but mortgage meant death. Interesting.
Speaker 3:Yeah. So now we know that you're literally not only you and financial servitude. You're really setting yourself up for death when you do this. So that's where I explained the real estate investor leverage that damn thing for 30 years and don't touch it unless you refinance to pull cash back out to buy more properties, make your properties, buy more properties, make that breed for you and compound your ownership, compound your. And too often people get caught up in what they call the cash on cash return model. What's my first years of cash flow? This is not a good deal. Don't look at the first year, don't look at the first two or three years. Look four years out when you're raising rents.
Speaker 3:Rents are going up over 12% annually in the United States. Now I believe it's been a bit immoral what we've seen with rent raises lately. I mean, some markets are seeing over 30%. You're seeing people's rents. My daughter just told me that her rent's going to go up over $100 a month midway through her because she signed this lease that they put a little clause in there that says that they can raise it during the lease period.
Speaker 3:That's bullshit, right? These people that are renting these houses out need to be a little bit more, a little bit less about the dollar, a little bit more about the people right, and we're taking advantage of people. I really find that to be an immoral thing. Three to 5% very, very acceptable. I mean hell. If you're getting $1,000 a month rent and you're making $200 a month cash flow your first year and you raise it 3%, that only goes up by $30. But that means your cash flow goes up by $30, which, when you do the calculation, that's a 15% compound growth in your cash flow. Every time you raise the rents 3%, you get a 15% compound growth in your cash flow, while you're paying the lender back at an 8% decline or even higher, based upon inflation today. Do it in a way that has a good, steady, predictable outcome. Quit trying to take advantage of everybody else and then get pissed off when somebody else wants to hit you with a different interest rate.
Speaker 2:Well, that's what it's mind boggling. I'm in the house now but literally like right when I I got a divorce bougie apartment, two bedroom, 2,200 bucks a month I'm like Whoa, that's fine. And then they're like, well, uh, your lease is up, we're going to have to raise rent. And I was thinking you know the typical four or 5%. They're trying to raise me an extra 800 bucks a month, the 3,000.
Speaker 3:Yeah, 3,000 bucks, $3,000,. Man, that's a $600,000 mortgage. Exactly, at least, it was a $600,000 mortgage. It's not quite right now. It's a little different than that now.
Speaker 2:Man, you've been explaining a lot because, believe it or not, I was going to ask you how would you go about now telling people it's still the best time to invest in real estate? What we're talking about not about buying a house, creating wealth, being a real estate investor. When you hear everybody panicking saying the rates are going up, inflation's going up, the sky is falling, everything horrible is happening.
Speaker 3:Well, let's talk about those things right there. So inflation is claimed to be the highest it's been in 40 years, right?
Speaker 2:Oh yeah, I remember when it was Jimmy Carter.
Speaker 3:Yeah, so do you know what the interest rate was 40 years ago on a home?
Speaker 2:It was around like 18%, right, because I remember my mom was like yeah, 17 or 18%.
Speaker 3:Some people are paying over 20, right for a home right. So then, do you know what the federal fund rate is today? No, but you're going to tell me 1.75%. You know what the federal fund rate was 40 years ago when Paul Volcker was running shit.
Speaker 2:No, but you're going to tell me I was only eight 17, 18%.
Speaker 3:Right, so same here. You know I was born in. I think I was six, seven, yeah, seven or eight. At that time I was seventy four seventy three for me.
Speaker 2:So you know we lived through that, but we didn't know what we were living through, right?
Speaker 3:Oh no no, yeah, here's the thing. If inflation is the same as what it was then and interest rates were that high, the federal fund rate was that high. But yet today we have investors getting interest rates in the sixes, maybe low sevens, and investors. The federal fund rate is at 1.75. And we're hearing some of the members of the Fed saying well, I think it was John Williams of the New York Fed saying we see the federal fund rate going 3% to 3.5%. What the hell are you waiting for? Take advantage of it right now, because we've never seen such a gap between those two. We should literally have a 10% higher interest rate than what we have now. And you're bitching. The other thing is you're going to end up paying points. Somebody is right now offering money to you for 30 years. If you look at the real rate of inflation, it's over 17%. So that means they got a 17% burn rate on that money. Even if you go with the Fed's bullshit rate of 8.6%, they got an 8.6% burn rate on that money. It's losing 0.7% of its value every single month and they're going to ask you to pay 7% Then maybe a point or two upfront. What the hell are you waiting for? Take advantage of that now before they pull the head out of their ass Because you're getting your money for free. You're literally borrowing it for less than the value of the dollar you're giving it back at.
Speaker 3:So that's why I tell investors quit worrying about rates going up. I tell investors you're the CEO of your real estate investment business. You have two damn jobs Pick the right people to work with and pick the right business to buy, the business being the asset, the property. That property has to stay reasonably rented for the entire time you own it and you can raise rents on it. You can do that. You've accomplished your goal period. That's all you have to worry about.
Speaker 3:As far as the rates and all that other crap, let all let it do what it's going to do, because you're never going to pay back what you borrowed as long as you get in the market and you set your costs. A good in a good CEO doesn't worry about the cost. They worry about their margin. Products are going to cost more, inflation is going to drive materials up, but if you can raise the margin to the market that you're selling it to enough to cover all your expenses and make a profit, that's what matters. So, because inflation pushes up our rents as high as 30% per year in certain markets, 12% average across the country. You know damn down well, the money you're you're leaving in your bank account is burning a lot faster than that. So get it to work in the market and let it sit there and build for you.
Speaker 2:You know. The best part, though, is quit listening to the masses. Quit listening to the masses saying you can't. Why would you want to invest in real estate? Cause the higher rates, the higher inflation. These are the same people. Why would you want to invest in real estate? Because of the higher rates, the higher inflation. These are the same people. Do you want somebody to call you up? Have you ever the toilet? You know the toilet's broken at two in the morning every, every single time, and, like anybody that doesn't, these, these people probably only invest, like in their safe quote unquote IRA or their their, you know, or their 401k SEP that their company gives them, but yet they'll say you don't want to be fixing headaches at two in the morning. Well, they're going to ask so what are you doing this weekend and then the following weekend? So exactly.
Speaker 3:Well, and the thing of it is there's nothing wrong with those folks that don't want to get involved. That stuff's like. God bless you. Right. It's especially like golf. I don't understand the damn game, nor do I have any sort of interest in wanting to understand the game, but I've got blessed golfers because if there wasn't golfers, maybe they'd be out in my tree stands hunting my places. Maybe they may be where I'm at in Alaska trying to hunt moose and, in my damn way, go play your golf, go do your thing, enjoy the weekend sitting on your cooler and drinking with your neighbors and just kicking back. So that way you're out of my way while I want to go build my business.
Speaker 3:Real estate investors. What I explained to you is that you got to find your own road. You got to quit listening to the masses. Like you said, those who don't want to invest, good, don't invest. Stay out of our way and let us go do what we're going to do. The fewer people that get out there and want to play in this, the more opportunity there is for us. The goal that I have is to get everybody to understand the burn rate of money better, understand the advantage that you have. I even built an app. The numbers I gave you from the tool, they can actually download the app. In fact, if I have share screen capability, are people going to see this or is it all going?
Speaker 2:to be verbal. No, I've got an ugly mug, dude. I might throw it down on YouTube later, but I only have like 10 subscribers. But no, they'll see it, but plug the app, dude. They can go to my website.
Speaker 3:AaronChapmancom or AaronBChapmancom. Either one, shoot me a message, we'll get you the app. We'll shoot you the email so you can download the app and you can calculate this stuff for yourself. That way you can see what the real value of money is and how that burn rate works, and give you more confidence to go out there and kick ass over somebody else who's questioning do I buy this place? Do I not buy this place? Well, you know that you're going to buy the damn place.
Speaker 2:You take advantage of it while they I don't see why now is not a great time to invest in everything, brother, there's. You know, people keep on. They're fearful. That's that little voice inside their head. Oh, fearful of failing, fearful of looking bad, always trying to over-prepare I'll take action when I'm ready. You're not ready, man. Now is the best time. Yesterday is the best time when it comes to investing. There's two investments One within yourself and your corporation, your head, things that make you more remarkable, things that promote your business, and two real estate stocks.
Speaker 2:Yes, and to me, always be a contrarian. When people are saying not to buy real estate, that's when you buy it, because I remember, like at 2005 and 6, when everybody was like into real estate, that's when you sell. And the same thing with stocks and the same thing with crypto. Four or five years ago, nobody wanted it. Six, seven months ago. Hey, are you investing in Dogecoin or what cute little? No, that's when you dump everything. And even Warren Buffett, the guy who was once the world's he probably would still be the world's richest man if he didn't donate so much money. Be a contrarian man. When people are selling, you start buying so much money. Be a contrarian man when people are selling, you start buying and when people are buying and everybody's just talking out of their ass like they're a real estate investor or a crypto investor and all that. That's when you dump and you run.
Speaker 3:Well, the other thing is inaction itself is the greatest risk to anybody. Too often people are too scared to make any sort of move whatsoever, and I understand that. Man. It's like which direction you go.
Speaker 3:There's too damn much information out there, so I got to narrow it down to what you're going to do and just focus on that one thing. There's too many shiny objects out there, and much, and they may be great object right. There may be great things to do, and I'm just as guilty getting wrapped up in too much shit. That's where I keep never going to build something that takes me away from this. This is always going to be the thing that I continue to do, because this is where I found success. This is my niche, this is my life, this is what's going to make it happen. But sure, I'm going to do other things, but for the most part, don't let it distract you from your one thing. Keep on your one thing. Don't do things that's not going to compliment your one thing. Again, I'm just as guilty of it.
Speaker 3:And the whole thing of being yanked all these different directions because you might be able to do awesome here, you might do awesome there gets you to a point where you do nothing at all and, as a result of that, you have your money sitting in your bank account, inflation working against you, right? It's burning up that value faster than you can do anything with it. So find some place where you can put it, and it's going to be able, and real estate's the only place I have found that you can actually invest in inflation. The only way to invest in inflation in real estate is to finance it for 30 years. Right? If you lock up that heavy leverage for 30 years, you are now riding the wave of inflation to your benefit. If you pay cash for it, you're still going to ride it, but not near as high.
Speaker 2:And the best part, man, all the tax advantages, because I was a big stock guy for so many years and Uncle Sam's there saying hey, man, we want 40% of the capital gains If you sell it within less than 12 months, that's like 20%, 25% If you hold something over a year, it's like, come on, uncle Sam, at least with real estate you can buy 25% down compared to like Wouldn't hurt me so bad for the taxes that we pay if we knew they were doing something with it.
Speaker 3:That was a benefit to everybody.
Speaker 3:I don't mind paying taxes to make sure the roads are done, that the infrastructure is safe, that everything's done they're supposed to do. It's all this pet project bullshit that we have going on. That's just wasted. Come on, guys. One thing I absolutely detest hearing is public servant, public servant, public servant, my ass. You guys are making millions off of us. You're one, you're charging a salary. You, public servant, my ass. You guys are making millions off of us. You're one, you're charging a salary. You're getting your personal security walk around covering you for everything and on top of that, you're making backdoor deals. Where you're, where you're making fortunes off of what we're paying you supposedly to do. Don't give me that public servant bullshit.
Speaker 3:Pension too, don't forget. They have a lifetime yeah and a pension for the rest of their damn life. For doing what? For sticking us in the ass for 40 years of their existence?
Speaker 2:You're going to laugh when people and I laugh at all people that drink the Kool-Aid on either side, because I've been alive almost 49 years and they piss money. Just the same, man. Whether you're a liberal, you're a conservative, it doesn't matter. It doesn't matter, man. The roads have stopped. Everything's been the same.
Speaker 3:And I really wonder you know there's people that go in there with good intentions, right, and we do see a few of them out there and they're slugging out, they're fighting those son of bitches because they're like.
Speaker 3:I'm tired of it too. I was on the other side of it. I was the person getting taken advantage of. That stops here with me, but I'm not wondering if they're not getting pulled aside. It's like dude, you either play ball or taking your ass out because you're not going to come in here and start upsetting some of the children. It's an establishment.
Speaker 2:Man, you know what You're going to laugh. This is when I learned it was just like World Wrestling Federation. It was fake. When the democrats and republicans they hate each other. I remember when john bainer was the speaker oh, I hate obama, I hate obama. And then they would go golfing together. Yeah, it's like, but I thought I thought you guys were arch enemies that hated each other. Oh no, no. In fact, if people look at the money trail, all the major corporations donate the same amount to both parties they don't care who gets in, just as long as one of their guys gets in right, so yeah, this this has a way of dominoing out of control.
Speaker 3:But, just like you said, you know you see the golf, the lot of golfing outings and the pictures their arms are.
Speaker 2:You got obama, you got bush and you've got uh clinton, all hanging out.
Speaker 3:Well, and we don't see the Epstein list being released, so we got that thing too. So who knows where that picture was taken?
Speaker 2:It's true, man, but you see, this is what I love, that we're talking about Focus on what matters, man. Don't focus on politics. Don't focus on, you know, all that stuff's a smokescreen. This, right here, what you're talking about, can change people's lives and generations to come. This is wealth, man. This is how you create wealth. You can't create wealth watching CNN or Fox News or hammering on social media your views, man. I mean, yes, somebody can start late, but it's not how you start, man, it's how you finish, and it's not even how you finish.
Speaker 3:It's how you play during the middle of it, because that's how it determines how you finish. And let me speak to any young listeners right now that might be catching this If you're in your life right now and you see all the stuff that's going on around you, you do have a tough road ahead of you. But let me tell you this Omar and I had a much rougher run in the respect of trying to figure out how we're going to put bread on our table and how we're going to get money in our pocket. The guys were everybody from our generation. We fought over the jobs that were available. There was a handful of jobs and a lot of people trying to get them and we had to slug it out with each other, trying to prove who's the best person to get that job. It was tough getting a job. Now you have shit, tons of jobs available to you and you've got a ton of people don't want to freaking do them.
Speaker 3:But I told my son he's 25 years old now he started with FedEx. He got a job opportunity to sort boxes at the airport for FedEx. I said, I explained to him you've got one of the greatest opportunities I've ever seen, which is you've got a generation of people around you who are not willing to put the work in, not willing to bust their ass, not willing to sweat it out every day. If you go in there willing to do that, find out from your supervisor exactly what makes the best employee in your job and how to become better at it and go to the next level. Find out what does it take to get to the next level Not just be best at yours, but what's that next step and keep working towards that. I guarantee the people around you aren't willing to do that.
Speaker 3:You know it wasn't long. He went from the sort to being able to be to running the loading of the bins, from the loading of the bins to actually putting them on the airplane, to the guy who ran the equipment putting on the airplane, to the guy who actually ran the crew putting on the airplane. Within a couple of years Now he drives truck for FedEx. Now it doesn't mean that that's his end-all be-all. He also started kind of taking over a portion of my father-in-law's business as an entrepreneur, drawing house plans on the site.
Speaker 3:He has got a lot going on in his world. Now and again he has to go back to the sort to pick up boxes with his truck. The same people are still working the damn sort right because they don't have the driver ambition to go beyond it. Just know, if you're in the world today trying to get a leg up, you've already got it. If you decide to go out there and whoop ass and you're not going to take no for an answer and you're going to try and find your way, you don't have a whole lot of people in your way to get there.
Speaker 2:But you see, he's in the minority. Young, the young generation now it. I don't know whether it's participation trophies or whatnot. They're like hey, I showed up, I want to be ceo, and it's like no man, that's not how it works.
Speaker 3:You got to take your beating first, man you got to get your ass whooped first.
Speaker 2:We're products, man, people, our age, you know, young people, hey. So what was it like protesting? Like protesting? That wasn't our generation, man. Our generation was about let me earn and let me shut up, right? We never protested, we never did anything. And it was funny because I remember, you know, the older generation, the Gen X, was going to, we were going to, you know society was going to crumble.
Speaker 3:Man, we're carrying the heavy load of both. We're carrying them and the next generation.
Speaker 2:We're the muscle man.
Speaker 3:I truly think the shift happened, not so much as a participation trophies, but I think the shift happened when you and I are in high school and they started calling the cops. Every time there was a play, there was a fight outside the school. That's when the shift happened, because it used to be that you could slug it out on the playground in grade school and the teacher would watch and wait till somebody started kicking and then they'd pull you apart right, but as long as you're punching, it was okay, as if it went to the ground is okay, but when somebody started fighting dirty, they stopped it. That's when bullies learned that either you got the balls to be a bully and back it up, or the person getting bullied stepped up and became more of a, more of a and, I guess, a more of a man. You know they're only a kid, but they found that. They found that breaking point and there was a community. There's communication that went on there and there's overcoming adversity and there's interacting with others.
Speaker 3:That has completely been wiped out and we stopped that playground fighting. Allowing kids to slug it out was it was to me, a graduation process for life that we took away from them. Not allowing them to do that took a certain part of their maturation away from them. Not allowing them to do that took a certain part of their maturation away from them. Now look what we have. We got a freaking society full of breastfed bitches that bitch about what they don't have because they haven't fucking earned it yet well, no, they want to say that, that you know their generation is the hardest and they've been through so much.
Speaker 2:and it's like what have you been through, man, you guys haven't we? They've been through so much and it's like what have you been through?
Speaker 3:We all have been through something. You know life is tough for anybody. Guys just know that. For anybody. Just get out there action. What's gets it done? There's this thing that you hear in the military saying violence of action.
Speaker 3:If you're going to win you have to be moving all the time, you can't stay still, and that's the whole thing. Just the action itself gives you a better advantage of being able to get it done. So I mean, that's going to be the best advice I can give everybody Just get off your ass and get moving some direction, and if you're not, you're bound for failure period.
Speaker 2:Well, the world doesn't owe anybody shit, and you know, sorry, life isn't fair. Some people, yes, were born with silver spoons. Some people had better cards than you're dealt with. But you know what? Suck it up, man. Quit bitching about it. Do something. Buy a property, do create a side hustle, work for yourself. Do something, man. Don't wait and hope that life's going to get better. Because yourself, do something, man. Don't wait for and hope that life's going to get better, because time goes by fast, man. If I was sitting on the sidelines waiting for somebody to hand something, man, I'm going to be 49 next month.
Speaker 3:All those things that you just said. Not only do all that, but stick freaking with it, guys, don't give up after two, three, four months. Man, if I throw in the towel when it really sucked, I would have said well, that loan origination shit doesn't work. I've heard a lot of people that, oh, I was a loan officer once. I was a loan officer once. I was a loan officer once. It didn't work, it didn't work.
Speaker 3:I'm doing break 100 transactions a month. That's a huge, huge, huge deal. And now we're still hitting that. And we were barely hitting that 100 a month right now because the market, there's just not inventory for my clients. I have tons of clients, but the inventory is coming and when it does, we're going to get that barrage of 200 transactions a month and 300 a month. When I go to the grave, I'm coming in hot. I ain't planning on giving this up at any time soon. I need other people to understand that. Find where you're useful, become better at it and stay with it. That's it. Unfortunately, I got to be on my next thing, but that's the shit you need to be doing.
Speaker 2:You said it best, man you have to pay your dues. Everything sucks when you first start. Pay your dues. Everything sucks when you first start, man, when I was a businessman, when I became an entrepreneur 20 years ago compared to now, of course, man, you're going to fall flat on your face. It's going to be hard. It's going to be hard being a loan officer. It's going to be hard in any field. It's called. You have to pay your dues God, life, the universe, it's like in order to become successful. All three, God, the universe, and just man says what have you done? Where are your dues? It's not, hey, man, life isn't fair. Keep on waiting for life isn't fair. Keep on waiting for life to be fair.
Speaker 3:Well, the one thing about earning it. You know paying your dues and earning it and all that kind of thing and I'll have to jump with this thought is it's a lot easier to achieve it than it is to keep it. So if you have not paid the dues and you have not gone through the difficulties it is to get there, if it was just handed to you you would not know the lessons, you wouldn't know the procedures and the things you got to do to hang on to it and keep growing it. So it will slip through your fingers. You've got to pay for it to get it, and then you'll know how to keep it.
Speaker 2:Well, that's why lottery winners or people that go to Vegas and win on the progressive slots, they lose that money. They had no skin in the game, they didn't have their soul in there, they weren't up at night, they didn't create a process of earning anything, and that's why you can win 40 million bucks, 50 million bucks. That money's gone, man. They never created that mindset 100%.
Speaker 3:Well, I appreciate you allowing me on here to chat with the audience, brother Dude same here Plug away, promote, always promote, man.
Speaker 2:That's why we're here to learn, but we're also here to listen to you promote yourself, man. Thank you, it's the best way to find you.
Speaker 3:Go to AaronChapmancom, it'll always be. Thank you. Go to Aaron Chapmancom, it'll always be there. Or Aaron B Chapman, it'd be. As in boy. I had to do that one first, and then the kid who was putting his baseball stats up there with my same name. He finally relinquished his uh, his uh web address and I got Aaron Chapmancom. But you that still doesn't work for you. Just Google me. There's only one bald bearded redneck with a steel chainsaw hat as a lender out there. The rest is a soccer player, an author, a pastor or something else.
Speaker 3:I'm also an author. You can go to Amazon and look up Aaron Chapman QJO initiative, as in the quit jerking off initiative. You know those are the books that I have out there. I've got another book right now. I'm finishing up. I'm working on with Robert Allen. I don't know if you remember him. He's the OG of purchasing with no money down, and I got four more to release after that. So I'm just trying to get the data out there to the world. If you don't pick it up, that's your own damn fault. For me, I'm going to get it out there, and if I die and people don't pick that up, so be it. Eventually somebody will and they'll change their lives.
Speaker 2:Brother the two of us were in service. We're not chasing money. We're not chasing money. Yeah, once you help people, the money follows. And thank you, thank you for your time, thank you for for giving us wisdom, man, you, you blew my mind away on a lot of things, brother, every day. If you're not learning, you're not growing. If you're not growing and learning, you're dying. Thanks, brother thank you.
Speaker 1:If you're not growing and learning, you're dying. Thanks, brother, thank you for a long time to make you happy. You gotta take action. Just imagine what if it did work.