Follow Incentives, Not Instagram

Your advisor is lying to you. Not because they're evil. Because their incentives are misaligned with your success.

In this episode, Ryan and Tanner break down why social media real estate doesn't match reality, why grit matters more than hype, and how to find advisors who actually have your back. This is the conversation YouTube's algorithm won't promote but your portfolio needs to hear.

Subscribe for more conversations about faith, freedom, and building a life on your terms.

0:00 - Intro
4:42 - The Instagram vs. Reality Gap
6:55 - First Deal Disasters (The Collapsed Sewer Line)
8:33 - The New Investor Mindset You Need
15:04 - Why Incentives Drive Advice More Than Values Do
16:40 - The Lifetime Value of Integrity
20:27 - How to Find Unbiased Advisors
25:13 - Grit: What It Actually Takes
26:24 - Multiple Exit Strategies (The Real Playbook)
51:30 - Nobody Does It Alone (Ask for Help)
1:02:13 - The W2 Security Myth

Episode 82 of the Freedom Fighter Podcast with Ryan Miller and Tanner

Follow Ryan on Instagram: @ryanlmillerinvests
Listen on Apple Podcasts, Spotify, and all major platforms.

#FreedomFighterPodcast #RyanMiller #FaithAndBusiness #Entrepreneur

Transcript

 I'm the only one I know that has flipped one unit three times in less than six months. People perform or they, they act on their incentives, not on their values. Everything I touch turns to gold bullshit. Too often we think that a W2 is secure. Meta just announced they're laying off 20%.


 So, dude, I gotta tell you, ever since I started real estate, it's been just like every TikTok and Instagram, YouTube video. Since I've been there, I've never had any failures. Everything's been perfect, smooth sailing, and it's like a, a, a dream come true when it comes to investing. Is that your same, uh, history with investing?

Yeah, yeah. I, I wake up at 2:00 AM every morning. I do a cold plunge. I've got three Lamborghinis in my garage and, and I only work two hours a week. So yeah, it's everything that, all the YouTube videos that it would be. Obviously we aren't very serious with that, but I, I think that is the, the story that is told on, on TikTok, Instagram, YouTube.

And I know for me, when I got into it, I was, I don't know, 40 or something like that. So I was, I was a little bit older, so I had a little bit saved up, if you will, but. It was still way harder than I think most people realize starting off. And you drive by these nice apartments and my wife's like, why don't we own one of those?

Why? Why do we have these little crappy duplexes and six plexes and quads and all that stuff? And I know for me, I, I've told the story a few times about how I walked away from my first deals out of fear more than anything. But even the first few properties I bought, not that I bought a ton, but I've never, you hear of home runs, grand slams and maybe I just got in at a bad time.

But if you're getting in investing today, real estate business, all that stuff, you're not gonna hit a home run your first time. And I think that is what. The internet teaches you? Well, I mean, someone's gonna go in the comment section and say that their first deal was a home run, and, but for anyone that I've seen that didn't lose their, their ass on their first deal, the next five were pretty difficult.

And so I, I definitely experienced it. And even doing all the research, like I did two plus years of research before we bought our first property, I thought that I, you know, had eliminated most of the, the risk and trial by Fire Un until I did it. There was so many things that I, I hadn't even considered like a collapsed sewer line.

The, the first duplex that we bought, we, we didn't do a sewer scope. We did a full home inspection on the duplex and didn't know that the sewer had collapsed and there were tree roots going through it. And backed up into the unit. We just got done renovating this, this unit after 30, 60 days of owning it and sewage backed up into it.

So we had to file an insurance claim, renovate the whole thing. It was a nightmare. It was, I mean, I'm the only one I know that has flipped one unit three times in less than six months. Yeah. It's, uh, for me, I didn't have anything catastrophic like that, but it's just, you mentioned all the time the, the unknown unknowns.

Mm-hmm. And when I first bought my first stuff, I was getting interest rates in the fours, and that was, that was still fairly high for, we, we started with the wind in our back and it was still hard. What do you mean? Like with the low interest rates and, you know, the, the wholesalers were really active and like, so we had a lot of advantages getting started.

It was still difficult. Yeah. And, and it's not like that now, but I just, it's still like a cease that I not as much as probably. 20 20, 20 21, 20 22. But it's still, you know, do a wholesale deal and get $30,000 or flip this property and get $30,000. And I was talking to Sean Gomez the other day. He is like, dude, I can't find properties right now.

It's, you know, everything's $30,000 over. And too often that's, that's what it is today. So if someone's getting in right now, what kind of mindset do you think they truly need? I think, I think they need to be constantly evaluating the opportunity cost of, you know, if I invest in this single family, which is, Sean's a perfect example of that.

Like, I talk to him regularly and we're talking about partnering on bigger deals now because the, the smaller deals, it, it just doesn't make sense. You've, the sellers are pushing all the margin out of it, and the construction costs have gone insane. Like, we've gotta change the strategy. And so if we were pigeonholed to, I, like, I remember getting started at, at the real estate events, and they're like, it's almost like you have to wear what you do on your forehead of like, I'm a flipper, I'm a buy and holder, I'm a whatever.

And they, they want to stick. It's, I'm an investor, I follow what makes sense. And I had a conversation the other day with a guy who's got a, you know, five to $10 million portfolio. And I told him that, uh, as a real estate guy, someone who's liquidated everything, put it all into real estate. I think you should sell all your real estate and pay your capital gains taxes and put this money into treasury bonds because you get a better return than you're getting right now.

And how insane is that? And pattern disrupt to hear a real estate guy say, go buy super safe, low risk stuff because the deals that you have him in are, are not working. And so he's ready to pivot because of that and look for better opportunities, multifamily, commercial, you know, things that make more sense for his goals.

So I think to answer your question, having a good understanding of everything and not, not getting scatterbrained and be like, I just bought a single family in Atlanta and then I bought a duplex in Montana. And like, you do all those things. Like, that's, that's not diversification, that's, that's just being scatterbrained.

But having an understanding of the different sectors and knowing when the time to pivot is there's, you know, real estate cycle seven years or 13, 15 years, whatever for this most recent one. Different asset classes make sense at different points in the market. So. Follow the market, be ready to pivot when necessary, but always be looking at your return on equity, not just picking a metric and say, I only look at cash on cash.

I only do deals when I get 10% cash on cash. Like, I, I think that that's just flawed metrics. Do you really think treasury bonds is a better investment right now? No. You kind, you kind of had me no myths whenever you said that. Yeah, no, I, I would not say that they are a better investment. I think the performance, evaluating the actual performance of this particular portfolio, I said that you would've been better in treasury bonds because he was just not earning good money on this portfolio.

So for if, if you were asking me, honestly, what should you put it in? I mean, looking back, I wish I would've put more money into the s and p. 'cause 2024 and 25 was what, 13 to 16% returns? Yeah. It's better than a lot of my real estate deals are doing. Not better than my best real estate deals, but better than a lot of 'em.

Yeah. I guess I'd push back on that. 'cause it depends. You have to pay capital gains on, on that real estate saves you from paying taxes. So I think it's hard to evaluate a deal in, in that limited mindset of what's my cash on cash return. Mm-hmm. Or what's my, 'cause you can't do an IRR, I guess there's probably a way that you could do an IR calculation and factor in your tax savings.

Mm-hmm. I, I have, I have calculators that do it and so, so for example, this this investor 10 31 into this package and so his basis is nothing. And so he's not getting any tax savings on it. So the only thing he's getting is appreciation and because, well, he's getting tax savings from not in the pay it when he sold.

Right. So he's getting the deferred taxes of the 10 31, but not on, he doesn't get any depreciation benefit for the current portfolio. So the only metric that matters for him is his cash on cash and appreciation and debt pay down. So if his debt pay down is three to 4% per year, and his cash on cash is 4% per year, and he has a super high risk portfolio, super high risk, meaning North Omaha single family package, like all scattered individual houses.

When one furnace goes out in a 1960 building, which happens every year, all the cash flow for that unit wiped out for the year. So why did he 10 31 and two, what was the end before that? He 10 31 to into, uh, single family North Omaha houses because to me that's, uh, that's where you start off at is buying single family North Omaha, south Omaha houses not.

10 30 wanting into something like that. So, I mean, without getting into the particulars of this investor, he was sold a package that happened to meet the criteria for how much he was 10 30 wanting almost perfectly. And he was sold this vision of being hands off and passive. And I talked to him the other day.

He says it's basically like a full-time job. Like he's, he's putting local or nope. Outta state. And so, and, and it's not easy to get out of those, like selling off, you know, a couple at a time here and there. He pay the capital gains on just those. But it's, it's a very difficult situation to get out of. And so he, he was sold a vision and the vision didn't come to fruition.

So I just wanna bring that up in a, in a different context. I think it's a good, uh, case study, if you will. If you're 10 30 wanting into something you want it to be, my 2 cents is less trouble. And if you, I dunno what he was in before, but why would you go into more. Single family homes. And I think it's knowing, knowing what you're doing, and going back to my first thing, you know, like not knowing what you're doing and the mindset of getting outta stuff like that, that's like my mind is racing.

Like the, the bad investment advice that I feel that is, I mean, I don't know the guy, I don't know his situation, but it seems like horrible, a horrible investment. Like I wouldn't want it. Yeah. And, and it was a horrible investment and he admits that it was a horrible investment. So the, the biggest thing in the last three weeks that my wife and I have been discovering is how important the incentives that you give to your advisor are to the credibility of the advice they're giving you.

When the advisor has an, I mean, perfect example. If you ask the doctor who has a chance to make $400,000 this year, should I get this elective surgery? They're probably gonna tell you yes, you absolutely should. They have a vested interest in telling you yes. When your investment advisor or your real estate broker, or your property manager or your contractor, whatever, has a vested interest.

And I mean, look at, look at it on the plum plumbing side. If someone's panicking because there's, there's a, a leak in the house somewhere and they can't find it, I mean, you have a vested interest and selling them your $15,000 package of redoing all the pipes, but. If someone's really protecting their interests, let they'd say, let's shut the water off.

Let's go figure out where this leak is coming from first. Right? And I'm not saying that you're doing that stuff, but you have a vested interest and people are calling you as a trusted advisor, but you also need to run a business. And so I think that people perform or they, they act on their incentives, not on their values.

They can tell you that they're integral. They can tell you that, you know, they, they want to do what's best for your money and all that stuff, but follow the incentives. Yeah, I, maybe I'm just naive or have a different mindset there, but I think doing right by the customer keeps them there long term. So yes, you can do one package with that one person.

Say it was a million dollar package, I dunno what it was, but say they bought, you know, 1,000 thousand dollars homes, that's a one time thing. Versus you put them in a good property that makes money. Then they have more money to reinvest the next time. So you get 'em a good thing that's putting off 10% IRRA year or whatever, you know, cashflow, cash, whatever you, however you want to calculate that.

And now they have a hundred thousand dollars the next year to reinvest and they can buy another $400,000 house or something like that. Mm-hmm. And your long term, so marketing metrics, you know, you have your customer acquisition costs, how'd you find them? And then you have your lifetime value. To me, that is the most important when, when acquiring a new customer.

Like we run a lot of LSA, uh, leads, that's kind of our, our, one of our marketing channels right now. So we know that we get 80,000 or $80 for LSA lead or something like that. What is our, it's not that first deal that matters. It's really what, what's the lifetime value of that customer over that period of time?

I think that's where people get lost, is they just look at the near term. Okay, so we, we got this customer for 80, uh, $80. We need at least five row ads, five roas, five, you know, five x ROAS on, on this investment. So I have to sell 'em at least $400 too to break even so that I can remarket and remarket.

Mm-hmm. Versus okay, maybe I only sold 'em a $300 service package or whatever it was, you know, I just fixed a leak or what, you know, something like that. I only got $300, but they trust me and next time they're gonna come back and they want their kitchen remodeled or the bathroom remodeled and I'm gonna get a $3,000 thing.

Mm-hmm. And I, I, when you're telling that story, I just think people think too nearsighted for it. Absolutely. And a, a good example as a real estate broker is, I mean, I've told many clients. That were, had bad experiences with their property management or bad experience with a contractor, and they're losing money and they say, I just, I wanna sell it.

Just get rid of it. And I've told them, like, if you truly want me to list it, I will list it for you. But I'm telling you right now that you will lose money. It's, we're going into November, it's not a good time. Interest rates just spiked. You know, whatever the, the story is, I don't think that you're gonna get the best value for it.

And like right now we have, we have a property listed for a client and he wants it sold asap. I, I mean, I have a vested interest in getting it sold as quick as possible. Like if I, if I want that commission, you know, I'm gonna, I'm gonna tell 'em, all right, let's drop it 20,000 and we'll, we'll get it sold quick.

But that would be lying to him because your mortgage payment's $2,000 a month. Hold onto it for a month or two and I'm gonna get you the top dollar I can. Two months tops if it has not moved. And I, you know, give performance metrics of after six weeks, if we haven't gotten this many showings, then we drop it 3000, something like that.

And worst case, he's out 5,000. But if I go and drop it, 10,000, 20,000 right now, just so that I can get a commission sooner, I'm giving him advice based on what I'm incentivized to do, which is get paid sooner. Yeah. LSC has some emergent need for the money, you know, that he, you know, a big investment. He has to, that changes the risk.

Yeah. Pay, pay for a doctor's bill or something like that. Keep outta jail or, you know, so something that's going through a divorce and has to sell it. Like there are, I mean, that's where wholesalers come into play mm-hmm. With all that. But, well, I, I sat down with a, um, a financial advisor today just to have coffee and one of the things that he broke down for me, which, which I, I'd known in, you know, at a high level, but he really broke it down granular.

About how as a registered investment advisor, you have the fiduciary responsibility of understanding everything about a person. You have to know their life story. You have to know their age, their relationships, like all the factors that go into making a financial decision. You have to have a good understanding of, and you have to have it documented so that if something came up like that, like you said, a, you know, legal risk or doctors or anything like that, they can't come back and say like, he helped me make a bad investment and I really needed to pay this doctor's bill.

Now they're coming after my house. You know that that same level of fiduciary responsibility should be acted on by everyone that has, you know, stewardship over money. But it's not, and part of, like I keep saying, is that incentive Pro problem is if someone has contracting in-house. They're not gonna go out and give you three other bids to go get opinions and make sure that, you know, you actually did need to go put $30,000 into your building.

They're just going to, they're gonna send you a bill for 30,000. So the incentives, and, and we've talked about this many times, but the love of money is the root of all kinds of evil, right? I would say that taking advantage of people who are trusting you with their life savings is an extreme evil. Unpack, what do you mean?

I, I think it, it's evil for someone to accept investor money and then go and spend that investor money doing services that probably weren't necessary, or at least should have gotten a second opinion from someone other than you to verify the cost, verify whether it needed to be done or not, or, or even just to integrity.

Check to see if. There's maybe a better way that you hadn't considered. Yeah, I, I'll say it's a double-edged sword. 'cause as I hear you saying that, like, I look at it from the business owner standpoint, and we try to do things with integrity. Like when we preach it every week to our guys, like we aren't the high pressure sales, the plumbing company.

Like we're not, we're not gonna sell you, you know, the, the kitchen sink when you, you don't need it type thing.

But then it's also frustrating when, when you go in, honestly, and then they just try to, you know what, I, I need 17 bids and, you know, all that stuff. So like, you feel like you're wasting your time. And so I, I don't know. I don't know the answer. 'cause it's, it, it is hard, it's frustrating. And, and what I loved about what you said before is that you're focused on the lifetime value of that customer.

And if you show them integrity, maybe the next time that they, you know, need a water heater, they give you a call first. Maybe they don't, but what's gonna keep you up more at night that you, you let money come priority to your integrity or that you missed out on some potential income? I, I, knowing you well enough, I know that it's going to be the integrity side and so I think that continuing to treat people right, do the right thing, be honest with them, is going to earn me more business in the long run.

And it has in real estate, I mean those, the people that I've told not to sell one, sure. I probably could have used another commission. I could have been like, yeah, that is garbage. Let's sell that and we'll, 10 31 to something else. And we get that side. I get buy side, I get sell side, I get, you know, all that good stuff.

But I've told them, no, you should hold onto this. Let's pay down that note a little bit more and we'll reevaluate the market in the spring. And then they refer their siblings to me and they refer their parents and their friends and all. So I, I turned a potential sale into seven other sales because I chose integrity instead of greed.

So for a new investor, I want to kind of go back to, to that guy. He wasn't a new investor, but just from my point of view, the two minutes that you gave of, of the story, he's in a bad situation. Maybe not bad situation, a not good situation. He could, he could be making more money on his money. What is the mindset that you have to like to that.

Angela Duckworth got the book grit. Like how do you stay gritty enough to stay in it when you're like, dude, I could have put this in 5% bond and and made more money off from it. Or I could have put it in the s and p and just paid the capital gains and I'd been better off. What, how, how, how do you do that as a new investor?

Hmm. I think that for all the seasoned gray-haired real estate investors, we'll say the same thing, is there's probably very few properties they regret buying. 'cause they either made a profit or they learned a lesson and that lesson saved them somewhere else. And I can tell you even on my worst deals, like deals where I was paying eight, 10 grand a month in hard money costs because the lender that told me they could refinance me bailed in the last minute and I got stuck holding the, holding the bag.

I still wound up making out Okay on that. It sucked. In the meantime, I was, I was running lean at that point, like we were ramen and rice for a while, but we, we came through, we learned some things. Next deal that I do like that probably have a few more lenders lined up, you know, and I'll probably have a couple other exit strategies lined up.

And even if I'm sure that this is my strategy on something, I'll probably have third and fourth contingencies just in case. So you, you said something and some of the people I've talked to, coaching, stuff like that, they always say you need three options. Every deal you go into, you need three options.

Mm-hmm. You know, you your primary option, Hey, I wanna flip this property. Okay. So flipping or wholesaling is my number one choice. Okay. I can't whole sell it. I got at a good price. I'll flip it. Okay. Flipping's not working. I can't sell it. The market market changed right away and go into. Um, hold as a rental or something like that.

Like you just have to be able to, I think pivoting and not, not getting disgruntled with the position that you're in. Like I said, I, at the end of the day, I think it comes back to grit and, but what is grit, I think is the question that, that is harder to define. Yeah. And, and, and I think that on small deals it works out like that.

You can have those multiple, I could, I could just assign this to someone else. When you're, when you're talking about a one to 10 unit, like sure, maybe you have four or five exit strategies that all could potentially work. If I try to flip it and it doesn't work, I'll just keep it as a rental and, you know, if I do all these things when, when you get a 50, a hundred, 150 unit apartment building, like good luck trying to wholesale that.

There's people that that do, I'm sure, but. That's not the most feasible exit strategy. So I think, but I would argue if you're doing a 50, a hundred unit, you should be contrary to Grant Cardone's philosophy go out by 30 unit. Mm-hmm. But it should be, you should be more seasoned to do that because you have to take starting off with a single family and growing your way up.

Is it, it's a learning lesson, like you said, it's, it's lower risk. Like yes, I might lose $30,000. That's some people, you know, their life savings. Mm-hmm. So I don't wanna minimize that, but it's a lot better than losing $3 million. Oh yeah, no, of course. And and to be fair to Grand Cardone, that's exactly what I did, is I, I bought a single family, then I bought a duplex, and then my next deal was a 31 unit.

And the biggest mistake I made on that deal is. That I didn't take control of the property management soon enough, but you did it with partners, so more seasoned partners, if you will. So you leveraged their experience to be able to get a 31 unit. I've only bought stuff myself. Like I, I, I didn't, I never leveraged somebody else's time, money, any, I mean, I used a bank, but I'm leveraging it there, but mm-hmm.

I've never partnered with somebody to leverage. So I think it's, it's a little bit different. It depends on how, how you're doing it, so, yeah. Absolutely. You know, and, and I mean, buying, buying a portfolio yourself, you're going through a lot of those growing pains alone. That's, that's a tough place to be in, especially when, you know, the, the financial projections that you had, you come home and you gotta talk to your wife about why it's not bringing in $10,000 a month like you thought it would, you know?

So, I, I completely understand. It's a completely different animal. Um. But my point in bringing that up was that even when the strategy was very clear, the financing was in place, the, you know, ev all the money was raised, everything went according to plan. The execution didn't follow through, and the learning lesson there is make the change sooner.

And so my, my point is that deals that a deal like that, it didn't have two or three exit plans. It, there was one plan, and when the plan wasn't being executed on, you gotta find a solution very fast. We let it linger for far too long. Yeah, I'll, I'll use my first deal as an example for that. So I bought a duplex, I bought a duplex in my quad at the same time.

But we'll talk about the duplex. I had a 30 year loan on it, you know, conventional loan investment, conventional loan, and

I rehabbed it. Markets were changing. But my first year in this duplex, renting it out on Airbnb in 2022, it was probably in nine months, eight months I think it was. I made $60,000 in eight months on Airbnb. So when I refinanced it, I was looking at what I did last year in 2022, thinking I would carry forward in 20 23, 20 23, full 12 months.

I made like 45, $50,000. Still decent, but, or, uh, November hit and Airbnb in Omaha basically became non-existent for where I was like the, the, the, the market. I was in Airbnb. And so November, it said, dormant December, said dormant January. Basically, you know, I'm getting one booking, two bookings here and there, but completely changed.

So I switched to, uh, midterm. Midterm did all right for a while, and then I was, I got tired of it, but, so I was making a little bit more money, but I refinanced it all from a pro forma of Airbnb. Now I went to midterm, now I went to long term, and I've just got traditional renters in there, so I'm losing money every month now.

I pulled all my money out at the beginning when I refinanced it, so it's a little mm-hmm. Like, okay, so I lose $500 a month. Is, is it worth it? Probably still, but you know, I, I can spread that across the portfolio and, and it's okay, but still at the end of the day, I'm losing money on this, on my first deal today because of a decision I made three years ago off from a proforma that made sense at the time.

Made sense at the time, but I wasn't thinking like, what if this changes? I only went in with one strategy, and that strategy was. Airbnb and yeah, when I was making $60,000 a year on a $200,000 duplex, it, it looked really good, but it's not, not quite there anymore. So have you ever had a deal like that, that you, like you screwed up, not something else, some other management decision or something just that you owned and screwed up?

Yeah. Yeah, I can, I can think of many. And so, I mean, sometimes it was not sticking to contractor timelines. Sometimes it was the financing. I mean, sometimes it was, I overestimated the rents that we were, we would be able to get, well one of 'em was, I overestimated how quickly we could get the mar the rents up to market.

And I stress tested it that, you know, even if we push 'em up to market in and, and for, for example, one property had average rents of like 6 75. I estimated that in 12 months we could get them stabilized at eight 50. Like that's what the market could hold. It, it made sense on paper. It took 42 months to get them stabilized above 800.

So I, I completely underestimated how quickly we'd be able to get 'em stabilized there. That What was the, why, why, why did that happen? Well, I mean, a lot of, I mean, on the asset management side and ownership side, you, you don't really see the conversations that happen with property management. Like you, you see the reports, you see numbers and metrics, but getting into the weeds about like the individual stories and, you know, people have been there for five years and their rent's only gone up 50 bucks a year, something like that.

10, you know, five years later you realize that they're 30% under market. That's super common. And so instead of kicking that tenant out, who pays their rent all the time, you give them a hundred dollars increase. So now from 6 75, they're at 7 75, they're still, whatever that is, you know, 10% under, yeah. Yeah.

10% under market. But when that happens across a bigger portfolio, I mean, the numbers are drastic. Yeah. And I mean, I, I don't know what you're talking about, market size, but our portfolio size. But

I found that it's a lot harder. Well, for one rinse quit climbing. When, when I got in, they were boom, boom, boom, boom, boom, boom. And then they, they kind of dropped down. I that, from my perception is they, they dropped down a little bit. But how, how do you,

how do you make that work? How do you, how do you, uh. Run with it. When, when things are are hard, like that, that's where I, I, I struggle with the, the day-to-day management of it, if you will. Does that make sense? I kind of rambled. So, so how do, how do you stay, I, I guess, stay involved when things don't go according to plan.

Is that what you're saying? Yeah. I mean, like for, for me, I got so many different things going on. Like, I got my real estate, I got my, uh, family, I got the plumbing business. Like I can't stay on top of everything. I can't. I probably should, but I don't stay on top of where's my rents at market's, this what other things we have.

So I know that's a struggle for me. Um, like I, I just. Within the last week or so, I've been talking to my property management, like, how do we do this? How do we, you know, and it's, it's a struggle. I mean, I, since you text, do you have, um, rentometer access, you know, stuff like that. Mm-hmm. So it's that, that was me trying to, trying to get ahead of it or, because going back to that one unit, like I am losing money.

So I'm, I market rent for those. How do I, in other areas that I might not be, how do I get more to pay off that $500 that I'm in the hole every month? So it, it gets hard across, like you said, across portfolio. So to answer your question, I think if you can't allocate, you're, you're stretched so thin that you can't allocate two hours, maybe four hours a week to go over specific KPI.

Then you need to find someone who has that time, and that's a who, not how. And that's part of why we started this new business was, I mean, we managed for hundreds of investors before. Most of them are the same. They, they bought some properties, they thought they could be passive on it, and then things just slipped through the cracks.

They didn't realize that these contractor bids were coming in so high, they didn't realize this unit sat vacant for an abnormally long time. And it's not that, it's not always malicious intent. Like sometimes it's just freak circumstances that you didn't know about until the knifes already falling. And so.

We started an asset management division, which for owners that want to be hands off, they pay a fee. They pay a fee or equity in their portfolio. For us to manage those things, for them to answer the phone calls to, you know, at one in the morning when a decision has to be made on, you know, whether to send out an HVAC technician at $1,100 or if, if we can, you know, find him a hotel room and d decide in the morning, like that decision has to be made.

So either you're rolling out of bed, you know, with an upset wife answering that phone call or you hire someone that does. And to take it back to the investor from earlier, he got into this with the intent to be passive. And I mean real estate for those, those who own it. No, it's anything but passive. You have to be paying attention to these things.

And I love traction because that level 10 meeting should be happening with your property manager. If it's not, things will slip through the cracks. The more units you get, the more drastic it'll become. And right now, that $200 a month that you didn't think was a very big deal. When you apply that to a hundred units and now you've got a 400,000, $500,000 leak at a six cap, you just lost over, you know, $2 million in value in your portfolio.

$500,000 across a hundred unit portfolio at a six cap. What is it? I, I'm just trying to your, your math, like how, how does a, a leak turn into a 500,000? I don't You're thinking in plumber terms. I don't mean a literal leak. I mean a Okay. A leak of money. Okay. A leak of not paying attention to things of vacancy, creep expense, creep of unit turns costing.

Too much of, you didn't realize that your, your property manager placed 15 bad tenants last year and you had to pay for all those evictions and those unit turns and all that stuff. When that starts to cost you three, $400,000 a year. At a six cap. What's, um, quick math there? $400,000 at a six cap. That's over $6 million in value you just lost from your portfolio.

Yeah, but I would argue, yeah, that's a hard one because most people that are trying to sell or paying more attention, I would say the people that pay less attention are the people that are buying hold and plan on holding forever. 'cause they're, they're just worried about getting passive money at the end of the day, which becomes a problem.

'cause that affects your mindset. And it's kind of my overarching, you know, I brought up grit and all, all that stuff mm-hmm. You know, in this, but your mindset and how you, how you manage stuff. You mentioned the 31 unit and not taking over management in time, like that was your mindset. Like you had a different mindset, you were a slow moving mindset and.

And I was tracking the numbers full-time. That was my full-time job, was looking at the numbers and reading work order reports and all that stuff. And I didn't take action soon enough. And I mean, this, we had this happen on 50, 70 other units where we should have fired the property manager sooner. And then we put a, a new, a new property manager in and they sucked and we fired them very quickly.

It was a good decision 'cause we didn't lose too much money. And so, but you asked earlier, how do you stay strong when those things happen? I know that if we just hold onto the properties longer, like sure, I wanted a four year exit. I wanted that perfect burr. I wanted to be able to raise rents and rehab some units and get all my money back out quickly.

But then when these things happen, you realize, okay, so we're just gonna have to hold this property a little bit longer, longer than we intended. And if you have, like you said, I, I do everything raising capital. So if my investors are aligned with what I'm saying and they trust that. We hit some hurdles and we're just gonna have to hold this property longer, then that's what you do.

And in, in real estate, real estate's very forgiving in that way. It is. And, and that's kind of what I was saying, unless you're planning on selling, you didn't really lose $6 million. Are you leaking? Oh yeah. Okay. Are are, are you leaking month to month cash flow? Absolutely true. If you catch it, if you don't catch it, if you don't start spending the time necessary to start clogging those, those leaks or, or what, whatever the plumbing term is.

I'm not up to date on that terminology, but if you start fixing those things, then yeah, I don't lose that value. But if, if you start bleeding out to the point where you have to sell or you have to get outta your, I mean, most of our notes on all the guys, I know they're on five year balloons. If you let it bleed for four years.

Then you don't do anything for the last year, you're going to lose out on value. 'cause the 'cause the bank won't, uh, refinance or they'll refinance off from the actuals versus what you could be doing. Watch how hard it is to refinance something that you have a two and a half million dollars note on at four, four and a half percent and the NOI drops and then you try and refinance it at 7% guarantee you don't have the debt pay down to justify refinancing it.

You're gonna have to put cash in to refinance. Imagine, I mean, if you had to go put a half a million dollars in, you know, into the deal just so that they will refinance you at a worse rate where your, your monthly payment goes up significantly and you're already losing cash flow. You have to fire sale.

That's how you lose value and a lot of that's happening. Today, you know, and not as fast as we thought. I mean, I would, I would, the bank, the banks have been kicking the cans the last 12 to 18 months. They've given one to two year extensions. Every, everyone and their mother refinanced in between 2018 and 2021, right?

20, 22, 23, the rates started going up a little bit, and then 23, 24, they went up a lot. Everyone and their mother had a five year note in, you know, between that timeframe, 2026, all those notes should have matured already. So why haven't we seen all the fire sales? Why don't we see auctions everywhere?

Because the banks are giving 12 to 12 to 24 month extensions at more favorable rates. Sometimes they go up a little bit, sometimes they're like, well, we have to move you to 7%, but we'll do io we'll do interest only. And so they're kicking that can, so hopefully you'll be in a different position, but eventually it's going to, it's going to fall.

Yeah. If people don't start taking control of their properties and clogging these, these leases. So how does a new investor do that? Like, if you're starting out, uh, some of what you're saying is like more for the seasoned investor, but I guess I'm just looking at, at the new person starting out, you know, I'm been doing this for a little while, but I wouldn't say I'm a seasoned investor from that standpoint.

Yes, I bought a couple prop or a couple properties, a couple, uh, plumbing companies, stuff like that. But you got half the graze. Huh? So you got half the graze of a seasoned investor. Yeah. Uh, but how do you, how do you, how do you weather that? How do you even know? And, and go back to the, the joke we made at the beginning about how everything on TikTok, everything is, is perfect.

But it's not. Mm-hmm. And so how do you, even when everybody's telling you it's perfect and you don't have to do this and it's passive, like how do you do that? I, I think the best advice there is find a trusted advisor that doesn't have a vested interest in telling you sweet. Nothings. Like if you, if you have a property manager who you're paying to manage your properties and you ask them, how are my properties performing?

They're like, oh, they're great. 'cause if they tell you they're garbage, then you're gonna fire them. So why would they tell you the bad news Unless they tell it to you with a plan? And if that, if, so, if someone says, well these things aren't going well, but this is what we plan to do about it, then that's a great manager and they should call me 'cause I will hire them.

But if you don't have someone who's completely unbiased and can look at your performance and say, this is where you're missing the mark, or these are the things that are slipping by you, you need to tighten up here, then I mean. I, I think anyone, regardless of experience, needs people in their corner that don't have a vested interest in their success or failure.

So that comes up to the question of how do you find somebody like that? Because this is my problem. Like, I'll, I'll pick on you for saying that. Like, yes, it's easy to sit here right now sitting in a chair in a backyard and say that, but it's a million times harder. Like, and that's the problem with social media.

We say these things, find a trusted advisor, find, find a good property manager, find a good asset manager, find a good, um, financial advisor, find a good doctor, find whatever. Like we say, all these things, but where are they? They're not on every street corner. Like it's, it's so easy to say, but so hard to do in practice.

And that's my problem with all this is that's why I, you know, kind of pick this topic is yes, you say that. Then do it. That's you're 31 unit. Oh, we should have fired the property manager. It's easy to say, hard to do, I guess is my, my pushback on that. Yeah, I, I'd agree. It is hard to do. So how do you do it?

Finding people that, again, have more experience than you or just are unbiased? Because I mean, the, the most, yeah, and I can say whatever I want. If, if you hire me for something, hire me for plumbing. I can say whatever I want. I can say I'm the most honest plumbing company there is in the world. That doesn't make it true.

How do you find that person? Like, it's easy to say, but they're not on every street corner. Like, you can't health, I'll use health as an example. Like I feel like I have a pretty good doctor. Draws my labs every six months. You know, she's on top of stuff X, Y, and Z. Looks at things more holistic, more long-term than just just fixing the, the immediate problem.

But if I'm completely honest, she's probably not the best. I like her go to her and all that stuff. But how do you find, how do I find somebody better? If I had a bad doctor that I liked, that I trusted, but I they're bad. How do you know that they're bad? How do you know that your property manager is bad?

How do you know that your asset manager's bad? How do you know that your business broker is bad? How do you know that your insurance, insurance agent's bad? How do you know that your attorney is bad? How do you know those things? And that's, I think that's where the struggle comes in. Does that make sense?

I absolutely. I think that's a hundred percent fair point. What I'll ask you is how many times in the last week, two weeks, months, six months, year, have you said that statement right there? I'm looking for a doctor. That can be unbiased, like, you know, can provide me X, Y, z I'm looking for this. How many times have you said that to anyone else in your circle or, or out?

Well, I'm not looking for a doctor to, to be fair. Like I said, I Right. But, but your example was that I have a doctor that could probably, there's probably people out there that can outperform them, but part of the reticular activating system that we've talked about many times on this podcast is you find what you're looking for, right?

And if, if I'm a new investor and I say, I just bought my first duplex and I'm looking for someone that can tell me three good plumbers, I guarantee you'll get 50. You go into the, the rhe chat and say, I'm looking for this. I, I need to get a second opinion on plumbing. Can someone make some recommendations?

And the people that. Complain about it after the fact that, oh, this guy screwed me, all this stuff. They're probably not asking the right questions. And the best advice that I've gotten has been from getting into rooms with people who have already done the thing or hiring someone's advice that has no emotional opinion of what I'm doing.

They have no vested interest hiring a coach, best investments. Because when I go to him and I say like, I'm stressed about this, this insurance, stuff like that. Okay. How many insurance agents have you called? I don't know. Five. Okay. Why haven't you called 20? Like if this was a real estate deal, you would've called 20 lenders already.

So why didn't you call 20 insurance agents? Like there's nothing worth stressing over because he's not emotionally involved. I'm emotionally involved 'cause I've just got five no's. But that, that's my point is that putting it out there and finding someone who's either got the, the gray hairs to show for it or has done the thing before, you know, well I guess it's two in the same thing, but I put it out there that I'm looking for this, I need help with this.

Not being so caught up in the highlight reel. Like we, we started talking about people. They just have this ego of like, oh, I'm great at everything I do, everything I touch, turns to gold bullshit. Everybody needs help at every level. I I, I work with people with, you know, nine figure net worth that still know that they need to ask for help.

So if you're looking for a better doctor or you're looking for a second opinion on plumbing, or you wanna know, should I sell this real estate deal or not, don't take the one person's advice who makes money on your decision. So one thing I've noticed a lot of times, it's not the, the one person, like if you gimme a recommendation, a lot of times it's not, that's not the best recommendation.

It's the second, third, fourth recommendation. All from that recommendation, like, Hey, I need a good plumber. And then you ask them and they go and like, oh, it doesn't work out, but they refer you to. A good roofer. Mm-hmm. And then that roofer refers you to somebody else, and then that other person refers you back to another plumber and then that's the best plumber.

It, it, it's weird how that happens. Yeah. From, from my experience. I mean, I've, I've seen that a lot. Especially, I was at a networking event the other day and I, I asked the host like, Hey, uh, I'm, I'm, you know, raising capital for this and you know, who should I be talking to? And he made the introduction. He is like, you know, go talk to this guy and this guy, he's looking for his own deals.

And so I was like, okay, well let's talk and if that leads to a different type of conversation or I can service it, you know, elsewhere, then, then by all means. But the best. Have you, have you listened to, um, pitch Anything by Orrin cl? Mm-hmm. Great book. More on the capital EA side, which I know is not your bread and butter.

Like, you know, I nerd out on that stuff. But he talked about at these networking events, you should be looking for $2,000 conversations. Who can I meet with here that will make me another $2,000? If you can't find that person, find a way to be a $2,000 connector for someone else. And I think that if, if you truly were looking for a doctor that gave you X, Y, z, you know, whatever you were looking for and you were asking people for it, if you tried to, you know, connect other people for health advice or, Hey, I'm looking for a new gym, do you know anyone that's, you know, a trainer that could, if you could make that connection, God will, will reciprocate by finding you that doctor somehow, because you, you've focused on, on being selfless and putting someone else's needs first.

And, and that's what I've seen happen time and time and time again. So, first thing, if you really want to find something, or if you really wanna do something, you'll find a way. If not, you'll find an excuse. Jim Rohn said that, but also I, you're really seeking for some. Guidance or some connection or something.

Be that connector for someone else and you'll be reciprocated. I agree. I, I think that's probably one of my biggest downfalls is I don't network in a proper way. I guess maybe, I don't know. But why, why, why, why do you think that you, you don't network in the proper way? Like what, what is the, who defines what the proper way to network is?

I mean, I dunno, there's a, a proper way, but I don't, I'm not always looking for, like, I'm more of a, if, if I connect with you, I connect with you type person versus how you said the $2,000 person and then connect. I, I guess I just don't think that way. Mm-hmm. So I guess I'm going off, proper, off from pitch anything, whatever you're saying, like the, the traditional way you're saying it like I just.

I'm more of a go somewhere and have a relationship meet you meet a thousand people and you have a relationship with one versus meet a hundred people and then try to connect them. Oh, absolutely. And, and I, I completely agree with that is, I mean, since my wife and I started in this business, we, we always said that we don't want to be the realtor that, you know, does a hundred deals a year with one person each, and then see again in seven years, I would much rather have five to seven investors that buy 10 to 15 deals with me a year.

That, that's, I'm good with that. So when, when we're going to these meetings, I mean, granted it's different now that, you know, we're raising more capital and doing other things because, I mean, before, if we're just doing real estate sales, like that's our sole focus is I need, I need people to buy and sell with me.

But. Now we, we have so many different services that we can offer, that we can find a way to add value to anyone, even if it's just unbiased advice, which is why I said about going to these events and finding someone who does not have a vested interest in whether you've succeed or fail. Find, find people who are completely unbiased and can give you advice.

And, and I've seen interviews with several billionaires that talk about just, who is it? The, um, Sam, Sam, uh, the Walmart guy, Walton Walton, Sam Walton. People have said they got into a room with him and they, they, you know, were so interested and they wanted to hear his advice and all this stuff, and the entire time he just asked them, what do you think about this?

I've been thinking about doing this. What do you think of that? Because he's curious and he's looking for someone who has, they will not benefit. Or fail based on the advice that they give him. And so that curiosity of just constantly seeking out unbiased opinions is probably the reason why he's done so well for himself and his family and, you know, many other families.

So we started this, this podcast talking about how the gurus don't have it all. Right. And I'm not saying they don't have it all. Right? Right. But it, it's not the whole truth. It's, uh, a jaded, it's a, it's a jaded perspective of the truth based on their lens that they see things through because they've been in it so long, I would say anyhow.

Yeah. And not fair of me to say whether they're being truthful or not. I, I have no idea, but I know that I'm. If I hear something on YouTube, I'm probably gonna go get a second opinion and a third opinion and a fourth opinion, and I'll probably call 15 other people and ask them, Hey, I saw this thing. I, and case in point, like I, I've had this idea for an investment philosophy.

I'm talking to everyone I can about it. I don't steal my I idea. I don't care. I have an idea. I want to find the blind spots. And right now it's Claude. I'll go into Claude and I'll be like, this is my idea. This is all the things I'm thinking of. Show me my blind spots and it'll kick it down, you know, faster than, than Ryan will kick me down.

And when I, when I say something false, you know, but I'm looking for, like, I, I'm, I'm not so egotistical that I need someone sitting there telling me, oh yeah, you're great. That's a great idea. Like, 'cause when I fail, I'm the one holding the bag. I'd rather go out and talk to people, which is why you and I get along so well.

It's 'cause there's no fluff. Like if I'm wrong, I wanna be told I'm. I don't wanna sit here in this delusional world that everything I do is great and I have no idea why my, my deal just failed. I'd rather talk to 15 people that can gimme ideas on how to do it better. And so to that new investor, take the motivation that comes from those YouTube videos, but weigh it against someone that doesn't have a bias.

You know, if they say You're gonna do great, just buy my course. I'm not saying that course is bad. That course probably is gonna teach you something that you didn't know before. There's probably no bad courses. Yeah. Yeah. Well, I would say, yeah, I mean, unless you've already taken the 15 other courses that you know, or, or on the same topic like, then yeah, I mean, I, I, I think that anyone who loves the consumption of knowledge is gonna be better off for it, but find people that have either done the thing or can give you an unbiased opinion on the thing, and that's where you're gonna see the best results.

I would probably agree on that. As far as this topic goes, I don't know if I got much more to add. I think, uh, I, I mean if, if I'm just frank with, I just, I see so many people struggling in this world and they say we're in a, a case shaped economy and all that stuff. And I mean, we don't have a big podcast if I'm frank.

And, but I wish more people would listen to us just from the standpoint of like, we're, I feel we're relatable 'cause we're two dudes sitting in the backyard today, you know? But. Who, who clearly don't always have it. Right. No, I, I mean, and, and, but we also go back and we look at our old episodes and we say, what did we get wrong from that?

Like, what, what have we learned since then? We, we make predictions, right? How, how arrogant is it to make a prediction and put it on YouTube with billions of users, like expecting to get proven wrong, but we use it to document and go back and reference and be like, here's what we got wrong, here's what we thought then.

And not that I'm some wise guy now, but here's what I've learned since then. No, and I, I think that is the point is like, I don't have it all together. I am whatever, 45 years old and like I don't have it all together. Like, I don't know everything, but I'm constantly trying to learn and trying to find an advisor or find a group of people or find a mastermind or whatever to, to get in the room with people that have done more and stuff like that.

And I. That's what you need to do. You need to not be scared. You need to, and what I was getting at is I feel like people, like I, I want this podcast to reach somebody that hasn't tried something, that they're, they're scared to, they're, excuse me. They're, they're, they're, they're on the cusp of, should I do this or should I not do this?

And the answer is yes, do it. Like, too often we think that a W2 is secure meta just announced they're laying off 20% of their workforce. Mm-hmm. Like it, a W2 isn't secure. Sure. How do you, how do you secure your future? Mm. How do you, how do you bet on yourself? And I, I just wish more people would listen to this and just say, you're, you know.

These two idiots are right. You know, like, I need, I need to bet on myself. I need to be,

I, I hate to say I talk to men like every time I touch GPT or Claude or something, like, they're like, your avatar is men. I'm like, no, my avatar is anybody who wants to better their life. And bet on yourself. Bet on yourself. I don't care if you are here, you're in Europe, you're in Africa, you're in Asia, you know, wherever.

Like, bet on yourself because that's the only way you're gonna win at the end of the day. So that's my, my 2 cents that I think we should end it on. Yeah, I think that that summarized it. Great. So, well Tanner has been a interest, interesting, uh, conversation. I think we were all over the place. So we started off with one thing and we, I don't know where we ended up, but I think it just goes to show that.

I mean, entrepreneurship, real estate investing, it is all over the place. There's so much that goes into it. And I mean, I, I wouldn't have it any other way. And I, and I think we can go deeper on that topic of should you stick to your W2 or should you make the jump and, and be a solo entrepreneur and all that stuff.

That, that's probably, uh, I'm gonna need a refill for that one. Well, I appreciate it and we'll, uh, we'll have to do another episode till next time.