Talk Wealth to Me

#014: How to Earn a Passive Income with Real Estate Investments with Dustin Heiner

July 22, 2019 Felipe Arevalo, Chase Peckham, Katie Utterback Season 1 Episode 14
Talk Wealth to Me
#014: How to Earn a Passive Income with Real Estate Investments with Dustin Heiner
Show Notes Transcript

How many of you would love to find a financial opportunity that would allow you to travel the world for weeks at a time and have your mortgage payment completely covered each month without ever having to step foot into an office?

Dustin Heiner of MasterPassiveIncome.com has done exactly that and joins us in Episode 14 of #TalkWealthToMe to share how he managed to earn more than $8,000 each month in the form of passive income through his 30+ rental properties.

Dustin shares with Chase, Felipe, and Katie, just how he got started with real estate investing, shares tips on how to get started if you're interested in a similar passive income investment opportunity, and more!

Comments, questions or suggestions for the show? Email us at [email protected]

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Intro:

Welcome to Talk Wealth to Me. A safe space podcast where we chat about anything and everything related to personal finance.

Felipe Arevalo:

The information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting, legal, tax or other professional advice.

Chase Peckham:

Skip-a-de-do-dah, skip-a-de-ay my oh my what a wonder. Nope, sorry. I just, I this interview today, this podcast, welcome again to Talk Wealth to Me. We just got done with an interview that literally changed kind of the way the three of us, Katie, Felipe and I, think about money and the way you can make it and you know, we've done lots of interviews and we are, you know, hopefully going to do lots more, but today was an interview that I think everyone who listens can take away from it, that they're going to at least look into it. And that's talking about rental properties. Investing in real estate for the purpose of renting to create a passive income. Today is like unbelievable. But we're talking to Dustin Heiner, Dustin, and we're talking about an energetic guy, somebody that I'm telling you, you're going to listen to this and you are going to think, oh my goodness, what is that man eating and drinking because I want some of it. You've got to take a listen .

Dustin Heiner:

Awesome.

Chase Peckham:

Yeah. So we are with Katie and Felipe, and I and we're sitting here and we're in Sunny San Diego. And you are out there in the Arizona valley is a , isn't that correct?

Dustin Heiner:

I am in the blazing heat of Phoenix, Arizona. Yes.

Chase Peckham:

Oh yeah. I guess there's a little bit difference in temperature where we are right now. Um , so give us an idea of, of what it is that you started with , uh, and, and how you came into what you're doing now.

Dustin Heiner:

So what I started with was basically I was just an employee and from the beginning of , um, I want to say I was like 13 years old. Um, I always decided or I knew I wanted to not work for somebody else. I was always more at an independent type of person. So from 13 years old on until you're getting older and starting going , getting a job and working for somebody else. So I had a paper route when I was 13 years old, you know , was delivering newspapers on my bike. And I liked that because I worked for myself. And then I started , got a job. My first job was at Walmart and I hated it. It was horrible. Not to mentioning having a boss, but all the money got taken out in taxes and there was even a part of union and I realizing, man, they're taking out so much money. So from that point forward I realized I need to be a business owner or I need to do something where I didn't work for somebody else. So fast forward, I started many businesses, everything from a graphic and website design company to a skateboard manufacturing company, to a convenience store and a restaurant. And I had so many businesses and in the meantime I started buying real estate and all those other businesses were really hard. I had to do a lot of work, but real estate, that was where I was actually able to not do much work at all and still make a lot of money. So I bought one property and then started getting rid of my other businesses and bought another property. Then kept buying properties that eventually when I was 37 years old, I was able to quit my job. And now I just, you know , live the, live the dream life. It's, it's terrific.

Chase Peckham:

So when you say living the dream life, give us an idea of, of what that means.

Dustin Heiner:

It's uh , three major things. Number one, the , the freedom to do whatever I want time-wise . I don't have to um , go anywhere. I don't have to be any place. I just do whatever I want and I don't even have to live anywhere. Like I used to live in California, in Fresno, California for my whole life. And then I realized I wanted to move to be closer to my in-laws. So we moved to Phoenix and in moving to Phoenix, I didn't need a job because I, I didn't need to find a job because I didn't need a job. So I had the freedom to move. I could live wherever I want. So that's one is freedom. Number two is control over my life. Like I said, I don't have anybody to answer to other than my wife, you know, she's the one that she keeps me in line. Um, and so I don't have any like a boss or anything really trying to tell me what to do or if I have a different opinion, I could just do what I think is best rather than have somebody telling me what to do. So that's another one is control. The other one is money. I just have enough money to literally do whatever I want. Like in 2017 the year after I quit my job, I took my entire family, my, my four kids, my wife and my dad. We went to Japan and drove like 2000 miles all around the island of Japan on a six week trip. It was terrific. And then the following year we went to Europe. We went for a six week trip in Europe, all throughout 11 different countries. My Dad didn't go that time. It was just me, my wife, and my four kids for a six week trip over 11 different countries. So we had money to do all that stuff. We had the freedom and we had the control to do it. And that's why real estate for me and just specifically rental properties, not flipping, not wholesaling or tax liens or anything like that, it's really rental properties and that's why I'm able to do all this stuff because I literally only work 30 minutes a month, not a week, a month, 30 minutes a month, just by reviewing the statements that I get from my property managers who all those other people do all the work in the business.

Katie Utterback:

Oh Wow. So Dustin , it sounds like you had an entrepreneurial spirit since you were 13 how, and it sounds like you interests in a wide variety of different businesses. Why real estate investing? How did you kind of turn to that?

Dustin Heiner:

It really came out of trial and error. So trying to find businesses that would work well. Um, businesses that would make me money so I didn't have to work a job. I was fine to work my basically start a business and work 80 hours in my own business and not work 40 hours for somebody else. Like I just love it . I'm that type of personality. I'll quit my 40 hour week job to work 80 hours for myself. And so it was more out of trial and error. So I started businesses, ones that were more work or you know, more headaches I would get rid of and eventually just boil down to where the best one was where I bought one rental property one time. It takes me three to five hours worth of work to do that. And then I released my business that people in my business, like the property managers, contractors, realtors, I release all them to do the work. I pay them, but it's not me paying, it's my tenants paying that, you know, I rent the property to them, they put money in my pocket as well as pay the expenses and so I make money. So it was a process of trial and error. Eventually the best one. I just stuck with it because it was so easy to do and I literally don't do any work.

Chase Peckham:

And I think that's the entrepreneur. I mean that's what makes successful entrepreneurs is they don't like to be told what to do for instance, or have a boss and they are self motivated and if you have your own, and that sounds exactly like what you got into. And so when you, before you bought that first rental property, what was it that made you take that step to say, Hey, I'll get involved in that when I'm working my restaurant right now, so to speak. Yeah.

Dustin Heiner:

Yeah. So the really, I Read Rich Dad, poor dad. That was what, a quick story for that by the way. Absolutely. Um , a step before that, my brother had been researching about real estate and he told me about it. And so that kind of piqued my interest. Plus I was a , my dad was a contractor, so I was always in around building homes and stuff like that. So I just had an appreciation for it. My brother told me about it. He showed me a book about renting properties and I, it kind of piqued my interest, but I didn't pursue it. But then I read Rich Dad, poor dad, which turned me on to the idea of passive income and making income. When you don't even work like active income, you work an hour, you get paid for that hour passive income, you work one time and you get paid over and over and over again. Like if I buy one property, like I said, it takes me three to five hours physically on my own work to buy that property. And then year after year after year, I make money every single month. And so it round numbers. If I buy one property that makes me $250 in passive income every single month, that's $3,000 a year in passive income. Now imagine if your boss came to you and said, hey, I want to give you a $3,000 bonus or raise this year. You'd be like, of course. Well, it's super easy. Just buy one property that can do that and you put that in your pocket and then you multiply it over. Just keep building that business over and over again. And that's how I was able to quit my job because I had passive income coming in every single month to replace the income from my job and it really stemmed from the passive income I learned from Rich Dad, poor dad.

Katie Utterback:

Maybe you can explain the process a little bit more is, I know that you're saying it's so easy, anybody could do it, but what did that process look like for you and your family when you were determining if you could afford to invest in real estate or trying to figure out exactly where you wanted to invest?

Dustin Heiner:

Yeah, so I started investing when I was in California in 2006 2007 so before the crash and the hard part was I was living in California and the prices were crazy high and I knew I could not make any money every single month because it just, it would not cash flow. The properties would not make any money. So I started looking other places. So I bought my first property in Ohio of all places and you know, thousands of miles away. Oh , I bought a property in Ohio, then started building it up the little by little, but now here's what I did wrong and this is what I would tell anybody listening. Don't do it the way I did. I didn't know what I was doing. So I just flew out there and said, hey, this property looks good. Bounce the first property manager bought the property, put that property manager over it and started having them, you know , manage the property. Well, I did that wrong the wrong way. I bought the property first. Then tried to catch my feet underneath me. Now while I'm running and build the business after that was what's wrong. What you need to do is you need to build the business first by finding the right people in the business to run the business first. Now, my first property manager, the one that I, I did not know anything about when I hired her. Um, I interviewed her once and I didn't know what questions to ask. I just said, okay, you seem all right. Well, she started stealing from me about a year later and so I had to fire her and get somebody else. And so all this, all these lessons that I learned along the way. I've been doing it for close to 12 years now and I've been retired for almost three years now because of all the lessons that I've learned, I've actually been able almost to make it a science. You know , I do x, Y, and z. If you do this, you're going to have this result because it's really simple. I know that I am not a smart person. I'm not that smart. I just, I know elementary school math and that's really all that's gonna take when it comes to buying a rental property. You know, in order to count the numbers and make sure you're gonna be making money. But where the science comes in is how to run the business, right. How to build the business right. And it's very easy to do it wrong. You know, back in 2009 people couldn't give away properties in Detroit like nobody would want them because it was that bad of an area. Well if you would get that, you'd actually have a liability because it might burn down or you don't have taxes, let a lot of problems. So doing it right. I didn't have anybody showing me what, and this is what I do in my business now is I had so many people asking me how to do it. Just like you just ask Katie. Yeah, you just asked me how did you do it? You know, it seems hard. And I was teaching people one on one like friends and family, but it was taken up so much time of my time. So here's what I did. I actually just wrote a book. I just said, you know what , I just gotta write it all down. Like basically it was just like a piece of paper book that I could just give to people. So read this and then come back to me. And then cause when you're , everybody has the first all these same questions and these answers, all of them then come back to me when you have more questions that are applicable for you. And so there it just kept growing and kept getting bigger. Now there's basically a system. So basically here's the way the system works out. You want to find the area of the country you want to invest in. After you find that area, then you drill down into the city, you know, go from state to city, then into the particular neighborhood. And then you start finding properties that are going to be good. Once you find a good property that's gonna cash flow. And I show all my students how to do all this stuff. Um , once you find a good property, before you buy any properties at all, like you don't just jump in and buy that property. You pause everything. Even if you lose that property, it's completely fine. There's plenty of properties out there. What you do is you build the business first by contacting property managers, contacting realtors, inspectors, contractors, plumbers, roofers, you, you basically build the business around you so that when you buy that first property, you already have everything set up and that's the right way to do it.

Felipe Arevalo:

Interesting . Interesting. So curious, how much research did you do approximately before you chose Ohio? Of all places and did you do it from a distance? Did you visit the neighborhoods?

Dustin Heiner:

Yeah, so I don't do this anymore, but my very, very first time buying a property a out of state was in Ohio. I looked so in finding Ohio and finding that it really may be took me , um, cause I didn't know I was , I didn't have anybody teaching me how to do this. I was just searching on the Internet of all places. I found a place , uh, a duplex on Ebay being sold in Ohio and I was like $40,000 for a duplex. That's cheaper than California. But I have no clue if that's cheaper there. It turns out that was expensive for over there. And so it is , they were, you know, their market was crashing. And so I was able to pick up some properties. But anyways, so fast forward to how I was able to now , um , buy in Ohio, the first time I ever bought my first investment property, I flew out to Ohio, took a red eye, you know , uh , slept on the plane and woke up the next morning, drove all around and saw properties. So property managers, realtors stayed one more one night and then left the next day. And so it was a whirlwind. Now I literally don't do that every other our new city I invest , like I bought one property in Ohio, or sorry, in Houston, Texas. I just said, you know what, I need to start building my business in other states. And so from Arizona and California, Texas and Ohio, like in Texas, I bought my property and I didn't even see, I've never been to Texas. And I found the area, I found the property, I got it fixed up, I got it rented. Now I've had my tenants just signed a a third year, a third lease. So they're in their third year now I'm renting from me and they're making me money and I, I have since went and visited Texas cause I had a conference I was at and I was like, Hey, let's go drive over and check out the property. I've never seen it before. Let's just go look at it. But that's it. So every other city that I invest in, I don't even go to the city anymore because I have a system in place and I trust other people to give me information. Like the realtors , the property managers , contractors, and I use all of them to give me as much information so I can move forward. But that's honestly, that's my risk tolerance. I can, I can tolerate that because I've done it so much. But to start, a lot of my students, they go out and they , they check out the area, which is completely understandable. It's really helpful to actually do that.

Chase Peckham:

I'm still sitting here going, okay, this is almost too good to be true yet it makes sense for the fact that you have done a a system over and over and over again and have been successful at it. Tell me what is the success versus , um, the rate of unsuccessful?

Dustin Heiner:

So in buying a property, the re the way that you're successful, even the properties that I bought in 2007, I think I bought three properties in 2007, which was right before the crash. Even though I still own those and I still make money on those, even though there's a crash, I still make money every single month. That's what I invest for . I don't invest for appreciation. I don't care what the value of the property is, as long as it's making me a minimum of $250 or more in passive income every single month in the rents, you know, income, which is rent minus the expenses, all the expenses accumulated, plus the property management fees and all that. I make $250 a month in my pocket. And so because of that, all those properties I still own that I bought way back before the crash. Now they're backup . Now they're appreciated a lot and all that good stuff. But the way you do it right when you say it's too good to be true, the reason why you, it's really hard to lose money. I'm not saying it's impossible, but it's really hard to lose money if you buy for cash flow every single month where the money goes in your pocket now you have to work hard to find deals. You know, back in 2010 when banks were trying to give away properties or foreclosures everywhere deals where everywhere I , I didn't have enough money to buy as many as I could. I bought as many as I was possible to buy with all the money that I did have. Um, but now you have to work a little harder just because of the way the market is. But I can buy properties in an up, down or sideways market and still make money as long as I'm buying them for cashflow .

Chase Peckham:

Yeah. And you'd do that for the specific reason of rental property. Only so you're not banking on whether you can flip it or the market's good or, or the economy's good. Those guys , everybody's got to have a place to live.

Dustin Heiner:

That is the absolute biggest key point that you said, Chase, is everybody needs a place to live. Now, if you're going to buy like in the Sahara desert or the Antarctic, people are not going to rent their because just nobody lives there. But even in hot Phoenix like it is here, people rent here or in like , uh , Ohio work freezes and it's really, really cold. A couple of the opposite of San Diego. People still rent there because they live there and as long as people are living there, you're going to be able to rent it. So that's the absolute key is everybody absolutely needs a place to rent. Now here's another amazing thing about, obviously there's so many great things about rental properties, at least in my opinion, there are six different ways that you can make money buying one rental property. One would be , uh , just the cash flow, like we just talked about, making money every single month. That's amazing. Then you have a forced appreciation where you buy a property and you fix it up, put maybe $10,000 into it and then it's worth about $20 to $30,000 more so you make more money there. Then you also get equity capture where if you work like I do, where if a property's worth $100,000 but you offer 80 and you work into where you're 90,000 in the middle, you just captured 10 grand right there. Then you also have tax advantages of having a business and doing a 1031 exchange, which has a whole, you know, tax thing where you can move your money over, roll your money over and not pay taxes. There's also just regular market appreciation. We know just values go up, but here's another great one. It's the mortgage buy down and I love this. This is just almost as good as passive income. So if I buy a house, and this is something I teach my students, if I buy $100,000 house and I could get an FHA loan, 3.5% down, that's $3,500 that I put down out of my pocket to buy that property. Then I get a tenant and they rent the property. I still owe $96,500 in a mortgage plus interest. But the great thing is my tenant pays that. They, I only paid $3,500 for that house. My tenant then pays the mortgage off and the interest and taxes and everything, and I still make $250 a month. So there's so many great things and know one of the last ones, because I have four kids, I'm looking to pass down my business. This is a generational wealth building business because I can pass down the business to my kids and they can absolutely get the business and not like they need to learn it . They just need to own and the property manager to do all the work.

Chase Peckham:

So let me ask you this. Do you say, Hey , let's just get this off the table. So how many properties do you own now to pull in the type of income that you need to live comfortably?

Dustin Heiner:

So I, when I quit my job, I had 20, so it took me about six years to get to 19 properties. Right when I bet I know. Let me take that back. So it took me six years. I quit my job, I had 19 properties in six years. I had enough money to quit my job, but it's really nerve wracking , you know, I've only known working, you know, a job and to quit that w2 job where it's a guaranteed check, it was hard. So it took me another two years, but I bought more properties and I eventually quit my job and I think I had 28, no 27 properties, something around there. I kind of lose track as I do buy and sell, buy more, mostly buy . Um, now I currently have, I think it's 34 30 plus properties. I know, like I said, they come and go. Um, as I buy and sell, I kind of lose track. It's kind of , it just happened. I'm not the best when it comes to numbers, but I just know how everything's running. But 30 plus properties now and I, like I said, I can travel the world, I could do whatever I want and never work a job again.

Chase Peckham:

So I guess the skeptic, well not the skeptic, just this thinking about the fact that you find the right property managers, how do you know, as you mentioned earlier, how do you know that somebody is not stealing from you? If cause , I mean some people are just going to be that type A, that they're going to be on top of it working those hours as you spoke of , uh, just try and you know what you don't , it's basically like this, you know how people, when they make money, they say they were never so more so stressed more than when they had money because they're trying to keep it. And so how do you kind of go to sleep at night knowing that you've got property managers that aren't stealing from you?

Dustin Heiner:

Yeah, I love that question. The answer is hiring, right. There are tons of property managers, anybody that could just as long as the city codes, you know, they might need to get licensed. But , um , just about anybody can say, yes, I'm a property manager and start managing properties. In my opinion. You don't want to go with somebody who was relatively new. Um , you can. But in my experience, at least, this is what I teach in my, for , for, I teach all my students, the system that I set up is you basically you're interviewing an employee, somebody, even though they're not an actual, you know, a , um, an employee a W2 , um, employee that you're going to be getting a paycheck to . They're a contractor, a subcontractor for your business. And so they are basically your employees . So you need to interview them well, and I on my website, have a list of, I think it's like 22 different questions and the answers of what they should say. And what I look for in my property managers and so asking them questions, interviewing them, making sure they're answering it right, but another, another really easy thing is if somebody, I'm trying to get, basically if I'm trying to get a property manager, I'm trying to find one and I have a list of six ones and this is another tip is to interview more than one like interview as many as you can , five or six because you want to boil it down to get your your top number one, your number two. But here's the thing, when you're calling six of them, more than likely going gonna get one or two that aren't the best at contacting you back at communication like they might, you might call them, leave a message and within four days they finally call you back or you have to call them again. In my opinion, if somebody takes a long time to get back to you in , in my world because I'm so far away, I can't see my properties, I'm relying on my property manager. If they don't get back to me in 24 hours while they have my business, now they're actually my property manager, then they're fired. Like you have to get back to me. This is uh, a no , um, uh , non negotiable. You absolutely have to do this. And so if a property manager that you're interviewing can't get back to you in 24 hours or if it's like a week when they don't have your business, imagine how bad it's going to be when they do have your business. They are not going to care. They're just going to add , but just blow it off. So this is what I'm saying, there's a way to find good property managers and that's something that I heavily, heavily stress to all my students because they are the quarterback basically. You think of like a football team, the leader of the entire team, that's your quarterback and that's what your property managers , so you've got to hire them, right.

Chase Peckham:

Yeah. That's great. I mean, so you , you have a team of people around that you trusting and I would imagine including a , an accountant , a tax professional, a that that can keep track. I mean obviously because if you're making an income, even though you live in Arizona, but if you have businesses, properties, your , your , you've got things like, you know, state income tax, property tax, all that kind of stuff as well.

Dustin Heiner:

Absolutely. I even have lawyers. I'm ready. Just, just, you know, everything from a estate planning to making sure that legal entities, I have a team built up around me and these are people that I , I obviously start working with initially, but I built up a trust because I'd been working with them for so long and especially like a property manager. I don't want to hire a property manager that I'm going to work with for six months or a year now. This is going to be like a 10, 15, 20 like I'm going to, if you're good, I'm keeping you indefinitely until you quit. Like I don't want to change property managers. That's a lot of headache. I want somebody I can trust and so as long as somebody is going to be around for a long time, I'm just going to keep going with them. So yes, you've got to build and this is the biggest part about the business is building the team around you so you don't even. Like I traveled all through Europe for six weeks. There were 11 different countries. Didn't even think about my properties and still made money. Okay, check came in. Good. We're , here we go. Let's keep going.

Chase Peckham:

That's fantastic. How about , how often does it, does it filter down to you? Usually I was going to say people hear nightmares about tenants , uh , and being a landlord. But you've taken that out of the equation.

Dustin Heiner:

Absolutely. I hate being a land or a a property manager. Landlord's fine . Like I tell my property manager use me as the bad guy. Like if the tenants not doing something right, just say, hey, the landlord wants this. I'm just the Messenger. Like completely do that. Like I've, because they don't have my number, they don't know where I live. They don't know anything about me, so I'm totally fine with them using me as a bad guy. But I don't want to manage my properties. That's why I love paying my property manager. But here's the great thing, I am personally not paying the property manager. I bought the property well enough so that the tenants are paying for the property manager and I'm still making money every single month.

Chase Peckham:

You just put that into the rent.

Dustin Heiner:

Absolutely. I make sure that's accounted for.

Chase Peckham:

So how, alright and I'm taking over this interview apparently because I am so involved and I've just enthralled. But what is the margin? What are you looking at? How much you need to go over your mortgage and taking into account what the standard cost of rental rents are in the area you have the property. Typically, how far do you mark up above what you paid for the mortgage?

Dustin Heiner:

Um, there is no rule of thumb in how much you should mark above the mortgage , um , here. But here's one rule of thumb. If you're going to be looking for a property, a quick rule of thumb to see if a property is worth investing more time to actually run the numbers and I like, I'm on my website, MasterPassiveIncome.com I have videos of how I do all this stuff. I have a calculator on there, I so I basically show you how to do it as well. But what you want to do is you want to look at just the property and one person . Okay basically here's the rule of thumb. 1% of the purchase price should be how much you can rent it for every single month. So if it's $100,000 property, you should be able to at least rent it for $1,000 a month. That's then worth your time to analyze a property further and see cause there's things you got to account for. Property taxes, insurance, property management fees, there might be an HOA, there may be some electrical that you might have to pay for. I usually have the tenants pay for it. It's just whole bunch of different circumstances that you need to account for. But in order to actually look at a property, I use the 1% rule to say, is it worth my time to invest more time into that property to see if it's worthwhile to purchase. Now I know a lot of people that might be saying, man, I don't even like I live in San Diego. I can't, you know, you can't buy a hundred thousand dollar house and rent it for $1,000. Well, that's the key. I almost, I guess I specialize in buying out of state . Um, I love buying places that are far from me so I don't have to actually even physically touch them . I'm the type of personality where I would, if it was like three hours away and there was a toilet thinking, I would really consider driving there and changing it myself and the paying somebody else. But when they're thousands of miles away, I can't do anything about it. So I have to pay somebody. But investing out of state. If a lot of my students ask me, well, where can I invest? Like the west coast is so expensive out here. I'm like, yes, you're absolutely right. It's really hard. And so I show them how to buy like in the Midwest, like if you look at 'em , you know, stay away from New York and Washington DC, which it is possible to invest in those areas. I have , um , people that I that do invest there, but going down to Florida, up to Indiana, Ohio, like all in like the Midwest, really, really good areas of the country to invest.

Chase Peckham:

Well I mean it makes sense. I mean, because regardless, a passive income or, or passive income is passive income no matter where it's coming from. If you're making an extra $250 why invest in $1 million property versus a $100,000 property? It just makes more sense to me.

Dustin Heiner:

Absolutely. Well , absolutely. And imagine if you got a mortgage for a million dollar property and you're only making $250 a month at best if you, because more than likely you won't be able to get that because the rents would not even compare to the price of the home. But if you were making $250 on a million dollar mortgage, what if the tenants , they're great tenants, but they move out, they bought their own house. You have two months, one month, maybe two months of it not being rented. How much $1 million mortgage would be what? Like I'm $3,000 a month, maybe $4,000 a month. Well, there goes all of your profits you've ever made. So yes, I definitely lean towards buying more inexpensive homes that rent for a good cash flow . And you're not going to break the bank if you actually have a tenant move out.

Chase Peckham:

That's funny because in the state of California, we have, if people fight for rentals for rentals, I mean it's literally someplace goes up for rent in our neighborhood. There are 50 people putting in applications before you can sneeze. Um, but I would imagine that changes from place to place all over the country.

Dustin Heiner:

Yes, definitely. And every area is unique. And here, here's a tip I'll get , but everybody listening, if you're going to invest in another area, you need to heavily depend on your property manager. So a lot of my students come to me and say, Hey Dustin, what do you think about this property? You know, give me an address and I'll take a quick look at it. But my first question is always going to be, and if they don't lead with this, I ask this, what did your property manager say about this property? Now, they may not have needed to walk through the property, but you need to run it through them first. Number one, to see if they're actually willing to manage that property. It might be in a bad area that they don't even want to manage it . That would be bad. Um , it might be an area where , uh, you know, the airplanes fly over. I don't know the property manager there on the ground. They know what's going on in that city. They know the good areas. they know the bad areas and all that sort of stuff. So you run it by them first. If they're okay with it, then we can go forward.

Felipe Arevalo:

Interesting. And it's with all the online tools that are out there, do you still use the common tools that , uh , for say for example, a Zillow, I pulled it up on my phone, I threw a dart at Ohio and now I'm looking at houses and they're really inexpensive. I mean, I know people's cars worth more than these houses. Um, and so obviously there's a whole lot of 'em are research, but do you use sites that are common that one of us might know and already use or apps or things like that to do the initial research anyways?

Dustin Heiner:

Absolutely. One of my favorite tools, even though that has its drawbacks, one of my favorite tools is Zillow and it is a very, very good , um, basis to get started, especially finding a whole new area of the country to invest. Just like you said, you know, hey am I just pull up Ohio and start zooming in, zooming in criteria to maybe make it three bedrooms instead of four or whatever you know, and price. It's really easy to use. Now the drawback is usually their comps, their, their estimate, their , there's estimates is what they call it, right ? Of the value of the home. I find that they are conservative, not concerned. Sorry they're not conservative. They're on the higher end. So if you see the value they're saying it's, you know, $200,000 maybe it might be one $190k $180k but then they, I wouldn't say that they necessarily do it on purpose. I have just seen and the properties that I buy, I can get them for cheaper. So whatever dollar amount I see on there as an estimate, I usually offer a lower because I know he can get it for lower. But, so to answer your question, there are plenty of other websites, but Zillow is a fantastic one. There's a couple of other ones that I point I gear my students to . Um, a lot of them, I try to do my best to have everything to be free. I love free websites and um, Roofstock is another one. It's a little different. Um, it's actually, it's a lot different. More of like a broker not brokerage. Think of it like craigslist for investment properties. So it's , it's pretty neat there . That's another good one. Um, here's a great one that I'll definitely you for free. It's awesome if you're gonna to manage any properties yourself. And if you have a property manager it's not necessary, but a great one is cozy.co it's uh , I, I've interviewed the founder and I , they're just a really great, it's completely free for landlords, completely free for tenants. The only thing that they make money on is background checks. And what they do is they're basically a property management software that's online. You can put on your phone, you can have it through the computer and the customers , your , your tenants can pay online, they can put in maintenance requests, you can list properties. It's, anyways, it's completely free and it's fantastic. So cozy.co is a fantastic, fantastic way to use or a site to use.

Chase Peckham:

Yeah, I've definitely heard of it. So let me ask you what type of properties it did. Does it range? I mean, do you buy duplexes? Do you buy apartment buildings? Do you buy a single family homes? I mean, how do you, I mean, do you specialize in one or the other? Do you feel comfortable with one or the other?

Dustin Heinere:

So single family homes are the easiest ones to first get into. But in my opinion, duplexes, triplexes and fourplexes are just as easy. It takes just as much work to buy a fourplex, obviously a little bit more money, but I'm as this, but the same amount of work, buying a fourplex as a single family home. Now, I personally started with single family homes, built my business, buying single family homes and duplexes as well. Um , so now, because I have a good amount of single familyl homes with all the single family homes that I have now, it's time I'm building , I'm buying multifamily. So 40 50 units be , I'm being the active investor and the act investor finds the deals, does all the work, puts everything together, builds a business, and I will get passive investors. I already have a long list of passive investors that when I get deals, they give me money, we start a business, they get ownership of it and they get profits from it. So that's the next step. But I'm , yeah, so me mostly single family duplexes and now moving up to multifamily

Chase Peckham:

And that makes a lot of sense. And it's been dawning on me as we've been going through this interview and talking to you, that not only are you getting the passive income for this, they're paying for your mortgage. How quickly in some cases do you pay off these properties and own them outright?

Dustin Heiner:

That's a great question. So the majority of the property's at home. I own, are actually owned outright because of the passive income coming in. And weirdly what it came down to was when I was quitting my job, I was looking at all the expenses that I had and I was, I sold some property . So I had some money. Um , and I was like talking to my wife about let's try to get, we're, we're pretty frugal in general. Like that's a blanket statement. My wife and I are very, very frugal. Um, and so we're looking at the expenses and was like, well it'd be nice if we didn't have these expenses. We have plenty of money. Why don't we just pay those off? Well why it anyways, we made a decision to pay off a good amount of mortgages. And so I think on all the 30 properties, I think I have maybe three mortgages. I think maybe two , I can't remember. But um, uh , the rest of them are all paid off and I'm just making money hand over fist on all the properties

Chase Peckham:

Cause eventually if, yeah, that's gotta crazy cause eventually, I mean you could move anywhere in the country you want to now with, if you decided that you needed to go somewhere else. But beyond that, if for some reason you wanted to sell a few because the market was up, you would be in incredible shape.

Dustin Heiner:

Absolutely. Yeah.

Chase Peckham:

Cause you honestly, you didn't pay for them really in the first place.

Dustin Heiner:

Correct. That is the key. And here's a great thing was um, I actually just did a Webinar last night where I talked about using other people's money. Um, basically getting loans, borrowing from people using your 401k. It's just, there's so many different options. I think I counted like eight and just maybe 10 different options of how to use other people's money. But that's what I did in order to build my business so fast is I recycled the money over and over again, pulled money out, bought more properties, I even took money out of my personal residence. I refinanced it, cashed out and bought properties with that. So here's really quickly the way the numbers worked out. Um, so I had a $250,000 house. It might've been a little bit more, but I only owed like $170. So I cashed out and I think in the end I got like $50,000. Well I bought one property and that paid for the increase in the value or the, the mortgage that paid for the increase. And then I bought I think two , it was a little while ago, maybe three properties on top of that, which I think after I pocketed maybe $1,200 a month from that one refinance and buying three, two or three, four properties.

Chase Peckham:

And you're not a math genius.

Dustin Heiner:

No, I'm definitely not . I'm not good at numbers

Chase Peckham:

because that sounds like you and I sound very similar and I'm , I'm really pissed. I didn't think about this earlier.

Dustin Heiner:

My wife is, she was going to school before we got married. She was going to school to be an accountant. So she does all the numbers. She makes sure all the numbers work. I just make sure that we're making money.

Chase Peckham:

That's phenomenal. I'm , I'm very, very impressed. And you sound like a just over Skype here, which is what we're interviewing you over. You can tell how relaxed you are. And I don't think a lot of people , uh , that will be listening to this , um, are listening to this and just go about their daily lives. Don't have that freedom and that to , to feel so stress free , at least regarding money.

Dustin Heiner:

Oh yeah, absolutely. And so there was a time where I had the many businesses, I was buying properties and I had my job and I was working 15, maybe 16 hours a week from my business to my job and everything else I was doing, I was very stressed. I had so much going on. But now this is the , this is basically the way today. This is what I tell you. It works out. I woke up, we were just, whenever I woke up, like, I don't know, 6:30 the kids were running around at 6: 30. He had coffee and then , um, you know, hung out with the y play on the computer for a little bit. Then eight o'clock, rode to the gym, worked out, came back, and now we're just doing a podcast with you. And today I'm , I'm going to take the kids swimming at a local pool here and we just, I don't have any responsibilities that every business that I create now I created so that I don't have any responsibilities in the business.

Katie Utterback:

And Dustin , you're a member of the fire movement, correct. The financial independence. Retire early.

Dustin Heiner:

So I, I, so I started doing this back like I said 12 years ago, a long time ago, and I started doing this there . Fire wasn't around, but there was like rich Dad, poor dad. Now if I, I definitely ascribed to it, I am huge wholeheartedly. Uh , I wouldn't say I'm like , uh , the, the poster boy for it or like I'm, I'm, I'm pushing it. I'm just trying to show people how they can do it themselves. You know, by quitting their job. That's my whole thing is I loved quitting my job. The feeling to be able to walk out that door and never need a job again was amazing. And so that's why I teach it. But yeah, the , um , financial independence, I love that because I don't have somebody holding and dangling the paycheck over my head, making me work. That's being independent. I didn't want that. And then also retiring early now I used to use the word retire, like, Hey, I retired when I was 37 years old. But the first question everybody gives me is, what do you do with your time? Like, aren't you bored? Am I, and I completely agree with that. So I don't use the word retired . I just, I literally say I quit my job or even better. I even wrote a book called " Successfully Unemployed." I got myself out of a job so I'm absolutely unemployed. I will never be employed again. And by doing that, people understand I worked my way out of a job and I have, and then the next question is, well, how do you not do that? And I tell him about real estate and how awesome real estate is just like I'm doing now.

Chase Peckham:

That's the thing. I don't see how you're retired. I don't see how you're unemployed, what you're doing is a business, whether you have to put serious amounts of time into it weekly, whether it's 20 hours a week, 40 hours a week, 80 hours a week. Seems irrelevant to me. Is the fact that you had an idea and it's just your ideas working for you money. I mean you, it builds why you sleep. And that to me is you're fully employed. In fact, you are the most gainfully employed person I think I've interviewed since we started this podcast. You just are doing it. You're not doing it. The normal what we perceive as working every day.

Dustin Heiner:

Absolutely.

Chase Peckham:

So you're not, you're retired from the grind. This is a great way to say it. You're not You're very, very much gainfully employed in my opinion.

Dustin Heiner:

Yeah. So you're 100% right that I didn't want to work for somebody else where I clocked in and clocked out. I, like I said in the beginning, I would gladly change working 40 hours for somebody else a week to 80 hours for myself. It's not that I'm not working because that's my personality. I feel like I'm continually building my business and my business is, I love working, but I hate working for somebody else and so I'm done doing that. Everything that I do now is building it for myself.

Felipe Arevalo:

That's what I was going to ask next is, is it at this point now, because you've built such, such a business, do you just wake up on a Tuesday and say, hey, you know what, I'm gonna go buy another house or do you have like a business plan where like I'm gonna Attempt to purchase this many or is it just kind of when the deal shows up?

Dustin Heiner:

So that's a, that's a, I really, really appreciate that question because it really depends on where I'm at. So if you were to ask me that 10 years ago, be like, when I first started it was I need to buy the next one right now. Like it's just keep going, keep going. Cause I saw the value of buying one property, making $250 every single month. I was like, man, this is amazing. How in the world can I keep buying more? And so that's what I kept doing was I would every bit of money I would save every bit of money. Like our one vacation a year would be driving from Fresno to Phoenix, a 600 mile one way. And so 1200 mile round trip. That's our one vacation to see the in laws because we wanted to save every bit of money because I knew any penny that went to something else is one less penny going into real estate now because I sacrificed for so long, I'm able to live the life that I am now. So today, now it's, I don't have to grind or grind out by meaning I don't have to push, I don't have to be forcing deals when deals come. Like I'll get an example. Recently I bought uh , three duplex , sorry, three single family homes and a duplex off of an investor. He's just trying to get out of the business. I gave him $25,000 cash. He put the rest in a seller finance note and it's a great deal for me cause it's, you know , not that ton of money coming out of my pocket and the tenants are paying the rest of the note and I just went ahead and bought the entire thing. So when deals come up, I buy them. So it's not like reg , right , right now because I have the luxury to just wait for deals cause I'm not forcing deals cause I don't need to. That's how my life is right now. So just okay, here's the deal, let's go and buy it.

Chase Peckham:

Wow. I mean it's not often when we have these podcasts or, and we do these interviews that I'm literally so moved to want to make a move and now I'm seriously going to go take a much, much closer look at this because the wheels are definitely turning a nd, and I guess the question last one for me is you mentioned that you did sacrifice, I mean no b usiness i s, it's not a golden egg, right? I mean it's not something where you just go, okay I'm going to start buying all these properties. You had to sacrifice the first number of years going i nto this to build it well and make it successful.

Dustin Heiner:

Absolutely. Yeah. I definitely sacrificed lots. Like every, like I said, every penny went to saving any money that I made from the property. I put that into account to then buy more property . So, so think of it like a snowball. You know, you smart , you make a snowball, a tiny small snowball on your hands and you roll it down from the top of the hill. It just keeps grabbing more snow and making it and getting bigger and bigger and eventually gets to be huge. Well now it's like the snowball is so big. I can't even stop it. Even if I wanted to and I wouldn't, it's just great having that money come in, but it just keeps going because it's compounding on itself now. That sacrifice. In the beginning it was hard, but I saw I , I'm, I'm, I'm definitely type of like a visionary type of person. I could see where I was going after I got that first property, making that $250 a month. I can see, hey, it's just a numbers game. If I get 20 properties or if I get 30 property , I , it's just, I just knew just running the numbers, I could eventually get there and I just sacrificed until I got there. Now I don't even worry about bills like the bills that come in. I'm like, okay, here you go. Like we turn up the AC like 75 degrees because it's hot here in Phoenix and I don't have to worry about the bills, or we travel or go out to dinner. I was like, ah , you know, it's a bummer. We gotta pay for it, but oh well, you know , I have the money now. I am absolutely frugal, so I get, we'll have to say that. So I don't spend willy nilly, but it's just great not having to worry about bills ever again. It's just a, I would love for everybody listening to be able to have that feeling. You don't have to worry about bills. It is amazing.

Chase Peckham:

Yeah. I think that that's a, that's a good way to finish this podcast is telling everybody that if you can get to a place where you don't have to worry about bills, you're in a good place.

Dustin Heiner:

Absolutely.

Chase Peckham:

I can't tell you what a pleasure it's been Dustin to speak with you today. I think that the p that everyone who is listening today, I know the three of us are sitting here looking at each other thinking, hm , you know about the wheels are turning. Right. Um , and so tell us again, if people want to become your students, you mentioned that a few times. Where can they find you?

Dustin Heiner:

Yeah, thank you. So I started my website master passive income.com. That's where I have just loads of free content because my whole goal, like I make my money from real estate. My whole goal was just helping people. I have so much extra free time, so I thought that'd be able to help people. So it's master passive income.com as well as I have a podcast where I just, and it's just basically me. I do a couple random interviews, but basically me teaching how to do real estate rental properties and that is the master passive income podcast. So those are the ways that you can find me and if you want to, my coaching and courses are on the website too. So do you want to check that out. Uh , but I do also have, if anybody's really interested in just seeing if get a little more information, I have a free course, a free downloadable course that you can get if you want. It's masterpassiveincome.com/freecourse and I'll send it to you right away and just if you want to see if it's even more, you know, better than, or worse than it is, gets you started and then we can go down the route of helping you out.

Chase Peckham:

That's fantastic. Well, I know that it's been, I've, I've had a great time today. Uh, and I love doing the podcast . I love teaching people. Uh , I know that Katie and Felipe feel the same way. Uh , today has been a, it's been a real treat, so thank you very much.

Dustin Heiner:

Thank you very much. I really appreciate it. That's really great to hear that too. I really appreciate it. Thank you guys very much so much for having me

Chase Peckham:

stay cool out there.

Dustin Heiner:

All right. Thanks guys.

Chase Peckham:

All right , and now a little follow-up with myself, Phil and Katie. He's been doing research? I did research after that thing. That was pretty awesome.

Katie Utterback:

Have you been stuck on Zillow too ?

Chase Peckham:

I've been on Zillow quite a bit. I was in, I went to Ohio and I went to Texas.

Katie Utterback:

Okay, well let me just stop you there. So I found the top 10 worst cities and the top 10 best cities for investing in real estate.

Chase Peckham:

Okay, let's go there.

Katie Utterback:

Which one do you want? Best cities or worst cities?

Chase Peckham:

I say go worst first.

Katie Utterback:

Okay. Worst number one, San Jose, California. Number two.

Chase Peckham:

And is this because of just pure cost?

Katie Utterback:

cost and then I think it's also there. They were talking about the tech industry. The tech industry is largely moving out of silicon valley into New York. Really not a really good time to be investing in that part of California it sounds like.

Chase Peckham:

I was like, oh, that would be an issue.

Katie Utterback:

Yeah. So number two, unfortunately for us on this podcast is San Diego, California.

Chase Peckham:

That doesn't shock me

Felipe Arevalo:

or surprise me.

Katie Utterback:

Number three is San Francisco, number four, Los Angeles, Seattle, Washington, DC, Baltimore, Maryland is number seven, Virginia Beach, Portland, Oregon. And number 10, Chicago, Illinois.

Chase Peckham:

Those are the worst ?

Katie Utterback:

Those are the worst cities for real estate investment

Chase Peckham:

Baltimore surprises me a little bit.

Katie Utterback:

There's a lot of crime.

Chase Peckham:

There's a lot of crime. Yeah, there is. And even though they redid that harbor down there ,

Felipe Arevalo:

The harbor's nice.

Chase Peckham:

The harbor is beautiful. Yeah, Petco, I mean Camden yards is , is, is gorgeous. The Ravens Stadium is really nice. Um, but you're right, crime is, they have a hard time getting in .

Katie Utterback:

There's pros and cons of every city, right? Yeah. So yeah,

Chase Peckham:

absolutely.

Katie Utterback:

But the 10 best cities,

Chase Peckham:

and I would imagine that most of them are cost related.

Katie Utterback:

I think so

Chase Peckham:

it would seem to me even Virginia Beach is really expensive.

Katie Utterback:

But I want to just read off the 10 best cities because I have some thoughts on why these maybe more affordable.

Chase Peckham:

Let's discuss that.

Katie Utterback:

Let's talk about it. Number one is Indianapolis, number two, Cincinnati, threes , Kansas City, Missouri, Charlotte, North Carolina. The Dallas Fort Worth area is number five.

Chase Peckham:

Really?

Katie Utterback:

Yeah. And that's the one we can come back to later

Chase Peckham:

Let's discuss that because I researched that area.

Katie Utterback:

I'm thinking there's a reason the price is starting to drop on some of these coastal areas because rounding up the top 10 would be Columbus, Atlanta, San Antonio, Austin , and Cleveland. Some of these areas were hard hit by hurricanes.

Chase Peckham:

Oh yeah.

Katie Utterback:

So I'm wondering too, like, especially like the Dallas area, they got hit really hard last year, wasn't it?

Chase Peckham:

A couple of years ago there was the big rains and Houston's the one that got absolutely really pummeled, pummeled. But Dallas does have some, I mean it's been getting whether that is as rough, that whole Gulf of Mexico, that that coast there tends to get hit pretty hard by weather every few years.

Katie Utterback:

Yeah. In Charlotte, North Carolina is in there too Atlanta, Georgia. So I'm thinking some of this could be weather related too.

Chase Peckham:

Those are the top 10, but that's probably because of cost . But I mean, I was looking at Dallas and that whole area around Dallas. I have quite a few friends that live in both Plano and grapevine and the areas surrounding Arlington , um, that general area. And it's a very, becoming a very popular area. Um, Austin, Texas, which is down south from there is a beautiful, beautiful city, but it's the probably the most expensive city in all of Texas. Um, but the costs of properties, although not San Diego, like still, there were quite a few homes up in the one point ones and that area. And there's a ton of lakes and a lot of things to do in that area. But I mean typically I've found one bedroom or not one bedroom, but single family home dwellings for anywhere between two and 500,000, which, you know, compared to San Diego that's low. And we're talking four and five bedroom homes.

Katie Utterback:

Oh yeah. Cause in San Diego you can find a one bedroom, one bathroom home for $1 million. And it's really rundown. I know this because I was looking on Zillow too

Felipe Arevalo:

Yeah, that's true. It's funny though. I also looked up, I was , I was telling Katie, I have family in Chicago, so out of curiosity I was poking around in Chicago and she's like, yeah, it's on the worst list. I could see why it was not expensive. It had very affordable areas. Um , I feeling, I'm not too familiar with the city, but I have a feeling those areas may not be the ones where people necessarily want to go live in or rent. So there's that. It's affordable because are you going to be able to find a renter there?

Chase Peckham:

Again, crime. Chicago's got a bad reputation for that. Not, not, I'm not positive, no expert. So I wouldn't say whether that's the case or not, but it does have a reputation for a high crime rate. Um, unfortunately a high homicide rate. Um, so I mean I guess, you know , it's hard to throw a big lump that whole area into that. But yeah, I mean it's,

Katie Utterback:

it is hard. You're right. Cause there's beautiful parts of Chicago

Chase Peckham:

really difficult parts of absolutely great city. I love that city. Uh, weather for me would play a lot into it, but I was thinking the way he was thinking and I was looking at the Zillow going, where would places, where would there be that I would never think of moving like that I personally would not think of. And so I looked at Topeka, Kansas. I looked at a few others in the Midwest,

Felipe Arevalo:

There's a lot I looked at Ohio, Indiana,

Chase Peckham:

Nebraska, Missouri. My brother-in-law lives in Carolina and North Carolina is really, really pretty, that whole area. It all looks the same. Georgia, North Carolina, I mean trees upon trees upon trees and little mountains, West Virginia in that area, but it's still super nice places to live and a pretty affordable. So I was looking in those areas. I took the coasts out of it and just thought, where would, you know, people need to live, people want to live, but I just wouldn't think of it. That's kind of how I went and looked.

Felipe Arevalo:

The other thing I did is I avoided the big cities, like the really big cities and the areas directly.

Chase Peckham:

I did look at Cleveland maybe because the all star game was there just recently watching the home run. [inaudible] Cleveland gets such a bad rap. Right ? It's historically movies made about the sports teams and there's , yeah, I mean the, I mean they have the browns. I mean , that's tough in itself,

Katie Utterback:

but don't they have the rock and roll hall of fame?

Speaker 4:

They do. Absolutely. They do. Yeah. That whole downtown Lake Erie is really pretty. I mean it just gets really cold.

Katie Utterback:

Um , and it's, but some people like that.

Felipe Arevalo:

Yeah. The rental properties, you don't have to live there. That's the cool thing.

Chase Peckham:

That's why I was looking in that.

Felipe Arevalo:

Yeah. Some city was like , I never lived there, but some people do. And as long as you have enough people wanting to live there, that creates that demand.

Chase Peckham:

Well, I was trying to think about it in that way. Not that I ever wouldn't want to live there because yeah , it's just been, you know , beneath me or it's not something that I would like. It was the statement that he made through there, through that interview that he was saying, I never visit. I never have to go. And part of that plan being the passive income that it is, is the idea that he has very little stress level in the day to day management of all of it, which he really, he's taken out of the equation. Which can you imagine owning something that you've never seen?

Katie Utterback:

No.

Felipe Arevalo:

No.

Chase Peckham:

That was hard for me to take. But the more I thought about it, the more I thought, man, this guy is brilliant.

Katie Utterback:

Yes. Brilliant. I'm still digesting it though cause it seems so foreign to me to own something that you would never see.

Chase Peckham:

Yeah. Agree 100% and be trusting to those to take care of the things for you.

Felipe Arevalo:

Right. I like the idea. I would, we didn't want to do it locally where you could just be like, oh, you know what, I'm off early today . I'm going to run over real quick and take a look. No. And like he was saying, then you have the, the idea of, well the toilet's broken. I could just go swing by the Home Depot, pick one up. And if you remove yourself geographically, now you've removed yourself where you don't stress about it because there's absolutely zero you can do about it.

Chase Peckham:

Really nothing. You can do it right. 100%. I agree with that. That's where it really hit me when w through that whole interview and having a couple days to digest it. So , you know, before we recorded this part , um, I found myself becoming more and more intrigued and talking about it with more and more family, I haven't brought it up to my wife the other day and you should've seen that her eyes were the size of silver dollars. Like what are you talking about? But Hey, once we figure out a few things, I, I don't , it may not be a bad way to go.

Felipe Arevalo:

It's very interesting and it's one of those things also where if you can, I don't know about you guys, but I can jump on Zillow and then just get lost and then look at my phone like, oh, I gotta plug it in. I just charged it here for forever.

Chase Peckham:

I looked at it like where, I know friends live. I do that all over the country just trying to figure out, okay, well they live there so it must be nice, right? What, what does it cost? What, what are the rents? What are, I mean, I looked in Lincoln, Nebraska where some of my closest friends in the world have moved in the last three years and they absolutely love it because of the simple life that they lead now compared to the hustle and bustle of San Diego and trying to keep up financially. Um , his wife, my, my friend does not have to work anymore. They can live off one , um, one salary even though she, you know, she's bored. So she'll, she'll work part time. She , she's one of those people, she'll never stop working, but she has that freedom to feel like I don't have to go through the hustle and bustle. I don't have the stress of having to be at work at 9:00 AM every morning or 8:00 AM or whatever it is. And that has really done a lot for their marriage. Their , um , stress levels. Their kids really like it too. Um, and they thought in a million years they never would've wanted to leave San Diego. So obviously there's a lot of these places that people really love living, grew up there, whatever it is. So if you can buy a piece of that and you can rent it to people that, why wouldn't you do that? Somebody's got to right,

Katie Utterback:

Just make sure that you're considering hidden expenses and forgotten expenses that was advice that I also found , um, we talked about toilets breaking . Um, but there was another real estate investor who had a video that I watched do . It's kind of giving out advice. Um, some of the forgotten costs include closing costs and listing costs when you're trying to actually rent that out. Um, because they're saying it's easy to look at the end result and see how this passive income works so well, but setting it up does take a mountain of work and there are going to be some setbacks.

Chase Peckham:

There will be pain points.

Katie Utterback:

Yeah. But what he was saying is it's not going to be like some sort of HGTV emergency and that just a reminder that those shows are still scripted and that like your floorboards aren't going to be gutted or something.

Felipe Arevalo:

There's not going to necessarily be asbestos and everything else you buy and have to be a wall that you're trying to change. Be a supporting wall so that you have to readjust your whole plan. It doesn't work that way.

Katie Utterback:

Well, no , he was actually saying that one of his rental buildings, the foundation was off, but he was saying just to fix that when they were going in, they called him and they were like, Hey, your foundation's tilted a little bit, we can fix it right now. But he's saying it wasn't like it was this huge charge, like h g t v proportions. It was like, it's going to cost you $1,000

Chase Peckham:

oh wow .

Katie Utterback:

So it's like, it sounded a little bit more manageable than what I was expecting.

Chase Peckham:

Yeah. I think there's a lot, yeah .

Felipe Arevalo:

To this. Yeah, it was very interesting. And then you could pick a city and then start drilling into like the little neighborhoods that go along with it and then trying to figure out why one neighborhood is a lot more affordable than the neighborhood. Just a few blocks away. And then we'll that inc .

Chase Peckham:

But he said that, he said, you got to do your research and you need to call management people. You need to figure out, you know, the experts in the area and really get, get the right idea and, and get the lay of the land, so to speak, from, from the previous people that are on the ground and know the area and then hopefully you hire them and trust them.

Katie Utterback:

Yeah. It sounds like this is an investment where you hit the ground running. There is no time to walk or warm Up.

Chase Peckham:

No, absolutely not. But I think again, if you have a management person that's taking care of that day to day stuff, you're not going to have to stress out about it. And like he said, if you can clear $250 to 500 bucks,

Katie Utterback:

no, but I mean, that was the other thing I did want to bring up was that in my research I did. I find that a lot of investors, that the magic happens once you have two, three, four, five, six properties. It's not just with one I was hoping it would just be this million dollar paycheck every month. [inaudible]

Speaker 6:

[inaudible] .