Simplifying Subject-to Deals across America with Brad Smotherman

Join us in this captivating episode as we sit down with Brad Smotherman, a seasoned real estate investor who began his career at the impressive age of 17. Brad shares his remarkable journey from being a licensed real estate agent in Tennessee to becoming a full-time investor in 2010. He opens up about the challenges he faced in balancing both roles and the pivotal decision to focus solely on investing. With insightful anecdotes about the influence of his mentors, including his eighth-grade math teacher, Brad emphasizes the importance of prioritizing personal relationships over financial success and how strategic decisions led to his thriving career in creative finance and remote real estate deals.

Throughout our conversation, we explore the dynamic landscape of real estate investing. Brad discusses leveraging tools like PropStream for data analysis and the benefits of virtual property purchases. We reflect on the pros and cons of being a licensed real estate agent and the significance of ethical behavior in transactions. By drawing parallels between the 2008 financial crisis and current market conditions, Brad illustrates how opportunities exist in any market if approached with the right mindset and strategy. We also touch on creative deal structuring, with Brad recounting memorable experiences, such as turning a contentious divorce property into a profitable venture through owner financing.

To wrap up, we delve into effective real estate marketing strategies and the vital role of mentorship. Brad shares his journey of turning a modest budget into substantial deals, highlighting the efficacy of search engine marketing over traditional methods. Real-life examples demonstrate how even small ad budgets can yield significant returns. Finally, we discuss the profound impact of personal connections and meaningful mentorship in real estate investing, underscoring the value of helping others achieve success. Brad's story is a testament to the power of strategic decisions, ethical behavior, and the importance of fostering personal relationships in the pursuit of real estate success.

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Chapter Timestamps

(00:03) - Early Real Estate Career Success

(06:32) - Real Estate Market Trends and Insights

(16:48) - Creative Real Estate Deal Success

(28:40) - Real Estate Investment Strategies and Success

(38:23) - Real Estate Deal Structure and Risks

(51:11) - Real Estate Marketing Strategies and Efficiency

(55:51) - Real Estate Marketing Strategies and Belief

(01:05:42) - Real Estate Mentoring for Success

Real Estate, Investing, Mentorship, Creative Finance, Virtual Property, Market Trends, Ethics, Data Analysis, PropStream, Nashville, Decatur, Home Inspections, CMAs, Licensed Agent, Market Conditions, Opportunities, Wholesaling, Sub Three Deal, Owner Financing, Profit, Transparency, Subject-to Deals, Cash Flow, Financial Freedom, Due-on-Sale Clauses, Reverse Mortgages, Credit Reports, Attorneys, Paperwork, Client Expectations, Due Diligence, Marketing Strategies, Google Ads, Direct Mail, Motivated Sellers, Distressed Homeowners, Foreclosure, Divorce, Health Issues, High-Intent Leads, Personal Connections, Education Space, Success

Transcript

Marcus: 0:03

Welcome back to MVP real estate podcast season four, episode 12. We got Brad Smotherman here, new resident of Florida but from Nashville, tennessee. Started his investing career very early. Might be the earliest guest we've had, started at 17, first deal at 19. Very cool career path that he has taken, unofficially retired at 28. So very successful, started early. But before I spill the beans on his career, I'm going to have him tell it. So let's bring him on. Welcome, brad. Thanks for coming on the show. Thanks for giving us the time.

Brad: 0:46

Hey, thanks, man, great to be with you today.

Marcus: 0:48

Yeah, we're excited to jump into it. We've read a little bit about your background, which is extensive. We didn't have enough time to read the whole history, so hopefully you shed some light on your career path that you've taken. But to jump off from there, let's give the audience a feel of who Brad is. Where'd you come from? How did you get into real estate?

Brad: 1:10

Well, I appreciate the question. In terms of who Brad is, I would say I'm a husband first, a father second, a friend third and then a real estate investor, and in that order. I've seen a lot of people over the years really focus on financial to the detriment of everything else, and I've made it a focus to not do that. But I got involved in real estate when I was 17. I reached out to my eighth grade math teacher who I'd been in contact with. He became more of a father figure to me once my grandfather died and he was a real estate agent and I said, hey, I'm thinking about getting into this. Do you think that would be a good idea? And he remembered me from eighth grade. I'm not sure if that was a good remember or a bad remember, but you never know. But he said that he would be happy to mentor me, and so he became my first real estate mentor. I became a licensee in the state of Tennessee at the ripe old age of 18. And I made one sale my first six months, so I was definitely not an out the gate success. I transferred into the investing side in 2010,. Having never bought an investment property, I realized I couldn't wear both hats. A lot of people can, but I couldn't. I couldn't be a licensee and sell real estate and also try to buy it as an investor, and so I burned the ships, got rid of the license and started doing the investing side in 2010. And then from there, we've done deals all across the country I mean hundreds and hundreds of deals and we've done a lot remotely and a lot of what we do is in the creative finance space and we've been having a lot of fun. So I mean, that's basically 20 years and what I hope was a little under two minutes started early.

Marcus: 2:45

That is something that I wish I would have started, because I didn't get started until I was 28 26 in that ballpark so that's still pretty early, though I mean 20s, 30s, I mean there's still a lot of time yeah, there's still a lot of time. You just hear about you starting at 16, 17, 18 and you're like man, the decade I could have gained if we started early, had our priorities in line. But no, that's super cool and you already you hit on a nuance that I don't think a lot of people take into consideration being a licensee or being a real estate agent and buy and hold, investing or flip investing, investing or flip investing what went through your head in terms of all right, I've got an obligation to be an agent but I also have an obligation to the company and the investment that I am starting. There is some weird crossover, just like being a general contractor and going in and doing my investment properties. You have a certain standard of knowledge that you can't let things, you can't let them go. You can't like look past them and like, ah, that's not. My problem Was that kind of the mindset you were coming from with being the agent and doing your investments.

Brad: 4:01

Well, it was really tricky, man, because I would go into houses and I would say, well, I can list it for this and hopefully get that price where I can buy it for that. And, as you can imagine, I would get listings and not buy anything. And sometimes that was the best thing for the seller and sometimes it wasn't, because remember, like this is 2008, 2009, and we would take listings but you know, a third of the market was distressed. So either short sale or pre foreclosure or foreclosure from the bank as an REO. So you had a situation where there was all of these problems and I just had a difficult time going in and trying to wear both hats. And then also, from a legal perspective, as an agent, you're a fiduciary, so you had a fiduciary responsibility to the client and there would be times. You know, if I was an agent, you know that would be a gray area and I didn't like that. You know I wanted everybody to know on the field, you know who exactly was on what team. And so the last straw came for me whenever the board called me, I was doing marketing and I wasn't putting my broker name and broker info on my marketing big enough. And so they said you know, your phone number cannot be bigger than the company phone number. And then I realized at that point that I couldn't do this. We buy houses type of marketing as an agent, put the broker info on it. They're probably getting half the calls and I'm doing like I'm going to have to do double the amount of marketing for the same result of lead flow. And so at that point it became clear it's just like and really to to make this longer than it probably needs to be. You know, my first mentor his name's David Alexander is now a great friend of mine, but I'm a big believer in the mentor mentee relationship and he asked me he said man, well, do you want to sell real estate or do you want to own something? I said man, I want to own something, I've got to own something. He said well, you know what you have to do. I said well, what do you mean? He said you got to retire your license and become an investor. Now, that's the entire way I made money, you know, and but I did it and somehow it worked.

Marcus: 5:52

Yeah, and obviously you had to pick a career path that you're going to go on and it has shown to be successful. Do you miss your access to the MLS? Because I know holding a real estate license that is majority of what I use my license for is just access to the MLS. I don't do a lot of my own transactions because, just like yourself when you held your real estate license, you're not going to take a buyer's agency uh, commission on it because you're just stealing from Peter to pay Paul in most circumstances.

Brad: 6:32

I would say in 2010,. It was a bigger factor than it is today with PropStream. Propstream has a lot of the data outside of states that are non-disclosure. But I will say also, once we started jumping markets so I guess to give some context to this, we buy my hub is Nashville, tennessee and then we kind of started to expand out. Then I did my first deal in Decatur, alabama, that was out of state and I tried not to buy it but they kept just telling me I was going to buy it. So and dropping the price to where I was like finally, like I guess I'm going to cross this imaginary line of the state of Alabama, I bought that deal and then I became a lot less scared of doing things virtual. And then I became a lot less scared of doing things virtual. And then I kind of got to the point where, because we have home inspections on every deal, I'm going to know more about the condition than if Brad was personally there, and then we get multiple CMAs on each deal to kind of have a good understanding of value. And so we became really comfortable buying virtually and so with that, even if I was licensed in Tennessee, I'm not going to have the MLS everywhere, and so the context there, I think, is important. But some people make it work and especially if you're in a situation where you're you've got lead flow and you're able to to take that lead flow and list the property to pay for your advertising budget and you're just wanting to do a handful of deals a year, I think it may make sense to still be licensed.

Marcus: 7:41

It just comes down to what people's goal goals are in my opinion, yeah, and everybody's situation is different and obviously it's good to highlight that one. Yeah, it's good to highlight that. I just know that there's a lot of people that I have talked to personally in this area with the conflict of what you were saying, area with the conflict of, like what you were saying the fiduciary. How do I sit across the table from Joe and say, hey, I can buy your house for 300,000, or we can list on the open market for four, like doing the right thing for the client. And what I always tell people is like, let that that seller know as soon as possible all of the options and where you are at. Like, if I buy this house cash as a personal investment I'm not a real estate agent but if you do that, then these are the protocols we need to go through. This is the paperwork we need to get signed. So having, like you were saying, a mentor to help you guide through that would be very beneficial.

Brad: 8:44

Yeah, I think that there's a way to do it and do it well, and I think ethics and legality don't always coexist, but I think ethics is almost always the higher standard.

Marcus: 8:54

Yes.

Brad: 8:54

And so you know, if you disclose things in the correct way, then I think you can do that transaction and be a thousand percent above board, and there's no need to play in the gray area of ethics. I mean, that's one thing that we really want to stand on?

Marcus: 9:06

yeah, absolutely, and I want to get back to the ethics thing for a second. But if I can, you mentioned something. I don't want to lose the thought you started investing in that 2008-2009 time frame, right?

Brad: 9:19

well, it's 2010, I did my first deal or 2010?

Marcus: 9:22

um, I unfortunately was not in the market at that time. So when there were, and when I meet investors who were investing during that period, my first question is like what are the parallels that you're seeing in today's market as the 2008, 2009 crash? 10 is kind of like the tail end of it? Do you see any comparisons or, I guess, contrast in that period? Because the people that aren't investing now are saying well, the market isn't right, we're not in a good investing period to start, so I'm going to wait for all this to blow over and then I'll start investing. What do you say to those people?

Brad: 10:03

I think it's a very strange way to look at things, you know. So, look guys, I guess I'm relatively young, but I feel old in the space because I've been through the 08 cycle and then you know the 2020 market with COVID, and you know we've done a lot of deals, and so I think I feel like an aged real estate soul, I guess, if I had to put it a certain way. But I think it's really strange when someone says oh, you know, now's not the time because things, the prices are too high, or whatever.

Dan: 10:32

I'm going to wait.

Brad: 10:33

I'm going to wait until it gets worse. And then, undoubtedly, what happens is things get worse. And they say well, you know, it's not good right now. I'm going to wait till things get a little bit better. And so it's a way for smart people to continually kick that ball down the road and really put off what they feel like they can't do anyway, in my experience here's the thing there's always opportunities in any market, and I'm a firm believer. I don't really care what we're doing, what the market looks like, because we're always in inversely related markets. There's a market to buy and a market to sell, and so it's either really good to buy and difficult to sell, or vice versa. And so if you're in that dichotomy, you shouldn't care what that market does, you just want to know where we're going. So I think that's really like the soul of the question. I feel, with what I'm seeing, that this feels like 07. And the reason I say that is in 2007, I met a builder and you know, keep in mind, I was what? 20 years old at this time and he was very upset that his house hadn't sold. And I said well, man, how long has it been on the market? And he said we're already through framing. I said wait a minute. So what? What does that mean? I didn't understand what he meant by that and so he was upset that the house was framed. Now it wasn't bricked, it was under roof, I mean, but it certainly wasn't finished. It was 60, 90 days from being finished. But he felt like the house should be sold and I'm seeing that there's a lot of people that have gotten in the business the past four years and certainly post-COVID. They're used to a six days on market, 12 days on market, 30 days on market, and if you go to 90 days that feels like a crash. You know where 90 days historically is a very good seller's market. Now, am I seeing some trends? Yeah, I mean we're seeing more inventory. I think we're up 40% in inventory year over year, but that was from a very small base. You know, I think that that certainly right now, right before this election, that the buyers are having a lot of anxiety. You know we're not seeing a lot of buyer demand. We're seeing that in mortgage applications. But this is not a bad market, you know. But at the end of the day we want to be conservative, so buy well right, so buy correct deals on the front end, and if you do that, then you're always going to have safety through markets, right. So I could go on about that, probably far more than what you guys want to listen to, but I think the people that really miss out are the people that stay on the sidelines and just don't play the game.

Marcus: 12:53

Yeah, and I think you brought up a good point with mortgage. Rates are down, not the percentage or the interest rate, but the number of mortgages coming out are down. I spoke to a couple of mortgage brokers and they're all, I guess, in a way, downsizing. Agents are leaving because they're not getting commissions, because they're producing less mortgages out there. And I was actually shocked to hear that I didn't even put two and two together until I started talking to them. I was like, oh, that does, I guess makes sense, like all this is having the ripple ripple effect through the whole industry, which is kind of crazy, I think, for both mortgage lenders and for realtors.

Brad: 13:34

It's a tough, tough place to be right now, because even in the 2021 market which was what they would say was a really good market the supply was so low that the transaction numbers were very low. So, even though prices were going up, houses were selling very quickly, you couldn't get enough sales volume to do what you could have done really in 2018. And so was it a better market or a worse market? Well, it depends on what side of the coin you're on. But and mortgage lenders as well I mean, we went from a 3% rate to an 8% rate a little low, I think it was and an 8th was the top that we had, and then now we're down to about 6 and an 8th. The Fed just cut 50 basis points, but the rate actually went up after the Fed cut, and so all of this is very interesting to see the Fed cut 50 basis points. The 10-year treasury went up subsequently, and so did the 30-year rate. So I mean, it's not apparent to me that things are going to get better on the buyer demand side outside of this, this election coming to an end and and having some certainty in terms of who's going to be leading the country, which I've seen in 2016 and 2020, that that did have an effect much more than what I expected. So we'll see what happens, I think after first of the year.

Marcus: 14:42

Yep, and that's kind of the mode I'm in as well Wait till the election's over to see what, what happens, I think after first of the year. Yep, and that's kind of the the mode I'm in as well wait till the election's over to see what, what happens.

Brad: 14:50

it's a a wild time I think it is, it's an, it's an interesting time, I think it's an exciting time. But uh, exciting covers it both ways yeah, and there's still.

Marcus: 15:01

there is still good deals out there to to be had. So if you're on the fence, obviously there's still still deals to look for. You were saying, like some of the tools you use is PropWire, which I know we held off for a while getting PropWire. I'm sorry, but that tool has been great in terms of our research that we can do.

Brad: 15:28

Yeah, I mean my team uses it. I actually don't know how to log into it. I'm the worst when it comes to tech like the worst, but I do think we're gonna have a challenge on that one. Yeah, I know, seriously, it's really bad.

Marcus: 15:42

Yeah, it is Dan. Dan's got the login on that one. I think I've logged in twice so I got to see what it looks like and that's about it we have to leave the the expert level stuff to the experts.

Brad: 15:53

That's the way I feel exactly exactly.

Marcus: 15:56

um, all right, can we backtrack to your first deal in 2010, because I want to compare and contrast that with where you're at now with the investing, because a lot of people get in and they're like well one, I don't know where to start. Because, when you look at real estate people think like that's it. But as you get into real estate you can see there's all these different sub markets within it that you can focus a whole career on just wholesaling or just buy and hold rentals. So when you started, did you have an overall picture of where you wanted your end game to be, or were you more in the I want to get in real estate. Just got to get my feet wet and we'll see where it takes me.

Brad: 16:39

You know, I wasn't sure up until the point that I met David, the mentor that I spoke about earlier. So David was someone that did things differently. Now keep in mind this was 2010. So wholesaling all but did not exist because there was no fix and flip market to sell to a wholesale deal by and large. You know, I'm talking in general terms. You know, and if, if a fix and flipper wanted a deal, they would just go to the courthouse steps and buy a foreclosure. So getting inventory for a fix and flipper was not difficult. So that was a really tough way to make money. Rentals I couldn't do rentals because I didn't have cash or extendable credit to get into that business, and I think rentals are a good place to start if you need to really store your wealth, but maybe not the way to build it quickly. I think it's a slower way to build wealth, but also a surefire way to build wealth. And so for me, what I did and I guess to give some context to this, what we do is a lot of creative deal structure, so like lower level stuff, like sub two, all the way to what I'm describing here, which is what David taught me as a sub three deal. Okay. So it has a sub two element with a twist. And the first deal, guys. I literally still remember when this lead came in. Okay, so I was. It was a hot August day. I was in my truck, I couldn't afford the $4 per gallon gas, so I would put you know, 10 or $15 in at a time and not ride with the air conditioning because of course that took additional gas Now. So I'm sweating. I get to my house. I see I have a voicemail. It's very similar to every other voicemail that I ever received. It was hey, I've got a house to sell, call me back. So. And I remember I looked at my phone and the voicemail for like 10 minutes and I just did not want to call the guy back. I was just, I'm eight months, I was pressure washing houses with a college degree, my friends from accounting were making fun of me. Yeah, hey, brad, you made that first million yet. Have you at least bought a house yet? And I was like no. So I had all this going against me and I was like another voicemail and I was just so beat up emotionally. But I I had what we in the South call a come to Jesus moment and it was just like okay, brad, this is the life you chose. You made the commitment to do this. Put your big boy panties on and let's call the guy back. And I did so. I went to the house. It was a divorce situation and I remember the numbers. They owed 97,000 on the mortgage. They were about to be a month behind and it was one of the more contentious divorce situations I've, even to this point, been a part of. So they wouldn't talk to each other. They're not strong man, it was wild. And I don't know what he did, but she was very angry at him. So I went through the pitch of what I could do, which was I'm going to leave the loan in place, but I'm going to put my buyer in place before I close. And we have the paperwork that goes through everything. We were going to sell the house with owner finance, okay, so, um, so he signs, he agrees. I hand it to the wife. We're all at a kitchen table. I hand it to her, she signs, she takes the pen and she throws it as hard as she can at him and hits him in the face and I'm like I didn't know what to do. But she has my paperwork over here. So I just slowly grabbed across the table and grabbed the paperwork and I'm like anything, any questions? I'm like squeaking, just trying to get out the door with my paperwork. And so I sold that house with owner finance to a husband wife couple that were. They were both registered nurses. They had lost a house in Tampa in 2008 for foreclosure, but they had great incomes. They had a good down payment. So I bought it for 97,000, subject to I sold it owner finance for 135,000. I got a $20,000 down payment, so that down payment went a hundred percent to me. And then my note was roughly $17,000,$18,000 on the deal and that note cash flowed about $400 per month. So I guess, to recap number one, other investors had looked at this deal and decided to pass on it, and so I was like maybe I'm missing something, but I knew what David had taught me and so I took a deal that other investors had passed on. I made 20K cash. I never owned the house, so in that way it was similar to a wholesale deal, but I also got the note in the cashflow. So my first literally my first four years were all deals like that. I didn't take title to anything. We did creative finance, I created notes, I created down payments, and I still say that that first deal was my best deal because it gave me a little bit of cash you know, the 20 K to get going, but the confidence to say, yeah, I'm on the right path. I'm doing this professionally. When my friends from accounting said, hey, brad, have we bought a house yet? I could say, yeah, here's a deal, you know. And then, um, there's. I don't know how much time we have, but there's a subsect to this that that I think is important. So I was concerned about a seller finding out about what I made right, and I think that that's something that a lot of newer investors are like. Well, no, are they going to be upset that I'm making it So-.

Marcus: 21:33

And that's one of the things with the subject two deals that a lot of investors worry about and they. I read a book and I can't remember what the title was, but he talked about a way to structure it so that it wasn't as available or accessible to the seller, and I can't recall what his method was. But yeah, that's a that is a concern within subject two, for sure.

Brad: 21:55

Well, so it's different on a sub three deal because we have to market the house for sale while they still own it, so there's no way to hide it. Okay, and that was my concern. So you know, I go to the house on a Saturday night to put a sign out that says for sale, owner financing must sell, no banks. A phone number and that phone number was a dead invoice mail that talked about the house and I tried to do it at a point that I didn't think that they would be home, right. So I put the sign out and I didn't get down the street in my car before I get a call and I look and it's Mr Seller. Okay, so the conversation goes like this hey, brad, this is Mr Jones. And of course my stomach dropped a little bit. You put a sign in my front yard, stomach dropped a little bit and I listened to the voicemail. Now, guys, at this point I couldn't tell if he's upset with me or not. And he said you're owner financing this house for $135,000. And I kind of squeaked yes, you know. And he said huh, yeah, my daughter's looking for a house with owner financing. Do you do? You, do you think you could sell the house to her. Oh, my God, and I couldn't believe it, you were blessed in that moment. Just couldn't believe it and so I had to call her. She didn't have a good enough down payment and so I had to call him back and say, hey, you know she doesn't qualify. But at that point I was like if you're motivated, if somebody is truly motivated now divorce pre foreclosure is what their, their motivations were they don't really care by and large and I've I've only had a few exceptions for this in my entire career but they don't care by and large that you're making money, and I ended up putting it in my purchase and sale agreement. The first point that they initial is that we buy and sell for profit. Okay, so, it's. It's even agreed to in writing, because I just think that that's the best way to do things. But people don't care. They just want to know that they're in the hands of a professional that can solve the problem. And so, guys, if you can be professional and be good at what you do, you can solve people's problems and do well. So it's doing well financially and doing well for people.

Marcus: 24:02

Yeah, and that is. It's a good thing to highlight In those situations when you're dealing with that a divorce or an elderly getting moved into a care facility, any of those like bad or unfortunate situations where people need to unload real estate. It does feel kind of slimy the first time where you're like I'm going to profit off of their misfortune or their situation, but you're solving a huge problem for them. Like we're in a deal right now where grandpa in the house is going to a memory care facility. The last thing the family wants to do is put this on the market, and that's one of the options. I told them we could put this on the market, sell it for X. And they're like no, we don't want to do that, we'd rather just get rid of it quickly. And I was like okay, well, if we do that quickly, the price point's going to come down. Is that something you're comfortable with? I'm like, yep, I'd rather take less money and get it done quickly, because our motivation is the memory care facility needs us to have X dollars in our bank account, so make sure we have X dollars in our bank account. And I was like, yep, we'll run the numbers, we'll find a purchase price to where you will end up with this in your pocket, and that should solve your problem. It'll solve my problem. We're going to make a profit on this house, and they know that problem. We're going to make a profit on this house, and they know that. And once you get everybody as a win win, win, that likes I feel bad, calling it a slimy feeling, that uncomfortable feeling of profiting doesn't really hit you like the first one, like what you're talking about, Cause you are, at the end of the day, solving their problem.

Brad: 25:38

Well, I love that story, man, and we do things very similarly. I mean, oftentimes we'll say, well, why don't you just list the house? And a lot of times they'll tell you well, I don't want to do that because of A, b, c and D. Everybody knows that they can list the house and get more. I think 30 years ago it was different because people didn't have access to the internet really, their pricing wasn't really known of what the value was. All of that is really pretty much a non-issue at this point, but I think it's important to understand that the value systems are different for people. Some people want to maximize price, and that's most of the seller market, and some people want to maximize convenience. And if they're willing to lower the price to maximize convenience, then I think it's fair for us to go forward with the transaction. So, I love the way you told that.

Marcus: 26:22

Yeah, and we had another one that kind of went a different direction, where I approached him I said, oh, why don't you list it? They're like, well, we need to have it by this day, right, that was 60 days from now. And I was like, well, you can still list it for 30 days If you still want to try and get the most profit out. Why don't we list it for 30 days? I'll give you a letter of intent that I will close if you don't get a better offer by the deadline you need. But why don't we see what's out there? See if you can get more money? And they ended up getting an offer for like$15,000 more than I was offering. So they walked away with more money. It was a win-win. We didn't end up buying it. So they walked away with more money. It was a win-win. We didn't end up buying it, but their solution got solved and they made more money than they thought they were going to.

Brad: 27:04

I think it was about 10,000 higher than what they wanted to take in, yeah, and you can do that because you're not operating from lack and feeling like this is the only deal that I'm going to get this year. You know, whenever you have abundance and you know there's there's guys, there's more sellers out there that need to sell than you can buy. You know, and and people just don't understand how big the motivated seller market is. And once you understand how many people out there truly need help that aren't the best fit for, you know real estate agents and you don't mind saying, hey, you're really not the best fit for me, why don't you go ahead and list it? And then sometimes they come back to you and say, well, I'd rather you just buy it. I understand, and that's okay too, but you know, pushing people the right direction, I think it's just. It's just better for everybody.

Marcus: 27:50

Yeah, Yep, and like I liked that you were. Your first deal was the subject three kind of deal. So that is a very, very cool starting point for an investor. Usually you talk about you buy it through financing, you have your down payment, you max out some credit cards to pay for some repairs, like. We've heard those stories Very, very few do you see people that start out in the subject to subject three world Right, with you starting there, I feel like you got through the first hundred meters very quickly and you're now in a different subsect of real estate. Are you still focusing on that niche market for investing or, since you've gone now more national, are you introducing other buying strategies or are you still sticking to the subject two?

Brad: 28:40

subject three yeah, so sub three was something I did my first really four, four and a half years in the business, and it was because the market was so quote unquote bad, you know. In other words, it was really tough to sell and easy to buy. That sub three was the only thing that really made sense, because I didn't have extendable credit. I had a good credit score, but going to the bank, you sense, because I didn't have extendable credit, I had a good credit score, but going to the bank, you know, I didn't have tax returns and that kind of thing to where they wanted to loan me copious amounts of cash and so I had to do things creatively. But it what it did for me is it built my cashflow base. So I mean I was gosh, I mean in terms of like bare bones living I was probably retired when I was 28, something like that so like where my cashflow that came in passively exceeded my very bare bones living expenses, you know. But I had a deal in 2014, by the way. Well, thank you. Um, in 2014,. Now, that was not an extravagant lifestyle, by the way. I'm just just to be clear. It wasn't Rolls Royce, and, and yeah, whatever, but oh, you weren't on Instagram. No, I'm the worst social media guy that you'll ever see Like, I hate that stuff, man. I hate it Anyway. So I had a deal in 2014 that I got back. Okay. So I owner financed it in like 2009. And then, no, in in 20, 2010,. Got it back in 2014. And in that time the value had, uh, had increased. So I think I sold it owner financing for 140 grand. I'd bought it for 80. Uh, it had paid down to about 75 in that time. And now I got this property back because they needed to move to Phoenix Arizona. And they came and said, hey, can I just deed it back to you? I said, no problem, I gave them their, their down payment back so that they could move. And now I have this deal that was worth 180, that ballpark and these have been a long time on the numbers, but to ballpark it, I think it was worth 180. I had 80 in it, something like that. So I retailed that deal in 2015. And that was my first big cash pop. Okay, so I had like a 60 K net profit, something like that. We had to do some renovation on it. That was really my first fix and flip. And then we moved more and more away from owner finance and towards retail Once the REITs entered the market and we started going more virtual because it was just it was tougher to owner finance kind of all over the place and have 20 deals going at one time. So and then, whenever rates hit two, 3%, we started buying a lot of sub two rentals. So you know, a lot of our rental portfolio now is, you know, certainly sub 4% money. Whenever you look at it, as in this inflationary environment that potentially we're out of now, but you know certainly we're at eight 9% inflationary environment. That potentially we're out of now, but you know certainly we're at eight 9% inflationary environment. At a certain point I mean we're at a negative interest rate on on those those deals in real terms. So, we did that for a while and so now I think you know the wholesale model is actually more attractive than it's probably been in a long time because, um, and historically I I don't wholesale, but I've done more wholesales in the past 12 months than I ever have, and I think that the InvestorLift software has made it easier to have a virtual wholesale business. So we have the cartel version of that. And then, you know, being in a situation where the inventory is so tight, I think most fix and flippers are starving for deals and they buy marginal deals. So we've had situations, even recently, where I wasn't going to buy the deal at all but I think, well, let's just put it on the market, wholesale, and we make 40 grand. I had that happen just a couple of weeks ago and I don't understand why people buy the deals that they're buying, right Cause I, but that's okay, you know. So I think the wholesale first model makes a lot more sense today than it has. And then keeping the best deals for yourself. So like, if you're going to spend 60 K a month on ads, which is roughly where we're spending right now, you know we can wholesale out the bottom 15 deals and keep the best. You know five deals for ourselves and then decide on on the middle.

Marcus: 32:46

You know something like that and that's the abundance that you were talking about. It's easier to let some of the deals go when you know you've got your top deals that you can focus on and, like some of the ones that aren't your big hitters, but let other people make their money on those. Yeah, absolutely. Two questions on your sub two that you kind of prompted in that last statement. So with the market right now, prices are high, interest rates are high, matching that. When you approach a seller with subject to and you know their interest rate, you know how much money they have left on their mortgage, you know how much equity is in their property. Are there common themes or pushback that sellers have or hesitations that seller have that get brought to you pretty consistently.

Brad: 33:37

Certainly, I would say. The top two are how long? How long is this loan going to remain in place?

Marcus: 33:42

yep right.

Brad: 33:44

And then, secondly, what happens if you don't make the payments? You know that those are. Are two that that if they don't bring them up, we bring it up. Yeah, because if it's not what they are thinking, it's what they should be thinking, you know, and whenever we we have paperwork that spells out exactly like a disclaimer, you know. So if you like, I'll kind of go through the script script work on this. Yeah, if you want, yeah, great. So first, in my negotiation strategy, we never give a price, we never make an offer, okay, so I do not make offers ever. So we have the seller tell us what they want as their walkaway number. This is what they need in addition to the mortgage, and part of that is because we're planting the seeds of subject to. So if somebody has a $200,000 mortgage and they say, well, I want $10,000 to walk away with, they've already, in their mind, segmented the mortgage amount from their actual cash amount, right? So whenever we negotiate this, it's well, I can do the $10,000 at closing if we can do it another way. And then we spell out the sub two element of it, okay, and we get to a point so if I can do that, would you sell me the house today. Now, at a certain point, we want to go through this disclaimer. So, guys that are listening to this on podcast, I'm drinking coffee and I probably had too much of it at this point, but I'm always, whenever I was in person at a house, I would have my coffee cup because, you know, starbucks, mcdonald's, whatever, and it would always say caution, coffee hot, you know. And I would take it because I drink coffee all the time. But I also took it because I knew I was going to go through the script work. So the script work is so, john, we usually get a couple of questions at this point. The first is how long is this loan going to remain in place? I think that's a really good question. Now, I don't have my crystal ball. I wish I could say you know, here's the buyer, here's the date, but if I did that, of course I would be telling you something that I couldn't really hold up to, and the last thing I want to do is tell you something wrong. Now, on average, it takes between this date and this date. It could be longer, could be shorter, but for me to give you a date, I just don't know and I don't want to tell you something wrong. Now the second question is usually what happens if that buyer stops making payments? Okay, now the disclaimer on my coffee says caution coffee hot. Okay, as if we don't know Right. So here's my disclaimer on this. I've never been in a situation where, if that buyer stops making payments, that we have not gone in and continued to make payments on this loan and just repossess the house from that buyer and just resold it to a new buyer. Okay, that could happen. But you know, says caution coffee hot. If Great Depression number two happens or World War III happens or something happens and I get a bunch of houses back at one point, I can't guarantee, john, that you don't get a call from me saying, hey, if you want to protect your credit, you'll have to make a few months payments until I can get this thing resold. That could happen. So I need you to understand that.

Dan: 36:33

Yeah.

Brad: 36:34

But if you're ready to move forward, then I think I could get you the 10 K. So that's kind of how we go through things, you know, because I think what a lot of investors do is say, well, under no circumstances would I be in a situation where I couldn't make the payment, and that's just impossible. You know, we don't want to set ourselves up or them set them up for a situation where the expectation is just impossible to uphold.

Marcus: 37:00

Yeah, and that's important and it's good that you got that out there early, because obviously you don't want it to go through and they feel super comfortable that all of a sudden you have to make the phone call and they're like well, brad, you said this was like ironclad, there's no problems. And now we are, and that is the situation. You don't want to be caught in Correct. Another question I don't know if they've ever asked you it's along with how long is this mortgage going to be in place? If it does go three, four years in place, have they ever asked you like when will this fall off of my name or my credit report?

Brad: 37:38

Yeah, I mean we have what we call selective memory sellers, where they haven't paid a payment in six years, and then you send the reinstatement quote, close, you now have title and then the next week they're saying, hey, this mortgage is impacting my credit, you know what I mean. And so we have an affidavit signed at closing that says we understand that this is going to be on my credit report, we understand that this is going to be on my credit report, we understand that the loan is not being assumed, we understand that the payments are going to be continually made and it's not going to be paid off as I'm closing. All of that is agreed upon and signed at the title company and this is why we use title companies and closing attorneys as opposed to doing kitchen table closings, which we could do in-house. We just have decided if the paperwork's wrong, then I want to to yell at someone else if it's wrong, but then, secondly, you have an attorney there that is a witness to them signing a lot of the times, you know. So I think that that's important. But, yeah, I mean, certainly we have people that have incorrect expectations and sometimes we have to send them the closing paperwork that they signed, and sometimes people are unhappy with us about that, but we do try to leave people in a better position than we find them. You know that's the positive impact of our core values and you know sometimes that's holding people to the agreements that they agreed to. You know it's not just doing what they want.

Marcus: 38:54

Right, and that's a tough, tough position that you got to be in, but that is the deal that was made and we were all comfortable at one point. Let's try to remember how comfortable we were and this is just a snapshot in time.

Brad: 39:07

Yep. But I will say also, if you have a seller that is difficult or asking a bunch of questions and you have to tell them like hey, you, you, maybe you shouldn't do this.

Marcus: 39:18

Yeah.

Brad: 39:18

Like this is the way that I can do it and there's no other way, but I want you to be a hundred percent comfortable with it, and if you're concerned about being able to buy a house in the next few years or this impacting your credit, then you probably shouldn't do this.

Marcus: 39:29

Yeah.

Brad: 39:30

And that's okay.

Marcus: 39:31

Yeah, and I, um, I was reading that with subject to like, portion of the debt will come off of your name within a year and it usually takes like two to three years to be completely off of the record from a subject to.

Brad: 39:45

I don't know.

Marcus: 39:47

So it was more of a question.

Brad: 39:49

Yeah, definitely not. So it's going to be on the credit report as long as that loan is in place. Now how a potential underwriter would look at that as a debt really depends on that underwriter. So if you think about a rental where you have debt in your personal name but you have incoming payments to offset that, then they usually give a credit for the incoming payment. Right Now I have seen mortgage underwriters on a sub two deal because there is a note and a deed of trust or a mortgage created where there is an obligation for somebody to pay that payment that they would take that into consideration for the debt to income ratio. But the idea that it just pops off of the credit report because it's sub two is incorrect.

Marcus: 40:28

Yeah Well, thank you for clarifying that one. And it leads into the next kind of question with. It is still in the seller's name. It will remain in their name until that mortgage is either purchased by another buyer or, I guess, if you get new financing to close out the loan. So that is clear, no questions there. Have you ever had a due on sale clause? Come up with a buyer, seller, and I guess I'll leave it there and then I got got a follow-up question. But I'll answer that little bit right there.

Brad: 41:03

I think four times I have yeah.

Marcus: 41:05

Okay, Was that like a stress phone call where you've got like the pit in your stomach again, or was that? Did you know it was kind of coming?

Brad: 41:12

The worst one was on a reverse mortgage. So three of those four were reverse mortgages and then one was a small local bank. So in terms of Fargo city bank of America, I've never had one done. Okay, and that's after doing hundreds and hundreds of these. And you know, with my network I mean it's, it's, it's a real estate equivalent of being struck by lightning. Like, does lightning strike? It does, is it what keeps us up at night? It's not, but you have to be willing to to walk outside without, you know, lightning proof shoes on. You know what I mean. Like there's a certain risk to anything but, um, the worst one was a reverse mortgage because they, they gave me no notice, and so I actually had an investor cold call me and I never answer my phone, like my phone is an out out, out dial only phone, but somehow my, uh, my notifications were on, it wasn't on sleep mode and I had a phone number and I was like, eh, I'll answer it. And they cold called me because I was getting foreclosed on in like six days. Okay, I had no idea, no notice, no, nothing. And then the problem was that reverse mortgages are exempt from having to require under federal law. I think it's. It's either 14 days or 21 days, I can't remember exactly, but under federal law, most banks are required to give a payoff in a certain amount of time. Um, once it's, it's asked for in writing. For whatever reason, reverse mortgages are exempt. They would not give me a payoff.

Marcus: 42:41

Really.

Brad: 42:42

Okay. So I had to estimate what this payoff was and I had to send like $140,000 wire like the next day and I overshot it by like 25, 30 grand because I could not have this house going to foreclosure, yeah. And so then it took them almost six months to return the overage to me and, like we have all of this on tape, I had my attorney on the line, matt anderson. We were going to sue him, file a temporary relief injunction and like all this stuff. But the woman I said well, what happens if I'm a a dollar short on the payoff? You won't give me a payoff. What happens if I send this wire and it's short by $1? And she laughed and she said well, then you're gonna get foreclosed on.

Marcus: 43:30

This seems like taxes, Like you know how much you should owe, but we're not gonna tell you, you know, and I was like and I'm an investor, Like this isn't my home.

Brad: 43:40

but I've always been anti-bank. But this made me even worse because I'm like how can you treat people this way? Most people that have reverse mortgages are aged people. A lot of times they've had this house 30, 40, 50 years. This is their home, this is where their children grew up. And you're going to laugh at someone, you know, and there was, frankly, nothing I could do because they're exempt from federal law, you know. So I had to overshoot, overshoot the payoff. Yeah, it was insanity.

Marcus: 44:05

That goes into the. Sometimes the rules and ethics aren't the same.

Brad: 44:08

Correct.

Marcus: 44:09

Absolutely.

Brad: 44:10

Yeah, it was awful man.

Marcus: 44:12

That's irritating. So when you're doing these subject to in that reverse mortgage, I've heard multiple different ways for people to structure that deal, one that I brought up that I've never actually talked to somebody who's done it. But instead of buying the home and taking the mortgage in the subject to they buy the trust. Is that a path that you go? Or you heard of that, that avenue of sales? So basically, not buying the house, the seller puts it in a trust.

Brad: 44:45

You buy the house. Yeah, I have heard of that. It's not what we do, but I'm just. I'm not afraid of the do on sale. So, out of four times, three of them are reverse mortgages. One was a small local bank and that one worked out just fine and I think that's Well. I had this conversation with a litigation attorney that was a pretty well-known guy in the real estate space and there's a difference in a title attorney and a litigator. So a title attorney knows how to get a deal closed and they know something about the law, but litigators actually will to themselves say they're not real attorneys, they're title attorneys. Now, a litigator knows the gray area and they know the case law, and there's more about law and case law than in statute. And so I had a high-level litigator. I was like what do you think about this no-transcript? You know? So the idea whenever we do a deal, sub two, we transfer title to the corp or to the personal name of whoever's buying the property, which is constructive notice of exactly what we've done. We're not trying to hide anything, you know. And then, in the event that the bank decides to cause a problem, I mean keep in mind, I mean we're talking, I mean certainly hundreds and hundreds and hundreds of sub two deals. I've had four issues and three do not do sub two deals on reverse mortgages, by the way, because they have a high likelihood of being called. And smaller banks have a higher likelihood of being called, but not super high. But you know, big box banks, I just think it's not a big deal. I'm just not afraid of the due on sale. So I'm not trying to be crafty and I've seen people to further that whole argument say well, whenever I sell with owner finance, I'm going to do an assignment of beneficial interest in the trust as opposed to actually give them title. So I that there's a foreclosure process to give a borrower due process and it's a circumvision of due process. So that's also something that I don't like to do. So to short answer no, we don't do that, we just transfer title. It's public record, not trying to hide anything, not scared of due on sale.

Marcus: 46:59

Yeah, and I'm sure the sellers enjoy not having to do more paperwork.

Brad: 47:08

I don't know, because I've never done the trust thing and I mean I I don't know how to talk about that Like hey, what we're going to do first is you're going to deed it to a trust so we don't have to tell the bank. It just sounds yeah For me.

Marcus: 47:18

Yeah, no, that makes sense. Now, you mentioned before earlier in the show that you you do house flipping, right, yeah, and I'm now taking all these subject to deals that you have aren't really flips, those are longer holds.

Brad: 47:36

Well, some of them we're going to take retail you know some of them and cash them out. Some of them we're going to hold as rentals. Some will turn to owner finance notes. It just depends on the property, depends on the market, depends on the rate, depends on how much cash we have in. It depends on condition, I mean. So I know that's not much of a decision tree, but short answer is it depends.

Marcus: 47:54

Okay, no, that works. And because I was going to break it out into you're sitting in front of the seller. They want to sell. After you get the numbers together, you kind of decide of what you're going to do with that property. Is it going to be a retail? Are we going to flip it? Are we going to hold it and find a seller, or do you go in with the intent we're looking at this asset class for this, this seller has to have this much equity and it's going to be a rental or this one is going to be a retail.

Brad: 48:22

Yeah, I don't want to go into an appointment to buy something with this preconceived notion that I know how it's going to turn out, because what I think that that does for people we want to be good listeners and with good listening and asking really good questions we could lead people, as opposed to trying to push something a certain way, because I've had situations where I think it's probably going to go this way but it goes a completely different way and I've had situations where I think I'm never going to buy this but I go to the appointment anyway and we get an amazing deal. So I try not to go in with preconceived notions and I would say that most of those decisions are made post contracts. There are times whenever I feel 90% confident that I know the direction it's going to go at the end of that seller appointment as they're doing the contract. But until I have final numbers, you know, I know exactly what the value is, I know what the condition is after a home inspection and we budget it I don't want to make those decisions, you know. And also I think it's fair to go to paper if we have 75% certainty that the deal works. So I'm not the guy that says put everything under contract and tie people up and file memorandums and try to get paid on the memorandum. I think that's garbage. Like we want to have a reasonable certainty that the deal makes sense, but also not a hundred percent certainty where, like we're, because that takes time, right, so we don't. I've. I've seen people literally want a title report before they put something under contracts. Like that's backwards, you know. So 75% certainty before we go to paper and then see what the numbers look like and where it takes us.

Marcus: 49:51

Nice. Yeah, I like the open-ended kind of go in and explore where the situation will take you. Yeah, I feel like that's an easy way to get to a win-win rather than coming in force Like this is the way that this deal is going to go.

Brad: 50:05

Yeah, yeah. And. But you know, whenever you don't make offers, it's it's much easier to do that, you know. So if somebody is like well, what's your offer? Well, I've been doing this for a long time and one of the things that I've seen is that when a seller needs to sell something, they know what they need for it and I don't want to low ball. No-transcript.

Dan: 50:47

No, I guess bigger questions is you talk about getting to the sit down with the sellers, where you're finding them. Did you say $60,000 a month? Ballpark, yeah, okay, and that's nationwide?

Brad: 51:01

Yeah, correct. So I believe paid marketing starts at$1,000 per month. If you have $1,000 per month that you can invest into some type of marketing, then over time that will work Okay. Now, if you have less than a thousand, you probably have more time than money, so use your time to get to that first deal, like I did that first 20 K deal. I had $300 in the bank my first closing, so I had that 20 K cash come in and then I used 4,000 of that 20 K to go back into marketing at that point, but at 1,000 per month, we can start to run paid ads and everything that I do is basically search. So somebody has already identified that they have a problem. We understand the mechanics of what keywords are going to convert and what the landing pages need to look like. So someone is actively searching for a solution, as opposed to us cold calling, cold texting, direct direct mail, which is interrupt pattern marketing.

Dan: 51:48

We want to be found when someone is already, uh, searching for a solution so a thousand dollars a month, just say from there, walk me through it so that maybe it's something that I could take away from this, because that's kind of my purview or what I try to think I can handle. So, like, break that down like a thousand bucks. If like, would it be mailers you said it would be search engine, like where do you, where do you put this? Like you're you're breaking it and you don't have to. Don't give away too much of that If that's.

Brad: 52:20

I'm an open book man, like I said, so everything we're going to do is Google ads and other search engines. Okay, One of the questions that we'd have to ascertain is are we going to do this locally or virtually? And then, if we're local, what does that market look like? Because I guess you can imagine Detroit would look substantially different than LA.

Dan: 52:37

Yeah.

Brad: 52:38

You know. So then it comes down to well, is LA more expensive? Well, it's certainly more expensive per lead and per contract, but the prices are higher and if your margins remain the same, it's actually more of a net dollar amount per contract. See what I'm saying. So it's more efficient. So it really depends on where you're at and what the goal is. But I've like, okay, I've got this guy, marcel, we just did a spotlight on him. He has a $2,000 ad budget and I don't even remember where he's located I think he's in South Carolina but he's done, he's on track to do a million his first 12 months of implementation net. So that that's equity capture. So that's in note equity, rental, equity and cash right. I've got another guy that's doing about 2k a month and and he's done, 550 his first year. But he's really conservative, he's a data scientist, phd, him and his wife, pranav and Deepti really good people. So let's just take averages. On average in a local market outside of the big metros that are hyper-competitive Salt Lake, la, san Francisco, new York, miami you're going to be around $2,500 cost per contract and that contract assuming averages again, 400k-ish median price in that market is going to be about 65K. So you're trading 2,500 in marketing dollar for a contract that has 65K in equity on average, something like that. Okay, now we're usually at 11 to 12 leads per contract. So if we have let's just let's just say 15, you have 15 leads, you get in contact with 10, you pay per one. So it's hyper efficient when it comes to time, and this is why a lot of part-time people can use this model and still buy one, two houses a month, because they're not having to talk to 300 people. But the big difference, man, is you're in a position where people are contacting you and saying, hey, will you buy something, as opposed to you reaching out asking someone to sell you something, and everything's different in the negotiation. Whenever you send direct mail and I used to do 70, 80,000 mailers a month, but you would have a third of your calls angry that you mailed them. Okay, and you'd have probably another 50% that are like, yeah, I'll sell $10 million. You know they'll give you a price, but it's crazy, and you'd have probably 5% of your calls that are kind of somewhat motivated. And so I likened it to you've got a 40 yard dumpster of construction debris and you've got two golden nuggets in there somewhere, and so you have to go through all this garbage and you know it's going to work because you know it's in there, but it's so inefficient and you get very dirty and very tired, you know. So it's just it's a very inefficient model. So, um, I used to have three full-time people on the phones doing direct mail calls, and being in the room was depressing because they'd get yelled at every third call. You know, just, wasn't that's a hard role? Yeah, it is, man, and but at the time that you have people so like this, like I'm, I'm not handy at all when it comes to fixing things, and so I'm. I'm married to a wonderful lady for almost 15 years now. Uh, we've been dating since we were 19. She was my girlfriend's best friend back in high school, so that's how that happened. And, um, you know, but she knows. So Thanksgiving dinner we have everybody at my house got 20, 30 people, I cook three turkeys on the smoker and, let's say, a pipe burst upstairs, you know hardwood floors getting flooded. I've got a problem. My wife is not going to call Brad. You know Brad cannot help. She's going to go to Google type in plumber near me fast and whoever can get there, no matter what the cost. You know we're going to pay it and be happy because it solves the big problem. But right now, in every market that everybody's listening right now, there are people that got served foreclosure notices yesterday. There were divorce decrees signed yesterday. There was probate opened up yesterday. There are people that got the bad health report yesterday and their sole intention today and tomorrow is to find someone to buy this house. And if you're not being found in that situation, you're at a disadvantage because most people that are buying from wholesalers potentially the wholesaler has that lead first. They keep the best lead and they wholesale out the bottom, just like I talked about earlier. See what I'm saying. So we want to be in a position where people have already identified that they have the problem and they want the help. They're raising their hand right. There's a big difference in that and practically every other marketing aspect that I've seen. I've tried a lot of them.

Marcus: 57:16

Yeah, and it's a more proactive than reactive approach too, like having them come find you rather than you.

Brad: 57:23

I've thought about this a lot, man. Like you think about the thought process of I'm going to get my phone. Go to Google type in house buyer near me, fast go to a site, fill out a form. That's a deep buy-in psychologically as opposed to some type of interruption pattern marketing where it's like, well, let me see what my house is worth, or or whatever. And I actually one time I had a lady type in sell my house before I burn it down Seriously. And the reason I knew that I took that call and the beginning of the triage call was tell me about the house and what you got going on with it. And she said, sir, I need you to come by my house because I'm going to burn it down and my ex-husband's in there. I'm like whoa, we got ourselves a lively situation. Yeah, you know we're got one on the hook and I go to the appointment, I buy it. Divorce situation very contentious and later that week I looked at my keyword report and one of them that was a conversion was selling my house before I burn it down. I was like that was a conversion, was selling my house before I burn it down. I was like that was that lady you know.

Dan: 58:31

so there's so much motivation you literally searched that you should have showed up in an ambulance or a fire truck just to uh, I'm here.

Brad: 58:38

I'm here to rescue you that'd be funny as hell, dude. I was concerned about the guy because, uh, she kept talking about killing him and I don't know. I mean, she was kind of a bigger lady and I don't. I'm not gonna say like bigger ladies are more violent, but it just seemed like she. She just had that bubbly personality. If she would be a little extreme. I don't know, I'm not explaining this exactly right, but she could possibly what's that?

Marcus: 59:03

you could pack a punch possibly correct?

Brad: 59:05

yeah, I mean, and he was a little fella so I was a little bit concerned for him.

Dan: 59:11

I think we need to take a class on how to do this, how you're doing the Google searching, and how to market accurately or properly, because I really think we're missing a good opportunity. Based on the communities that we're searching in a very limited scope in southeastern Wisconsin and I think the demographic fits a lot of what you're describing either the older generation moving to homes, possibly divorcing, and the average home price is well over 400,000.

Brad: 59:43

Well, what I'll say, man, it's. It's very much less about the property, it's about the problem that's to be solved. These problems exist everywhere, so I can't even say honestly that one market is better than another outside of pricing. So I don't want to be in markets where the median price is 125K because I'm having to do a real estate transaction that's not going to net me 65K. Like you explained earlier, yeah, yeah, but on the opposite end of it, man, I don't want to play in Beverly Hills where a lot might be 10, 10 million. You know, that's not my sandbox, I like to be around median. We'd make 65 K a deal, you know, and the average is average. But, um, you know, one market's not necessarily better or worse than another, because if they're searching for the key terms that we like, I want them. You know, like one of my guys just did a 110k net deal in Alaska, in Anchorage. I never bought a deal in Alaska, you know, and I don't really love the idea of buying in Alaska, but if the numbers work, the numbers work.

Marcus: 1:00:44

Yeah, that's a cool area to get into, breaking into Alaska.

Brad: 1:00:49

I don't, I don't, I don't think it's for me, man, I hear that they have to wear these like happy hats half the year to keep from getting depressed like there's just doesn't shine yeah, yeah, and there's there's things about that like I just don't know about that. you know like we started marketing in hawaii to pick something up personally and I had two houses under contract in Hawaii, uh, next to each other one seller and then I found out that, uh, I couldn't get them insured because you know like, we have flood maps in the continental U S, they have lava maps there, and so you couldn't get insurance because it was in the flow of where lava was going to be. And I'm like there's just some areas where you know it's just so different. You know, I just I want to go where I know most of what it looks like yeah, no it's it's a safe bet.

Marcus: 1:01:36

That lava thing, yeah, that you're not going to find that in states at all.

Brad: 1:01:40

Well, the mainland, yeah well, I assume, around yosemite and different places you don't have it, or maybe that's not what I'm talking about, mount rushmore or no, the they're yellowstone, I think yellowstone has to be, I guess, somewhere, because there's other volcanoes.

Marcus: 1:01:54

I've just never heard, especially like through agency, and you get all these little like inspection reports. You need to call these different people and you're dealing with insurance policies and those are topics that have never been brought up like lava right brought up surprised right now. So then, that's funny to think about the things that we don't know in other markets. Um well, we've kept you for an hour and I'm going to ask one final question and I I'm looking forward to your question because I feel like you've come, I guess, full circle being the 17, 18-year-old guy with $300 in your bank account, starting in real estate, into where you're in now. What would be advice that you would give the younger you or the person who is on the verge of investing but is nervous to do so, because I don't have whatever. The big objection is time, money, resources, mentor, whatever their reason is. Like you did it. You had 300 in your pocket, no mentor, and you built your company to making just for inflation, let's say a thousand.

Brad: 1:03:04

Yeah, probably number one I mean for the people that say I don't have time, I don't have money, just for inflation, let's say a thousand. Yeah, probably Number one. I mean for the people that say I don't have time, I don't have money, all of that I mean that's garbage, you know, like you don't have to have any of that. But I think most people will say, well, they want to hold to their excuses, because if they don't have any excuse, then it really depends on them. And if they don't have any excuse, then it really depends on them. And if they don't think that they can do it, then they, they have to have that excuse. It's like their teddy bear. It makes them feel better, you know. So I mean I have to quash that right out the gate. But I would say two things I would want to tell myself. Is number one you have to believe and believe that you'll get there, because I lost a lot of time in in not having a good belief system that I could do it. A lot of worry, um. So I would say that would be the first thing. But then, secondly, is almost an antithesis to that which is it doesn't really matter because, like I've seen a lot of people that are successful right now, and they're successful because they've only seen this rocket ship of values. They bought something in 2019 at market value and now they look like a genius, when it was just the rising tides raises all ships philosophy that they caught the market at the right time and that's good. They played the game, but now they think they're smarter than they really are and so they equate their net worth with their self-worth and that works up until your net worth starts to decline. And I see a lot of people and this is probably not what you're looking for, but I've seen a lot of people that they equate what they've done with and what they own with who they are. And looking back, I mean we've got some rentals, we've got some notes, I mean our retirement's good, I'm 38, but I look at it also, it's like it doesn't really matter. You know, like I don't think any of this. What matters, like being a good husband, being a good father, being a good friend, being good to the community Like if you're not those things and you have some rentals, cares you know, like. So I would just say that which I guess is at the at the end of the day, if we wanted to marry both of them together, don't get too emotionally involved in the outcome, but and enjoy the, the, the ride, the way through.

Marcus: 1:05:21

Yeah, I like that. I like that. Yeah, priorities is like a big thing Ethics and priorities 100% 100%. Just the hour of talking to you. It seems like that's like the leading charge in your mission.

Brad: 1:05:42

You know, whenever I was trying to get to that first deal, I would often think about my deathbed, which for a lot of people I think is kind of morbid. I guess maybe it is, but I would think about it. And I wanted two things. Number one, I wanted my friends and family there, not because they felt obligated but because I was good to them. And then, secondly, I wanted to be able to say that I did it and I don't really have major regrets, whatever that meant, okay, and I always thought that that was a financial thing. But looking back, I'm I'm really more happy about the decisions that I've made with family and the decisions that I've made for, like, bringing people with me. You know, like I have this, this almost hell bent, um, I guess I guess vendetta against what I see in the education space, you know, and I think that there's all. There's some good coaches, for sure. You know, I had David, the guy that brought me up in the business that I never would have been successful without, and I always felt like if I could ever get someone, if I could ever be good enough to take people with me, I wanted to take people with me and I'm more proud of what people have done, because I've I've taught them things. Then I am happy about what I've personally done, because and I've talked about this with people If you have a a $10 million net worth, what can you do with 25 million that you can't do with 10? Like if you, if your life, you're going to the restaurant, want to go to your kids, go to the school they want to go to, you live in the house you want, what does it matter? And at that point I'm just it becomes very disinteresting. So what's fun for me is getting the people their first deal, getting people to their first million. Like that's fun, man, you know.

Marcus: 1:07:23

So anyway, I like that. No, that was a great answer. I appreciate that. No, that was a great answer. I appreciate that. And thanks for sharing. Thanks for sharing the whole hour. A lot of good nuggets in there.

Dan: 1:07:34

I feel like we should have you back on for like a case study where you actually go through your whole. I mean, if you'd be willing to just-.

Brad: 1:07:40

I'm happy to do whatever you guys want.

Dan: 1:07:41

Start to finish. Hey, we're gonna use me as an example. Like I have no investments, I have nothing like that, Say, I'm starting from zero. How do I establish a marketing strategy? Finding the property and then, like you said, going in, I think, the negotiation part. I feel confident in being able to have a similar conversation. Like you said, not talking, not making an offer. You just say, hey, what is your problem that I'm gonna help you solve. What is your number? What are you looking to get out of this? And then, obviously, if, if it makes sense, you figure out the details after that. But, like I think that would be very helpful, beneficial, I don't, I don't. Do you have a? I don't want to. Do you have a? You don't, I don't. Do you have a?

Brad: 1:08:29

I don't want to do you have. You don't have a course or anything that you sell, do you? I'm a mentor. I don't sell courses just because I don't think it gives people what they need. Like, as an example, we have 20 support calls per week in what we do, because people need the support when they need it.

Dan: 1:08:40

And that's what I meant. Yeah, the mentoring, the mentoring aspect, I think is is huge, yeah, yeah, I don't know if we could, if you'd be interested in doing it we can talk offline and and yeah, happy to uh when yeah because we've been wanting to get more, more pivot more towards either case studies for something that we're working on or something like yourself, because I think everything that you've shared today was like I was just caught listening most of the time until I had a chance.

Brad: 1:09:11

Thank you. I mean, I enjoy this stuff, dude. I mean, and frankly I have probably too much time on my hands. I've delegated myself out of the real estate investing business completely, which is why I started doing education and I had bought a $25,000 mentorship, supposed to have a million dollar income, to be in the room and and they, you had to have an affidavit, a test, a testing to it. And then I get in the room and there's one guy that had done two deals and I realized, and I don't think he made half a million each. And so, just to be clear, and so, uh, I realized, wait a minute, the real litmus test is do you have 25 K that you'll give me? Yep, and, and I saw that, and then the guy wasn't doing deals anymore and I was just like I was really disappointed in it. And my right-hand guy, tony who's, who was my first employee and just retired, he had$550,000 of unsecured debt, okay, from a failed business prior. So like, not only did he have no money, he owed 550 grand, okay, and didn't bankrupt on it because he wanted to hold to his word. And so we created enough for him in three years and creating these notes to where he had enough note equity that paid off the debt, you know. And so that's why I say, like whenever people say I don't have money, I just wrote a book called buy houses and retire and I use this as a case study for the I don't have money. No lie that people tell themselves and I put in there if you have less than $550,000 negative net worth, you have more money than Tony did. A good way to frame it.

Dan: 1:10:44

Yeah.

Brad: 1:10:44

You know so. But yeah, dude, I'm happy we can just jump on for like an hour and a half and go through kind of where you guys are and where you're hoping to go and analyze like what I think you guys should should do specifically. Now are both of you guys in wisconsin we are yep yeah, okay. What's the goal of the podcast?

Dan: 1:11:03

uh education, not.

Marcus: 1:11:05

We're not trying to build like followers we have and we can cut this out of the show yeah yeah, I mean either way the podcast started primarily because, being a single dad, I can't network, I couldn't go to the 7 pm. Yeah, groups, I couldn't do the 5 pm dinner networking. I I just couldn't do with my schedule. So I'm like, all right, what can I do? And this is pre-covid. What can I do to, like, meet people in the industry, talk to like knowledgeable people, um, within business hours or within the time, construct constructs that I have within my, my life, um. So the podcast was born and then it was all local and then COVID hit. So I'm like, all right, now we can go online and I can start talking to people around the US. And that's kind of where it led to and it was it led into networking so we can make contacts. And then education is the main thing. I just wanted to get more people into learning about real estate and learning the power of real estate and kind of, look what you're saying, you don't need to be a person that pays $25,000 for a course right. I'll do this you can, because I just didn't have the money. I was trying to save up money to start the company. Yeah, work on my W-2. So with you saying like you had $300 at the time making deals, like it resonates with me because I was in the financial corner of life.

Brad: 1:12:42

What's y'all's email? I'm going to send you over the book, so you have that.

Marcus: 1:12:45

Yeah, and I was going to ask you I didn't want to be selfish, so we'll put this in the show, but I don't want to be selfish in terms of getting more info from you what is the best way to contact you? And then we're also going to link your book to our show notes so that people, when they listen to the show, can actually buy that book.

Brad: 1:13:09

Yeah, that's cool. So I guess the best place for me is Insta, just investor creator. So I feel like we create investors, so that's that. But uh, yeah, I mean message me there and and happy to connect with whoever cool. All right, y'all have a great weekend. Thank you, you too, see ya.