Jason Peterson (03:48):

So upon being released, I had a lot of people that supported me along the way. They knew that at my core, I was a good person. I just made some very, very bad mistakes that I take full accountability and responsibility for. And I had to prove to everybody that believed in me that I would make a change for the better. And in doing so, I got onto the path of self-development and pretty much anything that would propel my life into a positive state of wellbeing. And in that path I found real estate. I have a cousin that’s very successful here in my hometown area and he mentored me and I started with a house hack. I’ve been rolling the snowball all along ever since. So I can’t stress how important that house hack was in the path I’ve chosen.

Robert Leonard (04:49):

When I first got started in real estate, I didn’t have a lot of money, but I had a good job. I had good credit. And generally speaking, I had a pretty good life situation yet, I still didn’t think that I could become a real estate investor. You became a real estate investor from a much, much worse circumstance than I did. So how did you know that you could do it and why real estate specifically?

Jason Peterson (05:14):

I didn’t really know that I could do it. I’m a fearless type guy where I devote my focus onto learning something and I delve completely into it. And real estate was an area where it actually has a very low barrier to entry. If you go about the right path as far as even the low down payment, owner-occupied loan and that’s what I used. I had very little money and my credit score was nonexistent. So I started from zero and within nine months from my release, I went from being charged a triple security deposit because when I first got released the landlord I rented from, he saw my background and immediately thought, “Well, this guy might be trouble.” So he charged me a triple security deposit and then nine months later I was actually collecting one. So I chose real estate because I think there’s a path for everyone. And if you study anybody that has been successful in a short amount of time, I think real estate has been a major percentage of those people that have reached financial freedom in a short amount of time.

Robert Leonard (06:38):

You said that you didn’t know that you could do it. Do you think having, quote unquote, nothing to lose might have played a factor in it?

Jason Peterson (06:45):

Definitely. I mean, I’m a pretty simple guy. I mean, eight years in pretty bad conditions that, keep in mind, I asked for that. That was the punishment that was due to me and I accepted it fully. However, when you’re around more comfortable situations, if I have a bathroom with a door on it, I’m happy. So the risk for me wasn’t too grave, because what’s the worst that could happen. However, these risks and these fears are pretty much your mind making up excuses for you to not pull a trigger because these risks are very minimal, especially, I mean my mortgage payment on this house hack was a hundred dollars less than what I was paying for my apartment that I rented from the triple security landlord so where’s the risk there. Plus I have my tenant paying my mortgage. So it’s a no brainer.

Robert Leonard (07:47):

What do you do, if anything specifically, to keep yourself from getting comfortable? I know you mentioned you’re very happy with not having much and that makes sense given what you went through, but I feel like as humans, as people, after a period of time of having some creature comforts, you kind of get used to it and you get comfortable. So how are you making sure that you don’t get comfortable at a higher standard?

Jason Peterson (08:10):

I seek out the suck, embrace the suck as they say. I seek out discomfort because I think that in order to be the best human you can be, you should seek some discomfort and put yourself in uncomfortable situations so you can adapt and overcome. And then when times are good, I mean everything’s a breeze. So I embrace the suck in a lot of situations. I do jujitsu. I have my ear messed up. I broke a rib. I sign myself up for struggle so I can enjoy the good times. But to tell you the truth, there really isn’t much struggle as far as the real estate portion of my life.

Jason Peterson (08:59):

At first, there was a lot of fears to overcome. I’d get a text on my phone that would have the first and last name. So I knew it was a tenant. And immediately towards the start of my investing, when I had about one or two properties, I would get anxiety. I’m human. I’m like, “How am I going to deal with this? What if the furnace blew? What if the hot water tank is leaking all over the basement and I have water everywhere.” But a lot of these fears that you manifest are unfounded. And at the end of the day, it’s a phone call and it’s a problem that you have to solve.

Jason Peterson (09:37):

And over these past short three years here, I don’t get that anxiety anymore because I’ve dealt with these problems. It’s not a big deal. Nobody’s bleeding. Hopefully, there’s a person you can call. And as much as I want to get in there and do the maintenance myself, I have to take a page out of your book. I call people and I think I’ve actually learned a lot from you and it’s opened up my eyes to how easy, long distance investing could be because I kind of do it already.

Jason Peterson (10:14):

I have two rentals that are 20 miles south of Milwaukee, which is not a big deal. I can get there in 30 minutes, but I mean, 30 minutes there, 30 minutes back, I still work my W-2. I mean, that’s taken a good chunk of my time. So I’ve actually set up quite a nice infrastructure of contractors and people that I can call down in Racine, Wisconsin, and that can handle this stuff for me. I mean, I could duplicate that a thousand miles away. I had systems set up and are very, very nice.

Robert Leonard (10:51):

I had a friend and also a guest that was on the show recently, Travis, who said something similar. He to have to drive 30 to 45 minutes to get to his Airbnb property just to refill toilet paper and paper towel, these things that would take 10 minutes and then he’s done. And he’s like, “It just didn’t seem to make sense to drive an hour, hour and a half round trip to do a five or 10 minute task.” I mean, that’s the philosophy I take with whether it’s my, I live in a house hack right now. We’re having this conversation as I sit in the basement of one of my house hacks and it’s the same thing where next door, if the toilet breaks, I’m going to call somebody to fix it. And I have the same processes and procedures for my house hack as I do for my long distance rentals. And now I can continue to just scale and scale and scale and just do the same thing over and over.

Jason Peterson (11:36):

Absolutely. And I’m in my house hack as well. If you can see behind me, I’m in the wooden room here and I have nicer rentals than I live in. So this is kind of the embracing the suck, but like I said, I’m used to, I was in an eight by 10 foot cell. I don’t need much. And this to me, I can’t find a better situation that I’m blessed. I’m very blessed to have this and to have the financial freedom that comes with it. I mean the mortgage payment that looms over your head stops many people from taking other risks and maybe some other personal development things in their life. For me, if for some reason the company I work my W-2 for got sold to an overseas company and we all got liquidated, I would be fine. I mean, I still have the roof over my head. I can regroup and figure out what my next endeavor is. It’s so much freedom. The house hack is so underutilized and I wish more people would know about it.

Robert Leonard (12:42):

It’s funny that you mentioned your rentals are nicer than where you live because I’m in the exact same situation. All of my rentals are significantly nicer than the unit that I live in for my house hack and the most recent property that I bought as a rental, it’s really, really nice. It’s a three or four bedroom, single family house with a garage and a nice yard and everything. And I’m like, “This is so much nicer than where I live.” And my brother just the other day was giving me a hard time, because he’s not an investor. He doesn’t have the same mindset that you and I have.

Robert Leonard (13:12):

And he was giving me a hard time. He’s like, “Oh, he you’re a big baller. Why don’t you go buy a really fancy house?” And I’m like, “Because I don’t need that right now.” I was like, “I want to keep house hacking because I’m trying to buy another house hack right now.” He’s like, “Well, don’t you want to own a single family?” And I’m like, “Yeah, I do. I own four single family houses already, but they’re just rentals. I don’t need to live in one for now. I want to keep house hacking and in five years when I have 10 or 12 units just from house hacking, you’ll see the power of what I did while I was in my 20s.”

Jason Peterson (13:40):

Definitely. And I have a wife and a 15 month old son, but they’re awesome. Well, obviously my son, he’s not going to complain. He’s got two toy rooms that he’s taken over, but my wife, she is on board. I mean she gets it. She sees the power. She knows the sacrifices we’re making will lead to, like you said, I mean, when we’re ready, let me have my cash from all these rentals, pay for the mortgage on our dream house.

Jason Peterson (14:16):

It’s so crazy to think that four years ago I was sharing a room with another inmate who knows what he was in for. And now I am talking about having passive income pay for our dream house. It’s amazing. It’s just amazing, the power of real estate. I try to talk to everybody about it, but after so many attempts of trying to sway their opinion, they just get sick of hearing about it. You got to have the mindset. I think Rich Dad Poor Dad was very influential into changing the wiring of your brain almost because you go from liabilities to assets and you never go back.

Robert Leonard (15:03):

I think too many people miss the long term or the backend part of a house hack, when you are house hacking it’s not always is great. I mean, you can have some really nice house hacks that are having ADU in the back and you have a really nice situation, but most house hacks are not overly comfortable. But in a year or two, when you move out and that property provides a thousand to $1,200 in monthly cash flow for you, that you could put towards your dream house, I mean, that is what house hacking is worth and what it’s for. It’s not why you’re there. It’s not in the short term. It’s in the long term.

Jason Peterson (15:35):

And even if you just leapfrog from one house hack to the next, just be prepared to move. Don’t accumulate too much stuff. I mean, I try to stick to the game plan. However, I have a pretty big extended family and a 15 month old son that just had his first Christmas. So the material items are piling up. Hopefully I find one. I’m at the point now where I’m going to pay a moving company. The whole time freedom and outsourcing, that almost takes over where, how valuable is my time? I’ll pay a moving company to come get me out of here and I’ll be onto my next one.

Robert Leonard (16:16):

The same thing happens for me when I, or when I want to start collecting material things, sometimes I’m like, “Don’t do it. You’re moving to another house hacking the next couple of months. And then after that, you’re probably going to move to another house hacking 12 to 15 months after that. Wait till you move into your forever house before you start accumulating all this stuff.” Because I hate moving and I’m probably to the point too, here where I’ll start hiring a moving company, but I still hate moving. I hate boxing it all up and I hate living in a cluttered house. So that’s an undiscovered or overlooked benefit, I think of house hacking.

Jason Peterson (16:47):

I mean, it’s a small price to pay. Even if you do it yourself, I mean, what does it take a weekend? I’m all up here in Milwaukee, the beer capital of the world. I don’t drink myself. However, I got some buddies that I get a couple of cases of beer. I’m sure they would move me out of here in a heartbeat. So you just make it happen.

Robert Leonard (17:07):

It’s part of embracing this suck, right?

Jason Peterson (17:09):

Yes, exactly. My back has been not as forgiving when I embrace the suck and do these crazy burpee challenges and stuff like that. I’m getting a little older, but I’ll pay buddies with beer to move my stuff.

Robert Leonard (17:26):

Going back to what you mentioned about how you had to pay for a triple security deposit. Now that you’re a landlord yourself and you have tenants, how do you look at that? I’m sure when you were coming out and you had to pay it, I’m sure you were not overly thrilled to have to do it, but now from the lens of a landlord, do you view it differently? Do you understand kind of where he was coming from and how would you approach it?

Jason Peterson (17:47):

Yeah. I definitely understand where he is coming from. He took a risk in taking me on. And the funny part about that was I think he tried to dissuade me from renting from him with the triple security deposit. He thought that, “Oh, well, this guy he’ll just turn away. There’s no way that he is got close to $3,000. He’s willing to just, holding an escrow for the next year.” However, I really wanted the place. It was in a nice quiet neighborhood and I said, “Okay, where do you want me to bring the security deposit?” And he was kind of taking it back like, “Oh, well bring it to the office.”

Jason Peterson (18:28):

So I brought it to office and I actually established quite a conversational relationship with him. He’s kind of a big landlord in the area. He’s got a building company. I told him, when I first started diving into real estate and just soaking up podcast, I went there to make a payment and he actually took the payment from me and I asked him, I said, “Hey, is there a chance I could take you out for launch and ask how you did it?” He wasn’t too receptive to it. I think I might have just came at it a bad time.

Jason Peterson (19:01):

I understand the situation, why he had to do that because I’ve run a lot of people’s backgrounds actually recently, a couple months ago, and you have to be very, very fine tuned with the tenant you pick. I’m one of the class of people that I’d rather have a vacancy over a bad tenant, just because I want sleep well at night, comfort where I don’t have to worry that I made the wrong choice with the tenant. I like to sleep well at night. This kind of goes back to the Instagram meme where it’s like, “Hey, it’s the first of the month. Are you paying rent or are you collecting rent?” And just to be in that collecting rent category is life changing.

Robert Leonard (19:48):

It’s too bad that he said no, but kudos to you for even asking. I mean, the fact that he was there collecting rent, tells me he doesn’t have the best processes in place. It sounds like he’s working in his business, not on his business. So who knows, you might even know more about running a successful real estate business than him. Maybe you’re just a little earlier on in your journey, but definitely kudos to you for asking him because I mean, that’s how you network. That’s how you make connections and I mean, it didn’t work out this time, but next time you do that, who knows you might meet somebody that changes life forever.

Jason Peterson (20:18):

And I think word of mouth has been my biggest asset in real estate in general. I mean, I have the best lender you could ask for. I have the best realtor you could ask for. I’ve bought two property off market that are just great cash flow monsters for me. And I mean, this was during the appreciation craze of the pandemic where he probably could have listed it and got quite a bit more than what I paid for it. But you build a rapport and a relationship with these people. And I told him there’s a small roof repair that I had to address as soon as I took ownership and he didn’t want to let go of the property. I mean, he is a old school, old time Polish immigrant landlord that didn’t want to let go. So he actually agreed to meet me and show me how to repair this rubber roof portion on the thing and it was great. It’s great to learn from him. I owe him a cup of coffee. So if he’s listening to this, I’ll be paying that forward very soon and I’m very thankful for that.

Robert Leonard (21:26):

Speaking of mentor, you mentioned that your cousin has played a big role for you. How did you get started with your cousin as a mentor? Did he approach you or did you have to approach him? How did that kind of get started?

Jason Peterson (21:38):

So shortly after my release, I had an uncle that passed away. So at his Memorial my cousin was there. And my cousin was kind of a legend in our family because he was retired by 40 and he had been a master’s in engineering. He had a very high paying engineering job. And our family is very traditional, hardworking, stay at the company and get a pension, that kind of old school mentality. So to hear about him retiring and all the success he had, he was like a legend. So when I saw him at this Memorial, we started feeling each other out and a common misconception of somebody that’s done time in prison is that they might be, sometimes they say it’s college for criminals and that’s not always the case. And I’d like to be a voice for the people that go to prison and actually turn their life around and use that time to develop themselves into honest citizens.

Jason Peterson (22:45):

So there is a feeling out process between my cousin, myself, whether my head was screwed or I’m straight and we kind of just chit chat, family friendly chit chat and came up that, “Hey, I’m interested in what you did. I mean, I think it’s remarkable. Can you teach me more about it?” And he said, “Yeah, well, it depends. I have an assignment for you. I’m going to give you a copy of Rich Dad Poor Dad. I have it out in my truck. Read it, tell me what you think.” He said that he’s done this with, nine out of 10 people he tries this with that approach him and claim that they want to learn what he does. He said nine out of 10 won’t even read the book. I mean, that’s a challenge for them.

Jason Peterson (23:33):

So I call them about Rich Dad Poor Dad, is a pretty quick read. So about two days later I called him and I said, “Man, that book, what is that? It’s like magic. It changed my mind. I’m so scared to spend money on anything now.” And he said, “Okay, I’m going to meet you at a sub shop and I’m going to break down some numbers for you. And I’m going to tell you what to look out for.” So he guided me. I mean, he really coached me through. He walked this house hack property with me. He told me the things that I might need to call attention to and he helped me write the offer. It was a for sale by owner property so he helped me write the offer up. And from then he would answer calls from time to time, but most of the time he kind of clipped my wings and let me fly and just point me towards the right resources to find these answers.

Jason Peterson (24:30):

And I mean, the world we live in for real estate investing or any type of investing or self development, I mean we’re in the information age. I don’t think there’s been a better time in history where if you want to learn something to have a positive benefit on your life, I mean, you need to get rid of all the distractions. You could spend six hours on Instagram wasting your time scrolling, or you could design it to learn and follow informational Instagram page. I learned a lot from Instagram. There’s a lot of value to be had on Instagram. And I think that people take it for granted and lack the focus, but he clipped my wings and pointed me to the right informational areas.

Jason Peterson (25:22):

And I’m very, very lucky and fortunate that he opened my to this world and showed me it was possible. Even for someone like me that had zero credit and very little money, he showed me, “Hey, there’s an avenue you can take. It’s not going to be easy. You’re going to have to save your money. You’re going to be told no, a lot of times.” And over time, he was right and that avenue paid off and here I am today.

Robert Leonard (25:51):

Were you a reader before he handed you Rich Dad Poor Dad? Or was that a bit of a challenge for you to even get into that?

Jason Peterson (25:58):

I was not a reader in the sense of business books. I read a lot of self-development like 48 Laws of Power, kind of psychology books. But as far as business books, I was never really focused enough to, I think it basically boiled down to the fact that I didn’t think that the content I was reading in those books would be applicable to me. However, once I realized that I didn’t have these limitations, I mean, now the sky is the limit. I mean, I looked into buying a franchise. There are so many avenues to me that I put these self-limiting limitations on myself and it really just boils down to taking the time to learn.

Jason Peterson (26:44):

And I think this is a book that kind of goes under the radar and I think it needs a little more attention is Scott Trench’s Set for Life because that one was very influential. And even if you just flip the book open and you get to the pie chart onto what most Americans spend the majority of their money on, housing and transportation. And if you can knock that down to minimal cost, the amount of money you can save to invest is just magnified.

Robert Leonard (27:19):

What did your cousin’s portfolio look like roughly when he took you under his wing? Did you know what he had done and that it was real estate and kind of what he owned or was it kind of, you just knew he was successful and you wanted to follow him?

Jason Peterson (27:32):

I didn’t know the massive scale of it. I don’t think anyone in our family did. He’s a pretty humble guy, so he didn’t really want to boast. He didn’t want to come about it with an ego, but at the time, he had 101 doors in the Milwaukee area that he self manages. I mean, he is a busy guy. He gets down and dirty when he needs to and just the massive scale of 101 properties. And as our relationship grew and he knew that there’d be no judgment as far as the massive amount of wealth he was making. He started to tell me basically, “Okay, one door, I make $400 on this certain property.” But when you magnify it on a linear rate and the snowball keeps moving and moving and moving, well one door at for $400 extra a month isn’t that impressive. When you start scaling that up and now you have 10 doors, you just replaced your W-2 income. And it amazed me that this was even in the realm of possibility for me.

Robert Leonard (28:38):

I mean, a hundred doors sounds like a lot, but that’s $40,000 a month at $400 door. I mean, that’s incredible. And even 10 doors, like you said, 10 doors is $4,000. I mean, that still is replacing a lot of people’s W-2 income.

Jason Peterson (28:54):

Yeah. It replaces mine. And then I have properties that make well over $400 a month. I have two section eight tenants right now. I have a single family house and it’s section eight. I had a lot of good luck with section eight and I cash flow pretty well. So if you do the math on say $700 a door, now you’ve just cut that time in half to replace your income. So you might only need five properties. It’s amazing.

Robert Leonard (29:23):

I know one of the things your cousin taught you is the rule of 70. What is that rule?

Jason Peterson (29:28):

Just that the amount of time it’s going to take to get your investment. He taught me more or less cash-on-cash return and how important the cash-on-cash return is. See, I don’t use the rule of 70 or the rule of 72 as much as I should.

Robert Leonard (29:44):

I was going to say I knew it as the rule of 72.

Jason Peterson (29:46):

Yeah. The rule of 72. He had the rule of 70 as well. It’s somewhat the same. The 1% rule is a foundation for me. I think that the market and what’s going on recently, I’ll make some exceptions. The 1% gross rents, you shouldn’t pay more. If gross rents are $1600 a month for say a duplex, you shouldn’t pay more than 160K for it. I abided by that for quite a while. I mean, I have a realtor that she’s pretty in tune with that. She knows what I’m looking for. She knows that it’s going to have to cash flow for me, but the cash-on-cash return is a good metric for me, depending on if it’s a house hack. I mean, you could get exorbitant numbers for your cash-on-cash return. It’s amazing.

Robert Leonard (30:36):

Have you started to do any borrowing, even light borrowers yet? Or are you still just mostly turnkey rentals?

Jason Peterson (30:43):

Besides this house hack here, it’s mostly have been turnkey rentals. However, this house hack, I’ve done almost every avenue of pulling money out of this thing. That’s pretty much how I kept the ball rolling. I mean, when I bought this house hack, I bought it with tons of equity. I got it for $97,000 and the first appraisal that came through was for $165,000. So I bought it on an FHA. I used seller concessions to help with closing costs and the upfront mortgage insurance premium. There’s a lot of hidden cost to FHA that some people don’t know about, but you can maneuver. I mean, there is ways to minimize your cash on hand at closing and I’ve done a cash out refinance. That was my first maneuver about nine months after I acquired the property. It was seasoned. I had an appraiser come through, I did a cash out refinance.

Jason Peterson (31:43):

I pulled out a tax free check for approximately $40,000. I rewrote the whole loan. So I bought a single family property with, it was I think, $70,000. So I put a 20% down on that. I still had $20,000 left. So I bought another duplex down in Racine with the other 20. And then I got to the point where I was kind of out of funding. So I took out a home equity line of credit on this house hack for another $40,000. And I have used that to buy two more properties since. So I will pay it down and then rinse and repeat. I mean, it’s been so influential. I did do rehab in here, which helped the appraisal go up. I got it up to 190. So the more sweat equity, and I did it slow.

Jason Peterson (32:32):

My wife and I had a plywood countertop probably for almost two months in an old house. There were issues. And there was a gravel driveway. I’ve recently just poured a foundation and put a whole driveway section in. So much value to be had and I don’t think people realize that when you spend money on updates on your house, that you’re not throwing it away. Because I’ve heard people say like, “Oh, I got to replace all the windows in my house. I’m throwing away $20,000 on all the window updates.” But that’s equity that you’re reinvesting. I mean, it’s almost like if you reinvest the dividends in a stock, it just keeps paying itself forward.

Robert Leonard (33:17):

When you bought your first house hack, you mentioned that when you got out of prison that you didn’t have an existing credit score, it just didn’t exist. How did you build your credit so that you could buy that first house hack and where was your credit at when you did buy it?

Jason Peterson (33:30):

My credit was nonexistent upon my release. They give you a check to walk home with, which is like your prison earnings. And they just want to make sure that when you’re released to the outside world, you at least have a little bit of money to get started with. And so I took that to a local credit union and at the same time, I opened up a prepaid credit card with a $500 prepaid limit on it. And at the time I was like a cave man. I wasn’t smartphone handy. I didn’t know how to work a smartphone. I didn’t know online banking. So I did it the old school way.

Jason Peterson (34:15):

I bought gas on my prepaid card and I went in there every Friday and saw the drug deposit for my W-2 check. And then I paid off the credit card. And over time I slowly established a credit score and I was able to get it around 700 when I bought this house hack, but you don’t even need it that high for FHA. I mean, FHA is very forgiving when it comes to credit scores. So as soon as it was established and I was good to go and like I said, I don’t fear much because I don’t have too much to lose. So I went all for it.

Robert Leonard (34:52):

I’m not sure if you’re familiar, but Dave Ramsey teaches people that credit scores don’t matter. And he even says that people shouldn’t even have a credit score. They should pay off all their debts and then do nothing with it so that their score is nonexistent essentially like what happened with you. What are your thoughts on credit and how it impacts your life and investing in financial future?

Jason Peterson (35:13):

I couldn’t have done any of this without credit. I mean, I think leverage is the greatest tool in real estate. If I had $50,000 worth of stock compared to $50,000 that I could invest into real estate, you can control so much more of an asset with the $50,000 invested in real estate. The leverage and the credit is what separates the ultra rich from the people that are just getting by. The right type of credit that is. I mean, consumer debt is something that it’s a no-no. I mean, there’s a lot to learn as far as the intelligent use of credit. However, convicted felon with $3,000 to his name established a credit score.

Jason Peterson (36:02):

I don’t know who comes up with the factors that make you a reliable consumer. However, a felon with $3,000 to his name went from a non-existent credit score to a 700 and then controlled $165,000 asset that put money in my pocket every month. So I understand what Dave Ramsey preaches and I agree with maybe the freedom of not having a mortgage payment, but when your tenants are paying your mortgage and you of an appreciating asset that is paid, then debt is not the evil thing that he makes it out to be.

Robert Leonard (36:46):

One of my favorite strategies when investing in real estate without a lot of money is to utilize a seller credit. And you mentioned before that you’ve used one yourself, but I don’t think it’s something that’s taught too often and I think it should be talked about more. So walk us through what a seller credit is, how it works and exactly how you utilized it and how you plan on utilizing it in the future?

Jason Peterson (37:09):

So a seller credit is pretty much when you get into a contract or offered a purchase agreement with somebody, you agree on a price. So for sake of math, we’ll just say the property is a hundred thousand and you have the appraisal and the appraisal comes in higher than that a hundred thousand. As the negotiation goes on and underwriting gets involved and you get cash to close amounts, you’re able to reposition the purchase price of the loan in order to absorb some of that cash on hand cost. I believe it is 6% for government loans, 3% for occupied loans, and 2% of the purchase price for investment properties.

Jason Peterson (37:59):

So you’re able to redraft the offer to purchase with the seller. And instead of a hundred thousand purchase price, you can renegotiate to $103,000 with $3000 kickback to you at closing. So the seller gets his bottom line $100,000 that was formally agreed upon, but it’s renegotiated to the point where at closing you get a $3,000 credit to come to the table for cash to close. I mean, it’s very beneficial, especially for somebody like me who has to wait for the needle to move. And I have enough funds for my next deal, because I pretty much deplete everything besides safety measures that I have in order to close on my next one. I get kind of itchy and want to put my money to work. So when I’m coming with small amounts for cash to close is to make a deal happen, it’s very, very beneficial.

Jason Peterson (38:57):

I would investigate in every deal you are in, if you would be able to utilize it, because I’ve used it, I think on three separate properties now. And my lender is actually the one that kind of keyed me into it. I told them, I said, “Hey, I’m getting pretty tight here. All this cash to close is, I’m trying not to spend anything I have, but closing’s two weeks from now.” And he said, “Oh, well, don’t worry about it. I’ll talk to your realtor and see if we can get some seller concessions for you and take some of this burden off of you.” And sure enough, he put me onto it and I’ve done it at ever since. So very fortunate and I think people should use it.

Robert Leonard (39:40):

I think I’ve done it in every single one of my real estate deals or pretty close to it. I think I’ve done it in eight or nine different properties.

Jason Peterson (39:48):

Yeah. There’s so many ways to explore the avenue. I mean, people do it for a roof credit or something that the seller isn’t really keen on fixing. There’s so many moving parts to closing a real estate transaction that in order to make the deal happen, people will kind of not bend the rules, but they will go the extra mile and find these loopholes in order to make it happen. I mean, nobody wants to have a house under contract for 45 days for it to fall out at the last minute because of a few thousand dollars that are short at the closing table. So I’m glad that they exist and I utilize them and seller credits are awesome.

Robert Leonard (40:33):

I mean the reality is if you have a house under contract for a hundred thousand dollars and you offer $105,000 and ask for a $5,000 seller credit, the seller’s still netting a hundred thousand dollars. So it’s the same as if you offered a hundred thousand and just didn’t ask for a seller credit. So as long as the appraisal can support the little bit higher amount that you’re offering, then there’s really no downside for the seller and you’re financing it, but you’re financing the closing cost and you get to come in for less cash out of pocket.

Jason Peterson (41:01):

Absolutely. I mean, when you have done them, you do it right from the get-go. From the first offer you make, you include the seller concessions.

Robert Leonard (41:11):

Yeah. I have for every single one, but the way that you just said that made me think to myself like, “Man, maybe I shouldn’t. Maybe I should just go in with a clean offer and then add it in at the end because I don’t know.” I just feel like when you make an offer and we’ll use the same example that I just mentioned a hundred thousand dollars purchase price, that’s the asking and you say, I’ll give you $105,OOO but I want a $5,000 seller credit. It’s not complex to us as investors, but to the seller, that might be a little bit complex. And I feel like sometimes maybe that could confuse the seller if they’re not like a sophisticated investor. So maybe I would be better off just offering a hundred thousand dollars and then 30 days in just be like, “Oh, by the way, can we just move the purchase price to $105,000 and I’ll get a $5,000 seller credit? You’ll still get the same amount.” And kind of maneuver it that way.

Jason Peterson (41:58):

Human nature is kind of predictable. And I think I might actually go your route the next time, because maybe the seller will see the higher number that you come in at the $105,000 and then they’d be, “Oh, I only really expected a hundred.” And maybe they’re more prone to sign them. I don’t know. There’s pros and cons in both ways. I think maybe my method is just useful for once you already got it under contract and you’re trying to squeeze as much juice out of it as you can towards the end there so that you can keep that cash on hand. But do you know what? I think I might side with your method. Just human nature is predictable. They’re going to see that $105,000 as opposed to a hundred and they might be more off likely to take your offer.

Robert Leonard (42:43):

Yeah. That is a good point. People do like seeing higher offers. I know I’ve always come in towards the higher end of the offers if I’m ever in a betting world. Just because I am always asking for that seller credit, even though net it’s about the same, but it does appear on the surface to be a little bit more.

Jason Peterson (43:00):

Oh yeah. We’ll have to try our methods out and see what works.

Robert Leonard (43:05):

Well, the thing is you can actually submit two offers at the same time. There’s no rule that says you can only submit one offer. So you could submit an offer for a hundred and say no seller credit. And then you could submit one for $105,000 a seller credit if you really want it. I mean, you just ask your realtor to write up two different offers. I don’t think there’s any issues with that.

Jason Peterson (43:20):

Yeah. That’s something to investigate definitely. And I kind of like how you said you kind of approach with a higher offer anyway. When there’s a multiple offer bidding for a situation, if you really break down your make or break, I mean, if the property cash flows and you’re squabbling about, let’s just say $2,000 on the surface for a purchase price, break that down over 30 years, 360 payments, and you’re going to be amazed at what would stop you from securing the deal. And you would probably kick yourself for not just writing the offer for what will actually get it under contract. Because at this stage in the economy to borrow money at this cheap of an interest rate, I mean you’re squabbling over peanuts. Rents will increase. I mean, you could almost increase the rents right off the get-go and make up that pennies to the dollar that you’re squabbling about.

Robert Leonard (44:28):

It’s like trying to pick up a penny in front of a steam roller, is what people are trying to do.

Jason Peterson (44:32):

Yeah. I don’t know if it’s just principle, how dare they?

Robert Leonard (44:37):

I tell people all the time that the listing price is pretty much irrelevant. I mean, it gives you a ballpark as to what the seller wants or expects to get, but in reality it’s irrelevant. And a lot of times they have run [comps 00:44:50] and kind of have an idea of what the market value is, but they could list it. A property could be worth $200,000 and they could list it for a hundred if they wanted. People probably won’t, but they could, or they could list it for $300,000. I mean, there’s no rules that surround what people have to list something for. So just because somebody listed it for something, that doesn’t mean that’s what it’s worth. And it doesn’t mean that’s what the numbers will work for you.

Robert Leonard (45:12):

There was a property, I think it was last year or maybe a year before that, where they were asking $500,000 and it was a triplex that I wanted to buy. And I knew the numbers made sense at a lot higher figures for me. So I offered $75,000 over asking. I knew that, even if I got it for $575,000, the numbers were an absolute home run for me. I said, “The $500,000 purchase price doesn’t matter. This is such a good deal.” What I did was I went in at, I think I went in at like $550,000 or even $525,000 with what they call an escalating clause, which says that every time there’s an offer over your price, your offer goes up to beat that offer by whatever amount you set.

Robert Leonard (45:51):

So I set an escalating clause to beat every offer by $500 up to a maximum of $575,000. So ultimately I offered $575,000 on that deal. And because people thought I was crazy, they’re like, “Why would you pay $75,000 over asking?” And I’m like, “Well asking is irrelevant to me. I’m still going to make $3,000 a month in cash off this deal even at $575,000 as a purchase price so I’m going to do it.” Ultimately I didn’t end up getting the deal. I don’t know what offer they went with, but to me, that was a perfect example of how the purchase price is what’s important, not the asking price.

Jason Peterson (46:27):

Definitely. And I mean, that goes to show the power of leverage there too. If the bank’s willing to do it, you got a deal.

Robert Leonard (46:35):

I recently read a book called Make Your Bed. I don’t know if you’ve ever heard it, but I really liked how he broke down the 10 lessons he learned from his time in the military. So I’m curious from your life experiences, whether it was your time in the military, prison, or just even other times in your life, what have been some of the biggest life that you’ve learned?

Jason Peterson (46:55):

Discipline shapes your identity and the embracing the suck and doing the hard things in life are going to be your foundation when times get tough and you separate the strong from the week. I’m familiar with Make Your Bed and that’s a very good book. I like Jocko Willinks’ Discipline Equals Freedom. That’s a very good book. I think that, it’s funny too because my childhood lacked discipline and I was searching for it. And I think a lot of young people are searching for it and they get lost and they never find it.

Jason Peterson (47:38):

Regardless of if my time in prison was a punishment or not, it was a blessing in disguise. And it forced me to mature into a confident, disciplined man that took care of himself and shaped my identity into the path of not sacrificing, I lost eight years of my life. I gave away eight years of my life because I deserved to be in there for the crimes I committed. And I think that’s a chip on my shoulder that, “Hey, I’ll never get those eight years back. So I need to make the most out of every day that I’m given.” And discipline is the foundation for that. So I definitely agree with the military’s installation of discipline.

Robert Leonard (48:31):

Do you think discipline is a skill?

Jason Peterson (48:33):

Well, not like a natural ordained skill. I think it’s something that can be developed. So yes, I guess discipline is a skill, but it just takes development. I think that anybody is capable of it. It just takes the sacrifice and dedication of doing it. I mean, I’m very, very disciplined with the morning routine. I don’t know if you’re familiar with Hal Elrod’s Miracle Morning. So I do a Miracle Morning type morning routine, right? When you wake up, I think silence is golden. I think you need to have a lot of time to collect your thoughts. I’ve been getting into Wim Hof breathwork recently. And I find that, that actually puts me in, it’s hard to describe the state. I think you have to do it and you’ll agree or I’m sure you’re probably familiar with it.

Robert Leonard (49:25):

I’m familiar with it, but I haven’t tried it yet.

Jason Peterson (49:27):

I mean, just go on YouTube. It’ll take 11 minutes of your and I think it’s very beneficial, at least. So you get to the point where your mind is clear so you can reward yourself with that time and silence.

Robert Leonard (49:41):

You’ll have to give 75 Hard a chance.

Jason Peterson (49:44):

Yeah, I saw. Wow. What a progress you’ve made. I mean, you were pretty ripped from the get go though, even when you were at day zero, people kind of strive for that. So I’m for it though. Maybe I’ll have to have you hold me accountable.

Robert Leonard (50:00):

Absolutely. I mean, I did have a good physical transformation and you’re right. I did start from a pretty good spot, but the reality of it is more the mental piece. The discipline that I learned from it was, I joke with people. I say, I wish I could take a picture of the transformation of my discipline on my brain rather than my body because I don’t really care too much about the physical appearance side of it as much as I do the mental and discipline that I gained from it. That was tenfold of what the physical transformation was and I completely agree. I think discipline, I don’t know if it’s a skill or not, but if it is a skill, I think it is the number one most important skill out of anything, is if you have discipline, I think you can do anything.

Jason Peterson (50:36):

Definitely. Even as far as learning the ins and outs of real estate, it all came down to discipline. I could listen to stand up comedy podcast and enjoy. I use it as a form of entertainment, but instead I have the discipline to use that time to learn a new skill that will benefit my life. I think reading books. I’ve come to find out when I’ve told people to read this book, I get kind of met with shock. Read a book. It just takes discipline to be the person that focuses on development. And that’s one thing for me, human optimization is, I’m just fascinated by it. I’ll find myself, for hours at night when I should be having downtime on researching supplements and the things that ultra successful people have done to get where they’re at and I’m just fascinated.

Jason Peterson (51:34):

That’s why I love your podcast and the network you’re part of. I mean, We Study Billionaires, I think that’s the greatest title you can have because who doesn’t want to know the footsteps they took. And I think that’s one thing too, that people just find somebody that’s doing something that you strive to do or that you admire about them and just copy them. I mean, you don’t have to reinvent the wheel, just do what they did and you’ll get to where you want to be.

Robert Leonard (52:06):

This is for you, Jason, but for anybody listening too, if you’re enjoying this part of the conversation about kind of human optimization, discipline, that kind of stuff, I highly recommend you go check out this episode of a podcast called My First Million. The guest on the episode I’m thinking of is Rob Dyrdek, the skateboarder. And you don’t really think of Rob Dyrdek when you, if you know who he is, you know him as like fantasy factory and ridiculousness and a skateboarder. And you don’t really think of him as being this super disciplined human optimized machine, but this is like one of the best podcast episodes I’ve ever listened to. And he is like the epitome of human optimization and I highly recommend you, Jason and everybody listening, go to check out that episode. It’s really, really good.

Jason Peterson (52:53):

I’m excited. I’m not familiar with it. So you’ve given me something. I have homework today that is, homework for me is something I look forward to. It comes along with discipline. I’m looking forward to that. I’ll have to check that out.

Robert Leonard (53:07):

Before we give a handoff to where people can find you Jason, I like to wrap up the show by turning the tables and letting the guest ask me a question. So what question do you have for me?

Jason Peterson (53:19):

When is your next house hack? I think I saw on social media, is it a townhouse? I think you had at least an eye on, I don’t know if you’re going to, it was a very nice, it looked like a perfect scenario for a house hack.

Robert Leonard (53:36):

Yeah. So I did post that on Instagram a couple days ago. I did make an offer on it. I did offer a seller credit and I did go a little over asking because it seemed to be a really, really good deal. It is a townhouse style duplex which just means the two units are side by side. It’s same, essentially to what I live in now. I live in a duplex with townhouse style units next to each other, and this was essentially the same thing. But what I really liked about this property was two things.

Robert Leonard (54:00):

One, it had four and a half acres in a really nice town, like a really, really nice town next to the town that I grew up in. And so the numbers on the house hack were great. They made a lot of sense as a house hack. They were great as a rental when I moved out. So that was a win. And then the four and a half acres, I had two plans with. I was probably going to build a small motocross track so I could ride my dirt bikes on the four and a half acres, have some fun with it. But then what I wanted to do was subdivide that four and a half acres. I’d keep two and a half for my own and then I’d subdivide two, one acre lots and try to build houses on those and then sell them. And I mean, that alone could lead to a significant profit.

Robert Leonard (54:42):

We’re still waiting to hear back on a decision from the seller for whether or not they’re going to accept my offer. I don’t know if they will. As with real estate, you got to make a lot of offers and sometimes you just get told no. So I don’t know if I’ll get that one, but if I don’t end up getting that one, then a new house hack will be in my future in the next probably three or six months or so.

Jason Peterson (55:04):

Well, absolutely good luck with that. And along with that, I have a follow-up question for you. When is your book due to be released? Because I’m definitely looking forward to it and I think that it will change a lot of lives. So I’m very optimistic that it gets the press it deserves so pretty soon?

Robert Leonard (55:23):

Yeah. I really appreciate that. It should be coming out late summer or early fall and I’ll be sure to send you a copy and anybody that’s interested reach out to me and we’ll see what we can do.

Jason Peterson (55:34):

Awesome. I look forward to it.

Robert Leonard (55:36):

Where can the audience go, Jason, to connect with you, find you on the internet, just learn about what you’re doing?

Jason Peterson (55:43):

I have a website it’s feedofffear.com that it’s kind of, I mean, it’s baby step stages here. After talking, I’m in a mastermind group and people have reached out and want to know how I did what I did. So I created a platform for that. It’s feedofffear.com and I’ve done some writing, some blog article writing. I have that on there. I’m not trying to sell anything. I just have a landing page for people to reach out to me so I can communicate with them. I got all my information to do what I’ve done for free. And I think that there’s a lot of people that will try to sell you things that you don’t need. And I don’t want to say fake gurus or anything like that, but I just want to be a landing page where people can get in touch with me.

Jason Peterson (56:37):

And if I can help in any way, that’s my form of giving back. I encourage people to reach out to me. Email me, jasonpeterson@feedofffear.comand I will answer every email and try to help out the best I can. And for me, that’s more fulfilling than any amount of money in the world that people will take the time out of their day to contact me. It’s the greatest form of, I don’t know, appreciation for me as a person, because to be where I came from and to where I’m at today, it’s very humbling and I’m very grateful.

Robert Leonard (57:17):

I’ve heard from past guests that our audience reaches out quite a bit, quite a few people will reach out. So I hope and I encourage everybody that’s interested in connecting with Jason takes advantage of this opportunity to reach out. There’s not a lot of guests that are willing to take their time out of their day to answer your emails and help you out with your questions. So if you have anything, be sure to shoot it his way. I’ll put Jason’s resources, his email, Instagram website, everything in the show notes for you guys that are interested in checking it out. Jason, thanks so much for joining me. I had a great time.

Jason Peterson (57:48):

I did too. Thank you so much. I look forward to your book and the Rob Dyrdek podcast that I’m about to delve into right now. Thank you.

Robert Leonard (57:56):

All right guys. That’s all I had for this week’s episode of real estate investing. I’ll see you again next week.

Outro (58:01):

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