Robert Leonard (00:03:53):

Do you think it’s kind of a gimmick, or do you think people can actually achieve material results with it?

Alan Corey (00:03:57):

Well, I think every credit card company out there, it provides gimmicks because they’re not going to make their money or lose money on the gimmick. It’s just to keep you as a cardholder, and they’re going to make money off of you on all these other transactions. I love credit cards. I put I think every single purchase in my life on a credit card. I’m trying to think of one where maybe if I’m buying a lemonade at a lemonade stand, I have to use cash, but otherwise, give me. Give me some free. Why not? Right? I’ve used to do airline miles. Now, my credit card is earning me Bitcoin. That to me would be better than airline flights kind of thing. But I think whatever you’re interested in, you should go out there and get a credit card.

Alan Corey (00:04:36):

Why I like the real estate one is there’s a recent article in The Wall Street Journal where the average home in the last 12 months went up in value $52,000. So it used to be, a year ago, $270,000 was the average home price. Now, the average home price is… What’s that, $322,000? $52,000. Just by owning a home on average, you probably made $52,000 in equity, which when you compare it to the average salary in the United States, which is $50,000, it’s more profitable to own a house than it is to have a job. That is amazing to me, just how much real estate, and home ownership, and wealth building is so important to improving your finances. But two, it also illustrates how difficult it is for a new generation of home buyers to even get in the game. If the homes are appreciating more than they’re making in a year, how do you even save up for a down payment or these sort of things? I don’t necessarily think they’re gimmicky. They’re help solving problems like this.

Robert Leonard (00:05:36):

A friend of mine is actually closing on his next primary residence in seven or eight days, and he’s purchasing it for $590,000, which is a relatively high-cost house in this area, but it’s not… There are some that are $700,000, $800,000, $900,000. There’s plenty of those, but there are also some $250,000 $300,000. So it’s a moderately priced house, but I was looking at it yesterday. He sent me the link to it on Realtor.com or Zillow, and I was looking at it, and it sold last year, July, 2020, for $380,000, and he’s buying it for $590,000. I was like, “Oh my God, in two years, it went up that much.” It’s crazy.

Alan Corey (00:06:13):

So I’ve been in real estate for 22 years, half my life, and everyone always ask me, “When is the best time to buy real estate?” My answer for the past 22 years, more or less, has been, “You should have bought two years ago when you asked me the first time,” because people are like, “Oh, I’m going to save when homes are cheaper,” or, “I want to save for a bigger down payment because I don’t like homes in my price range. But if I save a bigger down payment, next year, I’ll buy the home in the next budget up.” But what they don’t realize is you can’t save faster than the home prices typically are going up, and what you’re doing is you’re just paying more for the exact same house because sure, you save an extra $10,000, but that house that you passed on at $600,000 is now $620,000. You can still afford the same house just a year later, and you spent all this money saving and also paying rent for a year. You should have just bought a home.

Alan Corey (00:06:57):

Now, people are going to say, “Well, what about the real estate crash, things like that?” There’s two types of buying real estate. One is primary residence. What I always do is say, “Buy a house that’s comparable to your rent payment.” If you’re paying $2,000 a month, go buy a house that’s $2,000 a month. I don’t care what the value is. If it crashes or not, you still need a place to live, and you’re already comfortable spending that in rent, so you should be comfortable paying that in a house, or if you’re real estate investing where you’re buying something to rent out, you’re buying it based on the numbers. You’re going to lock in 30-year fixed rate that your expenses aren’t really going to change too much, and then you can get an idea of what it can rent for before you buy it just by looking for rental ads around the property.

Alan Corey (00:07:36):

As long as that’s buying money or making money, profit, your mortgage is $2,000, but you can rent it for $2,400, and you adjust for all the maintenance and expenses or whatnot, and you’re cash flowing, buy it. Buy as many as you can because as a real estate investor, you don’t have to sell in a down market. It’s cash flowing right now, and in a market crash, it doesn’t mean the rents crash. Rents roughly stay the same. If there’s a financial crash, people lose their jobs and lose their homes. You actually have a bigger pool of renters needing a decent place to live.

Alan Corey (00:08:09):

To me, you’ve got this evergreen situation where you’ve got 30-year fixed expenses, which is awesome, and especially in periods of inflation, which is going to make rents go up anyway, and then you’ve got this rental income coming in that’s a little hundred bucks here, 50 bucks here. You just have these little tiny ATM machines. Buy as many properties as you possibly can, and those ATM machines pay great, and they’re going to pay more year to year. Someone is paying down your mortgage, your home prices are going up, and your cash flow is going to incrementally go up at the same time.

Robert Leonard (00:08:39):

I was just reading an article. I think it was a couple days ago, and it was about this couple who’s out there doing something really prudent. They thought, “Oh, I’ll sell my house. Market is really high. We’ll rent for six months to a year, and then when the market comes down, we’ll buy again.” In this article, they were explaining how they have been completely priced out in their market now where they literally owned a home just a couple months prior. They cannot afford to buy that same home again now just because of how the market has been on a tear. It just proves your point even further that you can’t really time the market.

Alan Corey (00:09:11):

Yeah. I’m a realtor as well, and I have a real estate team of agents. We have clients where every single year they’re like, “Hey, our lease is about to come up. We want to look for a home.” We go look for a home, and nothing is perfect. Everything is just $10,000 or $15,000 more. So I’ve learned this through just helping clients, and they’re like, “Okay. We’re going to sign a lease, and we’ll talk to you again next year.” We’ve been having that same conversation for five years, and the homes that they’re looking at are getting worse and worse, and the prices are getting higher and higher. It’s like, “Guys, you got to adjust your expectations. Just buy something. If you would’ve bought a house last year when you said this wasn’t worth it, you would’ve made on average $52,000.” Right?

Alan Corey (00:09:49):

Just get in the game. That’s the hardest part is getting in the game. You almost can’t be picky right now, especially with this housing shortage, but it’s… I don’t see it speculative. I don’t see it that it’s artificially produced because of crazy mortgage rates. If anything, the mortgage structures are tighter than they’ve ever been, and so the people buying them can actually afford the homes, and it wasn’t just free money for everyone which caused the last boom. This is just strictly housing shortage. There’s just not enough homes.

Alan Corey (00:10:17):

We had a two-year period where home builders couldn’t get supplies to build a house, and there was no evictions for two years, which meant the house flippers who get their money, their product on the courtroom’s steps couldn’t even… No one was getting foreclosed on, so they they had no product to flip to begin with, and so they’re out of business. Then, we have banks who were scared to even give money to either home builders or renovators because they didn’t know what coronavirus was going to do the economy. So there wasn’t even loans out there for these businesses to operate. Of course, we have a housing shortage because this whole industry get put on pause for two years.

Robert Leonard (00:10:51):

Similar to the credit cards, you tweeted recently about the buy, borrow, die strategy that is supposedly used by a lot of wealthy people. I had learned of this strategy actually from another podcast a few months ago. So I was intrigued when I saw you posting about it too. Explain what the strategy is for those listening who haven’t heard it before.

Alan Corey (00:11:11):

Okay. This is basically how everyone is angry at the super wealthy for not paying taxes, and this is part of that strategy as well. A recent in-the-news example, Elon Musk buying Twitter. I think it was for $44 billion. What people think he does to buy Twitter is he takes $44 million of Tesla stock and sells it or that he has $44 billion in his name and says, “Oh, I’m going to go buy this. It must be nice,” but that’s not how the rich think. That’s not what they do because if he goes and sells his Tesla stock, he’s got to pay capital gains tax on it, and that’s going to be huge because he probably got it for free, so zero, and it’s whatever, a thousand bucks an hour, whatever, and he doesn’t want to do that.

Alan Corey (00:11:54):

What he does in this situation is he goes to a bank and says, “Hey, guys. I’ve got a hundred billion in Tesla stock. I don’t want to sell it. I want to keep it, but it’s worth X amount of dollars today, and I think it’s going to keep going up.” Like anyone who owns stock, you keep it because you think it’s going to go up, and the banks are like, “Hey, that makes sense to us. Here. We’ll give you $44 billion as collateral. We’re going to hold this stock. You get to keep it, but you don’t get to sell it. If you default on this $44 billion loan, then we’re going to force you to sell some of that Tesla stock.”

Alan Corey (00:12:26):

No. I’m generalizing, but this is the idea. So he buys Twitter, leveraging his other company, Tesla. So now he owns two major companies, and it didn’t even take a dollar of his own money. It’s just he’s borrowing against another asset that he owns, and what is great about this is let’s assume that stock market goes up 8%, 10% a year. He gets to keep this Tesla stock that’s $44 billion worth, and it’s going to keep him compounding at 8% to 10%. He borrows at 4%. So he’s borrowing at 4% interest rate. Possibly less because it’s such a large number. Most likely less because it’s such a large number, but just to keep the numbers even, we’ll say 4%.

Alan Corey (00:13:08):

Now, basically gets Twitter for free, right? It’s a 100% finance deal more or less is the way to look at it. It is leveraged off something that he’s borrowing at 4% that’s making 8%. So even if Twitter goes to zero and he defaults on that loan, he’s still making 4% on his money instead of 8% on average kind of thing. But the reason that they do that is now he buys Twitter, and he’s going to assume it goes more than 8%, or he’s going to do what he does best to improve the company, and it’s going to go 20%, 30%. Then, he’s like, “Oh, I want to buy another company. Why don’t I just leverage Twitter stock?” So now he’s got this other company that he has all the stock up, and he’s going to borrow against the Twitter stock to go buy whatever, new tech company, new tech startup, or whatever, and so you’re just borrowing against everything.

Alan Corey (00:13:56):

In some ways, people get freaked out, and they’ll say, “Well, this is a house of cards.” The way I look at it is say house of cards if you do this in your personal finances, your personal life because when you get a personal loan or a mortgage, a bank comes and looks at your personal income. They keep using the word “personal.” Primary personal residence, right? So it’s based on what you make at your day job, and we’re going to give you a loan based on this. Everything is underwritten based on your personal income.

Alan Corey (00:14:23):

So if you lose your job, then you can lose your house, and then if you’ve leveraged that house to buy a second house or a third house, all these mortgages are based on your personal income, and that freaks a lot of people out. But the commercial way of thinking is they’re not looking at Elon Musk’s personal wealth. He actually has nothing in his name. Probably hasn’t been to all these LLCs. Businesses lend money based on the business, the asset, that asset’s ability to pay off its debts. So they look at Twitter, and they say, “Wow, Twitter is making X amount of dollars. Your loan is going to be Y amount of dollars. Is that X going to pay for Y? Oh, here, have money all day.”

Alan Corey (00:14:59):

This is how commercial real estate works as well. If you go buy an apartment building that’s $20 million, they’ll look at me and be like, “Alan, you can’t afford that based on your income,” and I’ll be like, “That’s why I’m not getting personal mortgage. I’m getting a commercial mortgage,” and then the commercial bank will be like, “Oh, a $20 million apartment generates X amount of dollars. Your mortgage going to be Y amount of dollars. We’re going to give you money because this asset is going to pay for all of its debt. You’re buying a business, and the business is paying for itself, so we’ll give you that money all day.”

Alan Corey (00:15:26):

That’s the way to look at the borrowing and why they don’t even use their own money. I didn’t really get into the tax, taxes, right, too much, but you’re saving a lot of money on taxes. Then, when you’re buying a business or using that money for business proceeds, that margin, that borrowing against your assets, that interest rate, that 4% is now a business expense. That’s a tax write-off through just the interest that you’re paying on that as well. So it’s basically giving your money… Like everyone says, “Make your money work for you.” These billionaires are making their money have four different jobs because they keep that money in Tesla stock earning 4%. It used to be 8%, but now he’s borrowing at 4%, so it’s making 4%. Now, that money is invested in Twitter. If it’s a company, maybe 8%, but he’s going to try to make it work more, and then he’s saving money because he didn’t sell anything. So there’s no capital gains tax, and he’s saving money because that interest is now a business expense that’s a tax write-off.

Alan Corey (00:16:17):

So he basically is giving his money four different jobs. That’s the borrowing, right? You buy an asset. You can do this with real estate or buy a business or stocks, and you’re leveraging against your whole debt worth. Then, the die strategy is where it all ends. Right? What happens is if you sold all that Tesla stock, Twitter stock, and everything right before you die, then say, “I’m going to give it to my grandkids,” you’re paying taxes, taxes, taxes, and they’re going to say, “Wait a minute, you bought the Twitter stock at 60 bucks a share, and now it’s $200 a share. We’re going to charge you on that difference.”

Alan Corey (00:16:49):

If you die, your heirs get inherited on a step-up basis, which basically says, “Well, now Twitter stock is $200. You got it as a beneficiary at $200, so there’s no tax gain.” They just wipe away that snowball of when the person who died bought the stock. They could have bought it at $1 or $2, and now it’s $1,000. That person would have a huge tax gain. But if your heirs inherited at $1,000, then they say, “Oh, that’s a step-up basis. You didn’t become the owner of this until it was a thousand. So now we’re only going to tax you know… If it goes to $2,000, we’re only going to tax you the difference between… on the delta of $1,000 and $2,000 rather than $5 when you father or grandfather got it,” if that makes sense.

Robert Leonard (00:17:29):

Yeah. Absolutely. Another way I’ve heard this being used is in the personal finance sense, but not quite in the house of cards way that you explained it. In the way that I’ve heard it is people that are worth multimillions is they’ll keep… Rather than selling their equity portfolio or even real estate, they’ll go… Say they’re in retirement and they need some cash flow from it or they need income, they’ll go, and they’ll get a line of credit from a large bank, a commercial bank usually at 1%, 2%, 3%. I mean, this was prior to interest rates rising, but they get super low rate debt.

Alan Corey (00:17:57):

Yeah.

Robert Leonard (00:17:58):

They’ll use that to live off of because that income from the line of credit is not taxable income, and then when… I mean, in theory, the idea is that their stock portfolio, or their real estate, or whatever investments they’re using as collateral to back that line of credit, those will go up more in value than the interest that they’re paying, and so their portfolio will still outpace their loans, and then when they do die, they can use that portfolio to pay off what they spent on the line of credit. Then, the remaining portion can still be donated, or given to their beneficiaries, or whatever they want to do with it. So they’re basically, like you said, avoiding the taxes in that time period when they’re alive and they’re still in retirement.

Alan Corey (00:18:35):

Yeah. 100%. Yeah, because you’re living off borrowed money at 3%. Obviously, the more you have… I’ve seen some that are less than 1% because the client was so wealthy and they… JP Morgan or whatever just wants you to keep that balance, and there’s your investments within their company and not sell it. So they’ll let you lend on it. Yeah. So if you’re living off 3% borrowed money, but it’s backed by something that’s earning you 8%, then yeah. Yeah. Why would you ever pay yourself?

Alan Corey (00:19:01):

Also, that’s why people want to be paid… really wealthy people want to be paid in stocks because there’s no capital gains, but if they… If you get a million dollars in stocks, no taxes to be paid until you sell. But if someone says, “I’d rather want a million dollar salary,” well, then, obviously, you’re going to have to pay 30%, 40% in taxes to IRS. But if I get a million dollars in stocks, then I can get 4%… I can borrow against that, that stock and live off those dividens or those payments, and yeah, I’m still making money because that million dollar, I still own, and it’s still earning 8%, and I’m spending 4%.

Alan Corey (00:19:32):

So that’s the mindset. Personally, the first million dollars I made in my life was using a similar strategy like this and just got lucky in many ways. I had a house that had a lot of equity in it, and it was just sitting there doing nothing, which a lot of the personal finance gurus out there say that’s the dream, American dream. Have a paid off house, right? But it changed my mind that I did not do that. I got a HELOC for $300,000 off my house, and that’s a home equity line of credit. It’s like a credit card where if I have a $300,000 line of credit, if I don’t use it, I don’t get paid. I don’t pay anything. If I use $100,000 on it for whatever purchase, then I get paid for the $100,000 that I’ve used, but I still have $200,000 that I can use. So if you’re not familiar with home equity line of credit, that’s how it works.

Alan Corey (00:20:19):

There was a duplex next door to me, Brooklyn, New York, that was a million dollars. I just put some numbers in the spreadsheet, and I said, “Wait a minute. If I took my 30% down payment or $300,000 HELOC, use it as a down payment on this boundstone next door, what would the numbers look like?” I would have a $300,000 HELOC that was like, I don’t know, cost me 1,500 bucks a month, a $700,000 mortgage, which was… Let’s say $5,000, so $65,000 all in. I basically would get a duplex 100% financed. It’s a [inaudible 00:20:52].

Alan Corey (00:20:53):

That duplex was generating $8,000 in rental income. The way I looked at it was, “I might as well buy this 100% duplex. I’m making 1,500 bucks a month.” That’s the business way of thinking. I couldn’t afford a million dollar… I was 25. There’s no way I could afford a million dollar duplex, but it made sense on a business spreadsheet that the asset is going to be paying for itself. What happened was four years later, this was in Brooklyn, New York, the Brooklyn Nets moved from… New Jersey Nets moved to Brooklyn right by my house. Brooklyn became a hot thing. Everyone wanted live in Brooklyn. A bunch of businesses moved there. In four years, that million dollar duplex turned into $2 million. Then, I sold it, and then I did other 1031s and all this other stuff. But basically, I made a million dollars for $0 of my own money because I leveraged. I did that borrow strategy. I had an asset that was earning me nothing. I took the equity, and I got to keep my current primary residence and re-deploy that money.

Alan Corey (00:21:50):

That’s the same strategy where it’s buy, borrow, and just pull out as much equity as possible. In my book, House FIRE, that’s what I… I learned this late in life, and it took that thing, that great event, that lottery ticket experience that I had there, and still, I was wanting to pay off my mortgage. I just kept coming across stories, kept investing in real estate where I was taking my HELOC, and reinvesting it, and making more money. Now, I realize and what I preach is you should have no equity in your assets. You need to be borrowing constantly and reinvesting them, and that’s how the rich get really, really wealthy.

Alan Corey (00:22:28):

It’s a mental mindset to overcome, and all the brainwashing and everything of paying off your debts and having no debts. I think I talked about… Last episode, it’s like, “Don’t pay off your car note.” If your car note is $30,000 and you have a $200 payment or whatever it is, take that $30,000 that you would give to the car company. Go buy a house that you can rent out that cash flows for 200 bucks. You keep your $30,000 that way, and then let the house pay off your debts. That’s the same thing where you’re just borrowing, borrowing, borrowing, and letting the assets basically pay for your entire life.

Robert Leonard (00:23:01):

When did that Brooklyn deal take place?

Alan Corey (00:23:04):

I bought it 2002. That’s when I bought my primary. Then, I want to say 2013, 2014. I think I bought with the HELOC my primary. I got $300,000 10 years later. Then, I bought it about 2013. Then, I sold it at 2015.

Robert Leonard (00:23:23):

I asked that because I’m curious how a strategy… I am generally in the same ballpark as you with this kind of borrow from your equity and buy assets with it, but I do wonder, like how does an asset or a strategy like this work during a crisis like 2007, 2008? There’s a lot of talk right now that the economy is a little shaky, and I’m not saying we’re going to have a 2007, 2008. I’m just saying how… Like if we do see a falter in the economy, how does something like this do in 2007, 2008?

Alan Corey (00:23:49):

That’s the conversation I have with my wife every time I try the strategy. So she thinks differently, but it’s math. It comes down to math. It comes down to a spreadsheet. I did not buy that duplex because I thought it would double in value. I did not buy it because it would make me a million dollars. I bought it because it was going to make me $1,500 cash flow, and to me would be… If I have to drop the rents on each unit by 700 bucks, that’d still be okay and be like, “What event would make the rents drop 700 bucks each?” To me, it would be tremendous amount of supply like, “I’m a New York City. Are they going to build 5,000 new units in this neighborhood that’s already highly dense?” That didn’t seem like it was coming. Right?

Alan Corey (00:24:30):

What other catalysts could make rents drop like crazy would be… I don’t know. Something happens to the US economy. The US dollar becomes worthless. I’m going to have problems no matter what I’m investing in if that’s the case. If everyone loses their job, like what’s the worst case scenario? What we found is when that happens, like the coronavirus, the government did step up and say, “We’re not going to evict anyone. We’re not going to foreclose on anything.” There’s programs in place to basically keep the economy afloat. You can’t bank on that, but that’s what we’ve seen is historic precedence now.

Alan Corey (00:25:02):

To me, the risk was not doing it. The upside was, in my thought process. “Hey, in 30 years, I’ll have this million dollar duplex completely paid up.” I’ll be like, “That’s fine. That’s great. I’m happy being a millionaire in 30 years. That’s a dream of mine,” and that upside was… Missing out on that upside was more risky than actually putting my money to work and a 100% finance deal kind of thing. That’s the way I looked at it, and it just happened it took four years. I said 30 years. Like I said, I got lucky. I always preach that as well. Every house that you buy comes with imaginary lottery ticket or every real piece of real estate where something like that happens. A new school opens up, a new park opens up, and they build a new subway stop, or whatever it is that had nothing to do with me. But because I have a bunch of properties scattered around, I have all these lottery tickets where something like that can happen.

Robert Leonard (00:25:47):

I’m looking at doing this exact same thing right now with my primary residence. I actually just got an email from my mortgage rep because I had a question for him about DTI calculations and how they’re impacted by HELOCs. I could probably get a HELOC right now on my primary residence I’ve owned for a year for about $100,000 for the HELOC itself. That’s not exactly how much equity, but I’m thinking I want to take some of that and invest it like we’ve just been talking about. But when you go… When you went and borrowed, and you went and said, “Hey,” to a lender, “Hey, I’m going to buy this duplex. This is going to…” They always, almost always at least ask, “Where is your down payment? What is the source of those funds?” When you told them, “Hey, I’m going to borrow those funds. It’s going to be from a HELOC,” how did that impact your financing?

Alan Corey (00:26:28):

So if you have a HELOC of $100K that you’ve never used, a bank is already underwriting it that you’ve used it all. So it goes against you whether you’re using it or not because they’re going to assume, and they see that you’ve got this tool that you can go get in $100,000 of debt 30 seconds after closing. So they already have calculated that you’ve maxed that out. That’s really not a problem for them at all. Alternatively, if you come across someone who… or you just want that peace of mind that it’s not going to be a problem, just write a check to yourself for $100,000 and put it in your checking account, wait two months, and then you… to season it because the banks, when you get a mortgage, they only look at the last two months of your checking account, and you just say, “Oh, I just keep that in my savings. I’ve had it in my savings the last two months.” That’s your workaround, but typically, no one is going to care.

Robert Leonard (00:27:15):

So I’ve heard some banks do exactly what you said, and they just basically assume that you’ve maxed the whole thing since you have it available to you, but I’ve heard that some banks don’t, and they actually just base it off the balance.

Alan Corey (00:27:25):

That’s great. They might tell you that, but there are some ways they’re calculating that. Just like if you had a credit card that had zero balance that you’ve never used, but it has $30,000 credit line. That goes into their calculations when they underwrite you. They see all your open credit lines, and that’s worked into some big formula where they give you your credit score and your underwriting riskiness. I bet you that bank probably charges a little bit more interest rate because they’re taking on a little bit more risk if they’re not looking at that.

Robert Leonard (00:27:54):

So I want to buy… I live in a house hack right now. I want to buy a house hack. My year is up on my current house hack, so I want to buy another one. I don’t need the HELOC to buy that next house hack. I have the capital. So I’m thinking I’m probably going to buy the next house hack without getting the HELOC first, close on that house hack, and then get the HELOC so that I can use that money to buy investment properties. That way, the HELOC isn’t hurting me to go get that next house hack.

Alan Corey (00:28:17):

My default advice would be while you’re living in your home, the cheapest money you can borrow is owner occupied primary residence mortgage. If you’ve got that much equity in your current property, do a cash-out refi rather than a HELOC. Lock in that cash-out refi, get a 30-year mortgage. You’re going to get the lowest rates you possibly can because you live there right now, and once you close on that loan, you can move out five minutes later. No one is checking, “Hey, does Robert still live at this house?” So you get this huge bundle of money that’s tax free. That’s cash sitting in your account, and then I would use that money to go buy your investment property. That’s usually my blanket advice in that situation.

Robert Leonard (00:28:57):

Does the clock restart when you refinance?

Alan Corey (00:29:00):

What clock?

Robert Leonard (00:29:00):

Because you have to be there for a year.

Alan Corey (00:29:03):

You don’t have to be there for a year. One, it doesn’t. No. You have FHA loan?

Robert Leonard (00:29:09):

This property, I do, but my previous two house hacks, I did not.

Alan Corey (00:29:13):

The idea, the spirit is that your intention is to live there for the year. But if your situation changes, you get a new job, you got to commute to work, you’re married, divorced, whatever, there’s no follow-up to see if you actually lived there for a year. That’s the spirit, the idea. “Hey, we’re giving you a loan as a primary resident.” Then, you should make all intentions and do that. But if your situations change, no one can force you to stay in a home against your will. People get job changes all the time. Things like that.

Robert Leonard (00:29:43):

I thought about the cash-out refinance as well. I’m just a little torn because my interest rate right now is 2.25% on a 30-year fix, and I’m like, “If I refinance right now to do the cash-out, it’s going to be upwards of five plus percent,” and so I’m like, “Ah, that’s going to hurt,” or I can just do the home equity line of credit, and I think the interest rate that the local credit union is offering me is 1.99%. So I’m like, “Ah, that just seems to make a lot of sense to me.”

Alan Corey (00:30:07):

If those are the interest rates that you have and you’re getting quoted, I agree with you. Yes. 100%. Yeah.

Robert Leonard (00:30:12):

When I went to the closing table for the property I live in now at the title company, the closing agent literally told me, “This is the lowest mortgage rate I’ve ever seen in my life.”

Alan Corey (00:30:22):

I have a couple duplexes that I’ve locked in at 3%, which is not as great as you, and they’ve got tremendous equity. So I’m having the same struggle as, “Do I do a cash-out refi on…” because they’ve doubled in value to pull out this equity, or do I stay in this super low interest rate for another 15 years or so? I get that struggle. I do. That money you pull out, can you go make more with it? Yeah. I think your HELOC… and it’s much easier to get a HELOC when you live in the property. So definitely get that HELOC before you move out.

Alan Corey (00:30:51):

It’s really difficult to get a HELOC on an investment property. It exists. It’s just a little bit more expensive. So you’ve got options, and that’s the best way to make money is if you have options. So explore all those different baths and see where it gets you. But to get back to that one year thing, you can only get an FHA loan. Maybe this is where that was coming from. Typically, one a year, and then also, you can only have one in your name. Your next purchase, whether it’s a primary or not, would not be an FHA loan. It would be a traditional conventional mortgage, but those can come with a 5% down payment instead of a 3.5% payment, which FHA loans have.

Robert Leonard (00:31:27):

You mentioned the difficulty of getting an investment property’s line of credit. So that’s exactly the line I’m trying to walk here is I need to get that line of credit while I still live in this property so it’s owner-occupied, but I’m also worried that that’s going to impact my DTI to buy my next property, my next house hack. So I’m trying to walk that line of what is the right approach.

Alan Corey (00:31:45):

You’re following the exact same steps I did where I got as many different mortgages on my personal name than I possibly can. It used to be 10 is the max. I think eight is the max now. So if you’re married, you can have your spouse also have eight in his or her name as well. But now, the sort of the loan programs that I’m looking at is… There’s some called portfolio loan or blanket mortgage, and that is by a commercial bank, and they’re going to say, “Hey, why don’t we pool these 8 to 10 properties you have, and let’s just give you one blanket mortgage across them, and we’ll pull out all the equity kind of thing?” which obviously gives you a lot of options.

Alan Corey (00:32:20):

Honestly, if I followed through, and did that, and refinanced all these properties, then I can start over and start doing another eight in my personal name because I just took eight off of my personal name and then put them in a one commercial blanket mortgage. Now, I can start all over and do eight more in my personal name. That’s the other layer too once you start acquiring these properties and doing what the super wealthy does where they keep all their assets. They just restructure the debt so that it’s tax-free, pulling out all that equity, and reinvesting, and living off of it that way.

Robert Leonard (00:32:52):

I have four single family rentals down in Texas, and I’ve actually been looking at doing the blanket loan right now to do a cash-out refinance, get some of the equity out.

Alan Corey (00:32:59):

Yeah. That’s the beauty of the bird, and so a lot of people are like, “Isn’t that risky? Why do you want more debt?” I think your situation, if I recall it, let’s say you bought all these properties, and let’s say… I don’t know. Whatever numbers. Yeah. You put $100K in it. That was a combination of down payment, renovation costs. You’re all in $100K. Hold these properties long enough. Four of these properties, you do a cash-out refi, and a bank is going to say, “Well, here. We’re going to give you a mortgage of $100K more than you currently have,” and then you get $100K cash back. Right?

Alan Corey (00:33:28):

So, now, all of a sudden, you’ve got four homes in Texas that you have $0 in because it took you 100 to acquire them all and fix them up, and then you got a cash-out refi of a hundred. There’s no risk. They’re just going to cash flow you for you still, and if something happens, a bomb goes off in Texas or something, and they all get demolished, and you have no insurance on any of those, you are still out nothing because you have got your original $100K back. That’s the BRRRR real estate investing where Buy, Renovate, Rent, Refinance, and Repeat.

Alan Corey (00:34:00):

That’s also this buy, borrow, and die strategy because you’re just, “Let me put money in. Let me pull it out,” and then you take that $100K, and you rinse and repeat it, and you buy another four homes. Then, you pull all the money back out and buy another four homes. That’s how you become a real estate tycoon. That’s how all the people who have massive amounts of real estate…. That’s how they do it. They’re just recycling. It’s not that they’re super rich. They just recycle the same cash over, and over, and over again, and just restructuring the debt that’s tax-free, and putting those dollars to work, giving them two, three, four jobs like the Elon Musk example.

Robert Leonard (00:34:30):

I believe that’s what they call the velocity of money. Correct? That’s why a lot of the rich people say they want to increase their velocity of their capital.

Alan Corey (00:34:37):

I haven’t heard that phrasing, but I like it, and it makes sense to me. Yeah.

Robert Leonard (00:34:41):

I’m pretty sure that’s what… When they’re reusing capital like that, I’m pretty sure they call it the velocity of their capital, and they’re trying to increase the velocity.

Alan Corey (00:34:47):

Yeah.

Robert Leonard (00:34:48):

Not so much increase the amount that they have, but the velocity of it, and that eventually leads to the more of it.

Alan Corey (00:34:54):

It’s the mindset, I think, to get there is that people struggle with is like, “Well, what if I lose my job?” It’s like, “No. All of this has nothing to do with your job because your houses are paying for it.” Right? The bank who’s going to give you a blanket mortgage in Texas is going to say, “Well, what’s the rental income? Okay, and then the mortgage amount is this? Oh, yeah, the houses are going to pay for this.” Then, you reallocate that money in another asset that pays for itself, and then you reallocate that money into another asset that pays for itself.

Alan Corey (00:35:20):

It has nothing to do with your personal job. Anyone who has that anxiety or stress, or that keeps you up at night, it’s like, “You put it all in LLCs. You can’t get a blanket loan unless it’s in an LLC name.” Nothing is coming after you personally. These businesses are just propping up other businesses. To me, that gives me little bit peace of mind that… and my wife when I try to tell her, “This is what we’re doing with our money.” Obviously, put it all on a spreadsheet and be like, “A bank will not give me money if this is dangerous.”

Alan Corey (00:35:46):

The bank, any bank is the most conservative partner you can have in any sort of business transaction, real estate or otherwise. They are such conservative accountants and everything with the way they evaluate a deal. They’re going to assume worst case scenario over and over again. If they’re willing to give me money, then we’ve passed the hardest bar possible of whether this is a good deal or not. They’d send out their appraisers. They send out… have their own inspections on these commercial deals sometimes. To me, that’s the cherry on top where it’s like, “Hey, this person who knows this, this is their entire business is to evaluate whether this is a risky deal or not. Give me the thumbs up. Then, that I know we’re good to go.”

Robert Leonard (00:36:24):

Alan and I are not tax professionals or financial advisors. We’re not giving you any specific financial advice for anybody that’s listening, but these are just certain things that we’re doing ourselves, and these are, to our best knowledge, the way things work. You should do your own due diligence if you’re going to apply any of these strategies, and I wanted to give that caveat because I have a question for you, and I don’t want people to see it as financial advice, but I’m just genuinely curious about how you think about this type of capital allocation. If somebody has some capital and they want to deploy it, there are some options such as you could put it in an HSA. I’ve heard those are the best tax advantage accounts in terms of long-term savings. Then, there’s IRAs, retirement accounts. There’s 401(k)s, and then you could put a new investment property. If somebody has a little bit of capital that they’re looking to allocate, where do you go first with your money?

Alan Corey (00:37:10):

I used to do all those things that you said. As I generated more wealth, and my network got wealthier, and my clients became wealthier, my partners became wealthier. I can tell you most people that are entrepreneurs that are in business that are really billionaires, none of them have an HSA. None of them have a 401(k). None of them have an IRA. None of them have mutual funds. That is a safe, super safe way to make money. That is not a way to create legacy wealth. It depends. So you’re asking me my advice, what would I do? It’s what are your goals? Are you looking to preserve wealth, and are you basically looking to incrementally slowly increment your income or maybe your net worth? That’s a safe vehicle. That’s the Dave Ramsey way where it’s like, “Hey, if you do these steps, you’re not going to go broke. You’re going to be able to sleep at night, and you’re going to be okay.” That’s the advice I give my parents because they are school teachers, and that’s what makes them sleep at night. They’re not going to call me 15 times a day because the market changed for 15 minutes kind of thing. Right?

Alan Corey (00:38:19):

If you are someone… I think we think alike where it’s like, “Let’s generate as much wealth as possible. We don’t come from wealth. This is exciting. This is a journey.” To me, the stories, win or lose, are fun and that’s… Leverage it all and get into, I guess, riskier investments like investing in businesses, investing in big real estate deals. All these billionaires and people look up to Richard Branson, Elon Musk, Bill Gates, things like that. They let it all ride. They have a very concentrated investment and something they really believe in, something they really understand, and the asymmetric bed of it all is how it plays out.

Alan Corey (00:39:00):

Elon put all its entire amount of money that he made in PayPal into Tesla, and then he took his entire amount of Tesla, put it into SpaceX. Now, he’s taking all the money back from Tesla into Twitter, and he doesn’t even own a primary residence. He’s not a rich guy that has a bunch of yachts or houses. He sleeps on people’s couches because he travels so much. He’s like, “I don’t want a house. Also, I want more money to invest in my company.” I would say what do you understand the most? Do you understand bonds the most and that is your passion? You’ll read a bond website, and you pull up TikTok, and it’s 10 people talking about bonds? I would say go put your money in bonds. You know a lot about bonds. I don’t know anything about bonds, but I know a lot about real estate. My entire TikTok feed is real estate advice people, right, and cryptocurrency now. So most of my money is in crypto and real estate, but that’s because it’s a passion of mine. I’m interested in it.

Alan Corey (00:39:53):

The way I approach things is if I lose money on a house, real estate investment, or I lose money in cryptocurrency, to me, it’s an education. I’m like, “Well, I lost $50,000. I won’t make that mistake again, and I’m going to take that education, I bet, because I learned that that was such a painful loss that next time, I’m probably going to make $75,000 because I’ve taken that and I didn’t quit.” I took that loss, and I applied it to my next purchase that’s going to make sure it’s going to protect me, or I’m going to circumvent that, or I’m going to avoid a deal because I got burned in the past.

Alan Corey (00:40:25):

It’s just all education to me. To me, it’s like people will go to get a master’s and spend $100,000. This happened to me three times because I was raised by two teachers. They’re like, “Education, education, education,” and I applied three different times in my life, a span of over 20 years to go get a master’s in real estate because I love this. I want to learn more about real estate. Every single time the bill came back, the tuition would be somewhere between, for me to graduate in these programs, $50,000 to $150,000. Every single time, I was like, “Wait a minute. I can go take that $150,000 and just go nuts on real estate market and lose it all. I bet I’d learn more than I would in a classroom. Real world experience is going to teach me way more than in a classroom.”

Alan Corey (00:41:06):

I keep coming back, and I’m like, “Okay. Maybe my parents are right. I need to go get an MBA. I need to learn more about real estate,” and then it’s like, “Wait a minute. I’m going to take this $50,000. It’s going to turn into $100,000.” So I don’t know. I keep coming to this recurring pattern, and it’s always benefited me to reinvest that money in real world rather than the safe path, the rich dad, poor dad path, the safe, “You got to go to school. You got to…” either good in debt and you’re going to get a better job to me is… I trust myself more than I trust an employer to keep me employed no matter how loyal I am because at the end of the day, if there’s budget cuts, they’ll cut their best employee if they have to to keep the lights on. I’d rather just invest 100% in myself. I’m not going to let myself down kind of thing.

Robert Leonard (00:41:49):

Yeah. The Elon Musk story after his sale of PayPal is really interesting. I believe he put 60% or 70% of his proceeds from PayPal into Tesla, and then put 30% or 40% of it into SolarCity, or SpaceX, or whichever company it was, and he was sleeping on the couches. He basically had no money left. Like you said, it was a really big bet for him. The only caveat I have to the retirement account is that if you use a self… Have you ever heard of the story with Peter Thiel and his self-directed IRA?

Alan Corey (00:42:19):

Oh, does he buy stock options or get company options in that?

Robert Leonard (00:42:23):

Yeah. So back in the… I forget what year it was, but he basically made contributions to his Roth IRA, and he put $2,000 into it, and it’s worth $5 billion today because he got very, very early shares of Facebook, and then he reinvested all that money into future companies that he could get investments in. Because you’re self-directed IRA, you don’t have to put that money into stock market. You can actually invest in a real estate with a self-directed IRA. You can invest in private companies. You could do VC type investments, private equity type investments. So I think if you’re going to go… I think the one caveat to what you said, which I agree with, but the caveat is that there are some self-directed IRA accounts that can provide some pretty cool flexibility and investment options.

Alan Corey (00:43:04):

Yeah. If you can get paid in shares and you put that in a vehicle that’s protected to pay taxes as long until you’re 65, 100%. I’m not saying it’s a bad move. Obviously, there’s no blanket advice for everyone, but yeah, something like that is great. But at the end of the day, if someone’s got $10,000, I would 100% say you’re going to be better off buying a house, 10% down payment on a $100,000, and people are going to scream, “There’s no such thing as a $100,000 house.”

Alan Corey (00:43:31):

Guys, there are. I just sold 50 of them. I bought them for $30,000 each. I just sold them for $60,000 each, and they’re an hour within Atlanta. In every single state, there’s a $100,000 home. So I promise you. It’s just they might not be in your neighborhood, but I would say go buy that, and go use that down payment to buy a house. You’re probably going to make more money in the long run than you will in the stock market. Sorry, not in the stock market, but in the… Well, I do agree with the stock market, but I was bringing it back to the IRA or mutual funds. But most likely, you’re not going to lose money in the IRA, the mutual fund.

Alan Corey (00:44:02):

That’s the trade off, right, is do you want… because everything is more risk, more reward. You want something that’s basically risk-free. Yeah, that’s a great vehicle. You’re going to have a great safety net, and nothing wrong with that. If you want a 10X, 4X that money, 20X money, there’s a lot of other options out there. It’s going to take a little work. It’s not easy. It was easy, everyone would do it. That’s why I say whatever you’re passionate about, that’s where you should put your money in.

Alan Corey (00:44:27):

Like Elon Musk is passionate about SpaceX, and I just watched that documentary, Returning to Space, on Netflix, and that’s his passion. He’s willing to put every dollar he’s ever made off PayPal and Tesla into that. Now, Twitter is his passion. If you’re that invested in something and you enjoy it, to me, you can’t lose. It’s like when people say, “I’ve never worked a day in my life because I love being a singer. I love doing this.” That’s how I feel about real estate. It doesn’t feel like work. I enjoy it. Win or lose, I have a smile on my face and be like, “Ah, I’ll do better next time,” kind of thing.

Robert Leonard (00:45:00):

I don’t believe you do much or any investing in short-term rentals, at least we haven’t talked about it, but you are a resident of the Atlanta area, like you mentioned, and Atlanta just recently put some pretty strong limitations on Airbnbs there. What are your thoughts on these limitations that Atlanta has placed on short-term rentals and Airbnbs?

Alan Corey (00:45:23):

I think that overall, it’s a good thing. So law that they put in place is you can have two Airbnb licenses, one for your primary residence and one for another residence. But if you’re married, your spouse can also have one. So, technically, you could have three. We have a housing shortage, right? This will ideally alleviate some of that because a lot of these homes are in very desirable locations. You get bidding wars, and there’s a lot of businesses buying them up to do short-term Airbnb. I see that aspect of it. However, there’s still going to be investors buying them to do long-term rentals. That doesn’t really get rid of the investor aspect, but I would imagine being a neighbor to a house that’s an Airbnb where you have a rotating guest coming in every week, and different parties, and everything. That’s definitely going to take away from the neighborhood feel that some of these neighborhoods have really established. So I see the benefit of that also as well.

Alan Corey (00:46:15):

I’m all about home affordability. I think the problems with Atlanta come down to density. Most of the land here, something crazy like 80% of Atlanta’s zone, single family. You try to educate people and say, “Guys, what builds great cities? Think of any great city.” To me, some of these great cities are San Francisco, or New York, or Paris, or London. It’s high density that creates a lot of walkability. To me, that’s great, and you have a mix of incomes as well. There’s a problem in San Francisco that the Chipotle couldn’t open because the only way they could afford it was charge 20 bucks for a burrito, and the whole staff was driving from San Jose an hour and a half away then. So you had to pay them tremendous amount of money to make up for that commute.

Alan Corey (00:46:58):

What makes a great neighborhood is if you go down to your deli, and the deli is the guy who lives up above the deli, right, or your neighbor… your teacher also lives in your neighborhood or your fireman. That only happens with high density where you can have an ADU unit in the back or you can build a second… a basement unit or a third unit that you can rent out. This is what makes thriving cities. So, to me, it’s a bandaid. Also, I’m told there’s no staff in Atlanta to even govern whether this licensing yet or even really enforce it, but it’s a step in the right direction. But I would want to see Atlanta and most cities saying, “Guys, single families are what’s ruining the city because that creates traffic.”

Alan Corey (00:47:39):

I want to be able to bike to my bagel shop, not have to drive, and because Atlanta has been built on as a driving city, every commercial spot has to have X amount of parking spaces. Nothing is walkable because it’s all parking lots, and then store. Parking lots, and then store, and then apartment. Everyone needs two parking spots in their apartment. It’s not affordable because new apartment complexes have to budget $200,000 for a parking deck that no one uses, but you’re required by law to have X amount of parking spots per apartment. We’re just a city of parking lots. If we could just change some of those parking lots and some affordable housing, to me, the city is really going to take off.

Robert Leonard (00:48:16):

Speaking of parking lots, that’s an investment that I’m interested in. In my area, parking is incredibly expensive, and I’d love to just buy a small little parking lot near a beach or near some sort of destination that draws people and just see how that plays on real estate.

Alan Corey (00:48:31):

I know some people who that’s what they do, and yeah, there’s good money in it. If it’s a commercial parking lot and nothing else, what I’m talking about is you’re a business, and you’re building a business, you’re required to have parking lots, even though 100% of your customers are walking to your coffee shop because they live there, and no one driving, and it’s just a waste of space. That’d be great if I could add a second store there, or an apartment there, or just anything besides unused parking lots, but yeah. Yeah. If you’re in an event space or near a stadium or something, you got a parking lot, yeah, you can print money pretty easily there.

Robert Leonard (00:49:03):

Yeah. I was thinking just a purely commercial type parking lot, not attached to another business. When I was prepping for this call, I noticed that you co-founded a company called PutPost.In, and I wasn’t aware of that prior to this conversation. I didn’t know that in our last conversation. So I just want to chat a little bit about what that business was and just hear a little bit more about that story.

Alan Corey (00:49:25):

Yeah. Sure, so PutPost.In. Whenever there’s a problem, if I can’t find a solution to the problem, then I’ll create a business that solves that problem. That’s my thought process. So that was catalyst for this. As a real estate agent, one of the tasks is you got to put a for sale sign. Right? This big wooden for sale sign in the yard, and then when it’s done, you got to take it down. Most of the time, unless you have a truck or SUV, you can’t even pick this post in your car. More, it’s too heavy for a lot of realtors to even deal with it. So there was a sign shop in town in Atlanta, two sign shops in Atlanta that were reluctantly install the sign for you, and then they would take it down and store it.

Alan Corey (00:50:02):

I say reluctantly because I asked the owners, and they both said, “Yeah. We hate this. We don’t want to do it, but we want to sell signs to realtors. So this is a way to generate the business.” Because they hated it and it wasn’t really a profit center for them, it was just a lead attraction that they did a bad job at it. My name’s Alan Corey, but there’s another real estate agent named Corey something. Corey Allen. Half my listings like Corey Allen signs would go in front of my house instead of Alan Corey, and I’m like, “That’s not good.” Right? That makes me look like an idiot, or I tell a client, “Hey, we’re having an open house Sunday.” We’re going to list it Friday. I’ve scheduled a for sale sign to go in Friday. Then, the guy doesn’t show up on Friday. He shows up on Monday after the open house, after the house has been on the market, and then my client is like, “Alan, put a for sale sign in the yard.” I’m like, “I’m trying. This guy didn’t do it, and now they’re closed.”

Alan Corey (00:50:52):

It kept embarrassing me and making me look bad. Actually, I come from a software background. I went to one of the sign guys, and I said, “Guy, hey. I buy my signs here. If I build an app for you, think of it like Uber for real estate signs, and it keeps all your inventory.” As an agent, I never knew how many signs I had, or where they were, or when they were installed. I was like, “This is going to do all that for me. I just open up the app and say, ‘install this sign at this address on this date,’ and when your guy comes, I want him to take a photo of it installed, which will go to me, and it will go to my client, and we’re all on the same page. I don’t have to drive by the house seven times in a day to see if it actually got installed that day or not or installed at the right house or the right sign. Right? Then, you’ll get instant feedback because I get a photo, and I’ll be like, ‘Nope, I’m Alan Corey, not Corey Allen,’ and they can fix it.”

Alan Corey (00:51:36):

He’s like, “Oh, that’d be great. If you build that app, I will use it, and we will do great business together. Whatever.” I built it. It took a year. I partnered with someone who’s a developer, a great smart guy. A year later, we came back. We built this, and he’s like, “Great. What is this going to cost me?” I was like, “It’s going to cost you nothing. We’re just going to raise the price five bucks, like a hundred bucks to install a sign. Now, it’s $105.”

Alan Corey (00:51:59):

“You and one other person are the only players in town. You both charge the same amount of money. We’re just going to charge five bucks and agents can use this app. Your life gets better. My life gets better. You can actually get rid of an employee because this employee that was doing invoices…” Two employees. He had one that would print out every single request and draw on a Google Maps daily, print out the route. I was like, “You can get rid of that guy, and the person who follows up with me a month later about all the signs I installed for the month, you can get rid of that person because it’s all in the app. I’m saving you money, and we’re charging agents five bucks more.”

Alan Corey (00:52:30):

He flipped out and said, “No, I’m not interested in doing that. That’s scary. Agents will not pay $5 more.” I was like, “I’m an agent. I’m your customer. I would pay $20 more. Just let me do it. At end of the day, fine, you pay the $5 on each install. Still saving you money on employees.” I couldn’t get him on board. Yeah. I think it was just a bit of technology. He was a little bit scary for him. He was in the sign business. He wanted to make signs. He didn’t want install signs. He didn’t want to run a sign installation company. That was from the get-go. So I said, “Okay. I still have this problem. I’m just going to start a company, and we’re going to install signs.” He’s like, “Fine.”

Alan Corey (00:53:04):

So that’s what I did. Then, I was like, “We’ve got the app. Let’s just tell all the real estate agents in Atlanta we’ve got this.” We successfully launched the company, and then it made my life much easier. I knew if I was having those problems, every other real estate agent was having those problems. It ran. I owned it. My partner and I owned it for two years, and then we sold it, and it’s still running. I still use it to this day. I solved the problem. I helped other real estate agents at the same time.

Robert Leonard (00:53:28):

So even though your background was in software, you were not a programmer?

Alan Corey (00:53:32):

No. Yeah. I was a project manager. I had never learned how to code. I learned early on when I learned the HTML in 2000 when it was the newest thing, and I had my… It was like the first. One of my friends had a website, and it launched, and then six months later, they’re like, “Oh, we use JavaScript now.” I was like, “Oh, okay. Let me learn JavaScript.” Then, it was like we launched. “Oh, we use Flash now.” It was like, “Every time I became an expert at something, my skill became obsolete,” and it was like, “I need to get out of this business because I don’t want to be constantly learning.” I think that’s why I fell in love with real estate. I was like, “You learn it once. It doesn’t change.” Maybe something like Airbnb didn’t exist, but the mechanics of financing a deal and evaluating the deal are constant. So once I’m an expert, I don’t have to relearn a new programming language or anything. So I find myself attracted to ways where I can learn once and master it rather than constantly mastering new technologies.

Robert Leonard (00:54:24):

How did you find the programmer or developer to partner with?

Alan Corey (00:54:28):

Before I was in real estate, I was a software project manager. I reached out to some of those programmers that were on my team prior to me leaving my day job. A few of them. This one guy, Michael Seneadza, was my partner. He launched a very successful stock trading app called SwingTradeBot. It monitors and gives formulas and algorithms to do your swing trades for stocks. He basically left the day job because that was going so well, and I was like, “Hey, you want to build a real estate app to mimic your stock trading app kind of thing?” He was on board, and we went from there.

Robert Leonard (00:55:01):

Who did you sell it to?

Alan Corey (00:55:03):

It was a local contractor who was doing a lot of business for real estate agents and wanted to do more business for real estate agents. So he’s running it as an addition to his business and a way to contact and be face-to-face to every real estate agent in town now.

Robert Leonard (00:55:18):

Interesting. I was expecting you to say something… Maybe not as big as these companies, but something along the lines of like a realtor, or a Zillow, or something like that.

Alan Corey (00:55:27):

We did talk to them when Zillow was in the iBuying business. Our customers, big portion of it were these iBuying programs because they don’t have boots on the ground. They’re not people, right? They’re this big company, but they own a lot of assets. They do need for sale sign. That was a big part of our company. We looked into that as well, and they wanted more of a national company. Ours was an app specific just to Atlanta, and so it was, “How much work do we have to do to make this scale to every other city?” kind of thing. We just weren’t excited about it. Both of us, my partner and I, were making more money spending time doing other things, so we were just like, “All right. Let’s just move this along. Keep it in Atlanta thing, and we’ll focus on other ventures.”

Robert Leonard (00:56:07):

Are you able to give us a ballpark on roughly what you were able to sell it for?

Alan Corey (00:56:10):

We basically broke even on it. This was not an exit where I made a lot of money at all. The timing. Coronavirus is when we… It got to the point where… Coronavirus happened in 2020. This was our second year in business, and no one had listings because no one was selling their house, no one was letting people inside their homes, and no one was getting mortgages. Everyone was losing their jobs kind of thing. So it was the slowest time, and we were just like, “Do we keep this afloat through coronavirus or we just sell it for what we got into it for?” That’s where it came down to.

Alan Corey (00:56:43):

The writing was on the wall like this was never going to make us millions of dollars. It would make us a few hundred bucks a month and no work. It was on autopilot, and we just had one contractor installing it all. So we had already done the upfront effort, and it was just one of those things where he was going to have to be involved to do tech support and upgrade the latest technologies and whenever a new technology came out. That was like customer service. They kept calling me for questions, and I was like, “For a couple hundred bucks, I’d rather just have the phone calls stop and not have to deal with it,” kind of thing. A hundred bucks, 300 bucks a month is nice, but like I said, I can go make something else more.

Alan Corey (00:57:19):

So this wasn’t a big play, but it was fun. I’m glad I did it, and I still have my problem solved. We learned a lot doing it, met a lot of agents. When I do these things, it turns into other things. Now, I’m a partner in a mortgage company, and I already have all these relationships with real estate agents as well. So, to me, just doing stuff, good things happen. Success begets success. Just being active, getting out there, talking to people. This business might not be what’s going to make me a lot of money, but now I’ve got another business that is paying me more than that ever did. I’m leveraging those relationships I built by solving other real estate agents’ problems. So my advice, go out there and do it. Whatever idea you’ve got in your head, go out there and do it. That idea, whether win or lose, you’re going to get an education or you can build relationships that you can use on the second idea, or the third idea, or business opportunity that comes along.

Robert Leonard (00:58:09):

Yeah, I couldn’t agree anymore. This podcast does okay from a financial perspective, but it opens so many more doors and opportunities that can lead to even more income. It’s just one of those examples, right? Your app might not have made a ton of money, made you all these relationships, and it built a lot of other stuff that you can basically open a lot of doors and opportunities for you. It’s the same idea with me for this podcast. So totally, completely, 100% agree with you on that. Alan, there’s a lot more stuff that we can keep talking about, but as we wrap up this show, I want to give you a chance to tell the audience where the best place is to connect with you. If they like some of the strategies and philosophies that we talked about and approaches, where’s the best place to go to connect with you and learn more if they’re interested?

Alan Corey (00:58:48):

Sure. I branded myself on social media The House of AC. I’m Alan Corey. AC is what my friends call me, and I talk from my house, and I talk about houses. So The House of AC on every social media channel is probably the best way to get in touch with me. I would love to interact with you. As a 44-year-old guy, learning social media, it’s a lot of misses to go with the hits, but I’m getting better every day. Like you said, I’m just getting out there, doing it, and getting on podcasts, and things like this happen because of it.

Alan Corey (00:59:16):

That’s another thing. Anyone who’s thinking about social media, just get on it because I’ve had deals. It’s not that my social media account made me money, but someone saw it and said, “Let’s do a million dollar investment in Atlanta,” and like, “Wow, TikTok paid for itself in other ways.” It’s just a great business card, and it’s just another… It’s fun to do, and so anyway, The House of AC is where I check it out. You can tell me whether I’m being a fool or not, but so far, it’s working for me.

Robert Leonard (00:59:41):

You guys can find all the links to Alan’s resources in the show notes below for anybody that’s interested in checking it out. We’ll be sure to have you back again, Alan, to finish up our conversation. I really appreciate you joining me.

Alan Corey (00:59:52):

Hey, thanks for being here. I’m going to have you back on my House of AC Podcast as well. So looking forward to that.

Robert Leonard (00:59:57):

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 (01:00:03):

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