Brandon Turner (02:35):
I bought myself a duplex and I lived in half of that and rented the other half out and my new wife. Man, from there, we just had a collecting unit. I realized I could go to law school, which was the plan, or I could just collect a bunch of rental units and eventually not have to work anymore, and so that’s what I did. I just kept buying properties, and most of that was in Western Washington. I ended up, I bought about 30 or 40 of them and then I bought, kind of maintained around that 30, 40 mark for a number of years while I built the BiggerPockets podcast, started of teaching the stuff online.

Brandon Turner (03:00):
Then bought a mobile home park at one point, which got me up to almost a hundred units. Then I was like, these mobile home parks are awesome, and then bought a couple of thousand units of mobile home parks over the last few years, and now I think I just crossed the 3000 unit mark with both mobile home parks and apartment complexes. Yeah, it’s been a wild ride.

Robert Leonard (03:17):
I think a lot of people know you and your story from most recent, some of the bigger deals you’ve been doing, some of the mobile home park stuff, but I don’t think a lot of people know more of your backstory, how you got started. I want to spend a little bit of time talking about that. I think that’ll be super relevant for the audience. We’ll talk about some of the stuff you’re doing now. When you got out of that first house, you were house hacking. I don’t think it was coined at the time, right? House hacking wasn’t a thing yet?

Brandon Turner (03:40):
No, I was just like … I mean, I don’t even think I even logically thought through, I could live for free. I just remember thinking this is a cheap duplex and maybe the other unit can offset some of the cost. I never even did the math. I didn’t know how to do the math. I just was like, well, it’ll rent for something and my mortgage is going to be something, so my mortgage will then be less out of my own pocket. That was my only thought. I had never heard anybody talk about it.

Robert Leonard (04:01):
Real estate seemed cool, but I mean, there are a million different things you could do. Why did you stick with real estate?

Brandon Turner (04:07):
There’s this thing, like certain things just like appeal to people. I mean, I know guys right now that are super into, I don’t know, cryptocurrency or shorting AMC, or whatever the Reddit guys are all doing right now, or yeah, cryptocurrency or whatever. There are like a million things that appeal to people. Some people are just really big into options trading. Some people are really big into whatever buying companies or franchising [means]. For whatever reason, for a lot of people, when they just think about real estate, it creates this fire in them. Like I get it, I understand it.

Brandon Turner (04:34):
I like to think like real estate’s so simple, like a simpleton like me can understand it, and therefore I get excited about it. I’m like, oh, this makes sense. Buy property, and every unit you buy makes a little bit of money. So, if you buy a bunch of them, you make a whole lot of money. That just makes sense to me and it just fired me up. I once heard…I think it was Warren Buffet once said like “I could have been good at something that didn’t … Like being a teacher. I could have been fired up about being a teacher or being a fireman, but I wasn’t. I was fired up about making money.” Why? I have no idea, but something in me just fires me up about the idea of making money through real estate.

Robert Leonard (05:03):
You actually mentioned something there that I didn’t plan on talking about, but it’s actually something I’ve wanted to discuss for a while. You mentioned how each house provides a little bit of money. So, if you get a lot of them, [they] make a lot of money. What do you say to those people who are like, real estate sounds great, I understand it, but it’s only 200 bucks a month. That’s nothing. I gotta put out 15, $20,000 to get 200, $250 a month. Why would I ever do that?

Brandon Turner (05:26):
Yeah. That’s a great question. Because yeah, if you’re just going to make … When you start investing in real estate, yeah, your first house is probably $100 to $200 a month. Maybe if you buy a big, expensive house, maybe you’re making more than that. But most people in the blue-collar areas buying a couple hundred thousand dollars property, you’re probably making $200 a month. You might be getting a 10% on your money, which is probably comparable to the stock market, maybe a little better than the stock market, but it’s like, why do that? That’s the question.

Brandon Turner (05:46):
Why go invest in stuff for that little bit of money? The way I like to look at it is those little deals are kind of the equivalent of like, if you go and put in 50 bucks in the stock market, it’s irrelevant to your future. Throw in 50 bucks in the stock market or buying a piece of Bitcoin is fairly irrelevant, most likely. But what it does is it gets you in the game. Real estate investing is a very scalable business. It’s a very scalable investment, and it’s a scalable investment that can utilize other people’s money to scale it.

Brandon Turner (06:14):
In other words, that $100 a month, $200 a month, it’s fairly useless. So, you buy a house, okay, great, you have $200 a month. Then you buy a duplex, maybe next year. Now you’re making like $400 a month. Well, still pretty useless. Whatever, it’s a few hundred dollars a month for spending money for your gas and your gas tank, but it’s whatever. But then you go buy a five-unit property, and then you’re like, okay, well now I’m making a little bit. Then after that, you buy a 20 unit property. And then after that, you buy a 50 unit property.

Brandon Turner (06:35):
Now all of a sudden, in one purchase, you get a 50 unit property, and all of a sudden, boom, you’re retired. I mean, it really scales fast. The reason why is because like real estate is exponential growth versus like linear growth, right? Linear growth would be like, I have $10 and now I have $20 and now I have $30 and now I have $40, but real estate can be exponential. I have one unit, now I have two, now I have five, now I have 10, now I have 30, now have 50. It ramps up so quickly. At every level of that, you’re gaining knowledge and skills and contacts from the industry and confidence and excitement.

Brandon Turner (07:06):
You’re making some money along the way that you can then recycle into new deals. Yeah, that’s where, like in the beginning, yeah, it’s worthless. Those first deals don’t matter at all, but they matter so much because you can’t get to the later deals or it’s really hard to get to the big [ones] until you’ve gone through the little ones. And that’s how I look at the smaller deals, is they’re just training ground.

Robert Leonard (07:23):
I remember on a podcast, this was a while ago now, but you and David, one of you had said, I don’t know … I pretty much know nobody that has only done one real estate deal. Once you do one deal, you’ve done at least two or three or four. You don’t know pretty much anybody that’s only done one deal.

Brandon Turner (07:38):
Yeah. Well, it’s like, I was once at a Costco, and I ran into this guy who was from the island here. I live in Maui, so this guy in Maui, he’s like, “Hey, aren’t you Brandon from the podcast?” I was like, yeah. And he is like, “Hey cool, nice to meet you.” He goes, “I heard you were doing jujitsu now.” I said, “Yeah, actually I just started.” “Well,” he goes, “what belt are you?” I said, “Oh, I just started, I’m a white belt.” I said, “I’m only a white belt.” And he said, “Well, Brandon, don’t just say only a white belt because the white belt is the hardest belt.”

Brandon Turner (08:01):
Now, for those that aren’t familiar with martial arts, the white belt’s the belt they give you when you show up. It’s like your first belt. It’s an automatic. You get the belt. It means nothing. Why would he say the white belt is the hardest belt? It’s because most people in the world don’t get the white belt. Most people never step foot in the gym. So, that’s why like once you buy one property, you’re now in the gym. You’ve got [the] white belt.

Brandon Turner (08:20):
People don’t typically stay on the white belt. I mean they, they move up and they eventually move into other belts because I mean, not all of them obviously, many people do fall away, but in real estate, especially like you buy the one, you’re in. You’re in, and you realize it it’s like proof, oh this actually works. Or wow, I really screwed that one up. I’m going to do better next time. So, nobody buys one deal. If they have the guts and the boldness and the fortitude and the persistence to get the one deal, they have what it takes to get 50 of them, and yeah, they’re going to make it.

Robert Leonard (08:50):
Today, I would say that you and BiggerPockets kind of go together like peanut butter and jelly, but similar to your real estate backstory, I don’t think a lot of people know how you got started at BiggerPockets. Tell us how you got started there.

Brandon Turner (09:04):
Yeah. So, it actually started with, so I’m 27 years old, and I had quit my job. I worked at a bank as a banker. I opened checking accounts for people and all that, and I was building my real estate portfolio during that, and I bought an apartment complex. It was a 24-unit apartment building, and I fixed it up myself. I did all the work pretty much. I go in there, fix up each unit one at a time. My wife and I together would go and paint until three in the morning, get the unit rented out, and then move on to the next one.

Brandon Turner (09:25):
Over the course of several years, from 24 when we bought it, to 27, when I was like stabilized, we just fixed it up. And then I’m like, all right, okay, now I’m 27 years old. I got about $3,000 to $4,000 in profit coming in every month. We call that cash flow, just extra money, and I’m like, well, what do I do now with my life? I was like, I guess am retired. Quit my bank job and I just sat at home for a few months, and I was like, well, this is boring. So, I decided, I was like, well, I’d like to make more money than what I have now, and now I don’t have a job. I can’t get loans anymore. Maybe I’ll get into internet marketing, which is like, I was like, could I like sell products on Amazon on or eBay?

Brandon Turner (09:56):
I started researching that, and I started researching other stuff. None of it really clicked until I discovered I could write. I’m a halfway decent writer. When I look back, I’m like, no, I was not a halfway decent writer. I was a terrible writer, but I thought I was a halfway decent writer. So, I started blogging on this little website I started called Real Estate in Your Twenties, and actually still exists today, realestateinyourtwenties.com. I haven’t updated it in a decade, but I started writing there, and the secret to growing your blog back in the day, and it still kind of is true today, is you go and write for another person’s blog.

Brandon Turner (10:21):
So, who was the biggest blog in the real estate space at the time? It was Josh Dorkin, founder of BiggerPockets had this blog called the BiggerPockets Blog. So, I started writing and guest writing over there, and that became me and Josh, then the founder became friends. Then one day he’s like, he put on his Facebook, hey, I’m looking for someone to help me edit blog posts. Who’s good at editing and wants to make some money? I was like, I’ll do it. I could use some more money. I started editing blog posts just for like … I don’t even remember what he’s paying me, probably like 20 bucks an article or something like that, but I would edit them and then I’d post them.

Brandon Turner (10:49):
That’s how it started. A few months into that, I was like, “Hey, Josh, let’s start a podcast. We should make this thing a podcast.” And that’s where the BiggerPockets podcast came from.

Robert Leonard (10:58):
Did you guys have grand ambitions for BiggerPockets to be what it is today or was it kind of just flying blind?

Brandon Turner (11:04):
Yeah, no, I had no … I had gotten into internet marketing that year, but even before that, I didn’t know anything about what I was doing. I didn’t even have a computer a year before joining BiggerPockets. I had no idea. I had no expectations. I remember us talking. We said our goal is within, I think I said within two years, we want to be the top hundred business podcast. We want to be in the top hundred of all business podcasts. And the day we launched, we hit like number six, and then never dropped below 20 ever. Now, today we’re typically right around six or seven of [the] business podcasts.

Brandon Turner (11:32):
That was a shock, a huge shock. Because again, this is like, within two years we want to be in the top hundred. Yeah, no, didn’t expect [it]. There were a few other websites at the time that were all kind of equal to Josh. There was BiggerPockets, and there’s one called CREOnline and one called REIClub. They’re still around, I think. And Josh, or BiggerPockets, and REIClub and CRE were kind of the same size. Neither of them had a big solid footing. Then, when I came on board at BiggerPockets, and I’ll preface this by saying like, it wasn’t me that did this, but I’ll tie this into a lesson here in a second.

Brandon Turner (11:59):
When I came on board at BiggerPockets, all of a sudden we just took off. I think the podcast was a huge driver of that. But to the point where BiggerPockets became the dominant player, like the category king, they call it in the real estate education. Again, it’s not that suddenly I came and knew what I was doing. In fact, like I said, I was a terrible writer. I didn’t know how to edit, didn’t know how to spell or do grammar. It was the fact that for the first time, Josh, as visionary, had somebody to be the integrator.

Brandon Turner (12:25):
Now, for those who aren’t familiar with the term, it comes from a book called Traction, where it says every great company has two key roles at the top. There’s a visionary, somebody who sees where we’re headed and lays out the plan and motivates everyone to get there, usually the CEO. And then somebody else to be the one that drives the actual tasks forward, because the two are usually not the same person, the visionary and integrator. I kind of became the integrator. I was the one writing the blog post and the one editing things, and then managing the forums and then starting the podcast, doing the actual like day to day annoying work.

Brandon Turner (12:54):
Because of that, that mixture of the right integrator and the right visionary creates what they called rocket fuel. It’s like the right mixture of two chemicals, and it just led to explosive growth. The lesson for everyone here is if you’re struggling to get started, especially for a long time, maybe it’s because you are a visionary or you are an integrator, but you’re probably not both. It’s very rare to be both. I would recommend thinking hard about who you are. Are you the visionary or the integrator? And if you’re the visionary, then get yourself an integrator and watch the rocket fuel just take you off.

Robert Leonard (13:21):
Brandon mentioned two books there, Traction and Rocket Fuel. Those are both by Gino Wickman. We’ve had them here on the podcast. You guys can go back and check out that episode. Why did Josh hire you if your editing skills sucked, your writing skills sucked, why did he hire you?

Brandon Turner (13:36):
I’m a good interview. I think I made Josh believe. I’m pretty good at selling my points. Even today, I could argue pretty well why crypto is such an amazing thing, and I don’t know anything about crypto, but I’m pretty good at getting people jazzed up and excited about it because I get excited about it. Even stuff I don’t know about, I can get myself pretty pumped up and excited. So, in talking with Josh, it started with just like, dude, I could write like a hundred blog posts. I think that’s what I told him. I’ll write like a hundred blog posts in the first year. So, I wrote a hundred blog posts for different companies in the first year that all pointed back to BiggerPockets, which led to a lot of SEO growth by people visiting the site.

Brandon Turner (14:09):
There’s a great book out there called Big Money Energy, I think is what it’s called, by Ryan Serhant. He’s the guy from like a million-dollar agent or million-dollar listing or something like that. But his whole point is like so much success in life is just about being confident and having that energy. That big money energy like, yeah, I got this. We can do this. We’re going to the moon. And everyone’s like, yeah, follow that guy. He knows where he is going. I don’t know where I’m going half the time, but when I’m excited and confident about it, it’s generally worked out.

Robert Leonard (14:34):
I don’t want this to be a knock on BP if you say no, but do you think you’d be where you are today if it wasn’t for BiggerPockets?

Brandon Turner (14:42):
Yeah, no, not a chance. And here’s why. I am not somebody who is good at sticking with things for the long term. When I talk to people about Josh Dorkin, who found BiggerPockets, I like to say that Josh is the best entrepreneur I’ve ever met. Not because he’s wicked smart, which he is, he’s crazy smart. And not because he’s a hard worker, which he is. He’s the best entrepreneur I know because he stuck with something for years and years and years without it making money. BiggerPockets had existed for almost a decade before I came in.

Brandon Turner (15:11):
He had worked at it, like, by himself, every day, no employees, no help, just making no money for year after year after year, trying to improve it, trying to make it work, where 99.999% of the population would’ve given up. And that’s why Josh is so successful today and why BiggerPockets is so successful. What I mean by that is I would not have continued Real Estate in Your Twenties. I really don’t believe it. I would’ve gotten bored after another few months or six months to a year. But the thing is, when you’re getting a paycheck when you’re making money, most people tend to stick with things for a long time because they have to, it’s their job.

Brandon Turner (15:42):
So, BiggerPockets became essentially a job to me that I showed up every day and I worked at. I did not have the mindset of a true entrepreneur. Now, I think that’s changed. Now, today, I actually run my own real estate company and I’ve stuck it with it for a while. But the key with me even sticking with it is I had to do what Josh did. I had to bring in an integrator because I would not have stuck with Open Door Capital long enough working in the business. I had to get out of working in the business, work on the business, and that’s, I think, is the key to long-term sustainability as an entrepreneur. You have to like force yourself to stick with it by allowing other people to obligate you to stick with it. Does that make sense?

Robert Leonard (16:15):
Yeah. So, you would’ve quit your website, but would you have kept with real estate?

Brandon Turner (16:20):
I think I would’ve kept with real estate because I’d been in it already for a decade almost, or seven years. I think I would’ve just slowly picked up another property here and there. Because here’s the funny thing about real estate. You naturally will climb to the level of where your mentors are at because that’s your, for lack of a better term, like your God. That’s your idol that you’re moving toward, is the people in your life that are successful towards that.

Brandon Turner (16:41):
For example, if you’re a basketball player and there’s this like player that you idolize, you’re probably going to play like that player. You’re going to learn like that player. Same thing is true for real estate, you’re going to move towards your mentors. And my mentor had like 50 units and he did all his own work, and he would manage … Once in a while he’d hire employees and they’re … Not employees, but contractors and they were usually felons, right out of prison, and they would do a terrible job and he would’ve to yell at them.

Brandon Turner (17:03):
He lived a very stressful landlord in life, but that was my model. That’s what all I knew and so that’s what I was mimicking the first half a decade or decade of my investing. It wasn’t until I got into the BiggerPockets community and we started the podcast, and I started interviewing people and meeting people in real life that were at an entirely different level that I was like, oh, there’s a whole other way to do this.

Brandon Turner (17:23):
I want to do it that way. I think that actually sounds fun. Oh, I could be a visionary and not do the work, like all the work. So, yeah, I think I would’ve stuck with real estate at a very painful level for a long time.

Robert Leonard (17:34):
What do you think you’ve learned from the experience of joining BiggerPockets that new investors can take away from it? Should they also try to get involved with a BP-like company that can help their careers, whether it’s real estate or not? I think this is an interesting question because people who listen to this show are probably fans of our company, TIP, for a while. At TIP, we joke that I’m the Brandon Turner at TIP, because it was started by two guys, similar to Josh in your situation, and then I came in kind of early days and helping scale and grow it just like you did with BiggerPockets.

Robert Leonard (18:05):
I’ve kind of taken a similar path to you and I’m seeing how it’s helping my career and my investing. I’m curious about what we can teach newer investors from what we’ve done.

Brandon Turner (18:14):
That’s such a great question. Yeah, I think one of the most important things in life is to do work that you’re passionate about and you love doing. Like work, what your day-to-day work, work. Now, that could be real estate, that could be flipping houses or wholesaling or some kind of like real estate, like entrepreneurship type business, which is fine, but it also could be internet marketing. It could be working at a title company. It could be being a real estate agent. I think just doing something day to day that has scalable income opportunities, meaning that it’s not like somebody pays you $50,000 a year and that’s all you can get.

Brandon Turner (18:41):
Bigger pockets gave me scalable income opportunities, specifically through writing books. So, when I write books, I get a large percentage, and not a huge percentage, but I get a good percentage of the sales that come in, of the profit. Therefore, I invest time into creating significant cash flow from a business that’s within another business. They call those entrepreneurs. Being a real estate agent is a kind of entrepreneurship, even though technically you are self-employed, you’re really just an agent for a large brokerage, that you work under another agent or you work for a brokerage company.

Brandon Turner (19:11):
That’s great. Who cares? You have a scalable income source. If you’re making 45 grand a year as a teacher and you’re in Ohio, it’s hard to save enough money to go out there and buy a bunch of real estate. So, you have a couple of options. You could go out there and create a bunch of wealth by being creative, like flipping, wholesale, and putting together some no and low-money-down deals, nothing wrong with that. Or you can go find a scalable way on the side to make a bunch of income, whether it’s working for another company, or whatever, and then take all that extra income and dump it in real estate.

Brandon Turner (19:39):
Today, yeah, I make money from a number of different sources and I dump almost everything I don’t spend into real estate. I just constantly just buy more and more real estate, which also helps offset the taxes, which is nice. Yeah, I’m all 100% on board with doing something you love that gives you scalable income.

Robert Leonard (19:55):
I want to dive into a few strategies or maybe topics that you’ve talked about over the years from podcasts, YouTube videos, and maybe even social media that I really liked and that I think the audience can learn from. The first one is when you talked with Josh about focus by I think to know, and then you use an analogy about building bridges and not working on other bridges until one hits the shore. Explain to us what this concept is and why it’s so important.

Brandon Turner (20:23):
Yeah. Every investor, every entrepreneur has this that I’ve ever met, I think has the same fault, and we all do it. It is this idea that we are invincible and we are infinite it and we can do an infinite number of projects. So, we tend to say yes to things we tend to start. The analogy being every … Like, you live on one island and you want to get to this financial freedom island, or wealth island, or success island, whatever. But in this imaginary world, there are no planes, there are no boats. The only way to get there is to build a bridge.

Brandon Turner (20:48):
Now, so you start building this bridge. That bridge might be flipping houses, but then you see an infomercial for Bitcoin trading, and you’re like, oh, that sounds cool too. So, you start working on Bitcoin, start learning about that. Then you hear about options, and then you hear about starting an Amazon business and then selling eBay stuff, and you start building all these little bridges. The problem is we have a finite number of hours in the day. Every day, the more bridges you have to build every day, the slower each bridge gets built.

Brandon Turner (21:13):
Essentially, no bridge ever gets to the promised land, never gets to them, that fantasy island, because you spent all your time building 20 bridges, and each one’s just partially constructed. Because at the end of the day, a bridge that’s 99% finished is still just a pile of cement and rebar. The goal, you have to get all the way there, but here’s the beauty. Once you get all the way there, now you can go back and build other bridges. Still, I would try to limit them, but you’ve already made it once. You already have the wealth and freedom coming in.

Brandon Turner (21:39):
So, I have that through real estate. I could go build the other bridge, which at the time, I’ll give a real example of it. So, I built up my first three, roughly $3,000 a month in income from real estate. That was my focus. I built it through real estate and just buying these crappy rentals. Now, it was hard work and I had to manage them myself and I had to do all my own maintenance and repairs, but it was still, I had made it to that level one financial freedom. I could pay my bills using the money I made from real estate.

Brandon Turner (22:04):
That allowed me to go build another bridge. That bridge was called BiggerPockets. It allowed me to take a risk. Similar to that, if you’ve ever played the game Cashflow from Robert Kiyosaki, the game is played in this little tiny circle. They call it the rat race, right? You just go round and round and round, and round, and round, and round. It’s this little like six-inch circle, but then, once you make enough income in the game, you make more income than you’re spending, you get out of the rat race, and now you’re in a whole different game where you’re doing really cool stuff. You’re taking risks that allow for way bigger payoffs.

Brandon Turner (22:31):
Because I had the three or four grand a month, depending on the month coming in, I could take a risk on this little site called BiggerPockets that I had a chance for building a lot of wealth in and a lot of cash flow from, and so I took that chance. And so that bridge ended up panning out. But if I wouldn’t have had that three or four grand a month coming in, I don’t know if I would’ve even pursued BiggerPockets because I don’t know if I would’ve thought he paid enough money. Josh didn’t have hardly any money in the beginning to pay me.

Brandon Turner (22:54):
So, he was like, well, I can pay you a little bit right now, and if you can make me more than that, maybe we’ll talk about giving you more later on. It was like that kind of arrangement. I was like, all right, I’m in, I’m in, because I had the ability. Yeah, bridge building. I would say the number one reason people failed. The number one reason above everything else is because they’re are simply building too many bridges.

Robert Leonard (23:13):
So, how do we focus on which bridge to build? I literally have right behind me, I have a couple of your books and I have the one thing, and this is the biggest thing that I struggle with still. I cannot focus on one bridge. I have probably a hundred bridges going across from island to island right now, and I really need to focus, and I’m trying to learn. I think lot of people in the audience are entrepreneurs and deal with the same thing. So, how do we focus on that one bridge?

Brandon Turner (23:35):
Yeah. A couple thoughts come to mind. First of all, knowing what that bridge is, that’s the most important bridge, like what’s the priority bridge? What’s the thing that is most important that if you dedicate your time towards that? Then every day, even every hour, the task you’re working on, is there anything you can first do on the, we’ll call it the primary bridge, is there anything you can do on the primary bridge? Anything actionable that can be done, you should do that above anything else. But a lot of the times, the thing that we have to do is like send an email.

Brandon Turner (24:03):
Let’s just say your primary bridge is building a real estate, building five grand a month in passive income from your rental properties. Great. If that’s the bridge, maybe like you have to send this email, but now you got to wait for that email to come back before you can even move on to the next step of whatever you’re trying to buy. Okay, great. So, you’ve done all you can on the primary bridge. Now you can go to the next bridge and go work on that thing if you need to or go to the beach or something fun, but then go back act the next day or even the next hour and say, okay, wait, now, is there anything else I can do on the primary bridge?

Brandon Turner (24:29):
So, it’s always keeping that the primary, and everything else comes second. Step one, again, is identifying what is that primary bridge? And then asking yourself every day, is there any actionable step I can do towards this primary bridge right now? The third thing you can do is, if you want to have multiple bridges, it’s actually doable. The answer is to hire other people to build your bridges for you. And you become more of a foreman that oversees all the bridges. Now, I still don’t love that idea, but if you have to, or if it’s an important thing, you can find ways for other people to build bridges.

Brandon Turner (24:54):
Now, maybe that’s partnerships. So, each person in the partnership is moving the bridge forward, but you only have one little piece of it. So, you only got to show up once in a while and pour concrete, but they’re doing all the rebar and all the foundation work. So, you just show up and do concrete once in a while. Now that bridge is getting built even when you’re now actively working on it, or you could hire employees to build the bridge for you. There’s some automation there, but that’s pretty tough.

Brandon Turner (25:12):
But yeah, figuring out what that one thing is, and the one thing is a great book for that, and just constantly reminding yourself is probably the key to that. What do you think?

Robert Leonard (25:21):
I don’t know. It’s literally something I’m struggling with right now so bad, is focus. Because there are just shiny objects everywhere. As entrepreneurs, you said it’s the number one thing that makes people fail, and I completely agree. I feel like I’m working on, let’s just say five different projects right now, and I’m not doing great at any of them because I’m working on all of them. And I feel like if I really just focused on one to two of them, I think I could do them really well instead of doing all five.

Brandon Turner (25:46):
Yeah. The other thing to remember is I tell myself this a lot, not now doesn’t mean never. When I get excited about another project, I really would love to launch like a performance coaching company. I love performance coaching. I’ve been a huge advocator for years. There’s such money to be made there. I could make a killing. I could make millions of dollars off owning some big performance coaching company, where I hire a bunch of coaches and we bring in a lot of clients, and it helps … Everybody wins. Win, win, win, win across the board.

Brandon Turner (26:10):
But Open Door Capital, my commercial real estate company that we buy mobile home parks and apartments is my primary bridge. I have simply said, rather than the fear of missing out, the FOMO of the performance coaching company, I just have to remind myself, and honestly, I have to remind myself this every day, not now doesn’t mean never. Not now means not now. It means I can do the performance coaching company next year. I mean, how old are you right now?

Robert Leonard (26:30):
26.

Brandon Turner (26:31):
You’re 26. I’m 36, right? I’m like, next year I’ll be 37. Year after that I’ll be 38. You’ll be 27, 28. We have so much time ahead of us. I sound like Gary Vaynerchuk right now, but so much time ahead of us. You could literally work on one thing for the next decade of your life, 10 solid years, which is what I believe most business endeavors require 10 years. It’s weird. It’s a weird thing, and I don’t know why it’s that way, but almost everybody successful in business I’ve ever known has been about 10 years before they got that traction needed to be able to like step back and the thing just takes off. It’s about a 10-year process. You could literally spend the next decade of your life on one project and then the entire next decade on another project.

Brandon Turner (27:09):
And then the next decade on another, and the next decade on another. By that time, technology will improve so much that you will all live to 150. So, you have like 10 or 12 more of those decades ahead of you that you could do these decade-long projects. When you think about it in that term, you’re like, oh, well, which one of these can be done later? Open Door Capital, I believe we are in a unique position right now to buy apartments and multifamily in America that we will likely never see again. I think this five to 10 year period right now is going to be, we’re going to look back on this and go, man, remember when real estate used to be cheap in America? If you look at year up Australia, real estate is not cheap. It’s not. It’s super expensive compared to what we pay for it.

Brandon Turner (27:45):
So, I think we’re going to look back on this as a glory year. Right now is the time to do that. Will performance coaching be around 10 years from now? Yes. Five years from now? Yes. 20 years from now? Yes. So, I can do this one now because I don’t know if I’ll be able to do it later. That’s another way to kinda decide which bridge to do is, which one can be done later? And which one, if I do it, to answer the book, The One Thing, which one, that if I do it right and actually finish that bridge will make the other bridges not that important?

Brandon Turner (28:11):
It’s like, oh yeah. Well, I guess if I was making five or 10 grand a month of cash flow off rentals, I wouldn’t even have to worry about creating an Amazon business. Oh, well, maybe I should just focus on that. Then the last thing I’ll say, and I’ll throw it back to you, is some bridges are really sexy because they say sound fun and they sound like a way to make a lot of money. For example, an Amazon business or some kind of eCourse, or something like that. But some bridges are way more sturdy than others. Some bridges are made out of solid concrete and their piers go way down, deep into the foundation.

Brandon Turner (28:39):
Other bridges are made of wood or straw. When deciding which bridges to build, sometimes it’s worth building the more solid one, and I think real estate is probably the most solid bridge you can build like out there. I mean, there’s good money in business. Like, you go start a blog, you go start an Amazon, but that’s great. You could make some good money, but also you could lose that money immediately and the whole business could just go kaput. But real estate is so tried and true, and it lasts forever. It lasts forever, and it’s such a solid bridge. So, think of that too when you’re trying to decide which bridge to build. Build a solid one first.

Robert Leonard (29:10):
I’m glad you mentioned Gary V. because I find myself going back and forth between the two Garys. Gary Keller from The One Thing and Gary Vaynerchuk. Gary Keller and Jay Papasan say the one thing, do one thing and that’s it. Then you listen to Gary V., and he says, I love juggling seven, eight, nine balls all at once. He’s like, I couldn’t do just one thing at once. And he talks about this all the time. That’s where I’m like, which Gary do I listen to? To your point about the sturdiness, I completely agree. But then I wonder, what if somebody has the plan of taking the money from that extra business and putting it into real estate?

Robert Leonard (29:41):
What if real estate is the ultimate goal but they don’t necessarily have the money to scale that to what they want? So, they’re going to make the money in another business and then pour that into real estate. Now, it’s like, which one do I focus on? Because I could scale real estate if I focus on it a little bit more maybe, or I can just go out and start this other business, make some money there, and then pour that into real estate.

Brandon Turner (29:58):
Yeah, so good. Couple thoughts. First of all, I’m 100% on board for people who are like, you know what? Right now, I’m going to build this consulting business because I’m there, and I’m ready, and I know I can do this, and I can make a lot of money as a whatever. I’m going to start a plumbing business. I’m going to go start a bathroom remodeling company, whatever, because I believe I can make that business so successful and generate so much profit that I can then use to dump into real estate. More importantly, in that conversation with yourself is, which one fires you up more?

Brandon Turner (30:25):
Honestly, if you’re like, I like real estate, but I really love the idea of building a construction company, I would choose the construction company right now, because if you’re more excited about it and you are honest with yourself that you’re going to do the work needed to become the needed to be able to build that into an actual business, not just a self-employed job, if you’re really willing to do that, yeah, then go.

Brandon Turner (30:42):
You’re going to have more energy to do that and to build that thing up super successful, and then you can dump the money into passive investments. Go give it to guys like me or guys like you, like give it to other people to go invest. You can be a passive investor because you’re doing what fires you up and you’re investing your money on other stuff. Now, I go back to the Gary Vaynerchuk versus Gary Keller thing. I love Gary V., but Gary V. and a lot of other online influencers have a tendency, and I probably fall into this as well, we have a tendency to preach what works for us today as if that’s what got us to where we’re at today. When in reality, it isn’t.

Brandon Turner (31:15):
In other words, yeah, Gary is doing a ton of different things right now. He’s doing NFTs and he’s doing the Vee cars, cards, all that stuff. But 10 years ago, what was he doing? Wine. That was it. He even brags about this. I worked for 15 years in my dad’s basement or my dad’s company, and I lived in my basement and I worked for 10 years. I did nothing but wine. That’s all he did is he made his dad’s store amazing. Then he shifted, he pivoted, and he made Wine Library TV. He did a thousand videos. That’s all he did. He was not doing NFTs back when he was doing Wine Library. He was not building a social media empire when he was doing Wine Library, that’s all he was doing.

Brandon Turner (31:50):
Then he shifted from that after he was making a killing off that I’m sure, and he could then build a podcast or whatever. I don’t know if it was the blog or DailyVee came first, I don’t remember the order. But then he built the social media thing. Then he started to expand. As he got wealthier and wealthier and wealthier, he started hiring people to build bridges for him. I guarantee you, Gary did not build a single NFT that he has right now. He did not figure out how to do it. He didn’t go do the work. He doesn’t even know how they work probably, maybe he does.

Brandon Turner (32:15):
He has people around him that are building his bridges for him. And that’s what should be doing. That’s what a great entrepreneur does. They hire a bunch of people to do that. But in the beginning, that is not what he did. He focused head down, built his dad’s wine business in-house, and he has excelled from there, and that’s why he’s successful.

Robert Leonard (32:33):
That’s a really, really good point. I hadn’t given it that consideration. I just hear him speaking and explaining it the way he does today, and I didn’t consider what he did actually decades ago when he was building. When you were talking about the bridges, it’s something … When you’re building a bridge, you got to do it continuously. I’ve heard you talk about how continual improvement is the differentiator of the elite. What is continual improvement and how do elite performers use that, that everyday people don’t?

Brandon Turner (32:59):
Every episode of the podcast, every single one, I’ve done 500 episodes now at the BiggerPockets podcast, every single time we end, and the first thing we say is, okay, what can we do better? We don’t always use those words, but that’s what the conversation is. What can we do better? Every interaction, every book that I write, every time I publish anything, I’m always asking, how do I refine my systems? How do I make this better? How do I make this easier next time? How do I make this sell better? How do I make this real estate transaction go easier? How do I get a better employee? How do I do everything?

Brandon Turner (33:22):
It’s always just continually asking the question, I can do better how? But most of the world simply takes what they’re given and assumes that’s the way they’re always going to do whatever it is they’re doing. It’s like, well, yeah, that’s just what I always do. So, you work at a job, you’re a real estate agent. You haven’t made any changes in your real estate business life in the last 20 years. You’ve been the same agent for 20 years. Nothing’s changed. So, continual improvement is a thing that I see separates successful people from unsuccessful people in such a massive degree because there’s always trying to do better.

Brandon Turner (33:50):
I mean, this is like David Greenes of the world. David is one of the best real estate agents in the world. Why? Because he just continually asks himself, what did I do wrong? What’s my team screwing up on? How do I do better? It’s not in a negative light. We still celebrate our wins. High achievers still celebrate, maybe not as much as we should, but it’s just always refining the process so it gets better and better and better. Otherwise, you’re linear growing, not exponentially growing.

Robert Leonard (34:13):
Another strategy you’ve explained that really stuck with me is this idea of buying a newborn baby a rental property on a 15 or 18-year note, if you can get it, using that kind of as their college fund. Explain to us what the strategy is, how you came up with it, and how you’ve even used it.

Brandon Turner (34:30):
Yeah, I mean, it was kind of an accident in a way. We were having Rosie, our first kid. It’s fun to pretend this was like … I’m just some super genius and I figured this out a long time ago, but no. I was having Rosie. We were having my first kid. At the same time, we get this amazing fourplex under contract. As we’re about ready to close on this project, we actually closed on it the week she was born. We went and signed. It was Rosie’s very first outing into the world as we went to the title company and we signed papers for this fourplex, and then we fixed it up. As we were doing that, and somewhere in that process, I think it was actually before I closed that, and I had the idea, I was like, well, what if I just paid this off over the next 20 years, or 18 years before she goes to college?

Brandon Turner (35:05):
I’m like, well, it’s worth a couple hundred thousand dollars today, It’ll probably be worth at least 300,000, 20 years from now. I mean, so, if we bought a property and then just paid it off over the next 18 years, then that’s a $300,000 profit we would have if we sold it or if we refinanced it that Rosie could use for college. That’s what started this idea. I was like, wow, real estate’s amazing for generating mass amounts of wealth over time. Fairly easily. Think about the value, how cool this is, is because we’re not even talking about the property going, like, up and value that much.

Brandon Turner (35:34):
That’s just a pretty like standard, like 3% per year, 2% per year growth. In reality, the funny thing is I’ve now owned this property for five years. Rosie’s five. It’s actually worth closer to $400,000 today. Five years in, not even 18 years down the road, we’re talking five years in. It’s already worth way more than I thought it was going to be worth down the road, but we’re not talking cash flow. Even though this property does cash flow about a thousand bucks a month, and I get to keep that money. It goes in my pocket to let me live a cool life in Hawaii, but that property cashflow, but forget the cashflow. That property also gives me some amazing tax benefits. Forget the tax benefits.

Brandon Turner (36:03):
All that really matters is I’m paying off the loan over 18 years. So, I literally just got a 30-year mortgage like everyone does. I went to Dave Ramsey’s website, and he has like, if you prepay your mortgage a little bit every month, how fast can you pay it off calculator? I don’t know what it’s called, but it’s called like the payer mortgage faster calculator. Anyway, and I just figured out, I just kind of put in some numbers and figured out, if I paid an extra $200 a month on my mortgage, it would take the mortgage from 30 years down to 18 years.

Brandon Turner (36:28):
I’m like, well, okay, well, $200 a month is not that much. So, I can shave off 12 years by doing that. But the real value in all of this, I mean, yes, I’m going to have a lot of equity. Yes, I get the cash flow. Yes, I get the tax benefits. Yeah, I get Rosie’s college paid for, but the real value is that Rosie gets to see, for the next 18 years, and now like 13 years from here, she gets to see the value of real estate. As soon as she’s old enough to do math, which she’s getting close. She’s in kindergarten now. As she starts doing math, guess what? Who’s going to be doing her profit loss statements every single month? Her and dad are going to be sitting down.

Brandon Turner (36:58):
When she’s old enough to be able to talk to the property manager on the phone, she’ll be talking to the property manager about the issues that come up. So, she’s going to learn the power of real estate and the power of buying assets and not liabilities, and the power of accounting and financial statements and all that. So, that’s the real value here, is a real-life example. Then, of course, I don’t get to burden her with student loan debt. She’s not going to be burdened with student loan debt. She can use that money for student loans or for college, or she can use it to go and start her own real estate journey or live off the cash flow and have her some money to get started with her career, whatever she ends up doing. So, it’s just a win, win, win, win, win across the board. I love that strategy.

Robert Leonard (37:32):
It’s like a 529 plan, except with a 529 plan, you have to use it for college. I mean, you could take it out and pay taxes and all this other stuff, but with this, I mean, it’s kind of like that. You still get tax benefits all along the way like you said, but you don’t have to use it for college.

Brandon Turner (37:46):
Yeah. I think the 529, it might be great, I’m not saying a person shouldn’t do it, but no kid, I feel like no kid is going to get a grasp, internalize this idea of my wealth is growing like you do when you own a piece of property. And every time we drive by that property, it’s like, Rosie, that’s your property. That’s what I’m excited about with that strategy.

Robert Leonard (38:07):
I want to dive into your newest two-part series of books. But before we do, I have one more question and it’s very, and I know that, but it’s a very common question that investors have, especially new investors, and it’s something that you’ve done a lot. What do you look for in real estate partners? What has made your partnership successful and then what has made them, the ones that haven’t been successful, what has made them unsuccessful?

Brandon Turner (38:31):
Yeah. That’s a great question. So, let’s talk about partnerships. Partnerships, I’m a huge fan of them. I love partnerships. I use them all the time, the right partner, of course. Now, I’ve had times where I’ve like, there have been people in my life where I’m like, hey, you’re a cool person. Let’s partner together. Those never work out. Those almost have never worked out,  just because they’re a cool person than…or just because they have a pulse doesn’t mean they’re going to be a good partner. The first thing is the thinking, like, what do you need in a partner? If you’re going to do a partner, what do you need? Do you need money?

Brandon Turner (38:57):
Well, good. You better hope that person has money. Do you need experience? They better have experience. So, make a list of all the things that you need that partner to do. For many people, especially those listening to the show, it’s probably you’ve got a lot of hustle. You’ve got a lot of knowledge and a lot of drive and motivation and excitement, but you don’t have the capital. Great. So, if you need a partner, maybe a partner who has some capital would be a really good idea. But now, just because they have money doesn’t mean they’re a good partner either.

Brandon Turner (39:18):
They have to be the right personality fit. Yeah, I still like … I like to like my partners, I don’t wanna have work with anybody that I couldn’t go grab a beer with after work. I want to be with people I like. But my thought with partnerships, it’s like, I’ll get biblical on you here, like Old Testament biblical. There’s this guy, David. David and Goliath. Everyone’s heard the story, David and Goliath. David goes in the story to the king of Israel and says, “Hey, I’m going to go fight that giant for you because all your people are too afraid to fight that giant.” And the king says, “Oh, that’s ridiculous. You can’t do it.”

Brandon Turner (39:46):
And he’s like, “No, seriously, I’m going to do it.” And then the king’s like, “Okay, go fight him.” Why would the king let this kid, who was like 12, go and fight a giant? It’s pretty ridiculous to let a kid go fight some big strong warrior, like on the enemy, especially when the stakes were, the loser loses the war. That was basically the gamble. It was like, whoever loses has to give up and they lose the war. Why would a king let a kid go and fight this giant? It’s because David wasn’t just a kid. He had actually said, I killed a bear recently and I killed a lion recently. In other words, he had proven himself to be a lion killer, and that’s what I call my team oftentimes, we only work with lion killers.

Brandon Turner (40:20):
People have proven themselves already to be able to take down lions of their own before we bring them in. So, how do we find those people? How do we know they’re a lion killer? Well, resumes are generally crap. People can write whatever they want. Like, oh I’m a high achiever. Oh, I’m super dedicated. Oh, I work too hard, whatever. Resumes, interviews are all crap. So, we run everyone through a gauntlet. In other words, we throw a bunch of lions at them and see how they do to fight them.

Brandon Turner (40:42):
If they come out the other side, they prove themselves worthy or capable, then we end up hiring them. A real-life example, how we do that is, now we do a lot of internships. So, we’ll bring people on for a short term, for example, my finance manager today, Micah, who’s awesome. He’s brilliant. He started by just doing the books on one of my flips. He was like, “Hey, how can I provide value to you?” I was like, “Well, you’re an accountant guy. Like you can do accounting, so you’re a financial analyst or whatever. Can you just do my books on this rental or on this one flip?” He did a great job. He killed that lion.

Brandon Turner (41:08):
So, we brought him in more heavily. Walker, my COO, he started out as an intern to help me find deals, and he ended up revamping our whole spreadsheet and ended up being really good at talking to brokers, and he ended up working that way. Mike, my investor relations guy, he ended up just being an … Basically killing a bunch of lions of his own, and proving that he was like the most likable guy on the planet earth. Everybody that comes into our system, every partner that I have, and every employee, has to prove themselves. My employees are generally all partners. We all give equity. We’re all proven lion killers.

Brandon Turner (41:38):
That’s the key with partners is not just to hire someone just because they’re there, but because they fit what you want, because they have a personality and a culture fit that you love, and they’ve proven themselves, not just in their past, but also working with you, they prove themselves to be a lion killer, and that’s when we’ll commit full time to bringing them on.

Robert Leonard (41:55):
To dive into one of the strategies in your newest book, The Multifamily Millionaire, you talk about The Stack and you explain how people can create a million-dollar net worth in just five years. I think when people hear things like, oh, you could have million-dollar net worth in just five years. It seems too good to be true, kind of like one of those internet foo-foo type things. I know it’s a strategy. I know it’s a real strategy. I know it works. I’ve read it. I understand it. I like it. I’m kind of working on it myself. Walk us through the strategy and explain to us how it all works.

Brandon Turner (42:25):
Sure. It relates back to what I said a little earlier, and I will repeat a little bit of it because it’s so important, but it’s this idea of like, if you grow exponentially versus linearly, so trying to build a million-dollar net worth in five years, that’s pretty tough, right? If you buy a house for a hundred grand and then next year you buy another house for a hundred grand, especially going to take you a long time if you’re saving up a hundred thousand dollars to go buy a hundred thousand dollars house, that’s going to take a long time, to take you five years just to save up for the first property.

Brandon Turner (42:49):
The idea of growing fast is A, you have to use a leverage, which means you’re going to use a bank loan. You may even use no money down strategies. There’s a lot of creative strategies with no and low money down like raising money and partnerships where the partner brings in money and blah, blah, blah. There’s a lot of strategies. People listening to this going well, I can’t do that. I don’t have enough money with what I’m about to say, just understand that there are dozens of strategies out there for investing with no and low money down.

Brandon Turner (43:14):
I even wrote a whole book called The Book on Investing In Real Estate with No (and Low) Money Down, so it’s doable. So, I just want to say that so you don’t shut your brain off, everyone listening, going well, I can’t do that. The idea of The Stack is you start with, let’s say a duplex, like two units, and then later, maybe a year later, let’s just say for easy math, you buy fourplex, and then a year later you buy an eight-unit, and then a year later you buy a 16 unit, and then a year later you buy a 32 unit. At that point, you’ve got 32 plus 16 is what? 48 plus eight is 56, is 60. So, you got 62 units in five years.

Brandon Turner (43:45):
Now, each of those properties, you really only bought one deal per year for five years. That’s all you bought, one deal per year for five years. That’s not a lot of work. I mean, and again, people are saying, what about the money? Again, there are ways to overcome that. But if every one of those units, first of all, is giving you, let’s say $200 in cash flow if every unit was netting, you profit of $200 a month, you’re now making over 12, what is that? 62 times … I mean a hundred would be 6,200, so over two, 12,000. What is that? $12,400 a month. You’re making 150 grand a year in cash flow, in passive income by owning this portfolio, and each one of these has equity, which means it’s worth way more than what you paid for it.

Brandon Turner (44:25):
At the end of five years, not only are you making six figures in passive income, you’ve also got potentially a million-dollar net worth that you’ve built by doing this, and it’s totally doable. In fact, true story. So, I bought a property two years ago. Two years ago, it was a mobile home park, and I had run my number so that in 10 years, it was going to be worth…, we bought it, it was a set of mobile home parks, we bought it for roughly $6 million. I said that within 10 years from now, it should be worth $10 million. Here we are two years later and it’s worth 13, maybe 14.

Brandon Turner (44:56):
We built massive amounts of equity. In fact, I’m selling that property right now, and I should personally clear, personally by myself, not even my team, my take-home is going to be over a million dollars on one deal. Now, can you do that your first deal? No, you’re not going to do that with your first deal. That’s why you start with the duplex and then move up. But this was one of the first mobile home parks that I bought, and I used other people’s money to buy it. And I’m still going to walk with a million dollars. That’s how it’s doable, is by getting outside your comfort zone, investing exponentially, and getting into those multi-family deals with which is where you can really scale up quickly.

Robert Leonard (45:29):
When people think about multifamily properties, specifically small multifamily real estate, they typically probably think of duplexes, triplexes, things like that. But in your book, you explain that there are seven different types of small multifamily real estate. Break down or explain to us what the seven are, and then which ones make for the best rental properties.

Brandon Turner (45:46):
Ooh, all right. Let’s see if I can get them all. And there probably actually are more than this. This was just, as I was writing the book, I’m like, what are the types that I see over and over and over. So, let me see if I can get them all. First of all, there’s a side by side. I love side by side, like duplexes, fourplex. It basically means like they’re right next to each other, but they’re not stacked on top. That’s the next one, which is like the top-bottom or the up-down, or they have different names for that one. Then there like the, let me see, we’ve got one, we’ve got the up-down, we’ve got the garden-style apartment.

Brandon Turner (46:11):
I’m skipping ahead a little bit. We have the garden-style apartment, which are typically like kind of the suburban-style apartment buildings, those things. There are high rises. There are mid-rises. There’s something I call, originally I’d call it the boarding house, then I kind of change it to like the starter apartment. It’s usually like a 6, 7, 8 unit property, usually like a big long hallway down the middle, usually built in the early 1900s. There’s a lot of those in cities. We have like, yeah, anywhere between two and 10 units crammed into like one building.

Brandon Turner (46:37):
We have the…what’s called the monster house. The monster house is a freak of nature. It’s a house that has been turned into a multifamily through a bunch of additions and remodeling, and sometimes it’s not done very well, and it’s usually pretty ugly, but they can make a lot of money. Just something to be aware of. Are they legal or are they not legal? That’s a big thing I talk about in the book, but monster houses can be effective. So, there’s a side by side, the up and down, the monster house. I know I’m missing some in there, the starter apartment, the garden apartment, the mid-rise, the high rise.

Brandon Turner (47:06):
Yeah. There’s a bunch of them, but just knowing what you’re getting into. This is why it’s important. People might be saying, well, why is that important? Let me explain. So, knowing like, oh, this is a monster house, there are things you’re gonna wanna be aware of, like the legality. Can you even operate this? Are they going to force you to turn it back? I bought a monster house a couple of years ago here in Maui, about a year and a half ago. And the city found out it was a monster house. They found out it wasn’t zoned for three-units, and they’re forcing me to turn it back into a single-family house right now.

Brandon Turner (47:29):
It sucks. I did this big, huge rehab, and now I got to go rehab it again to turn it back into a single-family house. Now, there are ways like I’m going to survive it. For example, I’m going to basically rent by the bedroom. Just turn it into a rent by the bedroom, kind of a situation. So, I’ll get about the same amount of rent maybe, but that’s something to know going into it is, is this going to be a legal property or not? Or let’s say you have an up and down unit, the up and down stuff, they’re fine. They can make a lot of money if you have like … These are really popular, especially on the east coast, but you have like three floors and each floor is a separate unit.

Brandon Turner (47:55):
Just know that you’re going to get people who are like walking down the floor and the person below gets really irritated. Just know that. Check out the sound quality, how thin are floors? Or what does the water line do? If it’s an up-down, top-bottom, like where there’s stacked on top of each other, those can be difficult to separate the water meters, which means you as a landlord are likely going to have to pay the full water bill. The electricity might even be combined on a monster house or on an up-down.

Brandon Turner (48:19):
Those are just things to be aware of versus a side by side, which you can usually separate the water meters because there’s nobody on top of each other. So, you’re not mixing water lines quite as much. Just knowing what you’re getting into can be a big help when you’re looking into the multifamily space because it gets overwhelming. So, you can just say, oh, I’m only gonna look for a side by side right now. Let’s go look for a side-by-side, duplex, triplex or fourplex. Nice and easy gives me a lot of opportunities, and people like to live in those things.

Robert Leonard (48:42):
Yeah, that was exactly what I did. I’m on my third house hack and this one, I knew I wanted to buy a two to four-unit, but I did not want to live up-down for all of the reasons you mentioned. I only wanted side by side. So, I offered, first property, I offered on was a triplex, but it was three units side by side. Unfortunately, didn’t get that one. Now what I live in today is a duplex, but it’s side by side. We’re not up-down.

Brandon Turner (49:04):
Yeah. I love that idea because they just … People tend to like those better, less problem with tenants. Sometimes if you get the right one, I love the duplexes where there are garages that join in the middle. So, it’s like unit, garage, garage, unit. So, you’re separated by two garages in the middle, which means you don’t even hear the neighbor ever, and they typically have their own yard, front and back, their own driveway, which means you, as a landlord, don’t have to do the landscaping because they each have their own garage. They can put their own lawnmower in it, their own snowblower if you’re in a cold area.

Brandon Turner (49:32):
So, you can take care of like … The tenant pays their own expenses for that stuff. And if you can shift the water and electricity bill onto the tenant, your expenses just dropped almost nothing. So, that’s why I love those properties.

Robert Leonard (49:42):
There are a bunch more strategies in the book, and if anybody wants to cover all of the strategies, go check out the book. But one more I want to talk about here today is, how that we can quickly and accurately analyze a multi-family investment property, and you say it’s regardless if it’s two units or 20. So, how do we do that quickly and accurately?

Brandon Turner (50:04):
Yeah. Good question. I like to rely on something called the four square method. Now, this works really well until you get into the 20, 30 unit range. Once you start syndicating and you’re raising money from people, you’re going to want to get a little bit fancier on your paperwork here, but for most people, smaller to midsize multifamily, I call it the four square method. It’s very simple. Just take out a piece of paper, make a big box, and then put a cross in the middle. So, you basically have four little squares, four boxes.

Brandon Turner (50:27):
Now, in the upper left-hand box, right at the top right income, on the bottom left-hand box, at the top of the little, the bottom left-hand square expenses on the top, right-hand corner, you’re going to want to write cashflow, and on the bottom right-hand side, you’re going to write, let’s see, income expenses, cash flow, and I’m going to write … Yeah, you know what? I think we’re going to change this. Hold on. I’m going to put cash flow, I think on the bottom. I think that’s what I have in the book. I’ve altered this slowly over the years.

Brandon Turner (50:53):
Go income expenses. No, that was right. Cashflow on upper top right. And we’re going to go ROI, that’s what I now have. ROI on the bottom right. That’s what I got. Okay. So, income expenses, cashflow top right, bottom right is going to write ROI or return on investment. Here’s how we’re going to do this. On the upper left-hand corner, in that box that’s labeled income, you’re going to write down, in a list, all of your sources of income. So, all your rents combined, stack them on top of each other, and write all your income sources, including things like laundry income.

Brandon Turner (51:19):
If you got storage there, you can add the storage income, whatever. Then the on the bottom left corner, you get expenses. You’re going to list all your expenses. This is the key. This is the thing people screw up on. This is where you win or lose is in this box of expenses. So, same thing, you’re going to list all of the expenses. Now, the key here is not just listing the taxes, the insurance, the mortgage payment, even though you should put all that there, the key here is knowing what expenses you need to account for over time.

Brandon Turner (51:46):
I’m going to explain what that means here. This is a super important concept. The phrase I like to say is Phantom cashflow, and then there is pure cashflow. Now, there is like, or fools cash flow, I might even call it, because there’s fools cash flow like there’s fools gold, and then there’s real gold or pure gold. Pure gold, gold that’s been purified has been put through the fire. It’s been purified through fire or through like acid or whatever they purify gold with nowadays, but it’s gone through some hell to get there.

Brandon Turner (52:10):
That’s what we wanna do with expenses. We want to write down all the expenses that could happen on average per month. Specifically, there are four things we want to include in this, repairs and maintenance. That’s one thing, repairs. There’s something called capital expenditures, which is like saving up money to replace your fridge, replace your water heater, replace your carpet. It’s like a replacement. So, you’re saving up money for that. So you have repairs, CapEx, property management that costs you every month if you’re gonna hire a property manager, and then you’re gonna have a vacancy, which means your property sits empty once in a while.

Brandon Turner (52:40):
Now, add on to those four all the other things, taxes, insurance, do you have an HOA payment every month? You can work with an agent to really nail down these expenses. So, add up all your expenses. Let’s just say your income came to $10,000 every single month. Now, you’re on the expenses box and you add it all up and your expenses come to $7,000 every single month. Well, now, on the third box, the upper right corner, all we’re going to do is take income minus expenses, 10,000 minus a 7,000. Remember, that 7,000 number, that expense number is the pure cashflow after, we’re including taking out money for repairs and maintenance, and vacancy, and CapEx, and all that.

Brandon Turner (53:15):
So, we’re left with, call it $3,000 in pure cash flow. Now the question is, is that a good deal or not? Well, that’s what the final box is. ROI is your cash on cash return on investment. Take that total number, so 3000 a month, in this case, make it an annual number. So, multiply by 12, we have 36,000, and then divide that by how much money you invested in the deal. In that case, let’s say we’ve made $36,000 a year in cash flow, and we spent $200,000 in our own cash. That’s money out of our pocket for the down payment, for repairs, for whatever we spent.

Brandon Turner (53:48):
The total amount of money we spent was $200,000. Well, what’s 36,000 divide by 200,000, 18%. That would be an 18% return on investment. Now, that 18 is really good. I mean, I think anything over 10 is usually pretty darn good. If you can get over 10, if you can get 12, 15, that’s phenomenal. 18 would be a home run.

Robert Leonard (54:06):
Where do people really … Is it Phantom cost, is that where people really miss it?

Brandon Turner (54:10):
Yeah, I think it’s in the Phantom cost. I think it’s in those, the repairs, maintenance, vacancy. I think they forget to account for those, especially CapEx and repairs. For example, CapEx, like it only happens … A refrigerator only needs to be replaced once every five or 10 years, but it’s still … Okay. Think of it this way. A refrigerator costs $1,000 to replace. If you were to replace one every 10 years, that means you should be setting aside $100 every single year for that refrigerator. That means you should be setting aside about $8 every month for that fridge, and the same thing is true for the water heater and the roof has to be replaced every 20 years.

Brandon Turner (54:42):
That’s what kills most people’s cash flow is the capital expenditures, the repairs, and the vacancy. People forget to account for that. So, if you account for it and the numbers look good, then fine. You’re fine. You’re going to do great.

Robert Leonard (54:54):
Before we wrap up the show and handoff to where people can find you, I like to turn the tables and let the guest ask me a question. So, Brandon, what question do you have for me?

Brandon Turner (55:05):
Here’s what I want to know. How did you get into real estate?

Robert Leonard (55:08):
I got into real estate by an accidental house hack. So, similar to you, my parents told me when I graduate college, I’m going to have to start paying him rent, my dad, said, “When you’re going to earn a decent salary, you’re going to have to start paying me rent.” I said, “Okay, that’s pretty fair, reasonable, but I just don’t want to do it.” I said, “By the time I graduate college, I’m going to buy my first house.” And everybody thought I was crazy. Nobody in my family ever invested. I was the first one in my family to go to college, all of that. I was purely buying it simply just so I didn’t have to pay him rent. I just didn’t want to do that.

Robert Leonard (55:35):
I figured I’ll just buy something. So, I did. Ultimately, it was a two-bedroom condo. I lived in it for a couple of months and I realized I didn’t even open the bedroom door for the second unit. I said I should probably do something with this. I hadn’t heard of BiggerPockets or real estate investing really at all. Ultimately ended up renting out that one bedroom for like $700 or $750, and it only cost me like a thousand or 1,100 all in with all expenses. So, I was like, wow, this is pretty cool. I realized I’m not that smart.

Robert Leonard (56:01):
So, somebody must have thought of this before me. Ended up searching it, of course, found you, BiggerPockets, house hacking, that broke every limiting belief I had about real estate, and the rest is history.

Brandon Turner (56:12):
I love it, man. Do you regret it?

Robert Leonard (56:14):
Not at all.

Brandon Turner (56:16):
Does anybody ever regret getting into real estate? It’s like workouts. Nobody regrets doing a workout.

Robert Leonard (56:21):
Yeah, it goes back to that same idea, right? You buy one and you never stop at one.

Brandon Turner (56:25):
Yep. That’s what it is, man.

Robert Leonard (56:27):
Awesome. Well, Brandon, I’ve really enjoyed the conversation. I know the audience is going to enjoy it as well. You’re all over the place, so I don’t think people will have a hard time finding you, but where is the best place to go find you?

Brandon Turner (56:38):
Yeah. Good question. I’m like a 13-year-old girl. It’s like, Instagram is my thing right now. I got to change that story though. It’s like 13-year-old girls are all on like TikTok now, but I’m also TikTok, but yeah, beardybrandon. Beard with a Y, beard with a Y everywhere.

Robert Leonard (56:50):
I’ll be sure to put a link to Brandon’s Instagram below, and you can also check through my followers and you’ll see I’m following Brandon there. Brandon, thanks so much for joining me.

Brandon Turner (56:59):
Thank you for having me. It’s been fun.

Robert Leonard (57:01):
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 (57:07):
Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be before syndication or rebroadcasting.