Speaker 1: Welcome to How to Money. I'm Joel and I am Matt,
Speaker 1: and today we're talking real estate fire with Alan Corey.
Speaker 2: That's right. Yeah, So any longtime listener of the podcast
Speaker 2: knows that we're fans of investing in real estate. We
Speaker 2: both have a handful of rentals and a decent bit
Speaker 2: of our financial success is because of those properties, because
Speaker 2: of those houses. But we also approach the conversation with
Speaker 2: a degree of reservation because we don't think it's for everyone,
Speaker 2: first of all, but also we got into the market
Speaker 2: at a historically great period of time, and so we're
Speaker 2: nuanced when we.
Speaker 1: Talk about real estate.
Speaker 2: But our guest today is not so here to preach
Speaker 2: the real estate go is Alan Corey, who is all in.
Speaker 2: He's a realtor, he's author of House Fire, which we'll
Speaker 2: be discussing today, and of course he is an investor himself.
Speaker 2: Alan is a self proclaimed real estate maximalist here in
Speaker 2: our wonderful city of Atlanta, and we're going to talk
Speaker 2: about all things real estate. I also heard that he
Speaker 2: wanted to be a stand up comedian in a previous
Speaker 2: slave show, so maybe we'll talk about that a little bit.
Speaker 1: But Ali, we.
Speaker 2: Really appreciate you joining us on the podcast today.
Speaker 3: Glad to be here. You're right, real estate is not
Speaker 3: for everyone. It's only for people who want to make
Speaker 3: a lot of money.
Speaker 1: There's the first is the stand up comedian. I can
Speaker 1: tell Alan the first question we ask everyone who comes
Speaker 1: on the show. Matt and I. We splurge a lot
Speaker 1: on craft beer. Even while we're being intentional, we're saving
Speaker 1: and investing for our futures. What's that for you? What
Speaker 1: do you like to suplore? John?
Speaker 4: You speak craft beer?
Speaker 3: And then I turned forty, and then my gut was
Speaker 3: telling me that I can't have I pas anymore.
Speaker 4: And that time I got.
Speaker 3: Really into flat caps, which are basically the hats that
Speaker 3: Sherlock Holmes wears, and the only reason I've it. I'm
Speaker 3: fighting every urge. But when you hit about forty five,
Speaker 3: which is my age, now you start turning into your father.
Speaker 4: And it's just.
Speaker 3: Genetically predisposed that I'm going to wear these hats that
Speaker 3: he wears. What my grandfather where and my great grandfather.
Speaker 3: I don't know what it is. I just can't stop
Speaker 3: buying them, and my wife is going crazy that our
Speaker 3: closets getting filled with these caps.
Speaker 4: I end up buying one a month.
Speaker 1: For tweet and stuff. For that, I'm guessing.
Speaker 3: You get the plaid, you get the tartan, you get
Speaker 3: the tweed, you get the Saint Patrick's themed one, you
Speaker 3: get the you know, there's a new holiday.
Speaker 4: I need a new cap.
Speaker 3: And you know, my wife's like, you look forty years
Speaker 3: older when you wear that, and I know I do.
Speaker 3: It's just I cannot stop myself. I don't know what's
Speaker 3: going on.
Speaker 2: So it's not like I thought the direction you're going
Speaker 2: with it. I thought you were gonna start talking, You're
Speaker 2: gonna mention hair loss or something.
Speaker 1: Yeah, yeah, yeah, but.
Speaker 2: You're saying that just truly it's in your DNA, not
Speaker 2: that you're going to lose your hair, but that you
Speaker 2: are turning into your father and your grandfather.
Speaker 4: Yeah.
Speaker 3: And my dad's really into you know, the ancestry and genealogy.
Speaker 3: And we're from Ireland and Scotland and England, uh, you know,
Speaker 3: but we've been in America as far as we can
Speaker 3: trace it back for over two hundred years. I just
Speaker 3: can't shake this this flat cap thing. And it's all
Speaker 3: my ads.
Speaker 4: On every social media.
Speaker 3: They know that this is my weakness and that all
Speaker 3: the ad I get, and I just keep buying them.
Speaker 1: So I just hope you're sitting on the front porch
Speaker 1: smoking a pipe on a rocking chair, also telling the
Speaker 1: kids to get off your lone while you're wearing it.
Speaker 3: Yes, then then I've I've metaphorphed into my dad and
Speaker 3: cycle continues to my son.
Speaker 2: I do feel like there's a way you could. You
Speaker 2: could kind of change the script and what people expect.
Speaker 2: Alan as long as you're not walking like clasping your
Speaker 2: hands behind your back while you shuffle down the sidewalk,
Speaker 2: because if you do that, I don't know, it reinforces
Speaker 2: the character I have.
Speaker 3: You know, perk. I have solved three crimes since this,
Speaker 3: so you know it comes with some perks.
Speaker 1: Matt would be happy to be your doctor, Watson, I'm
Speaker 1: not gonna handle that.
Speaker 2: So even though you're here in the city, we've ever
Speaker 2: we've never actually met, we've never hung out. This is
Speaker 2: truly the first time we've ever talked, and so we
Speaker 2: would love for you to share a bit about your history,
Speaker 2: like tell us about how you became a super saver,
Speaker 2: like when you're first starting out, because if I understand
Speaker 2: you were making something like forty K. You're living in
Speaker 2: New York, but you were investing a massive chunk of that.
Speaker 2: I'm assuming you weren't living large. So I want to
Speaker 2: kind of hear the I guess the Alan Corey origin
Speaker 2: story here.
Speaker 4: Yeah. Sure.
Speaker 3: So I moved to New York with dreams to be
Speaker 3: a comedy writer. And so to be a comedy writer
Speaker 3: you basically have to be a stand up comedian and
Speaker 3: then hopefully you're funny enough that people hire you to
Speaker 3: write some jokes for them.
Speaker 2: So the next Liz Lemon, Yes.
Speaker 4: Yes, exactly. And so because in my head, I was like.
Speaker 3: Entertainers are rich, and I had no entertaining skills. I'm
Speaker 3: not an actor or singer or dancer or anything like that.
Speaker 3: But I was like, well, I was class clown in
Speaker 3: high school. Maybe I can turn this into a lucrative
Speaker 3: side gig or a full time gig. And so I
Speaker 3: moved to New York City. I found a tech support job.
Speaker 3: And this was the year two thousand. It was the
Speaker 3: dot com boom and everything right right after that actually,
Speaker 3: and and I was like, let's live the fire life,
Speaker 3: the lean fire. This was before all that existed. But
Speaker 3: the cheapest place I could find was an illegal sublet
Speaker 3: in the Spanish Harlem project. So you know, I had
Speaker 3: a roommate who lived in the projects and he gave
Speaker 3: me his room for four hundred bucks a month, which
Speaker 3: was great. And then I just started reducing my expenses everywhere.
Speaker 3: I'd save on food by going to the bodega in
Speaker 3: Spanish Harlem and buying ram noodles for thirteen cents each
Speaker 3: if I bottom in bulk.
Speaker 1: That's what I'm talking about.
Speaker 4: Yeah, yeah, And.
Speaker 3: Then I'd go to the bakery as they were closing
Speaker 3: and about to throw off away all their fresh break
Speaker 3: baked stuff for the day and get them at fifty
Speaker 3: percent off or sometimes free. And I would just try
Speaker 3: to cut all my expenses. And I even went to
Speaker 3: my HR person and said, listen, I want you to
Speaker 3: put fifty percent of my income or whatever my take
Speaker 3: home pay into this bank account that I use every
Speaker 3: single day, and the other fifty percent in this one
Speaker 3: way across town that is really difficult for me to
Speaker 3: get to. And this was pre online banking and all
Speaker 3: that as well. I mean, I'm not that ancient, I'm
Speaker 3: forty five, but you know, twenty years ago this was.
Speaker 1: This was what were the horse and carriages like in
Speaker 1: New York, exactly, exactly, Well, I pass.
Speaker 2: Changed a lot in the past twenty twenty five years,
Speaker 2: but no, I honestly, just to interrupt those for a second,
Speaker 2: I love that you set that barrier between you and
Speaker 2: your money to make it more difficult, because I assume
Speaker 2: you're socking that money away and hopefully you were planning
Speaker 2: to do something with it.
Speaker 4: Right.
Speaker 3: Yeah, Well, so everyone I felt like everyone in New
Speaker 3: York was wealthy. Like you see the nice restaurants, you'd
Speaker 3: occasionally see a celebrity, and you see people driving and
Speaker 3: even taking cabs. I'm like, look at that rich person
Speaker 3: who can take a cab? And so I was like,
Speaker 3: how do they do it? And so I went to
Speaker 3: the library because pre podcast, pre social media, pre YouTube,
Speaker 3: all that stuff, and I just bought every book I
Speaker 3: could on wealth building and stocks and everything. And what
Speaker 3: I realized is with stocks, like I felt like I
Speaker 3: was gambling it was like a thirty year horse race.
Speaker 3: But real estate, I felt like I could control it
Speaker 3: and that I could, you know, determine what I was
Speaker 3: going to buy, how much I was going to buy
Speaker 3: it for, how much was going to put to renovate it,
Speaker 3: how much I could rent it for what my financing
Speaker 3: terms are. I felt like I had a little bit
Speaker 3: more control, a lot more control, actually, and so I
Speaker 3: sort of reverse engineered that. You know, I was burning
Speaker 3: the midnight oil going working my nine to five and
Speaker 3: then I would go to the comedy club still three
Speaker 3: o'clock in the morning. And it wasn't sustainable. It was
Speaker 3: terrible at both my day job and at comedy. But
Speaker 3: I was like, man, if I could just buy one
Speaker 3: piece of property a year for five years, then I
Speaker 3: could probably replace my day job income. And so that's
Speaker 3: where I went to that bank account that was collecting
Speaker 3: fifty percent of my take home bay every single year,
Speaker 3: and I would just say, whatever's in that, that would
Speaker 3: be my down payment.
Speaker 4: For a property.
Speaker 3: And every year I would say fifty percent and whatever's
Speaker 3: in that, you know, let's apply it to That was
Speaker 3: my get out of like corporate plan in five years.
Speaker 3: So that first year I had ten thousand dollars saved up.
Speaker 3: It was right after nine to eleven. Everyone's trying to
Speaker 3: leave New York. You know, Alan, you're an idiot, You're
Speaker 3: trying to buy a real estate. You know, everyone's so
Speaker 3: fearful it's the worst time ever to ever buy a
Speaker 3: real estate. You know, you don't know what you're doing.
Speaker 3: And I found one property that I was one hundred
Speaker 3: thousand dollars in Brooklyn. I had never been to Brooklyn before,
Speaker 3: and I went to Brooklyn and homeless people were right
Speaker 3: outside all this stuff that.
Speaker 4: You see in movies.
Speaker 3: And I was a naive kid from Georgia. But I
Speaker 3: was like, I got to buy it. This is the
Speaker 3: only property I can buy. It's a one bedroom apartment.
Speaker 3: And you know, if things go bad bad into the projects,
Speaker 3: like I'm already in the projects, like it can't get
Speaker 3: any worse. I'm buying living in the projects whatever, right,
Speaker 3: or I have tremendous upside if I can, if I
Speaker 3: can make this work, like I thought it was going
Speaker 3: to work. And what I did is I bought it
Speaker 3: and it was a big living room and I was like,
Speaker 3: I'm not going to have any people over. I don't
Speaker 3: have any friends, so I.
Speaker 4: Uh, I'm working big heavy. Yeah, exactly.
Speaker 3: In New York, no one ever goes to your apartment.
Speaker 3: You meet in a bar or a restaurant or everything.
Speaker 4: Like you have no idea what.
Speaker 3: People's lifestyle is because they all live in Jersey and
Speaker 3: Brooklyn and Bronx or whatever. But I just took a big,
Speaker 3: heavy curtain and sectioned off the living room and I
Speaker 3: rented that out to a friend of mine, another comedian,
Speaker 3: And that was like house hacking before else I existed.
Speaker 3: And that would pay off my mortgage. Right, So I
Speaker 3: went from paying four hundred bucks in the projects to
Speaker 3: paying nothing and I own it, yes, And I was like, Okay,
Speaker 3: there's something to this, right, And then the next year
Speaker 3: I was able to save up fifteen thousand dollars on
Speaker 3: January first, and so then I bought a duplex and
Speaker 3: then I just you know, saved up some more money.
Speaker 3: And my third property, I did a flip, and I
Speaker 3: didn't have enough money, but I found the deal and
Speaker 3: I found my next door neighbor was a contractor and
Speaker 3: he would work for free for equity. And then the
Speaker 3: only person that I thought was rich or knew was
Speaker 3: I was dating a girl at her time at the time,
Speaker 3: and her dad was a lawyer, and I was like, well, he.
Speaker 4: Must be rich. He has a job in New York City.
Speaker 3: He's a lawyer in New York, so he must be rich,
Speaker 3: you know, I asked him if he would pay for
Speaker 3: the down payment and you know, twenty percent down on
Speaker 3: the renovations here on this deal that I found.
Speaker 4: He said sure, and.
Speaker 3: We bought this property in Red Hook, Brooklyn, which at
Speaker 3: the time no one knew anything about, for four hundred
Speaker 3: thousand dollars. We put two hundred thousand dollars into it,
Speaker 3: and we sold it for one point one million dollars
Speaker 3: a year later. I was twenty five years old at
Speaker 3: that time, and the buyer was Barbara Corcoran from Shark
Speaker 3: Took and that gave me the boost of confidence, like, wow, okay,
Speaker 3: I found a deal, I renovated it, and Queen of
Speaker 3: New York City Real Estate bought it for your own
Speaker 3: personal investment. I'm doing things right. And I was like,
Speaker 3: all right, I don't need to do comedymore. Let me
Speaker 3: let me lean and do real estate there.
Speaker 1: That's cool. Well, yeah, I love that combo of like
Speaker 1: early sacrifices. There's I think there's a lot of stuff
Speaker 1: that we can glean from that. The fact that you're
Speaker 1: kind of divorcing yourself from that money until you're ready
Speaker 1: to invest it. I love that. Yeah, siphoning it off
Speaker 1: elsewhere so it's not a temptation for you, and I
Speaker 1: want to talk a lot more about We want to
Speaker 1: talk a lot more about investing on this episode. But
Speaker 1: you're you're not just an investor, you're also an agent,
Speaker 1: and so in spring is just the hottest time for
Speaker 1: the housing market. What are you seeing right now? I'm
Speaker 1: curious because there's a lot of a lot of our
Speaker 1: listeners are interested in buying a house. Maybe they've put
Speaker 1: it off because what's happened over the past couple of
Speaker 1: years with rates and prices. Do you are you starting
Speaker 1: to see things moderate, things chill out a little bit
Speaker 1: in the housing market or yeah, I'm curious to hear
Speaker 1: your perspective.
Speaker 3: Yeah, so you're not going to like this or your
Speaker 3: listeners are not going to like this, but it it's
Speaker 3: hot and everything's a bidding more.
Speaker 4: If you have a property that doesn't.
Speaker 3: Need any work, it's going to go under contract with
Speaker 3: multiple offers and there's not going to be comps that
Speaker 3: support it. That the data just doesn't make sense. But
Speaker 3: that's what's happening. Why is that happening? We have a
Speaker 3: housing shortage. Has the housing shortage improved since last year? No,
Speaker 3: the year before that, No, the year before that. No,
Speaker 3: we are twenty years behind on building to match the
Speaker 3: demand that makes prices go up regardless of the interest rates.
Speaker 3: People want to wait, and they're going to wait. Oh,
Speaker 3: let me save up twenty thousand dollars. You know, I
Speaker 3: don't like the homes that I see right now. If
Speaker 3: I save another twenty thousand dollars, I can go up
Speaker 3: a price point. I can move my budget from five
Speaker 3: hundred thousand to five hundred and fifty thousand dollars. It
Speaker 3: doesn't work that way with inflation and the housing demand.
Speaker 3: When you save up twenty thousand dollars, that house you
Speaker 3: looked at five hundred thousand dollars is now five to fifty.
Speaker 3: You're just buying the exact same house a year later
Speaker 3: for more expensive price, And so you can't outsave inflation.
Speaker 3: And you know, so you have money in your bank,
Speaker 3: but inflation is eating away at that and you're trying
Speaker 3: to outsave it. You're trying to outsave the rising housing market.
Speaker 3: It's one of those things where it's never a good
Speaker 3: time to buy real estate in that if you're waiting
Speaker 3: for the perfect scenario of interest rates and price point
Speaker 3: and what you get combined with it's always a good
Speaker 3: time to buy real estate because tomorrow is always going
Speaker 3: to be worse than it is today. You know, every
Speaker 3: real estate investor, everyone who's ever bought a house, they're
Speaker 3: always like, Wow, I'm glad I bought two years ago.
Speaker 3: You know, ask them. You know, I've in real estate,
Speaker 3: in real estate for twenty five years. Every single person's like, man,
Speaker 3: I should have bought two year ago. I should have
Speaker 3: bought two years ago. There's just not enough homes to buy,
Speaker 3: and so it's it's tough, and so there's two ways
Speaker 3: to look at real estate. Is whether you're looking as
Speaker 3: an investment or a primary residence. But a primary it's
Speaker 3: an emotional decision. Sometimes many times the numbers don't make
Speaker 3: sense in terms of an investment, but you're buying for
Speaker 3: life lifestyle. You want to be close to your work
Speaker 3: or school district, or you just like the walkability or
Speaker 3: close to the interstate, whatever it is.
Speaker 4: That's fine.
Speaker 3: You can pay extra and pay a premium for those
Speaker 3: things because that's for your lifestyle and that brings you happiness.
Speaker 3: But you can't always look at your primary resident is
Speaker 3: going to be the best investment for you, and real
Speaker 3: estate investors look at property differently. They look at it
Speaker 3: as a spreadsheet decision, not an investment decision, and so
Speaker 3: they might like the uglier house or the one that's
Speaker 3: in the floodplain. And I always like to say, you
Speaker 3: want to buy the you want your house to be
Speaker 3: ugly in the street and sexy in the spreadsheets, and
Speaker 3: so that's what makes a good investment. And typically the
Speaker 3: opposite is true for primary where it's sexy in the
Speaker 3: street but ugly in the spreadsheet.
Speaker 2: Yeah, you wanted to have that curb appeal something that, Yeah,
Speaker 2: your family is excited to come home too. But I mean,
Speaker 2: I totally agree with what you're saying as far as
Speaker 2: the overall trend of real estate. I mean, it's one
Speaker 2: of those things that continues. It's almost like the stock
Speaker 2: market in that way, like, yes, there are little fluctuations
Speaker 2: here and there, but generally speaking it's up into the right.
Speaker 2: But mortgage rates are crazy high compared to where they
Speaker 2: were years ago, and they have a massive impact on
Speaker 2: your monthly payment. It has a huge impact on individual's
Speaker 2: ability to afford a home or not. And so I'm curious, like,
Speaker 2: I know it depends on from market to market, but
Speaker 2: how have you seen folks cope with that. And I'll
Speaker 2: say where we are where we're not down in the
Speaker 2: city and the small neighborhoods around central Atlanta like you are,
Speaker 2: but we are seeing things slow down a good bit here.
Speaker 2: There is not as much mobility because it seems like
Speaker 2: a lot of folks are locked in. They've got folks
Speaker 2: are hanging on to the three percent mortgages because they're
Speaker 2: seeing what move into something at six and a half
Speaker 2: and seven percent, what that's going to do to their payment.
Speaker 3: Yeah, that's as adding to the housing shortage.
Speaker 4: Right.
Speaker 3: People don't want to sell because they have a three
Speaker 3: percent mortgage, or if they do need to move because
Speaker 3: of a birth in the family or a death, or
Speaker 3: a marriage or a job transfer, they'll keep that as
Speaker 3: a rent because the interest rates so low, and so
Speaker 3: that adds to the housing shortage. But if you have
Speaker 3: to move, right, you have to get into the school district,
Speaker 3: you do get a job transfer, you got married, or
Speaker 3: whatever it is you have to move, you have like
Speaker 3: ten choices to choose from within your buybox, whether that's
Speaker 3: your zip code and your price right, And so then
Speaker 3: that's where these bidding wars go nuts, because you have
Speaker 3: to move, you don't have a choice. A real estate
Speaker 3: investor doesn't think that way. A real estate investor will
Speaker 3: buy and get a thirty year fixed and hold it
Speaker 3: until it's the right time to sell. For instance, I
Speaker 3: invested all through the real estate the great financial crash,
Speaker 3: and my property value went down fifty percent, but I
Speaker 3: wasn't selling. And when people aren't buying homes, that actually
Speaker 3: increases the rental demand. There's actually more renters because they're
Speaker 3: not interested in buying homes because the lenders at the
Speaker 3: banks aren't giving money or the interest rates are so high,
Speaker 3: so there's actually more renters. And then even though my
Speaker 3: property value went down, I'm not selling. I'm just waiting
Speaker 3: and renting it out and collecting cash flow month to
Speaker 3: month until it is a good time to sell back
Speaker 3: when interest rates are low again or there's you know,
Speaker 3: high demand, and I can sell it there's been a
Speaker 3: lot of appreciation on my property, then I sell it.
Speaker 3: So that's what's great about real estate investing is you
Speaker 3: don't time the market. You just wait out the market
Speaker 3: until you want to sell. And but primary investing is
Speaker 3: you hear the horror stories and they make the headlines
Speaker 3: because they're they're just time, you know, independent.
Speaker 1: Yeah, yeah, that's a that's really important. Actually, I think
Speaker 1: your history owning rental real estate through the Great Recession,
Speaker 1: because yeah, you can write it out if if you
Speaker 1: have a long long enough time rise, and then if
Speaker 1: you have enough cash reserves. I want to know too, Like,
Speaker 1: let's let's pivot, let's specifically talk about real estate investing,
Speaker 1: Like what's your philosophy there? Do you you think of
Speaker 1: it more like buying a small business? Right? And then
Speaker 1: how do you how do you talk to people who
Speaker 1: are like I'm interested, I'm curious about real estate investing,
Speaker 1: but I'm just I'm not sure if it is for me.
Speaker 1: Maybe I'm not. I'm not quite as gung ho as
Speaker 1: you are. Alan, Maybe I should keep going with thein
Speaker 1: k in the roth I rate kind of like Matt
Speaker 1: and Joel talk about too. Why like what do you
Speaker 1: tell folks when they're when they're kind of debating the two?
Speaker 3: Yeah, So the number one way to get wealthy, like
Speaker 3: really really wealthy is through leverage. Leverage is borrowing money
Speaker 3: and making more money with that money. That's what a
Speaker 3: mortgage does. You can't buy stocks with mortgage. It's very safe.
Speaker 3: Every investment is a mix of you know, the risk
Speaker 3: heer it is, the more money you make. But what's
Speaker 3: great about real estate I think is actually safer than stocks,
Speaker 3: and you make five times as much money as stocks.
Speaker 4: So, for instance, let's say you.
Speaker 3: Have one hundred thousand dollars and you buy one hundred
Speaker 3: thousand dollars in stocks one company and it goes under,
Speaker 3: you lose one hundred thousand dollars. You can also buy
Speaker 3: one hundred thousand dollars of a house right by buy
Speaker 3: one house for one hundred thousand dollars. It can be
Speaker 3: out of state or whatnot. A property manager in a
Speaker 3: rural town where homes may be more affordable than where
Speaker 3: you live, and you're making one thousand dollars a month
Speaker 3: an income, and then let's say you take that one
Speaker 3: hundred thousand dollars, you rent it out for a thousand dollars,
Speaker 3: and you know, let's assume after all expenses, you're taking
Speaker 3: home one thousand dollars. Now, if that burns to the ground, okay,
Speaker 3: well I could still sell the land, right the lot's
Speaker 3: probably twenty thousand dollars. You can't do that with stocks.
Speaker 3: So in some ways, you're a little bit protected. But
Speaker 3: I like like to take a mutual fund approach to
Speaker 3: real state. Similar to stocks. You wouldn't put one hundred
Speaker 3: thousand dollars in stocks. You would probably spread it around
Speaker 3: in mutual fund, which buys hundreds and a bunch of
Speaker 3: different stocks. I do the same thing. Let me take
Speaker 3: that one hundred thousand dollars and let me put it
Speaker 3: is five different down payments on five different one hundred
Speaker 3: thousand dollar homes twenty thousand year, twenty thousand year, twenty
Speaker 3: twenty twenty. And now I have a mutual fund of houses.
Speaker 3: So what's great about that is if one burns down
Speaker 3: to the ground. You know, let's say after mortgage, I'm
Speaker 3: making two hundred bucks, tw hundreducks, two undreducks to undred,
Speaker 3: I'm still making a thousand bucks a month. One burns
Speaker 3: to the ground. Oh well, I'm making eight hundred bucks
Speaker 3: a month.
Speaker 1: Right in that scenario. Let's hope you have insurance.
Speaker 4: Yeah, yeah, yeah, you have insurance.
Speaker 3: Yeah. If you have a mortgage, you have to have sure.
Speaker 3: So let's maybe don't be so drastic. If I have
Speaker 3: one house, let's say I raise the rent fifty bucks. Great,
Speaker 3: I'm making a thousand and fifty bucks a month. But
Speaker 3: if I have five houses and they're all exactly the same,
Speaker 3: and I raise the rent fifty bucks over time because
Speaker 3: of inflation or whatever, well now I'm making two hundred
Speaker 3: and fifty bucks a month. I've scaled my wealth up right.
Speaker 3: If I do nothing and I never raise rent and
Speaker 3: just wait thirty years, if I have one house in
Speaker 3: thirty years, maybe that one hundred thousand dollars house is
Speaker 3: one hundred let's let's say one hundred and seventy five
Speaker 3: thousand dollars house. But if I have five, I have
Speaker 3: five houses that are paid off that are one hundred
Speaker 3: and seventy five thousand. So that five x my wealth.
Speaker 3: And if five x is my rental income, if I
Speaker 3: raise rent twenty five thousand, if one goes down, if
Speaker 3: one is vacant, maybe doesn't burn to the ground, I
Speaker 3: just can't rent it or whatnot, then the other four
Speaker 3: booie it like like a mutual fund. And then I say,
Speaker 3: every house comes with a lottery ticket, hidden lottery ticket.
Speaker 3: I was investing in Brooklyn and different neighbors in Brooklyn,
Speaker 3: and all of a sudden, Brooklyn blew up and became
Speaker 3: the next hot neighborhood, not because of anything I was doing,
Speaker 3: not because i'd need foresight or I was smarter trying
Speaker 3: to time the market. But if I had one property
Speaker 3: and I kept trying to pay off that mortgage and
Speaker 3: I wasn't trying to scale and leverage and buy more properties,
Speaker 3: I wouldn't have gotten quote unquote lucky.
Speaker 4: And so there's all these things that sort of happened.
Speaker 3: If you borrow money and you put it to go
Speaker 3: make more money, and the more properties you buy, the
Speaker 3: less risky it is, and the luckier get and the
Speaker 3: more money you're gonna make.
Speaker 1: Sure.
Speaker 2: So yeah, the mechanics behind it certainly makes sense. But
Speaker 2: do you think that this is something that everyone out
Speaker 2: there should consider, Like should everyone out their own rental
Speaker 2: real estate? Because it's when you are just looking at
Speaker 2: the numbers, you're like, oh, man, who wouldn't do that
Speaker 2: with say it was a spare twenty thousand dollars, which
Speaker 2: I'm not sure I everyone has to spare twenty thousand
Speaker 2: dollars sitting around, but even.
Speaker 1: And I'm not sure houses cost one hundred thousand dollars.
Speaker 2: But so I guess with all that in mind, like
Speaker 2: there's a an element of time that's required to manage
Speaker 2: these as well. It's got like a part time job
Speaker 2: element to it. It's not nearly as passive as a
Speaker 2: lot of real estate influencers want to make it sound.
Speaker 2: And whether it's managing renovations, showing the property, screening tenants.
Speaker 2: I guess what would you say to somebody who is
Speaker 2: assuming that it's going to be a set it and
Speaker 2: forget it kind of deal.
Speaker 3: It wasn't ever a setate forget it until you get
Speaker 3: to a certain scale.
Speaker 4: And when you have, you know, you can.
Speaker 3: Get property managers. You can find one hundred thousand dollar properties.
Speaker 3: I mean, as of four years ago, I was buying
Speaker 3: properties for thirty thousand dollars just an hour south of
Speaker 3: Atlanta in a town called Griffin, Georgia, and I recently
Speaker 3: sold them all for sixty thousand dollars each two years ago,
Speaker 3: and they're probably eighty one hundred thousand dollars now.
Speaker 4: So they exist.
Speaker 3: They just might exist in your hometown and you're not
Speaker 3: looking for them, so you don't really see them because
Speaker 3: they're not in your neighborhood. But what I would say is, yes,
Speaker 3: it's going to take a little bit of work. It's
Speaker 3: leveraged work. Going to have to leverage and build the connections,
Speaker 3: build a network. I always say, find a rock star
Speaker 3: in the town you want to invest in, whether that's
Speaker 3: a rockstar agent or rockstar property manager, a rockstar lender,
Speaker 3: because rock stars hang out with other rock stars, and
Speaker 3: you just leverage their network and say, hey, I want
Speaker 3: to invest in real estate in this town. You're a
Speaker 3: rockstar in this town, can you help connect me and
Speaker 3: to the other players, and you can just leverage their network.
Speaker 3: It's much easier to do it that way. But if
Speaker 3: you have twenty thousand dollars. This is my sort of
Speaker 3: approach to my book House Fire, where it's should you
Speaker 3: ask me and should everyone do this? And it's like, well,
Speaker 3: if you like math, you should do it. If you
Speaker 3: trust math, you should do it. Because I look at
Speaker 3: my internet bill and my internet phone bill combined is
Speaker 3: one hundred and fifty bucks a month. And if I
Speaker 3: follow typical fire movement, which is fire, you know, financial independence,
Speaker 3: retire early. I know you've talked about this plenty of
Speaker 3: times of your podcast. It says it takes twenty five
Speaker 3: times or your annual expenses of that bill and as
Speaker 3: long as you have that in stocks, and you withdraw
Speaker 3: four percent each year, then you've got that. And so
Speaker 3: that would be let's see, one hundred and fifty dollars
Speaker 3: bill would be eighteen hundred dollars a year, forty five
Speaker 3: thousand dollars in stocks. As long as I have forty
Speaker 3: five thousand dollars in stocks, I can pull out four
Speaker 3: percent of that, which is one hundred and fifty bucks
Speaker 3: a month, and that internet bill's paid for my life.
Speaker 3: That sounds crazy to me, Like, yeah, of course, if
Speaker 3: I do that for every bill in my life, I
Speaker 3: have to be a millionaire. And that just seems too ambitious.
Speaker 3: I will never get there, and that then I'm living
Speaker 3: on a constrained retirement. So instead, I was like, how
Speaker 3: can I apply this to real estate, this fire method,
Speaker 3: because I'm not doing that. I'm done living below my means.
Speaker 3: I did that in my early twenties. I'm not going
Speaker 3: to do that anymore. When what I just what I
Speaker 3: took was half of that, so forty four forty five
Speaker 3: thousand dollars, half of that's twenty two thousand, five hundred dollars.
Speaker 3: I went and bought these hundred thousand dollars properties fewer
Speaker 3: than one hundred thousand dollar pperties. I built up a
Speaker 3: portfolio of fifty single family homes, all under one hundred
Speaker 3: thousand dollars. And what I realized is if I put
Speaker 3: down twenty percent on one hundred thousand dollars property, and
Speaker 3: then there was two thousand, five hundred dollars of closing costs,
Speaker 3: that was my twenty two thousand, five hundred dollars. I
Speaker 3: could cash flow after expenses, property manager vacancies, capex repairs
Speaker 3: like a big roof, and things like that, I could
Speaker 3: cash flow one hundred and fifty bucks.
Speaker 4: So all of a sudden, I have right away.
Speaker 3: I don't have to wait until I save forty five
Speaker 3: thousand dollars and withdraw four percent. I took twenty two thousand,
Speaker 3: five hundred dollars, put it in the market, and it
Speaker 3: would kick off one hundred fifty dollars to pay my
Speaker 3: internet phone bill. And I was like, Aha, that's my
Speaker 3: AHA moment. And so then I went down to my
Speaker 3: next bill. Wow, if I collect all my utility bills,
Speaker 3: my gas and electric, you know, that's probably one hundred
Speaker 3: and fifty bucks there. Okay, I just need to save
Speaker 3: another twenty two thousand, five hundred dollars and then that's
Speaker 3: going to pay off my bill. And then I just
Speaker 3: started matching my houses for each bill, and then that's
Speaker 3: my house fire method, and I would just this house
Speaker 3: for that bill, that bill, that bill, and that is
Speaker 3: my retirement plan. And what was great now is that
Speaker 3: I live larger and larger each year in my retirement.
Speaker 3: Because rent goes up, you charge a little bit more
Speaker 3: in rent, my mortgage payments go down a little bit.
Speaker 3: I still get great tax breaks, and the properties are
Speaker 3: appreciating more and more. So I'm not pulling four percent
Speaker 3: from my stock, keeping that at a artificially low level,
Speaker 3: because as you withdraw money from your stocks, you can't
Speaker 3: appreciate as much. I'm not pulling any money for my
Speaker 3: real estate except for the cash flow. And so this
Speaker 3: is the retirement plan that took half the time, half
Speaker 3: the money, and I get to live larger and larger
Speaker 3: each time in retirement. It just makes sense to me.
Speaker 3: So yes, I think everyone should do it if you
Speaker 3: like math, if you're willing to put some upfront work.
Speaker 3: It really only takes five properties over five years, and
Speaker 3: that's better than working at your day job for another
Speaker 3: fifteen twenty years to retire.
Speaker 1: I love how well you said you have to like math.
Speaker 1: Then you really wait a second, No, no, you have to
Speaker 1: trust mathing because I don't really like math, but I
Speaker 1: trust math, and so there's a difference there for me,
Speaker 1: and I think maybe for a lot of people out
Speaker 1: there who are like, yeah, now, algebra wasn't really my thing,
Speaker 1: but I trust the math. I trust the way some
Speaker 1: of the basic numbers work, and so I too can
Speaker 1: get behind the idea of investing in real estate. But
Speaker 1: we've got more questions to get to you with you, Alan,
Speaker 1: specifically about your house fire method, how it works. There's
Speaker 1: a lot of details we want to unearth. We'll get
Speaker 1: to those questions right after this.
Speaker 2: All right, we are back from the break talking with
Speaker 2: Alan Corey about investing in real estate, specifically real estate fire,
Speaker 2: achieving a sense of financial independence via real estate. And
Speaker 2: now I'm having a hard time, I guess, getting past
Speaker 2: the just where mortgage interest rates are right now, and
Speaker 2: given the fact that they are higher and that most
Speaker 2: folks are likely looking to the banks in order to
Speaker 2: finance their properties, how are you approaching that, I guess,
Speaker 2: because obviously, when you're paying three and a half percent.
Speaker 2: Your numbers look one way, but better you're paying six
Speaker 2: and a half to seven and a half percent on
Speaker 2: an investment property, it's going to have an impact on
Speaker 2: the numbers. You know you're mentioning the math right before
Speaker 2: the break, talk to us about the math behind where
Speaker 2: rates are right now, and specifically from an investor's standpoint.
Speaker 3: So, as an investor, I completely don't care about interest rates.
Speaker 3: Let me explain that, because you're gonna be scratching your head.
Speaker 4: Here's what matter.
Speaker 3: I've found great real estate deals that would be great
Speaker 3: to even good with twenty percent interest rates. I found
Speaker 3: terrible real estate deals that would be terrible even with
Speaker 3: zero percent interest rates. It's just a variable. You plug
Speaker 3: it into a formula. It's a variable. It doesn't it doesn't.
Speaker 3: It's just like the purchase price. I look at it
Speaker 3: this way. If with today's rates, let's say it's a
Speaker 3: seven percent eight percent, or if I'm doing hard money,
Speaker 3: I got to do ten fifteen percent.
Speaker 4: Whatever it is.
Speaker 3: You put in your spreadsheet and you look at the numbers,
Speaker 3: and if it's cash flowing, this is I've got three
Speaker 3: things that are going to happen, Like I only get
Speaker 3: fixed debt. You won't get in trouble with fixed rate debt,
Speaker 3: meaning thirty years fixed. And every time there's a crash
Speaker 3: the commercial people right now offices, it's because they have
Speaker 3: adjustable rate mortgages back in the actually two thousand and
Speaker 3: eight is because of adjustable rate mortgages. If you have
Speaker 3: thirty year fixes, your golden and you you'll just get
Speaker 3: rich by longevity. And so the three things that are
Speaker 3: going to happen are this, I lock in a ten
Speaker 3: percent interest rate. In ten years, twenty years, thirty years,
Speaker 3: interest rates stay the same and it never moves off
Speaker 3: ten percent. That's fine. I'm still cash flowing. I'm making
Speaker 3: money each month. This is a little ATM machine for me.
Speaker 3: So I'm glad I bought and that I didn't wait
Speaker 3: for interest rates to change or interest rates go up.
Speaker 3: And you know, the day after I close, interest rates
Speaker 3: go up to twelve percent and forever and they never
Speaker 3: go back down to ten percent. Well, that's fine, I've
Speaker 3: locked into ten percent. I'm glad I bought. Third thing,
Speaker 3: interest rates go down, Well, I'm making money right now.
Speaker 3: If interest rates go down to eight or seven, then
Speaker 3: I refinance. I'm glad I bought. So that's how real
Speaker 3: say investors look at it is they're not going to
Speaker 3: make They're not going to buy anything that's not making
Speaker 3: money into day's environment, in today's prices and today's interest rates.
Speaker 3: But if you buy a residential property which is four
Speaker 3: units or fewer with a thirty year fixed loan, you
Speaker 3: and you can find a way to cash flow it
Speaker 3: today with the numbers. I don't care about interest rates.
Speaker 3: I can either stay locked in or I refinance if
Speaker 3: they get better. Like I'm just glad I bought because
Speaker 3: I'm trying to buy a property to pay my bills
Speaker 3: that one hundred and fifty dollars here, two hundred bucks here,
Speaker 3: trying to buy the car, pay off my car note,
Speaker 3: my student loan debt. That's what I'm using my real
Speaker 3: estate for. I'm not trying to flip it. I'm not
Speaker 3: trying to sell it. So that's why I say that's
Speaker 3: irrelevant what the interest rates are.
Speaker 1: Okay, talk to me about how you determine what's a
Speaker 1: good deal and what's worth investing in, because it can't
Speaker 1: just be oh, it's cash flowing two bucks a month,
Speaker 1: because then you're like, eeah, it's not worth my time right.
Speaker 1: So like your philosophy is always be buying, but you
Speaker 1: also you don't seem to put as much emphasis on
Speaker 1: finding the property with the absolute best returns. And my
Speaker 1: thought is fewer better properties maybe means less hassle with
Speaker 1: the same amount of income. But I'm curious to hear
Speaker 1: your philosophy.
Speaker 3: Yeah, this is where everyone freezes analysis paralysis. They they'll
Speaker 3: create their bybox. You have to create a bybox because
Speaker 3: what happens is someone's going to say, well, I found
Speaker 3: this airbnb in Florida, I found this duplex in my hometown,
Speaker 3: and then I've found this single family home in my neighborhood,
Speaker 3: and they'll come to me and say which one should
Speaker 3: I BUYO. I'll typically say, well, if you found the
Speaker 3: best duplex in your in your old hometown, and you
Speaker 3: found the best single family and you bought the best
Speaker 3: you know, short term rental because you've been looking.
Speaker 4: There, then buy them all. You can't really.
Speaker 3: Compare and contrast. And what I say is you don't
Speaker 3: have a buy box that's strict enough. It's much easier
Speaker 3: to narrow that bybox and only look at the duplexes
Speaker 3: from your own old hometown.
Speaker 4: Why is that, because.
Speaker 3: Then you could become an expert and you're gonna get
Speaker 3: the word out there that hey, Alan buys duplexes in
Speaker 3: his own hotown, and then everyone knows to call you
Speaker 3: if there's a duplex and you just buy duplex, duplex,
Speaker 3: and all of a sudden, you are a market expert.
Speaker 3: You know what a duplex rents for, how much is
Speaker 3: cost to renovate, what the property texes are going to be,
Speaker 3: the insurance. And so if you sort of concentrate and
Speaker 3: become an expert in one niche, rather than trying to
Speaker 3: diversify off the gate, you were going to go much
Speaker 3: further and you're gonna learn more.
Speaker 1: And that's exactly what you did with quadplexies, right like
Speaker 1: you were the quadplex guy.
Speaker 3: Yeah, I'd learned this. There wasn't any foresight. I just
Speaker 3: bought one and then I bought another one, and then
Speaker 3: the neighbors come and like, hey, you bought two in
Speaker 3: the street, you want to buy this one, And all
Speaker 3: of a sudden, I became the duplex guy. It's just
Speaker 3: your reputation becomes a lead magnet and I become an expert. Obviously,
Speaker 3: I'm not going to make a ton that first I'm
Speaker 3: gonna learn a lot of lessons on that first one,
Speaker 3: but then then I can apply it to the second
Speaker 3: one and third one, and then you become an expert
Speaker 3: in that niche So if you want to hone the
Speaker 3: skill set without buying anything. I realized I was doing
Speaker 3: this when I lived in Brooklyn. I went to every
Speaker 3: single open house on my block, and I would just
Speaker 3: track every sale on my block, and then I would
Speaker 3: predict what I think it would sell for and whatnot.
Speaker 3: And then I would predict what I think it should
Speaker 3: list for. And I tracked my block and once I
Speaker 3: sort of was like within five percent of getting it.
Speaker 4: Right every single time.
Speaker 3: Then I went to my street, and then I went
Speaker 3: to my zip code, and then I went to the
Speaker 3: school district or whatever. You just widen it, and I
Speaker 3: just started tracking numbers and data. It's fun for me.
Speaker 3: And I was just looking at it on Zillo like
Speaker 3: everyone looks at Zillo.
Speaker 4: I hate math.
Speaker 3: I'm not a big math guy, but real estate math
Speaker 3: is just addition and subtraction. It's not anything to you know,
Speaker 3: you don't have to have a degree in. It's great
Speaker 3: if you have a passion and you can hear my passion.
Speaker 3: People call me after this podcast, Alan, let's buy real
Speaker 3: estate together?
Speaker 4: Can you help me?
Speaker 3: Like, you just got to get your word out and
Speaker 3: share your passion and it'll change your life.
Speaker 1: I like what you were talking about there with kind
Speaker 1: of zeroing down into street level, and that's kind of
Speaker 1: where I started to It's like investing all inside of
Speaker 1: a neighborhood. And then I was like, wait a second,
Speaker 1: I can invest in the neighborhood over and maybe the
Speaker 1: neighborhood over from that, But it was all kind of
Speaker 1: within this limited sphere, all within kind of driving distance
Speaker 1: and my ability to thoroughly understand the market. You've now
Speaker 1: invested in a bunch of different markets. You've invested in
Speaker 1: New York, you invested Atlanta, You've invested in South Georgia,
Speaker 1: evest in different kinds of properties too. How do you
Speaker 1: think is that just like do you grow that over time?
Speaker 1: And how importance is it maybe to start off with
Speaker 1: a like a niche inside of a particular neighborhood or
Speaker 1: small geographic location, so you can kind of become an
Speaker 1: expert before you expand.
Speaker 3: Do as I say, not as I do. Definitely you
Speaker 3: want that niche. The reason I sort of kind of
Speaker 3: go all over is twofold one one of ADHD. But
Speaker 3: I'm a realtor and people are you know, will come
Speaker 3: to me and say, hey, I want to buy a
Speaker 3: short ter mental. Hey, Alan, I want to buy a duplex.
Speaker 3: I want to buy an apartment building. And I don't
Speaker 3: feel comfortable giving advice unless I'm doing that too. But like, like,
Speaker 3: who am I to give you advice on short of
Speaker 3: mental unless I'm doing it. So I'm going to go
Speaker 3: buy it shorter mental. I'm going to learn the ropes
Speaker 3: so that I can teach those to my clients. I
Speaker 3: also teach real say investing as well, and written books
Speaker 3: and stuff. So I whatever people want to buy, I
Speaker 3: want to go buy it along with them or before them,
Speaker 3: so that I can be a better guide to.
Speaker 4: Them on their investment. It's all sort of fun to me.
Speaker 3: I always say, there's million ways to make real estate,
Speaker 3: a million ways to make a million dollars in real estate.
Speaker 3: Just pick one, like you can be the only by condos,
Speaker 3: or only by townhouses, or only by single families.
Speaker 4: But you want to accelerate.
Speaker 3: Your path to expertise, and if you just rinse and
Speaker 3: repeat and get those reps in. That's how you become it.
Speaker 3: Don't get distracted by all the noise, the new shiny thing.
Speaker 3: Like obviously, when I started Airbnb didn't even exist, and
Speaker 3: so that's a new product. I don't know there'll be
Speaker 3: you know, there's pad split out there right now where
Speaker 3: you can rent by the room a single family house,
Speaker 3: but you're renting by the room instead of renting it out.
Speaker 3: Like there's always going to be new products. I don't
Speaker 3: care which one you choose, pick one. I just highly
Speaker 3: recommend that you stay at four units or fewer that
Speaker 3: small multi family because you can get that thirty year fix,
Speaker 3: which I love. And if you can buy a duplex,
Speaker 3: triplex or quad, I love that much more better than
Speaker 3: buying four single family homes because then I only have
Speaker 3: one roof to worry about instead of four roofs. I
Speaker 3: only have one property tax build instead of four. I
Speaker 3: only have one pest control bill instead of four. You
Speaker 3: can scale down all your expenses if you can kind
Speaker 3: of condense it in that small multi family.
Speaker 1: That's true.
Speaker 2: Yeah, Okay, So speaking of we're gonna take a break
Speaker 2: here in a minute, and I think we're going to
Speaker 2: get to maybe maybe like a bunch more rapid fire
Speaker 2: style questions with you Alan about real estate. But I'm
Speaker 2: curious I want to follow up about the houses that
Speaker 2: you mentioned down in Griffin. You said that you actually
Speaker 2: sold those properties. It sounded like you held onto those
Speaker 2: for a couple of years. The way I approach the
Speaker 2: properties I own, I'm planning to keep them forever, and
Speaker 2: so for you when it does come time to sell,
Speaker 2: what's the trigger? What is it that makes you say,
Speaker 2: all right, it's time to list these properties?
Speaker 3: Well, it's just what I just explained why I had
Speaker 3: fifty pest control bills. I had fifty, you know, fifty
Speaker 3: of everything.
Speaker 1: Too many?
Speaker 4: And so yeah, yeah, yeah, too many?
Speaker 3: Okay it And in two and a half so I
Speaker 3: bought the entire portfolio, roughly each house with thirty thousand
Speaker 3: dollars each. And I know, whatever you're visioning in your mind,
Speaker 3: what a thirty thousand dollars house bought you five years ago?
Speaker 3: Our south of Atlanta, like people were paying six hundred
Speaker 3: and seve hundred bucks. And then they're very livable properties.
Speaker 3: These were fine and mostly Section eight so where they're
Speaker 3: guaranteed income, the government's going to pay for it. Tenants
Speaker 3: that have been there for twenty or thirty years, and
Speaker 3: so if I've lost you when you say you know
Speaker 3: sure you bought a one point five million dollar portfolio.
Speaker 3: I didn't have money to buy this property, but the
Speaker 3: seller was a retired real state investor. His kids didn't
Speaker 3: want these properties, and he was having trouble selling them
Speaker 3: because at the time, there wasn't a ton of loan
Speaker 3: products for large single family portfolios like there is now.
Speaker 3: And so I went to them and said, hey, I
Speaker 3: want to buy this and I'll buy them all, but
Speaker 3: I can't get a loan for it. But no one
Speaker 3: can get a loan for this because who's going to
Speaker 3: get fifty different mortgages, Like, it's just not going to
Speaker 3: make sense. So we agreed on a seller financing deal,
Speaker 3: which means he was mortgagee. He had all these properties
Speaker 3: paid off, so I only had to put one hundred
Speaker 3: thousand dollars down. Again, I got another partner. I put
Speaker 3: in fifty thousand, My partner put in fifty thousand, and
Speaker 3: we got a fifteen year mortgage at seven and a
Speaker 3: half percent interest rate. You know, five years ago that
Speaker 3: was crazy because everything everyone was getting two and three
Speaker 3: percent interest rates. But I only have to put ten
Speaker 3: percent down on a fifty home portfolio, and it cash
Speaker 3: flowed even at a fifteen year note. It covered all that,
Speaker 3: and on top of that was making it would kick
Speaker 3: off about eight to ten thousand dollars a month, and
Speaker 3: we just took that money and put it back into
Speaker 3: the properties, fix them up. There's a lot of deferred maintenance.
Speaker 3: We didn't pull any of that money out. And then
Speaker 3: eventually I bought my partner out because he wanted to
Speaker 3: go do other investments in real estate wasn't his thing.
Speaker 3: And then I ended up selling that property two and
Speaker 3: a half later as a whole portfolio for two and
Speaker 3: a half million dollars. So with I turned one hundred
Speaker 3: thousand dollars and two and a half years into a
Speaker 3: million dollar profit. And so that was one of those
Speaker 3: things where I wanted to, you know, turn that into
Speaker 3: apartment building. It makes much more sense to take that
Speaker 3: those fifty single family homes and buy a twenty unit
Speaker 3: apartment building because then I only have to go to
Speaker 3: one address instead of fifty. It's much easier to property manage,
Speaker 3: you know, allthough, you just it's so much easier to
Speaker 3: manage when it's all under one roof, sure, rather than
Speaker 3: spread across an entire zip going.
Speaker 1: May not want to start that. Might know, your first
Speaker 1: purchase is the twenty unit apartment complex, but you scaled up.
Speaker 2: You commercial residential may not be the first thing that
Speaker 2: somebody wants to dip their toes in the water.
Speaker 1: So we gain the skills, and you'd also gain the
Speaker 1: financial ability based on appreciation of your other properties and
Speaker 1: the smart moves you've made to then take go into
Speaker 1: that endeavor.
Speaker 2: Yeah. Well, and you what you laid out here, Alan
Speaker 2: is a perfect example of I love how what you said.
Speaker 2: You said it kind of quickly, but at the time
Speaker 2: the rate that you're paying to this owner was ludicrous,
Speaker 2: so much higher than what anybody else out there was paying.
Speaker 2: But for you, you were again you crunched the numbers
Speaker 2: and you were able to see, well, man, we're making money,
Speaker 2: but times fifty were really making money, and for you
Speaker 2: it made a ton of sense and ended up working
Speaker 2: out for not only you, but you and your partner.
Speaker 2: But you know, just a second ago you also mentioned Airbnb,
Speaker 2: how that's it's a new product, and how that has
Speaker 2: an impact on real estate. So we've got a few
Speaker 2: more questions about that, plus more. We'll get to all
Speaker 2: of that right after this.
Speaker 1: All right, we're back. If you're still listening to real
Speaker 1: estate fire conversation with Alan Corey about investing in real
Speaker 1: estate to boost your ability to retire early to reach
Speaker 1: financial independence, and Alan man, I so appreciate all the
Speaker 1: great information you've brought already, Let's get it to a
Speaker 1: bunch of like quicker questions because there's just so much
Speaker 1: warm wun to cover and we just don't have forever.
Speaker 1: But like one of the things I want to talk about,
Speaker 1: you're against paying off mortgages. You say, you call it
Speaker 1: the dumbest thing a person can possibly do, But that
Speaker 1: is that flies in the face of so much traditional
Speaker 1: personal finance advice. Why are you a fan of people
Speaker 1: holding onto their mortgages as long as possible?
Speaker 4: Okay, I'll try to make this short.
Speaker 3: Imagine you found a dollar in the parking lot and
Speaker 3: in the gas station parking lot. You have two choices.
Speaker 3: You can go mail that dollar into your mortgage note,
Speaker 3: pay off a dollar of your principle, where you can
Speaker 3: walk into the gas station and buy a one dollar
Speaker 3: Snickers bar. You have that life decision. A lot of
Speaker 3: people who have extra money, they're going to throw it
Speaker 3: to their principal mortgage and pay it off. Now, let's
Speaker 3: say you left that dollar there and you came back
Speaker 3: fifteen years later and that dollar was still there, and
Speaker 3: you're like, fine, no one's gonna pick this up. I
Speaker 3: want to pick it up. Then what's going to happen
Speaker 3: is you have two choices. You're going to have that
Speaker 3: same dilemma. I can either mail it into my mortgage
Speaker 3: lender and get another dollar off my principal payment, like
Speaker 3: you could have done fifteen years earlier. Or you can
Speaker 3: walk into the gas station and try to buy a
Speaker 3: Snickers bar and guess what your Snickers bar is now
Speaker 3: three dollars thanks to inflation.
Speaker 4: So what does that tell you, Well, that tells.
Speaker 3: You that everything around you is going to get more
Speaker 3: and more expensive over time except your mortgage. Your mortgage
Speaker 3: is the only thing that's going to stay the same
Speaker 3: or feel like it's getting cheaper.
Speaker 4: So why do you.
Speaker 3: Want to get rid of the best benefit in the
Speaker 3: world where you've locked in the most expense in your
Speaker 3: life for thirty year mortgage, whether it's your investment or your
Speaker 3: primary is probably the most expensive expense you can lock
Speaker 3: that in for thirty years. Everything else is going to
Speaker 3: get more expensive. You know, just looked at your grandparents
Speaker 3: or your parents who bought twenty years ago, thirty years ago,
Speaker 3: and they have like a thousand dollars mortgage payment and
Speaker 3: they look like geniuses. They did nothing except wait and
Speaker 3: not pay off their mortgage. So it's such a huge benefit.
Speaker 3: I just don't understand the rush to pay it off.
Speaker 2: People will have that emotional psychological aversion to debt. Unfortunately,
Speaker 2: not all debt is created equal. But Alan, what do
Speaker 2: you say to folks who are trying to limit the
Speaker 2: amount of risk when it comes to their different properties.
Speaker 2: Like we get the question about if folks should incorporate,
Speaker 2: if each property should be owned by its own LLC.
Speaker 2: Like that's one path you can go. Or another path
Speaker 2: is umbrella insurance to cover you as an owner. Where
Speaker 2: do you come down on that debate?
Speaker 4: Yeah, umbrella is great.
Speaker 3: I don't think you need an LLC unless you have
Speaker 3: over ten property or if you get to the point
Speaker 3: where your debt to income ratio DTI, which is sort
Speaker 3: of how you get residential mortgages in your name. They
Speaker 3: look at this formula, how much is your debt to
Speaker 3: your income. If that's out of whack it's more than
Speaker 3: fifty percent, you can't getty residential mortgages anymore. Then you
Speaker 3: got to get an LLC and commercial. But if you're
Speaker 3: worried about getting sued, guess who gets sued. It's the
Speaker 3: people who have a paid off property. Let's say you
Speaker 3: have a million dollar property that's paid off and someone
Speaker 3: breaks their foot or whatever. They're going to sue the
Speaker 3: person as a million dollar asset force you to sell
Speaker 3: that asset. But if you have a million dollar property
Speaker 3: with a nine hundred thousand dollars mortgage, the attorney's are like,
Speaker 3: it's not worth suing them because by the time they
Speaker 3: sell it with realtor commissions, you're not going to get
Speaker 3: any money.
Speaker 2: So you've got another argument for not paying off the
Speaker 2: mortgage and keeps that loan around as long as possible.
Speaker 3: I've got fifty arguments for that.
Speaker 4: Yes, exactly, all right.
Speaker 1: You talk to me about hiring a property manager verus
Speaker 1: self managing. I'm a big fan of at least starting
Speaker 1: off managing the property yourself so you're learning the ropes,
Speaker 1: and then maybe down the line, especially as that property
Speaker 1: becomes more profitable. Maybe you can add that as a
Speaker 1: lot on them and take that off your plate, especially
Speaker 1: as you're kind of growing your real estate portfolio. What
Speaker 1: are your thoughts on that.
Speaker 3: Yeah, I tell people to manage your first five. Hopefully
Speaker 3: they're local and is driveable. If not your town, the
Speaker 3: numbers just don't make sense for any good investment. Then
Speaker 3: you know you're going to have to use a property manager.
Speaker 3: And that's fine. But find a property manager and then
Speaker 3: invest within their skill set. Well, you know, are they
Speaker 3: section eight, are they luxuriality and are they a certain
Speaker 3: part of the neighborhood. Understand who's going to manage it
Speaker 3: and make sure that they can keep an eye on it.
Speaker 3: I try to get rid of the busy work if
Speaker 3: you find it that has just becomes busy work for
Speaker 3: you. You know, get a property manager, and you know whether
Speaker 3: you want to go buy more real estate or look
Speaker 3: for more deals, or you can now go do a
Speaker 3: hobby and your real estate's paying for that hobby. Or
Speaker 3: maybe you can work extra hours in another you know,
Speaker 3: side gig or something. That's what the beauty about real
Speaker 3: estate gives you options.
Speaker 2: Okay, talk about vacation rentals, Joel and I are families.
Speaker 2: We vacation every summer, we go to the beach, and
Speaker 2: a lot of times when you go to the beach
Speaker 2: or wherever you you.
Speaker 1: Go off to, you start dreaming.
Speaker 4: Yeah.
Speaker 2: Yeah, you start walking around, You're like, Oh, would be awesome,
Speaker 2: what if we could just come here every other month,
Speaker 2: you know, to our own place. But at the same time,
Speaker 2: I start to think through maybe the pain in the
Speaker 2: butt that that might be, especially if you're trying to
Speaker 2: manage a vacation rental. But what are your thoughts on
Speaker 2: investment properties that are vacation rentals.
Speaker 3: Yeah, it's similar to long term rentals. I usually say
Speaker 3: you don't want to invest in properties that you want
Speaker 3: to live in, because then you're making your own biases
Speaker 3: and emotional decisions over a spreadsheet decision. A lot of
Speaker 3: people want to buy that that that beach house that
Speaker 3: they go to every single year on fourth of July,
Speaker 3: and then what they don't realize is fourth of July
Speaker 3: is when you can make the most money out of it.
Speaker 3: So you're you're going to be staying in it and
Speaker 3: not be able to make the most money out of it.
Speaker 3: And then when you don't go, that's when no one
Speaker 3: wants to rent it because in the off season you can't.
Speaker 3: You know, you're you're renting it for pennies, and then
Speaker 3: you find.
Speaker 1: Yourself you're going to the beach in January.
Speaker 3: Now yeah, yeah, exactly, So you're you're now altering your
Speaker 3: your lifestyle to make sense of this investment. You go
Speaker 3: in the off season, or you don't go on the
Speaker 3: best week of the year. So I don't like miss
Speaker 3: mixing business and pleasure. I do like investing in sort
Speaker 3: of big cities. I've got some in Atlanta. I like
Speaker 3: sort of the sub tier touristy markets. So maybe not Disneyland,
Speaker 3: but maybe, you know, two hours from Disneyland, there's a
Speaker 3: bunch of beaches in Florida.
Speaker 4: You don't have the.
Speaker 3: Big corporations that are going to invest there. You don't
Speaker 3: have the hotel districts fighting you, and then the h
Speaker 3: you know, the airbnb laws. As much things are much cheaper,
Speaker 3: people will come and.
Speaker 4: Stay for a week.
Speaker 3: If it's sort of a destination rather than a weekend
Speaker 3: pop in kind of thing. And it's probably not something
Speaker 3: where I would want to go to every single you know,
Speaker 3: I'll go once to, you know, every now and then,
Speaker 3: because it's it's smallest beach town or something. But I'm
Speaker 3: not going there, you know, religiously with the whole family
Speaker 3: kind of thing.
Speaker 1: Sure, talk to us about scaling, because you have scaled,
Speaker 1: but I think you said you had like three hundred
Speaker 1: and fifty doors. Is that about where right now?
Speaker 4: Yes?
Speaker 3: So I've got about twenty doors in my name and
Speaker 3: then the rest I was through partners.
Speaker 1: So I want to know the when you stop, like
Speaker 1: what makes you quit? Because at what point is it enough?
Speaker 1: And like our friend Chad Carson talks about basically the
Speaker 1: small and mighty real estate investor, which is, hey, ten
Speaker 1: ten paid off units, at some point is going to
Speaker 1: be able to, you know, fund more than enough for
Speaker 1: the lifestyle you want. When do you know when do
Speaker 1: you stop a value of property properties? When do you
Speaker 1: stop investing? When do you say enough's enough? I've crushed
Speaker 1: it and I'm gonna, like, I don't know, be more leisurely.
Speaker 3: I've got through to fifty doors. But it's it's fun
Speaker 3: for me. It doesn't feel like work. I've got a
Speaker 3: lot of people who want to invest with me, or
Speaker 3: they find a deal and they say, Alan, how can
Speaker 3: we get this done?
Speaker 4: Achieved? A lot through real estate.
Speaker 3: But it's not like, oh, I'm gonna get happier if
Speaker 3: I have more. If I get happier if I have more.
Speaker 3: It's just I like treasure hunting. I'm like the guy
Speaker 3: on the beach with the electrical thing. What's that called
Speaker 3: the metal detectors. Yeah, like that guy's life going to
Speaker 3: change it finds a wedding band. No, it's just fun
Speaker 3: and entertaining for them. And that's me in real estate.
Speaker 3: It's fun to look at opportunities. Oh, this is an opportunity, guys.
Speaker 3: Do you guys want to pass around out and get
Speaker 3: this done? Or should I buy this myself? Like it's
Speaker 3: I enjoy it, it's my hobby, you know.
Speaker 1: I love it. Obviously.
Speaker 2: I think there's a lot of folks who are just like, Man,
Speaker 2: I've got a job that I took so that I
Speaker 2: can pay the bills. I don't enjoy my work, but
Speaker 2: the ability that's something over time that you do want
Speaker 2: to sit your sights on the kind of work that's
Speaker 2: going to be fulfilling, the kind of work that's going
Speaker 2: to be able to allow you to at some point
Speaker 2: achieve some sense of financial freedom. But I love that
Speaker 2: and the value that you're able to put out into
Speaker 2: the world through the work that you do is It's
Speaker 2: a huge part of life fulfillment. And I think our
Speaker 2: opinions of retirement has even changed over the years. Joe
Speaker 2: and I as as this is something that we've talked
Speaker 2: about a lot. But you mentioned Airbnb earlier. Alan without
Speaker 2: being a platform that can change the rules and not
Speaker 2: only what say Airbnb charges folks what they charge hosts,
Speaker 2: but even cities and how there's a lot of cities
Speaker 2: that are claiming down on short term rentals. How much
Speaker 2: should investors take that into account as they're looking to
Speaker 2: buy a property.
Speaker 3: Yeah, you should take an account and that never buy
Speaker 3: a vacation rental that won't cash flow as a long
Speaker 3: term rental. So if the laws change, you can just
Speaker 3: pivot it into a long term mental and you're still
Speaker 3: cash flowing. So you run your numbers twice, you run well,
Speaker 3: run first as a long term rental, and if it
Speaker 3: makes sense as a long term mental, if that day
Speaker 3: ever comes, whether it's tomorrow or ten years from now,
Speaker 3: you've got that's your pivot point. I always love properties
Speaker 3: that have pivots. The more pivots you have, the better.
Speaker 3: And so you can say, well, I'll make four times
Speaker 3: as much money as a short term mental and if
Speaker 3: they change the laws on me, I'll make you know,
Speaker 3: I'll still make money. I'm not losing money as a
Speaker 3: long term rental. Yeah, that's how you go about it.
Speaker 2: I love it.
Speaker 1: That's a little more conservative in nature too, just making
Speaker 1: sure that. Yeah, because that's happened. I had a friend
Speaker 1: who bought one in Chattanooga, and then Chattanooga it says, wait, wait,
Speaker 1: no more short term rentals here, at least of the
Speaker 1: time being, And so he's kind of halted for a
Speaker 1: minute at least from buying more. He's able to still
Speaker 1: he's grandfathered in for the one he's got. But that
Speaker 1: can be a really tough position to find yourself in.
Speaker 1: But Alan, thank you so much for joining us today
Speaker 1: on the show. Where can our listeners find out more
Speaker 1: about you? More about your house fire method?
Speaker 4: Yeah?
Speaker 3: Sure, I'm a real estate maximalist, so you can find
Speaker 3: me on social media real estate MAXI Also I teach
Speaker 3: real state investing at house Money Media and we have
Speaker 3: a podcast called the House Money Real Estate Investing Podcast,
Speaker 3: So all those channels would be great.
Speaker 1: Awesome, Alan, Thank you so much for taking the time
Speaker 1: out of your day to talk with us.
Speaker 4: Thanks guys, it's been blast all right, man.
Speaker 1: That was a good combo, a lot of interesting information,
Speaker 1: obviously from someone who's rabbit all in on real estate,
Speaker 1: and so it's just nice to pick his brains as
Speaker 1: someone who I think is we like real estate. You
Speaker 1: kind of like set it up nicely at the beginning
Speaker 1: of the episode. It's like, we're not Alan Rabbit Dog
Speaker 1: Corey though. Yeah, but I did his insights. I think
Speaker 1: there's a lot that some people who are interested in
Speaker 1: investing in realistic can learn from Alan And from this episode.
Speaker 1: What was your big takeaway though from this combo?
Speaker 2: I think my big takeaway is being is influenced by
Speaker 2: the fact that I don't want to alienate alien eight
Speaker 2: folks who are listening to this, and they're just like,
Speaker 2: three hundred and fifty doors, what the like, I'm never
Speaker 2: gonna do that, And so I'm gonna take it back
Speaker 2: to personal finance and at the beginning, because I think
Speaker 2: there's a lot of folks who are saying, well, yeah,
Speaker 2: if I had that much money on hand, sure, if
Speaker 2: I could go to a hard money lender and drop
Speaker 2: one hundred thousand dollars like, there's a lot of if onlys.
Speaker 2: And the fact is Alan got to that point by
Speaker 2: working his butt off when he was up in New
Speaker 2: York and he was socking. He was setting aside fifty
Speaker 2: percent of his paycheck. Man, wasn't a big paycheck, it
Speaker 2: wasn't a bunch, but that percentage. Think about what folks
Speaker 2: could do right now, who are in their twenties if
Speaker 2: they set aside fifty percent of their pitcheck for a
Speaker 2: short period of time. I'm not saying that you have
Speaker 2: to do this in definitely, but the ability to do
Speaker 2: that for a short period of time to achieve some
Speaker 2: very quantifiable, measurable goals, Well, if you want something bad enough,
Speaker 2: that is what it takes. And by doing that you
Speaker 2: can achieve something as massive as what Alan has been
Speaker 2: able to do.
Speaker 1: When he was describing that, all I could think was
Speaker 1: frontloading the sacrifice, which is what Dachi talks about, and
Speaker 1: that's exactly what he was doing. He was saying, like, listen,
Speaker 1: I'm going to go the opposite of hog wild right now.
Speaker 1: I'm going to cut to the bone just for a
Speaker 1: few years, so that I can build up this nest
Speaker 1: egg and then boom, I'm gonna make an investment or two,
Speaker 1: and then eventually I'll be able to inflate my lifestyle.
Speaker 1: He's not eating ramen every night now he was back then.
Speaker 1: The sense of packet, he's about how many fancy tween
Speaker 1: hats he has Now, I mean, like, come on, he
Speaker 1: would not have imagined that back then. That's right, but
Speaker 1: I appreciate that that. It's like, for a period of time,
Speaker 1: I'm willing to do this in sacrifice, even more than
Speaker 1: I want to do in the future. But it's because
Speaker 1: I'm preparing that future for myself, and I think it's
Speaker 1: a good way looking at it totally. Yeah, what about
Speaker 1: you was your big takeaway though, So I like when
Speaker 1: he said get reps in and you get better with
Speaker 1: things over time. I remember man being so freaking scared
Speaker 1: running out my first property, and then the second one.
Speaker 1: I was still pretty nervous, but not nearly as frightened,
Speaker 1: and then over time you're like, wait a second, and
Speaker 1: some of that confidence.
Speaker 2: Yeah.
Speaker 1: Now, I think part of the reason he's so gung
Speaker 1: ho on it is because he's been doing it so long.
Speaker 1: He's been so successful, He's made so many good deals
Speaker 1: and over time and he's learned from the bad ones too,
Speaker 1: and so you just kind of then you begin to
Speaker 1: know what to look out for, the fine print to
Speaker 1: watch out for, maybe how to screen tenants even better,
Speaker 1: and it becomes this well oiled machine. But it involves
Speaker 1: getting reps. You just don't get better by sitting on
Speaker 1: the sidelines and consuming information in the same way you
Speaker 1: do by getting in there and trying the ole man
Speaker 1: in the arena thing, I guess, right, But yeah, yeah,
Speaker 1: So it's obviously important to do your due diligence and
Speaker 1: know the market in and out that you want to
Speaker 1: invest in, kind of like he was actually talking about too,
Speaker 1: But then it's important to get in there and actually
Speaker 1: do the thing. Start off small, self managed, learn as
Speaker 1: you're doing, and the more reps you get in, the
Speaker 1: better you're gonna get at it.
Speaker 2: Yeah, I think that's I think that's when he was
Speaker 2: talking about finding a specialty and focusing like laser focus,
Speaker 2: because I think that's so important as well, not only
Speaker 2: getting the reps in massive number of reps, but really
Speaker 2: narrowing in on what it is that you're going to
Speaker 2: say specialized in it, but our beer Joel, that you
Speaker 2: and I enjoyed today was an OOST. I wanted to
Speaker 2: say that that's that's what it's called o sd oust.
Speaker 2: This is another one by High Grain Brewing Company and
Speaker 2: it was donated by Mike and Christy.
Speaker 1: What were your thoughts? Yeah, I like this when it
Speaker 1: had like caramel vibes some FIGI notes. I thought it was,
Speaker 1: oh yeah, smooth and warming. Uh, it was definitely warming,
Speaker 1: So there's no joke. It's a strong strong ale. So
Speaker 1: this is a ten percenter and you could pick up
Speaker 1: on some of that peppery nests that came from that
Speaker 1: basically from the higher gravity, but almost had like a
Speaker 1: clove like pepperinus too it because of that higher ABV
Speaker 1: while still.
Speaker 2: Maintaining it's like Belgian banana like sweetness that you get
Speaker 2: from Belgian golden strong ales like this. But is it
Speaker 2: is it monkey? What's the victory Golden monkey that I
Speaker 2: feel like had that years me?
Speaker 4: Neither.
Speaker 2: I think that was my first golden Golden strong as.
Speaker 1: Okay, but I mean that was a classic back in
Speaker 1: the day. But I don't think I've had a victory
Speaker 1: beer in forever.
Speaker 2: It's been a but Mike and Chrissy thank y'all again
Speaker 2: for sending this one plus the others our way for sure.
Speaker 1: All right, let's going to do it for this episode.
Speaker 1: We'll have links up in the show notes to help
Speaker 1: you if you're interested in investing in real estate, so
Speaker 1: please do check those out, but Matt, until next time,
Speaker 1: Best friends Out, Best Friends Out,