The Property Perspective
From hidden gems to billion-dollar deals, this is The Property Perspective - where seasoned real estate pros reveal how they spot value others miss, and industry disruptors share the unconventional strategies reshaping real estate.
The Property Perspective
Debunking the Myth of Passive Income in Real Estate
Rental properties are not the golden ticket to passive income. Join us as we challenge the conventional wisdom surrounding real estate investments with insights from Jesse Burrell and Tyson Smith. We dissect the myth of effortless earnings through rentals, emphasizing the active involvement required in managing properties and the surprises that often arise. Through personal accounts and real-world experiences, we highlight why true passive income might be found elsewhere, with rental properties serving as long-term appreciation assets.
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00:00 - Hope (Announcement)
Is your rental property truly passive income? Real estate veterans Jesse Burrell and Tyson Smith reveal the uncomfortable truth about building wealth through rentals and why most investors are taking the wrong path to financial freedom From hidden gems to billion-dollar deals. This is the Property Perspective where seasoned real estate pros reveal how they spot value, others miss and industry disruptors share the unconventional strategies reshaping real estate. Now here are your hosts.
00:29 - Jesse Burrell (Host)
So today we're going to talk about the passive income in real estate what's true and what's a myth? I mean, there is so many gurus to talk about today and so many myths and different ways how people think when they're just getting started. So let's kick it off with you know what are your thoughts of, you know passive income in real estate investing, and let's start diving into does rentals make you a bunch of passive money?
00:57 - Tyson Smith (Guest)
No, there is. No, there's nothing passive about having a rental property. I think that there are two ways to get passive income in real estate and it's through leverage and or leveraging your capital and leveraging human resources. So when you're a big businessman like yourself and you have a company and employees who do work and they provide goods and services that then make you money, that in a way, is passive income. Right Now, you still have to run those people or whatnot.
01:23
But going to buy a rental property, there's nothing passive about it. When, all of a sudden, your tenant wants to break the lease and they just leave, or they don't leave and then you have to evict them. Or the AC is out in the middle of the night and here in Arizona, all of a sudden, that's priority number one, you got to get that fixed. Or their toilet stops working, or all of a sudden the sewer breaks or the garbage disposal breaks. These are all things that have happened to me and it's like, okay, cool, that just wiped out how many months of my profit after looking at everything. Buying rentals is great, but if you want to get passive income, that's. That's not what I'd look, look to.
01:58 - Jesse Burrell (Host)
Yeah, and as someone that has owned hundreds of doors in my lifetime, I would. I would agree with you, and my best advice to someone that is in real estate and you know, don't get into it for the passive income. There's a lot of ways to make passive income that we can talk about in a little bit, but real estate to me is and I've talked to Ryan Pineda about this like to a big degree if you're not making an active income, at least half a million dollars a year, don't go buy rentals. Go do what you just talked about is leveraging your money with um, you know, getting more leads, or leveraging your money with more human resources to continue to grow your active income.
02:39 - Tyson Smith (Guest)
Yeah.
02:39 - Jesse Burrell (Host)
Um. But rental properties to me is just a long-term appreciation play, like you should. I'm not saying you're going to lose money, but you should expect to basically break even with all your capital expenditures and so on and so forth to where, yes, it will continue to appreciate and be worth more and someone is in that unit paying down your principal, which is fantastic. But don't expect to retire on it, especially if you don't have a whole ton of money.
03:06 - Tyson Smith (Guest)
Absolutely. I think you nailed it. I think that it's a very poor people idea to buy rental properties for passive income. The smart investors, the rich investors, they're buying rental properties for exactly like you said principal pay down their depreciation, the tax benefits, and then it is a little piggy bank. Hopefully you just see appreciation in the property over time. But nobody's getting into it really for the cashflow. No, I mean you're not going to go buy a rental property. The cashflow is $500 a month that you know you're going to go put 20% down on. Even if you're getting into it using some sort of creative finance like that is not going to replace your income in the foreseeable future.
03:44 - Jesse Burrell (Host)
Right, the way I see it. And I mean I guess if you have a pile of money, just go pay off a bunch of houses or buy houses with cash. But yes you could. There's so many better passive ways to make more, a higher return than he would that way as well.
04:00
So 100% it's just, it's a huge myth. And I think people are like, oh well, so 100%, it's just it's a huge myth. And I think people are like, oh, go, bird, or go get your first rental property, or get 10 and Airbnb arbitrage and you're going to live this lifestyle One. I don't know what lifestyle you can live. That's awesome On like 90 grand a year or something like that which would be like an amazing thing to do.
04:20 - Tyson Smith (Guest)
So let's, let's do the math on this. Let's talk about this. Let's say that you want to buy a property and, just for using easy numbers, let's say that the property is going to be worth $100,000. And you're putting 20% down, so it's $20,000 for you to get in the property, and let's not even think about anything else the closing costs, getting the property, rent ready, whatever. Let's just say you're 20 Gs into this property and would you agree that most people would say that if it cash flows, after expenses, everything, right, your maintenance, your vacancy, everything it cash flows $500 a month, which, on $100,000 property, would be insane, right, correct?
05:10 - Jesse Burrell (Host)
So in that, year that first this, which again, we're being very, very liberal saying this, then you're making what?
05:13 - Tyson Smith (Guest)
$6,000 a year. That's a single problem. Yeah, so you're making 30% cash on cash year one, which okay, this is good.
05:21
That is good, see. Now I wish that I gave a better example, because this is too unrealistic. Where I'm actually like fuck, I never mind, give me that deal, I'll buy that for 30% cash on cash. But where I'm trying to go with this is you actually when you start to do the math every single time it just looks better to go put your money in the market and make 10%. Like that takes you zero. Like if you're like oh, I truly want passive income for the vast majority of people, take that 20 grand, put it in the stock market, buy an index fund, buy a Reit if you want to actually passively invest in real estate and your return is going to be better and the amount of work you have to do is actually zero okay.
05:59 - Jesse Burrell (Host)
So let's you know, identify the elephant in the room. If you only have $20,000 and you want passive income, you have the wrong mindset, absolutely. So let's go into what we said originally and originally what you want to do is, if you have $20,000, find ways with a side hustle or a wholesale business. If we're talking real estate, let's say wholesale business if we're talking real estate, let's say wholesale business.
06:25
You should keep compounding your money into your business, as me and Ryan were talking about. Is you want to continue to grow your active income? Yeah, active income, active income, active income. Until you're making half a million to a million dollars a year in active income, you shouldn't worry about anything passive, literally nothing. Keep putting your money into your business and your employees. That's it. That's what's going to make you the most money. And then you're going to have more money than you know what to do with. And then, when you have hundreds of thousands of dollars, either choose to flip and make more active income or, if you're making too much active income, that's when you start considering rental properties.
07:00 - Tyson Smith (Guest)
Right, that's the only time, and that is because, so that you don't have to pay Uncle Sam so much, correct.
07:05 - Jesse Burrell (Host)
That's it Like do not go buy your first rental property to get passive income. Now, if you want a second property and you're a W-2 employer or you're doing something like that, and you're just like you bought a house, you have a low interest rate, you're ready to buy your next house and you don't want to sell it because you want to have that piggy bank, that's totally fine. But you're not saying, hey, I want in two years to not have to work anymore because I have rental properties for passive income.
07:30
Because, that's not going to be the case. These people that are selling you a course, they make their money selling you the course. That's what they do. There's no such thing as passive income buying 10 rental properties. You cannot retire on that. That is bullshit.
07:46 - Tyson Smith (Guest)
I completely agree. And also you said earlier what kind of lifestyle do you want to live, like how many rental properties you would have to have that are paid off? That are? That's Zach. Yeah, true, exactly. Well, he's the exception, not the rule.
08:01 - Jesse Burrell (Host)
Well, he did over 25 years. Yeah, absolutely you want to buy rental properties for 25 years. It's our friends that keeps has like 300 single family rental properties in the Phoenix market and he still works every day.
08:13 - Tyson Smith (Guest)
And yes, and he doesn't have to. But yes, um, but what I wanted to, what I wanted to get out there was that, um, buying rental properties is most definitely a get rich slow scheme. Yes, yes, it's not the worst thing in the world by any means, but expecting that it's going to all of a sudden you're going to be able to quit your W2 job with just your rental income in the foreseeable future is the wrong. Look, you need to be looking at a 15, 20 year time horizon. Yeah, and that's yes, if that's what you want to be looking at a 15 20 year time horizon yeah, and that's yes if that's what you want to do.
08:46 - Jesse Burrell (Host)
I'm not saying don't buy rental properties. Rental properties are great if that's something that you want to do, but don't think in two years you're not going to have to work anymore because you have passive income. Yeah, that's what these people like spew to you to take their course. That's not the case, like. Let's go back to Zach for a perfect example. He bought like between five and ten properties a year for 25 years and now everyone looks at to him like he did something special. He was just consistent, yeah, and really good at buying property. That is actually very special. To stay in your lane and do all those things, yeah, he is special. But what I'm saying is someone you don't have to be super special to do what he did. You have to be very disciplined and stick to a strategy for very, very long time.
09:26 - Tyson Smith (Guest)
Well, and you know what the other thing is that he's great at buying good deals right.
09:31
You know, if you're just some Joe Schmo and you're thinking, oh, I'm going to go on the market and go find a good deal, sorry, they don't exist right now. Maybe in different markets they have, but right now no you have to like go look at all the properties listed on the MLS right now. And the only way you make them a good deal is if you're getting them for far under contract, what they're listed for, right, where. If you're like Zach and you've built a ecosystem around you where you're getting great deals, you're having wholesalers bring you deals, realtors know you as the guy who is the cash buyer that is going to close Right now, you can start to make some moves, absolutely, but that's another thing.
10:05
When it comes to buying rental properties, the real magic for the people who are like, hey, look, I want to get into real estate, I want to make some extra money, is when people talk about burying right, sure, that's great, but the. The wrong thing to think about is okay, the, uh, the rental income I'll make later. The right thing to think about is the equity you pull out on the refinance that is tax-free, right. It's like hey, if you can go pull out $20,000, $30,000 of equity on these deals, which is reasonable, I would say, in a market like Phoenix, so long as you're getting the good deal.
10:36 - Jesse Burrell (Host)
You have to find the right deal to even do that.
10:38 - Tyson Smith (Guest)
Definitely. Well, and this is where you're having to put money into it. Right, you have to increase the value and get the appraisal up, but as long as you bought it right, right, you did a proper level of renovation where you're getting being able to pull the equity out to refinance. So that's money you made tax free. So that's better than going and making a $20,000 wholesale deal, True, and plus, you keep the asset if you want, right? So that's where I see, okay, yeah, go, go, do as much of that as you possibly can, but you're limited by how many you can find.
11:08 - Jesse Burrell (Host)
Yeah, but it's just once you burn. Pull that equity out. With the interest rates it's hard to cashflow. True, it's, but that's where, even if the property breaks, even, yeah, but if you have to have a bunch of money to do that, yes.
11:20 - Tyson Smith (Guest)
Yes, 100%. Where, if you're the guy, well, all of a sudden an AC breaks and it's like, okay, that's seven grand. Now it's like, for how many people can you just go shell out seven G's Back?
11:31 - Jesse Burrell (Host)
to my point if you're not making half a million to a million dollars a year of active income. I wouldn't do a lot of these strategies or buy really, really, really good and when you pull equity out of a burr, make sure you're at a payment that you're comfortable with if something does happen, that you are cash flowing enough during those months if something breaks. But back to my point you shouldn't be using that money that you're getting from the rental property to go do a car payment when you have one or two rentals.
11:57
True, you should have it saved in that account because, something's going to fucking break right, someone's going to move out or some tenant is gonna to light the house on fire, which has happened to my buddy, spencer, two times. Crazy shit happens, absolutely, spencer, Cornelia, he's a big YouTuber, or a pretty big YouTuber. He exposes scams and stuff he was just so keen on. He didn't quite make that range that I said of half a million to a million dollars a year of active income. He went, bought ten rental properties and was renting out the rooms and call me two weeks ago and he's like, yeah, I sold everything, like it's just fuck, I don't make any money and it's not worth the headache.
12:34 - Tyson Smith (Guest)
Yeah Well, in theory it's always good dude, it's always great in theory well, I know.
12:40
So. I have a very smart friend. He's in the military, you know, saves his money, works hard. You know he's advancing up, he's got a good job in the military and makes good money and he's saving it away. And he bought a rental property. And I was talking to him last week we're working out and he was like I fucking hate that rental property. He said all it does is a pain in the ass. It's like I get this, I want the passive income, so I hire the property manager and then they take a shitload of my profit and it's like, okay, now I'm not making any money, so I fire the property manager and now I'm starting to rent it out. But I realize I don't know how to screen tenants and now my tenants I'm having to pay to evict and it's like I don't even want this thing anymore and it's like how many times has that played?
13:19 - Jesse Burrell (Host)
out wholesaler comes in and says how big of a problem is this really for you?
13:24 - Tyson Smith (Guest)
I was like shoot how much are you into that property?
13:26 - Jesse Burrell (Host)
What do you owe? You want to take a little L on this.
13:37 - Tyson Smith (Guest)
Yeah Well, dude, I mean, even I have found myself as a wholesaler who has done hundreds of deals where I've had properties that I'm like holy shit, I would so take a loss on this. Now I have the connections I do and I can go directly to the cash buyer where I wouldn't have to. But I totally see, it was like wow, like I get it. It made me understand a lot more of these people that we are working with and helping. It's like, dude, people find themselves in very shitty situations with their properties.
13:58 - Jesse Burrell (Host)
That's what's scary about you know a lot of these new investors getting into sub twos and stuff like that, to where you know you're looking for passive income.
14:06
And.
14:06
I just I don't think that's the way to do it. It's find the deal, structure the deal and sell it to an investor that could afford it.
14:11 - Tyson Smith (Guest)
Absolutely. Get your assignment fee, as always has active income. Yes, yes.
14:16 - Jesse Burrell (Host)
I'm telling you, the smartest thing I ever did was, instead of going and buying rentals, when I really started making money wholesaling like real money, like making 50 to a hundred grand a month in assignment fees is I started picking off the best deals and flipping.
14:30 - Tyson Smith (Guest)
Yeah.
14:30 - Jesse Burrell (Host)
And then what I finally did is I found rundown you know duplexes, single families, triplexes, fourplexes, sixplexes, and then I use the expertise I got in flipping and basically burying those is I would burr those and then I wouldn't even take out as much of the cash which I wish. I didn't understand the birth strategy as much back then, so I wish I would have done that and then I could keep compounding that money yeah but I liked having like actual cash flow, like real cash flow right.
14:59 - Tyson Smith (Guest)
Well, when you start to get into these, you know, keep more and more in the house yes, definitely.
15:04
Will you get into just a better economy of scale when you have to get into these, you know, keep more equity in the house? Yes, definitely. When you get into just a better economy of scale when you have multiple units, and then it's like, okay, now the cashflow starts to become more meaningful, it's like, okay, I'm not worried about 500 bucks but for most people in extra $2,000 a month, okay, that's going to start to move the needle for people. If you're cash flowing 2000 across four units and but, like you said, if you keep equity in there and then in the event that something crazy happens, you got to, you know, fix the foundation or whatever, okay, you can pull out on the equity, get it done.
15:31 - Jesse Burrell (Host)
You're chilling yeah, and, and for someone that is worth eight figures, I own no rental properties right now. Yeah, I sold all of mine in the peak, so I'm not just sitting here spewing to you guys. Are they good? Are bad? I think there's great things about them. For me personally, right now, I put a lot of my active income into startup companies and software space, and so that's something that I focus on now, and then the rest of it is in hard money, which is, in my opinion, the only passive thing that you could actually do in real estate is lending money to other investors as long as they pay. There's funds you could do, as long as you're collateralized, properly, partnering with the right people. Um, it's a great way to make 12, 10 to 12 percent, even a little bit more sometimes, depending on how risky the circumstance or the deal is or, uh, the borrower is. But I have millions of dollars in hard money and I have it. Dude, it's, we call it mailbox money.
16:30
It truly is. I write a check to get a check, and I have a lot of wealthy friends that do it that way. Because I plow all of my money and a lot of my active income still into my business to grow it, because that's what grows my net worth. And one day I'll be able to sell my business which is worth way more than you know buying some rental properties here and there. But when I sell the business then I'm going to go buy a fuck ton of rental properties.
16:57 - Tyson Smith (Guest)
Yes, but it's because you're going to have a shitload of money.
17:00 - Jesse Burrell (Host)
Just me personally. I think there's benefits and drawbacks, and I'm not saying don't buy rent. We just wanted to talk about the myths of why it mattered.
17:09 - Tyson Smith (Guest)
I want to talk about hard money, though. I think that truly the best way to go to passive income is going through almost exactly what you just said right there Learn how to wholesale increase your active income. Increase your active income even further by doing some flips. Once you get to a point where you have a lot of money that's just sitting there that you don't need let's say, a quarter million dollars, something like that can put into hard money. This is genius for a couple reasons. Number one it truly is passive, but in the event that your borrower defaults, this is an asset that you know right. You've been wholesaling, you've been flipping right and you underwrote the deal. So it's like now you can easily take that asset because you underwrote it and you know that if, for some reason, they default, they mess up, you can take it. Finish the job. Now you're off. Even that's honestly, best case scenario for you.
17:54 - Jesse Burrell (Host)
Right.
17:55 - Tyson Smith (Guest)
So that that pipeline right there from wholesaler to flipper to hard money lender is like.
18:01 - Jesse Burrell (Host)
That's the trifecta and I'm in a lucky situation to where I know, like crazy operators, that one have a lot of money and have a lot of rentals where I'm able to collateralize it. Not, I don't even.
18:12 - Tyson Smith (Guest)
I don't even wow. It's against the I more.
18:15 - Jesse Burrell (Host)
Give them a line of credit and then I collateralize that line of credit against their hundreds of units that they have and so on and so forth and um. I have long time relationships with these people so I'm not really concerned. It's to me it's, it's just mailbox money yeah, no, that I.
18:32 - Tyson Smith (Guest)
I hadn't even considered that that's.
18:34 - Jesse Burrell (Host)
That's gangster, right there that's the way to do it well, it is because you're de-risking it, but you're getting closer to nine to ten percent, yeah, instead of 12 to 15, because they could go get money for cheaper. But what they like and the value I'm bringing to them is like this is basically a line of credit, yeah it's whenever you need it, yeah use it and but like they always have to use it, so they're paying on 100 of it.
18:56
Oh, but they don't have to go transaction by transaction and get new loans and yeah. So it's like they just have this cash where they can go buy, and they can even leverage that cash, if they want to, to use other hard money for all I care, because I have it. Um, I have the right collateral on the notes that I'm protected it's protected, exactly.
19:14
So I'm like, do whatever the you want with it. Like, yeah, I don't care, just make sure that as long as I know that I'm protected. Um, I just know that they're going to use it because it's a little bit simpler than having to just get hard money, especially for the guys that flip a ton of houses yeah, it just becomes a pain in the dick.
19:29 - Tyson Smith (Guest)
Well, that's next level, right there. And it's funny because I'm fortunate enough to get to be around people like you and Zach, and it reminds me. I called Templeton and I had this big plan where I was like Templeton, I'm going to go buy a bunch of rental properties. And I was like, look, I have this big community. I can, you know, pay out these people wholesale fees. I can tell them exactly what I'm looking for. I can go do this.
19:53
And Tim breaks it down to me. He's like Well, why are you doing this? He's like, well, because I want to make more money. And he was like Okay, so he's like buying a house for you and doing all that work and then making an extra $400 a month, is that goanna help you make more money? I'm like well, I mean, I guess, if I do it at scale. He's like, well, yeah sure. And he was like look, I'm not going to persuade you not to do this because, again, he's like you're in a position where you have the active income If something goes wrong. You're not like SOL, but he's like now, if you just want to invest your money, like you want to feel like, hey, I'm not just blowing. All the smartest, richest people I know are like just put in a hard money private money.
20:31 - Jesse Burrell (Host)
Hard, yes, same thing, but you know it's that's kind of a slow and steady. But there is down downsides with hard money or private money is it is taxed as ordinary income. So you're not getting those um tax deductions like you would from a rental property, or you know you're you can't. You know I have a separate LLC with hard money and there's only so many things I could write off into that company. But that's where a lot of people do buy a handful of homes that are able to do something like that to help offset some of that. It's all a tax game and if you have a great tax person or financial planner to work alongside you, that's when you're strategically buying rental properties instead of just buying a rental property for passive income. Yeah.
21:17 - Tyson Smith (Guest)
And you know I'm glad you brought up like getting a tax return or stuff like that. I want it to be clear to everybody Don't even think about that until you've done like a deal. I looked through and one of the most common questions I get asked on my social media from people who are complete beginners are well, how do I pay taxes on my deals that I do go make the get the fucking deal first? Yeah, it's a well, hold on. Are you creating a problem in your head right now that doesn't even exist? That is only going to like will not actually be a problem because you will have already made a shitload of money to where, in the event that you did have to pay some taxes, you'd be fine. It's like, oh yeah, I guess I am.
21:53
It's like well, look, when you create these problems this is a problem with so many beginners is they start to think of all these other things that eventually one day could happen, and then they're like, oh shit, and they start to overcomplicate it. And the problem is your brain can't tell the difference between these made up problems that might happen one day in the future and real problems that are in front of you. Where the real problem in front of you is motherfucker, you need to make more money and it's like, but now you're stopping yourself from ever even getting started doing that because you're worried about these future problems. So don't worry about your taxes or anything like that. Go do your first deal, make twenty thousand dollars and then go have a free consultation with a. By by the way, word of advice to everybody talk to a tax attorney rather than a CPA, they're better.
22:35 - Jesse Burrell (Host)
Yeah, and then when you get to that next level, that's when you're working with financial planners and people like that. I have a team of people that I get to work with. It's awesome. Every deal that I talked earlier about deals that I invest in, they vet every single person I want to work with, like oh, and they underwrite the investments, they underwrite the people, the investment, the company, the, the term.
23:00
So I'm like, hey, here's my new buddy I want to give a million dollars to for hard money. And I'm like, and, and my buddy's like, hell yeah, I'm like go talk to my yeah here, yeah, here we go.
23:09 - Tyson Smith (Guest)
They're going to have some questions.
23:10 - Jesse Burrell (Host)
And they came back to me and they're like no.
23:13 - Tyson Smith (Guest)
Yeah.
23:13 - Jesse Burrell (Host)
And I was like but he's so fucking cool. They're like the investment that you have current hard money in they're like it's a point or two more that you're arbitraging. They're like on a million dollars, it's like $30,000 a year and it's not collateralized as well as what I currently am invested in. They're like is it worth $30,000 to lose a million? I was like no and I was like but I really like him, like you could still really like him. He doesn't need to have your money.
23:42 - Tyson Smith (Guest)
Wow, that's so nice to have some people in your corner like that, that's.
23:48 - Jesse Burrell (Host)
They protect, you know entrepreneurs um. We're optimistic yeah, everything's going to work um, when you meet someone that you really like, you want to find ways to work with them. Yeah, um, you know the people that I have surrounded myself with on my finances. It's their job to protect me from me, that's their job, protect me from me, and that's what they do.
24:07
And then after I'm excited and after I get like, oh yeah, they'll bring me down to reality They'll walk me through like the deal, yeah, and they'll help me make the right decision because if I didn't have them, I could be impulsive. We're impulsive. We get excited. Most entrepreneurs are visionaries. They have a lot of passion. That's just who we are, yeah.
24:32 - Tyson Smith (Guest)
And it's nice to have people that could ground you and make sure you don't make mistakes. I mean, I've obviously always known that you're a phenomenal operator and you're just like great at building teams, but this is really just speaks volumes that you always know how to cover your blind side. Dude, you're always like, hey, I need to get the person who can, you know, take over whatever, whatever my drawbacks or wherever I fall short.
24:51 - Jesse Burrell (Host)
You've got somebody covering that base. Yeah, definitely on the you know financial side, and then on the business side. You know I I have two you know amazing business partners that are both more on the integrator side, where they go in and do the dirty work, and Annie, who is one of my partners who oversees like finance and HR, but like dude, she is a finance. She protects like us to the nth degree as well. So I like have her, me and evo, my other partner, will want have some crazy new idea. I want to spend this money or do this or like ready to sign some contract on some new vendor, and she's like whoa, whoa, whoa. She's like did you guys read through? Yeah, kind of skimmed it yeah and she's just.
25:28
She's like. I'm so lucky, have like. I have strengths that they don't have. They have strengths that I don't have and that's why we've been so successful and able to grow a company, and we also don't step on each other's toes. There's a lot of people getting a real estate or business venture with someone else just like them, and then, when you're partners with someone, someone's going to have to default to doing something that they don't want to do if you have two visionaries?
25:54
yeah, and it gets really tough because someone's working out of their genius zone and not happy. It's like when you partner with someone. The best book to ever read uh, it's I forgot for a second. It's called rocket fuel. It's by um gene something. Alex rocket fuel. Look it up for me and tell me who it's by. But it really talks about the visionary and the integrator, and that's really how it should be, because it's really tough to succeed. You're the visionary, your dad's the integrator. Let's be honest. I know he has some visionary to him, but you're really that person moving the needle on the vision and then he's in the background making sure those systems processes, implementation, and that's why you know you guys have a father son duo and it works so well.
26:38
because of that.
26:39 - Tyson Smith (Guest)
Yeah, well, it's so. I I'm really glad that you mentioned this because, especially when people get into real estate and I'm kind of a problem with this I made a video and basically I was like, hey, here's how you and your best friend can go make $20,000 next month. Now, the only reason I did that is because it's a really good hook and because I can get you to share it with other people, which makes my video be seen with more people, right? But one thing I want to kind of just caution is when you're starting this or a new thing like wholesaling real estate, a lot of people feel like they need a partner, they need a friend that they're going to go do this with. You do?
27:14 - Jesse Burrell (Host)
a lot of the time.
27:15 - Tyson Smith (Guest)
Sure sometimes. But don't you think sometimes it's just cope, that it's just like you need somebody to reaffirm your belief that you can do this, like if you have your best friend who's just like you and it's like I don't know? I see it so often where it's like, dude, are you guys doing this together because you feel like you really need each other's help or it's just because, like you want to feel like you're making the right decision?
27:37 - Jesse Burrell (Host)
So I actually, um Anthony, went through this Papa's a buddy of mine with Alec Lebec, and they're both getting into it and they wanted to partner and like they didn't work, but like what they did that was really good. So like let's say, make another video. But say it this way it's like find your partner or your best friend to partner with, but don't create an LLC together. Just have like a 50-50, like JV agreement for your first couple deals while you're figuring it out, so you can go make some money, you know what.
28:04 - Tyson Smith (Guest)
That's actually a really good point, because then you do have somebody to bounce ideas off the accountability.
28:09 - Jesse Burrell (Host)
and then when you're ready to have a business. Are you guys actually good as partners?
28:12
yeah split some marketing costs, but don't, dude, don't, don't get married before you get engaged. That's really good advice. Then you could get engaged. You know you guys could like you're not. You still have separate LLCs. Uh, me, and Ivo, when we started batch we had our own Dude. We dated for over a year before we did anything like combining stuff together. It's just like, hey, here's the Batch money, we're going to split it up. We each have an LLC. We're both kind of on title or whatever. But no, I think it's great to have someone by your side, excited about something new.
28:48
But you don't set the proper expectations. Like, let's get our first couple of deals together, figure out if we work well together Okay, we worked well together. Okay, let's do a little bit more together and see what roles and responsibilities each of us want to have Okay, if that really works, great. And if it doesn't just go your separate ways.
29:03
Or if you're carrying the load and they're not putting in the work that you're putting in. Then you've gotten those couple of deals and you're like, hey, man, I'm just going to do my own thing, but just set those expectations early, cause I think, a good friend, they're going to push you and you're going to push each other over that edge to at least get started and do the calling together and not feel like you're just grinding alone and being scared. You have someone by your side, you know what.
29:23 - Tyson Smith (Guest)
You completely changed my mind on this Cause. I was so against it for the longest. And this is somebody who you know I'm obviously partnering with my dad, like, but for the most part I've always thought about I'm like, ah, this is cope, like you're just looking for somebody to like hold your hand, tell you it's okay. But now that I think about it, you're so right and I think if you do it that way, that really is the best way. And also, this is a perfect litmus test. If you're thinking right now well, how do I, how can I trust that? This person is, you know, actually, you know, not gonna screw me over? It's like, oh well, there we go. You just answered it. That's not your business partner. You can't even trust them without having a signed contract.
29:55 - Jesse Burrell (Host)
But and some people just want to get started on their own. But I'm saying, if you want your best friend and you're both interested in something, then go start it together, go start your journey together, split whatever marketing and whatever and have some type of like little JV agreement in place to where it's notarized and you're protected to some degree. Right, you're obviously probably not going to have a bunch of extra money, but I've seen people do it successfully and I've seen people do it very unsuccessfully, to where we're partners, we're doing everything and a year later they're both making a lot of money and then egos get's getting away and all these problems start happening and then neither of you're making money because you're fighting over money.
30:32
Yeah, and you shouldn't have been partners in the first place. You just should have maybe got started together and worked together to learn the business should have dated just like you said. Yeah, I mean you didn't. I mean you proposed to your soon-to-be wife well, after you dated for quite a long time. I mean, she's pretty hot, so I would propose even sooner if. I were you, but you know it's just, you have to treat business the same.
30:56 - Tyson Smith (Guest)
It's a relationship and it's a long-term relationship. It's huge. It's, I would say, just as important as your significant other. You spend more time with your partner than your significant other typically. Well, if you're actually making money moves, then yeah All right.
31:09 - Jesse Burrell (Host)
So next topic, let's talk myths a little bit further. Let's talk about you are a real estate coach. You help people get started. Very successfully, very successfully, so I might battle with him a little bit here. Actually, let's talk about the myth of overnight success versus reality on when you're getting started in real estate.
31:29 - Tyson Smith (Guest)
So I have plenty of examples of people who have come in and, like I, have a student who, in his first month, made $75,000 his first month in my program. Now I'm not going to tell you that you're going to come join and you're gonna make 75 grand, cause the difference between you and him is this guy also had a year under his belt of trying to flip properties and during that time he didn't make a lot of money. But you know, what he did make Was a fuck ton of cold calls which got him experience on getting on the phone, and so while he came in and sure you guys are both starting from zero- no, but that's not getting started.
32:02 - Jesse Burrell (Host)
True, but I'm saying getting started, because he already put in a year of work. So that's the over. He did not have overnight success.
32:09 - Tyson Smith (Guest)
He had a year of grinding.
32:11 - Jesse Burrell (Host)
Yes, and then he saw that success. But people get in and that's what that, that first year, is. There's no like. You may get lucky like, but most of you that get into wholesaling or trying to real estate invest, you quit. It's like that iceberg effect you quit before you get above. You know the water.
32:30 - Tyson Smith (Guest)
Yes, well, here's the thing. The best way to think about this is in the beginning. You need to realize you're getting paid in experience before you get paid in dollars and like. So my system when, when I'm bringing somebody in who's a complete beginner, they want to go get their first deal, I always have them start cold calling and I think that's 100 what they should do. And they Tyson when I see you calling.
32:52
You know you sometimes you're calling leads that your VA has called for you or or these inbound digital marketing lead, Like I want that, and it's like, well, listen, can't afford it. Well, not even that. But it's like, look, even if you had, you don't even know how to do it. If you, I still wouldn't have a beginner do that because you're going to mess it up. You could get on with like the hottest lead ever and all of a sudden it gets time to sign the contract and you start to piss on your nuts because you're freaking out and you don't know what to do.
33:17
You need to build up that experience of getting comfortable on the phone and making these calls and that's why you start with cold calling, right, and then, yes, once you get comfortable, then you can start doing these other things. But it's like you need to realize that in the beginning you're getting paid with experience. I talk about when I got my first deal. It took me two months and but if I had talked to that lead, I did, but still, I mean he, he wasn't like he was sitting there with me. He was like hey, look, call these people. Yeah, no know that if I had talked to him my first day, I probably wouldn't have gotten it locked up because I would have fumbled around and fucked it up somehow because I didn't have the practice.
33:59 - Jesse Burrell (Host)
Yeah, but let's not talk like you're coaching in general. I don't want to plug you for the next 20 minutes, but let's, let's just talk about, you know, kind of like what people see online of really, you know, saying having that overnight success versus because a lot of these gurus or yourself, it's not overnight success, it's a ton of grinding, all these people that are wanting to get started. I was there, I was broke, I was serving tables and I wanted to do more with my life. You just see all these people and all this success and it's just overwhelming. You're like how do I do that?
34:32 - Tyson Smith (Guest)
Yeah.
34:33 - Jesse Burrell (Host)
And no one has overnight success. It's a ton of grind and then you're seeing their highlights and the fruits of all the work that they put in. So just understand that you better be willing to really focus on the journey instead of the result, on the journey instead of the result. Because the result if you're going to really put the work in, get the right mentors, do all those little things that need to be done, you will be successful. Most people will be to some degree, more others and not. But it's not overnight success. Ever I've never seen someone just instantly be crazy successful. So just know that. Be patient when you're getting started and like don't get in real estate investing for the money. Get into it to help people buy and sell houses, to be a problem solver, to want to make a community nicer by flipping houses and in bad areas and driving up the values and putting you know good families into these homes. Like you have to have a bigger purpose than money. If it's money, you're not going to stay motivated.
35:36 - Tyson Smith (Guest)
Well, and I think it's like you have to realize that, when it comes to being successful in this, like you're not special, it's not like you have some deep fucked up thing that's going to prevent you from being able to figure it out, because it's a repeated process. It's like there are certain inputs where, if you go through, you learn how to do this. You make the calls every single day, you're going to eventually get the output of getting the deal, making the money, doing whatever it is, and it's like if you just do that, you're going to get the same result. Like now, it might take you longer because of, or might take you longer, faster, depending on certain natural inclinations or whatnot natural inclinations or whatnot but it's going to happen, yeah, you know, and it's just a matter of sticking with it and staying consistent. But, like you said, I mean me personally when I thought about like okay, I want to get into real estate, it was 100% oh, it's because I wanted to make money, right.
36:23
But I didn't have success until I kind of fell in love with the process of being like oh, like, yes, real estate is the vehicle, but I'm myself getting better, like I'm learning these skills, I'm becoming a better communicator, and like I'm getting better at you know my analytical skills of being able to look at a property and learn about it and do these things, and it was like those are the things that eventually really allowed me to start making more money.
36:45
Right, it was, but, but it was when I really, like, became obsessed with that. It's like how do I improve myself to where I became this person that's capable of making more money? And it's like that, right there, I mean, I tell people like you, if you want to, if you just want to get into something that is going to force you to level up yourself. I think real estate is perfect because it forces you. You don't have a boss most of the time. You have to be accountable to yourself, unless you have a really great mentor who's going to help you with that, and then you become the type of person who is capable of doing these things.
37:15 - Jesse Burrell (Host)
That's true. That's. That's a good point, because everyone gets into something because they want to make, you know, more income or more money, for whatever reason, their family lifestyle, so on and so forth. But my point was, you know to what you just said is falling in love, you know, with the process. And I think the biggest thing that really helped me become and get to the success level that I got to is always uh, and still today is curious to learn, being eager to just soak up knowledge that I could get from people that are smarter than me, that have experienced more from me and I know you do that with your students in coaching. But like I still look for that all the time, like I haven't figured it all out. I have so many weaknesses that I have to continue to work on. And how could I lean into my strengths, like even further?
38:05
But like, if you're wanting to be an entrepreneur or even a side hustle for real estate, it's like really falling in love or even a side hustle for real estate. It's like really fall in love with the process and the community and the people and money will find you, but fall in love with what you said. There's so many cool things that you get to learn with how to underwrite deals and put your math skills and your critical thinking. And then, especially when you're wholesaling, most of the time you're dealing with people that are in really shitty situations, where you have to be very empathetic to their situation and you really want and need to help solve their problem. It shouldn't all be about the money. Of course you should get paid for your time and your service to help somebody. There's nothing wrong with that but making it too transactional is very short-sighted, in my opinion.
38:51 - Tyson Smith (Guest)
Yeah Well, I mean, I know people who are like, they're willing to do anything to get the deal and they will, you know, resort to some shady tactics, but those people don't last. Like karma will come take care of you, you know. Yeah, like, any industry has bad apples, but wholesaling obviously gets a bad rap. People are like, oh, you're taking advantage of people, you're stealing their equity. It's like, okay, I mean, look, all the pawn shops down the street are completely fine, you know, but me over here doing the same thing in the house is now a problem. But it's like, look, if you're actually, you know, are taking somebody who's put themselves in a bad you know spot, and you realize that this is the logical way forward.
39:27
Like, look, I talked to somebody. You have a disgusting house. It's filled with shit. You don't have any money to clean it out and fix it, and then you know, stage it, make it nice, sell it on the market. It's like, but you have to go. It's like, what is your other option? Right, like you need to work with a wholesaler, somebody who's going to be able to get rid of this house for you, whereas I don't know no-transcript.
39:58 - Jesse Burrell (Host)
Like you spent years meeting those people, getting to know those people? Yeah, these homeowners don't have those relationships. It's not like you're just like oh yeah, here you go. This person will pay 30 grand more than what I'm going to pay Like. This person will pay 30 grand more than what I'm willing to pay Like no you have a business and you built relationships and you are a middleman.
40:16
That is your job. You're agreeing with this seller of like hey, here's your situation, I'll make sure I get you this amount of money. I'm either going to take it or I'm going to find a partner or someone that I know in my sphere that will pay more. Are you good with that? It's that simple.
40:31 - Tyson Smith (Guest)
Yeah, well, and it's funny. It's funny Well. I mean I have in my contracts in black and white I'm a wholesale buyer, I'm looking to assign this contract for a profit. It's the first. It's in big letters just before they sign and it's like people are okay with that. And it's but yeah.
40:53 - Hope (Announcement)
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