Dustin Heiner is a real estate investing expert and creator of the Real Estate Wealth Builders Conference (REWBCON). After becoming successfully unemployed at 37 by building wealth through rental properties, he made it his mission to help one million people achieve financial freedom through real estate. Since launching MasterPassiveIncome in 2015, Dustin has guided countless investors, even those in expensive markets, on how to invest nationwide, proving that anyone can build passive income and escape the nine to five.
Here’s some of the topics we covered:
- Inside Dustin’s Growing Multifamily Empire in Nashville
- The Unexpected Path That Pulled Dustin Into Real Estate
- From Government Layoff to Building a Single-Family Portfolio
- Dustin’s Proven Investment Formula and How He Finds Winners
- What the Best Property Managers All Have in Common
- The Real Truth Behind the Multifamily vs Single-Family Debate
- The Difference Between Single Family & Multifamily Cashflow
- What a Fed Rate Drop Could Mean for Real Estate Investors
- Step-by-Step Blueprint for Buying Cash-Flowing Rentals Out of State
- How Dustin Attracts and Screens Rockstar Tenants Every Time
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
01:20:07:27 – 01:20:26:06
Rod
Welcome to another edition of Lifetime Cash Flow to Real estate investing. I’m Rod Khleif, and I’m thrilled you’re here. And I know you’re going to get tremendous value from the gentleman I’m interviewing today. His name is Dustin Heiner, and, he teaches people how to buy single family all the way up to four units. His website is master passive income.com.
01:20:26:08 – 01:20:31:00
Rod
And, and he also has a conference coming up in March. Where’s it at?
01:20:31:02 – 01:20:31:18
Dustin
Nashville.
01:20:31:18 – 01:20:37:08
Rod
Nashville. Now we’ve got an asset. Nashville. Love. Nashville. Okay. Well, welcome to the show, bro.
01:20:37:10 – 01:20:52:17
Dustin
Hey. Hey, Rob, thank you so much for having me on. Yeah, I just I love real estate investing. It allows me freedom in my life. But then I go to the gym every day, hang up my family. I come on podcast. I could fly here to hang out with you. So it’s amazing to have real estate investing. But thank you for having me on.
01:20:52:20 – 01:20:55:28
Rod
Yeah. Of course. So, where do you live, by the way?
01:20:55:28 – 01:20:56:14
Dustin
Nashville.
01:20:56:14 – 01:21:15:00
Rod
Oh, you live in Nashville? Yep. Yeah. You’re where? You know, my Avalon of Hermitage burned down. Did you see that on the. No. He did it. Yeah. Yeah, yeah, I had, I had, it didn’t completely burned. And I lost a 2020 unit building there. In, Yeah, I have a beautiful. But, you know, B-plus asset, 145 doors in Hermitage.
01:21:15:02 – 01:21:25:15
Rod
Yeah. Which, you know, obviously. Yeah. But, yeah, I didn’t realize how fun Nashville is. It’s that that that, Is it Broadway? Oh, yeah. Yeah. Broadway Street that’s got all the bars and restaurants.
01:21:25:15 – 01:21:41:10
Dustin
It’s, it’s a great city to visit. Yeah, 100% live there, too. We love living there. Yeah, I have a 300 and, 375. An apartment complex just south of Nashville, about 20, 30 minutes away. Nice. That goes it really well. And also one in Chattanooga, 350 units.
01:21:41:10 – 01:21:53:09
Rod
So that’s where you’re, you’re. So you’ve got some multifamily assets as well. You told me before we started recording. Yeah. Why don’t you tell us your story? I you know, when you get into real estate, maybe. What’d you do before real estate? Why real estate?
01:21:53:15 – 01:22:10:29
Dustin
Yeah. So I just, like everybody, have been taught you go to school, you get good grades, and then you take those good grades, you go to college or university, and you get a thousands of dollars into debt, and you take that piece of paper they give you called a degree, and you go and hopefully get a quote unquote career and work for 40 plus years.
01:22:10:29 – 01:22:28:13
Dustin
Your life, and then retire on 40% of what you manage to save that entire time. Working a job is what I call it is just over broke is what you’re living. So I’m doing the exact same thing. But in 2006, I bought my first rental property. Yeah, I was living in California. I bought this one in Ohio, and it started making me money and cash flow.
01:22:28:16 – 01:22:48:27
Dustin
And I knew I need to be an investor. Like, I knew this is the way to go, but right. Life started getting in the way and my wife and I started having kids. We have one, two, three and four kids, and this is really what shoved me to become a real estate investor. So when my wife had her fourth kid, I had a regular sit down desk job working for a local county government doing it.
01:22:48:29 – 01:23:04:29
Dustin
And we know this was in California too. So California is not going away. Government’s definitely not going away and it is not going away or technology. And I got the most stable, secure job I could ever think of. But then my wife had our fourth, our fourth child and I went on paternity leave. That’s where the dad stays on the money.
01:23:04:29 – 01:23:06:02
Rod
What? I’m sorry, I didn’t hear that less.
01:23:06:03 – 01:23:22:00
Dustin
I went on paternity leave, turned to leave. Got it. Yeah. That’s where the mom or the dad stays on. The mom changes poopy diapers and all that good stuff. Well, two weeks I’m off work, but then I go back to work. And in that same week, I go back to work on a Friday at 330 in the afternoon, I get a call from my boss’s boss’s boss’s secretary.
01:23:22:00 – 01:23:37:28
Dustin
Like the top dog, she says, Dustin, would you please come to the office? I said sure and hung up the phone. I thought, why in the world are they calling me to the office? This is not normal and I’ve seen plenty of movies. Friday at 330 is not a good sign, and I remembered a few rumors before I got.
01:23:37:28 – 01:23:55:08
Dustin
I want to paternity leave that there was potentially layoff going on in the county because they’re having some budget issues. I said, no way. I shook it off. I said, there’s no way I have great seniority here. So I get up and I start walking down the hallway to my boss’s office. Well, this hallway isn’t very long. In fact, it’s kind of short.
01:23:55:08 – 01:24:12:18
Dustin
But every single step that I took felt like the hallway got longer and longer and longer, and it felt like my feet became less bricks because the thought of potentially losing my job was really starting to rain down on me. Well, I get down the hallway and I turn the corner. I see my boss’s door, his doors close to his office, and I see a secretary there.
01:24:12:19 – 01:24:34:12
Dustin
Super sweet, nice old lady. And she says, Dustin, would you please have a seat? And she’s kind of sheepishly grinning at me, kind of consoling me with her eyes because she knows everything about what’s going on. I know nothing about what’s going on. So I go and I take my seat and I start thinking about my life. If I get laid off right now, did I just waste my life following this entire plan that somebody else told me to follow?
01:24:34:15 – 01:24:50:17
Dustin
And then I thought, oh my goodness, we just had our fourth kid. If I can’t afford and feed my family, does that make me a failure as a father? Does that make me a failure as a husband, as a man trying to provide for his family? Well, as I’m sitting there, my hands get all clammy and my forehead gets all sweaty because the nerves are just crushing me.
01:24:50:19 – 01:25:08:00
Dustin
Well, the door to my boss’s office opens up an aisle, walks a coworker of mine with a piece of paper in her hands. She’s noticeably distraught, very upset. She passes by me and my boss calls me into his office. I go into his office and I get laid off and remember, this is the government. Nobody gets fired or laid off from the government.
01:25:08:07 – 01:25:22:02
Dustin
But I did, and this is the reason why I tell the story. So I take that layoff notice and I go and I sit down on my desk just getting laid off. I realized two things. Number one, I need to get another job. I need to find another way to provide for my family. So I was really blessed.
01:25:22:03 – 01:25:41:14
Dustin
Praise the Lord to find another job in the same county, a different department wasn’t having those issues. Check. But then sitting there in that chair just getting laid off, I realized I need to make sure that this never, ever happens to me again. I didn’t make sure that nobody can take away my ability to feed my family. So right then and there, even though I knew I needed and being better, I let life get in the way.
01:25:41:14 – 01:25:59:03
Dustin
I said, no longer will I ever let life get in the way. I started telling everybody, I said, I’m going to tell everybody I’m an investor. Whenever I get asked the question, what do you do? We all reply with our job. Well, when we reply with a job, we’re basically telling the world, projecting out to world that our value that we put ourselves comes from our job.
01:25:59:06 – 01:26:16:14
Dustin
I realize my job, my value comes from my God and for myself, for my family. So right then and there, even though 100% of my money just about came from my job, that’s now my part time job. I’m a full time investor. So I fast forward the story started buying property after property after property went up. Ohio, Texas, Arizona.
01:26:16:14 – 01:26:17:06
Dustin
Right now it’s.
01:26:17:06 – 01:26:20:06
Rod
Ohio. What single family? Single family in other states?
01:26:20:06 – 01:26:20:19
Dustin
Correct.
01:26:20:20 – 01:26:21:23
Rod
Who was managing them?
01:26:21:23 – 01:26:26:17
Dustin
I hire other people to do it. Okay. Yeah. Okay. Yeah. So I saw this turkey’s purchase.
01:26:26:17 – 01:26:27:04
Rod
No. Okay.
01:26:27:04 – 01:26:42:24
Dustin
No. All right. Yeah. I can get into all the how I did all this sort of stuff. But I started I was living in California at the time, bought in Ohio and just started buying property, a property, each one making me 4 or 5, $600 a month in passive income. Now, I still have 30 plus properties now.
01:26:43:00 – 01:27:00:01
Dustin
And these are single family homes. And with that I have some making me $3,000 a month in passive income from these properties. And eventually that last part of the story, I went to my boss and I said, hey, I’m laying you off this new boss, good boss and all as I’m laying you off and you kind of jokingly and we laugh and he said, well, what are you going to do?
01:27:00:01 – 01:27:19:25
Dustin
I said, I don’t have to do anything. I own real estate that makes me money without working. So the last quick part of the story, I would walk to and from my job, from my car parked a mile and a half, done it a thousand times. The last time I walked to my car for the very last time, I felt like I was walking on clouds because I knew I would never need a job again because I had financial freedom.
01:27:19:27 – 01:27:34:08
Dustin
Now, for you listening, I want you to realize that you are worth so much more than anybody could ever pay you. And you’ll know this because your boss is paying you just enough to keep you working without quitting. But not so much. Money takes money out your pocket. If they paid you what you’re worth, they would go broke.
01:27:34:09 – 01:27:59:00
Dustin
So instead, like rod and myself, we found ways to make money outside of working for somebody else. That’s why I like the term successfully unemployed, because not necessarily tired. Retired means, you know, maybe getting way. Am not doing anything. No, I still create businesses. I have four businesses. I invest in real estate. But if you put your life in your own hands and build in the value for yourself instead of making somebody else rich, you’re going to do very well.
01:27:59:00 – 01:28:01:13
Dustin
So I’ll pause the story because you probably got plenty of questions.
01:28:01:16 – 01:28:02:23
Rod
What for businesses do you?
01:28:03:00 – 01:28:31:18
Dustin
So I have the real estate investing that I have. I have the online coaching that we have as well. I also for, for real estate investors started that in 2015 doing that. So podcasting just like you having a long time then I also have my events that I put on. More it’s more of like, community events, like big Expo, you know, big type of conference helping real estate investors and then also, coaching for, let’s say, exercising, lifting and stuff like that.
01:28:31:20 – 01:28:33:02
Rod
Oh, like physical because.
01:28:33:03 – 01:28:34:17
Dustin
Yeah, physical training type stuff. Yeah.
01:28:34:23 – 01:28:37:21
Rod
Okay. Okay. So,
01:28:37:23 – 01:29:00:12
Dustin
Okay, I missed one, I forgot I forgot to add one in there. We have a software company that helps people to analyze deals. Single family homes. It’s called Income Builder and can Builder bio. And so we created that because my students were needing work. There’s only so many Excel sheets that like, eventually people screw up. So now we created a platform that people go in there and find deals, single family homes and yeah.
01:29:00:12 – 01:29:09:07
Dustin
So just now I have 40 plus hours of my life because I’m not working for somebody else that I can do whatever I want, hang with my family, build businesses, invest in real estate.
01:29:09:10 – 01:29:24:12
Rod
Yeah. Okay. Okay. So talk about when you got started in you’re buying houses in other states. How’d you find them? How’d you finance them? And and who manages them?
01:29:24:12 – 01:29:46:04
Dustin
Yeah. So you know what’s interesting? Yeah. These are great questions. These are questions that I always get because most people, when they’ve never done Single-Family homes or residential, actually, in Brazilian investing in general, they always ask finding funding. Then they forget the last question which you ask which is most important. This is the most important question. Yeah. How do you manage them for longevity?
01:29:46:08 – 01:29:48:13
Rod
Which is why I’m very much against turnkey.
01:29:48:16 – 01:29:50:19
Dustin
But I’m I’m against turnkey too. Okay.
01:29:50:19 – 01:29:52:13
Rod
So anyway, so so you do.
01:29:52:15 – 01:29:54:02
Dustin
But yeah financing and funding.
01:29:54:08 – 01:29:56:00
Rod
Those are two finding and finding.
01:29:56:00 – 01:30:19:18
Dustin
Yeah. Sorry. Yeah. And finding. So the number one thing for me was I, I want to make sure because I have a somewhat of a business background. I went to a school for, for business and I approached it instead of being a quote unquote investor let because those, you know, TikTok gurus or even back in 2006, I watched an infomercial and, they, you know, these gurus that that, charge you like $100,000 to work with.
01:30:19:18 – 01:30:37:05
Dustin
And I’m like, I don’t have that money. But what they say is find a property, analyze it. You’re going to get appreciation. This is 2006, remember? So they were saying, you know, you’re going to be so happy. Like don’t even worry about any cash flow. Just invest for appreciation. And then you spent thousands dollars to buy the property, then spend thousands to fix up.
01:30:37:08 – 01:30:53:20
Dustin
Then try to find a tenant and then try to find a property manager. Well, my opinion that’s backwards. So what I look at is how do we build a business in a certain city? I invest in Ohio, Texas where it all the Tennessee, Akron, Cleveland, Youngstown and Barberton.
01:30:53:22 – 01:30:55:08
Rod
Those are all pretty close to each other.
01:30:55:09 – 01:30:56:07
Dustin
Yeah. Yeah, yeah.
01:30:56:10 – 01:31:00:15
Rod
So, so so to talk about the process, please. Micro.
01:31:00:16 – 01:31:13:17
Dustin
Yeah. So what you do is you look at so within every single city that I’ve gone to or invest in, the first thing I do has a look at the city. Does the city have good inventory. Like if you go to a city that has like three homes for sale.
01:31:13:17 – 01:31:15:29
Rod
What’s your definition of good? Oh, just plenty of houses for.
01:31:15:29 – 01:31:32:17
Dustin
Plenty of houses for sale. On the rise in the right price point and the right size. Like I don’t want to buy a two bedroom land under square foot because family families won’t live there right? But I don’t want to buy a, let’s say six bedroom, you know, 3000 square foot house because there’s extra walls of paint, extra toilets and all that sort of stuff.
01:31:32:19 – 01:31:49:25
Dustin
So my buy box is three bedroom, two bath, 1200 and 16ft². The types of homes that everybody either wants to rent or families either want to rent or buy. If I ever want to sell it, the most popular type of home. Right. And those are the best ones because lower prices but higher cash flow because you could rent a higher.
01:31:49:27 – 01:31:53:29
Rod
Okay. So you researched the market to see to see what’s there.
01:31:53:29 – 01:31:58:28
Dustin
Is the city, does it have enough inventory that I’ll be able to continually buy more.
01:31:58:28 – 01:32:00:11
Rod
Property instead of just one house?
01:32:00:11 – 01:32:20:15
Dustin
Correct. And here’s a great thing about that too, because let’s say you go to a small city, you might buy 2 or 3 properties, but if there’s so few properties, there may be fewer property managers. That’s the number one thing. I’m glad you asked that question, because most people just don’t even think about that. I want to make sure that not just making money for the longevity of having a property, that’s that’s number one key.
01:32:20:16 – 01:32:27:18
Dustin
We want that. But I also hire experts that are going to do the work for me, finding the right properties, making sure not just.
01:32:27:21 – 01:32:29:18
Rod
You hire experts. Could you be more specific?
01:32:29:18 – 01:32:48:05
Dustin
Totally. So they are going to help me to find properties. The manager properties give you example. So what the gurus will tell you is, you know, just do all the wrong way, the right way. Find a city. Find a city has a good amount of inventory, lots of properties to buy, and then you hire your property manager. You stop looking at properties like you don’t need to buy properties yet.
01:32:48:07 – 01:33:01:19
Dustin
You then look for a property manager, somebody it’s going to take care of your property. But then they’re experts. They’re also going to tell you the right areas of the cities to invest in. They’re also going to tell you, well, let me say it this way. I’ve had plenty of I’ve coached thousands of people. Now how buy Single-Family homes.
01:33:01:27 – 01:33:16:13
Dustin
I get people say, hey Dustin, I did what those gurus said. I spent $3,000 to buy it and blah blah blah. I did everything and then I went to call property managers after I own it and everything, but every single property manager said they would not manage it because they get shot there like, oh, you don’t have an asset anymore.
01:33:16:14 – 01:33:26:25
Dustin
You have a liability. What we do instead, instead of after you do all that and you’ve tried to find a property manager, that’s backwards. What we do first is we find property manager first.
01:33:26:25 – 01:33:30:09
Rod
All right. So so give me a give me what you look for in a property manager.
01:33:30:12 – 01:33:35:14
Dustin
I look for a number of different things. Communication’s huge. If they don’t.
01:33:35:15 – 01:33:40:13
Rod
Care about their background and or ecosystem and or infrastructure, what do you look for.
01:33:40:13 – 01:33:56:29
Dustin
There? I don’t even go there yet. First I look because, imagine if you had a company that you built and then you just see somebody across the street and you just say, like, one way, that’s not what you were saying, but I’m saying in general, grabbing somebody and say, hey, you say that you’re a manager coming in, manage my inventory, my money, my business.
01:33:57:05 – 01:34:12:11
Dustin
You’re not going to do that. You’re going to hire very slowly. You’re going to hire an interview. Many, many people. So what we do first is we interview many property managers. And at the same time, with interviewing all these property managers, we ask them questions that help us to understand how they work.
01:34:12:11 – 01:34:19:14
Rod
So this is we do have a management company, small property management companies, not actual individuals. You’re looking at companies that you’re interviewing.
01:34:19:14 – 01:34:24:28
Dustin
It depends. It depends. It’s like so anybody who calls himself a property manager, there could be a big company nation.
01:34:24:29 – 01:34:42:27
Rod
Yeah. Well, you know, sometimes you’ll see a broker doing it on the side and sometimes that’s that’s not a bad solution because they’ve got the time to do it. But, you know, as you may know, I’ve owned over 2000 houses that I’ve rented long term in three states. So, I mean, I’ve done your business in a, in a you know, 100 capacity.
01:34:42:27 – 01:34:58:11
Rod
Yeah. No kidding. And, and so, you know, I’ve hired property managers, I’ve had property managers embezzle from me, and, and, you know, it’s it’s rare that I have a good experience. I’ll be candid because they’re they’re not sophisticated. But,
01:34:58:13 – 01:35:05:26
Dustin
There are so many people who call themselves a property manager and. Terrible. Right. They just it’s easy to just put on a hat and say, yes, I’m a property manager.
01:35:05:29 – 01:35:16:06
Rod
You know, you’ve got to interview them. I actually have a book on how to hire a third party property management company. It’s it’s pretty good, actually. It’s it’s free. On my Linktree guys, it’s at Rod’s links.com.
01:35:16:14 – 01:35:19:13
Dustin
With that many properties, would you be able to create your own.
01:35:19:13 – 01:35:20:18
Rod
Oh yeah I manage myself.
01:35:20:18 – 01:35:21:16
Dustin
Yeah yeah yeah yeah. Good good.
01:35:21:16 – 01:35:34:00
Rod
Good. But but I’ve, I’ve, you know, prior to going in-house and vertically integrating, I had, I had used like in Memphis, for example, I had 200 houses in Memphis. I don’t even want to fly over Memphis.
01:35:34:05 – 01:35:35:20
Dustin
No, you don’t know. You know, you’ll get it.
01:35:35:24 – 01:35:49:17
Rod
Yeah. I bought houses. Just, you know, I bought houses in Memphis, 1500 square feet, three bedroom, two bath houses for $1,500 and $5,000, $3,500. And I regret every freaking wanting to know.
01:35:49:17 – 01:35:50:01
Dustin
What you mean.
01:35:50:01 – 01:36:11:07
Rod
Yeah, so. But but anyway, so I. Yeah, that’s where I had it. I got, I had a property manager embezzle from me, but so, so, so you get the property manager, helps you determine the markets to buy in the the really the, the the specific, areas of a town to buy in which it’s important.
01:36:11:10 – 01:36:12:29
Dustin
And even the properties, like, if they tell me.
01:36:12:29 – 01:36:15:17
Rod
They will, they can find, they can bird dog houses for you as well.
01:36:15:20 – 01:36:32:02
Dustin
Yeah. But at the same time, because I have investors sending me deals, realtors I have deals come all over the place. But I will ask my property manager first. So instead of calling a property manager later after you buy it and say, will you imagine? They say no, I’ll get shot there. You call them and say, I’m looking to buy this property.
01:36:32:02 – 01:36:36:11
Dustin
Tell me how much it would rent for. Will you manage it? All the good questions, that vacancy factor.
01:36:36:11 – 01:36:53:26
Rod
Oh, that’s really smart. That’s really smart because they’ve got their, you know, they’ve got their ear to the ground. They know what the demographic is there that’ll rent it. They know where they work. They know what the what the what. The hood is there in that town. And there’s one in every town. And you know, and, and I tell people don’t, don’t buy D-class assets.
01:36:53:26 – 01:37:08:22
Rod
Yeah. You know, and I say, ask me how I know because I’ve had properties where people have been killed in them, around them, behind them. Hole cut in the front door to pass the crack through, you know, concrete blocks put at the end of the street to slow down the drug traffic, not stop it, just slow it down.
01:37:08:24 – 01:37:22:26
Rod
You know, this was in Denver. I bought a whole block. It was a frickin nightmare. Now, don’t do D-class houses, but but so. So you asked the property manager where to buy. Okay. So so. Got it. So? So he says, okay, pull the trigger on that one. How do you finance it?
01:37:22:29 – 01:37:41:24
Dustin
Financing. I’ve used 20 different ways. Creative financing. It could be your own money. It could be home economic credit, private money, hard money. I’ve I’ve used credit cards, signature loans like you name it. We look at creative financing ways to use other people’s money to buy him. So. But one thing that I wish would have happened there was around back in 2006 when I first started messing.
01:37:41:24 – 01:37:47:26
Dustin
That’s around now that is just absolutely amazing. Is a debt service coverage ratio loan, doctor loan.
01:37:47:27 – 01:37:49:27
Rod
Yeah, those weren’t around. Those weren’t around I.
01:37:49:27 – 01:38:04:11
Dustin
Know, and they’re amazing. I just bundled six properties together, pulled out 500, almost 600 grand out of all those properties. And DSR loan six point 6.5% 30 year fixed. So once it paid off, a 30 year fixed. Yeah, DSR.
01:38:04:11 – 01:38:07:28
Rod
One through through what lending and what sort of a lender.
01:38:08:00 – 01:38:12:06
Dustin
I think well Renovo is the company that I used and yeah, 30.
01:38:12:08 – 01:38:12:29
Rod
Year fixed.
01:38:12:29 – 01:38:15:14
Dustin
Exactly. That’s what I’m saying. Like what’s the deal.
01:38:15:17 – 01:38:16:14
Rod
I’ve never heard of that.
01:38:16:15 – 01:38:28:03
Dustin
Yeah 30 year fixed. Once it’s done it’s paid off. And so it’s, it’s a it’s a regular regular almost like a conventional loan. But it’s for us investors. But it bundles six properties together. Pull out the money. That’s how I bought a $32 million apartment complex recently.
01:38:28:03 – 01:38:29:08
Rod
Not heard of that before.
01:38:29:08 – 01:38:29:28
Dustin
Oh, yeah.
01:38:30:00 – 01:38:30:13
Rod
Okay.
01:38:30:19 – 01:38:31:24
Dustin
I can connect you with them.
01:38:31:27 – 01:38:47:28
Rod
Yeah, I, I that’s very interesting. I, I’m not in your space. I mean we in my, in my world, every loan is a DSR loan. You know, if you don’t miss one, if you don’t meet a $1.25 service coverage ratio, you’re not good unless you do bridge debt, which you don’t really want to do unless you really have to.
01:38:47:28 – 01:38:51:03
Dustin
Or you’ll get hurt if you do that. That people and multivan are getting hurt. Banks. Yeah.
01:38:51:04 – 01:39:15:01
Rod
No. This that we’re seeing a tremendous amount of deals right now in multifamily because people got adjustable rate debt. You know, so, so okay, so every, every type of financing. Yeah. Same thing I did, you know, hard money. I had an old woman that loaned me millions of dollars, hard money, and, you know, seller finance deals, tons of seller finance deals.
01:39:15:03 – 01:39:20:27
Rod
And that’s bank loans as well. You know, you go to the bank as well, right? Absolutely. Do any, Fannie Mae stuff.
01:39:21:04 – 01:39:21:23
Dustin
Yeah. Okay.
01:39:21:23 – 01:39:34:25
Rod
Yeah. So you don’t Fannie Mae loans, they have a limit, I think. What is it, 10 or 12 Fannie Mae loans you can get? Okay. So, talk about some of the issues you’ve had with the property management, though, because I know you have.
01:39:34:26 – 01:39:49:15
Dustin
Well, the biggest issue is finding somebody who is not going to be able to take care of properties. And they don’t look at you as a customer that they got to take care of. I gave example just today, literally today, this morning, I got an email from one of my property managers who I’ve been wanting to let go, but I’m in a contract.
01:39:49:15 – 01:40:05:19
Dustin
His 12 month contract. They nickel and dime me with so many things, and when I got into business with them, I didn’t. They didn’t tell me all these. Now they just oh, we added this fee. We added this fee. And then they’ve just done such a terrible job. But I got an email from them saying, well, we’re giving you a 30 day notice that we’re not going to be your manager in 30 more days.
01:40:05:19 – 01:40:20:09
Dustin
I’m like, good. I’m so excited because here’s the number one thing with property manager. Actually, anything in this business you should have backups. You should already be looking ahead. So you’re not reactive. So I already have two other property management companies I’m already ready to move to. So as soon as I said that I’m like, great, let’s do it.
01:40:20:11 – 01:40:28:09
Dustin
Now. The bad thing is, is if you do not overlook your managers and get their statements and verify what they’re doing.
01:40:28:10 – 01:40:29:12
Rod
Trust has verify.
01:40:29:16 – 01:40:49:00
Dustin
100%. And because some some property managers say anything under $1,000, we as the property managers are like, you’re agreeing that we can just do whatever we want. I’m like, no, there’s absolutely not. I’m going to have no cash flow at the end because you’re going to be nickel and diming me, especially when they have really huge expenses and they don’t get second and third and fourth quotes.
01:40:49:03 – 01:40:59:29
Dustin
I had the same property manager that I that just, stopped working with today. They got they even tell me they went and changed an entire main line for my property. The main drain, which is that’s.
01:40:59:29 – 01:41:01:09
Rod
One $1,000.
01:41:01:11 – 01:41:15:12
Dustin
It was five grand. I said, you didn’t get more quotes like like I. Anyways, long story short, it should have been a $700 fix. They just got in there and I said this I’m not paying this. You got to get this price lower. So they eventually knocked it down to $4,000. But I’m like, I’m so glad I’m done with that.
01:41:15:12 – 01:41:29:18
Dustin
But that’s the thing is, you have to find a company that you trust and then as you work with them, eventually if they do well, I have one property manager, been with them for 15 years. I trust them implicitly because they do so well. Now. Obviously I check, I’m always checking everything, but you really, they do such.
01:41:29:18 – 01:41:34:24
Rod
A great job them on you should line all that out. Yeah. If it’s over X amount.
01:41:34:27 – 01:41:38:03
Dustin
You told them that they said no it’s an emergency. It’s okay. No, but it doesn’t.
01:41:38:03 – 01:41:50:11
Rod
Matter if it’s an emergency. There’s there should be an approval process. And yeah it’s always three bids if it’s over a certain amount of money and it’s right and it’s always a written approval. Yeah. If it’s over a certain amount.
01:41:50:11 – 01:42:07:21
Dustin
Absolutely. No. They said no, it’s an emergency. I said no, a water shooting out pressurized water okay. That’s an emergency. We shut it off. We stop it or gas leak. That’s emergency. We shut it off, we stop it. We do not do a main drain which is not pressurized, and it’s not even leaking. There’s no snap. Anyways, it was just like, you guys are ridiculous.
01:42:07:23 – 01:42:10:00
Dustin
It was there. Just basically stole my money.
01:42:10:02 – 01:42:40:06
Rod
Yeah, well, I’ll tell you. And that’s the thing. Whenever you hire a management company for a smaller asset, and this is not just single family up to four plex or, you know, four units, which is your main wheelhouse. Dustin. It’s it’s anything, candidly, where you’re relying on the management company’s maintenance or contractor infrastructure, where you can’t, you know, like I would say probably 30, 40, maybe 50 units or more where you don’t have a full time maintenance guy on staff.
01:42:40:08 – 01:42:57:10
Rod
You’re going to rely on their maintenance infrastructure, and, and you you really need to dig into that because of what you just described. The other thing they’ll do is they’ll hire some kid at 15 bucks an hour and bill them out at 100. I know that’s very common. Yeah. And they, you know, they they shore up. They shore up their, their income with, with maintenance, maintenance.
01:42:57:10 – 01:42:58:18
Rod
It’s a real problem. It’s a form.
01:42:58:25 – 01:42:59:19
Dustin
It’s a problem.
01:42:59:19 – 01:43:18:02
Rod
Yeah. It’s a huge problem in, in, in in your world, in my world, you know, you’ve got somebody on site, that’s, that’s doing the work. But yeah, it’s super important. The other thing with property management companies is, is you’ve got to check out their digital infrastructure. There’s a lot of digital dinosaurs still in the management space.
01:43:18:02 – 01:43:18:15
Rod
And I get.
01:43:18:15 – 01:43:19:29
Dustin
Paper checks still from one.
01:43:20:00 – 01:43:20:06
Rod
Yeah.
01:43:20:06 – 01:43:24:13
Dustin
Jesus. I’ve been with them for 20 years. They make me a lot of money. So I kind of like I just put up with it.
01:43:24:15 – 01:43:53:08
Rod
Okay, okay. So that’s where you finance them. That’s where you manage them. Well, let’s, you know, I obviously have done single family in a big way. And, now I do multifamily in a big way and actually other asset classes now as I just started into senior housing, which I’m very excited about. But, you know, I if you don’t know my story, but in 2008, I lost $50 million and I had 800 houses along the Gulf Coast of Florida here.
01:43:53:08 – 01:44:18:23
Rod
And I had several apartment complexes, and it was the houses that pulled me down. So I’d love to debate that a little bit with you. We talked about this a little bit from another recording. Let’s, you know, we’re going to basically debate single family versus multifamily. Now. Yes. Is multifamily hurting right now? Absolutely. Because they’re there because of this adjustable rate debt and expenses have gone through the roof, payroll has gone through the roof, taxes have gone through the insurance.
01:44:18:25 – 01:44:37:17
Rod
Yeah, all that’s gone crazy. Luckily, we’re starting to see reductions in insurance in places like Texas and Tennessee and places like that. But Florida still crazy. I settled for almost $1 million here at my compound, so the damage I had from Hurricane Ian. But but, So. So tell me why you like single family better than multifamily.
01:44:37:17 – 01:44:56:12
Dustin
So I do both have multifamily. Single family. Right. The reason why I love I basically love playing monopoly. I play monopoly as a kid growing up. You start small and you keep growing up. So the reason why I love single family home homes is because I’ve got 3035 doors. Most of them are all free and clear. Other than the six I just bundled because I wanted to buy more.
01:44:56:16 – 01:45:11:24
Dustin
More real estate. Wanted to buy a $32 million apartment complex. Reason why I love it. I got 30 plus properties and I have no headaches because I buy the property. Obviously it’s tiny headaches. I come up like today, but I don’t manage it. I have other people do all the work and I have financial income or financial freedom.
01:45:12:01 – 01:45:16:28
Dustin
I can’t tell you how much I make and you can imagine. So let me just give you a paint a picture if you are.
01:45:16:28 – 01:45:17:22
Rod
Free and clear.
01:45:17:25 – 01:45:18:14
Dustin
Free and clear.
01:45:18:16 – 01:45:21:21
Rod
Okay. Well, yeah, that’s not realistic for most people.
01:45:21:21 – 01:45:31:14
Dustin
It took time. No, no, it took time. But I started thousand six. Okay. But here’s a great thing. I was making sure I was trying to make $500 or more in passive income. This is after an all.
01:45:31:14 – 01:45:34:27
Rod
In net income, by rent versus mortgage.
01:45:34:27 – 01:45:36:20
Dustin
Correct. And and taxes.
01:45:36:20 – 01:45:38:27
Rod
I might go to 500. Was your number. Yeah.
01:45:38:29 – 01:45:53:18
Dustin
Because and then so one property is $500 a month. That’s $6,000 a year. That’s not bad. Ten properties is $5,000 a month. 20 properties is is $10,000 a month. And and so on, so forth. That’s the minimum is $500 in properties making me a thousand, 2000, $3,000.
01:45:53:18 – 01:45:55:12
Rod
How do you get 3000 on a properties that have.
01:45:55:12 – 01:45:57:19
Dustin
A midterm or midterm midterm rentals.
01:45:57:19 – 01:45:58:22
Rod
Oh yeah. All right, all right.
01:45:58:23 – 01:46:12:13
Dustin
Midterms are terrific. Okay. But yeah. So when you like, you know, 30 properties, I have the minimum of 500 started buying back then I start on and but the rents have doubled, if not tripled since then. So I make a lot of money every single month. But that’s the number one key is I can feed my family with that.
01:46:12:16 – 01:46:14:20
Dustin
Now, here’s another thing. Thinking about single family home.
01:46:14:20 – 01:46:16:20
Rod
All right. No, I know that’s my turn to read, but let me give.
01:46:16:23 – 01:46:33:02
Dustin
You one quick, quick, quick. No, I’m with you. I’m with you. But let me give you one quick thing is, are the financial independence that I wanted. And I talked to somebody. I had somebody on my podcast, the Master Passive Income Podcast, that they said that they have $3,000 an apartment, apartment investing. I said, that’s great. How long you been financially independent and then quit your job?
01:46:33:02 – 01:46:44:08
Dustin
Like, oh, no, I still have to work a job. Like what? How do you have that many headaches anyway? So that’s like, I have very little headaches and a lot of money coming in as opposed to multifamily, which you don’t have much money coming in.
01:46:44:11 – 01:47:04:07
Rod
Okay. Well, let me let me circle back to that last piece, but I want to talk about your $500 a month in net cash flow. And here’s the problem with that. And it’s a big one. Number one, when you’re when your house is empty, you’re 100% vacant. If you’ve got even a ten unit and you’ve got two units vacant, you’re probably still breaking even.
01:47:04:10 – 01:47:24:21
Rod
Okay. So that’s one piece every. And, you know, unless your rents are lower than they need to be a lot lower, you’re going to have turnover every time you have turnover you’re going to lose it typically at least a month’s rent. And and that rent is probably, you know, in today’s day and age is 2 to $3000.
01:47:24:21 – 01:47:26:17
Dustin
And even releasing fees or you’re going to have to pay.
01:47:26:17 – 01:47:32:18
Rod
No, no more than that. Yes, yes, you have to. You don’t typically have to pay to release. I would never.
01:47:32:21 – 01:47:33:11
Dustin
Get a new lease.
01:47:33:11 – 01:47:52:13
Rod
In. I would never recommend you pay to get a new lease in because you’re encouraging turnover. If you do that with a management company, you pay for renewals. You don’t pay for releasing. But, but, but you’re going to have make ready costs and and that could be anywhere from 2 to $5000. A two is would be very low, for a, for a turnover.
01:47:52:13 – 01:48:12:27
Rod
If somebody has been in there a year and there’s got to be painted, it’s got to be cleaned, it’s got to be. So if you if you talk about losing, say and I’ll do it low. You talk about losing $2,000 for a month’s rent. Then you talk about a minimum of $2,000 for a make ready. That’s $4,000. You’ve just eaten up a lot of your $6,000 in cash flow on a turnover.
01:48:12:27 – 01:48:30:01
Rod
That’s why, you know, when I had 800 houses and again, I was at a 30% loan to value wasn’t free and clear, but I was 30 and $0.30 on the dollar and I still crashed and burned. And it was the houses that did it. You know, because every house has its own taxes, every house has its own insurance.
01:48:30:04 – 01:48:46:01
Rod
And, and, you know, these were C houses that have a lot you just you are just complaining about the maintenance. You know, I most of these houses were C class that I owned, you know, A, B, C and D a brand new DS. The hood, these were C, c plus maybe some B minuses. No A’s at all.
01:48:46:01 – 01:49:04:01
Rod
And no really no D’s in this portfolio that I had I had D’s in Memphis and some in Denver. But but but you know, with a with a C class actually got a lot more maintenance and, you know, and you just talked about what maintenance can cost. So it’s not just turnover cost, it’s ongoing maintenance that you’re paying as well.
01:49:04:03 – 01:49:30:13
Rod
And you know, so so that really negatively impacts the cash flow. Now coming back to your comment about, you know, not making any money, cash flow, you know, a larger syndication deal. No. Typically typically when someone syndicates a deal to get an acquisition fee, which is not insignificant. I mean, it can be, you know, 5% of a deal in on a even on a $3 million deal, which is a small deal.
01:49:30:13 – 01:49:54:18
Rod
It’s 150 grand acquisition fee, which is customary that that gets charged. But that may be the only money you make until you refinance that thing. And so, you know, it’s the it’s the it’s the burr method that you that you you’re I mean, you know very, very well. And it’s the same burr method in big multifamily. You buy, you renovate it, you increase the net income, you increase the value, you refinance it, you get your investors their money back and then then the cash flow happens.
01:49:54:18 – 01:49:54:26
Rod
What do you.
01:49:54:26 – 01:49:55:24
Dustin
Mean cash flow happens?
01:49:55:24 – 01:49:57:19
Rod
Well then then then there’s you’re not poor.
01:49:57:19 – 01:49:59:24
Dustin
You refinance it, pay off your investors. Correct.
01:49:59:26 – 01:50:16:26
Rod
So you don’t you don’t have a preferred return any longer. You know, a lot of these syndications the way they’re structured is, is you offer your investors a preferred return, meaning they get that off the top anywhere from 5 to 8%. So that comes off the top before there’s a split. And then there’s a split anywhere from 5050 to 8020 split.
01:50:16:28 – 01:50:40:23
Rod
Typically the lower number is the operator and the higher number is the, the people that put the money up. But, you know, so, so it’s very often there’s not much cash flow with any until that thing gets refinanced, but then it’s pure cash flow. So but but yeah, if you talk to somebody that is like maybe they’ve got, you know, a thousand units, 2000 units, 3000 units, and they just got started like, oh, it’s only been 2 or 3 years.
01:50:40:23 – 01:51:00:08
Rod
They’re just getting rolling. Yeah. The cash flow may not be that much yet. They’ll, they’ll, they’ll have made a lot of money from acquisition fees, but they haven’t made money from the cash flow. But you know, I wanted to debate this with you just because, you know, in my experience, when I lost $50 million, it was the houses and and in fact, my multifamily is the reason I started my podcast.
01:51:00:08 – 01:51:20:17
Rod
Dustin, my, my multifamily did just fine. If I hadn’t cross collateralized my apartment complexes with packages of houses to save a half a percent interest, 50 basis points, I still have those apartment complexes. They pulled back about 11% in the crash, but they would have survived. So. So the other piece is, you know, they’re safer in my opinion.
01:51:20:17 – 01:51:45:10
Rod
And well, based on my experience, they’re safer. An apartment complex is safer typically than some houses. Now, on your side of the equation, when you’re buying houses for yourself, you’re the one that’s that that gets all that cash flow. So there’s definitely that. There’s that. That’s definitely an advantage. But you know you talked about like right now you’re financially free because you’re you’re free and clear.
01:51:45:14 – 01:51:47:10
Rod
Well I’m sure up to that point.
01:51:47:12 – 01:51:49:17
Dustin
I was paying off those mortgages. Well sure. Yeah.
01:51:49:17 – 01:51:50:16
Rod
So now of course.
01:51:50:19 – 01:51:54:03
Dustin
That was our resell rated you. My wife said you can’t quit your job until we pay off.
01:51:54:03 – 01:52:12:28
Rod
Right. So you were working. You’re paying off your mortgages. So. So yeah, I mean, that’s that’s a fantastic strategy. Okay. I, I don’t I don’t want to discount that. You know, the other mistake I made in your, in, you know, back to your side of the equation in this debate is I had my houses spread out. I had houses two hours north of me, two hours south of me, and everywhere in between, which was a big mistake.
01:52:12:28 – 01:52:31:05
Rod
Okay. Logistically, it was a it was a mistake, you know, because what killed me really killed me was the maintenance. So if if, you know, if I send a guy to one of my apartment complexes, you can stockpile parts. That’s another big advantage. You know, that you have appliance parts, electrical parts, you know, plumbing parts, Hvac, door locks, window locks.
01:52:31:05 – 01:52:50:03
Rod
You can stockpile all that stuff. Our inventory it, and they’re in and out in an hour. Well, if I do send a maniac out of one of my houses, that’s an hour away. Okay, then they got to see what’s wrong. Every house is different than they got to find a Home Depot. Lowe’s? We have an account. I don’t know about you, but when rod taps goes to Home Depot, ends up going more than once because he forgets something.
01:52:50:03 – 01:53:13:12
Rod
And same thing with maintenance guys. So what took an hour at one of my apartment complexes. Took all day at one of my houses. So the maintenance was a real was a real issue. But but anyway, you know, the natural progression that I mean, you know, I have again, I have 2000 coaching students around the country they now own, I think, probably close to one over 280,000 units under my tutelage.
01:53:13:12 – 01:53:36:00
Rod
Maybe it’s probably closer to 300,000. Honestly, we’re losing track, but the natural progression is to go from single family to multifamily. And again, I’ve got you like, you know, I’ve got 2000 students around the country that own, like I said, somewhere 280 to 300,000 units under my tutelage, something I’m very proud of. And but almost every single one of those started with houses, okay?
01:53:36:00 – 01:53:54:19
Rod
They buy a house, they buy a duplex, they and they buy a five unit, ten unit. And then they realize they want bigger. Yeah. Yourself. Include it. Right. Play monopoly. Some big stuff. Right. So, so, you know, I think that’s the natural progression and, and and there’s and I don’t, you know, I don’t I don’t think there’s anything wrong with starting with single jump, right.
01:53:54:19 – 01:53:55:21
Dustin
I mean I family. Yeah. Yeah.
01:53:55:27 – 01:54:11:12
Rod
Well no, I mean, I personally, you know, I ask people when I’m interviewing people in that chair, right? They’re, they’re on thousands of units. If they could go back until 18 year old self something, what would they do different. Because they know what the answer is going to be every single time. And I want them to I want my listeners to hear from them, not from me.
01:54:11:12 – 01:54:16:29
Rod
And it’s always go bigger, faster, right. That’s the answer I always get. But,
01:54:17:02 – 01:54:27:07
Dustin
I wouldn’t say that you would. We know now, now. Well, the big reason why. Because in single family homes, I love that I control the entire asset. Yeah. Have it. That’s a.
01:54:27:07 – 01:54:28:00
Rod
Big deal.
01:54:28:02 – 01:54:45:29
Dustin
That’s that’s huge. And then, so on your numbers, when you’re walking through how much like of the $6,000 make $5,500 a month, $6,000 a month in profit, or, sorry, a year in profit? That can get eaten up, obviously, if you have big things, but we have reserves just like you had. Oh, sure. CapEx.
01:54:45:29 – 01:54:48:15
Rod
And so that’s coming out of hip National Bank, those reserves.
01:54:48:15 – 01:55:01:06
Dustin
Well, no, we we those are an expense that we are a line item as we, we count for mortgage taxes, insurance, capital expenses, repairs, monthly repairs. We account for and vacancy factor. We account for that. And then we add.
01:55:01:07 – 01:55:03:29
Rod
Make ready turnover, make ready. You put that as a line item.
01:55:03:29 – 01:55:07:01
Dustin
No. That’s, Well, yes, a repair like that repairs.
01:55:07:01 – 01:55:26:01
Rod
Sure. You’ve got a maintenance budget every month for, for for repairs. Correct. You know, and then but here’s another thing, though. You know, Hvac is 5 to $8000 to replace the Hvac. I mean, that wipes out your cash flow for the whole year. I, you know, listen, I did 2000 houses. It took I’m a little slow to get the memo on that.
01:55:26:03 – 01:55:28:01
Rod
But but, you know.
01:55:28:03 – 01:55:42:03
Dustin
It’s interesting. I personally in 2006, but I think I had two properties by the time three properties, 2008 happened, and I and I started buying 50. Yeah, but but the great thing was in not 2008, I bought a couple more 2009 bought a couple.
01:55:42:06 – 01:55:44:04
Rod
Nine more. That was the best time in the world to buy.
01:55:44:05 – 01:55:44:25
Dustin
100%.
01:55:44:25 – 01:55:46:14
Rod
2008 and 910 hit me.
01:55:46:14 – 01:56:03:09
Dustin
Well, I made more money because sadly, people were losing their homes in foreclosure. Well, sure. And then they became renters. So I made so much more money. But we were talking about this a little bit earlier. I share that I’m excited that interest rates are going up. So I’m not I’m sad that you’re going down. I was excited that I hope they could continue to go up.
01:56:03:12 – 01:56:19:16
Dustin
Do you know why I want them to go up? One big reason why I want them to go up is I don’t pay interest on my properties. I don’t pay for my taxes. I don’t pay for my, property manager. I don’t pay for insurance. My tenants pay for all that. So I don’t care what interest rate is the reason why I want them to go up.
01:56:19:16 – 01:56:41:06
Dustin
Not down. When they go up. What happens is my competition for single family homes that were out the market. Who’s my competition? Not the real estate investors. That’s why I coached thousands of people how to do it. Now is because we all are not competitors who are competitors for us homeowners, homeowners way, way over pay for properties they fall in love with it and they bid up everything.
01:56:41:12 – 01:56:46:16
Dustin
When interest rates go up, prices are going to come down. And so it’s easier to buy those properties at a discount.
01:56:46:17 – 01:56:48:01
Rod
Now that makes sense. That makes sense.
01:56:48:01 – 01:56:58:17
Dustin
Yeah, but but multifamily investors there is screaming right now. Oh no interest rates are going to come down. We need to come down. And that’s the thing about syndication about I don’t like or syndication or multifamily investing.
01:56:58:19 – 01:57:01:09
Rod
Well you syndicated those two big deals I’m sure correct.
01:57:01:09 – 01:57:03:08
Dustin
Yeah. Right. Right. I bought another investors. Right.
01:57:03:09 – 01:57:12:27
Rod
Yeah. Because you said you use the money from a refi to buy that capacity to 35 million. I was going to say that definitely wasn’t enough down. Right. So you raised the 10 million.
01:57:13:04 – 01:57:25:20
Dustin
Right? Okay. And the way that we do it or my my three other partners and myself, the way we, we look at it is we’re going to try to buy it where we have like these, both these properties are like 60% of the market value currently. We got a really good discount seller.
01:57:25:20 – 01:57:26:17
Rod
When did you buy them?
01:57:26:19 – 01:57:32:12
Dustin
So I bought a the one near Nashville. It was probably about a year ago. Well I’m May of 24.
01:57:32:13 – 01:57:32:24
Rod
That’s good.
01:57:32:24 – 01:57:39:22
Dustin
Timing. And then this we closed in March of 25 on the one in Chattanooga. No. And the sellers just needed to really get out.
01:57:39:22 – 01:57:55:00
Rod
Yeah. Which the deals are being sold right now for the debt, I mean, and some and even I’ll tell you something like we’ve got a we’ve got two assets in San Antonio, a mile away from each other. We got a 200 unit on a lake, and the property next door sold for 43,000,003 years ago. They’re down to 28 now.
01:57:55:02 – 01:57:58:20
Rod
And and, I think if we will buy it at 24.
01:57:58:20 – 01:58:00:22
Dustin
Well, you say it’s going to go lower. Yeah, it’s just right.
01:58:00:22 – 01:58:01:20
Rod
Yeah, yeah.
01:58:01:22 – 01:58:08:20
Dustin
And hit a bank. Come to me and say, hey, do you want to. We have these these assets. Right. Here you go. However you want to buy them. Now just take the debt, Mike. No. I’m waiting.
01:58:08:27 – 01:58:14:10
Rod
Yeah. No, no, I mean, even debt plus fees, they don’t pencil out yet. So there’s the interest rates. They don’t pencil.
01:58:14:10 – 01:58:24:08
Dustin
Out. So my problem with it’s it’s you’re basically unless you do what you do, which is refinancing and paying off your investors, which most syndicators. It is flipping an apartment.
01:58:24:13 – 01:58:27:05
Rod
Well, they’ll sell them very often and still sell it instead of hold.
01:58:27:05 – 01:58:50:27
Dustin
On to it’s what it is. Yeah. It’s flipping. So all my property, my Single-Family homes, I can and will literally give those to my kids in generational wealth. I’ll literally give it to them. They get stepped up based on their stuff. But the bigger problem for me is that eventually somebody is left holding the bag on a syndication, because you buy it here and you hope somebody five years is going to buy it here, then you buy it, somebody else buys it, and you hope somebody else raises more money to buy here and just keeps going up.
01:58:50:27 – 01:58:52:28
Rod
Even if you’re selling right now, if you’re selling.
01:58:52:28 – 01:58:53:26
Dustin
If you’re 100%. Yeah.
01:58:53:27 – 01:58:54:22
Rod
If you’re selling right.
01:58:54:22 – 01:59:00:22
Dustin
Now, people are stuck holding the bag. That’s why we’re buying them 50, 60% of the market value because they’re hurting.
01:59:00:22 – 01:59:20:08
Rod
There’s now fantastic deals out there. Right now I’m going to tell you we heard about an asset, a portfolio in Texas at ten, a 700 plus units for 10,000, a door. Yeah, I mean, I mean, you could yeah, 10,000 ago. You can even buy them for 100,000 a door. So I mean, that’s what’s out there right now. It’s I mean, if there was ever a time to get into my business, it’s right frickin now.
01:59:20:08 – 01:59:21:08
Rod
And and.
01:59:21:10 – 01:59:21:24
Dustin
It’s very.
01:59:21:24 – 01:59:22:06
Rod
Exciting.
01:59:22:06 – 01:59:26:20
Dustin
I’d say definitely right now. But then watch. It’s going to it’s going to get worse. Yeah. I think because all the.
01:59:26:20 – 01:59:41:27
Rod
Yeah I know I’m just saying you should be getting it now. I mean it takes time to learn if you’re going to learn this business, it’s right now because it’ll take months for you to, to get up to speed. But but yeah, no, it’s going to get worse. And, you know, I think, you know, we’re right ahead of, the fed meeting, here shortly.
01:59:41:27 – 01:59:42:27
Dustin
It’s best to drop some rates.
01:59:42:27 – 01:59:46:17
Rod
You are supposed to, but I don’t think it’s going to be significant because that because because.
01:59:46:19 – 01:59:47:15
Dustin
There’s always some now.
01:59:47:17 – 01:59:56:26
Rod
Old doesn’t like Trump and vice versa. And I think, you know we might see 25 basis points maybe 50, but that the the market says 50. We’ll see.
01:59:56:26 – 02:00:00:29
Dustin
One thing I love about seeing if I’m, I’m a among many other things is a 30 year fixed.
02:00:01:00 – 02:00:10:10
Rod
Yeah. Oh sure. That’s a huge that’s a huge benefit. But 30 year fixed is if you’re going to live in it. Right. Primarily.
02:00:10:10 – 02:00:11:10
Dustin
No. Not necessarily.
02:00:11:14 – 02:00:17:24
Rod
Okay. Well that’s how it’s always been up to this point. You were talking about that DSR loan a 30 year fixed. I’ve never heard of that.
02:00:17:24 – 02:00:25:00
Dustin
But okay. Yeah you can get these. And that’s that’s no belove. No no no. In fact they don’t want me to pay it off early. I have no.
02:00:25:00 – 02:00:46:18
Rod
Prepayment. Yes. So you got stiff prepayment penalties which is why they must have. Yeah. They must be selling this debt on the secondary market, which is what they did when the shit hit the fan in 2008. And I see a lot of this DSR stuff. And so it’ll be interesting to see if the same dynamic happens. That happened back in 2008 with with subprime stuff that, that they were selling on.
02:00:46:18 – 02:00:53:05
Dustin
Well, the subprime was people couldn’t pay those mortgages. I can still pay my mortgage on. Yeah. In fact.
02:00:53:08 – 02:00:57:24
Rod
What is the DSR ratio that they use for these single families?
02:00:57:26 – 02:00:59:15
Dustin
I can’t remember.
02:00:59:17 – 02:01:03:25
Rod
Because in multi it’s 1.25. But but I’m just curious what it is in single file.
02:01:03:25 – 02:01:07:14
Dustin
Well they were they were free and clear and I pulled out 80 plus percent.
02:01:07:14 – 02:01:07:26
Rod
Oh okay.
02:01:07:26 – 02:01:09:11
Dustin
So many 75, 80%.
02:01:09:14 – 02:01:10:24
Rod
You pulled out that much. Yeah.
02:01:10:27 – 02:01:12:11
Dustin
Yeah.
02:01:12:13 – 02:01:14:08
Rod
You didn’t feel like you over encumbered them with that much?
02:01:14:08 – 02:01:24:28
Dustin
No. And the reason why is I think that the mortgage payments, $3,000 002 of those houses, the rent for two of those houses covers. Hey. Covers that. Oh, I got four more properties that are making money.
02:01:24:28 – 02:01:51:15
Rod
Okay, well, listen, you listen, if you can free and clear your properties, you’re printing money. Okay. So so I completely agree with that. I had an old Jewish guy, in Denver once tell he was a multi, multi, multi freaking gazillionaire. He had all kinds of apartments that he owned free and clear in Denver. And he told me something that I’ve never forgotten in, which was, you know, if you can buy property and just hold on to it and pay it off, you’ll have buckets of money.
02:01:51:15 – 02:01:55:29
Rod
That was the term he used. And that really stuck with me. Yep. And,
02:01:56:01 – 02:02:01:07
Dustin
And I just got a 15 year fixed on, one of my, my primary residence. Yeah. Well, that.
02:02:01:07 – 02:02:02:05
Rod
Now that is four and.
02:02:02:05 – 02:02:08:25
Dustin
A half, 4.5%. Wow. Just now the rates dropped in March. They just dipped really? And I said I like, locked it in more.
02:02:08:25 – 02:02:14:02
Rod
And I have one test. And that’s very common to get 15%. It’s very common with banks to.
02:02:14:02 – 02:02:16:00
Dustin
Get say 15 year I’m.
02:02:16:00 – 02:02:23:18
Rod
15 year I’m sorry 15 year. It’s very common to get that’s not uncommon. Oh actually it’s it’s not super common either. 15 years even not the drama.
02:02:23:19 – 02:02:26:01
Dustin
They just dropped like a whole point and a half and then.
02:02:26:02 – 02:02:44:03
Rod
Well, know what I’m saying? Even the 15 year term oh was never that common. Typically what you’ll get is you get a 30 year amortization with a five year balloon. Yeah. And maybe you can maybe you can, you know, have a, a renewal clause, with a bank for another five years. But that’s the typical debt you get when as an investor on a single family property.
02:02:44:03 – 02:02:52:05
Rod
So this DSR thing, this is brand new to me. I’ve never heard of this, so I’m going to look into it, but, Okay. So so,
02:02:52:07 – 02:03:06:20
Dustin
Then are you the problem for me with multifamily is the cash flow, and then you’re, you’re flipping properties is what? Unless you’re able to refinance and pay it off your investors. Yeah. You’re always going to be flipping a property just like flipping a home. Now you have to obviously you have to wait.
02:03:06:20 – 02:03:14:26
Rod
Well, you have two options. You can flip or you can refinance. I mean, it’s pretty much the same. The numbers need to be about the same for you to make any profit if you’re flip.
02:03:14:26 – 02:03:26:00
Dustin
But I just need the cash flow right now, every single month. But here’s what I did. I got to 30 plus properties, and then I had so much money coming in that I’m now stable. I can quit my job. I can be financially dependent.
02:03:26:00 – 02:03:29:18
Rod
That’s when you’re free and clear. What’s that? When you were free and clear?
02:03:29:20 – 02:03:32:08
Dustin
Yes. I didn’t quit because my wife wouldn’t let me write.
02:03:32:08 – 02:03:49:06
Rod
Until you all will tell you free. Clear. No. That’s smart, you know. And another thing you can do, another thing you can do is you can buy a few houses and you can sell 1 or 2 of them, pay the other ones off. So that’s another strategy you can do. And yeah, if you have free and clear property, I mean, that’s golden.
02:03:49:10 – 02:03:53:10
Dustin
There’s nothing better than it started because I have one, two, three and I just kept rolling. Yeah.
02:03:53:10 – 02:03:54:06
Rod
No, I mean.
02:03:54:08 – 02:04:02:23
Dustin
But then going into multifamily, I 100% I think the family’s fantastic, right? I just wanted financial freedom, independence first. Then I can get into multifamily.
02:04:02:23 – 02:04:11:06
Rod
So when you buy one of these houses and or bought them, I mean, this was years ago, but, I you still in buying now or you buy new stuff now?
02:04:11:07 – 02:04:34:13
Dustin
Oh yeah. Great question. Let me quickly share because you brought up something or a little bit earlier. So I don’t have $2,000 a month mortgages on most of my properties. If I have a mortgage, usually they’re going to be because that’s a you buy a big house or a really expensive house. We’ve been buying $100,000 homes, which the mortgage is like where, where in, Akron, Ohio is a really good canton, Ohio has been really good thinking.
02:04:34:17 – 02:04:47:29
Dustin
But my daughter, she’s 16 years old. I just like coached everybody else, coached her. She took her life savings. She bought her first home. It’s making her $300 a month. I think she bought it for 125. It’s making $300 a month. One other quick thing, I at the same time in like March.
02:04:48:00 – 02:05:05:22
Rod
I’m just going to tell you, I have to say something that scares the hell out of me. $300 a month cash flow could get wiped out so easily by a turnover by an Hvac going out. Buy another decent size repair that just scared me. I’m just content. I’m with you. My my daughter. My daughter just bought a triplex she closed a week ago.
02:05:05:29 – 02:05:19:06
Rod
Yeah. Which I’m much more excited about. Oh, I’m very excited. Yeah, yeah. I mean, I think she’s going to be able to live for free. We were talking yesterday. She’s she’s probably going to hire a mid term property management company. I tried to talk her out of s a do it yourself for a while, but she’s going to hire them.
02:05:19:08 – 02:05:20:20
Rod
I’m pretty sure.
02:05:20:22 – 02:05:22:11
Dustin
Midterms are fantastic. Yeah, I like them.
02:05:22:11 – 02:05:24:21
Rod
So much for the traveling nurses and things like that.
02:05:24:22 – 02:05:45:03
Dustin
Executives of businesses. Right. So I bought a home for $67,000 from an investor that I know he’s like, I just got to get out of it, and it cost 20 grand to fix up. So I’m in basically 90 grand for that property. It’s worth 150 now and I’m cash flowing or I’m renting it for like 1300 bucks, some cash for at least 4 or $500 a month, passive income from that one property.
02:05:45:06 – 02:05:54:00
Rod
So let’s talk about, when you’re buying one of these assets in another state, how do you coordinate getting it fixed up? Yeah, I’m assuming they don’t work.
02:05:54:06 – 02:06:11:12
Dustin
I so I every where I go. So I invest in Ohio, Texas, Arizona, Tennessee and Indiana and every location that I have a business built, I have the property managers contractor. So I have all those people ready. And usually I like to work with property managers, obviously that I trust number one. But number two, that have a crew that would be able to go in there.
02:06:11:12 – 02:06:20:27
Dustin
But then I also, you know, fix up the property. But I also have contractors that I’ve also found that I can also have to the work. I’d much rather just have the property manager release them.
02:06:20:28 – 02:06:30:13
Rod
Just talk about talk about the procedure. How do you do this to minimize overruns, delays and getting screwed? Yeah.
02:06:30:15 – 02:06:42:10
Dustin
Okay. Well, getting the screwed thing is I’m going to start there. Number one, we don’t pay all upfront. Like a lot of silly times people pay up. Oh, I’m going to give it all upfront, you know then they run away at the money. So we’d probably due in quarters or thirds, depending on how much.
02:06:42:10 – 02:06:48:26
Rod
You might buy the material directly yourself. Correct. Sometimes you’ll you’ll, you’ll you’ll. All right. Call me from Home Depot. I’ll give you the credit card.
02:06:49:03 – 02:07:07:07
Dustin
Here’s the best way to. So paying pay. Right. You got to do that. But here’s the best way to not get screwed is you have other people. Because I’m not there. I don’t want anyone to be there. All right? I didn’t ever meet in the semi cities that I invest in. You have other contractors or other people that are working on other things, verify what’s being done.
02:07:07:07 – 02:07:23:07
Dustin
So give you a quick example. I had a sliding glass door being put in, you know, one of my properties in Houston, and there was a plumber that was fixing one of the leaks or something like that. I said, hey, would you mind when you go in there, just open the sliding glass door, just take it. Does it look good and maybe take a picture and send it to me?
02:07:23:14 – 02:07:28:22
Dustin
Don’t do it. Takes two minutes. Yeah. So I’m using and it multiple times with multiple different companies.
02:07:28:25 – 02:07:34:10
Rod
Different vendors, different vendors some different each other. Gotcha. Correct. I mean, the property manager, I would guess.
02:07:34:10 – 02:07:34:26
Dustin
100%.
02:07:34:28 – 02:07:36:27
Rod
Should be doing that as well. But if they’re if.
02:07:36:28 – 02:07:39:28
Dustin
At the time I didn’t have a property manager okay. Just all yeah I see.
02:07:39:28 – 02:07:40:25
Rod
Yeah I see but.
02:07:40:25 – 02:07:43:24
Dustin
Your property manager absolutely should be verifying all that stuff.
02:07:43:24 – 02:07:50:03
Rod
Stuff okay. So but how do you, how do you determine the pricing in when you’re thousand miles away?
02:07:50:05 – 02:08:06:29
Dustin
Because I’ve been doing this for a while, and it takes time getting used to it, but, the one if you don’t have experience, I can do my experience. I can. I know what it should cost. So it’s easy for me to do that. But other people like that, let’s say somebody doesn’t have any experience. What you need to do is get multiple quotes.
02:08:06:29 – 02:08:19:24
Dustin
That’s the number one thing. It’s not just price, but a lot of people think I get multiple quotes, so I get different prices. No, no, no, you need different eyeballs. Looking at the problem. Because what one guy says, a furnace guy says, oh, you just need to replace the entire thing, which all furnace guys say that unless you get a.
02:08:19:24 – 02:08:22:29
Rod
Good one every time. Yeah, every every time, every time.
02:08:22:29 – 02:08:36:26
Dustin
But I have to as well. I’ve actually found I got three quotes. I eventually the third guy came in and said hey, no. And he I, he’s still my furnace guy because he’s amazing is I know he just needs a stick, a bubblegum patch together to be work by next ten years. But he did it. It was so great.
02:08:36:29 – 02:08:42:02
Dustin
So you get other eyeballs and other experts, and then you find out who is the right one to be working with.
02:08:42:05 – 02:08:50:22
Rod
Yeah, yeah. No question. In that. Temp temps takes time and sometimes you get your ass kicked a couple of times you are. You asked for your find the right person. Totally. And it’s that way when.
02:08:50:24 – 02:08:53:19
Dustin
I had an well yeah I know it every every type of.
02:08:53:19 – 02:09:04:05
Rod
Asset class. I mean you’ll find that with maintenance man, you know, you’re the one. You know, you try to you try to screen them, you know, but but sometimes you’ll have a problem there. But you’re definitely with contractors as well.
02:09:04:09 – 02:09:20:11
Dustin
I had a contractor that came in, was doing great work and I was paying him little by little, you know, like as, as he as everything went get him draws. And then all of a sudden after $6,000 worth of work is water repair and stuff like that, 6000 hours of work worth of work, I paid him another $3,000, another draw.
02:09:20:13 – 02:09:33:11
Dustin
I didn’t hear from him like, maybe you died. I don’t know, I can’t get Ahold of him. And I was like, I need my money back. So I also another thing I try to do, I try to pay through multiple ways that I can get my money back. And so if you send it, yeah, good luck. You’re not going to get it back at all.
02:09:33:15 – 02:09:43:06
Dustin
But, this one paying through a credit card through PayPal. So PayPal got me my money back. If they didn’t, I would have done it through my credit card. So I have two ways to get the money back.
02:09:43:08 – 02:09:54:01
Rod
Have you had have you had problems with occupancy on occasion? I’m assuming you have. Were you there having a challenge renting a place? Talk about that a little bit.
02:09:54:01 – 02:10:08:20
Dustin
Yeah. So that always happens. I mean, it’s a constant in a business for any type asset class, but what I love to do is I just like hiring a property manager very slowly, I find I take my time to find the right one. Same thing with the tenant. I don’t grab the person that says they have a pulse and a little bit of money, right?
02:10:08:22 – 02:10:27:16
Dustin
I don’t put them in there. I make sure, number one, they don’t have any evictions. I make sure that they have decent credit, not felons, all that sort of stuff that help me to know that they’re a good potential tenant and then to in order to keep them in there. I don’t chase rents, like keep it at the very top of the market because they might eventually think, oh, I could just move.
02:10:27:22 – 02:10:44:14
Dustin
So what? I like to just care about the middle of the market. So let’s say like a lot of my houses, they’ll probably rent for two, sorry, $1,200 to maybe 14, $1,500. So we’re about 1250, $1,300. And that’s my goal because I want them to think, okay, this is a good place. I’m not going to move because I don’t want them moving.
02:10:44:14 – 02:10:45:10
Dustin
I don’t want the turnover.
02:10:45:12 – 02:10:48:02
Rod
Turnover is your biggest expense. Oh my goodness. Like we just talk.
02:10:48:02 – 02:10:48:28
Dustin
Carrying costs.
02:10:48:28 – 02:11:03:12
Rod
On not just the carry. No you got the carry. You’ve got you’ve got repairs and you’ve got lost rent. That’s all right. It’ll it’ll it’ll kill it’ll kill a year or two of, of profit on a house. And that’s, that’s my whole argument for doing multi instead of single.
02:11:03:12 – 02:11:15:10
Dustin
One thing that you mentioned I agree I much multifamily. Fantastic. What I view now I think 30 plus properties I have that because if you say okay what if one house is not rented then it’s not making money. I’m like yeah but I got 30 problem.
02:11:15:10 – 02:11:16:24
Rod
Well yeah, they’re free and clear. It gives a shit.
02:11:17:01 – 02:11:23:08
Dustin
But well yes or no. But I got 30 properties. So think of it like a 30 property portfolio that if one’s not rented, it’s all.
02:11:23:08 – 02:11:27:16
Rod
Sure you still got income coming in. Got it. Oh, that makes sense. That makes sense.
02:11:27:18 – 02:11:43:01
Dustin
So when I look at multifamily right now, I see a lot of people, a lot of investors having problem syndicators having problems because interest rates and they can’t refinance and they can’t sell and it’s just going bad. And what do you think the the market is going to be going for that. But at the same time, how do you mitigate the problems?
02:11:43:01 – 02:11:59:19
Dustin
Because I’m just like worried that I have other people that I know that invest in deals. There’s capital calls, there’s stopping distributions, and it’s getting really, really tough. And they’re going to be they’re losing money. So like right now I’m excited to buy real estate. But I’d hate to be owning bad assets right now. What are your thoughts about that.
02:11:59:21 – 02:12:21:06
Rod
Yeah. Yeah. No there’s I mean listen I look at crisis as an opportunity and right now multifamily, large multifamily is in a crisis place because of adjustable rate debt, because of expenses. You know, typically an expense ratio for multifamily assets, 50%, we’re seeing 60% be the norm now, which which really kills cash flow. You know, we’re talking multi-million dollar deals.
02:12:21:08 – 02:12:40:23
Rod
And because the interest rates have gone up, the values have gone down. And so it’s created the perfect storm because you know, these in the big multifamily space, you don’t have 30 year financing. You have you know, you have a three year window, five year windows, ten year window. There’s $1 trillion in debt coming due right now. And the people that have that debt coming do have two options.
02:12:40:23 – 02:13:02:25
Rod
They either have to refinance or they have to sell sales are down 95%. So selling is very, very hard. And refinancing, they have to meet debt service coverage requirements which they can’t meet because the interest rates. So it’s a fantastic opportunity to pick up assets right now at a great discount like we talked about earlier. And so, you know, again, I don’t look at it as a bad thing.
02:13:03:00 – 02:13:32:02
Rod
I look at it, I mean, it’s bad for the operators going through. And I’ll be honest, I’ve got a couple assets that are in trouble from a partner got me into, you know, nobody’s immune from it. I know super successful, sophisticated operators. Just about every person I know is having challenges right now. And and even losing a property here and there, you know, and so, you know, it’s it’s a, it’s a, it’s a the market is in a meltdown, from, from my, in my space.
02:13:32:02 – 02:13:50:14
Rod
But it’s again, with crisis comes opportunity. So I look at it and I look at it through rose colored glasses because, you know, like you said, you you kicked ass in 2008 and nine and ten because you’re buying properties that are heavily discounted. That’s why you have a bunch of free and clear properties that that I’m sure, played a role in that or do assess.
02:13:50:20 – 02:14:02:15
Rod
Well, that’s happening right now in my world. Okay. So again, very exciting. You know, I got my ass handed to me in 2008 and nine and got crushed by that wave. I’m surfing this one, so, you know, that’s the difference.
02:14:02:15 – 02:14:14:03
Dustin
But, I guess the for me, looking at the people who are in the hurting spot right now because I know some big people who have, you know, big communities doing all the real estate investing that they’ve stopped distribution maybe. But did capital.
02:14:14:04 – 02:14:17:09
Rod
Oh yeah. Distributions have stopped capital calls have been going off.
02:14:17:12 – 02:14:19:01
Dustin
And so those investors are stuck now.
02:14:19:05 – 02:14:33:15
Rod
Well there’s a lot of investors losing a lot of money right now. A lot of money. And you know, and that’s no fun. Yeah. But again, I could focus on that or I could focus on the fact that there’s opportunity. I like to focus on the positive.
02:14:33:17 – 02:14:34:13
Dustin
100% with. Yeah.
02:14:34:13 – 02:14:53:14
Rod
So, you know, I think there’s going to be I know there’s incredible opportunity. Some of the things I just described 10,000 a freaking door for asset in Texas. I mean, come on. You know, and I think that you know, we’re heading into a time and, and I don’t think the interest rate reduction is going to have that much of an impact.
02:14:53:17 – 02:15:17:10
Rod
And, and slowing this, this really train wreck down, I think, you know, and, and I don’t want to get too political, but I tell you, if the Supreme Court doesn’t, align with Trump on the tariffs, I think we’re headed for some serious pain in this country, 37 trillion in debt. So I’m praying to God the Supreme Court, negates that appellate decision that came through that that’s now at the Supreme Court regarding his tariff.
02:15:17:10 – 02:15:30:10
Dustin
I my my my point is, or my thought is the courts don’t have an opinion. Like that’s not a it’s not a league. There’s no there’s no crime. There’s not like, no, they don’t have any jurisdiction. No. That’s my perspective. Well that he’s supposed to be able to do this or.
02:15:30:13 – 02:15:36:22
Rod
We’re in some crazy times. We are, you know, with Charlie Charlie Kirk. Oh my God. And that horrific. Yeah. Just absolutely.
02:15:36:22 – 02:15:42:21
Dustin
Horrific. And it’s one quick thing about Charlie Kirk. It’s looking like the shooter wasn’t in front of him. Looks like him from behind.
02:15:42:27 – 02:15:43:10
Rod
What?
02:15:43:11 – 02:15:44:03
Dustin
Yeah.
02:15:44:06 – 02:15:51:18
Rod
I’ll when we’re down, there’s some you know, there’s some crazy stuff happened. I’ve been watching Candace Owens talk about the Israeli connection and things like that. I know there’s some crazy stuff.
02:15:51:18 – 02:15:52:27
Dustin
All that talk we’ll chat off.
02:15:52:27 – 02:16:05:20
Rod
Oh, yeah yeah yeah yeah yeah, yeah. But anyway, well, listen, it was a pleasure to have you on the show, Dustin. And, I really appreciate you coming down here for that. And, you know, I’ll have to pay you the next time I’m in Nashville because I’m up there for my asset all the time.
02:16:05:20 – 02:16:07:15
Dustin
Sounds good. Rob, thank you so much for having me on the show.
02:16:07:15 – 02:16:08:00
Rod
Thank you for.
02:16:08:00 – 02:16:09:15
Dustin
Listening to the lifetime Cash.
