Financing and partnerships
Dylan Osmon: From a $33,000 Triplex to 215 Units in Five Years
Dylan Osmon started with $15K and a $33,000 triplex. Five years later he's at 215 units. Inside: scaling, debt strategy, partnerships, and $100K in bad payroll.
I caught up with Dylan Osmon at BPCON for the first time in a while, and since I last saw him he's advanced his portfolio immensely. So I brought him on The Owner Meeting to talk about how he scaled, how he structures his deals, and what the actual goal behind all of this is, because you won't get very far in business without a specific target.
Most people, I'd say 99%, go into real estate for cash flow. Dylan has a different take, and it's the most interesting part of this conversation.
$15,000, a $33,000 Triplex, and March of 2020
Dylan bought his first place in March of 2020, which is a genuinely interesting month to buy your first property.
It was a triplex in Laurel, Mississippi. He had a job making $40,000 a year and maybe $15,000 saved. He bought it straight off the MLS for about $33,000: one of the worst-condition properties he's ever owned, and cheap enough to justify it. Tenants were paying roughly $300 a unit.
Today he's at 215 units, with some properties under contract to sell. He expects to stay above 200 for the next three or four months and then scale up a lot next year.
The turning point was a 22-unit, his first large commercial deal, bought around the end of 2021. That's the catalyst for everything he owns today, because after you get that first big deal you realize how much easier it is to buy bigger deals than to keep doing small ones.
I asked whether starting in single family was useful or whether he'd go bigger if he could go back. I get a genuine 50-50 split on this question from investors. Dylan's answer: getting reps in on the early stuff made him a better investor for what he's buying now, and it's also exactly what taught him he needed to buy bigger.
His reasoning is simple and it's worth repeating. It's a lot easier to live off a million-dollar property than a $60,000 house. The cash flow numbers are different, the deal structure is different, and the long-term benefits are different. You can't have bottom-line income if there isn't topline income. Every more expensive property makes more money: you can also lose more money on a bad big deal, but if your goal is to scale or you have a specific cash flow number, larger steps are how you get there.
That concept first clicked for me playing the board game Cashflow, where you win by always doing bigger deals. Turns out the game works pretty well.
Why Cash Flow Isn't the Real Prize
Early on Dylan was very concerned about cash flow. Then a later mentor who owns a lot of real estate opened his eyes to something else: the name of the game is owning as much real estate as you can for as long as you can, because the real benefit isn't cash flow. It's loan paydown and appreciation.
Put it on a spreadsheet and look out 20 years and your biggest gain won't come from cash flow. It'll come from those two.
That's his argument to the smaller-portfolio crowd. It's great that a $3 or $4 million portfolio is cash flowing well. But his $50 million portfolio (or $100 million, wherever he ends up) is going to produce a lot of money long term.
His own target has moved. The first year, he got fired from his job, and he'll say plainly that going from zero to 100 units was fed on nothing but "I'm never going to work for somebody else again." It was almost anger about getting fired, plus wanting job security back.
At 100 units he hit a slow season for four or five months because he had to find a new reason why. Now there are two. He wants to be able to give away as much as possible: he believes God gives people gifts to make money and he intends to use his to bless his church and the people around him. And the second is lifestyle.
His cash flow target is $30,000 a month. A lot of his mentors have told him that past the $300,000 to $350,000 a year mark it gets genuinely hard to spend much more: nice house, new car, travel as much as you want, and most needs are covered. When he started, his goal was $30,000 a year, because in Mississippi without kids he could live on that. His baseline now is more like $50,000 or $60,000 just to cover expenses.
The honest note here is that at his portfolio size, he'd drift to that number anyway. If he bought nothing else and just managed what he has over time, the portfolio migrates there on its own. Acquisitions just speed it up.
Scale Is Risk Management
The part people underestimate is that your risk goes down as your portfolio expands.
I'd just had the first fire in my portfolio the day before our conversation. It was isolated to a garage (the firewalls did exactly what they're supposed to do) but it's still going to be around an $8,000 repair between smoke damage and the city inspection process. My reaction was to write the check and not even ping insurance.
Now run that same event through a single family house making $150 a month, the kind of deal you see advertised everywhere. An $8,000 hit against $150 a month means you're not making money this year. Maybe next year you pay it off and get back in.
At scale it's a rounding error on one deal, and there are 30 others supplementing the income. One thing can happen at one property and it doesn't tank you. As a small business you're vulnerable to random acts of God, and they do happen.
Dylan's version of that lesson was an HVAC. He bought a house in Arkansas with a unit maybe 10 years old, expecting no problems. Within six months he had about three service calls costing roughly $1,500. Then he replaced the unit because it was on an old type of freon and he was tired of it: nine or ten grand. Then another $1,500 because the installer didn't do it correctly. That's about $13,000 he hadn't planned for.
Which is why he cringes a little when someone paycheck to paycheck wants to buy a rental. Yes, it cash flows on paper, but an act of God may happen in year one. He didn't build a nest egg first himself (he scaled risky with very little cash) and he can see how fast you can get into a pickle.
Starting with almost nothing is how most people start. There are three main types of money in this business: cash flow, liquidity, and equity. That's where your wealth gets stored. If you start with none of them, you'll have vulnerabilities to all of them, and you can borrow any one from another player in the market.
The way you buy stability is diversity, not eight different businesses, but not betting your future on one house, one deal, one duplex. Scale in a measured way, stack cash flowing rentals responsibly and quickly, and the income gets fixed. One refi later you have liquidity, and you start to get legs under it.
Dylan put it in employment terms, which is the clearest version I've heard: when you have one employee and they quit, you lose 100% of your workforce. With five, you lose 20%. What's actually riskier: 30 units with nobody working for you, or a thousand units with 15 to 20 employees?
The Two Sweet Spots, and the Miserable Middle
There are two places in this business where life is good.
The first is small and elite. Dion McNeeley gave the BPCON keynote and he's the model: heavy cash flow, no need to scale, all his needs met, sitting around $16,000 or $17,000 a month, working roughly two hours a month. No employees required. Dylan called his the most relatable story for the average person who works a job and wants to retire in ten years, and he's right, it's the simplest path.
The second is real scale: liquid, with a real team, where losing one person is a bad day and not a catastrophe.
The miserable part is the middle, where you need more people but you have a handful of key ones, you're still wearing six or seven hats, and every time someone quits you take the hat back and train their replacement. That's where a lot of people quit because it's discouraging. Every mentor I've talked to says the same thing: pull out of that middle stretch and it gets way easier again.
Dylan's on the back end of that middle, and he thinks he's about one good bulk buy away from enough topline on the rent roll to justify one more key position and feel meaningfully safer.
He also flagged the tradeoff honestly. He buys value-add-heavy deals and manages his own properties. Buy turnkey and use third-party management and you don't need employees, but you also won't buy at the discount he buys at, and you won't operate as efficiently.
Favorite Deals: Four Resorts and a $24,000 House
I shared mine first: three beat-up buildings in downtown Ephrata, Washington, a town of about 5,000 people. We bought one building, then the next, then the next, and ended up with roughly a block and a half of downtown: retail and multifamily. It's one of the only Washington buildings my wife has declared we're not allowed to sell.
Dylan had two.
The first is Cranefield Resort, right off the lake where he lives, and the first larger complex he bought solo with no partners. It was 100% short-term rentals when he bought it and it's about 85% long-term now: he'll tell you straight that he doesn't like hospitality. Since then he's bought the resort across the road, the one next to it, and the one next to that. He closed on the fourth the day before our conversation. Four resorts, about 45 units total, and he owns the whole block. He also put in a pickleball court, which cost more than he expected but is a fantastic resort amenity.
The second is my favorite kind of deal. He messaged somebody on Facebook Marketplace who had a rental posted and asked if they wanted to sell it: a completely free way to find a deal. The answer was no, but they had another property they would sell.
It was a single family house in Mississippi. Purchase price $24,000, existing tenant at $500 a month. Dylan put $4,000 down and the seller financed the rest at 0% interest over 60 payments, so he was paying roughly $300 a month. Textbook. He raised the rent immediately to $600 so it cash flowed. In two and a half years of ownership he had exactly one maintenance call, about $800. He sold it for around $40,000 having already paid down five or six thousand of principal: call it $25,000 made on a deal that cost him nothing to find and gave him zero headache.
Debt: Get More of It
I asked Dylan about debt paydown strategy, since I'd recently had Coach Carson on talking about paying down debt off the amortization schedule.
Dylan's strategy is the opposite and he's blunt about it: his strategy is to get more debt. The more debt he has, the more debt he's paying down, as long as it's good debt. Will he ever pay it all off? He doesn't know. He's still scaling, so right now he wants the cheapest debt possible and the longest amortization possible, because he cares more about owning the deal, and better cash flow makes him more likely to be able to buy it.
There's also a protection argument his mentor makes, which he tends to agree with: when you own a lot of assets outright, you're more visible to lawsuits. People are less likely to sue you when they see debt across the portfolio, because the bank has to get paid in any catastrophic event.
The counter-model I've watched work belongs to a guy named Gary Mann in central Washington. You wouldn't know him unless you met him. He cash flows somewhere over $100,000 a month on a couple hundred rentals that are completely paid off, and his most expensive vehicle is a $17,000 car he fixed up.
His method: get as much interest-only debt as you can, stack as little principal paydown as possible, save it all in a side account, and when that account can pay off one mortgage in full, kill that mortgage. Now you own a debt-free property.
He solved the liability side a different way, and I'll probably copy it. He put together a holding company (in his case in Wyoming) that lends to all of his properties. There's debt on the books, so an attorney sees encumbered properties and not much to go after. Dig deeper and you find he's essentially paying himself from a hundred properties into one entity in the form of debt.
What 215 Units Actually Means
I hate door count as a metric and so does Dylan. It's a vanity metric with nothing to do with how successful you are.
So I asked what his equity actually looks like. Weighted by equity percentage he's at roughly 130 to 140 units of the 215. He used partnerships heavily when he started, and while he won't call it a regret (he likes all his partners and they got him in the door) looking back he thinks he should have taken more deals down solo.
He's never below 50% ownership in any partnership. The only one he plans to keep scaling with, he owns two-thirds of. Everything else from here is solo, because he needs partnerships far less than he did four years ago.
Market value on the portfolio is around $7 to $8 million with roughly $3.8 million of debt against it, putting his net worth in the portfolio somewhere between $3 and $3.5 million in five years. He recently discovered he's less leveraged than he thought (closer to 50-55% than the 65-68% he assumed) so he wants to leverage up and pull cash. He's also selling off old partnership deals, which means liquidity events this year, and he expects to enter next year with the most cash he's ever had and the clearest buy box he's ever had.
He also just filed his first return where he owed the government money. They did a cost seg, but he wanted to show some profit this year because he needed a good year of tax returns for the bankers before buying a lot solo and building.
My own version of that liquidity story went differently. I finally got liquid at $1.4 million and had to spend all of it getting rid of partners. Some of them had made bad decisions unrelated to our partnerships and needed to be emergency evacuated, or they wouldn't have been able to pay the balloons: so I bought them out and covered the balloons. That was my stupid tax: $1.4 million of too many partners, and not rich enough partners. It's nice to have partners who don't need the money.
The Stupid Tax: $50,000 to $100,000 in Bad Payroll
We close every episode with the most expensive mistake. Dylan could have said partnerships again. Instead he said bad employees.
In his first year of having employees, he estimates $50,000 to $100,000 in bad payroll: the cost of learning how to be an employer. When you hire someone you want 100% of the value you're paying for, and you may be getting 30 or 40%.
His rules now:
- Hire really, really slow, fire very fast.
- Your expectations have to be a lot higher than you think they are.
- Don't hire anyone unless you have clear data showing whether they're doing a good job. Don't rely on your gut. Black and white.
I agree hard on fire fast. The question I ask when there's an employee problem is whether they're failing because I haven't given them the tools to succeed, or because it's the wrong person in the wrong position. If it's the wrong person, get them out. If I might have set them up to fail, I'm all for second chances, and 0% for third chances.
We differ on the front end. The person I get in the interview, no matter how much time I spend, isn't always the employee I get, so I've gone to hire fast, fire fast, trial by fire. I also run sales and marketing companies with an inherently high burn rate, so that HR engine is always running. Dylan admits his stated policy (two interviews, with his current employees doing the first round) is what he wants to do, and that he's still bad about hiring too fast and firing too slow.
Where we completely agree: the best way to know if someone's a good worker is to work with them for a week and watch how fast they catch on. Dylan's test is whether you pick up a task by the fourth or fifth time. If he sends you a Loom video and you come back with a question that the video already answered, that's a bad sign. You have to be able to figure things out and make decisions.
He's also honest that his firings have gone worse than not, and that it's his fault, because employers think they're the only one who sees it isn't working. If it's a bad relationship, both sides feel it. He let people stay too long, got angry at them, they got angry back, and it ended in a blowup that three earlier months of honesty would have prevented. Getting rid of the wrong person quickly is the kindest thing you can do for them; hold them too long and they leave frustrated, which is where the bad company review comes from.
He learned the friendship line the hard way too. An employee he'd been cordial with the entire time left to go out on his own, then submitted PTO for dates after he'd already left and wanted to be paid for it. The answer was no, and within minutes it was lawyer threats and the ugliest conversation imaginable. His conclusion: care about your people, know their lives and goals, be friends, but not best friends.
On lawyer threats generally, we've both stopped flinching. Someone brings up the L word roughly every other week. My answer is to hand over my legal team's contact information and end the conversation there. In 31 partnerships and 400-some units, I've had exactly two actual legal battles, and one of those was mediation rather than court. Dylan currently has a tenant who lived somewhere six months, then high-centered his car on a tree stump everyone can see from the road and treated that as grounds to sue and break his lease.
Key Takeaways
- The first big deal is the catalyst. Dylan's 22-unit taught him bigger deals are easier than repeatedly doing small ones.
- Cash flow pays your bills, but loan paydown and appreciation build the wealth. Own as much as you can for as long as you can.
- Scale lowers risk. An $8,000 fire repair is a rounding error across 30 deals and a lost year on one $150-a-month rental.
- Know which sweet spot you want: small and elite with heavy cash flow, or genuinely scaled with a team. The middle is where people quit.
- Door count is a vanity metric. Equity-weighted ownership, leverage ratio, and liquidity are the numbers that matter.
- Hire slow with clear data, fire fast, and don't let a bad fit sit for three extra months: both sides already know.
The line I'm taking away is Dylan's closing one. The money will find the deal; your job as a real estate investor is the real estate. You can't pre-find capital any more than a car salesman can sell you a car before there's a vehicle on the lot. And people don't just get stuck on money: they get stuck on not having a contractor yet, or worrying about finding a tenant for a property they don't own. Really good entrepreneurs are really good problem solvers. So go get a problem. Go get bigger problems, and solve them. That's where the big money is.
Watch the full episode for the whole conversation, including Dylan's four-resort block and his debt philosophy in his own words. If you want to go deeper on our side, you can learn about my mentorship at multifamilystrategy.com, download our free course on getting started in multifamily investing, or join our free Skool community, which comes with a calculator. You can find Dylan on Instagram and Facebook at Dylan Osmon, and he's launching his own show, the Do Real Estate Podcast.
Read the episode transcript
0:00 All right, welcome back to the Owner Meeting podcast. I'm Christian, your channel host today, joined by Dylan Osman. I am super excited for this 0:06 episode. Caught up with Dylan for the first time in a while at Bigger Pockets Con, which is why I decided to wear the 0:12 t-shirt. I don't usually wear other people's logo, but uh today seemed fitting. We got the t-shirt. We went to 0:18 the event, just got back from Vegas. Since I last saw him, this guy's advanced his portfolio immensely. Just 0:26 absolutely incredible what he's doing. Uh, so I am going to bring him on to talk about how to scale, how to 0:31 structure your deals and we're going to talk about what the goal is behind real estate. There's no point in buying 0:37 anything and quite honestly you won't get very far in business if you don't have a specific target for most people. I would say 99% of people and going real 0:43 estate for cash flow. Dylan might have a different take on this. So we'll see uh we'll see what we find out here on 0:49 today's episode. Dylan, let's start with the start. When did you start in real estate? What was 0:55 your your actual starting point? So, let me know like what it looked like, how rich were you when you started, and uh 1:01 where are you at today? Cool. Uh, so I bought my first place in March of 2020, which was a really 1:07 interesting month to buy your first place. It was a triplex down in Laurel, Mississippi. At the time, I had a job 1:13 making 40K a year. I think I had about 15 grand saved up at the time, maybe. 1:18 And I bought this place really, really cheap. Like I said, straight off the MLS. It was one of the worst condition 1:24 properties I've ever bought. It was a I think I paid $33 grand for it for a triplex and it was 1:29 okay. It's pretty cheap and but it was rough. It justified it. So, but at the time it was like $300 a 1:36 unit on tenants paying. So, very green behind the ears. Today I'm sitting at 215 units. I've got some 1:42 properties under contract to sell. So, that may change a little bit going forward, but yeah, I'm I'm going to stay above that 200 mark for the next 1:49 probably three or four months. And then next year, I'm thinking we're going to scale up a lot. So I mean that is pretty explosive growth. 1:56 I mean getting into the hundreds of units in you know it's called half a decade. That's absolutely amazing. What was a 2:04 turning point for you from going to like hey I did you like hey year one you bought a rental year two you know 2:09 explosive growth yet. Where did you go from I'm buying a deal or two to 2:15 we're in the multiund unit territory. What was the turning point there? I think the biggest deal I got was a 22 2:20 unit. That was my first big commercial deal I had I had bought. Yeah. And I bought that at the end of 22, I 2:27 believe. Okay. Maybe end of 21. I don't remember exact. I think it was end of 21, but that was my first large project to buy. And you 2:34 probably remember your first big deal, but I had started with single families and small multifamilies and did a lot of those. 2:40 And after you get that first big deal, you realize how much easier it is to actually buy bigger deals versus doing smaller ones all the time. And I think, 2:48 you know, if there was a catalyst for everything I own today, it would probably be that deal. It it gave me the confidence to go do bigger deals. 2:54 And that that is a big thing for a lot of people is they start out thinking that, hey, I need to do these smaller 2:59 properties. I need to do single family. Did you find in your portfolio, did you find a lot of utility from starting in 3:05 single family or if you went back in time, would you have started bigger? I get mixed reviews on this. It different people. This is like a 50-50 split for 3:12 most investors. Yeah, I don't I'm with you because you hear of some people like you know Ryan Pana where it's like oh my 3:17 first year I flipped 100 houses and it's like well man that's a big jump and and some same thing like some people buy 100 3:24 units their first year in real estate. I think getting my reps in on the early stuff helped me uh it it made me a 3:31 better investor for what I'm buying today for sure. Okay. I realized because of the single family I need to buy bigger stuff 3:37 because it enables me to buy or not buy but you know pay the right people in my business that I need and then you know 3:43 the financing and structuring the deals. It's a lot easier to to live off of a million-doll property than it is like a 3:49 $60,000 house. You know what I mean? So cash flow numbers are a lot different. The the structure of the deal is a lot different. And then I think just the 3:56 long-term benefits are a lot different. Well, and that's a really interesting concept because it's really simple, but you said it perfectly. a $60,000 house 4:02 or a million-doll property. A million dollar property is going to have more topline income. You can't have that 4:07 bottom line income to live on if there's not a topline. Every expensive property makes more 4:13 money. You can actually lose more money on a bad deal on a larger deal. But the numbers make sense. If your goal 4:19 is to scale or you have a specific cash flow goal, typically larger steps are going to be how you get there. 4:26 just funny enough that blessing click for me on the uh the board game Cash Flow where I was like wait a second you win 4:31 by just always doing bigger deals. Yeah. And then you translate to real estate. I'm like oh well I'll be darn 4:37 that game works pretty darn well. Yeah. It's really tough cuz at BPCON there's a lot of really smart speakers who don't 4:44 own necessarily huge portfolios but they're really they're still getting the life they want. Mhm. and uh you know I didn't get to 4:51 talk with them but there's some advantages and disadvantages to having a larger portfolio versus a smaller one. 4:56 And so I think early on I was really concerned about cash flow. And then one of my later on mentors, a guy who owns a 5:02 lot of real estate, he really opened my eyes about like the name of the game is owning as much real estate as you can 5:08 for as long as you can because the real benefit is not cash flow. It's actually that loan payown and that appreciation. 5:13 Mhm. And if we can put that on a spreadsheet, you'll see all the time if you look over 20 years, your biggest gain is not going 5:20 to come from cash flow. It's going to be from those two things. And so that would be my argument to the smaller portfolio 5:25 people is yes, it's really good that you're a three or $4 million portfolio is cash flowing like it really well, but 5:32 I think my $50 million portfolio at the end of this, you know, journey or hund00 million, I don't know where I wind up is 5:38 longterm going to give me a lot of money. Lot a lot of money. You had mentioned when people are designing the 5:44 the life they want and we talked about this speak there a lot of speakers there some of them don't even have massive portfolios but they've been able to sustain the life they want. You have a 5:51 couple hundred unit portfolio you're scaling. What is the life that you want to build with this? Why why why 25 rentals and why why are 5:58 you still buying? It's a lot of property. You know the targets changed a little bit. I don't 6:04 know if you felt the same way. That first year I got fired from my job and I can honestly say from zero to 100 units 6:10 was fed on nothing but like I'm never going to work for somebody else again and like I don't want to ever 6:16 I don't ever want to feel that vulnerable to losing my job. So that zero to 100 unit span was like nothing 6:22 but almost anger about getting fired maybe and that 6:27 job security again. Yeah. Yeah. 100%. And at 100 units, I had to like I almost went through like a 6:33 slow season for four or five months because I had to find that new reason why. And I think for me nowadays is a 6:38 couple different things, but like I want to be able to give away as much as possible, right? I I really I want to 6:44 make a lot of money. I I feel like God gives us gifts to make money, right? Some people are in doubt with that and I need to use mine for what he's given me 6:50 and I want to be able to bless the church and bless people around me. And then number two is is more lifestyle. 6:55 You know, my bottom or my number that I want is probably grown as I've made a little bit more money. Uh I'm not going 7:01 to go extravagant, but my target right now cash flow-wise would be u 30,000 a 7:07 month. A lot of my mentors have said over that 300 $350,000 a year mark. It's 7:13 really hard to spend a lot more than that. Obviously, I'm sure you could, but like they're like that covers most of 7:18 our needs. We have a really nice house, a brand new car, we travel as much as we want. It's hard to need much more money 7:23 than that. So, when I first started, 30 grand a year was my goal because that was like I can live off of that and that 7:29 was before I had kids. And uh I was going to say Yeah, that's low. In Mississippi without kids. Yes. 7:35 Yeah. Well, probably my baseline now is probably 60 50 60, you know, to just 7:41 absolutely cover expenses. Great place to be. And then um but like where I want to be to to live 7:47 where how I want to, you know, it's probably 300 to 350. So that's my goal. And it doesn't it's not going to take that long to get there. No, no, 7:54 especially not with where you've scaled. Yeah. If you bought nothing else and you continue to just manage it over time, 8:00 you'll just that size portfolio will just naturally migrate to that cash flow anyway. Like you've already done the 8:05 ground work to be there. You just speed it up by more acquisition and scaling. And I think that's why it's hard to 8:11 start in this game is because once you get good, like once you make it to 2, three, 400 units, going to 1,200 units, 8:18 2,000 units is not as much work as it was to get those first two or 300. like 8:23 you start to get the hang of it. And here's the beautiful part. Once your cash flow is covered in this business, 8:28 like once your existing portfolio gets you a pretty good chunk of money and you don't need cash flow to buy deals, aka 8:35 you can buy a deal that loses a little bit of money. Man, I feel like your game changes exponentially because when when 8:41 everybody starts off, they have to buy deals that are, you know, making they can't lose money every month when people are starting out. Most people. 8:47 Yeah. But once you have that real good nest egg building every month, man, like going from there is I feel like it's 8:53 going to be a world of difference. I'm not to that point yet, I would say, but I'm excited for that when I get to that point. 8:58 Well, and what becomes amazing is is your your risk goes down as your portfolio expands. I just had yesterday 9:05 I had the first ever fire in my portfolio. Fortunately, it was isolated to a garage that firewalls did exactly 9:11 what they're supposed to do, but it's still going to be like an $8,000 repair because you have the smoke damage. you have the you have all the city 9:17 inspection you have to do that is a couple thousand dollars like there's there's there's a process when you have a serious fire going into that being 9:23 like oh okay well cool we'll just write a check for that I don't need I don't need a ping insurance have to do that if you had a single family house you're 9:30 you're making like you know couple hundred bucks a month cash flow the type of stuff that you often see advertised the bigger pockets for like hey this one 9:36 deal it's bringing in 150 bucks a month uh $8,000 out of your $150 a month cash flow sucks 9:44 you're like well I we're not making money this year. Uh maybe maybe next year we can uh we'll pay this off and 9:49 we'll get back in a larger portfolio. You get to the point where it's like, yeah, okay, let's go ahead write the 9:55 check. This is a a rounding error in this particular deal and we have 30 10:00 other deals that are supplementing this income. The scale really does provide stability. One thing can happen at one 10:06 property and it doesn't tank you, which is I think a big it's one of the biggest risks that I see in being a smaller 10:12 investor is as a small business you're vulnerable to random acts of God happening. 10:17 And they do happen. Yeah. And yes, they do happen. They do happen. Over 200 units. I'm going to 10:23 guess that you have seen at some point a combination of any of evictions, drugs, 10:30 water damage, or fire damage. I'm going to guess some of those things, if not all of them, happened at some point. 10:36 Yeah. It's amazing how many things break the day after closing. It's like they were destined to. Yeah. Oh, and and fun statistic. 100% of 10:43 domestic violence happens at home. Hence, domestic uh if you rent homes, 10:49 you have enough people there will be terrible situations that come up. It's it doesn't happen all that often to us. We 10:56 screen well for tenants, but you manage hundreds of people. Uh, people can suck, 11:01 too. So, you have buildings, you got people, you got all sorts of stuff that happens. It's a It's a hard job. I remember buying a house in I'm in 11:08 Arkansas and I remember buying a house in Gasful that the HVAC was maybe 10 years old, right? 11:13 And so, I bought the house not expecting for any problems. Well, within the first 6 months, I probably had three service 11:19 calls that probably cost me about 1,500 bucks if I remember right. And then after 11:24 that, I had to replace the unit cuz I was getting tired. It was an old type of freon and I was like, screw this. I'm tired of doing it. Then I had to put a 11:29 new unit in. And that was 9 or 10 grand. And then I still had to do a little more work to because the guy who installed it 11:35 didn't install it correctly. So there's another $1,500 after that. All that to say, that's, you know, 134 11:40 grand I hadn't planned for when I bought the place. And I almost cringe a little bit when somebody starting off is like 11:47 broke. They're paycheck to paycheck and they want to go buy a rental. I'm like, you know, yes, it cash flows on paper, 11:52 but an act of God may happen this first year. And so maybe it is better to have that little nest egg before you start 11:58 going buying stuff. I didn't do that myself. I scaled pretty risk risky. I didn't have much cash when I was scaling. But I can see where you could 12:04 get into a pickle very quick. Yeah. And that's how most people start. If you're starting with less cash, so you started with 15K, which is about 12:11 exactly what I started with. You're starting with nothing. You have like three main types of money. You got cash flow, you got liquidity, and you got 12:17 equity. Like that's that's where your wealth's going to be stored in real estate. And so if you're starting with 12:22 none of those, you're going to have vulnerabilities to some of them as you go. You can borrow any of them from any other player in the market, which I'm 12:28 sure we're going to touch on here when we talk about equity. But as you go through your portfolio, 12:33 one of the riskiest times is when you're building. I think you add stability through diversity. Not by going into like eight different businesses like a 12:40 lot of people think, but yeah, 100%. Don't bank on that one house, that one deal, that 125lex being your your 12:47 future. It's scale up in a measured way and really I I found responsibly stack 12:54 cash flowing rentals as quickly as possible. That's going to help stabilize you because now the income's fixed. You're going to have one refi and all of 13:00 a sudden you have some liquidity. You hold the liquidity and you start to roll and you get some legs on it. 13:06 Yep. 100%. I'm probably one good bulk buy away from having enough topline on 13:12 the rent roll to maybe justify one more really key position and then I'll feel really safe, a lot safer. 13:18 It's hard like when you have one employee and they quit, you lose 100% of your workforce. When you have five employees 13:25 and one person leaves, you lose 20% of your workforce. Like I said, my mentors really opened me up to that on like, you know, what does 13:31 truly risky look like? 30 units with nobody working for you or you know a thousand units with 15 20 employees. 13:40 Yeah, 15 20 employees sounds pretty stressful but if you lose one kind of a crappy day. Yeah. 13:46 I found two sweet spots. You have the I'm a soloreneur with a small the keynote for bigger pockets was Dion. 13:53 Yeah. 16 example heavy cash flow does not need to scale. All of his needs are met. He has I I 13:59 think he sits right around 16 $17,000 a month in cash flow. Yeah. Fantastic. That freedom doesn't need employees for 14:06 that. He works like two hours a month. That's that that's that's one of the sweet spots. If your goals happen to be 14:12 larger than that, which you had mentioned that I happen to uh also agree. I think the Bible would back you up there. Matthew 25 talks a lot 14:18 about stewarding resources for those who don't know called Parable of Talents. Uh great book. You should 14:24 read all of Matthew actually if you haven't read it yet. Uh there's some other good stuff in there. Pretty cool. pretty cool guy named Jesus. But as you 14:30 go through stewarding resources, if your goals are larger than, hey, I want to provide for myself, go on vacations, you 14:37 know, Dion had a very specific, I want to get to $10,000 a month, and now he surpassed that sweet spot. Now he's just 14:43 like, okay, when we have too much money, we buy another rental. Y your goal is bigger than that. You 14:49 kind of hit that. It's kind of the worst period of business where you're like, I need more people, but I have a whole 14:55 bunch of key people. You're probably still wearing six or seven hats and then whenever that person quits, you have to 15:01 take the hat back. You have to train the next person. Being really small and elite like Dion or scaling that business 15:08 to that next level where you're like, "Hey, I'm liquid. We got multiple like you said like 15 employees is the next 15:15 place you really get freedom. You get stuck in that middle section." It's where a lot of people quit because it gets discouraging. Every mentor I've 15:22 talked to is like, "Hey, if you can pull out of that middle section of, hey, I'm a really small business," and get to 15:28 like mid-size business, it gets way easier again. Yeah, 100%. So, it sounds like you're the really 15:34 really hard part of real estate. I'm on the back end of the I should say 15:39 it sounds like you're uh you could see land there. The visions The vision's there and you're like, "Hey, I'm one or two events." But 15:46 you're on the back end. Depends on your model. Yeah. It depends on your model. Like I'm buying pretty value head value adheavy 15:52 deals and I manage my own properties, right? So if you didn't do those two things, if you bought just turnkey and 15:58 you didn't manage, no, you don't need employees. But I'm going to guarantee you, you're not going to buy as deep of a discount as I am. Like you're if 16:04 that's your model and you're not going to operate as efficiently as I am either, you know, if you're using thirdparty management. So Dion story is 16:10 awesome. I think it took him 10 or 11 years to get there. I think I'm gonna get to the same spot quicker because I was 16:17 more aggressive with it and I didn't have a job in the middle of it. So maybe there's some time freedom benefit there. 16:22 But he does have an awesome story. Like he to me he had the most relatable story to your average person out there in the 16:28 world. I I don't recommend everybody do it the way I did. But average Joe who works a job and you want 16:33 to buy real estate and retire in 10 years, that's by far the best way. Absolutely. It it's certainly the simplest way. He's 16:39 done a great job in branding himself as the lazy investor. He's like, one of his questions is how much work is this? 16:44 Um I I'm going to just go out on a limb and say guys like you and me, how much work is this going to be is 16:50 usually not the primary concern. It's where are we headed and we're going to get do it. So, let's go do it. 16:55 Y pretty much. Do you have a Do you have a favorite deal? Was there a project that you had like this one was just so fun or it's 17:01 just like the returns were just so ridiculous? Did one stand out over the last five years? 17:07 While while you think about it, I I'll share a very quick one. I did a uh it's the one of the least flashy ones ever. 17:12 Three beat up buildings downtown Afraid of Washington. Small small small little 5,000 person town, but we bought one 17:18 building, next building, next building. We ended up with the basically one and a half blocks of downtown Afraida. We did 17:25 the retail, we did the multif family. It's one of the only Washington state buildings where my wife's like, "We're not allowed to sell it." I just Yeah. 17:31 love the project. It was super fun. I learned a lot and it went well. Um, 17:37 probably one of the most boring deals I did as far as like the work. It was just renovate, learn how to lease retail. And 17:44 now you go to downtown afraid. I'm like, we own a ton of this. This is crazy. Yeah. Is our street. 17:49 Yeah. You have any any deals that stand out? You're like, hey, this one was just awesome. Mine's kind of similar. I've got two. 17:56 Maybe I can have time to do both, but one of them is a resort that we live at now. It's called Cranefield Resort. Yeah. It's right off from the lake where we 18:02 live. And uh it was the first larger complex that I had bought solo without 18:07 any partners. And so I really like that about it. But it's just it was a fun property. When I bought it, it was all 18:13 short-term rentals, 100% of the place. Since then, it's like 85% long-term rentals, and I still have a few 18:19 short-terms in there, but I'm ready to get rid of them. I'll tell you, be honest. Don't like hospitality. But since then, there was a resort across 18:25 the road that used to be under the same ownership. And then there's a resort right next to it, and then a resort next 18:30 right next to that one. Well, yesterday I closed on that fourth one. So, I now own all four resorts right there. And 18:36 so, that's a total of like 45 units. So, that's pretty cool. I like that. I kind of got to own the whole block there. 18:42 But, uh, I put a pickle ball court in. The one across the street's got a wonderful lake view. It's just kind of a cool project. 18:47 Yeah. So, well, not on the pickle ball court, by the way. That is that is a fantastic resort amenity. 18:52 Yeah. Yeah. It costs more than what I thought it was going to. I got to get some pictures online for short-term 18:58 rentals so I can start monetizing it. But the other deal I bought was just so creative and fun and it was cheap. Like 19:06 it was not a very big deal, but it's just simple. I reached out to somebody on Facebook Marketplace 19:12 and they had a rental posted and I was like, "Hey, you want to sell this, right? A totally free way to find a deal. That's what I like about it." And 19:18 he said, "No, but I've got another property I would sell." And so this was a single family house. I'm hoping I 19:23 remember the numbers here, but he sold it to me for 24 grand. It had an existing tenant at $500 a month. These 19:30 are really cheap numbers. This was a Mississippi. He seller financed uh I put $4,000 down 19:36 and he seller financed arrest at 0% interest of 60 payments. So I was paying 19:42 like $300 a month, something like that. Yeah. Uh just a very textbook deal. I raised 19:47 the rent instantly to 600, so it was cash flowing. I had one maintenance call on that place in the two and a half years I owned it, and that cost me like 19:54 $800. And it was just the smallest little janky house ever, but it was just 19:59 a funny deal. And I sold it later for 40 38 or like $42,000 after owning it for 20:05 two years. And I already paid down, you know, 20 probably uh $5,000, $6,000 20:11 worth of principal. So I made 25 grand on this deal that I spent no money to find, owned, and just had zero headache 20:17 with it. And I it was just such a funny little deal. So, you had mentioned early 20:22 on, you'd mentioned the uh the big benefits are are appreciation and debt payown for for building wealth. Uh I 20:29 recently had coach Carson on because he said something interesting actually at BPCON. Uh he's one of the only other 20:34 people I know who do this. We're talking about how he likes to pay down debt without uh having a strict amortization 20:39 schedule, how they prefer to do it. What is your strategy for debt payown? Do you just do you just stick these all 20:45 on the uh on an AM schedule and just not relever them? Do you have a do you have a a specific method that you target for 20:53 how you manage debt payown over time? You know, I don't have a specific strategy right now. My strategy is to 20:59 get more debt. Like the more debt I have, the more debt I'm paying down as long as it's good debt. So, if there's 21:04 any strategy, that would be it. Will I ever pay off all my stuff? I don't know. There's a lot of arguments out there on 21:10 this. Obviously, Mhm. one of the biggest ones my mentor has, which I tend to agree with, is, you 21:15 know, when you own a lot of assets and you own them outright, maybe you're somewhat liable or 21:21 vulnerable for lawsuits. And so, a good way to protect yourself on that is to 21:26 have debt on properties. It's a lot, not harder, but people are 21:32 maybe less likely to sue you when they see debt across your entire portfolio because obviously that bank has to get paid off in a cataclysmic event. So that 21:39 would be one argument for not paying off debt. You know, two different ways. I could pay off the debt, live off the cash flow, or, you know, relever the 21:46 debt out every year and live off that. So, at this point in time, I don't know, dude. I I'm not trying to pay off any 21:52 debt because I'm still scaling. Yep. At some point, if I say, "Hey, I'm going to stop scaling." Maybe I'll I'll look at that side of my business. But 21:59 get the cheapest debt possible. Right now, I want the longest amortization possible because I'm more I care more 22:04 that I own the deal. So, the better my cash flow is, the more likely I can buy that deal. I love it. Yeah, the two 22:10 models that I've really appreciated, I've met a bunch of people on the podcast who've had different ideas on this. I have found that the wealthiest, 22:17 happiest, least stressed people I know at some point paid off their entire portfolio. So, one of the guys I learned 22:22 from is named Gary Man. He lives in central Washington. You wouldn't know him unless you met him. Yeah. Cash 22:29 flows$1red$120,000 a month. He has couple hundred rentals 22:34 completely paid off and he just kind of just lets it ride. still had his most expensive vehicles like a $17,000 car 22:40 that he fixed up. Like he's the simple guy who makes a boatload of money. Very stressfree way of living. But the model 22:47 that he had, and I really like this, is get as much interest only as you can. So I he stacks as little debt payown in his 22:54 portfolio as possible. Save it all in the side account and then when it's great enough to pay off one mortgage in 23:00 full, kill the mortgage. Now you have a debtree property. what he ended up doing, and I'll probably copy this one. 23:05 If you have a ton of income, it's one of the best things you can do to legally protect yourself, is pay to win every 23:10 lawsuit. So, it's a very helpful strategy, but another thing he did is he 23:15 just put together a holding company. That holding company lends to all of his. So, he has debt on the books, 23:22 but if you really traced it through, it goes to a company that he has in Wyoming that is also him. 23:28 Still, if a lawyer was to look at it, they would go, "These properties are encumbered." not that much to go after. If you did a deeper dive, you'd find, 23:35 okay, he doesn't really have debt. He's just paying himself from a 100 properties to one location in the form 23:42 of debt. Yeah, mentors talked about I think I don't I'm not a attorney obviously, but 23:47 when I get to that point in life, that'll be one of the things I look into is how can I show debt even though 23:52 there's not really any debt on the property. Well, this is the the rate that you're scaling. You'll uh you'll be 23:58 there pretty soon on worry about showing debt at this point. It's already there. 24:03 Yeah. Yeah. Yeah. Right now, we don't have to worry about showing debt. Yeah. Rocking, you know, tens of millions of 24:08 dollars debt. It's pretty easy to uh pretty easy to show debt because you in fact have a lot of debt. 24:14 Which brings me to uh one of the last couple questions I had. When you uh we 24:20 mentioned this before we uh turned the cameras on. How much equity do you have in your portfolio? Do you bring in 24:26 partners? There's a bunch of different strategies that were discussed at BPCON, and most of the people at BPCON don't 24:32 have any partners, which I found interesting. So, how much of the 215 24:38 units is really yours? Yeah. No. And I like being candid about it cuz 24:43 I really hate I really hate door count as a metric because it's really a horrendous metric. It's a vanity It's a 24:48 vanity metric to be honest. It has nothing to do with how successful you are. Yeah. My unit count by equity percentage 24:55 is probably like 130 140 and I used I used partnerships really heavily when I first started 25:01 which is probably I can't say it's a regret because I don't want to throw any of those partners like I had I like all 25:07 my partners but like looking back I shouldn't have partnered as much. I should have taken down some deals solo. 25:13 Should have, could have, would have, right? They got me in the door. I did the deal. But to answer I'm sorry. What was your question on that? That was door 25:19 count. Just what what does equity look like for you? So So it sounds like if you're like 130 25:24 weighted out of So you're you're a little bit over 50% equity of 25:29 your 200 as far as the ownership. Different partnerships. Yeah. Different. No partnership am I less than 50% 25:36 ownership on. Very wise. The only partnership that I want to continue to really scale with, I own 66% 25:43 of. I own 2/3. And then the rest of everything I'm going to continue to scale just solo. I need less. I need partnerships less than I did four years 25:50 ago, obviously. In fact, I just got my first return where I actually owe the government money. So, I was a little bit sick before I got on this call. I'm 25:56 about to write some checks and put them in the mail. It's October 15th. Not enough Not enough costs. 26:01 We did a cost sag, but I actually wanted to show some profit this year. So, I've never really had to pay taxes up to this 26:07 point, but uh it was I needed a good year of tax returns with the bankers, especially 26:12 since I'm about to start buying a lot of stuff solo and building. So anyway, yeah, total portfolio probably worth 26:19 market value-wise I'm probably at 7 or 8 million and on that I've probably got three looks like 3.8 of debt on it. So 26:25 I'm between 3 to 35 on you know net worth in the portfolio. That's a fantastic place to be. 26:32 Absolutely fantastic. And you built that in a relatively short period of time doing that in five. Yeah. When I looked the other day I was 26:37 actually a lot less leveraged than I thought. I used to think I was like 65 68 and I looked the other day I'm like 26:43 I'm more like 50 555 so I need to leverage some stuff up and get some cash. 26:48 Yeah. Oh that's again great place to be and I think we're entering a good market cycle here. I probably hold off till the 26:55 first of the year since we have a couple more planned little teeny rate drops. But like January, February should be a 27:02 better time than it has been the last three, four years to hop in, relever the portfolio, get a decent 27:08 interest rate on a uh on a whole lot of money. Well, that's going to feel really good because now you're going to be holding liquidity liquidity, cash flow, 27:15 still in a very strong equity position. If you're if you even just push from 55 to 65% leverage, you're you have a 27:22 basically an unusable portfolio. Yeah, I'm going to have a lot of liquidity by the end of the year 27:27 regardless because I'm selling off a lot of those old partnership deals and so I've got some good liquidity 27:32 events happening this year uh anyway. So, I am very excited for 26. I think 27:37 it's going to be I'm going to go into the year with the most cash I've ever had uh with the clearest buy box I've 27:42 ever had. So, I just feel like it's going to be a really good year of growth. Oh, I love that. And I'm very 27:48 happy for you. I uh perfect transition to our final question. So, I I had a a 27:53 million4 of cash. I finally got my liquidity. Got liquid to a million4 and had to spend it all getting rid of 27:58 partners. So, I took that unfortunately only owed the IRS uh 17K after making 28:03 about $2 million. Oh, that sucks. Over a year. So, it was a a great Mine was opposite. I got the liquidity 28:09 because I left the partners. Yeah. I got um I I paid the bill for the uh the part the the partnership 28:15 structures and it wasn't a planned paid bill that was partnerships. Uh people made bad 28:21 decisions unrelated to our partnerships and they needed to be emergency evacuated otherwise they would not pay 28:27 the balloons. So I had to take buy them out and cover the balloons. So that was 28:33 a bummer portfolio. And at a million4 in cash, which is hard when you start with 28:39 10K, that was my stupid tax. $1.4 million of too many partners and not not 28:45 rich enough partners. It's nice to have partners who do not need the money. Uh I 28:50 had some partners who needed the money, lost the money outside the business, and I saved uh I saved a few of them. for 28:57 you when you start. You're the dumbest you'll ever be by default because you will have more experience the longer you 29:03 do things. In the first five years, if there's one mistake that you made where we could save a listener to this podcast 29:10 a bunch of pain, either friendships, monetary, time, any of them, what's the highest tax you've paid? 29:18 Is this for a first time investor or any any level? Any level. Any level. Okay. Well, because I could go down the 29:23 same route and say partnerships and like I like I said before, I don't 100% regret them, but I gave a lot of a lot 29:31 of value away there and there were some inefficiencies that came from that. But I'll tell you what I I'll give you is bad employees, dude. I probably my first 29:38 year of getting employees and h having employees. I paid a lot of money out from bad employees and that was a cost 29:45 of learning how to be an employer. But honestly, I probably had 50 to $100,000 29:51 in bad payroll because I just didn't know how to manage. And that's that's a guess, right? When you hire somebody, 29:56 you want 100% value out of them, but they may only give you 30 40% of what you're paying them a value. So 30:02 now I'm a lot better about fire quick, hire slow. But um that would be my lesson. When you first start hiring 30:08 employees, hire really, really slow and fire very fast. And you have to be a lot 30:14 your expectations have to be a lot higher than what you think they are. And and also I would say don't hire an employee unless you have clear data 30:21 showing whether what they're doing is a good job or not. Don't rely on your gut. Okay? Have clear data that shows what 30:27 what the expectations are of your employees and then if they're hitting those or not. It needs to be black and white. So 30:33 I had a lot of bad payroll especially on the construction side. I I definitely definitely agree with the 30:38 fire fast. That is the number one. I'm okay with with working on stuff. And I 30:44 always ask the question when you have an employee problem, hey, is are they failing because I haven't given them the tools to succeed or are they failing 30:50 because it's the wrong person in the wrong position? And if you find it's the wrong person, you need to get them out. 30:55 If there's a question of whether or not you set them up to fail, I'm all for given second chances. Uh 0% never third 31:03 chances. I can reflect and they can it could be like, hey, you know, was it them? wasn't 31:09 me. Let's let's have a conversation and rework it. If it does not turn around immediately and aggressively, it's like 31:15 the faster you get them out of the org, the better it is for your company, your other employees, you them, cuz they're 31:20 never going to succeed here. Uh it's the best thing you can do. We have different 31:26 experience on the front end of this. This is actually interesting. I have found that the person that I get in the interview, regardless of how much time 31:32 spent, the people I'm the most excited about who we spent the most time on is not always the employee you get and I 31:39 sometimes have to fire them just as fast. So, I've adopted a fire fast, firef, get the right person in trial by 31:46 fire has worked really well. Yeah. But I also run a few companies that are like sales and marketing where they're 31:52 inherently high burn rate anyway. Yeah. So, we have that HR engine just 31:57 kind of rolling all the time. Um, I don't want to be a revolving door and we try very hard to keep our best people, 32:03 but I've been burned on that strategy before. How have you made it work for you where you're able to fire slow and 32:09 get the benefits of taking that time? Cuz some people Yeah. Well, so to be honest, that's what I 32:17 want to do. I'm probably more on your page. Like, when I'm interviewing somebody and I like them, I get a good vibe. I'm like, "Hey, you ready? Let's 32:23 go." Like, you're hired. Yep. That's where I need to slow down some. And like no, like our company policy is 32:29 two interviews and I want to set it up like where my employ my current employees do the first interview. If they like it, they make it to me. 32:35 That's really what I want to do. And I mean, like I said, like it's good in theory. I haven't executed as well as 32:40 you think. Like I'm still bad about hiring too fast and firing too slow. It's something all of us have to 32:47 overcome. And I do like that. Like it's it's hard to tell how good somebody's going to be 32:52 in an interview. The best way to know if somebody's a good worker is work with them for a week. Like how fast do they 32:58 catch on to stuff? That's a pretty big indication on if they're going to work out or not. I agree 100%. I'm a little impatient probably. Like I 33:05 pick up stuff pretty quick and I already know it. So I know I'm a little impatient with that. But like if I do it 33:10 and you watch me do it the first time and then I watch you do it the second time and we maybe a third time we do 33:15 that. If by the fourth or fifth time of us going over this task or thing, if you're not picking it up, I don't know 33:21 if you're going to cut it. Like, I'm sorry. Like, I I just I can't go over this with you a hundred times. Here's a Loom video. If you didn't pull every 33:27 detail from that Loom video out before coming to me with a question, bad sign. Like, I may not want you on my team. You 33:33 got to be able to figure stuff out, make decisions. Just I don't know. When I give you education and you don't follow it all and you come to me with a 33:39 question, oh my gosh, that makes me mad. So, that that is one of the quickest ways to get asked. I I I had a person 33:46 who was put in a key role where I I I realized I need to get rid of them, but we had to get the right person in to 33:52 backs stop them. It wasn't a role where we could just like not have someone in the slot. And so we got through and it 33:59 was it was literally every day it was a question on something we gone over before or 34:05 you assign a task to them and then they call and they they call someone else on the team. They're like, "Hey, can you do this?" And they just like delegate 34:11 everything to everyone else. Absolutely awful. Have you had a have you had any bad firings yet? Have you had a firing? 34:16 Oh, hell yeah. I think my firings have gone worse more on average than not bad. And it's sad. 34:23 Like, you know whose fault it is? It's mine because I think as employers, we think we're the 34:29 only ones that see if something's not working out. But if that's not the case, like if if it's a bad relationship, both 34:34 sides feel it. Yeah. And so I have let employees stay too 34:39 long. I didn't fire them quick enough. And it got so bad I was getting pissed at them. They were getting pissed at me 34:45 because I was getting pissed at them. And so by the end of it, it was just a blowup where I would have saved us both a lot of headache if I had just let them 34:52 go three months earlier. But no, I just wanted to keep giving them more chances and more chances and thinking it would work out 34:58 and like no, it would have been better if I just fired them three months ago. They would have been only, you know, a month or two with me at the point in the 35:03 company. Yep. You know, the writing was on the wall, but instead I just let it boil over and it just turned into a bad ending. 35:09 Yeah. And so that's that's been a big learning lesson on employees. Yeah. I hope everyone hears this and is 35:15 able to apply that if if you haven't done a lot of hiring or firing yet that that getting rid of the wrong people 35:20 first is the kindest thing you can do for them. And it takes a second to sit in and a lot of people are going to make the same mistakes. I've made them. You 35:27 made them. You hold the person in the position too long. Now they're leaving frustrated. Now they're upset. That's 35:33 where you're going to get the bad review for your company. my worst one. Turns out their kid was an ex-convict and they 35:38 they tried to come after us fortunately. Yeah. I posted up our our contractor who's six 35:44 foot four and about 285 lbs knowing that her son happened to happened to be a potential problem. But like 35:50 I mean it's um you can have people can turn ugly at the end. I just there's no other way to say it. Like 35:56 I just had an employee that uh had been cordial with me the whole time. Had a great employment. he wanted to go out on 36:02 his own and uh you know his PTO policy he didn't get PTO after his 36:09 long story short he put in time off for time after he had left the company and then he wanted money for the PTO and I 36:14 was like no you had left the company and it was after and then next thing you know it's like I'm threatening lawyer I mean it just 36:20 turned into the ugliest conversation ever and it really sucks like that good relationships can turn sour that quick 36:27 and I'm bad as an employer I want to be friends with my employees I I spend time with them all the time and I've learned 36:32 that lesson enough. As painful as it is, you just can't be best friends with them. You just have to keep them. Unfortunately, 36:37 I care about them. I know about their life. I know about their goals, but we are not going to be best friends. We're 36:44 going to be friends. I'm going to like working with you and hopefully you like working with me, but like we just can't be friends or best friends. It just 36:49 turns too ugly at the end. Of all the times people threaten with lawyers, how often do you actually see anyone ever actually go through with it? 36:57 Tenants are more is latigious the right word where they want to sue. I don't know if that's tenants are more su There's more tenant 37:04 lawyers out there now than ever. Yeah. And it seems like once a month with an employee or a tenant I'm having to 37:11 be like at some point you're like send it. If you think you got grounds for whatever you think legal wise, go for it. Like yep, 37:16 you're wrong. But I gone through two legal battles out of 30 31 partnerships and 400 something 37:25 units. You got 31. I had two where we actually had to go to 37:30 court for anything. And it wasn't even court. It was like the uh it was um mediation. So, we didn't even go in like 37:37 full We probably get someone once every other week. Well, I need this otherwise my 37:42 lawyer's been informed as Oh, yeah. Well, we we just I just ordered my lawyer's contact. I'm like, excellent. I 37:47 don't handle that. Here's my legal team. Yeah. Just so you know, we're like 40 and0, 37:54 but go for it. Our communication is done when you bring up the L word. Like when 37:59 you say lawyers. Okay, sounds good. Awesome. I had a lawyer. You're gonna love them. 38:04 I had a I've got a complex one of the resorts. We cut down a tree and the tree probably sits this high up off the 38:10 ground. You can see it. Anybody can see it driving around. And this tenant had already lived there for 6 months. So, I know they've already 38:16 missed a tree at this point. Yeah. One day, they just ran this thing. I mean, high centered this stump on their 38:21 little car. I don't know how much damage it did, but that was grounds for him to sue me and get out of his lease and this 38:27 and that and you know I owed him this and he wanted me to sign this document which is Uh so yeah, I mean we 38:33 have those conversations all the time but conver conversely don't hit trees. Another option. How long have you lived 38:39 here? 6 months. Have you hit that stump ever before? No. Okay. So why did we hit it this time? 38:47 You were texting or something? I don't know what you were doing. People People are silly. I've had I had a tenant try 38:53 to invoice me for renovations on a building because she got up on the roof and damaged it with a shovel. I had a 39:00 tenant complain at me that she was able to get out of her lease or I owed her money because we started construction on 39:05 the RV pads next to her place and we started at 7:50 a.m. on summer 39:10 days where it, you know, topped out at 105 110 degrees and that was early in the morning. Makes sense. It's like, okay, I think 39:17 750 is more than reasonable for Yeah. Uh, for a hot area where you can't do 39:22 work during the middle of the day, yeah, I'm going to say that's probably fair. So, people are crazy. People are crazy. 39:28 Well, there's a lot of ups and downs, but I would say super super worth it. 39:34 Um, at the end of the day, that's what the money's for. It is. we make a good 39:39 deal of money because it is a hard job and there is a lot of things that can come up and be it a a fire, a firing, a 39:45 tenant threatening to sue you because they hit a stump that they've known about for 6 months, whatever it is, that 39:51 is why we're in the business that we're in is not only is it a rewarding business. We get to provide housing, but 39:56 it is lucrative for these reasons. The money is there so that you can use it to continue to grow the business. 40:02 100%. I love what I do every day. I'm sure you feel the same. I love what I do every day. Oh my gosh. Yeah, 40:08 we solve new. It's never It never gets old and boring. You solve the Especially the more you scale, the bigger the 40:13 problems you solve. And I think that's the fun of it. Like in the moment, it feels really stressful and it feels like it sucks. But you 40:19 know, a year from now, I'm going to look back at problems I'm having today and laugh. And you know, that's always going to hold true. It's funny hearing a new 40:25 investor and the problems that they're going through buying their first deal and you're like, man, I I remember when that used to be an issue. Like they 40:31 wouldn't want to lock up a good deal because where will I get the money? And it's like, oh man, I I remember when I used to think about that. Uh that's the 40:38 and and the fun thing and this is what I've learned is where are you going to get the money? You're going to get the money from the next deal. Like the the next the deal will always tell you what 40:46 type of money it needs. Is it high cash flow? Is it high upside? The right investor for that deal, the right loan 40:51 product for that deal, you're not going to figure it out before you have the deal. If if you're trying to prefind all the 40:57 capital, it's never going to happen because you have no product to sell. It's like trying to a car salesman 41:02 trying to come in and sell you a car before they have a vehicle on the lot. like, "Oh, what do you want to pay for 41:07 for payments?" I We'll probably find something like that. Oh, cool. What color do you have? I don't know. I don't have the car yet. Like, how how are you 41:14 going to pitch a deal without having a deal? I find it the craziest thing where people feel stuck on money. 41:21 Uh the money will find the deal. Your job as a real estate investor is the real estate. Put together the deal. And 41:27 it's not even just money. I've seen people not do deals because, oh, I don't have a contractor yet, or oh, I don't 41:33 what if I can't find a tenant? It's like contractor you don't have anything to need a 41:38 contract. Yeah, I know. I know. I've been through it round and round. But it's that problem does not stop, right? 41:44 If I go buy a 100 units this year, I've never done that in one year. Like I'm not going to know how to do that until I just go do it. Like 41:51 really good entrepreneurs are really good problem solvers. That's part of this game. So So go uh go negotiate a 41:56 problem to solve. What a great note to end on. I like that. That's a great piece of advice from Dylan Osman. Go find a problem to solve. Go make a 42:02 problem to solve. No kidding. Go get a problem. Go get a problem. You don't have enough problems. You 42:08 probably don't have enough money. Uh go ahead and get more go get new problems. Get bigger problems. Solve them. And uh 42:13 that's where you make the big bucks. Solving big problems. Dylan, awesome having you on the podcast. It was 42:18 awesome seeing you last week, dude. You as well. That was a good talk. Yeah. Oh, you you made me miss one of my breakout 42:24 sessions, but it's okay. It was I I I apologize. I have a habit of doing that. No, we started talking and I looked up. 42:29 I was like, "Oh crap, it's been an hour and a half." So So unfortunately, I talk for a living. So, uh, I will I will in 42:34 fact do that. Dylan, awesome having you on. Uh, thank you for sharing all of your insights. For everyone listening, 42:40 this is the owner meeting podcast. Uh, download literally everywhere. We're finally top hundred on iTunes for 42:45 business podcast. We beat Alex Rosie for exactly two days last week. So, 42:51 then he's right back on top. But, uh, thank you guys so much for helping us grow this channel. We do these owner 42:58 meetings specifically because you learn by learning from the people who've already built the business that you want 43:04 to learn. If you don't have time to do this, you're trying to escape the nineto-5. I do my best to find the most interesting people I can so you can 43:09 learn from them. Dylan, awesome takeaways. I'm going to be thinking about this hiring slowly thing again. I 43:16 I'm going to rethink some of this. You've given me a bit to think about in how we run our companies, which I 43:21 massively appreciate. How does someone reach you if they want to follow up? if they have a deal for you, they want to 43:26 invest with you, they have questions about this episode, how do they reach Dylan? Yeah, man. Uh Instagram is Dylan-ossman. 43:33 Facebook is I don't know how you say your Facebook tag, Dylan. Whatever it is, same thing. DN O N. Uh I'm more 43:41 active on Facebook. I'm starting my own podcast, uh the Do Real Estate Podcast. That's fun. And uh yeah, guys, I'm in 43:47 Northern Central Arkansas. I'm Mountain Home. So if you're around me and you want to do deals or you got something in 43:52 the pipeline, let me know. All righty. Thank you so much.
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