ROE > ROI and Why Your “Cash Flow” Number is Deceiving - Transcripts

September 15, 2022

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Cash flow—the two words every rookie real estate investor loves to hear. It’s always about cash flow. “If the property doesn’t bring in a healthy amount of pure profit every month, there’s no point in buying it!” This sentiment could cost you hundreds of thousands, if not millions over the lifetime of your real estate investing career. Don’t get us wrong, cash flow is important, but focusing on this metric alone may lead to your downfall. Chris Lopez hopped off the “buy only for cash flow” bandwagon long ago, and he’s much richer for doing so. Chris has become successful quickly in the real estate game, which is doubly impressive if you look at his past business history. He didn’t start in real estate sales, investing, or anything of that nature—he was more interested in building content for other businesses he was pursuing. After realizing that rental property investing was the way to go, Chris took a hard pivot, repurposing the same skills he used in his businesses to work in real estate. Now, he’s got eight units of his own, passive investments he doesn't need to worry about, and a successful real estate brokerage situated in the real estate mecca of Denver, Colorado. He’s become the foremost expert on Denver real estate not because he’s done thousands of deals, but because he knows the area well enough to teach those who don’t. Chris talks about business building, mentorship, and a much better calculation than cash flow in this episode. In This Episode We Cover: Building a real estate business that not only makes you active but passive income SEO, content marketing, and using “lead magnets” to drastically increase your deal flow The wrong way to find a mentor and four simple steps to take to get the attention of top investors The world’s best business card and how it turns you from a novice into an expert How to reevaluate your real estate portfolio to ensure it’s making the most money possible And So Much More! Links from the Show BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast Get Your Ticket for BPCon 2022 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Rob's BiggerPockets Profile Rob's Youtube Rob's Instagram Rob's TikTok Rob's Twitter BiggerPockets Podcast 278 BiggerPockets Podcast 558 Watch Chris’ “House Hackerz” Series on YouTube 9 Simple Steps to Finding the Best Real Estate Mentor Books Mentioned in the Show: Rich Dad Poor Dad by Robert Kiyosaki BRRRR by David Greene How to Sell Your House for Top Dollar, Faster by Faby Gonzalez Good to Great by Jim Collins Who Not How by Dan Sullivan Connect with Chris: Chris' website Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-662 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

This is the bigger pockets podcast show 662

I think everyone's play monopoly and I can still return on

equity the way

to go from like a greenhouse to a red hotel and kind of skipping that 2nd, 3rd and 4th greenhouse. So it's a powerful way to scale up your properties and also

scale up your portfolio.

And this took me about nine months to flu wrap my head around. But once it clicked it changed everything. It changed my own investing clients and changed my business trajectory as well.

What's going on? Everyone, this is David Greene coming at you from Scottsdale Arizona where I am having a little bit of a getaway with christian and Kyle and we're sort of enjoying this. The area is beautiful out here and while here we have a fantastic episode for you. This will definitely be one that you want to share with other people and listen to more than once because it's just chock full of great examples, anecdotal examples, high level strategy. Our our guest today is chris Lopez and he is a S. C. O. Master. He is a real estate broker that owns a brokerage, he sells houses, he owns real estate, he invests in real estate for with other people, he teaches other people how to invest in real estate. He runs companies and we get into everything he does and more. I'm joined today by the lovely, beautiful and talented robert Abba solo rob. What were some of your favorite parts of today's show.

We talked about how to get mentors some of the realities of trying to get a mentor and how you can prove yourself to, to get in the door with somebody, you know how to provide value to someone so that they can take you on under their wing. I think we spend a lot of time talking about this, something that I think we care about quite a bit because this is something that we see often, so I think if you listen to it you'll get some tangible advice, but then we also talked about how to use content to market your business, how to get lead generation just from putting out podcasts and other types of content, the importance of copyrighting and doing so. And then we put a beautiful bow on this that talks about the return of equity and how you can use that to become a multimillionaire in real estate if you just play the real estate game of moving your money from one house to another.

Yeah, we also, I forgot to mention this, we have a pretty lengthy discussion about mentorship, how to find a mentor the right way to go about it the wrong way to go about it and maybe who you should be looking for when it comes to mentor chris has some really good insight into that as well as you. I thought rob you did a really good job giving some practical advice for people who are like hey somebody please, I want to be rich, help me to do it through real estate.

And just a quick

word from today's show

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Yeah. I found out that uh, you know the moment I started sending you gift baskets every single day, you finally, you finally decided to to respond to me and I'll teach you a little one. And so it's cost me thousands and gift baskets. But I'm really glad that we're partnered up together man.

I'm a weakness for a gift basket. Yeah, no, that's not true. Please don't send me a gift baskets. I feel terrible whenever, whenever people do that. Like lately I've been getting stuff that sent to me, which is awesome. But they don't always put like who it is that sending it or my assistant gets it and opens it and then comes and gives it to me. But they've thrown away the box that had the label and I feel terrible that someone sent me a gift and I don't know who they are.

One time someone showed up to my house and my wife was like, what, what was that about? And I was like, oh a subscriber showed up to the house. I don't know, they were nice and she was like okay and then like a day later this gift basket Shows up and she was like I'm not eating that, I was like well hold on, this is a $300 gift basket full of Sardines and Jerky and I was like let's just, I'll take the first bite and I'll let you know if everything's okay turned out that it was a delicious gift basket.

Today's quick tip is evaluate the equity that you have in your current portfolio. We get into this in depth on some really good stuff. A lot of people are sitting on tons of capital and they don't realize it because they they're not actually evaluating where their portfolios at. So the easy formula is you look up and you see how much cash flow is this property producing in a year and don't divide it by the initial amount you invested divided by the current equity in the property, we call this return on equity. If that number is less than you could get if you reinvested that money into a different deal, consider selling or at minimum refinancing it and moving that money into more cash flowing real estate. That is your quick tip brought to you by David and rob. And now let's get into the show chris Lopez. Welcome to the bigger pockets podcast. How are you today?

I'm doing fantastic, very glad to be here. Thank you guys.

Yes. So tell us a little bit about how you got into real estate investing and what your portfolio looks like today.

Yeah, so it all started about 20 years ago and I read rich dad, poor dad, like majority of people out there total mental shift and got me hyper focused on real estate, um spent a little bit of time trying to get real estate back then. I was a sophomore in college at the time, so I was about 19 or 20 so didn't have money, didn't have the knowledge and the internet was not what it was like back then. So I spent a few months trying to get into real estate, couldn't make it work, so did some online marketing businesses for about 10, 12 years. But after that business faded away and wrapped up, I then pivot into real estate And then over the last five years I have really focused on building a real estate business first, like my have a local podcast, I have a local real estate brokerage on focusing on building that. So I got there and then generate revenue, get in the game and then build my portfolio and my current portfolio is eight units. Um, and I also do a bunch of passive investing. So right now I'm in a very happy space with direct rentals and also a bunch of past investments, but my main focus goes into my, my real estate business

and so your investments, are they all in the Denver area?

All my directly owned rentals are, yeah, they're all within about probably 20 mile radius of each other. And then the passive stuff is just, that's all over the country in half the states, but I'm a big believer in like invest into my backyard so I can leverage my network, leverage, what I know it's very hard for me to duplicate, you know, all this knowledge, long distance, it's not impossible, but I very much like to have a very singular focus and just dominate that. So I've decided to stick in Denver

so curious what got you moving away from buying more units, doors, properties in Denver and into the passive side that you mentioned.

Um couple of things. One is just, you know, uh a lot of it's my lifestyle. I've got two young kids right now, three and five. So I'm very much like in the trenches with my wife raising my kids, I love it and I'm also experiencing a lot of business growth right now for now in my brokerage, but also a couple other real estate related businesses. So I have a lot of very limited time and so I've decided to start investing passively just to take some uh free up some time for me and also better utilize like my self directed 41 Ks to start investing. Not a big fan investing directly in real estate with a four oh one K. Or a self directed ira usually not really great returns. So it's, it's a lot of that into more passive investing because it's easier and you know, you get better returns that way than the stock market.

That's cool, kind of like me, it sounds like you're a bit of a gad fly, you've got a real estate brokerage, you are in a private equity fund, you own some real estate and a little bit of everything. So tell me, how did you get your business started? What's the goal of the business that you got into? Do you see real estate investing as the end goal or is business the end goal and real estate investing is kind of icing on the cake.

So, um I've gone through a few iterations, like most people as I've grown personally as my business has grown, you know, things have shifted and I'll kind of rewind before I get into real estate about the past businesses I did because I built that previous event marketing business, lots of success there in generating revenue and learning how to do marketing and I started taking that cash flow and once I had achieved financial freedom, I started trying to pivot into the stock market, day trading and then eventually foreign currency, this is all before Bitcoin and FTS and I got my butt kicked And so it made me realize that there's three main things I can focus on and said, hey how can I invest my time and my money because those are two very different assets and depending on what you have, you have different amounts throughout your life. So you know before I got married and had kids had a lot more time. So I prioritize my portfolio where I invest in the stock market. I'm a big believer in that um not majority my portfolio by like investment stock market but I spend less than one hour a year looking at my stock portfolio, I'll transfer in a couple of times when I need to and I'll check out like three times a year to make sure the money is still there that's about it. And I decided I can put my active time into real estate or a business and as I started doing some deals and I did fix and flip, did a wholesale deal, did some things like that. I realized that my best use of time and skills really focusing on the business aspect of it. So I go out there and generate revenue that way. And that's where I get the highest return on my time. If I put you know, 100 hours or 100 units into the real estate business like my brokerage, my meat and all that. I enjoyed a lot more and then get a higher return. So my real estate investing um I spent a few hours a month on it. Not a tremendous amount of time, but I very much put all my attention on the business and then real estate second and stock is a very, very third uh distance in my portfolio.

That's interesting. I like that. I like interviewing more people that run a business within real estate than simply are pure full time investors. And that's because I'd say like when the podcast got started, your ability to become a full time real estate investor to just buy a lot of property and live off the income that they made This is a subjective opinion. But I think it was easier than what it is today. There was less competition. There were less people interested in this. There wasn't as much technology to make it smooth And as podcasts like ours have grown and new software companies have taken root and the information is getting out there man, it's not hard to learn how to do this anymore. It used to be kind of a secret. It was like like knowing jiu jitsu and mm a if you knew jujitsu, like you had a secret. Nobody else had. Well now everybody knows it.

It's become significantly more difficult to become the traditional full time real estate investor. But at the same time there's a big demand to get out of that cubicle out of that commute out of that job you hate. So what do you do? Well, I tend to think that a really happy medium is leave the job you hate and get a job in real estate which you like and let that supplement your investing. But like you said, you can also make good money doing something that you like more So I'm curious how did your background in tech as well as your SEO and marketing experience help you with building a successful real estate focus business. And was there like a pivotal moment early on where you knew who I can go do this?

Yeah. So to kind of go back a few layers on there to build up to how this went into real estate. I want to tell that backstory because I've had explosive growth the last five years in Denver in my portfolio, my real estate business is like, wow, you're an overnight success. Yes, I am. But it's built on 12 years of my previous business where it was not an overnight success and I I got quite a few black eyes and you know, punch in the face more than I would like to admit. But that's just normal business, normal entrepreneurship. So I started out, I got my first position opportunity as a sales guy, not in real estate, but general sales guy was like, cool, I'm ready to go, let's do this. And I realized I needed leads. And so once I had that realization, oh, if I have leads, I can go out there and make my phone calls, make my appointments and then therefore get a commission. So I go out there and pay my bills and make money. So I had a huge mental shift there about generating leads. And so I put all my focus on the majority of focus on how do I generate leads because I realized if I had leads I can make money and I realized, oh I go out there and build a sales team pass along the leading act more as a sales manager.

So that led me to copyrighting Youtube marketing, facebook podcast. I kind of grew up with the internet from 2003 time frame And just cranked on that business for until about 2012 mixture marketing and make sure to check in there. And as I focused on the leads, I just kept getting more and more success. And then the huge wake up call, it was like 2010 or 2009 is something called the google slap, which I don't think a lot of people are familiar with. But as I had ramped up all my advertising campaigns, we were spending on average about 20 to $30,000 a month on a google Adwords campaign, you know when you search google, those ads would pop up google display network, all the typical stuff. Well the google slap is what some marketers coined this 12, 13 years ago where google just unilaterally turned off a ton of accounts. They turned off people in financial services, affiliate marketers work from home opportunities, anything with types of claims, just all board. They turned off the ads, no warning and just cryptic. Oh, here's an email. Your ads are turned off. Here are three bullet points of course no contact And those Google Adwords campaigns was the majority of our leads at the time. And so we had one big pipe coming in of a lot of leads and it was phenomenal until they turn it off and it wasn't phenomenal anymore.

So we spent six months, me and my business partner pivoting figuring out, spent like $20,000 on consultants to get back on Google. We eventually got back up there. But the big lesson I learned there is, I need to have multiple sources of leads and ideally lead flow that I have control of if all my leads are coming from one advertising campaign, it's great until it's not because then facebook google whoever can turn that off and just put your business, you know, put you out of business very, very quickly. So that made me pivot more towards content, marketing, personal branding. You know, being a thought leader because if I can go out there and publish a content, establish my website, build my email list, I am controlling my destiny. Uh, so I very much focused on that and that was a huge pivotal moment in my mindset as a marketer and also a business person realized, hey, if I want to be in control of myself and my business, I have to know how to generate leads and have to consistent supply of it and cannot rely on advertising campaign from a big company that can just shut me off.

Yeah, I think a lot of people fall into this, this trap right, where they want to put all their eggs in one basket. And I think the reason that this happens is because if you find success in the proverbial basket that I speak of here, why change it, why do anything, why would you take time away from a successful thing to then go and put time into something else that's probably not gonna be as successful. Right? And so this is, I've seen this time and time again, even in my own business. I mean, I started out on Airbnb when I was starting out my short term rental portfolio and about a month ago, a month and a half ago, same thing, they shut down my account, They didn't tell us why this was happening to a lot of hosts everywhere. And we're just like, oh my goodness. So after we got access to our account now we're like, okay, probably shouldn't put all of our eggs in that basket, so now we're on V R B O, we're starting to list on booking dot com, we have direct booking websites and so it's something that is very painful in the moment to do so to stop focusing on the one thing that works because it works like I, I just feel like I'm taking money away from my business by not doing that. This is something I've struggled so many times chris because you know, I tend like I'm a Youtuber by trade, but now, like you said, I do google ads as well, tiktok instagram and I feel like it takes a lot of time at the very beginning to just establish all of those different ways to acquire leads. But once you lay the groundwork that, that's how you can truly start growing your business. So after you found out that your google account was sort of back, obviously you started pouring back into that, but what was your first big step from a lead generation source? Was it content and was it a specific platform?

It was content elk and that happened kinda as those, those businesses were winding down. So I won't talk about what I did in that business, but how I took that knowledge and pivot to grow real estate because the previous stuff was a nutrition business, online marketing, not related to real estate whatsoever. And so you can always build upon those lessons and skills you've learned and so I took that knowledge as I wanted to get into real estate, so it took me about 18 months to figure out the best way to get into real estate. Uh and I'm very happy to fail forward. I have no problem with failing as long as I, you know, don't go bankrupt or hurt someone, I'll fail all day long and I'm happy to fail because the faster I fail, the faster I learned, so we're not there to fix and flip to the wholesale deal, did a few different things, made money, but I was like, wow, this is gonna be a very hard like transition for me to get into real estate. So I started realizing, wow in real estate, especially local markets, there's just not a whole lot local knowledge and you know, 67 years ago I found bigger pockets, started listening to podcasts with, you know, Brandon josh and getting plugged in on the bigger pockets. Community phenomenal learned so much, but I kept coming back to, what do I do in my local market, what do I do where I'm at, which is Denver colorado, how do I have success here, who do I find and I could find no online content and I really had no network out here, no experience, so I did not know how to learn or connect with people. So after probably about two months of just googling and searching bigger pockets forms a light bulb when I was like, oh I can be the bigger pockets of colorado, that is my solution to go out there and be able establish myself and generate business and investment opportunities for myself. So I basically took what I wanted to know because I figured I have all these questions, I'm not the only person out here wondering, oh what do I do in Denver, who's the lender, what's working, what's not because the 2% rule do not work in Denver back then, all the stuff I say, I'm gonna go out there and fill that void and as I went out there and was analyzing where I could create content and also I created a ton of content between podcast, long form sales, red letters, uh Youtube videos, all that stuff, I decided to go on the podcast route and that was because podcasting was really starting to boom Ben, but from just like a content production standpoint, I think prepping recording and producing podcasts, some of the easiest content videos were great, but man, a lot more prep, a lot more editing or a podcast, I was at my gym clothes half the time uh and just have a conversation that we're having and then go out there and publish it. So I focused on the podcast because that worked well in the trends and also what I noticed was it was gonna be the fastest way for me to go out there and create content. And I'm a big believer in speed, speed matters and everything you do. So I could go out there and crank content very quickly.

So I start with that podcast first approach and then I just did some very simple tactics of you know, writing a simple blog post to follow along with it, repurpose some content and all I did was take what questions I want to know and other investors want to know and I would go find and interview people with that expertise around Denver and I would basically just stick the key word Denver in front of the podcast title and it was just instant S. C. O. Juice and help grow the podcast and then that just started the whole machine going.

So when you're establishing yourself as a thought leader in thought leaders, someone known in this space and authority of of sorts. If you will, what are you doing to really to do that? To establish yourself in a new market zero network and zero experience. I know that you have the podcast out there right. And so right now you're obviously very smart, you've done this, you're successful but for someone starting out is it just a matter of making cont and being like I'm just gonna do a lot of it or were there specific things that you were doing to really really solidify yourself in the space?

Yes, um the biggest thing I would say is I went out there and got a mentor, like I I had the expertise to create content and get to know how to get eyeballs on the content, What I did not have was the expertise on all the real estate investing tactics and techniques for what works in Denver colorado. So I had two options, I could go out there and actually three options go out there and try to learn everything myself and then create it which is a very very long way to do it, I could fake it till I make it and I hate that because a lot of gurus a lot of people over the years, it's fake it till you make it and that is complete B. S. I do not like being inauthentic, but the main way I go out there and find that person with the knowledge that was the biggest growth hack I could go towards. And so my previous business I learned the power of mentorship and the power of hacking someone's knowledge and network because it can give you that like hockey stick type growth of just vertical growth. So what I did is I have this idea, I need this but I need to learn how the skill and knowledge and so all these other thousands of investors around Colorado. So I did something really unique in marketing, I started calling people, I started cold calling brokerages that had any type of semblance of investing and I was just very pleasantly persistent, my follow up and I found a mentor and when I find a mentor, my goal is to turn that mentor into essentially a business partner because what a lot of people do is they, we all want mentors, we all want that advice, that knowledge, what happens is people go out there, oh can I buy a cup of coffee, Can I buy you lunch? Can I go sweep your fix and flip? It's not really like me going out and buying coffee or someone, they don't care about that $3 latte, I'm buying them, you know an hour their time with way more than that. So a lot of times, um you know mentorships, it's like a one way street value, I'm taking, taking, taking, I do not want to do that. So the focus on how can I make it a two way street of value, How can I make it a win win situation? And that starts with you know, being self aware of what I am good at what skills do I have and what, how can I apply those skills, knowledge and hustle to someone more successful to me and a lot of times they have a lot of knowledge success and you know in these buckets are these banks and I've got knowledge and other buckets, well where can we find complementary skill sets because if we're both the same, not good partnership, but if we have, you know, complement skill sets, well then one plus one equals three.

So I found the Guy Charles Roberts and he was actually on your podcast, I think episode 278-76, the boring path to real estate success. Um, found him and just a phenomenal guy. He has found one of the biggest brokers in Colorado. He had been investing in a realtor for about 15 years and just kind of one of the pillars of the community around Colorado. So highly successful, highly busy. But what I do is I went out there and I researched him, I found out what he wanted to do, I found out where there are gaps in his business. I talked to some of his employees and agents and just did research on there and I found out he has a passion for teaching. He generally loves teaching. He would teach classes all the time, you know, 30, 40 person classroom, but you know that in person classes great, but it's very hard to scale. So I proposed the idea of, hey, we could take what you're doing and put on the internet, go out there and market it and I would love to do that. And then what I did was once I provide that solution to him, I went out there and said, hey, here's what we're doing here is the plan, Give me this and I didn't wait for him to tell anything. He gave me, you know, a couple lemons, I went there, made lemonade and came back, here's what I did because we do better and I just started executing.

So I think the key here for this is being self aware, what's my skill set, trying to identify what value I can provide to my mentor and then I want to align their interests with mine because hey, people can give free advice, they can be a friendly mentor, but at some point everyone has to focus on their business, their problems, their revenue. So the way we structure it was, as we're starting this content, uh, you know, this is very common, real estate agent industries to pay referral fees. So as clients came in and I would create the content, I would, you know, work them and help them go out there and find the property and then Charles will be a referral fee and the plan was as everything built up, I would always continue getting a referral fee, which I was very happy to do, but he had a vested interest in my success. So the more money I made, the more money he made and it was a great win win situation that kept him interested and to start snowballing from there,

a lot of music to my ears here chris because this is something that I deal with every day, probably you too. David feel free to chime in on this. But I have a lot of people that will reach out and this actually just happened today. Someone reached out, they asked me a very, very, very long question on, on Instagram that was like, Okay, so I inherited this. I have 30,000 here. Here's five deals that comes out here. Would love to look look at you, I would love for you to look at the whole 18 unit development this and this and this also happy to provide any any value to you as well. Just let me know. And I was like, well, I could obviously chime in on that, but I what value can he bring to me? I don't know. I'm sure there is. I would love to know actually, but he said happy to provide value to.

And I'm like, but what do you do? Are you good at copy? Are you good at editing? Are you good at sourcing deals? Are you good at being boots on the ground? Do you have family? Do you have a family of realtors across the country? I have no idea. And thus, because I didn't know, I just didn't have time to think about. It would be very odd if I was like, well, hey man, I actually need someone to uh answer emails, can you, is that value you'd be willing to provide to me. Like it doesn't really make sense. And so I think that if you're seeking out a mentor, that's totally fine, shoot your shot, put it out there, but try to find out what that common ground is and if there's something that you know that that person likes or wants or needs talk about how you can fulfill it.

I think Brandon talked about this a couple of years ago on the podcast where he said he wanted to learn how to surf or something like that. I think someone reached out and they're like, hey man, I can teach you how to surf if you teach me how to, I don't know, buy houses or something, I don't remember and I think they actually became friends and like work together in that capacity and I was like that, that to me is what people should be seeking when they're seeking a mentorship. Don't just ask, hey, can you do this for me? I can also help you to be very intentional and specific with how you can help me. Otherwise it just gets lost in a sea of messages. David, you ever get messages like this or how do you handle it when this comes across your desk?

Yeah. And I'm trying to be very diplomatic about how I answer this because Brandon and I did an episode one time where we said, look, don't just ask us for a cup of coffee cause like $5. It's probably not worth two hours of time. And it sounded very arrogant. Like I'm so good. I'm too good to help someone and I don't want it to come across that way. It's more

if

you want to, I use an example of working out right? Like if I want to work out with the rock, the reason I want to work out with him is he is very good at working out. I'm going to learn, learn things about workouts from the Rock. However, because he's very good at working out, he is very focused and dedicated and purposeful about his workouts. Okay. He wouldn't look like the rock if he stopped every workout to teach the new person bench press form. Okay, so if you're gonna go want to work out with a person like that and you're asking for that much of their time in the space that they take very seriously. You can't show up as a person that's never lifted weights and be like, I want you to be my personal trainer. That's kind of what you're asking. Okay so you gotta be aware that like you probably don't want to work out with the rock, Go start working out follow what he does when you get to a certain point. It might make sense to say can I come work out with you? Let me spot you or let me help you in some way that would benefit the rock.

Do you have something you want to add there, rob,

That's great. No, that's, that's very, very, very, that's a nice way to put it. I think that's perf diplomatic in that, you know, because it can seem harsh and no one obviously wants that, but I'll give you a really good example of actually what just happened to me. Two or three weeks ago, I talked about on bigger pockets how I'm becoming a realtor in the Houston market and I'm going to start a real real estate channel specifically for Houston. I just started shooting all the content for it yesterday and someone heard that and they reached out to me on instagram and they said, hey dude, I love your channel. I follow it super, super closely. I've actually started 14 real estate Youtube channels around the country. I've got 50 agents under me or 100 agents, I can help you do this. Would you be willing to meet? And we met and he's provided a ton of value and we're actually gonna partner up on a few things here in the city. And that to me was a really great example of him understanding that I was gonna fall into some kind of issues like there's gonna be some barriers with what I'm about to go through and he's like, let me help you with that. And I was like, okay, I don't know what I know, I'm sorry, I don't know what, I don't know.

Let me hear him out and I heard him out and now, you know, it's gonna turn into a really cool thing. So that's a really great example, David, because that, that, that's, I'm not gonna say I'm the rock, I think we can all just look at me and pretty quickly see that I'm not. But in this analogy, like I'm pretty good at Youtube and he's done that too and he's gonna brought it to me and I was like, okay, it's

your hairstyle that kills the rock

percentage

That's going there for you rob. But I actually wanna unpack too picky about what you guys were saying there. Um it's not just asking how can provide value, be proactive, like, I mean I have tons of content like you guys out there and people schedule a phone call with me or email me. I'm like, have you spent more than 15 minutes on one of my freaking, you know, podcast or my even read my bio on linkedin for goodness sake. Like you can research someone. So I would, you know, if I was where I was years ago, go online, research people go father channel, go fall on social and do that for a week and you can see things especially like a marketing standpoint or business standpoint and look for opportunities on how to make something better or hey, I noticed this, I had this idea here or you know, I saw this that you did here and actually repurpose isn't a landing page or a podcast. Like don't just say how can provide value, come provide a solution actually come with something in your hand, ready to go because guess what? That gets a lot more attention if I have to, I think you were saying that a few months ago rob if someone has to ask you how can provide value and I have to put on your busy schedule and already I imagine you probably already maxed out and band with like all of us are you don't have time to think, oh, how can this guy, how can you know, use your 1234 instagram help me out. I don't know. Then you forget about the person, you never think about them again. So research people and be proactive and come back with a product or a solution proposal and show it to the person,

couldn't have said it better myself. I mean, I think I've just experienced this several times and I'm like, I've seen it work. It's worked on me several times. I'm like, yeah, there we go. You did it. You showed me value. Thank you. At the end of the day, we just don't want to think. We don't want to think. Like if you give us something and you make us think for 5, 10 minutes, we're too busy. We're like, there's so many things, I'm scatterbrained, I'm a D. H.

D. If I have to think about put any thought into a random message that comes my way. I'm like, I I just, I'm so sorry, but if it's like, here's what I can do, I'm working on it now, here's how you're not doing it and here's how I'll help you do it. I'm like, oh that's a great pitch right there, the four second power pitch as they call it.

This is a principle of success that I think chris is a great example that highlights. So chris, I'm gonna get your two cents on this idea. The wrong way to approach getting good at anything is to say, oh that's a person that's good at it. Let me just see if they will become my friend or my mentor because mentor doesn't sound bad, That's a nice word. But what's really saying is I want this person who doesn't know me to do all of the heavy lifting that, that I don't want to do myself to learn this thing and help me avoid all the mistakes that they had to go through themselves just because they want to help somebody that doesn't sound as nice as mentor, but that's what's behind it, the way that success works is it happens in incremental steps, okay if you're climbing a staircase, the step, three quarters of the way up there, you can only get to, if you can get to the step beneath it, you cannot skip from the bottom all the way up to the top. So you have to have some form of a skill, some way to bring value to the world. That you then apply in a different way that opens up new doors for you. That gives you new skills. Now there are more other doors that you can walk through. You get new skills there, you're building momentum. So like chris what you were saying is you were in S. C.

O. You were in marketing, you kind of understood copyrighting, you knew how to get people to find you when they were searching the internet. You turned that into a brokerage that could get leads coming in. You learned a lot about real estate, you learned a lot about helping clients, You got exposure to investing by watching your clients go through this process and learning the system which made you confident that confidence allowed you to go by your properties for yourself. Now you've got the confidence that comes from owning property with the confidence that comes from helping clients. You can now apply this into starting a software company like, oh I know people need help with this thing. I can solve that problem. That opens up doors that gets you into private equity or syndications or whatever you're doing every successful person did some form of a trajectory that worked this same pattern. Elon musk did not start Tesla as his first company, he got into whatever he did with Paypal and before that he learned something that gave him skills to get into Paypal, you can absolutely get mentors in my opinion, if you've already got a skill that you can bring to help them and then you learn new skills from there, it's the skipping, I don't want to build the skills, I just want to start off at the top that stops so many people from finding the connection that they need to get them ahead. And when we say things like bring value, that just is a confusing term because that could be anything that could be like, I'll smile, I'll be happy, I'll get your coffee, I'll send you an encouraging, but that isn't necessarily going to get the attention of the person that you want to help. It's got to be something practical. So I think chris you're a great example of the person that walked that staircase.

So rob, I'll let you get your question in there and then I'll ask you chris like from your experience, like what, what is the way that you see a person can start building skills right now, that would both benefit them in their wealth building as well as in the mentor that they're trying to find.

So I think the best thing to do there is you gotta start with like a self assessment, self awareness because at this point, anyone in this podcast, I'm assuming they're probably older than 18 or, you know, they've got some life experience out of high school, like we're already at that point in life have inclinations towards items. We like some skills we developed from, you know, uh some job, some courses, whatever it is, like their skills. So I'm a big believer in like doubling down on what you're already doing. Um like when I got started real estate, I look to go do a fix and flip did one made $25,000 and it was a pretty miserable experience. I was like, wow for me to start fixing flip business. I'm starting a lot of my skills from like zero, but I can lean into existing skill sets, I can keep doubling down those. So I think it all starts off with like doing a self assessment for two things, what current skills do you have And then what do you enjoy doing? And I think really allotting those two things is phenomenal because anything that we're gonna do, we're gonna put our heart into it, put time into it and I wake up excited every day to go out there and start my job, start my day and just attack the day. I love like 90% of what I do, where as I was bouncing around the past business to start, I would research something or start and be like kind of a humdrum feeling and then if I'm not that I don't have the excitement, I can't go out there and execute and so I think starting with those two things is very important and then go out there and leverage that into a mentor, into a new business and I like to look at skills that can be very scalable and that I can go out there and just you know have a real honest crack at going out there and providing value to multiple people in different terms but going out there and looking at your own skills and I would say pick one or two, that's already a good skill you have that has value to the marketplace or whatever you want to get into, go out there and get better at that. I'm not a big believer in Oh let me go to right field when I'm on first base, let me stay where I'm at and get better and better and better because the more you focus on that I think you get a better return on your time and your skill sets by getting very very specialized.

Why don't we chris do you have like a four step system, editor takes part out that we can go into?

Yeah, I have a four step system mean so it's that self awareness um like I talked about and this is for like finding mentors, I would say like this is my four step process to mentor. So it starts that self assessment, just talked about, goes back to what we talked about to research the person and basically I'm not gonna be diplomatic, don't ask stupid questions, don't waste the person's time because if you do they're probably not gonna return your phone call or not gonna turn your, you know your two page instagram DM. The third step is be proactive and provide a solution the mentor needs and the fourth step is actually follow up. I call it being pleasantly persistent. Now if I when I first started reaching out to Charles and the mentors over the years like I get it like they're busy. Cool. Didn't reply to an email. I don't stop there. I don't go and cry, oh you can stop calling me to email me back. I get it. He probably gets 1000 emails a day, awesome. Give it a couple of days, send it back, do something else and just stay pleasantly persistent and as you do that, make sure you execute.

So those are very much the four things that I have focused on and I repeat that process numerous times with really good success.

Yeah, I really appreciate the non diplomatic response here. I think this is probably something that that we deal with a lot. If I had a dollar for every time someone reached out and said, hey, um I'm looking to start a short term rental business. Do you think you could send me your favorite youtube video that you've done on how to do that? And I'm like, I mean, you could just go to my Youtube channel and just like it all teaches it really. And I'm sure David, how many times have you ever had something that's like, alright man, I'm looking to burn any tips. I'm sure the responses. Have you read my book? Because I do have a whole book and that is, it's the biggest, it's the greatest assortment of tips out there on how to do a burr.

Yeah, That comes up quite often. I think I just want to highlight the reason we're doing this is because we care about the people that are wanting to mentor. We are, we legitimately wish we could help every single person. But if we did that, we would never get our workout in. We wouldn't look like the rock and then you wouldn't come to ask us, how do I do this? Because I'm not in shape anymore, right? It's not a, I'm better than other people thing. It's just logistically this is impossible when, when you get the message where they say, hey, I'm looking at these seven deals, can you analyze all of these for me and then tell me like which one of them you think is the best. Like there's absolutely no way I can do that. But you're so excited and this person wants to invest in real estate, you wanna help? So what we think is, well, let's make a video that would show people how to analyze a deal that everybody could watch it. Um, in general, Yes, Like you get the whole, you can read my book or whatever.

But what I tend to find is the people that I'm entering the most, if I'm honest, are the people that work in my company. So if someone says to me, hey, I really want to learn from you, I would say, well do you want to work at the one brokerage? You want to work on the David Green team? Do you want to work on whatever like thing that I have going on? Because I will pour into those people. Cause chris, like you said that now becomes a two way relationship. I'm sure agents that work in your brokerage have a much better chance of getting your attention and your mentorship than a person who's like, yeah, I'm buying my house with this other company that's not you, but my realtor doesn't know what they're doing. So can you tell me what I could do instead? Like that's a very common one I'll get and I don't think people realize it's the same feeling of you ask a girl out and she says, no, I'm not interested. She dates another guy and then she's like, can you tell me how to communicate better with men because my boyfriend doesn't understand me, Like that hurts, You chose the list your house with someone else and then you're coming to me to say like how can you list the house? That's not a way to get a mentor if you came and said, hey, if would you sell my house and if you do it, I'd really appreciate if you could show me some of the techniques you use when you're flipping a property. Now there's a very clear two way relationship and we can pour ourselves into it.

I really do like in this to uh, to instagram ads and why they work on me so well. Like I'm such a sucker for an instagram ad because I don't like to think about things that I need because I'm just too busy to think about it. But I know for a fact I need more clothes because all my clothes have holes in them and so instagram serves me a picture of a cool guy strapping with a nice shirt and I'm like, yeah, that that's a nice, so I'm just gonna do that because I didn't have to think about you made the decision for me. I'm such a sucker for ads. I hate it, but it's, it's very true. Um, so chris I want to talk about, we, we did, did you cover off on all four of those steps before we move on. What was the fourth one? I think? I think you probably ended there.

Yeah, the fourth one kind of muddied up in my explanation. That's just being the pleasantly persistent, which is a polite way saying follow up, but that's my mindset, I want to be like pleasantly persistent, not annoying, but like, oh yeah, I got this guy, this guy, this guy, this guy, so be pleasantly persistent and it also just falls into like execution, which maybe step five, I just assume execution probably shouldn't assume that, but execute on the, execute what you're gonna say,

so that that's the four steps, I think that's very nice bow on how to find a mentor, I'm sure now you're probably seeing kind of the opposite end of it now as you become the mentor Dave talked about how he takes the different employees in his company and that's the people that he pours into, I want to start moving in back to

actually can I want to throw one more thing on it because this has been a very interesting shift for me because I, I've been very focused in the last 20 years on finding that mentor to grow, grow, grow and now it's where I'm heading in my career, I'm kinda now I'm the older, more successful guy that used to go after and so I'm having the, that new effect, I'm kinda changing, always finding mentors, which I still want, I'm still finding, you know bigger and better mentors, but also I have now people reaching out to me that are doing the same approach, which is creating investment opportunities, business opportunities or great, you know, employee agent opportunities to where I get to kind of be in that mentor role now and I always try to structure with how I structure the mentors in the past and that's been a super fulfilling personally for, for filling for me personally, but also very rewarding for me from like a financial business standpoint as well.

Yeah, actually I'm curious on, on the opposite end of this, you said it's fulfilling, but obviously you've been on the end where you've been trying to, you know, you've tried to get mentors time and time again, you said you're still there now, at what point now are you, are you looking like how how much of a mentor are you looking to be? Are you looking to be a mentor for more people in your life or do you kind of see your role as a mentor more in the car, content capacity and more in the podcasting capacity where you can influence a much larger group of people?

It's both, I mean because you know, like I love the one on one mentoring um but the problem is that's very hard to scale and there's, you know, we all have so many hours in the day that we all have, so have to be realistic about that, so I definitely view the content marketing is like that's the most scalable way because whether one person listens to it or a million people, it's about the same amount of work in cost a lot of times. So I focus on a lot of that to do at the top of the funnel type branding and providing value, and then looking at various ways to mentor people, whether it's an agent on my team to go out there and mentor them in their business or if it's a new business opportunity where someone can bring, hey, I got this idea can be leverages and do this. So I try to spend most of my time uh doing the content, but also looking for highly uh relation, highly, one on one relationships that give me a great return on my time for investing in that person,

funny that you look at relationships in a similar way to how we look at real estate, We don't put our money into deals that don't give us a return, we don't dump money into a property that's not going to give us some form of cash flow. Right? Like that mindset that goes into investing really does incorporate into everything else

really. Does it mean that I hadn't really thought about it that way. David, David, you're so profound sometimes, man, get me right right here right in the old. Um well I wanted to ask chris because obviously, you know, podcasting and the content side of it was a really big component to this for you. So

obviously

the content side of it was one of the ways that you wanted to start producing the leads and I wanted to talk about that dichotomy, right? The marriage of content and lead generation and how you were able to start actually extracting leads from the content that you made, Was that simple to figure out at the beginning, or is this something that you're still figuring out?

Um I I've been thinking about 20 years now, so it's it's very simple for me when I got into real estate five or six years ago, I already had so much just, you know, I could do it in my sleep and I think one of my superpowers is that I'm very good at putting myself in the shoes on the other person, they're on their iphone, they're on their laptop, I'm going to put myself in their shoes and getting the right information on there. So, my general attitude is that, you know, there's a whole audience out there, a third that people won't like me a third, or indifferent and a third, really like me, I don't care about the people don't like me, I don't care about the indifferent people, I want the people that jive with me that like me, and so my philosophy is go out there and push a lot of content and just be very authentic and be very real because people eventually find out who who you really are. So just be real from day one, and that starts attracting the right people now, it gave me a very, I think a great advantage is I'm also a salesperson. I talk to people, I grab coffee. I make phone calls to go meet people. I go to networking events. So as I'm going through my investing as I talk to the people I know the tools people need, I know the questions they have, so provide all the content and then do the classic lead magnet, what do people need? Well, spreadsheets and local market trend reports. Uh, they work amazingly well. So hey, here's a toolkit, Here's your, I call it your Denver real estate investing toolkit, go to the website, download, you get, I think it's like three or four spreadsheets get a bunch of like local trends data, a few maps of what's going on around town. And so a lot of people come opt into there and so it's just the next step in the relationship and then I get to talk to the person. And my first goal was just every time someone opted in, I got the phone number and I called them and I would build oration up that way.

And so at first it was, you know, it was just a very small stream, a very small trickle. Uh, and then it, you know, as you produce content. It's like compounding interest and if you do it the right way, it builds up every single month. We all, I think we all know like the power of compounding interest, you all seem like the four oh one K. Stock graphs and you know, by year 20 or 30 you're making more money off your interest than you are what you put in. And I view content marketing as the same way it starts compounding in two ways. You get more and more reach out there as you get, you know, different S. C. O. Different long tail stuff out there, but also since real estate such a big pipeline, people listen to me for a year or two and then reach out, oh I wanna invest, so I should talk to that chris guy. Um And so as lead started coming in, I'd call every single person and help that individual output the game plan together, you know, and and do the process well then got to the point where I had to me leads, I couldn't handle myself and I started getting busier and busier. So I actually started taking the phone number off the form and started going more towards a marketing approach.

So I would just do that incremental stair step like Dave was talking about on every time I get to that next part of the funnel, I would forget what do I need to do to scale, what do I need to do to kind of take this campaign or my business up one level and that's just a constant reevaluation of what's the best opportunity and what stuff might play, like what's not working well because making phone calls, everyone is great in beginning, but a lot of voicemails a lot of time and eventually it gets to be too much and then you adjust and grow from there. So I very much focused on just content legion connecting with people. And then, uh, my ultimate goal is when I have my agents, I want to drown them in leeds. Like that was my goal from day one. That's the game I play. I'm like, oh, David, you're on my team. All right, My goal is to drown you in leeds. And that's just kind of my competitive nature and gives me a really good focus.

I mean, even just let's talk talk about the lead magnet side of it, because we're going, we're talking about providing value to people, right? And so your lead magnet to people is a piece of valuable uh digital real estate. If you will write a pdf that teaches you how to do something, you said it was the Denver investor toolkit. Um, so that right there already, if you go and you open it and you read it, it's going to give you some fundamentals about investing in Denver, right? That teaches that person a lot, you have now, given that to them in return, you've probably gathered their information, their name, email, maybe phone number and that right there establish is a relationship they trust you because you've given them something that they're going to use and now there is the opportunity for you to communicate them? Whether it's via email, whether it's phone calls for me. Lead magnets are a really big part of my business too. I provide as many lead magnets as I can. I have uh you know, all the gear you need to start a youtube business. I have uh furniture lists of furniture that people can use to furnish their Airbnb s. I have the different models that you can invest in in real estate and I give all that away for free to people. And in return I get a lot of different leads for the different businesses that I run and it's not complicated.

It really isn't. I mean lead magnets going to cost you 100 bucks and design fees, it'll cost you chris your time to copyright it, give it to a designer, they design it, you advertise it on through your content and then people will download it because you know, spoiler alert, people love free stuff. So I can't imagine. Yeah, I know it's crazy concept. Right? So I mean that that really is the lifeblood of a lot of the businesses that I'm running behind the scenes is just giving that content away for free. I mean obviously the ultimate lead magnet is your podcast. But then if you can give someone a tangible thing, it's just one more like, oh thank you for this, I really appreciate it. So I'm on the side of the lead magnet. Do those typically produce pretty quality leads from you or are you still pretty, like, are you still having to filter them out quite a bit

now? They're they're very high quality leads. Um you guys ever watch Glengarry Glen ross, you know that alec baldwin show or the old alec baldwin

movie? I

Haven't seen that. Okay, got a homework, go, go, go, Google like Glengarry Glen Ross and watch an eight minute video on there, and it's, it's the 90s movie with real estate brokerages in there and it's a great scene with Alec Baldwin in there and they call him the Glengarry leads. Um and so the glengarry leads are like the great leads and so through that marketing, since I've already established myself still much away for free publicly, again, people like me or they don't, people like, oh, you know what chris is an idiot chris's investing philosophy is silly, I don't want to do that, I want to do this, they generally don't come out and reach to me, um like I'm not a wholesaler, I'm not into fixing flips. So in the beginning I got a lot of people reaching out because I've established my brand in the content. I have very, very few people reaching out and now when people reach out, they're usually like, amazing fit for what we can provide in the various services and help them go out there and invest in real estate and then um, through the funnel and through all that, we have a very highly qualified lead base and investors and so no, I have, so to back up on there, the better the content, the better the marketing, the better the person, the better the lead. And so I very much focus on that to attract the right person.

That makes sense. And I'm told also that you have a very, like a unique form of a business card. Do you think you could talk about that a little bit too?

Oh, I actually might be able to show you two. I've got, I've got a row of them back here behind me. Um, so This is, I think one of my strengths and also probably one of my weaknesses is I like to be creative. Um so oftentimes I reinvent the wheel when I shouldn't, but the other side of the corn is oftentimes I get some really good ideas. So I actually don't have a business card. I don't have the standard business card to give to people because when I get business cards, I mean, 90% of the time they're in the trash, can I get home now? If I actually make a meaningful contact, Yes, I'm gonna talk to that person. But most of the time, a business card, whatever. If there's no relationship there, people throw it away. So what I have focused on is self publishing books, I have published four books for Denver and colorado real estate investing. So a very, very specific niche. Uh and to go out there and self publish a book, you can do it for less than $1000.

Uh take some time hire some people on fiber, but you can do it for very inexpensive through, you know, amazon or these different self publishing sites. So I took knowledge in specific niches like investing in colorado or a really good one I have is the ultimate house hacking guide for Denver and that's very geared towards house hackers in Denver. So super niche focused. So I published those books and that's actually when the lead magnets to give away my website. Plus when I meet people, I always carry a stack of books in my car and a couple of like my laptop bag and I give it to people. So just a couple of things here then if you're an author and whether it's a great book or a junk book, you have instant credibility. Now of course always drive for great content, actually give great value, but instant credibility. Uh but the second thing is people don't throw away books, we are wired um to like revere books and maybe it's different now with younger generations grow up, you know, with internet age. But when I grew up um you just really respect, you trust books and one of my lending partners out here, joe Massey. Uh we do a lot of work together and every year we publish a annual guy to invest in colorado. So like nine months ago I was as office, we're just catching up in B. S ng And on his bookshelf behind him, he had like 30 books from like 2019.

I was like, dude, why don't you throw those away? Like they're, they're kind of useless, outdated to keep a couple around. He's like, I cannot bring myself to throw them away even though they're completely, I don't need them anymore. I cannot throw away books. I mean when was the last time you guys throw away a book?

No, I'd be more likely to go drop it off at a bookstore somewhere because it feels wrong to throw away a book like burning right.

Yeah. And so that's why I like it because people don't throw it away. And what happens, it usually hangs on the bookshelf for months or years or decades and so that lays around the coffee table, you know, next to me, the bookshelf, whether constantly seeing my name and then they don't get rid of it. So I have done this my old business and I think it's one of the best growth hacks out there. Um and yes, it takes time, but here's a secret to doing it. There's this really cool website called W W W dot G 00 G L E dot com. If you go in there how to self publish a book, you can find amazing content on how to actually go out there and self publish a book, pick a niche and go out there and publish a book and create your business card that way, instant credibility and then your business card ak your book. It hangs around that person's apartment, their house for decades to come.

Yeah, I did the same thing. I wrote a book called How to sell your house for Top dollar. And that's something that like we give to clients whenever they're interested in it. So I think that that's really smart. It's also, you know, in the world we live in now, nobody wants to pick up the phone and call someone that they don't know, but they will stalk you online. They will everything that they can about you without having to directly confront you. So, a book sort of allows them to satiate their curiosity about, let me know about this person without having to face rejection or awkwardness of a real conversation. We do the same thing with a lot of our listings where buyers don't want to call and talk to an agent, but they will text. So we set it up where if they text, they can get pictures of the house and ask questions and chat with people and then you can transition that into a phone call all right, before we move on to the next portion of our show. Let's take a quick break

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and don't forget to fire

it up with frank's red hot and cool it down with bud light, enjoy responsibly. Anheuser Busch bud light, beer, ST louis Missouri. Hey, it's me, your uncle cooper, Sorry to interrupt your music. I do love music, especially when it's set at a reasonable volume. You know, music is really only as good as your speakers. The same is true for minivans. A minivan is only as good as the tires it sits on and the button on the screen there. It agrees with me. If you click on it, it'll bring it to all the cooper minivan tires. That'll make your minivan a really good minivan go with the coopers cooper, you know, something that I noticed you do different than other realtors and even maybe investor friendly realtors is that you're obsessed with return on equity, which is cool because I think about this constantly. I teach and talk about it all the time. Can you tell us what this means and why it matters.

Yes. I think everyone's played monopoly and I can still return on equity. The way to go from like a greenhouse to a red hotel and kind of skipping that 2nd, 3rd and 4th greenhouse. So it's a powerful way to scale up your properties and also scale up your portfolio. And this took me about nine months to truly wrap my head around. But once it clicked, it changed everything. It changed my own investing, changed the clients and changed my business trajectory as well. So you know, a lot of the content out there. A lot of the education of our focus is on, hey, what's the deal today? Let's go out there and look at the property. What's the cash on cash return? What's the capri is a good deal today, which is a very important metric.

But if I bought a property six years ago in Denver, a lot of things have changed. The market has changed. That property has changed, especially last six years. I mean appreciation has skyrocketed And so it's another way that the market gives you a return. And I think a lot of us know that leverage is critical to success in real estate And often why we get like double digit, sometimes triple digit returns because we can, you know, use leverage in real estate, which a lot of other asset classes you can't do. And so if you think about like a simple fraction you have the numerator on top the nominator on bottom, the numerator is the money that you're making. So in that one year it's the cash flow, it's the appreciation, it's the tax benefits, it's your tenants paying down your property. So it's four ways to make money in real estate. That's the numerator. The denominator when you first buy the property is your initial investment. Great. I put down $50,000 and making to make $10,000 here in cash and appreciation.

Great. We know that return but then after you get into like years two and three and four you can no longer just use your initial investment because your equity is starting to grow and you get into this really interesting. I say almost tension when looking at properties because what people see is their cash flow goes up and that's usually the biggest metric on how we look at how well real estate is performing. So your cash flow is going up and a lot of times your appreciation is going up and all that you all your returns. But your denominator is growing as well. So if your denominator is growing you know $50,000 a year from appreciation that pay down and numerous growing $10,000 a year. Well that return gets smaller and smaller every year. And so one of my mentors out here, he's just a brilliant, brilliant person. Um He mapped it all out and a lot of times after about you know 8 to 10 years, you start getting returns similar to the stock market if you, as your real estate gets unlettered. And so the key with turned equity is looking at, hey, how is this performing now? When you look at that, you can often see like 100% 80% 70% returns. But every year, especially, you know, I should say every year.

But in the markets we've seen the market in the last 10 years, the markets like Denver and of other appreciate markets, you actually start getting a lower percent return on your money now, your equity, even though your cash flow is going up. So it's vital for investors to go out there and figure out how to analyze it. I'll give you a perfect example of how this happened to me. Um, I bought my first place about 11 or 12 years ago before I was into real estate before as a realtor. I just knew things were so cheap and I need a place to live. I should go buy something. I bought a condo for about $70,000.02 bedroom, two bathroom condo, had a roommate, house acted. Um, and got a private loan on their 0% down at 5% amazing loan condition. Didn't realize how lucky I was at the time. And in my mind, I was like, wow, why would ever sell this property? I bought it for so low. I'm having an infinite return on my investment of zero.

Why would ever sell the property right? Well fast forward seven years I learned and I was like, oh I'm gonna sell this bad boy. Because what happened is I took this condo that went from $70,000 like $230,000 cash flow in 4000 bucks a year. Nothing great was paying the bills. And then I was sitting on like about 100 and $80,000 in equity. And as I realized I could sell that or I could actually extract the equity either through a cash out refi or sell and do a 10 31 to you know, kick taxes down the road and I could take that equity and redeploy it. So I sold it to 10 31 and bought a four plex. And now that four plex makes me one or $2000 a month in cash flow when I traded up. And not only was the cash flow was there, but now I went from a $203,000 asset to a $800,000 asset. So I'm getting more appreciation, more debt, pay down more tax benefits, increased all my returns and basically took that condo from not just the lower cash flow, but it was like a 5% return equity. Now I'm making like a 25% return my money with the four plex. So that concept was extremely powerful for me.

Uh and then if you guys have any questions on there, we can talk about that. But I actually want to spend some time and talk about how I shifted that into helping my clients. And I turned into some really cool business opportunities as well about repurposing skills into more, you know, more opportunities. All right. Um, and so this kind of came from the mindset and you guys are marketers like we're all in the minds of how do we repurpose content, like the standard thing to say, we've got an hour long podcast. Let's take a 42nd clip posted to social. Um, that's repurposing content. It is a key pillar for success in marketing. And so I've trained my mind to always go out there and repurpose repurpose repurpose and years ago the light bulb went off for me that, oh, I can repurpose skills, I can repurpose business processes that I'm doing into other products, whether it's a different business or an info product like, you know, you're an Airbnb expert rob, you know everything about Airbnb. You can turn that into a course or download or coaching to go out there and, you know, give, you can repurpose that skill. So I always look for how to repurpose things. It's just a maximum return on my time.

So this eagerness to learn return equity was for me and my investing light bulb went off, I was like, oh, I'm gonna go out there and do a detailed write up on this uh condo trade up I did. And that became a great content piece of my website, my podcast, actually on the top content piece ever produced, draws a lot of people, but actually helps also help clients go out there and invest more. So it actually draws people in and helps me do more business and helps clients reach their goals by getting a better return. And then through all that, um we started developing ways to go out there and scale that so we can help clients more. Now. I built a spreadsheet very and the spreadsheet, I used to analyze my own condo to four plex trade up. Um It was great. I used that for two or three years with people. Well, it just is very hard to scale a spreadsheet. And then what happens when you have a guy with nine properties and we make nine spreadsheets and they do all these different snares, cash out. Refi should do this and you start getting on and I have to create like 50 spreadsheets. It's just, you can't scale that way.

So that pivoted into wow, we need a software platform to go out there and actually be able to scale this and model this model these for clients. And of course my first thought process, hey go out there and find the website to do it. Well, there was none out there. And there was another light bulb, Hey, we're not the only people that need this, we can go out there create it create for our business, which will be key here. And if it works awesome, if it takes off great, it might be a whole their business because return on equity and housing properties is not specific to Denver, it's not specific to Colorado, that service is needed for investors all around the country and all around the world. And this goes back into like, you know, I call it the riches or in the niches. This is a very niche thing that started in a very, very specific market and a very small market segment. And then going deep on that and looking at how to repurpose that grew into opportunities and services and software and go out there and help other people in the country. So it's a big way I took a concept for me and then repurposed it across marketing across legion across helping clients and some new business opportunities as well. And then starting to scale nationally as well.

That's amazing. That's smart. That's a very smart way to kind of swoop in and sort of just, yeah, command that space. David. I know you're relatively, you know obsessed with the idea of a return on equity as well. And you speak about this quite a bit, How are you doing the whole execution of return on equity in real life?

I have a great anecdotal example of what this looks like when you do it using several strategies that we're teaching here at bigger pockets and and how exponentially powerful this can be. So I bought a property in buckeye Arizona several years ago and it was doing well. The problem is they started building a lot of new home construction around this house that I bought. So the value of my home was going up because new, more expensive houses were coming in and there were now higher comps, but the rent wasn't going up because most of these new homes were being Bought and then rent it out. So there's too much competition for my rent to actually increase. So I ended up with that new numerator denominator thing that you were talking about Chris where the equity in the home was increasing at a faster pace than the rent was going up. And so my return on investment wasn't really climbing. So I sold that house, I think that I had probably put down like 60,000, it had climbed about 80,000 in value over a year and a half or so. And I took that 80,000 in profit. And I bought a house cash in Jacksonville Florida. This was like the first house that I bought out there and I ended up doing the Burr method on that property. So I recovered 100% of my capital.

I had almost the same cash flow on that deal as I had had in the buck ideal. But I had my $80,000 back which I bought another house and then I use these long distance investing as well as value add as well as burr altogether. And I just kept using that same 80,000 to buy another house every 3 to 6 months while I was still saving money to buy new properties. That one house turned into 10. On average each of those homes had about $40,000 in equity when I was finished with them which was 400,000 instead of The 80,000 that had been sitting in the original house. And then from there I was able to build relationships with contractors, relationships with other wholesalers and people that were now bringing me deals because I'm the guy doing all the business out there. That led to more deals outside of just that initial $80,000. And then the castle ended up being like several $1000 probably like $4-$5,000 on those those 10 properties. And it's a great example of had I just rode it out like oh it's doing good, why why mess with it or oh I have a really good interest rate on that property, I don't want to have to lose it and get a higher rate on another property. I would have missed out on not only the 400,000 in equity and the $4000 in cash flow but also the other 30 homes that I ended up buying in that same area. Yeah, which I ended up selling and then doing the exact same thing. Like the cash flow is not keeping up with the growth.

Let's sell. It did at 10 31. Now I've got into more expensive properties that are short term rentals. The cash flow is going to be even higher. I added around a million dollars in equity just from moving the money from one to another. If you look at like on day of closing what they appraised for versus what I paid, Just that one move gained a million. So in a sense, you could say I took $60,000, invested it in a property that went up to 80,000. I reinvested the 80,000 and turned that into not only, I mean a million in the new equity, but right, I've been paying that loan down for a while and the properties have been appreciating as well. That's several million dollars over the course of like, it's probably seven or eight year timeframe now. There's a lot of things that go into that. Like we've had a really hot market, we've had a bull run. It's not like this is gonna happen every time, but you are gonna have the same pattern happen every time, you're gonna see exponential increases when you take action with the tools that we talked about.

I just want to tell that story as a way of highlighting you describe the concept really well and I think people go, oh, that sounds good. Well, this is what it looks like when you actually do it. That's a little bit more exciting when you can see how it plays

out exactly. And what kind of way I picked that for myself and our clients is that, you know, a lot of people sit down to financial advisor, maybe their stock portfolio every year. Hey, what we need to rebalance, do, we need to go from change of stock allocation to hire by allocation, all that stuff? I think people should sit down and do an annual portfolio review and give themselves a reality check. Very few people do it. Um, I think it's a great habit of doing it and a common mistake I see is that people look at, oh, I bought this property five years ago, I bought for seven cap. Okay grandma, let it ride. No, no, no, no. You have to reevaluate that property at today's value, what's today's cap rate, what's today's metric, what's today's value, what's today's rent and it's a good investment today. And that uh, parlays into what David was talking about with analyzing. Hey, if you have a bigger equity run up versus a capsule run up probably makes most sense to extract the equity or selling 1031. So I am personally have been looking at my properties every single year, if not more frequently.

I'm not a real active trader, I kind of do more like a swing every couple of years trade up as my goal, that fits my personality and strategies very, very well. But I would highly recommend investors out there, look at their portfolio every year and we have agents or lenders out there in space. You want to create an amazing value for your clients. Do that, sit down with your clients, your investors once year, help them look at their portfolio, it's gonna do two things, you'll help them reach their goals. You also do more transactions, which is a good win win

man. I have just been waiting because I quit my full time job about 16, 15, 16 months ago and you know obviously now to a bank, I look super broke when I'm doing okay and I've just been waiting for my income to quote unquote season on my taxes for two years. So I could go out and get loans and stuff because I have so many houses with equity and then that I can't touch, I just can't do anything because I can't qualify it. Now. I just did my taxes and finally I've got my original house, the house that really kicked started a lot for me and I used the equity to build other houses and cash out of those that house has like half a million, $600,000 of equity in it that I'm just like, oh the things I could do with you if I just had access to the money. So yeah, I'm really excited. I am bummed because my interest rate on that is 3.25%. So I think we know it's probably not going to stay at 3.25%. But just like you guys were saying, I mean the yields from whatever properties I get into will definitely, you know, offset that extra 100 to 300 bucks that I'm gonna be paying.

Yeah. And that's another thing people get stuck on the interest rate. Oh, I got this property, it's worth $1 million 3000 loan balance. But I got yeah, three and a quarter interest rate. Okay, great. You can, that's definitely a great interest rate. But let me show you what you're missing out on. And that's where people have to understand that real estate is way more than just cash flow because right now you trade up, you're not gonna see a lot of times a big swing and cash flow. And of course if you go to Airbnb or higher cash flow model. Yes. But you know, long term to long term rental, you'll see some cash flow increase. But what you really see is a bigger acid increase in like, you know, no, I net operating income.

I always um, no, I as future cash flow, that property pays off or as things go. That is future cash flow. I think that's a very important metric to look at when doing these evaluations is not just cash flow, but what's the overall return to really maximize that and realize, hey, a lot of this, its future wealth is delayed gratification.

Very true. Yeah. David. David slapped me around when we first like, dude, it's not just about cash flow. Stop it. You should. And I was like, you're right, you're right sensei. And now I realized, yeah, when you factor in cash flow debt, pay down, you know, appreciation, all that stuff, your return is double, it's double usually what the cash flow is at a minimum. So thank you, David, you changed me. You changed how I think

people don't get to hear this very often because the majority of real estate educators, they only understand cash for themselves. And so that's all it's talked about. And because cash flow is like what everybody starts off wanting, it's the training wheels that you don't always grow out of. Now. That doesn't mean cash flow isn't important. It plays a very important role. You still need cash flow. But just for an example with the, with the 10 31 that I just described my cash flow did go up. But let's say I did Go into the 1031 space. And so let's say theoretically my cash flow stayed relatively the same. Well, I still took that 100 30,000 in debt that I owned on the Buckeye House. And I turned that into by burning and then doing the 1031 around 13 million of debt.

So now I have the tenants that would have been paying off 130,000 are now paying off 13 million. I took the overall amount of the house was worth around like say 200,000 in that range. Okay. And that's been now turned into a little over 15 million. So uh, imagine if, if your property appreciates by 10%, house goes up 20 grand. A $15 million 1.5 million then because I'm value adding at every single turn, I'm also forcing equity at every single exchange of stuff. So every time I go out there and I'm buying deals and I'm getting them below market value and then I'm doing stuff to add value to fix them up. You're forcing equity, I call it buying equity when you buy it below market value. But you're just taking all these tools that we teach at bigger pockets. They only make sense when you apply them and you have to be buying property to be able to use them when, when you just buy it and it sits there. That is a strategy. It's not wrong.

I buy every property assuming I'm gonna hold it forever. But then you play the cards you get dealt and what we just got dealt was ridiculous inflation and huge appreciation and all this opportunity. Now there's loan products where I can use to buy a house with that service instead of my own income. And buying is fun and easy again and you take all this knowledge that people have been soaking up for the last 5 to 6 years, you start applying it, It's sort of like watching these workout videos, knowing everything about working out, but you never go to the gym, you actually got to go work out to apply the stuff you're using. So I love chris that you're sharing this information as a broker, as a person representing clients guys, this is what to look for when you're picking your agent or your picking your broker. You want a person that knows how to build your wealth, not the person who says, well my commission is the cheapest or not. The person who says I'm a marketing expert, there's a whole lot of stuff that agents have learned how to say like one of my favorites is I'm the neighborhood expert and people forget that no buyers buyer ever cares where the listing agent lives or what they know about. They're never gonna even know the name of the listing agent. But yet listing agents can come along and say, I'm the expert in this neighborhood and I no more. No look for an advisor. Look for a person with experience that has done this that is passionate about helping you grow your wealth and then develop a two way relationship, send them referrals, support their business, helped them in the same way that you want them to help you. And in my opinion, in the real estate space, there is no better way for your average american to become a millionaire to build massive wealth than just hitting these fundamentals repeatedly.

Nothing I'm describing, nothing that we've described on the show is a massive home run that you just fell into where you got lucky, it's just getting back hits, drawing walks, getting on base, slowly advancing forward and then letting the power of real estate do its thing. So this this episode has me excited for all the people who have been watching and they've wanted to get in the game. But these really low rates and this artificial demand that we've created has kept anyone from being able to buy. You had to be the one out of 10 buyers for the last 6 to 7 years to even have a chance of getting that house and now the force has finally become balanced buyers are getting some leverage a lot of the, your competition's backing out. So you can actually use these tools that we've been religiously teaching all the time to get your butt in the gym and get those games, get those financial gains. So thank you chris for sharing this. I'm gonna move us on to the last segment of our show, this is the world famous famous alright, chris in this segment of the show rob and I will take turns firing questions off at you one by one and we are interested to see what you think. So the first question is, what is your favorite real estate related book?

My favourite one is what every real estate investor needs to know about cash flow and 36 other key financial measures by Frank. I read this book years ago. It's actually one of the few books actually referenced back on a regular basis because it is a deep, deep dive into metrics and very advanced stuff. But this helped me really understand all this advanced returns, return equity that we just spent the last 15 minutes talking about. So this is this has been the most critical book for me in real estate

awesome. What is your favorite business book,

man that changes every time I'll give you two answers. So I'm like, my all time favorite right now is um Good to great uh jim Collins book from, I think 2025 years ago. And just one of the phrases that stuck in there with me was the right people on the bus because this book looked at a bunch of companies and just like the great companies, you know, how do you go from a good company to a great company? And the thing that I remember was they focused on the right people on the bus and as your business grows, your seats change and sometimes people no longer fit in the seat or you have to get a new person. Oh wow, we have a new seat, we gotta go fill this. It's all about getting the right person on the bus. And so that's stuck with me and along that same theme, my current favorite business book is the, is Who not How, which is a very similar concept in the right people. And so that has been a key concept. That's really changed like, you know, my business and how I've been able to scale things and also just grow so good to great and who not how it's

awesome, you can kind of see it in the background. My buddy just mailed me that book like this week and it was a note from amazon and said, I think this book is gonna change your life and I was like, everybody keeps telling me to read it. So it's going to happen this week. It will be the only book I've read since the bird bible by David green running joke on the, on the podcast because it is the last book that I've read the arrival. I like that um chris whenever you're not master louis executing the art of returning of getting a great return on equity. What are some of your hobbies.

Um so I have two young girls and I just absolutely love them. So spending time with them. A lot of terrible things in Colorado in a beautiful state. So outdoor activity, hiking, uh and also just kind of spending time with my girls to teach them life skills. Um like this has been a very interesting thing for my guy I've always known, I love mentoring but actually be able to like create and mentor like little human beings into real human beings has been a very fulfilling thing. So all my time goes on there And then I go on like an annual retreat every year. I haven't seen a retreat, but just an annual trip every year. And a lot of times they get older, it's more like a canoe trips or whitewater rafting trips get unplugged for 10 days. I go with a couple of friends who are not in real estate and it's just a complete unplug and I find it very mentally refreshing and see only seven days of the year. I don't think about business or real estate. And so getting that unplugged or unplugging is very, very critical to like my mental health, I would say

in your opinion, what sets apart successful investors from those who give up fail or never get started?

Oh man, I mean, where do we start the list on that? Um, I think some common ones, I'd say two common ones are people don't have patients, like real estate is not hard to get rich in, but it takes time if you do what we talked about, you know, like David is talking about, you do that for decades. You can become a multi, multimillionaire, but it doesn't happen overnight. It's not hard, but it takes time. So I think people like patience and the going along with that with that long term perspective, that patience in mind is a lot of people set themselves up for failure from beginning. Hey, this is gonna be a 30 year career for, it's gonna set you up so you can retire one day. You're thinking about your, your future, grandkids, you know, taking care of them. Well, you gotta get through year 12 and three to worry about 30 years or 300 years from now. And when people make the transition to be an agent or an investor, they quit their job and go full time. They don't give themselves a financial runway. Um, because it all takes time to go out there and start a business and go investing. I think everyone should go out there and structure a financial runway.

Like when I pivoted to my real estate business 56 years ago. Uh, we structure things with my wife where she's a veterinarian, you know, stable w two complete opposite what I do, entrepreneur and investing. But everything was structured where we could level for her salary. No problem. And so we planned out. So it's like 234 years. I did not have to have the pressure of worrying about paying bills from, you know, my income, I got their reinvest money and reinvest my time to go out there and build a much bigger income. So I think having that patience, but with patience you have to make sure you can get from, you know, 30 years past month three. So have a financial runway.

Great, Very wise words. Thanks man. Yeah. Uh finally chris, can you tell us more about where people can find you on the internet? They want to find out more about how they can work with you, all that kind of stuff.

Well, since I'm a market and I'm S. C. O. The best ways actually, google chris Lopez, Denver, chris Lopez real estate. If I do my job, I'll pop up on their um, actually something I wanna plug and I'm very excited about is I'm in the process of recording a bunch of house hacking videos for the bigger pockets. Youtube channel. We actually just recorded last one like two days ago and I've done a few Youtube series with bigger pockets. I absolutely love it. And so I love for people, go check it out. It's called the house Hackers right along and it's a very unique look at house acting, which I think is phenomenally get into investing. We go through and look at different strategies and different people and how they executed a single person, a married couple, uh, you know, a family with kids how to go out there and house act. We talk about their strategy, we go walk the property and then of course we talk about return equity, what I call the house hack stack, which is a great way to do it.

So google me or go check out that new house hacking series, which should be live once. This podcast publishes

awesome, man And David, what about you? What can people find you on the internet?

Go to YouTube, David Green Real Estate or David Green 24 and pretty much all of social media and I've been putting out more content. So let me know what you guys think or what you'd like to see more. And then rob. Where can people find, you

can always find me on Youtube at rob built. R O. B U I L. T. Actually feel free to google at google rob built. Uh, maybe some S C. O will start kicking in for me. You can also find me on instagram at rob built and uh, Tiktok rob built toe if you want to see me do funny little dances.

There it is. Alright, chris, this has been fantastic. Thank you very much for joining us today. And everybody, make sure you go check out chris on the bigger pockets Youtube channel, let us know in the comments, what you think about what he's doing? My opinion. I'm sure chris would second it, House hacking is the most powerful strategy in all of real estate right now for both beginner and experienced investors. I mean, unless you are like at that ken Mcelroy level where you're buying $100 million apartment complexes. House hacking is something that you need to be doing constantly and then adding in everything else we talked about here as a supplement. Chris, I will let you get out of here. Great job today. Thank you for joining us and keep flying the B. P.

Flag out there in Denver colorado, the mecca. This is David Greene for rob, funny dances online, alba solo signing up.

Hey listeners, before you go, I want to let you in on a newly released resource from your friends here at bigger pockets. It's a quick and easy read by bigger pockets author J scott titled A quick start Guide to economic shifts. This downloadable guide will leave you with a solid understanding of the current economic climate and help you answer questions like why is too 2022 different than 2008. What is stagflation and one will interest rates stop rising. It's now more important than ever that you're educated on the changes occurring in the economy. Stay ahead of the shifts and download the economic shift guide at bigger pockets dot com slash inflation. That's bigger pockets dot com slash inflation

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