Episode Transcript
[00:00:00] Speaker A: Welcome to the Investor agent podcast. I'm Steve Seymour, your host, where we help transform the human mindset from scarcity and lack to abundance of wealth. One conversation at a time.
Hey, guys. Welcome to the Investors Agent podcast. Today I have chase Gallagher on Chase from CMG landscaping. Thanks for being on today, Steve.
[00:00:20] Speaker B: Thank you for having me.
[00:00:21] Speaker A: Yeah, man, I liked you watching you pull up in that Corvette today.
It's great for days like this, you know, top down. Tell me a little bit about what inspired you to buy that Corvette that.
[00:00:32] Speaker B: Was similar to you. I had it on my, like, vision board, or I just saved a picture on my camera roll. So I was like 17 when they came out with this new version, and I was like 15 when they were talking about it and releasing images. And I would look at it like, holy cow. And then I like the research, it was only 80 grand or something. And so I was like, that could be like, my first nice car. So I just kept in the back of my head. And then, you know, one thing led to another years later, and I bought the car. Let's see, I was 22. It was last. Last March 22 was a month after my 22nd birthday. And one of those situations, like, we kind of discussed, I wanted the car I had sold, the mercedes I had, and then I just hit up the dealership they had. I was cleaning out my garage on a Sunday, like, preparing for the car. Did not even look online locally. And then, like, the next day, I was, like, looking online, and the Chevy dealer in Phoenixville had this white on black, which is the colorway I wanted, and called up the dealer and I was like, yo, give me, like, the out the door price. I did, like, everything without wasting my time in the, in the spot. And then went later that night and just what did I do? Like, write a check or something?
[00:01:37] Speaker A: It's pretty ambitious for a 22 year old. Yeah, it's amazing.
It was actually on my dream board, and I'm 40, so I gotta pick up the pace here. But, you know, and a month before.
[00:01:48] Speaker B: That, for my 22nd birthday, I actually bought a rental property. So I was in my head, I'm thinking, all right, I bought, like, my asset. I value added that, and now I'm going to, like, go have fun a little bit.
[00:01:57] Speaker A: Yeah, that's smart.
[00:01:58] Speaker B: Yeah.
[00:01:59] Speaker A: Buy the asset and then buy the toys.
[00:02:01] Speaker B: Yeah.
[00:02:01] Speaker A: So, Chase, tell me a little bit about what got you into, I guess, your business first and then real estate, because at 23 years old, you've achieved a lot. So let's go back to the beginning.
[00:02:13] Speaker B: Yeah. So it's a funny story. And all the real estate people that are watching this will relate. I read rich dad, poor dad in 7th grade. It was like the summer going into 8th.
[00:02:22] Speaker A: Wow.
[00:02:23] Speaker B: I always wanted. I always had this. I was always working, whether it was chores or odd jobs. And then I kept doing research, and then I would get these books, and so I just ended up reading rich dad, poor dad.
[00:02:34] Speaker A: And you said 7th or 8th grade?
[00:02:36] Speaker B: Yeah, it was like the end of the year.
[00:02:37] Speaker A: That should be everyone's 7th grade reading.
[00:02:40] Speaker B: It should. It really should. It changed my life. I mean, literally, I was so naive back then, Steve. I thought I was rich. Like, I literally read this book, and I would, like talking to my buddies, like, oh, I'm rich. Cause I just thought, like, it was like, something weird in my head. That's what got me started. I always knew I wanted to be in real estate. I didn't have any money at the time, so I was like, all right, let me figure out how to make more money. And that's when I started my lawn care business.
[00:03:00] Speaker A: At what age?
[00:03:01] Speaker B: I was 1313. Yeah.
[00:03:03] Speaker A: Mowing lawns.
[00:03:04] Speaker B: Mowing lawns. The name was buzz cut lawn care at the time.
[00:03:07] Speaker A: Buzz cut. You're creative, man.
[00:03:09] Speaker B: Yeah.
[00:03:09] Speaker A: Marketing genius at 13.
[00:03:11] Speaker B: I don't know about that. It's just that Chase's lawn care was taken up on as far as, like, the LLC names, so I had to get, like, some other random name. Um, but I got all my first clientele by passing out literally thousands of flyers after school at night. I convinced my parents and they would, like, drive their car around, and I was.
[00:03:28] Speaker A: What was your first lawnmower? Did you have to buy it or did you?
[00:03:31] Speaker B: It was my dad's 14 year old craftsman riding mower.
[00:03:35] Speaker A: Nice.
[00:03:36] Speaker B: So I had that. And I knew once I had about ten clients, I knew I wouldn't have enough time after school to mow the lawns, so I knew at that point I'd have to upgrade to a zero turn. And I had the one picked out at frames power equipment down in Chester Springs. And so I hit 13. I remember one night I was literally mowing till 815 at night. Like, couldn't finish the lawn. And so I was like, that weekend, I had the cash, I had, like, two grand, and they gave me $400 for the lawn mower, and it was $2,400.
[00:04:03] Speaker A: Wow. All right, I want to go back to something you said. So you said you read rich dad, poor dad, 7th, 8th grade. And then you started acting like you were rich, right? Because the tagline of this podcast, which I typically say is transforming the human mindset from scarcity and lack to abundance and wealth one conversation at a time. So if that's the intention of this conversation, can you pinpoint something that you got out of that book that helped shift your mindset? Because it was honestly a mindset. Mindset shift that happened.
[00:04:38] Speaker B: Yeah, I think.
[00:04:38] Speaker A: And it happened so young, which is amazing.
[00:04:42] Speaker B: I think it was just the piece of knowledge of, like, now, like, I always wanted to be rich. I always like from a very young age. So I think I read that book, and it taught me, like, how to be rich, buy, you know, own ten assets for every two liabilities or whatever we want to, you know, convert the. So I think that's what the mindset was like. I had the playbook. Now all I had to do is just execute on it, which is obviously the hard part. But back then, you know, you're naive. You just think you're rich all of a sudden.
[00:05:09] Speaker A: That's pretty amazing. Just fascinated that you got that information at such a young age. You know, uh, there's so many people that are. They would die to have that information at that age, because not that you can't teach an old dog new tricks. Right. But the earlier you learn these principles, the. The better you will be in the long run. All right, so you started CMG landscape. Well, buzz cut. Buzz cut. And then you transitioned to CMG at some point.
[00:05:34] Speaker B: Exactly.
[00:05:35] Speaker A: Um, what. When did you start buying your first properties?
[00:05:39] Speaker B: I was, um. Let me think about this. I was 21. So, like, two years ago, was it? Yeah, I'm 23. Was it only two years ago? It was July of 21, so.
[00:05:52] Speaker A: July of 21?
[00:05:53] Speaker B: Yeah.
[00:05:54] Speaker A: Okay. I thought you said you were 21.
[00:05:55] Speaker B: Maybe I was. Maybe I was 20.
[00:05:57] Speaker A: Okay. Yeah. Cause it would be in three years ago.
[00:06:00] Speaker B: Right.
[00:06:01] Speaker A: And fast forward. Today, you have multiple rental properties, and you've done a bunch of flips as well.
[00:06:06] Speaker B: Yeah. So I mostly just own, buy and hold. I have nine properties currently and about 16 tenants. And so my first deal was an owner finance deal. I was, again, I read rich dad, poor dad all these years. I was like a saver. So I had this cash account. I've always wanted to buy real estate. My old landlord, I was paying him rent one day, and he was bitching about this guy that he had lined up to buy the back half of his property. He wasn't coming up with a down payment, and I was, like, so eager at the time and naive. I was like, I'll give you ten grand more than whatever he's going to buy it for.
And he was like, well, give me some time. So he gave me some time, and then we reconvened. He was like, here's what I want. Here's the properties, the parcel numbers. And so I did, like, due diligence for, like, a couple weeks, and I went back in, I lowballed him, and I was like, I'm not going to give you 150k down payment. That's what he wanted, because he was going to own or finance this. It's raw land. And I was like, I'll give you like, 85k down and x amount. And so it was a note over ten years, and that's how I owned my first property. It was great.
[00:07:09] Speaker A: You said it was raw land.
[00:07:10] Speaker B: Raw land.
[00:07:11] Speaker A: Was that for the landscaping company then or what? Okay.
[00:07:13] Speaker B: Yeah, we parked my equipment there, inherited one tenant, and then we slowly kind of developed that property, at least a small chunk of it. And now we have, like, I don't know, five, four other tenants.
[00:07:22] Speaker A: Nice. Yeah. So what is your strategy now? What are you looking at buying now? And how do you evaluate your deals? Because I think the biggest thing is people are like, you know, well, number one, how do you get the money, and then how do you find the deals, and then how do you evaluate them? So what are you currently looking for in the market that we're in now? And what do you constitute as a good deal?
[00:07:43] Speaker B: Yeah, and that's going to obviously range depending on the person. My main focus, Steve, when I'm buying my real estate, like, my main business is home services landscaping.
So my main focus when I'm acquiring real estate is reducing my tax bill. Right now it is. In the beginning, it was something different. It was cash flow.
And so really, I analyze, I prefer higher purchases. Like, instead of buying three $100,000 houses in Pottstown, I would rather go up to Westchester, where I bought one of my last properties and pay 500 grand, have debt on it. That way I can cost, segregate these. But I'm looking for appreciation. I'm looking for right now. My mindset is, and this has developed over the past three years, like, nicer tenants, higher end tenants, and appreciation, and obviously, cash flow. I don't need to make the $1200 I'd make all in a paid off house in Pottstown. I need to make three, four, $500 net cash flow, and I'm good, and I want to put the minimum down. So what my strategy is currently is I'm going to go in these higher appreciating markets, and it's been like this. Downingtown, Westchester. I'm going to live in the unit for a year, put my 5% down, and then after a year, rent that thing out. And ideally it's a multi unit, too. That's where you're going to get cash flow.
[00:09:03] Speaker A: That's a really smart strategy.
I bought up about nine small single families in Delco, and they were all like, lower end properties. And then I realized that even though, yeah, the cash flow was better on paper, once I transitioned into some higher end properties, realized all the other benefits that come in equity pay down, the appreciation tax benefits. So I think you're way ahead of your time. So good for you.
Tell me a little bit about, like, what helped you get to where you're at now. I know we talked a little bit before the show about mentorship training. You know, what. What's gotten you to where you're at?
[00:09:42] Speaker B: I would say, like, you know, if I had to narrow down, like, two things, work ethic, just getting up every day, you know, facing your problems or figuring out a solution and then being like a sponge, I'm always asking questions. It could be literally from another landscaper that mows lawns, asking them little things and just collecting the data to a real estate investor, to a guy that I'm paying to be on his yacht for a couple days and work, and it's a mentorship program or just different things. I'm always trying to collect new information, analyze it, and then make decisions off that.
[00:10:13] Speaker A: That's really smart. So you've intentionally surrounded yourself with people that are much more successful than you be like a sponge from them and just ask a ton of questions?
[00:10:23] Speaker B: Yes, I try to do that as much as possible.
[00:10:25] Speaker A: And it's interesting, when you think about little kids, they tend to ask a ton of questions naturally. And then as we get older, we think we know it all and we stop asking questions. So what in your, you know, what's ingrained in you that keeps you so curious about learning?
[00:10:40] Speaker B: I don't know. I just know, like you mentioned, since a little kid, I've always asked a ton of questions. I remember, like, I'd go across the street, my buddy Tyler, his dad was like, more of, like a handyman contractor kind of guy. He worked for these daycares around here, and I loved learning how to do trades. Like, he had, like, a workshop in his basement, and I'd be down there. Like, the kids would be playing video games, and me and him would be like, learning how to build stuff. So I was always asking questions, and I just think I never stopped. Like, I'm always interested.
[00:11:08] Speaker A: So for all you listeners out there, if you're not asking questions, just trust me, you don't know it, all right? Because there's always more to learn.
[00:11:16] Speaker B: The most successful people, like, I'm 18.
[00:11:18] Speaker A: Years in this business, and I still learn something every day.
[00:11:21] Speaker B: And sometimes it's literally that little piece of information for guys like me and you from people that have done it before that can, like, really change a property's value, your direction of that property, all that kind of stuff.
[00:11:35] Speaker A: So what do you think? Because I know we met at a real estate investor meetup at Janelle's. Yeah, yeah. What do you think is one of the biggest stumbling blocks getting in the way of people getting started in real estate investing?
[00:11:49] Speaker B: Strategy? Focus. Right? Like, I would say, have a conversation with yourself, your family, or a mentor and pick one strategy and just focus on that. Real estate is so big, you can get lost in it and then not actually execute on something. I would say real estate is definitely a long term play unless you're wholesaling, unless you're flipping, unless you're doing these other things, selling real estate.
So, yeah, if you're. If you can understand, just take chunks at a time. Like, I'm sure, you know, you've been in the business 18 years, but, like, I've only been in three years, and I've just seen the appreciation, the debt paydown. And then if I just keep stacking these and stacking these, and then it just, it compounds. What was the, what was the question?
[00:12:34] Speaker A: Well, I was just saying from, you know, I watch a lot of people that say they want to get started. Right? Right. And then they get, they get stopped. And it's usually what I see as fear, but it manifests in different ways. Right. And you said to have a strategy and focus on it. So I think that the key, I think that that's a really smart answer for anyone listening because like you said, you can get lost in the mix of so many different avenues. Wholesaling, flipping rentals. Now, there's all types of stuff like our Airbnb, Airbnb, arbitrage. All these things are really are nothing. Real estate investing, they're running a business. Right.
But to me, the buy and hold strategy is, like, the way to go, in my opinion. I mean, just from interviewing a bunch of investors. Not that you can't make. You can make money at all of the things that I said, 100%, just long term wealth creation. Buy and holds like tried and true works every time for everyone that does it. As long as you find, follow the basic principles.
[00:13:32] Speaker B: I agree, Steve. And if you guys are listening out there, like literally understand what he just said. Owning a real estate portfolio, it's different to have one or two properties or three. But owning a real estate portfolio is a business. And that's one thing I tell my home service contractors, you have a business here, don't try and push it takes a lot of work, a lot of knowledge. You can lose a lot of money too, if you don't know laws, tenant laws. All this b's that I've learned as well. It is a business, you will learn from it. You're going to make mistakes, going to cost you money just like any new business. So, but don't let that stop you. So if you're just beginning, like Steve was saying, and if you have a job, or if you have a business, if you own a business, you need two years tax returns of positive income. And then what I would do is go into like we just discussed a nice market, middle class, or like higher end middle class, three to 600,000 and try and buy a multi unit, 5% down property. And that's going to give you the most benefits, debt, pay down, interest, write offs, depreciation, try and get some cash flow out of it, that type of thing.
[00:14:35] Speaker A: Yep. That's a great, great way to, very good way to get started. And like you said, you can almost house hack it. So, you know, for someone that's younger, that wants to get out of their parents house, or, you know, have some roommates, there's just other ways to get started into it. Build some cash flow. So tell me a little bit about CMG and what you do with your. Because you have a coaching program, you, you help other home service businesses scale their profitability and just everything business related.
[00:15:03] Speaker B: Yeah, so, you know, similar to what we're doing now, I just started posting videos online about my business, about my life. That was a mentor, that was like, I was at his real estate workshop. Troy Kearns. I don't know if you ever heard of Troy Kearns. He was like, dude, you just need a post about your life. And like, at the time, I was like paying down my Amex bill. It was like 50K. So I would like make a video about that. Like just different random stuff started growing online. Then I got all the DM's and so it filtered into, you know, one on one coaching. Then I built a coaching program to have everyone come on the same call. You know, I built a blueprint, a course of how I got from zero to a million dollars per year in my home service business. And so now that's what I do, is on the side. I help other, you know, businesses. Number one, they need to know their numbers. Most contractors do not know their true overhead and their work, their amount of working days they have in a year. So we really analyze their numbers and their lead generation, and then once we have a baseline of that, we increase that, and it's a six month program. We hop on weekly calls to track that and increase that.
[00:16:06] Speaker A: That's amazing. It's so great that just even at your age, you're already helping other people along that pathway. I think that when you start building these businesses and start scaling, at least for me, one of the most fulfilling parts is helping other people do the same thing. Right. And you get a lot out of it, too. And I know you charge for it, so obviously there's a financial benefit, but I'm sure it's coming from a place of wanting to help other people make a difference.
[00:16:31] Speaker B: 1000%. Steve. Just this morning, I was, like, doing my workout, and my student Gino was posted on his Instagram how, like, his success and, like, how he's more than doubled. He was trying to do, like, 150 grand this year when he first signed up. I'm like, no, no, no, dude. Like, re elevate your goal. You're going to do a minimum of 300 grand. And so he was just posting his success, and it's like, this is a blessing to help. You know, obviously, I'm growing my. My business, my team, but now I'm helping others grow their business and team and just their. Their mindset, too, which is huge.
[00:17:03] Speaker A: Yeah. And on that topic, what do you do for your mindset, right, to keep your head in the. Keep your head in the game. You know, when you. When you hit roadblocks, when you get knocked down, when you get beat up, and. Cause I know it's not easy. Right. And you've probably taken a lot more punches faster than most people. You've just figured out a way to get up and get back at it faster.
[00:17:23] Speaker B: Amen.
[00:17:23] Speaker A: So tell me a little bit about what you do for your own mindset practices, things that help you stay on track.
[00:17:31] Speaker B: Evan. Yeah, I really should do more, like, meditating and stuff like that. We were talking about that as we're walking here. But what I do is I focus on my health. My health always comes first. So whether that's, like, I try to eat as healthy as possible. I work out basically every day unless I'm sick of, you know, try to get, son, I'm a positive person in general. So, like, you know, if I do get knocked down, I'm only going to be negative and sad for a half a day, an evening, and the next day I'm getting right back at it.
But you got to have that, like, mindset. Can we curse on this?
[00:18:01] Speaker A: Sure.
[00:18:01] Speaker B: You know, you got to have that fuck you mindset of just like, I don't give a fuck what the problem is. I'm just going to be a solutions driven individual. And this is what I tell myself. I speak these words to my team.
There's always a solution. So if you're a solutions based individual, you're going to be successful in whatever you do.
[00:18:20] Speaker A: I'm a huge proponent of that. I've always said you get paid directly proportionate to the problems you solve in the marketplace. If you solve bigger problems, you get paid more. And if you're solution based, that's the first step in that, finding problems that other people have, figure out solutions for them and help them achieve that. And the bigger problems, the bigger solutions, the more you get paid and the.
[00:18:43] Speaker B: More problems you can handle. Maybe you got problems in your home service business, your real estate, your coach, whatever it is, try to process those. Figure out a solution. Make sure your tenant, your client is satisfied, whatever it is.
[00:18:58] Speaker A: What else would you suggest for anyone out there looking to get off the couch and get started in real estate? What would you suggest for them to do?
[00:19:05] Speaker B: I would say definitely get around people that are doing it. You know, the seasoned guys in this industry want to help. The biggest thing I found, tons of value, and it's the simplest thing, is go to these real estate meetups that you were at, that I saw you at. I went to one last week right down here in Exton at Cal Williams office.
And these speakers like yourself, I mean, it's, they're vast, they have tons of knowledge.
You're in a group like mine, and you're not going to go to three groups and buy a fucking house. Like, go to two years of meetups, and then you'll see that effect compounding.
Do research and just don't be afraid to execute everyone, especially peers that I talk to. And I'd love to hear if you experience this a lot. A lot of peers of mine have ideas, and they love to have conversations with me about their ideas, and I love that they're being creative, but I always end the conversation with, I don't give a fuck about an idea. All I care about is execution.
[00:20:03] Speaker A: Yeah. Take action. What are you going to do about it?
[00:20:05] Speaker B: Right?
[00:20:06] Speaker A: Yeah. And I'll just second what he said about the meetups. I went to a meetup in 2007, and then by 2011, I started running that meetup and I ran it for ten years.
[00:20:16] Speaker B: Okay.
[00:20:17] Speaker A: So, you know, that's. I will say that 90% of the deals that I did either came from that meetup or somehow were connected to it, maybe through, you know, a lender, or maybe I met a contractor that worked on that deal. But the amount of resources that you get from a combined brain trust. Right. It's like, think of each little person as a neuron firing. It's a much larger brain than what you have in here, and you're just tapping into it.
So stay curious like Chase, you know, always asking questions. Show up at the meetup, surround yourself with people, and then get a mentor, get a coach.
[00:20:53] Speaker B: Yes. And so what did you do before zero seven? Did you have a career before real estate or.
[00:20:59] Speaker A: No, no, I mean, I got my real estate license in 2006. Okay. And the idea was just to do sales initially, and then I got introduced to investing.
[00:21:07] Speaker B: And how old were you when you were in 2000?
[00:21:09] Speaker A: 623.
[00:21:11] Speaker B: Okay.
[00:21:11] Speaker A: Yep.
[00:21:11] Speaker B: Okay.
[00:21:12] Speaker A: Yeah. So you're. You're ahead of the game, man.
[00:21:14] Speaker B: Yeah. And so did you.
[00:21:15] Speaker A: And I'm not as aggressive as you. I'm much slow and steady. I'm a turtle. Yeah.
[00:21:20] Speaker B: It's all. It's all whatever, you know? So did you own any properties before 0809?
[00:21:26] Speaker A: I bought my first flip in 2007.
[00:21:29] Speaker B: Okay.
[00:21:29] Speaker A: Yeah.
[00:21:30] Speaker B: And how did that turn out?
[00:21:31] Speaker A: It worked out fine. I mean, it was a lot of work, but I didn't make much money. But I got a great education. I got a really good education. But I did make money. And then my second flip, I made like $92,000 off of.
[00:21:45] Speaker B: Okay, and what year was that?
[00:21:47] Speaker A: 2008.
[00:21:49] Speaker B: Oh, wow. So did the market. Had the market tank yet or.
[00:21:51] Speaker A: No, it was. It was on the way down. But honestly, Westchester, a lot of people don't realize that every area is different. So we didn't see like a 20% drop off day one, you know what I mean? It was a slow. A slowdown. If you had a good property in a good location, it was, you know, still a great deal. I sold that house for. I think. I think I bought it for like, 120, and I sold it for like 235 with the renovations. And that's in downtown Westchester borough. That house is probably worth about 500,000 right now.
[00:22:23] Speaker B: Right. That was my one question for you, too. Like, I have a bunch. But what's your biggest regret as a real estate investor?
[00:22:29] Speaker A: Well, I'll tell you, and I asked this question a lot, especially to seasoned investors, and it's always selling property, right. Every single time.
You know, at one point, I think, I mean, we flipped over 100 houses with different partners and things, and if we had kept all of them, it's just a really nice portfolio because some of these were great houses. And at the time it was like, always take the quick flip money. But looking back, I mean, thank God I still held onto a ton of them, but I would have double what I have now.
[00:23:03] Speaker B: How many do you have?
[00:23:03] Speaker A: Currently I have about 60 doors, including, so some multifamily. And then, like, the condos here, office retail, mixed use, about 60 units total.
[00:23:16] Speaker B: Yeah. And that's what I tell some of my home service business owners is, like, I think we have a strength in our play. If you're an investor and that's all you do. Not that you have to, but sometimes to balance out your debt and whatever, or you want some cash to go on that vacation, you have to flip a house versus like, you know, if you own a business and let's say you're making a couple hundred grand over here and you have savings and equity, you can have that flow to kind of be like, all right, well, I don't need the 50 grand, I'm just going to keep it. I'll put a line of credit on it, and then we can keep stacking because you have cash coming in over here. So that's a, that's a, that's a strong suit I see in home service guys.
[00:23:53] Speaker A: Yeah. The, uh, one of the challenges for most real estate investors is it's get rich slow.
[00:23:58] Speaker B: Right?
[00:23:58] Speaker A: So how do you support your lifestyle as you go?
[00:24:01] Speaker B: Right.
[00:24:01] Speaker A: So a lot of agents at our office, they sell houses, and then, you know, over, we have 110 realtors at our office and over half of them own investment properties. So the vision here is to empower human potential by providing a pathway to financial freedom through real estate investing, where a lot of brokerages just focus on the sales component.
[00:24:20] Speaker B: Right.
[00:24:21] Speaker A: And it is a balance because, you know, if you just go after rentals, unless you figure out the Burr refi game, and you can start paying yourself in the construction draws or the refi.
And you can do that, you could pay yourself a little commission maybe on the purchase here and there, but it's usually not quite enough getting started. Right. And then even the cash flow over time, at least in my experience, is not really all that exciting. Right. You know, it's like if you can, you know, initially your cash flow is going to look really good because you're managing it. You're getting the cheap handyman. Maybe you're doing a little repair yourself, you're leasing it yourself, you're doing all these things that are saving a. You're staying on top of the leases when the turnover is. And then you get a property manager. Not that all property managers are bad, but things tend to start slipping. No one's going to manage your money like you do.
[00:25:10] Speaker B: Exactly.
[00:25:11] Speaker A: And then as you grow, it's harder to make the same margins. I mean, I know a guy that was telling me a 6% of the net if you take the gross rent. If you're making 6% net, that's actually pretty good. And you think about that, wait, so for every thousand dollars I'm only making 60 net?
[00:25:28] Speaker B: It's crazy.
[00:25:28] Speaker A: I mean, after true, like, truly after all expenses, capex, you know, over time.
[00:25:33] Speaker B: Right.
[00:25:33] Speaker A: Obviously, we never go into a property looking at that. Like, you look at 3400 a month cash flow. Right, but that's off of Piti, right? Principal interest, taxes, insurance.
[00:25:43] Speaker B: Yeah. And you look some maintenance, you know, right. In the monthly budget.
[00:25:47] Speaker A: Yeah, yeah. But when you factor capex management, vacancy, repairs, all that, and then actually have a few years of turnover, a few years with the turnover or whatever, that's going to be one of your biggest expenses that people don't think about. I don't want to scare you away.
[00:26:02] Speaker B: Right, but we're being realistic.
[00:26:04] Speaker A: Yeah. The point is that, you know, the cash flow is not the end all, be all. I do think you need to buy off cash flow because otherwise you're going to be selling that property in a year when you're writing a check just to keep it.
[00:26:16] Speaker B: Especially in the beginning.
[00:26:17] Speaker A: Yeah, yeah. But what will excite you over time is the balance sheet.
[00:26:22] Speaker B: Exactly.
[00:26:23] Speaker A: Your personal financial statement. When you start looking at your assets, your net worth and your liabilities and the pay down, and then you start realizing you're saving a ton on taxes. If you get creative with things like he mentioned cost segregation and accelerating your depreciation.
[00:26:38] Speaker B: And I will say, steve, I think it depends the market you're into. Like, we're in Chester county. This is a beautiful market. I love it here. Um, we're more equity type of guys.
[00:26:47] Speaker A: Like we're.
[00:26:47] Speaker B: We're looking for appreciation equity. If you got guys out in whatever Alabama these section eight guys, it's probably. They're focused on the cash flow, so it does depend on what market you're in.
[00:26:57] Speaker A: That's a great point.
[00:26:58] Speaker B: Um, but again, for guys that are making a lot of money, um, or if you're not, whatever, 100 grand to a couple hundred grand, it. It helps, you know, we're looking at tax benefits, and then, you know, we don't want to be taxed more, you know, on top of our already income. So I'd rather equity appreciation and then, you know, borrow off that balance sheet of.
[00:27:15] Speaker A: All right, well, we'll wrap up with that. Now that we're just going off on a tangent here, but hopefully you guys grab some info on that. And if it all sounded like jargon, just keep listening. Cause it'll all become clear over time.
[00:27:28] Speaker B: And not to interrupt you, Steve, but that. That's how it sounded. Like these books, rich dad, poor dad, these biggerpockets podcasts. I remember when I was 1618, I'd be on my lawn mower all day listening, and a lot of it just sounded like jargon. But then, you know, 18 months later, I'd listen to the same podcast, and I'm like, oh, I know exactly what that is. So, yeah, it's literally, just keep listening.
[00:27:47] Speaker A: And if you take anything out of this entire conversation, it's when Chase said, I don't really care about your ideas. I care about what you're gonna do about it. So what kind of action are you gonna take? So, if you listen to this and you heard anything that was valuable, write it down, put it in your calendar.
[00:28:04] Speaker B: And go take action execution over anything. And it's not even about what you're gonna do. It's about what you've done.
That's what I wanna analyze.
[00:28:12] Speaker A: Cool. Thank you for your time, Steve.
[00:28:14] Speaker B: Thank you.
[00:28:15] Speaker A: All right, guys, have a good one. Thank you for tuning into the investor agent podcast today. We hope you found it valuable. Please tune in weekly at the investoragents.com.
