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SHOW NOTES FOR EPISODE 181: LIVIN’ IN THE CASH FLOW ZONE
He went from house flipper to buy ‘n holder investor to cash flow expert! In this episode, Tyler Sheff, successful real estate investor and host of the Cash Flow Guys Podcast, shares his real estate investing journey dealing with massive tax bills he couldn’t pay, to getting a W2 job to pay his tax bills and, finally, to mastering the “slow and steady” cash flow game!
What You Will Learn
- How to get your PhD from the school of hard knocks
- Why flipping houses will never make you rich
- How he found out that buy ‘n hold is the best way to accumulate wealth and achieve a lifetime of steady cash flow
- Why rental properties are the best way to avoid paying taxes
- How Tyler uses “real assets” to pay for “fake assets”
- Why multifamily rental properties are the best rental properties for consistent cash flow
- The advice he received from a mentor that successfully turned around his rental property business
- The value of the old saying that “slow and steady wins the race”
About Our Guest
Tyler Sheff
Tyler Sheff, Founder of CashFlowGuys.com, is a licensed real estate problem solver, educator, investor and syndicator. Tyler has been involved in real estate for over 16 years and now maintains a 100% focus on investing for cash flow and helping others do the same. As a master facilitator of Robert Kiyosaki’s CashFlow101 Game, Tyler hosts workshops to teach busy people how to use what they have to obtain what they need in order to build passive income and escape the rat race.
More About Tyler
- He has a PhD (Public High School Diploma) from the school of hard knocks
- He’s a “recovering flipper”
- Is now a “buy ‘n hold” guy, who also lends money, educates real estate investors and even buys non-performing notes
- He’s 47 years old (3 years away from being an Old Dawg)
- His Flipper Life
- Started flipping houses in 1999 in Tampa, Florida area
- Thought he was going to get rich flipping houses (which he knows is a joke now)
- Made and lost a lot of money
- Wasn’t really focused on the taxation part of it until it came back to bite him
- He got hit with such a big tax bill that he had quit flipping to find a full-time job to pay off the bill
- Doesn’t think flipping is a good way for middle-aged and older people to get started in real estate investing
- He got out of flipping before the 2008 crash
Becoming a Buy ‘n Hold Guy
- To cover his tax bills, he got a government job as a merchant marine. Started at $35K annual salary and watched his salary grow to $200K
- He had to deal with high taxes again, but this time from a W2 job
- Re-read Rich Dad Poor Dad by Robert Kiyosaki trying to figure out how to handle the tax issues
- Saw a way to get tax savings as a buy ‘n hold investor
His First Buy ‘n Hold Investment
- Tyler and his wife were looking for a place to rent and found a fourplex
- Owner was a realtor who was trying to sell the fourplex
- Tyler ended up buying the fourplex for $210,000 using a VA mortgage and NO MONEY DOWN!
- He even got a check at closing (he got paid to buy the property)
- It was recently appraised at $429,000
- Just did a cash out re-fi with a 3.5% interest loan
- The fourplex brings in a net cash flow of $5,000 each month
- He saw how this buy ‘n hold thing can really be a “home run” for the long-term
- Started investing in other small multifamily properties in other areas like Memphis
Moving Into Other Real Estate Investments
- Started raising private capital
- For the last 2 years, he has been crushing it by buying non-performing notes
- He is now looking for non-performing notes on multifamily properties (it’s a great way to obtain apartments cheap)
- Is also investing in short-term rentals in “B” class markets
- Buying buildings no one else is buying
- “Near war zone” areas
- Learned how to make money in “C-” and “D” areas
- 10 unit in Memphis for $7,000 per door. Needed $35,000 in rehabs (cheaper to do in Memphis)
Maximizing Profitability as a Landlord
- His rental properties were not going well until he got some great advice from a mentor:
- The #1 thing he needed to do: “Listen to your tenants!” – They are your main client!
- Ask them what they need
- His Memphis PM said, “don’t buy people A/C units for D class properties.”
- Bought A/Cs for a 12-unit (12 A/Cs) – In 2 weeks he had zero A/Cs (kids stole them out of the windows)
- What people want – Clean safe affordable housing. Exterior lighting.
Team Building
- In Memphis, he had 2 different property management companies
- One of them, JD Marks (PM from the 1940s), was most respected by tenants. The other was not
- If you want to be successful in a market, it starts with good property management
Biggest Mistake
- Not starting soon enough!
- Everything was always in a rush
- He acquired 26 doors in eleven months
- Wasted a lot of time
- When he slowed down he started to do better
- Too old to make major mistakes
- He learned that he needed to start at a pace that he can handle – one building at a time
- It doesn’t matter how many you acquire. What matters is the quality and profitability of the properties. And the longevity.
Advice for Old Dawg’s Interested in Real Estate Investing
- Find someone who is an experienced buy ‘n hold investor in your market and ask him or her “What value can I bring to the table?” Time? Funding? Management skills? Experience?
- Try to get started working with him or her in exchange for mentorship
What Are His Goals for the Future
- He wants to remain debt free (except for the “good debts” of his mortgages)
- Wants to continue to educate people (Cashflow 101 Games, seminars, webinars, etc.)
- Bring people together for one deal at a time
- Looking for good deals and notes
- Buying one property at a time
“How to Network with Real Estate Investors” for Introverts
- Tyler says he’s an introvert. He had a mentor that told him to start doing Robert Kiyosaki’s Cashflow 101 Board Game at a local bar, etc. and invite other real estate people to attend and play – He can educate and network at this event
- He didn’t know the game when he started – nut he read the instructions
- First 3 meetings only had one guy attend, then it exploded
- Today there are so many people (over 70) that they have to charge $20 a head to keep the crowd down, cover room expenses, marketing and other operational costs
- Talks with everyone attending about deals and other stuff along with the game
- He has 20 game boards – 4 people per game, has a leader with each group
- He also follows the Kiyosaki philosophy (“only buy assets that cash flow”)
- He won’t buy big purchases that won’t produce cash flow (i.e. a car or truck) unless they can pay for that item with an asset that does produce cash flow and will cover the cost of the big ticket “non-asset” – He bought a fourplex to cover the monthly payments of his wife’s new truck
Rap-It-Up
- Favorite real estate book: Equity Happens by Robert Helms and Russell Gray
- Favorite business book: Traction by Gino Wickman
- Most valuable web site for success (other than your own): CashFlowDiary.com
- Favorite app: Evernote
- Favorite quote: “You got to get busy livin’ or get busy dyin” – from the movie Shawshank Redemption
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Spend $240 on 4 Cash Flow games, the rest on pizza and marketing and start networking!
How to Reach Tyler
- His website: CashFlowGuys.com
This Episode Brought to You by HealthIQ.com
This episode of the “Old Dawg’s REI Podcast” is sponsored by Health IQ, an insurance company that helps health-conscious people like runners, cyclist, weightlifters and vegetarians get lower rates on their life insurance. To see if you qualify, get your free quote today at HealthIQ.com/OldDawg or mention the promo code OldDawg when you talk to a Health IQ agent.
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