SHOW NOTES FOR EPISODE 535: REAL ESTATE INVESTING MADE EASY

You don’t need thousands of units to be financially independent! And you don’t need to syndicate.  In today’s podcast, author, podcast host, blogger, coach and real estate investor Chad Carson shares how smart investing can help you achieve financial freedom and do more of what matters!

What You Will Learn

• How you can started in real estate with absolutely no money
• Getting start-up funds without having to deal with banks
• Practical strategies to survive a recession
• How to create your real estate investing goals based on your personal goals
• Focus on what matters most to you first and then you can come back to build a business model around that
• Why buying properties for the long-term is the best strategy
• How smart investing can help you achieve your goals faster and more profitably

About Our Guest

“Coach” Chad Carson

Chad Carson is an entrepreneur, writer, and teacher who used real estate investing to reach financial independence before the age of 37.  Soon after achieving financial independence, he traveled with his wife and two kids to live in Cuenca, Ecuador for 17 months. Chad also wrote a best-selling book Retire Early With Real Estate and hosts the popular podcast Real Estate & Financial Independence.  When not writing about himself in 3rd person, vying for the silliest dad award, playing pick-up basketball, or publishing in-depth posts and podcasts at coachcarson.com, Chad enjoys volunteering with a local non-profit he co-founded to create a network of walking and bike paths in his hometown of Clemson, SC.

More About Chad

• Chad was born in Noonan, Georgia (part of the metro Atlanta area)
• Went on to play football at Clemson University in South Carolina
• His dad owned rental properties when he was growing up
• His dad used to drop Chad and his brother off (when they were in middle school) at his rentals to paint (paying them $5-6 an hour)
• They had to clean out old, moldy refrigerators in the middle of summer
• Chad used to say, “Who would ever want to do this work?  Real estate is terrible!”
• But once he got into college, entrepreneurship and investing sounded real appealing
• Initially he wanted to become a doctor
• But, thinking back on it, he saw how real estate helped Chad’s dad to attend all his baseball games and coach his teams
• Chad thought, he wanted to enjoy his work but he also liked the lifestyle
• He was drawn to the freedom and flexibility of the lifestyle his dad had

Becoming a Real Estate Investor

• After college, he decided to take a year or two off from football and try real estate
• He moved back home
• Didn’t have any college debt, he owned his car free and clear
• He didn’t have any money so he decided to try “bird dogging,” looking for vacant houses and fixer-uppers for his dad
• Every time his dad bought one of the homes, he’d make $2,000
• He saved his money
• Then, in 2003, he moved back to South Carolina and started flipping and wholesaling houses with a buddy from Clemson
• They were flipping 5 to 6 houses a year
• At the end of 2004, they started purchasing rental properties
• He also found people to invest in the properties who would use their IRAs
• He also accessed hard money lenders
• Chad would find the investors, private money and buy the properties
• They also did seller financing, lease options and other creative strategies to acquire properties
• His friend would sell or hold the houses as rentals
• He saw real estate investing as a marketing business and he tried to keep a steady flow of leads coming in all the time
• They did direct mail, networking, driving for dollars and many other strategies to generate leads
• By 2007, they had 33 closings in one year (some were flips, some were rental properties – 50 units were rentals)
• Some of the rental properties were duplexes, fourplexes and small multis
• This made it better for them when the recession hit
• Once he had a taste of real estate investing, he was hooked
• 18 years later, he’s still investing in real estate
• He doesn’t flip many houses any more but he owns a number of rental properties

Surviving the Great Recession

• Fortunately, because he had so many flips in 2007, he had accumulated a lot of cash
• He also had solid, good long-term financing on his rentals so didn’t have to worry about property value decline and the banks pulling their financing out
• At that time, he was living frugally, too.  He lived in the fourth unit of fourplex he bought and the other tenants were covering the mortgage
• His business had saved a lot of money so he had a pretty big reserve to pull from
• For a few years, he had to draw from the reserves to fill the gap on properties that were hurting because of the recession
• They were making smart investments where they could using seller financing, private money and other creative approaches
• They also made a conscious shift to ramping up and buying multis for college housing in Clemson, which helped a lot
• The college was going well at the time so they, stopped flipping and would look for older multis and try to build there student rentals portfolio
• They would also do lease options on some of the houses they might have flipped – a “delayed flip” – they could sell 2 years later

Building a Passive Income Business

• During the recession they shifted from primarily a flipping business to buy ‘n hold landlords
• This also allowed them more freedom as they eventually outsourced the landlording responsibilities to property managers
• Their business became much more passive
• Chad was even able to take his family in 2017-2018 to Ecuador for 17 months on an extended vacation

Coaching

• Chad would regularly speak at real estate meet-ups and networking groups
• He enjoyed learning and educating others
• More and more people would contact him for help and to answer questions about real estate investing and marketing
• It started out as just sort of a hobby, then became more of a consulting side hustle
• He wrote a lot too, so he started posting some of his articles on a blog, which evolved into a podcast and YouTube channel

Enjoying Passive Income

• He still is involved in real estate investing but it not as active as before
• He has created a business that provides true financial independence
• He travels, teaches, writes new content all the time for his blog, podcast and YouTube channel and coaches others to become financially independent

Your Biggest Mistake(s)

• When he first got started, he would “borrow goals” from more successful real estate investors
• This is not a good idea
• It just caused more frustration and disappointment
• Bigger and more properties isn’t always the best goals

Redefining Success

• Each individual has their own reasons why they get into real estate investing
  • Some want to travel more
  • Some want to spend more time with family
  • Some want to use the money they make for specific things
• Setting big goals isn’t a success in itself
• True success is when your business helps you achieve your personal goals – why you set out to do this in the first place!
• Maybe just getting 5-10 houses, paying them off in full, getting nice cash flow and spending your time doing things other than real estate may be a better goal in the long run
• Focus on what matters most to you first and then you can come back to build a business model around that
• Keeping things small with low overhead can sometimes be better in the long run
• Everything you do beyond what’s necessary must have a reason
• Most people don’t realize  that you can oftimes have more financial freedom with fewer properties

Your Biggest Success

• He read a book fresh out of college called “7 Habits of Highly Effective People” that had a big impact on him
• There’s a lot of great ideas in the book but a few key ones on interpersonal skills were extremely powerful:
  • “Listen First, then try to be understood” – Take the time to let the other person speak and then you’ll better understand
  • “Think win win” – Look at every deal as a win win situation for both parties
  • If he just takes those two principles and applies them, for example, to his 50/50 business partnership with the partner he has now been with 18 years, was the best thing that ever happened
  • It also works well with bankers, contractors and others that have resulted in great long-term relationships
  • In stead of working quickly with someone to “get the job done” or get what you want out of it, it helps you create long-term business relationships that greatly benefit his business in the long run

Investing for the Long Term

• Chad buys his properties with the idea of holding on to them for the long term
• He uses an analogy he heard from John Schaub, the author of “Building Wealth One House at a Time”
  • He looks at his properties as a herd of cattle or a herd of goats
  • To a farmer or rancher, those animals are their livelihood that provide for you
    • Some are your best
    • Others may get sick and are not a good producer
    • In the same way, he ranks his properties to cull the herd
      • Which are best properties in terms of location, lowest maintenance, attracting the best tenants that stay the longest
      • The ones that are consistently on the bottom of the list they either try to solve the problem or sell them and replace them with others
      • He also makes loans to other investments with excess cash to generate additional income
• Overall, he is just remaining patient and looking at the long term

Preparation for a Market Correction

• Chad keeps a pretty large reserve – maybe more than he needs to
• He recommends that all investors keep, at a minimum, 3 months work of expenses
  • Add up, for each property, your mortgage, taxes, insurance, and maintenance  and multiply that amount by 3 to determine your minimum reserve you should have in the bank
  • And, as you grow, with more properties, that reserve should grow quite a bit
• He has had a very large reserve since 2009 just sitting in a bank account
  • Some would say it’s bad cash management but for Chad…
  • He sees it as an insurance policy
    • The opportunity cost of that cash just sitting there is the insurance policy for the uncertainty of the future, on what’s going to happen to the economy
• Relationships are also a very important part of being prepared
  • “Do I have private lenders that could help me if I had a great deal land in my lap?”
  • “Could I make 3 phone calls and raise $500,000?”
• He also regularly studies his market to know what is going on at all times
  • Maybe his market changes and there are some fundamental that make him think he needs to sell some properties and go to a different market

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

• Chad wrote a book called “Retire Early With Real Estate”
• But he thinks the book perfectly corelates to what people in their 50s and 60s are facing
• A core fundamental of the book says, “You don’t have to touch your principle.” – Don’t eat the Golden Goose!
  • If you can spend $100,000 and make a 6% return on your property, you can  annually make a $6,000 cash return
  • When you compare that to stocks, bonds and annuities, that’s pretty good
  • But, people say, “You still have to manage your properties, etc.”
    • Chad says it’s pretty easy to outsource most of the work
    • When Chad was in Ecuador, he spent only 30 minutes A WEEK on managing 110 units
  • If you buy properties in good areas, they will keep up with inflation and with construction costs going up, home values will go up, therefore you have an inflation hedge built into that!
    • That means, if you invest $1 million today and are generating $60,000 this year in income, you will make the same equivalent amount in 10 years – where  can you find a retirement  return like that today?
    • Your retirement will keep up with inflation
  • He diversifies with index funds, bonds, cash etc. but real estate is his main investment
• If you’re starting serious retirement investing later in life, real estate is the ONLY place to be!
• The best part about it is you control your own destiny, unlike investing in the whims of the stock market or other investment that you can’t control

Paying Off Mortgages Early

• He didn’t accelerate mortgage pay-offs earlier on, when he was building his portfolio, because it didn’t make financial sense.  But, today, he is starting to
• He does a “Debt Snowball” approach
  • If you want to reduce risk and build cash flow, he recommends a “Debt Snowball” approach
  • He take all the cash flow from all of your properties and, instead of paying extra on all properties, he recommends paying all of the income on ONE property and pay it off in three years!  And then go to another property and you keep doing it
  • In a 5-10 year period, you can pay off quit a few properties
  • The result is you boost your income with less properties and reduce risk at the same time

Current Business

• He wants to improve his portfolio
• Teach others how invest in real estate
• He wants to know that the other people are benefitting from his teaching
• He wants to build his relationships with his kids
• He also wants to give back in time and money
  • Have the profits from hos Coach Carson business go into a charitable trust
  • He’d love to give away $1 million in the next 10 years if it’s possible
  • He also has a local non-profit organization that builds trails, improves walkability, and low income housing

Rap-It-Up

• Favorite real estate book: Building Wealth One House at a Time
• Favorite business book: Deep Work by Cal Newport
• Most valuable web site for success (other than your own): His local Tax Assessor Counties (in Clemson area)
• Favorite app:  He has an “Aura Ring” that has 3 sensors on it that keeps your pulse, lets you know how you’re sleeping at night, the temperature and other vital signs
• Favorite quote: “The best stock market that you can ever invest in is yourself.  Finding this truth is better than finding a gold mine.” – Byron Cady
• If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business?  He would call is private lenders. I would call them up and say, “I’m starting back over and I’m going to go out and hustle and find some more deals like I did before.”  Then I would get them to put up all the cash and give them a good return and go from there to build it back up.

How to Reach Chad

• Website: CoachCarson.com
• On YouTube: https://www.youtube.com/user/CoachChadCarson

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