What do you actually need to get started in real estate investing? Join Ken McElroy, Danille, and BiggerPockets host Brandon Turner in a conversation about all of the steps he took to purchase his first rental property, and what it took to scale up from there. EVERYTHING You Need to Buy Your First Rental Property (with BiggerPockets’ Brandon Turner)
Ken McElroy:
Hey everybody. So today I’m very excited to have my friend Brandon Turner on and I’m with, uh, Danille, our cohost. So a, uh, Brandon, welcome welcome welcome. Um, and, uh, I cannot wait to chat with you about your new book.
Brandon Turner:
Oh, thanks man. This is an honor cause your, your book changed my life. So, uh, you know, I wouldn’t be here today if it weren’t for you. So I appreciate you a ton. Well,
Ken McElroy:
I, I obviously I’ve been following you. It’s fun to watch people that are putting, uh, you know, their discipline into action. You’ve obviously done that. Um, and we met in Seattle years ago through our good friend, Tarrel Yarber and, and, um, I’ve been following you ever since, and I’ve been on the bigger pockets and you’ve been on my stuff. And, um, and thank you by the way, for sending me your most recent two books. I noticed it was interesting when I got it. I didn’t realize you did one book for small deals and one book for big deals. Can you talk a little bit about that?
Brandon Turner:
Yeah. So anyone who has been in real estate kind of realize that there’s, there’s two different approaches to real estate right there. It’s not like a unit number. It’s not like it starts at five and you suddenly magically approach real estate differently. I mean, technically at the, at the lending level, yes, five units and greater is different, but it’s like, you know, when you, when I was young, like I would, I would do most of my own repairs. My tenants had my cell phone number. Uh, I would go to a local bank to get the loan. It was just, you know, go to my, whatever bank I banked at and get the loan. And like, that’s like the very, like the smaller way to approach real estate, nothing wrong with that. You can build an entire portfolio that way. I know a lot of landlords who have had a lot of success with that, but if you’re trying to take down like a hundred or 200 or 500 unit apartment complex, it has an entirely different game. I mean, we use the same words, cashflow appreciation, but man, the game is just so different. And so as my coauthor, Brian Murray and I were sitting at Chinatown chat about what we’re going to write up these multifamily, this multifamily book on we’re like this can’t be one book. Cause it’s two, it’s two completely different businesses. So that’s why there’s two books. One on the small side, one on the large side. Yeah.
Ken McElroy:
I really thought that was smart. You know, I didn’t realize that you had done to, uh, when you send them to me. I don’t know, a couple of months ago and I was, I was reading through them. I’m like, this is brilliant because that’s a question that we get asked a lot, you know, like how to just start. And then everybody who’s, everybody sees what you’re doing and what I’m doing. And they’re like, we’ll never get there. And you know, sometimes they lose hope. So let’s start right down to the very beginning. Uh, you know, I know like we all started very humbly. I started with a two bedroom, two bath, my own, you know, my own savings into it. I know Danille did the exact same thing and she was an ex school teacher. Um, and let’s, let’s talk a little bit about your story because I get a lot of people. They listen to us, they hear us and they’re like, you know, I’ll never get to that level, but you’ve actually, you’ve actually been at it. And uh, for really, you know, I guess I could say this, but not for that long, uh, you know, I guess you started when you were 21 years old, but still the fact is is that, you know, the way you soared through this industry and what’s you’re doing now is, is, is incredible. Let’s start at the very beginning.
Brandon Turner:
Sure, man. Yeah. I mean, I got started my very first like rental. I mean, I did like, uh, I owned a house and I rented the bedrooms out, so I kind of did it that way. Um, got in, but I sold that like pretty quickly on when I got married and that’s when I kind of look at my, the start of my real estate journey is I kind of look at it in three phases. I’ll go with you all three phases, real quick phase number one was buying that very first duplex. I lived in half of it, rent the other half out, or we call it house second today. And that was like the small real estate trying to figure things out, you know, almost really never any money down. Cause I didn’t have any money. I didn’t have much credit, didn’t have much of anything.
Brandon Turner:
So that was like phase one was that. And I bought a number of like these little deals, like houses, like little cheap houses under a hundred thousand dollars, a little duplexes triplet. I bought a triplex for 45,000. That kind of like real cheap, rough area investing where I did everything myself. So that was phase one, phase two was actually started when I read the ABC’s of real estate investing. And I read that book and I’m like, dang, uh, I want to get into multi, like the larger multifamily. And so I read that on a Saturday and I love this story because I read it on a Saturday and then I read this, you know, the follow-up now the advanced guide to real estate investing that you wrote. And I was like both in one day I read, I love them both. I read them one day, the next morning I go to church of all places.
Brandon Turner:
I go to church and there’s this old couple there and I’m telling them, I’m like, I really want to buy an apartment someday. I just read these amazing books. They were so good. And they’re, they’re all about apartment complexes. And they looked at me funny and they looked at each other and then they said, well, it’s interesting, Brandon, we actually have an apartment we want to sell. And it was like the most like mind blowing coincidence. Right. But at the same time, it’s not, I probably told 10 people that day, how much I loved the idea of buying apartments. It’s one of those, if you don’t put it out there into the world, you’re never going to get anybody that wants to help you. So anyway, that led to my phase two, which was the, a world of larger multi, and really it was 24 units. So it was pretty small still. And uh, yeah, I lived in phase two then for a number of years and just the last two years really graduated to phase three, which is I built a team and scaled up rapidly.
Ken McElroy:
Yeah. And I definitely want to talk about that. And what about you? Like you started with your very cool, you started as a teacher started, you know, started saving your money and realizing that you’re not going to make it. I remember her telling me the story is she’s she, she would meet with the principal of her school and the principal said, you know, you two can make 42 grand someday after 10 years, like put your head down, you could soon be running one of these schools. And she’s like, okay, I need to figure out another way. Right.
Ken McElroy:
So let’s, uh, let’s jump right in. Um, you know, a lot of people want to try to do the transition from, you know, the, the call it the, you know, the ones and twos and uh, you know, the house hacking and stuff like that. And, and I think that’s a great place to start because you make a lot of small mistakes, but then that next step, that 24 unit, you know, uh, obviously you’d read a lot of people stop right there. They don’t take action. You obviously took action. I think I remember you telling me that was it, there are a lot of vacancies I want there to certain publications are out in the financing. So I want people to understand that, um, like, you know, you’re not getting deals that are packaged, like the brokers are not bringing you deals. They’re like, oh, okay. Let’s, you know, let me really think about this and run the numbers, these things that are a mess, right? Yeah.
Brandon Turner:
I mean, the thing was 50% empty. So I had 12 units that were rented 12 that weren’t, uh, the old couple that I bought it from. They actually sold it like seven years earlier on like seller financing and the guy that had bought it, it just drove it into the ground. But because it had the seller financed on it, they were able to eventually he just stopped paying them and they foreclosed on him and he took it back. And so now here they are in their early seventies and there, they were tired now for like a decade. And all of a sudden they have this 24 unit that’s half empty at a port. They don’t want, they don’t want to be in that phase of their life anymore. So yeah, so they, they was definitely a distressed asset and I’m not sure, like, I’m not even sure I got a good deal on it.
Brandon Turner:
What made it a good deal is the fact that I was like willing to get in there. And like I worked at it and yet I had no money to be in by it. I mean, in talk with the guy that was wanting to sell it, I had no money to buy it, but he, he trusted that I would like get it done. So they basically did this kind of cool, like it was, we started with a lease option. So I rented the entire property from them. Cause I didn’t even have enough money to pay closing costs. Like they weren’t willing to do no money down, but I couldn’t even afford the closing costs. So I did a rent to own essentially on the entire complex, uh, for the first six months, I then used that time to get a couple units rented out and save up the, I think it was $4,000 I needed for closing costs.
Brandon Turner:
And uh, then we transitioned it over to an actual seller finance deal. So I, I bought it in my, you know, in my name at that point they cared the contract and again, one unit after another, my wife and I would work till three in the morning painting units, putting carpet in. I learned how to do everything there. And over the course of two years, got it turned around and fixed it up, got 24 fully paying units, uh, you know, tenants in there bringing it from a four 50 average rent up to about 600 average rent over a couple of years. So,
Ken McElroy:
And I remember didn’t you, you almost doubled the value right. From what you purchase.
Brandon Turner:
Yeah. And we did, we paid for, we paid for, was at 4 75 for it when we bought it, maybe with four 50, something like that. And we ended up selling it now like five years ago. So about six years into it, we sold it for nine or just under nine. Um, and so it was a, I mean it was a turnaround, but it was also, I mean, it was a lot of work in the process, but it, I think I cleared quarter million dollars in actual profit at the end of the day when I, when I sold it, which really was like propelled me into the next level instead of kind of that level three, which is where I had the confidence to go into the bigger deals. But yeah, it was, it was at a phenomenal deal all the way around.
Ken McElroy:
And, and I wouldn’t, you agree Brandon, that there are deals like that all over the place. I mean, you just have to mention it and you were sitting next to somebody at church people don’t realize they’re not always advertised. They’re not always out on the internet, but there are deals. There’s a lot of mismanaged broken deals with people at different stages in their life that, that, uh, you know, and I think what happens is everybody wants them served up to them, you know, like, oh, well that’s what everyone wants. And, and really like, like what you did, you put, you put it out there and all of a sudden, you know, it started to come back, right? Yeah.
Brandon Turner:
It really is. It’s, it’s, I’m such a big believer in like tell the universe or tell people, tell the world what you want. I know what you want and tell everybody, because people love to help people who are specific with their goals, right? Like if you had a friend come to you and be like, Hey, I’m looking for a job, you’d be like, all right, well good for you. You know? Ah, you got it. But if they were like, Hey, I’m looking for a job at a hospital, somewhere in the Scottsdale area, you immediately, it would be like, okay, who do I know that can help this person who do, I know that works at a hospital and you would go out of your way to help that person because they’re so specific on what they want. There’s just something about human nature. We love to help people who are specific about their goals.
Brandon Turner:
In fact, that’s how I got the, my very first mobile home park is I once spoke at some real estate club out in New York city. It was a terrible trip. My daughter got sick on the way there. She was like one years old at the time she got sick, threw up all over my wife and I on the car and the flight over. It was like, everything imagined what could go wrong. That trip went wrong. And the whole time I’m like, what am I doing? Why am I flying across the country to go speak for, for no pay? And I’m just, I’m just because I say yes to everything and somebody does event. And I mentioned to the crowd, do you know, there’s probably 50 people there. And I said, yeah, I’m looking for a 50 unit mobile home park with the city sewer and water. And a week later, one of the attendees that was at that event that Ben emailed me and said, Hey, I saw you speak. And you said you had a 50, you’re looking for 50 units. I got a 50 unit mobile home park just came across my desk. That looks like a good deal. Do you want it? And uh, that’s what got me into the mobile home park game was again telling the world what I wanted. I love
Ken McElroy:
That too, because you know, one of our top questions we get is I want to syndicate, but like, how do I raise money? Where do I find money? But it’s like, have you even told anybody that you want to do this or that you’re trying to raise money? And the first thing you do is you just mentioned it to everybody now. And eventually somebody’s going to know somebody.
Brandon Turner:
Yeah. It’s people there’s so much more money out there today than there is. Then there are deals. The problem is like years, like people just look silly when they’re like, oh yeah, I’m trying to raise money for real estate. Well, what are you buying? Oh, I don’t know. Real estate. You just look silly. Like I’m not going
Ken McElroy:
To put money with you. And there’s one other thing that there’s some, there’s some wisdom in there. Cause I did the same thing. I read the cues that why you fly it over here, you know, and speaking and you know, why are you doing this? Why are you doing that? You know? And I think that, um, uh, you know, you and I are similar in the fact that if, if you just teach and, and you just try to help people, it comes back to you, uh, you can’t go across the country and go speak to 50 people and expect something. Uh, you know, but I can assure you guys that it does happen if you’re out there and you’re trying to help people. You’re trying to, um, you know, uh, tell them about some of the knowledge and some of the things that you’ve done, just like you did Brandon early on. I’m sure you’re still gonna continue to do, uh, isn’t that true?
Brandon Turner:
It’s so true. Yeah. People teaching builds such trust and credibility at scale in our modern world or today or anybody, anybody can become a teacher, they don’t have to do it. You know, you actually go to, you don’t have to go to school to be a teacher anymore. Right. You just go on the internet and you go on social media and you start talking about what you know, and you’re like, oh yeah, this is one thing I know. And like, Hey, the reality is, everybody is farther along the journey than somebody that’s behind them. Right? Like there’s always somebody who hadn’t always somebody behind. So if you just start looking at the people behind you and saying, Hey, here’s what I figured out so far. You know, I figured out how to buy, you know, a couple of duplexes or I figured out how to buy a couple of small multi-families, there’s a lot of people who would love to learn what you just figured out about those small multifamily. So get out there, you teach what, you know, talk about it, help people and it’ll come back to you all the time.
Ken McElroy:
I’ll tell you a story. I haven’t told much. Um, you know, so, uh, I was out, uh, early on obviously syndicating deals in the early two thousands and, um, and, and find, trying to find investors. And that’s when I ran into Kim and Robert Kiyosaki is they were brought to me. I was in a group EO back then. And uh, one of my friends knew them and said, Hey, you, you should meet with this couple. Well, I actually hadn’t read rich dad, poor dad, um, and had just come out. So call it 99, 2000. And, uh, so I obviously like you went to the report to the bookstore, read the book. I, and I had a meeting with them at the finish country club. And I’m not knowing obviously where it would all go and not, you know, not really even knowing. And nobody at the time knew that were said for dad was going to be what it was going to be.
Ken McElroy:
Cause it was narrow. And so Robert says to me, he goes, Hey, would you come out and speak at one of my events? And I didn’t even know who he was. So I was like, you know, sure. If you don’t talk about, so kind of to your point, right? So I went out, I drove out on a Sunday and I spoke for an hour and he had about four or 500 people in the crowd, I think at the time. And he was doing his teachings and um, Kim said, be ready. Like these people are gonna like mob you afterwards. And that’s what I, that’s what I got. I was like, oh, like, like, you know what I’ve been doing? And kind of, you know, independently is beating my head against the wall buying deals and all this experience on our property manager, all us, there are people that want this.
Ken McElroy:
And, um, and that’s actually what that’s actually there. I, I wrote my first book thinking, okay, this is a great way to put it all in writing. So of have to keep that through these emails and phone calls and all these kinds of things. And from there, of course, then all of a sudden it became the, you know, obviously we’ve, I’ve had a little bit more of a platform and people started to invest. And so I think that people don’t understand the small seeds, you know, along the way, like you said, when you flew across the country, start in front of the room with no expectation back in that 50 unit, I’m sure it’s worth a lot more now. And isn’t it true that there’s a lot of small little things like that along the way that, um, people that you know that don’t ever get any kind of notoriety.
Brandon Turner:
Yeah. Well, it’s amazing. You know, like you’d never see the, there’s a great quote from Steve jobs that says you can’t connect the dots, looking forward, only looking back. And I was like that in that concept, but you never know what’s going to take you to the next spot to the next one. The only way to do it is just to keep moving forward and keep trying, like you’re not even trying to connect dots. You’re just being an open individual. It just says yes to things. Now it’s hard for somebody who is like, you know, once you have a career, you know where you’re headed, it’s hard to say yes to every opportunity that comes your way, but still being the type of person who says yes, more than no, and being open to ideas and opportunities and at least conversations about things. It just, you never know, five years later that one of those things made a little pivot in your life.
Brandon Turner:
Like me picking up the ABCs of real estate investing, right? The Midland little pivot that led to another conversation that led to this led to that. And then down the road, you’re a completely different person because of those moments, you have so many people sit there and they look at what you and, and we all have, and they say, wow, must be nice to just go buy a 500 unit apartment complex, but nobody’s given me a 500 unit apartment complex. I’m like, you, ain’t got a duplex yet, go, go buy a duplex. And that’ll lead to the 500 unit five or 10 years from now, but quit looking at what I got and comparing it to what you got because we’re in different parts of our journey.
Ken McElroy:
Yeah. Yeah. And I think what’s interesting is, um, like you, I had massive fear around using my own money on that first deal from people that I didn’t really know very well. Um, you know, they said we trust in you. And so, you know, there was this massive fear that I had that first time to meet with a lender, not really understanding, you know, everything around a loan term sheet and all that, and what I was signing, these big loan documents and, you know, and what you’re kind of getting into. Um, you know, you do have to take a bit of a leap of faith that with, uh, with team members that kind of help support you. Right?
Brandon Turner:
Yeah. The team was, I mean, it’s everything like, I feel like, I don’t know half of what, like what the terms are still because I got smart people that figure this stuff out for me, like at such a high level. I mean, like, I just like see these documents through my email and I’m like, that’s an 87 page legal document that some lawyer just spend a lot of time doing God bless him because me having to write up 87 pages of that legal, uh, no, that sounds terrible. I can review stuff. That’s great. But yeah, there are people that do all of these things. That’s one thing I love about the large multifamily game is that there are people like, I didn’t have to figure out how to get the money wired into my checking account, you know, to be able to buy a deal. I got a guy that does that. Like he figured that out and I’m like, that’s just like, that’s why my favorite thing. If I had to really narrow it down. My favorite thing about the large multifamily game is that it is a team sport. It’s not, you’re not playing tennis by yourself. You’re playing basketball with a team of, uh, and if you get the right people, it’s a team of superstars.
Ken McElroy:
Well, I think the one thing that all three of us have in common or that we don’t like being told what to do, but we want to be able to do what we want to do. Right. We want to do it. And I actually think there’s a lot of people that fall into that category. You want to chat about. I mean, you moved to Hawaii, we’re both from Washington state. Um, you know, I grew up in Tacoma and um, but you moved to Hawaii, uh, you know, that was it during the pandemic.
Brandon Turner:
Yes. Right before the pandemic. Yeah. I’ve been here three years now.
Ken McElroy:
Yeah. And so you’re doing right now from there, you know, it’s, it’s awesome. And people don’t realize that they are really are in control once you get to this passive income and you know, and this model going, right.
Brandon Turner:
Yeah. You know, four years ago, my wife and I sat down, it was on, it was on new year’s Eve almost four years ago. Now three and a half years ago, it was a nearest or new year’s day. We sat down, we do it every year. We do a goal setting retreat. And we sat down at a restaurant out on the coast of Washington state, a little town called Seabrook. And we’re saying to this restaurant, we did it. What is our goals for the next few years? Like, what’s our goal this year. And then what’s our five-year vision look like. We sat down and I, and I have this piece of paper still. And I wrote within five years, I want a house in Hawaii with an extra unit that family and friends can come and stay at. And so we can kind of like have this cool kind of like vibe or like house with, with people that we love out in Hawaii.
Brandon Turner:
And we’re like, oh, that sounds scary. Five years. I mean, I don’t know if we could ever do that in five years and six months later. I mean, this, this is now again, three and a half years ago. So six months later we buy a house in Hawaii with, you know, like an extra unit, actually two extra units that family and friends can come stay at. And it just, again, just shows the power of like defining what you want, right. It down. And then all of a sudden it, it’s not so scary anymore. It’s like opens up for you. And so again, yeah, I love the fact that real estate allows me to do that. I can live in Hawaii and, uh, that it was kind of my wife and I, his five-year vision got done in less than a year. It was cool.
Ken McElroy:
Yeah. And, um, not to mention the fact that it is scary at the time. So a lot of people shut down right there, you know, at the time where they’re actually discussing it, there’s all this, I call it, the little voice starts popping up and it starts to put all this rational thought in there and it kind of, it kind of kills your dreams, right?
Brandon Turner:
Yeah. I mean, it did. In fact, like w when I, when I made that goal, I was like, well, it’s probably not going to happen in five years, but you know, maybe someday, maybe 20 years from now, I can have that. Right. Uh, I remember thinking that, but then what we did is we started taking these little action steps that would allow it, for example, for that one, we were like, well, why don’t we just go to Hawaii for a couple months? That’s a pretty easy thing. I’m going to cost some money, but why don’t I just go to Hawaii for a couple months? And I can learn to surf. And, and that was no commitment. It was just an idea of like, let’s just go see if we can spend a little bit of time there. Right. So with anything in life, when you’re afraid, if you’re like, I’m scared to buy a 50 unit apartment complex, all right.
Brandon Turner:
Maybe just buy an eight unit C or maybe don’t even buy it. Maybe just go and partner with somebody else. Maybe just invest in somebody, syndication, just get your feet wet a little bit. And all of a sudden it becomes less scary because it’s not that things are actually scary, right? Like it from Stephen King, he’s scary, right? Like the scary clown, like there are scary things in this world. A 50 unit apartment complex is not scary. It’s simply something we don’t understand. So that we, we say it’s scary because our, our biology, we’re wired to think that things unknown are scary, but in reality, it’s just unknown. And so if you make yourself aware of it and get yourself familiar with it, all of a sudden it becomes a lot less scary. In fact, I remember, so we, we came to Hawaii for the few months and we found this house, like at the very end of the trip, we found this house on this property.
Brandon Turner:
And I was like, this is it. This is what I’ve always dreamed of. Like, and I couldn’t even verbalize it until I saw it. And I was like, this is it. But it was $2 million. My average home that I bought before that was about a hundred thousand. So we’re talking like 20 times more expensive. And I remember calling my buddy David, who’s the co-host of the BiggerPockets podcast with me. And I called him. And I’m like, I found the most perfect house, but there’s no way I could buy this thing. And he goes, well, why not? I’m like, well, I mean, obviously it’s $2 million and he’s like, well, yeah, but you make good money. I was like, that’s besides the point, I mean, it’s $2 million David. And he goes, well, tell me about it. And I’m like, well, it’s got these three units. He’s like, what would they rent for?
Brandon Turner:
If you, if you couldn’t live there. And I’m like, ah, probably about 2,500 bucks a piece he’s like, in other words, worst case scenario, you rent out all three units, separate you move back to the mainland. You go live in your crappy little duplex house because you failed. And now you’re making profit on a cash flowing rental in Hawaii. And I was like, oh yeah. Okay. I guess that is worst case scenario. He’s like, and then 20 years from now that $2 million house with an ocean view and a pool in Maui, what’s that worth more or less than $2 million. Oh yeah. I guess that’s probably where the whole lot more, if there’s a worst case, you’re a multimillionaire because you took this risk. Yeah. Worst case. I’m a multimillionaire. All of a sudden it’s not so scary anymore. So I bought the property. It’s just, yeah. Fear.
Ken McElroy:
Yeah. And also guys pay attention who is on the other end of that phone because, um, that’s an important piece, you know, I don’t want to just brush over that, that I have, we all have those kinds of conversations with friends that either support you or encourage you or, or, um, you know, I say, you know, kind of take the air out. Right.
Brandon Turner:
That’s such a good point. I never thought about that before, but what if I had called my parents? Right. What if I called somebody like somebody who didn’t have those questions? I never thought about that. But like the fact that like the person you call in those times make such a difference to the, like, what would it, my parents have been like, yeah, you’re right, Brenda, that’s crazy that you can’t afford that. You’re crazy. And they would have talked me out of it. That’s fun. I never thought I never thought about that before that that could have gone the opposite way. Just based on who answered the phone. Yeah.
Ken McElroy:
And I finished, I, the only reason I bring that up is because as what happens is as your circle, you know, evolve and you’re, you know, you’re raising the bigger equity and you’re finding better deals and your brokers and all that kind of stuff. It doesn’t matter. You still have people that say you can’t do that. And you have people that say, you know, go for it. Right.
Brandon Turner:
Yeah. It’s so true. It’s if you’ve got a guard who’s around, who’s around you and who you let into your circle and you don’t want just, yes. People either. Like, David’s the opposite of a yes. Person. He’s actually like the most, no person I know, same with like Josh dork. And you’ll find our bigger pockets, very much a no person. Uh, but I mean that in a good way, it’s like the they’re, they’re not gonna let you do something stupid. They’re gonna actually like think through it, but that’s exactly what David did. So yeah. You don’t want the, yes. People, you don’t want to know people. You want true friends who believe in you and support you and are going to help you figure out a way to get there. Because of course, there’s always a way to get there, whatever you’re trying to get to. There’s always a way. And so a very small percentage of this world population are the kind of person who says, let’s figure it out and let’s help you get there the right way. And those are the people you want to surround yourself with.
Ken McElroy:
That’s right. So let’s jump right into your books because, um, you know, when you sent them to me, first of all, I think the industry needed kind of fresh new books. My book has been around for 20 years. Um, candidly it’s dated, um, I’m, I’m redoing it right now because I, I went back and read it. I was a little embarrassed. Uh, hopefully that never goes on with you, but in 20 years, would you go back and look at this book you’ve got, there’s like, like one of the things that I noticed, um, crowdfunding, crowdsourcing, once you even read what I wrote the book, you know, so all those kinds of things, I’m trying to update the book right now. I’m working all of that, but I love, you know, you’ve got the seven different types of small multifamily real estate and, you know, kind of the best rental property. So can you walk through that because I really, really enjoyed the way you laid it all out.
Brandon Turner:
Yeah. So I went through these different types when I looked at like the properties that I own and the people that I, that I know owned, uh, I thought it would make it a little less scary for people when they’re thinking about multifamily, if we gave things names, right? So I’ll give you a few examples. So there’s the, the side-by-side use it to duplex, but sometimes you find a side-by-side triplex or fourplex. And it’s just like these, these small little apartments that are usually like, it’s a side-by-side duplex. There’s also the up and down, which is the, you know, there’s a unit on top unit on the bottom. Those are all over the place in every market. I think you’d go to, you can find a side-by-side or an up and down now, why is this important? Well, there’s these little things like you learn, for example, a side-by-side when there’s like, they’re next to each other.
Brandon Turner:
And then on top water lines are much more likely to be separated or easily separated if they’re not already, well, why does that matter? Well, if you’re owning like a, you’re gonna buy a duplex or triplex or fourplex, if you can shift the water costs onto the tenant, it’s going to stabilize all your expenses. It’s going to drop your expenses. You’re gonna make way more money. And almost nobody thinks of this. Like when they’re trying to buy like the small multi-family, they don’t like the thought of who pays the water. Doesn’t even come into the picture. But I mean, that could easily be half of your profit is just the water bill or the water and garbage and sewer bill. So depending on which way you go there can help make a big difference. Another one I call is a monster house. I own a bunch of these.
Brandon Turner:
Well, a few of these, I should say, now I’ve gotten rid of a lot of them and they’re, they’re dangerous as a monster would be. And the idea of a monster houses, it’s like a single family house that has been converted over the past a hundred, some years into multi-family. So somebody added on this and he took the garage, turned it into this, they added this little piece on the side, you got a little studio up there. They turned the attic into this, and they’re usually just poorly done. Like you’re, you’re likely, never been able to separate the water meters and something like that. Uh, they usually are super thin walls. There’s all these problems. I’m not saying they’re bad. They can just print money. I’ve got a few that just print money.
Brandon Turner:
Yeah. They’re they, they are, uh, a different, a different beast right there, but man, they can make really good money. Uh, and so th there’s this, you know, there’s a garden type apartments, which are more like the kind of suburban, usually a couple of floors, maybe two or three stories total, you know, the, the, the, the lobby see the large, the high rises. And it’s just recognizing what these are and then what you want. You’re like, oh, I’m really looking. I think a side-by-side duplex sounds great. Now, when you go to your real estate agent and say, hi, I’m looking for a side-by-side duplex, all of a sudden, like, you look like, you know, you’re talking about, even if you have to explain what that is to the agent, again, you’re way more clear on your goals. Now the agent be like, oh yeah, let’s go find you one of those. And now you just the chance of getting it to someone.
Ken McElroy:
Right, right. That’s really good advice. Like really good advice, because most people just, I liked it because I think a lot of times when people talk about buying real estate or buying multifamily, it all gets lumped into one big category. So you broke it up into the two books and then you broke it up into the types, which I really liked because to your point, what happens is you get into all these nuances guys, when you’re buying stuff for, from common area water to boilers, to independently, metered, to common area lighting, you know, and, uh, [inaudible] landscaping even at, uh, you know, when you, when you buy something has to in it. Uh, there, there are, you know, you potentially could have battles about who pays for what, uh, there’s all this stuff that goes on app operationally. Right. And I’m sure you learned a bit about that, uh, after you bought a few of these.
Brandon Turner:
Yeah. Yeah, definitely. I mean, there’s things like we’d have properties where like, you know, like, even like a garden style where you have somebody upstairs, usually in somebody’s downstairs, usually they’re like four, you know, whatever. But like we had a times where like the tenant, like the tenant upstairs just walks too heavy and that makes the people downstairs ate irritated, or they like throw stuff off their deck. That was a common thing. So just understanding these little things that, that go with that property type, the side-by-side usually has their own yard, oftentimes has their own garage, if so, great. They can have their own lawnmower and you don’t have to pay lawn care. So like, that’s why, again, one of the reasons I love the side-by-side duplexes is especially the ones that have the garage in the middle and each have their own little garage garage. It’s such a simple rental property to own, and it’s very low maintenance, but yeah, just knowing what these things are, that can not.
Ken McElroy:
So, so let’s talk about, so when you first kind of started to, you know, obviously before you made the big leap to, you know, call it the gardens, I guess the one we’re talking about, right. The one you just bought
Brandon Turner:
In Texas. So
Ken McElroy:
What timeframe was that from, from beginning? I know you still have a lot of properties that cashflow and all that, but what timeframe
Brandon Turner:
Was that? Yeah. So if we’re thinking like some 36 right now, I was 21 when I bought my first property, uh, I was 25, 26 when I bought that second or like that, uh, that small apartment, 24 unit. So kind of phase one was the first two years trying to figure it out. Phase two was that. And then it was three years ago that I went to a conference called the best ever conference out in a, it was in Denver and Joe Fairless put it on. And then, so it was three years ago. That would have been 33 at the time. And that’s where I was at this conference speaking on stage. And man, I was like, I don’t belong here. Like everybody here is doing these big apartments and big syndications and all this cool stuff. And here I am with my like few tiny little properties out in Western Washington.
Brandon Turner:
And I just felt like out of place. Uh, and what I realized was like, I was at this point where I was bored with my real estate and I was just coasting with my 30, 40 units, whatever I had at the time, I wasn’t really doing much. I just, you know, they were all just stabilize and it was fine. And not that like more units make you happier and more money makes you necessarily happier, but there’s such value in the climb right. In the, in the challenge and like, oh, I’m going to get to that new level and setting goals and then going towards those goals, that’s where a lot of, I think happiness and fulfillment is. So I decided then, and there, I was going to get into the syndication game and kind of get to that third level of real estate investing. And it terrified me, but that’s where it all started, was at that conference.
Brandon Turner:
And I read a book called the vivid vision or vivid vision by Cameron Herold. And it was all about just like, it doesn’t matter where you go, but define where you want to go, like lay out a very clear picture where you want to go. So that’s what I did. I was like, all right, I’m going to have $50 million of real estate. I’m going to have a thousand rental units. I’m going to do all that in three years. And so I laid it out then. And, uh, 18 months that was really two years ago from right now is when I wrote that vision, not even two years. Uh, and we’re at, I think 2,500 units right now, but $150 million in real estate, or at least we’ll, we’ll be at 200 million by the end of the year by the ones we have under contract right now that kind of blew by the goal doing that.
Ken McElroy:
So let’s talk a little bit about, you know, cause I, I believe a lot of people look at goal setting, vision, you know, vision boards or whatever. I know there’s a bunch of waste to kinda wrap your head around these kinds of things. One is, again, you showed up to something, uh, you were a little uncomfortable with it. You got onstage, you were doing a self assessment of your, uh, you know, of your people that you were with and it pushed you to that next level. And I think, uh, is it that kind of, one of the things that, uh, you know, it doesn’t matter what level you’re at you, you feel like you always need, right. Just to just, um, just a little nudge.
Brandon Turner:
Yeah. It’s a hard line. It’s a hard, I guess a decision like one hand you don’t want to always be comparing yourself, right? Like they’re all, you’re never satisfied because there’s always somebody better than you. Like, no matter what, you’re no matter how good you are in life at anything, there’s always somebody better than you and feel like you don’t want to be getting that trap of like, I’m not happy, cause I’m not as good as that person. But at the same time, if you’re the smartest person in every room you go into you’re in the wrong room. Right. We’ve all heard that. And so when there, again, I don’t even, I’m not good at that line. I’ll admit I I’m generally comparing myself to the next level, always trying to strive up because I want to do better. But I just think there’s such value in knowing like, Hey, I’m good right now. I’m complete with who I am. I am happy here. However, I still love the, of pushing myself and trying for the next thing, because I’ve got potential that I see in myself and I’m going to see if I can do it. And I think finding the balance between those two things is such a secret to happiness.
Ken McElroy:
It definitely is. And I think that a lot of people don’t really embrace the, the vision, the goal setting and all those kinds of things what’s are really, really, really important. You have to sit down and be intentional with your relationships, with your health, with your finances, all of those things, guys. Now you just did a mastermind in Maui that, um, you know, I know people can go take a look@howdopeoplefindthatmollymasterclass.com?
Brandon Turner:
Uh it’s uh, yeah, we’ve done a few of them now, me and Tarley are the guy that introduced you. And I, uh, Tara is an amazing event coordinator. And, uh, apparently I can get people to show up in Maui, which is, it’s a tough sell, but you know, some people do it and we hang out and talk real estate for a few days. But yeah, that’s a big piece, actually a big piece. I’ve done three of them now. And a big piece of all of them is we all work on vision together. Cause almost everyone shows up to these things with going, you know, I just don’t know what to do next. I got a lot of opportunity, a lot of options, but I haven’t nailed down what I want to do. So that’s kind of our focus heavily is like, by the time you leave the thing, you know exactly where you’re going, you’ve got a clearly written vision for your future. And then you know how you’re going to get there and then the relationships come with.
Ken McElroy:
Yeah. And I think that one of the people acknowledge it or not. I think a lot of people have that thought in their head so that, you know, cause it doesn’t matter. Didn’t matter when I was in high school, I was in college, which is starting in business or even, uh, in EO YPO or whatever setting I was in. There was always somebody that a fi the money was never really the issue, the driver of anything. It was always okay. Like you, you know, you, you know, there was always like, what’s next. And you know, they’re always kind of looking for that, you know, well, I got a little more structure, right?
Brandon Turner:
Yeah. Yeah. It’s, it’s everybody struggles with this all the time. No matter how successful you are, your struggle with that. Like, what’s the, what’s the next thing I need to do. And then how am I going to get there? And then, I mean, that’s really probably what separates successful people from not successful. People is not successful. People just never have that conversation internally. Right? Like if there’s, if somebody is successful, most likely they are the kind of person who says, where do I want to go? And then at some point they figure that out and then they make a step to be able to get there. But yeah, it’s, it’s shocking how few people set goals, how few people read books. So few people set, uh, you know, attend master minds or go to conferences because the majority of the world is just simple and they’re happy. Right. Or maybe they’re not happy, but they’re, they’re complacent with where they are in life. And a lot of times they’re not happy, but they just don’t know how to get out of it. But yeah, I it’s such an important yeah, it
Ken McElroy:
Is. We, we, uh, we started mastermind with George Gammon. Um, yeah, he, you know, Jason Hartman and, and, and, and so it’s interesting. We’ve been having these calls and we had one actually yesterday. Um, and you know, to your point, these are, these are folks with means these are people that sold their businesses. These are people that own a lot of units. Uh, you know, these are people that are maybe looking for some kind of career change. Um, and, um, so I think what’s interesting is what I love is that they all get on there and they’re fully transparent. They’re fully authentic and said, this is what I’m trying to do. I don’t know if it’s the right path. Um, you know, and, and, uh, and I think, uh, that’s, that’s part of the, the, the first step is just being, you know, that kind of raw, right?
Brandon Turner:
Yeah. It’s so, so important. Like that community of people you surround yourself with, whether it’s a small mastermind group of 2, 3, 4, 5 people, whether it’s an organization like EO or YPO, or I’m part of what’s called GoBundance, or whether it’s like the Maui masterclass thing, whatever that thing is, like finding a place where you can build those lifelong relationships and be vulnerable and be open and getting out of your current circumstances. There’s this great phrase by, uh, the famous psychologist, Abraham Maslow, you know, Maslow’s hierarchy of needs. So one of his books, he talks about this thing. He calls it a peak experience and a peak experience is this moment in life, or these moments in life where it like transcends the day to day of like boring every everyday, right? So when you go to camp, when you’re a kid, those are usually peak experiences.
Brandon Turner:
When you had a really good conference and you’re hanging out with your buddies, that’s like a peak experience. Uh, this thing in Maui that we do, it’s a peak experiences. And Mazza talks a lot about how, like, in these moments are when we make these pivots in our life, these changes and these like life altering decisions that affect our life. And the thing is most people, well, I should say this, those moments of peak experiences do not happen naturally when you’re an adult, when you’re a kid, right. They happen all the time. I mean, how many times when you’re a kid, you have that late night taco bell run with your buddies, and you’re out there at like three in the morning, Nina’s drinking a Slurpee and having these like life conversations, like those were amazing. And they happen naturally back then, but adults will go 20, 30 years without a single one, unless we are intentional about creating those, which again, full circle goes back to why I think it’s so important to like, just say yes to those things and go to that event and go to that conference, even though you’re not sure what you’re going to get out of it, it just gets you out of the day-to-day and gets you into a moment of peak experience
Ken McElroy:
And definitely does. So, um, let’s turn to real estate real quick. Um, you know, obviously we just had the eviction moratorium lifted. I know some states, uh, it’s still there. Um, you know, what are you guys? And I know you’re around just that bigger pot it’s and all those guys, and they’re lifelong learners and they’re personal development guys, and that’s why I love, I love that whole brand and, and what you’re creating as well. What do you see moving forward for both renters and landlords and, um, you know, what’s your crystal ball.
Brandon Turner:
Yeah, yeah. I have no idea, but I’ll say, let’s say a few guesses. Uh, my, my assumption is this, first of all, the, the whole eviction thing, I think was more of a, for the most part, more of a media way to sell papers and get clicks than it was an actual issue. Most people, I know that own real estate didn’t have a massive problem with tenants not paying, even during all of COVID. Like most people still seem to pay rent. Most people like at least, yeah, nothing crazy happened in our world. I mean, there was a few stream examples where we had a tenant that was taken advantage of for a long time, but most people either paid rent or we worked with them, uh, and we’re getting it all back right now. We just restructured how they paid us. And it’s fine. So, first of all, I don’t foresee a massive, like a foreclosure or eviction backlog happening.
Brandon Turner:
I mean, maybe it will, again, I know there’s some data that shows that there’s some stuff coming, but I just don’t see it. But what I do see is a world where increasingly the government is going to make housing more of a right than it is a privilege. And so I think that we’re going to see a lot more expansion of government programs to help people pay their rent. Uh, as we clear through the mess of COVID, I think we’re going to see more and more of that, of money being printed and given to landlords. So,
Ken McElroy:
You know, I get a lot of people on our show when we do our lives and I’m like, guys are landlords, like, you know,
Brandon Turner:
Yeah, exactly. If the government wants to print money and then give me that money and then inflation, if that happens because of what they’re doing, then my property is a Goldman value. It’s kind of a, we’re, we’re sitting in a good spot right here. Like, I’m glad to be in this spot and I’m not on this part. That’s supposed to be taken from the government, you know, like, you know, in order to live, I like, I like where we’re sitting and I feel like either way, we’re going to be fine.
Ken McElroy:
Portfolio two. We haven’t had much of an issue with the, we are. I know I was, you know, like people, you know, I, I say that guys, listen, what you shouldn’t be mostly concerned about is the, you know, the pandemic on employment and the PUA is going away. The pandemic emergency, I don’t play that cop or the PE UC is going away. And, uh, you know, the federal pandemic, unemployment cop or the, you know, the FPA UC is going away all in a week or two. Um, and that was money that was given to people so that they could pay your rent. So you could pay your mortgage. And I, to your point, a lot of these folks, they, uh, you know, the government was giving them money to, to help them stay in housing. And I think, uh, I think the next, the next few months are going to be very, very interesting to see. Um, but I went through 2008 and, um, you know, people figure it out. You, you know, what’ll happen is that some people will move and they won’t pay their landlord. They’ll go to collection and that’ll figure itself out the way it figures itself out, uh, that will vaguely will reopen up and they’ll stick a tenant in there that can pay and life will return to normal pretty quickly when you,
Brandon Turner:
Yeah, I do. And you know, like people ask me a lot, like do is now a bad time to get into real estate because of like, people might not pay. I’m like, look, if you look at a 20 year horizon, and during that time, there were six or eight months where like the worst happened where you got zero rent for six months, because you had some tenants take advantage of you over the course of 20 years when that property went from a million up to $3 million over that time period, like, are we gonna look back and be like, oh yeah, sure sucks. I missed out on that $5,000, which I would have never gotten into that game. So like, it’s more important just to have reserves right now if you’re worried about it. Just so we have a lot of reserves, we’re like, all right. If something happens, we can withstand some more, some more drama. And, uh,
Ken McElroy:
You know, and our YouTube channel, we were talking to a guy today that found a good deal because that tenant hadn’t paid and he got the property at about half off. And then he gave the tenant $2,000 cash for keys and they moved out within a month.
Brandon Turner:
Yeah, I totally believe that. Yeah. I think, I think if I, for people who are thinking instead of, oh no, the world’s falling apart around me. There’s, there’s some people going, okay, the world might be falling apart in some ways, how do we capitalize on this? Right? Like maybe create an ad campaign that just says, Hey, we’ll buy your property with your deadbeat tenant or whatever. You’re like, like going after that. And all of a sudden you’ve got a marketing arm that you can go after people and hit everybody who’s, you know, filed eviction or whatever in the coming months. Like there are there’s opportunity here for both the help, the landlord, and maybe even the reset with the tenant. Like if there wasn’t, if all the legitimate issue or if it was a bad landlord, they just didn’t handle it. Right. Maybe you’re helping the tenant get out of a bad spot and buying a good property for a good deal and everyone
Ken McElroy:
Well, and I, I’m a firm believer that, uh, you get the best deals when there’s a bit of chaos. It could be chaos with the bank. It could be chaos for the tenant. It could be chaos with the landlord. It could be chaos with the property manager, but when there’s a little disruption and that’s kind of the beautiful thing. I mean, when you look at Zillow and you’re looking at houses, um, you know, the markets, I think pretty efficient, but when you, when you’re in the 2, 4, 8, 12, 2400 unit spa, it’s not very efficient, you know, with rents and expenses. And, you know, people are paying all over the map, different kinds of ramps and different lengths and all that kind of stuff. And people moving in and moving out and, you know, some people are managing, well, some people are, are good landlords and some people are not.
Ken McElroy:
And so there’s still massive opportunity. Um, you know, like I, my, my stepping in and, you know, I always tell people, I love cleaning up neighborhoods. You know, we’ve, we’ve got plenty of projects in areas where those homeowners have come in afterwards and said, thank you, you know, thank you for, you know, uh, filling this up with a better quality tenant. Thank you for upgrading the landscaping and fixing all that for maintenance. Um, you know, so there is a, there’s a massive opportunity. It’s a, it’s a social opportunity in a lot of ways. I think that, um, you know, that, that, uh, that we’re doing here too, because there’s thing for sure, we’re, we’re under supplied on housing
Brandon Turner:
That is for sure. And that’s why, that’s why, no matter what happens, I kind of cling to that as like, we, we do not have enough housing. So even if we have a hard time here in the next few months in the next year, like the, the, the macro view of what’s going on with real estate in the U S right now, I still feel very, very good about a longterm. So as long as we have the reserve to be able to get through blips in the, in the, uh, in the matrix here in the next few months, I think we’re gonna be fine. Yeah.
Ken McElroy:
The, um, Hey, before we wrap up, I was, I was having a conversation with a friend of mine and, uh, I happen to be good friends with our governor. He asked he was in my EO forum. He started Coldstone Creamery, but I, I was telling somebody the other day, I said, I don’t think I’ve ever been so in tune with who the governors are, the states right now. Right. And they’re the reason I bring that up is because I think we really need to pay attention to the policies and the things that are happening state by state, even now with this eviction moratorium that just got lifted, you know, there’s 11 states that are still importing, at least in the short term. Uh, you know, we’re talking about Washington DC, we’re talking about New Mexico, we’re talking about some states are still kind of enforcing either. Uh, you know, uh, wouldn’t you agree that now more than ever, we need to start drilling down into that, um, into the governmental policies, kind of the day-to-day things that are happening and people need to start paying attention to the stuff that’s getting passed.
Brandon Turner:
Yeah. A hundred percent. I think that’s actually a huge piece of if you’re trying to get into real estate, especially the larger multi, I feel like if you want to buy a single family house or duplex, you can do it in California. I’m sure like the policies are annoying there, but you can survive, but I’m such a big believer in like looking at the location and saying is overall is the direction this state moving, going to help me over the next 20 years or hurt me over the next 20 years. And that should play. It’s not the number one thing. Right. But it’s definitely in the top five of me of like, you know, the job growth and the, and the type of employment that’s there and the income levels and whether or not this is a friendly to investors, friendly to business or not state. And so, yeah, paying attention to that is it’s going to be huge for people getting into multifamily, especially
Ken McElroy:
It is, I’ve had a lot of friends call, you know, uh, during this time during the pandemic time. And one of them was Morgan. He was a big time D one college coach, uh, at one of the big schools. And he bought some rentals in Oregon. He’s like, he goes, I don’t know what I can do. You know, I’ve got, um, kept on my rents. Um, and they’re jacking me on my property tax. And so, you know, all of a sudden I went from cash flow, then now I’m getting tight. And then, you know, so, so I think that’s kind of the point is you need to start taking a look at when they start telling you how much you can charge, and then they start getting you on the property tax side, which I think, I think, uh, the, I think real estate, uh, owners are gonna really take it in the chin hair. Uh, you know, cause a lot of these places, they can’t, they can’t support their, um, you know, the expenses in a particular area because people are moving and uh, so they’re going to go after the property taxes. Uh, what do you think?
Brandon Turner:
Yeah, I can totally see that. I think that it’s, it’s an easy thing for the local governments to be like, oh, we need more money. Let’s just, let’s just tax the homeowners more. Uh, especially as they have a lot of equity in their properties, people are like, well look, they got this huge net worth. Let’s go after the people who have a big net worth, you know, even though mostly they can’t tap into that and, and it’s Phantom anyway, but they’re, I definitely agree. They’re going to go after the, uh, gonna go after the property taxes. It seems like the easiest tax to do without having to get a whole lot of, uh, a whole lot.
Ken McElroy:
It is. I know we look a lot around about that. You know, certainly we have, as we’ve kind of moved around and bought stuff in different states, but I think even more so you, people should start paying attention to, you know, who’s in office and, and, and some of the things that are going to the restrictions potentially that you might have. Um, so Brandon, before we wrap up, what’s the best way for people to find your book, you know, your two new books. I can’t wait, uh, uh, you know, see the success of those and, and the mastermind and, and what’s the best way for people to reach out.
Brandon Turner:
Yeah, thanks, man. Um, probably, I mean, biggerpockets.com/store is probably the best place for, uh, for books that we’ve got. So any of my books are at BiggerPockets that comes to the store, or honestly, if you go to my Instagram, uh, like, you know, they give you like one link in your bio. That link goes to a, what are they called? Link tree that has like my books, the Maui masterclass, which is Mallee masterclass.com, but the mass classes in there. And anything else that I’ve got going on, that’s important. Like we’re launching a coffee brand. We’re not making any money with it all. It’s all the profits go to charity, but it’s fun to have beardy brew coffee. It’s just the fun thing. So, uh, I’ll send you some beardy brew coffee sometime.
Ken McElroy:
I definitely need to get to all of that as always. Let’s, um, let’s get back, uh, you know, after this kind of pans out and kind of see what goes on with this eviction moratorium and the forbearance. And, uh, I know you’re still buying, we’re still buying. We just closed on 650 units in Houston. I got another 4 55 in escrow in Austin that we’re working on. And I know, ah, didn’t you put another mobile home park in Instagram?
Brandon Turner:
Yeah, I think we got two more. I think we actually have four in ESCO right now that we’re closing on the next couple of months.
Ken McElroy:
Well guys, um, uh, uh, you know, uh, I hope they really listen to this. Whoever wants, because, uh, I think you can learn a lot from, uh, from Brandon in the future. It’s definitely someone to watch he’s growing his brand and in every way, and he’s a fabulous educator at Brandon. Thanks again. I appreciate your time. God bless you guys, and we’ll see you soon. Thank you guys.