How To Build A Real Estate Empire (While Working A Full Time Job) Using the BRRRR Method - Mike Anderson

If you're interested in learning about investing in real estate, you are in for a real treat! Please enjoy this two hour deep dive conversation with Mike Anderson.

We get into the nitty gritty of how he acquired 13 rental units in the past year while working a full time job.

After listening to this, you should have the framework to be able to do this yourself.

All show notes & resources available here -> https://boundtoberich.com/mike-anderson

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Transcript

This transcript was automatically generated using Descript.

Ismail Humet: Welcome to the Bound to Be Rich podcast, where I attempt to reverse engineer people who seem to be successful no matter the circumstances, so that you can apply those lessons to your own life. I'm your host is meed. In this episode, we are joined by Mike Anderson. Mike is a friend of mine from the event space, but he's building a name for himself as a prominent real estate investor in my area.

I'm really excited to share this one because I know many of you will find it more relatable than my other episodes. You don't need to trade stocks or start an online business to be successful. If you're more comfortable with something like real estate, you can absolutely just stick to that. So while having a regular job, Mike has somehow acquired 13 rental units in the last year and as quickly building a valuable real estate portfolio.

We talk in detail about how exactly he did it and how you can too. We also cover a bunch of other topics like investing and productivity. Let's dive in.[00:01:00] 

All right, Mike, thanks so much for coming on the show, man. Appreciate you coming on. Yeah, man. Absolutely. 

Mike Anderson: Thanks for having me. 

Ismail Humet: I'm excited for this conversation. Uh, we've actually known each other. I'm really bad with timing, but it's years. I think we met in person first at a conference years. Uh, and we've been on interacting online for a long time.

Um, so we, we have some history, but I, I think this conversation spurred from a Facebook thread or, or something like that where I made a comment as a joke that, uh, real estate can't compare to crypto investments because you can't get like 500% returns a year, uh, with like you do with crypto. Of course, this is being recorded the day after crypto crashed

So that's that. But you made a comment that, hey, uh, you have very high returns in real estate because you don't leave your money in the transaction. So that [00:02:00] kind of started us talking about real estate. I have a background in real estate, You're doing stuff there. Um, so I just wanted to set that up for everyone listening, but if you don't mind, uh, just sharing a little bit about yourself.

Backstory of Mike 

Ismail Humet: Who's 

Mike Anderson: Mike Anderson? Yeah, yeah, absolutely. Just to touch on that, uh, that Facebook thread, me and you, you know, in the, uh, the online community that we're in, you know, I always had a strong presence there. Um, as did you, So, you know, I'm sure we saw our names pop up, um, on Facebook over the years. And, you know, I had commented on that thread and, uh, you know, we'll get into that a little bit later.

But it's, it's definitely comparing apples and oranges. They're two different asset classes, but, um, hopefully we could talk about, you know, how I do real estate and, and how it's a great investment vehicle. Um, you know, it's not always make about making hundreds of percents, uh, return on your money per year.

There's different ways, uh, to make some great cash flow and make, uh, great investments. But, um, yeah, I mean, just about me. to stick with the theme of your show. You know, I've always had a little bit of, um, [00:03:00] the entrepreneurial, you know, itch or the bug. Um, you know, I grew up in traditionally, Hey, go to school, get good grades.

So I don't think, um, it was really encouraged, you know, I always had an, uh, curiosity to me, you know, I like to tell people, like, I was that kid when, uh, when we'd get a foot of snow. I'm like, Oh, this is the greatest thing, you know, I get my snow shovel, I get my business partner. It was the kid next door, and we get our shovels and we go knock on doors.

And it was a dollar 50, a dollar 50 for me, and a dollar 50 for my business partner. We shovel the driveway, you know, um, for $3. Yeah. I, I thought that was amazing. I remember getting a, a zip block bag of six quarters, and I said, This is the coolest thing ever. Um, you know, 

Ismail Humet: $3, I, I'd pay you $3 happily to shovel my driveway.

Now I'd pay any 

Mike Anderson: kids. Sounds like a great deal to shovel my driveway. Yeah. So, um, but you know, that just kind of mindset always stayed with me, you know, uh, [00:04:00] going through high school, I, um, I was into music, so I had some recording equipment. I was always trying to kind of hustle the kids in my school, hustle, my friends and, uh, recording there their music and just trying to make a buck off of it.

Um, so I just, I was just always in that mindset. Um, you know, outta high school, you know, I got a W two job. I became a police officer. That's what I still do. Great profession, I love it. Um, but you know, as I was doing that, I still kept an interest in just doing things on the side. I, um, you know, when I was about 22, 23 years old, so about 10 years ago, I decided I wanted to, uh, learn how to dj.

So, um, I had a friend who was a DJ at the time who was also a coworker, so he kind of showed me the ropes. You know, I kind of got into that and that kind of snowballed into the photo booth business where me and you kind of got acquainted with each other. Um, so in about in 2014, [00:05:00] uh, I started my photo booth company.

Uh, I've been doing that for about seven years now. Um, so that's been a, a good learning experience just from the business side of things, you know, just going in really with no expectations. You know, I think my first year in 2014, I dropped $3,000, which I thought was a ton of money at the time. And I'm like, if I do seven events, I can make my money back and that would be great.

And, uh, I did 40 events that year, you know, from August to December. So, um, and then it was just kind of rolled from there. You know, I made a lot of mistakes, you know, trying to do everything myself. But, um, you know, over the years I've gotten a little bit better at it. Learned to leverage other people, learn to leverage other people's skills and time and stuff like that.

Um, so I'm still doing that currently. And then about a year and a half to two years ago, I started doing the whole real estate thing. Which we'll talk about. Do you want me to get into my, a little bit about my portfolio or where I'm at right now, or? Yeah, if you, 

Ismail Humet: if you don't mind just [00:06:00] first of all, what you just like touched on until now.

There's a lot of things to get into that we're not real estate related, so hopefully we have time to touch on some of that stuff too. Yeah. But if you, if you don't mind sharing, like what have you done in real estate in the last year and a half or two years? I, um, I know you share with me what you've done.

I just so the audience knows that you know, what you're talking about. And then I'll pepper you with some questions if you don't mind because, um, you know, part, part of the reason, and I told you this before we got on, I, I wanted to discuss is because if I get people on the show and I talk about trading options or investing in crypto and then I hang out with my friends and family that I know listen to the show, they don't.

Relate to that. It's like unrelatable. They don't understand crypto, they don't understand stocks, they don't understand these other things. But real estate seems to be like the great equalizer. Everyone understands real estate. Everyone seems to want to do it. They just dunno how to do it. So I feel like the, the hope of this conversation is that we give people that light bulb moment, that [00:07:00] motivation to say, Hey, you could do.

Uh, and this is exactly like how you did it and how other people can maybe go about doing it as well. So, um, that, that was the goal of the conversation. 

Getting into the real estate business.

Ismail Humet: But yeah, if you don't mind sharing what you've done so far, and would you say year and a half or two years? Yeah, So since 

Mike Anderson: doing this, I closed on my first property, uh, in November of 2019.

So if you started, if you count that as a start dating it, it's about a year and a half. Um, but like you said, I mean it with all the HGTV shows and, you know, people owning homes of their own, anything that you post or talk about real estate, everyone's always into it. You know, they can relate to it, they can talk about it.

Um, you know, they like to watch, you know, the realtor shows on tv, the fixer upper shows on tv. So it's a, it's an easy topic to kind of grab people's attention on. Um, you know, let me go back a little bit. You know, as I progressed, you know, through my twenties, you know, with my side business and everything, I started just seeking a little bit of financial [00:08:00] education, you know, um, I jumped on the, the Dave Ramsey bandwagon, who's a, a no debt guy, as you probably know.

Um, you know, I followed those steps for a while and I got a super strong foundation, you know, paid off all student loan debt and everything, you know, got 20% to put down on a house and, uh, you know, that was a couple years ago and. You know, my goal was always real estate. It was, you know, I'm 33 now, and this was probably three, four years ago.

My goal was to have my first rental property by the time I was 35 and then to purchase one, uh, every five years after that. So maybe I'll have like four or five by the time I retire, whatever it is. Um, just to give you some perspective on that, um, I own eight residential rental properties right now and I'm closing on, uh, five units tomorrow.

So as of tomorrow I'll have 13. 

Nice. 

Ismail Humet: Congratulations. Over the closing goes well. Yeah. Hope by then jinx 

Mike Anderson: myself there. 

Ismail Humet: It's what you, but what you [00:09:00] said is impressive because that's a lot in a year and a half. Like people probably that are not, uh, familiar with real estate probably think, how can you close that Often they, like, I know my friends always ask like, Hey, if I get a mortgage and buy a property, don't have to wait a couple years before I can get another one.

So like, I guess this minutia of details, what I, what I hope to get into with you, but it looks like you have about 13 units. Um, rental units, uh, as of tomorrow, uh, in a year and a half, which is impressive. Um, so 

How do you get returns?

Ismail Humet: how do you get these returns, 

Mike Anderson: right? So there's a lot to dig into there and, and like you said, it's like if I saw myself two years ago and said, Hey, I'm gonna own, you know, 1300 rental units in a year and a half, I'd say, You're either doing something illegal, you're doing something crazy, You must have a, you know, you must, you must have inherited a million dollars, right?

Is is that, is that what goes through most people's head when they they hear that? Um, uh, the truth of the matter is, you know, I did, uh, save up, you know, uh, not a significant amount of money, a [00:10:00] little bit of money just to get, get started. Um, but I just, I consume so much education and um, I just feel the mindset is really where all that leverage and power comes in.

Um, you know, getting into, um, you know, how to reuse the same capital over and over again to purchase multiple properties. Um, how to leverage the bank's money, um, to the point that you have no money working in a deal because you've used, um, your knowledge to add value to a deal. And I think that's really where the power of investing comes in.

Ismail Humet: So from my knowledge of you, you are always interested in like educating yourself, learning. And I know this cuz of our. If you look back through our thread of Facebook communications, it's always like, Oh, you read, you were reading this guy. Hey, look at this guy. I'm telling you about something that I read.

Having a business mindset.

Ismail Humet: So you've got this thirst for that knowledge. Right? And you talked about the importance of the mindset. Why do you think you had [00:11:00] that when it seemingly seems like most people don't like, and you had it from a young age, like what gave you. 

Mike Anderson: I, I don't know. Um, I've thought about that. I think I've just always had, um, you know, I've always asked why I've never just accepted things for how they were.

Um, you know, if I, if something, if I was told something to say, Well, why is it that way? And, um, you know, I just, I don't know if you can teach it honestly, because when I had these conversations with, um, people who are not so like-minded, you know, maybe coworkers, maybe friends, it's hard to spark that fire in them.

You know, they want the one line answer to success when that's really not there, you know? Oh, how did you buy 13 rental properties? Oh, if you really want to know, I'll get into it. Oh, never mind. It's, it's not just like a one line. I can do it. Oh, nevermind. You know, how, how did you, uh, make so much money on Bitcoin?

Oh, oh, it took you years. You know, you kind of had to do your research and, and, and buy and wait and, [00:12:00] you know, people just, people are looking for the quick answer. And I don't know if you could teach mindset other than just, uh, telling people. It's all mindset. I, I'm a big mindset guy. I'm just, you know, once you, once your mind's there, it's, you ex you'll exceed your own expectations.

Why did you want to be a Cop?

Ismail Humet: Why'd you wanna be a cop? 

Mike Anderson: Um, you know what, That's a good question. Um, I started early, so I was into it from a young age and, and like I touched on earlier, you know, I was, I was always encouraged to get good grades in school. Um, get, you know, get a good, stable job, you know. Um, so, you know, my parents definitely encouraged me.

I was also interested in it, you know, Um, my parents always felt like I was a very, uh, Like kind of black and white person. So they're like, You'll be really good at enforcing laws, you go and do that. So I'm like, Yeah, this is cool. You know, it's a fun job. It's, um, you know, you also have a lot of, um, you know, you do answer to people, [00:13:00] obviously you, you follow strict orders, but, um, you're not in an office where you're being, uh, given assignments all day, right?

You have the freedom to go out there and, um, kind of be your, your own, uh, I don't want to say boss, but you could be, you can self initiate things as a police officer. You can go out there and interact with people and there's a level of, uh, you know, freedom there where you're just not stuck behind the desk.

And I just felt like that was the most suited thing, uh, for me at the time. 

Ismail Humet: So the re the reason I ask about the job is because one thing I learned, I had a corporate job behind the desk, and even though I was doing very well, uh, for my age in that career, it wasn't satisfying. So I think knowing that about.

Early on that you didn't wanna be behind the desk, uh, is important. Some people don't know that until much later and they're stuck there. Um, so what I learned after I left my job and I didn't have the W two income, is that it was much more difficult to qualify for [00:14:00] financing, uh, purchasing properties.

There's still ways to do it. I'm still able to do it. Uh, there's some people that do more shady things to be able to do it, Uh, but I think people don't, may not realize that, 

Importance of W-2 income.

Ismail Humet: that the W2 income is so important for borrowing money for anything, not just real estate. Even for like credit card limits for what, whatever you want to do, that W2 income is viewed as sacred.

And I don't understand why as an entrepreneur if you have a history of proven, um, performance. Like I'm paying people salaries, they're getting W two s from me, right? Yeah. And you, you weigh that more than you do my own income. So it's a little bit of an odd thing, but, uh, talk to us a little bit about how important that W two income is and why.

That may want to make you stay in your job, uh, a little longer, even though maybe financially you're able to quit. Now, I, 

Mike Anderson: um, so the reason you have, you get favorable financing, um, which is what you're referring to, [00:15:00] um, when you have W2 income, um, it's just a product of the financial system and, uh, government backed loans, right?

Government backed securities, uh, they're able to offer those rates that are backed by the government. As long as you meet these criteria, which one happens to be a W2 income? Um, I can't fully back you on the, the thought that W2 income gives you an advantage. Um, let me give you an example. Um, okay, because, so my property manager, right, he's, he's in real estate full time, right?

While, you know, three and a half, 4% interest rates might be my advantage when buying a property, you know, his advantage is he's in that real estate, you know, basically 24 7. So he's, he's getting the advantage of finding those deals and, um, you know, making, you know, basically finding better deals than I'm finding because he's able to.[00:16:00] 

Um, just spend so much time in there. So I do feel like it is a advantage, um, to have a W two income, but I think there's other people without W two income that have other great advantages that could work for them that maybe the typical nine to five or might not, you know, maybe you're good at building relationships, maybe you're good at finding partners that can get you good financing.

Um, so I don't think it's an unfair advantage at all. 

Ismail Humet: I, I love that answer because again, and I feel like this might be a common theme in this conversation, is that, um, it's mindset, right? So I talked about how, hey, you have an advantage with your W two. And your response is that everyone has an advantage.

Yeah. Right. You have your own unique advantages. You have to work with what you got and 

Mike Anderson: stop looking at what you don't have. And, and let me, let me pick on you a little bit there, because you hear that a lot. Well, well, I don't have money saved up, so I can't do that. Well, I don't have a W two job, so I can't do that.

Well, you just told yourself that you couldn't do it, so obviously you're not gonna find a way. You [00:17:00] just said, Well, that's, you have this unfair advantage that I could never get. So of course you can do that. And you know, it's just not that you're just limiting yourself there. 

Ismail Humet: That, that's so fascinating because I actually, and I don't know if you relate to this, like I have friends that, um, for whatever reason, when you have conversations with them about money and success, um, I've heard this statement a lot where they're basically alluding to the fact that they think money makes, like to get money, you have to do bad things to make a lot of money, you have to take advantage of people.

You have to become basically a bad person. And my response to that was kind of what you were just alluding to, that you don't have to worry about it, man, cuz you don't never make money. You will never make money if you think making money is bad, because your mind won't let you think that you're a bad person.

So you're already outta the game from the get go cuz of the mindset. 

Mike Anderson: That's a great example just because I, I, there's one particular person I have in mind when, uh, and I'll say this, real estate investors have that reputation for being sleazy. Um, people who take advantage of other [00:18:00] people, which is really not the case.

Um, you know, and I'm explaining this whole, uh, borough strategy that we're gonna get into in a little bit. Um, but you know, I'm like, Oh, you do this, you do this, you do this, and then you know, now you're making money. Is well, well who loses? What do you mean who loses? Why does, why does someone have to lose for me to make money?

I'm providing housing. I added value to an asset. Um, I employed contractors. The contractors are putting a heck of a lot more money in their pockets than I'm putting in my pocket at the. Moment, you know, maybe long term I'll be okay. Um, so my tenants are happy to have somewhere to live. My contractors are making money.

The, uh, taxes are getting paid on the building, so the town's happy. Uh, my property manager's happy because he can collect some money and he can employ his, his employees. 

Ismail Humet: Um, the bank's making their interest. 

Mike Anderson: Yeah, so it's, you know, who's losing, you know, who's losing in this situation. 

Ismail Humet: Again, it goes back to the mindset.

Like they, [00:19:00] they, that person thinks that someone has to lose for you to win. Like life is a zero sum game. Um, and we'll get into this too, I just wanna make a note so I don't forget that inflation in an inflationary system, it's not a zero sum game because they're just, the pies getting bigger and bigger and bigger.

Um, but I'd like to get your thoughts later about inflation compared in comparison to real estate for now. 

What is the BRRRR Method?

Ismail Humet: You talked about the bur method. So for people who are not familiar with that, they understand the basics. Hey, I can buy a house and flip it. I can buy a house and rent it. That's the level of their, uh, knowledge or experience.

What is this magic bur method that I've heard so much about? 

Mike Anderson: Yeah, it, it's kind of a buzzword over the last couple years. Um, that's primarily, uh, thanks to a, uh, an online podcast slash blog site called Bigger Pockets, who, uh, I'll give a little bit of a plug there. Uh, they've been a huge resource to me.

Free education, you know, um, basically an unlimited amount. Um, so, you know, my, my strategy is primarily buy and hold, right? [00:20:00] You, you buy the house, you buy the property, you put a tenant in there, um, hopefully it covers the mortgage, and then a few extra bucks every month, um, gets set aside for save repairs.

Then a few bucks goes to your property manager, and then above that, hopefully you have a few bucks to put in your pocket at the end of the day. Um, so with the birth, your, your traditional way of that, you would think of purchasing a property, cuz this is how any average home buyer would buy a property.

You either save up 10 to 20%, um, let's say a hundred thousand dollars house. So we're gonna save up $20,000. Um, we're gonna go put that $20,000 down, we're gonna contact the bank. The bank's gonna pay for the other 80,000. So now we're living in this a hundred thousand dollars house, um, with an $80,000 mortgage.

Um, so that's your conventional method. Um, with the Burr method, you're not doing, um, much different than that. Uh, you're just switching up your order of operations, you're still doing all those things. So, um, to keep with my a hundred thousand dollars house example, right? So with diverse strategy, you wanna look for a distressed [00:21:00] property, kind of like you're flipping a house.

All right? Let's say we're in a neighborhood, the houses are going for a hundred thousand, but here's this one. It's 50. It needs a ton of work. Okay? Um, but once it's fixed, it's gonna be worth a hundred thousand, like all the other houses on the block. So, um, we go purchase that house for cash or some short, uh, some, uh, source of short term financing.

Um, so you don't have to actually have $50,000, right? You can partner up with a private lender or a hard money lender or, you know, however you can finance that. Um, so you'll, and, 

Ismail Humet: and, and just interrupt there. Sorry. Why does it have to be that kind of financing and not a mortgage? It 

Mike Anderson: can it, so it can be a mortgage, right.

But a lot of the time it's, it's a little more inefficient. Um, a lot of times those deals you kind of have to move a little quicker. Um, a lot of time there's other cash offers on the table. They might not entertain something with a conventional mortgage. Um, a conventional lender may [00:22:00] not lend on a distressed property, depending on what type of work is needed, um, but totally an option, um, to get a conventional as well.

It's just not the traditional way that it's done, It's just a little less efficient, um, just for those reasons. Um, but yeah, you can use, you could use conventional financing as well. Just, it just doesn't always work out as well. Um, so we'll, we'll acquire that asset for 50,000, however we pay for it. Um, usually some, some form of cash.

Um, it's gonna need 25,000 worth of work to get it up to that a hundred thousand dollars value. Um, so we get that 25,000 of work done. We have $75,000 invested in that deal. Now it's a new shiny place. Um, you know, we put a new water heater in, We put some paint, we did some kitchen cabinets. Um, now it's worth a hundred thousand dollars.

So we, we put a tenant in there. Um, you know, say we rent it for $1,200 a month after our tenant is placed in there, uh, we go to the bank [00:23:00] and say, Hey, I have this house that's worth a hundred thousand dollars. Will you finance this? They say, Okay. Uh, so the bank goes out, checks it out, and said, you know, they send their appraiser out and say, Yeah, this house is worth a hundred thousand dollars.

The bank says, Okay, we'll give you 75% what's called loan to value. Um, they're gonna give you a loan on 75% of what that house is worth. Um, mind you, I have $75,000 in the deal and conveniently they're gonna give me a loan for $75,000. So we go close on that loan, I get a mortgage, let's say, uh, $600 a month on something like that with taxes and everything.

So now I get my $75,000 back at the closing table. I have a mortgage for $600 a month, but that asset is now rented for $1,200 a month. So going back to your rate of return, theoretically you're making an infinite rate of return because you have zero money invested in the deal. Um, hope I [00:24:00] explained that okay.

And let me just, No, that was, that was great. Let me just ex uh, so when I say bur, cuz people are probably wondering what that is. So I just explain the steps of that. So it's, uh, a buy is the B first B, um, so you're acquiring it, uh, oh, geez, I'm mess up the Rs uh, rehab. Uh, so you fix it up, then you rent it, rent, uh, third R is refinance.

And then the fifth R is repeat. So the repeat, right now I have my $75,000 back, or I'm gonna go find the next $50,000 house. On the block that's gonna be worth a hundred with 25 worth of work. Um, and 

Ismail Humet: and the reason this is so appealing now is 

Velocity of money.

Ismail Humet: because of what you just explained with the, the returns.

That's the reason why it's better than other options of just buying and holding or buying. A flipping is primarily because you get your cash out and you have a free property, basically. Yeah. 

Mike Anderson: Yeah. The term used, uh, that you hear used is, uh, the velocity of money. Uh, don't quote me on that, but it just [00:25:00] allows you to reuse the same capital over and over again, um, to acquire assets at a more rapid pace rather than, Hey, I put my $20,000 down on this deal, now I have to save up for another three years until I can afford the next one.

Ismail Humet: And that 75,000 that you pull out, right. Um, because you, you financed that first purchase with whatever financing method you decided. Um, so that has to be paid back. So once you get that mortgage from the bank, You're paying off that money that you borrowed, so you're not leaving with 75 grand in your pocket.

Right. You're basically breaking even, but now you own a cash flowing asset. Yeah. So let's, 

Mike Anderson: Right. Good. No, go ahead. Lets, Right. So let's say, Hey, I got no money, right? Um, I have $0 money. How can I own a rental property? Okay. Um, I could partner with either someone privately, um, a hard money lender who allows you to put maybe 10% down and they'll fund the rest of it.

They'll fund the rehab and everything. Um, so like you're [00:26:00] saying, um, even if you don't have the, the initial capital to make that deal happen, Um, at that closing table, that 75,000 you have into the deal goes and pays back your lenders or whoever you partnered with on the deal. So now you own that asset, um, with none of your own money being used in the deal.

Ismail Humet: Okay. So now you sold that property, you own the asset, but you still don't have money. How do you repeat it? Do you leverage that property? You can't cuz you already did to pay off the existing liabilities, right? So how does that help you get the next one or It doesn't really, That's more of like, you put that aside to build your long term wealth and you just gotta do it again from scratch.

That that 

Mike Anderson: first asset is already leveraged. Um, so you're not able to leverage that anymore unless it continues to appreciate. Um, so when you repeat it, you would hopefully go back to that same lender and say, Hey, this worked out, um, one time, [00:27:00] do you wanna do it again? You know, whether it's a combination of.

You know, they're, your lender's making money, so you know, they're more likely to give you that financing again. Um, or at some point, you know, you start to accumulate some of your own cash, um, and uh, you know, you just take it from there. 

Why is it important to rent the property before going to the bank for financing?

Ismail Humet: Why is it important to rent the property before you go back to the bank to get a financing?

Mike Anderson: It's not, um, critical. Um, I have, 

Ismail Humet: if it's an investment property, do they look at that income as a way to gauge the value of the property, 

Mike Anderson: or that doesn't really affect it? It's not. So, a residential property is not valued like commercial property. So commercial property is valued based on how profitable it is.

A residential property is valued like a homeowner would pay for it. So it's, it's valued off of, you know, what someone living there would be willing to pay for it. [00:28:00] So, um, to answer your question, the, sometimes the lenders would have guidelines to say, Yeah, it has to be rented before, we'll give you a loan.

Or sometimes they'll just say, Okay, the market rent is this, and they'll allow the loan based off of that. Um, usually vacancy is not an issue. So if you revert, if you switch those two rs, it's really not crucial cuz you're gonna want to get that renter in there right away as soon as it's fixed up Regard.

And 

Ismail Humet: so you're classifying these as investment properties. Um, and that, I, I believe, correct me if I'm wrong, the bank keeps you a lower LTV because it's an investment property, not a primary residence. Um, so that matters there. Okay. So can you give us a, like, 

Example of imaginary numbers.

Ismail Humet: we talked about imaginary numbers. Can you give a recent example of one that you actually did, what the numbers actually look like?

Mike Anderson: Yeah, sure. Um, I can give you one I'm, I'm working on right now actually, and just by [00:29:00] coincidence, I think the numbers are pretty similar to what I just said, but, uh, I'll put it in a real life example for you. Um, just cuz uh, so let me think of it. Yeah, let's just do this one. All right. So I bought a property, uh, back in October and I paid 50,000 for it, , coincidentally, um, it was rented at the time.

It was, it was, uh, technically an off market listing. It was, uh, one of those Zillow for sale by owners. So I consider that an off market because it's not on the multiple listing system, so it's not going to all the agents in boxes. So, uh, I saw it pop up and I knew it was a deal. So I, I gave the guy a call that night.

It was a Friday night, um, Saturday morning. We, we went out there and saw it about an hour and a half drive from where I'm, where I'm living, but that's where I invest. So that's what we gotta do. Um, offered him full price. So 50 grand. Uh, there was tenants in there for a thousand dollars a month. Decent tenants.

Uh, the unit itself a little older. , [00:30:00] but by no means in terrible shape. The mechanicals were pretty good. The electric and the plumbing had been somewhat recently updated. Um, and these are 120 year old houses that I'm talking about here. Uh, just in the area that I'm in. The houses are old. So when you see electrical that's less than, uh, 80 years old, that's a great thing.

Um, 

Ismail Humet: this, this is blowing me away so far. I'm sorry to interrupt, but yeah. The homes that I'm looking at that I've looked at, there's no $50,000 homes and especially ones that are already making a thousand plus a month, Right? Why would that guy want to sell the property for that love? 

Mike Anderson: I did a little digging there.

Um, his reason for selling was he was tied up on two flips and needed the capital. Um, but let me just talk to you about the power of real estate because he bought that in 2018 for 25,000. Um, so is he really that disappointed with a quick sale for 50,000? You know, he might have put a few thousand into it.

Um, you know, I know he did a few [00:31:00] things just to get it up to code. Um, but for him to make that quick sale, he's still making out on the deal. Um, I think he could, could have got a little more, but, um, I think he, you know, he sold it for a good price to sell price, um, you know, for that area. 

Ismail Humet: Okay. Uh, cuz I, I think that's the main thing.

People wonder, like that guy is an investor. He's looking to flip other properties. He knows what the property could be worth. He knows that there's already tenants in there. Why would they let it go for such a great deal? But as you find, and I dunno if you agree with this, is that there's so many different motivations.

Uh, I'll talk about a recent example that I did. Um, it happens, uh, these are human beings. They have problems in life or they have things that they're trying to accomplish, and they, they need to do it quickly and they're willing to do it for cheaper. So it happens. 

Mike Anderson: Yeah, that was just kind of his mindset, like, I need a quick sale.

I don't want to do anything. He, you know, just from talking to me, he knew that, um, I was an experienced investor in the area. Um, so I handled a lot of the township [00:32:00] side, uh, paperwork and everything for him. So, um, you know, it was, it was a example of a win-win scenario. You know, he was happy that he got the cash.

Um, you know, had he put on the market, he could have got a little more. But, you know, in this area, in South Jersey we're talking, this is a very small two bedroom unit. Um, you know, that was a little bit dated, you know, with renters in there. Um, you know, not the most desirable turnkey sale to be honest with you.

Um, but 

Ismail Humet: if it was making, it was one tenant paying a thousand a month. Yep. So that's 12 grand a year. Um, so you got it for like, what, four year and change payback period, which 

Mike Anderson: is Yeah. Really, really good. Yeah. You, yeah. You're, you're make, it's, it's, it prints money like an ATM machine, units like that. That's what I like this, that's what I call, 

Ismail Humet: even if 

Your business strategy.

Ismail Humet: you didn't do anything that wasn't ATM machine.

Yeah. So , all right, you got it for 50. It's making 12 grand, um, a. , what do you do next? Did you remove the tenants to fix [00:33:00] it and find higher price tenants or flip it, or 

Mike Anderson: what's the process that you went through? Well, typically the strategy wouldn't be to push any tenants out unless they're really causing an issue, especially in the climate we're in right now, um, with the eviction moratorium, uh, across the nation.

Um, but they were actually solid tenants. They paid their rent right on time and, um, you know, they didn't give us much trouble, so I would've, I was just as happy if they stayed. Um, but they decided to leave when their lease was up. That was just, uh, the beginning of May, Um, which happened to be perfect timing just because, uh, I was looking to refinance it.

So, um, this is where the bur comes in, right? So I can't really bur it until I get those tenants out. So this one was kind of like almost a little more buy it and wait, and then I'll, I'll improve the value once they move out. So they move out in May, which is perfect timing for me. It couldn't have happened at a better time.

So, um, we go in there, um, it needs about 15,000 worth of work. Um, that's, uh, [00:34:00] just all cosmetic, new flooring, uh, new bathroom, kitchen countertops, and a, a couple appliances. And then we had done the roof and some other small ticket items when we purchased the property back in October. So I have about 20,000 into it.

Um, that's still ongoing, right? Um, and with appreciation, um, with how the market, the real estate market's been, rents have been going up and I think everyone across the nation knows that there's just been a really big spike in real estate. Um, so I've benefited from a little bit of that. Um, in addition to what we call forced appreciation, which is when you improve a property to, uh, add value to it.

So after we put that 20,000 into it, um, I'm expecting, um, an arv, which is after Repair Value, that's the term that, uh, US real estate guys use. Um, I'm expecting that ARV to come in around 1 10, 1 15. Um, so, so you're 

Ismail Humet: you, so you bought it for 50, you put in 20, right? [00:35:00] Yep. Did I get that right? 70. And then the arv, you'd get 75% of that.

So would you get more than what you put in? You could 

Mike Anderson: outta the deal? Yes. I'm, I'm actually doing the calculator right now, so if it appraises for one 15, I can take a loan for 86,000. Um, you do have closing costs, so let's knock off 5,000 for closing costs to be fully transparent here. So, I mean, even if your closing costs are six grand, um, you are, um, upping the rent.

So we're shooting for a 1350 rent on that place. Um, and I'm gonna pocket 10,000 on the deal and we'll be cash in a couple hundred a month. You know, I gotta see what the numbers work out to, but it, it's, it's definitely profitable. 

Ismail Humet: Now that cash flow do. What do you do with it? Do you pocket it? Do you put it towards principle?

Do you, uh, put it in a reserve account for repairs and stuff that may break? How do you handle that 

Mike Anderson: cash flow? Okay. Yeah, that's a good question. So, um, some [00:36:00] people look at their cash flow, um, as any dollar over their mortgage. So, um, on a property like this, I would expect the mortgage to, to be around $600.

The taxes are low, so I'm probably looking at about a $600 mortgage payment. Um, after I refinance this place and say we rent it, let's, let's just go easy. Let's say we rent it for 1200. Um, so your mortgage is gonna cover your principle, your interest, your taxes, and your insurance. Um, above that, um, my property manager is gonna get, um, his 10%.

So he collects the rent, he handles all maintenance request, he plays the tenant. So, um, that comes right outta that cash flow there. I'm gonna, I'm gonna deduct this as we're, uh, talking about it. So he gets the one 20, I'll set aside another 10%, um, for any future repairs, just anticipated repairs. So that'll be 120 a month [00:37:00] there.

Um, and then I'll put aside another 5% for any, like, mostly vacancy. Like if it goes vacant for a few months, I'm still factoring that into my asset return. Um, and then just other little miscellaneous, uh, admin costs that just pop up here and there. Um, so I'll, I'll basically just. A blanket 25%, um, extra.

And that'll cover your property manager, your repairs, any vacancy, any um, township like permit costs and stuff like that. So all said and done. Um, in this example, say we rent it for 1200, um, I get that little extra 10 k bonus from the refi like you've noticed and pointed out. And then we're looking at about a 300 a month cash flow.

That's just how I calculate it. Some people calculate it differently. Um, but if you look at asset return factoring in repairs and management, you're looking at about 300 a month. I, 

Making actual profit in real estate.

Ismail Humet: I love that we went through that in detail. Cause I think, like you said, people watch these HGTV things and they do this calculation on online and [00:38:00] like, Oh, look at the mortgage, look at the rent.

That's what I make. But I know from working in real estate finance, we were doing large properties, but the rule of thumb that they were doing was that 150 bucks a month per unit, no matter what was going into a r and r account and a replacement and reserve account. And that was for the things that you alluded to, Hey, you know, with replace the, the microwave or the refrige refrigerator broke or the plumbing needs to be repaired.

Uh, so you're never caught having to go into your own pocket. There's an account set up separately to handle these things that inevitably will happen. I mean, it's just the way it goes. We all live in homes or re rent places. Things go wrong and things break. Um, so that money is set aside. Uh, and then you can start to look at what do you actually make, what's left over.

And I think that's a more realistic way of looking at it. A lot of people. And we see this in the photo booth world or any business, uh, industry, they don't run the numbers correctly. And that's why you start to see people charging rates that don't make sense. And you wonder how are they still in business?

Well, [00:39:00] they won't be in business for long because they're not making money, They just don't know it yet. And I think, uh, going through this real life examples is very helpful to kind of illustrate that for people. 

Mike Anderson: Yeah. And especially for someone starting out like, like you mentioned in the photo booth business, uh, it's, it's hard to, it's easy to kind of get caught up in, uh, trying to save money, you know, and, and thinking that you could do things for cheaper than you can.

Um, you know, in real estate you'll see people that want to manage their own units, um, because that's gonna save them that $120 a month. So instead of making $300 a month, now we're making $420 a month. But what they forgot to factor in was their time. Um, so they're basically buying You read my mind. That was, Yeah.

Ismail Humet: That was gonna be the next thing I wanted to go into because 

Real estate business Philosophy.

Ismail Humet: you alluded earlier to property manager and now you explain it, they take 10%. Uh, I'd like to hear you riff on why it's worth it, because I also have family friends that own multiple, uh, properties, and they're the ones still going out, [00:40:00] collecting the rent, managing the property, mowing the lawn, shoveling the snow, like they're still doing all that for all three, four proper.

And to them it's like, Hey, I'm not doing anything else. Why not? I save money, da da da. So I'd love to hear you riff on that and I will send them a clip of what you're about to say, please. Geez, . 

Mike Anderson: Oh, I'm so ready to answer that question. Yeah. Um, my philosophy is to focus on things that make you money. Not things that save you money.

So, um, if you wanna buy a property and pay more than everyone else in the area is willing to pay for it and do all the work yourself and then rent it out and manage it yourself. Not only are you buying a bad investment, you're actually not buying investment. You're just buying a job. Because if you paid, uh, 70,000 for that property, just that I just paid $50,000 for, because you said I'm gonna do the work myself and manage it myself to save this money.

You're making the same $300 that I'm making. But you're doing all, you're just, [00:41:00] you're like, if you wanna do that, just go work for a property management company and go work for a, uh, construction company. At least you get the benefits in the, uh, sick days, you know, , 

Ismail Humet: I mean, that was, that was a great way to put it.

Cuz they're making the same, I mean, I just wanna hammer that home. They're making the same return in their example because they're doing all the work. They're saving the money, but they're paying more for the property. Um, so, but how do you get around the mindset of saving? Like, I agree with you. I'd rather focus on making money, not taking money, but I'm as guilty of that myself.

I look at my finance. Where does money go to waste? I hate waste. And I think a lot of people listening relate to that. They're worried about waste leaks. I gotta plug the hole. Why are we spending money here when we don't need this? I don't use this. Um, is this worth it? How do you get away from that mindset and get more okay with these leaks cuz you know you're gonna make up for it with making more money.

Mike Anderson: I think it just, it's just a matter of valuing your time and it's, it's, so, if [00:42:00] I knew a good way to teach that to people, I'd be doing it. Um, but I just do have these conversations with people who just haven't learned the value of their time yet. Um, and everyone, everyone values their time to some extent.

Right. Do you, do you change the oil on your own car? You know, why not? I, 

Ismail Humet: I don't, but yeah, 

Mike Anderson: people do. Hey, if you love changing the oil on your car, Yeah. Um, by all means go and do, There's certain things I do around the house that I can pay someone to do, but I just enjoy doing it. You know, Same. Um, do I, do I like cutting my lawn?

No. Uh, I pay 40 bucks for the guy to come. It would take, it would take me three hours. Um, it takes, uh, my company a half hour and they do a great job for 40 bucks. So, um, everyone values their time to some extent and you can give the oil change example is an easy one cuz no one changes their own oil. Um, you know, so that's one way to kind of get people thinking and, um, just, you know, as I just, you know, [00:43:00] I.

kind of bust my butt a little hard, you know, on the weekends during my twenties and had to learn the hard way. Um, just so from experience, how to value my time. Cause after a certain point you don't wanna work all week and then go work all weekend. Um, so now just my, my journey is just looking for a little bit more time freedom.

Um, and I don't know how to teach that. Um, other than just kind of share my stories a little bit. 

Ismail Humet: Um, I'm gonna, I'm gonna harp on this because I'm going through this person, even though we're going all over the place. I'll come back to the real estate after this, but you are touching on something that I'm struggling with right now.

And, you know, I just had my second child and I feel like I'm dropping like balls left and right, more than I ever have in my life. And it's, it's a struggle to get as much done as I used to get cuz I have so much less time and I'm getting frustrated with myself. So I'm like, all right, how do I, um, like, automate a lot of the work I'm doing?

Who do I hire? How do I make processes and, and give it to people? So I like to hear you talk 

 Ideas to save time & money.

Ismail Humet: [00:44:00] about that a little bit from your mindset. Cuz I know you're trying to automate the photo booth business as much as you can. And even in the real estate that you're talking about, um, you alluded to a team, right?

You have an attorney, you have the contractor, um, you have someone that manages the property, gets to rent, uh, gets the tenants. So you're, you're already outsourcing work in all these different facets that you're doing on top of having a job. How do you think about that? How do you advise like someone like.

Uh, then I'm like, Wow, I gotta really get my arms around all the stuff that I'm doing. Maybe some things I have to let go, Um, just not do it at all. Maybe some things I have to, uh, outsource people. How do you think about that? How do you advise people, uh, to work through that problem? Yeah, uh, I'll 

Mike Anderson: touch on, you know, the way I've leveraged other people in real estate in a minute.

Um, because I did go into that business with the mindset of leveraging other people's time and skills, um, people who do stuff better than me. Um, but in the photo booth business, it was just me. It was, I was doing everything and I had to learn piece [00:45:00] by piece that other people can do a better job, um, at the things that I'm doing right now, or just as good of a job.

Or even if they don't do as good of a job, doesn't really matter because they're still getting it done. Um, and I'm not. . Um, so for me it was what, what is taking up the most of my time consistently that, uh, you know, what's keeping me busy, but not productive? Sometimes people feel as long as they feel busy, they feel like they're getting stuff done.

Um, but just to give you, like from the photo booth example, I'm sitting here for three hours designing graphics for, uh, my jobs this weekend. I'm not getting anything done. I'm just playing defense. I'm not, I can't build any systems in my business to make things easier for me in the future. So I started going through things one by one, and it was just really hard to let go of it.

First. I said, How am I ever gonna find a graphic designer to do what, um, I do? And then I realized, I just literally made one Facebook post and someone [00:46:00] messaged me like, Oh, I can do that. And they already knew all my software. They knew all the systems that I used because they have their own photo booth company.

So she's like, Yeah, I wanna make a few. Extra bucks, you know, in my free time. And, um, I'm happy to do it. And, uh, just like that, you know, that burden was lifted off of me and it just frees up my time to either enjoy it or, you know, go jump into your next endeavor or improve your business and build your business.

Ismail Humet: And they probably are a better designer than you are. Uh, but how did you get around, uh, having to pay them whatever the number is? 20 bucks, 40 bucks per design. 

Mike Anderson: I didn't even question it when she told me the rate . I'm like, just do a good job. And you know what, one of the things I learned is, um, you don't have anything without your team, so pay them.

Well, um, I gave all of my employees an $8 an hour raise at the beginning of the year this year. I'm like, Look, the events are coming back. This is, you know, I'm gonna expect more from you [00:47:00] guys, but this is what I need. Um, I want to keep them happy because it's a very, it's a basically a per DM job. Um, and if you don't have them working for you, I don't have a, they don't have them working for me.

I don't have a business. Um, so it, that's not the place to say, you know, that's not the place to cut corners. You know, if you wanna. You know, get a bulk order of supplies and save 10% fine, but um, you need to invest in the people that run your business. 

Ismail Humet: Yeah. And I think that, uh, everything that I'm reading is kind of hinting at a, um, I dunno if it's a labor shortage, but very competitive landscape on hiring people.

Like I starts to see all these companies now offering sign-on bonuses and it seems to be very difficult to get people now. And with the inflation and stimulus and all this stuff going on, um, Rick people expect to make more money cuz everything costs more. So, uh, you do want to take care of your people.

So I don't know 

Mike's advice to Ismail on Podcast.

Ismail Humet: how much you know, Mike about like the podcast workflow, [00:48:00] um, but I'm just curious, follow my curiosity here. Um, I would love to be in a position where all I do is this. I click the button, I record, I have interesting conversations, and then I'm done. I don't need to edit it. I don't need to schedule these, I don't need to create the social media posts.

I don't need to post the podcast. How would you advise me like to go through that? Like you said, first thing you did was get the designer and I'm, I'm sure, and then you had second step in the third step and you're going through a process. How would you advise me to think through creating this process for me?

So this is all I 

Mike Anderson: do. Yeah. And the big podcasters, I would imagine that's what they're doing, right? They're not scheduling the guests, they're not finding the talent. Um, they're just basically getting scheduled and, you know, they're just doing the interviews. Um, you know, I think it would just come down to just doing one thing at a time.

Find that, Do you have an editor? 

Ismail Humet: I, I did use an editor. Um, and it's very easy to find 

Mike Anderson: them. Yeah, I [00:49:00] did speak to, um, someone else who does podcasts in my area. I said, Hey, how's your podcast going? Um, she said, Oh, it's great now that I have an editor, um, . So I would imagine that's like one of the big things, um, you say that's easy to find.

Um, so that's one of those things that can, that's an easy one to check off. Um, and from there I would say, what's next? What is taking up? Um, you know, if we talk, Yeah, 

Ismail Humet: let's, let's go through this. Let's play this out. Uh, I already, I know what your comebacks will be, but I want to go through, uh, because I know the thoughts that come up and I'm sure other people are thinking similar things, like there's these limiting beliefs that hold you back.

So I wanna just say them out loud and hear your response to them. Okay. I think it'll be helpful to people. So, for example, you talked about the editing.

Leveraging others skills.

Ismail Humet: I did have an. And the, this comes up and I'm sure you heard this and you thought this, uh, people can't do it as well as I can cuz they don't know, uh, how I [00:50:00] want it to sound.

What I want to cut out, what I wanna emphasize. Like they don't know those things. They don't know what I know, right? Editing, anybody can do editing, but this is editing my show and taking out things that I don't want to be out there and stuff like that. How do you address. Concern. 

Mike Anderson: I, I've certainly struggled with that.

Um, more so in the photo booth business than the real estate business because the photo booth business was my baby that I did everything with. Um, I started the real estate with leveraging other people's skills. Um, so how can you get outta that mindset of I'm the best at it? Um, I think you just, when you find, you know, you find, uh, the right people, you know, that are just aligned with, um, what you're looking for.

Um, you know, maybe it's a little bit of trial and error, but when you find that rock star that can help you succeed, you know, they'll be there to, to take care of what you need to do. I mean, I don't, [00:51:00] 

Ismail Humet: so I had, I had someone that I would put in that category. It was amazing. I was done, Editing was great. I was happy I didn't have to do anything.

But then this is the other limiting belief that comes into play that I think people do deal with. So the podcast doesn't make money, right? Right. How am I gonna pay this person, whatever it is, 30, 40, 50 bucks an episode? How do I justify that when the, the entity isn't generating that? Like, do you take the risk and just pay it outta pocket and hope that it grows and you make money later?

Or do you. Wait or generate revenue somehow first, Right. And then hire people. Like that to me, comes up with everybody that I talk to. Oh, I don't wanna hire someone yet because I dunno if I can afford pay them yet. Yeah. So how do 

Mike Anderson: you think about that? Um, I mean, so a, a business that's not making money as a hobby, right?

So that's true. 

Ismail Humet: Some things that start out as hobby during the 

Mike Anderson: business. So I think that decision point, because, because you're [00:52:00] right. If you are gonna do, if you are gonna do it right and, and hire a team to do the social media and to schedule the talent and to do the editing, you are running a business.

Um, if you're just starting something up and like, Hey, let's see what happens. You do have to do everything at first because you don't have the capital to invest in them. Um, nor do you really intend to be invest in that capital because you're just doing it as a hobby. 

Ismail Humet: So let me, let me rephrase that from a, let's say a photo boother perspective instead of a podcast.

Cuz you're right, the podcast can be viewed as a hobby. Uh, but let's say a photo booth. You know, they're just a stupid example. They're profiting, you know, a hundred bucks an event and they want to outsource the design, uh, the admin work, da da da, da, and whatever. And it would cost them a hundred bucks per event to outsource all that work.

Um, so the money that they're making, they're not making anymore. Or maybe they're, they're gonna lose 50 bucks, uh, by hiring and outsourcing all. Would you still tell them to [00:53:00] hire someone to do all the work because it'll allow you to grow and make that up? Or would you never spend money that you don't have yet to grow the team?

Mike Anderson: That kind of reminds me of like the, uh, the Amazon example because they, they were cutting super thin profit margins and showing losses for years just at the expense of growing, and it worked out for them. Um, just one thing that comes to mind, I would tell them that if they are looking to expand, um, you know, maybe they're not able to get the, the price that they need to get, um, for that photo booth rental because they are there doing everything themselves.

So, um, you're basically stuck making that a hundred dollars per event. If you're doing everything yourself. Uh, you're gonna have to find another way to grow. You're eventually gonna have to, uh, add value to be able to charge more. Um, and in time, you know, hiring out those, that graphic design and employees and, and whatever it be, it's, it's gonna cover itself.

Um, [00:54:00] 

Ismail Humet: it, it, it seems more efficient to get, um, like you were talking about people that are much better than you because now with, with the way the world works, you can get people for not that much money. Right. Um, they're freelancing, they're online, they're. They're just doing graphic design all day, every day.

So it's very efficient and they can charge a lower rate. Um, so it's more economical now than ever to do stuff like that as opposed to trying to do it yourself. And it reminds me of, I, I think I shared this on the previous episode. I don't remember which one, but I remember going to this NYU real estate, uh, program and they brought him this big speaker and there were students from all around the world and he was like a ta real estate tax accounting expert.

And everyone's favors for taking notes. There's like students from Saudi Arabia and all over the world, and they're all taking notes on these tax accounting, uh, you know, hints and tricks or whatever he was teaching. And I remember just looking up and looking around. I'm like, Wow, like I'm never gonna be the tax accounting [00:55:00] guy.

Like this is really not my thing. Um, like I can't compete with these people. That's, that was a thought that came into my mind. And a couple minutes later, towards the end of the session, uh, this professor basically said, Hope you guys enjoyed it and found it valuable. And if you're ever working on any deals and you need someone's help, uh, please contact me.

I do that. I do consulting on the side, and then this light bulb went off in my head where I don't need to compete with everybody. I don't need to try to be the best at everything. I can just hire the professor, the world class expert that teaches this, and it still works out because everyone wins in the deal, like you were kind of talking about in the beginning.

He makes his money. I make money as well. So I guess what I'm trying to get at, you don't need to be the best. Uh, oftentimes it's better to hire the best. Like you can hire anybody if you're willing, if you can pay them enough. 

Mike Anderson: It brings to mine. Uh, 

Running a Business is a skill.

Mike Anderson: one of my favorite Robert Kiyosaki quotes, Um, [00:56:00] he po in his book Rich Dad Poor, that he, he poses the question, um, can you make, make a better cheeseburger than McDonald's?

And the common answer that people say, Oh yeah, of course I can make a better cheeseburger than McDonald's, then why do they have more money than you? And his point is obviously, um, it comes down to just knowing how to run a business, um, rather than always being the best. Right. You know? Um, 

Ismail Humet: and you probably know this, but just for the benefit of people listening, have you heard of the book or if revisit or have you read?

Mike Anderson: I have not read it. Heard a lot about it. 

Ismail Humet: So you, you probably are familiar with this, where the main, it's one of the best selling business books of all time. But the main thing that you take outta that book is that people start businesses because they're really good at something. They're really good at making burgers, they're good at baking cakes, They're good at, I don't know, whatever you can think of, construction.

And [00:57:00] everyone's like, Hey, you should start a company. And that's what they do. They open up a bakery cuz they're amazing at baking cakes. Uh, but a lot of them fail. And that's why you hear the statistics about small businesses that 90% fail after five years. The reason they fail is because you're good at a skill that is really a skill that you can hire.

Like it's easy to find bakers, it's easy to find all these things. Graphic designers, what's the hard part? Is the skill of business. It's, uh, the marketing, it's the managing of people. It's the hiring of people, the training, the uh, promotion, the advertis. All the other things that come along with the accounting, the investment, like all that other stuff that ties all those pieces together is what really you need to know to succeed and, and have a profitable business.

But people start these things because they're like, Hey, I'm good at cooking. Let me open up a restaurant I, I'm good at. I like liquor. Let me open off a bar. And they fail because they don't understand that you need to. Business. And I know you know [00:58:00] this cuz you, you read a lot of similar books that I do, but if you have any comments to riff on that, I'd love to hear.

Mike Anderson: Yeah, I think exactly what you're describing is, you know that people that are just working in their business and not working on their business, there's a big difference from starting your own restaurant because you like to cook or starting your own baker cuz you like to bake cakes. Um, if all you know is going.

At six in the morning to the bakery or four in the morning, whatever, those time those people go in, um, and baking everything for the day, you're never gonna get out of that cuz you're not really in the, the mindset of running a business. You're kind of buying a job, just kind of like I mentioned earlier.

Um, a good investor knows how to identify other people's skills and leverage them to build the business that they want. Um, and that's maybe why I struggled. Your question earlier about the photo booth business, because I was that guy that was really good at it. Like, no one knows these computers better than me.

No one knows this software better than me. Um, like that's still what I struggle with to this day. [00:59:00] I don't know if I'll ever get out of it in that business, but in other businesses, I've, I've learned enough skills where I can move on, like into real estate and understand that I'm not even gonna learn this.

You know, I don't know how to renovate a house, you know, and people ask that stuff, Well, oh, you do all the work yourself, or you know, what happens if the tenant doesn't pay? I'm like, I don't know. Let me ask my property manager. Or what happens if this happens? I don't know. Let me go ask my property manager.

They are the professionals. They do it, uh, day in and day out and uh, I've delegated them to, um, to work for me and also add value to me. Um, I've gotten comments, um, from other investors, Well, I don't want to hire a property manager cuz it costs me too much. Um, Like, what do you mean it costs you too much?

Like, have you considered the amount of value it brings you? ? Um, let's not even mention the time that it saves me. Just their [01:00:00] knowledge, um, of the area just can just save you thousands alone. Um, from whether it be like avoiding a fine from the township or, um, you know, holding a security deposit because there was something wrong.

They realized that there was something wrong with the plumbing when the tenant moved out. You never would've caught that. Um, 

Ismail Humet: this, this is reminding me like you're so right because I have, for example, I have this real estate attorney that I've worked with over the years and she's a bulldog and she's saved me so many times like that.

I don't pay her enough. She does not make enough money. There's a property literally right next door that came on the market and I wanted to buy and I was like, biased cuz it's right next door. I just wanted, I know the area, I know it. I know, I know, I know it. And she looked at it and she's like, I will, you can't buy this property.

Like, she literally f me and said, I will not let you buy this property because of X, Y, and z Reason that I don't even remember some of the legal reason with the naming on the title. Like there [01:01:00] was something I forgot and I don't even know what it is. Uh, but it ended up being a hundred percent the right decision if I bought that property that property's still for sale years later.

No one's buying it. Someone bought it to flip it. They can't get rid of it. The property taxes are too high. No one's willing to buy it because of this issue that my attorney found. And there was other examples like this too, where I wanted to buy something down the block. And same thing, she looked into it.

She's like, This is not, I will not let you buy his property. There's something fishy going on here. Um, so these experts cost you money, right? But like you said, you have to look at the value they bring you and also the things that they avoid for you. The mistakes they avoid for you, the issues they avoid.

Uh, you dealing with, there's an opportunity. And here as well. So, um, I definitely spot 

Mike Anderson: on. Agree with that. Yeah, you definitely have to a hundred percent. Right now I would not have 13 doors without a team in place. How could I do all that myself? I would be so caught up with this tenant, didn't pay their rent.

[01:02:00] How am I gonna collect that rent? Um, this tenant keeps calling me for the same maintenance request and I don't deal with any of that. And how could I ever, uh, maybe I'd have two units now, right? If I decided to do everything myself, I don't even know if I, you know, I might have just given up. You'd have 

Ismail Humet: two.

You'd have two units and you'd be working a lot more and only having two units. Now you have 13 and you barely do anything . And so what's better? Right, 

Mike Anderson: right. And, and I'll even on top of just the standard value your, your team gives you, um, you know, this five unit deal that I'm closing on was just brought to me because of my connections in that, just in that network of people, you know?

Ismail Humet: Ha

Your thoughts on Value of Time.

Ismail Humet: Have you heard of the guy, uh, Naval Racon? I have not. I I'm gonna include a, a link in the show notes to this like famous Twitter thread that he wrote about how to get rich, how to get wealthy. And he's this Silicon Valley billionaire. Uh, but people, he, he's like a philosopher [01:03:00] now, and people listen to him cause he's really smart.

And there's one thing that he really harped on, which is kind of what we're talking. Um, valuing your time. And he talked about his experience where he went extreme with it. Like he's like, I'm a billionaire now, right? I can say it now, but even when he was a kid, uh, didn't have money, he's like, I still valued my time at like 500 or a thousand dollars an hour.

I forgot what it was. Because he, he, and he's advising other people to do the same thing. And he took it to the extreme of like, he will not mow the lawn or, or if he bought something that he didn't like, he wouldn't even return it. He would just throw it out because the time that it would take to return it or package it, send it back to Amazon, go back to the store to get back whatever 30 buck it was, it wasn't worth it to him.

And he says that that allowed him to focus solely on value, like tasks that create value or learning, uh, educating. And to me, I'm like all, I listen to that thing and there's like [01:04:00] a podcast snippet of that too that I'll share with people over and over again because I feel like I have to drill that into my head.

It's hard to do it though when you don't. When you're not a billionaire, right? You'd rather save that money or, or save the money and do the things yourself because you could. And the other thing that I struggle with is like, you and I are both educated. We're well read, we, we follow same people. Um, that stuff doesn't feel like you're doing something right.

I love reading. I love talking to people. I get a lot of ideas out of it. I learn more, but it doesn't feel productive. Back to that thing that you talked about earlier, where if you're designing graphics all day, is it high value? No. But you feel like you're getting stuff done. And I struggle with, you know, there's kids running around the house.

My wife's doing all this stuff. If I'm just sitting there reading a book, or if I'm sitting there having a conversation with somebody, uh, it doesn't feel as much of getting something done, even though you really are leaping like forward a [01:05:00] lot with the knowledge that you're, remember the people that you're connecting with.

So, um, I'll look to that in the show notes. I'm curious to hear what you think about that mindset and the philosophy of going to that extreme. Yeah, it, 

Mike Anderson: it's, it's such a great, uh, point that you make. Um, it's hard and it's, it's hard to teach that to people. Um, I think you just need to learn that as you go.

Um, you know, it's, they talk about, you know, you'll hear lead measures versus lag measures, right? Um, you know, in real estate, um, you know, it's just how you basically measure progress. Um, you know, lead measures. You are, you know, you know, if you analyze 50 properties a. You're gonna close at least one of 'em.

Um, so like you're saying, you know, focusing on those things that aren't making you money right at the time, you know, focusing on your lead measures, um, that are pushing you forward, um, rather than things that [01:06:00] just have to get done that aren't really pushing you anywhere. Um, you know, like, like collecting your rent, right?

Or just responding to maintenance requests. If you're responding to maintenance requests, you're not gonna be able to put in your, your 50 leads a week, which may result in a property or may not. But you know, if you do 50 week every week, you're gonna grow and you're gonna get a property. So even though you're not getting paid to do that, the reward is gonna come later and you have to be able to realize that.

Ismail Humet: And now, 

Message from Sponsors.

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All right, let's get back to the show. All right, So if we go back to the property aspect of all this, I know there's tax benefits to owning real estate. Would you mind, You know what, actually, this is what I wanted to get into next. I remember, Sorry. Before, before we get back into that, uh, I remember you posted something 

Sharing story of a homeless couple.

Ismail Humet: where you shared something a while ago, um, and I didn't go into it in depth, so I don't, I don't wanna butcher it here, but I'd love to have you elaborate just a little bit about it to show people the power of this methody talking about you shared this story of, I forget if it was a couple or an [01:10:00] individual that was pretty much homeless, like living on someone's couch or something like that.

And then they used this to grow a huge real estate portfolio in a very short period of time. So would you mind just like, touching on that briefly to give people an idea of the power of this, even if you're starting from 

Mike Anderson: nothing? Yeah, and I posted that just to show that you don't need anything to get started in real estate.

You just need a little bit of knowledge and a little bit of hustle, right? You can have money and buy real estate, but if you don't have money, you know, get some knowledge and hustle and you can get it done. And yeah, you're gonna put in the work now, but it's gonna pay dividends later. Um, so I just happened to, um, listen to a podcast episode and, um, it was from bigger pockets and you know, they always have, um, host, they always have guests from very high profile people to people who are just starting out within, you know, the last couple years who just have a really, uh, inspiring story.

You know, they've had celebrities on the. And then they've just had the small time people like us that are just trying [01:11:00] to make it. So this one particular couple, um, just happened to strike me and, um, they were living in New York and um, for whatever reason they decided, you know, they grew up, you know, they say right in the episode, you know, we grew up in that rat race, you know, our parents, you know, or whoever was on, uh, state assistance, you know, we had low paying jobs in the city.

Um, so we were kind of taught that growing up. And then they got the real estate bug and they said, You know, we don't have to work these low paying jobs anymore. We don't have to, um, work just to pay our rent and then just repeat that every week. So they basically picked up everything they had, Uh, I think they like rented a car or they went down to down south somewhere, I think in Tennessee and, you know, see, saw if they could make it work.

And there was just a few parts in their story that was just really interesting where, you know, they were talking to people, uh, but they call wholesaling houses. It's basically when you find a house. Um, that needs to be [01:12:00] sold, That's kind of distress. And then you flip it, you kind of flip the contract to an investor, so you're kind of making a spread there.

You know, you couldn't make anywhere from five grand to 50 or a hundred grand, you know, comments like five to 20 grand on a single family deal. Um, so they had that hustle. They went down there and they said, um, you know, they had a rental car and the guy selling the house said, Yeah, I can tell you guys have money.

I could tell you guys know what you're doing. Um, and I thought that was funny cuz they're like, literally we showed up here in a rental car with a completely different state license plate and we have no idea what we're doing. So they were just, they were faking it until they're, you know, until they made it.

And, uh, turns out they just basically said, We're taking whatever we have, whatever fixed in this fits in this rental car, we're moving down there and, and we're doing it. So, uh, that was just a little story I saw I wanted to share because, you know, these people had nothing two years ago. Um, and now they are basically just doing it in real estate, real estate professionals.

Ismail Humet: Yeah. I'm gonna, I'm gonna share that as well because I, I think this is back to what we were saying [01:13:00] about real estate. It's like everyone sees it as an attainable path to getting ahead, getting wealthy. It's not some like incomprehensible thing like crypto or whatever you wanna throw in there. Everyone feels like they can do it and it feels less risky.

I don't know if it really is less risky, uh, but for whatever reason it feels that way because everyone's like, Hey, I can touch the property. I can see the property, I see all these TV shows. My aunt flipped the property and my, my brother owns rental. It just feels less risky. Uh, but I don't know if there is no risk, because I think the key thing here is that you have to find, um, the, the right property.

So all these things that

 Finding the real estate investment properties.

Ismail Humet: we talked about, it's, it's amazing, right? The return's amazing. Uh, the lifestyle. Amazing. You have a team. Wonderful. Um, but I just know because everyone has the same thing. The, the hard part is finding these opportunities, these properties, right? And there's all these things that people say, you can't find them on MLS [01:14:00] anymore.

You have to find like, uh, what was it like, um, unlimited properties, I think you said earlier. So I'd love for you to talk a little bit about, hey, someone hears this, you spark the fire, they want to become financially free. Um, how do they find these properties? Because it's like, 

Mike Anderson: it's not that easy. You have to go and do what other people aren't willing to do.

Um, in the beginning especially, um, you're not gonna do a five minute internet search and then find the deals that we're talking about right now. Um, that deal that I did that little in depth example of, you know, I was able to identify that deal, um, because I became an expert on that particular market. Um, when you're just starting out, you're not gonna know a good deal if it hits you on the head.

Um, so I think it, it really comes down to doing those kind of lead measures that we spoke about that aren't paying you anything. You know, get out there and, and go, um, meet some realtors who are, you know, that know investors. Go out there and meet property managers, go meet other investors. Network online.

I mean, it's so easy [01:15:00] today with the internet. Um, and then there's, there's communities of, uh, investors out there. 

Ismail Humet: So I've tr 

 Breaking into a network of agents.

Ismail Humet: I've tried that in my area, and again, feel free to knock me down if I, if I'm wrong here, but it seemed difficult to, like, it was a hard way to find properties because if these agents or other investors found a great opportunity, the last thing they wanted to do was give it somebody else.

And even getting on like wholesalers list, I was, I went on a mission once to. Wholesalers, and I'm sure people see these signs around their community where there's like, Hey, we buy houses for cash. Call this number. I will call those numbers and be like, Listen, if you're a wholesaler and trying to flip that property, let me know.

And what I ran into is that oftentimes these real estate agents, these wholesalers, whatever, they already have a list of people that they work with, um, that they have a long history with, and the, like, the people that already do these deals, they want to do more cuz they're making money off of it. It's really hard to break into that network [01:16:00] of people.

Um, so I didn't have success with that aspect. I'll show you how, how I did as well later. But for me, I found it, I found it everywhere to break into those existing networks or communities. So have you had that experience or am I, am I 

Mike Anderson: off facing? You're absolutely right. Um, but it's like anything else, you know, it's, it's hard to get momentum.

It's hard to get the wheels turning. Um, so your, your first real estate deal is, uh, not gonna be this unicorn, uh, home run deal. Right? And I think a lot of people are looking for that because you don't have the connections yet. You don't have the team. Um, I'm not as connected as some people in my circle, so by the time the deal gets to me, three other people turned it down.

But, hey, that's the deal I'm getting. It works for me. I'm gonna make it happen. Um, you know, you can't have that expectation that you're gonna get this, you know, this unicorn of a deal that maybe you hear about on tv or some investor told you about some crazy deal they got. So you think you have to get a deal like.

You know, there's really, [01:17:00] you gotta find the deals, but it's, there's no, like, you know, a deal's a deal. There's not this, these magical secret deals out there. You know, find a house, find a property where the numbers make sense, Do your education, buy that property, and, and get the experience. You know, there's not these magical properties out there that are just hidden, like in this little tight knit group.

You know, they're out there, but those people are also out there finding the leads, you know, they've put the work in as well to get those deals.

Ismail Humet: Yeah, it's, um, people often ask me as well, for my opinion, like, Hey, is it a good time to buy? You know, it looks like everything's too overpriced. Is it a good time to buy? Is there gonna be a crash soon? And the answer is always, Do the numbers work? Or is the property making money? Is there, is it like, did you calculate the numbers?

If the numbers worked, then it doesn't really matter if we're in a hot market or a cold market. The numbers work and get the property. Uh, but I also love that you touched [01:18:00] on that first deal is not gonna be a unicorn deal. So, for example, with my situation, I had a friend of mine who was a contractor, uh, and we decided to flip properties together.

So the first deal that we did, it was not a great deal at all. Uh, we just barely, you know, broke out with some profit on that deal. We, we got an auction, a foreclosed property, and an auction site, and it was really not in good condition. It required a lot of work. It was just problem after problem. Uh, but luckily we made something out of the deal.

And more importantly, it was what you learned. It was the experience. It was the connections that you made. It was the team that you built. Now you have the attorney, you have the agent, you have whatever. And what we found is that the next deal that we got was way, it was almost a unicorn deal, and it worked out extremely well.

And it was handed to us, uh, basically it was not, it was an off market property that, uh, some someone died, their kids inherited the property and in, in state and [01:19:00] they just wanted to do a quick closing. And someone knew someone that we knew and that we were flipping properties. And then they just kind of got handed to us and it ended up being a great dream deal, but that first one wasn't.

And I think it's like a lot of things in life where you have to go through those first. You gotta put that work in, right? You gotta earn it. And once you do things become easier. But no one really wants to go through that process. So I don't know if it's avoidable though. I think you have to. 

Mike Anderson: Yeah, it's, it's definitely about getting your foot in the door.

You know, your first deal's not gonna be your best. You kind of have to pay for that education. Um, you know, if you want to progress and succeed and you know, and if you do, only if you're the type of guy that only wants to buy one property every five years, you're not gonna find those sweet deals. You know, you're gonna go on the MLS and, and take what's there and you're gonna get an average deal.

And there's nothing wrong with that either, because that might be a person's goal. I know people who buy a real estate and they're just trying to diversify for their retirement. Because in the long run, re uh, real estate always wins. You know, it's such a [01:20:00] forgiving asset. When we talk about cash flow, we're not talking about, we're not even touching on mortgage pay down, we're not even talking, we're not even touching on, uh, property appreciation either.

Um, 

Real estate appreciation.

Ismail Humet: so let's talk about that stuff. Why is it such a forgiving asset? So this is kind of what I wanted to talk about with inflation, but, um, I'm curious to hear your opinion on why it's such a forgiving asset and it's kind of hard to mess up in the long run. Like even if you get a bad deal right now, um, in the long run, it's very hard to mess 

Mike Anderson: up with a real estate.

Yeah, it definitely is hard to mess up in the long run. Um, I haven't really been doing it long enough to give firsthand knowledge on that. Um, but I will say that historically, um, aside from 2008, um, real estate has not corrected with the stock market. Um, I know it has been more of a steady, uh, increase rather than, um, something that goes up and down with market cycles.

Um, so even when [01:21:00] there are market corrections, real estate does tend to hold strong overtime and to always go up in value. Um, 

Ismail Humet: I, I think, uh, a reason for that though is that, uh, the real estate isn't listed on a stock market. Like your property isn't constantly being traded, so it's not as a liquid, right?

So there's not the opportunity for like in March, 2020, the market. But a couple months later, it was already higher than, than what it was previously. So you, you get like real time price action with stocks and crypto, and that's why you see these big ups and downs throughout time. Real estate is a different asset class where it's not as liquid.

Um, so it, you don't see those quick adjustments to value and people don't really sell their properties that often. So, um, I, I think one of the benefits of real estate is that because of that, you don't get freaked out like, Oh my god, my big Bitcoin went down 50%. Should I sell it? Panic sell. You don't panic, sell real estate cuz you don't get those price, uh, alerts every day, [01:22:00] right?

Maybe once in 10 years you wanna sell your home and you check the value. Um, so it, it's kind of a different beast in that respect. But I'll tell you what I really love about real estate. Um, and I don't know as much as you do about the tax benefits, I'm just talking about high level here. So I'd love to hear, uh, your comments on, on my thoughts here.

People know that, listen to the show, the inflation that I am, uh, assuming is coming. And I think when I thought about that, there's only a few things that I wanted to put my money in, in an inflationary period. Um, precious metals like gold, silver, crypto, like Bitcoin and some stocks, equities and real estate, that's really the only thing that you can put your money in to protect against inflation or devaluing currency.

Um, 

 Pros & Cons of real estate investing.

Ismail Humet: real estate, the perks of real estate to. Um, it's, it's, first of all, it's harder to find, so that's a con. It's, it's harder to get a deal. Um, there's the closing process and all the other stuff that goes [01:23:00] along with it, but I love the protection that real estate gives you against inflation because you're essentially buying a property now at the current price, um, and you're locking in a contract.

So you bought that house for a hundred grand, The low interest rate is 3%, right? So you're locking in 30 years of payments at the current price, at the current interest rate, right? And maybe people that have parents or, you know, they've owned a home for a long time can relate to this. When you first buy that property and you see that mortgage of a thousand dollars, that's still a lot.

But after five, 10 years, 15 years, that mortgage payment is really like nothing. It's a lot easier to pay it. So to me, that is a great protection against real estate because you're locking it in and you're benefiting from, you're actually benefiting from the currency devaluation because it makes it easier for you to pay that debt on top of that, um, because of inflation over time, [01:24:00] the rents go up, wages go up, the property appreciates all along the, while your payment is fixed.

So to me, that to me is the huge win. And I know there's like depreciation, tax benefits and other stuff, but that alone as a concept at a high level, makes it a no brainer to me to 

Mike Anderson: do it. If you could, Yeah, you're, you're making all the same points that I would've just. Um, you know, when you're, when you're talking, say if you're trying to get away from the, the centralized dollar, like you're talking with inflation, you know, your options are limited.

You could go in Bitcoin. Um, the difference in real estate, um, you know, in real estate is a hard asset. So you are going, um, you are kind of going again, you know, you're still within that centralized, you know, system cuz you're paying us dollars for the real estate, but the real estate's its own asset. So even if our tur our currency changes in a hundred years, the real estate's gonna be worth whatever the going currency is, right?

Um, so the difference with real estate is [01:25:00] that's not so much the same with stocks as you are expected to acquire debt to obtain the real estate. So you have two things working for you. You have the inflation, whereas as dollars are printed, the dollar and the value of the real estate itself is going up.

That a hundred thousand dollars house in 30 years might be worth 200,000, but you also borrowed that $75,000 to buy that house and in 30 years you're paying it back with much less valuable dollars than you borrowed it at. And, uh, that's what you're getting at before I just basically said the same thing in a different way, I think.

Um, but a better way. And, and going back to five years ago, I was like dead as bad, dead as bad. Dave Ramsey. No bad debt is good debt and there is tons of bad debt out there. Um, but when you learn, you know, yeah, car payment usually bad for most people, not everyone, but [01:26:00] usually, um, credit card debt, usually bad.

Um, even I'm not a fan of student loan debt, you know, not good debt to have in my opinion. You know, people might disagree with me. Um, but when you're talking about using debt as a tool to leverage an appreciating asset, um, it's very powerful. Especially if you can borrow money for 30 years at under 3%, you should be borrowing as much money as you can.

Don't go buy a boat, invest it in something that goes up in value and you cannot lose. 

Ismail Humet: That's, that's the, the low interest rate. I mean, I, I was talking to someone on a deal and they're like, Hey, would you pay for this in cash or would you finance it? I'm like, If I have the option, why would I pay for it in cash with these low interest rates?

Like it's, so, it's not difficult to make 3% on an investment. And, and I don't know if you [01:27:00] have this experience, Mike, where a lot of my friends, um, that own companies got offered all this SBA loan, um, I forgot what it's called, the, the E IDL or something like that, or I forgot the term, but it was like 30 year loans where you don't make any payments for the first two years.

And it's like a 3% rate on the long, I'm like, I'll take every dollar that you can give me at those terms please. And they're giving out like ridiculous numbers. Like I have a friend who for all intents and purposes, shut his business down. It's it's shut down, like closed the bank account. It's just a legal entity wasn't closed and he just got offered $400,000 in the second, second batch.

And I'm like, this is so to me. Good for you man. You're my friend. I I hope you take that money you invested. Um, I told him to put it in Celsius, said make 10% and just like make the difference. It's like 80 grand of free money. Um, but it makes me [01:28:00] concerned again from the inflation aspect because they're literally handing out tons of money to like zombie companies and that feels wonderful to people that can get it.

But if you look at the big picture, it really harms the middle class and the lower class because they're the ones that are paying this invisible inflation tax. Like now, I dunno if you, you're doing work on any recent properties, but if you go to Home Depot and you're buying lumber, it's literally triple the price it was last year.

If you can find it. Like everything is way more expensive. Um, if you wanna build a pool in Florida, cause I was looking at buying property in Florida and putting a pool in, it's like an eight month wait list and it costs a lot more money. So, This stuff is affecting the regular people, right. Cuz they can't get it, they can't pay for it.

It's more expensive. Um, so again, I'm, I, I kind of riff on this all the time. You gotta protect yourself in whatever way you feel comfortable. If you don't feel comfortable about crypto, you can do stocks. If you don't feel comfortable about stocks, you can do real estate, [01:29:00] but do something. Yeah. Um, so it's something I'm passionate about getting across in every episode.

I don't, Mike, you agree with me, but any any comments you have on, on that little rank there, I'd love to, 

Invest in real estate & stocks.

Ismail Humet: I will 

Mike Anderson: say do anything except save dollars in your bank account that goes down in value because the dollar only goes down in value and your bank account's not paying you anything for it. So, um, yeah, I think real estate's very safe, especially long term.

Um, crypto's very volatile. Um, I, I personally wouldn't put my life savings into it. Um, but I mean, even in stocks, you're okay. You know, at least as inflation goes, as inflation runs, the stock market will at least keep pace, maybe within inflation. Um, you know, cuz as dollars enter the, the, the money supply, you know, these stocks are going up because the cost of goods are going up.

So the, the values of the companies are going up, you know, at least with inflation, hopefully a little more. Um, but yeah, I'm, I'm aligned with your thoughts. [01:30:00] You know, I don't know the ins and the outs of the economics like you do, but I like how you call it the invisible. , you know, it's kind of like that, the whole wealth, you know, the whole wealth gap, uh, argument with inflation, which, you know, I don't really know enough about to get into, but 

Ismail Humet: yeah.

And I know we both follow key sake. He's getting really passionate about this too. So I think, uh, just my, my last two senses here for people that wonder, cause I get a lot of questions about this, is that as long as the Fed is printing money and keeping rates low and saying that they want inflation, like as long as those things don't change, I agree with Mike, You do not wanna hold cash.

I, I just don't see how you will lose owning stocks, crypto, whatever. They may be volatile, but I would argue that that's only happening in, um, liquidity events where there's some shock to the system and there's a liquidity event. It may cause a crash, but it would be a short term crash as [01:31:00] long as those three variables don't change.

Fed printing money, keeping rates low, wanting inflation. If, if you keep seeing those three things staying there, um, it's a free for all. And that's what you see now with all these, like, they have these kids that are just trading on Robinhood and making tons. It's monopoly money. They don't care. Like, they don't care.

They just got free money. Let me just throw it out there and see if I can flip it. And it, it's a fascinating time. I don't know if you're dabbling in a lot of this stuff, Mike, but to me it's fascinating 

Mike Anderson: to observe. Yeah. It, it, it really is. Um, I think it's crazy what's going on in the crypto world, right?

Um, but, um, I, I like to think of, I think of the dollars as the currency just for exchanging items of value. Um, I think once you stop thinking, uh, like the US dollar as of like, you know, uh, like I have all this money, I'm rich. Like, no, you're not, you don't have any assets. What do you like? Do you have any cash flowing assets?

You know, what do you [01:32:00] have that's of value. Yeah. The dollar right now, if you have a million dollars in the bank, sure it's, it's a million dollars in value I guess today, but, you know, what are you acquiring that's of value? Um, so I, I just like to look, you know, I look at currency, US dollar as just a means of obtaining things of value.

And I think that's how you have to look at it 

Ismail Humet: spoken like a true in investor and reader of gi. Oh, was it a rich? Yeah. Um, so I heard, I've heard about this two, 

 1% Rule.

Ismail Humet: I think it's the 2% role. Is that right? Or is it 1% role in, in buy real estate? Yeah. 

Mike Anderson: Um, are you referring to the 1% rule where the, um, the monthly rent should be 1% of the purchase 

Ismail Humet: price?

Mm-hmm. ? Yes. And I, I'd love for you to explain that to people and address. My, my feeling was that it was very hard to find anything even closes, satisfying that maybe I'm looking in the wrong places. But if you can explain that to people that, So you still live 

Mike Anderson: in New York, that's why. Yeah, I know. So [01:33:00] I know they say in Jersey it's like the two, the.

In South Jersey, it's like the 2% rule, but that's very different. It's almost the opposite of North Jersey. Um, the 1% rule is a guideline. It's not a hard fast rule. So don't think just because you can't find a 1% property, um, that you can't invest in that, you know, the 1% rule like you're saying is, you know, if the house is at that a hundred thousand dollars, it should rent for a thousand dollars a month.

Um, I know the strategies up in Northern New Jersey and New York are different as far as real estate investing. I don't know the game up there. I know it's more of an equity play, like more of a value add in like long term. They're not really cash flowing, the numbers that we're cash flowing down here in uh, South Jersey, but we're also not seeing the appreciation, some of the other benefits that they are.

Um, that 1% rule is, I've never been a huge fan of it. It's not a hard fast rule. It's a guide, especially for like when you're starting out. Um, [01:34:00] but once you know, once you know a market, you don't really need a formula or a rule because, you know, from, just from other experience of doing deals, what a deal looks like.

Ismail Humet: So, um, I guess that makes me feel better cuz I couldn't find anything. And again, I know I'm in a, in a very competitive, like the, the numbers are just crazy in New York. Like you're basically banking on appreciation or like the long term value ads that you're talking about. Uh, I'm,

Flipping vs renting. Which is better?

Ismail Humet: I'm curious to hear though, cuz my strategy, um, it was to flip properties.

To build a larger cash stack pile so that I can buy like a larger multi-family, um, properties with that cash pile. Um, now things have changed because of, of the inflation that we just talked about and it's hard to find properties that makes good sense for flipping, but I was getting like 20 to 30%, um, after everything, including tax on the flips that we, we were able to find.

So I'm curious to hear from you, why did you not go the flip route? [01:35:00] Cause that's what everyone thinks about H utv. Look at that easy money. Um, why did you go more of the rental route? Yeah. 

Mike Anderson: Uh, you know, two different animals. Um, like you mentioned, uh, flipping is as ordinary income. It's like a short term capital game type situation.

Um, but I think, you know, flipping I is kind of sexier. It's kind of flashier. Look at this, this gorgeous house I flipped, you know, rental real estate's. Not always the the sexiest flashiest thing. You know, I don't have a crystal chandeliers in my units or anything like that. Um, I think, and it goes back to the mindset, you know, everyone's looking to make that quick buck.

Everyone wants that quick dollar so they can go spend it on something. Then they're have to chase another quick buck. You know, they wanna make a quick buck and then go buy a car and, and that's their idea of success. Um, you really need to switch that mindset up. Um, you know, I don't care how much money you made in a year because you probably spent it all and.

Just as [01:36:00] good as everyone else because you have nothing at the end of the year. Um, you know, I'd rather go the rental route because you know that asset even though, hey, I'm, I'm only making a hundred dollars a month rather than 10 grand on that flip. But in the long term that that asset's gonna pay me for the rest of my life and appreciate and value 

Ismail Humet: what, 

 Tax benefits.

Ismail Humet: what are the major tax benefits that you like count on with real estate investments?

So 

Mike Anderson: your major tax benefit is your depreciation. Um, to give you an example of that, so what depreciation is, is you can write off the value of that property over 27 and a half years in residential real estate. So, and that's even if you didn't use your own money to pay for that asset, right? So let's go, let's go back to our a hundred thousand dollars example.

Um, so we ha we bought a property for 50,000. We put 25,000 into it in capital improvements. So our tax basis for that property is [01:37:00] $75,000. So we can depreciate that $75,000 over 30 years or 27 and a half years. And don't forget we got that money back on the refinance, right? So we have $0 into that deal.

And let me, let me bust that my handy calculator real quick just so I can give you a number. So, How much we, how much are we make in a month? 300 a month, right? Cause we talked about our operating expenses, which is our property management and our, uh, late, you know, our maintenance and all that, right? So we're only making like $300 a month on this property.

So our profit is, uh, $3,600 a year. So we would have to pay tax on that $3,600 a year, right? So now with our depreciation, we are depreciating $75,000, which is not our own money. That's, you know, someone else's money. We are writing that off over 27 and a half years. So we'll take our 75,000. So the [01:38:00] government's gonna let off right off.

Oh, $2,700 and 20, uh, 27 thou, $2,727, over 27 and a half years. So, I just made, uh, 3,600, uh, $3,600 on that property. But I wrote off 27 20 or let's say 2,700 to make it easy, um, due the depreciation. So I'm only paying tax on, uh, $900. 900. 

Ismail Humet: Yeah. Yeah. That, that is so powerful and I think people, I love, it was hard for me not to interrupt there because , but I wanted you to go through and explain that because I think most people don't understand, um, depreciation, why does it matter, Cetera, et cetera.

And they see people like, um, Donald Trump's tax returns in why it's so low. And this is something that you know wealthy people leverage, is that they have [01:39:00] depreciation and that allows you to make that money tax free. So that really reduces your tax burden each year on the property, and you keep more of your money.

It's a huge, huge win. I would argue a lot of. Real estate investing, um, or properties may not make sense without this benefit. Yeah. Um, so that, that's a very key benefit in investing if they ever took that benefit away, Uh, I would imagine property values would Dr. Like drastically decrease? 

Mike Anderson: Yeah. Um, the US has some very good, uh, tax laws when it comes to real estate investing.

Uh, always has. I mean, think that's part of what built this country. Um, but you know, every country in the world has some type of, uh, depreciation benefit as well. Um, yeah, it cracks me up when, um, people think that, you know, everyone's cheating the system by not, you know, I won't mention any names of past presidents or anything, but every, 

Ismail Humet: I try, I try not to, but it was hard, not

Mike Anderson: People think that they're tax sheets for, uh, [01:40:00] and they're calling them loopholes in the tax code when they're a loophole is an unattended, unintended benefit of something, right? Depreciation is written into the tax code. Um, and it should be taken, There's actually, I'm not an accountant, but I was advised by an accountant that if you don't take depreciation on a property and you sell that property, you need to reduce your tax bases as if you did take depreciation.

So you're actually required to take depreciation on these properties. Um, but people wanna, you know, make a story about how everyone who invests in real estate's cheating taxes, but it's actually required by the tax code. . 

Ismail Humet: It, it, it's, again, back to the mindset where, um, whether it's, you know, society or your job or school or whatever, people oftentimes complain, Oh, you know, it's a loophole.

The system, the, the professor. Whatever, whatever you wanna say. And my philosophy is, I can't, I have to work with the system as best as I can. [01:41:00] So, for example, with my family, friends that go to college, um, my device to them is always like, Listen, the first day they give you the syllabus, right? That's the first day of any college class.

And the professor tells you exactly how they're gonna calculate your grade. This is kinda like a tax, uh, cheats and whatnot, right? He says 20% is gonna be attendance, 20%, that's 20%, 21. You have to understand that formula. And once you understand that formula and you realize that 60% of your grade is just for showing up, participating and doing your homework, uh, you feel less stressed because, uh, even if you get like a 70 average on all your tests, as long as you hit those other points, you'll still get a good grade in the class, right?

And people don't understand, uh, the, the importance of understanding the rules, understanding how the game is tructure. How it's played and, and uh, playing within those rules and taking advantage, I don't wanna say taking advantage cause you're [01:42:00] operating, uh, according to the rules, but like, people don't understand the rules and they just complain and they, they wonder why they don't get ahead.

I mean, you can use the same benefits. Like you can get the appreciation too. Right. Just gotta 

Mike Anderson: go through the process. Yeah. I think it's important to understand the tax hood. I, I am a big, um, tax guy. Um, can I, can I plug a book, Tax Free, Free Wealth by, uh, Tom Wheelwright and what your accountant isn't telling you by, uh, I forget the name, but we'll look it up and we'll put it in the notes.

Um, both great books. Uh, what your accountant isn't telling you is, I would say more for the average everyday folk and how they can pay less in taxes and tax free wealth really is eyeopening as far as, you know, the IRS code and, you know, following these tax strategies is really just doing what the government wants you to do.

They want housing, they want real estate investors to provide housing for people because that stimulates the economy, that creates jobs. So, um, by corporations and real estate [01:43:00] investors getting tax breaks, they're, they're stimulating the economy and, and putting money and back into the economy and providing jobs for people.

So you're just doing what the government wants you to do. 

Ismail Humet: Yeah. This is a whole other conversation. I don't wanna. Upset, get people riled up and upset people. But I always found that ironic, like people complain that corporations don't pay tax. Right. And I understand why people think that, and I understand the mindset there, right?

It doesn't seem fair, but if you really look at the way the system is structured, I'm just being unbiased, right? It would it be great if the companies paid more taxes and I had to pay less? That'd be great. Wonderful. I I'm not, I'm not against it. I'm just looking at how the structure, the game is structured and the way it is structured is that I don't think corporations are viewed as taxable tax income to the society in America.

Their purpose is to what you said, employee people and like stimulate the economy in other ways. Those [01:44:00] other ways are what's taxed the, the wages of their employees, the purchases of their employees. Those like the, the suppliers that they buy from, the cost of those, those things are taxed, but the corporation is not really viewed as a tax revenue source to begin with.

That's not how the game is structured. Their role is to employ people so Uncle Sam can text those people. And that's just the way it is. I, I'm not saying it's right or wronger of complaining about it. It's just the way literally it's 

Mike Anderson: laid out. Like can agree with you more. And, and one of the things, Tom, Uh, Wheelwright says in his books is, uh, yeah, taxes aren't fair.

And they, they weren't designed to be fair. Um, which is what you're kind of getting at as the middle class, kind of get in the brunt of the taxes there. Um, but yeah, that's just, uh, that's how the tax code's written. 

Ismail Humet: Yep. Okay. So I, I'd love to go back. Uh, I know we're, we're gonna try to wrap this up soon.

 Specific criteria to find properties.

Ismail Humet: I'd love to get back quickly to have you touch a little bit more on how do you find the properties? Cause we, [01:45:00] you kind of said that you have to do things people aren't willing to do. Uh, but what are the specific things that people can do after they hear this? I'm like, Alright, I wanna start looking for seriously at properties they hear you can't find anything on the MLS anymore.

Um, so what are some specific things like I've heard of driving for dollars, et cetera, et cetera. What can people do to find 

Mike Anderson: properties? Yeah. Um, and I think if you can find deals now you can do anything in real estate. I've always said that especially like this year, 2021, where we're at with the real estate market, if you can get your start now, um, especially in rental real estate with the whole eviction moratorium, like you have a lot of stuff working against you.

Like if you could be successful now, you can probably be successful at any time. And I've heard that from other more experienced investors. Um, my first couple deals were on the mls. Um, the deals aren't there right now. I mean, I'm not saying you can't find deal if you look, you know, if you really dig, I'm sure you can, but the, aside from your conventional methods, [01:46:00] um, yeah, you're driving for dollars, you can go around.

I mean, I've never had success with that. That's very specific to a a certain area. Um, you know, people do direct mail marketing, um, you know, sending letters. I've done some of that. I haven't closed any deals off of it. But you're basically, you could buy a list offline, um, send a letter out to 'em, you know, negotiate a price, try to find distressed sellers that way.

Um, but my, my number one way is just networking, um, talking to wholesalers. Wholesalers are the people that do that work for you. They do the driving for dollars for you. They, um, do all the direct mail. So they're taking up all, they're taking that investment to put that time in to go find those deals. 

Ismail Humet: Uh, how do you find wholesalers?

Mike Anderson: Uh, there's plenty of 'em. , you know, they're not, they're not out there. Like the MLS is out there, you know, advertising on Zillow. Um, but you need to get hooked up with your local [01:47:00] real estate group, you know, Um, you know, go on bigger pockets.com, look for, um, any local meetup group that's local to you. Look up, uh, look on Facebook.

You know, there's Facebook wholesaling groups, um, for specific areas. You know, there's New Jersey wholesaling, there's New York City wholesaling. I'm, I'm sure there's just hundreds of 'em. Um, build a network that's, those are just different ways to build a network. Uh, 

Ismail Humet: but, but don't these wholesalers, I could be totally off here, but don't they just like, find a property, uh, and then blast it off to an email list and whoever pays the most is who gets it.

Yeah. Uh, 

Mike Anderson: and you have to find what your, what your, uh, your niche is gonna be. Right? Because when I. You know, when I first started out, I didn't know what I wanted. I found a market that the numbers worked and I said, Okay, I'm gonna be the expert on this market. Um, this deal that I'm closing tomorrow, I'm closing it [01:48:00] because it's in the market that I buy in.

And I put out there saying, this is where I buy deals. This is what I want. It was very specific to what I buy. The person that brought me this deal happened to know I was looking to grow my portfolio. They knew I had, uh, access to, uh, they knew I had, I'm sorry, experience in single family deals in this area.

So this happened to be a portfolio of single family deals, um, that just really meet my criteria. Um, those emails that come from those wholesalers, I really don't even open 'em anymore because if it's not in the town that I'm looking in it, I'm not interested in the deal, even if it is a deal. So yeah, it gets blasted out, um, to a ton of people, but I think you still have to be able to identify a deal when you see it, you know?

Ismail Humet: Yeah. I, I think that's what it all comes down to is identifying the opportunities. Um, everything else, you can hire an attorney, you can hire a contractor, you can be, you can, those are kind of easy problems, is, that's the main problem, is finding them. So [01:49:00] hopefully people could take advantage of some of the tips that you mentioned, um, in sourcing them and analyzing them.

I think you walk through some specific examples which made it really helpful for people to understand, uh, what I like to call. phantom costs. It's not just what is the total rent and the mortgage, right? There's other things you have to factor in and you watch HGTV and they don't show you those things and it makes it look a lot easier.

And it's not. You have to be really transparent about what you're getting into. Uh, and that's why maybe the first deal, you should do a nothing crazy, like get your feet wet, learn the process, see what it's really like before you start going big and going hard. Um, one other thing that I'm curious to get your opinion on, uh, people are always questioning like,

Best time to invest in real estate.

Ismail Humet: Don't buy now.

It's crazy. There's a crash coming. Once this moratorium is over, the real estate's gonna crash. So I've got my own views on this. I, I'm curious to hear what you think about the real estate market. Yeah. Um, 

Mike Anderson: I'll quote, uh, Scott McGary, I think I mess up his last name, HGTV guy. Um, the best [01:50:00] time to buy real estate was yesterday.

Um, the second best time is today and the worst is tomorrow. Or something along those lines. So basically, like you mentioned earlier, it's, it's always the time to buy. Um, you know, I'm in the mindset of acu accumulating as many assets as possible, even if there. Short term fluctuations. Um, the one thing I think of too is have you ever met a wealthy person that said, Oh yeah, I just waited for the market to crash, then I bought everything.

It's never happened. There's gonna be market fluctuations. Um, but in the long term, things are always gonna go up, you know? Um, and especially with real estate, and we can speak to it because there was a major real estate crash left less than 15 years ago. Um, when the market crashed, if your strategy was to wait and buy, you weren't buying anything because no one was lending on anything.

So, um, I don't [01:51:00] think anyone has ever gotten wealthy in real estate, um, by waiting for the market to crash. 

Ismail Humet: So yeah, it's, it's a different beast than like buying Bitcoin When it crash, it's just a 

Mike Anderson: different animal. And I, it's traditional liquidity. It's not, You don't just buy the dip in real estate, it just doesn't happen.

Ismail Humet: Yeah. Actually when we were starting to flip properties, we, we did a study in my area of the, of the real estate crash years before to see how did it affect prices in our area. And what we found was that it was a very delayed reaction in the actual, like, listing sales. And it wasn't that big, like it was negligible, Uh, at least in my area.

I know some other areas got hit way harder, like Detroit and whatnot. But in New York, Long Island, It was really negligible that if you waited for that, you just wasted a ton of time that you could have been accruing uh, wealth by owning stuff. So, um, I agree with you.

Your investment portfolio.

Ismail Humet: Do you other, is there any other, like, um, investments or ventures that you'd like to talk about?

I dunno if you wanna get into [01:52:00] anything else that you do, that you own, that you e focus on? Cause we talked about the business side, the job, and the real estate. Is there anything 

Mike Anderson: else? Uh, my primary focus is real estate right now and just building, you know, financial freedom, uh, through that, you know, I've just found it's a, a really great avenue.

Um, and I think I could build, you know, a level of financial freedom faster through that than anything else. Um, especially when you consider how much, you know, time and work, um, gets put into it. Um, you know, I just, I do the standard stock market investing and, you know, I, I got into, I adopted Bitcoin as a viable investment, uh, vehicle earlier this year.

Prior to that, I wasn't into the, the crypto at all in 2017. I thought it was way too early. Um, I wasn't ready to invest money into it. Um, but now I, I'm long on Bitcoin. Um, none of the other silly coins that are out there, , preach, preach. Um, but that's, [01:53:00] um, you know, that's my portfolio and, you know, other than that I just, I love talking to people about, you know, how they're making money.

You. It's not like an ego thing. It's not, Oh, you know, talking about how much money you have. It's, I'm just in genuinely interested, um, in hearing how you're finding ways to make money. And if you want to hear about how, how I'm choosing to do it, that's great too. You know, cuz maybe my ears are always open, you know, maybe I'll get an idea and just start, you know, the next venture.

That's just how it goes. 

Ismail Humet: That's part of the reason why I love, uh, doing the podcast is that I find that I learn a lot. Everyone's different. I learn from reading. I do a lot of reading, but I also learn a lot from talking to people. Cuz that's like live feedback. Hey, what are you doing? Hey, what's working over here?

Hey, here's what I did. I think the conversations are really valuable, uh, for learning for me. So that's why I really like doing the podcast and why I enjoy listening to podcasts. That's another thing I tell my friends is like, growing up I had to like listen to like Lil Wayne on the radio. I had to like, [01:54:00] there was no other option.

But now you've got podcasts, man. You can listen to billionaires and all these entrepreneurs that for free, like they're telling you what they're doing, what they think for free. Why would I be listening to Drake when I can listen to someone that's successful and I can get something out of Yeah. Um, I know you feel the same way cause I know, I know you soak up knowledge too.

Yeah. There's so 

Mike Anderson: much free education out there now. Um, and it wasn't always like that, especially in the real estate world. Um, but you know, there's, there's just so much, you know, people sharing their stories and podcasts and YouTube and you know, they call it YouTube University now, right? Cuz you could learn anything there.

Yeah. So it's, it's the information. You gotta take advantage of it 

Ismail Humet: in the beginning of the conversation. These are the last couple questions that I'd like to wrap up with. Uh, you talked about 

Any hint of a future successful entrepreneur as a young kid?

Ismail Humet: how, uh, growing up you had that different mindset. Did you feel different than everybody else growing up? Or like, if I interviewed people from that knew you as a kid, would they say, Hey, you know, Mike, I always knew, you know, he'd be [01:55:00] a multimillionaire real estate entrepreneur one day, or would they be surprised?

Mike Anderson: Um, you know, I don't know if the business side of me, uh, kind of shined out when I was a kid. I was very, uh, introverted. I still am introverted, um, as an adult. Um, I was never like really a go at the flow. I kind of still, you know, I did whatever made me happy. My hobbies were what I wanted to do. I wasn't, uh, you know, just doing something to go along with the, the crowds growing up.

Um, so I think that allowed me to think for myself and develop my own mindset, um, which is different from the school mindset of go to school, get good grades, get a good job, and hopefully you have a million dollars in your 401K by the time you retire. And I don't even think people do that these days. So, um, 

Ismail Humet: I, I gotta just throw this in there before I forget.

I wonder, I wanna see what your reaction is, if you'd be shocked because. I worked at a real [01:56:00] estate firm and I, I was curious one day, cause I'm like, all right, these are all real estate professionals, right? This is what they do for a career. Where do they put their money? Do they own real estate? So I remember walking around the office one day and, and going into each every person and asking them what people might view as, uh, inappropriate.

And I'm like, What? You said, what do you do with your money? Like you're a real estate professional. Do you own properties? Where do you put your money? And the overwhelming majority did not own real estate and, uh, put it in a stock market. So to me, that kind of, that was really surprising because everyone talks about real estate, they do it for a career yet that they don't put their money in there.

Um, I found that from the conversations, I just viewed the stock market as easier, more passive. They didn't want to deal with the headaches. Uh, but again, as we alluded to, you don't have to if you build a team. So does that surprise you that people didn't put their money there? 

Mike Anderson: No. Um, because you even find, you even see that in the financial fields.

Um, [01:57:00] people who are these, you know, financial brokers, they don't even really invest in the stock market. They're just employees. Um, they know how to work for a paycheck, um, and then buy, uh, things that are expenses and then work for their next paycheck, and then buy things that are expenses rather than earn a paycheck and then buy something, an asset that goes up in.

and then take the money from that asset and buy things that go down in value. You know, people kind of miss that step. And it, that's just the mindset that pe there people are in the employee mindset. Even the people that are in the financial services and real estate people especially, you know? Yeah. They don't, they typically don't own real estate.

Ismail Humet: Um, is there, we talked about a lot of different things in this conversation, was a long conversation and very valuable. But 

What is a rich life to you?

Ismail Humet: what I ask everybody is like, what is a rich life to you? Cause it's not about just money, even though we're interested in money, and like you said, you, you like to learn how people do it.

So do I. Um, what is a rich life to you? 

Mike Anderson: Yeah. I mean, a rich life to [01:58:00] me has nothing to do with money, right? I said earlier that the money's just your, your currency to exchange things of value or obtain things of value. Um, a rich life just comes down to freedom, you know? Um, if you make, you know, a million dollars a year and you spend a million dollars a year, um, I don't really consider that a quality of life because you're just always chasing that next paycheck.

You might have nice things. Um, but where does that really get you at the end of the day? You know, are those mat those material things will make you happy for a minute. Um, but you have no freedom in your life. You know, the, the joy in life comes from freedom. Um, and then once you've reached that level of freedom where you don't have to work or you, you do work a little bit, but you work on your own terms, Um, you're able to use that wealth that you've built up to do good for others and really live a [01:59:00] rich and valuable life.

Ismail Humet: I totally agree with you, and I think I told you that I actually lost a family friend, uh, to cancer recently. And these thoughts were like part of my reflection because the person was wealthy, beautiful home, like mansion. All these things, like all these nice things that you just alluded to. Uh, but how much does it matter at the end of the day?

Right? So I think you hit it on the point with the freedom aspect and doing things that you actually enjoy. Uh, cause we have a limited time here, right? It's not just about chasing that next paycheck that doesn't really do anything for you. So it's a great place to leave it. Um,

Way to connect with Mike.

Ismail Humet: is there anything that you wanna point people to?

Uh, can they interact with you, social media, any, anything like that you wanna point people to? Um, I'm not really 

Mike Anderson: like a big, I don't produce a lot of content for social media. You can find me on Facebook, um, Mike Anderson with this face here. Um, but yeah, I, you can link to it. I have a blog, but I haven't really, you know, if you find me on Facebook, I might post some blog links every once in a while.

[02:00:00] Sometimes I, I post little stories about what I have going on. Um, if you, you are interested in real estate and, uh, you have a few questions and want to connect, you know, I like answering questions, I like to help people out. Um, we're just starting out just to kind of pay it forward. Awesome. 

Ismail Humet: Mike, 

Thank You & Wrap up!

Ismail Humet: thank you so much.

Great place to leave. A lot of great. Actionable and like practical stuff that we went through. So I truly appreciate it. Um, hopefully people will get a lot of value out of it. And thanks you so much for your time. Appreciate it. Thanks a lot. Thank you. And there you have it. If you enjoy this episode, please remember to leave a review.

I may even give you a shout out and reach yours out on the show for any and all resources that we discussed. Check out the show notes or head on over to bound to be rich.com. Until next time.