Dustin Heiner – Financial freedom at age 37

Dustin Heiner – Financial freedom at age 37

Imagine the feeling of giving a two-week notice to your current employer and when they ask you what you’re doing next, you tell them whatever you want. The look on your boss’s face will be priceless. My next guest is a real estate investor who did exactly that. In this episode, he breaks down how he financed his first rental property, how he creates leverage to buy more properties, what he looks for with property managers, and how long it took him to fire his boss. This episode is packed full of value on how to create passive income and achieve financial freedom through real estate investing. Please welcome Dustin Heiner.

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Transcription

 

[00:00:03.230] – Intro

Payback Time is a podcast about building businesses, wealth and financial freedom. We try to uncover the challenges our guests faced, the mistakes they made, and the steps they took to achieve their goals. The overall objective is to provide you with a roadmap that leads to your own success. Sean Pepper is your host. Are you ready? It’s Payback Time.

 

[00:00:33.090] – Sean

Imagine the feeling of giving a two week notice to your current employer. And when they ask what you’re doing next, you tell them whatever you want. The look in your boss’s face will be priceless. My next guest is a real estate investor who did exactly that. In this episode, he breaks down how he financed his first rental property, how he creates leverage to buy more properties, what he looks for with property managers, and how long it took him to fire his boss. This episode is packed full of value and how to create passive income and achieve financial freedom through real estate investing. Please welcome Dustin Heiner. Dustin, welcome to the show.

 

[00:01:11.060] – Dustin

Hey, Sean, thank you so much for having me on the show. I just really love talking about financial independence and real estate investing. And not necessarily those things are fantastic, but it’s what it affords me to do in my life, being able to do whatever I want, not work a job and be successful employed and come on, great podcasts like yours and talk to people like you. This is great. So I really appreciate you having me on.

 

[00:01:31.330] – Sean

This is my jam. I love hearing how people achieve financial independence. They can kind of create their own schedule, do what they want. But let’s go back in time a little bit. Why don’t you give us a little bit of your back story and we’ll lead up to the transition point.

 

[00:01:45.720] – Dustin

Yeah, totally. So I’ll quickly jump to the end. When I was 37 years old, I was able to quit my job. And I like the term, successfully unemployed. Basically, I figured out a way to not work for somebody else but still make money to provide for myself and my family. And so I was 37, I was able to quit, but I’ll go back to the beginning. So my entire life I’ve been entrepreneurial. So starting businesses, that type of idea. But I’ve always been taught, just like all of us, we’re all taught. You go to school, you get good grades, then you go to College and you get good grades. You get thousands and thousands of dollars into debt. And then you get a piece of paper. It’s called a degree. And you take that around. You try to go to a company and ask them to give you a job with that piece of paper that you get. Then you work at that job, might get fired or laid off, but you work at a job until you’re 65, 70 years old, and then hope to retire on what you saved your entire life. To eventually in the future to be able to retire on.

 

[00:02:39.100] – Dustin

So I was doing that my entire life. But I’ve also been entrepreneurial, meaning when I was 13 years old, I had a newspaper route. That’s where you had newspapers. You ride around your bike with bags of newspapers. You throw them at 05:00 A.m. And bang them on garage doors, waking people up. I had a graphic and website design company. I had a skateboard manufacturing business. I had a pizzeria and a convenience store. All these businesses starting up from the beginning because I’ve always loved business. Now they made me a little bit of money, but they weren’t that great. And I was still working at nine to five. I call it a just over broke job. When you’re working a job, it’s a just over broke job because that’s what you’re living. And so I was doing that. I got married and my wife and I started having kids. We had a business at the time. We bought one or two rental properties. I knew I really wanted to be a real estate investor, but life really got in the way. We started having kids after kids. So if you could see this in the video, you can see my kids.

 

[00:03:31.800] – Dustin

They are in the background right there. And you can see that we have four kids now. But I’ll tell you a quick story of what catapulted me into financial independence and real estate investing specifically. So after my wife and I had one, two and three, and then our fourth child, I was working at a county government in California, just regular county job. And I’m working here. We have our fourth child and I go on paternity leave after our fourth child was born. That’s where the dad stays home with a mom, changes poopy diapers and buzz with the baby and helps mommy out and stuff. And so I’m off for a couple of weeks. And then I go back to work. And then that week I get back to work on a Friday, I get a call from my boss’boss’boss’s Secretary, the top dog. His Secretary calls me up and says, Dustin, would you please come to the office? And I said, sure. And then I hung up the phone and I paused for a second. I thought, oh, why would they be calling me to the office? This isn’t normal. This is weird. 330 on a Friday.

 

[00:04:28.130] – Dustin

I’ve seen plenty of movies. This doesn’t sound good. And then sitting there, I remembered a couple of months before I went on opportunity to leave. There was some rumors or some rumblings going on that there could potentially be layoffs in the county because taxes were going down. It was just not a good time. And I immediately shook that off like, no way. I’ve got 1213 years seniority here. My boss think I do a great job. This is the government. Nobody gets fired or laid off from the government. So I shook it up, and I get up and I walk down the hallway to my boss’s office. Now, this hallway isn’t very long, Sean. It’s actually kind of short. But every single step that I took, it felt like it got longer and longer and longer. It felt like my feet also became lead bricks and each foot moving, that was like labored intensive pain trying to do that because the weight of everything started weighing down on me. This could potentially be the time I lose my job. Well, I get down the hallway, and I turn the corner and I see my boss’s door.

 

[00:05:24.010] – Dustin

His door is closed. I look at his Secretary, and sheepishly, she kind of grins at me and says, Dustin, would you please have a seat? Super nice lady. And she’s consoling me with her eyes because she knows everything about what’s going on. I know nothing about what’s going on. So I go and I sit down. I take my seat. And as I’m sitting there, I started thinking about my family. And I start thinking about, oh, my goodness, I’ve been working this nine to five, doing what everybody told me my entire life. Was that all a waste? All that time doing all that going to College, getting all that debt was all a waste. And then I started thinking, oh, my goodness, if I can’t provide for my family, what does that make me as a father? Does that make me a failure as a father? Does that make me a failure as a husband, as a man trying to provide for his family? Well, as I’m sitting there, the weight of everything just keeps crushing down on me. And my hands get all clammy and my forehead get all sweaty because I’m just so anxious.

 

[00:06:17.150] – Dustin

Then the door to my boss’s office opens up, and out walks a coworker, a lady, a co worker of mine. She is noticeably distraught, noticeably upset. She’s not necessarily crying, but you could tell her world has been devastated. And a piece of paper in her hands. And she walks by me and my boss says, Dustin, would you please come to the office? So I get up and I go into the office and I get laid off. And remember, this is the government. Nobody gets fired or laid off from the government. But I did. So if it happened to me, it could happen to anybody. Well, I took that layoff notice, and I went back to my desk and I sat down and I realized two things sitting right there. And this is the reason why I’m telling everybody’s story. I realized two things. Number one, I need to get another job. I need to be able to provide for my family. I need to make sure that I have food on the table for them. And so I was blessed, praise the Lord to be able to find another job in the same county or another Department.

 

[00:07:07.200] – Dustin

They were able. They had extra money, so they hired me. So that was a huge blessing. Then the second thing as I was sitting in that chair, that I realized was that I need to make sure that this never, ever happens to me again. I need to make sure that nobody has the ability to take away my ability to feed my family. So right then and there, and remember, I said I always wanted to be an investor. I needed to, but life got in the way. Well, right then and there, sitting in a chair, I realized that I was telling everybody my value came from my job. And we all do this when somebody says, hey, what do you do, Dustin? What do you do? I would say, oh, I work for the county. I do it. Work for the county. And they’re like, oh, okay. But I’m basically projecting my value as my job. We all do that. And when we do that, we’re realizing that now after that, I had to realize that my value doesn’t come from my job. My value comes from my God, for myself and for my family. So right then and there, I realized from now on, I will tell everybody I am an investor.

 

[00:08:06.640] – Dustin

Now, it may so happened that 100% of my money comes from my job. That’s now my parttime job. I am a fulltime investor. So I’ll fast forward the story. I started buying rental property after rental property, after rental property, each one making me $250 or more in passive income every single month. Eventually, I had 30 plus properties. And I realized working on this new job, it’s a great job and everything, but I’m like, I’m losing money working here. Even though I’m making $75,000 a year, I’m losing money. And this is what everybody needs to realize. Your value is more than anybody can ever pay you. And this is how you’ll know this? Your boss is paying you just enough to keep you working without quitting, but not so much money. It’s taking money out of their pocket. So if you got paid for what you’re worth, they’d probably go broke. And so I started realizing that. So I started buying property after property. Now round up the story by saying, once I have 30 plus properties, I realized I’m losing money here. I need to quit. So I went to my new boss’office. Good guy and all, good boss at all.

 

[00:09:03.820] – Dustin

I gave him a layoff notice. I said, Boss, I’m laying you off here’s your two weeks notice. Jokingly, of course. And he said, Dustin, what are you going to do? I said, Well, I don’t have to do anything. I literally have real estate that works for me. I don’t do a thing, and I make money without working. So I’ll finish up the story by sharing that. If you remember that hallway that got longer and longer and longer, it was rather short, but got longer. It was the worst walk I’ve ever taken. Well, this last walk that I walked away from my job and I worked in the downtown area, a mile and a half walk, and I’ve done it a thousand times. I didn’t want to pay for parking, so I did it a thousand times. I felt like I was walking on clouds. It was the best walk I’ve ever taken because I knew looking back, I would never, ever need a job again. And nobody would be able to take away my ability to feed my family. So I’ll go and pause the story, let you ask questions. You probably got some questions asked.

 

[00:09:53.770] – Sean

I love this story. So motivational. And I love the leading up to that pain moment. You’re going into that office and you know what’s coming. You’re anticipating it now to flip the equation, that moment to go to your boss, and it sounds like you had a decent relationship with it. It wasn’t like a painful, stressful employee boss relationship. So in this case, you know, because you told him what you’re doing, you’ve got real estate, you can do whatever you want. And I love this. He’s going to remember that moment for the rest of his life.

 

[00:10:29.550] – Dustin

You’re absolutely right. I’ll give you one other thing on top of that. So he’s also somewhat business minded, even though it’s a government. He’s also business minded. He had like a couple of businesses himself. And when I was quitting, kid, you not Sean. I gave him a two weeks notice. But then after that two weeks notice. This is really funny. I was sitting there, I gave him a two weeks notice. I get ten in the morning. Eight in the morning. When I got started, by noon, I was like, why am I still I don’t need two weeks. I don’t need this. And usually you get two weeks. So you don’t burn a bridge. So you can go back if you want to. I was like, I’m done. I went to my boss at noon, right at lunchtime, hey, boss, I’m done. I’m just going to go to clock out. And he goes, I want to do like a going away party for you. And I also want you to share with everybody, all of your employees, friends, not friends, coworkers, share with them what you’re doing because it’s really inspiring. So he did. He got some pizza for everybody in like a two hour notice.

 

[00:11:25.570] – Dustin

Got pizza. We got into a room and he asked me. He walked me or talked me or interviewed me through the process so I can hopefully inspire other people, which was really interesting coming from the government. But yes, I agree. He will absolutely remember every bit of it.

 

[00:11:39.340] – Sean

That is so cool. I love it just to see the look on his face and look on other people. You’re doing what? Because to me, you feel like the type of guy you’re not going to be boastful or break AOSIS. You show up, you do your job, but you keep to yourself. Right. So there must have been people in that room. Like, wait, what?

 

[00:11:59.430] – Dustin

Well, yeah, absolutely. And what was great was I had people asking me afterwards. Also, this led to me creating my online business, which is master passive income. It wasn’t really going to be a business. It was just going to be a passion project of mine that people were asking me, how in the world are you doing this? I said, Well, I just invest in real estate. They say the second question always comes, can you show me how to do that? And so I’d be teaching people one of my friends and family members and co workers and teaching people one on one. Then I realized, oh, my goodness, this takes up so much time teaching people one on one. So I said, there’s got to be a better way. So I wrote a book and I started giving that out and said, here, just read this book. I just literally give it to people because I don’t care. I give it to them and say, these are going to answer your basic questions. They’re good questions, but they’re basic ones. When you learn the basics, then you’re going to have really good questions that apply to you.

 

[00:12:48.260] – Dustin

Then I can coach you through that process. So from their podcasts and YouTube channel and courses and coaching, all this sort of stuff, because it’s just fun. I just really enjoy seeing people’s lives change.

 

[00:12:58.050] – Sean

That’s great. So let’s dive into the real meat of this conversation. This is what our listeners really want to know. We’re going to dive into the numbers a little bit. So thank you for giving the 250 market sounds like $250 profit per property.

 

[00:13:11.300] – Dustin

Minimum, right?

 

[00:13:12.830] – Sean

Minimum, 30 properties. It sounds like. How long did that take to build up 30 properties?

 

[00:13:19.490] – Dustin

Yeah. So I would say probably took me five, maybe six years, six years at the most. But at the same time, I waited another two years to quit my job because it’s hard leaving that paycheck. You feel secure. And it’s like, oh, it’s risky to quit. But when you realize somebody can fire you at any time, that’s risky, in my opinion, having your life in somebody else’s hands, that’s so much more risky. But yes, it took me about six years to have enough properties to quit. But then it took another one to two years for me to muster up the strength to do it.

 

[00:13:50.300] – Sean

Sure. So total of eight years, we could say you really bootstrap this on the side. Building up real estate. The first property is always the hardest. From what I learn from people, you have to, I assume 20% down, right.

 

[00:14:04.180] – Dustin

Or close to that’s one way. There are many ways to get financing. One way is 20% down. I’ve counted them 14 or 15 different financing strategies or methods to get a property. I can quickly go over a couple of them like, please save it money. Seller financing is another one. I’ve even used signature loans. Go in a bank and get an unsecured line of credit and do that. I’ve done commercial loans, portfolio loans, which is like a local bank. I’ve even done this is a bad strategy. Maybe they use their credit card to buy a property. This is the reason why I’ve done so many. And you may be calling risky, but it’s a business and this is the big thing. If anybody’s going to invest in real estate, I would suggest don’t listen to the gurus, the quote, unquote gurus out there, because I did that when I first got started in 2006, I went to one of those late night infomercials, like at 02:00 A.m.. Hey, we’re coming to your town. We’re going to a free seminar. I went to that. I was like, good. Before, I didn’t know anything about it. I went to that and then it was a sales pitch, an hour long sales pitch and then said run to the back.

 

[00:15:08.330] – Dustin

We’re going to take the first 1000 people. And instead of being $100,000, it’s only going to be $1,000 for you. It’s another two day seminar. So I went to that. I paid that $1,000 with that two day seminar. From there, it was another sales pitch for like a $40,000 rental property course, a $50,000 flipping course. And it was just so much. But this is what the guru will tell you. They’ll tell you that your property is your business. But what I suggest and I’ll round it out by sharing. What I always tell everybody is we build the business first, what we do, like you said, a minimum of $250 a month in passive income. What we want to make sure is that we are buying a property that has the ability to make us money. And no matter what it takes to get that property, I make sure those accounts let’s say if I use a credit card and there’s higher fees on it, I make sure that is accounted for in the property that I buy. So I don’t buy a property if I’m going to lose money. So here’s what we do. We add up all of our expenses and then we make sure we can rent it for more.

 

[00:16:09.980] – Dustin

My suggestion is a minimum of $250 or more. That’s the difference between the two. And then you make that money in passive income. That’s how I’m able to do more. I guess expensive types of financing. I guess signature on. You’re going to be paying 14% probably. But it’s okay because here’s the great thing, Sean. You’ll definitely understand that I don’t pay my taxes, I don’t pay my mortgage, I don’t pay my insurance, I don’t pay for repairs. My tenants pay for all of that. Just like in a business that you would create, let’s say a brick and mortar business, you’re going to create that business. You’re not going to go to get a job to help pay for things. No. You’re going to make sure your expenses are accounted for in the products that you sell. And then you make money on top of that. Same thing with real estate investing.

 

[00:16:50.550] – Sean

Smart. So everything is broken down on the financial plan of the business. Each property is paying for itself and then some. You’ve got some leftover, correct? Excellent. Okay, let’s take a quick commercial break. Do you wish you would have bought some stocks earlier? Imagine you had $5,000 to invest. Let’s say you bought Amazon stock in 2010. That $5,000 would now be worth over $95,000 today. Let’s say you bought Tesla stock in 2013. That $5,000 would now be worth over $220,000 today. And let’s say you bought Netflix stock back in 2012. That $5,000 would now be worth over $245,000 today. Do you feel like you find out about opportunities like this way too late. What if you could find great stocks before they become mainstream news? And what if a software find those stocks for you? With Ticker, you can find great stocks before what feels like the rest of the world finds out. No matter if you’re a beginner or experienced investor, Ticker will help you find great buying opportunities and get a head start on your wealth building journey. Get started today with a free trial. Visit Ticker.com. That’s tykr.com again. Ticker.com, tell us about what kind of areas are you targeting?

 

[00:18:15.690] – Sean

You’re located in California. Are you buying properties in that same area near you?

 

[00:18:20.760] – Dustin

So I was in California when I started. This was in 2006. Now, I since moved to Arizona. It’s much cheaper here. Laws are better. I like it better here. And so I invest in Ohio, Texas and Arizona. My students, we invest all over the country. But I would suggest the better price to rent ratio, meaning the prices of the homes are lower, rents are a little bit higher. So you can get that passive income. The Midwest is terrific. Down into the Carolinas and in the Florida, all those areas, those States are really good properties. And if you live on the coastlines, it’s going to be hard to hear this. But there are properties that sell for 60, $70,000, 8100 thousand dollars. And if people want to live there, yes, I kid you not. They want to live there, which is great for us as investors. We give them good quality properties to live in. And I’ll quickly share that in the Midwest, you’re able to buy these good properties. But what we do is again, remember, I suggest don’t listen to the gurus. The gurus will tell you this is the process. And I did this process and it was bad.

 

[00:19:20.800] – Dustin

Meaning I found an area in the country and the best they told me that’s what to do. And I found a realtor and a property manager. I put them together and I bought a property, and my property manager started stealing from me in six months. It was horrible. I did it all wrong because I couldn’t find a good property manager. Long story short, let me give you the right way. So that was the wrong way. This is the right way to invest in real estate. What you want to do is you build the business first. We find inventory. You’re not going to start a convenience store in a place that you can’t get inventory and a place that you don’t have customers. You’re not going to do that. You’re going to do that business where you can find good inventory. So that’s the first thing that we want. Anywhere in the country you can find inventory. And those are homes that we want to buy. I suggest three bedroom, two bath, 1251 sq. Ft. Not too big. We’re going to take a lot of money to paint it and a lot of toilets to fix.

 

[00:20:11.210] – Dustin

We want properties that people either want to rent or buy. And with that, we’re going to find good areas. I found the Midwest is really terrific for lower prices for the homes and higher rents. And here’s the great thing. In order for me to become financially independent, Sean, I realized I needed to replace my income. Not just my income, but I need to make sure that my expenses are covered outside of my J-O-B. That just overbooked job. So here’s what I did. I worked my way backwards. Backwards in a sense, where I started. I said to my wife, hey, honey, how much money do we need per month to cover expenses? Like, what are our expenses? She said, $4,200 a month is what we need to cover mortgage, food, and all that sort of stuff. I said, okay, let me figure this out. Easy. And more than likely, Sean, your audience is much smarter than me. I’m not that smart. All it takes is addition, subtraction, and a little bit of multiplication. So all you do is you add up your expenses, and then you subtract your total rent and you get rented for and that’s your passive income.

 

[00:21:08.990] – Dustin

Remember, I said $250 a month? So I wanted to be able to quit my job. I want to be successful and employed. So I said, okay, one property at $250 a month, that’s $3,000 a year without working. That’s fantastic. That’s a lot of money. But if I bought ten properties at $250 a month, and remember, this is passive income, I don’t work. I literally don’t work at all. But ten properties at $250 a month, that’s $2,500 a month. $30,000 a year without working, 20 properties is $5,000 a month, $60,000 a year without working. And I realized if I just get to 20 properties at the minimum of 250 a month, I would be able to replace my income. And so I realized, oh, my goodness. It’s just the economy of scale. I just keep moving and keep growing. And this is also how I found so many different ways to get financing because not everybody has 20% down. I didn’t in fact, I didn’t start with very little money. In fact, I’ll have to say I’m really blessed. I was taught not to go into debt, which was good, but I was not taught to save.

 

[00:22:08.650] – Dustin

My wife was taught to not go into debt and to save. So we got married and she came to the marriage with $15,000 of her own money. And after like six months after we got married, I saw that infomercial. I went to do all that stuff, and I came to her six months after. Hey, honey, can I take all the money that you saved to buy our first property? She was so against it. She hated the idea. It was horrible. But after really helping you to understand the business, that everything that’s going to happen, she reluctantly agreed. And I took that $15,000, bought our first property, and from there recycled that money, meaning I bought a house, captured equity because I’m an investor. I buy it for lower had equity in the property. Then I refinanced, pulled all that money back out that I could to buy the next property. And then I did that over and over again. That’s probably a long winded answer for everything that we did to get to the point where I am financially independent. Yeah.

 

[00:23:01.200] – Sean

You just revealed the key point there is get that first property and then leverage the equity to get the next to get the next kind of like a domino effect to get the momentum going. Thank you. You’re really providing a lot of great information here, like actions our audience can take. Let’s go a little further here. You mentioned low end prices. You’re aiming at homes that cost about 50, $60. Right. Go to the high end. How high do you go?

 

[00:23:27.050] – Dustin

I personally don’t like going above $200,000. And here’s the reason why once you get higher than that, it’s obviously the higher down payment. So that makes it a little harder. On top of that, if you’re going to have a mortgage payment, that mortgage payment is really high. And if it’s not rented for one month, let’s say $200,000, mortgage payment is going to be maybe $900, $1,000 while interest rates are going up now. But let’s just round it up to say, let’s say $1,000. If it’s $1,000 a month, then that’s going to eat up your passive income in one year. Now, if you have a $400,000 house, that might be a 16,000 or one $800 a month, that’s going to eat up a lot more of your passive income. And so I like to get as little money out of my pocket every single month to pay for expenses and make a lot of money in like $250 a month in passive income. So what it really comes down to is trying to buy properties for none of my own personal money. Maybe it’s getting a mortgage, getting private financing from friends and family members and other businesses, getting hard money.

 

[00:24:32.250] – Dustin

And yes, hard money. It’s not like Jimmy the Wolf coming to break your knee caps if you don’t pay them. It’s not that bad. They’re actually just institutions that aren’t banks that want to lend money. Those are really good. So, yes, I personally like $200,000 and below. I definitely have homes that are worth more than that because of appreciation. But when I look to buy a property, I’m looking for less than that. But the sweet spot right now is $80 to $100,000. That’s usually a sweet spot. Now you can find them for lower $60,000. In fact, one student just bought a house. I’ll tell you a story. So a student just bought a house about a month, not two weeks ago. Three weeks ago, they bought a house and they were asking like $60,000. And we’re investors. So we negotiate. We negotiate down to like 53. I think they were at like 68. We got him all the way down to 53, which is terrific. He fix it up, we got it rented, he reappraised it, and it’s appraised for $103,000 now. So he’s got that much equity. But here’s the great thing, Sean. I coached him how to take and he’s a pastor.

 

[00:25:31.170] – Dustin

He doesn’t have extra money, but he lives in Sacramento. His home just appreciated it. The value is higher. So we took his home equity, the value in his personal residence to buy this property. So it’s a home equity line of credit. We took that cash, bought that property for $50,000. With that, he’s refinancing it. Currently, he’s going to take 80% of that entire amount. Like it’s worth $100,000. He’ll take out 80 grand. 50,000 would pay off his home equity line of credit. Now he has $30,000 extra to buy the next property and do it all over again. And he’s making 200 no $350 from this one property. Does that make sense?

 

[00:26:06.840] – Sean

Totally. I love it. Thanks for breaking down the numbers. So we talked about financing a little bit. One aspect of real estate that can be a little intimidating for people is and I’m a big supporter of and you mentioned it, which is property management. I don’t like it when I hear people buying a home and they’re also maintaining it. That means they’re doing the work. They’re fixing toilets, they’re taking calls, they’re changing light bulbs, all that.

 

[00:26:28.830] – Dustin

I don’t want to do any of that stuff.

 

[00:26:30.120] – Sean

No. So finding a great property manager, you learned the hard way. You found a bad one. But can you give us some advice on what to look for?

 

[00:26:39.770] – Dustin

Yeah, that’s a brilliant question because like I said, I didn’t know what I was doing, and I was listening to the gurus. And this is what I’ll quickly go through exactly how they say it. They say find an area of the country and the best anywhere in the country. Find a property, run the numbers, make sure you’re making $50 a month in passive income. And then you’ll get appreciation because that’s what you’re going to go for. I said I personally don’t have appreciation. I’m going to literally give these properties to my kids. This is generational wealth that I’m creating. So from there, you find a property, run the numbers. Then you spend thousands of dollars to buy the property. Then you spend even more $1,000 to fix it up. Then you find a tenant, and then you find a property manager to manage a property. In my opinion, that’s just about backwards. What we want to do is we start with the property manager because the worst thing you can do is think you’re buying an asset. You do what the guru say. You buy a house and you do everything for that process. And then you try to go and find a property manager.

 

[00:27:31.370] – Dustin

You call up every property manager you can find and all of them say, I’m not going to manage that property. I’m going to get shot in that area. Now. You don’t have an asset anymore. You have a liability. So what we do is we look for experts first. The property managers, the contractors, the Realtors, the inspectors, the mortgage brokers, the insurance agents. We do all remember I said it from the very beginning. Build the business first. The first step is making sure we have a business in a certain area that has inventory. From there, we inventory properties because I don’t buy properties and think I’m going to ever live in them. In fact, let me give you a quick example of what that looks like. If you’re going to start a convenience store, you’re not going to sign a lease on a location, open the doors and set a box of candy bars in on the ground there. No, you go out of business in 2 seconds. What you would do, though, is you would build the business first. You get the gondola. These are shelving units that the candy bars go on. You get the cold storage, the countertops, bank accounts, cash registers, insurance employees, all that stuff.

 

[00:28:30.660] – Dustin

Before you buy any inventory, then you buy the inventory and put it in same thing with real estate investing. We find everybody in the business, and every piece of property is a piece of inventory that we put into our business, and that’s how we can scale the business so quickly. So getting to your question about property managers, your property manager is your quarterback. They’re the ones that are going to protect you. They’re going to make you money. They’re the leader of your entire business. Like you’re going to start not going to start a community store and just find a random person off the street and say, hey, you can manage my business. No, you wouldn’t do that. You would interview them. And so my suggestion is interview many property managers. First time I did it because this is what I was told the property manager, hey, you got a pulse. Let me have you manage my property. Horrible idea. What you want to do is you ask questions. So with all my students, I give them like a list of 22 questions and answers that they should answer. But I’ll give you a general overview of what you should be looking for.

 

[00:29:24.820] – Dustin

Number one, trustworthiness. That’s easy to kind of like, oh, yeah, that’s a no brainer. Yeah, trustworthiness. But that’s big though. And you’re not going to get that by texting somebody. Your interview is not through text. Email is not an interview. What is an interview? Phone calls, literally talking to them on the phone. If you can do a Zoom even better, you can see a lot more. You get a lot more understanding. Like in a conversation. They say 20% is what you say, the other 80% is how you save everything else. And so you interview people and property managers. My suggestion is to interview multiple property managers multiple times because anybody can kind of pull the wool over your eyes in one conversation. But if you interview them two or three times, what if they don’t call you back? You call them. One time, they’re going to call you back. But the second time, two days later, you call them. But they don’t call you for like three days now for me. So trustworthiness is one, a big one. I’ll dive in a little bit more about this one. Communication. I cannot stand it when a property manager does not communicate and, you’ll know a bad property manager.

 

[00:30:28.910] – Dustin

If you’re trying to get their business or sorry, they’re trying to get your business, remember, you’re the customer. The landlord is the customer. The tenants are not the customers. Your property manager’s customer is you. So they’re trying to earn your business by talking on the phone. You’re interviewing them. If they’re bad at calling you back, like they say, it takes three days for them to call you back before they have your business. Imagine how bad it’s going to be when they have your money. Like, oh, I don’t want to talk to them. I’m not going to talk to them. I’ll call them back later and they’ll hang up or they won’t even answer. They’ll ghost you. That is horrible. We want to find the right property match. So trustworthy communication. A good question I usually ask is 24 hours or I suggest or I want 24 hours being the turnaround time that I absolutely need from you. Can you adhere to that? And if they can’t adhere to that, then they say, no, that’s too soon. I’m like, oh, that’s too bad. Hang up. I can’t talk to you anymore. 24 hours is not rough from there.

 

[00:31:29.230] – Dustin

So you got trust, awareness, communication. Another one is experience and referrals are a great way to get experience. I had one property manager I was talking to said, hey, can I get some referrals from you? I don’t need to talk to them for very long. Just tell them it will take like two minutes of their time. Your current customers, your current landlords, and this guy literally says, I don’t give up referrals. I’m like, well, okay, thank you. Bye. And I hung up because there’s no point in talking anymore, because the reason for referrals is to get other people’s experiences working with you. Because I don’t know if I could trust you yet. I want to talk to the people I can trust that you trust to give out referrals. And I can trust that at least they’re not going to snowball me. They’re not going to try to lie to me, who knows? But if they are hesitant to give out referrals, then I personally just think, okay, I’m going to move on. So those are three big things that we need to be looking for now, specific questions. We could definitely dive into those.

 

[00:32:21.840] – Dustin

But big thing for me, Sean, is I love to teach people how to fish, not just give them the fish. I can tell you ask this question one, question two, question three. But I want to give you the principles. And so for me, trustworthiness. And you’ll get a lot talking to them on the phone, communication, and then experience. Those are the big key three things that you need to find in a good property manager.

 

[00:32:41.870] – Sean

Great breakdown there. Really appreciate that. And just to clarify here, are you putting the process of finding a tenant on them or are you doing that?

 

[00:32:50.340] – Dustin

I have them do it. I don’t want to talk to tenants. I don’t want to find tenants. I have them do all that. But here’s what I do, though. What I do is I have them bring the tenants to me after they’ve vetted them in my criteria. And another reason why I don’t do any work. In fact, a lot of people have heard of the book The Four Hour Work Week. Well, in my opinion, working 4 hours a week is for suckers. I don’t want to work 4 hours a week. I don’t even want to work 4 hours a month. Maybe 30 minutes a month is the most I work. And the reason why is because what I do is I look at the property management statements and say, everything looks good and set it aside. But the reason why I’m able to do that is I built the business first, and I’ve given them business processes and procedures that I tell them, I don’t care how you run other landlords properties, run my properties this way, do X, Y. And if this happens, then do this. If this happens, then do that. What I do is I make sure that they know exactly what to do at any given point.

 

[00:33:45.260] – Dustin

So with that, let’s say there’s an eviction so let’s say they haven’t paid, like in three or five days after late period. I’ve already told them, start the eviction process at that point. That’s literally your process you go through. So with the property manager, what I love to do is make sure that they know exactly how to run my business. I might have missed the point on your question. Help me remember what your question was.

 

[00:34:08.990] – Sean

You’re giving a lot of good context here, which I really appreciate, but they hire the tenant or I’m not hire. They bring in the tenant or you do it. And long story short, you put it on them, but it sounds like you still like to do you still talk to the tenants or do you like to talk to.

 

[00:34:24.620] – Dustin

No, I don’t want to talk to the tenants. And in fact, I want the landlord to be the intermediary saying, hey, this is just what the landlord wants. Sorry, they’re the bad guy. Oh, well, I don’t want them to talk to me because I want them to use me as the bad guy because it’s a business. If you don’t pay your mortgage for your bank, you can’t call them up. Hey, bank. My son got arrested. My car got impounded. I’m having a rough time. Can we skip the mortgage payment this month? They’re like, no foreclosure process starting right away. Same thing. This is a business. This is what you’re creating as a business. Now, what I would say, though, when they find a tenant, when they’ve narrowed down a tenant, I want them to bring their application to me so I can make sure which tenants I want that. Let’s say one has a credit of, let’s say, $400 or sorry, 400 credit score. Another one has 700. Even though I’ve given that to them, I will have them bring it to me so I can say yes, move forward with this tenant.

 

[00:35:21.390] – Sean

Got it. Awesome. Let’s take a quick commercial break. Imagine this. You’ve been putting money away for years, if not decades, with the hopes to retire someday. But at the average rate of 6%, you realize you have to work another five to ten years longer than expected. Not fun. And this is actually a reality for a lot of people. An article from CNBC stated that in order for most millennials to retire by age 65, they have to start saving 50% of their paycheck or they’ll continue working into their 70s and 80s. I don’t know about you, but I don’t want to be working well into my 70s if I don’t have to. I want to enjoy freedom. Freedom to spend more time family, friends, traveling, and picking up new hobbies. In fact, I want to retire early. And I think most of you would agree the problem is a 6% return just won’t cut it. But did you know a 15% return can cut your retirement timeline nearly in half? The question is, how do you generate a 15% return in the market. Introducing Ticker, a software that helps beginner and experienced investors manage their own investments.

 

[00:36:32.690] – Sean

I’ve been using Ticker to generate between 15 and 50% per year, and some of our customers have come forward and mentioned that Ticker is not only helping them take control of their investments, but it’s also helping them match and beat market returns. But don’t take my word for it. Check out our Trustpilot reviews to see what people are really saying. Get started today with a free trial. Visit Ticker.com. That’s tykr.com again. Ticker.com, before we transition to the rapid fire round, is there a question that I should have asked but I did not ask.

 

[00:37:15.130] – Dustin

Yeah, that’s a great thought. So I would think that the best thing that we can do after building the business is focusing on the passive income side and offloading everything out of your shoulders. Because a lot of people that get into real estate investing, what they’re going to do is say, you know what, I can save money in general if I were to manage my own property. Now, if you remember, I said I don’t pay my mortgage, I don’t pay my property manager, I don’t pay my taxes, I don’t pay that stuff. I make sure that all those expenses are accounted for. Like, I don’t have to get a job to pay for my property manager because I’ve already accounted for that expense before I bought the property. And I don’t buy the property unless I can afford a property manager with the expenses in the expenses. So what happens sometimes? And I don’t mind this at all. Like if students do this, they say for the first five or ten properties, I’m going to manage them myself. And if they do, I say make sure that you account for that property magic expense where you’re getting paid to manage the property, because in the future you’re going to stop being able to manage the property because there’d be too many.

 

[00:38:18.820] – Dustin

You’re not going to be able to do it. You’re not going to want to play with their kids. So make sure that expense is in there. So then you could then hire the property manager, but you’re also getting paid while you’re doing it yourself.

 

[00:38:28.030] – Sean

And what percent do you like to keep the property management payment within? Are we talking like 1012 percent somewhere in there?

 

[00:38:35.090] – Dustin

10% is always it’s usually about industry average, but there are different cities where it’s not necessarily a percentage. I’ll give you an example, like Houston, where I have some properties, they are a flat fee because rents are higher 2000, $2,500 10%, $250 a month, where a lot of property managers and it’s industry, like in that area, all the property managers charge a flat fee, but either like $100 or $95 to compete. That’s just what they do. But I’ve paid as high as 12%. And the reason why I paid 12% was because the rents were like $600 $700. It’s only like $8 more to the property manager, and they’re doing a lot of work. Those are C class properties that aren’t really the best areas. So I’m willing to pay them $8 more so I don’t have to think about the property.

 

[00:39:19.850] – Sean

Got it. Okay, great context. All right, so let’s jump into the rapid fire round. This is where we get to find who Dustin really is. Are you ready?

 

[00:39:28.510] – Dustin

All right, yes.

 

[00:39:29.570] – Sean

Try to answer each question in 15 seconds or less. Here we go. So what is your favorite podcast?

 

[00:39:36.850] – Dustin

Favorite podcast. One that I listen to a lot is The Shane Sam’s Show. He’s actually a friend of mine. He’s a good businessman, but he interviews awesome people. Think of like Joe Rogan, where Joe Rogan brings on his friends and interviews people and they have great conversations. Same thing with Shane Sam. It’s the same Shane Sam’s Show. But I also listen to Joe Rogan occasionally as well. But those are the two number ones that I like to listen to right now.

 

[00:39:58.400] – Sean

Nice. All right. What is a recent book you read and would recommend?

 

[00:40:02.830] – Dustin

Well, I haven’t read it the entire thing in a while, but the Bible. I read the Bible literally every single day, but I read parts of the Bible every single day. In fact, I read it multiple times a day. But if you go to a book outside of the Bible, I would have to say, well, not the most recent one, but I’ll give the one that is probably the most profound that’s worked out that’s changed me is The Richest Man in Babylon by George SQL. And I think I maybe read it last year. I usually try to read it like every other year or something like that. But Richest Man in Babylon, it’s financial principles in a fictional story format that really help you to understand how to apply financial principles to your life. And it’s brilliant, it’s amazing, and it really just gets you to change the way you think about finances.

 

[00:40:46.230] – Sean

I’ve had a lot of people recommend the book, and it’s just one of those deals. You just need one more person to say, hey, check this book out. Amazon cart.

 

[00:40:53.890] – Dustin

Absolutely.

 

[00:40:54.300] – Sean

Right after the call.

 

[00:40:55.420] – Dustin

There we go, guys.

 

[00:40:57.190] – Sean

What is the best business advice you ever received?

 

[00:41:02.050] – Dustin

I would have to say, well, this comes from another good book and this is the one that catapulted me into real estate investing or passive income. It’s rich dad, poor dad. And his advice is go for passive income. Because remember, I was always taught you work, you work, you trade 1 hour for a dollar or how much dollar you’re supposed to get. You trade time for money. And from Rich dad, poor dad. I realized after reading, I was like, oh, my goodness, there’s another way to do this. I don’t have to trade an hour for whatever dollars that I’m making. This is so much better. So from there, it’s passive income. That’s the best business advice anybody can have now because I literally have 40 plus hours of my life back because I’m not working at J-O-B-I build businesses now. I have four or five businesses. Yeah, probably five businesses now that make me money impassively or I hire employees that they do the work and I make money passively. So passive investing and passive income is by far the best way to go. That’s the only thing I do now and flip side of that equation.

 

[00:42:02.890] – Sean

What is the worst business advice you ever received?

 

[00:42:06.550] – Dustin

Listening to gurus that have no idea what they’re talking about. So a guru would tell you, hey, dude, it’s sad. They tell you that they have lots of property. I’m straightforward. I have 30 some property I don’t know about, maybe 32 or something like that. But I’m not flying on jets. I’m not like a grant Cardone or something like that. I’m just like your next door neighbor who found a way to do this. And I just love sharing it with people and I just love getting out. In fact, my podcast Master passive Income podcast. Same thing with the YouTube channel. I just literally give out the content. I rarely do interviews. It’s really just me teaching how to do this because it’s fun. It’s fun to be able to just share this out. But yeah, I don’t listen to gurus anymore. It just seems a little rough for me.

 

[00:42:45.560] – Sean

The world is filled with a lot of fake gurus. We’ve got a new sign up process and you’ll appreciate this, but one of the rules is no fake gurus and no false profits.

 

[00:42:57.920] – Dustin

Keep looking. I love it, right? I love it. Yes, absolutely.

 

[00:43:01.580] – Sean

Last question. Here is the time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?

 

[00:43:10.930] – Dustin

I would have to say it would probably be when I first started working my first job, I was 17, 1617 started working for Walmart. It was the only job I can really get and I started working for Walmart. I would go back then and tell myself to start sooner, even though I was business oriented, like I was entrepreneurial. Like I said, start sooner and looking for passive income streams. Absolutely. Back then because I started when I was 26 years old, 27, 26 or 27 years old really started going after passive income. And I said, I’m going to give myself a goal of quitting in ten years. Like that’s the deadline. If I would have started when I was 17, oh my goodness, I’d be so much earlier. In fact, I have students that come to me for coaching. Investing in Real estate. 1819 year old, 20 year old I think I have 117 year old no. Currently I have 117 year old working with me now. I’m like, I am so excited for you. It’s going to seem hard right now because you don’t have that ball rolling. But let’s say in two years from now, three years from now, you’ll be 20 years Old.

 

[00:44:06.620] – Dustin

That ball will be rolling bigger and bigger and bigger. By the time you’re 23, 24, 25. You’re the only 25 year old that you’re going to know that’s not going to need a job because you have investments, you have money coming in. So that’s what I would do.

 

[00:44:17.910] – Sean

I love that. I’ve got a guy in my network, we’re in the stock market and he actually invests in stocks and real estate. He just turned 18 and I’m like, oh, my gosh, you go another ten years out. Yes, another ten years or less. You’re done. You can do whatever you want.

 

[00:44:33.650] – Dustin

Absolutely.

 

[00:44:35.710] – Sean

It’s awesome. Well, this is great, Dustin, why don’t you go ahead, tell the audience where they can reach you?

 

[00:44:40.890] – Dustin

Yeah, absolutely. I have a real estate investing course I’d love to get for free. Do you mind if I share that out?

 

[00:44:45.530] – Sean

We do.

 

[00:44:46.190] – Dustin

Awesome. So if you text the word rental, rental 23377, rental 23377, I’ll give you my real estate investing course a little bit for free. It will show you how to find an area of the country to invest, how to build the business first, like I told you how to make sure you’re finding the right properties, buying the right properties, making $250 a month and or more and then also scaling your business to be able to quit your job. I’ll give it away. Or you can go to masterpassiveincome. Comfreecourse, all one word masterpassiveincome. Comfreecourse. And that was rental 23377. And I’ll give it to you. But also I have my podcast, the master passive income podcast, where it’s literally just me teaching how to do this my YouTube channel as well, my website. But yeah, I love seeing people’s lives change and giving out all this free information is the best way to do It. Awesome.

 

[00:45:38.550] – Sean

Well, thanks for your time, Dustin. This is great.

 

[00:45:40.350] – Dustin

Thank you, Sean.

 

[00:45:47.330] – Sean

Hey, I just want to say thanks for checking out this Podcast. I know your time is valuable and there’s a lot of other podcasts out there you could be listening to. So thanks for taking the time to listen to my guest story. If you did enjoy this podcast episode, could you head over to itunes and leave a five star review? That would be much appreciated. Thank you. And last but not least on this podcast, some episodes we do talk about stock and please keep in mind this podcast is for Entertainment purposes only. So if you did hear any buy or sell recommendations, please don’t make those decisions based solely on what you hear. All right. Thanks a lot.

Thank you, Sean.