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Mike Powell and Brandon Gaunce

Episode 8: Real Estate Investing Success Stories & Owner Financing Student Case Studies

Mike Powell is a creative real estate investor from San Antonio, Tx. He began selling commercial real estate in his early twenties to put himself through college at Texas A&M.

His goal was to make his first million by age thirty. He smashed that goal. Today, he specializes in finding private lenders, seller financing, and buying self-storage facilities.

Mike continues to grow substantially year after year and attributes his success to God and his endless desire to keep learning and improving. He says, “I am a reflection of the mentors in my life.”

Brandon Gaunce had worked in Corporate America since he was 16 years old. In February 2014, fate and opportunity finally met, and Brandon discovered his position at his corporate job was being eliminated in the next few months. As God had a hand in it, he attended a real estate seminar where Mitch Stephen was a guest speaker to whom he gravitated towards due to Mitch’s genuine, non-guru personality. “Mitch truly wanted to help.”

Subsequently, Brandon and Mitch had an hour long interview to discuss Mitch’s program and Brandon’s circumstances. Afterward, Brandon decided to turn down a relocation package from his corporate job and to dive feet first into Real Estate knowing he had Mitch’s mentoring and guidance.

Brandon started from zero and what happened over the proceeding 18 months proved that Corporate America had been holding Brandon back.

Mike and Brandon are two very different people in two very different markets. Yet both are successful and winning on a daily basis. Here’s a chance to listen to their inspirational stories.

What you’ll learn about in this episode:

  • Mike and Brandon’s different backgrounds and how they got into this business
  • What both Mike and Brandon focus on in their businesses
  • Brandon and Mike’s first years that were filled with mistakes and lessons learned
  • Fighting through the struggle of finding private money and succeeding
  • What kind of interest rates you should offer
  • Why attorneys can be great for private lending
  • Brandon’s first two and a half years and where he’s going from here
  • How Mike has hit $32,000 a month cash flow in just five years
  • What mentorship has meant to both Mike and Brandon

Resources:

Transcript:

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Mitch: This is Mitch. And we’re here on another Real Estate Investor Summit Podcast. I have two guests today. And so, me, your all-knowing host, will be having a conversation with these two folks about how their careers started. They’re relatively new in the business, and we’ll be talking about the changes that have happened and some of the challenges they had to go through. The first person I have on the line is Mike Powell. He is from San Antonio, Texas.

Hey, Mike. How are you doing today?

Mike: Good, Mitch. How about yourself?

Mitch: I’m doing great, I’m doing great. And then, we’ve got Brandon Gaunce, over in the Houston area. Hey, Brandon. How are you doing?

Brandon: I’m doing wonderful, Mitch. Thanks for asking. How are you?

Mitch: I’m doing great. So, I thought it would be interesting because, you know — both of you guys came to me several years ago to try to launch your real estate careers, and I was studying both of your progresses the other day, and noticed just how far you have both come. But, you both came from different directions, and a whole different set of circumstances.

So, I thought it might be kind of neat to talk to you all about your beginnings in this business, and how exactly you did it, because, it’s different for everybody. And then, I thought, it might be a neat dichotomy to have both of you all here together, since you are so different. 

So, let’s start with you, Mike. How long ago did we meet? And, what were you doing when we met?

Mike: When we met, I was working the oil fields of South Texas. I was working about, I don’t know, anywhere from 100 to 140 hours a week.

Mitch: That’s all, just 100 to 140 hours?

Mike: Yeah. Just depended on how lucky I got. [LAUGHTER]

Mitch: So, I bet you really like that, huh?

Mike: Yeah. I was ready to be done with it, Mitch. I came to you because I was ready to get off that train and get into having a normal life again.

Mitch: So, if I remember correctly, you were planning a wedding and you had been doing this for about a year or so. And you had put, like, a year’s worth of money in the bank. What was driving you into entrepreneurship? I’m going to guess that 100 hours. [LAUGHTER]

Mike: Well, yeah, the lifestyle of that job was not what I wanted for the rest of my life. And I had already been self-employed before. I was determined to get back. And, I had been in real estate, but I was tired of making all these investors rich, finding them all these properties and I was ready to do it myself.

Mitch: That makes sense.

Brandon, where were you when we met? How long ago did we meet?

Brandon: I met you in February of 2014.

Mitch: Was that two and a half years ago?

Brandon: Yeah, give or take.

Mitch: Okay. Your circumstance is quite different. Did you have any previous real estate experience?

Brandon: No, I had a little bit of knowledge, but no hands on experience. Never actually pulled the trigger doing anything, and I think that was primarily due to my corporate job holding me back a little bit.

Mitch: Do you have a college degree?

Brandon: No.

Mitch: Mike, you did have some real estate experience, right? You had been a commercial real estate agent for a while. That’s how you put yourself through college, right?

Mike: Right. I had my license probably about 6 years when I met you, Mitch.

Mitch: So, you weren’t a novice, and you did get a college degree. And, Brandon — the reasons why I’m breaking this up is because Brandon is the complete opposite of you. You didn’t have a real estate license, you hadn’t been involved in real estate, to speak of. And you didn’t have college. What was your job when we met, Brandon?

Brandon: I was a corporate trainer. So, I traveled about 45 weeks a year, from all over the United States, training people in the auto glass industry.

Mitch: Yeah. And, what’s driving you into this entrepreneurship?

Brandon: After 20 something years, and 6 years in the position, they decided to eliminate my position at the company and, basically, it was a blessing in disguise [LAUGHTER].

Mitch: You didn’t feel like it was a blessing when I talked to you, I remember.

Brandon: No, no, no. I did not.

Mitch: You were in a bit of pressure cooker, because you really didn’t have a — you really weren’t planning for this, and you didn’t have a lot of money in the bank, did you?

Brandon: No. I had very little savings. You know, I was “successful in the corporate world”, you know. I had a good job, and a steady pay check, and it all was good. I just didn’t have a whole lot of savings, and when this came about, it was — it blindsided me.

Mitch: Yeah. It kind of made you mad, didn’t it, if I recall?

Brandon: Yes, very.

Mitch: So, I wanted the audience to hear both sides of it from both people. One of the main reasons I decided to take both of you all was — I call it your “Had Enough Meter”. Your “Had Enough Meter” was pegged way over to the right and the red. You had simply had enough.

Mike: I was to a point where it was affecting my whole life and I needed to — I was just so sick of it that I had to do something or else. I was going to have my relationship with my wife change and all that kind of stuff, if I didn’t figure out something to have a more normal life.

Mitch: That oil field just doesn’t leave any room for anything, does it? Not even sleep.

Mike: No, no. I would get to see my wife maybe 1 or 2 days a month.

Mitch: And you were in the same town? More or less, the same region.

Mike: Yes.

Mitch: It wasn’t like you were over in a different country drilling for oil. You were in the same state. You were in the same counties.

Mike: Yes.

Mitch: Yeah. Horrible. So, let’s start with you, Mike. What’s your strategy? When you go out to do the real estate business., what is your niche or your strategy?

Mike: Well, my major niche is owner financing, Mitch. I bought a couple of owner financed houses when I very first called you, and I was having trouble selling them or getting decent buyers and what not. So, I just started out, and I just kind of jumped in with both feet without knowing what I was doing. And, luckily, you took me on, because you don’t take people on where I’m at. And so, luckily, you took me on and helped me get straightened out.

That’s my main strategy. But, I try not to let anything pass me by. If it is a good flip, I like to do it, or, if it’s a good wholesale, I’ll do that or maybe even a listing here and there. I try not to let anything pass me by. But, my major niche is owner financing.

Mitch: So, you get up in the morning, you go to try to find owner financed houses, just like what I teach and that model. But, along the way, you find a lot of different stuff, right?

Mike: Exactly.

Mitch: And then, Brandon, what ends up happening in your typical week or your typical next 4 deals? What’s gonna happen?

Brandon: If I were to purchase 4 deals, typically, I would wholesale, or retail three of them, and owner finance one.

Mitch: Right. You’re still kind of addicted to that big check, aren’t you?

Brandon: No. You know, it’s, honestly, it’s because one of the things you teach about private money, I still haven’t overcome that stuff, and went out and given it enough diligence to actually go find owner or private money. So, I’m still using my own money primarily, at this point, to buy and sell houses.

So, the money that I make from wholesaling or retailing, I use to live on, obviously. But also, to build up a little and if I have to keep any of my funds, you know, on an owner financed deal, then I do that. I’m really — it’s limiting me, which you warned me of. But, it has limited my growth.

Mitch: Well, but you’re — I think it is a function of confidence, I think that your confidence is way up, because, you know what. I was looking at what your goals where for 2015, and your goals were to do 12 houses. Right?

Brandon: Yes.

Mitch: [LAUGHTER] And, you ended up doing, like, 26 houses?

Brandon: That’s correct.

Mitch: Right? And so, you must have gotten healed up pretty well, financially, and those fears must have run away in 2015, right?

Brandon: Absolutely. That was a great year.

Mitch: Okay, and so, that was basically your first year. Your first 18 months. The last 12 months of your first 18 months. So, then in 2016, what were your goals for this year?

Brandon: You know what? I got a little confident and decided, if I did twenty-six in my first year, my first calendar year, that I may as well shoot for fifty in my second year. And, I’m on target for that right now. I just contracted my 39th property this year.

Mitch: Thirty-ninth property. Mike, it’s been a hard year in San Antonio. It’s probably hard everywhere just because of competition and blooming real estate markets. It’s hard to find great deals, kind of like looking for Sasquatch, right? 

But, people think there’s not deals out there. Brandon’s proving them wrong over there in the Houston area. What do you find in San Antonio? What were your goals this year and last year? Let us start with last year, 2015. How many houses did you do in 2015?

Mike: In 2015, I did just under a hundred. I don’t know the exact number, but it is somewhere between eighty five and a hundred. And, this year, same goal. We like to try to do a hundred. It’s going to be even tougher this year, because we really try to focus on quality not just quantity. So…

Mitch: It doesn’t do any good to do more deals, but make them worse deals. It doesn’t make sense.

Mike: Yeah. Yeah. And that was something that you had, but I had to learn from you. I kept bringing things that made money, but you spend a ton of time doing it. And it wasn’t very much money for the time you spend. So, I’ve teetered back on from some of that, and have — I bet we’ll do probably sixty to seventy this year. It’s a hard market to find the good deals in.

Mitch: Yeah. There is a seminar every week in the town, or in these towns. There’s people holding, you know — I think what’s driving a lot of this is the renovation shows on T.V. you know; flip this and flip that. And, I think every housewife on the planet wants to be a house flipper.

Right now, watch them. As soon as a little recession hits, watch everybody disappear, because I’ve been through 2 recessions, and Brandon and Mike know this. This business of owner financing, that particular niche, booms in a recession. Really, really booms in a recession.

So, one of the reasons I wanted to have both of you guys at the same time is I wanted to get your input as to how much your life has changed since you decided to make the commitment.

One of these things that both of these men did was they both jumped in with both feet. They, one, didn’t have a choice; Brandon didn’t have a choice. His job was being pulled out from under him. Mike did have a choice, although it really wasn’t much of a choice. He could stay or he could go, and certainly couldn’t stay at the pace that they were trying to wear him out at.

So, I don’t suggest that anyone jump off with both feet, unless you have a plan or you’re ready, or there is some kind of net. Sometimes, life doesn’t give us that luxury. It didn’t give Brandon that luxury. Mike was able to put a year’s of worth of expenses in the bank, and he had 12 months to make something happen.

Brandon, how fast did things start happening for you? I mean, you jumped off and said, “Do or die, I’ve got to do this.” You started from scratch with a blank sheet of paper. How long did it take you to get moving?

Brandon: I think I got super serious about it at the end of May of 2014. Contracted my first property in August, and closed it in September. And, the remainder of that year, I had two other properties. I think I made about 30 or 35 thousand dollars in that May to December time frame. But, I learned a lot. I made a lot of mistakes. I planted a lot of seeds, and that’s what helped 2015 become successful. But, it was a struggle at first.

Mike: Brandon, when you said you made a lot of mistakes, I feel your pain. Because, I went down the same route. I can’t imagine the amount of mistakes we would have made without having some kind of guidance going through it.

Brandon: Yes.

Mitch: We’ll talk about those mistakes in just a second. So, what were you making at your job, Brandon? When you were at your job, what were you making at your job?

Brandon: Over 80 thousand a year.

Mitch: Yes. See, that was a nice paycheck. So, you know, you got to jump into a whole new career and try to make 80 thousand dollars a year just to be where you were at. So, you know, I didn’t take that lightly when I heard that. But, you just didn’t had a choice, did you?

Brandon: No. No. And, you know, that first year, financially, it was a struggle. And, you know, life in that home was a little tense. And, you know, things like that, but it all came to me when I was ready for it, honestly.

Mitch: When you were ready?

Brandon: Yeah.

Mitch: A teacher will appear when the student’s ready, that kind of thing?

Brandon: Yes.

Mitch: [LAUGHTER]

Brandon: Absolutely.

Mitch: I tell people stuff over and over again, and they won’t get it until something happens and they go, “Okay, I’m ready to hear that again. Tell me again about that.” [LAUGHTER] I’ll go, “Okay, what you had happened is what I’ve been telling you is going to happen and you keep doing this.” So, when did — how long did it take before you knew you were okay?

Brandon: Probably, I would say, February of 2015.

Mitch: How long was that, like a year?

Brandon: Yeah. That would have been a year from the date that I met you. So…

Mitch: Yeah. So, pretty typical. What about you, Mike? I remember you shot out like a cannon, and, of course, you had kind of gone out on your own and tried to do a few things and kind of got yourself upside down in some houses. And, we were trying to undo that or mitigate that. Some of them are just now being mitigated not so long ago. I mean, they went on for a long time, right? You got a hold of a sidewalk attorney and guy strung you out for a long time. So, pretty ugly stuff, but, you know, in the overall picture, you survived in great fashion. How many houses did you do in your first year, Mike? I know the number, if you don’t.

Mike: Boy.

Mitch: I was wondering if you remember how many you did in the first year.

Mike: It’s funny, because Brandon said he was hoping to do 12 and I was the exact same. I got into — if I just do a house a month, I can make a great living, you know and all that kind of stuff. And, once I got rolling, I did 28 houses in the first year.

Mitch: Twenty-eight houses in your first year, Brandon did 26 his first 12 months, fiscal year. Either of you guys remember how much money you made for the entire first year?

Brandon: I think mine was a little over 200 thousand.

Mitch: Okay.

Brandon: That doesn’t count the owner financed notes that I created.

Mitch: So, you’re just talking about cash you put into your bank account, right? There’s so much down payments or wholesale profits or retail profits. You’re not counting cash flow right now.

Brandon: No, no, no.

Mitch: And, that’s really what you are supposed to do in the first year, you know. You need to put some cash in the bank. You need to get some naysayer spouses or some nervous spouses — get them calm down. Get yourself calm down, for heaven’s sake, right? [LAUGHTER] Get the gun away from your head, so that you’re not under all this pressure to make a deal.

Mike, do you remember what you did the first year? I know that you were a lot less in taking the cash. You were trying to build that cash flow, because you had that one year’s worth of money in the bank. So, I remember that you grasped the owner financed cash flow model pretty quick, although it took you a little bit of time but you grabbed it pretty quick.

Mike: You know, I made some mistakes and I didn’t listen to you, listen as I well I should have on some things, so that cost me some money. And so, I probably made somewhere between $70 to 80 thousand in down payments, and was making somewhere around $7,000 a month cash flow on these houses.

Mitch: Yeah. So, what was your freedom number per month? Just to pay your overhead.

Mike: About $3500 a month.

Mitch: So, you exceeded your freedom number. You exceeded creating cash flow that passed your freedom number. So, you were free at that point. Before the end of a year, you had — not only had some decent money in the bank. I mean, I know you spent some of that probably, correcting some mistakes that you made. But, you had, more importantly, created a $7,000 a month positive cash flow. When you only really needed about $3,500 to live modestly.

And, may I point out that both of the people that I am talking to, Brandon and Mike, they did heed that lesson well. Both of them lived very modestly in the name of financial freedom. They wanted to keep their overhead down. I remember, Brandon, you paid off a lot of bills to get your overhead down so that you could weather the test of time in this business. Mike, you just never really had a high overhead, because you always knew that you were headed in this direction, and you had been preparing for a kind of a long, cold winter yourself, right?

Mike: Yeah. And, even now, Mitch, my monthly is much, much higher than that. I’ve been there and seen what happens, because I went through the 2008 recession in real estate, so I still don’t let it get away because you don’t know what’s coming around the corner.

Mitch: Well, Mike is real conservative. So, Mike, what is your cash flow up to per month this year?

Mike: Actually, I was just looking at the spreadsheet yesterday, and I think we’re at about $32,000 a month cash flow.

Mitch: Unbelievable, huh?

Mike: Yeah, it is. With more properties, I think we have about 80 properties that are owner financed now that we’re carrying notes on. And, out of those 80 — when you have so much going on, you have more overhead, so it’s not all in the pocket. But, every time I add a new one, it’s more cash in your pocket. Because, by overhead, we’ve been more than covered for a while now.

Mitch: Yes. So, I want to point out some of the differences. One is, Mike’s been in the business probably about 5 years, and Brandon’s been in the business about 2 and a half years. The other huge difference, I say this with all the love in my heart, Brandon. The difference is, Mike mastered private money.

Mike has a lot of private money behind him now. That wasn’t easy, was it Mike? I mean, that wasn’t like you walked up and everybody gave you a million dollars. I mean, tell me your about your struggle to find the private money.

Mike: Well, that’s funny because it was a struggle. The biggest part of the struggle was the confidence level. My big struggle with it was I was 25-26 years old, and you go sit down with these very successful people that have — they’re usually older, and have money in the bank. And not a lot of my 25 year old friends were sitting on millions, you know. [LAUGHTER]

Mitch: Yeah. So, you are talking to these older, established guys, you’re walking in there and you’re 25 years old when you started, and your biggest problem was, “Who’s gonna listen to a 25 year old kid just fresh out of college?”

Mike: Exactly. And so, you know, I touched base with some of my parents’ friends. And I was very fortunate to have some of them jump on. I wound up doing about 10 houses for my dad for free. That was our deal. I’d do them for free, but I got to use his examples for the reason to take chance on me at first. I got to use his examples for my portfolio to show everybody else. It sounds crazy, but it worked out really, really well.

Mitch: Well, you got you some confidence. You could show people 10 houses that you’d done, and the numbers. That came out really good.

Mike: And, he was able to tell people, you know, “This is what he has done for me. Here’s my numbers.” It kind of snow balled from there. I got into one, and then into  the next. Private money started to snowball, because one guy told his friend, and he brought $400,000. That was enough to do 8 houses and then, that guy told his brother and there’s another 10 houses, so it kind of snow balled after that.

Mitch: Do you remember how we got over part of that complex that you were so young?

Mike: Yeah. The biggest thing that you taught me, Mitch, was it’s not about the person you are loaning the money to. It’s about the asset and the deal they’re loaning on.

Mitch: Yeah. It wasn’t about you. We changed the mindset where you were focused on how young you were. It has nothing to do with you, Mike. It has to do — the private lender wants to know how much money you’re going to pay him every month for using his money. You know, what’s the interest rate, and what are the terms.

Mike: Well, you told me Mitch, I should be able to get somebody without having a medium. If I talked to somebody on the phone and email him a deal, then you should be able to get private money without ever meeting him just based off your deal.

Mitch: Right. Because, they want to know how much — what are the terms, what are they going to get paid for loaning you the money. And, if you don’t pay him, what do they get. And, in this case, they’re going to have a first lien on your property that you used their money to buy. You’re either going to pay them, or they’re going to take your house.

And, I’ve been privy to your deals. I know that you’re averaging about 52% LTV, or loan to value. So, if you spend $52,000 on a house, then you’re going to owner finance it for around 100 to 110, you know, a $100,000. So, you’re only borrowing 52% of what the owner financed value of the house is.

That’s a pretty safe position for a private lender. It really shouldn’t be about you. I mean, you should actually — if you were in jail for murder, you should be able to get this deal done. It’s somehow just getting you to a computer, or a phone so that you can make some phone calls.

Mike: [LAUGHTER]

Mitch: It’s not about you. It is not about you. You’re either going to pay them, or they’re going to get your house.

Mike: You were able to teach me so much about it on how to deal with your private lenders and the credit people to talk to. I remember I was talking to the totally wrong people at first. I would talk to the people who were really entrepreneurial, and you’re going, “No, those people know how to make money. You’ve got to go get the people who are sitting with it in the bank, not leveraging it.”

Mitch: Yeah. They’re sitting there making 1%, where they’ve lost half of their wealth in the stock market. So, they pulled it out of the stock market. They put it in bank CDs. They’re making less than 1%, and they don’t know what to do.

Mike: They’re is all this stuff that I would have never thought about coming in. You think to yourself, “Okay, well this guy has got a lot of money.” You don’t think that he’s entrepreneurial, and he’s not going to want sit on the sidelines and let you do it. He’s going to go do it himself.

Mitch: So. Brandon, have you found some private money, right? Or, are you still looking for your first — landing your first private money guy?

Brandon: No. No. I’ve had family members and stuff like that on some small deals so far. But, I think the big thing is — what Mike owns, as you put it in his heart, about finding private money, and about it being the asset not the person. I haven’t got over it yet.

Mitch: Okay. So, we’ll go to work on that as soon as the phone call is over.

Brandon, Mike and Mitch: [LAUGHTER]

Mitch: Look, the difference between making a great living, like you’re doing, Brandon, and becoming a multi-multi-millionaire — not just on paper, but, I’m talking about cash flow — is private money. Because, when you can fund every deal that you want, because it is a great deal. Then, you’ll never have to say,”No.”

You don’t have to pay a hard money rates. You don’t have to take on partners, which are sometimes the most expensive, because they’ll want 50% or better. You know, when you have a funding source that you can go to that’s fair, reasonable and long term, because that’s one of the things we need more is private money for owner financing.

We need underlying debts that we borrow to buy the house that we can wrap when we owner finance the house to our buyer. You know, the buyer pays us on their mortgage, and, then, we pay our private lender on the mortgage that we owe. And so, we have to get to a certain, I call it a certain color of money, right? It has to be longer than 6 months or a year. It has to have some length to it, like 5 years, if not 10 years. And, it needs to be at a reasonable rate.

What are you guys borrowing money at right now? What are your private lenders, typically, what do they do for you?

Brandon: I’m at 8 and 10 % on the low dollars that I’ve borrowed.

Mitch: Yeah, 8 and 10%. Mike, what about you?

Mike: I’m almost all at 8%. I try not to go to 10, because money is so cheap right now that I’m really trying not to do that. If I could just show them how cheap the money is at the bank, I can usually keep them at 8%.

Mitch: For the record, I used to go out and I ended up offering people 10%, because I wanted to make it really lucrative for them. Because I was desperate for the money, because I was finding so many deals. I did it.

Sometimes, I offer people 12% and even a little bit more, and I actually scared them away. They thought, you know — their rationale was, “Wow, if this strategy, and this guy wants to pay me 12%, there must be something wrong with this. It must be some kind of scam.” And, by offering too much, you could run people off. Have you experienced that, Mike?

Mike: I have, and you know, I started off the same way; eleven and twelve. And, then, just recently over the last year and a half is where I really stuck to my guns at eight.

Mitch: When you give people the level of security that we’re giving them, and of course, there is nothing guaranteed at all, because the guarantee is that, if you don’t get paid, you get a house. That’s the only thing that is guaranteed. Because, the FCC, and the laws and regulations don’t allow you to guarantee anything. It’s against the law to make anyone a guarantee.

But, you know, when you’re borrowing $52,000 from someone, and the house can be owner financed for a little over $100,000, then there’s not a lot of risk in this where a guy can lose his $52,000. He either gets paid the 8% you promised him, or he’s going to get your house. And certainly, he should be able to get $52,000 out of the house that we know for a fact the owner finance, based on the rents in the owner financed for a little over $100,000.

I’m going to throw something out here to Brandon. Brandon, I think you could probably kill two birds with one stone, if all you did was call on attorneys. You could walk into attorneys to ask them what they think of your business plan. And, in the business plan, you could actually pitch him for the money. And, then, if they didn’t volunteer to give you the money, at least you made an impression on them that you’re going to buy their houses from their clients that have real estate problems.

Let’s face it: Nobody walks into an attorney’s office that doesn’t have a problem. Very seldom. Mostly, or 98% of the people that walked into an attorney’s office have some kind of issue that they need to solve. And, I’m going tell you that 50% of those issues are either involving real estate, or could be solved by the selling of a piece of real estate.

And, so, talking to attorneys is a great way to introduce the fact that they might be able to — the attorney might be able to loan you money at 8%. The very protective way with real estate as collateral. And, it’s also a way to plant seeds to find houses. Because, I know for a fact that you get a lot of houses from attorneys, if they know who you are and they believe that you can close quickly and effectively on houses, especially solving title problems, taking houses that are not in perfect condition. So…

Mike: So, I’ve got an attorney friend of mine, Mitch. He brings me a lot of houses, and I get my best deals from attorneys. And, usually it’s just, one, because we’re such good friends. But, I bought one last week. It’s worth $90,000, and we bought it for $13,000, because the people had to get rid of it so fast.

Mitch: So, you bought a house that is worth $90,000 for $13,000, because someone had to get rid of it fast. Can I ask why they had to get rid of the house fast? People don’t believe that this happens. They think that this is all a bunch of guru hype B.S.

Mike: This gentleman — In the state of Texas, they take child support extremely serious. And, this gentlemen owed $13,000 for child support, and, if he didn’t pay it by a certain date, he was going to go to jail and lose his job and the whole nine yards. So, he went to the attorney, finding out what he can do, and he had a rental house. So, he called me up and said, “They need $13,000 by this date.” I drove by the house, and took him a check the next hour.

Mitch: Wow. I’ve had the same thing happen to me almost exactly. Little house on Guadalupe Street, leaning a little bit to the left. Probably, worth about $70,000, if you put a little money into it. Guy needed $18,000 to stay out of jail for 10 years. He’s going to go to jail for 10 years, if he didn’t pay child support of $18,000 in 4 days. And, you know, there’s not a lot of people equipped and ready to write a check for 18 grand. And, can do what it takes to make sure that you’ll not buying some rotten asset in 4 days.

Mike: And, that specific attorney, I’ve probably made over $100,000 this year off of houses just from that one attorney.

Mitch: No wonder you’re good friends with him.

Mike, Mitch and Brandon: [LAUGHTER]

Mitch: But, you didn’t start out as good friends with this guy, right? Is this someone you met through the house business, or this a friend of yours that was an attorney? Or, did you all just become friends because you did a lot of deals?

Mike: No, I met this guy through the house business. He was a young and aggressive guy, and so I hired him for a deal that I was doing. And, I’ve used him numerous times since then for some letters, and even for a closing here and there just to put a little money in his pocket so we could become friends. And, you know, I kind of paid for the relationship upfront, and now I’m his first phone call anytime he gets anything real estate related.

Mitch: Yeah. Does he introduce you to any other attorneys?

Mike: He has. He’s introduced me to a couple of others. But, what he tries to do, if he finds out one through them, he likes to work it with me. We’re good enough friends, if he likes to just take it off of their plate for them, and work it with me.

Mitch: Okay. He’s no dummy. He’s trying to keep himself in the middle, so he can get a little bit of it too, right?

Mike: Exactly. [LAUGHTER]

Mitch: Cool. It’s all right. So, Brandon, we’re going to probably wrap it up here for a second, but, what would you say to the audience out there? You’ve been in the business 2 and a half years, you hired a mentor — mentorship wasn’t chump change, and it certainly wasn’t chump change when you decided that you needed to do it. Because, you didn’t really — you didn’t have a lot in the bank. So, it was everything you could do.

Hey, Brandon. Let’s describe your first two and a half years in a nutshell in this business, and then hear a little bit about how you feel about your future.

Brandon: Alright, Mitch. Two and a half years ago, like we discussed, I didn’t have, you know, a whole lot of savings, and was facing unemployment, essentially. And, I just had to subside all my fears, and put my belief into this one hundred percent. And, two and a half years later, I’ve got my monthly cash flow up to about $5,100 a month. And, I just had to do an asset sheet, I guess, what is called. First time I ever did one of those for a bank, and net worth of about $700,000 dollars as of today. So…

Mitch: Wow. Quite a change. [LAUGHTER] And, how do you feel about your future? I mean, what is the next two and a half years? Where do you think you’ll be? Do you have any idea?

Brandon: You know what? It’s almost unfathomable, you know. At first, it was hard to find houses and now it’s — which is how you make money in this business is finding the properties — and now, like Mike had said, too, having a goal of doing 12 houses in our first year. Once you start this, it’s like turning a faucet on. And, I don’t think you can limit yourself. Because, it just starts happening. Once, you know, you get a reputation and you put systems in place and things of that nature, and support along the way, it just — the water just keeps on turning on. It is amazing.

Mitch: [LAUGHTER] Don’t drown. Don’t drown. Hey, Mike. You’ve been in the business for about 5 years. Tell us a little bit about that first 5 years’ journey, and what you see for your future.

Mike: Well, it was a struggle upfront. Both, mentally and somewhat physically, because you work a lot of at first. And so, it is definitely a struggle, but it’s the best thing that you can do, because, if you get over that hump and get over all that learning curve, the sky’s the limit. Like I said, we’ve got 80 properties owner financed. You know, I’d like to have 200 or 300 so that, if I don’t ever want to go back out again and go look for houses, I shouldn’t have to for the next 20 years.

Mitch: Yeah, there you go. So, you know, over 5 years, I think you said your cash flow is like $32,000 a month or something?

Mike: Yes.

Mitch: Yeah. Do you have any problem living off that?

Mike: Not at all, and the bank is extremely impressed by my financial standing, so… [LAUGHTER]

Mitch: Yeah. You don’t have to say a number, because I’m sure it’s a large number, but I’m going to guess that you’re a multi-millionaire on paper.

Mike: Yes. Yes.

Mike and Mitch: [LAUGHTER]

Mike: All in 5 years and at the age of 30. I’ve been extremely blessed and happy with the guidance I chose and the route I chose to do it.

Mitch: Yeah, and how do you all feel about mentorships? Because, I know that we’ve put in a lot of time, and it’s not a baited question, because I think there’s a lot of times I told you things you didn’t wanna hear. And…

Mike: I’m a firm believer in education, and a mentorship is a cheap education compared to what I’ve paid for a 4 year degree. So, your mentorship is the most important thing of this. If I had to learn all this and go through all these mistakes on my own, I wouldn’t even be a quarter of the way of where I’m at right now.

Mitch: Yeah. Well, you’re a great student. How about you, Brandon? What has mentorship meant?

Brandon: I agree with Mike. In the beginning, the most difficult part is the mental challenge of everything. And, what mentorship meant the most to me was having you there to help me through those mental high and lows.

Mitch: Yeah. It’s an emotional roller coaster, and it’s not just deals. There’s a lot of family pressure, and a lot of bills to pay, and a lot of conversations that don’t have anything to do about buying a house or selling a house. There’s things that have to do about just the household, right? We talked about a lot of that stuff.

Brandon: Absolutely.

Mitch: You know, how are you going to look at it? How are you going to handle it? What are you going to do? How do we let off some of this pressure, and how fast can we do it?

Alright you guys. I really, really, really appreciate you guys spending the time. You guys have both been a really bright spot in my life, because it’s always fun to win. And, you guys are certainly big winners. And, to be part of it was great for me.

You know, the relationship continues. Because, what happens is all my students become my friends, you know. I can’t help it. It’s been a pleasure talking with you all. Thank you for coming on so early, and I appreciate your attitude and your work ethic, and I really admire your success. Thank you very much.

Mike and Brandon: Thank you, Mitch.

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