From Flipping Houses To Becoming A Landlord With Kirby Atwell

Episode 392: From Flipping Houses To Becoming A Landlord With Kirby Atwell

 

Are you on the flipping treadmill and are constantly looking for the next deal but never really getting ahead? In this episode, Kirby Atwell joins Mitch Stephen to talk about leaving flipping houses behind and focusing on landlording. Kirby and Mitch dive into the factors that need to be considered when becoming a landlord and the things you need to plan for to achieve that cashflow you are looking for. Learn the model Kirby had created when he became a landlord to achieve his main goal of financial freedom and his ten-folder system to get you organized and see a spike in your income.

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We are sponsored by Tax Free Future. You won’t believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you. We’re going to tell you why they’re not telling you, and then you can do with what you want, but there is a reason why IRAs, 401(k) and self-directed accounts with checkbook control to grow your financial future are so important. We’d like to tell you all about it in 37 little video vignettes at TaxFreeFuture.com. I’m here with Kirby Atwell. Kirby, how are you doing? Where are you standing? What city or state?

I am in Northwest Indiana. It’s about an hour outside of Chicago on the Southern tip of Lake Michigan.

They’ve got a lot of affordable properties there. It’s unusual to be able to buy properties for $20,000 or $30,000 or $40,000 there. That’s not particularly in a war zone. There’s not going to be on the golf course, but it’s a decent neighborhood that can show pockets of pride.

Also, low taxes which is not the case about an hour from here in Chicago.

We’re going to be talking about landlording and how he made the move going from flipping houses to moving into landlording and why. Tell us a little bit about your career first. I’d like to hear someone’s background so we can get where you’re from. Were you born rich? Were you born poor? Did you go to college? Tell us where we can get our arms around like what kind of guy you were and then how you did all this stuff.

Unfortunately, I wasn’t born rich. I was born typical middle-class family in the suburbs of Chicago. I always wanted to serve in the military. I ended up getting an appointment to West Point. I went to West Point and graduated in 2005. I was stationed down in El Paso, Texas down in your neck of the woods. I was at Fort Bliss right after West Point. I’d always wanted to be an entrepreneur as well. I knew I wanted to serve, but I was going to get out and be an entrepreneur. I didn’t know what path I wanted to take. Like many people, it’s cliché but I picked up Rich Dad Poor Dad in 2005 or 2006.

After I read that, I was like, “This is what I’m going to do the rest of my life.” I was 23 at the time and I knew it. About a week later, I saw the property across the street go up for sale from where I was living and went across and made an offer on it not knowing what I was doing at all. Luckily, I was in El Paso, Texas where things are very affordable because this was 2006. You know the height of the market at that time before the crash. I picked up a couple of houses there and learned those. They were $100,000 houses that were stable properties.

You learned what not to do. Ready, fire, aim, that’s how we do it. I’m a ready, fire, aim guy like, “That didn’t work. What I should have done was this. Now I know what I don’t have to do with the next one.” Hopefully, we survived the first one and we do. We break even, rented out, string it along, and have a little bit of negative cashflow. Nothing that is going to kill us.

From there, luckily, I went to Hawaii because then it was after the crash and I was able to pick up a foreclosure property in Hawaii that was an incredible deal. Eventually, I got out in 2011 and I knew I wanted to do this full-time. I partnered with a friend of mine and we started flipping houses. We did about 70 flips around Chicago from 2011 to 2016. I knew the concepts in Rich Dad Poor Dad were buying and holding assets and that’s what I always was drawn toward. Once I got out of the Army, I didn’t have the financing and I thought I just need to flip then. I got on what I called this flipping treadmill where you’re constantly looking for that next deal and you never get ahead. You make a little bit of profit, but then you pay a whole bunch of taxes and it was this constant treadmill. I couldn’t make any wealth.

At the end of the month, everyone else was getting paid and my account never changed. In 2016, I decided to leave the flipping behind and I started focusing on rental properties. I came up with this model. It was very basic. I pulled out a spreadsheet and I said, “If I want to be a millionaire, what do I need to do?” I plotted it out and I was like, “If I can do one property a month for two years, I’ll accumulate 24 properties. If I can build in $500 of cashflow into them, buy properties that will cashflow $500 and build in through the crappy property rehab it and build an equity of about $40,000 per property. At the end of that, I’ll have about $1 million in equity and I’ll have $12,000 a month in income for the rest of my life.”

I got super focused on where I could do that. I found out about this HUD-VASH program where you can rent properties to homeless veterans through this voucher program. Since I’m a veteran, I had a rapport with these veterans. I started rehabbing houses in the South suburbs of Chicago. When a veteran would get a voucher and needed a place to live, they could rent it using this voucher. It was a great program and got them back up on their feet. It was a good cashflow because a lot of people will not rent to homeless veterans.

They hear homeless veterans and they think PTSD and drug addiction. They automatically say no. I was able to mitigate some of those risks from more of a hands-on management piece and it worked out well. I started accumulating properties, got about thirteen of those. I then found an eleven-unit apartment building. I did that, it was vacant and needed to be fully gutted. We gutted that and did the exact same model on that. I looked up about two years later and thinking that I hadn’t hit my goal and I realized I had 24 units. I was right at my goal and it was satisfying. I’ve been doing that ever since.

First of all, thank you for your service. I love you guys. Second of all, thank you for helping the veterans because we don’t give them near enough help that they deserve. Good for you on that. Last but not least, congratulations on becoming a millionaire. $1 million don’t seem like what it used to seem like though.

It’s not flashy like you see these guys on Instagram standing in front of fancy cars and stuff. My lifestyle has not changed because I have $1 million equity in properties like that. It doesn’t impact me. I still work as hard. It’s different than what social media makes it look like.

Back in the 1950s, 1960s, if you were a millionaire, that was a lot of money. $1 million doesn’t go as far as it used to go. People are living in houses that cost $500,000. Everyone in the whole neighborhoods down there is living in a $1 million house. The point is, you squared up with some goals and you got there. Everybody knows that I work the other side of the coin. I do the owner finance. I don’t choose to be a landlord because I say that that rental income is unpredictable because of the number of liabilities that you’re responsible for. You’re responsible for everything from the back fence in the backyard, all the way to the mailbox in the front yard and everything in between. Anytime it goes wrong, it’s your problem. I’m not saying that you can’t learn to mitigate that or you can’t make money doing it. A lot of people have.

My problem is I can understand how people who had free and clear houses in their IRAs. It would work out all right because they don’t have any debt service. We are trying to make the difference between what you owe to the bank and what you’re collecting in the rent trying to make the spread. It takes one air conditioner to wipe you out for the year. Let’s have that discussion. It’s like the elephant in the room whenever I’m talking to a guy who’s a landlord. I’m not bashing landlord because if you get a handle on it and know what you’re doing and buy right, you can still survive everything. How predictable is your income? Have you been able to make it predictable?

The hard thing about feeling financially free is that you know there are issues when you start accumulating properties. Share on X

That’s the challenge in that model. I was thinking if I accumulate 24 of these that each have $500 of free and clear cashflow, then you’ve got $12,000 of income forever.

On paper, you will have $12,000 coming in, but it’s impossible to work that way because that thing breaks on 24 houses. Nobody moves out in 24 houses and nobody tears up the house on the way out in 24 houses.

What I have in my model is I’ve got all my debt service, all my expenses, insurance and taxes. I also add in 20%. That’s 10% for maintenance items and then 10% for management. That’s included before I calculate my free and clear cashflow. As you said, it’s so unpredictable that you might not even spend 10% on some and then some might be way over that if you’ve got a big issue.

Does it level out?

It does but it’s still hard to go to sleep at night. It’s not like getting a paycheck on the 1st and 15th. It’s hard to rely on that and think, “I know I’ve got $12,000 a month coming in no matter what.” It’s up and down. The problem and the hard thing about feeling financially free is that you know there are issues all the time when you start to accumulate these properties. My ultimate goal now because your goal has always evolved is to eventually have these paid off. Some of them I’m selling off with a lot of equity in them. I’m still continuing to buy and renovate and build in more equity into properties. Eventually the debt service gets more reduced and then the risk factor is a lot lower.

I want people to say about me one day what you said about Kiyosaki. It’s passé or cliché, but I read Rich Dad Poor Dad. I want you to say, “It’s a cliché now, but I read Mitch’s book and now, I owner finance half of my properties after I get past the year of capital gains.” That’s one of scenario and I’ll try to convert you. If you have a black cloud house or one that keeps killing you, that one goes up for owner financing next time it’s vacant, just stop that. The problem with rent that I saw was when I collected rent, I never knew if it was mine or it was the air conditioner man’s or the plumber’s or the roofer’s because if something happened, I’d have to take it out of my wallet and hand it to him. I was doing a hell of a job collecting money for these guys. They were running all over town with me and I was handing them checks.

I never knew if the money was mine or someone else’s. Even if I had $5,000, $6,000, $7,000, $8,000, $9,000 or $10,000 in the bank, I was afraid to spend it because I didn’t know if something’s going to happen. When I get a mortgage payment, it’s my money. Short of a foreclosure, I don’t have to give it back for anything. It’s not my air conditioner or my hot water heater. Here’s the idea. If I were you, I would think about putting them in a spreadsheet from the very best one at number 1 to the worst one at number 24. I would take the bottom twelve after. I’m going to assume that you’ve owned them for over a year. You can get long-term capital gains. There’s only 22% tax on it. Go ahead and sell those seller finance. What’s your average house worth?

It’s about $100,000 to $120,000 or somewhere in there.

Let’s say you demand 10% down. You’re not going to sell it for less than 10%. On twelve houses, that’s $120,000 and you’ve still got your cashflow. You’ll still have your $500 a month. When you start paying off houses that way, it’s faster and you don’t lose all your cashflow. That cashflow is going to be temporary now because it’s on a 30-year note. Let’s say I sell all my houses 30 years, 10%, no balloons. I don’t want them to pay me off, but they will pay you off probably between now and ten years. That means you get another lump sum of cash that you have to buy something else or pay something off. It’s a lot faster than trying to do it with your cashflow and your savings, and maybe flipping some houses on the side. Do you still flip it all?

I do, every now and then.

First of all, you’re a deal junkie and we know it. I can tell just by looking at you that you’re a deal junkie. That’s good because that will help you get everywhere faster. An extra $20,000 here, $15,000 there or $30,000, who knows an extra $80,000 sometimes or somewhere, it helps the process move along. Even a blind dog can find a bone a couple of times a year. I would think about that. Do you know how we arrive at the owner finance value? It’s the OFV, Owner Financed Value. You take the rent and subtract the monthly taxes and the insurance. Let’s say it’s $1,000. The tax is $100 and insurance is $50. I’m just using some numbers. If you take $1,000 minus $150 for taxes and insurance, that leaves $850. That’s what this renter across the street can afford to pay for principal and interest because nobody gets that $150 but the taxman and the insurance man.

If there’s a rent of $1,000 across the street and you have a comparable house in that same neighborhood, take the rent $1,000 minus $150 equals $850. You then take $850 and multiply it by 115. That will give you a number. That number, in this case, is going to look like $97,750. To me, it looks like $98,000. I don’t deal in BS numbers. I always round up a nice pretty number. I always round it in my favor. What this does is you’re multiplying by 115. I went to an engineer. Someone who is much smarter than me and said, “I’m tired of having to run for this book or go and plug in these variables on an amortization calculator, $850, 10% interest, 30 years, and then solve for the balance. Give me a multiplier that I can do on a dollar calculator.” He says, “Use 115.” Anything under $250,000, 115 will get you real close. It represents 10% in 30 years.

This man can afford to finance $98,000 at 10% for 30 years and have about $850 PI payment or principal and interest. By the time he adds the taxes and the insurance, he’s back right where he was at rent because I’m trying to offer this renter a house for $1,000. If he can borrow $98,000, then what is the sales price? I want at least 10% down. I would add at least 10% onto $98,000, but I don’t ever want to shoot for my minimum so I had 12% on. If you add 12% on top of $98,000, you come up with a number that looks close to $110,000. That’s the owner financed value. I don’t give a shit what the MIA appraiser says or the BPO or the CMA. I don’t care because that was for people that could get a new loan.

What I’m trying to say is why are you paying $1,000 for nothing when you can pay $1,000 to own something for the rest of your life and be able to enjoy the appreciation, the interest right off, and the solidness of having your own place in the roots and all that jazz? If you want to improve it because you’re a master carpenter, you can add a room. It’s all yours now. That’s how you sell it. I’ve sold houses 100% over the appraisal. If you go back into your $120,000 house, it’s like that fear of what the rents are. If the rents are lower than the comps, then you go with the comps. People will pay $75, $100, $125 more than rent because to them, it makes sense. To them in their mind, it should cost more to own your own home than to rent a house. That’s my idea.

I love the concept. That’s how I found you is I heard that concept. You talked about that on a podcast that I listened to and I was like, “This is smart. It makes so much sense.” The other thing, the cashflow goes up and down but also values go up and down. You talk about having $1 million net worth. If next year there’s a huge crash, you’re not going to have that much equity in your property. All of a sudden, property values take a 40% dip. That’s a significant chunk of your net worth, but with your model, you know that it’s fixed.

It’s a perfect mixture of the blend. It’s just that I am such a crappy landlord. I’m so jaded by now. They’ve lied to me. They shaved their heads and said they had cancer and I gave them six months to find out they don’t have cancer. I don’t believe anything anymore. Everyone’s a liar. If your lips are moving, you’re lying to me. If you’re on the other side of the table in the rental business or the house business. I don’t trust and verify. I’m a little bit like Reagan but not always. I don’t even trust you and I’m going to verify. It’s a perfect blend because you could do the rental thing for a year or two. If you have a perfect renter at the end of the year, they’re not complaining, they’re sending in their payment and taking care of the property, don’t go and kick that sleeping dog, just leave it lay. It might go on for five years and you might get five extra years of appreciation. You’ve had a black cloud house, haven’t you?

I know the house that you’re talking about.

The black cloud house is like, “Screw this. I’m selling this to someone else and they can take it. I just want the payment. I don’t want to hear any more about anything else about this house.” If it’s bad, like if it had foundation settling and you can’t get it to stop settling. You do the repair and then it settles again in another eight months, that’s the one you sell down the road. I had houses that you buy and go, “This is going to be a great one. This will be a great house,” and it causes me more trouble. There’s no reason why because I got houses all around it that are fine but this one house, I don’t know what it is. It’s like someone mojo did it or took a voodoo doll into my house and stick my house with pin.

I then buy one house. I don’t even want the house so I bid low. I win and it’s like, “I’m not even sure that I want that house and I got it.” That’s the one that sells overnight and it’s fine. Sometimes there’s no rhyme or reason. You might have the perfect blend. Check it out one time and run the numbers. I’m going to tell you a secret. I use this a lot. You run your advertisements and it says minimum $10,000 down. If it’s $120,000 house, you want $12,000. Someone says, “I got my $12,000.” They come in and they give you the app and everything. You don’t say anything until they’re approved. Once you say, “I’m going to take this guy,” you go back to him and this is how you work your down payments up without being a back trader, an idiot or a jerk. You got them all approved and he’s got the $12,000.

You call him back and say, “We’ve got a couple of more things to check, but I’m sure you’re in. I’m going to honor my agreement. $12,000 down is fine, but I wanted to plant a seed with you. I want you to pray to your wife and talk to your God. For every $1,000 you give me over $12,000. I’m going to take a $1,000 off the price. I’m going to double your money over $12,000 and watch them come up with an extra 4 or 5 all the time.” This is what’s cool about seller financing houses. There is no appraiser in the equation between you buying my house. I’ve always paid my house at least $3,000 over what even the rental formula says, depending on how I feel about the neighborhood because I’m marking it up so I’m marking it down. I’m giving myself some free bargaining chips. A guy could come up with up to $4,000 extra and I’m not giving away anything. Instead of $12,000, I’m collecting $16,000. If you pick up an extra $3,000 or $4,000 on twelve houses, that’s the difference between $120,000 and $150,000. Do you like my plan better or do you like your plan better?

I’ve never done it. My plan is to start to implement some of that.

Don’t put up twelve of them if you don’t know what you’re doing. Start with the crappy one, the one that you should have never bought and owner financed that one. Here’s the cool thing about seller financing houses that I don’t think you can do in the landlording business. I can buy a house and not take the dog shit off the carpet, not fix the hole in the roof and not fix any of the broken windows. I can seller finance it for double what I got in it and walk away. I end the deal for me and wrap up.

You put money into yours all the time and then that money can be ruined. You put a new carpet and it would be ruined. I put a new carpet for the guy that moved in. He moved down and I don’t have new carpet anymore. It’s not even decent anymore. That money I put in was out the window. Whereas I buy a house for $40,000 and I don’t fix it. I seller finance it for $80,000. I double my money and it goes for sale the day I bought it. I bought it at 8:00 and by 3:00, the for sale sign is on the yard as it is. You fix it. This guy comes along and he puts $20,000 in it and he makes it worth $120,000. I got an $80,000 note. Now the house is worth $120,000 and that guy did it all.

You’re secure at that point.

Here’s the other side. I could buy it for $40,00. I could put the $20,000 in it and then sell it for $120,000 to double my money. Either way, you double your money but all the risk is in the rehab and in the repairs. That’s where all the risk is and that’s where all the time is also. When you buy a house and seller finance it as is, you’ve eliminated all the time that it takes and all the risks. It’s very difficult to get all your materials ripped off your job when you didn’t do a rehab. Think about those things. I would love to hear how it goes for you on the one. I’ll even coach you on your first one if you want some help.

That’s why I came on this show was to get free coaching.

You’re a very intelligent person. You have your collective crap together. You’re a doer and you don’t need anybody because you can figure anything out, but if I can help, I raise my hand.

This is a totally new strategy for me. I appreciate that.

The main thing is to make sure you get your RMLOs, comply with Dodd-Frank, and don’t make some of those mistakes. How did you pick in Northwest Indiana?

I was in Chicago. Up until a few years ago, all my properties were in the South suburbs of Chicago. What drew me to it was that the rents are super high there and the taxes are also high. It worked well there. Things had appreciated quite a bit but we wanted to live in Northwest Indiana. The quality of life I feel is much better over here. The tax situation, you get a lot more for your money. We moved over here first and then realized that there are some great opportunities over here as well. There are lot less city issues to deal with. It’s an easier place to work.

The reason why I asked is you picked a very affordable place. If you’re going to do the seller financing strategy, you have to pick a state that has decent foreclosure laws and you’re in a decent place. I think you have dual laws. You have judicial and nonjudicial.

I’m not too sure.

Simplify your plan and get focused. Dig into it and don't get distracted by all these other BS that's out there. Share on X

That would be the first thing we have to figure out is how do you get out of a house if they have a mortgage? How are you going to pay for that up? How are you going to handle it? Georgia has the fastest foreclosure process in the planet and probably Mississippi. Most of the states that are good for seller financing are the flyover states.

Landlord laws are good here. Everything’s very quick. I’m not sure about the judicial.

If the landlording rules are very conservative or make sense, that’s a different group of conservative. Probably everything else is too like the foreclosure laws. My first mentor that turned me on to all this does a lot in Indiana. I don’t think he’d be in Indiana if it didn’t work. Let’s go back to the landlording side. How many houses do you have now?

I had accumulated thirteen initially and then the eleven-unit. I bought a few more after that and then I sold eight in 2019. I’ve got eight single-family homes and then I’ve got the eleven-unit property.

You don’t have any problem finding houses where you’re at I’m sure. If you want a house, you could probably go out and get one that works.

I’m always looking for the cream of the crop. They’re available.

The crux of the whole thing is funding.

Things are so cheap here that funding hasn’t been a huge issue because I have enough private investors. Getting long-term cheap financing is definitely a challenge.

What terms are you looking for?

When I refinance into a long-term loan, I’d love as close to a conventional mortgage as possible. That 3.5% for 30 years is ideal.

I’m talking about private people. What do you start out with?

There are a lot of people, friends and family who have their IRA. They’re at 8% or 10%, fixed interest rate.

Do they amortize or is it interest only for a while?

It’s interest only in somewhat quarterly payments. Some put it into a project and when the project closes, “Pay me out my interest.” It’s somewhat annual. It depends on the person.

Do you have the veterans started telling you they don’t want to loan anymore to you because they’re overexposed on you?

Not yet. I’ve been good with the banks, but it’s just the terms. That interest rate makes a big difference on the back end on the long-term financing. Trying to get it as low as possible is the challenge.

 

Do you manage all your own properties? Do you have a property management company or a property management software? Tell me about that.

I did manage all of them because most of them were the veteran homes that I was doing previously. The demand for that waned a little bit. I’ve started to pick up some conventional long-term rentals and some short-term rental, some Airbnb type of rentals. I managed all of them up until I had about 12 or 13 properties. I transitioned those over to a property manager.

Do you walk in that guy like a hawk?

That’s the challenge. Nobody ever manages them as well as I would like to, the attention to detail.

To have longevity strategies with seller finance, you’ve got to get out of the line of fire directly between the tenant or owner occupant. You’ve got to get someone between you and them because that’s the part of the business that will wear you out emotionally. Everyone has a sad story. I have a big heart. I’m going to guess you probably have a big heart too and that will work against you in this business because people will tell you all their problems all the time. It’s not fair because we don’t get to cry to them when there’s a hailstorm. We got hail on the roof and we didn’t have that covered in our insurance. I sometimes want to call up one of those complaining tenants and go, “You’ll never believe what happened to me. I had a hailstorm and I wasn’t covered by insurance. I don’t know what I’m going to do.” I would rather beat them up.

With the vouchers, it’s been a little bit easier being the manager, because typically, they’re not paying the majority of the rent. It’s coming from the VA or whoever’s providing the voucher.

I’ll ask you about that. That’s cool. What’s that voucher called? Is this the national name for it?

It’s called HUD-VASH. HUD has partnered with the VA. It’s specifically a voucher for homeless veterans. You have to verify that you’re homeless and that you’re a veteran. You then get a voucher that has a bedroom count for how many family members you have, and then you can rent whatever. It’s similar to a Section 8 voucher, but it’s specifically for homeless veterans.

I did the Section 8 thing for a while. Is the veterans’ mentality at this level better than Section 8 mentality? I hated the mentality of the Section 8. I couldn’t stand it.

That’s the thing with the welfare system. It’s tough to get people out of that mindset sometimes. I think it’s a mix. I’ve noticed that a lot more with HUD-VASH is a temporary measure and that’s what it’s designed to be. A lot of my tenants are people who hit hard times. It’s a lot of single moms or veterans. They serve in the military. They got married, got kids, and they got a divorce or somebody lost a job or they hit something that caused the homelessness. When they get the voucher, they’re assigned a case worker at the VA who helps them through whatever the issue was. Some people, it is PTSD or it is a dependency. They’re working through that while they have a house to live in. The intent is that they work their income up because 30% of their income goes towards housing. If they can get their income up high enough to where they no longer need the voucher, the voucher can go to another veteran who needs it more.

That’s encouraging because they’re more likely to be using it for what it’s meant for which is a bridge, not a lifestyle. What I didn’t like about Section 8 was there were people that had been on Section 8 for twenty years.

It’s not what it’s designed for.

Do you teach any of this stuff?

I’ve had some coaching clients in the past where I’ve walked them through getting started with rental properties and stuff, but I don’t have a formalized program or anything. I do have a YouTube channel, Living Off Rentals. I’ve got a ton of great videos there that walk people through concepts of what I’m doing.

Do you have something you can give away to my audience?

What I realized is that my income level was directly tied to how organized I was. When I got more organized, I saw a direct spike in my income and the number of deals I was doing. When I was flipping properties, there was a lot of chaos. When I started renting properties, I needed to get more organized. I designed this system of organizing all my files because I realized I had files all over the place and I spent more time looking for files or recreating files that I could never find again. I have this ten-folder Google drive system that I created that I know exactly where every single item that I’ve ever saved is. I can put my finger on it in five seconds and nothing is ever disorganized now because it’s all captured in one of these ten folders or subfolder. I’ve got a video that explains it. I’ve got a free giveaway. It’s a map of how those folders are all laid out. It’s been a game-changer for me. It’s designed for real estate investors.

The small improvements lead to much bigger wealth than when you shoot for the big deals right out of the gate. Share on X

What do you call that video?

It’s the Google Drive Organizational System. It’s specifically for real estate investors. It works for any entrepreneurs but you’d have to tweak it a little bit. I’ve got a good feedback from it.

I need that. I gave up on myself and I hired people. I said, “Organize this, I’ll see you later.” What do you say to the new guy that’s coming in and trying to dream his way out of a job? What’s your advice to those guys?

I used to think that you had to make it super complicated and that everyone making money had this sophisticated way of doing it but it is not. When I got specific on my strategy is when I started making money. Before I was saying, “Just send me a deal.” I did talk to wholesalers and I was looking at all of Chicago land for deals and it was slow and hard. I had to recreate systems in every community that I went to. When I got specific and said, “I’m going to buy 24 properties over the next two years in these three communities. This is my purchase price. I’m targeting brick houses, 3 bedrooms, 1-bath, no basement,” and got super specific about the exact parameters, all of a sudden, my deal flow shot up.

You eliminate so much area. You think that’s counterintuitive. Before, I was looking in 57 suburbs and now, I’m looking in three communities. I’m getting way more deals because the wholesalers are like, “This popped up in this area. That’s one for Kirby.” I could spend all my time knowing that area and buy better deals. Simplify your plan, and get super focused and then dig into it and don’t get distracted by all these other biases that are out there.

You don’t have to buy a million houses a month to be successful in this business. I’ve pushed it to 8 or 10 over the years, but I grew into that over a long period of time. It was a very organic thing. You won’t be at twelve houses a year your whole life. At some point, you’ll either stop because you have enough or you’ll say, “I’ve got to do more.” What is your goal?

It evolves over the years. Once I hit my first goal, then I was like, “What’s next?” On my show, I ask people all the time, what does live off rentals look like? That’s the name of the show. For me, it’s not necessarily 1,000 doors. It sounds like a lot of work. It’s having enough to live on and then enough security. I don’t know what that number is, but what I’m focused on more than what I was doing in the past is the short-term rentals. It’s a new challenge for me. I’ve accumulated a few Airbnb properties and they’re going well in this area. It’s super affordable and the cashflow is high. It’s more management intensive, but it’s a new strategy for me. I’m enjoying learning that. I think if I can get ten more of those that are fully paid off, it’s another chunk of cashflow and security that will be there.

Just be careful. A lot of people went into the Airbnb in San Antonio and then it started taxing Airbnb the highest in the nation. What they did was they applied the hotel tax to the Airbnb. I would hate to see you get loaded up and then something happened, but pay attention to your city council or whatever runs there. That’s been me to multiple streams of income. Maybe I can be on your show, Living Off Rentals, because I do have 1,600 storage doors.

You were on it. I know you do tons of interviews. Definitely, check out that.

We didn’t talk about that. I’m about to cross my 400 interviews where I have people on my show, but I don’t know how many I’ve done for other people. I learned my digital footprint. I have thousands of pages out there. I don’t know how that happened. I was not trying to do that because I wasn’t smart enough to do that. I was trying to apply myself on my show and my interviews to pick up new students or get more books out. I don’t make any money off the books, but where it turned the corner is when you start having the higher reason. I didn’t need to do it for money anymore. Don’t get me wrong. If you want to give me an extra million, I’ll take it. I’m not going to eat any better, drink anymore, live in a nicer house or drive a nicer car. I have what I want.

When we came about a higher power, my higher reason was I want people to get free from their job and get financially independent so that they can become the person that they want or need to be. Sometimes we can’t be that person if we have a job and we’re a slave to the company store. The definition of financial freedom is when your wants and your needs are exceeded by your passive income. That was a big revelation for me because I thought financially free meant you are rich. At the time, all I needed was $3,500 a month and I was financially free. It means I didn’t have to have a job, which meant that I freed up 2,600 hours a year that I could apply to me now instead of making money for someone else. That’s a lot of hours. A guy could get good at something with an extra 2,600 hours of effort. You can ride a motorcycle, skateboard, or whatever. You can become one of the world’s top with an extra 2,600 hours a year.

I wish I had learned that concept that you shared right there earlier because it would have saved me five years of flipping. When I was flipping, my whole goal was to try to accumulate riches. You’re after this number that is like nebulous. If you can define, “I need $3,500 a month,” you can get there super quick if you lay out a plan to get to that place.

Once I decided that that’s what I needed. It took me 6 or 8 months. It was attainable. Everyone else was like, “We’re going to make $1 million.” To be $1 million was a myth. I’ll never see $1 million. Maybe one day but it didn’t seem real. When I got down to the goal like, “I need to make $3,500 a month come in.” I’m looking at myself in the mirror like, “This is the United States of America, $3,500 a month doesn’t do anything. It’s nothing. We can’t do this. Take me out in the field and shoot me somewhere.”

I didn’t know how long I was going to do it. Don’t get me wrong. It did scare me at first. It doesn’t seem like much at all, but I don’t know how to do it. I said, “I’m going to start studying.” All these big plans went away. I was trying to find stuff to bring in $200 here, $300 there or $400 there. I do it 10.5 times. I’m good. You can get $3,500 a month to come in. You can get $35,000 a month to come in. It’s rinse and repeat. You get a little smarter and you get better. You start to niche down a little bit and then you start exceeding your dreams. I’ve exceeded my dreams four times already. Can you make great big goals?

I wouldn’t say huge. I’m always working toward a goal but I don’t have grandiose like I want to be a billionaire.

That was my point. You probably had a bigger goal than I did. I never had a goal to be worth $1 million. I was like, “$3,500, can I get that to $5,500? Can I get it to $6,500? I think I’ll take a big leap and go from $6,500 to $10,000 this time.” I was always trying to better myself. Can I be better this month than I was last month? Can next year be better than this year? I keep trying to better the bar a little bit all the time. You look up and the snowball effect is incredible.

 

Making those small improvements, that leads to much bigger wealth than when you shoot for these big deals right out of the gate. You think you’ve got to make $1 million all at once. It typically doesn’t work out.

My theory on that is when you’re shooting for the moon and you don’t make it, you’re crashing down on earth again. If you don’t make it into the space where you keep going, you’re coming back down. It’s going to be a hard landing. I’m grassroots movement, just a little better all the time and then again that’s what it was. It could be my computer system. Something’s got to improve every week. Me personally have to improve maybe, but I don’t like that as much. I like to improve other things. There’s a lot of different challenge. Once you accomplish one thing, there’s another thing to do.

One of the biggest things you’ll notice if you don’t have money now, and then you start making money. One of the most obvious things in the world that you have to go in to learn next and be in the next level is making money is half the equation, keeping it is the other half. You’ll say, “I finally made all this money,” and then the IRS will swing by and there it goes right out the door. How do you stop that from happening? I’m on a quest for 2020. I was until COVID hit. It’s a little postponed. I’m trying to study how to retain more of what comes in the door legally. It’s always another level. Do you ever make it down to San Antonio?

Not in a while but I’ve been down there.

If you make it down here, will you take my phone number and call me? You seem like a neat person. If you ever get down this way, if you’ll give yourself an extra day, we’ll go out to my ranch and we’ll have some fun. I wish I would’ve had my wherewithal together when I was 23. My head was so far up my butt when I was 23. I couldn’t even tell you. I was a hard worker. I was always doing that next entrepreneurial thing of the day, but it took me a long time to learn how to learn on my own. I didn’t get it fast enough. I didn’t start learning on my own until I was in my 30s. That was been a big mistake or maybe things happen to people when they’re ready for things to happen. I wish I would have started a little earlier because I’ve done everything that I’ve done between the age of 34 and 59. I had a lot of businesses and I tried a lot of businesses. One reason I liked real estate was I’m either going to get paid or something bad is going to happen to the person that’s not paying me. I couldn’t make anything bad happen to him. I couldn’t afford to even take them to court because what they owed me wasn’t even worth. I’m going to pay twice as much to go to court for what they owed me.

I’d like to thank you, Kirby, for coming on. I want you to go to 1000Houses.com/kirby. Get your free Google Drive Organizational System for real estate investors. Get organized. He’s got it all figured out for you. It’s free. Go over there and check it out. If you don’t like it, throw it in the trashcan. If you do like it, why don’t you send him a message and tell him, “Thank you,” for taking that one piece off of your plate. There’s a lot of free stuff that you can get that will get you along and get you a way. Every now and then, when you find out exactly where you want to be and there’s this piece that you exactly need, you’re going to have to write a check for it. I did that with my note servicing. I finally got so many notes. I spent $20,000 on a note servicing system that will practically drive you home.

I’d like to thank everybody for stopping by to get you some Kirby Atwell. I’d also like to thank my sponsor, TaxFreeFuture.com. There’s a reason why rich get richer and pay less taxes than everybody else. Stop complaining about it because the same rules that they use, you can go out and use the same principles, the same accounts, or the same loopholes. It’s all available to everybody out there in the whole United States. The only difference is they read up on it, study it, take action on it and all the other people don’t. You get to pay the maximum taxes in your life. It’s your fault if you don’t go and take a look at why and how you can minimize your tax ramifications. I’ll see you, Kirby.

Thanks for having me.

 

Important Links

• 1000Houses.com/Kirby  
• 1000Houses.com/KirbyBook  
• 1000Houses.com/Grow  
• 1000Houses.com/Moat 
• 1000Houses.com/100
• 1000Houses.com/101

 

About Kirby Atwell

Kirby is a US Army veteran passionate about real estate entrepreneurship, initially starting out by flipping properties and then transitioning into long term rentals using the BRRR strategy.

 

 

 

 

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