Welcome to Passive Real Estate Investing. I’m your host Marco Santarelli. One thing I haven’t done for a very, very long time is a client spotlight. Every once in a while I like to have a real estate investor, whether they’re a client of ours or not on the show, to talk about themselves, their journey, their experience with real estate investing, their trials and tribulations, where they have succeeded, where they fall, and, you know, just talk about things that they’ve learned and, and maybe it’ll be something that can help inspire you or get you to that next level in your real estate investing journey.
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So with that, I’d like to welcome Scott Saunders to the show. Scott, welcome!
Marco. It’s great to be with you today. Thanks.
Well, I’m glad you’re on. We’ve been talking about this for literally months. I mean, it was, I remember it was last year I was driving up to Lake Tahoe for one of our Power Room mastermind meetings, and we were discussing things that you were working on as far as kind of an educational platform and your investing journey. Now, full disclosure, you are a client, a Nora real estate investment, and you’ve been doing very well on your own as well as through us. And I don’t have an official bio for you, but I’m gonna throw it over to you and just say, Scott, tell us a little bit about yourself.
Great, Marco. I appreciate that. Well, I, I wear a couple of hats professionally. I’m in the 10 31 exchange space. I’m a senior vice president with a company called Asset Preservation. I’ve done 10 31 exchanges, Marco, if you can believe it or not, since 1988. So I’ve been doing that a long time, helping people defer capital, gain taxes, build their real estate portfolio. So I do that professionally. Then on the side, personally, I’m a real estate investor. I started probably about 20 years ago or so investing in real estate. And then at the last few years I’ve really kind of accelerated that and been acquiring more assets and really growing that side. And so it’s really been a journey like it is for everybody. Like you said, it really well you, you’ve got ups and downs you know, a few, few painful learning experiences and happy to kind of share some things that have gone right and maybe some things I would’ve done differently that might be benefits to other investors out there.
So for me, I wanted to jump in and said, you know, I want to, I wanna start swimming in that pool, not just watching other people do it. So my first investment was probably about 20 years ago. It was a little fourplex in town, kind of what I call a c class fourplex. And I did everything wrong on that. Right. I, I bought it, I was gonna manage it, screen the tenants. I’m not handy at all. I can barely change the light bulb, so, right. I thought I could paint the walls and take care of it. I was naive. I bought a C-class building and I thought, you know, I’m gonna make this nice. I’m gonna landscape and make it pretty. I’m gonna repaint, I’m gonna put in some fence for kids to play. And the reality is I put all that time and effort in.
It was still a seaquest building on a seaquest street. It didn’t change the quality of 10 at all. And yet I put a lot of, you know, blood, sweat and tears in. And then I just learned the hard way. I’m not good at managing properties. I’m not good at maintaining them. I’m not really excited about screening tenants when I work full-time. And so at the end of the day that that fourplex was sold, now it’s probably not wise. I probably should have gotten a property manager done something to hold onto it cuz it’s now tripled in value from where I bought it, you know, in the early two thousands. So that was kind of a, a first experience and it really now guided me to doing things much more passively. You know, that’s why I’ve kind of gravitated towards that turnkey model where I’m not the hands-on guy and there’s really good local property management that they know the market, they do all that.
So that, that was first experience. From there, I graduated something a little different. I did builder model homes down in Arizona. So there was a, a builder friend and I would buy the model home, he would lease it back from me. It kind of a really elevated rent. And so you always hear buy the, the least expensive property on the street. I actually kind of had the most improved <laugh>, but it was discounted, so I got a good deal on it. Right. I got a property that was really bumped up, but very discounted. Yeah. And that, I did that for I think with five different model homes. So five different developments in Phoenix, right around 2005, 2006. So you probably know what happened shortly after that <laugh> two to 2007 hit. Right. And I, I went through a divorce personally, which was, you know, a little bit of a financial hit.
Right. You give up some assets, you, you kind of have a, a big hit there to deal with. Right, right. I was left with one house down there and a and a lot that I was gonna build a custom home on. And my house I bought for 2 55. He went up right before oh seven to like three 20 at the very bottom of the market, Marco. It was worth about 80 to 85 grand. I mean, it just fell off a cliff. So I kind of rolled that roller, you know, went through that roller coaster and that was that was very interesting and a little humbling.
Yeah, no kidding. If I can ask you a quick question about the first property. It’s always interesting to me what people learn from their first real estate investment. What was your biggest mistake and what was your biggest lesson from that duplex?
Yeah. Biggest mistake was trying to do it all on my own. Everything I tried to do in areas that I’m not really gifted at, at doing right. I, I, I’m not really handy. So trying to fix the little things that a handyman could do was miserable for me. And I, I had a lot of football language there, you know, trying to fix stuff, <laugh> and, and frustration, to be honest. It wasn’t what I’m gifted or good at. So anytime you try to do something that you’re not good at and you suck, you, you don’t get great results and you’re not really having much fun. So the lesson for me was, there’s some, you can own real estate without having to do it all yourself. Right. You don’t have to maintain it necessarily. You don’t have to find the tenants, you don’t have to go through all those hassles. And I don’t know why I, I think maybe I’m a type A personality and thought, well I can do this. I can jump in and figure it out. And the wisdom now, you know, would be it’s okay to offload some other things to other people that are good at it, pay ’em a small percentage to do that and do what I’m good at, which is finding assets and growing a portfolio.
Did, did you have a goal at that time or you just wanted to jump into real estate investing and you found something that you would label a deal and and went ahead and bought that?
You know, I, at the time my goal was to kind of scale with multi-family, right. By a fourplex. Go eight plex, 12 plex, kind of play that whole game. And boy, the lesson you’ll learn, and I know those of us who have been around the block a little bit know it well, you know, when you see all those units, they’re not all producing. You run the projections and you think, oh, this thing’s gonna be a money maker. And the reality is you’re always gonna have certain level of vacancy and turnover and, and frankly with a lot of those types of assets, you find more turnover than in a single family type asset, in my opinion.
Yeah. I kind of you made me think of something that a lot of very pro multi-unit investors say often. And that is this, you know, if you have a single family home and it’s vacant for whatever period of time, it could be a day, it could be a week, maybe a month, but whatever, if it’s vacant for a short period of time, you have a hundred percent vacancy. Which is true if the context of what you’re looking at is that single family home. But if you are a real estate investor and you have a portfolio of let’s say 10 single family homes and one of those units are empty, you, you only have a 10% vacancy rate. The same thing is true with multi-unit. This is the the example I always give. If you have 10 single family homes, you have 10 rental units.
If you have a 10 unit apartment building, you still have 10 units. And if one of those units is vacant, you still have the same 10% vacancy rate. So it kind of drives me a little crazy when, you know, people who are very much pro apartment building or large multi-unit bring that up because I’ve seen, and I’ve even owned apartment buildings where, you know, there is unfortunately a relatively high percentage of vacancy on an ongoing basis cuz you just have constant turn and churn with tenants in apartment buildings. I would anecdotally argue that your vacancy rate overall, you know, after a year is probably a little bit higher when you have, you know, whatever, 10, 20, 30 apartment units versus 10, 20, 30 single family homes or duplexes just because the type of tenant you draw is a little bit more transient. Again, I don’t have hard data to back this up, but just anecdotally, not just with myself, but other people too have told me this.
Yeah, no, mark, I, I agree with you. I, I, I know mine, I think I’m close to, close to about two years on an average. If you look at the whole portfolio about two years where somebody stays mm-hmm. <Affirmative>, well, when you just think of like a fourplex or multi-family, it tends to be more transitory. People come in, they come out, it’s not as desirable, right? It’s a little denser. You have a single family, you got a yard, you might have a garage. It just tends to attract maybe a, a, a tenant that wants to stay there and, and maybe even keep it up a little bit better. I, I think they’re, personally, I like single family homes as an asset class and I think we’ve seen over the last few years, wall Street that really wasn’t jumping into that niche is is tending to pick that up as well. So I, I love single family rentals. I just think the cap rates are good, the tenants are good. It certainly did great during the whole pandemic, right? People wanted to have that extra space. There’re just are, there are a lot of advantages, a lot of desirability to own in a or, or renting or being in a, a single family type home.
Yeah, I agree. Scott, is there something that keeps you motivated with real estate investing? I mean, we know why you got into it, but you’ve had some issues and struggles and I mean, we all have these problems. We all step on landmines, especially early in our real estate investing journey. So what’s keeping you motivated today?
You know, today I would say I, I associate with other real estate investors. I’m involved in a, a mastermind group of real estate investors that are like-minded. And you know, what’s neat about that is you’ve got people that are all kind of going in the same general direction. And you’re right, sometimes you things go well and you, you have a really good experience. Sometimes you have times that are tougher and, and somewhere in the middle. But being in a like-minded community, you find that there are other people that are right there with you. They’re experiencing the same thing. And for me, I think the, the key is find somebody that’s just a couple steps ahead of you, right? There are, you know, let’s say in the real estate world, you got the, the Grant Cardone’s that are, you know, billionaires with gobs of units. But in real estate, I just need to follow somebody.
It’s just a few steps ahead of where I’m at and kind of draft off of them and watch what they’re doing and, you know, get, learn from them and experience that. And I think in real estate, what’s neat about is we’re, we’re all growing and learning and people are in different places. So being in that environment, you, you get a lot of connections. You get resources maybe maybe on tax strategy that you wouldn’t get other places. Maybe you get connections with other lenders or other service providers. So I think being in a mastermind type community is really critical.
Yeah, I think masterminds in general are a very helpful, productive environment to put yourself in. You know, the old saying, you are the sum of, or the average of the five people you hang out with the most. So if you want to be more successful, hang out with people who are doers, that are achievers that are making things happen and are, you know, aspiring to higher levels because it rubs off on you. It just, it pulls you up. It doesn’t drag you down and you can’t help but to become more successful hanging around So other successful people. And that’s why, you know, I’ve been in masterminds for, geez, probably 10 years, multiple masterminds and, you know, we even started our own, which is power room. I, and I dunno if, I think if I, oh yeah, actually I did tell you about that. So, yeah, I mean, I’m a big believer in masterminds and the fact that you’re in a real estate mastermind is great because it’s very focused. It, it’s got, you know, a topic and a theme and that just opens it up to learning about the things you need to learn about to be more successful in that area, that asset class of real estate. So yeah. No, good for you.
Yeah. You know, one, one thing about that mastermind, I’ll just share with you, you know, we’re looking at the economy today, right? Rates are up and you know, just a little bit of uncertainty. We’ve got something that we kind of have right now, we call it into the storm. And it all came with that. I dunno if you’ve heard of this illustration. I’m here in Colorado, so I’m in Monument, Colorado, just south of Denver. Yeah. If you’re not on the planes of Colorado and you have a bunch of cattle and a storm’s coming in from the west, cows tend to run away from the storm. Buffalo run into the storm, they go as a group and they run into it because they know intuitively going into the storm, they’re gonna get through it faster. And in real estate right now, we’re kind of a little bit of a stormy time, right?
We’ve got interest rates, we’ve got uncertainty, we’ve got the fed, we, you know, inflation, we’ve got a number of things kind of stirring about. So in our group, that’s kind of a theme of, of being like the buffalo and running together as a herd into the storm rather than kind of cowering down, being strategic, right? Setting out some goals and objectives and then running into the storm together. And boy, where would you get that if you’re not in our mastermind group, where are you gonna find like-minded people? I’m in Monument Colorado, and yet I’m connected to people in other states and you know, and we’re all moving the same direction together, growing our real estate portfolios.
Well that was almost like a tease. So now I have to ask you, what is the right advice? I mean, I’m, I’m sure that you can ask different people in your mastermind whether they’re running away from or into the storm. What are you doing and what is kind of the general consensus?
Well I’ll tell you what I’m doing. Cause you know what I’m doing. I’m still buying assets. I’m still acquiring, I think real, I think there are opportunities that are out there now. The market was so frothy that you could get great financing, but you’re competing against everybody now. The pool of buyers are shrinking. I’ve got a a number under contract right now. I’m getting concessions, right? I’m getting people to pay points. I’m offering lower than asking price. So I’m getting good deals right now. I think real estate in this inflationary environment that we’re in is a fantastic asset class, right? I just think would I wanna park a hundred grand at a bank where I know inflation’s gonna eat up some of it, right? And we could debate about what inflation is. I think it’s a lot more than the official rate. I know if it sits there for a year, probably 10 to 15% less purchasing power in a year.
And the same thing. I think we’re in a dynamic where inflation’s gonna be a factor we’re gonna deal with for a number of years. I don’t think this is a little blip personally, I think we’re gonna be dealing with inflation. So you buy an asset, that asset now will kind of track with inflation. The rents over time will keep up with inflation. My debt, my good business debt is gonna get devalued or debased a little bit with inflation helping me out. I still get tax benefits. So I mean, I can stack up all those benefits. I can’t do that in the stock market, but I can do that. Buying little single family rentals in St. Louis, Missouri or Memphis, Tennessee or Little Rock, Arkansas or Jacksonville or you know, some of the different markets I’m in or the markets I purchased with you, Dayton, Ohio or Cleveland, you know mm-hmm. <Affirmative>.
Some of those markets. So those are the things that I think are gonna, you know, make rather than taking this time of uncertainty and shrinking and cowering back and sitting on the sidelines, make some strategic moves, I’m gonna move forward. I think when rates do go down, prices will go up. And so it’s, it’s almost like in the stock market where you do the dollar cost averaging, right? Buy a few assets. Now I bought some in there and you know what, over the next five, 10 years, it’s gonna be a great play. You know, I’m not worried about the short term horizon, the types of properties that I bought. You know, the, the ones that I, I bought several through you up in Dayton, Ohio, they’re around a hundred thousand dollars. They rent for 9 95. If that home goes down in value by 5%, it goes down to 95 grand. Does that hurt me at all? No. I got the rent coming in and I know that property in the long term is gonna keep going up. So I’m not worried at all.
You made a plethora of great points and I, I can’t disagree with you on any of them. I mean, that was just, you know, well said and brilliant and you’ve actually teed it up and set it up for, you know, kind of my, my next question and that is this, you know, a as everybody knows, markets are very important. Where you choose to invest is an important decision and investors often really don’t know where to start. How did you pick the market or markets for your rentals? How, how did you go down that road? What did you look at? What was important to you?
Well and I’ll answer that question for you. I’ll tell you one thing I did wrong cuz I want to be on candid. We, we learned from successes and also failures. I’m in too many markets, so I got overzealous. I’m in way too many markets. So one thing is pick a few markets, two to three to start off, maybe four if you wanna diversify. I looked for markets where there was a, a good purchase opportunity. The price to rent ratio was good. I like to hit right around the 1% rule. The sweet spot for me is somewhere between, oh, maybe my lowest was maybe 80 grand to maybe 140,000 somewhere in that ballpark. And then I want to get rente right around the 1% rule. I want a stable, I want a kind of a, what we call a linear market. I don’t want the boom bust cycle generally. I want a linear market that’s got steady cash flow, steady appreciation. And the number one thing I look for, to answer your question, jobs, job growth, diversified jobs, I think jobs drive everything. And so if you’ve got people coming in and jobs coming in and it’s a diversified economy, I think you’re in probably in pretty good shape. Doing that. All of my investments are, are outta state. Nothing’s in Colorado now. I’d won it one time and a piece of dirt. Everything’s pretty much, you know, ma mainly in the Midwest markets.
Did you know where you wanted to start investing when you started? Or did you kind of fall into a market or some other real estate investor was saying, Hey, here’s where I’m investing, you should invest there too. How did, how did you pick your first market?
My first markets, I went in about 15, 16 years ago. I went to Florida, Wichita, Kansas and Clarksville, Tennessee. Clarksville is just north of Nashville. Two of those markets were just because people said they were good. They showed me some of the numbers and I said I’m in. You know, one thing that I’d mentioned, Marco, is that, you know, the key is kind of getting in. You know, I mean if I were to give you kind of a big important concept for any real estate investor, which, or at least to my experience, take action, right? Get into a good market. It doesn’t have to be a, there’s no such thing as a perfect market. You just want one with good fundamentals, good job growth good upward pressure on prices and rents over time. I’d rather have a slow, steady market than right a a yo-yo, let’s say in some markets like Miami or you know, Los Angeles, San Diego, you know, a lot of different markets out there. So I think just jump in and what I’ve done over time is I’ll go to one market and then I’ll add another market. And so now I’m fairly diversified, so I’m not tied into any one economy.
Yeah, I know listeners of the show have heard me say this before. I have very general rule of thumb. And that is three to five and three to five, which simply means purchase three to five properties in three to as many as five markets. That’s usually more than enough geographic diversification. And of course you could buy more property than than three to five in a particular market, but it just means starting one market, get three to five properties there and then move to another market. Your first market could be a growth market. Your first market could be a cash flow market, could be a hybrid market. But start somewhere that’s in, in alignment with your investment goals and criteria. And then you can, you know, diversify that portfolio into the opposite type of market. So if you’re starting off with cash flow, cuz you’re focused on, on cash flow, go with growth.
You know, the way I look at things today, just as a side note is if I was to do it all over again, I would probably focus on markets that have the highest growth potential while the property still carry themselves. I wouldn’t be looking for the cash flow, even if they were like break even. I would just go with markets that had growth or hypergrowth just to gain that equity and then continue to invest. And then when that equity was large enough or became large enough, I would refinance or get a HELOC or something and pull some of that equity out to further build my real estate portfolio with more property in other markets. And those could be cash flow based properties at that point in time. But I’ve learned, I didn’t know this in the beginning cuz I actually did it the other way around, but I’ve learned over time that the best way to accelerate the growth of your real estate portfolio and success is to focus on growth markets, to build that equity that then you could later use to fuel additional acquisitions in your real estate portfolio.
Yeah, that’s, that’s interesting. And you know what I, I love your comment of three to five markets, if I would say anything. You really don’t need more than five markets total. I know some areas now I’ve got 20 to 25 assets, but I’m just going deep in that market. I’m just continuing to do it. So you add a layer of complexity if you go to too many markets and have too many managers and too many LLCs in different states. I’ve learned that one the hard way. I I would not, I, I’m glad I grew and I’m glad I went for it, but the downside is now it’s a little unwieldy to manage. I love your, you know, three to five markets. You could just go deep in three to five good markets and you’re set for life. You’re, you’re ahead of 99.5% of people out there.
Yeah, definitely. So when you were picking properties, did you have, this is kind of similar to the market question, but did you have a criteria in mind for what you wanted or what you were looking for? Whether in terms of property type, property size, number of bedrooms or anything like that? Did you have a criteria or was it just whatever is the best looking deal that comes across my desk? That’s what I’m going after.
I’d like to say I had really tight criteria. I personally didn’t. You know, everybody likes like a three bedroom, two bath brick and, and I have some of those and they’re nice. I I have, I have a lot of two bedroom, one bath in a particular market and it’s a great little niche. So no, I really didn’t, and I don’t know if that’s a, a flaw or not. I think when I really decided to kind of put the pedal to the metal, I did not last year, the year before I did a fair number tr I think I did 30 some deals that year, which was, which was a fair amount. I knew capital was cheap and I just wanted to scale and acquire. So I was fairly flexible if it looked like it was a decent deal. And I know that’s, that’s kind of not typical advice. Everybody has kind of their sweet spot. I’m pretty open. If it’s a decent deal I probably wouldn’t do a one bedroom, but, you know, I’ll do, I’ll do two bedroom, one bath all day long if it’s a good deal.
Yeah, for sure. So, you know, investing as we know is a journey and for many people it takes them from financial frustration to financial freedom. That’s the purpose and point of it. What was your biggest frustration before you got started investing in real estate? Everybody has kind of a burning frustration or desire.
My mine really simple is I just wanted to have more, I wanted to have more economic independence. I want to have a source of cash flow that wasn’t tied slowly to what I do professionally. I wanted to grow another source of cash flow and I was, I knew real estate was a way to do that. I knew the data, you know, 90% of millionaires make their money in real estate, both in the US and worldwide. And I just said, Hey, why not go where the momentum is and, and begin developing an additional source of income that would keep up with inflation and has all sorts of economic tailwinds driving it.
So I’m gonna take that question one little micro step further. When you actually started going down the road of finding a property and making your first purchase or investment, were there frustrations during that process that you can think back on? What were they, if any? Cuz everybody’s gonna have some frustration, especially with something that’s new, uncharted territory. And especially if you don’t have a team working with you. Like if someone’s not advising you or counseling you and you don’t have a team around you, you’re, you’re really, you know, charting a new path on your own. And that’s when a, a lot of investors get into trouble and step in, you know, in holes or step on landmines. So did you have any big frustrations in the very beginning when you were going down this road of making your first purchase?
The first frustration I had was just finding an asset. They were, they were moving fairly quickly. I would look at some different things and they were turning it over and I would look at it and go, well, that looks good. And then I’d, you know, I had a little spreadsheet to plug in numbers and do all that, and I’m playing with it and looking at it, and by the time I’m like, oh, that’s good. Somebody else would’ve grabbed it. And so <laugh>, I don’t do, I don’t use spreadsheets for anything now. I just look at the price to rent. I know the market, I just, I never run numbers anymore on anything. If it looks good, I’ll just do a little kind of look at it and rent a value and I’m like, it works. I’ll buy it. So I’ve kind of gone maybe almost the other extreme now to get rid of that frustration because I, there was some deals I looked at that by the time I decided I wanted to move, they were gone and somebody else had scooped up that property.
I think due diligence can be broken down into two phases. There’s pre-contract and post-contract. This is the way I look at it. The pre-contract due diligence is essentially is it in the right market? Is it in a good desirable neighborhood? Do the, the numbers make sense and is the condition of the property the way I need it to be, right? Like, in other words, no deferred maintenance, no major expenses or CapEx, you know, close to like new. Then once you have it under contract, because this is where a lot of investors waste a lot of time, they spend weeks doing that initial due diligence that they do exactly what happened to you and they lose the property. So if, if everything looks and smells good on the litmus test part of it, put it under contract so you lock it up, you still have your escape clauses to get out of it based on, you know, condition inspection financing. But then you continue to do your due diligence and you do what, you know, Ronald Reagan said, trust but verify. You verify the numbers, you verify the condition through your inspections. You know, you, you basically dig down deeper to verify that what was presented to you is actually correct.
Yeah, yeah, absolutely. The inspection is so key. Do things like a sewer inspection, you know, I, I learned that one the hard way. I didn’t do it on one and it was an expensive lesson. So I think doing those inspections, studying it, now you’ve got it under contract. Now you’re, you’re getting close to buying the asset, you’re doing your due diligence, but if something comes up that doesn’t look right, find out before you close on it, right? That’s your time period to decide, hey, do I wanna pull the trigger and buy it? Or is this have enough hair on it that maybe it’s just not worth it. So, great. Now that’s really, that’s great wisdom there.
Yeah. So so this, this is the way you protect yourself as a, as a real estate investor. You know, you, you, you find the deal if everything checks out, put it under contract. So now you control it and you take it off the market and then you continue your due diligence to make sure you are protected. And then you go to closing, you go to, you know, close escrow and take possession and rinse and repeat. Go on to the next one. So if a new real estate investor is listening to you here today, what would you tell ’em? What advice would you give a new real estate investor, Scott?
Simply I’d say number one, get with other like-minded people, right? Find a local real estate group, find other mentors or people to do it. The other one that I would say is jump in, you know, find a market. Don’t be concerned about making your first purchase the perfect purchase that it has to be the ultimate investment with the best roi. You make money in real estate by buying a lot of good properties, right? Solid base hits. So if you’ve got four single families, you’ve got something going and just look at buying your first one, go for the second one. You’ve just doubled your return. You got two assets, so go for four, now you’ve got that. And then I would say the sweet spot is scale up to five assets. I think that’s kind of an important number. Generally, you got enough money coming in to kind of service your debt at five and then maybe aim for 10, you know, after that.
I know you know, Robert Allen, I’ve, I’ve been to some of his stuff. You know, he talks about buying one a year or two a year, but 10 or 20 single family homes will change your life for what you can do. You’ve got the, the amount of return you’ll get from that, that for the, the average American is the difference between winning financially and being at a really risky position. And it could be as small as 10 20 or more, just gives you additional breathing room. But most people can do that. And the types of markets that I buy in, and a lot of the ones that I see on your website, you buy homes for around a hundred grand, a hundred twenty, a hundred thirty, a hundred forty ten of those, and you’ve got financial security long term. But the only way to do it is you gotta make that first step. So it’s kind of that paralysis analysis thing where you’re, you know, angst over buying it, jump in, buy a good asset, rinse and repeat. Do it a few times and try and get to that four or five mark and then scale it up to 10. That’s what I’d say.
Yeah, good point. And of course, it’s worth mentioning, even though most people probably understand the benefit of leverage as it applies to real estate, but these 10 properties that you’re talking about, whether they’re a hundred thousand dollars or 150 or even 200,000, you don’t need the a hundred thousand in cash or the 150, you need 20% of that. It’s a 20% down payment. You borrow the other 80% from a mortgage lender. So you’ve got the benefit of leverage, now you control a hundred percent of the asset with only 20% of the purchase price. It’s a beautiful thing and you just keep doing that and that’s how you build a portfolio. So same question, essentially. What advice would you give a seasoned real estate investor that’s looking to grow their portfolio, especially in in today’s environment? What advice would you give them?
You know, for a seasoned investor, I would say use that experience. There’s a, there’s a phrase, a friend of mine says, get rich in an niche. So for me, it’s single family homes season. You know how to evaluate a good deal rather than chasing a shiny object, right? You know, commercial apartment, this or that. I don’t think there’s anything wrong with, with scaling up with where you’ve already got the expertise, you’ve kind of paid the dues to get to where you’re at, to be seasoned, you know, and, and it doesn’t mean, I mean, there’s some things down the road that I might like, I don’t have short term or Airbnb. I might wanna eventually have one or two of those, but continue building the portfolio with what you know and what you’re comfortable with and, and grow it. And to me that almost takes a little bit of discipline because, you know, you’ve, you paid the dues in whatever niche you’re in.
If you try to go into another niche, you’re gonna have a whole more learning experiences. Stay in the lane, keep growing it, you know, and maybe set, set a goal. I’m a big fan of I like 90 day targets. I live by 90 day targets. So I’ll set a goal that’s just three months out and I will fight like heck to hit that three month goal and then have, and then another one. So I don’t have big goals that are maybe, you know, a year out. I just do little three month increments. But I’ll work really, really hard to try and hit that three, you know, that three month increment.
Yeah, good system. It’s good advice too. So let’s start wrapping things up here. You know, they say that experience is the greatest teacher, and, you know, that’s pretty much what we’ve been talking about here. And a lot, lot of wisdom can be gained from the experiences that you have and other people have, but we need that basic knowledge through education and schooling. So if you were to look back, Scott, what would you have done differently? If you look at your entire journey up until today, what would you have gone back in time to change or done differently?
Oh boy. I read and absorb a lot of books. I, and, and I don’t think it’s all head knowledge, but you can learn anything you need to know through reading. So I am an avid, avid reader. Elon Musk, they say he learned how to do rockets by reading books primarily. And he, he is research people. He build rockets, you know, and did all that by reading. So get the knowledge. I, I guess if I were to take it from reading, it would be reading podcast. We’re, we’re in a situation, you know, look at us, you’re in California, I’m in Colorado. Knowledge is out there, right? You can get in on a podcast or in a book, or you can go to a thing, get the knowledge you need and keep learning. I think the faster you get the knowledge, the faster you get over hurdles.
When I started out, I thought, well, you gotta stop at 10. Now I do everything as you know, non qm, right? Non-Qualified mortgage fi. I do that all the time. I do portfolio loans and do all sorts of stuff, but I thought my 10 loans was kind of my end stop. But you, you get around other people and you get knowledge and you realize that’s just a starting point. The game just gets, gets a little more interesting after that. And frankly, it’s a little bit easier dealing with non QM financing than conventional loans. So, mm-hmm. <Affirmative>, get the knowledge, get the knowledge that you need, dig in, get serious about it and, and go after it.
Yeah. Quick sign note for those listening. Non QM is essentially mortgage loans that are not conventional financing. And there’s many lenders out there that provide them. They’re a little bit more quote unquote expensive than conventional loans. But for some people who can’t qualify or they’ve tapped out the conventional loans, the non QM way is the way to go because there’s virtually no cap on how many of them you can have. And little shameless plug, Nora real estate funding is a non QM mortgage lender. So you can just hit us up or hit my team up for financing if you need it. That’s not conventional financing and there’s no limit to those. So, Scott, I don’t know where to end with you. I think you’ve probably wrapped it up well. Maybe I’ll just ask you, are you happy with the accomplishments that you’ve made thus far in your real estate journey?
Happy. I, you know, I feel like I’m, I’m going where I want to go. I’m making progress. So I mean, yeah, overall, I’ve now got a portfolio that has its own momentum, right? It’s, it’s big enough now where it carries itself sustains. So I, I put something in place that’s got a momentum of its own and I’m pleased with that. I’m happy, gosh, you know, I, I guess you always want just a little bit more and a little bit sooner. <Laugh>, you know, the two rules of money, Marco, right? More is better than less and sooner is better than later. So I’m working on both of those.
That’s a great way to summarize everything. Scott, share with our audience anything you’d like to share with them, how they can contact you, reach you, find out more about the stuff and projects that you’re working on. I know you’ve been working on a real estate course. I’ll just open it up to you and we will wrap it up there.
Thank you, mark. Yeah, probably the easiest way is just my name. I’ve got a, you know, just I’ve shared what, what I’ve done to build, and I’ve just put that together, put together a course of kind of what I’ve learned, good, bad, and tried to assemble that from A to Z. That’s at scottrsaunders.com. So just my name with the initial R and that’s probably the easiest way on that front to, to reach out. And boy, it’s been great visiting with you. You know, you, you, I’ve listened to your stuff for so long and you’re just, you’re always current. You’ve always got such, such great economic insights from your experience. So it, Marco, it’s just a pleasure to visit with you a little bit here and, and share a little time talking about real estate and growing and scaling portfolios.
Thank you, Scott. Really appreciate you saying that and I appreciate you coming on the show. This has been good because it, it’s been long overdue and it’s refreshing to hear, you know, the trials and tribulations of others. So thank you for sharing. We’ll put all this in show notes and on the podcast show note blurb, as well as on the website, it’ll all be transcribed. So Scott, once again, thank you for coming on.
Thank you very much.
Yeah, definitely. And for everybody else, appreciate you taking the time here today. Remember to subscribe to the show if you haven’t done so already, and then share the show with your friends and family, other like-minded people. You know, we join masterminds like Scott was talking about, because we want to be around other like-minded people. So if you have friends and family that love real estate investing, then you know, share the show with them. And that is it for today. Thanks for listening. We will see you all on our next episode.
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