Today on Unstoppable REI Wealth we have another incredible guest, Blake Choisnet, our first french cowboy to the show. Blake has successfully acquired 40 units sight unseen or why he turned down a 100% pay raise to invest full time. Blake is a highly successful real estate investor, business owner, coach and speaker. He did what was told of him, got great degrees that ‘would pay well’, worked hard, and then proceeded to be lulled into boredom and exasperation by the 9-5 life. Realizing he needed to find a way out of his full time job so he could actually live his life, he did something he thought he’d never be able to do: he started investing in real estate. What started with $10k of hard- earned savings (‘stupid money’ for tuition to the school of hard knocks) turned into a multimillion dollar real estate portfolio in 18 months. 12 months later he had enough monthly cash flow to cover all expenses and retired at the age of 32 despite his boss offering to double his salary to stay. He continued to hone his skills of finding below-market deals, raising private money, market economics, deal analysis, and real estate tax strategies, and within 5 years of buying his first property he became the first self-made millionaire in his family line. Blake now splits his time between rapidly growing his real estate portfolio and teaching new investors how to get started investing in real estate. He believes he can teach anyone how to invest in real estate and helps his clients lower their risk and move faster - having helped new investors acquire over $10M of cashflowing real estate. His unique ability to learn difficult concepts quickly, communicate complex ideas simply, and diagnose roadblocks to progress makes Blake a uniquely skilled investor and coach. Listen in, grab your notepad and enjoy this episode. Before you go I just wanted to say how truly thankful I am that you are here and listening and while you are here I will continue to provide valuable content for you for you all! Ready to connect with Blake: Blake’s Website - https://www.blakechoisnet.com/ BRRRR Investing for Beginners - https://www.facebook.com/groups/brrrr Blake’s Instagram - https://www.instagram.com/blakechoisnet/ Blake’s Youtube - https://www.youtube.com/channel/UCPN5QUZ85hunsi39qagvO5Q Blake’s Facebook - https://www.facebook.com/Blake.Choisnet And after that head on over to... https://easysell411.com https://billyalvaro.com https://billyssecrets.com Who knows maybe you will be our next partner? To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Today on Unstoppable REI Wealth we have another incredible guest, Blake Choisnet, our first french cowboy to the show.
Blake has successfully acquired 40 units sight unseen or why he turned down a 100% pay raise to invest full time. Blake is a highly successful real estate investor, business owner, coach and speaker. He did what was told of him, got great degrees that ‘would pay well’, worked hard, and then proceeded to be lulled into boredom and exasperation by the 9-5 life. Realizing he needed to find a way out of his full time job so he could actually live his life, he did something he thought he’d never be able to do: he started investing in real estate. What started with $10k of hard- earned savings (‘stupid money’ for tuition to the school of hard knocks) turned into a multimillion dollar real estate portfolio in 18 months. 12 months later he had enough monthly cash flow to cover all expenses and retired at the age of 32 despite his boss offering to double his salary to stay. He continued to hone his skills of finding below-market deals, raising private money, market economics, deal analysis, and real estate tax strategies, and within 5 years of buying his first property he became the first self-made millionaire in his family line.
Blake now splits his time between rapidly growing his real estate portfolio and teaching new investors how to get started investing in real estate. He believes he can teach anyone how to invest in real estate and helps his clients lower their risk and move faster - having helped new investors acquire over $10M of cashflowing real estate. His unique ability to learn difficult concepts quickly, communicate complex ideas simply, and diagnose roadblocks to progress makes Blake a uniquely skilled investor and coach.
Listen in, grab your notepad and enjoy this episode. Before you go I just wanted to say how truly thankful I am that you are here and listening and while you are here I will continue to provide valuable content for you for you all!
Ready to connect with Blake:
Blake’s Website - https://www.blakechoisnet.com/
BRRRR Investing for Beginners - https://www.facebook.com/groups/brrrr
Blake’s Instagram - https://www.instagram.com/blakechoisnet/
Blake’s Youtube - https://www.youtube.com/channel/UCPN5QUZ85hunsi39qagvO5Q
Blake’s Facebook - https://www.facebook.com/Blake.Choisnet
And after that head on over to...
Who knows maybe you will be our next partner?
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
SUMMARY KEYWORDS
money, people, market, real estate, investing, cash flow, engineers, engineering background, deal, private lender, find, properties, blake, cashflow, business, engineering, buying, calls, data, numbers
SPEAKERS
Billy, Blake
Billy 00:01
Let's see Welcome to unstoppable real estate investing well my name is Billy Alvaro, aka the unstoppable BA, former billion dollar mortgage banker gone bankrupt, turn professional real estate investor, where each week you'll learn the tools, strategies, systems and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses creating massive profits and how you can too, and we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth now let's get started. What's going on everybody? Welcome back. Welcome back to another episode, unstoppable Rei wealth. I'm here today with a dude from Texas and his name, says it all Blake guy sounds like a badass cowboy Blake Choisnet they kill you last name. Choisnet
Blake 01:16
Oh, you actually did a perfect.
Billy 01:19
Good. French man with a with a cowboy first name. I'm loving. This is gonna be a good interview. So Blake, Listen, brother. Welcome to the show.
Blake 01:26
I appreciate it. Thanks for having me on.
Billy 01:27
Yeah, no doubt, no doubt. So interesting. You've been in this business for a short time. So this, this whole real estate podcast that I put together, teaches people how to start grow and scale. And like you're five years in. So you're really from the growth phase. Now I'm thinking you're going from growth to scale. Is that kind of accurate?
Blake 01:43
Yeah. I mean, it's it moved reasonably quickly. You know, I started out, I bought my first house not really as an investment strategy. Just I was I was a bachelor at the time moving around. I said, I'll have my buddies rented out from me. Yeah, I didn't know what it was called. But you know, and then I found out I'm actually doing some legitimate strategy. And then about 18 months later, I did the same thing. Again, I was living in Austin quickly appreciating, and I kind of got the bug and said, had to leave my w two on this. And so about 18 months later had a multimillion dollar portfolio within less than five years, self made millionaire. And so yeah, starting to scale into some more small, medium sized multifamily. And we'll we'll see where it goes. I don't particularly want to work 40 hours a week ever again. And so. So I put that constraint on my lifestyle. So scaling means lots of systems, like, you know, like you, of course advocate for and teach so much about, yeah, lots of systems, other people employing them to help scaling so that I can spend time with my lovely wife and my five month old baby boy.
Billy 02:50
Love it. Congrats on the baby brother.
Blake 02:52
Yeah, thanks.
Billy 02:53
So let me get a little insight What were you doing at your W2, before you decided to quit the Gob and get into the world of investing,
Blake 02:59
as in the tech world. So I studied engineering academically, and ended up working for a tech company out of Austin, Texas. So I started on the engineering the nerd side of things, and then started working on managing some of those teams, and then ended up in business development sales and, and then just decided, you know, let's pull the plug on this. We hadn't had enough passive income to cover our expenses. And then, you know, but my story wasn't like a lot of people, which is my life is terrible. I hate my w two. Like, it's, it's, you know, killing me. They were good to me is a really good environment. I just wanted my time more than anything. Yeah. So when when I went to go put in my notice, my boss said, Well, what if we double your salary? And I was like, it just doesn't give me what I want, which is so wild, you know, that I would have ever, ever even considered that. But yeah, that was my life beforehand.
Billy 03:50
A lot of it's weird. I've been interviewing now you're I think my 96 or 97 of you over the last year and a half, two years and a lot of people engineering background get into the space of real estate investing. I don't know what the what the connection is. Why? Why did you like I know, it's freedom and not wanting to work with Was there something else because the mindset of engineers tends to do really well in this business, you guys figure it out quickly of how to put stuff together, how to set your processes up, and then start scaling it pretty quick. And obviously, you're doing the same thing.
Blake 04:22
Yeah, I agree. I agree. I think I think part of the reason at least for me getting into it was I just really enjoyed it. You know, what is the saying that a guy who just loves walking will walk further than someone who runs a lot and just has a goal that he wants to achieve that one goal and so so I kind of fell in love with the discipline of it, just because it was a hobby. So I joke I've got a weird hobby that doesn't make me money, which is awesome. But you know, some people like ballet or painting and I just happen to really enjoy real estate and I think part of the reason for that is my engineering background. The you know, engineering teaches a way of thinking that is Yeah, analytical and problem solving oriented. And so when you say how can I make this work? Or what are the numbers here? I think my engineering background, you know, I just pull up Excel and I say, okay, income minus expenses, you know, and just kind of figure out well, what are my expenses? Does, you know, consult Dr. Google and, and figure this things out. And that kind of helped me continue to push forward. And then when it started working, I was almost confused. Like, seems a little bit too easy. You know, I'm kind of looking over my shoulder for Ashton Kutcher is going to punk me, but But yeah, I do agree with that. I've talked to many, many real, real estate individuals that have a background in engineering. Yeah, that have just really, really loved it. And I think part of that is the analytics. The other side of that, though, is engineers tend toward analysis paralysis, which is like our, our analytical way of saying fear. Yeah, we're just scared.
Billy 05:53
Yeah. Because a lot of you guys overanalyze the shit out of things. And you like, you want to make sure everything's gonna be perfect. And you know, in this world, and anything you get into nothing's gonna be perfect, just sort of fall through the cracks.
Blake 06:05
Yeah, yeah. And so that's, I think one struggle that engineers have is they want to know, every single answer. And it's got to be the margin for error has to be zero. Because in engineering, you know, if you're building a bridge or an airplane, you can't be like, I think that works. Looks good. You know, you have to over engineer and have to understand all of the the fundamentals. And so what it comes with is recognizing when you are kind of in that analysis, paralysis phase, and, and moving past, and for me, what I've found is having numbers that say that are predetermined that say, this is a good deal, and this is a bad deal. Makes it a math decision, not a an emotion or field decision. Yeah. Then if I say no, it's because I'm scared, you know, and then I can go down the personal development path or whatever. But But yeah, that's a that is a real monster that a lot of us engineers battle with in the real estate world.
Billy 06:54
Over the years, when I was in the field, and I was buying properties. Now I have a team that does it. But I would, I would say about 20% of the people that I was buying from had some sort of engineering background. And you learn you learn early on, when you're buying from somebody with the mindset of an engineer you there's four different personality styles, and with that analytical type style, you can't go in and just try to sell them with emotion, you have to sell them with data. And so like, every single time and I was up at bat a lot with engineers, I closed like eight out of 10 of them for one reason. And one reason only, I gave them what they want, I gave them the information, the data, made it make sense to them. So they're like holy shit, the data is serving their purpose, they understand where I'm coming up for him with this offer. And they're like, You know what, I don't really like the numbers. I don't really like the offer. But because you're giving me the data and show me everything that's going on in the market, and how much it's gonna cost you and what the real costs are. I get where you're coming from, and I'll take the hit. And I'll make this deal happen. So it's like, you got to know the personality styles, you got to know who you're working with, who you're selling to who you're buying from. And engineers, if you don't know how to how to sell to them, they can be a tough group to buy, sell to because they are extremely friggin analytical and their, their bullshit radar is up. They want facts and figures. They don't want a bunch of talk a bunch of fluff. They don't want the personality of coming in being my friend. They want to understand how hard was that?
Blake 08:15
Yeah, yeah, they definitely they start with that BS radar. Hi. And then you have to prove them. Prove them against it. Yeah, for sure. And really, what I think most people want is they want safety and they want predictability. And you know, you've got your some some rogue individuals that just love the rush. But the way that engineers get to predictability is data. And so then they can say, well, if I'm wrong, I'm wrong a little bit. Or if I'm wrong, I'm wrong this amount, and I'm comfortable with that, for the potential upside of you know, something crazy, the upside in real estate or really, investing is really clear. Protecting your downside is the more tricky part of things. And you've got to make the decision whether or not it's worth it. I think that's one of the ways that I've seen engineers, the ones that have been really successful, say, Okay, I understand the information. And I'm willing to take the risk, because I know my downside. Yeah. And that represents itself more unpredictability than anything.
Billy 09:08
And you know, on the flip side to that, when I'm utilizing engineers, they have capital to invest. So I'm not buying from them. Now. They're investing in me or my businesses, or my companies or the deals that we're doing. It's all not about the upside with them of what they're going to make. It's capital preservation. They want to know what their capital is going to be preserved in their downside is extremely low. Good to have the upside, but I want to make sure lucky to lose when I'm investing.
Blake 09:32
Yeah, yeah, in fact, I read a report recently that psychologically, most people are more likely to be scared of losing what they have, then they are motivated to go get what's on the upside, even if it's 100x to you know, 10,000x more, they really want to protect what they have. And so particularly, you know, lots of times this this showed in my life, whenever I was considering liquidating my 401k You know, I left my left my w two or I was about to leave my w two. I said well How's my 401k producing? And I said, Shall I liquidate that and that's kind of a sacred cow, you know, in the investing world and just in the adulting world, as I will I really shouldn't liquidate that. But then I looked at the numbers and looked at my my worst case performance for a real estate, portfolio or property. And best year for my 401k. And I was still 5x better. Maybe I should liquidate it, you know, and but it was, you know, it just seemed insane to me to liquidate 401k, because that's the, you know, the bastion of safety. Yeah, it really, I mean, it worked out played out. Well.
Billy 10:34
Did you just out of curiosity, it's off topic. But did you roll that over into a self directed as you just liquidate and put it right in real estate and take the hit with the with the penalty.
Blake 10:42
No, I liquidate it and put it right in real estate, I actually it was kind of fortunate because it was during the COVID. Period. And COVID had the the the flexibility that if you've been affected by COVID, you can actually withdraw your 401k Spread the income taxes out over three years, and avoid the early withdrawal penalty. And so that was just really kind of luck. It's actually that's what actually got me thinking about it. Because both my wife and I had COVID. And, you know, we were married, probably a year, six months before, everything really kind of exploded. And so I said, You know what, sequestered newly married life is a good time to be sequestered. And we're probably just going to end up getting it if one of the other the other gets it. So we got it and I saw that rule. I said, Maybe I should look at my 401k and then I did and that's when the sacred cow thing kind of kind of hit and I ended up liquidating it and putting it into a bunch of properties.
Billy 11:35
I love it. All right, good. So we got your background got your story love the fact you're in Texas is your wife involved with the business with you or she's still doing her own thing, because
Blake 11:42
she's, in fact, she, she owns and runs a ballet studio for littles ages two to 10 It's been her life dream. And we you know, once we got the passive income, we said, let's do it, you know, we did not make any money. And so it's run kind of with a nonprofit motive. It's for profit, just because it's the restrictions are a little bit of a headache on nonprofit but so we scholarship in girls that can't afford it. And it's just been it's been awesome. So, uh, so she doesn't work with me sometimes. I'm dance dad, though, you know, I'm helping her on the operations, finance side of that business. But she's not she's not really. She's not really in the business operations of the real estate. Business.
Billy 12:21
Love it. Alright, so. So your whole background, we were talking offline, I read your bio, you're not a fix and flip guy, you're not a wholesale guy. You're a buy and hold bird type of mentality, correct?
Blake 12:30
Yes. I 100%. So let's get into this.
Billy 12:35
Reading, reading your bio, there's a couple of things I want you to go in deep on. So the first one people considering going into a market market selection. I know that's big with you, especially with your background. Tell me what you do, how in depth you go. When you're looking to get into a new market to start investing in? And I'm taking it you're single family and small, multi families.
Blake 12:55
Yes, yeah. Single Family small multifamily. Well, you know, this goes back to the engineering conversation, right, I'm much more likely to try and find as much data as possible. What's interesting is I've got an engineering background, but I'm more vision and high level oriented. So less in the details and processing system. I'm terrible at processing systems just from a default. That's fantastic. So I learned a bunch from her. But I have those two, those two pieces, the high level vision, affection with the engineering analytic brainstorms, or mindset. So the way that I approach it is a little bit different, because a lot of the reports that you see out there are more focused on, you know, these are the best real estate markets, but they're defining best as appreciating. Austin is the best real estate market for the last few years or less, at least one or two years, because so many businesses have moved there that's put people there, and it's increased price. But if you're a cash flow investor, that's not that's actually not what you want. A market is one of three things. It's either a cashflow market, an appreciation market, or it's neither. And it's it's not going to be the same. It's not going to be cashflow and appreciation at once. Sometimes they will hand off to each other. I think waco is in the process. Waco, Texas is in the process of this happening in the chip and Joe effect, where it was cashflow, and now it's more appreciation oriented. So it's a little bit harder to make the numbers work. And so for me, I was living in Austin at the time. And I didn't have 20% down on a $400,000 house that was more than I was making at the time. And so I had to figure out where could I go invest that fits my goals and my goals were first cash flow. And then price of entry a reasonable price of entry. I was starting with nothing, you know, I didn't come from money. I haven't inherited anything. I saved up about 10 grand of what I called Stupid money, you know, just school of hard knocks tuition essentially. Yep. And so I started looking at markets and now you know, what I've learned is markets all over the place I teach students on how to do this is you want to figure out two things, economic stability and diversity and will it cashflow? Alright, so economic study looking and diversity is, is it flat or growing, either of those are fine. If you're in a growing market, you probably have a three to five year window where your team isn't going to be as valuable anymore because you get priced out. Right, if you're in a flat market, you know, inflation helps you because your price, the overall value of the dollar is going to change. So the property value still goes up. But you've got a longer window, maybe it's 10 years of your team actually working because the price entry still works. Cash Flow still works. So that's that's economic stability. Diversity is important. Because if your market is only predicated on one sector, one market sector take the I think the best analog for this for people understand is oil and gas. What does oil and gas do? It goes up, it goes down, it goes up, it goes down, right? So when it's up, it is nice, but when it's down, it is not. Right. So a good example of a market like this would be say Midland Odessa, where it's predicated a lot on oil and gas or think about, say Tulsa, Oklahoma in the 90s, where I'm from, we you know, when we had the oil and gas bust in the 90s. You know, Tulsa was what Houston is now for oil and gas, but it was only oil and gas. And so it tanked and the entire market went with it. And if so, if you're going for cash flow and generational wealth, all you're generating your cash flow might still be there if you can hold on, but your generational wealth is just tanked. Right? So I'm trying to evaluate those the way that I evaluate those is population growth.
Billy 16:26
That was gonna be the next question. So economic stability, diversity, how do you go with what are the tools specifically that people that are listening can tap into because they hear this? And they're like, I get it, but how do i Where do I get the data from? And then how do I analyze it
Blake 16:40
that? Yeah, that's a great question. Yeah. Cuz, you know, one of the benefits of someone like you teaching people is you're actually in the trenches, you're doing this. So you're teaching from the trenches. And so in the same way, you know, I'm analyzing this information, too. So one of my favorite is a pro tip for everybody. Oh, my favorite tools is bestplaces.net. And bestplaces.net, just has a bunch of different data on different markets. And so the information that I use the most is the housing data and some of the economy data. So in the in the when I'm looking at the overall market, sometimes I'll look at the economy data and say, How is job growth growing? How is income growth growing? And what's the population look like? Those are a few of the main ones that I really care about as far as economic stability. Now, you could have one of those going down a little bit, if all of them are going down, that's a red flag, you probably just move on, move along.
Billy 17:33
Are you looking at a trendline, over a five year period to see what the trends are doing?
Blake 17:37
Yeah, I'm looking at, I'm looking at, I'm prioritizing a recency bias of 12 months. And then if one's a little bit negative, or maybe it's you've got kind of a from all the data that you're looking at, you have this synthesis of that information in your brain, you say, I think something might be interesting. You look back at five, five years, and maybe it's all down over the last 12 months. But over the last five years, it's been going up into the right, that's still a good situation, as long as it's less than a 1% decline. I'm comfortable with it. Because but also recognizing that the economy we live in right now is more volatile. And then you can remember, right? I mean, you can tweet something read it can get a hold of your stock. And I mean, it just because all look at Eli Lilly Yeah, right, they had a meme account lose, lose a billion and a half dollars in market value. And so so you got to take that with a grain of salt. So that's, that's the, how I evaluate the economic stability. The diversity is more focused on the different market sectors. So you don't just want one that's dominating. And so the best place is dotnet. And there's other resources out there, but I just I appreciate best place dotnet I found their data is really reliable, and it's consistently updated. And so they've got information on the breakdown, percentage wise, of people that are employed in certain industry sectors, break it out to 1520 industries. And so if you've got something over 50%, or really even over 35%, that's a pretty heavy chunk of the market, right? Because if that goes, let's say that loses 50% of the of its market value because oil and gas goes down. That means that you know what, overall, what 15 20% of your market just lost their job. Yep. Right. So that's, that's how I evaluate the the stability of things, cash flows. Cash flow is different though. I've got a few different methods on that end.
Billy 19:41
Let's talk about that. So I want to talk about your cash flow selection. How do you go about identifying the areas for cash flow, what do you look for specifically?
Blake 19:48
So I use an analogue for you know, when you're looking at a property, say a single family, three bed, two bath, what's the best metric that you can use for cash flow? ability rent to price ratio, right? So rent to price is you don't necessarily want to buy the cheapest home, you also don't want to buy just the highest rent home, you want a differential between the two. And so I'm using that at a market level. But then it becomes a little bit hairy how do you actually find rental price ratio for a market. And so use two methods, the top down and the bottom up method. The top down is simpler, but less accurate. The bottom up is more accurate, but it takes more time. So top down is essentially I use it as kind of a gating factor for should I spend any more time on this got and that is you take for rental price, you take the the median, three bed, rent for the market, and the median home value. It's important not average, but median because average will skew your data. Yep. If you get what I found by analyzing markets all over the country to have a cash flow market report that I noted out, it's my Excel sheet engineering brain, there's probably 100 to 120 capital markets in the country. But when you do that top down method, if you're less if you're lower than point seven, 5% it's your you're going to have a hard time finding cashflow markets in there. Maybe there's one or two. But it's kind of like, you know, if, if, if my wife told me go get an outfit for our little baby and I went to Home Depot, like could I find something that like maybe you know, but if I just went to Target, I'd be way better off. Yeah, that's what that breakdown is. That's what I found out on the point seven, five. You want that to be higher, ideally, at this point, maybe like a point nine to 1.1 is kind of the ideal number we're going for. But this is a conservative estimation of just average median numbers. So in order to find the more
Billy 21:46
reserved for the people that are listening, and if you have a $200,000 medium house price you want and that rent is $2,000 a month. That's a good deal.
Blake 21:55
Yeah, that's a 1%. Yeah. Yeah. one percenter. And so when you're looking at the market as a whole, you don't not all of them have to be one percenters. In fact, if your average is 1%, you're going to do the due diligence to find the good ones. So you're gonna be above 1%. Yep. So that just this kind of high level median divided by median, the bottom up approach is a little bit more accurate, and gives you a better true representation of the cash flow, you'll see on actual deals. So my recommendation there is, hey, I take 15 to 20. I go to my market, say on your favorite tools, Zillow, realtor.com, Trulia, whatever it might be, take 15 to 20 properties that are for sale right now or have been sold recently. So if you're in a non disclosure state, you know, you just use practical listings are open listings. But if you're looking at a non state that actually shows sale values, filtered down to say the last three months or six months, find 10 or 15 of those properties, and then go find comps for what they would rent for. So and the way you do this, if you got a three bed, two bath, 1200 square foot house, that's you're looking at rental grade, you're not looking Cadillac, you're looking cameras, so vinyl floors, laminate countertops, things like that, go find what that average rent would be. And so let's say it's 1200 for one door and 1400 for another, you're essentially going to come up with 15 to 20, rent to price ratios, that are statistically representative. And then you're gonna average them all together. And if your average is point nine or above, you're in good shape. Ideally, it's 1.1 1.2, something like that, sure that you can find better deals. But that's how I guide people to evaluate a market. And it's been incredibly helpful. Incredibly helpful.
Billy 23:42
I mean, it sounds simple enough, it's just data and analytics, right? You just dig in getting the data, put some formulas together, figuring out the numbers working on
Blake 23:50
it, and it's engineers, artists. Yeah.
Billy 23:53
Engineering one on one to your background.
Blake 23:56
Yeah, yeah. And the nice thing is, you know, if you if you just, let's say your listeners, listen, they say this is too hard. Just think of five markets, five markets, write them down, and then compare all the numbers of each one. And then you can qualitatively say, this is the best market for cash flow, or this is the best market now, it still might not be a good market for cash flow, but at least you've got numbers to compare toward. Yeah, you know, if you've, if you see 1.5 And you know, in your head, like, that's not a cash flow, it's let's say it's Portland or it's New York, I know, that's not the cash flow market. Okay, I can use that as a baseline. And then I find another market and I compare them to what I focus on is populations between let's say 80,200 1000 because they've got a lot more upside. Yeah, so that that that's a trick that I think would be will be helpful for someone that says how do I actually find one of these cashflow markets? And and then they can actually practically go out and do it?
Billy 24:54
Yeah, and look, if you're listening and you're like, I don't I'm not an engineer. This analytical shits not for me, I don't What I'm doing, he just gave me the formula, you can hire a VA to go market specific utilize this formula to do the analytics for you to give you 1520 3050 different markets to see, okay, here's the data, which one do you want to go into? So if you have the data done for you, and somebody analyze it, you just have to make a decision. If you're not the analytical type, and you're like, you're thinking, I can't do this, you have to find somebody who has the skill set to do it. And that's how you start growing your business and growing your cash flow. Exactly. Yes. Yeah, this is good stuff. All right. So I want to switch over now Blake, I want to go over to because you're big on private money, right? You're big on raising capital. So you started off, you had $10,000, as a nest egg, you cashed out your recent years, you cashed out your 401 K, your IRA. But in order for you to grow and amass all these properties, and live off the cash flow, you're gonna have to go out and raise private money. First question, before you go into doing next I know you have a process for it. Are you raising 100% of the private money to purchase these properties? And you're bringing these people in as a partner? Are you raising them as private money? Or you're giving them an interest on their capital? And are you marrying the to private money with capital funds from from the markets, like, from a lending one or something like that? What's your price question?
Blake 26:16
Great question. I started out if I'm doing a burr deal, which is how I built my, my portfolio. In fact, I had that $10,000 of stupid money, my first contractor walked off with 12 grand, so I was, you know, got punched, I really had to figure out a scalable way. I tend toward debt, because I want all the equity. Now, if someone offers me a good deal, I'd rather have 50% of, you know, $10,000 a month and 0% of $20,000 a month. But, but I tend toward debt rather than equity. Got. Now as I'm scaling into larger deals, I am bringing on private lenders with an equity position to put down the 20% down that's on turnkey deals. For for Burr, I'm raising the debt upfront, I'm buying it, I'm flipping it, and then I'm using the forced appreciation as my 20% down when I refinance, and when I refinance, that's when I pay off my lender, that's usually a three to six month window. And so so that's, that's how I use the money.
Billy 27:19
Are you so your private lenders, what are you generally paying them in the market that you're in?
Blake 27:24
So the the luxury that you've got with private money lenders is money travels real fast. And so whether they're in my market, or they live next door to me or they live in Timbuktu doesn't really matter. So the the general returns I'm seeing is 10 to 14%. And now that's, that's usually married with a with an origination fee. And so it's 10% interest with a two point origination or something similar, right benefit that I found is as you raise more money, you let people compete, because you're gonna have a private lender, most of these private lenders aren't professional, private money lenders. Right now, there, there are an elderly woman up the street, six doors away, who drives a 92 Camry and has $4 million to her name. And she just wants her money to grow. But she wants to be protected, protected, and predictable, like we talked about earlier. Yeah. And so you're kind of bringing them along this process? And they say, well, Blake, Billy, you haven't used my money in the last few months? Can we get that back in the market? Because otherwise, inflation is just chipping away at it? I say, Well, yeah, I will. But my best lender, you're at 10. And two right now my best lenders at eight one. And so I'm motivated, use up all I like you a lot I just don't like you 1000s of dollars worth, you know what I mean, arbitrarily. So if you can meet eight, one, great. And so you let them compete a little bit, and you get down a lot lower. And so my best money right now is at eight one. And that's very, very competitive right now. There's 30 years, there's 30 year loans at eight. So it's gone up in the recent, you know, with the Fed increasing the primary, but But yeah, eight One is super competitive. I think right now, in today's market, 10. And two is pretty reasonable. Even 12 and 112. And two could be reasonable. And then you get into hard money terms, which is, you know, maybe 15 and 215, three, something like that.
Billy 29:11
I haven't paid that in years. Yeah, yeah, I
Blake 29:14
haven't either, thank goodness. But I will say the numbers don't lie. If it works. If you find a really good deal, and you got stupid, expensive money. If the money does what you need it to do great, awesome. Don't don't say I'm better than this money, you know, you'll find more money or just use it
Billy 29:30
wholeheartedly. And you know, you have to look at the whole thing where if it is a great smokin deal and you get money at 14 or 15 or 16% Generally you're gonna have that money out for no, no more than six to eight months. So it's really costing your life reset 9% 10% over the eight month period, not expensive. If you bring in a deal for a couple $100,000 in equity and then lifetime cash flow just if the numbers work and warm his pencil, make the deal happen. But of course you want to try to lower your expense your capital expense as much as possible because every day Ultra bottom line accounts.
Blake 30:01
Exactly, yes.
Billy 30:03
What What's your process like? That you have a system or a way? Are you just like meet people to raise capital? If you systematize this part of your business?
Blake 30:11
Yeah, yeah. So I, so I'll go in acquisition mode, once I need, once I recognize I'm going to need some money for a future acquisition, or I want to start moving faster. If you got one private lender that has $100,000 available to you. That's fantastic. But if you're refinancing every six months, you can really only do two deals a year with that money. Yeah. So if you want to move faster, find more money, you got to refinance faster, those are really the only two options you have. And so as you continue to find more money, right now, I've got enough private money to where I don't need to continue looking, unless it's in a different world of money. Right? Like, if it's a, for example, I'm looking at a $50 million apartment complex, and I'm looking for somebody with 20% down to fund that amount of money, it's very different than someone's going to be a private money lender on $120,000 property. Right, right. So so I'll go into acquisition mode. And at that point, I really, I have a process built out that allows me to one, find money without just hitting up my parents and my friends, friends and making them feel like this. This awkward like buy my widget for 999. You know what I mean? And so that's I systemize, systematize? A little bit. And, golly, within 18 months of really starting remote investing, I had access to over a million dollars capital.
Billy 31:31
So what what was your process to do that? Because I know a lot of the people will be interested that's watching this or listening,
Blake 31:36
right? Yeah, no, I have a great affection for practical, just tell me what to do, you know. And so So here's, here's how I do it. First of all, you need to know who you're looking for. You're not trying to get a loan to you. That's a terrible idea. Don't use a shotgun approach. Where I mean, if you want to post on Facebook and say, Hey, I'm in real estate and looking for private lender, it's great. But don't use the shotgun approach and go ask all of your buddies, if you hang out with a bunch of people that don't have money and don't know anybody that has money, like asking them isn't really going to help you. Sure. So you need to look for a very specific person. So that and that specific person has very defined qualities. Because sometimes we convince ourselves that money is scarce. And the reality is, particularly if you're born in the United States, 25% of global economic activity, all the dollars moving around 25% of it goes to the United States, that's an insane amount of money. In fact, California is about to become the fourth most productive economy in the world. That's absolutely bonkers. So, so there's, I would, I would argue that within six doors of where you live, there's somebody with a million dollar network, that net worth that would consider lending to you. And so now, I'm not saying go knock on doors, but I am saying know who you're looking for. Right? And so they've got three qualities, one, they don't want, they're tired of getting point two 5% on their savings account, right? They're there or maybe even even index fund, but they're unsatisfied with the numbers that they're getting right now. They want higher numbers, but they're unwilling to expose it to the market, the volatility of the market, right? Because like I said, read it or, you know, Elon tweets something or whatever it might be. And everything tanks, it's just unpredictable. And people don't like that, especially one of these people are in the latter stages of their either career or life. And so they really have to protect their assets, because they don't have as much wiggle room for risk.
Billy 33:30
Yep. So your avatar is 55 plus, on that. Yeah,
Blake 33:33
I would I would probably go even as low as 40-45. the older you get, the more that they care about protection, usually. Yep. So. So they're tired of low returns, that banks are giving them, they don't want the volatility of the market, because that's not predictable and safe. And they care about liquidity, you know, let that's helpful to them. They don't want to look something up for five years. Because who knows if they have a medical thing. So for example, this person, if they just want a set it and forget it, and they're fine with illiquidity, they're going to go to syndication. And they honestly, arguably, they probably should, or maybe they should do venture capital. But if there's somebody that cares a little bit more, they want to have access to it, at least within the next five years. This is perfect for them. And so the way that the way that I look for those people is I'm not asking the individual Hey, Billy, will you lend to me, I'm essentially I start out with a 32nd call, and are a 30 second pitch on like a five minute three to five minute call. And then I set up a second call for about 30 minutes where I'm doing more discovery on if, if I can really help them Sure. Because you got a lot of value to them. You're not just it's not just some child coming to your door with a fundraiser selling candied apples a year. You're offering them 10 to 14% Return sometimes higher depending on the terms that you come up with. And that's a big deal to them. And so
Billy 34:59
what am I real estate. And that's a key point, not just for my real estate, shouldn't anything happen to you the deal secured by the piece of real estate,
Blake 35:08
right, your worst case scenario is that I don't pay you. And then you actually end up making way more money that way. Because you end up with a property. Now, you know, of course, you've got to figure out how to liquidate and all that stuff. But it's a very, very risk protected method of investing. And it what that is, one thing that speaks to them is, look, I'm securing it with the real estate. So if I don't pay you back, for some reason, let's say that I'm a scoundrel, and I don't pay you back, I'm trapped, I have to pay you back. Otherwise, you get all of the money that I just put all my hard work and effort into, which is a really big deal that adds to the predictability and safety that they're really looking for, of course, so. So usually what I do, and in fact, if you're looking for something practical as a listener to do, you know, I'd encourage you to start by making a list of 15 people that that have these qualities, either you think they might have access to money, not necessarily their money, but maybe they've got access to money, maybe their family's money, interest, money, whatever it might be, or they're well connected. So look for people with those two things, write down 15 names, and then send them a message. And you're not asking, Will you lend to me, you're saying, Hey, here's my insert value proposition. Do you know anybody that this would be helpful for? Or do you know, anybody that I should talk with? That would this would help them with their some of their goals? And what it allows you to do is one, it offers an easy out, right? If somebody you're not asking directly, hey, please, you know, buy my widget, right? So they can, but they can self identify. And I've had in so many, so many of these conversations, I've had someone say, you know, I can think of two or three people, but particularly me, you know, I think of one of my buddies, when I was early on doing this. He's not a college, but right after college, we, we roomed together, and I thought, golly, they don't have any money. And I called him and said, Hey, do you know anybody that I should talk with? Me? And it turned out, you know, they inherited a bunch of money on his wife's side. And so they were sitting on four or five $600,000. And he's like, I don't know what to do with this. It's just sitting in a savings account to raise money, right? And so he said, Well, I'll connect you to two or three other guys. But will you tell me you know, what's gone? And so the value proposition that I pitch is just, hey, look, I'm you know, I'm raising capital for, for real estate investments. And I'm looking for somebody that, you know, what I found it's really best for is somebody who's, you know, they're tired of making low returns in their bank, or maybe even index funds, but they don't want the volatility of the market. And they want the safety and security of it being secured by it's a really predictable investment. Lots of times I can get my, I'm seeing returns around 1014, sometimes 16%. Do you know anybody that would be valuable for that I should talk to right, boom. And if I
Billy 37:59
just I don't want to I want to gloss over that that was gold. It's a very simple, easy pitch, it's non threatening. You're not asking them for the money, you're asking them if they know anybody for any key point, yes. And then you're going in with a simple 3045 second, just pitch, but non threatening pitch and telling them a highlights, showing them that it's secure, and giving them what they want, which is a nice healthy return. And with that, I'm thinking your close ratio is pretty damn high. Because I know minus,
Blake 38:27
oh, it's awesome. Yeah. And it because if they don't have money, they're just connected. It that's a win, they're gonna connect me to somebody else. The other thing that I like about it is it's it's really consultative. And one of the risks here is, you know, if, if you're somebody who's really scared of making cold calls, you know, I have some sales background in my experience. So like, I've gone through the trauma of just cold calling, when you don't know what you're doing. But if you just call somebody, it's, it's more relational. So you can say, hey, you know, I'm doing this business, and it's consultative. And so one of the benefits is, you're now telling them what the what you're doing. So you're now the real estate person in their mind. And so when they think of who does real estate, you want them to think you, right? And that's, that's one thing that all of these calls are wins, because you get a free way to tell somebody else you're doing real doing real estate. And the the ultimate goal is they're either going to connect you or they're gonna say, Yeah, let's have a longer conversation.
Billy 39:21
Blake, how often are you because I know you go into your acquisition mode than you do this. If you had to guess, over a week or a month period, percent wise, what's your time you invest on having these types of conversations?
Blake 39:34
When I'm in acquisition mode, and I'm really trying to find private money. I'd say maybe two hours a week. But if you're if you're early, if you're early, if you just set out an hour a week and do this and you actually do it, but you're not just like scrolling Facebook and like planet planning, you know, quote, unquote, for talking to people but you're actually dialing you will be blown away. You'll be blown away how much more He is out there. And you'll I started, I think some of my earlier students, you know, maybe one out of every 10 calls but one or two out of every 10 calls turns into something, like actually valuable to get money out of it. But the the more you do it, the more comfortable it is, you get more comfortable with people saying no, just because it's not a good fit for them, or it's not a good fit for somebody else. And you just keep moving on, there's so much money out there. Um, it's It's bonkers to the point where now I'd say maybe half the calls that I make, probably honestly probably more turned out to me actually connecting with somebody that has money that can materially help my business. Love this
Billy 40:40
man, let you know, by the way, this is all if you guys listen, this is pure gold. For the people who are brand new for the people who are trying to grow their business. And for those you guys that are trying to scale it, I mean, it all just comes down to making the calls making the connections and getting it known as to what you do for a living. Because the more people will know what you do and more people who realize your real estate The more people that you know, that have money, it's all gonna come back your way like this is a it's a such a simple process. And a lot of people out there blade, they just don't get it. They make it more freakin complicated than it needs to be. This is this. It's a people business. It's numbers and facts and figures. But it comes down to this. It comes down to having conversations, whether you're buying property selling properties or raising capital, it's all about the people
Blake 41:23
Man, I love that aspect, too. When I was in IW, two, I felt like I'm a good person. I'm going out of my way to help people on projects and whatnot that I'm not measured on. I'm not comped on it's not part of my bonus or anything. And sometimes I get frustrated. I'm like, Man, I'm, I'm working my butt off for the culture of the company that we say we really value. And it's not really coming back around to me, you know? So I'm like, Well, don't be selfish. But now that I'm in, in this world, the more that I help people, the more you just really see people be like, Oh, for years, however long you've been been around, whether you're 3040 6080 People will say you know what, that person is trustworthy. They've always been good to me. You know, they communicate what they're honorable, whatever it might be, whatever your strengths are. Yep. And it'll come back around to you. It's so so valuable.
Billy 42:10
Yeah, I couldn't agree more brother. Listen, Blake, this was what 42 minutes in this this actually flew like, you're a great person to interview great speaker. If people want to know more about you your coaching all this other stuff that you do, how do they find you?
Blake 42:25
Yeah, they can find me either on Instagram at Blake jwaneng. That last name is C H, I S and E T is very, very French, at like 20. Or you can go to Blake twenty.com. You can connect with me there. And we can we can talk about how to how it can help or if you're if you're more interested in like a Facebook group type of community. I've got a group burr investing for rookies. And so if you want to join that you got a bunch of questions. You know, some people have normal hobbies like I mentioned, you know, ballet, basketball, whatever it might be mines real estate. And so I just troll forums try and get answers for people. And because I want my main goal in life is to help people get to get to freedom. And so once they have financial freedom, they can do whatever they want with their time. And so I'm just obsessed with that. So hopefully we'll get to connect.
Billy 43:09
You are the first French cowboy that I've ever interviewed on the show.
Blake 43:13
Maybe that'll be my new nickname, The French cowboy,
Billy 43:16
the French guy, whatever. It's been a pleasure, man. Honestly, getting to know you has been a pleasure. You're a great guy to interview tons of knowledge. look him up ladies and gentlemen, a guy is going places and he has some really practical ways in which you can invest which you could look for different areas to invest in, and also for doing private money with this whole burr method. So good. Good interview, brother.
Blake 43:35
Yeah, thanks for having me.