It's easy to have fun in games when there's a redo and a reset. But when there are no do-overs, and you just can't seem to win, where's the fun in that? In this game called Life, everyone wants to win, and truthfully, everyone can! People just haven't heard HOW they can. You've probably given up one too many times, thinking that winning in life - never having to fear you'd be unable to put food on the table - is a futile endeavor unless you've got "cheat codes". Futile, NO! But there are tips, tricks, and hacks that you can use so you can start winning, creating that generational wealth, and achieving that TRUE Financial Freedom you ought to have! Hear all these straight from one of the country's most successful and renowned Real Estate Investor and Coach, Alan Biel. Alan worked as a Tennis Pro while doing part time investing on real estate. In 2016, having been investing in Real Estate part time for 12 years, he left his job to invest full time and to spend more time at home with his wife and kids. In 2018, Alan co-founded Awaken Real Estate. They purchased 60 houses in their first year and were able to create a 7-figure profit business. By 2019, Awaken did just shy of $2M in profit. Alan started investing in rental properties, after which he started flipping and then wholesaling. He thought he'd have more time with his family since he was flipping on his own backyard, but somehow, time didn't seem to favor family life... That's when Alan thought, "there has to be a smarter way to do things". That's when he started getting involved in mastermind groups where he learned that there was NO Need to reinvent the wheel! In 2019, Alan co-founded REI Game Changers, a Real Estate Investment Coaching and Mentorship company. Game Changers has grown very quickly as well, and they have the honor of coaching some of the top investors from around the United States. Alan saw that probably the only thing more important than your own experiences are other people’s experiences. Immersing himself in other people's experiences has allowed Alan to perfect the wheel and come up with ideas on how to play the REI game smarter, and win! Thankful for all that he has learned, Alan wants to keep the ball rolling by giving back, and sharing all the tips and tricks so that everyone can achieve the financial freedom they deserve! Ready to learn how you can change the rules and keep the REI game in your favor? Check these out to learn more of the hottest insider info on the REI game! Email: alan@realestatescaling.com Facebook: Awaken Real Estate, LLC Website: https://go.reigamechangers.com/ Tune in to learn more about the hottest and most relevant information on real estate investing! Thank you all for listening and I will see you on the next episode. When you are ready head on over to https://billyalvaro.com or go grab your tools to help you at https://billyssecrets.com
It's easy to have fun in games when there's a redo and a reset.
But when there are no do-overs, and you just can't seem to win, where's the fun in that?
In this game called Life, everyone wants to win, and truthfully, everyone can! People just haven't heard HOW they can.
You've probably given up one too many times, thinking that winning in life - never having to fear you'd be unable to put food on the table - is a futile endeavor unless you've got "cheat codes".
Futile, NO! But there are tips, tricks, and hacks that you can use so you can start winning, creating that generational wealth, and achieving that TRUE Financial Freedom you ought to have!
Hear all these straight from one of the country's most successful and renowned Real Estate Investor and Coach, Alan Biel.
Alan worked as a Tennis Pro while doing part time investing on real estate. In 2016, having been investing in Real Estate part time for 12 years, he left his job to invest full time and to spend more time at home with his wife and kids.
In 2018, Alan co-founded Awaken Real Estate. They purchased 60 houses in their first year and were able to create a 7-figure profit business. By 2019, Awaken did just shy of $2M in profit.
Alan started investing in rental properties, after which he started flipping and then wholesaling. He thought he'd have more time with his family since he was flipping on his own backyard, but somehow, time didn't seem to favor family life...
That's when Alan thought, "there has to be a smarter way to do things". That's when he started getting involved in mastermind groups where he learned that there was NO Need to reinvent the wheel!
In 2019, Alan co-founded REI Game Changers, a Real Estate Investment Coaching and Mentorship company. Game Changers has grown very quickly as well, and they have the honor of coaching some of the top investors from around the United States.
Alan saw that probably the only thing more important than your own experiences are other people’s experiences. Immersing himself in other people's experiences has allowed Alan to perfect the wheel and come up with ideas on how to play the REI game smarter, and win!
Thankful for all that he has learned, Alan wants to keep the ball rolling by giving back, and sharing all the tips and tricks so that everyone can achieve the financial freedom they deserve!
Ready to learn how you can change the rules and keep the REI game in your favor?
Check these out to learn more of the hottest insider info on the REI game!
Email: alan@realestatescaling.com
Facebook:
Website:
https://go.reigamechangers.com/
Tune in to learn more about the hottest and most relevant information on real estate investing!
Thank you all for listening and I will see you on the next episode. When you are ready head on over to https://billyalvaro.com or go grab your tools to help you at https://billyssecrets.com
[00:00:00] Billy: Welcome back. This is episode number 63, unstoppable REI wealth. And today I'm interviewing a gentleman who, again, he's in one of my masterminds, Alan Biel, Alan is, just a, a real extraordinary individual lives out in Texas. He's was a tennis pro for years, and he got into the fix and flip and the buy whole and in the wholesale business.
[00:00:22] And his story is kind of unique because he ended up doing wholesale later. At three builtup his fix and flipping rental portfolio. But he has a unique story because he scaled his wholesale business within 18 months to over $2 million a year. And so when we start getting into his story, he's going to explain to you what he did, lessons that he learned, which is key.
[00:00:44] And then we transferred over to some really cool techniques that he's utilizing for buy and hold strategies where he's taking HELOCS and he's using them in a really unique way, not like your traditional second position. He has some really cool hacks on how to take HELOCs and just hack your way to success in the growth.
[00:01:01] So you're going to enjoy this episode Alan Biel. Take care guys.
[00:01:06] Welcome to unstoppable real estate investing wealth. My name is Billy Alvaro, AKA the unstoppable BA former billion dollar mortgage banker gone bankrupt turn professional real estate fester where each week you'll learn the tools, strategies, systems, and secrets, myself and other highly successful real estate investing entrepreneurs used to start, grow and scale their businesses, creating massive profits and how you can.
[00:01:34] 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 is going on everybody? Welcome back to another episode of unstoppable REI wealth. You know who I am, the unstoppable BA sitting here in sunny PR chilling out.
[00:01:55] I'm going to be interviewing a friend here. Alan Biel. Alan is from. All my exes live in Texas. I'm sure you heard that. And before Alan and I met at one of our masterminds multipliers, Alan, welcome to the show, bud.
[00:02:06] Alan: Billy. How do I top that intro? That is unbelievable. I don't know if, if the cars are sexier, if it's your guns.
[00:02:14] I mean, the gun show is out there. You mixing it up now. I got nothing. I mean, I'm not even going to live. Yeah.
[00:02:22] Billy: You got a good background though. You got the, you have the, the water, the background, like I do. I'm loving it. Yeah, it is. You got a nice lake in the back there. Perfect. Where are you at today?
[00:02:31] You said you were at your, your second home in the mountains of the lake house.
[00:02:34] Alan: Yup. At the lake house. We've got, uh, we got some vacation rental properties. This is, uh, one of them that we've been blessed to purchase a couple of years ago. And I was gonna mention that Billy. I mean, we're, I'm at the multi-million dollar lake house and you're, where'd you say Puerto Rico,
[00:02:49] Billy: Puerto Rico for a month.
[00:02:50] Alan: I mean, we're struggling, you know, I mean, this is how snobby, how arrogant does this feel?
[00:02:57] Billy: Yeah. You know what though? We, we built it, we've worked it, we set up the people and the systems and the processes. And, you know, I think when you really invest the time on building it out, your business, that overtime can serve you, and then you have more time to do what you want to do with whom you want.
[00:03:12] And then you don't have time to give back in the beginning. You give back a little bit of money and a little bit of time, but as you gain, you're able to give back a lot more. I think we're both in that, in that position, out in our lives where giving back is like an important thing,
[00:03:23] Alan: I completely agree. I feel very blessed. I also feel, I don't know that you, a lot of times I feel almost an obligation for one to give back, like you said, and that's probably, I enjoy that the most with all the coaching that I've done, but then also almost feel an obligation to continue with what we've been given.
[00:03:40] Right. I mean, we've been given different resources, you know, money. All this stuff. And it's like, man, I feel an obligation to keep that going.
[00:03:49] Billy: Agreed you and I have a lot in common with, besides the fact that you were a tennis pro. I can tell you that I have two left feet and two left arms. The worst in sports.
[00:03:57] I look like a sport guy, but now I got to tell you, I am a pansy when it comes to sports.
[00:04:03] Alan: There's no way I'm not by man at all.
[00:04:07] Billy: I might be embellished a little bit, but I'm bad. I'm not that good. But so you were a tennis pro for six years
[00:04:12] Alan: longer? Yeah, longer probably what's the math on that almost 15, probably.
[00:04:18] Billy: And you got into real estate investing how long ago?
[00:04:21] Alan: So always did real estate on the side. You don't necessarily make a fortune as a tennis pro it's like that in most sports, right? Unless you're at the very top of the top, you're not really going to be making it. Usually people are doing something on the side.
[00:04:33] And for me, a lot of times that was real estate. So my wife and I, we flipped our first house in 2005, 2000 beginning of 2006, we sold it. And then, our first rental property was purchased in oh seven with some of those proceeds. And then, we all know what happened in oh 7 0 8 0 9, but rushed. I was able to somehow ride that out and, ended up by oh 9 20, 10, 20 11 had several, still had several rentals that were doing actually pretty well.
[00:05:02] And in fact, I was listening to a thing on this the other day, the rental market actually did. Okay. Cause it didn't so many people got, you know, they needed somewhere to. And, so the rental market was okay. Not great for people that could hang on. And I know you have a, that's a big part of your story. I know that was a big part of my story as well.
[00:05:18] Was that time period. And then by 20 11, 20 12, I mean, we were really, that was about the time where I feel like we could have retired and just lived on the passive income and then, then it became, okay, you know, I'm enjoying this whole tennis pro thing. I was doing some coaching. I was doing some. You know, stuff with tennis and doing real estate on the side and really got to the point where I was thinking, okay, I dreamed about this.
[00:05:41] I dreamed about, especially coming from the background I came from, you know, never been. Uh, penny, there's definitely not any inheritance, you know, coming my way. I've known that for a long time, my wife relates and, and that's no offense to anybody. It's just, I've viewed it as a, actually a blessing to have certainty about listen, you know, if it's to be it's up to me.
[00:05:59] And I don't, again, I don't mean that in a selfish or arrogant way, but coming from that background, getting to the point where thinking, okay, like what do I really want to do with my life? Because there's enough passive income that we would be okay, not going to be loaded, you know, anything like that, but we could have the time.
[00:06:16] And so really started enjoying what I was doing. And then by 20 15, 20 16 started flipping houses full time. And then, so I went from rentals to flips and then 2018 started wholesaling pretty much. Full-time built that company out 2019 started coaching because the whole selling company was running so well.
[00:06:33] And then. Now I've gotten into Airbnbs and done a little commercial stuff. Not. And, really enjoy enjoying what I'm doing, building an RV park, which is fun. I've got these vacation rentals that are actual vacation rentals, not just, you know, Airbnb is in town. So that's fun for my family. I've got three little kids that, enjoy doing, you know, a little bit of this stuff with us.
[00:06:54] So anyway, that's the whole story Billy.
[00:06:56] Billy: All right. So that's it podcast is over. No, listen, we share a lot of the same past, except like I said, no tennis pro, but humble beginnings. And that whole thing. What I'm interested with you is you actually, you know, you did wholesaling generally. Wholesaling's an entryway in, and you ended up starting with the, with the rentals.
[00:07:14] You did your, or fix a flip rather than your rentals and then parlayed at a later time into wholesaling. Why did you make that transition over? Usually it's the progression of.
[00:07:23] Alan: Yeah, good question. I think we did it completely in reverse. We started with rentals and then went to flips and then went to wholesaling.
[00:07:29] So as someone who had rental properties and play the cashflow again. So I come from the old school Kiyosaki plan, a cashflow game, you know, I read rich dad, poor dad, and. 99, like fall of 1999. I was a freshman in college and kind of got a seed planted to play the cashflow game and did that, and then never thought I would sell anything.
[00:07:50] But in, in 20 16, 20 15, I don't remember. I sold one of my properties and I thought, well, that wasn't so bad, you know? And I'm not sure I could Chuck a change. Right? Little, a little nice little six figures back to me as opposed to the slow trickle, you know, we all know how that goes and thought well, that wasn't so bad.
[00:08:08] And then, um, now we'll say a year later when the tax bill came and had to recapture all the depreciation, I didn't know what recapture meant. And I don't think I knew what depreciation then either. So I figured that out. I remember sitting there asking the account, like what just happened, but anyway, then sold another one.
[00:08:23] And so it started actually just renovating my existing properties that I had already had and selling a couple of those. And I thought, well, this isn't so bad. Maybe I should just start flipping on. Not, you know, I enjoy renovating houses. So it started flipping full-time at that. And after about a year and a half of that, I had these two little kids.
[00:08:41] I have three little kids, but two of them are twins were like a year and a half old. And I remember thinking like, I'm flipping houses in my own backyard. There's no reason for me to not be around my kids more, but a year and a half gone by my little twins are a year and a half old. And I feel like I've barely seen them and that was not good.
[00:08:59] So I was pretty burnt out at that point. And I actually was making a good amount of. Flipping houses. But at that point, that was the end of 2017. And I said, there's gotta be a smarter way to do this. And I said, in fact, I'm going to go back to my roots. I'm going to go back to, so I've read over a thousand books and all this, but I'm just thinking I got to go back to the beginning and I just went on sort of search and pie.
[00:09:22] I'm like, there's this podcast app on my phone. I'm just gonna search. And I'm like, there's gotta be people that have figured this out better than me. Why am I trying to reinvent this and everything I've ever done? I've found that the smartest people that have already done it and just copied them. And through that,
[00:09:36] Billy: that's what smart people do, Alan.
[00:09:38] Like they look at, who's been there before. Who's cut the bath, look for the shortcut. And I know when people say there are no shortcuts, but if you learn it from somebody else that in and of itself is a shortcut because you just, you're, you're creating time by learning from, from those in front of you. So man.
[00:09:52] Alan: Yes. What's the old saying the only thing better than experiences other people's experience. Right. So learn from other people's. Well, unfortunately I'm afraid I did it the wrong way because I had to beat my head against the wall, uh, enough. But then, um, through listening to a couple of podcasts, kinda got into somebody's funnel.
[00:10:10] Right. Uh, which is funny now because I help people build marketing and sales funnels now, but, got into somebody's funnel and ended up joining my first mastermind group. Quite frankly, I wrote a check for $25,000. Didn't even ask if there was a payment plan option just went for it and on faith and a couple of weeks later, once I'm at first a mastermind event.
[00:10:31] And this sounds crazy. I was just a guy that had always kept my head down, did my own thing and my own backyard with, real estate and never, and I was happy to kind of fly under the radar until that point. And, so I really hadn't ever even heard of mastermind groups. Didn't know, of course, from thinking to a rich, you know, Napoleon hill was talking about that, that word mastermind way back.
[00:10:49] I don't know that he even meant by it. Well, we all do right. Necessarily, but I'd heard of that. Of course, from thinking, grow rich, reading that book several times, but never heard of real estate mastermind groups and joined my first one. And it was maybe two, three months later. I said, well, sorry. It was immediately.
[00:11:07] I said, I don't know what these guys are doing with this wholesaling thing, but I'm in, I'm like if I can flip houses the way I've been flipping houses, if I can expedite that, I mean, I'm already enjoying, flipping where I'm making six to seven years worth of. And you know, six months, so I'm used to rental property.
[00:11:22] So I was already enjoying flipping I'm like, if I can take three to six months and move it down to 20 to 30 days, I'm in and all the rehab and the risk and the projections and all that stuff with flipping. So did that. And like I said, within the first year, I think. First year of wholesaling, we did it right at 1.1 million and collected in revenue.
[00:11:42] And then I think within 18 months we were over not, I think, I know for a fact we were over 2 million in the first 18 months and, 2018. Yeah. From March of 2018 until the summer of 2019.
[00:11:54] Billy: All right. So let's dive into that. Cause that's, I think going to be a real, the whole premise of this show is it's given back to teaching people about the tools and the tips and tricks, but also showing them how to start, grow and scale.
[00:12:03] So you really quickly started, grew and scaled within an 18 month period to go over $2 million in revenue a year. What did you do specifically? Like how did you go about setting it up that fast? How'd you scale it?
[00:12:18] Alan: I mean, what do you want the Sunday school answer or would you want it to be real, man? I want you to be real well at that time I had a business partner.
[00:12:25] we partnered up just specifically for that business and we both had pretty fast motors. I had more of the background of real estate. And he was a bit younger, less experienced, but a strong motor. And we understood enough about marketing and sales. I'm like, this is, I mean from day one, we're like, this is just a marketing and sales game.
[00:12:43] I'm used to buying probably MLS or I'll source my own deals, but not at scale. Right. I can source deals, but not eight to 10 a month. So I'm like, but if I can, I mean, I know how to do that. So, and I know real estate, so hiring and training acquisitions, dispositions, people with. Terribly difficult, just because I can teach them the real estate part of it pretty quickly.
[00:13:04] We can figure out ARV, max allowable offer maximum allowable, wholesale offer, et cetera. Like I can train them up in my sleep on that stuff, because as a flipper, right? Like we all know as a flipper, you can't be wrong. You can not be wrong on that stuff. That's what's funny. People are like, it's so hard to evaluate deals.
[00:13:20] It's like, not if you flipped very much because you can't be wrong, you won't be a flipper anymore. You'll be out of business. You'll be out. So anyway, we had that part of it understood a little bit, like I said enough about marketing and you know, so then you start, okay, we got direct mail, we've got cold calling the SMS.
[00:13:37] RBMs voice broadcast, PPC, SEO, Facebook ads, right? There's all that. There's all the ways that we all know how to do that. Which ones are we going to turn on? And we kind of got obsessed with a feedback loop that we learned. We so early on invested a lot of money into coaching. So that's the other, if I'm being totally honest, we invested more money into marketing and coaching into those two things than anybody I'm aware of that, that early of a stage in the game.
[00:14:06] I mean, virtually everything was invested. The only thing we didn't invest into marketing. Was hiring our first, lead manager to start answering the phones because it was driving us crazy. And then very quickly, not even a month later hired acquisitions out, you know, a month after that hire dispositions out and a month after that hired a transaction coordinator and had our little skeleton crew.
[00:14:26] And then this is what's crazy, Billy, and I don't recommend this to anybody, but then a month after that went into market, number two, not marketing channel market. Number two, then market number three, then market number four,
[00:14:37] Billy: In the first year.
[00:14:39] Alan: that was in the first
[00:14:40] eight months.
[00:14:41] Billy: Holy shit. So that is in dude.
[00:14:44] You have elephant Titus of the testicles to do with that quick.
[00:14:48] Alan: Yeah, it was not, not that's what I was saying. Our motor was pretty fast. In fact, the motor was a little too fast and so then we had to figure out and I'll tell you that was the end of 2018 since then. And we're w we're at 2022. Now, since then every six to 12 months, I have scaled.
[00:15:05] I brought everything closer and closer in, I mean, we were up to 14, we had 13 full-time employees by the end of 2018. And since then I have spent the remaining years figuring out how can I still have a seven figure wholesaling and flipping business with fewer and fewer and fewer people. Because quite frankly, it's like, let's take the markets and the marketing channels and the people of all of the 14.
[00:15:31] And of the six or seven marketing channels and of the four different markets that we had scaled into. Let's take the best markets, the best marketing channels and the best three or four or five, six people. And let's bring all those together and let's focus on wholesale. Single family, residential real estate.
[00:15:50] Yeah. This way. And just do this. And then, and that's when we went up to 2 million and look a lot's changed in 2019, you know, and quite, not just in the markets and with marketing channels, but a lot's changed with me as well. I do not have business partner as of 2021. And so now to be honest with you, I've changed some other things, but, but the one thing that's remained the same is can I focus?
[00:16:12] Can I pick one thing that I'm doing. And focus on that. And every time I've messed that up, it's never gone as well. And so we hired one of our mentors early on. That was a $40,000 mentor on my first call with him. He said, Alan, listen, stabilize, then optimize, then expand if you will stabilize before you optimize.
[00:16:32] And if you will optimize before you expand and don't add anything on whether it's a marketing channel, a market, a new business, whatever. If you will just stabilize then optimize and expand every time I've ever done that it's worked out really well, a certain new, a seven or eight figure business. And every time I've broken that rule, it has not turned out well.
[00:16:53] So we started to get focused on that and every time we've done that it's worked out pretty well
[00:16:59] Billy: out of curiosity, if you don't want to speak about it, I completely understand. The scale that quick, there's a lot of disjointed activity. Cause I had the same experience when I scaled my mortgage banking business years back.
[00:17:09] And I know that there's a lot of waste. When you start growing that quick, did your bottom line net profit margin, was it suffering or was it still fat? I know with us, when we grew, as quick as we did, there was just so much waste. We could have sliced out a bunch of this shit, streamline our processes and probably brought down another 15 or 20% down to the bottom line when we had our bank.
[00:17:32] Alan: Yes. If I remember correctly, I could go back and look at our spreadsheets. We were at either 10% or 15% net profit at 2 million wholesaling, Earl selling that's real low. Yep. When we dialed it in and started getting more. And by the way, for the record, this is one of my criticism since 2018 with a lot of mastermind groups.
[00:17:53] And what was mastermind groups in a lot of ways became a lot of guru talk out on YouTube. All this stuff. Like some of it came from these rooms rooms where it's like, stick your chest out. How many cars do you have? How many watches do you have? And look, I got cars and watches
[00:18:09] Billy: he probably wants you to tell, like, nobody talks about their bottom line.
[00:18:11] You know, that's a big thing, Alan Gross, what they gross with a gross in and you know what? I don't give a shit. What you gross? What are you keeping? What's your net profit margin. What's your bottom line? Because that's going to tell the story of how well the producer and how well of an operator you are.
[00:18:26] And you're not. People are in their business and we've all been down the road. Most of us that we have that task personality as I do, you start off running real quick and you add on bolt on all these different legs and arms into your business, not optimizing as your mentor said to you. And you know, when you're looking at.
[00:18:44] You're working your ass off. You have a, you know, 2 million, 3 million, $4 million, some cases, eight figure business on the top line. But if you're only net in 5, 8, 10, 12%, man, it's like, what could you do to optimize, to drive down 20%, 30%, 40% or greater to the bottom line?
[00:19:02] Alan: I completely agree. So I will tell you by mid 2019, once we figured that.
[00:19:08] By the middle of 2019, we had completely changed operation. We changed our vision. I did, I had changed the vision and change personnel and change marketing such that our net was up to 45% for the wholesaling.
[00:19:23] Billy: Sick. That's a good number right there. Solid, solid number 45%. Yes. Yeah.
[00:19:30] Alan: As we over this last year.
[00:19:32] So as I've gotten back into rehabs, back into keeping things as rentals, which if we have time, we can talk about that. That is something I've been doing for a really long time. I know a lot of people were interested in that. I got a couple of hacks there that I think could be helpful for people as we've done that.
[00:19:46] I'll be honest with you, Billy. I'm not as much of an expert at this moment on the finances part of it with renters. And flips because I'm playing such a different game. We're playing a WP appreciation game. We're playing a cashflow game. It's not as sexy. It's harder to flash your lambo's, when you're playing the rental property game, but the net profit and the net result of it, as we all know, is a completely different.
[00:20:12] It puts you in a completely different place.
[00:20:14] Billy: Yeah. I mean, you're, you're building the whole fix it, flip it, wholesale thing. It's a widget. It's a marketing company is bringing them in and tying them up, turning them over, putting the money into the, into the, into the company. But your real wealth, your real net worth is built on the buy at hold.
[00:20:29] Cashflow networks, get the depreciation, write off all your ordinary income. That's coming into your fix and flip and all sub visits and keep on running. And like, you know, when you start making net bottom line net, net million dollars, $2 million, $3 million, and you're stroking a check uncle Sam for half that you got to figure out real quick.
[00:20:48] What in the hell could you do to offset your income? To drive down your net profit, your net income to as close to zero as possible on the books, not what you're really making, but because the appreciation, all these other rules and with the IRS, you're able to legally appreciate and write down your ordinary income.
[00:21:07] And so the game changes as you create more of a business with net bottom line results. The game changes from widgets to wealth, and I think you have to have a combination. That's why, you know, you and I have similarities. You have to have a combination in my view of all three, you want to have that net cashflow business, which ain't sexy.
[00:21:25] We all know it, but that cashflow business offsets everything else. I think in my opinion, you need that wholesale business because it's quick turns to keep the engine running. You need to fix and flip because it gives you larger chunks. Some cases, you know, greater than six figures to the bottom line. So if you're able to take all three of those.
[00:21:43] And run them underneath your same umbrella, but independently with its own P and L's and its own LLCs, all wrapped up into one overall holding company. You're going to have yourself a successful business, huge bottom line profits. But the most important thing is you're creating wealth for the long-term.
[00:22:00] Alan: Amen. Amen, brother. And I will tell you, what's the old saying, I teach this to my clients. It feels like every week, somebody different than I'm talking to. We all overestimate what we can do in a year, but we grossly underestimate what we can do in a decade. Yeah, for sure. So it's hard to build out wholesaling, flipping and rental portfolio in a year, but I'll tell you what, it's not hard at all in five or 10 years.
[00:22:28] Billy: No. I agree you, when I was reading your bio and you have some pretty cool strategies, some like hacks, when it comes out to the buy and hold, some birth strategies said that's a little bit different from how a bunch of the other guys trained to teach. Why don't you go into that for a little bit?
[00:22:42] Alan: Sure.
[00:22:42] And I'm getting proof of concept and all this stuff. So, disclaimer, I really I'm teaching my private clients. This, I don't have anything to sell though. I don't have like a course or I'm not coining anything. I just, it's something that I've observed. And, after many, many years of doing this, I thought here's an example.
[00:22:58] When you're playing a rental property game or a cashflow game, every hundred, 200, $300 per property. If you're talking to single family, every a hundred, 200, $300 a month that you can either make or save makes a huge difference. What I started realizing, because I don't like those little small numbers, it's not exciting to me.
[00:23:17] And so, but what I started thinking about was, so one of the big things we've done is we've done very well with Airbnb. So a lot of my personal resources are in real vacation rentals, places that I love. So this is the first, I would say difference from a lot with a lot of people were doing a lot of people.
[00:23:35] It's like, I think they've got a lot of resources tied up in properties that they really don't love the property. They just like the idea that it could be profitable in 10 or 20 years. And I'm not saying to not do that. I've got a lot of those kinds of properties. But once I realized I could buy my own dream houses, whether that's with cash and then refinance it, which I've done, or with lenders involved, obviously with the purchase and put 10, 20% down, whatever, just to get the property.
[00:24:03] And then. I can get that. And then I can use Airbnb VRBO et cetera, to float the cost, if not be wildly profitable. So that's the first thing. If you can make 10, 20, 30% more per year, because you have Airbnb than you would have with traditional rentals, it may not sound like a lot, but that's all extra. Your carrying costs are the same.
[00:24:25] Your carrying costs are what they would have been anyway, if you can, and I'm not talking gross, if you can net another 10, 20, 30%, because you play a different game. Than traditional that's big because it's pure profit, it's pure extra profit. So that's one example. Another one that I'm doing that I think I was teaching on this a little bit in, where we were at our mastermind in, Tulum in Mexico.
[00:24:47] I am amazed at how many, you know, this as well as anybody building. There's some major players down there. I mean, we get together, there's some major players and I am amazed at how many people are not using first position HELOC's. Instead of traditional mortgages when they're refinancing out of properties.
[00:25:06] So I started this, I don't know, a year, year and a half ago with my own personal stuff and with my company's assets moving into HELOCS. So we don't, we can get, however deep you want to get into this. It's not a big deal, but I will tell you from talking about this with major investors, they were Fascinated
[00:25:22] with this idea. So anyway, using HELOCs I can deploy my cash. So here's the, here's an example. If I've got a hundred, $200,000 sitting in the bank, a lot of people listen to this probably have 5,000, $150,000 just from operating capital or whatever. And even if you don't either way, this applies whether you do or you don't either way.
[00:25:40] If you say, if I use my cash to buy a property, renovate it and immediately call up a bank that I can get a relationship with or already have a relationship with and say, Hey, I've got a property that I own. Outright, you guys don't want to give me a line of credit against that. Do you, most banks are going to be very interested in that because you already own it and you own it free and clear, and they view it very differently than going to them and saying, Hey, uh, I'm thinking about buying this property.
[00:26:06] I mean, you just come across as a newbie versus so anyway, this is. If you're seasoned enough, you've got even some cash or you can, however, whatever you gotta do, this is even bonus for you. But what I'm about to tell you will work, even if you don't, but anyway, go to them instead of doing a mortgage, a traditional refi, pull a line of credit on it, and then number one, now I can use that line of credit if I want to, or I can just let my cash sit there and let my cash do its thing and not use the money.
[00:26:33] And in essence, my same say a hundred thousand dollars that would have been sitting in a operating account or in just a personal checking account, doing nothing, earning 0.02% interest sitting in a checking account. Now it owns a property that I have a line of credit. So I have access to the cash. If I want it, I can borrow it at four or 5%, whatever the line of credit is and use it and go buy the next property.
[00:26:56] If I want to or go invest it in crypto, if I want to or whatever I'm doing, but I don't have to. And if I don't, if I just let that money sit there, then in essence, it's making me whatever I would have been paying on a mortgage, right. It's making me four or 5%, whatever I would have been paying on a mortgage.
[00:27:14] Billy: So it's arbitrage. It's a smart way to do things, man.
[00:27:17] Alan: So little arbitrage there. I also can use this strategy in the middle of, for anybody that's doing an infinite banking, you know, thing, with the, with the advanced whole life policies, I can, then I can actually move money. I've got a little thing that I'm working on where I can actually have money working in like four or five different places at the same time.
[00:27:35] So again, I don't know how detailed we want to get into this, but if I had to pick just one thing, figuring out how to use lines of credit again, first position. Lines of credit, not a second position, equity position, first position HELOC.
[00:27:51] Billy: I've have you ever heard of the banks pulling back and say, Hey, we're going to cut off that line.
[00:27:57] Alan: They know they've done it on the seconds. That what about the first? I haven't heard of it happening on the first, look anything's possible, but banks view first position lines of credit. That the same way that they view first position mortgages. Most people don't know this and every mortgage that you signed with a traditional.
[00:28:12] There is an accelerated clause in that, that they can call that note due on a, this is on a traditional mortgage. They can call that note do whenever they want to. When you live through 2008, 2000 2007, 2008. So you know, this there's a clause in every mortgage agreement with a traditional bank. I can't speak for little independent lenders or anything like that.
[00:28:35] That's an accelerated. That they can call it. Do I'm not trying to scare anybody. I'm just telling you, you sign off on it. Every time you sign the closing docs, that same clause is going to be in a HELOC as well. The difference between a first position he locked and a second position is the difference between night and day.
[00:28:52] So they're very unlikely. It would be in my humble opinion, it would be similar to them. Calling a note due that's a mortgage. They don't want the asset. They don't want the real estate. I didn't even get into all the other benefits. Uh, there's there's look, there's pros and cons to everything. Another downside, Billy is that it's a variable interest rate.
[00:29:12] So the interest rate is going to vary, uh, up and down with prime. So if they'll give you 1% above prime, then three months from now, you might be a quarter percent higher on the note than you were. And so you're not locked in necessarily. That is a potential downside. If you do the math though, by the way, a quarter percent, half a percent over 20 years, it's not.
[00:29:32] See what it does to the payment. It doesn't do anything of the payment. One of the upsides to HELOCs, as you know, is the minimum payment required is interest only. So one of the things I'm doing with this is I can get my payments actually lower. It's not a mortgage. There's, it's not a principle. It's not a traditional American.
[00:29:53] Mortgage where there's principle and then there's interest. And then there's, you know, the taxes and the insurance and escrow and all that stuff. The minimum payment is interest only on lines of credit, which means the payments lower, the minimum amounts lower. Now it'd be smart to be super disciplined and make the payment that you would have made anyway would be the smart, responsible play.
[00:30:14] And you'll just pay that soaker down, even faster. The other, I think, largest benefit that no. And the reason nobody's talking about this, Billy is because it is not in the bank's best interest to do. HELOCS it's in their best interest to do mortgages. And it's because of this little thing called the reverse of Amortization schedule.
[00:30:33] So when we get a mortgage on a property, everybody's focused on the interest rate and they're focused on what their payment's going to be, how much their monthly payments gonna be. And that's all they think about because that's how we're programmed. That's how they want us brain washed. What they're not thinking about is this little nasty thing called reverse and ammoritization, where they give you the chart before you signed the mortgage, they're required to give you the chart.
[00:30:54] It's a 30 year note. There's 360 payments. Principal and interest is a thousand dollars. If that's what it is, 900 of that's going to interest hit the beginning of that thing. And only a hundred is going to principal. And then by the end it flipped. So by 360 months from now, it's the opposite, but they make all their money in year one, year, two, year three, year four, they're making all this money and interest.
[00:31:18] They don't first 10 years. Yeah. Yep. They're making it. So everybody's thinking everybody's focused on the payment and the interest rate. We are so brainwashed, in my opinion, it's kind of like Billy, how people are focused when they go to buy houses, they're focused on the price and not the terms like they think terms don't mean.
[00:31:37] And it's like, well, or if I wholesale a house, they're focused on what price did I sell it to my buyer at? Oh, I sold it to him for, uh, I'm going to make 40 grand on this deal. Yeah. But you gave him an option period. Don't be surprised when four days later he backs out. Like, it's kind of like that. It's like we're focused on price and not terms.
[00:31:53] And I think that's how the banks.
[00:31:56] Billy: So with the, with the home equity line of credit, first position, the differential, just keep on with your thought. What's the difference? It's just it's interest only versus principal and interest over a 30 year timeframe.
[00:32:07] Alan: Yeah. The minimum payments interest only the other benefit is I can park.
[00:32:11] So this is my big picture theory here for people that are playing this game, along with us, Billy is if I can use that as basically a checking account, if I can use. That line of credit. So say I've got a $300,000 house with a $250,000 line of credit on it. And of that $250,000 line of credit, let's say I owe what $200,000.
[00:32:35] So I owe two, it's got a $200,000 balance. The line is two 50. The house is worth 300, just use round numbers. Okay. Yup. If that's the case, if I've got money sitting in all these checking accounts, doing nothing, why not take all that money and park it on that line? In essence lowering the balance. The payment is based on what the daily balance is.
[00:32:58] Billy: That's the difference that I wanted you to hit on. That's the complete difference between a fixed 30 year note versus a, a HELOC you're paying interest off of what the actual balance is? Not what you originally take the note out for.
[00:33:10] Alan: Yes. Yeah. We can play this game again and again and again. So I'm up to, I think I've done nine of these just in the last 60 days.
[00:33:17] I've done another like nine, nine different properties. Where I can place, because, so here's the other thing you can do, Billy, for people that are playing the rental property game. Okay. Now that we've got the basic concept of HELOC versus mortgage, what if you could get nine of these things on nine different properties to where your payments, less than it would have been.
[00:33:37] Your minimum required payment is less on all of them. I can go minimum payment on the first eight, and then I can take all that extra cash. But I'm now getting, and I could park it on number nine to pay off number nine that much faster and start a much faster debt snowball. If that's the goal, is that payoff.
[00:33:56] So that's another way people could use. Uh, really the sky's the limit. I would say the big picture, Billy though, is the ability to pay it down quickly. But if you want your cash back, you can have your cash back. You don't have to decide. And we've all been there. If we've had rental properties, like, should I go ahead and pay this off early, man, I'm getting killed on interest.
[00:34:16] I can not pay this off in 10 years instead of 20 or 30 or whatever. Well, every time I have to make that decision, it's I'm not going to get that money back unless I refinance this whole property again. And spend another three or four, $5,000. Refinancing it again. It's again on Monday,
[00:34:32] Billy: that's a killer hack right there.
[00:34:34] That whole first mortgage he lock. And it's such a simple for him concept, but I mean, I owned a bank and I never even thought about doing it the way you just described it. It's not in your best interest as a banker because you're, you're going to make way less money. Of course, of course. But the whole house hacking thing, how are you utilizing it to really leverage it?
[00:34:52] It's a genius. How long have you been.
[00:34:54] Alan: A couple of years. I mean, really, really, really, probably a year, year and a half, like I said, I need to package something together. There's so much more you can do with it, Billy. Like I said, a lot of us play the infinite banking game as well. So we can, then you got, you got a product there.
[00:35:09] I hate to cut you off, but you definitely have a little, a little product that you can package and sell until. I think so, but at this point I'm really just wanting to add value. I teach my, like I said, my clients, these things, whatever cool ideas that we're doing that are working. So again, if you have, especially for those of you flipping houses or that have multiple rentals, If you can make 10, 20, 30% more than you're making one way or another.
[00:35:31] And if you can then save, I don't even know what percentage you're saving plan the hilar game, as opposed to the mortgage game. But if you weigh all of the pros versus the very few cons, I think you'll find it's probably another 10, 20, 30% that you're saving and multiply that out over all, all of your properties.
[00:35:48] I think it's a pretty big difference.
[00:35:52] Billy: This was a, this was good. Alan, really good. You gave some solid content, some really good information. And if people want to get in touch with it, how do they go about finding.
[00:36:01] Alan: So I'm kind of purposely not out there very much, to be honest with you ability. Like I said, I kind of keep my head down and do my own thing.
[00:36:07] I'll give my email address. I would give them a phone number, but people always say I'm crazy for doing that.
[00:36:11] Billy: So don't give your phone number. That's crazy
[00:36:15] Alan: if they want to email it's Allen. So it's a L a n@realestatescaling.com.
[00:36:22] Billy: Cool brother. Listen, it's been awesome. Having you on love, reconnecting with you.
[00:36:26] We got to stay in touch between the, you know, the, the annual thing that we do out in Talume. For sure.
[00:36:31] Alan: I need to get to Puerto Rico or do you need to get here to the, to the lake? I mean,
[00:36:36] Billy: I would come to the lake for sure, man. And you know what? You're welcome to come. And Puerto Rico, I got this house has multiple units in it.
[00:36:42] We rented out the whole thing. The kids were here for a week. They just left. So we have the whole place ourselves. Now we're just going to chill out for the next three weeks. Kind of enjoy the sun and the pool and just enjoy life. Love it. good having you on bro.
[00:36:55] Alan: Thank you, Billy. This was fun.
[00:36:57] Billy: Catching
[00:36:57] the next one.
[00:36:58] Stay with me. Thank you so much for listening to today's episode of unstoppable real estate investing wealth. My mission is to give you my listeners, the blueprint for success inside of secrets for starting growing and scaling your real estate, investing business stupid experience and live unstoppable lifestyle.
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