ChooseFI
446 | Small and Mighty Real Estate Investor | Chad Carson
Mon Jul 17 2023Real Estate InvestingFinancial IndependenceWalkable CommunitiesDebt ManagementSmall Investors
Description
The episode covers the importance of having 'enough' in real estate investing, living in walkable communities, getting involved in your community, optimizing real estate investments, building systems and operations, paying off debt and simplifying investments, strategies for debt management, debating real estate debt, the small and mighty investor's guide, achieving financial independence, and concludes with a call to action. The book 'Small and Mighty' by Chad Carson provides techniques and rules for real estate investing, emphasizing lifestyle and free time over scaling businesses. Pre-orders come with bonuses like a live Q&A call and coaching sessions. Bigger Pockets offers a 10% discount with the promo code 'choosefi'. ChooseFI email subscribers will receive a PDF of Chad Carson's personal buy box.
Insights
Real estate investing should focus on having 'enough' rather than constantly striving for more.
Chad Carson's book challenges the common focus on big goals and encourages simplicity and smaller-scale investing.
Living in walkable communities can enhance financial independence.
Walkability allows for a sense of community, connection with others, and opportunities for small changes at an individual and larger scale.
Getting involved in your community can have a big impact on both your community and yourself.
Spending time on activities that improve your community gives you purpose, power, and the ability to make decisions that affect change and generate wealth.
Optimizing real estate investments involves focusing on location, avoiding high management intensity properties, and transitioning to properties that require less involvement.
By picking the right properties and optimizing for least hassle while still getting returns on investment, investors can achieve financial goals with minimal stress.
Paying off debt reduces risk, increases income, provides psychological benefits, and simplifies the investment portfolio.
Having a smaller, safer portfolio brings peace of mind during uncertain times.
Debt management strategies include transitioning from high debt to lower debt and lower risk portfolios, calculating the number of properties needed to cover living expenses, strategically paying off higher interest debts first, and being cautious of balloon notes.
Small investors can strategically clean up their debt using methods like paying it off with savings or selling properties. Strategic refinancing can help restructure debt and increase cash flow on free and clear properties.
Debating real estate debt involves considering factors like risk, friendly lenders, and the potential benefits of paying off debt in the future.
Investing with other people as passive partners and being picky about investment opportunities are also important considerations.
The book 'Small and Mighty' by Chad Carson provides techniques and rules for real estate investing, emphasizing lifestyle and free time over scaling businesses.
Emulating the principles and best practices of successful investors can be beneficial. The book covers various aspects of real estate investing, from building teams to negotiating deals.
Achieving financial independence involves understanding that passive income is a myth and very few forms of income are truly passive.
Bookkeeping can provide valuable insights into the business, and hiring a bookkeeper can free up time for optimizing the business. The book 'Small and Mighty' by Chad Carson offers guidance for investors who prioritize lifestyle and free time.
The episode concludes with a call to action to join the Chooseify community, subscribe to the podcast and newsletter, join local groups, listen to episode 100, and access the free Financial Independence 101 course.
Chapters
- The Small and Mighty Real Estate Investor
- Living in Walkable Communities
- Getting Involved in Your Community
- Optimizing Real Estate Investments
- Building Systems and Operations
- Paying Off Debt and Simplifying Investments
- Strategies for Debt Management
- Managing Debt in Real Estate
- Debating Real Estate Debt
- The Small and Mighty Investor's Guide
- Achieving Financial Independence
- Conclusion and Call to Action
Summary
Transcript
The Small and Mighty Real Estate Investor
00:00 - 06:15
- Chad Carson has written a book called 'The Small and Mighty Real Estate Investor, How to Reach Financial Freedom with Fewer Rental Properties'
- The book emphasizes the importance of having 'enough' in real estate investing, rather than constantly striving for more
- Chad's book challenges the common focus on big goals and encourages simplicity and smaller-scale investing
- Chad's own experience led him to realize the value of 'enough' after making mistakes during the Great Recession
- He was inspired by books like 'Your Money or Your Life' and 'The 4-Hour Workweek' to simplify his real estate business
- Chad believes in working backwards from your life goals to determine how much real estate investing is necessary
- Chad and his family have been able to travel abroad extensively due to their financial independence achieved through real estate investing
Living in Walkable Communities
05:48 - 11:44
- The speaker and his family have been on a financial independence adventure, experimenting with living in different locations.
- They have lived in Spain and Ecuador for extended periods of time, immersing themselves in the local culture and language.
- The speaker enjoys walking the streets of walkable communities and studying history.
- Walkability is something the speaker craves when traveling and considers important for future living arrangements.
- Living in walkable communities allows for a sense of community and connection with others.
- In contrast, the speaker finds that in North America, people often only see each other through car windshields.
- The lack of walkability is attributed to infrastructure and urban planning decisions made in the past.
- Building walkable communities can be an important aspect of achieving financial independence.
- Small changes can be made at an individual level, such as choosing a gym or school within walking distance.
- There are also opportunities to advocate for changes at a larger scale, such as zoning regulations.
Getting Involved in Your Community
11:19 - 17:08
- Getting involved in your community and making small changes can have a big impact
- Using social media and local media can help bring attention to issues and drive change
- Spending time on activities that improve your community gives you purpose and a sense of power
- Real estate investing allows you to make decisions that affect change and generate wealth
- Considering walkability when investing in real estate can attract tenants and enhance the rental experience
Optimizing Real Estate Investments
16:40 - 22:42
- The convenience factor of walkability and biking in university locations
- Importance of location and building factor in real estate investment
- Focus on location first as a small investor to gain competitive advantage
- Criteria for a good location and investment property
- Avoiding properties with high management intensity and hassle
- Single-family houses as the least hassle properties in real estate
- Transitioning to properties that require less involvement as an investor
- Optimizing for least hassle while still getting returns on investment
- Picking the right properties and culling those that are problematic
Building Systems and Operations
22:26 - 28:04
- Building systems and operations in traditional business ladder is hard
- Advice is to have a small manageable size portfolio
- Outsourcing and property managers help reduce workload
- Small portfolio leads to lifestyle, time freedom, and flexibility
- Working backwards from customer experience helps in real estate investment
- Consider what people want to do in a specific location
- Intuitive understanding of customer needs is important in real estate
- Identify high-demand areas based on rents and prices
- Analyze the neighborhood and accessibility for value assessment
- Identify pain points in hotels and provide solutions for families
Paying Off Debt and Simplifying Investments
27:41 - 33:37
- Working backwards from a lived experience can lead to innovative solutions.
- Real estate investors should consider changing their game plan once they have enough equity or net worth.
- Paying off debt reduces risk and increases income for real estate investors.
- Paying off debt also provides psychological benefits and simplifies the investment portfolio.
- Having a smaller, safer portfolio can bring peace of mind during uncertain times.
Strategies for Debt Management
33:08 - 39:04
- Having a safe portfolio with low debt during difficult times
- Debt is a tool, not a religion
- Transitioning from high debt to lower debt and lower risk portfolio
- Identifying the small and mighty investor number as a goal
- Calculating the number of properties needed to cover living expenses
- Buying more properties than needed and selling some to pay off debt
- Using personal finance strategies like the debt snowball method
- Strategically paying off higher interest debts first
- Being cautious of balloon notes in real estate investments
Managing Debt in Real Estate
38:42 - 44:23
- Interest rates have gone up by 5% in the intervening time, similar to what happened in 2007 and 2008.
- Small investors can strategically clean up their debt by using methods like paying it off with savings or selling properties.
- Strategic refinancing can help restructure debt and increase cash flow on free and clear properties.
- Having a higher loan-to-value ratio can be advantageous when negotiating with banks during economic downturns.
- Debt snowballing, buying more than needed, and strategic refinances are ways to clean up a real estate portfolio.
- Cash reserves are important for a real estate business, but not all funds should be used to pay down debt.
- A viable strategy is to use excess cash flow from rental properties to make extra principal payments on loans.
- The psychology of feeling progress is crucial in debt payoff strategies.
- Paying off one mortgage at a time can lead to faster debt elimination compared to spreading payments across multiple properties.
- Taking mini-retirements based on cash flow can be done before reaching full financial independence.
- The goal for small investors is to own the minimum number of investments that achieve their financial goals.
Debating Real Estate Debt
43:53 - 49:45
- Debate on whether to pay off all real estate debt or not
- Current debt is low risk and friendly lenders
- Open to paying off debt in the future
- Investing with other people as passive partners
- Buy box criteria for property selection
- Adding properties to hit list for potential sale
- Being picky and waiting for the right investment opportunity
- Compounding money and skills with each deal
- Psychological aspect of being patient in investing
The Small and Mighty Investor's Guide
49:22 - 55:24
- Being small and simple in investing allows for a patient approach and better decision-making.
- The book provides techniques and rules for real estate investing, such as when to pay off debt, when to sell properties, and how to finance properties.
- Emulating the principles and best practices of successful investors can be beneficial.
- The book covers various aspects of real estate investing, from building teams to negotiating deals.
- Bookkeeping is a significant time commitment for the author, but they are in the process of hiring a bookkeeper.
- Responding to property managers' requests and handling maintenance issues take up some time each week.
- Real estate investing starts with more time commitment but becomes more passive over time.
Achieving Financial Independence
54:55 - 1:00:47
- Passive income is a myth and very few forms of income are truly passive.
- Bookkeeping can be therapeutic and provide valuable insights into the business.
- Hiring a bookkeeper to handle basic entries and bank account reconciliation can free up time for optimizing the business.
- The book 'Small and Mighty' by Chad Carson is available for pre-order on BiggerPockets.com/SmallAndMighty.
- Pre-orders come with bonuses like a live Q&A call and coaching sessions.
- The book aims to guide investors who want to prioritize lifestyle and free time over scaling their businesses.
- Bigger Pockets offers a 10% discount with the promo code 'choosefi'.
- ChooseFI email subscribers will receive a PDF of Chad Carson's personal buy box.
Conclusion and Call to Action
1:00:38 - 1:02:27
- Thank you for listening and being a part of the Chooseify community.
- Subscribe to the podcast and weekly newsletter.
- Join Chooseify local groups in 300+ cities worldwide.
- Listen to episode 100 as a starting point for understanding financial independence.
- Access the free Financial Independence 101 course on choosefi.com