3 Pillars of Real Estate Investing

Mike Hambright (00:00.715)
Hey everyone, welcome back to the show. I’m here with an old friend, Steve Carlson today, just down the road about five hours in San Antonio. We’re gonna be talking about his three pillars of real estate. He really focuses a lot on seller financing and cashflow. We’re gonna talk about what’s working now. He’s been doing this for a long time and what’s been working for a long time and maybe even get a sneak peek into the future of what he thinks will work forever. don’t know if there’s anything that, cashflow is always sexy I guess. So we’re gonna be talking about that today. Steve, good to see you buddy.

Steve Carlson (00:27.63)
Yeah.

Good to see you too, Mike. It has been a long time. Been looking forward to this.

Mike Hambright (00:31.553)
Yeah, it’s been a while, Yeah, yeah, awesome. By the way, you’ve been on the show, I guess the Flipkart show a couple times before. It’s been, I’ve got a couple notes here, but I think back in 2016, 2018 again, so it’s been a while.

Steve Carlson (00:45.006)
I was going to guess 10 years, so almost. I’ve got a little, I think we both aged a little bit.

Mike Hambright (00:47.829)
Yeah, yeah, yeah.

Yeah, well, we don’t talk about that. So yeah, man. So hey, before we jump in, I’m excited to talk about this. I know that I always, I have a rental portfolio. I’m always, like every other day, I’m thinking about just seller financing the whole thing off. I do have some notes and those owner finance notes are, they tend to perform way better than our rentals. There’s pros and cons. We’ve probably talked about that a little bit. But before we jump into all that, us a little bit about your background.

You’ve been in the business for a long time.

Steve Carlson (01:23.086)
Yeah, I have, um, full time since 2009, but I actually started about my first investment property and way back in the 1900s. And, uh, we started, I don’t know, buying, I started buying five to 10 houses a year and call it 1997, 98, uh, while I was working a full time job.

Mike Hambright (01:39.937)
That sounds crazy. I’m sitting here thinking, is that phrase the 1900s? Is that even a thing? I was like, oh my god, you’re right. Yeah. It sounds crazy to say that. Yeah. Wow. OK, sorry. Go ahead.

Steve Carlson (01:50.114)
The kids are calling it these days, I think. So, but yeah, I got out of college in 1990, I think, 91. And I realized, my gosh, I think I went into the wrong industry. I loved finance more than I loved engineering, but it took me a little while to get out of that job. And I’m pretty analytical. mean, I’m super analytical.

And so it took me a couple of years to buy my first house, we bought it for bought one. And then I got sidetracked in some, some other businesses. started getting the entrepreneur bug. Somebody introduced me to the Hamway business, multi-level marketing thing. Actually the best thing I ever did in my life. It really, really helped frame my, my business acumen, guess, understanding people, understanding America, God, all that sort of stuff. was a really phenomenal time in my life. But it was.

Mike Hambright (02:37.323)
Yeah.

Mike Hambright (02:42.667)
Yeah, yeah, yeah.

Steve Carlson (02:44.046)
It cost me money anyway, 19. So that, that, that was kind of short-lived if you will, and the lifespan of a, of an entrepreneur. then, um, started buying in 1998, kind of regular, went through a divorce and early two thousands. and then in 1997, went back in business full-time, buying more houses and.

And I realized, and then I met my wife, current wife, Tamara, and she was like the biggest supporter of me than anybody could ever imagine. I mean, she was all about team Carlson and having that kind of team player, that kind of spouse really propelled the business. She, she, I told her when I met her, said, you won the lottery when you met me. And she said, she gets defiant every time she said no.

You won the lottery. It’s so true. So she allowed me to quit my job in 2009 when we kind of, it was right in the midst of the recession, but I knew I could just turn that volume, that marketing volume up and get deal flow. And that’s exactly what happened. So we were off to the races and made a bunch of money in the early 2009 through 2016, 17.

Mike Hambright (03:40.257)
Yeah, that sounds like something my wife would say.

Steve Carlson (04:09.486)
A lot of equity was captured, a lot of deals were done. So it a of, it was fun, time.

Mike Hambright (04:14.091)
Yeah, yeah, yeah. So we’re gonna talk about your three pillars here. And I know a lot of it is on you’re really a kind of a cashflow guy. You really do a lot of owner financing, creative finance things. kind of kind of jump in. And so let’s talk about those. Let’s talk a little bit about seller financing. Like what does that look like for you? And then let’s kind of jump into the three pillars, I guess, like why seller financing?

Steve Carlson (04:35.49)
Yeah. The cashflow is amazing. mean, we, buy houses with private money and we’ll wrap that and we’ll wrap. So we’ll buy a house and either, either fund it with our own cash or with a private money loan and wrap that loan and, and still cashflow with a wrapped loan, with a loan in place. Cause we’re buying them per, I call them little junkers, little $30,000 houses or so. And we’re selling for 70, 80, $90,000. And so.

So we’re arbitrage in that investor money because we’re borrowing at X percent and selling it at Y percent interest. Plus we got that huge cushion of equity that we’re capitalizing on. so, especially when our private lenders are paid off, those things cashflow amazingly well. I can’t tell you how many times I’ve penciled it out to where they’ll cashflow 150 to $300,000 over the life of the loan.

Mike Hambright (05:33.345)
Yep. And it’s amazing. don’t, it’s amazing like how few people actually pay off their loans early. Like I’ve had a couple, but not very many. It’s kind of surprising.

Steve Carlson (05:43.95)
Yeah. So interesting story. I didn’t talk to you about this before. I don’t think I told many people, but we took using this little junker model. We took my wife’s IRA in 2014 from $40,000 in value to in 2015, 700 and almost $800,000 in value in just basically 10 years. So

buying these little houses, selling them on terms, letting them cash flow. Once in a while they will pay off because I sold several to investors to guys that wanted to be a landlord and those guys will pay them off. And then we were just recycling that money by two to three, one, two, three deals, max a year into her IRA. It’s beautiful thing.

Mike Hambright (06:20.395)
Yeah.

Right.

Mike Hambright (06:35.617)
Yeah, that’s great. I had a situation, this was probably about four, in the past four to six months, we had one of our owner finance deals, we were about to have to foreclose, won’t kind of get into the whole story, but it was basically a husband and wife and the husband died in a car accident and she just let it, you know, let it go and.

Steve Carlson (06:51.843)
Mm.

Mike Hambright (06:54.879)
We let it go too long. waited too long to really kind of push hard because we felt bad about everything. And there was a bunch of miscommunication stuff with our loan servicing company. Won’t get into all that. But the interesting thing is I remember looking at it. I think that they had bought it from us. It had been like eight or 10 years and we sold the house to them. This is

I don’t remember what we bought it for, probably less than, we probably bought it for, actually it was a rental for a while. And then I’m like, let’s just owner finance this one off. Cause I didn’t really, I liked the cashflow. We were having a bunch of problems with that specific house as a rental. Like for some reason we just kept having problems tenant after tenant after tenant. And finally I was like, let’s just owner finance it. So I don’t know what we bought it for. won’t, but I’m sure we bought it for 40 or 50,000, sold it for 125.

Steve Carlson (07:34.209)
Yes.

Mike Hambright (07:42.581)
And the interesting thing is after eight to 10 years, I, because we were again about to foreclose, so I was looking at what’s the principal balance, obviously. And.

I mean it was like 120. I mean there wasn’t a lot of principal pay down yet. Our notes tend to be around 10%. It might have been like 9.99 % or something. But the other side of that is the current market value was double what we sold it for. So it was like 250 now. And so I remember thinking, I was like on one hand, like I didn’t want to foreclose on anybody. I haven’t had to do that before and I didn’t want to do it. We’ve come close a few times but it didn’t happen.

Steve Carlson (07:56.398)
Right.

Steve Carlson (08:04.237)
Yeah.

Mike Hambright (08:23.779)
And but I remember thinking like man, I don’t want to foreclose but there’s a lot of equity there like if If if that happens like I don’t want that person to lose that equity either and that’s what we told him was like just She just refused to work with us for a while. I was like just go sell it Just go sell it and you’ll and you’ll make a bunch of money But I also knew I had a ton of cushion So the good side is we generated a ton of cash flow from it No problems really for ten years up until this point and then secondly was feeling

a little bit bad that, man, I didn’t capture that appreciation. I mean, it’s a trade-off, right? Yeah.

Steve Carlson (08:57.568)
It is. Yes. And that’s why I have the three billers because each business model has a downside in the real estate, in the single family real estate business. So fix and flip is a, is a, is a, you know, it’s a job. Wholesaling is a job. Rental properties that are leveraged don’t make any money. I don’t care who you talk to. I don’t, they just really don’t if they’re leveraged unless you got them on 30%.

Mike Hambright (09:06.347)
Yep. Yep.

Steve Carlson (09:24.078)
or 30 year loans at 3%, then maybe they will. And notes, you lose that control of, you lose the gain and they eventually pay off. So that’s why.

Mike Hambright (09:26.463)
Right. Yeah.

Mike Hambright (09:38.015)
Yeah, yeah. let’s talk about, so the three pillars. let’s, what are the three pillars? And then let’s dive into each one individually.

Steve Carlson (09:45.452)
Yeah. So I started fixing, doing fix and flips when I started this business. And I quickly realized that is another job. And, yeah, it made good money, but it was, it was a lot of work and it’s short term and it’s getting taxed to short term rates, all that stuff. so I started looking around and like, what else can I do besides just fixing and flipping these things? And so then I started buying.

rental properties and rental properties, they’re again, the ones that are financed, don’t make any money. And if you buy them wrong, like the cheap stuff in the rough neighborhoods, they’re a nightmare to deal with. They’re horrible to deal with. So too much maintenance, too much involvement, too many delinquencies. It’s just, it’s not good. When you buy them, when you’re able to buy the nice properties in the B neighborhoods, B class, working class neighborhoods, those guys, I tend to…

I find that they just, they just pay, they pay. And, for the most part, they stay two, three, four years, sometimes longer. got one lady that’s been in a house. We bought it. She was there 20 years and I bought it 15 years ago. So she’s paid for that house three times. So sometimes it’s really safe.

Mike Hambright (10:50.389)
Right.

Mike Hambright (11:00.929)
Yeah, yeah.

So the three pillars, I know the first one you said is kind of cash now. So yeah, what’s kind of in that bucket? What are examples of that?

Steve Carlson (11:07.48)
Cash now.

Steve Carlson (11:11.81)
Fix and flip is in that bucket and wholesaling is in that bucket. Hotaling, that’s going to be done within less than a year. again, wholesaling.

Mike Hambright (11:22.345)
Yeah, so that’s like active income. That’s like active income. You’re actively involved in the business, right? Making that, as I kind of call it today money, I call it today money, you call it cash now. Same thing, right?

Steve Carlson (11:27.318)
Yeah. We all need that.

Steve Carlson (11:33.422)
Yeah, today money. all need it. I’ll you how I’ve carried our business because again, rental properties don’t make money. And so we need the cash now. is a, I mean, wholesaling, I’ve done a lot of wholesaling and we’re trying to do more actually right now, but dang, it is a grind. It is a young man’s game. And so I’m not a big fan of wholesaling, but I do it on occasion.

Mike Hambright (11:35.487)
Yeah.

Steve Carlson (12:02.542)
And fixing and flipping is of course, that’s that you got to have good people involved when you’re doing more than two or three, four deals at a time. You got to have a good team.

Mike Hambright (12:07.669)
Yeah.

Mike Hambright (12:12.745)
I think, know, kind of what your three pillars are, which we’re gonna keep talking about is, I’ve always said the same thing. I’ve always used, everybody wants mailbox money, right? Everybody wants to be in that I-box on Kiyosaki’s Clash for the Quadrant that I don’t have to do anything and the money’s just coming in. But what a lot of people don’t realize is you have to have.

an active business to allow you to do the passive stuff. Because probably what you do, my guess is, you often let the deal dictate what you’re going to do with it. you know, if you don’t want to wholesale, like, but it’s in a crappy neighborhood, you’re like, I don’t want to rental there, I don’t want to deal with it, or you kind of cherry pick the ones that make sense to do something with. Probably cherry pick the rehabs, because they might be a little bit too high end to rent or maybe even owner finance. And you kind of let the deal dictate a little bit what you do, right?

Steve Carlson (12:44.77)
Mm-hmm.

Steve Carlson (12:50.766)
Hmm.

Mike Hambright (13:05.069)
have to cast a wide net to have those options in the first place, right?

Steve Carlson (13:08.718)
Right. Yeah. We can’t just write wide net. And so our marketing brings in all, all three types of deals. And my general rule is if it’s worth 200,000 or more, we’re going to fix and flip it or wholesale it. Uh, if it’s worth 200 to 150, maybe then it fits into that rental bucket really well. Cause those are generally good neighborhoods with good, good tenants. And if it’s less than 150 in value or 120 or something like that.

That’s when we’re doing the owner financed exit.

Mike Hambright (13:39.615)
Right. Yep. Yep. So the cache now is the active stuff. And your second one is cache flow. So what does that mean for you?

Steve Carlson (13:45.966)
you

Yeah. That’s what I’m most excited about right now, Mike, is the cashflow business because so the typical deal where these are the little junker houses, right? They’re not worth a lot. Can be land as well. Not worth a lot, but there’s a demand for those houses. So.

So we’re buying them for call it 30,000 and we’re selling them on terms for 60, 70, $80,000 and collecting a nice spread. we’re financing it or if we’re paying cash for it, obviously it’s just coming all coming back to us. But those, those are the junker houses that are going to pay for a long time to come. We structure them 30 year notes default is 10.9 % interest. And so yeah, that’s those, those things will generate 300,000 over.

over years, a lot of cash flow on those. The buyer that we’re looking for is somebody that wants to own a home and maybe just can’t afford or can’t find a bank that would fund it, not afford, but they don’t have necessarily the credit or the documentable income to deal with a traditional lender.

Traditional lenders really don’t want to touch anything for less than a hundred grand. So, so we’re filling that need and there is a pent up need for housing in that, in that price point. As you know, there’s a ton of people that want to own homes that just can’t in that price point. That’s need we’re filling.

Mike Hambright (15:19.413)
Yep.

Mike Hambright (15:25.535)
Yeah, I don’t remember the stat. was talking to, you know, Eddie Speed a little while back and he was telling me what percentage of homes of homeowners are not qualified for a traditional mortgage. And it it’s like shockingly high. It’s like 40 or 50 percent. Like there is a massive market of kind of owner financed or non QM type loans that the average person listening to this probably is blown away by that it’s that high. But.

Steve Carlson (15:52.428)
Yeah.

Mike Hambright (15:53.011)
Yeah, and it could be they have bad credit or they just don’t have established credit. Like a lot of people, probably a lot of folks that you sell to, there’s probably a lot of Hispanic folks and stuff like that that just don’t have, they just don’t use credit cards. They just don’t really believe in credit as much as some other folks do. And they just don’t really have enough established credit. Or there’s a lot of entrepreneurs, like are people that have small businesses and they’re cash businesses and they just don’t have the paper trail to kind of qualify for a traditional mortgage, right?

Steve Carlson (16:04.43)
Hmm.

That’s right.

Steve Carlson (16:18.188)
Yeah, that’s who we’re targeting. As a matter of fact, I’m rebranding to one of my companies or starting a new company, Casa Connect, because we definitely want to cater to the Hispanic community because I find that they really, they really have a demand. They want to live and they want to own their own and they pay and they stay. Almost never have I foreclosed on somebody that I verified their income that was a Hispanic.

And they involve their families in the whole business as well.

Mike Hambright (16:49.429)
Yeah, there’s a lot of pride of ownership and you know, whether it might be somebody that has a landscaping business or some sort of business and it’s a lot of cash stuff and you know, the traditional lenders don’t like that, but we don’t care. We just want them to pay and that’s it, right? Yeah, yep.

Steve Carlson (17:05.016)
That’s it.

Mike Hambright (17:07.105)
So that’s the cash now, so the owner finance stuff. And so let’s talk a little bit about what that looks like. Like there used to be, you know, when I was owner financing my stuff off at 10 % or you’re saying 11 % or so, like when mortgage rates, when it was easy to borrow money at five or 6%, like you had a bigger spread. And so there’s been more of a pinch on that over the past couple of years, right? Because kind of the underlying debt isn’t as cheap as it used to be. And you can’t necessarily go,

Steve Carlson (17:28.462)
Mm-hmm.

Mike Hambright (17:33.217)
raise yours to 12, 13, 14 percent, you get into some issues with usury, get into some, maybe there’s some, I don’t know if there’s, I think there is a cap that you can charge, but that spread is not as big as it used to be. So how do you kind of manage that?

Steve Carlson (17:46.638)
Well, we add in some servicing fees. So 50 bucks a month in servicing fee that doesn’t have to be, that’s not considered it user or anything like that. So we add a little servicing fee in there, but we’re buying better and our, yes, our, our lender loans are a little more expensive at 10 point, at, you know, double digit to our lenders, 10 to 12%.

But there’s such a huge cushion of equity that we’re still able to cash flow and get those when those. So I’m not really squeezed very much. think the default for us has always been 10.9. I don’t know about other guys that do this business, what their rates are, but maybe some of them squeak up to 12%. But I just don’t.

worry with that. It’s not that exact of a science in my opinion. I’m like, that’s close enough. That’ll work.

Mike Hambright (18:43.937)
Yeah, yeah.

Yeah, well, just to clarify for folks that aren’t aware, we’ve got a lot of pro investors that are watching this, even though your rate you’re borrowing, adding, lending to is about the same, your underlying debt is, in your example, 30 % and you’re selling it at 60 or 30,000 and you’re selling it at 60 or 80,000. So the sales price is double what you purchased for or more. And so, you know, that’s where you’re really making your money is on the difference between those two balances, right?

Steve Carlson (19:12.301)
Yeah.

Steve Carlson (19:16.91)
spread. Another beautiful thing about this model is it works really well in a downturn. So we’re kind of due for a real estate recession. I haven’t had one in a long time.

And it works in, you know, up times as well, of course, everything works when prices are going up. But this works. One of my early mentors who was a real estate agent in Sagan, Texas, he focused on selling houses to the low priced homes, 150 and less, to FHA buyers. And so that was his whole…

focus. I asked him one time, said, why don’t you move into the $200, $300,000 price points? Those commissions are so much better. And his comment to me was, and he was an old guy, he’d been doing this a long time. He says, in bad times and in good times, there’s still a demand for affordable housing. And so that was a, that was an interesting lesson that I learned that they didn’t have carried with them.

Mike Hambright (20:14.465)
Yeah, and housing isn’t nearly as affordable as it used to be either. yeah, yeah, yeah. That’s why, yeah, I think that’s why the owner finance model still works really well, especially if you’re going after the types of houses you’re talking about is that’s like, even if the interest rates a little bit higher than a traditional route, which they can’t get those loans anyway, that’s the last kind of bastion of hope is an affordable housing is the types of houses you’re talking about. Yeah.

Steve Carlson (20:19.15)
Yeah.

Steve Carlson (20:37.838)
100 % and we’re filling that need. So we got purpose behind what we’re doing. We got a mission and we got profit. It’s really cool.

Mike Hambright (20:45.311)
Yep. So that’s the cash now stuff. that’s the cash flow stuff. So then you got cash later is your third pillar. Like what is that?

Steve Carlson (20:52.802)
Yeah. Yeah. Again, I mean, every model has its downside. Notes, they pay off. So at some point the money stops. Rental properties is the third pillar. And they’ll cash flow after they’re paid off. They’re going to cash flow forever. That’s the legacy money. That’s what my kids are going to inherit.

We’re just going to keep these things and keep cash flowing them. If we need to sell one off, Hey, we can sell one off and put two and a grand in the bank if we need to. So that’s the cash later stuff. I’m a big proponent of getting out of debt as soon as possible. So I don’t like 30 year notes. I don’t care what the interest rate is going to be. I want to get stuff paid off. And so one of the, so I’m putting 20 year.

notes on most of these if I’m bank financing and getting them paid off relatively quick so that they’ll cashflow in my retirement. And we’ve got several of them paid off now and I really love those. They’re great and they’re starting to pay off more and more now.

Mike Hambright (22:00.417)
Yeah, that’s great. Yeah, most of our rentals, have, I bet we have close to maybe six or 8 % debt on our whole portfolio, which is pretty much paid off. But, and I just made myself a post-it note. I was like, we need to pay off these rentals. Cause I mean, it’s so close that we might as well. Anyway, one question for you is, your rentals, I don’t know if you’ve changed your avatar over the years of you kind of saying the 150 to $200,000 type rentals now. A lot of my,

Steve Carlson (22:17.176)
Good.

Steve Carlson (22:24.824)
Mm-hmm.

Steve Carlson (22:28.483)
Hmm.

Mike Hambright (22:30.489)
rentals most of them I would say are the types that I also would have owner financed like they were the kind of C plus B minus type properties and so do you have many of your rentals that way that you could just say hey I’m just gonna I’m gonna owner finance this one off are they a little bit too valuable for that model

Steve Carlson (22:47.354)
no, on occasion we’ll do that, but not, not very often because the, the margins aren’t as attractive as buying a little junker. can put 30 grand into a little junker and sell it for 90. if I’m buying a $200,000 house and selling it on, on, or if the house is worth 200,000.

paid 150, whatever it is, I can’t sell it for three times, two times what I’m buying it for. So everything has its margin related, the fix and flips, higher price points and…

They don’t cashflow as rentals very well. They’re not going to cashflow nearly as good if you sell or finance them. And so those are fix and flips. The cheap properties make crappy rental properties, the little junker deals. That’s when I had headaches. As a landlord, I had headaches when I was selling off these little, or renting these little dinky houses. So.

Mike Hambright (23:37.002)
Right.

Mike Hambright (23:41.366)
Yeah.

Mike Hambright (23:45.963)
Yeah.

Steve Carlson (23:49.486)
When I started moving into the B neighborhoods for my rental properties, that’s when my life became so much easier. I had somebody to collect rents for me, had the little maintenance guy, not a little, I had a maintenance guy to do maintenance on the stuff. And so today I spend 15 to 30 minutes a week maybe on my rental properties. It’s extremely low because we’re buying in good neighborhoods.

Mike Hambright (24:04.799)
Hahaha

Steve Carlson (24:19.09)
and keeping the ones that are in good neighborhoods that make for good rental properties.

Mike Hambright (24:25.337)
Yeah, yeah, I’ve thought about owner financing mine off, but you’re right. I got to kind of pencil a few of these out, a lot of them are houses we bought for 20, 30, $40,000, but 10, 12 years ago, right? And so the problem now is they’re $125,000, $150,000 houses higher in some instances. So do those really work in owner finance?

Steve Carlson (24:43.852)
Yeah. Yeah. know, another thing is to worry about the capital gain too. Right? If you sell or finance it, your capital gain is going to be spread out over time. Let’s hope. So that factors into all of that as well. That’s CPA question.

Mike Hambright (24:52.991)
Right. Yeah, yeah.

Yeah, for sure, yep, yep. So let’s talk about kind of raising money, because the way that you operate this whole machine is by borrowing money from private investors and kind of making that spread. who would want to be a private lender to a guy like you? Why are people interested in that model versus anything else they could invest in?

Steve Carlson (25:04.888)
Mm-hmm. Good.

Steve Carlson (25:16.064)
Yeah, it’s way, way more passive, right? Running a business, having this active income and filling properties and renting properties and maintaining properties and payments and all that stuff, it’s a business, right? We’re dealing with tenants, we’re dealing with toilets. so if you want to deal with that, then you’re probably better off not going into the private.

lending world. If you just want a double digit return that’s backed by an asset, it’s secured, insured, and protected by a cushion of equity, and have a regular job that you’re not necessarily wanting to quit, and you have an IRA, that’s even better, then that’s when you might be a private lender. So, if you want to do more passive stuff,

being a passive investor, that would make you a good lender. If you want to be an active investor, dealing with the headaches and the pains of business ownership and having the upside as well. mean, you know, having a real estate business is a lot of work and it’s a people business. so maybe a more introverted guy like me, maybe that’s what I should have done to begin with, which is loan money.

I think that kind of is the avatar somebody that doesn’t want to necessarily be enacted, but they want their money secured. Don’t want to deal with the turmoil up and down of the stock of the stock market and is interested in a better return that they can get from the stock market. I was looking at some numbers yesterday last night. Like I think it’s stock markets returned 8 % over the last 30 years. And if you take into consideration the dip three months ago, it’s way less than that or two months ago. So.

You know, and if you can get a double digit return on a loan that again is secured and insured and protected, that maybe would fit what you’re after.

Mike Hambright (27:25.377)
Yeah, yeah, that’s great. think that’s great. when you’re raising money, like give some tips for folks that are trying to raise money. mean, what are some things that you do that work in terms of helping raise private money? Because anybody in whole world could lend to you. Sometimes people are borrowing from friends and family or neighbors or whatever. But how do you kind of cast a wider net to find potential private money lenders?

Steve Carlson (27:53.048)
talk to your warm network, talk to the people that you, that you, you know, deal with on a monthly basis and let them know what you’re doing, not so that they can become a private lender so that you can inform them and let them know what they’re doing. And maybe they know somebody that might be interested in putting some of their idle cash or retirement funds to work in a passive, in a passive way, a more passive way. So, yeah, that’s.

Mike Hambright (28:19.723)
Yep.

Steve Carlson (28:23.606)
really just talking to both people and the warm network is absolutely the best. And then you got to have some tools. I built a website and so I have some credibility, I guess, comes from that. And I can send potential private lenders to look at my website and they can see what, learn a little bit more and then have a good model.

be able to explain your model, your business, what you’re doing, what you’re using the money for, and just having that open dialogue and communication. I’m working on a new pitch deck now to present to private lenders and just being professional about it. Professional, professionals. Honest, have integrity, have good character.

relatively easy to raise money. spent 2009 to 2014 going to events and being very intentional about raising private money and we had $6 million at our disposal at any one time after a short period of time. So it’s just talking with people and being genuine.

Mike Hambright (29:38.486)
Yeah.

Yeah, yeah, I think just sharing what you do, like a lot of people are intrigued by it. And I think, like you said, lot of folks, potential private investors, the folks that have money, I they don’t have to be like uber wealthy, but they could have enough for a deal here and there they’re used to making, you know, maybe three or 4 % of CD or something else like.

Steve Carlson (30:01.696)
Yeah. Yeah.

Mike Hambright (30:02.101)
I think lot people are intrigued by real estate and they just don’t really understand that there’s a passive route versus you don’t have to go flip houses, you don’t have to manage rentals and all that. You could just literally be a private lender and nobody really thinks of themselves as that until they talk to somebody like us that’s like, well, there’s a way to do that like through us, right?

Steve Carlson (30:06.797)
Mm-hmm.

Steve Carlson (30:19.15)
Yeah. Yeah. I was, was mapping it out on Excel the other day. And if the lender were to put it together, put to work 120,000 under my plan, call it $120,000. I’ve got a plan to, to show them how to, well, to get them to double their money in a matter of 4.3 years or something like that. It’s actually, it’s not, that’s a pretty good return really. So.

Mike Hambright (30:46.561)
Yeah, yeah, no doubt, no doubt. And I hate to say, use the word guaranteed, but it’s pretty well guaranteed, right? mean, they’ve got a first lien deed of trust, something bad could happen. And the reality is, is when you have that much equity in a house, all you’re gonna do is go take it back and reload it and do it again. And so it’s not like, there’s really not that much risk there. So, you you gotta put an asterisk next to that, but not really, I mean.

Steve Carlson (30:48.684)
as a passive investor.

Steve Carlson (30:56.216)
Yeah.

Mm-hmm.

Steve Carlson (31:13.184)
Right. Again, it’s secured by real estate. It’s insured. You got an insurance policy and there’s that big cushion of equity.

Mike Hambright (31:21.695)
Yeah, yeah. Steve, if folks want to learn more about what you’ve got going on, learn more about your private, you know, what it’s like to raise private money or any of those things, like where can they go?

Steve Carlson (31:34.077)
Probably the best place is my website consistentreturns.com. If you drop your email in there, you’ll get on my email list. I send maybe an email every other week, so it’s not like you’re going to get inundated, but you can learn what I’m doing. If you want to raise private money, you can learn and see what I’m doing. If you’re interested in private lending and you can go there to learn more about what it’s all about.

and maybe we can connect and have a cup of coffee virtually or face to face.

Mike Hambright (32:05.525)
Yeah, yeah, cool. Well, thanks for sharing your, some insights, peek into your business with us today.

Steve Carlson (32:11.786)
It’s fun. It’s a fun business. Exciting. Love it. We’re great to connect with you again. Thanks for having me on, Mike.

Mike Hambright (32:16.385)
Yep. Yeah, buddy. Great to see you for sure. It’s been too long.

Steve Carlson (32:19.788)
Yeah. I love your show, by the way. I’ve been watching it and you’ve got some of best guests in the industry. I I was binge watching, listening on Saturday and caught up on a bunch of others before and after that.

Mike Hambright (32:24.659)
Yeah, thank you.

Mike Hambright (32:31.859)
Yeah, that’s great. That’s great. That’s awesome. I appreciate that.

Awesome. Well, hey, thanks again for joining us today. For those of you that are listening right now, there’s a lot of ways to invest in real estate. Sometimes a more passive approach might be better for you. And by the way, if you’re an active real estate investor, make sure you’re focusing on some cash flow and wealth building activities too, because that active income, it’s a hamster wheel that if you never get off, you can never get, you’re never going to get off if that’s all you’re doing, or you can’t ever stop really ultimately. So ultimately we got in this business to generate cash flow and build long-term

wealth so make sure you focus on that as well. Appreciate you guys for joining us today. We’ll see you on the next show.