DSCR Loans Cash Flow and the Real Estate Long Game
In this episode, mortgage expert Jo Garner returns to discuss DSCR loans, cash flow strategies, and the long-term vision needed to build wealth through real estate. She breaks down how DSCR loans work, why they’re a game-changer for investors, and how to structure deals for maximum returns. Brett and Jeff dive into real-world property examples, showing how to turn a single investment into a multi-million dollar portfolio over time. They explore the importance of reinvesting cash flow, paying off properties strategically, and how to leverage financing options to scale up a real estate portfolio. Jo also shares insights on market trends, the future of housing demand, and why smart investors are positioning themselves for long-term gains. If you’re an investor looking to maximize cash flow and secure financial freedom, this episode is packed with essential strategies you won’t want to miss.
Real estate investing isn’t about quick wins—it’s about playing the long game. Too many investors get caught up in the promise of immediate cash flow and forget that true wealth is built over decades, not months. Brett, Jeff, and Jo break down the numbers on real investment properties, showing exactly how investors can use DSCR loans to acquire assets that generate passive income while appreciating over time. With real-life case studies, they analyze the impact of financing terms, down payments, and rental income on long-term profitability. From turnkey rentals to new construction homes, they highlight how investors can position themselves to maximize returns while minimizing out-of-pocket expenses.
The conversation also dives into the importance of financial discipline. Instead of spending extra cash flow, smart investors reinvest it—whether through property upgrades, additional down payments, or simply accelerating their mortgage payoff. The episode emphasizes the critical role of leverage in real estate investing and why a solid DSCR loan strategy can help investors acquire more properties with less personal capital. As Jo explains, real estate has consistently outperformed other investment vehicles, making it the ultimate wealth-building tool when approached with a strategic, long-term mindset.
In this DSCR Loans Cash Flow and the Real Estate Long Game episode:
- Understanding DSCR Loans – Debt Service Coverage Ratio (DSCR) loans are a game-changer for real estate investors. Unlike traditional loans, DSCR loans focus on a property’s rental income rather than the borrower’s personal income. Jo explains how these loans work, what lenders look for, and how investors can use them to scale their portfolios efficiently. The less documentation required, the faster and smoother the process is, making it an attractive option for seasoned and new investors alike.
- Real Estate Case Studies: Turnkey vs. New Construction – The episode breaks down real-world investment properties, showing cash flow projections and return on investment. A Memphis turnkey rental, for example, offers $600 in monthly positive cash flow, while a new construction model generates nearly $900 per month. Jo explains how different property types impact financing terms, maintenance costs, and long-term profitability, helping investors determine which approach fits their strategy.
- The Power of Leverage in Real Estate – The key to real estate investing is using other people’s money—whether it’s bank financing or rental income—to build wealth. Brett and Jeff emphasize why the initial down payment is your only real investment, as tenants effectively pay off the mortgage over time. They also discuss creative ways to minimize out-of-pocket expenses, such as builder incentives and closing cost concessions.
Real estate investing is not a get-rich-quick scheme—it’s about patience, strategy, and financial discipline. This episode highlights the power of DSCR loans and how they enable investors to acquire properties without the traditional income verification hurdles. By analyzing real-life case studies, Jo, Brett, and Jeff break down how investors can build a portfolio that generates consistent, growing cash flow. They emphasize that the real key to success is reinvesting profits wisely, focusing on asset appreciation, and understanding that real wealth is built over decades.
Transcript for this “DSCR Loans Cash Flow and the Real Estate Long Game” episode
Brett
0:00:55 – It is five o’clock somewhere. Jeff, you were going to bring the Johnny Walker, you forgot? Are you having problems with your mic again? We bought all our equipment at Goodwill, so I apologize for the… Dollar tree. Dollar tree. No one even said, God, good job, Brett. The studio looks great.
Jeff
0:01:07 – Looks good. We need a neon stamps real estate sign, a neon light real estate sign.
Brett
0:01:20 – It’s 5 o’clock somewhere, real estate podcast, investor podcast. It’s beginning right now, Jeff. You got anything else you want to say before we go? But I thank you for the applause on the great job in the studio. That glue is something else, man. I tell you, I walked out here like Snoop Dogg on Willie Nelson’s bus when I was done. I was high as crap.
Jeff
0:01:35 – Hey, the shower curtains do look nice.
Brett
0:01:48 – It’s not shower curtains, man. That is actual material. We just need to steam them. We just need to steam them.
Brett
0:02:13 – All right, so let’s get going with the podcast. Jo Garner is back with us. We had an amazing episode with Jo Garner. It ended up being a corrupted file, so we couldn’t produce it. So we brought her back today so we can kind of try to reinvent and I don’t think we can invent reinvent perfection because that what that episode was we’ll do our best.
Jeff
0:02:33 – Corrupted file what happened? Tell them what really happened.
Brett
0:02:36 – Oh no it’s fine we’re gonna re-record now Jo is here but it was such an amazing episode so Jo welcome to the show, give everybody an idea who you are and your contact info and what you do for a living. You do a lot, but your main focus is…
Jo
0:02:52 – Brett, thank you so much. I’m in the mortgage business. I eat breakfast, lunch, and dinner with mortgages, and I love investors because I’m an investor also. I wrote a book called Choosing the Best Mortgage, the Quickest Way to the Life You Want, and it’s for people who are buying a home to live in, but it’s also for a whole section for investors. So Brett, I love being a mortgage officer and an investor at the same time.
Brett
0:03:19 – Excellent. I’m glad you were able to come back today. We’re going to talk today a lot about the new in-house DSCR loan product that you have. And we’re going to talk about some of our properties that we have sold and the different
Brett
0:03:31 – types of properties and what the cash flow projections are from a mortgage person, someone who’s going to be writing a loan, what kind of cash flow you can expect, and then I’d even like to get your input on what a smart young investor should do with that extra cash flow.
Jo
0:03:45 – Yes, and I believe you have that too, Brett.
Brett
0:03:49 – Yeah, absolutely. You know what to do about that. I do, but hearing it from me, it apparently doesn’t carry as much weight as it does somebody who’s in the mortgage business who should be telling you how to do this the proper way. So let’s get started. Tell us about the company you’re with and the product, the DSCR product first.
Jo
0:04:05 – You know, Brett, the most exciting thing that’s happened in this industry over the last couple of years has been the DSCR mortgage product. It stands for debt service coverage ratio. What that means is that it’s a business loan that’s secured on residential investment real estate. So is you know the better price you’re going to get is if you have lease income coming in and your principal interest taxes and insurance payment is the same or better or less rather than what you’re getting for lease. In other words you’re making a positive cash flow. You don’t have to make a positive cash flow but your rate and your terms are so much better if you are making a positive cash flow. They’re not going to ask you to bring a wheelbarrow in full of your tax returns and leases and all of that. Your income is verified simply on the lease or potential lease income on that subject property that you’re purchasing or refinancing.
Brett
0:05:09 – And what’s counted as an expense against that income for the purpose of the DSCR loan?
Jo
0:05:15 – It’s principal and interest, taxes and insurance. Now, if you have an association fee with that property, that monthly figure would also calculate into that as well.
Brett
0:05:26 – So out of your profitability, you’re dealing with mainly management if you’re going to use a property manager. So let’s go through a property that, let’s take one of these properties and let’s say Jo Garner, the wizard of DSCR, writes the loan. What can we expect this investor to do? What will they make?
Jo
0:05:43 – Okay, so most of the investors that we’re working with right now, they’re still going to have to verify their funds to close. Usually on a purchase, it’s about 20% down. On a cash out refinance, usually around 25% down. There are some exceptions to that. 75% loan to value, 25% down, yes Brett. But that’s what to expect on money down, information you need to use to qualify. We pull credit, you know, try merge credit report. The property has to be in good condition when we’re doing this permanent DSCR rentable condition. Yes, it has to be in rent. So DSCR will not work for a rehab project It will not okay. We have another way of doing those but today we’re talking about DSCR and it has to be in pretty good condition good title on it a Quick turnaround less than 30 days and it’s for purchase and refinance.
Brett
0:06:46 – Excellent. All right. Well, let’s talk about a particular property. Let’s give an example. Now we talked on a previous podcast about the type of properties here and gave some examples of what the properties were like, how they work from start to finish, but we didn’t really get too much into the cash flow. So let’s talk about that.
Jo
0:07:05 – Yeah, you know, you’ve got a couple of examples that you sent to me and they were very exciting. One of them you call turnkey.
Brett
0:07:15 – Turnkey basically for me is we have builders that are buying an older home, need some work, and they’re rehabbing it top to bottom, inside and out, putting a tenant in place, and then selling that property.
Jo
0:07:26 – Right.
Brett
0:07:27 – With a one-year build warranty, I might add.
Jo
0:07:29 – This one is just an example. It can vary greatly depending on the credit profile and what the property taxes are, insurance on a particular property. So that’s my disclaimer and this is for educational purposes. I went and did a scenario as if they had high credit scores, they were putting 20% down on a 30-year fixed rate loan with the 3-year prepayment penalty. And I was using one of your listings on Bitter Creek in Memphis just as an example. On that one, Brett, I got real excited about it because the market rent you have here is about $1,550 or so a month and the price of around $153,000. Looks like, based on my calculation, the positive cash flow on that would be somewhere between $500 and $600 a month. That’s very exciting.
Brett
0:08:23 – So you take that $500 and $600 a month, let’s do that times a year. Let’s get your gross, let’s do a quick calculation. We did this on your radio show.
Jo
0:08:30 – Yes, we did.
Brett
0:08:31 – So let’s take $550 times 12 months. That’s going to give us a gross of $6,600. And let’s say you put 20% down?
Jo
0:08:39 – 20% down. This is a purchase.
Brett
0:08:42 – So 20% down would be around $30 grand?
Jo
0:08:44 – You know, your total move in with your down payment, closing costs, prepaid property taxes and insurance would be somewhere between $30,000 and $40,000.
Brett
0:08:52 – Jeff, quiz. Based on her numbers, how much does the investor have out of pocket invested in this property?
Jeff
0:08:57 – Well, at the end of the year, you just subtract the $6,000 from the $30,000 down payment.
Brett
0:09:02 – Well, hold on. So that’s right. You’ve got $30,000, maybe $35,000 out of your own pocket invested in this property. A lot of investors get sideways with this, but the balance of that money, that purchase, where did it come from? Came from a bank. It’s not out of your pocket. You borrowed it from a bank and the tenant’s paying rent, allowing that rent to go back and pay the bank back. So you really have no money out of pocket other than that $30 to $35 grand.
Jeff
0:09:26 – Your initial investment always, but we’re going to talk about ways to get that back pretty quick too.
Brett
0:09:31 – Yeah. So let’s take the $6,600 a year and divide it into $35,000, which is the cash you now have out of pocket. That’s an 18.8% return on your investment. Cash out of pocket investment. And when you look at it that way, and I try so hard to get these investors to realize your loan is not your money, it’s the bank’s money. And the payments that you’re making is not money out of your pocket, it’s the tenant’s money. So what do you truly have invested in this property. And when that light bulb goes off in an investor’s head, then their whole dynamic on how to invest in real estate changes, and they really begin to look at the cost of a mortgage versus the rent that’s coming in versus the expenses of maintaining that property become big factors. So I mean, that’s fantastic. All right, let’s go on to a different property.
Jo
0:10:21 – You have another model that is new construction.
Brett
0:10:24 – Which I love.
Jo
0:10:24 – Yeah, I do too My mother used to say, “look Jo if you’re going to invest in something, invest in something that’s brand new because then at least there’s not a big chance You’re gonna have to be doing repairs for the next right years.” So a new construction that’s that has a whole different element of a positive advantage there This one you gave me was on Rose Creek. You were selling it for a $185,000. Market rent you said was around $1,895. And you know, somewhere with the rate and the low to mid-sevens in that range or so, it looks like your positive cash flow on that, very exciting, between $800 and $900 a month.
Brett
0:11:07 – All right. Well, let’s be conservative. Let’s say $750. All right, so you’ve got $750 times 12 months. And how much cash out of pocket does this investor have invested?
Jo
0:11:17 – Between $40 and $50,000.
Brett
0:11:20 – Must be on the high end, say $50 grand. 18% return on your cash, out of cash investment.
Jo
0:11:27 – Wow.
Brett
0:11:28 – 18% return. You’re never going to touch that in the stock market, your 401K, anywhere.
Richard
0:11:33 – Even your Bitcoin?
Brett
0:11:36 – Come on now. Don’t pick on my Bitcoin, man. My XRP is, when it, listen, when my XRP takes off, screw you, I’m out of here. You can come down to the Caribbean on my 100ft yacht and visit if you feel like. But until that day, I’m going to sit here and put up with you. Well no, not even on your Bitcoin. I’m sure there are people that bought Bitcoin 10, 15 years ago that are very wealthy today because of, let’s face it, that’s not reality, that doesn’t happen to everybody if you really want to be wealthy in life you work hard you plan, you stay diligent, you stay disciplined, and you make it happen. We talked about this a lot on the podcast and that is how do you become a millionaire in Single-family rentals? and you and I talked about this in a radio show.
Jo
0:12:20 – It’s a long game.
Brett
0:12:21 – It’s a long game and that is You buy a property, you invest $35,000, you get an 18% return on your money, but do you take that 18% and go buy a new car or go take your wife on vacation? No. You take that money and you put 50% of it in the oh crap fund for something goes wrong, right? Now, that’s not your money. Where did it come from? It came from the tenant. So you put part of that tenant’s money aside. You take the rest of it, pay it down toward your principal and pay that asset off as fast as possible.
Brett
0:12:53 – So that $185,000 house in 10 years is worth $240,000, it’s paid for and now it’s producing $2,200 a month in clear cash flow.
Jo
0:13:01 – That’s an exciting thing. Well, I personally like to be in real estate investing because where are you going to find an asset that first of all you can get in with very little percentage of the value of that property, it’s called leverage. You put 20% down, you’ve got a property that’s worth a whole lot more than what you’ve got in it. And that property, over time, and there are some exceptions as we talked about, Brett, but over time, real estate has gone up in value, not down. And-
Brett
0:13:31 – But if it does go down, what’s it always gonna do?
Jo
0:13:35 – It’s gonna come back up. And the monthly income on it going up. So you have an asset that’s going up in value, you have income on it that’s going up in value. From the mortgage desk, I want to tell you
Jo
0:13:46 – the 30-year mortgage is a huge advantage. In the United States of America, we’re the only country that offers a true 30-year fixed rate loan. And why do I love them? Because if you have a 30-year fixed rate loan, that principle and interest is fixed forever. It’s never going to change. And every time that tenant pays you more and more rent each month, you’re giving yourself a raise. When you raise the rent, you’ve just given yourself a raise. So your income is going up, the value is going up, and you’re making money. That’s what it’s about.
Brett
0:14:23 – Right, right, right. That’s the key. That’s why you invest, right?
Jo
0:14:26 – Right.
Brett
0:14:27 – Oh, hey Jeff, I didn’t know you were here.
Jeff
0:14:28 – The trick for me is that you teach these young investors to do just what you said. Everything goes into reserve. Everything pays that mortgage off. Double, triple down on it if you have to. Get that first property paid. I mean, I don’t care if you’ve got two properties, ten properties, twenty properties, get that
Jeff
0:14:47 – first property paid for, okay? Liquidate it. Your little starter property is $120,000. You’ve got five down payments on five more rental properties. There’s a way to do this with an initial $25,000 to $30,000 investment and you will never have to spend it. You start out with one down payment and there’s a way to do this with not ever having to put another down payment down on another house again as long as you live.
Brett
0:15:15 – What is the long game? Joe, we’ve talked about this. The long game is for a 25, 28-year-old, has a career, he’s married, just birthed baby born and he’s thinking about his future. Your goal needs to be over the next 25 years is to buy 20, 25 properties and that when
Brett
0:15:33 – you turn 50 and you’re still a good number of years away from retirement. Now all of a sudden you’ve got 20 properties paid for that are now worth $4 million and are now producing $40 grand a month in gross income.
Jo
0:15:48 – You don’t really need a J-O-B at that point. You can do what you want.
Brett
0:15:50 – That is the angle of what you should be shooting for when you invest in real estate. Now we deal with seminar issues a lot here. We’ve had to go to counseling to be able to say the word seminar. For me, it’s been a four-letter word. And they preach to you that you need to go out and buy as many properties as you can,
Brett
0:16:11 – and you’re going to make $1,000 a house. Well, you buy 10 properties, that’s 10 grand a month. You quit your job and you go have fun and be Donald Trump. We all know in the real world that’s not going to happen because you have costs, you have expenses, you have things that go wrong.
Jeff
0:16:24 – The other problem with that is, is these places teach you how to go out, you know, down on Florida Street and pick up 10 properties for $20,000 a piece, do a half-assed renovation on them, put a tenant in it for $400 a month that’s never going to pay the rent, and it’s going to absolutely destroy what little bit of work you’ve done to the house within 30 days.
Jeff
0:16:46 – That’s what these seminars are teaching you to do.
Brett
0:16:49 – Yeah, and they’re misguiding, unfortunately, a lot of investors. The only reason why I can say that with 100% certainty is because they call us.
Jeff
0:16:56 – You have to treat your real estate investments like you would any other investment. Your stock portfolio, your 401K, you don’t withdraw your mortgage payment or your car payment out of your retirement account.
Brett
0:17:07 – You don’t draw your dividends away from your stock account. You just have your broker reinvest it for you, reinvest it.
Jeff
0:17:13 – You’ve got to teach yourself.
Brett
0:17:14 – Why are you reinvesting?
Jeff
0:17:15 – Yeah, you just have to teach yourself to do the same thing in real estate.
Brett
0:17:17 – That’s right. You’re investing for the future in your stock account, in your 401k account.
Jeff
0:17:21 – You’ve got to get in the mentality you have zero cash flow because you’re pouring it all back into your investment.
Brett
0:17:27 – I asked Jo on her radio show. I said, Jo, if I gave you $1,000 a month to put in your stock account every single month, no questions asked, would that be okay with you? And you’re like, absolutely.
Jo
0:17:37 – Oh, yes.
Brett
0:17:38 – Well, that’s all a tenant is doing. A tenant is sending you a rent check, paying your expenses and putting money in your pocket. It’s not coming out of your pocket. They’re putting money into your retirement account every single month. And that’s, if you view your portfolio that way, I promise you by the time you’re 50, God, I hope I’m not still here by then. That’s a long time from now. But you can call me and say, hey, it worked. Thank you. I appreciate that. You’ll be a very wealthy individual and the rest of your friends will still be working trying to retire.
Jeff
0:18:05 – When I first got into this business, I used to overthink it a little bit but Glenn Green said it best Glenn Green said It’s the easiest thing in the world: You buy the house you put a tenant in it and you let that tenant pay for the mortgage the repairs the maintenance the taxes the insurance and you all the while are collecting all the equity in the house and benefiting from it. And he looked at me and he says, it’s pure genius, Jeff.
Jeff
0:18:32 – That’s how easy it is.
Jo
0:18:33 – Yes.
Richard
0:18:34 – I think one of the great things so far is we’ve talked about the margin you can make on these properties, the bitter one, you’re going to make cashflow of 600 a month. We’ve not once mentioned rates because the rates don’t matter. This is the cashflow we’re going to get.
Jeff
0:18:50 – Before you go there, she gave a couple of very good examples of two properties that were cash flowing between $600 and $800 a month. I know we’ve talked in this podcast before, some of our little starter homes, $120, $125, these properties are producing $200 or $300 a month, and then we always reiterate, it’s not about the cash flow.
Jeff
0:19:10 – So is there something, Joe, is there something different that you’re doing that’s, are your rates lower? Or is there something you’re doing that produce more cash flow on these two properties than the average person would?
Jo
0:19:22 – Yeah, it is. And the products that we’re able to use right now are helping us come in at a lower rate and lower number of points that you would pay. So that helps your return on investment. Of course, these vary
Jo
0:19:41 – according to your credit score and how many properties you own and how experienced you are. This can vary. I mean the more risk involved in the person that we’re lending to, the higher rate and points they’re going to pay because lenders are out to make money too. You know so it is all about risk. But look, Really? I didn’t know that. But look, it’s a great partnership. If we’re offering you terms that can help you make a positive cash flow on a property with a reasonable amount of money out of your pocket, and if you’re getting return on investment and you can do the math, if that is, and you can consult with your financial advisor and And that’s what’s so exciting about today in this type of loan we’re talking about, which is called DSCR. There are a lot of different types of DSCR products. There’s myriad of different loan products in general, but today, the most exciting one, I believe, Brett, is this DSCR, low documentation on the income. You don’t have to bring in your tax returns, pay stubs, or anything like that. It’s a business loan secured on a residential income property.
Brett
0:20:59 – Based on the income it produces.
Jeff
0:21:00 – If I purchase one of Brett’s new construction homes for $165, I know I can get an appraisal for $170, and I tell him I want to make an offer $167,500, build or buy down a point, point and a half or something. That’s just all the better, right?
Jo
0:21:17 – Right. There’s different guidelines with these DSCR loans because they’re funded not by the government but by various private investors. So some of your DSCR loans have restrictions you need to pay attention to like they’ll only let the seller contribute a concession or pay in closing costs up to 2% of the sales price. Some of them don’t have that.
Jeff
0:21:39 – Right. We learned that the hard way with Frank out in California.
Brett
0:21:42 – Here’s an advantage, and we’ve done this many times. Not all the products limit you. Some of them do have limits of 2%. Some of them don’t. But I’ve done a number of deals recently where my investors are buying three or four properties
Brett
0:21:58 – at one time from one builder, would say, okay, I’m going to give him $170,000 in the house, but I want a $5,000 credit at five, $45,000 back from the builder at closing, which then he didn’t have to come out of pocket with that extra 45 grand. So it saved him money. So there’s all kinds of creative ways. And if you can limit your out of… The scenario we just talked about is fantastic with the 18% return. But if you can limit 10 grand out of your pocket and have the seller kick that back to you, and so you don’t come out of pocket, you went from 18 to 20% right off the bat. So there’s all kinds of creative ways to make that work. And obviously, you need to call Jo Garner and obviously find out if that product will allow you to do something like that.
Jo
0:22:58 – Well, thank you. I would love to do these numbers for people.
Brett
0:23:00 – Give everybody your numbers so they know how to reach out to you.
Jo
0:23:04 – Very easy to call. Text me, 901-482-0354. You can go to jogarner.com.
Brett
0:23:13 – Perfect. Yeah, I enjoyed doing your radio show. We had a good time. A little different podcast, a little different live radio. We were on a tight schedule.
Jo
0:23:21 – Well, I’ll tell you another reason, Brett, while I’m excited about investing in real estate. Now, everybody has their own opinion about which direction real estate is going. I pay money to hear regularly from people who are a whole lot smarter than me when it comes to seeing into the economic future for real estate. They’ve proven themselves over the years. Nobody has a crystal ball. I certainly do not. But if you look at the demographic model coming up over the next 10 years, it’s exciting. If I were an employee, I’d be buying every piece of real estate I could. Let’s look at this model. It’s the generation, if you look at the millennials, that’s age 28 to 43 years old, there’s 73 million of them and 45% of them at this point own real estate.
Brett
0:24:17 – How many?
Jo
0:24:18 – 45%. By the time they were 30, 33% of them owned real estate. Okay, so we’ve still got some millennials coming up. Let’s look at Generation Z. That’s the age group coming right after millennials.
Jo
0:24:41 – Age 12 to 27, remember we’re looking at a 10-year forecast here. There’s 69 million of them, 8% of them already own homes. Wow. And this is age 12 to 37, before the age of 30. Now, if the later Gen Z’s come in and start buying at the age of 30 at the same rate the Millennials have, we’ve got a lot of first-time homebuyers coming in here. Very healthy market there. By the time they’re 40, they, if home buyers coming in here, very healthy market there. By the time they’re 40, if they buy at the same rate as their predecessors, the millennials, we’ve got a huge market. We’ve still got the late millennials that haven’t even purchased yet 30 yet or 40 and they’re going to be buying homes. So if you look at that model, there’s another one too, I don’t really have it in here but right now we’re building about 1.3 million homes a year but we’re growing at 1.9 million households. So what does that do for our market? Our real estate we’re going to still be in a situation where the supply is going to be limited of homes especially affordable homes and the demand is going to be growing at a significant amount. So what does that do to the price of homes? It pushes the price higher and if I’m buying something, I want it to go higher, Brett. I want that value to go higher. I want that rental to go higher, supply and demand.
Brett
0:26:17 – Which it, you know, and like we talked, it always goes up. You know, Jeff and I have had this conversation before. You know, my dad bought our house I grew up in. I think he paid, I don’t know, $30,000 for it. It’s worth $250,000 a day on the market. And of course, that was 30 years ago or longer than that. I’m not going to say how long, but it was a long time ago. So typically over history, property values go. So let’s say you buy a house today and 20 years from now, using the fact that there’s going to be more buyers than inventory, which is going to drive up prices. Jeff, what would you say $100,000 house today would be worth in 20 years? $200,000?
Jeff
0:26:53 – Oh, at least.
Brett
0:26:54 – So you spend your time buying 20 properties at $100,000 a pop, they’re going to be worth $200,000 in 20 years, and now you’ve got them paid for. Where’s your asset wealth now? You are literally a millionaire, multi-millionaire.
Jo
0:27:05 – Multi-millionaire.
Brett
0:27:06 – And you’ve done nothing but allowed a tenant to pay into your asset.
Jo
0:27:11 – That’s a beautiful thing.
Jeff
0:27:12 – They’re doing all the work for you.
Jo
0:27:14 – That’s right. 90% of your millionaires are made so by buying real estate.
Brett
0:27:18 – Now used to, 20 years ago, that model was, everybody knew that model. Everybody used that model. Everybody wanted to do that. But somehow in the last 10, 12, after 08, you got all these clowns out of California and different areas who came up with all these harebrained schemes to sell ideas to people on how to invest in real estate. And now we’ve gotten these really weird and distorted views on how to invest in real estate and how to make it work and how to become a millionaire in real estate. And I hope that we get back to the common sense part of that. And God knows we preach it every week. We preach it to our investors. I’ve got investors that have been with me for three years that I just had a conversation with yesterday about this, saying, listen, you’re still going about this the wrong way. You’re looking at this through the wrong optics. If you look at it this way, this is going to make more sense to you. Once I was done with him, it just finally clicked. He realized, holy crap, so I’ve got 12 homes now, I need to buy 8 more and I can be a multimillionaire in the next 15 to 20 years. Absolutely.
Jo
0:28:19 – And Brett, it doesn’t have to be a house.
Brett
0:28:21 – Or you can wait for your Bitcoin to go to a million dollars.
Jo
0:28:23 – Well there you go. And there’s that. And you know, Bitcoin is going to be an item coming up, but there’s so many of these Generation Z’s and the late millennials who have heavily invested in cryptocurrency. And when they get ready to buy their first home, as we see is coming, what are they going to want to use for down payment? They’re going to want to use crypto.
Brett
0:28:45 – Well, if the government has their way and we end up with a strategic reserve of crypto and it becomes a secondary currency in America, then there will be a day where you just get on your exchange and wire $300,000 of crypto to a bank and you’re done.
Jeff
0:29:00 – Did she just say I missed the crypto boat as well?
Jo
0:29:03 – But here’s another- Brett, back to what you said earlier, you don’t have to buy a turnkey every time to make money and to use these type of financing vehicles, the DSCR loans. If you found a house that was just a bargain deal and it needed a lot of rehab, you can use hard money.
Jo
0:29:23 – And you’ve got connections, I have connections to people who will do a hard money. Now they’re not your mama. I mean, they’re gonna charge you a hefty interest rate and a lot of points and they’re gonna want their money back pretty quick, like six months to a year. But look, you can use a hard money lender, put it all in one loan to buy and rehab. And there’s a reason why I’m saying put it in one loan, not two separate loans for the purchase and the rehab. Put it in one loan, get the rehab done, call me even before the rehab’s done so we can go ahead and get started on your permanent loan because you’re going to refinance that property if you’re going to keep it and we’re going to pay off that high interest rate hard money lender and now you’re going to have that beautiful 30 year fixed rate loan. You’re going to have a property you’re going to keep. That way it’s better positioned to make you money. But now you’ve picked up the bargain, you’ve done the repairs and if you’ve spent the right amount of money on the purchase price and the repairs, you’ve got an asset that can you money over time and you can still use a DSCR loan just after it’s repaired.
Brett
0:30:29 – And you know, back when we were kids, what was the American dream? What did they preach to you? Why do they preach to you to buy a home? Buy a home today while you’re young, pay your note every month for the next 30 years and eventually value is going to go up and when you get ready to retire, you’ve got a $200,000 asset paid for, right? Same concept applies to rental properties. Same concept should apply. Because when I was a kid, that’s why my dad bought a house. Because one day I’m going to retire and I’ll have an asset paid for that I can leverage and retire off of. Or sell and take the money and move to Florida.
Jeff
0:31:04 – It was part of our parents’ retirement plan.
Brett
0:31:06 – Absolutely. That was the American dream.
Jeff
0:31:08 – You know, people weren’t switching jobs and relocating to other parts of the country every three to five years like they are now. You went to work for Firestone or International Harvester, you stayed there for 30 years, you took your pension, you paid your house off, you died in it.
Brett
0:31:22 – Well, my grandmother, when she married, she married at 17, 18 years old, she lived in the same house from that day to the day she died. Same block. And you know where she grew up as a little girl? Half a block away. Like, she literally spent her entire life in a one block geographic area of Hammond, Louisiana.
Jeff
0:31:41 – That’s the way it was. My entire dad’s side of the family grew up off North Parkway in Memphis. All the aunts, uncles, everybody lived within a block or two across the street or down the street from each other their entire lives.
Brett
0:31:52 – Every investor should take that American Dream philosophy from the 70s and 80s and 60s, 70s and 80s and use that when you get into real estate investing. And if you use that model, that long-term vision, I promise you, you will wake up one day at 45 and realize you’re a multi-millionaire. And if you don’t want to go to work today and quit your job, you can now do that. You can say, I’m done, right? I’m going to retire. But if you go off this concept of cashflow, cashflow, cashflow, give me the money, give me the money, let me spend it, you’re going to be 70 years old going back to work after trying to retire because you won’t have enough income or any assets to retire off of. That’s a fault of our generation, I think. We kind of let the American dream slip away, and we stopped teaching our kids how to benefit from these types of programs, how to invest for your future. You know, we raise a bunch of kids that are, we want it now. I need it now. I need it this instant. I can’t wait until tomorrow. So that’s why Amazon, you order it, and an hour later it shows up at your door, right? And that’s a tragic part of our society today, but I hope we get back to that investment. I’m sure going to preach it every day. Get back to the long game and I promise you, you’ll have a much brighter future. Well, Jo, I really appreciate you being here. Would you give everybody your contact information one more time?
Jo
0:33:03 – I’m Jo Garner. That’s Jo and you can connect with me at jogarner.com, 901-482-0354. Pick up my book, Choosing the Best Mortgage, the quickest way to the life you want on Amazon and Barnes & Noble. I look forward to being on your mortgage journey.
Brett
0:33:22 – Thank you, Jo. I appreciate you being here. You’ve been listening to It’s 5 o’clock Somewhere Real Estate Podcast, 901-692-7401 or MyMemphisInvestmentProperties.com. Have a fantastic day or night or drink or whatever the hell you’re going to do. See ya.
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