$100K/Year Passive Income with Cheap, Small, Repeatable Rentals

This investor is making $100,000 per year with small, affordable, repeatable rental properties. He started investing years ago but recently bought another home-run rental for just $87,000, which will continue to boost his passive income. His slow, steady “tortoise” approach is one that anyone (especially beginners) can use in 2025 to build wealth and massive passive income through rental property investing. How do you do it? He’s sharing his blueprint. Nathan Nicholson woke up one day in his 30s to realize that his bank account had only $32,000 in it. While by no means is $32,000 a small sum, as a top producer in the mortgage business, he expected to have much more—something needed to change. After watching clients close (and make it rich) on rentals, he decided to give it a shot. But instead of going for the biggest house his money could buy, he opted for a small, affordable property where less could go wrong. It was a good move and one worth repeating. Fast forward over a decade later, Nathan has 22 properties, 10 of which are paid off, with six-figure cash flow coming in every year. He scaled smart (and safely) using his “tortoise approach” to investing—an approach you can use, too! In This Episode We Cover Why buying small (less than 1,000 square feet!) rentals is a smart move for beginners Taking the “tortoise approach” to wealth so you safely get to early retirement Cashing out your 401(k) for rentals? Why Nathan says it’s worth it One quick calculation (that beats the 1% rule) every investor should use Why Nathan is buying even more as price cuts hit many major housing markets And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1132 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  This investor buys the same $80,000 house over and over again. He had only $30,000 in the bank in his early 30s despite a successful career. And at that point, retirement looked like a pipe dream. Then he discovered real estate investing and started slowly building a better financial future, one affordable property at a time. Now he owns 22 properties, cash flows almost $100,000 per year, and will have the option for a stable retirement well ahead of schedule. Let's find out exactly how he did it.

• 0:38Dave Meyer?

  Hey, everyone. I'm Dave Meyer, head of real estate investing at BiggerPockets. Today's guest on the podcast is investor Nathan Nicholson from Louisville, Kentucky. Nathan didn't buy his first investment property until he had a realization about needing to take control of his financial future in his early 30s. But he's since then built an incredibly impressive portfolio, all at very affordable price points. Today, we're going to hear how he was able to embark on a path to financial freedom with only a handful of properties in his first few years of investing, why he recommends being very careful with leverage even as a loan officer, and why, unlike a lot of investors, he always wants to buy the smallest possible house for his money.

• 1:21Dave Meyer?

  There is a ton of actionable advice in this conversation, especially for investors looking for houses at a price point around $100,000. So let's get into it. Nathan, welcome to the show. Thanks for being here.

• 1:34Speaker 01

  Yeah, thank you for having me.

• 1:36Dave Meyer?

  It's a pleasure. Tell us a little bit about yourself. How do you find yourself on this podcast? What do you do in the real estate industry?

• 1:42Speaker 01

  Well, in the real estate industry currently, I'm a growth leader at Success Mortgage Partners. I've had a long career there from Supreme Lending, Lower.com, and Sierra Pacific. I saw a lot of my friends in the mortgage industry buying real estate, and I just was wondering, how are they doing this? And that's kind of what projected me into buying real estate and looking into it a little bit more.

• 2:02Dave Meyer?

  What year were you starting? What was the timeframe for all this?

• 2:06Speaker 01

  Yeah, so I mean, basically, I've been buying real estate for right around 15 years, give or take, 14 years roughly. And so at that point, I was in origination. Of course, the market was, you know, very, very interesting to say the least, just like it kinda is now to this day. I mean ironically. But anyway, with that being the case, uh, obviously I was looking at different ways to, to try to afford retirement, uh, try to find ways to make more money down the road. And, uh, in all honesty with you, when I looked at my, my savings account, I think I had $32,000 in it. And, uh, when I looked at it and I'm going, I gotta be 60 years old to have 60.

• 2:41Dave Meyer?

  Yeah, right.

• 2:42Speaker 01

  At the rate this is going and, and looking at my friends telling me over and over again to buy real estate. At that point, it kinda signaled that I need to do something a little bit different. And a lot of people would tell you never to cash out your 401k. But the route is I was like, well, I have no money to work with. And I was kinda scared to take hard money, which a lot of people are in the very beginning. And, uh, so I looked at my 401k as an option and I kinda went that route with cashing it out. And I had about 85 to a hundred grand in there and just immediately was like, what can I do? How can I buy properties?

• 3:12Dave Meyer?

  So tell us about your first deal. You cashed out your 401k. Did you have like a very specific buy box or something you wanted to pursue first?

• 3:20Speaker 01

  I got with a property manager my mother knew and, uh, he, he, he basically was trying to show me the ropes a little bit. And he said, just go out and buy a deal. It doesn't matter what it is. We'll figure it out. Well, of course I found a foreclosure and obviously this was, uh, in a state kind of a situation where they were losing it, but it was in a state. It's kinda weird scenario. I bought that house for $32,000. Cat in Louisville, Kentucky.

• 3:43Dave Meyer?

  Okay.

• 3:44Speaker 01

  At the time. And, uh, you know, I thought it was very expensive and I thought it was really risky and my property manager, that is still my property manager today after 14, 15 years.

• 3:53Dave Meyer?

  Oh, wow.

• 3:53Speaker 01

  He said this, he said, this will be the best deal you ever buy in your entire existence. He's not wrong.

• 3:59Dave Meyer?

  Well, it's pretty great. You had 32 grand in your, in your bank account. Like you said, you were able to buy this property for 32 grand.

• 4:06Speaker 01

  So this is around, uh, 2013, you know, like somewhere around there. So, but basically, yeah, it was $32,000 and I bought it cash. And so it was more for me looking at it from a mentality of playing with it, right? Like being a cat in a ball of yarn is let me buy it cash. Let me make sure that I don't have any debts. Let me be safe. And so as I went into the house, I realized that $32,000 in my rent of like 750 a month or whatever, it was cash flowing really good. And I'm like, man, I really don't want to refinance out of this. So at that point, I decided just to keep that 32K in there. And that was my first house was a free and clear house. And that's really what set the tone. But then after that, I dominoed into three other ones. So I bought four back to back to back to back out of my 401k.

• 4:50Speaker 01

  I mean, literally, I bought within a period of eight months of each other, just to domino it. So that way the cash flow would carry it forward. So that way, if someone didn't pay, I would be able to afford that. So.

• 5:00Dave Meyer?

  Wow. Well, I'm sure everyone listening is just salivating at the idea of buying a property, a cash flow of 750 for 32 grand.

• 5:08Speaker 01

  Yeah.

• 5:08Dave Meyer?

  And so then, did you buy similar deals? I assume, just trying to do the math of how much cash you had on hand, buying for these deals?

• 5:16Speaker 01

  Yes.

• 5:16Dave Meyer?

  You bought some of them with leverage after that?

• 5:18Speaker 01

  That's correct. Yeah, I had about 50 to 60,000 dollars left out of my 401k. I fully pulled that out, all 100% of it.

• 5:25Dave Meyer?

  Wow.

• 5:26Speaker 01

  I was looking around semi-project area, stuff like that, just the outskirts that were getting better. And I really focused on small footprints. I really like, you know, 1121, 31s, 900 square, one story on crawl. And so I really focused there. But my second deal was a 203k renovation loan on Willer. And that was a house that was $60,000 brick, very nice, it needed full rehab. So I used a 203k loan for that. And from there, refinanced out of that, obviously, at the end, and then just kept moving into the same similar footprint houses.

• 5:57Dave Meyer?

  All right. So you said you like a small footprint. That's kind of unusual.

• 6:01Speaker 01

  Yes.

• 6:01Dave Meyer?

  You know, the traditional wisdom is, you know, get yourself a big house, get a 42, get a 53. When I say that, I mean, four bedroom, two bath, five bedroom, three bath. Why do you like a small footprint?

• 6:11Speaker 01

  Smaller footprints, to me, just cost less, right? You could buy them cheaper. Now, they may not rent for as much, but in all honesty, with the price of goods right now, as far as contract work, you know, painting, repairs. So if you do the math on a small footprint house, say it's a 700 square foot house, say the average, you know, renovation cost is going to be $30 to $40 a square foot. You know, you fully do that. I mean, you're what $20,000 in on that house? Now, think of it this way. If you buy a very large house and it's 1,500 square feet, it's got a second story and a basement instead of a crawl. I like crawls or slabs. But if you've got three parts of this house that are all 1,200 square feet apiece, if you do the math on your square footage there, if a tenant destroys your house

• 6:54Speaker 01

  and it's 30 to $40 a square foot and you've got two levels that you've got to do minus the basement, right? You're looking at a major rehab cost there. So even if the rent is $300 more a month, I'm looking at this from a, a cycle of how cheap can I make it over a long period of time? My cash flow may not be as big, but my costs to repair are going to be much lower. So in the long run, I actually make more money how I do it. So there's two different ways to look at it, but that's why I do it.

• 7:20Dave Meyer?

  That makes a lot of sense. And, you know, if you have a more complex build structure, like you said, if it's, if there's a basement or something like that, it might go up from 30 to 40 bucks per square foot, up to 40 or 50 bucks a square foot.

• 7:32Speaker 01

  Correct.

• 7:32Dave Meyer?

  So you're paying a higher rate and more per square foot as well. So that's an interesting approach. We do have to take a quick break, but we'll have more with Nathan right after this. This segment is brought to you by ReSimply, the all-in-one CRM built for real estate investors. Automate your marketing, skip trace for free, send direct mail and connect with your leads all in one place. Head over to resimply.com/biggerpocketsnow to start your free trial and get 50% off your first month. Buying real estate has a funny way of making the future feel very real. You start thinking about mortgages, cash flow, tenants, and suddenly you realize, if something happened to me, would the people I love be okay? That's why life insurance is one of those things

• 8:17Dave Meyer?

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• 9:03Dave Meyer?

  They fall apart because of the financing. You find a property that cash flows, the deal makes sense. But then the lender looks at your personal income, your tax returns, your debt to income ratio, and suddenly the deal doesn't qualify. That's the disconnect. Because as investors, we're not buying based on our W2. We're buying based on the asset. That's why Host Financial offers DSCR loans designed for real estate investors, where qualification is based primarily on the property's income, not your personal finances. So no W2s, no tax returns, and no DTI requirements. And with loan to value options up to 80 or even 85% on eligible deals,

• 9:46Dave Meyer?

  you can keep more capital available as you grow. If you're buying rentals, refinancing, or scaling your portfolio, go to hostfinancial.com. That's H O S T financial dot com and see what you qualify for. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes 10% below market value in the best markets across the country without making real estate your second job? That's exactly what rent to retirement does. They're a full-service turnkey investment company handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing,

• 10:28Dave Meyer?

  plus interest rates as low as 3.75%. They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com/retirement to learn more. Some listeners may wonder why their insurance quote only took 30 seconds. Some listeners may wonder why their insurance quote took 30 seconds. A better question is, how long will that Policy actually hold up when you need it. At NREG, the goal isn't just getting coverage in place. It's making sure your investment property is properly protected when a real claim happens. That's why they take time to evaluate each property's unique risks and build coverage design for the realities investors face.

• 11:13Dave Meyer?

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• 11:28Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with investor Nathan Nicholson, talking about how he's scaled up his successful rental property portfolio. So you bought those first couple of houses because you cashed out your 401k. How were you able to sort of keep on scaling after that?

• 11:44Speaker 01

  So I mean, really just looking at my first house, I bought it free and clear. So I was saving that $700 plus a month. In a year, that's $7,000 to $9,000, right? And so as I bought the second, the third and the fourth one, and that was all within the same year. I put all my 401k in it, went all in. I was netting about $350 a door at that point. So I was saving probably about $14,000 to $16,000 a year off of those houses. And so anyway, what I did is I would just snowball it. So work my W2 job and take that $16,000 in income. And if I found a property that I could afford at that point, I might put 10 or 12 grand into it, buy it, keep the four back for reserve and then buy again. But really, my progress was really based on rules of 72,

• 12:29Speaker 01

  which in all reality is just the compounding approach here is that I've never used my real estate income for myself. I've always put it back into the business. And so, you know, one year I've got $15,000 while I could buy one property, right? One, three years, I'm buying a property every eight months. And six years, I'm buying a property every six months, right? And so now I'm at year 15 ish and I'm buying three to four properties a year on average. And if I had the opportunity to have better rates in this marketplace, I would actually be able to burr probably four or five, like right before the market kind of got worse. I burd five houses in the same year.

• 13:06Dave Meyer?

  It's brilliant. I love it. I absolutely support when possible to reinvest as much as you absolutely can, at least early in your career. And you don't have to. That's like one of the cool parts about real estate investing is like. For a little while, I actually stopped because I decided to go back to grad school and I used some of my, you know, some of my cash flow to just pay down my tuition. So I didn't have to take out loans, you know, that kind of thing. But I do think when possible, the more you can reinvest early in your career makes a lot of sense because as Nathan just really articulately explained, that means, yeah, first, you're taking a couple of years. Took me four years between my first deal and my second year. Then two years after that, now I'm buying multiple deals a year. You know, it just really escalates if you

• 13:48Dave Meyer?

  could be patient and sort of have the discipline to keep constantly reinvesting.

• 13:53Speaker 01

  I just closed on a property this morning. Funny enough, I was just at Wood's in Louisville, Kentucky, closing on one on Longfield Avenue, which is a little 2-1. Back to my point, you know, 2-1, 700 square foot crawl space. I mean, I speak it as it is. It's true.

• 14:08Dave Meyer?

  Practice what you preach. I like it.

• 14:10Speaker 01

  Yeah. So I bought it for, you know, $87,000 and, you know, I paid a little bit over. I mean, again, I would have loved to have had it at 82, but once I, once I update it, I'm going to put about 15 into it. It'll be a 1.3 DSCR after the fact. So a lot of people use the 1% rule. I really look at a DSCR number as my 1% rule. If it's not 1.2 or higher, I will not buy it. So this, this property with the, the increase in rents, once I moved the tenant out, will be at a rough 1.3. And if I raise it an extra 60 bucks, it'll be at a 1.42, which is very, very good.

• 14:45Dave Meyer?

  Tell me a little bit about this deal. So you're buying another 2-1. What are the prices now? You bought it for 32K, but what are they today?

• 14:51Speaker 01

  Yeah. So I mean, you know, 32K in great moving condition back then compared to 87,000 and needing easily 13,000 to 15,000 minimum to get it rent ready. That, that's really the reality of the situation. You're buying 2-1 houses specifically for my market Louisville, Kentucky is right around. You see them listed at 120, but they're all dropping to 105. You're getting two ones in semi decent condition for 90 to 110,000 dollars around here.

• 15:19Dave Meyer?

  That's still pretty good. I mean, obviously triple what you paid. So it's a different era. But man, I think in most parts of the country, that would be a screaming deal right now. So what does that rent for?

• 15:30Speaker 01

  So yeah, that that house at this moment, so a lot of houses are in the 1200 range at a two one for a small footprint like that. And usually those are a little bit more updated. But you know, if you have it semi updated, you could probably pull 1,050 to 1125, give or take in that range. And if it's actually not really updated at all, you could probably rent it for 995 and get away with it pretty quickly. And I mean, these, these properties go very quickly because there's a rental shortage in Louisville, Kentucky right now. It's very hard to find properties to rent.

• 15:58Dave Meyer?

  And tell me a little bit, just mentally, how you've had to adjust to this new era. Cause I do think we hear a lot of people who maybe started before the pandemic and they're like, oh my God, it used to be so easy to get these deals or prices are crazy. And all that's true. It is true. But I guess my point has always been that you shouldn't let historical performance change your opinion on what the best investment is today. It's like about what you spend with your money now. Like it kind of doesn't matter what deals we're doing in 2017. If real estate is still the best use of your money, then you should be buying real estate. Like, and if it's not, then you should buy some other asset classes.

• 16:39Dave Meyer?

  So you should be evaluating things that way. But at least for me, it took, it does take some adjustments. So I'm just curious, like how that's gone for you, starting in an era of super cheap housing, moving to an era of very expensive housing that we're in right now. How have you had to adjust your strategy, but also just your mentality about investing?

• 17:00Speaker 01

  So what I've done is I've really focused on over the last 10 years and how things have been changing is how do I get my debt service paid off, right? How do I become more free and clear? How do I get rid of my leverage? And how do I use that cash flow in order for me to create instead of a debt snowball, more of an income snowball, which is what everyone talks about with their cash flow. And so really my focus now is actually buying properties. Finding a way to pay them off as quickly as possible through refinancing them and leveraging a little bit. But the other thing is, is that what I found recently for the marketplace is it's very hard to buy even today, like that deal I just told you, the $87,000 deal. That $87,000 deal, if you were using hard money trying to burn it, it would be very

• 17:43Speaker 01

  hard to cash flow it. You'd probably be in a negative cash flow in honesty with you or losing money. And so what I found and what I've been doing is I've been looking at properties that don't need as much all the time, but I've been having to put more money down 10% down, 20% down on a purchase. If I'm buying a cash, I may leave 10. If I'm finding it right out the gate, I generally will go in at 20% with lower terms like a 20-year and stuff like that to pay it off quicker. And so that's kind of what I've been doing to get around it is, is putting more money into it. And I think a lot of people would agree with me. It's getting a little bit harder now to do that. But what I will say is that if you're dollar cost averaging, especially now, I'm still buying. A lot of people are still buying and there's a reason for that because the prices only keep going up and it's going to keep going up. And if you're not dollar cost averaging and you're

• 18:28Speaker 01

  finding ways to put money into the deals or you're finding ways to burn out of them properly, you're going to be stuck because three years from now, that $87,000 house is going to be $115,000 for the same house, you know? So you gotta buy now.

• 18:40Dave Meyer?

  Yeah, absolutely. Well, I want to talk to you a little bit more about that because you've said a couple of things that I think are really important. One is you said that you're able to get some good deals right now, but long-term things absolutely go up. So I want to turn our attention to like how to sort of navigate the situation right now to make sure you're not taking on too much risk, but you are enjoying the upside potential that could be coming over the next couple of years. We do though, have to take one more quick break, so we'll be right back.

• 19:11Dave Meyer?

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• 19:56Dave Meyer?

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• 24:30Dave Meyer?

  Welcome back to the bigger pockets podcast. I'm here with investor Nathan Nicholson. Before the break, we were talking about how buying now makes a lot of sense because prices keep going up over time. Nathan, you also said, you know, these two ones are, you know, being posted for 115, but you're getting them for 105. Is that because market dynamics are changing or prices falling in Louisville? Like what's going on there?

• 24:52Speaker 01

  The market is stagnating a little bit to a point where you're starting to see a little bit of pullback, which there, funny enough, there was an article today about it, talking about how the seller, the seller market is ending and the buyer market is here and it will be here for the next six to eight months. And so I do see that happening in Louisville.

• 25:09Dave Meyer?

  And how do you sort of square that with the idea that you said, you know, prices go up, we're seeing prices stagnate. You said six to eight months is you're just feeling confident because you believe prices will just get back on the normal appreciation train later this year or, you know, sometime in the near future.

• 25:27Speaker 01

  That's exactly right. I feel like right now it's, it's just maxed out. When rates start dropping, as we both know, I mean, the question mark is the economics in the market currently with tariffs and everything else. The minute the market changes, I think the rates will actually start coming down and you're going to see a lot more opportunity. You're going to see a lot of investors jump back into the market very quickly. I would say that will probably occur within the next six to eight months, obviously, once they get all the world economic issues worked out.

• 25:53Dave Meyer?

  Yeah.

• 25:54Speaker 01

  But rates drop, it will be a, a buy party for a lot of investors. And I think that dollar cost averaging is really the best way to kind of get through this at this point, especially for the Louisville market, anyway.

• 26:06Dave Meyer?

  I'm kind of with you and. Listen, you know, there's a lot of uncertainty in the economy right now. A rate's going to drop in three months. I don't know. Six months. I don't know. A year. The trend is probably down over time. And so, you know, even if there is a longer period of price declines and softness, I don't necessarily think that's a bad thing. If you just sort of buy deals that still work today, then all you're going to do is get upside if and when the market does turn around.

• 26:32Speaker 01

  As you said, the buyer markets now, and that's kind of what that article said. And Louisville, that's exactly right. If you go from a 120 house and I basically come in and say, I'll give you 100 for it, and they go 105. I mean, they just drop it a huge percentage, almost in one shot to an investor, right? So you know what's happening. I mean, it's turning and all these houses that are sitting there. To your point, you could get deals like that. That's where this $87,000 deal came from. I mean, they had it listed originally for sell by owner. A wholesaler that I knew scooped it up before I did. I mean, it's okay, Kevin. But it's all good. He got it and I bought it from him this morning. So it all worked out. I know him. He knows me. It all worked out. And the thing is, is that I got it at a good price that works, you know?

• 27:12Dave Meyer?

  Even a year ago, it was hard to negotiate. Properties were still flying off the board. And no one knows how long this will last. And so it's hard to time the market precisely. But if you find good deals, that makes sense. And if you're buying for, you know, under what you think you could have bought for six months ago, and you see the intrinsic value, you think it was going to go back up, like it's a pretty good time.

• 27:33Speaker 01

  I agree fully.

• 27:34Dave Meyer?

  So catch us up to today, Nathan. How many properties do you have?

• 27:37Speaker 01

  Yeah, I mean, currently as of today with my closing, I'm at 22 properties. I've got 10 paid off, ring clear at this point. And the cash flow, I think my rents are about $280,000 a year. And I'm netting with vacancy and repair about $126,000. And true net is about $98,000 to $100,000 a year, which, by the way, I write it all off. So that's straight in my pocket. So.

• 28:01Dave Meyer?

  Awesome. Amazing.

• 28:02Speaker 01

  That's why they call this podcast Bigger Pockets, right?

• 28:05Dave Meyer?

  That's right. Yeah, exactly.

• 28:07Speaker 01

  So.

• 28:08Dave Meyer?

  So all that being said, Nathan, like what's next for you? It sounds like you kind of just do the same thing, bread and butter over and over. Is that the plan going forward?

• 28:14Speaker 01

  So I'm in that process of do I buy three to four more houses this year? Or do I take the cash that I have and I leverage out that line of credit and I go buy a three or four million dollar property, right? Uh, so that's kind of what I'm looking at now or building duplexes. I, I, I'm in a mindset of maybe buying land and building spec homes just for cash because the margin on that's really, really good and/or building at a duplex or quad. And the margin on that's really good, too. So I mean, I'm looking at a lot of these things, but it really depends on the land that I could buy at the time, right? Because it all matters with the deal. It's either you get the deal or you don't. And so whatever comes to me first, I'm kind of looking at those avenues.

• 28:55Dave Meyer?

  It's interesting. So you were saying doing development, but paying for it in cash and not paying a construction loan?

• 29:00Speaker 01

  Correct. That's exactly why I'm leveraging my lines right now. I'm actually, uh, it's something that I've always wanted to do. I've, I've done a lot of burrs.

• 29:06Dave Meyer?

  Yeah.

• 29:07Speaker 01

  So I'm, I'm, I'm pretty versed there. I've got some really good contractors and I know some that are builders. And so in my mind, I know a lot of builders too, because I've been in the real estate and the mortgage game for a long time. I know their margin sets. And, uh, so yeah, the line of credit is a lot better there because obviously not taking out hard money at 13 to 15% right now and paying a point or two on that. I can maybe leverage a line at eight, eight and a quarter. Uh, that's really helpful over the long term, especially if you're building something out over six months, you know, buying the land, owning it cash, building out all the, the sewer and so forth, and then building to spec on top of that. Uh, having a line of credit to do that of your own money or having cash to do that is definitely very helpful, especially now.

• 29:47Dave Meyer?

  Yeah. And I want to, to sort of clarify for people, when Nathan is saying cash, it doesn't mean he has that money in the bank.

• 29:54Speaker 01

  Yeah.

• 29:54Dave Meyer?

  Cause you're, you have a line of credit. So he's borrowing against assets that he has. For example, if you had a $200,000 paid off property and say you can rent, you know, 75 LTV, uh, you know, you could take out a hundred, $150,000 and use that to finance development of a new property. And obviously not everyone could do that. But it's great because if you were to just go get a construction loan, that might be 12% and paying two points or it could be higher. I don't even know.

• 30:24Speaker 01

  Yeah.

• 30:25Dave Meyer?

  Um, so just that level of, you know, doing a little bit of arbitrage here and figuring out that you can develop at a lower cost than someone else might be able to because you have these paid off properties can be really beneficial.

• 30:38Speaker 01

  Yeah.

• 30:38Dave Meyer?

  And I think it's interesting, Nathan, because you're a mortgage professional, but it seems like a lot of your strategy has been around low debt. You know, trying to not over leverage yourself and trying to pay off properties quickly. You know, it seems a little counterintuitive because you hear a lot of people wanting to max leverage. So like, how did you arrive at that strategy?

• 31:00Speaker 01

  I've seen a lot of people lose everything they have is the best way to put it. I in all honesty with you, I've, I know four people personally that have done strategies where they over leveraged and they've been burned on it.

• 31:11Dave Meyer?

  Yeah.

• 31:11Speaker 01

  And so my strategy really came from their experience and them telling me not to do it is the best way to put it. And so I started my career path out exactly on that as far as my investing pages is to not over leverage too much. But to your point now, I am looking to over leverage, but that's also because in the tortoise concept, right? I mean, the tortoise is slow, but again, a lot of people don't realize the shell is what is there to protect you. Right? And so in bad times, if you got good cash flow, that's your shell. And if you pay off your properties, that's your retirement and that's your cash flow. And the bigger your cash flow is, the bigger your shell is.

• 31:47Speaker 01

  And so you could leverage out and so being safe is very smart. So I try to buy these cheaper properties because if you put 20% down on an $87,000 house, you only owe 65 grand on it. That's half my net in a year. I could pay that house off in one single year and it gets me to that point a lot quicker. And so anyway, that's, that's definitely a format that I still will continue to use. I think paying off debt is very smart because it creates that shell. It allows you to have a larger income snowball to be able to leverage if you need it in good or bad times to buy or to, to try to play defense. And so it's, it's a really good strategy, I think.

• 32:21Dave Meyer?

  Awesome. Well, I think that's really wise advice. You know, I've people listen to the show. I'm all for the tortoise approach. I think this is what real estate is all about. It is a get rich slowly kind of scheme, and it's not really that slow when people say that. It's like 10 or 15 years, you're going to be doing great. And just trying to make wise, low risk, high upside decisions is just the name of the game. And there are times where you want to leverage, like, to be honest, in 2015, 2016, or even 2020, when rates were so low, it was a good time to leverage. Now, to my opinion, not as good time to leverage. You need to just adapt. And there's no one size fits all thing where it's like you should always be putting the least amount down so you can buy more properties. I don't know if that makes that much sense these days. So Nathan, thank you for sharing

• 33:05Dave Meyer?

  some of those insights with us. Any last thoughts or advice for our audience here before we get out of here?

• 33:10Speaker 01

  It's really smart to be secure. You know, it's not a quick game. People think it is.

• 33:15Dave Meyer?

  It's not.

• 33:15Speaker 01

  First thing we will tell you as an investor that is experience, and I'm at about 15, just like you, is that it is not easy. It takes a long time.

• 33:22Dave Meyer?

  Yep.

• 33:23Speaker 01

  But if you're methodical with it, and you're smart with it, and you listen to bigger pockets, you listen to these stories, you listen to other people's pros and cons that they've had, their experiences, take all of that information and try to figure out where you are economically, as far as your family, your income, your savings, where you want to be, your wants, needs, and aspirations, and leverage an approach that works for you. And if you can do that and do it methodically, you will always win. Just don't over leverage. Don't over leverage. Don't over leverage. I can always say it over and over and over again. Be smart. You can leverage, just don't over leverage.

• 33:56Dave Meyer?

  Well, that's a great way to get out of here, Nathan. Thank you so much for joining us today. It was a good time.

• 34:00Speaker 01

  Yes, definitely a pleasure. Thank you again for having me. It's always a privilege and a pleasure to be on the top real estate podcast in the world, in my opinion. So thank you so much for allowing me to do this. I appreciate it.

• 34:12Dave Meyer?

  Yeah, thank you. And thank you all so much for listening. Before we get out of here, I just want to remind everyone to make sure to follow the BiggerPockets Real Estate Podcast, wherever you get your podcasts, or make sure to subscribe on YouTube as well. We have a lot of great content going up there. And if you think other investors could learn from your story, and you want a chance to appear on the BiggerPockets Podcast like Nathan, make sure to go to biggerpockets.com/guest and apply to be on the show. Thanks again so much for listening. We'll see you next time.

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