You Don’t Need Dozens of Rentals to Reach Financial Freedom (He Tried It)

You don’t need to buy dozens of rental properties to have financial freedom. And if you ask today’s guest, less is usually more. For over a decade, John Crutchfield was in full-on acquisition mode. Despite starting with very little money, he scaled to over 600 units across multiple states and tens of millions of dollars’ worth of real estate. He even quit his job to focus on his portfolio full-time! But then the market changed. Interest rates spiked, debt became more expensive, and John’s expenses ballooned. He had overleveraged his real estate portfolio, and suddenly, owning more properties wasn’t really making him wealthier. So he did something he had spent years trying to avoid: he started selling. And in the process, John learned a painful lesson about building wealth: sometimes, having less can actually give you more. In today’s episode, John shares some of the highs and lows from his own real estate investing journey, how he went about pruning his portfolio, and why the number of doors you own doesn’t matter nearly as much as the cash flow, value, and freedom each property provides. In This Episode We Cover Why John pruned his portfolio after scaling to over 600 rental units When to buy more properties or pay off your mortgages John’s step-by-step strategy for finding seller-financed deals When to (and when not to) quit your job for full-time real estate investing How to prevent lifestyle creep as your income increases And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1339⁠. 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.

• 0:00Henry Washington?

  You don't need dozens of rentals to reach financial freedom. And if you ask today's guest, less is usually more. For over a decade, John Crutchfield was in full acquisition mode. Despite starting with very little money, he scaled to over 600 units across multiple states and tens of millions of dollars' worth of real estate. He even quit his job so he could focus on his portfolio full-time. But then the market changed. Interest rates spiked, debt became more expensive, and John's expenses ballooned. Suddenly, owning more properties wasn't making him any wealthier. So he started selling, and in the process, John learned a crucial lesson about building wealth. Sometimes having less can actually give you more.

• 0:46Henry Washington?

  More cash flow, more flexibility, more peace of mind. In today's episode, John shares the highs and the lows of his real estate investing journey, how he turned a smaller portfolio into a more profitable business, and why door count matters far less than the freedom each property provides.

• 1:08Henry Washington?

  What's going on, everybody? I'm Henry Washington, co-host of the BiggerPockets Podcast. And today, we're bringing you an investor story with Dr. John Crutchfield, who invested Tupelo, Mississippi. So let's bring him on. All right, Dr. John Crutchfield, welcome to the BiggerPockets Podcast, my friend.

• 1:26Speaker 01

  Man, too cool, too cool. How you doing, Henry Washington? D. Henry Washington.

• 1:31Henry Washington?

  Why don't you give us some background? Start a little bit before real estate and then kind of talk us up to where you are now.

• 1:37Speaker 01

  I'm John Crutchfield, grew up in Tallahassee, Florida. I'm a Florida boy. Time came to go to college. It was like, okay, where are you going? Well, I don't want to go too far. So, you know, Florida State was right down the street. Fast forward a little bit, you know, got my first job as a teacher, because you know, teachers get summers off, they get all the holidays. Somebody said, well, if you go back to school, you're such a good teacher, I bet you could be a good principal. And I was like, yeah, you know what? That's right. So I went back and got a master's degree, became a principal, realized that as a principal, you know, you do get paid a little bit more, but you have to be there all the time. So somebody then said, hey, you'd like to talk and you seem kind of smart. Maybe you want to be a college professor. Like, that's the next level, right?

• 2:23Speaker 01

  You gotta go back to school, pay more money so that you can get a better job. And so I just kind of followed that track. Ended up as a professor at Ole Miss, that probably was my dream job. Got to help people who wanted to become teachers, become teachers. So very fulfilling work. But every time I kind of got these increased roles, I ended up seeing lifestyle creep happen, right? So more money coming in the personal account meant, okay, better furniture or a bigger house, more spending, right? Because, hey, you gotta have a better car because you're making more money, right? That's the thought. And so ended up, at the end of the month, no matter what job I had, not having enough money or having to wait till the next month.

• 3:06Speaker 01

  So then I started Googling stuff like passive income and stumbled on like real estate investing. There was this podcast at the time called the BiggerPockets Podcast. So it's funny.

• 3:18Henry Washington?

  Never heard of it.

• 3:20Speaker 01

  Yeah, and I stumbled on their forums, getting tons of quality answers from the community, but just started kind of feeding that bug of getting financial education.

• 3:29Henry Washington?

  How old were you at the time when you, when you found this real estate bug?

• 3:33Speaker 01

  Oh, probably 26, 25, 26.

• 3:37Henry Washington?

  How long did it take you to go from that learning to doing? And what were those steps?

• 3:41Speaker 01

  I end up meeting a guy at church who had about 30 properties, and this was his retirement plan. And he, as we're having a conversation, says, you should kind of like sit with me so I can show you what I'm doing. And that mentorship became very valuable to me because we struck up a relationship, started having multiple conversations. He sat down with me and he told me, like, just look at your life in your W2 world. If you can run a school, you can run a business. That was kind of my moment.

• 4:13Henry Washington?

  Yeah.

• 4:14Speaker 01

  Because before he said that, I had never in my life considered actually owning a business. That's how ingrained it was for me, that you go to school, you get good grades, you go to college, you get a good job. Like, I was that guy. So what I ended up doing is going online, like some people do, and looking for for sale by owners because I had a big problem. I didn't have any money. So I remember my strategy, like very concrete. It actually still works in 2026. It's a lot harder, but it still works. To go on Zillow, filter for for sale by owners, and you get their phone number right there. And I will text them, I'm interested in buying your house, but I don't have any money. Will you owner finance it to me?

• 5:00Speaker 01

  That was the text that I sent hundreds of times. And one guy said yes. He said, actually, I will.

• 5:08Henry Washington?

  It does still work. You can actually do that. But most people won't commit to sending the amount of text messages that you would need to send in order for somebody to get a yes. Where people screw up, it's not that you can't get into real estate with limited funds. It's that most people aren't willing to put in the level of effort it's going to take to find that deal and to get that deal closed when you don't have money as a resource. You're going to have to spend way more time and put a lot more effort in. You gotta be more creative.

• 5:40Speaker 01

  Absolutely.

• 5:41Henry Washington?

  Well, I know it was a while ago, but the principles remain the same. Would you mind sharing with us kind of what that ended up looking like? Like, what that deal structure was? What'd you pay for the house? How'd you structure the financing? What'd you give them? What'd you not give them?

• 5:54Speaker 01

  I bought the house for $80,000. It was a three-bedroom, two-bath in the market that I'm in, Tupelo, Mississippi. The monthly payment was $528 a month. And then I was responsible for the taxes and insurance. The house did need about $20,000 in work. So he had just had a tenant move, and that's why he was interested in this, because he didn't want to do the renovations. Ended up spending that $20,000. A lot of it was with sweat equity, but getting the house presentable where we could rent the house out. And ended up renting the house out for $1,200 a month.

• 6:27Henry Washington?

  So this is a screaming deal.

• 6:28Speaker 01

  Look, I owned that house for maybe 10 years before we sold it. And we sold it recently for like $220,000.

• 6:36Henry Washington?

  Sounds like a deal to me, buddy.

• 6:38Speaker 01

  Yeah, and I ended up having an investor relationship, kind of a guy that, you know, we ended up doing more business together because of this. So that first deal went, went pretty well.

• 6:49Henry Washington?

  This absolutely can still work. Almost all of my owner finance deals have been from landlords because landlords understand the value of cash flow. That's why they were landlords in the first place. And a lot of people would love to get out of the business of being a landlord, but still maintain cash flow. And the way to do that is owner finance, because then you get paid every month, but you're doing a deal with tenants and toilets. So if you want to try this, I would say try it, except just do it a little different now. Help yourself, pull a list of people who own property free and clear, absentee owners and landlords. Call them all or text them all and ask them.

• 7:32Henry Washington?

  And I bet you won't have to send as many thousands, but it'll still be a lot and you'll get a lot of rejection. But this can absolutely still work. So I'm very curious how that deal sparked your growth and how long it took you to scale. But I want to ask you those questions right after the break. Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties.

• 8:14Henry Washington?

  You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year, no furnishing required, making this the easy button to save five or six figures in taxes this year. And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%.

• 8:57Henry Washington?

  New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 9:12Dave Meyer?

  Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use steadily. They offer landlord insurance built for real estate investors, including short-term rentals. And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 9:44Henry Washington?

  Quick word about a new pro perk you'll want to know about. Aven, if you're a homeowner, there's a good chance you're sitting on equity that you're not using. The problem is tapping into that usually means a cash-out refi, a traditional second mortgage, or weeks of paperwork just to get approved. Aven built something different. It's a credit card, but it's backed by your home equity. So you get a lot of the rate benefits of a HELOC with the flexibility of a card you can use anywhere. Rates are typically well below a standard credit card. Approval is fast and mostly online, and you can use it for anything. A renovation, paying down high-interest debt, or just have more breathing room in your budget. And if you're a BiggerPockets Pro member, there's an extra reason to check it out. Get approved for the Aven card and you'll get a $400 statement credit

• 10:27Henry Washington?

  after spending $400 on your Aven card. Enough to cover your entire annual Pro membership. Head over to aven.com/biggerpockets to see if you qualify. Aven Financial, Inc., MLS number 2042345. Cards issued per 2020 license from Visa USA, Inc. by Coastal Community Bank, MLS number 462289, member FDIC. Equal housing lender, subject to approval, terms apply. Visit aven.com for details.

• 10:49Speaker 03

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• 11:20Henry Washington?

  All right. Welcome back to the BiggerPockets Podcast. I am here with investor Dr. John Crutchfield, who just told us the story of his first deal. And it's so interesting that our stories are so similar in how we got started in our upbringings even into leading into that first deal. So you did a first deal, pure hustle, sent hundreds of text messages asking somebody if they'd own or finance you a house. And lo and behold, somebody says, yes, you end up buying a screaming deal. How did that spark the rest of your real estate investment journey?

• 11:53Speaker 01

  When I had the mentor that I mentioned come over to look at the house after we were done, he was like, I think you need to get this appraised. That was the eureka moment. When I got the appraisal and I had a property, but it was worth 160. And at the time, I was a professor at a college making $60,000 in a whole year.

• 12:16Henry Washington?

  Yeah.

• 12:16Speaker 01

  Like, I was like, wait a minute, like, this is possible to do over and over and over again? And he was like, yes. And so that is how the first deal really kind of sparks the push into, well, if I could do this five times a year, I'd be making like five times as much as I make on a job. And this is a no brainer. At the time, I never thought about quitting my job. I just said, I could do my job and do this on the side. So ended up doing my next deal, similar type situation. I would say you asked me how long. It was, it was probably a year or two. There was some space,

• 12:56Speaker 01

  but ended up buying a property, again, very limited funds, using sweat equity. I have pictures with my wife and kids helping me like paint and fix up countertops, but ended up doing a similar thing. $15,000 purchase. This is a Mississippi property.

• 13:12Henry Washington?

  $15,000 for the whole house or the down payment?

• 13:15Speaker 01

  Whole house. There was an evolution that happened here. Once I saw that appraisal and the whole value add situation, my mind switched from, well, I need to get the properties for as low as possible. Right? My strategy improved. And this is a strategy I used probably for my first 30 units. You have all these people on the MLS that are trying to sell their property. And some of those properties are sitting there for months and months and months. So I found a realtor who would do what I asked, because some of them wouldn't. I just want to offer $15,000 on everything on the market. And that's what I started doing, like just offering as low as possible on everything on the market. Some of them wouldn't respond. Some of them would say,

• 14:00Speaker 01

  heck, no, you know, all that stuff. But then somebody would counter a lot lower than their asking price.

• 14:07Henry Washington?

  Yeah.

• 14:08Speaker 01

  Or in this case, the guy just said, have you even looked at the house? Yes, I'll take 15K.

• 14:16Henry Washington?

  That doesn't sound like a good answer.

• 14:20Speaker 01

  If you could like, if I asked a third grader to describe what they think a $15,000 house looks like, that's what this house looked like.

• 14:30Henry Washington?

  The house needed a whole new house?

• 14:32Speaker 01

  It needed everything. It needed everything, everything. Holes everywhere, stuff everywhere, vacant for a long time. But the numbers made sense. I ended up buying that house for 15K. My wife and I spent about 35, again, a lot of that sweat equity in there, went to the bank, and they said it was worth 100K. So this whole concept of adding value and making something worth more because you did the work like that, it was, it was, it really provoked an addiction. And so that's kind of what I did. I started doing as many of these as I could.

• 15:07Henry Washington?

  I actually teach people like how to offer on the MLS in a very similar fashion. You want to find a deal on the MLS? Do these steps. Define your buy box. Your buy box is just what you want to buy and where you want to buy it. Right? Give that buy box to an agent who's willing to submit offers for you. John said, not everybody was willing to do this for him. That's still true to this day. You got to find an agent who's going to be willing to do this dirty work. And so I pull every house on the MLS that is in my buy box and has been listed for 90 days or more. Average days on market here is about 60 days. So I do 30 days beyond average days on market. That's my

• 15:48Henry Washington?

  assumption that they may be motivated for a lower offer. And then I just have my agent offer 40% off of the price it's listed for. So we take the list price, we subtract 40%. That is our offer. And we don't write up official offers for everyone. My agent has a canned text message that he sends to the other agent that basically paints me as the bad guy. So he doesn't have to damage his reputation for making lower offers. He says, hey, I've got an investor client. He's only making offers based on the numbers. It's not personal at all. I'm sorry, the offer is not what you're hoping it is, but would you consider an offer of X? And he sends that to every one of

• 16:30Henry Washington?

  these listings. We are not looking for someone to say yes. Matter of fact, I don't want somebody to say yes. Like your guy said, yes, that ended up being a doozy. If somebody takes that and says, yes, I'm probably pretty skittish, but absolutely want people to counter. Because if you counter, or if you say, hey, we consider it, great, now we can have a conversation. I can go see the house. I can analyze it thoroughly and I can make an offer. This is the exact same strategy you just talked about, maybe refined a little different for the times. You guys, this stuff still works if you're willing to put in the hustle.

• 17:06Speaker 01

  That idea of making offers and starting conversations is something that I still have to remind myself of all the time. Like when I want to build my pipeline, it's like, how many conversations have I had? How many offers have I made?

• 17:19Henry Washington?

  People get so overwhelmed with the concept of like, how do I find a good deal? Simplify the process. That's what John just did. If you simplify the process down, it becomes a lot easier. So what if instead of worrying about what kind of marketing you're going to do, or you know, if you're going to make MLS offers, what if you just said, what if I talk to three to five people a day who can sell me a house? Just get on the phone with three to five people a day who can sell you a house. If you make it a point to have a conversation with three to five people a day who could sell you a house, I bet you'd buy a house pretty quickly. 30, 60, 90 days, if you do

• 18:00Henry Washington?

  that consistently. So what does that mean? You can either call direct sellers and see if they're willing to talk to you about selling a house, real estate agent. You can call real estate agents and see if they have anything that would fit your buy box, or you can call a wholesaler. Those are three different types of people who can all help you buy a house. So talk to one of each a day. What if you just talk to a wholesaler, a seller, and a real estate agent every day? That's very easy to do. And if you did that consistently for 30 days, I bet you'd be pretty close to getting a deal.

• 18:30Speaker 01

  And also what you're doing is you're leveraging other people to help you reach your goal. So now it's not just the deal you're looking at that you might have started the conversation with, but it's all the other deals that they may be aware of that they may present and say, hey, this is something you should consider. So you're exponentially growing your reach by having these conversations.

• 18:52Henry Washington?

  Would you mind sharing with us kind of how big your business got over the course of the last several years and kind of what that timeframe looked like for you to get there?

• 19:01Speaker 01

  So I actually don't know how many I had at the peak. I really don't. People would, I would go to these conferences and people would be like, how many doors? And I was using a CRM. So I know I remember 585. I remember that number being in the CRM. Problem was, I was focused on acquisition and growing. So not all the units ever made it into the CRM. We were picking up deals in Iowa. I was picking up deals in Arkansas, picking up deals, we started buying in Texas.

• 19:34Henry Washington?

  And you were keeping these? These weren't like wholesale deals?

• 19:36Speaker 01

  Never sold a property till, till the market turned and I realized I should have been selling some sometimes. You know, it probably ended up being 600 plus.

• 19:45Henry Washington?

  That's a lot of real estate across multiple states. Like, were you building like teams in all these states to help you operate all this real estate? And were you buying it all creative? Like, that's, that's all, and that's a lot, man.

• 20:01Speaker 01

  Yeah. So out of state means you gotta, you gotta leverage other people, right? And so a lot of times we were partnering with property management in those areas, right? Because I didn't have a team there. And then you're absolutely correct. Like, you probably are not going to buy 500 plus units with it just being one house at a time, right? One property at a time. And so somewhere in, you know, 2017, 2018, it kind of clicked for me that a lot of property owners, a lot of landlords had more than one property that they would want to sell at one time. Right. And so, you know, I remember buying a package of 50 doors. I remember buying a package of 30.

• 20:43Speaker 01

  I would go on the property tax records and I would look for LLCs or people that had multiple properties under their name. And they would get a text or an email from me. And at that point, I was, my goal was growth. So I, if they asked me what I wanted to buy, it was like, how much are you willing to sell? And so I started being that leader, that visionary that was thinking, how fast can I grow the door count? Since I've realized that that actually doesn't matter at all. So what I loved to be doing was making an offer on a property, figuring out what my renovations were going to be, figuring out what that ARV was going to be,

• 21:22Speaker 01

  and putting that in a spreadsheet, figuring out what the rent was going to be, what the expenses I thought would be, and putting that in a spreadsheet, right? And so what I would do is every time I was acquiring, I would just add to my spreadsheet. And it starts to add up really fast. I mean, when I say I got addicted to this, I got addicted to every 30 days updating my personal financial statement and seeing my net worth just going up like crazy. Or every single month, like seeing the deposits in the bank account keep going up, right? And so, you know, if you're somebody who grew up like I did, or who was a school teacher and, you know, you're making $3,000 net after your pay,

• 22:03Speaker 01

  like seeing $100,000 hit a bank account or $200,000 started to hit a bank account every single month, you're just looking at that top number saying, this is beautiful. Like I'm doing something right. But when you as the owner are focused on just growing, you are kind of at the mercy of your property management. You're at the mercy of your team. And then, most importantly, you're at mercy of the expenses staying the same as what was in your pro forma. And that will not stay the same.

• 22:38Henry Washington?

  Were you still working your day job when you were this big?

• 22:41Speaker 01

  I quit my day job once I realized the possibilities, right? Um, in fact, I just became a horrible employee, right? They, they would ask me to do something extra, give me an extra assignment. And I was like, hmm, do I want to do this instead of trying to be a good team player? So I, I remember, and this was in the peak of good times, right? I remember doing a deal where, you know, I added $300,000 in, into my net worth on one deal. I remember my boss saying, hey, we need you to teach extra class or something and we're not going to pay you for it because we think you can fit it in your schedule. And I was like, I gotta talk to my wife, but I think I'm done. And, uh, I, I ended up quitting, but I went full time

• 23:23Speaker 01

  into this business somewhere around 2019. And so that meant every day I was giving a hundred percent of my effort to grow in the business. I'm an entrepreneur now. I'm a full-time business owner. I probably work too much, but I don't clock in or clock out. So it feels like, um, I'm doing what I like to do.

• 23:44Henry Washington?

  And that's specifically what I'd like to talk to you about right after the break is what were some of the lessons you learned as a technically small business operating a large portfolio? So let's jump into that after we come back.

• 23:58Dave Meyer?

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• 28:51Henry Washington?

  All right, we're back on the BiggerPockets Podcast. I'm talking with investor Dr. John Crutchfield, who took growing and scaling to a whole new level and did it during a market transition. You said you quit your job in around 2019. You know, the market got real good between 2019 and 2022. And then it's, you know, been not as great from 2022, 2023 until now. So I'm very curious about what lessons you learned while you were in that growth mode and operating mode and how that's shaped where your business is today.

• 29:30Speaker 01

  I learned that more doors does not necessarily mean more success. Once you get into it, you realize, okay, I'm actually now managing employees, right? I'm managing contractors. I'm managing inventory and materials that I don't want to just walk off. All of the little issues that you might have on one project, I want you to start multiplying those by hundreds of doors, right? You know the stories, right? Contractor walks off with this material or you got a water leak or some kind of plumbing issue or AC out. And this is going to create like wear and tear on your properties, but also ultimately affect your bottom line, which is what matters, not door count,

• 30:14Speaker 01

  your bottom line, what's left over at the end of the month. And so, you know, people ask me, well, what's it like? You know, were you really making 50, $100,000 a month? Henry, like, I remember celebrating.

• 30:27Speaker 01

  At one point, I was paying off a house every single month. You know, in Mississippi, a good house was sixty, seventy K. Like, I was paying down fifty, sixty, seventy K a month in debt pay down. And looking at that like, man, I got a house paid off. Like, and I'm doing that every single month. So beautiful, right? But then you'd have some seasons of the year where we were giving that back in CapEx. Because when their AC goes off, it has to be fixed. You can't say, well, I'm just a little landlord and I only have a property or two. And I need you to understand, or you're gonna be in a newspaper.

• 31:02Henry Washington?

  Yeah, you're right.

• 31:03Speaker 01

  You know, you gotta get those units fixed and get those people back up so that they're operating. They can have a safe, affordable place to live. A key principle here is that it's, it's like a living, breathing organism as you grow.

• 31:17Henry Washington?

  Yeah.

• 31:18Speaker 01

  That has so many like lessons that you can't find in a book.

• 31:23Henry Washington?

  Yes.

• 31:24Speaker 01

  And that's what I learned.

• 31:25Henry Washington?

  So how did that change your business? Did you start to sell property? Did you, did you stay in growth mode? Like, what changed and when did it start to change?

• 31:36Speaker 01

  So the big change started in late twenty twenty-two, twenty twenty-three. Um, a lot of us are aware that the Fed started increasing interest rates. And, you know, if you have thirty million dollars borrowed and your interest rate average is four percent. Okay, that's like free money. It's beautiful, right? You're, you're making payments and you got money left over to do stuff, right? But when that same thirty million dollars and a lot of my loans were these local community bank loans that reset every five years, um, ask me how they timed this, okay? When they reset and then your average interest rate goes to eight.

• 32:16Speaker 01

  That literally is a huge increase in your expenses and it changes your lifestyle. So if I had one property where the mortgage payment went from twelve thousand to twenty-one thousand, that changes the salaries that I can pay off that property. It changes the salary I can pay myself. And then you multiply that across the whole portfolio and you're really like in a tight, trying to figure out, okay, how am I going to adjust? The first adjustment we made is like, okay, let's double down on the strategy that was working for me. Right? I grew the business by borrowing, right? Buying and fixing up the property and renting it out and refinancing. So let's go borrow some more money so that we can have cash to keep operating. That was the first thing I did.

• 33:00Speaker 01

  The problem is we weren't borrowing that cheap money anymore. We were borrowing more expensive money and it got volatile, Henry. It got kind of volatile for a little bit as those rates were going up. Some of the lenders started squeezing in some ten percent rates in there.

• 33:14Henry Washington?

  Yeah.

• 33:15Speaker 01

  So we had the cash to operate today, but not the cash to operate in the future if we were depending on cash flow. And so realized, kind of looking at the spreadsheets, that this was not gonna work. Like, eventually we were gonna run out of cash and we were gonna run out of the ability to keep borrowing. Right?

• 33:32Henry Washington?

  Yeah.

• 33:32Speaker 01

  And so this is when I started saying, okay, we gotta sell some stuff. I wish I had took some chips off the table sooner. I will tell you something, this is probably like a, put this on a bumper sticker. It's actually very easy to buy real estate. It is a totally different game to sell real estate.

• 33:48Henry Washington?

  That's true.

• 33:49Speaker 01

  And it's a new skill that we're still having to learn because we're still selling some properties. Um, fortunately, I met some awesome realtors who have been helping dispose some of the, the, the portfolio. And I'm also now a licensed realtor, right? So I've learned, um, a little bit more about selling properties as well. I told you I quit my job, but I thought that I quit my job to live off the rental properties.

• 34:14Henry Washington?

  Yeah.

• 34:15Speaker 01

  That was a misunderstanding, right? And so when you start pulling your lifestyle off of the rental properties, that makes the, the things tighter as well.

• 34:24Henry Washington?

  Yeah.

• 34:24Speaker 01

  And so what I learned as we started selling properties is like, oh, I actually still need an active income from something to make sure that I'm not pulling money off of these very limited, tight margin rental properties and cash flows. So that, that's probably a whole nother thing. But if I could save one person, I'm like, hey, quitting your job is beautiful in this business once you're ready.

• 34:49Henry Washington?

  Yeah.

• 34:49Speaker 01

  But it's not always the right thing for everybody.

• 34:52Henry Washington?

  The realization I had was I'm running a business, the business makes money. And then if I take all the money it makes out of the business every month, it's hard for the business to grow. Right? If I suck every ounce of profit out and I don't reallocate some of that to improving the business, like, the business doesn't grow. Like, any business that isn't real estate, they don't do that. They don't suck all the profits out and then, and then hope the business grows, right? There's a plan for reallocating profits to continue to grow the business. Two, most investors realize, okay, if I'm going to quit my job, it's not going to be the cash flow that gets me there. It's a hard realization because most of us get sold into real estate investing

• 35:34Henry Washington?

  on the concept of properties paying for life's expenses, right? That was the thing that got me, oh, you wanna buy a new car? Get a house. The house produces cash flow. Cash flow plays for the car. In practice, it doesn't always work like that because maintenance is unpredictable. Because, uh, even if you are predicting the maintenance, if you haven't owned the property that long, you haven't saved up enough cash to cover said maintenance item that comes from somewhere out of your pocket, which means you have less to go pay for this new car or this thing you have in your lifestyle. And so you realize the same thing I realized and the same thing that a lot of investors listening to this are gonna realize, that if I want to quit my job and use real estate, I can't just do it on cash flow.

• 36:16Henry Washington?

  I have to find another active income stream within the real estate space to do that. And there's nothing wrong with that. And so I tell people, yeah, I retired from corporate, but I didn't retire from working. Like, I flip houses. That's a job. It's a construction business. Like, that's what I do, right? Like, and, and it's on, on its surface, I flip houses. So I run a construction business that renovates properties, that produces cash. I use that cash and I live off that cash, so I don't have to touch my cash flow. I can use that cash to also pay down the assets and then at some point I won't have to flip houses anymore. And so for those of you that are listening, if you wanna quit your job, you can get there. But think of it in two phases. Phase one is if I wanna get out of my corporate gig,

• 37:01Henry Washington?

  what job within the real estate space can I replace my corporate gig with? Phase two is to work yourself out of having to have that active income stream over the course of the next several years. So my goal is to take the flip proceeds, pay off more rentals, more paid off rentals is unleveraged cash flow. Unleveraged cash flow is substantially higher than leveraged cash flow. And at some point, I don't have to flip houses anymore. So that's the way that I think people need to think about leaving their job.

• 37:29Speaker 01

  And you don't need hundreds of doors if you're looking at it like paid off rental property. So the, the five hundred number, totally unnecessary.

• 37:40Speaker 01

  What you just said there is like, uh, gold for anybody that's like, okay, if I wanna fast track my knowledge, five, ten years in the business, like, just listen to what Henry just said about active cash flow, paying off, paying off your eventual retirement income.

• 37:56Henry Washington?

  Let's put some actual numbers to this, if you don't mind. Where does your portfolio stand today? And where are you trying to get it to?

• 38:04Speaker 01

  I mean, at the peak, we, we probably were close to thirty to thirty-five million in assets. And today we're down about ten million.

• 38:12Henry Washington?

  Wow. So you sold two thirds of your portfolio?

• 38:15Speaker 01

  Yes, and selling, and selling.

• 38:17Henry Washington?

  Yeah.

• 38:18Speaker 01

  And so, you know, what that means is we've had capital to be able to reinvest in other things. But also it means we've taken some chips off the table. Unfortunately, we are not selling at a time where you can get those max values. And so that means that in some cases I've had to be a motivated seller, right? We wanted to get out of certain debt. Uh, uh, just to be clear, like, if, if I'm in a ten percent interest rate right now, like, that property is not making money, like, not in the market that I'm in. So being out of them in certain cases was better than holding on to them. I don't actually have a target anymore for the size of the portfolio

• 38:59Speaker 01

  because what I realized is that I already have more than I'll ever need. If it's paid off.

• 39:06Henry Washington?

  Mm-hmm.

• 39:07Speaker 01

  I, I'll give you an example. A lot of my properties are five, ten property packages. Well, if I sell six of them, I've got four free and clear. And that's been happening over and over for the last three years. So I'm starting to fall in love with the ones that we own that don't have any payment. Whereas the ones that are kind of in these packages and still in debt, especially if they're not cash flowing, they gotta go. Of course, I have a pro forma and I have a spreadsheet.

• 39:33Henry Washington?

  Yep.

• 39:33Speaker 01

  But when you go to sell, you don't know what's gonna sell first or what's gonna sell for what.

• 39:40Henry Washington?

  There you go.

• 39:41Speaker 01

  Kind of adjusting the plan every thirty days as it goes.

• 39:44Henry Washington?

  This is like the realest real estate talk I've had in a while. All right, John, you shared a lot with us and I'm sure there are people who would love to learn more about you and the choices you've made in your business. And so if somebody wants to reach out, how can they find you?

• 40:00Speaker 01

  You can find me all over social handle is at Grab the Map. Um, or you can just search my name on Facebook. I'd probably hang out there where the old folks are.

• 40:11Speaker 01

  That's where my kids know me.

• 40:14Henry Washington?

  All right, John, and if you are listening to this episode and you are thinking, man, I've got a pretty cool story I'd like to share with the listeners of the BiggerPockets Podcast, well, you may have a chance. Once you head on over to biggerpockets.com/guest and fill out the form, you may find yourself right here in a conversation with myself or Dave, sharing your story for the betterment of our community. Once again, thank you so much for listening to the BiggerPockets Podcast. We'll see you on the next episode.

• 40:42Speaker 04

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